Full text of Commercial and Financial Chronicle : November 23, 1950, Vol. 172, No. 4962

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UNIVERSITY
OF MICHIGAN

2

tym&dz

ESTABLISHED 1S39

1950

NOV 24

.,+~

: BUSINESS

■}

MBHISTMTIj

USUI?

i

Financial

Reg. U. S. Pat.

Chronicle
Office

Price 30 Cents a

Jse,h

By S. B.

philosopher who said that
all we learn from history is that we learn nothing
from history. One can scarcely give much con¬
sideration to current discussions of current prob¬
lems and current world conditions without very
was

a

German

as

for

and
we

that

"taking

all sides

war," demand is heard on

Administration's

although it does not

is

very

fairer than

profits are really "excessive," what could be
to skim them off and give them to the government for
use in the military program.
Indeed
the most important argument being
currently advanced for the tax is
not its revenue productivity, as the

and

corporate

Sidney

(if it is won) and it is

enterprises gain by war

like

others lose. It is
plain enough that such efforts as we have hitherto
made to seek out those which profit by war and
take away the bulk of such profits have not suc¬
ceeded. It should be about equally clear that the
attempt to do such a thing has been costly and
troublesome. If there is any doubt of this fact
Continued

income

reac¬

viding additional revenues.
We

we're

If

Incorporated by Royal Charter

the

make

to

in

most

tion
new

era,

one

talk

*A

advocates

The Congress is

8

West Smith field,

49 Charing

64 New

O. K.

and a subsidy to indolence
stagnation. But very many feel

progress

Burrell

and

tax would be bad for peacetime it
appropriate in time of war when the
nation and particularly its young men are being asked
and expected to make greater sacrifices.
But the excess profits tax is not as simple as all this.
It is essential that we consider the impact of such a tax
on the economy.
It is not here argued that it is unde¬
sirable to tax away war derived profits. But we must
Continued on page 28

opportunities in

on

27

page

Club, Brockton,

REGISTRATION—Unierwriters and dealers in

while

such

a

corporate securities

with the SEC and potential
starting on page 38.

afforded a complete picture of issues now registered
takings in our "Securities in Regis ;ration" Section,

Franklin

under¬

State

Custodian

Funds,

E. C. 1

A Mutual

Cross, S. W. 1

inc.

across

Fund

PREFERRED STOCK FUND
BOND FUND

TOTAL ASSETS

£156,628,838

INCOME

& Co.

Deacon's Bank, Ltd.

THE NATIONAL CITY BANK

UTILITIES FUND

(BALANCED) FUND

Prospectus sent free on

Associated Banks:

Williams

FRANKLIN
64 Wall

request

DISTRIBUTORS, Inc.
Street, New York 5

Underwriters and
Distributors of

Municipal

and

Corporate
l

Pre:ptctus from
VANCE,
Ill

OTIS & CO.

SANDERS iN CO.

(Incorporated)
Established

BOSTON
New

Angeles




1699

CLEVELAND

Chicago

York
Los

Securities

authorized dealers or

Devonshire Street

y

and

New

York

Cincinnati

Chicago
Denver
Columbus Toledo

Dallas
Buffalo

1116

OF NEW YORK

Canadian Bank
o$@ommme
Head

Bond Dept.

Teletype: NY 1-708

New York
Seattle

Office: Toronto

Exchange PL
San Francisco Los Angeles

Agency: 20

Portland, Ore.

Bonds

Canada

Monthly Commercial Letter
upon request

COMMON STOCK FUND

1

Bond Street, W. 1

Glyn, Mills

peacetime

-Municipal

C. 2

Burlington Gardens, W.

a

well aware that

1727

OFFICES:

Bishopsgate, E.

as

ended. It

peacetime excess profits tax would
operate as a penalty on

,

3

repealed

but

wars

few

throughout Scotland

LONDON

world

tax.

OFFICE—Edinburgh

Branches

excess

would be entirely

before the Brockton Rotary
16, 1950.

by Mr. Lurie

both

an

inevitably

that

Continued

Mass., November

>

used

peacetime. It was used

has

a

but it does offer a

of our

never

promptly when the wars

prosperity, there's one considera¬
underestimated: We've entered a
which may later be called the "Buoyant

days of fearful
which can't be

these

have

profits tax in

A New Era

SECURITIES NOW IN
are

Royal Bank of Scotland

not offer security,
opportunity.

sought more as a

is

equity than as a

of

and rephrase this
truism—for it's the keynote of my
remarks today: The stock market—

life—does

wealth of

32

on page

B. Lurie

profit out of
war-derived
matter
matter of pro¬

necessity of taking the
war.
The recapture of

forecast the

actions

but not essence

capitalization.

"excess profits tax" has a good flavor.
appealing, even convincing, to a layman. If

I'd like to repeat

equally inescapable that some

HEAD

-

profits tax are

excess

The very term
It

opportunity.

inevitable, of course, that some

to

differential tax levied on form,

rarefied atmosphere
which doesn't exist
But the unknown is
a challenge, rather than
a cause for
concern.
After all, life itself does
not suffer security—but it does offer

be.

appear to
It is

to all,

a

tion; there's a
in
Washington
in Wall Street.

profitless in the ordinary sense of the term. The
difficulties inherent in giving practical effect to
such an idea as it relates to corporations should
by now be evident

for politics (both ex¬
domestic) has assumed

"P"

and

ated—for it's difficult to

proceeded to act accordingly. Of course,
not succeed either time in making war

we

influenced

taken by Washington

special importance in the economic
equation. In the process, a new ele¬
ment of uncertainty has been cre¬

profits tax upon corporations. In
World Wars, the story was much the same,

did

than

supply-demand factors.
this condition of pater¬
government—with the result

the

ternal

excess

an

both

confront us. Bent upon

nalistic

Administration

(1) it is only incidentally related to war derived profits;
(2) it destroys both corporate and individual incentive;
(3) it is a deterrent to efficiency; (4) it is a stimulus
to monopoly; and (5) it is complicated and filled with
contradictions. Sees in excess profits tax nothing more
of corporate

which has been

much by the actions
officials as it has by industry's
And Korea obviously emphasizes
as

objections

Burrell's

Prof.

over

heaven."

We've been in an economy
almost

doubt whatever about it,
he need merely turn his attention to current dis¬
cussion of a tax policy appropriate to the condi¬
profits out of

to

grow

harbors any

tions which now

outlook

Business

University of Oregon

the very long-term
for both the stock market and general economy is for
major expansion. For the immediate future, however,
he foresees highly irregular business due to consumer
credit restriction and dislocations from rearming impact;
and a fairly static stock market where "the trees won't

Market analyst asserts

it relates to business.

one

Professor of

Bad Tax

a

BURRELL

By O. K.

LURIE*

Paine, Webber, Jackson & Curtis,
Members, New York Stock Exchange

conspicuously and more regularly in evidence
than in things which have to do with public pol¬
If

Tax

Market Analyst,

quickly becoming impressed with the truth and
pertinence of this philosophic generalization.
Nowhere is this shortcoming of mankind more

icy

The Excess Profits

Prospects for Business
And the Stock Market

'

Copy

November 23, 1950

The

EDITORIAL

It

York, N. Y., Thursday,

New

Number 4962

Volume 172

Bond Department

THE CHASE

NATIONAL BANK
OF

THE CITY

OF NEW

YORK

-

2

(1978)

The Commercial and Financial Chronicle

.

.

Thursday, November

.

"

TRADING

MARKETS

The

IN

Amerex Holding Corp.
American Express Co. W. I.*

participate and give their

memo

nor

EUGENE

Boston

Personal

V.

FLOOD

The

the

is

Rights & Scrip

the

Personal

This

Trust,

of

Property

which

was

New

York

Curb

Exchange

has

ly

the

for

times

58

years,

to

d

a

wouldn't

growth

America.

today
Boston

Capital

BANKERS BOND ^

m

Incorporated
1st

2,

KENTUCKY

closed.

The

Machines, International Harvester,

about

National

amount

Steel,

Standard

Oil

of

ness,
as

the

such

utilities,

there

American

as

stocks

are

Gas

and

Elec¬

tric, American Telephone, Boston

Edison, and Pacific Gas and Elec¬
tric

Company,

Norfolk

Paeific

CONTROL

there

SIMPLEX PAPER
on

Request

*

bank

of

the

of

In

rails,

addition,

important
the

reasons

ended

the total expense

is

stock

June

the

For the

management.

months

this Fund,

the

stocks.

liking

low cost

★

in

large holding of insur¬

a

my

six

★

is

One
for

and

Western, and Union

Railroad.

and

ance

Analyses

and

30,

1950,

of operation of

including trustees' fees,

custodian fees, and transfer agent
fees
148 State St., Boston 9, Mass.
Tel.
w

CA.

7-0425

:

:

$10,824.34, and the total

was

portfolio,

of June 30,

as

Teletype BS 259

N. Y. Telephone WOrtli

4-5000

432,138.88.

In

othey

*

$6,-

was

words,

on

a

yearly basis, the cost of operation
of

this

Fund

is

approximately

3/10ths of 1%. For this, the stock¬
holders

Kentucky Utilities
South

must

thank

than whom there

Jersey Gas

the

following

Charles

Tidewater Power

F.

the

are

no

trustees,
better,

will

names

Adams,

as

attest:

Harvey

H.

Bundy, Richard C. Curtis, Francis

Toledo Edison

C.

V0GELL & CO., Inc.
37 Wall Street, New York 5
WHitehall 4-2530 Teletype NY 1-3568

Gray and Moses Williams.. Any
five

gentlemen manage his

investment account.
In

and

1949, the company paid $1.16,
at

quarterly
pay
year,

basis
an

might

has

as

on

a

25

cents

presumably

at

the

been

end

its

of

past

last year's divi¬

things

To¬

be

to

investing

con¬

money

will

what

prepared¬

have

best

such

in

continued

and

to

I

like

I

chosen

embraces

program

a

growth,

with

the

promise of considerable reward to
the

patient

say

that

the

only ob¬

stock is that there

outstanding is 260,-

shares, and it is extremely in¬

active

on

the

stockholder

form of probable capital

tion.. The security

in

the

apprecia¬

is the

common

with the bulk of the

NEW YORK CURt EXCHANGE

market.

in

the

recommend

Property Trust.

trading being

Over-the-Counter

and

Boston
'

income,
Personal

the
as

when
and

the

San

Francisco

Stock

Exchanges. It is not the ideal se¬
curity for one primarily interested
in a large rate of return. To the
contrary, it should only be bought
by those interested in long-term

appreciation, for large cash divi¬
dends

commensurate

earnings

are

with

its

not likely in the

near

future.
The company has reinvested

earnings

in

exploration

and

its

holder.
when

For

the

example,

stock

in

earned

1949,

$8.38

per

share, its total dividends amounted
only $1.25. This year, its pay¬

to

ments

will

should

earn

that

earned

part

of

crude

has

and

it

amount

close

to

year,

up

with

$1.50

1949.

lower

picked

has

an

in

this

was

coupled

total

ing the company

for

and

it

action

indicates

alert,
If

it

a

broader

the

change,

New

they

command

they

to

give

market
York

quite
much

a

by

list¬

Stock

Ex¬

likely
higher

in

the company's over-all report un¬
til final outcome of the Tidelands

question. It appears probable that
the

company will in no way be
affected
regardless of the out¬

will

Ralph F. Carr & Co., Inc.

price

31

listing, too, would
further split-up of

Milk

except that its landlord will

should

command

higher

a

price.

Currently priced around
$56.00 per share, Signal Oil & Gas
Corp.

to

appears

be

under-

an

priced equity.

Announcing
a

H. C, Keisler Go.

Direct Wire Service with

Forming Bee. 31 Ames, Emerich & Co., Inc.
H.

C.

Keister

formed Dec. 31
Wall

Street,

&

Co.

will

with offices

New

York

at

be

City.

be Henry C. Keister

and

A.

Leonard

presently

Sorneson.

officers

Chicago

72

Partners will

Henry B.Warner & Co., Inc.

Both

of Adams,

Members

Keister & Co., Inc.

Phila.-Balto.

Stock

Exchange

123 South Broad
St., Phila. 9, Pa
Phila. Telephone

Bell System

PEnnypacker 5-2857
New

York

Teletype

PH 771

"City Tel.: BOwling Green 9-4811

Business
BUY

Man's
U.

Bookshelf

S.

SAVINGS

BONDS

1950 Bituminous Coal Annual—

Bituminous Coal
ern

Institute, South¬

N. Q. B.

Building, Washington 5, D. C.

—Paper.

„

Economic
Power
under

Schurr

—

Aspects

An

the

direction

and

of

OVER-THE-COUNTER

Atomic

INDUSTRIAL STOCK INDEX

exploratory V Study
Jacob

of

Sam

Marschak

Princeton

combination of both.

Princeton, N. J.—Cloth—$6.

item

Street, Boston 9

Tel. HUbbard 2-6442
Teletype BS 328

the shares which is another factor

that

be the Federal government rather
than1 the State of California or a

University

H.

11-Year Performance of

—

35 Industrial Stocks

Press,
BOOKLET

ON

REQUEST
*

i

concerning

Economy of Latin America, The

ownership of the company's shares
was
recently revealed when

•—Wendell

several

University Press, 2960 Broadway,

the

Bought—Sold—Quoted

a

a

per

and will not be reflected in

of

Keyes Fibre Co.

the

it

28V2%.

significant

Mexican Lt. & Pr. Co.

do being regionally

now

necessitate

Co.,
a
property, in which it
controls 66%, but do not reflect
earnings from the Long Beach

neighborhood of $800,000

Enterprise 6800

New York Canal 6-1613

National Research Co.

amicable

,

earns

to

larger investment

trusts, notably Lehman

142

Enterprise 2904

Contrary

more

decided

ever
a

on

factor,
increase,
earnings to the

interest

Ino.

particularly in its geology.
is

shares

ing

Tideland

year

Open End Phone

The management has shown it¬
self to
be extremely
keen and

during the
same
period in 1949. These earnings re¬

minority

Dealers

Tele. BS

Portland, Me.

solution to the Tidelands -question*
as it affects California
properties.

flect the company's interest in the
Southwest
Exploration

This

Securities

with respect to the
and
Texas areas, this

this

Oil Development Co., in which
has a minority interest of

of

leases in the

area.

C.

i

St., Boston 10, Mass.

Hartford, Conn.

action

price

was

Assn.

to the friction

early

demand

new

Huntington Beach

are

the

Nat'l

Tel. HUbbard 2-5500

but this demand

the

accelerated

In

the

approved

'

of the State of California in
grant¬

de¬

velopment that eventually should
greatly reward the patient stock¬

question

of Oct. 1 of this year

Interior

••

J. B. Maguire & Co., Inc.

develop¬

Tidelands

■

75 Federal

Departments of Justice

traded.- Such

A

For peace of mind
I

Exchange,

in

poration,

Signal Oil & Gas Cor¬
listed on the Los An¬

and

I

very

unesti-

are

significant

place

than

geles

yet,

as

Bought—Sold—Quoted

under¬

are

Members

stock of the

come

Boston

but

Louisiana
economy

permanent

participation

the

is not enough of it
available. The

done




and

extra

jection to this

NEW YORK STOCK EXCHANGE

40 EXCHANGE PL., NEW
YORK 5, N. Y.
Phone DIgby 4-4950
Teletype NY 1-953

on

dend, the yield is 5%.

860

MEMtfUS

is

present

total amount

Shrnkan k Co.

profits.

than

I

Securities

material

controls,
excess

security

one

Verney
Corp.

what

be considerable and

to

ment

worry

any

these

the

Over-The-Counter

the

the

bar¬

inflation hedge.

an

in Texas

highly

took

point where the company is prob¬
ably earning more at this time

custom. Based

in

Jawetz

investor should be happy to have

will

Primary Markets

T.

Charles

geared

to

branch offices

ideal channel for

an

reserves

A

American

be

to be

looking for

valuable

of

the

to

100

over

mated.

before

With

many

Union
Carbide,
and
other stocks of like caliber.

list

our

re¬

share excluding those in
and some of the Tideland

per

appears

in any common stocks.

California,

Bell Tele. LS 186

U. S. THERMO

the

net

estimated at

rels

one

day, such factors must be well up
on

Direct wires to

future.

near

company's

properties, the stock offers

possible

sidered

''blue chip" list,

the

serves

Texas

without

made

portfolio is
with hold¬
ings of Christiana Securities Co.,
Draper Corp., duPont, Eastman
Kodak, International Business
or

real

With

ave

shortages and

In

Floor, Kentucky Home Life BIdg.
LOUISVILLE

Long Distance 238-9

been

Birmingham, Ala.
Mobile, Ala.

buying is for the long-

expected in the

ex-

about

finest in any trust,

such

stood

I

a

Common

value of about

their

NY 1-1557

New Orleans, La. -

been

months from

h

that

they
buying the stock for
porfolios. It is very apparent

have

The

For

fact

term rather than for the dividends

be

$27, consisting of securities which
open

Stock

Dobbs-Houses Inc.

one

St., New York 4, N. Y.

HAnover 2-0700

divulged the

considered six

could
a

25 Broad

tion,

that

selection

Eugene V. Flood

portfolio with
consider the

the

ampl e, preKorea, a

chaser obtains
Common

of

that

y

now.

for

approximately
$23, the pur¬

Churchill-Downs Inc.

hazard¬

make

to

ticipate in the

a

rather

very

future

the

pref¬

that

selection to-

Members New York Stock Exchange

today

a

well induce
one

SteineMouse&Co!
Members New York Curb Exchange

changing

a

Exchange

Reeves & Co., Beverly Hills,
Calif. (Page 2)

of

aware

Jawetz, Partner, Dan¬

iel

one

par¬

on

Charles T.

Co.,

factors

regardless

might

opportu¬

Selling

American Air Filter Co.

security

and

ous,

paid dividends

of

Tel. REctor 2-7815

erential

Bought—Sold—Quoted

Signal Oil and Gas Corporation—

Corporation

many

must be keen¬

nities

BROADWAY, NEW YORK 5

are

selected,

real

Exchange

There

Gas

1893

is in my opin¬
ion one of the

Members

&

that make the selection of

continuously

Since 1917

McDonnell &fo.

Oil

founde d in
and

&

Louisiana Securities

Property Trust—

Flood,

Manager of
Trading Dept., Frank Knowlton
& Co., Oakland, Calif.
(Page 2)

T. JAWETZ

Reeves

V.

•<Oh

Alabama &

and

Selections

Personal

Eugene

Beverly Hills, Calif.
Signal

stock

common

Boston

Trust.

Specialists in

Stock

Boston

be,

to

sell the securities

to

Partner, Daniel

security I like best for the

future

York

intended

CHARLES

Property Trust

Teletype NY 1-583

New

offer

an

particular security.

a

not

are

Frank Knoxvlton & Co.,

120 Broadway, New York 5

120

as

Mgr. Trading Department,
Oakland, Cal.

Corporation
.

be regarded,

to

forum

23

-

Week's

Participants

Their

discussed.)

New York Hanseatic

BArclay 7-5660

they

are

this

in

request

on

for favoring

reasons

(The articles contained

Puget Sound Power & Light Co.
up

This

Forum

country

Central Public Utilities 5V2/52
"Follow

Security I Like Best

A continuous forum in which, each
week, a different group of experts
in the investment and
advisory field from all sections of the

•

Gordon—Columbia

Corpora-.. New York 27, N. Y.—Cloth—$5.50.

National Quotation Bureau
Incorporated
46 Front Street

New

York4,N.Y.

Number 4962

Volume 172

.

.

.

The Commercial and Financial Chronicle

INDEX

What's Ahead?—Long- and
Short-Term Prospects

The

Profits Tax

Excess

•—S. B. Lurie

analyzes economic conditions and pros¬

period,

sees

tem

and
our
one

It would be hard to

exaggerate

American

which

to

nomic

history
being written
'today.
We
-are just com-

-ing

the

of

eco¬

is

future

election;

nates

some

and

the

two

the

1 1

o

-by

'Next,
War.

II,

lowed

Big

j

and

World

the

by

G. Nourse

Inflation.

:Now

Korean

the

which
called

episode,

columnist has cleverly

one

.'World

War

part in saving the free world with¬

her

out

wrecking
few

ourselves?

months

the

the

In

Con¬

82nd

have

to

we

the

-

so

people

the

by

a

as

Russia
this

Hardly

six

Congress

'to

weeks

recessed,

initial

but

double military

the

ago,

taking

after

decisive

steps

spending,

re¬

the
draft, raise
taxes
materially, and provide a ma¬
chinery for extensive economic
controls.
In
only a couple of
i weeks,
they will reconvene to

consideration

on measures

Funds—Adrian M. Massie 22

tolerated

action

and

or

designed to safeguard

not

to

preclude

5 v

12

Preserve Dollar's Buying

_;

_

___

—

to Blame for Lack

Largely

Held

Little

A

Silly! (Boxed).

Too

Would

Treasury

Opposes EPT__

23

___

27

Have

Gained

Holding

If

29

Period

As We See It

35

18

_____

.

_

citizens

sponsible

should

to
.get the soundest understanding
We can of what is happening and
to

prepare

make

democratic
and
f

sound

to

safe

national thinking,
Babson asked

the

on

personal

our

contributions

When Mr.

talk

try

theme,

me

with

full

8

Einzig—"Implications of 2nd Anglo-Russian Trade Agreement"

23

News—Carlisle Bargeron____

6

r—

36

Activity

of Business

-Mutual Funds

14

——

"What's

Speaking

*An

address

National

by

Business

Dr. Nourse at the
Conference, Wellesley

News About Banks and

as

sus¬

Our

military
have

an. economist,
I
hysteria that de¬

from

Bradley,

Joint Chiefs

Continued

Hills, Mass., Nov. 11, 1950.

page

_

Securities Now in Registration—

a

The

Tomorrow's Markets

(Walter Whyte Says)—

Published Twice Weekly

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interested in offerings of

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Copyright 1950 by William B. Dana

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The State of Trade

re-

—

Security I Like Best

a

In his

on

Salesman's Corner—

Securities

Chairman of the

of Staff.

---

Railroad Securities

and
diplomatic issues
given a distorted em¬

Here I want to quote

—

Securities.---.-.

Utility

Public

been

wise remark

Governments

Prospective Security Offerings—

very
able and conscientious man—Gen.
very

Reporter's Report

Our Reporter on

treacherous—attack in Korea,

say

Bankers

Observations—A. Wilfred May

veloped after the surprise—rfot to

Omar
T

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1- 30

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feel that, in the

phasis.
to

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42

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tained high

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(Editorial)

Bank and Insurance

military threat much sooner than
1960.
But even if they did not,
;Of those who will represent them such a policy would be one that
after Jan.1. These closing months we
could
continue
indefinitely
of 1950 and opening months of and which would be compatible
peculiarly im¬

BO

31

._

Regular Features

Business

■

in

Says Thomas H. Beacom_—.

Extravagance,

democratic

t

Philadelphia and Los Angeles

_—

:

Officers Nominated

NASD

United

.home folks, and on Election Day
the home folks made the selection

a

Incorporated

Broadway, New York 6

Gurley_ 19

Unlimited Income Taxation Opens Flood Gates to Government

only our prosperity, but our
Indeed, if we hit a
freedoms.
The the decade.
members of Congress have been ten-year miliary-industrial stride,
Soviets
might abate
their
-discussing national issues with the the

1951 seem to me

14

of Interest in

_

Capital Gains Tax Were ShortenedNew

long-cherished

portant, I might even say fateful,
half year.
In it, all of us as re¬

J.F.Reilly&Co.

21

U. S. Chamber of Commerce

Says

Sold — Quoted

—

■'

Securities

the

terly foolhardy for the Kremlin
to open a war at any time during

Bought

12

Says Moses

—

Rukeyser Sees America's Socialist Trend Waiting

and at the

aggressor
keep our

an
time

same

'•

10

Profits Tax Proposals

Changes Vital Factor in Trade Cycle,

Street

Wall

,

tory to

1

Railroads Can Meet War Requirements, Says Fred G.

quick vic¬

a

•

'

By now proving that we
mount the military strength

needed

Portsmouth Steel

v.

Anti-Inflation Measures

States.
can

•

0

;

Cutbacks in Housing

Present Measures to

Abramovitz

the

for

the

'

-

______

Inventory

the fallacy of the quick-war
dream.
It showed again the re¬
of

1

1

61

demonstrated

strength

4

'

/•' V

"

Power

fit)

serve

*: *'

j?#*

'

Economists to

after

demonstrated

•

.

Marcus Nadler Lists

ten-

by

•

Secretary Snyder Explains Excess

year without
serious loss of morale.

year

Korea

"V

Senator Maybank Foresees

Kaiser's benefit and Hitler's bene¬

activate

resume

Caution in Common Stocks for Trust
...

Newport Steel

17

Utilities—Harold H. Scaff 20

...

scale our
it can be
economy without

and

■;

;___

or

been

country in its next epoch.

Lone Star Steel

16

The Excess Profits Tax and Electric

...

to defend it

ithe solvency, and the freedoms of
"

Units

16

_

'

"real

again for
Stalin's benefit (as it had already

several

—Philip M. McKenna.

is

; us

neat solution
*to the Big Question.
But what
r.they do or fail to do will probably
-cast the die as to the prosperity,

revolt

Kaiser Steel

15

Inflation?—A. L. Gitlow__

vs.

Our Need for Gold Standard in a War Economy

take

Korean

taught

aggression by
stooges.
During
year period, we must
military effort so that

'they will hand

us a

Harrisburg Steel

13

Ripping the Seams of Our Economy—James E. McCarthy.

danger.'. We cannot

world

free

breakdown

;

12
Szymczak_.

'

Strain

against

borne

STREET, NEW YORK

Selectivity in Buying Stocks—Samuel M. Gofen___ 15

vs.

Price Controls

military leadership of

gress will give us the Big Answer.
rBy saying this, I do not mean that

our

Timing

Con¬

82nd

imperialism is

present

litical and
the

WALL

Telephone: WHitehall 4-6551

11

;

Planning to Meet Manpower Needs—Robert C. Goodwin

steady pull of something like ten
years in which we must sturdily
bear the burden of economic, po¬

IlVfe, poses the Big
Question: How shall we play our

'next

Thomson

Anti-Inflation Battle Report—M. S.

safely think in terms of anything
less
than settling down to the

folEdwin

which

thing

seems

that Soviet

Big
ession

-De p r

J

-One
war

9

Controversy Over Federal Reserve Policy

U/'

the

.

of

Years

Ten

d

e

w

hot stuff!

8

Strong._

—Murray Shields

.

You'll find

us!

to

Stiff Defense Tax Instead of Excess Profits Levy

Cameron

gress.

past

o

which
the

of

measure

decades.

First World I,

:f

-

a

it

that

with

bonfire

a

one year,

that is the time in

developments

The

that is business
political 1951; three months,

culmi¬

ntous

—J.

'50s; two years, that
next
Presidential

the

price

99

I

until

our

6

Theory Appraisal—F. P. Goodrich

Let's Have

light

obsolete—sell

4

.____

Inflation?—LAlan Valentine

No Justification for Foreign Trade Restraints!—A. M.

geared to four different
time perspectives, beginning with
tne longest and coming down to
the shortest: ten years, that is the
is

stage

Don't

4

—_

Profits—Roger W. Babson___.____

How Shall We Overcome
A Dow

NOT FOR BURNING
3

_

„„

be

which

of

Prices and

.

will

Short-Term Prospects

Incentive by Inflation—Melchior Palyi

immediately asked
myself, "How long ahead?"
And
what I am going to say to you
Ahead?",

decade of the

the

to

critical

m o m e

a one-

our economy

rapidity with which and the

.extent

period, and

two-year

and financial sys¬
go by the board.
Says national security rests on dollar
price index, and warns of increasing distrust in value of
currency. Concludes, with good management, we could in
year put nation on sound foundation for 10-year strain.

miLtary commitments and let

:the

a

THE SECURITY'S

Cover

—Edwin G. Nourse.

period. Because of continuation of Russian menace, fore¬
10 years of strain ahead, and warns we cannot plunge into

year

AND COMPANY

Cover

The Prospects for Business and the Stock Market

Council of Economic Advisers

pects covering a 10-year

mill

Page

Bad Tax—O. K. Burrell

a

What's Ahead?—Long- and

Dr. Nourse reviews and

B. S.

Articles and News

By EDWIN G. NOURSE*
Former Chairman,

f-

(1979)

and

Other
Chicaeo

city

news,

HI.

etc.).

135 South La Salle St.,
(Telephone: State 2-0613);

Offices:
3.

—

Other Publications

Bank and Quotation Record — Monthly,
$30.00 per year. (Foreign postage extra.)
Note—Qn account of the
*the rate of exchange,

fluctuations in

remittances for for-

eign subscriptions and advertisements
be made in New York funds.

must

THEODORE YOUNG &
40 Exchange

CO.

Place, New York 5, N.Y.

WHitehall 4-2250

Teletype NY 1-3236

4

The Commercial and Financial Chronicle

(1980)
-t

either

In

Nominated to Head

Incentives by

N. Y. Invest. Assn.

.

.

Thursday, November 23, 1950

.

.

Inflation

rising

business

incentive of

farm

profits

prices

must

and

eventually

effectiveness.

its

lose

By MELCIIIOR PALYI

the

case,

wages,

We

rely on monetary inflation as their
incentive, the result can only be
—price inflation.

might

what Europe has seen before:
inflation combined not only with

Perhaps it is unfair to the Fair

see

Edward

F.

Swenson,

Dodge

Clark,

nominated

the

lor

New York

on

Dr.

Palyi, in claiming Administration's current policy is planned
economy, with production as its first aim, and the inflationary

been

Presidency
Association

Investment

The

has

Co.,

&

X>±'

Jr.,

of
of

results

secondary consideration, points to neck-breaking rise
volume. Says creating incentives by inflation leads
to continuing economic instability, and with prospect of a long
"pax Trumana" ahead, rising prices and growing shortages
must be expected.

for action at the

the membership
annual

meeting
scheduled
for
Thursday, Dec. 14. A graduate of
Yale University and a veteran of
the recent war, during which he
served

captain in the U. S.
Army,
Mr.
Swenson is in the
sales department of his firm.
He
as

active

been

has

association's

head

as

speakers'

the

of

group

this

year.
Announcement of the slate was
made

by Blancke Noyes of Hemp¬

Noyes, Graham, Parsons &
Co., President of the association,

hill,

which

as

the
and

this

Co.,

year's

Treasurer,

was

nominated for Vice-President

and

Richard

G.

Murphy of B. J.
Ingen & Co., was named to

Van

succeed him as Treasurer.

Harry

Jacobs, Jr., of Bache & Co. was

A.

proposed

Those

Secretary.

for

nominated to the Executive Board

various

head

to

clude

committees

in¬

Hornblower, Jr., of
&
Weeks, program

Ralph

Hornblower

committee; Edward D. Toland, Jr.,
Shields

of

&

education; T.
Lynch,

Co.,

Alexander Benn of Merrill

Pierce, Fenner & Beane, publica¬
tions
and
publicity;
John
C.
Hagan of
White, Weld & Co.,
entertainment,
Case
New

of

The

and

Discount

He

Renwick

Corporation

E.
of

York, membership.

who

New

shall

we

listen
K

to

of

economy

what

see

public

we

are

in

kind—

a

kind—should

speeches

by

Mr.

dent's

chief

he

himself,

or

he says, as¬

suring
we

us

that

have

not

which

diver¬

Melchior

Dr.

is

Palyi

Mr.

that

Keyserling presents the dominant
rationalizations to justify the Ad¬
ministration's current policies —
in

turn

heavily

relying

"scientific"

which

his

as

witness.

is

"plan"

production

a

(in Rus¬

be fulfilled

is to

called

is

the

mechanism

A

sible

and

must

have

human

obeys the

J.

Cullum

Joins Bacon,
(Special

to The

of

W.

C.

Whipple

sia) or a "target" at which the
government is shooting
(in
Britain). In either case, a specific

Financial

Chkonicle)

CHICAGO, 111 —Joseph E. Rich
has

joined the staff of Bacon,
Whipple & Co., 135 South La Salle
Street, members of the New York
and Midwest Stock Exchanges.

TRADING MARKETS

billion
That

are

based

supreme,

rience and the urge
tion.
Official
and
forecasts

into

and

those

of self-protec¬
semi-official

exhortations

judgments

enter

But

UNLISTED

SECURITIES
tol

York

Stock

Exchange

Chicago

Los Angeles

easy,

Stock'Exchange

Los Angeles

Broadway

New York 5, N. Y.
Telephone WOrth 4-2300

'Philadelphia, Hartford
Providence & Portland, Me.

Bell

Teletype NY 1-40

Boston—Philadelphia—Hartford
Jersey City—Portland,Me.—Providence




ment

suffers, from top level down.

up on

full
of the other,
scale

at

that.
Total Confusion
Nor

it

does

help

on

the

domestic

nation's

front

Manage¬

That, in turn, is

confusion

"defense"

means:

how

gradually
the civilian sector if the
to

reflex of

a

derlying

long,

which

an un¬

about

what

against what, for
what

over

military

by

area,

and

spending

cies

oil

the fire of rising prices.)

on

bound

are

to

be

de¬

structive of the material and spir¬
itual

heritage of this country.

Prices and Profits
By ROGER W. BABSON

merely

as

The
tion

international

uneasy

plus

its.

Unfortu¬

nately,
also

the

Actually, the monetary volume

evident:

it

talks

about

and

longer

hours;

to

put
submarginal mines and farms into

has

dangerous
wide¬

belief

spread
that

time

be

it

revived

and

(cash in circulation and adjusted
deposits) has risen in six months'

should

situa¬

continuing rise in the
cost of most goods and services
has quite naturally focused atten¬
tion on prof¬
a

Double-Talk About Inflation

harder

As

long as defense preparations must

element among many—one to
be discounted by hard experience.

trols

which

maldistributed taxation pours

and

business,

big and
is

the

elements

large.

wageworkperfect¬
that

true

there

are

which

firms

Roger W. B»bson

do

profit

un¬

at
the expense of their
employes and the general public,
just as there are some individuals
ever ready to lie, cheat and steal.
duly

It is

industrial
now

a

longer

no

unions

In

in

stocks; they know that
investment

to $10,000 is

new

find

rare to

investing

additional

an

close

of

needed to give

job.

a

man

Why

Blame

When

costs

widespread

,

But the recent record of American

business

Manufacturers?
go

there

up,

is

a

to

tendency

manufacturers
the

ers.

ly

the

little,

expense

It is

now

all
population.

our

labor

even

profiting

of

of

is

fact, I am certain that the per¬
centage of wageworkers who are
actually
stockholders
is
very

excessively at
the

ownership of stocks
well spread over

pretty

make
storekeepers

and

scapegoats, just as there is a

false notion that the latter receive

disproportionate

a

retail

price.

tribution

system

respects;

some

long

which

wish

do

I

in

wasteful

is

make

a

pos¬

production.

mass

how

knew

dis¬

but it has gone

markets

sible

the

of

our

in the creation of the

way

mass

share

Doubtless

that

this

people

more

distribution

sys¬

example:

ber

of

greedy manufacturer because we
believe
he
is
taking advantage

part

—which is what the price problem

But the

of

miller

implies

comes

to

any

more

long

run

one

who

under¬

two

and

us

eat

Anyhow, we have a job to
The
apparent impossibility
do which is, they say, what mat¬
might work to some extent, as it
ters. (Actually, the "conservative"
did during
the last war, under
Professor

Slichter

the

advocates

to offset the

so as

"deflation.")

But

Keyserling

would

mean

to

ignores

to

raise

his

bete noire—ar¬

is his

the

■

needed

output, and
partial controls

the

worry,

final

are

over-all
than

reduce

still
a

inflation

underestimate

,

more

would

that

merely pooh-poohs it
Baruch, the inflation-

—Bernard

that

think

to

He

acumen.

incentives.

the

answer:

three

conditions.

actual

war

One

would

be

that induces people to
save their added

threatening toil harder and to

If

government

it will, by wise

economy

Exactly

time more

output.- It

break

substantial

really

of

profits

American business is being drained

off by government in the form

Federal,

State
If

levies.

time,

and

government,

local

one-half

even

money

labor

and

of

and

management

and

early
the

third

higher
these
ent.

expecting
a
reasonably
peace without—rand this is
condition

prices after.

—

appreciably

But

none

of

now, and

must expect, a long pax
Trumana with the prospect of ris¬

effort

curb

to

waste

increase

would

production, we
have
a
far
higher

soon

of

standard

living

than

Human

The truth is Uncle Sam has

become

the

squandering

which

money

that

now

adept at piling tax upon

so

tax—and

the

he

average

so

much of

takes in—
corporation

stockholder is really just another

''laboring man."
their

vest

stocks
duce

Those who in¬
in
common

money

enable

companies

to

pro¬

efficiently and reduce
This further enables these

more

prices.

stantial

Federal

to

make

and

sub¬

local

tax *

contributions.
There

unions have

plaints,
unions

ers

but
are

when
as

a

some

I

when

legitimate

know

barking

up

that

a

every

wages.

changes

are

as

Suggested Remedy

single group

blame

for

prices.

high

is

costs

entirely to
and high

The chief culprit is gov¬

ernment, but

we

all share in the

blame for government's

mistakes.

Year

by

year,

sums

of

money

away

from distributing organiza¬

larger
are

through

larger
being taken
and

taxes.

Far

much of this tax money
and is even now being

functions
of

which

too

has been
spent

in

increase the cost

living.
This

lead

can

socialism

which

to

the

has

kind

put

of

once

powerful England in the sorry
plight where she is today.
This
same
policy is killing our in¬
centive

will

and

demoralize

our

whole employment structure if we
do not force our
to

great

willing

abandon

nation

to

political bureau¬
it.

We

because

continually

money

in

became

we

were

invest

productive

pur¬

labor

poses.

com¬

savings because there was hope of
profit.
We must not permit gov¬

labor

We

were eager

to risk

the wrongs ernment-to

they attack stockhold¬

class.

that

of

salesmen's

and

weekly

or

A

more

times

are

cost

materials.

No

a

time

receive.

realize

the

of

rent

daily
raw

crats

tree

slice

tion,

at

same

baker

should

These expenses are not subject to

companies to pay fair wages while
the

the

and

tions

Stockholders Are

the

consists of taxes, transporta¬

now

we

enjoy.

conditions prevails at pres-r4
There is no real war, but an

emergency which may last "our
lifetime." The official prophecies

united

cost

than

market

total retail price to
which the farmer, the

Everyone

which

people

a

num¬

a

products

the

of

consumers

good

food

to

more

the

of

energy

in

spend

much

item

Bread and

other

tax

in

ing prices and growing shortages,
its
own
records.
Naturally so, with no end in sight. Its choice,
since at each peak it learns more
then, is between a self-imposed
know-how, develops better tech¬ austerity— hoarding the excess
niques, carries
equipment over money we earn with no chance of
from the previous peak, etc. But
getting real value for it—or hav¬
at each subsequent record, it also
ing the government take it away
calls for higher wages and higher
by way of excessive taxation and
prices.
forced savings.
can

"excess

would have to be limited in time,

sec¬

than it did at the pre¬

the
they

foolishly antago¬
nizing each other were to be spent

as

prise, is capable of producing each

up

income in the hope of enjoying it
later.
Secondly, the "duration"

which
influenced
people during
the last war, that a postwar de-i
the pression
would 'provide
ample
military sector expands, so that
purchasing power for the accumu-:
the
total
would
stay always in lated
liquidity and ample goods in
balance.
the stores, is scarcely
acceptable
In fact,
the American system, any longer to the simplest com¬
the system of capitalistic enter¬ mon
sense.
The
public expects
tor of the

take

then

profits" as
agitate for higher wages.
Mean¬
while an ever-growing share of
of

cry

the

prices.

systematic monetization of Federal

us.

Labor unions

stable

output should in the which are supposed to let
automatically restrain our cake and have it, too..

vious peak of

Direct Private Wires to Bostott,

the

which

For

planning, contract the civilian

INCORPORATED

confusion

from

Keyserling
line
is
"production operation; to invest at exorbitant
first,
prices
second."
In
other costs in plants which do not prom¬
words, let us not worry too much ise peacetime yields. And control
about such
little things
as
the it must, so as to maintain the pur¬
stability of the economic system chasing power of the "incentives."

has

J. Arthur Warner & Co.

s
a

compounded

one

—

international

an

on

than

more

is the

ticks and how much it costs.

you

120

ac¬

obvious

the

guing that incentives

Morgan & Co.

and

top

on

indicate

tem

Cassandra,

Members

1955.

danger of inflation? The Slichter-

Mr.

Paul H. Davis & Co.

employment

they

generally in this regard
is an honorable one worthy of
defense.
Yet, when costs go up,
our first impulse is
to blame the

debt

New

be

about

what

being built

one

checking
price
inflation
cording to Mr. Keyserling; in the whiledeliberately
promoting
quinquennium
1939-44,
we
ac¬
monetary inflation. Inflate it must,
complished a 75% output boost.
so
as
to induce people to
work

duce;

Members

should

much

defense boom is

What

anything else

i

when

expected

top of a civilian boom

hard expe¬

on

objectives, rising in¬
prices, are ob¬
stands
the
ABC
of
economics. viously irreconcilable.
Hence, the
What matters, they say, is to pro¬
bright idea
of
partial
controls

IK OVER 400

Direct Privnte Wires

terms) /by

real

(in

too

limited

by nearly $5 billion, a neckLangley & Co. headed the nomi¬ number of years is set; ours is of breaking rate. By the end of last
September, it had reached the allnating committee, which also in¬ the Muscovite
type; five years.
time high of about $172 billion.
cluded F. Brent Neale of Carl M.
The
Russians
never
fulfill the
Surely, the volume of goods on the
Loeb, Rhoades & Co.; Joseph O.
goal, and the British always miss markets—under
conditions of full
Rutter of Rutter & Co.; Charles
the target; to be sure, we might
employment—could increase only
P. Stetson of J. & W. Seligman &
overdo the 25%
expansion pro¬ under
the
stimulus
of
higher
Co., and Frank S. Streeter of
gram, which is the current Wash¬
prices.
Higher incomes are the
Tucker, Anthony & Co.
ington Plan: to raise the gross "incentive" the Fair Deal has in
national product to an annual $350
mind.
Its double-talk about con¬
Francis

be

slavery.
Under civil¬
conditions,
the
collective
judgments of the market place

planned

The first thing in every
economy

Pro¬

on

Slichter

Sumner

fessor

Which

returns.

to

ized

clash freely.
fact

is

exception of
slaves; that is why Soviet Russia

opinions

The

what

orders of the engineer automatic¬
ally; humans do not, with the pos¬

government in
gent

guided by anything else.) If
what will be the expectations

were

nore

free

a

saying
operating, and will do

are

we

of

way

increasingly, under the law of

what

wonder
that prices are
That is psychological, the
Doctor
insists; expectations are
the reason.
(As if civilized men

element.

only a free
country
but
also

ideas

The trouble with the

speaks only
for

their

compress
methods, etc.?
The totally obso¬
military sector grows in propor¬ lete idea of a
global Maginot Line
planners is
tion, or better, and if credit ex¬
that",
consciously
or
otherwise,
built of men, weapons, and espe¬
pansion and/or government deficit
they visualize the economic sys¬
pour
out
additional
purchasing cially of dollars, engenders domes¬
tem as a mechanism—it could not
power.
(Actually, even a budget tic production and financing poli¬
be "planned" otherwise—and ig¬
balanced with the aid of excessive

Of

course,

another

diminishing

from here on, how will they affect
the dollar's purchasing power and
the planners' plans?

Presi¬

economist.

that
so

rising.

so,

eyserling,

the

discuss

"public relations."

is

This

Small

Target

doubts that

planned

a

so

Association.

Witter, Jr., of Dean Wit¬

Dean
&

1947

Bankers

Investment

Junior

ter

formed in

was

Brokers

as

a

to

They may be nothing
efficiency (as seriously.
is the case already)
but with,a more than ideological stop-gaps
stationary or declining output.
for the sake of
labor-unit

reduced

in money

slate presented to

a

Dealers

They forget that

our

destroy that profit
motive, for that would lead to the

destruction of the nation itself.

5

(1981)
Number 4.962

Volume 172

.

.

.

Commercial and Financial Chronicle

The

if
The

Maybank Foresees
Cutbacks in Housing

Production

Steel

Electric Output

Observations.

Carloadings

State of Trade

Commodity Price Index
Price

Food

and Industry

Business Failures

J
A

apparent in nationwide

off was

slight falling

the ninth

consecutive week in

In

the 43rd
Asso¬
of Real Estate Boards at
Beach, Fla. on Nov. 14,
address made at

an

Convention of the National
ciation
Miami

S

of capacity. This week
unchanged from that of
last week.
As a result of the lack of steel, freight car builders
will deliver 20% fewer cars.than they expected to deliver from
November through February.
That is the prediction of an official

ineffective

booking on
quarterly basis, especially as regards the major products. As a
result, consumers can only hope to cover their requirements from
month-to-month, and even then they are not certain of full ship¬
ments
allotted quotas since firm mill commitments are lacking
in the face of rising priority requirements.
Consumers who have
been unable to improve their inventory positions this quarter
will be further stymied early in 1951.
Quotas for January will
be smaller, and in some instances there will be no open capacity
beyond rated orders for the month.
Scattered wildcat strikes in
the steel industry are causing production losses which will force
further deferments in shipments since the lost tonnage cannot be
the policy of

a

on

recouped, this trade paper asserts.
Steelmaking is being pushed to

the limit of available

facilities.

beginning to force some curtailments and raw
materials shortages are cause for cpncern.
Isolated advances in finished steel prices continue to be made,
but for the most part the market is marking time pending settle¬
ment of current wage negotiations.
Expectations are a general
advance, possibly averaging
more than $10 per ton, will be
effected when the wage matter is out of the way.
Auto output was curtailed last week as a result of parts short¬

Wear-and-tear is

produc¬

and model changes. Chevrolet brought to a close its
tion of 1950 models on Wednesday of the previous week, devoting
the remainder of the week to inventory and model changeover,
as did Pontiac.
Both producers have scheduled initial 1.951 model
ages

production for the current week, "Ward's" stated.
The continuing American Metal Products strike

forced week-

Packard, and Ford operated at less
because of alleged labor slowdowns
the Rouge rolling mill and parts shortages.
Contrary to the general trend, the electric light and power

will

construction

"The

convinced that the

need

construction

was

reducing

proven beyond dispute.
real problem remaining

demand con¬
dampened by

the stiffening of credit curbs. However,
the total dollar volume of retail trade continued to surpass that
of a year ago.
While there was a moderate rise in the interest in
unseasonal weather and

to offset
about 30
cents out of every dollar spent in retail stores went for durable
goods such as automobiles, appliances and furniture; a few months
ago such purchases accounted for 39 cents out of each dollar, Dun

apparel and some other nondurables it was insufficient
the drop in consumer durables.
It was estimated that

& Bradstreet, Inc.,

reports.

months; smoked
fruit and frozen foods continued to be among the

Food stores sold about as

meats, canned

much as in recent

popular food items. There was a
sales of pantry staples.
Shoppers'

most

the

discernible slackening in
interest in apparel rose
Continued on page 34

To Announce The

We Are Pleased

essential civilian
essential defense
needs, and which would result in
a fair apportionment of the nec¬
sacrifices among all those
of
housing, including
veterans and their families and

essary

need

in

low-income and

During the first half of November consumer
tinued to decline with interest in many items
,

A Direct Private Wire

government has

"The

the

Los

California

(

61

Broadway




:

Co.

Incorporated

arise.
for

remains

Therefore, it now
of us to watch

all

I know
that your industry, as well as the
Housing Agency and the Federal
Reserve
Boardf, are doing just
that. I am
sure,
also, that the
credit controls will be modified
from time to time on the basis of
actual experience, in order to en¬
able the housing industry to make

der

While "playing the market" against "the crowd"
does not strictly conform to the technical concept of the Theory
of Games conceived by authorities as von Neumann and Morganstern,* nevertheless, from the attitude of the individual doing the
forecasting, it does seem to harbor some connotations therewith.
Writing on that concept, John McDonald in "Strategy in Poker,
Business and War" (W. W. Norton, N'. Y., 1950) says: "The theory
of games is the only economic theory, except that based on Rob¬
inson Crusoe, to explain the working of the profit motive"; and
"the strategical situation in game theory lies in the interaction be¬

each of whose actions is based on an
the actions of others over whom he has
no control.
And regardless of the amount of information given
them—short of the ideal of perfect information—they generally act
in the final analysis on hunch; that is, they gamble without being

tween two or more

persons,

expectation concerning
.

able to

.

.

\Bold-face mine]

calculate the risk."

«

contribution

needs.
Association of

civilian and defense
National

whole
Real Estate industry has a tre¬
mendous
responsibility
in the

Real Estate

period

Boards and the

above all,
have it in
can

agine,

if

quences."

the

cooperation,

of industry. If we
this key industry
we

expect it,

you

will,

don't

where

and im¬

the

conse¬

■'?

overlook the fact
Exchange is not
and cause the

the market-timing technicians blithely
essentially a share in a business listed on an
from a share in a business not listed;

different

Continued
*

"Theory

Oskar

of

Games and

Piinceton

Morganstern,

Economic Behavior," by
University Press, 1944.

NEW

John von Neumann

and

ANALYSIS—

ARGO OIL
•

42

on page

AVAILABLE:

NOW

Exceptionally strong

CORPORATION

financial position—no long-term

debt—no

Preferred Stock.
•

Important

producing and

Texas and

undeveloped acreage

concentrated in

Wyoming.

Crude Oil reserves

•

of Common

equal to

approximately 24 barrels per share

Stock.

one-third of its outstand¬

Company has bought in since 1938 over
ing shares of stock.
Dividends have been paid in each year

•

•

inception.
•

Regular 15c

-thecompany's

since

•

" <

quarterly dividend plus extra of 15c will he
15th to stockholders of record November

December

6

paid

15th.

I

immediately ahead. Con¬
themselves cannot do the

need

V

f

stock,

& Gompany

Russ

trols by

We

••

Price-Chasing
Another major stimulant to forecasting proclivity stems from
the prevalent overemphasis on and misconception of "liquidity,"
entailing the invalid identification of market price with value
and concentration of investors' effort on attempts to discern price
"trends" in lieu of value determinants.
In complete misconception of the basic nature of the common
Liquidity Fallacies and

changing conditions.

greatest possible

of appeal as a

afford a liberal measure

such.

as

game

closely for the actual effects of
the recent credit restrictions un¬

else

New York 6

new

many

which

job.

J. F. Reilly &

the
foresee
developments
evaluate

"Game" Lure

The

Forecasting seems to

factors involved, nor

To

Angeles

fully

can

one

no

many

to our

Members

caught the swings!"

major step in its attempt to solve
this difficult problem. However,

the

Angeles Stock Exchange

taken a

to have

up-and-down swings. "How easy

completely irregular)

that

"The

Los

moderate-income

families.

Installation Of

EDGERTON, WYKOFF & CO.

The only

was how
credit regulations which

balance

the approaching
the week and year.

industry

housing cannot long
inflation in the cost of
construction materials.
am

of

mental

survive

"I

The

past business and general economic predictions.
gymnastics involved in contemplating a pictorialized mar¬
ket trend (particularly as projected into the future) is tempting for
its simplification as well as for pure enjoyment. The illusion that
it is easy to "beat the game"—to follow Baron Rothschild's ad¬
vice to "buy sheep, and sell deer" by catching the swings with
tours-de-hind-sight—seems to be irresistibly fostered by one's re¬
flections over past-performance charts that depict sharp
(but

ings

or

against

slight advance for

the

mand for new

for

be a variety

welcome
approaches,

it is, in
wartime, was na¬
turally one of the first industries
to feel the effects of our shift to
a
semi-war economy. It would
not be fair to the home buyer, the
real estate industry or to our citi¬
zens
generally to allow the eco¬
nomic forces resulting from the
international and military situa¬
tion to have full and free play.
A severe cutback in the
record
breaking level of home production
was
not a pleasant thing to aim
for.
Yet, it is'necessary if our
defense effort is not to suffer. It
is necessary also from a housing
viewpoint since the economic de¬
peacetime

needs

a

re¬

to

particularly when supported by charting, supplies a
escape from the difficulties involved in the alternative
such as the ability and rigorous self-discipline required for
business-like analysis and evaluation of individual securities; as
well as from disillusionment over the well-publicized shortcom¬

key industry

the

being

would

cooler weather and

A. Wilfred May

Committee, said:

Currency

in

historical high record.
Nov. 11.
response to
Winter holidays by showing

be

quired. Concerning this situation,
Senator Maybank, who is Chair¬
man
of the Senate Banking and

to devise

industry the past week established a fresh
previous high record occurred in the week ended
In retail trade sales volume showed favorable

restrictions

Maybank

long shutdowns by Nash and
than half of normal volume

The

or

needs, more
drastic

seems

mostly

defense

offset

System

of reasons,
psychological, for such popularity of
the "prophecy system" — particularly of the
"technical" methods for gauging the action of
the market-as-a-whole. An ordered "system,"
There

insufficient to

Burnet R.

crystal ball.

Motivation for the Prophecy

these steps are

beginning
$50,000,Metalworking shop shutdowns and

the first quarter next year.
Mills have generally departed from

of the

if

hinted,

and

available

of supplies from

re¬

construction,

the impact of

be felt until

depression which Wall Street as an
investment business has recurrently suffered since the halcyon
1920s, the forecasting industry assuredly has been enjoying a
continuing bull market. This has centered largely in activities at¬
tempting to anticipate stock price movements
through internal market analysis in lieu of
appraising individual securities according to
quantitative standards of value. The remark¬
able growth in the popularity of prediction is
evidenced in the enormous amount and content
of literature now being broadcast by the serv¬
ices, in the voluminous advertising of their
wares in our newspapers and financial jour¬
nals; the degree of public acceptance seemingly
being directly proportioned to the embodiment
contrast to the

building

duce

general distribution is shrinking steadily under
mounting DO and other rated orders. And this is only the
with military and related expenditures expected to hit a

diversion

to

tration

critical

lack of steel and other scarce
although the full effects of the
normal consuming channels will not

the

steps taken by
the
Adminis¬

in the Federal

000,000 pace by next Summer.
manufacturing curtailments for
materials already are imminent,

R.

defended

which steelmaking furnaces were

for

r

o

Maybank
(D. — S. C.)

operated at an average of more than 100%
the rate of output is scheduled to remain

mobilization program.
The steel shortage this week is rapidly approaching a
stage, says "Steel," the metalworking magazine. Tonnage

t

a

n

e

Burnet

PROPHETS' BOOM

THE GROWING
In direct

be first met.

must

industrial

week from the sustained high level of previous
weeks.
However, total output continued to be markedly above
the level for the similar week a year ago.
It was also noted that
overall claims for unemployment insurance were almost un¬
changed from the previous week.
While a decline of less than a point occurred in the operating
rate of steel companies last week, output in the week represented

Estate

despite need for more housing,
essential
defense requirements

-

production the past

Real

of

ciation

By A. WILFRED MAY

tells Asso¬
Boards,

Currency Committee

Index

Production

Auto

Banking and

Chairman of Senate

Retail Trade

INCORPORATED

OFFICERS
C.
W.

L.

WEST

G. HOBBS,

E. D.
A. M.

Alamo

Jr.

SAN

National Building

ANTONIO 5

Fannin 4324
SA 23 & 53

MUIR
Direct

and Connecting

Wires to:

Dallas, Houston,

Galveston, New

York <fi Los Angeles

RUSS

1

<3

(1982)

The Commercial and Financial Chronicle

.

.

Thursday, November 23, 1950

.

der these circumstances it
may be
better to risk too
little

From

How Shall We OvercomeMation? jtion,

Washington
of the News

putting

the other things wrong with

speech dubbing all those who disagree with
he must have got hold of an old ghost writer.

Secretary Acheson's
him as isolationists,,
His cracks

compar¬

his

at

why he

wife

his

up

planted them
velt

married

ever

pulling

and

decides

to

re-examine

her,

to

the

at least

were used

the great.

On the

one

once

Acheson

nobody is laughing
in the

is

that

they

headed to.

are

In

view of what happened in the recent elections
there is not the slightest doubt in this writer's
mind
Carlisle

I

wrote
not

were

the

Republicans

have

could

over¬

turned the House instead of

gaining only some
there; it had to be
develoned; it should have been developed, but

Bargeron

30

as

that

several

seats.

weeks

The

trend

before

the

was

elections

the

Republicans

developing it.

In the uncertainty in their minds about
what might happen in Korea they were in no position to make the
most of tnis

mess.

At the outset

they

prepared to go to town on the "bun¬
gling in Korea," and the commentators generally agreed they
Stood to gain from this issue. Then we
began to win and it looked

though the fighting

licans
hnd

drew

rest

of

the

were

end before election day. The Repub¬
their horns and with the exception of Bob Taft

in

maybe two

was to

three

or

campaign.

others, Korea got little attention
The

commentators

insisting that the Korean situation
crats:

when

were

adding

was

now

for the

generally

for the Demo¬

up

The courageous Truman had called Stalin's bluff and

Personally, I
were

won.

agreed with this analysis but the commentators
expounding it and there is always the question of whether,
the

know-

or

people
it has

its

never

commentators
care

are

what the people are thinking, they
they are saying is the way the
what they want them to think. Certainly
say

thinking

or

propaganda effect.

like Taft that

we

should withdraw

abroad and draw ourselves into

templated when
Scott

Lucas

in

a

man

a

our

Dirksen, who defeated Senator

forward.

comes

I

aid and troops from
I doubt if even this is con¬

shell.

like Everett

Illinois,

tionism" is not involved.
ization on the part of

The

question

convinced there is

am

of

general real¬

a

The whole question is just how
realistically

leadership, not

we

using

are

our

of relinquishing it.

one

There is the very serious
question, for example, of whether
way of exercising this global
leadership, should not finance
Chiang Kai-shek to fight it out with the Chinese Reds.
This, the
supporters of Acheson say, would be just too
intolerable. Instead
we,

of

by

working for

war now and

British used

peace we would be promoting war. But we are
at
in playing one side
against the other in China, as the
to
realistically

play

one

country against another, it

would be the Chinese who
would be doing the
each other off.
>

fighting and killing

The peaceful
way which Acheson is pursuing means
just as
as the sun rises and sets that
Red China
will, in the near
future, become a member of the United
Nations and along with
Soviet Russia will dominate
Korea in one

surely

way or

of

permitting herself to be

Russia

as

weaned

the Achesonites think

This is

certainly

be re-examined and

a

its

tall

some

another, instead

orbit

against Soviet

done.

.

one of

equipment

these Communists to turn
against

situation is involved in
Italy.
the proposition

of

I have heard

us

we

we

should pour in

when Stalin

In these

turning

often said, the problem ol
what
tion existing in those
countries.

our

two

backs

moves.

countries

but,

as

there for
This
is

Taft

same

not .in¬

has

so

should do in view of the situa¬

crucial

stages.

I

and read

do not

need

tions

suggest to
this
audience

how

serious

we

a

fighting it, or
why we must
not

not

for Acheson and the
Admin¬

re-examination of

policy.

It is something they

honest and capable

as

they.




are

going to get

our

whole

and from

but

reactions

a

to

yet

we

understand

as

&en just

free

assisted

Valentine

Dr. Alan

serious

so

gested

that

inflation

without greater nationwide under¬

standing, with resultant unity, ef¬
and personal sacrifice. The

fort

I

we

see

And

pain

some

tributed

since

I

value);
had

inflation

with

that

are

us

be

ephemeral

surance:

undergo

growing inflation of

1950

therefore erected upon an

is

already

high level of earlier inflation. We

know,

must therefore cope not

scene

only with

immediate emergency but with

long-term trend.
Can

do

we

have

I

been

with deference, as be¬
layman, to our experts
in government and business, but
a

in any case part of the answer lies
outside finance and economics. It

lies in the character of the Ameri¬

people.

can

der

The
of

Inflation
of

cure

national

standing.

inflation

character

Have

"We

under¬

the

People"

the seductions of

rising profits and rising
both
of
illusory value
which

tory

inflation

offers

edent

wages-r-

curbing inflation except with the
help of government regulations.

people,

only

in

That

by

the

can

be

American

unison.

does

sibility

upon

agents,

in

the

respon¬

government, and its
this matter. We must

and

To

course:

in¬

need be to

assist
the
people:
if
adopt and enforce con¬

trols:

to

of

and

battle.

ing

measure

In

we

are

the

course

performing
not

sadists

these

enjoy¬

little brief authority, but
agents of the people,
performing
our

best

as

the

we

can

orders

their will

of

Congress.

through
Please

remember that in months to come!
Please remember too that we
need
and welcome the
help of everyone
of
you,
and of
business,

labor,

education and the professions.
Reactions of

an

is

major

Amateur

bring

you

perts

of

given,

I

cannot

the wisdom of the

government.

I

can

some

panies,

ex¬

give

in

An address by Mr. Valentine
before
Economic Club of New York, Nov.
15, 1950.

costs,

that

will

labor

remain

to

in

out

line:

perhaps

a

new

upward

general

Can

com¬

which

groups

of

start

the

flation.

There may
some

these

spiral
be

of

in¬

adequately

policed by the industries of which
they are members?
If not, can

they be adequately held down by
selective mandatory controls, and
if so, for how
long?
In

candor,

have

to

action

too,

do

recognize

not

we

that

all

voluntary

is

powerless in some mar¬
kets—markets in which prices do
not

depend on the
cisions of anyone?

individual

de¬

The prices set
in these markets govern the
prices
of many

items of food and cloth¬
ing which are crucial in the con¬

sumer's budget. In these
shall have to watch

we

the

effect

other

But

ment

higher
of

these

real

any

of

forms

if

markets

carefully

taxes

indirect

should

and

control.

fail,

is there

to

govern¬

alternative

ceiling prices?
Standards

It

is easy to

and wages,

late

fair

urge ceiling prices
but not easy to formu¬

and

workable

standards

soon

Trading Markets In

wage

as

we

now

un¬

American Furniture

•

Bassett Furniture Industries

fields.

is

Camp Manufacturing
Commonwealth Natural Gas

to

sick he admits

so

A

decision

Lynchburg, Va.

to

operate,

or

must

day of work, for

productivity
depends.

STRADER JAYL0R&C0., Inc

even

LD

39

TWX LY

'

,

not

his daily

upon

security

our

miss

largely
MEMBERS

-

MIDWEST STOCK

,

Our

The

Fundamentals

best

and

surest

avoiding this operation
taxes

and

greater

tion.

Only

these

high

production,

fundamental
excess

credit

can

of

cause

and

—

means

are

oi

restric¬

to

go

and
the

Stix

relative

power

it.

measures

SOS OLIVE

The

restraints

prices

on

cannot

we

and

STREET

are

the less will be the need for direct
But

Co.

&

inflation—

remove

effective such

EXCHANGE

highei

measures,

purchasing

goods

more

77

patient, is complicated

by the fact that he
a

Life Insurance Co. of Va.

may

interests

own

Dan River Mills

I

necessary.

right, but it

his

to treat the

St. Louis l.Mo.

wages

rely wholly

on

fis¬

cal and monetary measures. Par¬
ticular prices or wage rates might
rise out of line and threaten an

inflationary spiral that fiscal
monetary
measures
wholly restrain.
So
to

could

and
not

Established

question becomes what
regulate. When, How and how
These

decision

questions

are

H. Hentz & Co.

for
Members

after

careful,
patient
study by qualified people, for our

New

York

economic system is in complicated

New

York

adjustment and

New

delicate

must not upset

we

balance.

The

Commodity

problem

Chicago

ogical:

New

Most

Americans

do

not

controls;

do

not

economic

work

their

best

under

the

lack

anger,

need

zone
as

a

alarm

followed

of

is

clear.

In

simulated

nation that

and
Pearl

Exchange

Cotton'

Exchange

Exchange,

-Board

Orleans
And

Exchange

Curb'

of

Cotton

other

Inc.
Trade

Exchange

Exchanges

detailed

supervision; and will not accept it
unless

Stock

York

is not only economic but
psychol¬

that

1856

the

much/

we

as

most

industries,

some

enough
coil

patients, is anxious to
himself, and us, that no

proves

be

only the first reactions of an
twilight
average American—A little dub¬
*

be

present
observation
Sam, the patient, like

operation

hope he

like
reasons

my

Uncle

convince

its

Newcomer
For

cases

in important

capable

allocations, ar\d
by voluntary

could

we

control

National

especially

few test

a

as

anyone

leak to sink the boat.

most other

to

lift

not

help to chart the
form

without gov¬

controls, inflation

defeated

It

no

or

the

as

general

as

shall

in terms of price and

beguiles us?. His¬

But whether with

watch

we

to

need

we

businessmen—who do

enough. Costs
are
inter-acting, just as wages and
prices inter-act: it takes only one

with

—

convincing prec¬
free society's success in

of

We

on

that

•

that

test

a

the individual and collective self-

control to resist

such

as

if

in

it.

is

and

operation. Do

wait until he is

Cure

must

have

may

surgery,

way

not

The

we

observed

controls—are

the bill for

pay

controls?

observe

that?

possible
We

and for future in¬

increases, 'and

listening

comes

and
an

drastic
direct

must

we

too

we

be

dis¬

inflated

or

excesses

it, in its less vicious form.

years

it

little, (though not much,
we forego will

a

earlier

in¬

must

as

Americans.

time.

a

of

let

to

seeing

fairly

as

all

among

suffer

an

un¬

for

cure

there

favor

since most of what

The

no

course.

painless

no

flation.

afford

can

government cannot win that fight

many

shown
But

attack

an

its full

run

alone: it must have the support of
most of the people most of the

so

has

ailments.

own

inflation, without great suffering
injustice. No one has sug¬

nation how great the loss would
be.
Certainly we will not win

have

the

and

a

We

to

newcomer

economy

its

cure

you

foreign

of

policy pro¬
the initial

no

only

economy has ever thrown off

may

lose before

therefore

Our

good

a

ama¬

great capacity, given time enough,

putting

fight. We

is

nouncement

are

at present: we
are

matters—an

problem.

winning

even

these

convic¬

thrown

This

are

win it. We

preconceived

there

opinion

might not be good
ex¬

only quali¬

my

But
of

to

vol¬

possible, and

of credits and

even

suddenly into the
vortex of the inflationary spiral
and
the
Washington whirlpool.

that is, or

war

why

in

teur

like

action

Perhaps

from

good

rationalization

case

fication for this tough assignment
is that I am an average citizen

may

free

,

Anyway, it is just utterly absurd
istration to resist a frank

con¬

perts and the omnipotence of gov¬
ernment.

is

like

by

else,
Actually we have already gone
beyond voluntary action in the

ious about the omniscience of

many

to

duties

a lot about what our
Marshall Plan aid
has done for these
countries, of how it has "contained" Commu¬
nism but I have not heard
one single
authority contend that it has
reduced the Communist
influence in either government in the
slightest. This influence in the
French
government, indeed, is at
present preventing the
development of the Military Aid
Program.
The claim that Marshall
Plan aid had
"contained" Communism
is based on the old
argument that
hungry people fall easy victims
to Communism.
We have the
spectacle in this
country of our
well-fed and
highly educated intellectuals
posing the greatest
Communist threat, not the lesser
privileged.
,

many

ernment

soul-searching devoted thereto.

withdrawing aid from Europe.
frankly facing the fact that France, its people
government, is riddled with Communists and the
problem

is how much
money and

volved

be

can

our

question which Senator Taft thinks should

The other question is
not
It is the question of
and

into

has

against inflation which

war

have

"isola¬

Republicans that regardless of how desirable
isolationism might be, at this late date it is
impossible.

so-called global

a

used to

V
Acheson's defiance now against
any looking into or re-exami¬
nation of his foreign
policy is just too ridiculous for words. And
certainly this has not the slightest suggestion when it comes from

warfare

this

subject I have

not

of

credit restrictions.

forms, all unpleasant. We are now
nearing the first crucial stage in

whether what

or

•

a man

Modern

up

''

as

and greater

wondering just where

are

of heaven

name

know

The American people

now.

worried; they

are

should

this

many

sumption by householders; and (4) acceptance of higher taxes

occasion I have in

good laugh from them, too. He
good at making the people laugh; his
knack for ridiculing his opponents was not the
least of his capabilities.

(3) curtailment of

security;

contained

untary action alone.
sharp difference
whether

regula¬
^
V,

would

everyone

inflation

is

demands and increased productivity in

wage

lines essential to national

why he
by Roose¬

was

what

(2) easing

cost;

farmer

mind he got a

But

Nearly
see

adequate fight.

an

re-examine

to

crops

or

up

rather than too much.

V

Exhorts public to cooperate in
following ways: (1) limitation of profits to reasonable mar¬
gins, in lieu of what traffic will bear or rigid markups over

ing the "re-examinists" to the man who comes down to breakfast,
looks

/HWi '

t w

Government's Stabilization bead declares inflation is reaching
the first of several crucial stages, against which we are not

By CARLISLE BARGERON

Aside from

,'Wm*

y.t

Administrator, Economic Stabilization Agency

Ahead

-

:'

*

»

By ALAN VALENTINE*

unity of

self-sacrifice
Harbor.

N.

Y. Cotton

this

peace

Un¬

Exchange Bldg.

NEW YORK 4,
CHICAGO

DETROIT

GENEVA,

N. Y.
PITTSBURGH

SWITZERLAND

Volume 172

Number 4962

.

.

(1933)

The Commercial and Financial Chronicle

.

.

to determine them.

Here

tread

we

fare of all the

ground strewn with the skele¬

on

of

tons

controversies.

OPA

cost-plus-profit
basis for price
increases

be

priority.

Can

War

workable

a

ceilings? If all cost
simply passed on

are

I

commission the economic wel¬

our

people has

higher fied

a

of

no

group

other

cies

force

sense

of values.

in

basing

stop

emergen¬

grave

adjustments

men

will

bear

on
and

and understand why

this restraint their

welfare.

long-term

I hope

what

that the inflationary trend can be
is patriotic?
/
Should they not be ready to go checked by sound taxation and
all out for increased production of credit measures, coupled with vol¬

limit

goods essential to national secur¬

"

profit ity?

reasonable

to

themselves

.

be willing to

their prices

market

the

our

At such times, for

fr- ?•.]*
better quali¬

help with the answers:

to

Will business

•

and

•,♦* V

i

know

7

untary cooperation on

business, labor and the

■

the part of
public. We

uncontrolled

system.

Should
not
American women, shall rely on these measures just
of our margins?
Will business men be willing, in who determine most purchases of as far as they can be made effec¬
safety.
goods,
manage
their tive. But we must not and will
At such times too, we may need estimating costs, to stop borrowing consumer
to revise a little our normal think¬ trouble from the future—to stop households and their budgets with not hesitate to use mandatory di¬
ing about profits and wages. When basing their estimates on fear of greater restraint and less desire rect controls to deal with any re¬
groups,
and in such
inflation is the enemy, the perfect the worst in 1951? Sufficient unto to keep up with the Jones'? And calcitrant
should not the Jones' be willing to areas as voluntary measures have
balance sheet, or expansion whol¬ the day is the inflation thereof.

It

endless

ly out of profits, or large reserves

example,

through price increases, where is
any incentive for economy or effifiency?
hold

Such

certain

in

than

profits
normal

our

competitive
encourages
the

even

it

indeed

makes inflation easier and
more

not

does

system

a

inflation:

down

comfort

whipsaw of higher wages—higher

think

we

and

more

hold

down

will?
control

find

we

costs,

formula

what

prices,

Can

and

method

a

not

must

enemy,

bear

for

is

an

a

whatever

other

or

to

that

the

gaining

cost-plus formula will not

a

our

Should

benefits

not

take

also

in

wage increases
the traffic will

reasonable

of

This is

costs

ideal not easily arrived

an

essential

proximation
seems
control of prices.

to

than

more

increases

in

Finally, must not higher taxes
put at the top of our list of

actually incurred?

From here

on

CHICAGO, 111.

be

anti-inflation measures?

out should not all

Have we

earnings got the intelligence and the nerve
and
good
financial position be to tax ourselves as we need to,
prepared to hold their prices and for our own good?
accept some compression of earn¬
Clearly, if the task of stabiliza¬
ings, if costs should rise, in the tion is to be accomplished, indus¬
interest of general stabilization?
try, labor and the public must

tion, 231 South La Salle

From

'

•

are

major factor in the

a

price of most commodities, either
through
the
push on
costs
or
through the pull of demand. At the
same itme, prices
(that is, cost of
living)
are
a
major factor
in
wages.
They are mutually
de¬
pendent in economic theory, mu¬
tually dependent in fact, and Con¬
gress has made them mutually de¬
pendent in the Stabilization Act.
Variation and flexibility are per¬
mitted in pi ice-wage regulations.
There may be exceptions but in A
"most cases wage stabilization must
accompany price ceilings. We ask
business
and
industry to apply
voluntary controls to prices. Is it
reasonable

not

to

'voluntary
creases?
■J

that

ask

we

with
equal
restraints to

apply,

accept understand that each must exer¬
these initial
reactions I for the time something less than cise restraint, They must all fore¬
with some questions, and tney mignt gain by arasuc means, go some immediate advantages for
Should not wage earners

Joins

Chronicle)

staff of Robert C.
Washington Street.

has joined the

223

Conolly,
Miss

Meyer

was

formerly

Glore, Forgan & Co.

$14,000,000

Territory of Hawaii
.80% Public Improvement Bonds, Series B, Issue

of 1950

Due December I,

Dated December I, 1950

1953-70, incl.

Principal and semi-animal interest (June 1 and December 1) payable in New York City at the Bankers Trust
or in Honolulu at the bfiico'of the Territorial Treasurer. Coupon Bonds in denomination of $1,000.
S,

v-N:

prices have ad¬

In the opinion

vanced

considerably
since
last
others have not. Whatever

June;

price levels we may adopt as ref¬
erence
points, must they not be
consistent
and
uniform, regard-

-b-

Company,

t

'

.

of counsel exempt

as to

both principal and interest from all present Federal,
Estate, Inheritance and Gift Taxes

State, Municipal and Local Taxes, except
In

our

Savings Banks and Trust Funds in New York State

opinion, Legal Investment for

-

less of whether they

result in set¬
ting ceiling prices or rolling back

If policy and fariness de¬
it, we should not shrink
from either procedure.
What
are
the
standards
by
prices?
mand

which

a

wage

proper

termined?

I

it

acceptable, workable

definition

or

rule-of-thumb. Obvi¬

there

ously

will

/which
,Yet

hold

must

we

sume

must
not

standards

be

inflation.

down
ask

$778,000

1953

1.15%

778,000

1954

1.20

easy

an

labor to

$778,000

1958

1.40%

$778,000

ea.

yr.

778,000

1959

1.45

778,000

ea.

yr.

ea.

yr.

778,000

1955

1.25

778,000

I960

1.50

778,000

778,000

1956

1.30

778,000

1961

1.55

778,000

778,000

1957

1.35

778,000

1962

1.60

774,000

1963-64 1.65%
1965-66
1.70
1967-68
1.75
1969
@100
1970
@100

as¬

(Accrued interest to be added)

undue burden in the war

an

PRICES

AMOUNTS, MATURITIES AND YIELDS OR

de¬

be

can

find

not

do

to secure

inflation, or undergo a
-sacrifice beyond that accepted by
against

other

elements

of

human

of

matter

society.

As

a
as

subject io prior sale
Dawson, Attorneys, hew York, A. Y,

and if issued and received by us, and

approval of legality by Messrs. Wood, King <j'-

and

quite regardless of economic jus'tice, we cannot expect the work¬
ing

offered when,

The above Bonds arc

psychology and

to restrain his wage de- ■"

man

mands if he reads almost

of

counts

daily ac¬
profits,
even

record

C. J. Devine & Co

The Chase National Bank

though such accounts may ignore
factors
that
make
real

.many

profits less than they seem.
Will

business

be

it

-examples

Harris Trust &

labor

or

of

restraint,

and

thus

Drexel & Co.

break the upward spiral of infla¬
what

neither

If

tion?

alternative

sets

Inflation

:

Union Securities

Salomon Bros. & Hutzler

Corporation

has

and

government

Added

-

Paine, Webber, Jackson & Curtis

& Beane

Merrill Lynch, Pierce, Fenner

example,

Blair, Rollins & Co.

and wage controls?

to price

Savings Bank

set the nation the first

which will

There have always been

-

Equitable Securities Corporation

Incorporated

Inequities

_

Laurence M. Marks & Co.

inequi¬

-

Reynolds & Co.

.....

Roosevelt
& Cross
Incorporated

Hayden, Miller & Co.
(

Hornblower & Weeks

v

Stranahan, .Incorporated
Harris & Company

ties in every economic system. In¬

flation, like war, brings added in¬

equities.
be

This is

moment in

a

form has top
'

mu

be

a

priority.

moment

social

which

Green, Ellis & Anderson

Incorporated

re¬

This is and

in

F. S. Smithers & Co.

W. H. Morton & Co.

W. E. Hutton & Co.

not and cannot
which

Whiting, Weeks & Stubbs

na¬

Central Republic
Company
(Incorporated)
.

Provident SavingsCincinnati
Bank & Trust Company
•

•

tional security and hence national

•production come first. The Stabil¬
ization Agency
I represent was
not created
to carry

ization

First Securities

out the mission of stabil¬
which Congress and '

Andrews & Wells, Inc.

.the Presdient have charged us. We

shall

or

be

deeply sympathetic with

of the individual man
company or industry but under

the

Company of Chicago

Wood, Gundy & Co,
Incorporated

E. M. Newton & Company

for social reform, but

with

plight




.

November 22, 1950

,

WAUKEGAN, 111.—Susan Meyer

J'

Some wages and

Street.

Conolly Staff

(Special to The Financial

New Issue

in¬

wage

'

-

labor

firmness,

Corpora¬

■

Wages and Prices

Wages

affiliated

businesses with generous

Questions to Businessmen

emerge

Chronicle)

Mansfield R.

—

Cleary,. Jr, has become
with The First Boston
*'

profits.

at, or happily accepted, but its ap¬

With First Boston
(Special to The Financial

all kinds of credits?

which price, increases

in

cases

reflect

Other¬

in wages.

cognizance

standard

•

.

of wise, there will be no end to this
profits, not to regulate them di¬ spiral of inflation: otherwise there
rectly but ot estimate their part can be no alternative and perhaps
in the ultimate price of the goods? no limit to mandatory controls of
.Cognizance of the margin between prices and wages.
cost
and
price
involves
some
method

since the
reexamine

consumers
be
Korean outbreak now
willing to accept
credit
restrictions
adequate
to
When inflation their situation and reduce prices
labor policy of wherever possible, and especially prevent inflationary expansion of

adequate justification

increase

prices

failed.
keep down with the rest of us?
Should not business, labor and

that

business firms

not

increased

have

future contingencies, are
adequate justifications for an

is

concern.

If

less

against

prices
(or
higher prices-higher not
wages) which is our present great increase in prices.

„

of

Magnus & Company

McDougal and Company

F. Brittain Kennedy & Co.

with

8

(1984)

The Commercial and Financial Chronicle

in

A Dow

free dividends collected— booms and depressions; wars and bility of the message in the un¬
losing proposition.
panies. No other Thesis has with¬ folding
patterns
under
Dow
Since the new high plotted by stood such a time test.
Theory precepts at a time when
the early October reaffirmation,
Among the attributes possessed business is again at booming rates
market
action
has
revealed
a
by the Theory, the one crucial of
activity—earnings
high—and
involves
a
function
of dividends present a rosy picture.
tendency to show diminution in virtue

P. GOODRICH

Harris, Upham & Co.
Members, New York Stock Exchange

a

volume

tions portrayed in the recent mar¬
ket

plottings,

the

following

are

After

(A)
c

.

vestors

when

Junior

that

its

example

he

the

country

had

attained

market -started

high

by

similar

a

action

boom

the

Compan¬

ion

Indicator

(I

F.

dustrial

n

views

P. Goodrich

left

Average)
when

surmounted

it

its

previous

in

(B) That movement
illustration

vis¬

gave a

of

a
reaffirmation
confirmation).
It
that the direction

initial

(not

an

gave

assurance

unenviable record

an

whenever

their

coincides

with

high point

his¬

torically in the Major Trend peaks
the

stock

market.

of

dependable from

Far

more

combination of

a

decline raised
strictly
objective
perspec¬
justification two
suspicion that the bull mar¬ tives:
(1) a closely focused examina¬
ket might have ended at 228.38)
and reaffirmed that the direction tion of price actions; (2) a longof the Major Trend was still up¬ range view of the wide swings in
vere

for

that point of

high

new

the Major

Important Premise

plottings

After

wherein

the

Dual Indicators both attained

phatic
trate

nical

em¬

highs in October illus¬

new

and

prescribe

facts:

(1)

certain

that

the

tech¬
severe

Close-Up View
16

a

months'

rise—in

three

in

orthodox second¬

contra movement in a bull
market;
(2)
that
the upward
ary

from

the

July lows is
third leg in the bull market to

the

points

nothing

from such

a

oscillations,
of

these

take

the

back

as

derived

of the peak

note

least

at
facts:

(a)

tendency has been true that
each high upswing has been in¬
variably followed by an ensuing
down

swing;

tended

with

around

churning
evidenced ability

no

fact

strongly

exhaustion

of

suggested

the

an

of

power

the

upward Major Trend; an abun¬
dance of stock for sale in relation

intensity in the ensuing contra
swing. Note also: (1) the
have

areas

in

always

been

en¬

environment

an

business

of

optimism

(2)

the ensuing bear market
always starts before a decline in
business has become visible.

to

the

volume

of

demand.

Price

In

booms and recessions

pressions.
that

market

porary with

business

is

of

contributes to

and

a

in¬

are

by-day

long-range perspective is the
degree of time precision dis¬

charted

have almost re-attained

their previous tops made just be¬

this

fore

Perhaps
into

most

before

print

stocks
has

in

heights

Before

is

those

support

such

however,

early-Novem¬

ber

of

the
A

third

test

and

(1)

last

secondary

about 30%

of

primary rise.

virtues

its

of

if:

ate

was

retraced

and

scope

the

eventu¬

can

both Indicators do not

entertain

the

of

signal

crucial test of
tue

and

bility

Ind.

penetrating jointly both

222.52

and

Rail

64.48—ac¬

By observing these facts in the
current

ing

pattern and by envision¬

just

such

to

possible

set

of

the moderate term,
himself in a

over

observer

position

a

places
detect

promptly

a

be

of

a

Theory vir¬
instance

technical

in

discern¬

greater dependa¬

than

purely
generalized
based solely on cur¬

rently

prevailing

mism.

On

business

the other hand,

opti¬
should

both Indicators surmount emphat¬

ically

their previous tops, they
plotting a fourth leg or
primary
movement
and
these

will

be

technical suspicions of

ing

been

already

I

companied by accelerated volume.

Dow

a

again

instance

an

another

jor Trend has

the

bear

pattern

a

would

with

presented

proceed

to

in

—

outlined—we

as

high

downward

however

Theory

closely conforming with the above

both

extent of

the

Indicators

term

Dow

a

market

sus¬

Should

Dual

moderate

prescribe

any

change in the direction

their respective October
points and thereafter (2)

surpass

are

Major Trend.

the

over

reasoning

the late-October to

decline

of

to

a

strictly

event

to

currently
harboring that line of thinking.
By the same token, it seems
currently out of order for the

afforded

an

new

There

averages.

who

ments

good technique to note that

market

attain

to be sound reasonings

appear

which

have surmounted

may

the

to

the

of

individual

that

power

gets

article

of

suggests

the

both of the Dual

this

one or

Indicators

decline.

recent

Trend

change

a

actions

plottings

crowning virtue of Dow's
As of this writing, the

Theory.

the

point to be noted in

1946.

be setting the
another of these tests

for

this

plottings

companions.

further

its
the

of

to

seem

averages

contem¬

recession—they

separable
this

de¬

or

Inescapable is the fact

bear

a

A

plottings

it

degree

down

top

Most

The recent and current

corresponding

to

upward

that bear market start in

the previous tops.

a

somewhat

1946.

(b) the degree or
robust upswing has
be translated
into a

intensity of

reject

undergo

technician

shows

fundamental

in

Major

upward

direction. In fact some of the day-

changed

swing

to

should

our

example

the

when

Trend

the

picion of

the

or

witnessed

pre¬

seem

change

to

vivid

military

by

—
usually
prevailing condi¬

and

from

justifications for suspicion

no

completely to detect promptly the
Dow
Theory signal confirming

is

more

be

supposedly alert technicians failed

far

panorama

a

hampered

tendencies

recent

stage

If

is

then

a

direction

Major Trends'

as

its

prosperity affords
apparent justification.

Major

stimulation

paredness. In short there

ap¬

purpose—

which

one

reverse

contemplation

because

was

for continued high tempo
booming business, high cor¬
porate earnings and even further
in

numerous

ness

considerable

classified

a

extreme

at this

level

That

an

conclusion which

well-balanced

a

to

is

for justifiable op¬

one

timism

that

direction

A

retrospect,: these
market
swings have coincided with busi¬

a

preparing

detection of such

Our

View

primary movements—from
(mid-1949) — there was re¬
vealed recently at about the 230
161

to make further upward progress.

as

a

point historically

tion of business

1929.

and

decline after mid-Juneis correctly

movement

for

proclaimed
A

Range

is very essential

shrouded

Trend historically.

attainment.

Those

derive

can

vicissitudes

It

prolific optimism
a

at mid-June

se¬

move¬

on

Jong-range perspective,

a

praisal.
Any one of
charts will serve the

guides

as

be deemed all too coincidental

can

Longer

believe

time

and

stock values.

common

Major Trend had not turned

An

I

experts

foretelling the ensuing

down

ward—to

one

their

which

these

held,

of the

(when the

in

esteem

taxes

higher for 1951-52.

preferably

were

ments in

top at 228.38.
ual

high

than

im¬

direction.

no

A

From

period.

Regardless of personalities
the

much

rates

business entered one
of its worst depressions.
Again in
1937 an array of experts foretold
uninterrupted continuance of a

the part of

on

prolonged

high

a

a

lower

relative

environment

current

seemingly

upward Major Trend has

an

is

and

such

much

are

Capital gains

Income for 1950—and income tax

plunge and

fol¬

—

its

when

attained

human

long-term

on

of

terms

own

a

perity. Shortly thereafter the stock

In

Trend.

The

a

in the Major

portance of its virtues, the Theory
undergoes its most severe test

taxes

permanently high plateau of pros¬

ship into an
emphatic new

change of direction

of

his concept

propounded

reasonably prompt detection of

Capital against potential losses of
larger
dimensions.
Additionally

Prof.
1929,

by

robust leader¬

lowed

proposition and the feasibility of
sacrificing even generous transi¬
tory dividends in order to fortify

was

the renowned
Fisher in October,

Irving

Index

stocks.

outstanding

mid-June, the
resumed

for

common

have

begun to sense the
realities of the above noted losing

undependable and
contemporary

be

of

provided

from

n e

to

proved

meretricious

An

de-

severe

1 i

symptoms suggest that astute in¬

swings in the Major Trend have

holders

pertinent:—
the

line

Major Trend. Concludes from technical evidence that bull
market is now substantially ended.

In the matter of visual illustra¬

rallies and acceleration

on

declines—downward being the
of
least
resistance.
Such

on

Market analyst, commenting on the chartered pattern in the
Dow Jones Averages, foresees an early test of the direction of
the

Thursday, November23,1950

tax

is

Theory Appraisal
By F.

...

to

prove

have

definitely in
in

ever

a

that

would

one-way

of

no

technician

direction.

premature
bear market
discredit

Theory—merely

the

Ma¬

no

a

a

be

will

premature.

continued in¬

event

contemplation
signal
Dow's
of

been

premature because

say

And

top hav¬

a

plotted

to

criticism

a

who

was

at¬

tempting to anticipate such a Dow
Theory signal.
I hope I have presented with

bear market signal.

some
degree of clarity and fair¬
Admittedly these current plot¬ ness both sides to the two schools
tings present some puzzling as¬ of thought justifiably present at
cepted premise very important in dent to some form of special news oscillations: about a 10-year span
pects and the impending move¬ this point as well as reasons for
such as splits or extra dividend from one
now formulating a reappraisal of
extreme low to the next.
ments will be highly interesting anticipating
a
test
of
a
Dow
announcements.
AH too large a From the last low
the market's status:
point—1942— as a matter
of technical studies. Theory Precept. The outcome will
segment of
the
public interest the prevailing time schedule sug¬
(i) The reaffirmation conveyed
And a point of criucial interest embody points of interest to both
centered around such issues—es¬
gests 1952-1953 as the next low
no assurance as to whether or not
will again be the test of dependa¬ schools of thought.
sentially a hit-and-run calibre of point.
the Major Trend will
substantially
A
surpass or exceed
the new top buying prompted by a mania for
combination of these two
recorded in performing that re¬ scalping quick profits by traders. perspectives assures a close
ap¬
Divorced
from
that
temporary proach to a sound
affirmation.
concept into
type of trading and dependent which
objectivity rightfully im¬
(II) It conveyed no assurances
solely on public buying of the
parts a good measure of realism
as to how much further in
degree long-term investment
type,
this
in
one's appraisal of the market's
or how much longer in time the
market would reveal a far differ¬
true
status and to afford
some
upward Major Trend will carry. ent
and less impressive
It is understood that the firms mentioned will he
complex¬ measure
of
pleased
practical
guidance
Those implications—I and II— ion. It
to send
appears to be correct anal¬
interested parties the following literature:
with
respect to the matter of
were
not only to be
accepted as ysis to say that we are witnessing: what
procedure is prudent.
correct but they acquired a
spe¬
(1) weak buying and (2) distri¬
An
cial importance when the reaffir¬ bution.
imposingJ question as to

date.

Such technical facts consti¬

tute

fundamental

a

and

an

ac¬

vitality

was

scattered

too much confined to

individual

issues—inci¬

fair

cernible

in

the

peaks

of

these

Dealer-Broker Investment

Recommendations and Literature

mation

brought

a

high

new

the

indicators

for

area

As

to

20-year

a

period.

d

a n

The Shareholders' Problem

As

had
16

the

market's

progressed

months into

tory

for

question
with

upward
new

a

for

some

high terri¬

decades,

a

serious

for those concerned

arose

stock: What Appro¬
Procedure?
to me that an

seems

approach

to this question should be

of

one

one's

the

arguments

(b)

ratios

Trend

used

to

are

price-times-earnings
too

low—it is

con¬

my

viction that this thesis has become

thoroughly shopworn. Correctly
interpreted, as I see it, the mar¬
ket's true message
might be sum¬
marized as follows:

common

priate
It

two

Major

to

support predictions of still higherprices that: (a) yields are high

(I)
ture

Prospectively yields
dividends—in

tained

amounts

Collector

takes

their

after

his

on

net

the

what

one

Bank Stocks—Discussion of their

prospects for the conservative in¬

week,

over

(1)

so

action

not

market's

is the main trend

the

next

of

two

further upward

stock
years

or

(2)

to

Major Trend turned down—a bear
market?

objectively, I believe

eral

to

Tax

Figure Your 1950 Fed¬
on

Security Profits and

all the rosy pictures verbally painted by numerous econo¬
mists.

sound

they

I

hold

and

of

no

expert

serve a

scheme

disrespect

for

economists

—

useful function in the

things—but

under

an

objective review of their histori¬
cal assertions

we

find

expressed at important peak
the

stock

of

substantial

ket

values

Also

available

is

a

leaflet

of

Suggestions.

market's




areas

long-term

shrinkage in

over

the

mar¬

two

next

my

market

comment

of

Oct.

1950, shortly before the high¬

3,
est

point

so

far

attained

by the

major trend.

bought
fore

now

at 80

(yield 6%

taxes)-is 20 to 30 points
on

a

basis

tained dividend

of

a

to-be-re¬

of only $2.50 for
taxpayer in a 50% bracket.
A $30 loss in
Capital value over a
two-year period—with only $5.00

the

—

New

Corp., 120 Broad¬
New York 5, N. Y.

American Stores Co.—Memoran¬
dum—Sutro

Bros.
&
Co.,
120
Broadway, New York 5. N. Y.

Over-the-Counter Index—Book¬
let

showing an up-to-date com¬
parison between the thirty listed

Argo Oil Corporation—Analysis
—Russ & Co., Inc., Alamo National

Building, San Antonio 5, Tex.
Associated Transport, Inc.—

stocks used in the National Quo¬
tation Bureau Averages, both as

Memorandum

—

Homer O'Connell

&

Co., 25 Broad Street, New York
4, N. Y.

to

Baltimore
&
Ohio
Railroad—
yield and market performance
an
eleven-year period—Na¬ Circular—Kalb, Voorhis & Co.,
25
Broad
Quotation Bureau, Inc., 46
Street, New York 4, N. Y.
Front Street, New York 4, N. Y.
Also available is a circular on

tional

Dependability of Dow's Theory
Undergoing a Test

be¬

over¬

Company—

memorandum

Hanseatic

over

An

example might be stated as
follows: a $5.00 dividend stock

•

Express

a

composite version from both per¬
spectives—as herein discussed—

in

years.

glaring in¬ priced

stances of misguidance for owners
of common stocks.
Their views
in

way,

a

regard
'

York

Losses—Francis I. du Pont & Co.,
1 Wall Street, New York
5, N. Y.

is that the Major Trend upswing
objectivity — espe¬ really high.
is essentially completed and that
industrial stocks used in the Dowhigh market level
(II) Prospectively those yields
a
bear market is in the
making. Jones Averages and the thirtyhistorically. I, for one, choose to (ex-taxes) are not attractive if
That
is
a
version
which
I
stated
be so objective as
five
over-the-counter
industrial
virtually to dis¬ projected against the potentials
very realistic
cially at such

American

Follow-up
How

*

•

Bissell & Meeds,
Broadway, New York 5, N. Y.

Switch

.

Viewed

120

be

down¬

Botts, 50 Broadway, New York 4,
New York.

vestor—Laird,

prices

ward. In other words: is the bull
market to carry further or has the

re¬

not

involves

the

be in any one session or in
but more important:

may

fu¬
Tax

toll—are

procedure

much

Ohio

Readers

might derive an im¬
pression that I have an obsession
on

I

this

subject of Dow's Theory.

respect

it

Thesis

which

severe

tests

as

a

has
of

a

Petroleum

Again
1

Booms

—

semi-scientific

withstood

the

half-century—

Special Call Offerings—Explan¬

atory

Haas

Edison

Co.

and

Rohm

&

Co.

Calvin

Bullock,
Street, New York 5, N. Y.

—

Wall

Study

Industry

booklet—Thomas,

Haab

&

Boston

Terminal—Review—Ira

Haupt & Co., Ill Broadway, New
York 6, N. Y.
Also

available

are

reviews

of

Number 4962

Volume 172

.

1937

since

and

& Chemical

Food Machinery

CorporationSurvey—In curent issue of "Busi¬
ness and Financial Digest"—Loewi
&
Co., 225 East Mason Street,
Briggs & Stratton

Milwaukee

By A. M.

2, Wis.
Aluminate

National

President, American National

is a study
Corpora¬

Also in the same issue
of

Midwest banker, asserting

tion.

135 South
Chicago 3, 111.

&

Street,

Salle

La

Inc.,

pressure

Island & Pacific
& Co.,

rearmament

Australia

214

Belgium

373

Brazil

421

Canada

199

foreign trade is a necessity to all

Denmark

Mutual

Defense As¬

sistance nations will

participate in

if the

materials and machine tools nec¬

2,480

India

and cites recent world-wide price advances. Says im¬
defense production abroad should be fully utilized
to reduce inflationary pressure at home.

nations should be assured the raw

245

France

326

ministration should be

Spain

487

to

Switzerland

198

share

243

for

Mexico

Ad¬

Economic Cooperation

The

4,920

_

for such production.

essary

383

Italy

of the
also be

program can

the production of armaments and
implements needed for their de¬
fense.
Such
participation
will
create
employment abroad and
conserve
our
manpower.
These

Ju,y".«".gust'
19o0

Bank & Trust Co., Chicago, 111.

national

our

The inflationary pressure

prices advanced 20 to

STRONG*

to

little

very

budget.

eased

Newburger

—

ing

has

money

Wholesale Prices 1937=100

ports and

Chicago, Rock
Circular

Yantis

S.

—Circular—F.

countries and

most

50 times.

justification for restraints, and
deplores existence of tariffs, allocations and exchange controls.
Points out world rearmament program creates inflationary

Inc.
Co.,

in

depreciation of

taken place,

countries, holds there is no

Central Public Utility Corp.,

—

where

No Justification lot Foreign
Tiade Restraints!

Koppers Company.

9

(1985)

Financial Chronicle

The Commercial and

.

.

the

of

designated

greatest possible
billion allocated

the

handle

$6

European defense and super¬

necessity to to the purchaser in the foreign United Kingdom
vise the procurement of raw mate193
world be- country. Before making a ship- United States,,rials and industrial equipment
Also available is a bulletin on cause each country has different ment, he must comply with conIn the United States the supply
needed by these countries to pro¬
characteristics and climatic condi- sular requirements that differ for of money is at a high point. Our
United Gas Corporation.
duce the defense implements. The
tions, different each country.
money
circulation in
1940 was ECA should also assist the EuroEastern Air Lines
Circular —
re sources.
There is no justification for this _hmit <*Q K-ir
A
,
—— -—
Walston,
Hoffman
& Goodwin,
Minerals, agri- restraint upon a business that pro- u
sOTbhlton^Bank de- ?.e?" '
0Vtf.r^
funds to build up secondary in¬
35 Wall Street, New York 5, N. Y.
cultural prod¬ vides a livelihood to approximatePhiladel¬

Street,

Walnut

1342

is

Foreign trade

a

all the countries of the

phia 7. Pa.

T

,

a

—

was?over

&

Co.,

New York 5, N.

36

ani¬

ly six million people in our country and to a great many millions
-a
business
all
over
the world—a
business

in

Y.

Bond

Electric

Street,

Wall

mals abundant

out

-

cular

the

tries.

Cor¬

able would be

poration Limited—Review—James
Richardson
&
Sons,
367
Main

drastically re¬

Famous

Players Canadian

should

government interference.

vanced

The

A. M. Strong

,

Butter—100

lbs

Cocoa—100

lbs.

Coffee—100

lbs..-

rafts

or

56.06

Marshall

Copra—100 lbs

1.95

11.12

now

Sugar—100 lbs.

4.49

8.08

28.00

53.06

Co.

—

Co.,

Analysis

—

people depend to a great extent
upon sales to foreigners.
In 1949
our

N. Y.

industrial and agricultural en-

volves

Memorandum

lbs

50.00

272.00

Copper—100 lbs.

10.22

23.25

Steel

(long

Rubber

transaction,

monetary

a

Jute

__

___

ton)

lbs

(short

bank

54.00
100.40

14.60

55.80

The

.86

3.16

21.40

48.20

ton)

Tobacco—100 lbs..

ing

35.40
42.30

__

_

While the banker played an im-

Power

New York.

Electric

Service

Public

Gas

&

Co.—Memorandum—Hirsch & Co.,
25 Broad Street,

New York 4, N. Y.

pentine, 24.7%; lard, 23.7%; cop
per,
17.8%; soybean oil, 17.2%,
tinplate, 15.1%; petroleum coke,
14.4%; condensed and dried milk,
12.7%; structural shapes, 12.4%;

Rexalt

Drug,

ctnu

lui icUJJiieiii

liic

the living olffllluaiua
standards of our

beans, 10.3%; cotton
The United States,
resources

mous

great

variety

&

There

are

10 Post Office Square, Bos¬
ton 9, Mass.

which

we can

memorandum

Card

—

Lerner

Co.,

Inc.—Bul¬

Camp,

Stokely-Van

Faroll & Co.,
Broadway, New York 6, N. Y.

letin—Joseph

29

as

Inc.

Baker &

—

Bulletin

—

Amott,

Co., Inc., 150 Broadway,

New York

7, N. Y.

and

appraisal—Selig Altschul, 25
Street, New York 4, N. Y.

Broad

—Memorandum—Shearson, Hammill

&

York

14 Wall

Co.,

Raymond

Street, New

finished products

Control—Analysis

&

Co.,

148

State

Also available

is

an

(Special to The Financial Chronicle)

BEVERLY HILLS, Calif.—

indispensable to our economy. To
meet our requirements of indus¬
trial raw materials and foodstuffs,
import sugar, coffee, co¬

must

tea, drugs, spices, manganese,
nickel, bauxite, tin, copper, rub¬

coa,

furs, wool, silk, hides and
skins, burlap, bristles, shellac, essential oils, jute, chicle, cork and
other products. Imports conof dollar

many

stitute the largest source

foreign countries.
ability to sell
depends mainly upon the volume
of goods we purchase.

trols
trols

Smith has been

to

the

staff

of Waddell

&

Reed,




remuneration

sman

financing and

foreign

f0r

banks

engaged in some undesirable
The American exporter

foreign government
regulations. He must be certain
that an import license and permit
to transfer the money was granted
subject to

World

supply

be

eased

civilian

of

increased

hv

of

Large imports
during the

imports.

check

runaway

goods.

One of the greatest obsta-

goods

™period will

,

TTT

„

,

a

have outlived their purpose.

Ralph T. Ryan Joins
John L. Ahbe & Co.
(Special to The Financial Chronicle)

BEACH, Fla.—Ralph T.

Ryan has become associated with
John L. Ahbe & Company, 268

con-

rearma-

materiaUy help
for such

Road.

County

He

was

formerly Palm Beach representaUve

for Atwin and Company

Effects of Korean
The

fense

Korean

he was

past

Co. in New York.

Scheffmeyer Partner

cles to imports is our archaic cus-

Scheffmeyer

service, our hit-and-miss
tariffs. Perhaps it would be well

tums-

&

Co.,

25

Broad

Street, New York City, members
to suspend most of the duties dur- of the New York Stock Exchange,
ing the emergency period.
Our will admit Harry C. Thompson to
income from customs is

contribut-

partnership on Dec. 1.

This advertisement

is not and is

under no circumstances to be construed as an offering
solicitation ol an offer to buy any of such Stock.
Circular.

ot this

ottering is made only by the

War

the De¬

and

War

Program will have

which

countries

address

Trade

16, 1950.

Ward before the
Conference, Norfolk, Va.,
by

Mr.

United

States

nations

will

pressure

and

the

create

throughout

European

inflationary

the

world,

depletion of national wealth
by usjng raw materials for war
The

purp0ses

manpower

and the diversion of
to war production will

diminish the supply of

g00ds.
will

The Franklin National

impor-

consumer

The availability of money
much greater than the

be

supply of goods with a resultant
advance in prices. - The wholesale

price index has more than

doubled

Bank

Franklin Square

of

27,562 Shares
CAPITAL

STOCK

(Par Value $10 Per Share)

industrial

lack

In

with D. M. S.
Hegarty & Co., Inc. in New York
City and with R. S. Dickson &
the

prices

The

needs will have to obtain the
equipment and finished products
from abroad,
The rearmament program of the

Nov.

can

.

private enterprise un¬
encumbered
by controls which
it

keep

South

Inflation

vs.

Stock tor sale or as a

other transactions.

as much by red tape,
regulations and prohibitions as is
foreign trade. The foreign trader
is subject to constantly changing

hampered

*An

Inc., 8943 Wilshire Boulevard.

,

government interference. We must

is the
received by

equipment and know how necessary to provide for their defense

added

that

remember

also

for this reluctance

reason

is

is

Robert C.

of American

from abroad; on the other hand,

business.

(Special to The Financial Chronicle)

only 60 banks—less than Vz%
banks participate in
this
business.
The
outstanding
to

longer

into American
In all countries including

freely convertible

were

BEVERLY HILLS, Calif.—

business,

shipments under
the Economic Cooperation Admin¬
istration has so far been allocated

their international trade,

the counmaintain contheir moneys and con-

governmental regulations. He must
obtain licenses, adhere to quotas,
North Robertson Boulevard. He file declarations and is placed unwas
formerly with Waddell & der strict supervision as though he

Waddell & Reed Add

commercial

foleign

The financing of

tant repercussions on international
trade. The manufacture of war
implements will require the importation of more raw materials

over

over

in

our

of the world

tries

Bof

diminishing

SUmer

suited to

traditions.

'accumu-

The
inflationarv pressure
nressnre nf
itie inflationary
ot the
the

£foodi

Each nation

for

Consequently,

R.

Reed, Inc.

dis—

mately 150, or about 1%, engage

Baus has become af¬
filiated with Douglass & Co., 153

Philip

still

is

reluctance

Many pn-

the United States no enterprise

Douglass & Co.

was

this

and

goods found only abroad are

dollars.

Simplex Paper.

which

other countries

Most foreign moneys are no

analysis of

in this new business
little known to them,

mary

obtain economically

With few exceptions,

Street, Boston 9, Mass.

With

a

materials.

raw

Imports

Banks were reluctant at the out¬
set to engage

from

5, N. Y.

U. S. Thermo
—

import

must

of

many

exchange
United Electric Coal Companies

the

of the Federal Reserve Act in 1913.

ber,

United Air Lines, Inc.—A study

is

know

vou

ing" Howeverther7Ts"iirttiriTke-

piayed
today by
many
banks
throughout the country. Out of a
total
14>650 banks, approxi-

we

Time,

cloth, 10%.

with its enor¬
and great capacity

production,

for

Company-

Cement

Riverside

c
people.

iiV

Inflation

iaw in England in 1882. The United

became

Act

ours.

task best

a

must

w

ui

ance

Broad

&

We

?f^^iilJ,810
***%* were
g™ted
accept- Rhood
our huge expenditures
11.6%, rails, 10.9%, sov"
soy- StateSprivileges
with
the adoption
wm bethat
curtailed.

Inc.—Analysis—

Co., 25
Street, New York 4, N. Y.
Stone

iron

Exchange

0f

fulfill

PALM

r,ntP roaf
cite coal,

Hayden,

wrought

11.9%;

printcloth,

in the 20th
century in the United States. The

^ury |n England and

are

foreign trade is an important link
in the friendly ties between na¬
tions. It is the foundation of world

a

only in the 19th cen-

and

our

its capacities and

values; strikes at incomes,
pensions and insurance. It is the
greatest enemy of private enter¬
prise. The simple cure for infla¬
tion is less governmental spend-

trade began

assistance

Plan

ries than it is to

civilian production is creating in-

rnn" merce
throughout the ages, exten- diseaSe
which affects all
sive
bank financing of foreign lated
-

—

Bonbright & Co.,
Building,
Rochester
14,
B.

D.

greatest

great increase in purchas-

puwci

pnn"

George

of the

one

munism is closer to their bounda¬

flation which will adversely affect

p0rtant role in international com-

is

receiving

must

(natural)

can

aid for their
defense must fully participate in
the defense effort. After all, Com¬

(scoured)

Tin—100

The buyer must pay for his goods
and the seller must receive payment through the medium of a

32.6%; machine tools, 32.2%; paraffin
wax,
30.8%; leaf tobacco,

6', N. Y.
—

3.40

entirely
different basis and each deal in-

terprises sold a substantial share
of their products in foreign countries. Wheat exports were 39% of
the entire production; raw cotton,

memorandum—Good-

Pfaudier Co.

1.71

foreign

million sold at home. Today's
trade is conducted on an

several

supporting

and

body & Co., 115 Broadway, New
York

40.50

100

International Cellucotton Prod¬
ucts—Brief

2.19

25.09

9.00

Wool

New

Street,

.78
4.90

Silk—per lb

G. A. Saxton &

Pine

70

Inc.,

York 5,

...

100 yards.
100 lbs

Cotton—per

Canadian Canners Limited

Giddings & Lewis Machine Tool

lbs.

that

rearmament

the

confronting our nation
today. Imports and defense pro¬
duction abroad should
be fully
utilized to reduce this danger. The
nations that have been receiving

63.30

Burlap—per

in

Inflation

42.03

_

_

•

dangers

7.80

goods

with

boats

1950

$49.30

...

Wheat—per bushel

their

1938

$22.70

.

-»

industries

program.

5.30

Tea—100

our

past

•

.

existing

28.00

impor¬
of

tance

the

September,
lbs

Bacon—100

be

duced.

Winnipeg, Man., Canada,
and Royal Bank Building, Toronto,
Ont., Canada.
Also available is a review of
Street,

during

greatly

decade.

of interna-

the early period

In

Prlces of major commodi¬

195°-

in

A»

•

en.

? $165 billion in
August, participate
m Augusi,

D

foreign trade from

free

to

made

goods avail¬

-» W

*,ir?aJL $!?. kRlion, ln~

ties in the United States have ad¬

effort

Every

Kil

(UkQ

QDDmvl m nTQltr

country's welfare. This in¬
fringement by government upon
private enterprise retards the nor¬
mal flow of goods between coun¬

quantity and
variety of

Republic Natural Gas.

on

posits> which in 1939 amounted to dustries in Europe and to strength-

every

foreign

trade

Street, New York 5, N. Y.
detailed cir¬

Also available is a

PSQPntial

absolutely

is

which

another. With¬

Co.—

Share

place
scarce
in

one

are

&

Circular—Kidder, Peabody & Co.,
17 Wall

and

ucts

Share—Circular

Electric Bond &
—Bache

Price: $55.00 Per

The Stock is offered
and to the

Share

subject to prior sale, to the

effectiveness of the consolidation

approval of counsel,

of the above Bank and

and when, as and if received
and subject to certain further conditions.

South Shore Trust Company

Purchasers

Copies of the Circular may be obtained in any
undersigned and other dealers or

such of the

legally offer this stock under

by the

State only from

brokers as may
the securities laws of such State.

W. C.

Blair, Rollins & Co.

Langley & Co.

(ncorporsted

Grimm & Co.

Boenning & Co.
Nov.mb.r 20, 1950.

Hallowell, Sulzberger & Co.

10

(1986)

The Commercial and Financial Chronicle

and

Snyder Explains Excess
Profits Tax Proposals

the

tration's

posal

for

an

profits

tax

aid

to

financing

in

the

current de-

fense

pro-

The

g r a m.

Secretary,
after
i

n

criticiz-

alterna¬

g

tive proposals,
such as an ad¬

ditional tax

on

corporation

profits,

John W. Snyder

profits

tax

that

a

75%

excess

on

average

based

produce

the

$4

billion

of

revenue
required
place the Federal Government

on

additional

a

to

pay-as-you-go basis.

-

In

the

course

of his

statement

1943,

or

about

a

68,-

was

quarter of

all corporations subject to income
tax for that year.
Because of the

relatively low rate of earnings on
capital experienced in the base
period years, little more than a
third
(35%) of the corporations
subject
to
excess
profits
tax
elected

the

base

credit in that

period

earnings
However, the

year.

profits tax of these cor¬
porations accounted for 54% of
excess

the total

tax.

After 1943 the tax
at

was

10%

which

reduced

rate to 85.5%.
age
war

imposed

was

flat rate of 95%, but provision
made for a postwar credit of

a

the

net

The over-all

tax

aver¬

effective rate, before the post¬
credit, was 80%.
The net

yield,

the amount by which
receipts from this tax ex¬

the

or

ceeded

the

been

poration

amount

raised

that

from

income

tax

would

the

cor¬

alone,

was

about $16 billion.

given the

The

Base

Period

principle of excess profits taxation
toy this Congress when it consid¬

corporations

ered the

case

interim tax bill suggests

that the need

for a special tax is
recognized by the Congress.

The

taxation

of

shows

of

profits.

This

weighing these difficulties against
inequities involved in substan¬

tial increases in

the

taxes

profits of all corporations.
of

the

on

Many

the

difficulties, however, can
tempered by benefitting from

foe

past experience to increase equity
among taxpayers
and to reduce
ihe burden of tax
In

searching for

the

isfactory approach

to

most

this

sat¬

prob¬

of the

Joint

amined

Committee

have

ex¬

variety of possibilities.
The Treasury Staff has
analyzed
the experience of a large number
a

of corporations under the last
cess

ex¬

profits tax and examined the

Impact of different approaches

on

various types of corporations.
These

that

investigations
suggest
developing a basis for

in

profits taxation it will
sary

to

largely on
experience of

earnings
tions

and

return

be

rely

look

to

to

invested

on

guide for taxation
porations

neces¬

the

rate

capital
of

past

corpora¬

the

those

of

as

a

cor¬

with

unsatisfactory
earnings experience.
If this approach is
adopted, con¬
sideration should

be given to the
fundamental
changes
in
the
World War II tax that seem most

desirable,

particularly

from

the

when

the

A

brief

War II

review

excess

Profits Tax

of

the

World

profits tax may be
setting for the dis¬

helpful

as

a

cussion

of

the

changes

suggested

for your consideration.
The wartime tax excluded most
small corporations

by

providing

specific

a

This

was

profits

exemption of $10,000.
in addition to the excess

credit

poration.

allowed

Corporations

each

had

choice
on

of computing their credit
the basis of 95% of the aver¬

earnings for the base period
1936-39, or on the basis of
percentage of invested capital.

age

years
a

The

rates

allowed

on

invested




peacetime

Other

industries

substantially higher prof¬

base

of

1946

period would

firms

needs

War

view

II
of

law
the

fulfillment

for

of

following the

their

consumer

war.

ing these differences would be

allow the taxpayer to use the best

three

of

would

the

be

four

the method

over

used in

World War II,
taxpayer with a
to substitute for his sin¬

which allowed
bad year

a

gle lowest year, 75% of the aver¬
age income of the remaining three
years. The suggested exclusion of
the poorest year would treat this
type of case more generously.
The

proposed treatment would
increase; the average base period
earnings by 6)4% for those who
the

old

qualified for
the

75%

law

would

have

adjustment under

an

rule.

It

would

also

be

advantageous to a number of tax¬
whose income in the low¬

payers

est year is

more

than 75%

of the

the

remaining

years

of

average

and who obtained

was

rela¬

view of the dynamic expan¬
of
the economy
in recent
an

up-to-date

the wartime rule.

corporation

period

would

years

the

use

aver¬

cannot

lates

be

to

restored

because

law

it

re¬

million, for the lowest
would

age

in

result

million
than

the

the best three
should

be

change would

This

of

less

aver¬

highly abnormal relationships.
The fact that most corporations
would now rely upon a base
pe¬

riod

earnings credit is

impor¬
selecting a
an

tant

consideration

base

period which would achieve

the

in

greatest equity and minimize

the need for special

The

years

afford

adjustment.

since the war, 1946a

broad

and

that

noted

such

a

necessarily reduce

the tax base since it would liber¬
tions without

some

corpora¬

reducing the credit

However, it would be

effective in minimizing pos¬

more

sirability of liberalizing the treat¬
ment of

corporations with deficits

in

of

some

portance

payers

the

base

period

years.

an

entirely

period

of

an

exceptional

sustained

prosperity,
giving an unusually large propor¬
tion
of corporations
an
oppor¬
tunity to earn high profits.
The
in

inclusion of the

the

year

1950

base

period should be re¬
jected since it already reflects to
an important
degree the impact of
defense expenditures. * To a lesser
degree, this objection is applicable
to all

recent years

mental

when govern¬
for defense

expenditures

taxpayers,

some

and

the number of tax¬

seeking general relief.

oped

that

most

or

in

and

the

this

may wish to consider
treatment of corporations

the

which

increasing their capacity to

earn

in

is

during the base period and,

the

normal

might

be

course

expected

of

to

events,

continue

growing. In World War II, this
type of situation was handled by
what is known
mula.

the growth for¬

as

With the elimination of the

taxpayer's

worst

year

under

the

proposed option to select the three
best

years, less need remains for
this adjustment.
However, it may

be necessary to make some allow¬
for cases where substantial

ance

investment

in

the

latter

part

of

the base period is not
adequately
reflected in base period profits.
Invested Capital Credit
Due to the

level

of

period
would

profits

an

be

since the

1936-39

invested capital credit
used

less

frequently in

the present situation than
during
the last war.
At that time this
credit carried the burden

of pro¬

tecting many industries that had
been
operating under depressed
conditions prior to the war.
Provision
vested

tial as

for

an

equitable

capital credit is still
a

relief

measure.

in¬

essen¬

It would

apply in three principal types of
situations.
First, certain indus¬

based

was

exempted

all

large corporations
basic

subsequent acts

adequately

reduced

the

allow¬

capital

a

terest

the

of

equity capital
terest

conditions.

These

allow¬

were:

the

$5

million

of

capital

next

8%

$5 million___

6

Under these
tions would

rates

rates

Unless tnese

provide

capital

significant

a

of relief.

measure

ment, the average rate of return

equity capital for manufactur¬
corporations,

tax, has

before

than

more

the 1936-39 period.
a third of- the

5%

on

income

of

com¬

less

than

firms had been

sucn

8).

of the

It is clear that the
termination

II

tax

against

tions is subject to wider fluctua¬
tions than where borrowed
capital
is not employed.
In the interest
of

equity, however, a revision of
statutory allowance is re¬

this

World

War

II

allowance

gave taxpayers the benefit of onehalf the difference
between the

statutory
and

the

rowed

rate
rate

equity

on

of

capital,

interest

capital.

This

bor¬

on

favored

the

larger corporations with well-es¬
tablished

credit

positions, able to

use

of

would

companies

the

Under

World War II
provi¬
example, a large com¬
having an equity capital al¬

sion,

for

pany

lowance of -3%

and

borrowing at

excess

statutory rates of return allowed
War

The'

interest rate of 3% would have

(Table

the

on

in¬

to

debt.

on

its

reduced to about one-tenth

at

risk

earnings

subject

are

payments

cap¬

In 1939 nearly

equity capital. By 1947 the

proportion of

the

an

return

a

where

doubled since

manufacturing

panies had

in-*

borrow at the lowest interest rates.

As indicated earlier in
my state¬
on

for

borrowed
gives recognition to the

The

few corpora¬

invested

on

deduction

quired.

increased the alternative

are

basi¬

amount of earnings
remaining for
equity capital under such condi¬

5

find the invested

now

be

An allowance for

r

On the amount of invested

capital above $10 million

should

paid.

The invested capital allowances
in the last version of the World
War II tax appear to be low for

On

existing

cases.

corresponding disallowance

50%

of

sound and should be continued.

first

protect

cally revised. That allowance pro-'
vided for including 50% of bor¬
rowed capital in invested capital

involved

the

cor¬

Borrowed Capital Allowance

ital

invested

With this dif¬

The World War II allowance for

industries' with

the

World

discriminate
with

low

in¬

by

profits credit increased

one-half

the

tween 6% and
amount

difference

3%,

its

of

be¬

l1/2% of the

or

borrowed

capital.

In
contrast, a small corporation
with a poor credit
rating borrow¬
ing at 7% could have received a

benefit equal to one-half the

dif¬

ference between this rate and the

highest
of

8%,

equity

capital

only

or

Vz

allowance

of

1%

the

on

in the base period because
the bulk of corporations have en¬

rate

joyed relatively much higher rates

would have

of return.

This inequity would be removed
by adopting an allowance for bor¬
rowed capital proportionate to the

come

der

revising the allowances
the

invested

balance
two

must

un¬

capital credit,

be

considerations

a

between

found

which

would

lead to

widely different rates. The
first requires a rate
sufficiently
high to protect normal growth of
business

new

normally
rates

firms

which

relatively

higher

and

earn

return.

of

capital

credit

If

is

invested

the

too

low

to

be

available

to any substantial pro¬
portion of corporations falling in
these

categories,

corporations

more

borrowed

capital.

had

been

If

its

been

interest

than

more

8%

it

penalized.

interest rate. This would give rec¬
ognition to the fact that high
interest

rates

greater risk.

generally
To

reflect

provide

reason¬

able

protection in these cases, it
is suggested that the invested
cap¬
ital

credit

25 to

be

increased

by about

35% of the amount of inter¬

est

paid

no

reduction

borrowed capital, and

on

be

made

in

the

terest deduction. To prevent

the

maximum

allowance

in¬

abuse,
should

will be forced

to have recourse to

be limited

general relief

in

capital in addition to the interest

sonable

obtaining

a

rea¬

minimum

exempted

from

In the absence of

earnings base
profits taxation.
an

adequate in¬

vested capital credit, industries of
great importance in the defense
effort might be adversely affected.
portant

same

to

allowances

time it is also

avoid

im¬

invested

capital
high that industries

so

characteristically having a rela¬
tively low rate of return might
become

never

subject

to

defense

profits taxation regardless of the
expansion in their profits. Such a
might arise in heavily

situation

capitalized industries.
affect

those

It may also
in which

industries

favorable treatment under the in¬
come

tax

return

law

results in

computed

for

a

rate

income

much below the rate of return

of

tax
ac¬

tually earned. Unless the invested
tries may earn a low rate of re¬
capital credit is adjusted to the
turn on capital which
though high realities of the situation, large
in relation to
preceding earnings .windfalls might accrue to heavily
is
low
by
generally
accepted

will

according to size is believed to be

On

in¬

increased invested

an

larger corporations. Tne
principle of varying the allowance

present

the

corporation

a

investment in most

for

ances

of

of

relief for those industries and

borrowed

on

It devel¬

in

ance

capital

allowances

size

porations that have lagged in the
general expansion of earnings and

World

therefore

At the

large increase in the

the

of

Congress

the

should be retained.

initiated, the in¬

rate

the

of

gen¬

number

a

In

repre¬

satisfactory measure
However, these

of normal profits.
four years cover

to

Another provision the Commit¬

basis for appraising the

earnings performance of individ¬
ual corporations. It is well
recog¬
nized, of course, that no one pe¬
riod provides for every business

When

was

flat allowance of 8%.

ing

years.

alize the credit for

were

profits of different industries and
corporations at that time reflected

tax

vested capital credit
a

$28.1

million

proposal to

of

$22.5

or

year.

credit

a

nearly $2

or

under

It

only

levels for the war years are also
obsolete.in view of the expansion
in the economy.
Moreover, the

II

best

vested

to

in

light of existing

not

tee

ing corporations have been or¬
ganized since that time.
Profit

War

the

at

the

would

75%

this $30 million average,

period when gross na¬
tional product was only 25% of
the present level and total
profits
At least 45% of exist¬

in

based

a

13%.

aim

must

level

credit

substituted

would reduce

previous

varied conditions peculiar to dif¬
ferent businesses.
The statutory
eral

The principle

differentiation

capital credit will afford effective

single rate of return on in¬
capital will allow for the

would

have

fourth to one-third.

ferentiation,

Capital

vested

capital option useful.

base

the

No

Invested

on

of the three highest years or
$30 million.
The
wartime
rule

will provide an adequate measure
of defense profits. The 1936-1939

of

new

according

million in the lowest year and $20,
$30 and $40 million in the other
three

vided at the end of World War II
should be increased
by about one-

To meet present
requirements,
the invested capital credit
requires
substantial revision.

Rate

the effect of

of

possible allowances un¬
invested
capital credit
suggest that the allowances pro¬
the

of

For example, a
earnings of $10

with

This would be of considerable im¬

period

of

Careful studies

different
der

proposed

status

Thursday, November 23, 1950

.

businesses.

relief under

no

Our studies also suggest the de¬

sion

that

basis for de¬

a

.

in¬

are

firms

the

tax

circumstances.

This

years.

improvement

an

sible grievances and relief claims.

times, only

termining the

rates

to

capital method than under

In

during

to provide

essary

the

The fairest method of recogniz¬

im¬

an

prosperity

penalize these

industries

and

prompt

from

vbase period earnings method.

the

cor¬

the

re¬

vested

1949,

Excess

In

to

war

of

for others.

sentative

II

the

defense

at

represents

World

were

because

tively lower level of profits in the
years
1936-1939, the majority of
corporations secured a higher ex¬
cess
profits credit under the in¬

under current conditions.
War

arriving

formulated.

point of view of its impact on spe¬
cific firms and specific industries

World

in

portant change from the situation

administration.

lem, the Department and the Staff

that

corporations an earn¬
ings credit based on recent years
would
provide
a
reasonable
method

ihe

Credit

of most

how¬

profits,

Earnings

The recent profit experience of

ever, is not without its difficulties.
The issue comes down to one of

1946

age

Snyder stated:
The extensive support

industries

some

in

Omission

under

have

outlining his proposals, Secretary

amount of

profits tax

excess

in

000

con¬

tended

earnings for the period 1946-1949,
inclusive, would not dangerously
impair corporation earnings and
would

ject to

excess

there

individual

or

its in 1946 than later years (Table

number of corporations sub¬

mum

of

earned

During World War II, the maxi¬

pro¬

second,

base period years; third, it is nec¬

general

production.

capital. There were numerous ex¬
ceptions to these general rules de¬
signed to relieve hardship.

Adminis¬

standards;

a

7).

capital varied with the

sub¬

failed to participate in the general

conversion from

corporations earnings.

Secretary of the Treasury, John
W.. Snyder appeared before the
House
Ways and
Means Com¬
mittee on Sept. 15 in defense of

been

Although the profit experience
of the years 1946-49 can serve as

depressed

readily

current

have

dustries

profits

inclusive and with allowance for changes in invested capital,
would bring $4 billion additional revenue and could be
from

aid

stantial.

guide to normal earn¬
ings, irregularities did exist. The

Treasury Secretary tells House Ways and Means Committee a
75% Excess Profits tax, with a base period of 1946-1949

met

foreign

.

capitalized industries.

to 2%

of the borrowed

deduction.
In

general, this revision would

the invested capital credit
favorable to small corpora¬
tions which must borrow at
higher
make

more

rates of interest than those
which

borrow

can

on

favorable

very

terms.

Impaired
Under

invested
and

the

Capital

World

capital

surplus paid

in

II

to

law,

capital

the

com¬

regardless of whether

pany

capital still existed

ously been lost.
that

War

included

number

a

tions

have

at

or

It is well known
of

large

some

corpora¬

time

in

history experienced large
of capital. The former
law,
theless, counted
much

that

had

such

had previ¬

as

their

losses
never¬

existing capital

been

lost

in

mote

periods. This treatment

ated

an

re¬
cre¬

inequity

corporations

an

by giving such
important tax ad-

Continued

on

page

25

,

Number 4962

Volume 172

Let's Have

.

.

a

The Commercial and Financial

.

Chronicle

pays much more tax than one that
has a higher invested capital base.

Stiff Defense Tax

The

yardstick by which manage¬
depreciates.

cents

Not

In

Chairman of Committee

President Northwest Bancorporation, and

Development's Subcommittee

Economic

for

Fiscal,

011

inflationary

motivation

I

that this Com¬

not believe

do

of

competent way in which'

tious and

staff approached the compli¬
ical circumstances.
The freedom, cated problems involved. "
If I may say so, I do not believethe security, the lives of all of
that the obligations of this Com-us
depend
mittee will end with the reportingupon
the

mittee has

met in

ever

more

crit¬

your

Strength of

out of

America.

World

day

To¬

the

it

are

we

nation

large part and

t

s

u

i

i

r

n-

a

1

power.

Whether
not

this

properly'

want

this Committee.

they

taxation

the

—

kind

of

rate

is

should

be

not

itself

a

tax

imposed,

for

does

base for

define

not

for advice

members of

only want to

reasons

mentioned

by

Secre¬

an

I

do

of such

not
a

economy

five

or

what

know

look

would
years

of

like
such

a

how

to

mittee.

"Except in the

dividual

after
tax.

defense

changes in profits of

enterprise

would
little

with

—

know

not

dynamic force for growth'
efficiency. Now, bureaucracy!

a

and

has its place.

There are, in my opinion, two us is not between such an excess
ways .in
which~ America's eco¬ profits tax and no taxes, or be¬
nomic strength could be seriously., tween such an excess profits tax
weakened, both of which come and no taxes now, or between such
back to this Committee.
One is an excess profits tax and no addi¬

for
or

a

use

should

we

fail to make full tional taxes

of fiscal and monetary

adequate to restrain
this

happens

policies

choice

should
determination of
new
tax base, as the
kind of excess profits

wholly

tax does.
How

:

much

should

be

profits

of

the

upon

additional

imposed

depends

amount

But it is not noted
enterprise, aggressiveness
efficiency. It is not the way to
its

factors

on

upon

revenue

added

a

be

sources.

We have found it

pricing

and

by

tion.

Continued

«<

inflation. If profits tax and a sound, adequate
find our tax proeram to pay for defense.

shall

we

in a strait-jacket of con¬
trols that prevents its growth and
economy

believes strongly that

The CED
an

excess

profits tax on the World

its efficiency. The other dan¬ War II type should not be im¬
is that we shall impose taxes posed. There are many arguments
of a kind that deprive the eco¬
against such an excess profits tax.
nomic system of the funds needed It is unfair, it is burdensome, it is
for
its
vigorous expansion and difficult to administer. So many

saps

ger

the

weaken

drive

for

more

pro¬

ductivity and in the long run re¬
duce our ability to

finance an ade¬

exceptions become necessary that
the

neither

taxpayers

the

nor

difficult

stand
until years of negotiation and liti¬
gation have passed. These are im¬
portant arguments, but by them¬
selves they are not decisive.
In

tween these dangers.

this

quate defense program. It is the
obligation of this Committee, as I
see

it, to guide the country on the
and
narrow
path
be¬

Treasury know where they

defense

which

emergency,

the short time allotted to me may last for a decade or more, we
are
going to have to do many
today I cannot discuss tax policy
things that are burdensome and
as it should be discussed—as one
difficult.
We shall even have to
element of a program that should
7 In

action to curb gov¬
expenditures, to promote

include

also

ernment

do

that

things

some

But

unfa'r.

are

saving and to restrict credit. The strength of America demands it.
The decisive reason for not im¬
Research and Policy Committee
of CEDi has just issued a policy posing an excess profits tax of this
statement that discusses
all of kind now is that it would weaken
America in the long-run crisis for
these questions. I have distributed
which we must .be prepared.
It
copies of this statement, entitled
would be folly to finance a pro-'
^Paying for Defense" to the mem¬
bers of this Committee.
I com¬ gram to strengthen America by a
tax that would weaken America.
*
mend it to your attention and

profits
part of my testimony.
My re¬ tax such as we had in World War*
marks today will be addressed to II and such as is now recommend¬
the immediate tax questions be¬ ed by the Treasury is that earn¬
ings above some credit are defined
fore the Committee.
like to have it

should

I

aware

am

New

York

or none

of $16,000,000 of Bonds of The Port

AIR TERMINAL

Installment), and of

TERMINAL BONDS of the SECOND SERIES,

(First Installment), will be

11:30 A.M.

of

SERIES, Due 1980 (First

$3,000,000 MARINE
1980

AUTHORITY

YORK

Authority consisting of $13,000,000

BONDS of the THIRD

Due

NEW

on

received by the Authority at

Wednesday, November 29, 1950, at its

office.

,

The essence of the excess

considered

that this Committee

Proposals for all

shall do them because the

we

PORT OF

THE

as

"excess"

and

taxed

at

a

Each offer must be

check in the amount of

rate

significantly higher than the rate
to report out
applied to other profits. The credit'
profits tax bill so that
is determined by earnings in somethe House can have the opportune
historical base period or by the
ity to vote on it. Your staff was
rate of return on invested capital.
kind enough to invite me down
It would be hard to think of a
here last month to participate in
informal discussions of the tech¬ tax better calculated to penalize
the enterprising firm relative to
nique of excess profits taxation. I
was
impressed by the conscien- the sluggish, the efficient relative
to
the
inefficient, the new and

acceptance or

accompanied by

a

certified check or cashier's

$320,000. The Authority will announce the

rejection of bids at or before 6:00 P.M. on

that date.

is under instructions
excess

an

i

Committee

1 The

for Economic Devel¬

opment is an organization of businessmen
formed to study and report on the prob¬
lems of

achieving and maintaining a high
employment
and
production

of

level

Its Research and
Policy Committee issues from time to
time statements of national policy con¬

within

a

free economy.

recommendations
for
action
which, m the Committee's judgment, will
contribute to maintaining productive em¬
ployment and a rising standard of living.
taining

1950.




are

the

form, of the Official Statement

Authority and of the resolutions pursuant to

to be

issued,

may

which these bonds

be obtained at the Office of the

Authority, 111 Eighth Avenue, New

Treasurer of

York 11, N. Y.

growing firm relative to the old
established one.
The big, estab¬
lished

firms

rate

long

so

its base
firm
more

pays
as

period

that

has

efficient

a

the

THE PORT OF NEW

standard

YORK" AUTHORITY

it does not exceed
HOWARD S. CULLMAN,

earning. But the

CHAIRMAN

better product or
method

the Treasury 75% of its

must

pay

additional

earnings if it starts to grow up to
challenge
the
established
firm.
♦Statement of Mr. Thomson before the The
corporation that uses its capi¬
House Ways and Means Committee, Nov.
tal wisely and earns a high return

21,

Copies of the prescribed bidding
of the

t

November 20,

;

,

spe¬

corporations. The
such an excess

on

other

to

renegotia¬

1950

1

,

'

*
•.

-

i

1

on

j

that

exceed-

from

should

and

corporation or even of an indus¬ that are explained in our policy
try." The profits resulting from the statement
(pp. 20-24) we con¬
defense program are mixed with cluded that
$3 billion of additional
the profits resulting from all other
taxes
011
1951
profits might be
factors. They are mixed beyond
needed. Further investigation has
all possibility of isolation, except
convinced me that our expendi¬
in the direct military contracts.
ture estimates may be too high
In the case of direct military con¬
and that the addition to corporate
tracts profits should bd limited by taxes needed for 1951
may be less
strict

'

,

needed

revenue

obtained

j

corporate '
the total

1951
corporate
profits will be
the- needed. On the basis of certain
particular estimates as to 1951 expenditures

contributing

•

tax

ingly difficult to get reliable esti¬
mates
of expenditures in
1951.

As

,

the

between

is

In

1.

simple tax plan i

;

that

special

Jan.

effect

take

However, I have seen no evidence
of in-- to suggest that as much as $4
it is billion of additional taxes from

impossible to determine the

like.

bureaucratic

case

contracts,

cific

Corporate

the

at

enacted

require

ordinary

are,

them.

to

a

proper

profits

measure

I know what I think it would look

become

The
Congress
should not be,
10
placed in a position where it mustdepend in
choose between an excess profits
the action of
tax on the World War II type and
no
taxes.
The real choice before

or

excess

or

Secretary Snyyder told this Com¬

advocates

tax think the American

ten

knows what

be

session

not

profits tax. No

excess

one

100%

is needed. The tax proposal

excess

the

should

order to do this

profits tax that has been suggested

them.

to

to

to

though the ,corporation tax is
But we be¬
lieve that this particular form of

maximize

better meas¬

than

We believe that additional taxes

the

and

a

because
billion,

125%.

corporations

on

is

"normal"

of

ure

basically bad tax.

a

believe that a
an
excessively

We

taxation,

taxes

more

earnings

period

not because 75%

even

tary Snyder and for other reasons.

from now—will

large measure upon

tax

the

tage five years from now—or
years

al¬

sound

strain

to

emergency
of

impose

be left with
to

the

limits

And they- drive for improvement, little fear
what the al¬ of waste, little pressure from com-*
ternatives would be if they should, petition and little willingness to'
decide to reject an excess profits take risks.- Profits would
be av
tax of the World War II type.
reward for having a big tax credit,*
present

J. C. Thomso*

advan¬

great

75%

you

will

still

we

have

not

may

incentive

production."

will

you

o r

they

sufficient

rate

excess

They

un¬

our

matched
d

best

income

additional

any

earn,,

imme¬

billion of

^

have drafted the
profits tax you can.
also want to know'
whether you recommend that they
should enact the excess profits tax
that

know

perhaps deci¬
sively because
Of

The
not

will

House

the

were

retain. We believe that such

though

even

The House

matters.

tax

on

in

—

type,

of technical defects

free

looks to this Committee

the

in

II

War
as

possible.

as

strongest

world

be

corporations

raise $6

base

that is the way to raise $4

by the Treasury—needlessly and
high rate. We believe that 25%- recklessly exceeds the limits con¬
is a very small part of additional ' sistent with a strong America.
The
term
"excess profits" by
profits tax of the r earnings to allow corporations to '•

excess

an

in

loyed to retain only a small part

"Defense Profits Tax" of

for

program

of

have

We

now.

arbitrary stand¬

by which to measure the exof profits. For exam¬

ple, it is clear that the Treasury
recommends a credit equal to 75%

ordinary
to large

directly. We
recognize that it will be necessary

ineffi¬

base

cessiveness

half from individuals

present conditions and in the ab¬
sence
of
wartime
production

profits levy and no tax at all, adyocates instead a
15%, giving combined rate of 53%.

excess

an

ards

taxes, half from corporations and

ciency." Again he said: "If under

proper

a

diate action to

because

and

waste

taxes

advanced

"Exces¬

pressures

induce

they

base, and would actually "weaken America."
Maintaining Congress should not be forced to choose beiween
a

additional

sively high rates tend to increase

Spokesman for business group, in reply to Secretary Snyder,
declares Treasury's proposals do not define "excess" profits
nor

profits tax of the
type is not opposition

Committee,

said:

Snyder

Secretary

Monetary, and Debt Management

Taxation

High

cess

this

before

Opposed to

perfectly clear
that CED's opposition to an ex¬

discussing the rate of profits

taxation

of

period earnings and return on in¬

I want to make it

the dollar.

on

standards

the

Surely

ma¬

vested capital are

Efficiency is worth only 25 cents
on the dollar; waste costs only 25

THOMSON*

J. CAMERON

By

industrial

chine.

ment makes decisions

Instead of Excess Profits Levy

American

the

run

page

25

12

(1988)

The Commercial and Financial Chronicle

.

..

Thursday, November 23, 1950

■h*

inflationary forces in check would

The

Controversy Over

be remote indeed.

Federal Reserve
By MURRAY

Policy

periods when

SHIELDS*

Vice-President, Bank of the Manhattan Co.

tens of

purposes any

option

no

billions

but

needs

courageous" effort to regain independence of
flexible, unpegged short-term interest

rates to control

inflation at

is

clearly the most
insidious
and
diffi¬

and

chases

source.

pernicious,

cult economic problem with which
this nation is confronted, for its

origins
deep

in

lie
the

history of the
15

past
Our

far

it

are

from

fect

per¬

the

and

risk

is

that

great

our

nomic

cannot af¬

we

subject

pegged,

credit

short-term

that

so

interest

Federal

the

rates

Reserve

au¬

thorities will be free to check

pansion

of

in

money

total

bank

booms

in

ex¬

foster

to

and

expansion

out such

change

a

Reserve

depressions.

the Federal

as

initialed

recently

in

policies, the possibility of holding

to

in

one

had

not

it

on

would

by
in

standpoint

75%-85%

of

taken

for

having

position

a

the

on

matter.

devel¬

Lays down 7 recommendations
In

locations
which

result

The inflation¬

is a complex rather
simple one, for it involves

process

ary

than

a

rounds

union-induced

address before the Grocery

an

to curb the forces of inflation.

York City, on Nov. 13,' Dr. Marcus

loans considered

Nadler,

the

Professor

of
U

of cost in¬

halt

a

of inflation

check.

It

is

in

be held

can

the

Reserve

effort

Board

following

rec¬

the

of

curbs

to

forces

of

as

the

defense

pro¬

should

gram

financed

be

mind

of

possible

Federal

in

labor

the

rest

of

the

on

the United States for

and

to

habilitation

during

It

is

not

War

II,

question that

to

open

well

every

World

industrial

developed

nation must have

strong central

a

banking organization if it is to be
able

to

sions

economic

prevent

inflations

if

and

erated

Nadler

it

is

to

This

entire
,

the

by

gram.

reces¬

from^developing into devas¬

tating

Marcus

the

excess

earnings

gen¬

rearmament

pro¬

should

apply

to

the

population.

(2) All civilian expenditures of

the

Federal

Government,

formerly.

expected.
less

is

less

of

Hence,
it

articles

Western
more

dependent
but

de¬

The economic

progressed

States

Europe

rapidly than

not

only

the

on

is

it

United

furnish

can

re¬

us

with

vital commodities which
only two
ago were in short supply.

years

Dr. Nadler's conclusion

well

as

of state and local governments,
be curtailed as far as pos¬

as

has

world

manufactured

to

appraised.

ca¬

pendent
than

forego

productive

and

tion

designed
siphon off

the

equipment are the
most
powerful
forces
working
against the inflationary
trends.
The supply of food is
large and

through taxa¬ food

to

that

pacity of the country is very great
and
is
steadily mounting.
In¬
creased production and efficiency

regain the in¬
dependence of action which it had
must be

the

people

of

the

will

country

should

deteriorating into wild inflation¬

sible and all public works should

realize the seriousness of the situ¬
ation confronting us and that

be

will

booms.

The technique is
but it is obvious

plicated,

Federal

our

tighten
bank

is

bank

threatened.

central

that

bank at

bank

that the

commercial

handled

Any
power

all, and

which

rates

on

the

only

its

any

cen¬

its

power

to

do

Without that power it

is, in reality, only

^making

inflations

deflations

perhaps
they would

and

than

worse

engine for

an

.be otherwise.
A central banking organization
simply must be permitted to manage
its portfolio of government
obligations and its portfolio of

■*-

member bank

trol
of

the

the

tem.

rediscounts to

over-all

reserve

commercial

It

policies

cannot

con¬

position

banking
this

do

sys¬

when its

dominated

are

by the
need for buying and
selling gov¬
ernment securities solely for the
purpose of holding the rates on
such obligations unchanged. That
was

the

serve

position

System

our

was

conditions

nomic

the

the

in

prevailed in

inflationary

(4)

All

cost

of

.

groups

contribute their share
the

tjaan

1942, and

.

economic

in

rearmament.

ized labor gains little

are

United

potentials

much greater.

purpose

obli¬

are

must

bearing
Organ¬

if it insists

on
higher wages, if this in turn
merely leads to higher prices and
reduces the purchasing power of a

large

portion

of the population.
development could lead to
large-scale
unemployment
after

Such

a

the defense program is completed.
should
not
expect the

Farmers

taxpayers to support a farm pro¬
gram which is obviously unsound.
Under

the

circumstances, the
legislation along the
the Hope-Aiken Bill is

adoption
lines

of

of

indicated.
will gain

Finally,

corporations

little from high profits

if this leads to drastic

excess

prof¬

its taxes and regimentation of the
economy.

in

gency

that

confronts

the

nation

encouraged to reduce

unnec¬

what has been popularly
referred to as, its ' Declaration of

and

Independence."

possible

Flexible Short-term Rates
Reeded

icy of the Treasury must be based

made,

expenditures

essary

to

and

as

save

much

as

,(The result of the recent change
in Federal Reserve policy
interest
rates
rose

was

that

moderately.
But, that is not the important conr

♦Froro

fore

The

an

address

Rhode

by Mr. Shields

Island

Bankers

tion, Nov. 16, 1950.




the realization that

low
harm

rates

money

than

good,

management

prevailing
tions.

»

and

must

money
-

can

■

-

-*

be

artificially
do

(7)
serve

act

accordingly.
If they do
both inflation and drastic regi¬

mentation

that

Credit

stocks

selling

are

more

able to

on

number

are

a

the

basis

of

at least

earn

&

Co.

views

ations

as

the

10%

on

instances where

insurance

earnings derived from invest¬

present stock prices
or

two

outlook

for

one

current

favorable.

The recent

before encount¬

underwriting lines, Geyer
insurance

company

underwriting experience

oper¬

auto¬

oh

mobile

injury and property damage risks has not been entirely
satisfactory. It is possible that rates, which were reduced last year
on these
risks, may be adjusted to prevent any "prolonged period
of unprofitable underwriting
experience."
The major line of most

tinues to
losses

so

show
far

excellent

companies, fire insurance

results.

this year of about

In

spite of

3y2%

the

over

proper,

increase

an

total

of

con¬

in

last

fire

year,

Geyer & Co. suggests that earned premiums may have increased
an even greater extent with the result
that the industry may be

to

showing better results than in the very favorable period of 1949.
It is also pointed out that the recent decline in
lumber prices
is

favorable factor in the current outlook in that it
may indicate

a

there will be

a

period when costs of settling fire insurance claims

decline.

may

Another favorable factor in
stocks is that

they

of 30%

count

As

final

a

the

at

of insurance

estimated

an

point, Geyer & Co. points out that

and

a

has

group

approximately 40% in market price since 1947.

change in prices has also created

of

dis¬

though the

even

position of insurance stocks is favorable, this

of the different issues

tion

current position

selling in the market

are

from present asset values.

advanced by

Measures to Preserve

of

Concerning the possibility of

ering the EPT levy."
With the exception of

avoided.

Economists to Present

Many

considerably lower.

an excess profits
tax, should the law correspond to that in existance during the last
war, "most fire and casualty companies should have an
exemption
credit high enough to suggest the
industry as a whole should be

current

Dollar's
An
be

Buying Power

anti-inflation

applied in

be presented

inson and
York

This

change in the relative values

requires "discrimination" in the selec¬

purchases at this time.

program

peace

or

war

to

Along with its current appraisal of insurance stocks Geyer &
Co.

comments

shares.:

will

E.

Spahr, New

economists,
and
Floyd
Cramer, President of New York
Savings and Loan Associa¬
tion, at a luncheon conference

cussed

professors

noted

State

sponsored

tional

Policy
Dec.

and

the

at

on

Monetary

Hotel

McAlpin,

corporate

Robinson

earning

analyze
and

power

its

relationship to Federal monetary
policy.
Dr.

Spahr will discuss

sirability of redeemable
importance
and

omy,

of

use

Insurance

briefly.

the

de¬

Mr.

this

is

company

condi¬

policies of the Re¬
authorities should be di¬

Manufacturers

Insurance
current

and

very

year

are

Insurance

over

dis¬

fundamental

a

recent years.

period

a

discussed.

a

share for

of

years at
The appraisal of these earnings
by the market

conservative.

discussed, is viewed

as

undervalued,

an

y

Company, the last of the

under-priced equity in

.

-

group

a

...

stocks

which
Li

•

controls,
econ¬

BANK STOCKS

NATIONAL BANK

—

I

will

speak

money

to

on

the

make

A

discussion of their pros¬

for

pects

the

conservative

of INDIA. LIMITED
Bankers

Copy

on

Bern Securities

from offices at 280 Madison Ave¬

New York City.m

York

Stock

Exchange

York

Curb

Exchange

120 BROADWAY, NEW YORK 5, N. Y.

Bern Securities
Co., Inc., is en¬
gaging in the investment business

A.

Teletype—NY 1-1248-49

Gibbs, Manager Trading Dept.)

Specialists

*

26,

London,

in Bank

Stocks

in

Uganda

Bishopsgate,
E.

Colony,

C.

India, Burma, Ceylon. Kenya
Kericho, Kenya, and Aden

Subscribed

Paid-up
Reserve

Zanzibar

Capital

Capital
Fund

The

Bank

£4.000,000

£2,000,000
£2,500,000

Telephone: BAiclay 7-3500
Bell

(L.

Government

Branches in

and

Members New
Members

New

the

Office:

request

Laird, Bissell & Meeds

tary policies.

to

Kenya Colony and

investor.

The meeting will be open to all
are interested in sound mone¬

nue,

Re¬

Company

Company—are

estimated at $3.75

"average" earnings

National Union Fire Insurance

seems

insurance

Company, Globe &

Company of Newark is also

who

,

"

Assurance

Head

to

of specific

currency,

credit

of governmental

sound

Equitable

$3.00.

considered

funding of the Federal

Cramer

for

number

Company, New York Fire Insurance

&

Earnings for the

debt into consols.

need

a

It is pointed out that there has been

Fireman's

not less than

will

position of

.

companies which comprise the "Corroon & Reynolds

Merchants

4.-

Doctor

y.,

•

improvement in the quality of these shares in

by the Economists' Na¬

Committee

the

on

j,

Group"—American
public

University

•»

The four

by Leland Rex Rob¬

Walter

and

debt

geared

market
*

be

can

more

be¬

Associa¬

so,

between

payments are con¬
equitable distribution of earnings is

"abnormal,"

ment income alone.

thrift attractive.

more.

(6) The debt management pol¬
on

they

proper

Federal Re¬
it

distributed

.

(5) The general public must be
made to realize the serious emer¬

until

have
present

likely!

of course, are selling
In addition there

Eco¬

States today are far different

a

thing that justifies its

existence.

efficiently.

those that

government

gations has lost

most

isn't

maintaining artificially low in¬

terest

should be taken

care

military expenditures

central

direct

must

operations solely for the
of

(3) Great

that

position when infla¬

without

drastically reduced.

must

Banks

the

on

up

reserve

tion

tral

Reserve

com¬

A

and

Discussing the 1949 and 1950 earnings of fire insurance com¬
panies, the report points out that although the favorable under¬
writing results of these two years are recognized as

that

was

prevent periods of prosperity from
ary

t

In appraising the future outlook,

Dr. Nadler stated it must be borne

(1) As far

considerations that the historically

significant

curbing of

unessential in

as

present emergency or unpro¬
ductive in character.

the

inflation:

in

the

sity,

n

as

light of such

and

ve r

for hope that the other two

forms

York

loans

offered,

the

in

monetary expansion, there is little
room

i

at

ommendations

ing policy is by far the most im¬

without

Finance

New

three, monetary and bank¬

for,

"niggardly."

both desirable and

companies

income

considered the normal earning power of these institutions.

the stimulation of pro¬

to

ductive

fiscal
unbalances
and
monetary and banking policy. But

portant

rected

Manufacturers Association in New

creases,

of the

these

investment

are generally valued
conservatively on the basis of ex¬
pected normal or average earnings. Even after providing for a
45% corporate tax rate*the stocks of companies in the fire and
casualty field are selling for only about eleven times what is

Nadler Lists Anti-Inflation Measures

decade

values

dividend

of

the shares

versely affect¬
by the dis-

inevitably from it.

sidered

thoroughly statesmanlike

so

courageous

basic

to

It is estimated that as a
group fire and casualty insurance
companies are paying dividends which are equal to only about
55% of the investment income to be realized this year. From a

historical

commended

relation

probability

increases."

been

ed
Shields

generally priced conservatively in
many
offer the "almost certain

and

consump¬

will be ad¬

Murray

The appraisal expresses the point of view that insurance
stocks
are

to

eco¬

opment in the
next

dividends, market prices, taxes and book values.

as

been

have

specializing in insurance

Co.,

a

is

be

JOHNSON

Week—Insurance Stocks

ridiculous not to apply the credit
brakes and the Federal Reserve
to

E.

63 Wall Street, New York, N. Y., has re¬
current appraisal of insurance equities.
As is usually the case with the reports of this firm the
pres¬
entation is both interesting and informative. Current
operations
are placed in perspective and comments are
made on such subjects

new

due

Geyer &

cently published

pur¬

yet

cutbacks

stocks,

war

government,
by consumers

other curbs

or

This

which

stockpiling

any

cumstances,

and

its

the

and

H.

One of the major investment houses

tion, could only have a pronounced
inflationary effect. In such cir¬

deposit

Our only hope of halting inflation
is to stop it at the source. With¬

when

by

its

the

been

markets which

ford to do without is flexible, un¬

such

years.

defenses

against

sideration, for what

subordinate

to

the Treasury had no need for
lunds

By

for

over-riding
Treasury. But, the

has

Korea

business
Inflation

funds

period since the outbreak of
in

Asserts need for

action.

of

central bank has

to

the

of

government

necessity of rais¬

ing
war

operations

and

the

is faced with the

Bank economist, terming inflation problem pernicious, insidious
and complex, calls for approval of Reserve Board's "states¬
manlike

Bank and Insurance Stocks

One must grant, of course, that

in

conducts

banking and

every description of
exchange business

Trusteeships and Executorships
also

undertaken

.

Number 4962

Volume 172-

(1989).

and Financial Chronicle

The Commercial

...

in last resort. In any case, even if
direct controls should be adopted,
it will be necessary constantly to
strong pressure on prices. Unless mop up excessive funds so that
restrained, price advances under the controls themselves will not
such circumstances will breed fur- become a sham while inflationary
ther price increases in an infla- processes find their real exprestionary spiral.
sion in black markets and con-

we-go

Anti - Inflation Battle

Report

Federal Reserve System

,

background of inflationary effect of the De¬

After reviewing

Program, Federal Reserve Governor outlines means by
this central bank organization influences credit and

fense
which

The

sumers

report

only

can

on

total

international

services available to civilians may

steadily

over

the past

three
The

somewhat,

crease

mounted

12

change,

little

show

have

tensions

in

months,

even

or

over

areas,

con-

To say that we face an
period of more or less chronic inflationary pressures does not mean

reducing

by

influenced by open market oper-<

ations, changes in the discount
rate, and changes in reserve re-

quirements. These actions all have!
their major effect on bank repositions, although they may;
also immediately affect the lend -

serve

ing ability of other groups of
lenders.
Even at the risk of appearing
either too elementary or on the
other hand too technical, it seems
appropriate to me, at this time, to
define a little more, clearly what
is meant by bank reserves and
reserve requirements.
The term

,

.

.

(

prospect of an extended battle of reserves may refer to any cash
tightening pressures upon man¬ fighting inflationary trends does assets held by banks. For memnot imply that business trends will ber banks of the Federal Reserve
power supplies, rising living costs,
and
expanding profits, workers follow a steady upward course. A System, however, it refers gengarrison, economy will have many erally to the deposits of commerare in a position to ask for higher
wages.
At the same time, em- difficult problems of balance in cial banks with the Federal Re-

creases.

in¬

the coming

some

and

holdings of that we face a period of progresliquid assets and by making use sive deterioration in the purchasof credit. These demands are in ing power of the dollar. It does
addition to those arising out of mean
that fighting inflationary
incomes earned through current dangers
will be our continuing
production. Furthermore, as prices problem. It doesn't meanThat^ye
rise, incentives become stronger need to lose that fight. But fightfor
shifting out of cash or its ing inflation cannot be painless.
equivalent into real assets, that is, if we are to do it successfully,
people buy goods and invest, and with or without a comprehensive
demand for credit becomes more harness of direct controls, we must
urgent.
; 1
accept
the financial measures
Rising
prices
raise
material which are necessary to do the job.
It should be recognized that the
costs
and
stimulate
wage
in¬

supplies of commodities and

We know that

fact

increase their expen-

can

ditures

certain rise with the increase in capacity,
phases of this battle.
As I see productivity, the length of the
work
week,
and
employment.
it, any report on our battle at
home against inflation should be¬ Total production, in fac£ may ex¬
gin
with a pand by as much as 8 or 9% over
broad consid¬ the next year, but it is not likely
eration of its to rise as rapidly as the takings
background. of the defense program. While
I

businessmen

both

that

Describes Open Market Operations, the Discount
Rate and Reserve Requirements provisions, and what has been
done in these categories as well as the monetary-fiscal meas¬
ures
already applied. Holds it is too early to judge effects
of anti-inflationary measures already taken, but if they are
ineffective, further means must be taken promptly.

price trends.

the

by

aggravated

cealed transactions.

is

potential

inflationary

further
•

institutions and actions that di-

rectly define terms of lending—
such as down-payment and maturity requirements — in certain
fields of credit. The former measures affect primarily supply conditions for credit, the latter mainly
demand conditions.
The availability and price of
extended funds to lending institutions are ;

rising demands which cannot be
satisfied
and
which will exert

By M. S. SZYMCZAK*

Member, Board of Governors,

fiscal policy, will result

13

es-

pecially metal-using industries
and residential construction, supPlies may be sharply curtailed,

With

high

employment,

labor production, prices, and employ- serve Banks. At the present time,
ment. Unbalanced conditions may country, reserve city,: and central
develop which can only be cor- reserve city banks are required
The attainment of such an in¬
only the most
to
lower
resistance
to
wage
inrected by temporary setback of to hold reserves equal to 12, 18,
crease
in
over-all
production
recent
of
a
would exert severe strains upon creases. With demand strong, busi- activity. ■' A
continuing danger and 22%, respectively, of their
series of criness is able to raise selling prices
will be that of speculative ex- demand deposits and reserves of
ses.
Korea
our available supply of labor as
5% of their time deposits. Thus

years.

Korean War is

the United States to

however

es-

tablished

the

It also

Nations policy with force.

brought
lation to

in

establishment

defense

our

in

light inadequacies

to

re-

diplomatic and moral
to the free world.

our

commitments
As

expanding

defensive power.

our

The international situation con-

tinues

trouble

Potential

tense.

luJUVjI

a.

spots are scattered throughout the
world. In these circumstances, we
must maintain a vigorous and in-

aims* of''

This

time

nite

establishment than we have
known

in

peacetime to meet our
defense

own

our

at this time,

do not know,

We

how
W

mu°h
iHUwii

11

defense
Utitiiau.

adequate
ducqudic

an
CIII

...

.

,

.

^ labo^

..

ultimately cost. Nevactions already taken

indicate

clearlv

present and

that

programs

exert

forthcomtag
a
heavy strain on our
that

and

must

we

gear

economy

level of

1.5 million to 3 million men. Con¬

appropriated

has

gress

billion for defense, mili-

tary aid abroad, and an expanded
stockpiling program. In men and
dollars, this more than doubles
the

■

indications

supplements
The

that

are

may

has

*

capacity to

our

ex¬

per

unit in

employed. This

intensive use
unique managerial genius, and a trained and
intelligent labor force. The sur-

nological

progress,

0f capital equipment,

further

vival

serious

is put under se-

.

Economic Impact of the Defense

Program
Even before Korea business and

of

our

democratic

way

of

depends in no small measure
our
ability to maintain and

life

w

improve'"ourpast''record

possibly improve our past record

a_

i

_

i-_•

avert
avert

inflationary
demiiationary dangers as ae
nrograrrr?

at record

was

levels both

purchasing

It is the task

power of
of mone-

requirements
tion

in

terms of physical volume and ex-

fort

serve

chase

and its

may

the reserve posi¬
The Federal Re¬

at any time either pur¬

sell United States Gov¬

or

Reserve

shows

a

If the Federal
willingness to

purchase government securities at
favorable prices and low yields,
it encourages holders to sell them
in order to secure funds to lend

productive re¬
inequitable redis¬

tribution of real income

on

banks.

ernment securities.

other

and

sources

of

and real

wealth.

on more
favorable terms to pri¬
expanding vate borrowers. These funds thus
money supply is required by an
resources were felt.
find their way into the expendi¬
expanding economy with an in¬ ture stream.
The Economic Prospect
creasing working population, in¬
The sellers of securities to the
What is the economic situation creasing capital investment, and Federal Reserve may or may not
in prospectf It is not one of all- increasing
productivity per be commercial banks. In any case,
out warfare expected to last for worker. Our banking system has Federal Reserve purchases
will
a limited period of time.
Rather, done a splendid job of supplying
^^with reserve7wMeT£
what we may face is a condition the financial resources to keep
^*
indicated may he the
of government expenditures which pace with our increased produc- hasis f0r multiple credit and deare expected to be high but below
tion.
it expansion. Any seller will
wartime levels for a number of
But to keep the economy on an be paid with a check on a Federal
even keel from month
to month Reserve Bank. If banks are them-

In

the

long run, an

•

„roQre!

years
the
f
In such a situation,
,

t

trols like

direct con-

price and wage controls

requires constant seives the sellers of securities,
There are always in- then they obtain reserves directly

and year to year

vigilance.

ture

and rationing are both less neces-

sary and

the

fpncp

were

future

the

his dollar.

— i-

very

demands

banks increase their credits they

-

a

Output of goods and serv-

consumer

credit that banks may

cipient movements in the economy ag a resuit of the sales. On the
less workable than in a which, if allowed to develop, other handj if the sellers are nonin
area. This means that tech¬
in this
this area.
This means that tech- period of all-out warfare. On the might result m runaway inflation bank jnvestors — say, insurance
nological
continue
nological research
research :must
must
continue
other
hand, sopping
up the excess or deflation. Whatever the *mit a companies—they
deposit
u.i
hit-j
r-viivr.V-1 ncinrt
nnuior +Virr»!10'h tflVPS ntanco nf Sliph HfiVPlOOmentS. HC"
in Knnlrowill
cinno
+Via TTprl —
to have a high priority. Modern purchasing power through taxes cause of such developments, ac- proceeds in banks, since the Fedis
war of technology as well
and monetary measures is much tions by the Federal Reserve can 0j.ai Reserve Banks do not hold
as of men.
more feasible than under condi- serve as an important offset. If a deposits for the general public.
Increased nroduction
however
tions of all-°ut warfare. Cer- genend price swing is caught Thus in this case, too, banks will
will not
be enough bv itself to tainly as lon2 as consumer durable early, it may take little to restore obtain increased reserve balances

on

war

ices

the size of defense pro-

has been the result of rapid tech-

strain.

high.

.

•

terms of manhours

„

vere

•

arisen out of

capacity to produce alm
and uu.
our
.

^Kiior^ri

„70

pand our production and at pro¬

ity. Great pressures are placed on

price structure

requires

economy

of

extend, since, as you know, when

~

primarily on changed expecta¬
tions. A higher price, cost,,, wage,

relative to our ability to
increase production. Much of our
national strength in the past has

implications for economic stabil¬
our

Consumer holdings of liquid as-

sets were reduced and bank credit,

„™oi

grams

be needed.

situation

new

Qc,

limited by

pre-Korean defense program,

and

irtn<y

Ac.

addi- gressively lower cost

an

dynamic
-

A

amount

Inflation

iet°us ^onsldef thePeffecTof

■
obliged to lnc0me, and credit, structure was
^me" of 'goods'1 TJZrvioel bui"j°to tbe econom^
f'
available -to
civilians
will
be f°re
real pressures ot the defensethe
program on our available

size of the armed forces will dou¬

tional $17

Monetary Policy in

Fighting

str0ng. Business ' revised enough money to permit a level increase their deposits and when
sharply upward its plans for in- of production which is compatible £bey reduce their credits they revestment in plant and equipment, with a high level of employment. duce deposits.
. . j
Consumers engaged in a buying If, however, the amount of money
spree of commodities which might of
in the
economy
is far in excess
open
available
supplies
^of faith
civilian
k t operations, changes in diseventually be. in short supply, goods, the saver may lose
in cQunt ^ and ch^nges in regerve

:

The President has stated that the

ble from the pre-Korean

The Task of

very

alg0 bave f0 be increased further,

eco-

our

History of amount of reserves or the percent-

inflationary periods is filled^with age reserve requirements, then the
examples of that kind of economic will
amount
of deposits
the reserves
support
is changed.
This
development.
will change correspondingly the

J d ?L ^

policy to the new situation.

nomic

the whole inflationary.

reflecting especially loans to
™°Upld f1
business and to individual buyers tary policy to see that the money
?
some 2 or 3 million 0£ consumer durable goods and supply is adequate for a fully
° house*, ex?anded at record rates« functioning economy but not so
^wihan
goods.
addition,
is These «deyelopments
were
based ''11
large
to cause inflation
l^ply that
+W
fbe In
worV
week it
Will
'
„i
j
all its as
misdirection
nf
of human
hi manwith
ffef¬
likely
the
work
week
will

progiam may

ertheless,

third

the

prices> incomes, and expenditures
a(jvanced very sharply. Incentives
for accumulating
0 inventory were

n p

fiff

ever

international commitments and to
secure

in

in

Developments

qUarter of 1950 illustrated the
nafure of the inflation process,
Defense expenditures rose only
very moderately.
Nevertheless,

levels> the additional workers will
bave to come mainly from a
Skater than normal expansion in
f®rrce and .transfers in
tif*°ff n!*
h° ttl

defens4

larger

much

a

indefi-

for an

means

again.

defense production and the armed
forces at 8 million persons by the
e*?d,0^
?r aboijd one-eighth
of the labor force of 65 million.
® allows for 5 million workers
H1 del:ense activities, about 3 milllon. more than at present, and
?n in,cr.e^sei!1o the armed services
to a total of 3 million men. Since
unemployment is now at low

tegrated foreign policy consistent
wfth the
the United Nations.

,

.

result, we are now greatly

a

by offering extra inducements to
workers. Advancing profits tend

to ; cover
additional
expenses, cesses, which from time to time
well.as on industrial capacity and
member banks can now have desupplies of scarce materials. It Thus, higher prices lead to higher could go much too far. We could
wages,
incomes, costs, and ex- then even witness the spectacle of mand deposit liabilities equal to
intention of would seem conservative to estipenditures, and to higher prices deflationary reversal at a time about six times their reserves. If
support United mate manpower requirements for
when underlying forces were on there is a change in either the

Szymczak

S.

M.

,

„

,

ployers must bid actively for

of

dicated

pvnand

the problem

bv

Thp

may

illustrative

na

be infigures

goods
are available in anything the economy to an even keel It t the Federai Reserve. In either
^ the volume we can still ex_ is mu'ch easier to check an infla11Ke ine vuiume we ettii aim ca- is mucii c«afci w
case, banks will find themselves

movem?nt with reser es in eXcess of legal
cumul t requirements and will be able to
L°"e l?cr^ toelr

allocating them tionary or
would be exceedingly before it has become

Pect- *he task
among us

nationai

penditures
Unemployment wasi Let's say that total gross
relatively low. In many
; dustries, output was at or
capacity and further output ^
«wm ***«
pended on new additions to plant third quarter of 1950 to the third
and equipment.
quarter of 1951. But if, for exam,

*

Now
fense

greatly

a

program

expanded

has

been

de-

super-

imposed upon these large civilian
As the defense program'

demands

total output will

accelerates
i

♦An

182nd

address

also

j
by Gov. Szymczak at the

„

,

.„

,

,

conditions of production change in
tbe different industries.
then only $5 billion would be left
Steps have to be taken, of
for additional private civilian and course, to conserve and allocate
regular government expenditures, certain strategic materials which
Meanwhile, private incomes be- are in scarce supply. But a harfore taxes would be increased by ness of direct controls; including

P*e> defense takings account for
$20 billion of the total increase,

^Lrc"""tfheTtau'oi Net"" York! S25
billion. These rising incomes, controls at the retail level, should
unless drained off by a pay-as- be accepted only if needed as a

Commerce
"

New

A

■

York

"

-

City, Nov.

16, 1950.

I
; T- *! —i




-- -

-

-

.

--

.

u ,

as a whole,
reserves may
policy is flexible. It can be ap- form the basis for an increase of
plied rapidly, it can be applied five or more times credit and degradually in experimental doses, posit expansion,
and it can be easily reversed.
jj. easy f0 see, therefore, that
Monetary Measures
' tbe Federal Reserve can avoid
lypes oi
y
. buying securities in the market
Monetary measures include ac- ^ pujs a powerful brake'on the
^ av^abJContinued, on rpage
lty and price of funds to lending.'
» 30

that controlled prices will develop ments which monetary policy is the banking system
serious economic distortions as bcgt adapted to attack. Monetary th§ increased^excess

14

(1990)

The Commercial and Financial Chronicle

With Waddell & Reed

sity

(Special to The Financial Chronicle)

he

JENISON,
Shoemaker

Mich.
is

Jacob

—

Waddell

with

should

Mutual Funds

H.
&

the

>

Keystone Fund Releases
Program for Fiduciaries

'

NATIONAL

Described

SECURITIES

&

CORPORATION

RESEARCH

Y.

shares

with

to

other

the

full

after

extensive

Invest-

testing of combinations of the dif-

high-grade seculong-term market con-

over

is therefore

and

ditions.

1950,

value

as2et

Oct. 31,

on

from

re-

Affili-

a

1940
share

per

increase

an

received $2.37 in

tions,

$2.76

in

to

net

$4.30.

making

total

of

$6.67.

,

varied

three cents
come nave vaned from
lrom tnree
cents

—*—*

share

Per

1941 to 28 cents

in

1949 and 24 cents in
1

——

in

1950.

It calls for the

of

use

due

to

bonds

deterioration

of

:

certain^

Prospectus and additional

investment dealer

day

coming

Economic

the

counts
or

conservative

hold

tion

been

more

passed to

this end," the

has

led

to

should

stock

be

to
the

in¬

is the
that

with

prices

the

that

so

amounts

a

market levels

they

your

advances.

The Fund in

or

PHILADELPHIA 2, PA

report
had
,

added

been

,.

decline

that

made

.

m

the

the

the

-

The

sharp

,

stock

prior

The report noted that the Fund

*

is continuing to follow a conserva¬
tive t policy in
view of growing
international tension and' uncer¬
tainties
tax

Keystone

l

of

national

The report listed total net assets

^common

amounted

to

Funds

61%

The

in

investing their capital

15,

balance

(Series B1-B2-B3-B4)

the
Nov.

ferreds, 15.98%; convertible sen¬
iors,
1.47%; appreciation bonds
preferred,

0.90%;

and-U.
cash, 21.46%.

S.

PREFERRED STOCKS

at

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

be obtained from

will

be

Keystone Company
of Boston
50

*

to

reinvest

Congress Street

Boston 9, Massachusetts

Certificates
for fractional

mmr




will

not

be

shares, but the frac¬

shares

purchased

under

dividend^ and
common

rights of
that they will
to

Burea

Economics

study

a

a

pro-

other

shares—except
have voting rights

rights to require the company
repurchase

such

shares

only

output

saies

is

opposite change

Abramovitz'
in

the

business

study

series

of

is

the

studies

in

cycles in which the Na¬

tional Bureau is reporting the re¬
sults of i.s systematic exploration
of the

causes of prosperity and de¬
pression. Dr. Abramovitz has been

member of

the

taught

staff

of

the

1938.

re¬

He for¬

Harvard

at

and

and

one

published

of

the

0f

role

series

a

the

0f

under

played
ac^

at the Na¬

on

tional Bureau.

Cause

of

Business

Abramovitz'

show that, of the
World

Instability

measurements

cyclical changes

Wars, approximately 32%,

changes

in

the

volume

of

goods

added to, or removed

from, stocks,
The figures indicate that
during
short
cycles inventory
fluctua¬
tions

have

cause

of

been

a

business

other

potent

more

instability than

factors

which

to

greater attention has usually been
paid.
For example, the average
of

itures

construction

in

producers'

on

aceount-

durable

facturing

Size of Stocks Is Found to Be

of

inventories
sales

of

are

that

so

Gammack
Norman

partner

are

Admit

to

Wall

become

Gammack

S'reet,

New

members of the

Exchange,

&

Co.,

York

a

40

City,

New York

Dec.

on

Stock

6.

HI) 114ItII

Trustees have declared

share payable December 23,
1950, to shareholders of record
at 4 P.M. December
4, 1950.
This distribution of realized

fol¬

profits is payable in shares of
the Fund, or in cash at the
election of the shareholder.
24 Federal Street, Boston
.

;

six

EATON & HOWARD

12

to

.

STOCK FIINI)

number of cate-

share payable December 23,
1950, to shareholders of record

«'(

shows,

This

together

rise

the average.

on

ments

be

cannot

casj. and

4, 1950.
realized

cash

at

If*

This lag,

>

<f//ie

orders

and

materials

Seorye

fast

PUTNAM

industries find

whi]e

a

to

receipts of

as

.

>

reduce

purchased
their

as

FUND

con-

sumption of materials falls.
The principal class of finished
goods stocks lag behind output by
an even
greater interval than do

purchased

materials.

cycles they

even

direction

a

short

In

tend to

opposite

►

Putnam Fund Distributor. Inc.
50 State

in

move

to

<dd7)o4ton

•

Street, Boston

business

activity during entire expansions
contractions.

or

The

for

reasons

?^e.se j36s> ^ concludes, lie partly
inability to forecast
l.n

in

inohl

iftr

demand.
the

4-

a

In

long lag
stocks

of

nh

n rf a

a

a

i

•%

changes in

large

part, however,
inverted behavior

or

finished

the

try

tAfAnnct

to

fact

keep

more

goods

that

their

stable

INVESTORS

must

manufac¬

SELECTIVE

sales and
or

are

Dividend Notice

than

their

forced to accumulate

liquidate stocks in the

process.

Beard

Selective

terly

not

only

aggregate
on

on

findings

an

are

examination

ers

of

cn

D.rectors

Fund

dividend

payable

Abramovitz'

FUND

output

cn

of

Dec.

record

H.

has

K.

as

ten

1,
of

of

Investors

declared
cents

1950

a

per

quar¬

share

to sharehold¬

Nov.

17,

1950.

BRADFORD, President

inventory estimates,

detailed studies of the

Principal Underwriter and
Investment Manager

to

the

shareholder.

Street, Boston

accurately fore-

many

^ difficup for

behavior of many individual
tx-

chan£es in business activity. Dur- -modifies.

tt

He

,

made

•

com,

special

ing the interwar period, the

aver-

vestigations of ten kinds of

age size

about

chased materials and

was

of

in

or

of the

24 Federal

he says, is attributable to the facts
that cyclical changes in require¬

Dr.

.

of inventories

Fund,

election

with

output.
to lag behind
output by three to four

and

months

lie

are

December

distribution

profits is payable in shares of

Raw materials tend

but also

adjusted

P.M.

4

at

The

book

Trustees have declared a "cap¬
ital gain-dividend" of 75 cents

.

lag, he divides total
a

Y~

total

behind

explanation

an

"cap¬

a

ital gain dividend" of 65 cents

the

fall

partly in the fact that stocks

,

will
part¬

a

Goods in process, he finds,

and

of

.

to

Mr. Reis will

Fischer wiil

in

materials and finished goods,

based

„

Reis

the Exchange member¬
ship of Alexander J. Burns.

Of these the principal ones
goods in process, purchased

partly in the great size of the in-

well

lag

by

find

long

ventories carried by business and

u

Exchange,
P.

Nov. 30.

on

Abramovitz

to

output

To

somewhat

inventory flue

important, Profes-

Abramovitz'

fairly

Dr.

tend

and

this

turers

Very Important

kept

nership
acquire

by

conclusions

area.

be due to

tuations

Output

move¬

of

equipment only 19%.

reasons

Stock

Raymond

about

manu¬

sales

Inventory Fluctuations Are Potent

The

a

inventory

studies

business

of

causes

cycles being carried

have

York

total

ments, particularly in the

.

probing

Admit

to

&

intensive and detailed

gories.

Dr.

stocks

rise

to

and

general

very

exploration

and

Stan-

at

a

investigation

.

in

finds that the movements of

is

issued

reinvestment order will have
portionate

and

of

Sales

inventories into

all

company at the per share net asset
value.

Dr.

fourth

EATIIIV &

the first comprehensive statistical

future cash dividends in additional
full or fractional shares of the

tional

the National

Company of America

permitted

tend

months.

sor

Tlie

low

only 8% and the share of expend¬

Commencing with the 1950 .yeardividend, shareholders of The

an

■

These

Moses Abramovitz

.

end

Investment

a

ing for cyclical changes in output
during the interwar period was

Cost

by

on

in

are.

in stocks.

Six to Twelve Months

title Inventories and Business

share

Fund to Permit Dividend

Reinvestment
(Series K.1-K.2)

of

on

will
:

Behind

of on the average, took the form of

of

com-

were diversified as fol¬
Investment bonds and pre-

governments and

BONDS

may

last,

in

1950,

lows:

and

IN

com-

assets

30,

invested

investments of the Fund

INVESTMENT FUNDS

Prospectus

net

Sept.

on

was

stocks.

mon

This

decline

Changes in Total Inventories Lag

stocky holdings in total output between the two

60.19%.

totai

ooo'nno
$141,222,903
which

Nov. 15, last, of

on

causing a
in
ou put

increase

Cycles, With Special Reference to
Manufacturers' Inventories.
It is

-

of$147,651,949

Custodian

Participation

and

policies.

which

Certificates of

defense

or

be

they

BALANCED Fll\l)

counting for changes in business,

-

thus

change

10%

a

output

by inventory fluctuations in

.

market

to election.

larger

3.5%.

*ord University,

reduction

before
,

rise

billion of goods

stocks,

involves the production of such

of

Professor

price

to

large amount of goods that

research

staff of

interim

an

study
Moses

the

produce $3.5

ilarly,

of.

Dr.

the

holdings in line with its
policy of reducing individual in¬

investment dealer

it is. the first effect
a

striking

Abramovitz,

Holdings

substantial

If

would

than

of

New

than would have been attributable
to the sales change alone.
Sim¬

This

member

stock

after

serious

As

admit

the

add

much

sus¬

new

by

Wellington Fund today reported
slight
reduction
in
common

vestments

to

perhaps the

a

and

Wellington Fund Reduces

a

business

in

more

cushioned

sales increase $10 billion, business

of

conclusion

profits taken through' their sale
during subsequent high levels."

Common Stock

factor.

fell

or

Co., 1 Wall Street,
New York City, members of the

average level of out¬
Since business tries to keep

will

hitherto

most

are

purchase

inventory

than

pected,
is

desirable

when

attractive

more

of

of

put.

impor¬

been

of

equities may be acquired at those
low

stabilizing

Gaines

stocks in rough proportion to sales
and
output, this means that if

far

a

cause

has

relatively

of

are

cycles

it

level

rate

of

that

business

Research

conclusion

Bureau
show

liquida¬

tant

fixed percentage but

no

vary

substantial

used.

National

Research

35%

accumulation
and

stocks.

the

changes in the

ac-'

some

in New York and other states has

should be

^■"prospectus from

by

quality
Recent legislation

proportion

New York

.

that

vestment company said.
"Much debated, however,

Established 1894
One Wall Street

most

should

common

CALVIN BULLOCK

New measurements released to¬

grade bonds steadily declining to
historically low levels, it is be¬
even

data obtainable from
your

tuations
even

Gaines

exerted stronger influence than other factors to which
greater
attention has been paid.

in
the
past as
trustee
standards,
and
income available from high-

agreed

a

rose

Columbia Universities.

are strong elements of instability.
during short cycles, inventory fluctuations have

Maintains

acquired

generally

instability

Dr. Moses Abramovitz in research
study concludes successive

meeting
with

the

immediately
whenever sales changed, the fluc¬

accumulation and liquidation

shrinkage of capital

some

is

merly

Inventory Changes Vital Fader in Trade Cycle

only quality

depending
"With

aggravate

search agency since

stocks and in different proportions
on market levels.

FUND

Stabilizing

a

of business, Dr. Abramovitz points
out that the laggard behavior of

a

The plan represents a departure

BULLOCK

of

—

from the

holding of fixed amounts
of equities in fiduciary accounts.^

find

to

behavior

Although inventory movements
greatly

capital distribu-

a

Dividends from net investment in-

a

—

31,

reveals

order

the

Factor

in¬

jn addition the holder would have

large supply of lowcost energy is an absolute neces-

■

Inc. from

in

of

Inventory Lag

stocks

investment

an

in

goods

low

a

a

Fund

basis

■

"Since

of

Oct.

to

cause

Mr. Orr remarked

concern.

vestment.

ferent classes of

rities

to

has

10-year record of capital

ated

gas utilities are already regulated through rate fixing to earn
a
normal
rate of profit and to
permit a reasonable return on in-

the

and

A

that

developed

research

factor

suits

Orr, President of Gas
Industries Fund, reports to the
shareholders of the Fund that an
undue

was

finished

explanations

these categories of stocks.

pre¬

Affiliated Reports

James H.

signed to increase
income
and
opportunities
for
capital
gain
through more efficient use of comIt

industry

Thursday, November 23, 1950

.

stocks

excess profits tax should not

stocks.

cripple
to

comparatively favor¬
able degree against wage inflation
induced b.y government spending.

Safety Factors Reported
By Gas Fund Officer

dis-

Conservative

Institutional

taxation

to

of

use

was

allowed

contributions

The

sulated

frac¬

aggregate

ors," the Keystone method is de-

mon

120 BROADWAY, NEW YORK 5, N.

"A

as

Program for

request

to

by fiduciaries and

investors

Keystone Company
today.

of Boston

and

labor

combined

tional

closed by The

.

upon

stocks

institutional

INVESTMENT PROGRAM
An Open
Inves^meiOccount
prospectus

approach

new

common

NATIONAL

when

shares.

A

program

vital

preparedness,''

"punitive

be

not

make."

By ROBERT R. RICH

of

national

.

paredness which the industry can

Reed, Inc. of Kansas City, Mo.

Details

for

remarked,

.

27

INVESTORS

DIVERSIFIED

SERVICES

•

mpur-

kinds of

Established 1894

as Investors Syndicate
Minneapolis, Minnesota

;

Number 4962

Volume 172

July of this year, labor mar¬
with a tight or balanced

and
ket

Planning to Meet Manpower Needs

There

Director, Office of Defense Manpower

with

in

military production required by present appropri¬
same time increase armed forces to three million

raise level of
ations and at

without serious

Envisions

disruption of civilian economy.

We,

as

selves

tion.

all;
a

a

job

a

It is

job for defense of us

a

g g r e s

of

Such

a

for

appear;
the peace

and

security

nearly half.

we

liberty-

and

paratively, a
.tough
job—

it

tough

have

rapidly

the

engaged.

into

account

to

partial

will

are

we

which

require

may

an

of

Com¬

aggression in Korea was a

shocking but enlightening reflec¬
tion of the greater menace. Prompt
and
resourceful
action
by
the

it.
ourselves

United Nations has dealt with
But
the

permit

cannot

we

of relaxation because
in Korea.
Military
there is but a sample of

luxury

.of

successes

action

what

may

we

is

It

where.

defense

our

brace

have to face else¬
only too clear that
program
must em¬
himself has

Truman

dent

both

world

and Asia

Europe

vast armies pose a
to

(I

said

;

quote):
"In

As Presi¬

eventuality.

any

.

.

.

constant threat

So long as they

peace.

persist in maintaining these forces
in using them to intimidate
other countries, the free men of
the world have but one choice if

'and

-they are to remain free. They must

there

So
to us,

is

It

have it.

we

up

nation, to be
'ready for any eventuality. But it
is not going to be easy. We don't
all of us, as

mobilization

continue

to

there is

'We do know that

it will

that

chance

be for

efforts.
a
a

good
long

our

personal

advantages and increase

them.
In

gathering such as this it may
like stressing the obvious to

a

seem

emphasize

that

fact

the

man¬

its supply, distribution and
utilization, is a highly important
power,

in

factor

defense

limited

a

well be the ultimate
limiting factor. The first action,
then, of the Department of I^bor
may

power

has been

power,

of

ation

Defense

of

Office

the

and

resources

manpower

our

Man¬

realistic evalu¬

a

scientific planning for their

a

fullest

Let

in

account

be

must

force expan¬
sion and the accompanying prob¬
lems of recruitment are increasing
rapidly.

shaping

taken

and upgrading and
in-plant training. Nevertheless, I
adjustments,

inclined

not

that

think

to

enough is being done along these
lines if management is to keep
pace

realistically with the chang¬

ing labor market conditions.
Even

though

fense program

limited

our

de¬

is in its first stages,

occupational manpower shortages
are already appearing. During the

months

two

past

creased to

a

have in¬
chief¬

they

marked extent,

the professional classifica¬
such
as
engineers
and

in
tions,
ly

draftsmen, and in such skilled oc¬
as

designers, ma¬
and
die makers,

tool

tool

men.

-

Occupational Shortages Ahead
Up to recently, civilian demand

Expansion of our defense pro¬

responsi¬
of

has been almost wholly

this limited mobilization,

highest levels in its history. Never

mand

of

with

toward

move

we

the

to the possible
of expansion into full mo¬

need

an

eye

gram

busier

an

We should make

it

a

basic prin¬

ciple of our defense effort that the

view is the safe view.

We

must not look to mere numbers in

'appraising
tial

and

more

prosperous.

production was at
of $267 billion,
that of any full year in the

Gross national

bilization.

long

peacetime had we been

before in

manpower-poten¬
particular em¬

our

but must give

annual

above

was

at

were

steel,

a

production

industrial

new

peacetime high. We

producing more houses, more
more automobiles than ever

(before. Our labor force had never
been so large, and we had never
asset—the
our work had so
many civilians employed
force.
as
in July.
We were then, and
It
is important that we build are
still,
in
the
midst
of
a
upon our existing production skills
"boom," and it is largely a civilian
boom. Translation of our defense
and technical know-how, so that
we
bring together the contribu¬ program into production and em¬
phasis

to

major
quality of

our

manpower

tions of our educational and train¬

ing

facilities

and

our

industrial

plants to assure that we have
a
continuing manpower develop'

getting under
Employment, excepting for

ployment
way.

seasonal
rise.

ment program.

few

ployment

The scope of such
should include not only
improvement of production

the

'skills but the development of su¬

pervisory and management competence and the kind of industrial
Goodwin before
the Society for the Advancement of Man¬
*An

address

agement,

Mew

by

Mr.

York City, Nov. 2,




1950.

lion
2.3

months

in

now

is

movements,

Within

a

program

is

short

the
we

have

seen

the

on

span

of a

unem¬

off from 4.7 mil¬
February of this year to
drop

million

last

month—50%.

At

nonagricultural
employment climbed to 54.2 mil¬
lion in August, the largest volume
in our history. It fell off season¬
ably in September. Between May
the

same

time,

still

more

strong and defense de¬

for

skills

growing,

will

shortages

pational

rate

Total

past.

skilled workers. With civilian de¬

mands

occu¬

become

serious in the months ahead.

One

major

employers,
aircraft

manufacturers of

the

and

of ■ defense

group

aircraft

parts,

are

in widespread recruit¬
of engineers and other key

engaged
ment

workers.

M.

Gofen

the
and

workers

needed

real

stocks; he

estate mortgage

they

needed

tained
ment

workers

be

as

promptly

capital.

If

the

cannot

be

ob¬

workers

problem, he
decision on the

this

must then make a

following points:

1921, 1932, 1938 or 1942, and sev¬
1946 and 1949,

at its

eral times between

thereafter endeavor to

and

catch

in

changes

group

32

all dividend

the New York
and was pre¬

prices

years,

have-

the second chart with
will note a strong
correlation. The ratio is generally
first

the

at

you

highest when the market

Js

top; for example—1929, 193$,

a

1946.

and

emphasis and yields

specific holdings?
Can such a
policy, if vvell handled, result in
substantial long-term growth of
capital value and annual income
at a rate better than that of the

general market?

attitude

lative

being

which

involves

completely in and out
frequently?

of

the market too
Facts

on

the Timing Question

I believe some answers

to these

questions will become evident by
an examination
of certain charts
and
tables.
These three charts

the timing
analyze the fig¬

bring out the facts on

If we

question.
for

ures

the

1

*An

20,

Mr. Gofen before La
Women, Chicago, 111., Nov.

address

Street

1950.

years, since
first instituted,

last 53

the averages were

Salle

page

covers

years' swing in the
My third chart, comparing the
market? If so,> what are the po¬
yield
on
bonds
and
common
tentialities, based on a study of
stocks, is especially interesting. It
the past?
confirms the point I made in the
(2) Shouid he, instead, concen¬
beginning—that an investor h^s
trate on an intelligent program of
virtually been forced into conk
selectivity,
and
in
accordance inon stocks by the great differ¬
therewith make common stock in¬ ence in
yields. It shows that only
vestments as funds become avail¬
at the bottom of the market, in
able from year to year, with due
1932, 1938, and 1942, was the dif¬
adjustments for subsequent ference between bond and stock

to seek voluntary agreements
employers whereby
'skilled workers in one plant will

on

ad¬

an

drop of

few

every

between

to transfer voluntarily

15

past

compared

sary

Continued

a

averaged 18 times dividends. The
current ratio of prices to divi¬
dends is about 16 to
1.
If you

Should he adppt a longpolicy of waiting for the
bottom of a cycle as occurred in
(1)

term

through expanded recruit¬
activities, it may be neces¬

be enabled

It

stocks on
Exchange,

paying

the

with

Faced

as

recruited.

by

peared; and so he concludes that, pared by the Cleveland Trust Co,
as a practical matter, he has little
It shows that in boom times stock
alternative
except
to assign
a "prices approximate or exceed 25
substantial portion of his savings times
dividends.,
In
depression
into common stocks, if he is to times, stocks are priced* as low
maintain the buying'power of his as 10 to 12 times dividends. For

its expansion program,
have to have these key

can

'Dividends."

disap¬ 'Stock

practically

has

market

ground in
will

1938;

advance and

-

preferred

the

realizes

to lay

groundwork for mass hiring
mass
production. If the air¬
industry is to get off the

skilled

March,

to

•

craft

it

50%

1939 and then

in

vance

Aircraft

skilled

of

subsequent 60%

later decline, followed
,Samuel

employers are
(3) Is there a method of com¬
recruiting in many of the nation's
bining the essential points of tim¬
biggest cities. The latest reports ing and selectivity so as to be
indicate they are having consider¬
alert to opportunities as they oc¬
able difficulty in getting the type
cur, without assuming the specu¬
of

from

in¬

evidence that industry is
beginning to take account of its
manpower
heeds through some
relaxation of hiring specifications,
utilization of women, wage rate high-priced
§ome

am

100%

over

40% to 1942; then over a 100%
speculation advance in the four years ending
because he has neither the time, May
31,
1946.
Following this
the inclination,
the tax position major move, there was a decline
of around 25%, with about the
nor the self delusion that is often
needed by the short-term security same low point reached each year
1946
to
1949.
In the
17
trader.
However, he is aware of from
since June,
the tremendous forces that have months
1949,^ there
raised the price level and the cost has been an advance of over 40%.
of living; because of the declin¬ > I now want to call your atten¬
ing value of the dollar, he is skep¬ tion to the second chart, entiled
tical as to long-term bonds and "Stock
Prices
as
Multiples
of

into

program

our

markets tighten there

As labor

is

operating activities.

and

that

find

we

the

long-

not

is

He

electricians, mechanics and repair¬

the 'manpower

review

me

which

result

a

of

advance

pattern

again by

terested in in-and-out

the manpower work

therefore, it is clear that we should
move

'

As

ma¬

raw

began at a time when our
economy
was
operating at the

As

goal

*

terials.

and

in

is shown

June,

to

normal

more

market

decline

thinking

runs

The

the

months

August, 1934 to March, 1937; the

media.

a

s

decline

32

to
in

than can?
of about

more

was

the

the

1921
500%

almost

of

held

This

movements

The

1921.-

to

by

in

1932.

term channels.

of

production
parts

chinists,
Manpower Facts

facts

justified" in
a

the

years,

celled

90%

H i

products. We
in turn

end

ble for the increasing shortages

time.

-

the

cupations

utilization.

possible

as

two.

in

advance

whether he

such

tanks. These are

as

remember that they

component

pro¬

In total mobilization, man¬

gram.

is'

are

the

however,
must

affect

that some types of pro¬
duction are expanded while others
are curtailed. We must, however,
our

eight

to

or ■

well

1897

from

perplexed

aircraft pro¬
ship recon¬
of elec¬
equipment, and such

tronics

year

1929

manufacture

ordnance items

so

hold

now

in-

the

sacrifices and shifts in our econ¬
omy

next

rather

portion of his
savings into

force^

it. But it will mean some

approximately three years, and.
then losing somewhat- less than
half
of its advance
within the

vestments;

duction and assembly,

way

tain

are

substantially doubling in value in.

of

as

broad way, the
a pattern oi

a

not

investor,

common

stocks

that, in

He is troubled by

of

program

a

companies,

market has followed

suit¬

ability

note

we

substantial

effective

institutions;

and

the

discus¬
of the

fense

ditioning,

grade

medium

assigning

of life. We must main¬
that superiority. We can do

free

a

know lor how long we shall have

our

which

and

give better results than

being directly affected by the de¬

matching

traditions

and

strength."

■match strength with

of

more
work

a

of

unem¬

severe

activities

dustrial

strength
with
strength, our advantage lies in
our
superiority
in science
and
technology — the fruits of our
In*

time.

eruption

bring about

utilization

We have to take
menacing world

a

sudden

The

the

to

which

effort at any

munist

afford

cannot

with

now

'situation

Goodwin

C.

question

my

standpoint

far-sighted

the

ployment and a large labor sur¬
plus is now experiencing some
labor shortages. Some of the in¬

improve

take steps to

months ago was

with

group

small

into

approach

the

the speculator.

Even New England,

not many

to

from

serious

of

sections

other

to

confronted

importance

quality of their work force
just as they strive to improve the
quality of their product. Such a
policy will not only reduce costs
of turnover and new hiring but

it
we

outlook

our

which

in the plant.
that

occur

utmost

employers

mobilization

all-out

of

But

that

limit

than

and on

it is spread¬

But

Coast.

West

buying

want

sion

Great

the

around

in the Southwest,

Lakes,

country.

is

I

is

development

States

Central

the

are

more

may

made

-clear

regarded as training.

shows purchase of

Says experience

important.

policy
and
advises purchase of growth type stocks. Concludes wise selec¬
tivity in stock purchases is paramount in investment policy.
of

largely concentrated in the North

ing

It

Robert

market

most

leading stocks in each

this

far

Thus

centers.

labor

include studies to deter¬

opportunities

events

recent

third

a

duction

complex jobs within the

how

.'become.

shortages exist in
of our major pro¬

about

workers

of

way

occupational

of

outside

and

within

explored and arrangements made
to follow through when such job

We have

knowing

would include an

those on which they
are
engaged.
All channels for
transfers and promotion should be

It is not, com¬

no sure

supply and important

the

plant

-everywhere.

«

Scarce labor

presently employed
capable of perform¬

ing

latter

ing and expanded defense produc¬
tion is now beginning to be felt.

mine whether

loving peoples

yet.

the

make

of the training resources

is generally

which
the

from

available manpower.

program

It should

peaks and valleys of stock market fluctua¬
\vfiich might serve as guide to
stock purchases. Points out degree to which common stocks
are
affected by market trends varies and therefore key to
investment is not only timing, but also selectivity, with the

tions and traces time intervals

receiving

now

are

,

Glossberg, Investment Counsellors, Chicago

Mr. Gofen reviews

-

public
employment
offices
throughout the country, indicate
that the impact of defense order¬

This analy¬
should not be confined to what

sis

By SAMUEL M. GOFEN*
Gofen and

September,

in
-

The labor market reports,

ex¬

individual plant.

the

ourselves

of

our

available

it

wherever

may

most

of analysis

t.KP discouragement
sion

for

*

nation, have set our¬
of limited mobiliza¬

will

that

Un¬

labor surpluses.

872,000

to-

May

panded labor force of five million and calls for nation-wide
voluntary cooperation of industry and government to meet
manpower needs and maintenance of free labor market.
leadership

-only 2 major areas

are now

heavy

completed weeks declined from a
weekly
average
of 1,700,000 in

occupations, but states it is probable that nation can

some

Selectivity
In Buying Stocks

vs.

employment insurance claims for

shortages

Newly appointed Defense official foresees manpower

increased from 12 to

the number is mounting.

And

19.

Timing

areas

labor supply

By ROBERT C. GOODWIN*

15

(1991)

The Commercial and Financial Chronicle

...

by

re¬

that
actually le$s-

The chart also shows

yields

stock

were

bond yields in

than

of

great as it has been

as

cently.

1929,

almost

the big book)

and that the two were
equal in the three sub¬

sequent

the latter
May of 194$.

peaks—1936,

part of 1938, and in
One
of
the
better
whether

market

a

tests as jo
is on soiled

ground, assuming a
reasonable
probability of continuty of earn¬
ings and dividends, is to make
sure that stock yields exceed bond

good margin. When
close together, and
especially when stock yields are
yields by a

the

two

less

come

than

bond

yields, there is
the stock mar¬

trouble ahead for
ket.

There are

authorities who claim

peaks and valleys of majfluctuations
are
spaced a

that the
ket

.little

differently than I

dicated

in

-three-year

my

nave

emphasis

average

Continued

rise
on

on

and

page

in¬
a

a

33

16

(1992)

The Commercial and Financial Chronicle

tax with sufficient vigor.

Price Controls

Inflation?

vs.

prefer
pay for
without

By A. L. GITLOW*
School

of Commerce,

Dr. Gitlow opposes

Accounts and

price controls

on

Almost

sin.

is against it.

everyone

what

is:

issue

like

is

The only
will

weapons

be

most effective in the anti-inflation
c a m

i gn?

p a

Some

lieve

e

u

the

be
I

to

These

my

plies

price
at¬

tacks

ef¬

the

fects
the

The

t i

they

down

and

war

basic
Abraham

L.

Gitlow

down

spending power relative
the supply of goods wanted
by civilians. Larger employment,
more
overtime, and wage rate
increases are giving our people
to

to spend, while our
rearmament program is
reducing the supply of goods on
which to spend it.
Therefore, so
long as our anti-inflation program
money

military

relies primarily on price
it will be ineffective.

control

shoppers
for

goods

and

regular

it

be

seller

fa¬

customers.

the

first

If so, how about those

hours

spend

position

in
un¬

getting

in

a

queue?

a

Will retailers not hold back
goods
from those in line to take care of

customers?

to

these

the

powerful

The

moral

answers

moment

compulsion

and emotional pressures
an

rationing.

When

people
meet retailer
favoritism, will they
refrain from using the
money they
have to
tempt the sellers into

them

favoritism?
Will
all sellers withstand such
temp¬
tation?
If not,
we
shall have
extensive unfairness and a
price
control

law

prohibition

less
was

effective
in

than

its

day.! To
fight favoritism, rationing will be
introduced.

Without

the

intense

patriotism of total war, and with
well-filled pockets
whetting the
desire

of

consumers

for

pregnancy, there is

the

as

spending
we

To

little bit.

a

basic

be

forced

a

it

such

no

By avoiding
of

inflation,

spreads

regimented

until

nation.

effective, controls
by

relationships
*A

cause

power,

become

radio

policy in

sapping

as

ity laws

Russia and the demagoguery in political

appeasing

attitude toward

big business.
agricultural

our

Attacks price support

hypo¬

a

be

of

colors

or

plentiful

Or,
item

an

while

other
It is

difficult

to

imagine

consumer

a

who would not feel frustrated and
seem¬

ingly irrational experiences.
Sixth, governmentally-set

max¬

imum

prices have a tendency to
become minimum prices.
Oddly
enough to price-control advocates,
there

businessmen

are

them

for

selfish

businessmen

that

who

learned

resistance

consumer

to

a

governmentally-approved price is
low.

Consumers

governmentally-set prices as hav¬
ing the stamp of
government
to fairness.

as

This de¬

prives the economy of the antiinflation effects of concerted con¬
resistance to such prices.

sumer

the
of

address

intimate

prices,
by

are

inter¬

materials

Professor

on

Gitlow

"University Forum of the Air" over
Station WEVD, New York
City, Nov. 17,
1950.




the

in

absence of the powerful emotional
pressures
attending a total war.
Since the full impact of our pro¬
posed defense spending will not

be

felt

until

there

year,

effective

the

is

middle

still

there

will to put it

of

time

is

next

for

an

political

into effect.

If this

lacking, we shall wind up
with price control, plus
rationing,
wage control and manpower con¬
trol.
In short, we shall wind up

tightly regimented

a

are

ing price
rather

my reasons

control

lowed through on

I

aimed

effectively
effects.

at

tion has

been

at

and

causes

Administra¬

taking steps in the

PHILADELPHIA,

Pa.

Henry

—

B.

Warner, Inc., 123 South Broad
Street, members of the Philadel¬
phia-Baltimore Stock Exchange,
announce

with
of

direct

a

wire

service

Ames, Emerich & Co., Inc.,

Chicago.

(1) Higher income and business

taxes;
(2) Tighter credit for housing
(regulation X)
and
instalment
purchases (regulation W);

(3) Increased

sales

(4)

Sales

pluses,

of

of

govern¬

public;

cotton,
government; and,

held

sur¬

by

supply

pressing
of

the

on

civilian

Nov.

scarce

goods.

"Financial Chronicle" of
in reporting the adoption

9

for

a
trial period by the Securi¬
ties and Exchange Commission of
an
amended plan
developed by
the Midwest Stock

Exchange,

indicated

stocks sold

be

that

bonds

or

under the

plan would
allotted by offering houses on

firm basis of not

a

the

it

more

than -30%

of the securities to member firms

in

engaged

the

securities; this

distribution

was

in

In¬

creased sales of government bonds
do what higher taxes do:

should have read "on
not

ties.

more

.

than

error

it

as

firm basis

a

50%

securi¬

of

.

and

the

civilian

increase

government.

however,
!

New

spending

funds

Jules

represent

power

available
Bond
a

10

commandments.

They

established the premises. Now we
are face to face with the turmoil
and

uncertainty
logical outcome.
Mistakes

in

that

in

field

interna¬

of

uncle Joe Stalin's drab gray tunic
beats
a
misunderstood heart of

to The

Financial

GREENSBORO,
L.

Stotler

Lewis

&

is

Chronicle)

N.

C.—Joseph

with

now

McDaniel

Co., Jefferson Building.

Reilly Wire

J.

F.

Reilly

Broadway,
nounce

New

&

Co.

York

Inc.,
City,

the installation of

a

61
an¬

direct

private wire to Edgerton, Wykoff
Co., members Los Angeles
Exchange, Los Angeles, Cal.

&

Stock

to

sales,

failure

to

Backman, letter to the editor,
York Times, Oct.
15, 1950.

Wesley Hall & Co.

(Special

SAN

to The Financial

ion, and

DIEGO,

Calif.—Allan

tractable

a

member

of

the

Mutty is with Wesley Hall & Co.,
First National Building.
„

had been

we

realistic

and

as

tough-

the world.
I

mention

our

notable, and

tive and
the

mishandling

even

a

of

representa¬

symptomatic, instance of

Alice

In

-

Wonderland,

-

Through-The-Looking-Glass,

at¬

titude that has been characteristic
of
American bureaucracy for a

long, long time, almost
first heard

we

To

Fear Is

since

ever

Offhand,

I

cannot think of one
with shakier evidence to support
it, or one that was more thorough¬

ly foredoomed to absolute failure.
The

statesmen

who

dreamed

it

impervious to facts. They
have been curiously and, for all I
up were

know, wishfully blind to the long
of
Russian perfidy,
and,
what is worse, too willing to sacri¬
fice principle for expediency.
record

They

were

from

wrong

the

start. Unless they are invincibly
ignorant, they know now, as they

should have known all along, that
can
be no compromise, on

unalterably opposed to each other
by their very nature. The com¬
bined

genius

thinkers

and

the

State

nation

all

ever

the

coats

Russian

man

with

cannot

ideology

the creature of

the

conceived

global

striped

wore

cutaway

which makes
the

of

who

concept

of

a

in

liberty and
dedicated to the proposition that

all

men

are

Fear

Nevertheless, our relations with
Soviet Russia have been predicted
upon

the naive belief that the two
be

made

second

the

hearts

compatible.

Some

such vagary lay behind our
recog¬

Itself."

hypothesis, close to
the politicians, the

of

medicine

self-appointed
and

low

ness

is

per
of

Convention

nance

tional

ceivable

Oct.

of

Industry,

16,

the

Commercial

sponsored

Conference

of

by

the

management

Commercial

1950.

-

.

-

have,

beginning of the New Deal,

very

American
chivved

business

and

hamstrung, to

it is

competing in

and the

blamed

the

very

obstacle race,

much

if

distinguishing

Directors

and J.

point where

a

an

been

harassed

in the street

man

trouble

has

badgered,

and

of

Edgar Hoover's

cannot

he

has

between

General

Motors

current list

of public enemies.

The

shameless demagoguery of

the

government's attitude toward
business
and big business es¬
—

pecially—is well illustrated by
from

passage

a

a

statement '.made

by Ben Fairless, President of The
United
Mr.

States

Steel

Corporation.

Fairless, who knows

is to be

what

it

a

government target, was
appearing before the Subcommit¬
tee on the

Study of Monopoly of*

The

House

Committee

the

on

Judiciary. I quote Mr. Fairless:
"It

was
war

only

a

few

years

ago—

years—that the govern¬

ment

gloried in the size of its
industrial
giants
and
honored
them for doing successfully the
giant tasks—that our national se¬

curity

demanded.

Na¬
Re¬

called

Companies, Inc., New York City,

men

all the predatory instincts
pack of coyotes. From the

single-handed, all
tions put together.

Fi¬

the

high

degree, is that big busi¬
facto bad, and that

It

called

United States Steel to
by Dean McCarthy before

of

se,
a

be

and

men,

Messiahs

ipso

practical

in the

created equal.

the

Business
A

economic

only
trouble
with
that
theory is that it has not worked.

the

V.

for

minded with the Russians as
they
have always been with the rest of

to it that Russia be¬

see

*An address

Chronicle)

I,

Demagoguery in Attitude Toward

can

With

troops to Korea if

consistently

tion for Communist world domin¬

reconcile

to

Edgerton, Wykoff

soft-headed.

persuasive arts of American diplo¬
macy, give up his driving ambi¬

pants

J. F.

have

only soft¬

magical halftruth, "The Only Thing We Have

terms, between two political
philosophies that not only have
nothing in common, but also are

With McDaniel Lewis

but

appease¬

We

not

are

gold; that Stalin had within him
the makings of an eagle
scout, and
that if he were properly handled
he would prove susceptible to the

any

(Special

we

cannot help wondering if we
would have had to send American

a

Foreign Policy

the

policy of

backfired.

the Russian situation because
it is

relations, until just recently
theory has been that beneath

the

has

one,

their

are

there

namely,

reduce

McCarthy

to

of

the

from future income.
It reduces
the immediate effective
monetary

demand

E.

The

In the

of

agricultural

like

James

to

a zeal and
singleness of
that is worthy of devotion

the

diplomatic air

our

Our

ears.

hearted,

and

—

harmony is allno-give—if, and for as
they can get away with

proved that

purpose

came

Correction

was

right direction, namely 1:

ment bonds to the

lives

as,

ment

and

consequently
our

fortunes

long

our

them¬
—

and

castles have tumbled down around

com¬

mitted

selves

international

take

it. Now at last

e r s

tional

Henry Warner Wire to
Ames, Emerich & Go.

fol¬

vigorous and

The

ad

First,

would

courageous anti-inflation program
not

e

family of nations.

leaders

a

of

omy.

for oppos¬

now.

political

our

1

have

econ¬

The Right Approach

These

nism; and that the Politburo's idea

politi¬

our

cal

program,

the

will is

with

the hard way that there is
nothing
normal
about
Russian
Commu¬

them with

anti-inflation

providing

Normally, the relationships be¬

mat¬

no

ter:

that it

successful

very

gross un¬

But

price-fix¬

discourages the hope
be

untenable

is

the

tween nations are on a give-andtake basis. But we chose to learn

are

are
a

mistake, if ever we made one.
It cropped up again in
Yalta, and
still again in the
temporizing and

fumbling that brought us to
threshold of World War III.

sense

they

nition of the U.S.S.R. back in 1933
—a

to

derstatement.

Past experience with
could

familiar.

foolhardy. To
say that they

effects, new
increases should be kept to

absolute minimum.

p

common

that

painfully

so

1 etely

c o m

income-raising

ing

run

counter

cut substan¬

be

become

They

for

programs

secur¬

are

have

the

view

to

seem

by
Expenditures

sup¬

reasons.

have

in

cut

Also, because of their cost

wage
an

Con¬

available

be sup¬

program

and contends social

economy

destroying independence of individual. Denies as¬
sumption that only the bureaucrat knows what is best for
people, and calls attention to inconsistency of excess profits
taxes, while urging greater defense production.

of

use

spending

social welfare

new

tially.

cut

goods, I
cannot
see
rationing producing
(5) Priorities
and
allocation
anything but widespread black
markets, just as prohibition controls, to be used when and if
necessary.
yielded bootlegging.
Higher taxes directly
reduce
Fourth, with price control and civilian
spending power.
They
rationing found lacking, there will
simultaneously
help
finance
the
he a growing demand
for complete
necessary
military
expenditures
and sweeping regimentation and
of
the
government.
Tighter
policing of the economy. This is
credit restrictions prevent
buying
the true logic of price control.
in the present
through borrowing
Like

thing

the

sharp

a

could and should

the

sizes and colors would not.

a

Third, with price control found
wanting, there will he a hue and
cry for extended
control—specifi¬

showing

re¬

agriculture, housing, public works
and

This

war.

be

would

sizes

would

attending

all-out war ended, we saw
mushrooming of favoritism.

cally

the least profitable.

last approval

The

discouraging

questions.

produce
items
and

by

nondefense

partial

a

found, and this is

certain

These

war gave us

items

program

government.

economic

face of

while pillow cases would not.

port

long-time

total

the

profitable
on

bedsheets

Shall

to

by

in

thetical example, that an item like

are scarce, the question
gets the limited supplies

able

too

military production
Therefore, I would add

plemented

I

wear

businessmen

sumers

arises.

favorable

taking

These measures should

do

now.

rather

would

happened in the last

of who

line?

Russia

III

helpless in the face of such

Second, primary reliance on
price control will create new and
dangerous evils,
like
wearying
of

and

War

weary
the American
This weariness would be

result,

civilian

lines

would
were

our

the above

to

nation's

critical

Dean McCarthy recounts economic and
political errors in our
foreign and domestic policies which are now ripping the seams
that hold together our sound national
economy.
Criticizes

be

the use
indicate

these

Dean, College of Commerce, University of Notre
Dame,
South Bend, Ind.

sup¬

the

powers

,

of

program.

Fifth, price control upsets in¬
price relationships.
As a

increase in

If

for

any

However,

consumers

quired in

ternal

an

voritism

point

situation.

most

more

that
much

and

of infla-

is

China

think

controls

not

o n

original

required

these

would

powers

guarantee

Economy

'

and

World

want

people.

causes.

cause

wage

guaranteed

in¬

of

flation,

of

impact. This is partially rec¬
ognized in the existing standby
legislation which requires simul¬

not

control

the

to

rearmament.

of

Communist

rea¬

sons:

First,

from

0! Our

By JAMES E. McCARTHY*

sumptuary, perhaps excise, taxes.
These taxes would be selective,
Such
since they
would be aimed at
unavoidable in a total war.
It
At the risk of some over-simpli¬
civilian
purchases
of
could be destructive without the reducing
emotional pressures which accom¬ just those items using materials fication, I am going to state a few
required by the military.
hypotheses with which you and I
pany such a war.
I assume that

thing.

agree.

rections

allocation

and

in all di¬

move

Ripping the Seams

price controls.
regimentation is probably

cannot

are

to

mortgaging

available

of inflation through

manpower

taneous

-

price

control

and

would

it proceeds,
future
in¬

as

supply of such commodi¬
ties, thus helping effectively to
hold their prices down.
Priorities

monetary policy, taxation, and sales of govt, bonds to public.
Inflation

rearming

market

including rationing; (4) it would distort production; and (5)
governmentally set maximum.prices tend to become minimum
on roots

I would
it

because

comes.
Sales of agricultural sur¬
pluses by the Commodity Credit
Corporation would increase the

Finance, N. Y. U.

the following grounds:
(1) it attacks effects not the causes of inflation; (2) it would
create new evils;
(3) it would lead to further controls,

prices. Instead, advocates action

taxing

Thursday, November 23, 1950

...

upon

our

Axis

We did

giant

Continued

upon

outproduce,

the

on

Na¬

so.

It

research

page

37

Number 4962

Volume 172

.

.

.

with first

Our Need for Gold Standard

less than

section of the voting

one

a

perverted way meant their future
opportunity. They evidently per¬
suaded Roosevelt to go off the

from the time he

year

made those statements.

public and then another at the ex¬

You have

that despite that

seen

of the public purse. It was
and in times of peace,
an unseen and unvoted tax pledge
upon
all those who have relied America went off the gold stand¬
ard
March
9, 1933.
Wittingly or
upon the dollar, in forms of sav¬
ings payable in dollars such as unwittingly it followed the Com¬
munist
plan
and
reported
advice
savings bank deposits, life insur¬
of Lenin as to the best way to
ance, endowment policies, pension
agreements, savings bonds, pre¬ weaken a capitalistic country.

pense

In

War Economy

a

President, Kennametal Inc.

Standard League

National Chairman, The Gold
'

tricked into going off the gold standard/'
denounces Gold Reserve Act of 1934, and urges

Maintaining "we
Mr. McKenna

Americans regain

feather

down¬

stairs!

In

the

o w

i ng

hope
is

deny

to

and plant

of-'■■■

silly

been
do

to

and which it

in

so

M. McKenna

Philip

time of peace.

is

allow

to

taken

such

savings

that

gerously stupid as it would be to
collect all the micrometers from

work

The sit-down strike

public

lowered, because of
inefficiency of motivation by

published May 27, 1943, in the

agree

reported to have said, there is no
no

surer,

icle."

"Money is a tool
a

by which evaluation of alternate
courses
of action can be accom¬

mankind is without a
The industrialist
asks, for instance, should I replace

plished,

guiding compass.

by

srsu sasr &
engineer to make an equa¬
tion.
Into this equation go the
cost

hours

of

work

of persons

at the

rates of pay to which
training and other con¬
siderations entitle them;
the
amounts of materials, electricity
varying

their skill,

of

instead

gas

for instance, or a

weight of cast iron for a
weight of higher priced

larger

subtler way of weaken-

which mankind

Without this in¬
common denominator

has found useful.

vention of

For Lenin is

America for defeat.

smaller

steel; and the labor and skill re¬
quired to make the changes.
The
farmer asks does it pay to grow
corn
on
this field and feed it to

to

and

other Eu¬

competent

to play

continue

to

as

That's why I'm here

sia's hands.
tell

into Rus¬

about it tonight.
"In
vain the fowler spreads his net in
to

you

The American

sight of the bird!"

»ms
tames
lid.
When •*
in
repose,
a
filmy,
inner eyelid covers
But when alerted or in

transparent
his eye.

flight the eagle draws up that
slight obstacle to keen vision, and
sees with his naked eye with a far-

seen

many

strange

happenings during your lifetime.
Our
eyes
behold a Presidential

-didate
a

I don't believe Americans will be so stupid
debauch the currency.

have

You

w=g theTe^n"on

platform pledged to economy in

Public

the

Federal

ing

especially

read to you

1932.

of

from the campaign

F.

D.

On July 30,

the late B. M.

people had been
period of nearly a

a

with

years,

which

during

War,

or

computa¬
wise conduct of
business, industry and agriculture,
and

accuracy

of these

said, "Let

Reserve

resented.

Paper

deemed in coin of the standard of

banks

stroyed.

nation

the

rendered

is apt to

be

impotent and unable to

defend itself.
"When the

normal functions of

inhibited by laws, and
restraints are put upon the use of
money are

for facilitating exchanges
and services the country
as
a
whole loses efficiency, because a clumsy barter method or
the like must be employed
inmoney

of goods

stead. By
in

whole

alter the

doing away with money,
or

in

part,

we

do

not

underlying motivation of

You
as

men

fortunate, gentlemen,
who must understand and

are

with

deal

money,

as

professional

accountants, that you have lived
in

a

time when you have had op¬

with

calm

incre¬

the people of Europe,
in France.
Our own
people did not hoard gold. In one
among

♦An

the

address

National

by

Mr.

McKenna before
of
Cost
Ac¬

Association

Mich., Sept. 21, 1950.




was

namely gold
The

people

at $20.67

ounce.

an

were

clipping Kings, by James II in Ireland

and

by the French Revolu¬

tionists with their assignat money.

Macauley, the British historian,

hoarding of gold was $5,000.
In
another, one of the largest, it was
less than $100,000.
The total for

had

all

ing the confidence and good-will

us

policy of the Republican leaders

Federal

less

Reserve

than $20

$6 million

districts

was

million and of this

to say

II

James

about

in

similar act by

a

"It is remark¬

1689,

able that, while the King was los¬
the Irish

of

accounted for by defending

was

Commons

against

by faintly

institution

one

quarter,

who

volved, not domestic hoarding, but

erty, he

managed to lay aside a few dol¬

hoarding by domestic agencies of
foreign concerns. The second for¬
eign run on our gold came in the

quarter, attacking that institution

.

r™

_

a"'st
concerns

my

you

friends,

•

with

the

in

them

two known transactions which in-

•

•

of

prop¬

himself, in another

was

violence if

a

possible,
theirs.
He

reckless^ than

more
soon

nied

by those in position to deny
it, that domestic hoarding became

of

late

the

Lord

J.

M.

from going off the gold stand¬

ard.

This,

the part

that pleased them, to

.

.

as

of

poverty

^

_

bodied

was."

those securities

in

^

in

"The

the Treasury
was
the necessary effect of the
has been shown
a factor in January and February
poverty of the country, a public
since, was a libel on the credit of
the United States.
No adequate of 1933.
The President-elect had prosperity could be restored only
answer was made to the magnifirefused to cooperate with Pres- by the restoration of private prosident Hoover during the interim perity;
cent philippic of Carter Glass the
and
private
prosperity
other night which showed how from November to March 4, 1933. could be restored only by years of
There
was growing concern in the
false was that assertion.
And I
peace and security.
James was

ago

minds of the Democratic Congres-

sional
advice

leaders

he

to

as

the

kind

of

getting and

as to
getting advice
in a foot¬
note, "I learned this in conversa-

the

was

people he

from.

was

Anderson

says

tions with several of the Demol-L
4
1
J
4
T
^*1 "t'.'l »L
cratic
leaders in January and Feb¬
Keynes.
These
theories were dubious as the President of the
ruary.
One of the members of the
United
States
(Hoover) claims it
seized upon by politicians, at least
ories

n

J. "L*.

i.

A

Later in that

same

was
«

£

as
^

speech

/I V»

1 /-.

An

rt wn

v\

Brain Trust told

n

me

absurd
there

enough

was a

imagine

that

speedy and effi¬

He could, he

ceived, at

extricate himself
difficulties by

from

his

once,

the simple process of

farthing

con¬

financial

a

n

in January or

to

more

cacious remedy.

calling

a

shilling.
The right of
-»
i
I
11
A<I
undoubtedly a flower

coinage was

of

the prerogative;
and, in hite
view, the right of coining included
the right of debasing the coin.

required to be redeemed in any-

Roosevelt said, "The Democratic early February of 1933 that he
was one of the four men who were
Pots, pans, knockers of doors;
platform specifically declared 'We
advocate a sound currency to be running the Government of the pieces of ordnance which had long
United States in the incapacity of been past use, were carried to the
prescribed at all hazards.' That is
President Hoover and the absence mint.
In a short time, lumps of
plain English. In discussing this
basic
metal, nominally worth
platform on July 30, 1932, I said, of President - elect Roosevelt. I

thing of any specified value, thus
letting them issue promises which

'Sound money is an international
necessity not a domestic consid-

indulge in deficit financing made

possible by diluting the currency
and expanding bond issues.
That
became possible only after 1933,
when our currency was no longer

discounted his statement but could
not

entirely disregard it."

We

now

realize, from the reve-

they cannot redeem and do not in- eration
for one nation alone.' In
other words, I want to see sound lations of historians of those years,
to redeem,
that there were many communists
~ii

Since then

we

have had deficits

in 15 out of 17 years and

in the 2

money

iun

in all the world

Certainly

we

a million sterling, intrin¬
sically worth about a sixtieth of

nearly

that sum, were in

circulation.

A

declared these pieces

royai edict

»

Americans

who

in strategic places, men who believed

that

Communism

was

the

.

*°

,

,

.

,

,

.

„

*eSal tender in all cases

whatever.

A

mortgage

for

it elected a President on that platcoming thing. What is more natu- thousand pounds was cleared off
form did not give any mandate io
was by inadvertance.
ral than that they should aid that
_
.
to
ensure
him to foist the curse of irredeemcould
spend
money
trend, which they thought in some
Continued on page lo
their re-elections by buying favor able paper money upon us within

years

we

had

small

surpluses

Thus they

countants, Detroit,

which

fineness

and

standard of money since 1837,

our

Federal Reserve district the total

portunity to observe and experi¬
ing tool, money, may lose our ence nearly a complete cycle in
country
actual man hours and monetary theory, from that of the
might add, Senator Glass made a
physical goods. To destroy a large orthodox gold standard prevalent
the civilized
world devastating challenge that no re¬
animal
it is only necessary
to throughout
strike certain brain centers with prior to 1913, through the period sponsible government would have
sold to the country securities pay¬
a
bullet, and the animal dies be¬ of toying with the idea of money
based upon index numbers, to the able in gold if he knew that the
cause its faculty of coordination is
destroyed. Similarly, when an im¬ brilliantly expressed but false the¬ promise, yes the covenant, emportant economic principle, nor¬
mally guiding and coordinating
the activity of a nation, is de¬

both

currency,

gold certificates and Federal Re¬
serve notes, were unfailingly re¬

Spring of 1932.
Our gold mone¬ found that no money came into his
The cause was suffi¬
tary stock dropped over $450 mil¬ Exchequer.
lion between the end of March ciently obvious.
Trade was at an
Americans to take off that film
1932 and June 1932.
We met this end.
Floating capital had been
cial solvency and integrity, were
which obscures our sight and take
withdrawn in great masses from
told
in
blunt language
in Des withdrawal without any shock at
a good look at our present mone¬
the island.
Of the fixed capital
Moines, Iowa by the President all," says B. M. Anderson.
tary policy, how it came about
It was not until rumors regard¬ much had been destroyed, the rest
(then Hoover) how close an es¬
and what we must do to correct it.
was lying idle.
cape the country had some months ing Roosevelt's gold policy, unde-

the measur¬

and how distortion of

United

in

Roosevelt

lar for a rainy day."
And on No¬
sighted vision which is character¬ vember 4, 1932, only four days be¬
istic of the eagle.
I am here to¬ fore election
day, he said, "The
night as head of the Gold Stand¬ businessmen of this country, bat¬
ard League, to alert you and all
tling hard to maintain their finan¬

sell it for

tions required for

time

with the gold which it rep¬

mous

.

should I grow wheat and
making flour. The poli¬
tician is not aware of the nicety
hogs,

minor ex¬

a

ception during and after the Civil

1932 at Albany

have tlie courage
to stop borrowing to meet contin¬
uing deficits.
Stop the deficits.
Let us have courage to reverse the

he

nurtured in

Welfare,"

shock

nance

government and mainte¬
of the gold standard.
Let

speeches

The American

like the Amer¬
dulity. Our whole financial tradi¬ ican Indians, who never having
tion rested on the principle that been exposed to white man's dis¬
we
would pay
gold.
G r o v e r eases were decimated by measles,
Cleveland in
the middle
1890's small-pox and other diseases from
had defended our currency with foreign shores. The American peo¬
gold payments under much more ple had developed no resistance to
adverse conditions.
During this the age-old disease of monetary
foreign run on gold,
domestic inflation, practiced by tyrants of
hoarding of gold in the United many ages, from the times of Nero
States was absolutely negligible. and other tyrant Roman emperors,
There was a great deal of hoard- through the Middle Ages by coin¬
the

Federal

me

conse¬

ex¬

Standard for Century

S.

U.

be

can

weight

servers

France

and

"Commercial & Financial Chron¬

Gold

as

1931, when England abandoned
the gold standard.
"The country

countries,

met

was

plained

ob¬

in

ropean

barter!"

and

resented
follows.

promptly

that Russia would
resistance to military

rencies

action. France had been weakened

shops

on

turn

to

States currency had been synony¬

forbid their
by debauching the currency
Our
present
danger is from
use, under the guise that there is
Communist
Russia.
You
may
be
Sfitze^!
""weakened by mona war on and we can't permit ac¬
etary inflation, presents a tougher
curate measurments going on in sure that they depend upon the
obtsacle.
weakening effect of the use of
time of war!
irredeemable paper money,
the
Tricked into Going off Gold
Let
me
read
to you what I
Standard
wrote over seven years ago.
It only kind we have now, to soften
machine

citizens

comply,

how un¬
necessary it had been for America
to go off the gold standard.
We
had
successfully
withstood the
first
foreign run on the
gold
of the United States in September

the

class,, the

little

peo¬

all gold
coins, gold or gold certificates into
the Treasury.
That such an act
of
arbitrary
tyranny
was
not

"Economics and

book

Congress,

imprisonment

or

to

required

were

hundred

You may read in

fine

of

failure

for

November

ultimate

its

of

Anderson's

the restoration of sound cur¬

find

had

penalty

quences.

saving people.
Today, despite the expenditure
of Marshall plan dollars, but with¬
out

in

Policy

March 9, 1933, in

on

ple.
Very speedily, April 5, this
authority was invoked.
Under

of

Committee

National

rate

tificates in the hands of the

advise
the
President
against that action and inform the

Monetary inflation was at
in France to weaken the

middle

qualified

Monetary
1933,
to

began in France from whence it
came
to
Detroit as a tactic in

of living are
the

omists'

during that process commu¬
weakening

1936.

the

the
monetary

majority

by

given the
President to do pretty much as he
saw
fit
regarding
money
and
banking, including authority for
the seizing of gold and gold cer¬

economists had formed the Econ¬

coincidence

mere

off

made

a hastily adopted Act of
blanket authority was

an

advocates

its

as

The

country's

of

since

inflation

by

no

that country.

profits.

monetary

is

out

claimed.

nistic ideas flourished,

is deemed impolitic

as

It

1914.

went

try

to

Inciden¬

the early
Mussolini and

among

was

At any

mira-

a

We

standard

work

of the value

99%

have

wonder that our standards

Small

dan¬

as

machinery

$450

log-rolling politicians

In France,

to

at

it

moves

experi¬
ment in times of peace, when it
was alleged our problem was too
many
goods at prices too low.
That experiment was abandoned
January 30, 1934, when it failed to

$1,000

buy only what
would have bought then.

facilities they will acquire

tional

man.

free

gold

when paid off

will

today

after the war. Log-roll¬

A

savers.

bond bought in 1940

producers induced to accept in
lieu of monetary profits the addi¬

war

has

managers

such

of

values

goods necessary to fight the
an equal amount of goods in
value must also be ordered and

in time

money

of

of half of the

in the taking away

war

of -sound

•use

the small saver who

we are

taking it

country

Hitler.

In

now?

soon

struggle

Already since 1940 it has resulted

the

the

America

fell upon

ing of all sorts takes place.
In¬
stead of having to produce only

of

people

corporation

control of the acquired

'to
the'

•

It

tally,

for

Communism.

a

for

over

and threat of war,

war

the most effective step to

was

prepare

the coming
disadvantage
without that necessary implement

very

watering milk.

as

a

said

the gold standard return

see

in time of

by

dishonest

as

expand facilities with government
money, with the unstated but real
motivation that they shall have

that

gerous

industry is
are found to

induce

dan-

as

in

frowned upon, means

to

show you

since mone¬

war

cle to

of

perforce has to make his invest¬
ments
in
such
simple
forms.

For example,

profit

tary

minutes

forty

It

the

form.

Would it be too much of

all

of

the
insidious
of monetary inflation. It

savings

is

sibility of gain.
Exchange simply
takes another and often wasteful

pil¬

lows

11

win¬

bonds

and

took from the value

processes

is the pos¬

individual which

the

people frantically throw the

plate glass mirrors out of the
dows
and
carefully
carry

it

such

the right to own and circulate gold coins.

When there is a fire in a house
some

I

It

and continuous
Treasury deficits as due to lack of gold coin standard. Says
gold standard will make cost of war substantially less.

*

o

stocks

sorts.

depreciation of dollar's purchasing power

Cites

f

ferred

were

had

standard, which Lenin

gold

really

By PHILIP M. McKENNA*

17

(1993)

The Commercial and Financial Chronicle

18; (1994)

The Commercial and Financial Chronicle

Continued

jrom

17

page

.

.

Thursday, November 23, 1950

.

bank

can
have its claims against
Treasury redeemed but the
citizen, whose gold it

the

American

Canadian Securities

Onr Need for Gold Standard

By WILLIAM J. McKAY
Since

Canada

geous step of

market,

cur¬

level in

own

fortune

one

far

so

dress

coura¬

permitting her

find its

rency to

free

the

took

has

Governor of the Bank of Canada,

by

old kettles.

Canadian

curities

economic and

counted

con¬

by

wisdom

the official

of
the
exchange move.
signing of the U. S.-Canadian

lasting

stability
The

to

Candian

likewise

rent

evidence

of

towards

the

further

gave

the

cur¬

Canada's
chronic
imbalance
trade with the United States.

of

While

ulative

holdings

creased

since

even

total

has

from

ere

the

not

were

vast

to

that

ilmenite

Corporation

tSorel

separation

from
new

of

for

plant

of

kind

would

in

the

world

that

appear

Canada

it

will

shortly replace India as the lead¬
ing supplier of titanium ore, the
.source

of

the

titanium.

wonder

new

Yet

another

which reflects

news

metal

item

of

favorably

on

the

Canadian economic situation
is the recent report from
officials
of the
International Pipe
Line
Co., that Alberta oil crossed the

international border

Edmonton,
reach

is

route from

expected

to

Superior, Wisconsin, at the

end of the

It is

that

and

en

month.

hardly surprising therefore

the

dollar

trend

of

has. been

ruptly

upward

mitted

to

find

the

Canadian

almost

since
its

it

own

uninterwas

vide

developments

sufficient

con¬

and
pro¬

for

the

liquidation of

theheavy U. S. speculative posi¬
tions

in

Canadian

Dominion
vealed

in

internal
the

dollars

bonds.

recent

is

It

As

previously
powerful

a

of

course

mentioned

exports

also

soon

influence

the

advent of the

ter,

dollar.

on

With

from

the

requirements, tend

and

As

re¬

Toronto

ad-

rise.

Canada

season, will
the .other side
of

ledger during the

dur¬
ap¬

the

winter.

It
is probable
also
that
the
anticipated results of the U. S.¬

view

of'recent
south

the

border:

The

pos¬

sibly provides
in

the

wind.

proval
to

significant straw
Congressional ap¬

a

will

be

required in order
practical effect to the

give

agreement, but as a consequence
of the trend of the
recent election
results it is certain that

foreign
spending will be subject to closer
scrutiny. The conclusion is reached
therefore that in the period im¬
ahead

the

when

rometer has

the

economic

been set

pathy

with

;!:

the

somewhat

corporate-arbitrage
to

hand

7%.

new

incorporated

easier

New York 5, N. Y.

industrial

tric,

1-1045

Boston 9, Mass.




and

Acadia

oils

to

dis¬

and
reached by
base-metal

Packers,

Elec¬

-Asbestos

Consolidated

International

Nickel,

Uranium, and Cobalt

Lode

notably in demand. Western

following their

led by

a

recent

sinking

disposition to rally

Anglo-Canadian,

Petroleums,
Golds

the

sharply

General

Corporation,

spell showed
Fifty Congress Street

were

Canadian

Canada

were

on

resiliency

high levels

Smelters,

Two Wall Street

strengthened

Stocks

groups.

A.E. Ames & Co.

rate

continued
remarkable

play
the

NY

consistently

tendency of the dollar and the
persistent decline of the
govern¬
ment bond market in
Canada. The
other

WORTH 4-2400'

ba¬

the bond market but
the internals
were inclined to
weaken in sym¬

CANADIAN STOCKS

fused

the

rested

fore

base

money

cursed

Provost

them,

Marshal,

and

Federated

Central

Leduc.

the other hand continued
their recent
persistent decline.
on

At

threatening to
own
doors,

hang
soon

sion

resistance.

or

on

a

minds

of

the

of the brass money.

"There

be

can

.

.

.

question that

no

James in thus altering, by his own

authority,

the

terms

all

of

the

contracts in the

kingdom assumed
power which belonged only to
the
whole
legislature.
Yet the
a

Commons
was

did
no

not

remonstrate.

however

power,

un¬

not

I may say

have

parenthetically that I

noted

in

the

meetings

citizens in the United
rise in protest against

irredeemable

our

present

system that
proportion of them

very large
have names

that

States who

money

a

Scotch

indicating Irish and

descent.

-

Macauley

You

have

in 1933.

gold

of

Federal

money

giving up a $20
containing nearly an

gold

handed

was

Reserve

note

$20

a

which

was

not

promised to be made good in
anything of any particular value.
Then began
an
experiment for
which the Administration found

colorable authority in the advice
of the late Professor
Warren of
Cornell.
The latter was an
agri¬
cultural economist and
was
not

especially qualified in the field of
monetary policy.
His idea was
that

prices generally, and espe¬
cially agriculture prices, were too
low and
that

was

that
to

the

way

increase

to remedy

the

price of

gold.

had

gold

been

and Mor-

been

arbitrarily
ments

correct,

altering

the

between free

the United States
by

tyrannical ukase.

they

men

were

agree¬

and

the

all

over

as

the

70

to 80 members of the
Economists'
National Committee on
Monetary

Policy had

correctly

doesn't work that

foretold,
quickly.

it

ty. prices

showed

an

went

such

the

as

The

to

on

increase

of

As

accountants, and therefore
capable of analyzing money

men

into

its

various

hardly remind
ments

the

for

I need

:

of the require-

,

sound

needs

practical

functions,

you

of

money to meet
free people.
For

a

,

they are first as
exchange for day to
day transactions, second as a repurposes

.

medium of

.

liable standard for deferred trans¬

fourth

as

asset

as

store

a

of

value,

for

reserves

a

cen¬

tral

banking system and fifth for
use in foreign exchange.
Collec¬
tively these five requirements of
money

important

are

of the most

one

of

means

new

N.R.A-.

thought will show
all

not

that since

you

transactions

>

done

are

si¬

multaneously injustice may occur
if it deteriorates rapidly in purchasing power.
In Germany in
1922 and

flation

.

1923 when the rate of in¬

increased

rapidly,

work¬

demanded their pay daily, in
order
that
their
wives
could

men

A.A.A.

a

cessful.
It gave the
Treasury a
profit of $2,806 million by merely

writing
which

the value of the gold
had in the Treasury

up

when I went into Germany
September 1922 read "multiply
reading by 160" and a week later
rode

'*

in

read

"multiply

/

240."
The
amount of postage stamps required
and what they had
bought, plus
was
uncertain
and
what
changed frethey had taken in under
threat of fine or
imprisonment quently. From China, just before
it
fell
to
the
from
the citizens
Communists, I re¬
at
$20.67
an
ceived a letter by air mail having
ounce
nine months earlier.
The
three
$5,000
stamps
on it.
Many
$2.8 billion could be spent by the
Administration for purposes which coin vending machines have be¬
they

would

its

ensure

popularity with

large segments of voters despite
the fact that had the voters been

asked,, through
tives

in

Congress,

taxes

for

would

not

to

submit

to

they

purposes

been

allowed

to

nickel.

a

Gold

It

contained

Reserve

the

of

provision

President

might

content

the

of

Act

that

alter

dollar

1934

the

the

gold

further

but

that provision expired in 1943 and
after consideration

by

not

was

the

further

dollar

grains

of

is

defined

gold

Thus

15-5/21

as

9/10ths

fine,

or

l/35th

of an ounce of gold, and
has been fixed at that now for 16

Fixity of weight of pre¬
cious metal in the unit of value is
years.

a

prime

requisite

peal the
ican

of

reliable

a

But, they forgot to

currency.

laws

citizens

re¬

prohibiting Amer^
from

owning gold
gold coins/enacted April 5,
1933, in an alleged emergency.

and

a

longer satisfactory

is

demand

<v

media

as

for

the

second

namely for

actions,

use

that

gross

chaos results

when

is

money

used

slowly.

even

live

.

injustice

printing
promises

impossible without

20

men

a

fixed stand¬

those necessary trans-

mean

;

which

in

vanced

and
press

deteriorates

and

The

,

in modern days become

by,

ard. I

function

must
perform,
in deferred trans¬

money

Congress actions

extended.

There is

of exchange for small transactions.

which

The

•<,

coining of lxkc and 12V^c v..
coins, because the nickel and dime

have the money.
Fixed Gold Standard Requisite for
Sound Currency

•

they cannot

the

are no

such

have

representa¬

•

be redesigned to take a coin other
than
for

their

by

obsolete because

come

money
is ad'-'
be paid back in 10

to

now

Everyone having a
life
insurance,
endowment
policies,
pensions,
savings bonds, or other types of
or-

years.

savings

account,

bonds

or
preferred stocks have
large portions of their value taken

from them
of

esses

In

by the insidious

v

inflation.

monetary

modern

,

proc-

France

for instance

;

since 1914 those who trusted such

■;

forms of savings have lost 98% of

j

their

value

in

terms

of

the

gold
present system we standard: It is generally the small
make good to
foreigners, through savers upon whom loss by moneforeign central banks, demands tary inflation falls most heavily,
upon our Treasury in gold at $35 namely
the
wage
earner,
the

of

September, Gui- widow, and the children

the

deputies that
from

Italian

he

America

tons

of gold, nearly
from the American

finance

chamber

had

brought

116.2

metric

$200 million,

Treasury.

was

that

$25

last

newspaper

sent to

■

;

,

Last

minister, told the Italian
back

y

the

me

in

rived from America.

limited

gold
to

.

gold

had

as

The

ar¬

The present

bullion

also

gold standard.

savings
vided

and

insurance.

the

as

the

standard,

limping

foreign central

for whom
were

by those who sought to pro¬
They are not politically

their

and

losses

generally

in

silence.

,,

pro-

tect them.

effective

..

suffer

The

,

1

ter-

rible temptation to seize, bit by
bit, the collectively enormous sav¬

headlining the fact ings of the defenseless

million

referred

An

winter

system has been designated

From
the
January-February
level in 1933, wholesale commodi¬

standard of value of gold and gold
coins?

spend the money the next day,
cynical political sense, the before prices went up. The taxi¬
experiment had been highly suc¬ meter of the taxicab in which I
In

arbitrary and Egyptian

But

foreign

Why must the American people
regain that elementary freedom,
the right to have and circulate our

sound

the dollar which

as

experiments

Pella,

nonchalantly
chose
arbitrary
lucky numbers. If Warren's the¬
had

interest.

experiment

defined since 1837.

genthau met at breakfast, as dis¬
closed in the latter's
diary, and
raised
the
price 'at which the: per ounce.
Treasury would buy gold.
They seppi

ory

that

dollar contained only 59.06%

much

Under

Accordingly Roosevelt

national

rate

stand¬

our

to

ounce,

bankers?

actions, third

up

later, often years
inflation is least de¬

the

in

Administration

done

was

A citizen

piece

ounce

what

seen

go

inflationary

says

the plague of brass
long remembered.

was

of

the

it out at

per

abandoned

new
as

a

Protes¬

but

to

gold dollar at 15-5/21 grains
gold,
nine-tenths
fine.
The
price of gold was fixed at $35.00
per ounce, instead of $20.67.
The

the

tants of Dublin than the plague of

prices

the

at

made

the

of

lasting impres¬

more

the

11

a

under

$35

protecting
January 30, 1934, human liberty.
buying price of gold was
For day to day transactions you
$34.58 and the Gold Reserve Act
may think
that the dollar as a
became
law
January 30,
1934, mere bookkeeping unit of account
which again fixed the
weight of should be satisfactory. But a little

them,

none

that

/'

when the

overcame

Of

out

cause

any

was

ar¬

them

ard,

a

later, when

locked them up in dark cells, and,

by

business

prevailing, devaluation

not

sirable

who

at

swore

serious

effect breaks out

by troopers and carried be¬

the

activity

Monetary economists

immediately

shop in

were

of

pointed

does

city round which twenty or
thirty soldiers were not constantly
prowling.
Some persons who re¬

political develop¬

of

During the week there was little
change in the external section of

'r

baker's

a

plunder the English population."

ments

had

lives.

Canadian Defense
Pooling Agree¬

•-'!

Corporation

not

their

majority

who

By what
government with¬

can a

while paying

January-February lev¬

conditions

of

ment have been
over-estimated in

fair.

Municipal

a

constitutional, which they were
willing Jo concede to him, as
long as he used it to crush and

.

months

Provincial

was

There

Canadian
dollar is likely to be
exposed to
greater strain than
during the past

Government

There

limbs and

deeper

Fur¬

summer

mediately

CANADIAN BONDS

their

the

thermore the tourist traffic, which

on

deem

place anyhow,

production

carrying out

the

Legal redress was
question.
Indeed the

the

plagues of that time

Dominion

to

operates in favor of

pear

of

their

the

value

And that 17%

taken

transactions.

guinea.

a

the

long Canadian win¬

the

to

ex¬

normally decline sharply but im¬
ports, largely on account of fuel

ing the

goods

their

seasonal factor will
ert

off

from

gold

policy of raising the price of gold

walk

the counter

on

have

the

privilege.
belong but

Americans

by their work?

reasoning

had got under way.
Certainly the
extent it would go was not reck¬
oned upon by those

the

also

ment funds.

shop, lay

in

same

individual

hold it from the American citizen

els of 1933 before the end of
July,
which was before the devaluation

prices.
to the

might

36.6%

general

rose

thought themselves
happy, if, by the sacrifice of their
stock and trade, they could re¬

rise

that any further

suppose

would
as

putting

belonged

dominant

of

value of the dollar.

sufferers

invite

per¬

also

reason

curious absence of

to

would

somewhat curt U. S.
rejection of
level. The' the Canadian
aluminum offer

uniformly favorable news
cerning Canadian economic
political

permitted

which

liquidation.

logical to

at

and

be

sharp rise will be discouraged in
order to avoid an abrupt cessation
of the foreign influx of invest¬

iron-ore

titanium-bearing ore. This
$20 million plant is the first

its

will

level

a

wholesale

de¬

posits at Allard Lake, Quebec, will
shortly be moving to the newly
completed Quebec Iron and

Titanium

out

return to parity with the
U. S.
dollar. In view, however, of offi¬
cial cognizance of the extent of
the
speculative
position
over¬

dollar

news

half

the

den flood of good

reduction

this

meet

by

regulating

who

now

carry

in¬

hanging the exchange market, it is
hardly likely that the Canadian

were

bit of brass worth three pence and

spec¬

been

tariff

man

a

to

machination

a

Any

reason

of

project which at last is approach¬
ing its practical stage. If this sud¬
announced

forth

the

into

the

Chancery

themselves

on

heretical

freeing of the
dollar in anticipation of its
early

long-range Quebec-Labrador iron

now

took

caste

that

of

of
Dublin,
who
generally Protestants, were
the greatest losers.
At first, of
course, they raised their demands;
but the
magistrates of the city

political atmosphere
favorable, liquidation will

believe

Court

tradesmen

economic and

to

of

In addition to these
highly en¬
couraging factors recent favorable
publicity has been given to the

enough it is

the

remains

be deferred. There is

favorable

elimination

authorities.

Economy

cording to the devaluationist the¬
ory, should have accompanied
a

creditors who complained

the

the

earned it

17% up to November 25, instead of
increase of 57.7% which, ac¬

were

imposing increase in
reserves.

monetary

October trade fig¬

ures

trend

the

ac¬

propor¬

difficult problem for the Canadian

which gave promise of providing
economy.

this

of

substantial

a

tion held principally south of the
border consequently still poses a

notable event

a

to

that

To whom does the gold

the

told by Fitton to take their money
and begone.
But of all classes,

This large scale exchange posi¬

Defense Pooling Agreement im¬
mediately following the exchange
was

non-residents

for

bag of counters made out of

a

"The

According to Mr.
Towers purchases of Canadian se¬

tion

announcement

reserves

million.

veniently appeared to confirm the
The

exchange

increased in the four months prior
to the freeing of the dollar by

$335

War

a

Towers,

the

certainly favored the brave. Si¬
multaneously with the announce¬
ment of the freeing of the
dollar,
favorable
developments
in
the
political fields

In

Graham

Mr.

of

is, is denied
to

by deficit financing
the U. S. A. than it
for

example, for

may

be

turned

where

taken

a

saver

was

by

trustful

a

in France

government

in

America

people

*

in

greater amount

predatory
the

small

is greater

,

have

1
,

-

;

Volume 172

Number 4962

.

.

.

.

The Commercial and Financial Chronicle

(1995)
$200

over

billion

in

savings

of

that nature.

Already one-half of their collec¬
tive funds has

been

10 years.

past

taken

during

A $1,000

bond

be said of any of the is¬

same

dare not

of irredeemable paper
money

sues

Paper Dollar Has Depreciated

the

the

printed

by

ment

Any

governments

many

resume

of

honest

member

that essential ele¬

financial

of

genuine effort to reduce non-es¬ et must be balanced, who know
policy? sential government spending.
It that this war must be on a PAY

government

our

during all the history of fiat paper in Washington who fears to return
money?
Even if preserved and to
convertibility now on the
legible what would be the value grounds that it might embarrass
of
the
French
assignat paper the Treasury is branding himself
money
of 1794, modern French and the government of which he
paper money of 1914, Italian, Bel¬ is a part as
meriting the distrust
gium, German paper money of of the people of this country.

bought in 1939, when paid off to¬
day, will buy less than $500 would
have bought in groceries at the
time it was trustfully saved.
1913, to say nothing of German
Money which will perform all
The other day it was said Amer¬ marks and Russian rouble paper of the functions I have enumer¬
ica might some day have a trillion money.
ated, has always been based on
dollar
Recently
the
British
national
income
paper gold.
In the past 20 years most
and
the
income be

average

over

$12,000 a
year. In France they actually have

over

trillion

a

franc

national

in¬

and wages are 10 times what

come

pound

was

peated

denials

they
are

of

houses in poor repair and in
tiny

apartments, despite

after

nations have abandoned gold, ex¬

re¬

by
Sir Stafford cept in international transactions,
Cripps, the finance minister, that and
have
substituted
managed
they would devalue British cur¬ currency systems, which is a po¬
rency.

were a generation ago.
But
the people better off?
No, they
live
in
overcrowded
ancient

devalued

Even though U. S. officials

fiscal

wise

responsibility

reiterate

may

similar

like¬

pledges,

what reliance may we place upon
their words when
they do not

will

make

government debt fi¬ AS WE FIGHT
basis, who will
nancing much sounder and easier. support the Gold Standard
Bill,
I need not tell you that govern¬
H.R. 3262, now in committee.
ment bonds under
tem may not

light

of

sell

recent

present sys¬

our

readily in the
experience with
so

the value of World War II bonds.
This

is

not

just

everybody's

problem,

which generally means
one's. It is your problem, and
here are four things you can do
no

to

help:
(1) Tell these facts to others, to
friends

your

and

neighbors,

House

thrift, who believe that

(2)

Buy
time

Support candidates forJ the
and

Senate

who believe in
our

budg¬

bonds and at the

war

fight to

maintain

the

integrity of the dollar by restoring
the gold standard.

(4) Become a member of the
organization I represent. The Gold
Standard League. If this message
is to reach the far

of this

corners

must have

we

help.

your

The

point of no return is very
near, gentlemen. At the end of the
present road is

debts.

The so-called management
in a currency that

to

associates.

your

(3)
same

country,

lite way of saying they resorted to
the printing presses to
pay their
has

19

10£ dollar

a

or

less

'and the ashes of our

liberty and

freedom

the

in

consumed

fires of

inflation.

resulted

or because of
always buys less and less and
make good their words
by re¬ never buys more.
fixing and promises of gov¬
housing during the past deeming the present currency in
During the 150 years our money
the standard which they say they
35 years. More irredeemable
was
exchangeable for gold it is
paper
Santa Fe executive, however, warns any governmental
will maintain, namely that which
change
money and bonds does not assure
significant that we balanced our
defines
the
dollar
as l/35th of an
a state of welfare
weakening our basic industrial economy will thwart objective
budget most of the time. Including
among the peo¬
ounce of gold.
As a practical mat¬ war years the
of creating efficient transportation system. Pleads for
ple.
Quite the contrary — they
average was better
equality
need a fixed standard of value at¬ ter, the denial to American citi¬ than two out of three
years.
We
of treatment for rails in transportation regulation.
zens
of
the
right
to
use
the
tainable practically only by strict
only never went longer than four
years
adherence to the gold standard universally accepted standard of without
In an address before the Trans¬
balancing the budget.
regulatory functions in the execu¬
with currency always convertible value, gold and gold coins, while
In the 17 years we have been portation Section of the American tive branch of
the government,"
still maintaining the fiction that off the
to the citizens.
gold standard we have bal¬ Petroleum
Institute's
National he declared.
we are on the
As
gold
standard,
is
an
anced
the
part
of
your
professional
budget only twice. In Convention at Los Angeles, Cal.,
A single independent commis¬
work you see to it that each man¬ act of tyranny which cannot sur¬ those
17 years the deficits total on
Nov.
15,
sion devoted to development and
vive
without
ufactured item
bringing its own

Railroads Can Meet War Requirements: Gurley

rent

ernment

bears its

the cost of
ment

it

as

cost"

We

has

have

all

discussions

figures

be

"orig¬

outmoded.

listened

to

regarding

to

of

use

become

endless

proper

used

to

cost

replace

equipment

that now costs twice
what it did when installed. Profits
are
overstated and investors are
unable

tell

to

the

true

worth

of

their investment in
The

a
company.
function for which

third

money must serve is for exchange
between persons in at least 105

retribution

vesting

solved

rates

when

of

is

their

readily

know the price

you

of gold in terms of
any currency.
Tyranical governments now try to

resist such free exchange.

stance,

the

British

ernment refuses to

to

women

For in¬

socialist

gov¬

permit English

travel out

of the

coun¬

try wearing customary gold

orna¬

The freedom to

country

ing

is

dependent
to

means

to another

move

hav¬

upon

transfer

values, to

take value with you for a new
start in another land or to
support

yourself there.
does that.
a

The gold standard

If the real objective of

is

government

trade

and

to

civilized

encourage

intercourse

between its people and other
peo¬

ples of the world they can make
it possible by restoring the coin¬
age
and circulation of gold
in
their-

own

country.
That would
permit fruitful exchange instead
of wasteful bulk purchase barter
deals arranged by
clumsy boards
and bureaus.
tween

tries

will

take

restore

we

Revival of trade be¬

peoples of different

place

coun¬

only

when

individual freedom to

gold and to transfer it with¬

own

out let

hindrance.

or

The fourth function of
money is
to provide a store of value for the

individual.

If the

final

valid

en¬

tity in our society is the human
being, as expressed by JudoChristian

a

philosophy

Constitution

our

which

upon

is based,

he has

right to protect himself against

man-made

stroy

or

children.

monsters who may de¬

weaken

him

Experience

and

shows

his
he

cannot
or

rely upon them, come war
revolution or unjust seizure of

powers

such
power.

and eventual collapse of
aggregations
of
political
The citizen who is not

compelled to rely upon the prom¬
ises which they do not redeem
and

do

who

has

a

the

use

to

redeem, but
gold standard,

defense.

Gold
ago

not intend

can

coins

2,000

years

uncovered in North Africa by

weeks
value

later
of

the

store

were

in

accepted

Cairo

gold

a

in




at

a

the

them.

The

reason

deficits

and

for these

their

size

continuing
should

be

paid

the money into a subsistence
farm,
to buy cattle, or even as some
financial advisors recommend, un¬
or

gov¬

ernment.
rose

from

three

bil¬

lion to 27 billion.
Bank deposits
diamonds, postage stamp col¬ rose from 32 billion to over 140
lections, raw metals, and other billion. National debt skyrocketed
goods which retain value.
from
22
billion
to
250
billion.

The

fifth

use

function

of

money is Meanwhile production rose about
reserves for cen¬
1V2 times. Only the miracle of our
Experience shows that ability to produce under the free

asset

as

Fred

G.

ley,

Gur¬

maintenance

President

of

the

Fe

Railway

and

Santa

asserted

that

"Come

Hell

of

port

well

a

coordinated

balanced

system of trans¬

embracing all types

riers

would

make

for

of

car¬

"freedom

from political influence and pres¬

or

sure
of
special interest groups,
stability and continuity of policy,

ring any gov-

and
for decisions reached upon
the merits of every problem after

high wa¬
ter," and bar¬
ernmental

changes

Currency

cut

basic

our

dustrial

t i

o

and

points of view," Gurley

careful

considera¬

Emphasizing the importance of

na-

the railroads to the nation's

rail¬

n's

roads

all

will

in

meet

thorough
tion of all
said.

econ¬

the

omy,

in
in¬

measure

Fred

full

G.

transportation

over¬

Gurley

setup,

said:

Gurley

"When

the

face the harsh reali¬

we

ties

of

and

economical

see more clearly
enterprise system has prevented
than at any other time that our
of complete inflation before now.
economy consists of two basic fac¬
"We have no more important
gold. It is not necessary to have
The manner in which a redeem¬
tors, namely, men and material.
an ounce of
task today than to insure that the
gold for every $35 in able
currency
prevents
unwise
The
test
lor
survival
revolves
redeemable currency outstanding
rules we adopt to govern the con¬
government
spending is simple.
largely around the wise, scientific
duct of our affairs in the new
any more than it is necessary for We had a fractional reserve

fractional

reserves

are

and efficient in the

a

economical

proper use

bank to have at its tellers' win¬

dows

every

the currency

Monday morning all
to pay off all depos¬

sys¬
tem of currency which means that
there was outstanding anywhere
from six to

12 times

as

much

cur¬

in

the unlikely event that
rency and deposits as we had gold
should all demand their to redeem them. As long as the
on that particular day. Life people
had confidence that de¬

they
money

requirements of national security,
national defense and the military.

phase

of

the

cold

war,

or

any

other kind of war, do not
our

destroy
free institutions," Gurley de¬

clared.

"Our fight

against the to¬

talitarian system would defeat it¬
self

if

it

should

lead

into

us

a

insurance companies do not carry
all of the money which would be

posits and currency would not be regimented society."
expanded artificially, most of our
Ability of American industry to
required in the event that all of gold remained in the
Treasury attain government's objectives of
the insured should die in any par¬ and the banks.
large-scale
rearmament coupled
ticular year. Actual experience is
continuation
of
economic
When the government went into with
a good guide in such matters.
debt without approval of the peo¬ assistance and furnishing of mili¬
City architects in Detroit for
ple,
gold started to leave
the tary supplies to friendly nations
example, do not provide enough
banks.
This action, which would of the free world will depend, Mr.
bridges out of the city so that all
destroy our money if continued, Gurley
said, in
great measure
of the automobiles might be ac¬
quickly became known to
the upon the strength of our indus¬
commodated in any single hour.
Treasury
officials
and members of trial economy, he stated.
If an emergency is
encountered
Congress. As a consequence, Con¬
"When we think of that strength,
the authorities may suspend traf¬
gress seldom went into debt ex¬ we
inevitably realize that our
fic except
as
they direct, until
cept during time of war, which
normal
profit and loss system of privately
conditions
may
be re¬ action was
approved
by
the
peo¬
owned
property is the warp and
stored.
The
stopping 1 of specie
ple. As I have mentioned before, woof of our free
way
of life,"
payments
by
the
Treasury on it resulted in a
balanced budget
March 7, 1933, was referred to by
Gurley said. "Change that, and
on an average of over two out of
you
are
on
the
wrong
road at
Secretary of the Treasury Woodin
every three years.
once."
as
a
"suspension of specie pay¬
Congress has been on a 17 year
ments" and specifically described
Some forms of emergency con¬
spree. They have bought their re¬
trol are inevitable in any rearma¬
by him as being only for "the
election
time
after
time
with
time being." Have we had a con¬
ment program, Mr. Gurley related,
printing press money.
Does
it but he
tinual emergency for 17 years?
suggested they "snould be
seem
likely that they will stop
It may surprise you to learn that
kept to a minimum and should be
without compulsion? Does it seem
we have more
retained only long enough to meet
gold in our Treas¬
likely that they will cease to lis¬
ury today, not only absolutely, but
the demands of rare necessity."
ten to the pressure groups — the
relative to the total net outstand¬
"Those
measures
that
would
veterans, the farmers and all the
ing paper currency plus the total
other
groups
who
think
that provide an entering wedge for
of all net bank
balances, than we
altering the basic structure of our
had in 1926 or other years when money grows on trees?
institutions
must
be
entirely
"Our Need For the Gold Stand¬
we
maintained the gold standard
avoided," he warned.
with convertibility to Americans ard in a War Economy" is the
Appealing against "discrimina¬
holding our paper currency. With title of this talk." Those who have
23 V2 billions in gold we have 13% studied
monetary economics are tory" government legislation and
convinced it is a necessity in any subsidies, Gurley urged "fair and
reserves compared to the total of
all currency plus bank
deposits.
In 1926 it was 8.4% and in 1921 as

little

as

7.4% yet we did not find

it necessary
ments as an

to

stop

specie

emergency

in

pay¬

those

years.

minted

American soldiers building

emplacement

a

t

itors

ments.

seeking

back only in
apparent. When the government
currency
of doubtful value, the 'had our gold and would not re¬
thrifty practices by which capital deem our currency, it could
print
is
provided
for
industry slows and spend money to their hearts
down, producing stagnation and desire. The people had lost "The
unemployment. It's safer to put Power of the Purse" to their

ting

currencies

be

to

tral banks.

exchange

economics.

our

from

of value in the normal
way of in¬

for

the

in

Thwarted

trading nations of the world. The
otherwise impossible task of set¬
different

2Va times all the taxes collected in
the previous 154 years.

of

out.

wears

The time honored

inal

share

replacing plant equip¬

Has
cans

the

in

confidence

the

financial

gun

our

few

even

full

than in years when

Can

specie

government fallen
with

reserves

payments

so

50%

we

the

of

Ameri¬

honesty

of

low that

greater

maintained

government

impartial treatment of all
transportation."

economy.

forms

of

war,

we

of

use

these

two

factors.

If, contrary to our devout
wishes, we must fight another war
with
will

Russia

have

supplied

an

both.

the

and

opponent,

we

adversary liberally

with

to

comes
men

as

an

When

economical

material

in

use

it
of

providing

land surface transportation,
nothing equals the railroads."

mass

In view of

already is

a

national debt which

$256 billion, Gur¬
cautioned against "unneces¬
sary outlay of government funds,"
particularly in creation of new
transportation facilities. He sug¬
over

ley

gested instead that
be

given

by

the

attention

more

government

to

keeping the present transporta¬
tion system in running order.
"In the light of the dependence

placed

the railroads during
security requires
that the basic railroad plant must
be in position to meet its obliga¬
tions," he said. "This need is em¬
phasized by the fact that during
upon

national

war,

World War II the railroad

indus¬

try carried

more

organized

military
traffic
90%
of
the

than

more

than 97% of ail
and
war

freight."
"The

railroads

ask

no

monop¬

concluded. "They seek
the removal of the discriminatory
provisions which now abound in
the regulatory law. They ask for
oly,"

the

he

elimination

of

subsidies

to

competing forms of transporta¬
tion, all of which are well past
the developmental stage and are
able

to

stand

on

their

own

feet

without subsidies. They ask that
policy where other forms of transporta¬
Government Spending
can best be assured by committing
tion are allowed the use of pub¬
As I have shown you, we have the administration of promotional
licly
provided
facilities
they
ample gold reserves. We can re¬ as well as regulatory activities should pay a fair user charge suf¬
turn to the gold standard tomor¬ affecting all forms of transporta¬
ficient to pay a just proportionate
row
morning, but Congress will tion to a single independent com¬ part
of
costs
of
construction,
then be under the compulsion to mission reporting directly to Con¬
maintenance, and operation. What
spend our money wisely.
gress," he said.
they ask is for fair • play and
Gold

Standard Will

Reduce

It will make the cost of
nroniahlir

locc

Tf

urill

war

rociilt

"A

apin

a

sound

"There
Hampn+al

transportation

are

deeply

nhipclions

rooted funto

Diacine

equality of treatment for all. They
asK

no

more

The Commercial and Financial Chronicle

20

..

%

is

there

doubt that

no

standing

credit

ment/of

excess

an

be

can

profit tax based on the 1941 Act better appreciated when it is realand subsequent amendments ized that the electric utility induswould have far more serious con- try has the following construction

The Excess Profits Tax

*

7

excess

electrical

tion of

think that we

It is distressing to

of

pact

Taxation and Nationalization

;

profits tax on
utility industry when

the electric
it is only

through equity financing, that is
to say through those securities
of plough back into plant, the elec- which are especially vulnerable
trie utlity industry from relative- to the imposition of excess profits
ly much smaller earnings retained taxes.

Congress

pTv'v;

one

that

had

plagued

us

r.

There

the

dropped in 1942 to 45% of the 1939
base. The same pattern was rethe rate base. The fair return is power which would result from the peated in the present crisis when
sufficient only to cover -interest- imposition of excess profits taxes utility common stocks dropped to
would seriously jeopardize their 85% of the June 23 base on news
on indebtedness and dividends on
stock, and to make a reasonable ability to raise money for the of impending excess profits tax

are

on

company

its

dition.

conse¬

of

Scaff

H.

Harold

is

o n

unsound. It is par¬
ticularly harmful to utilities be¬
cause
of their peculiar economic
and regulatory aspects.
economically

be¬
the in¬
centives for management to con¬
Such

inflationary

is

tax

a

works

it

cause

cient

materials and

of

use

I

effi¬

were

and

the last

tax the decisions
made to spend materials

profits

excess

that

man¬

of you

many

sure

am

recall from the days of

can

because the ulti¬
enterprise was

manpower
cost

mate

the

to

fair

required

15 cents on each
expenditure. Those who
tell us that
it is admin¬

public is

sound
profit

no

to continued growth of

necessary

industry.
If, however,

profits tax to meet clamor

excess

for

to have an

are

we

has

that

one

the

since

arisen

large investment

the

can

greater

pressure

plant for every dollar

once

coupares

of

in

received

with

two

revenue,

four years. This

of

a

following

a

is

1949

The

excess pi

of its tax

slow

turnover

creates

the

off

went

1937

An

of

mains to be

war

seen

in

if

it

Korea,
law

a

can

re¬

a

declines

return

raise

to

particularly heavy burden of Fed¬

pos¬

sibly be written that will provide
workable tax, and one that will

a

be

not

detrimental

too

to

our

eral taxation

from

6%

for

review

to

me

technical

the

provisions of the previous excess

profits tax law, nor the basis of
computing the tax. I am sure
many
of you know more about
that than I do.
I

do

want, however, to review

briefly the peculiar economic and

regulatory aspects of the electric
utility industry and to show, how
these made

in

the

profits

cess

the

last

of the

effect

felt

tax
world

ex¬

severely
Using the

so

war.

experience of the last

period

war

indication, I want to spec¬
the impact of such a tax
today in light of changed condi¬

as

an

ulate

on

tions,

and

what is
the

to

tell

generally

you

being done to
and

that
being

assure

industry's viewpoint is

understood

capital

for

In the first place, state and Fed¬
eral

wide

regulatory commissions have
powers over the privately

owned

the

utilities.

electric

more

important

jurisdiction

over

.

ones

the

Among
the

tric

regulation

because
earnings

nullify

regulatory authorities
provided by the

allowed by

and the methods

be

companies

World

is

really a fictitious capital¬
ization allowing only 50% of the
borrowed

capital

applies

to

the

capital

tax

million

essential

,

will,

many

have

liqui-

been

Company
,

...

...

.

to

Another factor which will ad¬
yu186!^.?- ^
"J-P°S !°^
the utilities is that while substanUal property additions have been

ex-

address

Accounting
Electric
Nov. 9,

by

Mr.

Section of
Exchange, St.

Scaff

before

Thus the

earnings of the indus¬

try are

in

of

the

Southeastern
Petersburg, Fla.,

1950.




all

realized for

estimates,

by the regulatory commission

set
as
a

be

its

reduced

seriousness

The

'

-

Federal

and

will serve only to penalize
the industry, for a major portion

by

40%

of

this impair-

gressive

supervise closely the issuance of
in, details such as the

securities

type of security that

may be is¬
sued, the cost at which it may be
issued to the public, protection to

investors

other

and

features.

Regulatory commissions
anced

with

capital

are

also

the

structure

over-all

:

which reduces the cost

for

Payment of Excess Profits Taxes
Indication

No

istics
of

and

and

the

electric

regulatory

excess

profits

utilities

in

utility paid an

profits tax is by no means
that it was earning an
excessive return. V Under the

evidence

method

computing

of

excess

War II

profits taxes in World

possible
for

for

utility

a

to

it
be

profits tax even

excess

the regulatory commis¬
subcommittee of
the National Association of Rail¬

lowed by

sions.

A special

and Utilities Commissioners

road

profits tax is a war
to yield rev¬

designed

measure
enue.

.

not

do

mination
result

r

a

of

by
enter

a

fair

.

pay

an

than

rate

adequate

an

.

.

into

may

factors

.

a

return.

deter¬

As

may

excess

tax where in fact it is

$769,500
2,035,700

.

.

particular utility

required to

^$1,710,000

__$1,840,900

The amount

.

.

determined

be

which

2,380,900

85.5%

be

$2,805,200

_-.-:_-___________,____$l,840,900

Net Income before Interest

$4,840,900
2,805,200

Expense____$4,840,900
J
1,840,900

Deduct Taxes

Net -Return

eco¬

effect

the
tax

on

last

the
war,

J__$3,000,000

$2,035,700

6%

4.1%

of. Return

Rate

-

a

be

profits

earning less

return

on

its

base."

to

retain

to

excess

able

would be

so

authorities

from

earnings

profits

taxes

small that regulatory

would,

by

one

means

another, bring about a reduc¬
tion of such earnings to eliminate
substantially the excess profits tax

liability
:

'

■

"

"

-

of service

character¬

the

Earnings

Excess
a

excess

subject

money

peculiar

considering

of

The fact that

The amount that utilities would

•

Construction
these

-$4,090,900

'

.

Surtax at 45%_____

Taxes

Total

.

of

1

'

the

public.

view

sys-

Excess Profits Taxes

.'

Excess Profits at

.

In

•

Subject to Normal & Surtax__$4,090,900

Normal and

•

to the

Subject to Excess

*

$4,090,900

___

Tax

Profits

Net Inc.

Income

Net

managed

Normal, Surtax and

Normal {>ncl
Surtax

bal¬

a

of

cost

;

.

,,

or

obtaining

protection of investors and reduc¬

ing

well

and

commissions

state

financial

healthy operating and

condition.

was

etc.,

common

,

Deduct Income

.

1

keep the utility in

necessary to

Likewise, * the coverage of these economies will material- appointed to study the effect of
for debt interest would decrease, ize in the years subsequent to the excess
profits taxes in 1944 on the
which would affect the price on
base period years.
Hence, the utility industry had this to say:
any future sale of debt securities, excess profits tax liability of pro"The excess

long-term
com¬

real-

after

return

profits taxes
considerably below that originally
excess

50%.

to

Taxable

manufacturing

been

of

rate

a

of

payment

though its earnings were greatly
insufficient and below those al¬

According

panies amounted to only 12% of
total capitalization.

of
the

would provide

tric utility industry at the end of
the latest

excess

liable

The average debt ratio to r total
capitalization in the private elec¬

debt

the

The utilities' rapid technological
progress, which has produced substantial economies in steam plant
operation, substation operation,

would

to

of

5%

to

$10 million.

over

lzecl>

stock

desirable.

1949 amounted to 49%.

turn,

invested
credits ranging from

where the amount is not over

8%

result

holdexistence in

in

II

War

'

that

long-term debt fi¬
This kind of
financing reduces the cost of the
capital and makes possible lower
prices for service to the public.

makes

nancing

in

and,

so-called

the utility continued to pay out in dividends the
same proportion of available common
stock income, the price that
Assuming

be

which

capital

invested

so-called

The
base

P19™ "ave not as ^et

could

long

com¬

mentally different.

avaiiabie

not

dated Under the Holding

stock

lives,

nomic
*An

have-

in

Code

Revenue

Internal

puting taxable earnings are funda¬

earnings of only
5% which is obviously inadequate.

common

and equipment of elec¬

utilities

are

pricing

A return of 4.1%

industries,

other

many

the plant

concerned

considered.

util¬

particularly vulnerable to the im¬
position of ad valorem taxes.
Unlike

discussing the impact of an
excess profits tax on the electric
utility industry, there is no need

$92

to

the method of computing

utilities will

returns

tax

Jarge degree>

ing

pansion

ities, while large investment in
plant and equipment makes them

economy.

In

the electric

on

between

amounted

profits tax would

excess

again

'

outbreak

rolls

tax

1945

and

million.

the
advantage
utilities had in filing

COnsolidated
a

Hence,

also

Government

75

ship from 1941-1945 amounted to
$36 million, while the total tax
loss of the 107 properties which

be anticipated.

can

wbjch many

the. adequate to service the capital of
financing of the investment is of the utility, thus impairing its credparamount importance to them. it standing and hence its ability
The

the

profits

excess

loss through

the

properties which were
transferred to government owner¬

of

cost

an

tax

Federal

As

the

to

loss

a

Federal
example, the

total cumulative

Furthermore,

of

investment.

exerted

result in
to

revenue

Government.

her levels

of

the electric

This illustration shows that the to most utilities since

,

earned

fixed

their

tax

of

profits $5

excess

raise

burden
on

charges

likewise used for

is

this slow rate of On investment to 4.1% after the
capital turnover, electric utilities application of an excess profits
must obtain vast sums of capital tax. Such a return is wholly infor

of

tm hi

to

The
^axes

computed on a basis of the 1941
Act and subsequent amendments.

light industries and once a
year for heavy manufacturing in¬
Because

wiu

■

is

year

for

;

impositi0n

taxes

which

comparison,

$50,000,000,

illustration.

turnover of capi¬

a

three times

or

utility, which

the

investment

that capital is turned

every

in even

regulated by one set of
standards
promulgated
by
the
Snnnnnmp , capitahzation ot be much heavier during the pres- Federal or State agency and at the
$50,000,000, consisting of
|25'000,ent
emergency than was even the same time
000 of 3%
debt and $25,000,000 cage
by other standards set
durjng the last war. The reacommon capital stock. A net earngon for this is that
the industry's by the Internal Revenue Code
which completely nullify the end
ing of $3,000,000 after normal and refinancing program
is substanresult sought by the regulatory
surtax of 45% but before excess
tialiy 0Ver and, hence, no further
profits taxes, which represents a major reductions in interest agency.
This would frequently

electric utilities require ap¬
proximately four dollars ($4.00)

means

electric

an

the

utility industry. On the aver¬

($1.00)

presenta¬

only result
being

eral tax rolls and

World War II that

in

experience

.

the earning power

on

factor in the market value
of its securities, may be seen from

age,

invested in

,,

,

major

of the most impor¬
characteristics of

one

higher cost of service.

a

The effect

re¬

being saddled

consumers

m,

economic

tant

dustries.

the

with

quired by electric utilities to en¬
able them properly to serve the

costly examination and litigation
before the tax liability is finally
It provides

reduce

very

tal

determining

result in

usually
their prices,
are

of

The

unworkable and re¬
quires excessive compliance costs,
as
well
as
involving years of

for

higher yields in order to attract
This, in turn, would

the investor.

a

ings.

over

determined.

representing

which in turn reduces their earn¬

something like

istratively

securities, but equity funds, if
obtainable, would require much
tion

sense

utilities

to

the excessive use of fixed obliga-

excess

as

reasonably bal-

a

financial structure without

anced

impossible
have

preserving

and

is

it

that

seen

regulatory

return,

dollar of

"basis

be

can

to

the

which

know

Obviously, any decline in utility
security values will raise the cost
of money to the utility companies,
Utilities need large amounts of
ononey for their plant and equipmenh which makes the cost of
money an important item to them,
Utility yields, particularly on
equity securities, have shown
m^rked increases since the Korean
crisis, and it is certain from the

commissions

reduce

to

trol costs and make the most

power.

only will there be the problem of
actually raising additional funds

for electric
earnings
of the
meaning. When their earnings go
above
the
point established by
utilities

in

that this
t i

in healthy financial con¬

generally

II who will not

a-x a

proposals.

it

Thus

-

dur¬
ing World War
quences

method

surplus to maintain a

construction of newvfacilities. Not

addition to

excess

profits tax and

agree

utilities

taxes and to earn a

persons

informed

of

depreciation, and degree than unregulated business,
The
impairment
of
earning
fair return on

expenses,

its

in

The imposition
further taxation on the private

of

.

Question of Equity Fi a ci g
pricing their service, electric
rates are usually estab¬ heavy capital requirements utility
Equity prices are very sensitive
lished by commissions at a level companies are dependent on se- to excess profits tax proposals. The
which will permit them to cover curity markets to a much greater Dow-Jones
index for utilities
their

for

€ix long years.

few

1949

of their earnings to

55%

utilities'

r e-

pealed

which in

enterprises

only 25% in the same period. For
this reason and also because of

In

five
that

years ago

Basis of Rate Regulations

utilities

tions to Congress.

may

turing

the issuance

fc.

charge, only a small which nearly $5.4 billion vvill have towards socialization of the in¬
portion of their construction pro- to be raised in the securities mar- dustry.
Such
socialization
would
re¬
gram can
be financed from re- kets. A significant portion—$2.2
tained earnings. Unlike manufac- billion — will have to be raised move the utilities from the Fed¬
they

securities.

excess

an

$8.8

the funds for their large billion will be required by the
expansion program. Since they electric -utility industry for new
are
closely regulated as to rates construction during this period, of

power.

their service and

discussing the im¬

-should today be

that

to procure

retained

1

son

that confronts the electric utilities

further nationaliza¬

profits taxation, and warns it will lead to

will

creased.

electric

Electric Institute,
These figures show,

Consider the matter of financing

profits tax as unsound, inflationary, and
particularly harmful to utilities, Mr. Scaff points out utilities
already have their rates regulated, and thus excess earnings
would be impossible in a regulatory sense. Stresses need for
heavy capital investment by utilities and slow rate of capital
turnover.
Foresees decline in equity financing under excess

of the
be in¬

and

general

the electric utility program confronting - it for the
The inequity of taxing private
industry today than it had at that next few years,
time.
The forecast of capital expendi¬ electric utilities and not govern-?
tures through 1953, shown below, mentally, owned- operations
has
New Utility
Financing Required was prepared recently by the Edi- often been pointed out by the

Vice-President, Ebasco Services, Inc.

Attacking

particular

in

industry

on

sequences

SCAFF*

By HAROLD II.

t

in

terns

-

And Electric Utilities

t

Thursday, November 23, 1950

.

(1996)
t

New

1950

'

Expenditures
■_

Equity

Depreciation accruals and
ploughed back earnings

1951

__$2,200. $2,200,

Money

Debt

(In Millions)

■

1,474

1,394

843

814

631

580

806

1952

1953

Total

$2,200.
1,310

$2,200
1,223

$8,800
5,401

784

752

3,193

526

471

2,208

890

977

3,399

An

utility

would

example of the pressure to
were subjected

because

situation

of

.

726

the

which the utilities

tice
.

.

that

otherwise incur.

May

18,

of

the

excess

profits, tax

be had from a no¬
general
hearing issued
may

1944,

by

the

Michigan

Volume 172

Number 4962

.

.

The Commercial and
Financial Chronicle

.

(1997)

\

Public Service Commission.
notice required the

The

ings method there
lowed a credit at

following:

"Every public utility subject to
the

jurisdiction

sion

is

with

a

this

of

such

forecast

will

incur

tax'

first

that

then

excess

be

not

later

day

of
June,
containing its

two

a

all

forecast

to

as

its

rates

charges

so

avoid the incurring of such

bility,

and

effect
its

of

statement

a

such

rates

an

and

charges

income available to it
upon its investments.
"Notice

is

public

any

certain

to

the year

of

liability

its

rates

of any such

of

liability

payment

of

sources

of power means

impairment

utilities' ability to
would

haps

result

in

the

of

and

supplying
have

a

period

80%

of

the

war

its

raise

In

expansion

preparation

portance

is

of

and

period

paramount

this

must

constantly

in
mind
consideration is given
excess profits tax.

Edison

the

on

kept,
aiiv

a

Electric

jointly
excess

a

Institute

memorandum

profits

tax

and

members of those two
associations
have discussed the
memorandum
with Colin

Stam,

Joint Committee

Chief of

on

Staff,

Internal Rev¬

enue

Taxation. The
following
ommendations were made in

memorandum
tion to the

to

give

Under any

termining

profits

ana

normal

ascertaining

tax

and

excess

Under

method

excess

the

of

de-.

net

in¬

surtax

invested

capi¬

credit,

the

borrowed

capital shall be included at
thereof with a

100-%

corresponding ad¬

to

excess

profits

net

in¬

for interest thereon.
"(3) Under the invested capital
method, the excess profits credit
come
<

shall

not

be

less

than

6%

of

the

invested capital.

"(4.) Under either invested
cap¬
ital

method

or

the

average




earn¬

from

central

would

industrial growth,
extraordinary shipping facilities to all parts of
world, manpower trained in traditional
craftmanship, excel¬
lent plant sites, cultural and
educational advantages, low taxes
and cheap electric
power.
the

the

financing
utility industry

the

or

seriously

jeopardize

country's rearmament

Cleveland Electric's three interconnected
power plants supply
135 communities in
1,700 square miles in northeast Ohio. In the
past five years the company has spent
$100 million on expansion;
Next year the
company will add 150,000 kw. capacity, bringing its
total to 1,100,000 kw.
The system is part of a five-state inter¬
connected electrical network which will have
11,590,000 kw. of
capacity in 1951.
President Lindsethof Cleveland Electric Illu¬

the

program.

made

an

the

utility
industry, therefore,
assuring capital for the expansion

to

amount

program for the
rearmament.

not

of

books

out¬

of.

the

coming period of
/

.

Urges education

ac¬

begin

capital."

emphasized

respect

excess

to

in

the

profits

ex¬

itself,-

po¬

legis¬

are:

United States
securities must be shouldered
by Wall Street

owns

public
tions

An

excess

profits

tax

is

Henry

Gellermann,

of

rela¬

to which manpower and ma¬
can
be put and adminis¬

tratively unworkable.
2)
Utilities are
regulated
.

governmental bodies

they

may

generally
earn

true

(3)
War

as to

earn, which makes
impossible for them

"excess profits."

Nevertheless, during
II

by

amounts
it
to

reason

Forum

the
ers

ica

Mr,

why* this

try

was

was
that excess profits
legislation neglected to make
provisions for the unique charac¬

utilities.
these characteristics are:

Some of

Very

large

which
than

regulated;

turns

in

most

capital
over

of

more

other

Continuing need
amounts
to

investment

slowly

industries;

for

additional

for expansion
demands of the pub¬

lic and of national

defence;

today."

prevents

beyond the costs

earnings
of supplying the

service;
The consequent need

able

for main¬

the

vestment

integrity of the in¬
by maintaining reason¬

earnings

without

interrup¬

tion;
The

inability of utilities

to

in¬

prices of their services to
offset increases in their taxes
and
crease

other costs;

..

.

•

.

The lag in
earnings from newly
constructed plant.

(5)

Regulated

utilities

therefore, subjected
treatment
the

which

utilities

to

themselves

rot

but

industry,

be out of

•

Mr.

to

a

and

;

recent
that

of

between

48

know

the

the-

nothing

urged

that

education

on the subject begin on
high school level.
He said
that-such a program should have

the firm support of

arc,

only
also

industry itself

not

only from the business point
view, but as a fixed moral re¬

sponsibility to the nation and the
Mr.

'

•

Gellermann said that if the

financial community loses the bat¬
tle of public opinion and conse¬

quently public
cease

to

be

good

will,

it will

formidable

a

com--

petitor for the public's dollar.
He

said

that

institutional

or

the general public.

The
prime purpose of financial
advertising, Mr. Gellermann said,

should

be to create and maintain

financial
the
both

understanding of the

firm,

the

industry

economic system
are

a

earning about 61/3%

>

its average capi¬
A small rate adjustment
on

schedules

on

sounder

a

basis

in

connection

The company

usage.

part.

of

with

rapidly

does not plan to

ask

any substantial rate increases unless the burden of
higher
Federal taxes and fuel and
wage costs prove too onerous.
A rise
in the Federal income tax rate from
45% to 50% would cost stock¬
holders about 270 a share.. The
company is at present maintaining
about a 70% dividend
payout, about the same as for the industry

as

whole.

a

;

fuel, coal is now costing them about $6.58 a ton
has not varied greatly from this level in the
past three years
despite disturbances in the coal mining industry.
However, pro¬
posed increases in freight rates will add to costs.

and

which

Eighty percent

of their power

latter
its

can

cost

plants can be converted from coal to oil, so that the
be used in emergencies or at the
occasional times when

dips below that of coal.- Natural

available

because

of

gas

the

is not economically

big demands of the local steel industry
The company does not make wide use of escalator
clauses
for fuel and other costs (as Cincinnati Gas & Electric
is now doing)
for gas.

since they consider this unfavorable from

public relations angle*

a

However, they do have coal clauses in their big industrial contracts.
Regarding wage costs, while wage rates seem to increase each
year,

this is partly offset by new economies in

stations, etc. For example, elimination of
(for each of three shifts)
of about $25,000

There is
pany

a

found to effect

was

37 years;

Electric, but

now

on a

Thei company

plants, sub-?

a

sub-station

overall

savings

area

but the

com¬

Cleveland,

tax-free basis, has been competing with

it used to be about 16%

is about 12%.

of these and is

at

The municipal plant in

as

large

as

Cleveland

There had been three competing

municipal systems in smaller cities, but the
one

an

municipal competition in the

some

is not concerned about it.

for

power

one man

year.

operating practically
them

educational advertising is a major
vehicle for taking the full Wall
Street story to

now

and

survey

50%

Gellermann

community.

is

Regarding

*

about the stock market than the
fact the market crash occurred in

1929,

/

business

"/

,.■

people

18

better public

inequitable

harms

of

ages

all

disclosed

American

on

regulation

lax in its advertising

V...

.

Pointing
which

of

the capital marketsneeded money, because

this

Henry Gellermann

rest of American indus¬
as

national average.

for

the

capital

meet the

mercial

program as the securities

possible

of

were

actuarial

increasing residential

declared

that if the

"we would

tax

teristics

night

Geller¬

mann

in

talization, about the same as 10 years ago.
has been requested (yielding about
$250,000 a year before taxes),
the principal purpose
being to place residential and small com¬

Columbia

World

triple

30%

:.

iversity.

n

is

The company

of

Amer¬

last

at

company

to

-

.

liability.
The company's depreciation
of gross plant account (35% before the
present
rapid construction program) which is well above the national
aver¬
age.
Despite liberal rate regulation in Ohio (the state law
per¬
mits cost of reproduction less
depreciation to be used as the rates
base) the company's average residential rate is below the
national
average; and despite appliance competition from a
strong natural
gas system (Consolidated Natural
Gas) residential electric use is

told

Consum¬
of

,

U

many

The

Co.,

*

already

(4)

firm of Bache
the

own

both

year will be double that of 1940.
Plant capacity was increased
by 180,000 kw. in 1949 and 150,000 kw*
are scheduled for
competition early in 1951, with 250,000 kw. more
in 1952-53/ Thus
by 1953 capacity will be 72% greater than iri
mid-1949.

New

&

expects

Anticipated peak load this

Stock
fundamenally unsound, inflation¬
in character, wasteful in the- Exchange

terials

estimated

above the

ary
use

the

reserve

director

the

'

'

industry—lie

The company has for some
years maintained a sound pension
system, and pension funds now aggregate nearly $15 million
(not
reflected in the balance sheet) which is
sufficient to cover fully

r

population: of /the

enact-;

tax

high school level.

at

Much of the blame for the fact
for. that only slightly over 10% of the

electrical

pany is conservatively
capitalized, and for the past 25 years the
capital structure has averaged (with some
fluctuations) 39% bonds,
17% preferred stock and 44% common stock. At
this time, because
of the $25 million bond issue of
September, 1950, the ratios are
46V2% debt, 12%% preferred stock and 41% common
stock equity.
These common stock
equity figures are well above the unweighted
utility average.

stock market

;

by 1970.

the future growth outlook for his

on

entire

However, in his recent address before the New York
Society
of Security
Analysts, Mr. Lindseth emphasized the financial sta¬
bility of his company rather than its growth
prospects. The com¬

.

on

the

size

Interest in Securities

begin¬

income

borrowed

and

Wail St. Held Largely
To Blame for Lack of;

capital, capi¬
surplus, as reflected

net.

very optimistic

tric

utilities,-

total

for

minating, who formerly headed the Edison Electric
Institute, is

the elec¬

blanket

a

'

-

integity
of'

Cuyahoga County alone

have topped the combined
output of five of the six
fastest growing counties in the southwest
and Pacific Coast areas.
Advantages of the Ohio area include unlimited fresh water for

first

of

and

is reported to

station,

Any impairment

industrial customers—

new

concentrated market—more than half the
population of the
United States and Canada within 500 miles."
The company also
points to the fact that more than $700 million has been
invested in
nCw industrial
expansion in this area in the postwar period—over
$1 billion if utility investment is included.

defense, since oyer 70%i
the country's industrial
capacity
powered

extensive scale to attract

turn

most

overestimated.

the ..country's

an

in

bring commercial and residential business.
The
widely advertised its central location in the Cleve¬
land-Northeast Ohio area, "which offers the world's
richest

of

ability

-

profits

in

profits net in¬

of

one

be

York

for

of

determining

profits

justment

of

profits

on

of

taining

"(2

<

excess

public

corporate

Reliance

come.

tal

of

the

deductions shall be allowed

come,

for

method

excess

the

is

sources.

borrowed

with

(1)

rec¬

coxisidera-

unique economic
regulatory characteristics. of
electric
utility industry:
"(1)

-I

was

plus

have

lation

-

Association

It

cannot

on

company has

The importance of the elec¬
utility industry to national

defense

con¬

regulated utilities,
earning less than what
their regulatory
agency itself re¬
future
garded as a fair return, paid
large

be

Recommendations

and the American
Gas

prepared

in

averaged

I

ment

im¬

when
to

on

amounts of excess profits
taxes.

Tax

The

of

tric

ex-.

plaining the electric utilities'

in¬

finance

obtain

conclusion, the major points

sition

Nation's

to

money
in
this

tising

which

relieve

case

excess

that

be kept at a
reasonable
consistent with the general
economy of the country.
Its
1o

Cleveland Electric Illuminating
Company is one of the com¬
paratively few large utility companies which believes in
adver¬

are

follows:

the

interest

of

ability

•

sstocks.

.(7)

to

a

the

to

requirements will
certainly
key role, not only in the

dustry

such

ning and end of the taxable
year,,
a
corresponding adjustment

preparedness, but also
in the event
that an all out
armed
conflict takes place.
It is impor¬
tant. therefore, that the
financial
health of the electric
level

back

with

this

utility

to

as

counts,

country's war potential and to its
peacetime economy as well.
The
private
electric
utilities
power

to

■

surtax

on

per¬

to

Cleveland Electric Illuminating
Company

billion.

impaired, it will be
difficult, if hot im¬
possible, for the industry to sell

percentage used* of
inadmissible assets. is

enacted

standing

industry

injury

$9

exceedingly

the

tal stock and

that

serious and

irreparable

nearly

more than $2 bil¬
raised in equities or

will be

income, shall be lines

net

less than 6%

of

private

serve

at

amount,

earnings

the

the excess profits credit
for any.
taxable year shall be not less than
the aggregate of the normal
tax

the goods of peace.
Over
70% of that industrial
capacity is
powered from central
station
sources.
Such reliance on out¬
any

lion

and

to

point below which ex¬
profits would not occur. It

"In

war and

side

Of this

year.

recommendations,

reads

One of the
country's first lines
defense
is
in
its
industrial

capacity to produce the sinews

be

cess

such tax."

any

income

by

establish

subse¬

a

period

prior

added

recommendation

charges

and

net

law

cific

are
subject to adjustment, as of
Jan. 1, 1944, to avoid
the incurring

quent

estimated

shall

hardship, re-,
(8) Provision should be written
inequities and relieve situa-r. into
any excess profits tax legis¬
are not covered
by the lation, that will give
consideration
usual statutory
provisions."
;
y to the unique
regulatory and eco¬
In addition to these
eight spe¬ nomic characteristics of

during

and

By OWEN ELY

through 1953, the
coming period of rearmament, are

the

tions that

charges,

of

base

years

Utility Securities

ex¬

additional plant and

on

move

1944 to pay
any Federal

all

Public

industries.

utilities'

equipment

-"(8) Adequate relief provisions
shall

'excess profit taxes,'
so-called, on
operations
under
its
existing
schedules of rates and
that

electric

penditures

otherwise

excluding
"(7) The penalty rate

tax

hereby given to
utility reasonably

incur

The

solidated return reporting shall be financial

return

a

the

eliminated.

the

upon
as

in

the

adjustment

other, unregulated
(6)

earn¬

there

credit

capital

profits

reduced

lia¬

a

of

as

the

determining
excess
income, interest on

net

normal
cess

to

as

average

profits tax

of

borrowed

and

avoid the incur¬

and

excess

profits

such a liability, and - a
statement of a possible
adjustment

of

re¬

and

year

"(6) Under the invested
capital'

incurred by it
during the
1944, a statement of a pos¬
so

tax

credit,

the

of

years

method

liability

be

charges
ring of

to

subsequent

will

its rates

or

during

net

first

of

public they serve when
they
required to compute "excess
profits" taxes on the same basis

additions,

borrowed
made

profits

profits

estimate of the Federal 'excess
profits taxes' as to which

sible adjustment

are

not less than 6% of
those
securities
which
capital additions whether through
are
particularly responsive to the
equity,
borrowed
or
retained
adequacy of earnings.
If
such
earnings
aaaect
uuring
uie
lasi

or

year

the

determined

than

1944,

al¬

subsequent thereto.

added

all

is

file with

and

years

be

incentive

determining

it

it

equity,

earnings

excess

shall
an

capital

"(5) Under the
ings method of

Federal 'excess

so-called,

Commission,

the

all

1944; and;
utility from

estimate

or

directed to prepare
this
statement

first

liability during the

a

year 1944 to pay a

profit

tained

year

the

to

appears

all

on

whether

to which it will incur

as

liability during the
it

Commis¬

directed to prepare forth¬
forecast or estimate of all

the taxes

if

rate

company has

acquired

negotiating for the purchase of another.
earned

$3.33

per

share

on

the

common

stock

for the

12 months ended

Sept. 30 after adjustment of nine months'

income

taxes

rate.

any

in

to

a

42%

This earnings

corresponding period in the last 20

rate

years.

exceeds

that

o£

The dividend rate

1950 has been $2.40 compared with
$2.20 in 1948-49, $2.00 dur¬

ing 1943-47, and higher rates in 1941-42.

selling

on

the Stock Exchange

The stock is currently

'around 42 to yield 5.7%.

The Commercial and Financial Chronicle

%L

Thursday, November 23, 1950

...

(1998)

There is

Caution in Common Stocks
For Trust Funds
By ADRIAN M.

York Trust Co,

this month I
pleasure of
talking to the New Jersey Bank¬
ers Association on the subject of
honor

the

and

cations

Strangely enough, while
changes have taken place
this 15-year interval in the

topic.
in

political,
economic
and
social
aspects of the world, trust invest¬
ing has not changed appreciably.
Since world conditions have
changed so drastically, I think it
might be well to refresh your
memory on a few of the important
points that will have a bearing on

let

Federal Govern¬
ment was just giving birth to the
new "welfare state," which today
is robust and thriving.
Federal
deficits appeared very large and
caused much concern, but were
In

the

1935,

something tem¬
porarily necessary—to be replaced
explained

away as

by surpluses as soon as there was
a sufficient recovery in business.

me

of

ment

turn

now

in

funds

trust

more

the invest¬

subject to

glamorous

common

reduction

interest rates

in

Investing

in

We

heard

have

Stocks

Common

deal in

good

a

the
this

about

years

rule

the

feels will

he

which

serve

of the fund over the

purpose

We all know what disap¬

years.

pointments have been encountered
this phase of investing. Just
for fun I examined a list of 188
in

which

stocks,

selected

pub¬

was

October, 1950, to see
what the results would have been

ing investments, even among com¬

if

stocks, which over a period

mon

of time will

the

m

increase in principal
income in proportion
the

in

increase

of

cost

I

As

out earlier, per¬
have increased

pointed

sonal income taxes
from

lished

in

they

had

of the names
I

and

until

are

in

Many

1950.

familiar to you

they appear in the

sure

am

purchased

been

held

and

1935

portfolios of most corporate trus¬
Out of this group I selected

tees.

living.

of
prudence.
Under
general
ruling a trustee theoretically is

recent

endeavors

and

stocks

principal and income.
The
fourth is the difficulty of select¬
both

to

^

the value of

affects

which

dollar

value and

stocks.

laws

legal

their

in

per¬

of

a limited liberalization
investments.
The change in the

effective

rule,

State

York

New

July 1, 1950, which permits the
purchase of non-legal investments
to the extent of 35% of the mar¬
trust, seems to
significant.

the

of

value

ket

It

to

seems

that this is

me

in

million

$527

estimated

1935 to

an

in 1950. To

$18 billion

stocks which in the 1935-1950 pe¬
riod

either did not increase at all

in market value
a

or

increased only

small percentage of the original
I thought I would give

1935 cost.

very

a

intangible yardstick to go by and
I

rience

with

most

expe¬

supposedly prudent
they do many

things which
would

own

your

shown

has

men

that

sure

am

a

corporate trustee

sanction.

not

common

One

the

of

invest in the

is to

which
Of
growing importance is
the they are directly connected. Un¬
der the rules of divided loyalty it
formation of common trust funds
have

as

most

the

been

mechanism

convenient

a

for

ad¬

handling the investment and
ministrative

discussion.

our

spendable income. The second

the

is

certain theories
to choose
those

on

study the impact of taxes on in¬
investment permitted to invest the assets of a
trust in
the same securities as come, I have made a rough calcu¬ you the names of a few of these
trusts in
lation covering incomes of $5,000, issues, presented herewith, so that
those
used
by a prudent man
the various States.
Some of these
when handling his own affairs. $10,000, $15,000 and $20,000 from you can judge for yourself the dif¬
States have made minor modifi¬
assumed trusts set up in 1935 to ficulty in selecting stocks which

mitting

great

net

stock

of

selection

his

makes

vestor
common

legal

governing

rules

am

I

personal income taxes

which has materially reduced the

of

modification

the

the same

Today

Investing."

"Trust

here to speak to you on

value.
the
trust,

principal
portion of a
to the

income

fixed

.

list of selected stocks.
Fifteen years ago

their

in

With these few thoughts about

a

had

income

fixed

increase in

not of the highest

are

loss

prob¬
lems arising from low fixed-income yields and high (income
taxation, warns "prudent man rule," under which stocks may
be included in trust funds, "is an intangible yardstick" and
not
safe guide for trustees who must proceed more conserva¬
tively than when investing own funds. Advocates trustee, in
combining fixed-income securities with common stocks, con¬
fine themselves to high grade securities of fairly short maturi¬
ties and to common stocks having stability and growth. Gives

securities and

the

If

use

qual¬ fostered by the authorities, which
also has had the effect of reducing
ity, it could be very difficult to
shift from
these securities into the spendable income. The third
is the great decrease in the pur¬
equities, when market conditions
permit, without suffering a severe chasing power of the spendable

items

executive, in reviewing trust

New York Trust Company

which

trusts

income

equities.

MASSIE*

Vice-President, New

Executive

in

fixed

both

further point to be

one

considered

of

work

smaller

Another change, the effect

trusts.

undoubtedly be felt

of which will

has been the forma¬
huge pension trusts by

in the future,

tion

of

In the coming years

corporations.
serious

have

could

trusts

these

impact

very

a

investment

on

markets because of their ultimate

stock

would

impossible

for

cor¬

a

marketwise and incomewise would
counterbalance the increase in the

turned

of

income

an

tax at that time was

The

$5,150.

in

to gross $6,100.
be

a

$125,000

1951,

today

have to be invested at 5%

would

Against this would

of $1,071,

tax

leaving

a

net

spendable income of $5,029. Simi¬

if

larly,

of $550,000 had

trust

a

Beneficiary

of

Problem

spendable income of $4,990. Based
on the income tax
which will be
effective

living.

cost of

$160 leaving
vs.

1

Remainderman
When

for

look

we

from

come

equities

high

a

in¬

know that

you

it automatically forces us to con¬

sider the purchase of stocks

whose

of enhancement in

value

chances

to
follow this
been created in 1935 to yield 4%,
benefit the income beneficiary the
procedure.
In
other cases,
a
the gross income would have been
remainder interest would certain¬
prudent man will often invest in
$22,300, the income tax $2,294 and
some new
and fairly small con¬
ly not keep pace with any change
the net spendable income $2,006.
in purchasing power. On the other
cern because he has great confi¬
The same $550,000 would have to
dence in the management.
Other
hand, if stocks of companies which
be invested at 6.6% today.
This we felt had better than average
prudent men would scoff at rules
would
give a gross income of
chances of growth were held, the
of diversification and would not
to

trustee

hesitate

concentrate

to

large

a

$36,200

security.
can
mention

other

many

and

of

come

portion of the assets of a fund in
I

The Rule of Prudence

be

porate

one

size.

with

companies

of

A $125,000 trust

created in 1935 to yield 4.1%, re¬

yield about 4%.

a

net

$20,050.

spendable in¬
The tax would

increase, however, from $2,294 to

$16,500.
I

used

these

words,

beneficiary would

income

be se¬

because of the
relatively
low
yields involved.
During a period of extreme in¬
penalized

verely

extreme
flation stock prices, as you well
point. Per¬ know, fluctuate within very wide
sonally, I know of no way that it ranges. If the timing of common
nessman would differ greatly from
would be possible, except through stock
the theory of trust investing.
purchases happens to syn¬
I
the use of 100% common stocks, chronize with the top of one of
think that what we are trying to
to obtain a gross yield of 6.6%
these violent swings, it may take
do is to establish a set of rules
stocks
in
trusts.
This is
the based on the theories used by an today. Of course, if a larger net years before the stocks recover to
income was used, the increase in the prices at which they are car¬
framework around which I wish average
or
composite
prudent
rate between 1935 and 1950 re¬ ried on the books. This predica¬
to talk to you today, and I am man when investing his own
that the deficit will not be large.
quired to offset the impact of ment may, I think, become more
sure that you want the discussion
funds.
This feeling is based on the un¬
taxes would be even greater.
It intensified in the future because
to revolve principally around the
Many prudent men sit on the should be borne in mind that in
usual circumstance of the Treas¬
of the uneven impact of social and
question of the part played by boards of directors of banks and
ury receiving the benefit of new
addition to the increased yield re¬ economic conditions on a given
common stocks in trust investing.
trust
companies
and
their
thoughts
taxes before heavy defense spend¬
quired to offset the impact of corporation.
As
a
preliminary, however, 1
ing gets under way.
For the would like to make a few com¬ on the investment of discretionary taxes, it would be necessary to
funds
are
reflected
in
the
annual
fiscal year 1952, it is estimated
increase the net income further by
Buying: in a Bull Market
ments
about
the fixed income
reports of common trust funds.
receipts may be as high as $45obtaining a still higher yield in
section of trusts.
Before yielding to the pressure
Just
as
a
matter
of
interest
I
$50 billion, with expenditures of
order
to
compensate
for
the
In the light of the fact that reviewed the annual reports of 10
to buy more common stocks it
approximately
$54 - $57
billion,
change in the cost of living index
common
trust funds and
found between 1935 and 1950. The U. S. should be borne in mind that with
and a possible deficit of $8 billi«n yields for fixed income securities
which would be larger than the are almost at their lowest point in that the common stock proportion Bureau of Labor Statistics Cost the exception of a few minor set¬
backs in the stock market in 1938,
entire Budget of 1935.- This po¬ years, it is my feeling that these of these funds ran from a high of
Living Index was 98 in 1935;
of 51% to zero, with the average
1940, 1942 and 1946, there has
litical financial bungling is dis¬ yields do not permit any reserve
today it is 173. While I have not
been an almost uninterrupted bull
somewhere in the range of 30- made a
cussed very casually by the poli¬ against credit risk or provide any
calculation of what in¬
From this it can be seen crease would be needed it is ap¬ market. It should also be remem¬
ticians and no apologies are of¬ reserve for a change in interest 40%.
rates.
It seems to me, therefore,
that
the
average
prudent man parent that it would be a large bered in trying to estimate future
fered.
income from stocks that dividends
In June, 1935, the Federal debt that a trustee should at this time handling
the
investment of
a figure.
received in the 1935-1950 period
fixed
income
invest¬ bank or trust company has a more
amounted to $28.7 billion; today confined

in the fiscal year
1935, total Federal
receipts amounted to $3.8 billion,
total
expenditures
to
approxi¬
mately $7 billion, leaving a defi¬
cit of $3.2 billion.
For the fiscal
year 1951, it is hoped the Budget
will be in balance, or in any event,
instance,

For

ended

June,

believe ideas
practices of the prudent busi¬

points

been

have

thinking a
great
deal
about the rule
of
prudence, and have been discus¬
sing the advisability of purchasing
large
percentages
of
common
Trustees

and

which

on

I

have

other

In

limited.

are

cases

two

illustrate the

to

-kv

is

it

approximately $258

billion.

Currency outstanding in 1935 was
$5.5 billion; today it is $28 bil¬
lion.
Commercial bank deposits
1935

in

$41

were

billion;

today

ments to those of very

and

with

the

because
life

of

an

th£y amount to $164 billion.
In
1935, taxes received from indi¬
viduals totaled $527 million; in

ably not

1950—$17.9 billion.

and

In

this

same

interval

we

were

called upon to fight World War II,
which resulted in almost com¬

pletely disrupting the economy of
Since the close of the

the world.

United States has in¬
vested over $42 Vz billion in the
recovery of friendly nations and,
at the present time, is preparing—
because of the Korean episode and
war,

the

incidents

other

of

vestment

untold

It naturally

all of this has had

effect

on

brought

armament

an

which will entail the in¬

program

dollars.

—

of

follows that
very

serious

and has
face-to-face with the

our

us

a

billions

economy

problem of inflation.
As

I

said

before,

this

16,

Asbury

Park,

N.

1950.




Bankers

J„

Nov.

subject to

the

a

credit

has

been

followed

enough;

the

invest

which provide for an annual

to

ing
it

During boom periods

fund.

is

characteristic

common

a

securities

fixed

income

yield

between

issues

and

the

high

very

low

for

of

grade
issues to

grade

approach each other.
This is not
true in periods of depressed busi¬
ness

conditions when

between those

the spread
yields widens con¬

siderably.

guiding

that

is

trustee
a

not

should

way so as

its purchasing power

preserve

both

this

fund in such

a

with

faced

are

that

conscien¬

to principal and income
This approach raises many

as

value.

questions

—

difficult.

both

It is

interesting

hard to

and

determine

whether

the pressure of public
opinion on trustees is motivated
by the fact that we have been in
a bull market for common stocks,
or by the threat of further infla¬
tion and devaluation of the dollar.

This

deal

us

now

trustee

a

ments,

to

select invest¬

among

even

Stocks

with the prob¬
common

stocks, which would

increase the
principal value and income in
proportion to the increase in the
cost of living,
or
expressed an¬
other

way,

purchasing

the

decrease in the
of the dollar.

power

articles I have read on
the desirability of using common
stocks as a hedge against inflation
have dealt with the subject from
Many

ducing
have

rather

to

tax

exempt

equal
securi¬

a

Jones

Averages

or

numbers. Unfor¬
tunately, a trustee is called upon
to make certain important deci¬

study of

index

sions—(1) how much of the fund
in

should

be

invested

stocks;

(2)

what particular com¬

mon

common

stocks should be selected and

pressure

been
years

in

The corporate trustee recognizes
on tax exempt
point which would the decreasing purchasing power
thought unbelievable of the dollar and attempts to solve
ago.
It has also re¬ resulting
investment
problems

fixing

low

the

credit

yield

tax

exempt

bonds close to that obtainable

high grade bonds.

for
on

within
are

several

which

The

conservative

make

most

limits

factors,
this

There

however,

difficult

to

do.

important is the large

any

sible

that these Averages had been
changed from time to time over
the years.

had

Therefore, if

invested

Averages
would

in

the

differ

the

a

Dow

that

result
probably
greatly from that

recorded by the

Services.

An in¬

nearly

act on the theory
percentage of anyin common

we

large

a

stocks

hedge against a further
in the cost

as a

increases in taxes and

of

living,

pared

to

trustee must be pre¬

a

take

risk

the

that at

some

future date economic condi¬

tions

of

the

country

take a
materially

may

turn for the worse and

principal values and divi¬

reduce

dend returns.
what

Now
can

It

be

general

drawn

seems

marized

to me
as

conclusions
of this?
they can be sum¬

from

all

follows:

(1) That for nearly 18 years we
have been in a period of mone¬
tary inflation which has resulted
in the purchasing power of the
dollar

being reduced.

(2) That for those 18 years we
have seen drastic upward revi¬
sions

in

and will

personal
probably

income

see

taxes

still further

decreases in the future.

trustee
Jones

in

trust funds should be

Averages, and it is well known to
you

larger than

been

other period, with the pos¬
exception
of
1928-1929.

Therefore, if

the Dow
some
other

1928-1929 period

the yield
to

have

the standpoint of either

appeared in the (3) when should these common
but we saw very stocks be purchased. I have never
The large increase in taxes little of it in the depression period yet seen an investor who bought
the years has resulted in re¬ 'of 1932-1933.
all of the stocks of the Dow Jones

These remarks apply with

emphasis
ties.

the

years

principle of corporate trustees has
been to seek stability of principal
and continuity of income and that
rule

Selection of Common

Let

lem of
many

limited and, if possible, a trustee
should
seek
out
those
stocks

sink¬

prudent

^

For

we

sulted

Association,

Since

years.

are

man.

individual

the

by

tiously. Now
the
thought

many

Trust Section of the New Jersey

in

in

period there has been very little
change in trust investing.
The

by Mr. Massie before the

22-23

held

the

trust is prob¬

average

conservative point of view than is

of these held in a trust should be

most notable appears to have been
address

indicates

risk factor
interest rates, the amount

change

issues

♦An

in

I say this

years.

record

over

high calibre

maturities not

preferred stocks

over

during

bond

of 20-25

excess

(3)

That the rule of prudence

an

intangible yardstick and the

is

trustee
on

a

must,
much

therefore,
more

proceed

conservative-

^Volume 172

Number 4962

.

.

.

The Commercial and Financial
Chronicle

(1999) " 2a
basis

than

the

prudent

in¬

man

vesting his own funds.
(4) That because of the increase
in taxes

in the cost of
living
will be under constant

and

trustee

a

pressure

to

accounts
common

(5)

hold

in

larger

discretionary-

percentages

of

doubtedly

trustee

a

use

will

un¬

combination

a

it

seems

logical

come

that

section

the

should

fixed

be

confined

to high grade securities
with
ly short maturities.

(6) That

in¬

gold

fair¬

stocks

in

the

and

to

hold

in

selection

in

the

chase.

of

an

These

account;

those

timing of

stocks

their

same

pur¬

difficulties

will be experienced
by
in
investing

every

dividual

his

in¬

own

funds.

in

(7)

That

the

record

of trust
funds over
past 20 years. The criticism
which he has received
is, in my
opinion, to a large extent unjus¬
tified, apd is merely a reflection
of the after
effects of a

under

of

is

of

gram

control.

inflation
The

is

result

It

to

sold

upper

be

hard

put

a

trust, even though he uses
large percentage of the funds
the purchase of common
stocks.

LIST
Air

OF

SELECTED

STOCKS

Reduction Co., Inc.

Allegheny-Ludlum
Can

Company

Sanitary
Steel

Foundries

'

American Tel. & Tel. Co.
American Tobacco

Company
Copper Mining Co.

Anaconda

Brooklyn Union
Canadian

Gas

Pacific

Railway

Chesapeake & Ohio Rwy.
C. I. T. Financial
Corp.
Congoleum-Nairn Corp.
Consolidated Edison
Company
Continental Can Co.
Corn Products

Refining Co.
Endicott Johnson
Corp.
General Electric
Company

R.

H.

be

ward

Edison

a

'sjij

an
an

doubt,

President of The Philadelphia Se¬
curities
Association,
has
an¬

Mickley

of

Exchange Bank & Trust Co.
Governor
the

has

been

more

the

than

British

dollar

rise

any

in the prices of
other factor that has

to

face

From

the

strain

this

point

of

rearmament

on

her

tactics tended to

difficult to

recent debate in

the

House of

more

important than the

cost

of

living.

In other

with the latter for the sake

of the former.

Thanks

increase of the gold

There

cost

of

industrial

be little doubt that

can

cause

living.

much

What

more

is

more

a

reduction in the standard

discontent than

unex¬

a

increase in

an

important, while high cost of
of those

living

on

decline in the standard of
living would hit the

workers

whose

discontent

would

cause

much

more

This does
entitled to

a

not

mean

of course

contributing towards the
But there

been

buy

an

are

reduced

rise in prices of Sterling Area
products.

obviously factors

unmitigated evil.

coarse

that the Soviet Government is

on

both sides, and the rise has not

Moreover, since Britain

was

unable

to

grain elsewhere her livestock would have had to be

considerably

grain, and her housing

in

the

absence

program

of

the

import

of

Russian

might have suffered in the absence

Security in

World"

and

books, "has had

Chang¬

a

various

other

rebirth of public

a

confidence. This

was

exemplified

in the recent election in
the grow¬

ing strength of Republicans and
Jeffersonian Democrats who are
unabashed advocates of the Amer¬
ican competitive
system. Certainly
the voting trend in

Iowa,

Michigan,

York

and

thumbs

Ohio, Indiana,
California, New

elsewhere

down

European
and

hand,

fringe

political

pressure groups,

by

such

blocs

potential

ing

events,, the

mon

of

sense

statesmanship,

serted itself in

fact

a

The

public mood

pathetic

productivity of

people. In the cir¬
and

sneering at the profit system are
recognized as either conscious or

the

the whole free

"Thus,
has

on

strength,

of

the

the

sources

which the

on

Republic

and

of

world depends.

82nd

new

Congress

mandate for common
sense,
common
honesty
and
national
a

solvency.

The

election

returns

warrant

bipartisan support of the
proposal by the Joint Committee
Nonessential

on

Federal

Expen¬

ditures, of which Senator Harry
F.
Byrd, Virginia Democrat, is

Chairman, to

make

for

room

ac¬

celerated

military
expenditures
through eliminating or reducing
nonessential, nonmilitary Federal
appropriations.

loting justifies

Similarly the

bal¬
scientific revision

a

of the tax

structure, and a rejec¬
demagogic tax prejudices,
including
the
pressure
group

tion of

clamor for
"The

an

new

excess

mood

in opposition
to
away'
schemes

merits

a

of

profits tax.
the

public

Federal

'give¬

and

subsidies

reexamination
trend

toward

with

of

the

statism,

the concentration of
power
at the nation's
capital. In view of
he

unavoidably heavy costs,

ing out of the Korean
international tension, a
of

the

cated.

Socialistic

trend

toward

reversal

indi¬

In

order to give relief to
the overburdened Federal
budget,
Sam should turn back to

states

and

localities

unsym¬

political

whole

demagogic

excellence.

coming
of

the

which

crusade

blue

The

against,

people

increasingly

be¬

are

appreciative

management
philosophy,
is compounded of
knowand

a

of ob^

sense

realism."

Fidelity Deposit
jamin

H.

Griswold, III, partner*
&• Sons,
yesterday

Brown

was

of

Company

Maryland.

board's

Mercer
also

In

action,
stated

had

announcing the

President
that

been

Mr.

elected

B.

H.

Griswold
a

and

director

member
of
the
executive
committee of the American
Bond¬
ing Company of
Baltimore, F. & D..

subsidiary.
tor

of

the

He has been
parent

direc¬

a

company since

January, 1948.
Other

directorships held by Mr.
Griswold include
Sharp & Dohme,
Inc., Philadelphia; Baltimore Life
Insurance
Company, Central
Sav¬

ings Bank
land

of

Baltimore and Mary¬

Jockey Club.

He

is

a

Gov¬

ernor and
immediate past Presi¬
dent of the Association of
Stock
Exchange Firms. Long active in
Baltimore civic
affairs, he is at

present

serving

the Commission

Treasurer

as
on

of

Governmental

Efficiency and Economy. He also
is a trustee
of Gilman
Country
School for
Boys, James Lawrence
Kernan Hospital and
Industrial

School for

Crippled Children

Union

Memorial
Baltimore.

Hospital,

and

all

of

Mr.

Griswold has been a part¬
in Alex. Brown &
Sons since
and with his brother is
the
sixth generation of his
family to
control that
ner

1935

firm, said to be the

oldest

in

name

banking business

the

investment

in the

country.

and

Uncle

the

be

sky, money
manipulation, and the

grow¬

war

is

to

seems

elected to the executive
com¬
mittee of the board of
directors of
the
Fidelity and Deposit

recognition of the

unwitting attacks

public
dominant

current

reas¬

cumstances, business baiting

of national

constitu¬

among

servants.

Alex.

sanction for a
bold American
foreign policy lies
in the unparalleled

survival

competency
to

com-"

that the final

the American

high

and honest
devotion
tional
principles

BALTIMORE, Maryland—Ben¬

challeng¬

people

Mr.

public taste. It now
appears to ba
good practical politics for a
pub¬
lic official to be
himself, and to
show
courage in sticking to his
honest convictions.
The serious¬
ness of the times
has heightened
popular
demand
for
genuine

the CIO-

instinctive
the

good,"

Rukeyser concluded^ "is inherent
intellectual fashions in

PAC.
"Under the pressure of

statsr

Griswold Elected by

articulate
as

police

or

and

inflation,

in the new

jectivity

of

home

the other.

on

how, foresight, and

turned

emulation

on

government

long-term

vote of thanks for the services
rendered to Britain
by

Commerce, at Harris-

Nov. 17.

on

of "Financial

small

trouble than that of people with
fixed incomes.

of

pired term of Dudley R. Atherton,
Jr., resigned.




it

the

increase of the standard of living can only be achieved
increase of the cost of
living then it is well worth our

fixed incomes,

PHILADELPHIA, Pa.—Newlin
F.
Davis, Kidder, Peabody & Co.,

fill

improvement of

address

an

"The American
enterprise sys¬
tem," Mr. Rukeyser, who is author

opinion, is causing much con¬
involved has been discussed

living hits mainly the "defenseless" classes

Phila. Sees. Assn.

to

course

living would

the

Newlin Davis Gov. of

burg,

its

little could be said about it that
could

an

materials

raw

payments.
Machiavellian

during

living.
of

Mfg. Co.

Association

and

reserve it may be possible to
proceed
with rearmament without substantial reduction in
the standard of

Woolworth Co.

a

to

of

is of

to the

Sterling Drug, Inc.

elected

Beyond
area

while to put up

Timken Roller Bearing Co.

been

transactions,

Commons, and en¬
dorsed by Mr. Dalton on behalf of the
government, is well worth
our attention.
A Socialist speaker
pointed out that the standard of

Standard Brands, Inc.

has

leading

area,

one

"Much
Merryle S. Rukeyser

at

without ruinous

regimentation,

editorial

Chamber of

materials from the

raw

the
business

opportunity for riding

challenges

the

on

as banquet
speaker at the annual
meeting of the Pennsylvania State

large

further

the sudden increase of the British
gold reserves.
Had it
this increase, Britain would now be in
a much
less

through

the

will

ing

living is much

James

further

a

which

been for

wort

that

very

te d

Hearst newspapers, in

is

Southern

nounced

of

the

the

abroad

writer for the

Australian

is, however, another aspect of the
import of Russian
goods which has been raised
lately.
It has been suggested that
the Soviet Government has
been using its
sterling resources to
engineer deliberately an increase in the
prices of raw material,
in order to provoke an
increase in the cost of
living in the demo¬
cratic countries.
That the Moscow
statesmen are quite capable
of adopting such
Machiavellian policy is beyond doubt. The
ques¬

Reynolds Tobacco "B"

Com

completed

of

and

delivery of the timber

putting

developments, he added, in¬

crease

current

Service

and

materials in the

tin

of view, therefore, any
help rather than hinder.
say how far the disadvantages of
the rising cost of
living are offset by the advantages of an increas¬
ing gold reserve. From this point of view an argument
put for¬

Pullman, Incorporated

I

again,

aspect

News

There

It

Electric Co.

Towne

is

cent

International
Einzig

the problem

new.

Russian

Parke, Davis & Company
Pennsylvania Railroad Co.

&

over

satisfactory position

Owens-Illinois Glass Co.

Yale

on

London, but since

and

over

balance

Norfolk & Western
Rwy.

-

American

in

cern

not

Corp.

California

agreement

raw

and

when the

This

caused

Company

&

earlier

that

will

position.

Macy & Co., Inc.

Pacific Gas

the

expected

gfciiipfe Commonwealth.

sterling

Great Northern Rwy.
preferred
Nickel Co.

Johns-Manville

also

Dr. Paul

cur¬

underpinnings of con¬
fidence under the
American sys¬
tem, Mr. Rukeyser declared. Re¬

columnist, for

grain

purchase of

possible repercussion

sterling

International

P. Loriilard

the

on

coarse

care,

banking functions."

new

economic

on

they
willing to

and

government further into

nationally
a

and

puts

York,

syndic

ready

carry on, including medical
the distribution of

The rebuke to
pressure for class
and
for

Stanley
Rukeyser,
of

freely.
highly probable that practically

schemes.

legislation

expressed

New

whether it is worth their while
to raise the prices of
materials which Russia has to
import. To some extent the urgent
Russian purchases are bound to
produce an effect on prices which
is out of proportion to the
relative quantities involved. The
ques¬
tion is whether the Russian
buying agents deliberately exaggerate
the effect of their
purchases. No private buyers would do such
thing, but it is quite conceivable that the Soviet
Government is
willing to incur financial losses by paying higher
prices than neces¬
sary, for the sake of political
advantages it hopes to gain at the
cost of such
comparatively moderate sacrifices.
Those who are inclined to take the
view that this is in fact
what is happening
appear to take a too one-sided view of the
effect of rising raw material
prices. Beyond doubt, the all-round
increase of the cost of
living in democratic countries tends to
cause discontent and to
aggravate the economic problems of rear¬
mament.
That is, however,
only one side of the picture.
The
other side is the
improvement of the balance of payments of the

Steel

American Radiator and Standard

American

is

under

tion

AHis-Chalmers Mfg. Co.
American

a

in

was

at present be
exported

be arranged, the
proceeds
increase Russia's
capacity to buy strategic

to

maintain the
purchasing power of
either the
principal or income of

It

purchase

geously, but with the knowledge
will

impose additional embargoes
can

coun¬

electric

by Merryle

at

there

sterling area, especially Malayan rubber

living

he

to

seems

wool.

the people in the
country.
That the trustee
recognize
problem and face it coura¬

that

not

the entire proceeds of
the Russian

(8)
his

goods, provided that

deliveries will be spent

and middle classes
and
eventually
reduce the standard of
all

is

strategic

those activities which

able,

rent,

This view

specified,

Russia

of

are

economy" and
statist
schemes.

embargo

goods which

to
of

any

were

agreement

all

interest in
"planned

their

ment

a

usually to

Wipe out the savings of the

present

the

private enterprise and investment

public

on their export in
general or
export to Russia and the
satellites
in particular. The
agreement contains no un¬
dertaking on the part of the British Govern¬

pro¬

difficult

is

no

on

condition created
by the Adminis¬
tration in
Washington in an en¬
deavor to build
up a political wel¬
fare state.
A
government

the

international aggressions of

Communism
and
the
domestic
boom in business and
employment
have dimmed American

and

area

whether

economy

The

the

liberty to buy

great war

and

While

by Russia

investment

the

financed

number of

a

area.

corporate trustee has done a
sound and conservative
job in the

improperly

sterling

question

Economic columnist maintains election
results confirm con¬
clusion that business and
employment boom is extinguishing
public's interest in planned

rearmament.

countries outside the
sterling
trade agreement of
Decem¬
ber, 1947, contained a schedule in which
the
goods to be imported

indicates

the

helps

LONDON, Eng.—Another

ficulty in deciding the proportion
of

thus

The

America's Socialist Trend
Waning: Rukeyser

agreement has just been concluded
between Britain and Soviet
Russia, providing for the purchase of
800,000 tons of coarse grain. The
agreement is on lines similar to
those of the agreement
concluded earlier this
year, under which
1,000,000 tons of coarse grain and
150,000
standards of timber have been
imported from
Russia and the satellite
states.
Payment is not
in specific
goods but in sterling which can
be spent in
any part of the

trustee will have dif¬

a

and

reserve

imports.

exchange. Perhaps closer cooperation
among the Democratic
tries might be able to lead to
that solution.

Einzig, in calling attention to the second
Anglo-Russian
trade
agreement, whereby Russia is enabled to
buy strategic
raw materials of
Sterling Area, says, though it is objectional
from political
viewpoint, it is an aid in building up Britain's

fixed income securities and
com¬
mon stocks.
In this connection

timber

Sterling Area wool, tin and rubber to Russia is
bigger or
smaller than the
strategic value of Russian coarse grain and
timber
to Britain is difficult
to answer.
The ideal solution
would be of
course if it were
possible for Britain to cover her
grain and timber
requirements without
having to give Russia strategic materials in

Dr.

of

Russian

value of

By PAUL EINZIG

stocks.

That

of

Implications of 2nd AngloRussian Trade Agreement

and

to

Joins E. E. Mathews

*'

(Special to The Financial
Chronicle)

BOSTON,
Kaufman

Mass.

has

—

Richard

G.

become

affiliated
Edward E. Mathews
Co., 5$
State
Street.
*
^
/

with

•

The Commercial and Financial Chronicle
24

shift

the

of

following

the

are

Vice-Presidents: W. Barton Cum-

Co., has agreed to serve as a diand Frank W. Breitbach,

rector

personal President, will become a director,
trust; William H. French of cus- and Vice-President in charge of

mings and Hugh Weir of

News About Banks

the South Shore office. Mr. Doug-

las Frisby will be the Auditor of
the combined banks. All other

department.

their

ser,

NEW BRANCHES

Bankers

and

ETC.

NEW OFFICERS,

Alfred H. Hau-

of investment; and William G.
Laemmel, Charles S. Parker, Jr.,
and Emil C. Williams, of the bond

tomers' securities;

CONSOLIDATIONS

REVISED

CAPITALIZATIONS

*

*

*

host

was

the

at

21,

Nov.

on

Quarter Century Club of the bank
in the
Sert Room of the

held

has a

The Club

Waldorf-Astoria.

membership of 230 of which

178
actively employed and 52 have

are

retired. At

election which pre¬

an

Mazzola succeeded Ralph G. Peterson
Joseph

meeting,

the

ceded

if

if

z

nounced

The Board of Trustees of Central

Company

Hanover Bank and Trust

33 of the bank's
City. Mr.

which comprises

New York

offices in

55

will

Mahoney

Macdonald

Ernest

succeed

the

The Hanover Bank. Subject to

to

serve

member of the Queens Com¬

a

as

continue

will

Irwin

Assistant

formerly

been

services.

the

declared

21

bank

the

of

Trustees

The
Nov.

on

regular

,

have

Vice-

Assistant

appointed

20

concern

A

dividend

stock

of

share of

one

capital stock for each seven held,

payable
which

22.

Jan.

is

to stockholders
This dividend,

15,

Feb.

record

of

subject

approval by

to

stockholders at the annual meet¬

ing

17, will increase the
of
outstanding
shares

Jan.

on

number

from 1,050,000 to 1,200,000, and

the

.

Thursday, November 23, 1950

.

Club,

on

Hall

Managers, respectively, of

sistant

Columbus Circle
57th Street offices. Following

the

company's

and

several

the

investment

Mr. Block joined

fields,

Trust

Manufacturers

of

staff

the

in

years

banking
in

been appointed

have

1935; he was appointed an As-

1943.

share

the

on

enlarged

capitalization.
The

adopted

100

Hanover
a

India

was

when the
organized by

ago

years

Bank

was

meeting

businessmen

of

group

at

"Hanover"

name

House, Hanover Square,

New York. The Hanover absorbed

in

Continental

the

turn

National

Bank, the Gallatin National Bank
the

and

Greenwich

The

Bank.

change

the

was

Mr. Middleton, after several

V

rt'

It

announced

was

the

that

Nov.

on

Rochelle Trust

New

17
Co.

has placed

of New Rochelle, N. Y.,

which

began

Central

operations

Trust,

Union

Bank,

in

1831.

Trust

and

The Plaza

Bank—through a series
mergers
—
become
Central

of

Union

Trust

Company,

which

merged with the Hanover to form
Central

Hanover

Company.
which

Bank

Trust

charter

The

the

and

bank

under

operates

1948, he
Account¬

September,

since

1941;

November,

has been in charge of the

ing Division of the Foreign
partment.
Mr. Barry, first

De¬
em¬

ployed by Manufacturers Trust as
office

an

1936,

became

analyst

several years has been a

of

all

of

Christensen, President
the

America

elected

was

companies

Fore

Trustee

a

the

at

regular

of

He

Company

of

the*

fills

the

by the resigna¬
Culver, who had

Bernard

served as

Central

meeting

week.

created

vacancy

tion

this

the

Group,

of

Hanover Bank and Trust

Trustees

of

Insurance

Trustee since 1939.

a

if

if

if

the Board of the Federal Reserve

that

17

President

Burr

of

the

P.

What
able

*

First

National

Bank
N.

of
Cortland, at Cortland,
Y., has been elected by mem¬

ber banks in

Group 2

as a

the

is termed

valu¬

most

shipment in this
history was completed

country's

20 when

Nov.

on

*

business

$5,000,000,000 of
moved
by
the
Trust

&

from

New York

165

Co.

of

Broadway to

its office at 30 Broad Street.

The

securities represented not only the
investments of this 126-year-old

bank, but holdings in its custodian,
customers'
trust and
300

securities, personal
The

bond departments.

employees

ments

and

investment

been

of
the

of

these

depart¬

tabulating and

analysis divisions, have

transferred

to

Broad

30

Street in a move to improve the
efficiency of the bank's securities

ter

class A

for

board

of

move

will

N.

customers.

Jackson,

on

Cleveland,

the

County

$2,047,000

as

that the trust

is further stated

It

business since

in

company,

had assets of more than
and

1888,

$25,000,000

$22,651,000 as of

deposits of

Nov.

Chairman

Bax¬

of

the

the

bank, said: "This
bring to the heart of

the financial district those depart¬

ments
most

the

of
to

do

bank
with

which

the

have

securities

business."

of the stock-

Special meetings

National

Franklin

the

of

holders

of Franklin

Square, Nassau

County, N. Y., and the South Shore
Trust
Co.
of
Rockville
Centre,

called for Dec. 11

N. Y., have been

Rochester,

reelected

Group 2

of

the

chosen

as

Reserve
for

a

N. Y., has
by member banks
class B director

a

Bank.

term

of

Each

three

was

years

beginning Jan. 1, next. Mr. Cleve¬
land succeeds Frederic E. Worden
class A director,
expires Dec. 31.

as




whose

term

of

of

the

proved

the

usual

directors

The

the

and

close

all

of

details

business Nov.
of

the

move

16,

were

and,

if

stock dividend will be declared at

new

shares

Dec.

29

Dec.

18.

would

be

stockholders

to

The capital,

H.

has

Hawks

*

been

succeeding Edwin Allen Stebbins

who has been chosen to the newly

created

post

board.

Both,

Rochester

Chairman of

of

surplus, and

000, exclusive of $2,512,000 of
bank

under the

the

institutions

two

and charter of the

name

The

Franklin National Bank.

according

to

"Times-Union"

vember,

will

positions

on

Feb.

of

stand at $72,100,000. :

now

*

*

stock

if

increase

to

of

solidation

six

depart¬

ments of the bank from 165 Broad¬

will not disturb the banking
operations already located at 30
way

Broad

Street.

Among the officers

moving to 30 Broad

as

a

result

of

Oct. 11, from $500,000

on

*

if

*

Effective Nov. 1, the Merchants
National Bank of Topeka, Kans.,

increased its capital from $500,000

$250,000.

by

stock dividend of

a

*

As

new

of

if

tf

;

result of the sale of

a

stock,

new

The

President

was

of the Rochester Trust & Safe
Deposit Co., now merged into the
Lincoln Rochester Trust Co., and

the

$25,000

capital

directors of

of the

ing

He

year.

has

if

Nov.

1927.

Worth, Texas
tion

of J.

announce

t

Fort

the

Edward

National Bank, of Fort Edward,
N.

Y., was placed in voluntary
liquidation, having been absorbed
on Nov. 1
by the Glens Falls Na¬
tional Bank

&

Falls, N. Y.

The Fort Edward in¬

Trust Co. of Glens

approved by the directors of both

approval

banks, is subject to the

of the stockholders and the

the Currency

troller of

Comp¬

in Wash¬

that the
consolidation will be effected by

ington.

is announced

It

shares of
National Bank stock ($10

Franklin

value)

par

South

l4/s

of

exchange

an

month

for each share of the
Trust Co. stock, $20

Shore

capital of $75,000.

a

Oct. 20, the Glens

ago,

$450,000 to $510,000 through
sale of $60,000 of new stock.
*

At

special

a

shareholders

of

agement
from

recommend

the

authorized

$400,000.

the

The

Currency

desirous of

11

shares

receiving cash for their vstock in

to

stockholders

of

of

stock

of

the

National

Bank;

to

this

shares

close

now

of

President

states that it
tion

of

group

underwriters

under

dation.

W.

C.

the

terms

of

the

consoli¬

of

.

annum

&

Co., Grimm &

and Hallowell Sulz¬

on

agreement Mrs.

George W. Loft, principal
of

the

South

Shore

stock¬
Trust

1.

election

of A.

Assistant

California
and

R.

if

Bank,

W.

D.

Jennings

Vice-President

of Los

Franson

of

Angeles,
John

and

Murray to Assistant Cashiers,
announced

the

Nov.

13

President.

bank

have

of

suance.

by

J.

was

Frank

L.

The directors of

authorized

the

100,000 shares of

is¬

com¬

stock at

$40 per share offered
through rights to shareholders of
record Nov. 15 on the basis of

third

share

for

each

With the issue of the
the

bank

all

of

ized.

will

From the

the

$2,500,000
shares

shares,

new

have

outstanding
400,000 shares author¬

the

through

one-

held.

share

of

value

par

will

$4,000,000 realized

sale

the

of

increase

stock,

the

the

new

bank's

capital

stock from $7,500,000 to
$10,000,000. The remaining $1,500,000 together with $1,000,000 trans¬

profits, will
surplus, bringing that
figure to $10,000,000. With undi¬
vided profits of more than $5,000,000 the

bank's

aggregate total of

capital

funds

will

then

exceed

$25,000,000. Fractional shares will
be

not

and

issued

but

wholesale

bought

both

fractional

warrants

may

be

sold from Nov. 15, date

or

of issue of the warrants, until Dec.

at

the

Nov.

29.

Naughton
is the present inten¬
M.

directors
„v

to
„

the

larger

continue

number of

the unsubscribed

With
(Special

The

stock.

Bank

Proctor, Cook

to The Financial

BOSTON,

Benedict
With

:

Chronicle)'

Mass. —Gordon

has

become

Proctor,

Cook

Congress Street,
New York

if

of

written

paid

and

M.

connected
&

Co.,

35

members of the

Boston

Stock Ex¬

changes.

of Virginia, at Richmond, Va, are
to hold
to

a

special meeting

consider

ment to

consolidation

on

stockholders

of

Mr. Roth states that "under the

be

record

of

*

The

27

Philadelphia.

will

held

shares.

The underwriting group is

Langley

shares for each

the current dividend rate of $2 per

berger & Co. and Boenning & Co.

holder

the

ap¬

stock dividend in

Joseph

sell

a

capital

already

business

end, these holders have agreed to
to

The

if

vestment houses who have under¬

a

new

Franklin

if

•

15, the expiration date. Blyth &
Co., Inc., head a syndicate of in¬

the ratio of 5

lieu

in¬

Comptroller of

has

shareholders,

are

,

proved this step; if ratified by the

Several of the iarger stockannounced,

an

11,000 to 16,000 shares of $25
or from $275,000

it

is

Na-

Cumberland, Md.,

holders of the South Shore Trust,

par.

the

of

Second

value each

par

to

will

in

crease

Vice-

ferred from undivided

Nov. 28, the directors and man¬

on

elec¬

as

be added to

meeting
the

of

tional Bank

the

*

*

the

Stuart Lydick

■

mon

;f

#

2,

President

been

of the bank since

First Na¬

The

tional Bank of Fort Worth at Fort

bank, and re-entered active bank- King,

ing as Vice-President the follow-

agreement, unanimously

move

the

$250,000

the, capital

to $750,000.

the

Mr. Hawks,

15.

dividend

No¬

their

assume

George H. Hawks,

con-

that the

of

re¬

The total resources of the

serves.

to $750,000

Falls National Bank & Trust Co.
increased its capital stock from

of acting on an agreement to

pose

of New York,

noted

on

record

dend, would approximate $4,400,-

the

spective institutions, for the purconsolidate

on

is

of

undivided profits of the bank, after
the declaration of the stock divi¬

ton, Wis.,
Thomas

Breitbach, Presidents of their re-

business

It

The

issued

the First National Bank of Apple-

A

Co., and Hornblower & Weeks, all

20.

ap¬

charter
adopted, the

proposed

Currency.

by Arthur T. Roth and Frank W.

completed in time for the start of
Nov.

cash

have

served

stitution had

composed of Blair, Rollins & Co.,

Company,

dividend.

bulletin of the Comptroller of the

On

at

been

year

distribution

A

if

if

the Franklin National Bank stock
The

available

made

earnings of the bank in
1950, in addition to the

Oct. 16, it is learned from a recent

15.

Director

in

the

been

have

effective

its

which would be available to them

Kodak

Bank

became

capital funds by $360,000 to a total
of

operation, it is stated, took
to plan; the packing
phase of the job actually started

Eastman

National

Richmond

until 1904. He then entered other
fields of business. In 1923 he was
of Aug. 31, 1950. elected a trustee of the savings
increased

period,

same

five months

the

the

his grandfather, Thomas, was associated with the Rochester Saviugs from 1879 to 1909. Mr. Stebof $1,250,000 ad- bins was associated with the old
F. C. and has, in German-American Bank from 1902

by

director of the Reserve Bank; and
Marion B. Folsom, Treasurer and
of

both

from the

•

Bank

*

venience

Bank of New York announced

security
last
senior se¬

business and to gain greater con¬

Robert T. Stevens, Chairman of

Nov.

October,

curity analyst.

were

by The Hanover Bank under this

junior

a

Bank

charter.

$1,800,000 in April, 1950. The

stock dividend of $200,000 and the
addition
to
surplus of $200,000

Insurance

$200,000 raised by the sale of common stock,
it is stated, are being
used to retire all the preferred
stock of New Rochelle Trust held

1940, and for the

in

Chemical

Frank A.

in

messenger

securities

in 1873 and all banking and

from

to

since

sur¬

was

paid off $450,000

Mr. Finnan has been with Manu¬

The

increased to this figure

plus

vanced by the R.

facturers. Trust

the pres¬

surplus of $2,000,000.

1935; he was appointed an Assist¬
Secretary in October, 1943.

was

trust operations will be continued

ent

the Reconstruction
Finance
Corporation. It is added that in
the past five years the bank has

granted to the Central Trust Com¬
pany

make it equal to

would

with another banking insti¬
tution,
was
first employed by
Manufacturers Trust in December,
ant

one

,

shares

presently held.
This increase in
the capital of the bank to $2,000,000

President effective Jan.

years

of

who is 34 years of age, has been Gulf National Bank of Gulfport,
Co. of New York $500,000 of 10- a trustee of the bank since Au* Miss., was increased, effective Oet.
'■
year debentures due in 1960. Progust, 1949. He is Treasurer of the 11, from $100,000 to $125,000.
*
*
*
ceeds of the loan, together with
Wollensak Optical Co. His father,
Life

Mutual

The

with

if

Greenwich

of

name

Port Richmond, N. Y., to the Rich-

.

earliest of these to open for busi¬
ness

the

in

of

presented to Mr.

was

company;

Flynn and Donald
As¬

and Thomas J.

F.

the

of

Secretaries

ant

priate gift

present

nine

each

for

„<

Nov. 15. In recognition
years' service, an appro-

security

the

of

The bank anticipates
continuing the annual dividend of
per

will be operated as the South
Shore office of the Franklin National Bank.
^

Savings Bank of Rochester, N. Y.,

Barry,

share

new

to

ratio

the

$3,500,000 and deposits of $50,200,000- The South Shore Trust Co.

elected President of the Rochester

J.

in

stockholders

additional

10,000

issued

be

to

the board meeting on Dec. 8.

ficers and friends at the Montauk

David

of

form

shares

Franklin Square National on the
date had capital funds of

The announcement also stated that

sistent Secretary of the company in

$4.00

Bank

the

in

amendment

the

bank's capital from $21,000,000 to

$24,000,000.

funds of $1,500,000 and deposits of
approximately $17,000,000.
The

Brooklyn, N. Y. by his fellow of¬

Schwab.

Dec.

of

As

capital

President, announces.

ment, have been appointed Assist¬

record

of

Loft.

reported

C. Von Elm,

11,
and in addition the board declared
stockholders

E.

Savings

Roosevelt

W.

it

1950,

Presidents of the company, Henry

of his 30

2,

was

Schwab,
Vice-President and Comptroller of

analysis department, and James C.
Finnan,
of the foreign depart¬

of

Jan.

payable

party

dinner
Joseph

*to

tendered

Franklin

The South Shore

George

1,

Port

if

if

surprise

Char-

founded in 1929 by

was

late

mond

Board of Trade.
if

the

as

in

of New York -Mariner Harbor National Bank of

Co.

past Governor of the Bronx

a

1926

Trust Co.

Mr. Vogt

ago.

years

Insurance

capacities."

Bank in 1949.

director of the Colonial v.r>A

was a

in

continue

of" same

He founded his^awn

Fountain Co.

$1.00 per
next to

dividend

quarterly
share

board

Vogt's Ice Cream, Inc. Mr. Vogt
began as a salesman for the Reid
Ice Cream Co. and subsequently
was
a
salesman
for the Fisher

57th

office at 5th Avenue,

Mr. Vogt

12

the

of

Chairman

Secretaries of Manufacturers Trust

Street

C

died Nov

New York
was

and

1951. No change is
involved in the bank's operations,
in its banking or trust

North

the

S. Block and Franklin H.

Middleton,

Vogt, a trustee of
Side Savings Bank of

Frederick

will

present

Oct.

*

*

officers

Square National, the bank changed
its name to the Franklin National

the

division.

utilities

Life

Company of New York, at its

fective during

Valentine, Jr., as an
Treasurer in the public

Assistant

if

if

if

appointment

the

announces

Stephen

also

mittee.

approval of stockholders on Jan.
17 the short title will become ef¬

or

S.

April

retire

will

who

recommended for

simplification
the
shortening of our corporate title to

of

*

Vice-Presi¬
dent, will take charge of the
Queens
Division
of
the
bank

of

purposes

Jan.

Nov. 20 that on

on

an¬

York

1, Lester R. Mahoney,

however,

of New York has

York

of New

Company,

30, next after 23 years of service
with the bank. Mr.
Macdonald,

President of the Club.

as

the Bank of the

dent of
tan

Presi¬
Manhat¬

Marshall,

C.

Lawrence

Jackson, Chairman of

N. Baxter

Chemical Bank & Trust Company

active
tered

Guaranty Trust Company of New

a

.

(2000)

permit

a

charter

an

on

Nov.

amend¬

increase in the

With
(Special

Paine, Webber Co.
to The Financial Chronicle)

BOSTON,

Mass.

Robert

H.

with Paine, Web¬

bank's capital stock from $1,800,000

Traylor is

to

ber, Jackson & Curtis, 24 Federal

be

$2,000,000. This increase would
effected

by

a

stock dividend

Street.

now

Volume 172

Number 4962

.

.

The Commercial and Financial Chronicle

.

(2001)
Continued

from

icant

10

page

the

vantage
whose

over

competing

capital

had

im-

The

This discrimination, often
resting on accidental circum-

dition

been

not

-

last wartime tax.

conditions

paired.

generally
the

of

.

prosperous

con-

country during the

past five years, and the type of
stances, might seriously affect new revisions outlined here would encorporations attempting to com- able
taxpayers generally to estabpete with those receiving such a lish a fair and reasonable base
for
tax advantage.
the measurement of defense profIt is possible to remove this disits.
Although the need for relief

crimination

and

yet

give

proper

would

recognition to temporary losses of
capital by limiting the allowance
capital impairment attributable

mal

to recent years.

Under

the

World

credit

for
was

War

using

the

allowed

were

or

equity

new

tax

capital,

must

with

the

Whether

primary use is made of an earnings standard or of an invested
capital standard, cases will arise

porations

using the average base where the tax might occasion seriearnings credit were al- ous hardship in the absence of rea
flat 8% on new capital: lief.

period
lowed

of

Lei's Have

motivation

present

Instead of Excess Profits
Levy

regular

45%
and surtax,
tax

In

uation

War

II

profgraduated

however,

eliminated

was

rate

I may sum
up the requirements
that should be met
by a

profits tax plan

(1)

grad-

and

all excess profits

on

It is our tentative conclusion that under
present

be

graduation

It

necessary.

would

would

draft

to

tained, and is therefore likely to

spread

have

less

desirable

To

incentive

achieve

the

equity capital arising

Although

*

have
some

been

at

record

Wide

years.

levels

in

recent

been adversely affected by
abnormal or unusual occur-

beyond the taxpayer's

rence

.

.

_

result if this allowance

depended

the fortuitous shift of corporations from the earnings credit
to the invested capital credit. The
upon

staff

has

_

tion

to

that

use

view

firms

an

equal to

ance

return

(3)

rev-

and

would

you

enjoy

base.

to

ognition

seeking

given

to

retained

earn-

rflief ai^d
was difficult
The

administer.

relief

,,

became

in

Lieu

Experience
desirable
the

of

type

the

of profits

consideration

significant

to

fair

advantages

tax

under

with

the

replacing
with

the

creasing

Several

purpose.

gained

specific

and

111-

imiim credit would

min-

a

with

corporation

a

to

not

profits

tax

exceeded

its

until

its

credit

'by S^'underl mini-

mum
mum

tion

earnings

credit of
no cornoraof ,25.000
$25,000 no
corpora
would be taxable, unless its

income exceeded $25,000..
A minimum credit concentrates

net

relief

in

brackets,

the

lower

since it

net

income

be

utilized

can

only by those firms whose
puted credits
Thus
would
area

ancf
for

are

provide

minimum

these

auditing

new

of

of

a

businesses

lax

corporatkms

greatly simplified.
use

credit

larger favorable

a

for small and

the

com¬

less than $25,000.

825,000

a

T.

o

rehjrns

would

be

credit

would

al<?n reduce
rpfiupp ciihqfanfiallv thp mim
also
substantially the num
ber of claims for relief
by small

corporations.

Such

cases

ac-

ter

or

approximately

13,000

of

the

a quar-

54,000

relief

claims filed under the World War
T

-

•

,

il, tax,

and

for

an

even

greater

trqtive

burden

would

adminis-

be

highly

desirable.




are

tax

win

j

ap
v

whose

current

B

f

Ihe

and

duction

" point

T

general

this

Tax

the

prof¬
aver¬

IVz

increase

tribution

of

in

provi-

tax

corporate

Rate

average

with

earnings

100%

of

this

between

average

75

np^fitarlfxcenss!vheeiyhlgh1ghVr,ates
tend

to

increase

pressures
waste

In

and

because
they
inefficiency.

induce-

and

in

tensive

the

absence

economic

of

I

am

the

war-

compre-

controls,

it

limiting

general

more

under

suggestions
vjsion

my

features of the

I

have

made

™centives of our private enter-

ited

The

for

to

the

essentials

the concept of the tax.

are

if

lim-

underlying
Since time

Nonetheless, a during this session is short, you
P™Perly designed profits tax is wiU doubtless want to confine
fasential for a balanced anti"in" this year's legislation to basic esprlse

econonW-

P™frwhf!n^Lpe.f0nnn0TnC sentials, deferring consideration

of

call

about

Br

odity
exchanges.
The

M

•.

centagc

points

only a few per¬
higher than those

regular corporation income

Stein Bros. &
Marshall

with

S.

Lehman

Morse,
Brothers

Such a tax would impose recently with American
additional burdens by way of tax- Corp., is now associated
payers> compliance and tax-administration which would be warranted

only if it produced signif-

Bros.

&

Boyce

as

Boyce
formerly
and

more

Securities

at
in

h

a n

a

the

ttan

a

Room

of

New

York

the

Athletic Club.
Marcus Goodbody

Each

this

new

member

war.

was

presented

firm,

date

date

of

rate

we

sug¬

was

club,

even

the

during

war

years

on

of

taxes—normal,

would

give

combined

a

control

we

employment

presentation.

having
the

firm

membership

become

associated

53

ago.

years

there

in

would

total

not

only

but

also

be

profits
of

or

in¬

no

after

tax

during

the

Defense

a

Defense

a

flat rate

a

CHICAGO, 111.—Stone & Web¬
ster
A.

is

contained

in

Profits

our

policy

is

Corp.,

the

Defense

be enacted
assure

for

now

further

provement.

Profits

Income

Also

Tax

one

study
we

Tax

should

only
and im¬

year

recommend

further stucly of excises
looking to
an increase in their
yield later in
1951. We
believe that
Congress
can

act

will

quickly and decisively if
two things:

do

First,

make

use

of

*

Second,

base

its

action

urgent

objectives

about

there is

common

strengthen

on

associated

now

and

with

Shuman, Agnew Adds
(Special

SAN
mond

to The

Financial

Chronicle)

FRANCISCO, Calif.—Ray¬
J.

Stewart

Doyle,
are

Jr.

Max

and

with

now

D.

Shuman,

Agnew & Co., 155 Sansome Street,
members

of

the

New

York

and

San Francisco Stock
Exchanges.

Joins Schirmer,
(Special

to The

BOSTON,
Rybicki
staff of

Mass.

has

Atherton

Financial

—

been

Chronicle)

'<

Heronin

J.

added

the

to

Schirmer, Atherton & Co.,

Congress
New

Street,

York

and

members
Boston

of

Stock

Exchanges.

which

agreement

America

the

South

in

statement.
Defense

33

that Walter

announce

charge of the municipal
department of their Chicago of¬
fice. Mr. Hintz was
formerly asso¬
ciated with McDougal and
Condon,
Inc., as Vice-President and Secre¬
tary.

Income

description of the Defense Income

Street,

Hintz

them

income above

on

Securities

Clark

the present exemption and tax. A

to

The

totals 26.

now

Stone & Webster

inflation

should, total profits
1951, under our pro¬

because

Both

and

Marcus

Walter Hintz With

tax

and

in

sion

and

sterling silver
which was in¬

Goodbody, senior partner of the
firm, is also senior member of the
with

In

a

1945

Thus

Tax

tray

to your attention

taken

years.

with

the

50

Marshall Morse With

took

place
dinner

the

*
ev? yu U i^l! aSree that
*here would be little advantage,
^
any>
Jn adopting this new tax
if its rales were

cere¬

monies

tion.

■

and

c o m m

simple and
well-established methods of taxa¬

-

coun¬

stock

fafr

share of the tax load

the

try's principal

it

_

ad way;
York

o

City, members
of

wo.dH he
Pr0Y.lsl°ns havlnS ™ore restricted
dividuals would be ,tnfafr
unfair nnW
unless application
to next year,

c0rp0rate profits carry their

of

New

share of corporate

a

Tax

re-

the World War II tax,

is- that approach is
adopted,

f>ecessary to retain the economic

to

as

to

Tax at

to

TwentyGoodbody
Co., 115

&

our

1951 defense program.
We believe that
Congress should
and can enact in the
present ses¬

^eir

consideration.

members of
dissented
from

high

war

crease

comments

Club

ad¬

were

the

serving

either

fflS.h°W
tax

situation short of total

a

and

inflationary-

Year

into

scribed his name, the name of the

49.

pay more

°n

16

$3

would be almost exactly
equal to profits after tax in 1947-

increased

over

Five

members

new

mitted Nov.

all

posal,

,

mgrmarrinaffaterrnd
earni"gs
had actually
this average would
Tit hfeTw ITf "T 7*%

Admits New Members

50% except in all-out

as we can

Th® type of defer>se tax 1 have only"a Wall"portion of a fiat'inde£t-'nked n?"s produce adequate crease
Finally,
firms
whose
high marginal rates ana withoS
witnout

Goodbody 25-Yr. Glib

in

on
as

six

Second, if

pay

have

these
questions "Yes"
will have the tax you should

rate of 53%.

Firms

want

you

answered
you

Defense

much

work

recommendation and said that the
combined rates should not
exceed

tion

would

would

When

on

effect
a

as

after tax

of the increase.

live?

and

excess

tax

three-year

in

that

equal rate

porate

corporate income
increase.
Firms whose

none

to

of

inclusive, total cor¬
surtax and
profits taxes—were 52.5%
of corporate income. Our
sugges¬

be

earnings had declined below 75%
of the

subject

rate

to

If

general

rate

ex-

basic

Add

corporations.

1942

burdens under
this profits tax will differ from an

equal

38%

$25,000

an

income

percentage

the

at

of

Profits Tax at

the

re-

will

tax

excess

rate

the

take as

base-period

credit

a

them

these

on#the first $25,000. This 38%

two facts

Excess

relief

on

in

eWivalent to

basic

and

sons

which they can return and
productively and live as we

following

gest. First, the combined tax rate
our
Committee
suggests
would

£

resulting from the 25%

crease

the

our

possi¬

was

I wish

to

„

higher than the

no

age of their best three

pay

tax-

this

supports

...1

added

meeting

profits

in

the

If

daughters must fight, will this tax
help build them an America to

it

18%

point that
Committee

years* For these firms the tax in"

consideration,

the World War II relief
provisions.
of

J

materials

fo[.

of .the

elimination

f

The sta(t has assembled

proportion of the litigation under

Thp
Ihe

this

firms

some

its

protds pax Council provide guidfQr the formulatjon
of an

,

counted for

law.

be

„

ance

Moreover, the

minimum

.

S^fTevenue

actual

would

excess

reduced

thon

sion>

ex^mtpIebelundetrh\hTsp™ciiic ex'be' subject

a

,

apply only to

corporations

provide

best

to

most

are

so

many

do

provide them with ample, modern

enacted

the

is

now,

billion is needed from this
source
the rate of Defense
Profits Tax
should be 15%,
giving a combined
rate of 53%. I should note
at this

to

•

specific exemption is tensive

a

granted to all corporations,

emption

™
q

appr0prjate

the amount to $25,000.

^eas

those

by

exemption

credit

minimum

a

to

must

to

came

as

1946-49.

defense profits
also

raise

Establish

profits

now

old

and

considering
we

corporate

recognized that if
the base period
earnings credit is

^°n^gher rate ofretumon
^Juoi
ITll
a"f0V^
y
jt P eci j attention
.

profits.

would, be

be

It

of relief which lends

determination. New and growing

excess profits
$10,000 specific ex-<

eruption for this

measure

Korea

tests:

pre-1950 earnings.

on

be
The

itself to reasonable administrative

The World War II
tax provided a

extremes.

is

it

taxpayers

defense

avoid

some

simple,

upon

national

our

this the tax that will

Seven

proposal

reduction in the credit based

SOme

,.

aplication

that

suggests
limit

to

to

objective should

of

Specific Exemption

pre-dated

rule

mther^Jhan
exception.
In relief ^the^
provisions should
revised

Minimum Credit

the

,
_

ings'in determining both the earnings and invested capital credits.

The fact that

corporation

be

should

After

This

greater

agreed

bilities

capital
big ad-

a

should

the industrial

enact.

rec¬

profits

needed from 1951
profits,
which may be as much as
$3 bil¬
lion.

Con-

restricted

_

consider in the alignment of these
I would prefer to see rec-

credits.

such

revenue

allow-

an

invested

thus

effort, while

that

It

be

can

high rates of

very

profits attributable

from

power? If our sons and daughters
have to fight, next
year, five years
from now, ten years from

through the economy and
be
isolated by statutory

quickly.
(4) It

posicredit

a

earnings

their

on

of

in

would, in effect, obtain

siderable detail the circumstances vantage over those
under which taxpayers would be the invested capital
for your in- entitled to relief. The law encouradvantage is even
will want to aSe.d the filing of about 54,000 than it was under

assembled

formation "data

con-

trol.
The general relief provisions of
World War II specified in con-

discrepancies would

then

gress

on

least

that underlies

power

formulas.

President's

the

was

allowance for the reinvestment of

earnings. Such reinvestments have

tax that will contribute most and

equipment?

as

America.

defense

cannot

ef-

earnings standard

an

the

ognizing

flat rate,

a

tax

a

to

enue objective with a tax of the
type I have described, and with a
from the reinvestment of
earnings takes into account both differ75% tax rate, it would be neceswere granted
under the invested ences
in
risk
and
differences
Sary to reduce base period earncapital credit but not under the' in
operating
efficiency as re- ings by 25%
for
purposes
of
earnings credit.
fleeted in past earnings, it is incomputing the credit.
This cutThe ' provisions
of
the
World adequate for the new or rapidly
back of the base period to
75%
War II law are in need of revigrowing firm whose profit potenmay be justified on grounds simsion. Otherwise most
corporations, tialities have not yet been dem- jiar to those which
underlay the
which will use the base period onstrated.
A
similar
problem cutback to 95% in the World
War
earnings credit, would obtain no arises where base period earnings n tax. It

Increases in

weaken

increase the top marginal
rate, if
the revenue objective is to be ob-

fects than

far

as

(2) It should comply as well as
possible with your instructions to

not

tend

avoid

progress

and

substituted.

conditions

as

should

possible very high marginal rates
that will retard economic

flat

a

It

corporate
follows:

the strength and
America. Is this the

upon

of

subtract

Suggested Requirements

normal

effect

security

retroactivity.

excess

with

1942,

its

extremely /undesirable

the

over

corporation

be

impose further retroactive

tax¬
ation on 1950 profits at
this time
and that the budget situation
does
not justify such

circumstances

75% appears to
This would mean

started

rates.

would
to

production,

differential tax of 30%

a

Stiff Defense Tax

a

$3 billion. We believe that it

'uictii

around

be reasonable.

its

is

exess

provisions

necessarily be drafted
typical firm in mind.

25% -larger than the
credit allowed on old capital: Cor-

the

rate

a

was

defense

a

General

a

Under

over-all

of

Continued from
page 11

If under present
the absence of

maximize

The World

Equi-

cases

in

production

to

tration

II

tax,
invested

centive

of the most troublesome
problems encountered in the adminis-

Capital

method

which

these

profits tax.

corporations

capital

remain.

in

one

.

New

would

treatment

At

revenue.

corporations were allowed to retain only a small part of
any ad¬
ditional income they
earn, they
may not be left with sufficient in-

greatly reduced, abnor-

cases

table

to

be

and

wartime

Relief Provisions

concerns

of

time, however, it is also
as high as
employed in the

desirable to avoid rates
the 85V2% rate

Snyder Explains Excess
Profits Tax Proposals
.

amounts

same

25

to

—

to

fight

inflation.

Bradley Higbie Adds
(Special

to The

DETROIT,

Financial

Mich.

Chronicle)

—

Edgar

L.

As

Americans, as parents of
with Stein America's fighting men, we ask
Manager of only this of the Committee and the

their municipal department in the

Congress.

New York office, 14 Wall Street.

ure

any

We want you to meas¬
tax by the standard of

Jacques

has

staff

Bradley

of

Guardian

been

added

Higbie

Building,

to

&

members

the Detroit Stock Exchange.

the

Co.,
of

Chronicle

The Commercial and Financial
26

perately hard it is to get things

Continued from page 3

going

after a real smash-

again

prices which is still under way
voluntary abatement.

without any

Thursday, November 23, 1950

.

When

What's Ahead ?-Long-and

from

the

to the

Short-Teim Prospects
article

•cert

into

said:

foreign affairs
responsibility. Mili¬
tary policy in our democratic
America must always remain the
servant of national aims.
But to¬
-day, amid new global dangers,
neither the diplomat nor the sol¬
dier alone can lead the American
people to wise international ac¬
tion.
Both voices must be heard
if the
course
pursued is to be
realistic and effective. The soldier
van see
strategic perils that the
•civilian might readily overlook.
The soldier mwst not direct the
civilian policy, but the civilian
must never overcommit the sol¬
dier.
We
must never have a
foreign
policy that sends our
.armed forces to world tasks be¬
yond their capabilities."
I suspect that Secretary Acheson
would
fully
endorse
this
"The conduct of
a

civilian

So, too, would Secre¬

statement.

tary Marshall, who has had both
military and diplomatic respon¬
sibilities.
So would you and I—

But it needs to
&e
completed with these
sen¬
tences: Neither should the mili¬
tary and foreign relations services,
ias far

it goes.

as

jointly or separately, overcommit
the
nation's
industrial
neither

Nor should our foreign
policy, our military effort, or our
system.

undertakings overcom¬

Industrial
mit

financial

our

resources

of

solvency

the

-jeopardize

monetary system.

or

a

which

in

ment

November,

in

submerged

quite

be

would

they

1952.
I

fully

am

think

souls

confident

that

aware

many
can

we

They point out
that there is a great deal more
stretch in the system that we have
now
built up with the Federal
inflation.

manage

Reserve

Federal De¬
Corporation, the

the

Board,

posit Insurance

already accepted $30 billion
on a $45 billion or even

for years

ducing non-military expenditures
are

of
"We

What
about?"
To

to be doing all right.

seem

is

They say:

into gold.

paper

to

there

worry

In the mixed psy¬

this I answer:

chological and mechanical process
of our money-credit-market sys¬
comes
there is loss of confidence

when

which

monetary unit in
registered and

the

in

point

breaking

the

tem,

values

prop¬

are

A dis¬
American not many
said: "The only thing
to fear is fear itself."

ago

years

have

we

might be applied
to the present situation
by say¬
ing: The greatest thing we have
to
fear
in the economy of the
United States is a spreading fear
That

aphorism

the dollar."

to the future of

as

in

us

already

is

distrust

That

It is not too

degree.
it by

some

upon

late

to

sound

cure

The signs of fear are

enunciated.

that

means

$10 to $15

I
cannot view the consequences of
adding that amount to the present
national debt of nearly $260 bil¬
lion with any complacency what¬
billion

a

showdown
the

Personally,

year.

We have not

ever.

the

on

yet come to a
refinancing of

which

that debt
by the public.

part

held

of

is

One

Business

of

Year

to wrestle with
that financial break¬
might lie ahead as close as

Leaving

you

the thought
down

two years

from now, I turn to the
question of what 1950 may do to
lessen or to heighten that danger.
Will
the
82nd
Congress
play
"politics
unions

usual"?

as

will

the

of

to

down

several

the

by

the

situation

and

sobered

be

seriousness
buckle

in

leaders

the

groups

Will farmers,

businessmen insist on

and

"business

If

usual"?

as

the

use

brains

of good business

one year

management

of

national af¬

our

to

through their votes on Elec¬
Day. But only when we see

tion

their

how

chosen

Senators

and

Representatives talk and vote on
particular policies and measures
shall

know in

we

nation's

feet

what path

the

going to be set

are

decade of the '50s.

for the

Here

will

I

give

you

few

a

weighed daily accumulating

be

to

military and civilian, and pretty
wobbly
on
levying taxes that
would pay as we go.
One reason
this

for

be

easy-going

the probable

attitude will

lull in the infla¬

tionary rush, now that revenues
are being stepped up before war
spending gets full headway. Even
in the short run, however, there
are other forces which may offset
the
few
disinflationary factors.
will

Congress

probably

accept

a

deficit of $10 billion plus or minus

easiest

the

sure

impasse

of

out

way

among

any

pres¬

They have already
sweeping controls, and

groups.

authorized

that

is

guess

my

these

controls

ready to build for
and, beyond
that, for the longer future.
Our
productive capacities are
very
great.
Will we use them
fully?
Even these capacities are

that

the

sary

Will

limitless.

not

scale

we

people
adopt • during
the next few months.
We cannot
American

election

the

is

out

the

of

way.

commitment

that

makes

would make

says

military

a

us

feel

that the military expert

secure or

any

into

plunge

eimply

safe against

us

foreseeable contingency, and

then

let

economy

our

financial system
of that

and

our

take the impact

military program as best

they may. National security rests
on.
the
dollar, the government
Ijond, and the price index just as
much as

it does

on

the tank, the

from dollars

into business inven¬

tories

consumer

Nonfarmers

a

Breakdown?

sketched

Having

the

seem

to

ideal

conditions

me

strive for

briefly

most

sumably

will

inflation

tide.

become

that

or

should

we

go

with

up

Recently

the
have

we

nimble

the

that

aware

look abroad for
inflation hedges are moving some
of their capital out of the United
States to havens in Europe, South
who

boys

even

Those

America and other places.

ready to take a chance
"containing"
inflation
may
are

well

what

sound

investors have

and

bidding for equities that pre¬

been

on

Two Years to

durables.
shopping

been

have

for farm land

who

atom bomb and the radar net.

and

a

ponder what happens when

stampede once gets started.
If

"fear

is

itself"

our

greatest

danger, those makers of our mili¬

tary;
industrial
and
financial
policies whose program brings a
prospect of what contagion of fear of the dollar

ten-year period,
I turn to the less reassuring, in¬
deed
may

over

a

alarming,

during the next
instead of skill¬

take place

will have much to

for.

answer

I

not

predicting that fiscal and
work¬ monetary breakdown will take
place
within
the next two years.
ing out an integrated diplomatic,
military, industrial, financial and I am enough of a social scientist
social program of steady power not to be dogmatic on a point
We are dealing with
for the decade, we try to mount like this.
the maximum military strength to human
behavior,
not
a
mere
meet the Kremlin on the field of mechanical process, and it is im¬
battle by 1952 or 1953, this would possible to say that 150-odd mil¬
mean manpower drain, materials
lion people absolutely will act in
shortage, credit strain and fiscal one particular way and not in any
•deficits all piled on top of an other way.
two

If,

years.

fully

and

am

conscientiously

r

economy

already at full strain

as

result of the inflationary pros¬
perity that we have been par¬
laying along ever since World
War II.
a

Of

course

some

switch

from

But

and

we

groups

selves

individuals

try to exempt them¬
the
inflationary

from

process—that

the

is,

higher prices.
do

that

know

pinch

of

The labor unions

it

civilian

by raising wages, and the
employers do it by raising prices.

be, and

But then labor complains that its

to military activity will
in fact already is being,
made.
But intensifying effort in
the
two-year short run rather
than deploying it over the 10-year

long

new

"paid with wooden
nickels," and so they must have
wages are

another

raise,

whereupon

the

Korea

equipped

most

the

were

troops

ever

over¬

committed

But here is the real milk in the
cocoanut.

Congress may be pres¬

sured

into

credit

controls—the

putting

most

dollar the Pentagon
wants," we will have
and hoarding of materials
every

it

waste

will

These
to

suppress

uses

are

fires

are

curtailed

and

of

inflation

prospect,

scaled

frugally

carefully

to

risks and the Defense

calculated

Department held to the business
standards of economy and effi¬

that

ciency

well-run

in a
Ex-Secre¬

demanded

are

corporation.

said: "I do not
have
a
peacetime
Defense
Depart¬

Johnson

tary

to

propose

in

WPA

ment,"
work

the

went vigorously to
(with the aid of a firm of
and

move

management

last

defense

restoration
local

to expand

summer

budget,
was

a

wholesale

announced.

carried news that
1,600 new spaces would be added
to
the
vast
parking
precincts
established at the height of World
War II.
With only a reasonable
amount

in

economic

of

statesman¬

Congress and in the
Branch; in corporation
and in union headquar¬

Executive

offices,

unquestionably

could

ters,

we

carry

the weight of supplying the
and

men

quate

materials

military

for

an

purchasing

The

and

the

dentally,

privae

they

the

businessman

consumer.

quite




Inci¬

possibly

their

costs

Thus, there is
the inflationary spiral

sheer

should

exhaustion.
have

taught

The
us

have

end
except

no

1930s

how des¬

excessive

This

power.

the

or

liquid
was

a

But, in

1951, come to a

cracker.

nut

to

If

marvelous
refuses

business

down—in

prices

get

a

spite of

rising costs—this is either due to
their monopolistic curtailment in
the use of available facilities or
inadequacy of those facili¬

to the

they will not or cannot
those facilities up to the

ties.

program

war

one

resources

of

avoiding faulty

of

the

have.

we

productive

A

ten-

sane

year preparedness program would
not be crippled by lack of pro¬

ductive

capacity.

The questions I
1951

to

seem

have raised for

to be markers on

me

the road to what lies ahead.

They

blank markers at the moment,

are

but

the

lettering will begin to
within
the
next few
months as Congress acts and the
appear

people

that

mean

it

Hopefully,

react.

would

rise

we

to

a

standard of economic sophis¬

new

tication

confronted

issues

social

and
as

responsibility,

are

we

by the grave

domestic

both

of

for¬

and

Realistically, there
discernible dangers that we

eign

policy.

are

at a level of confu¬
political log-rolling that

remain

sion and
will

result
in

during the next few
committing us to
jeopardize

which will both

prosperity

our

freedoms

curtail
prized.

the

and

have

we

F. W, Straus Heads

Conference Division
111. —Frederick

CHICAGO,
Straus,
Straus

W,

the firm of
and Blosser, 135 S. LaSalle
in

partner

Street, is serving as Chairman of
Investment Banking Division

the

annual National Con¬

of the fifth

Christians

of

ference

Professional

Men's

and

Jews

dinner,

to

be

held Dec. 14 in the Stevens Hotel.

Co-Chairman of the Commercial

Banking Division

are

Herbert T.

Spiesberger, 33 N. LaSalle Street,
and John McDonough, Vice-Presi¬

ganization.
Gates
the

They

Dawes,

United

are

or¬

Gen. Charles

Vice-President

of

1925

to

from

States

1929, Albert D. Lasker, President
the

of

tising

Lord

and

agency,

Thomas

now

adver¬

Cone

Foote,

bring
level

for them,

set

then govern¬

ment must step in to

finance new

method

Whatever

building.

materials

makes

still

is

In

scarcer.

government
new

and

manpower

both

will

cases

have

control in

basic

also

sub¬
in¬

dustries whether as mortgagee or
owner.

agreement between

It

remains

labor and management instead of

mark that the

the

being

of wages and

Chief Justice.

Court

who headed a
organize the Na¬

Dawes,

committee

to

tional Conference in Chicago dur¬

ing the

summer

of 1935, is Chair¬

of the Board of the City Na¬

man

tional Bank and Trust Co., of

Chi¬

208 S. LaSalle Street.

cago,

will

Funds raised at the dinner

If

standstill

spiral

be

to

administration

General

is

real, though not completely rigid

endless

the

Now

Superior

to

debauch

becaues
up.

military,

argument

would

raise

to

Chicago

comes

chorus.

gone

-

the

popular ditty
long before
Symington began to sing it.

to
be
self
defeating,
or
counter-inflationary controls that
as

short-run

touches

scarcities

of

manufacture

stantial

price

mili¬

to

this

of

however,

and

must, during

another

phase

civilian

we

have

civilian

from

.used, any substantial enlargement
ade¬ of these industrial capacities

establishment

without disruptive strain.

rather

they

must

con¬

a

shortage of plant capacity
than manpower hoarding,

deficits, such terrific taxes

gerous

the results of

materials

and

back to

the

either dan¬

figures.

with unemploy¬
excessively low

even

down

of industrial capacities. dent of the Harris Trust and Sav¬
pretty clear that the
ings Bank, 115 W. Monroe Street.
philosophy entertained
The dinner will celebrate the
at the apex of the control pyra¬
15th anniversary of the National
mid, namely National
Security Conference in
Chicago and guests
Resources
Board,
is
that
the
will be the founders and original
whole problem of price inflation
Co-Chairmen of the

judgment, if this is to be done,

mean

had,

economic

my

would

equipment

and

It is already

Our

papers

ship

plan

a

Mr. and
Belding, until his retirement
But in
1942, and Judge John P. Mchis rich bass (or is it baritone?)
Goorty,
former
Cook
County
the gives weight and authority to the

engineers)
to get rid of supernumeraries. As
soon
as
Congress made its first
outside

of boom

years

proved quite capable of
all the labor power we

effectively

serve

question

fanned.

manufacturers and merchants say

run

not

What I regard as the most por-

tentuous

Military appropriations need to
be

have

five

has, broadly speaking,

us

has

utilizing

tary use.

civilian

while

government,

by

given
that

courses

"votes
says

financing and followed by

intensive

conditions

months

resources

discard many

ment
an

'on

burdensome gadgets
before they were stripped down
to fighting trim.
If Congress acts
as
one
Congressman talked and

battle, and that even our Nor¬
mandy
invasion forces had to

capacity by 1955 or even
Taking
our
industrial:
plant as a whole, the stimulus of
War II demand, aided by govern¬

neces¬

objectionable

least

and

brake

a

tinuing inflationary gap.
On the
contrary, they will absorb man¬
power, entail heavy expense, and
impair the flexibility of business
adjustments, which is the prime
requisite for shifting part of our

to

ingot

sooner.

may

as

refugees fleeing

sion of economic

of

annual

of

tons

seem

guess

people ask load to the actual carrying the lot. They quite possibly may
with
technical
competence and each other, "What is the best power?
Will Congress really in¬ intervene in materials controls,
with most outspoken frankness hedge against inflation?"
Hedg¬ sist that the fat be taken out of which are the second best offset to
against the definition of military ing against inflation is a flight both military and civilian expen¬ the inflationary gap.
They will
jeecessity
(and
the
diplomatic from the dollar. In recent months ditures?
Some pretty competent probably go for most price con¬
some
wage
controls.
etcategy back of it) which the we have seen a growing proces¬ people tell us our soldiers in trols and
needs

objective

addition

industry's

10,000,000

matter

is that the new
will be lavish in the
of
expenditures,
both

first

foundation and

span

Such ex¬

Congress

will be applied more actively now

ten-year

normal

the

t>y

promises to withdraw more effec¬
tive
manpower
than
can
be
added.
Hence the problem would

fairs, one year of economic states¬
manship, put ourselves on a sound
the

steel

ment

and pertinent comments.

think

an

intended

people

the

what

at

legislative

is

of Soviet inten¬

tions, and take the measure of the
new 82nd Congress. We can guess

also

and

pansion is already under way, like
the

God gave us and
could in

ditions

about

say

construc¬

new

some

growth of the country.

digest the election returns, inter¬

as

the decency we
American quality, we

course

the next few months—in which we

pret the enigma

for instance 2,000,000,000

as

tion is called for by the new con¬

Congress

My

Management?

82nd

the

of

Finally, I come to the shortest
of my suggested time perspectives,

guesses

erty is held or exchanged.

tinguished

that

limited

so

annual deficits of from

Com¬

Exchange

and

Securities

ahead, I get goose
The possibilities of re¬

pimples.

mission, and non-convertibility

public
our and private policy,
But those
policies have not been clearly

practical economic

A sound and

suck the Administration
quicksand of economic
demoralization and public resent¬

Military might

S.

"U.

on

billion level

then

and

more

Policy; 1950," he

so

$15

recent

Months

Three

complac¬
ently of raising military spending
people talk

high,

pounds annually of aluminum.
Of

up.

ts

..

(2002)

only

to

re¬

capacity objectives

proposed

are

be

used

to

support

National

the

carries

on

a

work of

the

which

Conference,

year-round prograna

of education for better human rela¬
tions

gious,

through

organizations.
has

a

sons

educational,

community

and

The

Chicago

through the nation.
it

Conference

membership of 10,000
in

launched

World

reli¬

industrial

and

Last

per¬

300,000
summer

Brotherhood,

international human relations

fantastically ganization.

or¬

Volume 172

Number 4962

.

.

The Commercial and Financial Chronicle--

.

(2003)

Continued from first page

The Prospects
#!■

1

VUV

1

"Fabulous

or

An

is

This

if*

and

a

their

inexact

I

Be

believe

nessman—and

the

the

a

benefit

that

chartered

as

small
smaii

in

is

-

investor—has

(1)

ot
oi

stocks.

has

been

past

20
zu

through
that

years

tion

1951.

so

much

the

mere

the

be

can

the

All

is

^

the

previous
fashion was

1948,

the

alarm"—in

vestment
vcoiiiivnt

"view

with

micrht

ha-ir<*

hope;"

it

the

years which
paralleled 1920-1921
xictvmg
jjetsscu
wiuiuut
<x
having passed
without
a
inajui
major
depression, the theory that a bust

last

plan

fldXls

die

i

this

each

demand

Con-

year.

potential

with

New

York

rently
part

Stock

Exchange

cur-

is about $88.5 billion.

of

this

potential

Only

supply

is

year.

(3) The financial community it->:
self

has

done

excellent

an

job of

Sp"^ tto'ck split-ups^ When

business equa'

I

of

speak

the

financial

commu-

(31 This
is a
Vigorous country{6)
inis IS
a Vigorous
country
and our inventive genius which is

nitylhavein
xmy,
i nave 111

mindno
nana
nui

onSthe

constantly developing

many

ucts
can

that

create

aggressive

prod-

new

businesses

.new

kitchen

Take

and

look

a

vou'll

in

your

orobablv

find

their

bottomed

copper

pots

fore,.the

living
vision

Then

war.

and turn

room

and

set. You're

the

tele-

on your

looking

at

Contrary to
tu
the
cut:
thbught
LuuugiiL
c.uiiLicxx j

often expressed in the
a

rather
xauiex

owing
-growing

?30s,

than
ixxaxi

of

children's

baby

clothes,

manu-

carriages

can't

we

is

mature
umvuxc

economy. Even if we're not

factums

oo
so

ours

or

help

but benefit from the fact that the

population
million
the

to

has

grown

150

million

past decade.

bigger

than

130

from

in

people

This increase

is

that

experienced in
an'y other ten-year period in our

history,
sumer

and

means

market

big

as

new

a

con-

the State

as

In short, there's a new
scale of demand on which
industry

capitalize.

?

as

demand

for

securities

is

good part from semi-permanent

m

are

increase

the

overall

practically
law

has

for

to

be

la, De

Further,

aom
don't

own

which

points to

market.

stocks—all
siocks—an

common

huge untapped

a

In this connection

that there

are

E

of
ox

Bond

I note

maturities

in amount of $1.5 billion in
1951,
$3.9 billion in 1952, $5.4 billion in
1953 and $6 billion in 1954. If the

history of
erty

the

Loan

1920s—when

bondholders

Lib-

became

corporate security holders—is repeated in part, the security salesman's lot will be

Obviously,
billion
be

if

dollar
in

the

same

happy

all

the

stock

one.

market

on

or

stocks

actually
value.
But
is

management

exact

a

don't

-visualize

science

which

as

as

in-,

analysis-and 1
set

a

will

of

circum-

force

the

"Prudent

Man"

in.

common

only
State
went

a

stocks.

month ago

Savings
on

record

Furthermore,
the New York

Bank
as

Association

favoring the.in-




True,

from

some of the soft

developing

spots now

inevitable

were

even

before the
tightening up of Regulation W. There was a
great deal

of

anticipatory buying after Korea

which
and

has

now

to

be

businesses

some

voanhinc

wpro
were

reaching

digested—
previously
r>r,ir»+
point
production

c^nrotion
saturation

^

a

spelled

later

cutbacks. Significantly, however,
the government's regulations and
controls will have particular impact

the two industries which

on

were the

backbone of

prosperity; auto

it'o
it's

whiin
While

and

1949-50

our

building,

that
that rwniatir

tr,,*

true

sounds

finp_flnr1

^

thp

d

®

Vested

a

peace time economy
spells
for additional facilities.

need

a

Application of this premise oif
the business trend to the
outlook"?
for the stock market is not as

simple as one and one equalling
two; don't forget, this is an inexact science. And the essential
function of the stock market is
tn Hicpmini tKn fntm-o t-o+Viav
to discount the future rather than
mirror the present. As a case in
point, the market recently has
suffered

from

termed
the

what

surfeit

a

obvious

in

of

the

might

be

good

news;
of bril-

form

liant year-end dividends has lost
it,
wi,ii0
thQ
^,no,ti,r0
its
charm. While
the prospective

decline

regulation X"

""^1^tv)3*u
£tn C if
xei,

pxu&pexxiy.

ia

H11

u

'

thp

Hive

•

ra

10

t

xdibt:

inf111jrp

hppn

hi

dp-

Jjk

t

ha„

anvonp

chang

;

the

po-

•

the

th

omniscience

balances

within

to
our

tote"
-nnt;no.

nnpration

rvf V,nf

Mihd

ahniiHhp

nSe^sities

which

whelheV

as

tors

which

to-the latent

Similarly;

<

deserve

!

in

over-all

reguiati0ns will help kill off
hefore

it

has

been

,

T

,

...

business

ac-

s a distinct dif-

therefore be

and

the

•

.

Opinion

specific

market

the

and

are

on

by

that

•_

11

is

that

if

to be

ter than

more

not

are

fusion

materials and

M

...

to

been reading about
refer to
appropriations, not expenditures.
Furthermore, there's
a
lag between the two terms be-

_

.

,

word,

think

period

with the scope of the
readjust,

m

more clearly de-

other

maior

money under present conditions,
Tf
crnriJvn., to learn
lpnrn that,
It
may surprise you tn
that
actual

share

natinnal

Kprpan
K6rean

RUal

th

isn't
ratp
rate.

Hpfpnsp cnonH-

Soecificallv
Specifically, the
the an-"
an

rate Qf defense spending in
September quarter was $12.9

hillifm

it

nnd

rnqp

fn n.Uoher Whfle
'

arpp]pratp

to

in

onward

nPVt

$1^2

the

vear

more

current level

industries

than
-if

trend

will

the

first

our

10%

from the

that much. This

accelerate

defense

expenditures
after the turn

upward

and

equipment

reach

on

^

all

an

are

time

scheduled

Reak

^

1951.

potentially

high na¬
defense spending thus is
good way off in terms of our

As

case

a

?ov-

is applying will have

immediate effect

an

the economy,
the credit reg-

on

in noint

ulations. g0

the

second

some

total

fact

half

J

P°S'ng 0

^

Market Prospects

that

ganization brought

so

so
many people.
"We have
fought

who would smash all

of

Tlliv

about

credit

iqrin-

tho

even

companies found that
30%
of sales this spring

on

an

anyone here

instalment

basis.

doubts that the

credit regulations aren't

tive sales depressant,
do

legislators
from

is talk with used

the

straight
we've
years

up

close

spent

to

fluctuating within

will

results
which

a

an

If

new

effec-

all he need
car

dealers,

one-way street.' As I see it, this the home furnishings stores which
fairly widespread view is basi- do a large credit business or the
cally related to the qualitative small appliance dealer. You'll dis-

political

factor
our

in

the

economic

national defense

cover

prices

that
are

business

is

go

I'm not

range.

happen,

strengthen
indicates

three

roughly

for

election

my arithmetic
there's no iman

dollar than any other form of investment. Yet, my intuition tells
me

that

in

even

Wonderland
wont

grow

this

Alice-in-

atmosphere, the tree
to

heaven

in

the

our

who

With Merrill Lynch Co.
("Special to The Financial

Chronicle)

CHICAGO, 111.—James D.
ter
iex

has
uas

become
uecome

associated
associaxea

Merrill Lynch, Pierce,
Beane, Board
Mr.

Rutter

Central

of
was

.

Republic

^

~

Silly!

history has

one

single

or¬

much good (as the C. I. O.)

off the attacks of employers
unions; of

would

into
to

our

who

seize

would

bore

organizations in order

subvert

them

and

pervert

them in the interests of the evil

ideologies of dictatorship;
outside

no

force
our

has

interest,
been

But

no

hostile

able to

thwart

constant progress.

"Every forward-looking, longrange measure which has been

advanced

by

off—that

down—that it's possible

Philip Murray

labor
and other liberal
groups has been bitterly contested
in an effort to maximize business
profits and to un¬
dermine the advances
gained by progressive legis¬
lation in
preceding years."—Philip Murray.

organized

Labor leaders, like politicians, must, we
suppose,
indulge in a good deal of nonsense to hold their followings, but this outpouring of Mr. Murray seems
to

us

to be

a

little too

silly

even,

for such

with
wiin

Building.

formerly

Company
t
Halsey, Stuart & Co., Inc.

TT

Rut-

Fenner &

Trade

hands the traditional'

totalitarians

re-

maining months of the year, 1951
is another story,

a

equation—to

rule

no

must'

straight down;

or

—

just

there's

market

rights of American citizens; of

$4 bllUon between June,

iq4Q

After all,

says

A Little Too
"Never in all human

down

a

consumer

were

1949, the superim'
defense on a Prosperous

,

tional

the controls the

and

completed by

to

ernment

of

short, the u«jjwiiuci«uico
imponderables augsuggest
the market as a whole
may do relatively little in nearby

mm

in

though post-war expansion
rehabilitation plans as such

Depressing Credit Restriction

a

confi-

power

In

to

^

appro-

1951.

business life

lessened

purchasing

bil-

priation for this fiscal year—prob¬
ably won't be reached until the

Although

results—or

Manv

because not only will the trend of
government

jion annuai ra^e of spending—the

of

•

r'

There s a floor to the readjustment—and the FRB over-all production
Index
probably
won't

hillion

the $30

fjgure. approximating

.

•

above'the pre! ®USinfSS haf discovered that al"

fw-

j

ouciipi,y

the dollar

durable

,

still

»

_j•

uncertainty is
sharply 1rising
lMllg

iu
to

new
spark is needed
enthusiasm—such as
confidence in the corpo-

dence in the

goods has only slight side effects
on

-

and

rekindle

economy where the .this
consumer

con-

doubts
uuuxns

and fears spell
ji,

—

condusive
Lviiuupivc

months.

I

transition

ment to become

spells
speus

rate
earnings
o u 11 o 0 k—even
though it be a lower level of per

cause of a physical limit to the of next ^year, but because Indusgovernment's ability to spend try s expenditures for new plant

ing

fears—doubts

greater

car
v-aA.,;i

A Transition Period
a

confusion

cuinuaiuii

credit

year iSn t in the cards for 1951

and the telephone number decline

nnr

—

available, another bet¬

Tov put it in
we're now in a

transit.ransi-

prices. Some

W—total

production will

The

taking place spells

uncertainty
not

1J.V/V

by perhaps 20%.

year

of
of distortions.
distortions.

now

xuaiuu

and

concern, me iacx
it
will
mirror
a

1

reasons

6.5 million passenger

"Iau

tion

1951 will
win

Regulation

the

period
period

li/di

trucks

and truck

decline next
^
Even

for

—

fact

covered

weve

r.^ose

attempt to decide whether there's
justification for the belief that
business

that

dRure

were

Let's

favorable

fiSures

0?Ser

Current Popular

_.*■

•

time

great

that

mediate
need
fnr
TTyppcc
Z
major inaustries. many mediate
need
tor
an
Excess
businesses will face a problem of ..profits Tax. Moreover, the underproduction at the same time others lying fact remains that common
iS
worrying ab°ut sales. 2— stocks offer better value for the

ference between a government appropriation and an actual expen-

^"payment;

ag-

a

.

this

iui

remains

...

i111Sf.^°lni

.

the fact that there

♦

ji.

at

decline perhaps 15% from this
year's all time peak. Similarly,, although the truck outlook for 1951

re-

niappd

relating ^£949 ^ere
bought without

expressed-

1

_

the'
ine

up
up

reasonable

construction
in
LUiioii
UviiUll ill

Quesu°n as to wnemer me recent

built

era

•

j

_

new
new

in

wu5C

Wxinter^°?_th!;An 301 Paint grading

market^^Xl^lofthe
l^er^rU
recogmtionr.
in

comments

my

business

j

expectation
total
LUidi

decent Paracl°xes-an
react10n

the

increase

slack. Thus, the most

ever™

heavy
handed moneary and physJcal
,

sufficient

a

public
Puuxxt; works
wuiks to
iu take
wkc

say
Set'

von

militarv

the

i2fng

visualize

wK^

irg

Duua-

difficult to
to
npw construction—it's
construction—it's difficult,

or

or

-

tn

p

perDetual motion machine

a

Pg0

Fd

a

resiaennai

as such is less than 40% of all

were

Administration

wnettlerpIsp
tfte Administration
has
onvnnp

veio«

ing
new

new car

+
llllclubt

whpth

sirucixon—ana

is

Motion?'

straight to the heart
buyers" to. compete with nf
+he'Tact' that the r»re Korea
Thus I'm not making
boom in ef£ect was financed on
prediction; rather, I'm genefcah*'Wimwpdt ninnev
Note

tential,

(1) On July 1, New York State

rule which in effect permits up to
35% of a trust fund to be invested

nff

»

g0vernment obVlOUSly has

obyi- gresive forces.

adopted

falling

«

each other.

been-'.to this

followed the lead of Massachusetts

DC

cloplr

ntiv

&
f

would

scarcity

a

portfolio

the shoe business.

discounts

at

,

about

currently

in

fhi
.

were

supply and demand
ously works in the stock market

and

A1]

potential

buyers^

in

of

just as it does

itfi

through

Perpetual

summer

time, it's possible certain

command

stances

a

supply; .background philosophy'-fa the
this thought, for the than an appraisal of
increase

no

Let's pursue

demand

there

of

i m at
I'm
at nines
times surprised
suipuseu by
py the
me large
large
numbers of wealthy people who

mar-/a

factors at work which will tend to

sur-

thVfihancial naivete

peop e on! Y°ula

kef^of the '20s which fed

securities—while

markets,

COmmon-stock-minded.

mar-

gin;, speculation; (b)-There

direet.lv
directly

was
was

country, I'm at times

buyers-conti-ary to the bull
on

the

and

raised

year

whirh
which

Uy

the Investor

the investor is coneerned, these long-range generalkalions are intensified by two
highly significant facts: (a)—The
current

last

process

common

As far

Street

prigPd

to
on

Main

brought

0£

the

Incidence

to

and

L'

h
WOXIIQ

.

of

(4) As I visit different sections

of Illinois.

can

Thev've

million
million

in

trusts

a

new
multi billion dollar
dollar industry.
industry
new,
multi-billion

(4)

the

invested

be-

into

go

in

$278
$278

pans,

made

were

dealers

Wall'Street

things
for the
dishes, plastic curtains, fluorescent
litxhtin?
aluminum
snirp
shelves.
lighting, aluminum spice shelves,
etc. None of these

e

program

investment

open-end

a^Tdetergent

such

advertising

uxixy

brokerage firms, but more
particularly the excellent distribution job done by the so-called

really flower when it has half

chance.

a

assav-

wm,

military orders

4-tqItp

dp.,plnn:n0.

bil-

years,

the

in

consciousness the past few years.
With so large a percentage of our

tion.

pS
cllOri

that

see

recent

.p._® ~vndl1jr+jrm
ot Clvlllan Production

xunueu

_

be invested

to

fiinprl

ii/pta

funded

^^Pht^inX^bli^
of the shares listed
public availab1e—13%
actually changed hands last

tant factor in the

made

While

are

of

is auotpH

is

1

four times the
$12

Marshall

in7thaV
1I1S
tiled L
ing that
IjVcry
"Every

funds.

Julv

next

expenditure

Ocncral

xuiiciOi

winter.

plans

i

_

trast

country's thinking can't be underfear which has been

lion

an-

the fact
ictci, that
uidL
the
me
nicu
ivc i
market
value
value
ui
of
all common stocks listed on the

the

in

of

,uie

boom has been

change

•

still

have

This

*11

defense aooroDriation for

morcf than

foregoing,

insurance
companies, a multibillion stream of new capital must

iiruu

must follow every

pension

^eilblU11

•

With
1

(2) With the critical

discarded.

to the

jjciioiv/ii

pension

many

1I700

might

of
v/i

settled

was

cairl

pr0gram would

starting

for management—grew
by leaps
and bounds after the steel strike

thp carnP thin?
have said tne
same tning,
but the emphasis was /^l^-fpypnt
different.

might
Vkllf

reports

years or more—with the

p

aS

observer

Defense

news

goods

which

recent conference, the
0f Defense is
reported

confirmed

^ f

than

increase

will recall, the philosophy
0f pensions for workers—as well

to

was

than

more

men

As you

view

"to

1949

j

1

In

year.

year which

is

budget doubling again in the 1952
fien*
5

other important type of fiduciary
£
^
aemand
for securities:
The
in-

-1

with

apt to

(2) In addition

com-

30

buy

and the demand from fidu-

ex-

need

you

being emotionally upset,

of

at

^ave
Qur

Vr" """
ivToi;
today than
any time
in 25

1950 has seen the creation
~ucauwi

optimism.

gecretar

e

to decrease.

pare the tone of the 1949 year end
annual
business
reviews
with

those

been

a

a-

respectable

more

ciaries is more

xiroVo iirf»rl
doRo vHcAAtmt*
discover •fKn-f
that we're
tired n*f
of
o

one

they've

fact

St

1 gis

All of which points
conclusion: Common Stocks

years

started the second half of

20th'Century
77
.J
for

in

are

York

enabling

june

each of the past three
years.

^ ^
tQ

request

to

Psychologically, the nation

we've

New

in

would

next

appro-

double the roughly $12 billion we
actiiallv
actually snent
spent on
on our
our armed
armed forces

-

portion

common

Kqc:„11v

0

of

the

basically favorable normal background.

/o\

a

companies

science

why

reasons

cuSe

of

assets

111^that
takeanalysis
refuge that
This the
followed
talk last jsumme
Life Insurance

piay, permit me to offer t

the

,.

vestment

is

you

introduction

my

it

'50sA

fact;
to disagree,

want
in

not

facts

priation for the fiscal
ends

to

list.

the stimulus theoreti-

on

(1) The national defense

■

Alia 1110
atACK IllAIKfit
lliV

*50s"

popular

placing great

''

lillH

opinion,

to be

-^rom

smess
-1

*

particular,

seems

3*^.'-reliance

m

In

program.

opinion

27

purposes.

with
and

23

.

The Commercial and Financial Chronicle

(2004)

Continued from
'

■

Our

'

'

Reporter

:

'

'

'•

;

<

•

page

.

The

The Excess Pf of its Tax

By JOHN T. CHIPPENDALE, JR.

consider whether the

government market remains on the constructive side,
with the eligibles the pacemakers, despite the interest that is
being shown in the restricted obligations, particularly the neareligible ones.
The longest bank obligation has made the best
showing price-wise, followed by the 1956 maturities. Nonetheless,
no substantial uptrend is looked for in these securities in spite of
the improved psychological attitude of buyers of these obligations.
Reserve requirements could be still raised after the turn of the
The

and this would have an effect upon the market action of the
eligibles. Also the approaching refunding might bring along issues
which could influence the price trend of outstanding eligible

year

prof¬
its tax does in fact siphon off war
caused earnings and whether or
not there are more approprivate

We

to accomplish this end.

ways

tap bonds, that is, the longest ones, were able to move
slightly from the 100.26 level. This action, it is believed, in
quarters, indicates liquidation is about running its course
there should be a greater tendency in the not too distant future

away

would

tax

affect

adversely

economy—even

economy.

war

a

our

In

short, would such a tax impair
our capacity to wage war.
In or¬
der to win

all

war

a

must divert

we

possible men and resources to
production and outproduce
enemy.
We must not fail to
into

take

of

effect

the

account

taxes upon our power

to wage

war.

some

Why Not An Individual Excess

The short-term issues remain firm and active in face of a bill

which

is

still

pushed up by the authorities.
Some
switching is being done from the shorts into the medium and long
eligibles.
No Market "Surprises" Expected
being

*

sentiment

With

in

the

money

because it is believed there will
authorities

in

be

market

requirements,

reserve

decidedly

improved,

immediate change by the

no

there

has

been

greater

buoyancy in the whole government list, particularly in the bank
It is the

issues.

opinion of most followers of the

markets

money

that nothing will be done

in the near future to upset market
conditions, which would tend to complicate the coming financing
of the Treasury.
Because of this feeling there has been some
lengthening of maturities by the commercial banks, with the 1956s
and the September '67s getting a great deal of attention.
Volume
has enlarged slightly but not enough yet to say that the market
now

has discarded its thinness which
for

time.

some

has been its main characteristic

Also there has been

more

than

a

passing amount

public discussion of ex¬
profits
taxation has been

cess

between

is

better

demon¬

stration because it is believed there will be less of these securities

time goes along, and because there

institutions taking on these issues than was the

more

case

a

are

short

time ago.

This buying is expected to expand.
The Vies moved
away from the so-called "pegs," although there are no indications
that a sharp run-up in price is in the cards for these obligations.
Savings
reasons

banks

and

insurance companies were
why the longest tap bonds have been acting better.

The

a

couple

of

the

eligible restricted issues have been well taken with
averaging down playing a very important part in the better market
action of these securities.
Shifting from the long bonds into the
shorter ones has also been a contributing factor in the uptrend
of the near eligible restricted obligations.
Fire and casualty com¬
panies, charitable organizations and traders have been the principal
operators in these bonds.
nearer

Treasury Refunding in Spotlight
The

December-January financing is now getting more atten¬
tion because it will not be too long before the
Treasury will be
making known the way in which the maturing obligations will
be taken

care

of.

There seems to be

growing feeling that im¬

a

pending operations will not be another occasion
the

for

split between
is believed there will

monetary authorities.

a

Accordingly, it
offering of securities made to holders of the maturing obli¬
gations that will be in line with prevailing conditions. As usual,
there is that same guessing game going
on, but there is not the
same building up yet as to what
might come along as has been
be

the

an

case

It

in the past.

seems

as

though there

are

two

schools

of

thought in the
picture at the moment on the December-January financing. One
group holds to the opinion that short maturities will be
used, as
in the past, with 13 to 15-month
l%s being their idea of what to
expect.

On the other hand, a five-year l3/4s is looked for
by the
other group, but at the same time
they are not discarding the
possibility of a combination offer such as short iy2s and the l3/4s.
While it is realized that a 1%% for five
years does not seem to
give enough consideration to the narrow yield spread between a
and a five-year maturity, it is pointed out that
maturity will have to be replaced next winter, with

one-year

shorter

assurances

Likewise

that rates

or

terms will be

as

individual

The

ual

clues

as

equally

profits tax.
dividual

January maturity gives

no

indication

of

anything other than

a

short-term coupon obligation.
r
,

In the

(Special to The Financial Chronicle)

LOS

ANGELES, Calif.—Charles

with

men

incomes

of

$11,000

of

would

the

escape

The first

while the latter would
in

of 60%

excess

entirely

tax

on

pay

the

tax
in¬

a

same

come.

is

to

easy

inequities

the

see

and absurdities of an excess

prof¬

its tax when applied to individu¬

Avenue.

He

was

formerly

by

Some

Corporate Excess Profits Tax

of the in¬

case

excess

Specifically the following prac¬
tical

theoretical

and

arguments

be advanced against the cor¬

may

profits tax. These
arguments are based on the as¬
sumption of an excess profits tax
porate

excess

that of the
World War II excess profits tax.
(a) Such a tax is only casually
or
even
accidentally related to
similar

generally

derived"

"war

list below does not purport

in

of

the

present

into

taken

As

a

the acceler¬

of

amortization

ties
is

earnings.

of fact, when

matter
ated

to

facili¬

war

revenue

act

it

consideration,

exhaustive

assumption of
dividual

is

and

based

85%

an

income

net

tax

in

to be
the

on

in¬

on

of

excess

the 1946-49 average.

general and with relatively few
exceptions be almost immune be¬
of heavy

cause
no

an

would

one

time
war

capitalization. But
that the in¬

argue

in railroad earnings in war

crease

individual earned
an
amount equal to his 1946-49
average he would thereafter real¬
(a) When

real

not

are

war

derived

largely

derived.

but

They

they

escape excess

are

would

profits taxa¬

lar

ize only 15 cents out of each dol¬
of income earned.
He might

able

then reduce his earning activities.

in general would

Certainly

ings in wartime (because of lower
margins on government business)

he

would

then

not

anxious for overtime work.
of

stiff

a

penalties

severe

Short

with

draft

manpower

total

be

production

would be diminished.

(b)

Such

hor¬

ribly inequitable to young men,
particularly to young men whose
income reflects increasing useful¬
responsibility.

and

ness

a

the

of

case

1946-49

riod

"base

of

young

In

paper

route

$600.

In

tool

-

he

maker

maker.

to

a

pe¬

a

his

industry

have lower earn¬

have

would

there

if

But because of the

war.

secular trend in chemical
earnings and because of charac¬
teristic light capitalization this in¬
dustry would
excess

(b) An

In

a

1950

journeyman

income

to

the

an

To

a

considerable extent the burden of
is laid in inverse relation

the tax
to

the

social

and

economic

tribution of industries

erally be

an

profits tax is

excess

unwise drag upon progress.

was

with

hit by an

hard

be

profits tax.

prise units.

Any tax that would

limit

they
no

chemical

the

perhaps

merely nominal income.
he began earning as

a

greater

carried

earned

1947-48-49

apprentice

was

for
he

1946

and

whose

man

period"

preparation

usefulness.

were

Consider

tax would operate in
a

than

that

strong

tax would be

a

tion. On the other hand it is prob¬

dustries

Such

no

enter¬

tax will gen¬

a

burden at all

with

obsolescent

and

con¬

large

on

amounts

in¬

of

**dth Marache Sims & Co.




Russ Building.

Co.,

An

profits tax

excess

to

cost

efficiency in

is

reduction

production.

a

and

An

ex¬

profits tax has been urged as
a
device to fight inflation.
It is
true, of course, that a company
subject to high excess profits rates
cess

gets very little advantage from an
increase in prices unless costs cor¬

rates.

Witness

not

the

oil

ex¬
en¬

previously

engaged
during the pe¬

the oil business

riod of the last

excess profits tax.
major labor unions are well

The

that

aware

profits

in

weak

a

demands.

subject to

ex¬

tax

at high rates is
position to resist wage
The excess profits tax is

certainly
On

firm

a

cess

not

balance

anti-inflationary.

it

is

probably infla¬

tionary.
(d)

An

profits tax

excess

is

a

stimulus to

monopoly, but Senator
O'Mahoney of Wyoming, who is a
leading opponent of monopoly, is
also

chief

the

revival

semi-obsolescent

or

whose

products

have not

kept pace with the changing struc¬
ture

of

demand.
a

On

the

other

tax effectively pre¬

profits point, • monetary incentive
for

work

would

be

afinoSt

en-

to

of

spokesman for the

the

profits tax.

excess

the

of

progress

is change but the

profits tax is

a

penalty

on

excess

inno-

and indeed

can

adjust to the circumstances
These

tax.

would

adjustments

inevitably reduce the

profits

cess

modest

likely

tax

that

It is

sum.

business

will

ex¬

to

revenues

nominal

or

a,

quite

endure

such a tax for a relatively brief
interval, if there is general antici¬
pation of quick repeal, but with¬
out such

anticipation these adjust¬

ments would

greatly stimulate the

concentration
well

as

scale
are

of

economic

generally

as

power

reduce

the

of economic

some

of

activity.
What
these adjustments that

would have to be made and which

would
toward

the

accentuate

monopoly

duce

economic

used

because

as

well

trend
as

re¬

activity?
Small,
closely held companies might sim¬
ply dissolve as corporations and
reorganize as general or limited
partnerships.
The limited part¬
nership has not been extensively
of

inherent

some

disadvantages in raising capital.
Such a change in the form of or¬
ganization would, of course, make
growth more difficult and would
be

socially

small

sell

to

out

larger

same

or

corporation
P.

simply
concerns with

allied

would probably be
E.

Other

would

comfortable E. P. T. credits

the

in

undesirable.

corporations

with

T. situation

fields.

It

possible for a
an
impossible

to sell

out to

a

corporation specially organized for
1 J.

Butters and John Lintner,
Taxes on Growing En¬
Study No.
1, The
Lockheed
Aircraft Corporation, April 1944; Study
No. 2, The Polaroid Corporation, Novem¬
Effect

Keith

Federal

of

terprises,

ber

1944.

Business

tirely absent.

But they

pay.

must

more

capital

vents the development of new en¬

&

(c)

deterrent

war-derived
excess profits tax to the
growth of
nating to set down some of the earnings have a better chance to
inequities and problems of such escape than nonwar-derived earn¬ monopoly is not well understood.
It should
be clearly understood
an individual excess
profits tax in ings. The burden of the tax is
that business enterprises will not
order to point up the fact that es¬
related to the accident of capitali¬
sentially the same inequities and zation or recent earnings rather regularly continue to pay high.rate excess profits taxes.
They
problems do apply to the taxation than
to
whether
earnings
are
of corporate excess profits.
The "war derived." The railroads will cannot, of course, simply refuse
that

appears

inequitable but would reduce his

Johnson

stimulus to stagnation.

a

It must be that the relation of the

(Special to The Financial Chronicle)

of

most

socially useful
lightly on less so¬
cially useful enterprise units. It is
a penalty on social usefulness and

in

hand, such

staff

the

on

terprises

Against

Arguments

pre-1950 level would not only be

the

ily

units and very

ploration activities of various

SAN

to

on such enterprises. An ex¬
profits tax bears most heav¬

cess

lower

profits tax.

excess

an

Johnson & Co. Adds

and Howard Lee have been added

ultimate capacity to wage war de¬

pends

But

FRANCISCO, Cal.—Mrs. productive activity. When such terprises that offer new methods
N. Bishop is now with Investment Kay
Crofton, Bonnie P. Kramer, an individual reached the excess or old products at lowered costs.
Research Bureau, 1272 South La John W. Kramer, Anna K. Lee
The essential element of economic
Brea

being now and in the
depends on growing, ex¬
panding enterprise.
Indeed our

had

other

the

—

earnings of only $2,500.

fectly evident. While they appiv
equally to the corporate excess
profits tax they may not be quite
as self evident.
It may be illumi¬

serve

With Investment Research

excess

profits tax these
problems and difficulties are per¬

tool

-

individ¬

an

the corporate

to

to what

they expect to get in the refunding. The Dec. 15
maturity, however, has been active .and buoyant and is
selling
just above 100.
This may be the way hope is
being expressed
that something better than a
l1/2% issue will be received.
The

the

—

profits tax would apply

excess

how such

lengthening of maturities is what the bank market
need, and this should be as good a time as any to do it.
maturing obligations are not yet giving any definite

profits

excess

that would flow from

appears to

The

riod

would

but

inequities

same

no

a

two

sume

$10,000 annually. One of these had
average earnings in the base pe¬

it
only operate inequitably

individuals,

the

favorable at that time.

tax is not

a

unfortunate economic effects

same

as

lay distinctly unequal burdens on
men with the same earnings.
As¬

the

an

tax.

Confident Buying in All Issues

Such

nation's capacity to
wage war. But in logic if a cor¬
porate excess profits tax is good
so

coming into the market

tax would inevitably

pay

nomic well
future

excess

the individual.

impair

a

(d) Such

a

effective

here seriously proposed because

term issues.

ineligibles likewise have been giving

since

nominally increased.

ing are high Federal taxes on
growing enterprises. But our eco¬

every argument against respondingly increase. But an ex¬
only with taxation of
profits.
It is an individual excess profits tax is cess profits tax is a powerful
probably true that some of the equally applicable to a corporate stimulant to increased costs. Such
excess
most
ardent
advocates
of
cor¬
profits tax. Corporations, costs as salaries and wages and
porate excess profits taxation like individuals, * require some numerous other expenditures are
would just as ardently oppose the measure of incentive for top pro¬ likely to
skyrocket under such
taxation
of
individual
"excess duction. Corporations, like indi¬ conditions. There would be every
profits."
But if it is reasonable viduals, vary in maturity. Some incentive not only to expand costs
to tax corporate "excess profits" corporations with small capitali¬ generally but also to divert re¬
it is just as equitable to tax indi- zation have spent recent years in sources to essentially speculative
viduel "excess profits."
We might preparation for increased useful¬ undertaking with the hope of ex¬
return
especially
levy an 85% tax on all individual ness. Just as in the case of indi¬ traordinary
incomes in excess of the 1946-49 viduals corporations with the same where the return might be in the
form
of
capital gains taxed at
average net income received by income would be taxed unequally

corporate

would not

Nonetheless, these purchases have not been very siz¬
able because there have not been too many securities changing
hands in the recent display of strength.

it difficult to induce
accept greater re¬

to

sponsibilities

als.

concerned

tax would undoubt¬

a

studies of Butters and

case

Lintneri have shown how repress¬

could only be

It

far

So

professionalism in the recent strength in the eligibles because
dealers and traders have been taking on quite a few of the longer-

of

The

men

Profits Tax

to have these securities assume a more buoyant tone:

rate

make

able

must also consider whether such a

the

The

edly

Bad Tax

a

(c) Such

excess

war

obligations.

and

Thursday, November 23, 1950

.

tion.
•

Governments

on

first

..

search.

Harvard

Graduate

School

of

Administration, Division of Re¬

Volume 172

Number 4962

.

.

The Commercial and Financial Chronicle

.

■

that
tal

purpose

and

provided

new

interests

are

new

freeze

capi¬
intro¬

duced.
is

It

true

Sec.

that

would

129

benefit

tax

prevent

when

purpose

dation

or

acquisition is to reduce

taxes.

But in

particular

a

is difficult to prove

cipal

purpose

in the

are

same

business.

the

corporations

Corporations would also

be induced to undertake (perhaps
through
subsidiaries)
hazardous
undertakings and if successful the

profits could be taken in the form
of

capital gains but if

unsuccess¬

ful the losses could be largely off¬
set against excess profits taxes.

(e)

An

pecially
its

high rate

a

tax,

profits

excess

tax

prof¬
in¬

excess

of necessity

must

es¬

be

ordinately complicated and filled
with

contradictions.

mination

of

reduced

The

"capital"

formula.

to

cases

be

cannot

Groves2

ports that in 1940 there

ing

deter¬

were

re¬

still

pending in the courts deal¬
with the determination
of

capital

the

under

law.

1918

In

order to

determine invested capi¬

tal

necessary

it is

the

to go

back

to

the

date

corporation was or¬
ganized and trace the capital ac¬
counts up to date.
Balance-sheet
capital
ups

been

the

stock

down

par

and

reduced

capital

surplus

the

duction in the tax return.

transactions

return
of

been

to

capital

in

the

tax

expense

deductions.

requires

examination

as

this

books

included

but

Certain

have

may

the

on

accounts

and analysis of

acquired

in

tax-free

a

re¬

organization the capital is consid¬
ered to be the cost in money and
securities

to

poration.

The cost to the prede¬

the

predecessor

cor¬

corporation

may be diffidetermine,
especially
where such property was acquired
cessor

11

c u

lem. We

to

by
the
predecessor
wholly
or
partly in exchange for securities.
in

account

determining

the

present capital; and overdepreciation of previous years, of course,
seriously understates present capi¬
values.

tal

But

depreciation
little

tax

this earlier

have

may

much

over-

yielded

since

advantage

rates were

rate

corpo¬

lower than

at

present. Moreover the body of
stockholders
may
have changed
the

over

holders

Present

years.

are

stock¬

necessarily penalized

the

for

overdepreciation, the tax
benefit (if any) of which was re¬
ceived by a materially different
body of stockholders.
All

this

of

merely

touches

small aspect of the necessary
complications inherent in an ex¬

profits

tax.

There

are,

of the great problems of

taxation

profits

cess

of

Indeed

course, many, many more.
one

ex¬

from

the

point of view of the taxpayer is
uncertainty.. There

are

so

possibilities for additional
ment

disallowances

and

corporation

be

can

many

assess¬

that

positive

no

con¬

cerning its tax liability until long
after the event. This does not
tribute

to

not

logic of an excess profits tax
setting which includes such
general freeze.

the

there

are

all-out

that

justify

it

tax is

is

that

excess

profits tax is generally

undesirable because it freezes

nomic relationships

the

of

same

wages,

to

freeze

time

profits

there

salaries,

is

a

if at

freeze

rents

and

the

cases

duction

It
case

2

is
can

doubtful

if

be made for

a
a

very

good

price-wage

Production, Jobbs and Taxes




also

what

might

have

a

front,

both

In

is accomplished is to

that

the

suppress

War

Profits

Excess

an

tax

profits tax is a bad
only because it would
full production and the

excess

not

prevent
most
and

efficient

of

use

manpower

but also because the

resources

burden of the tax depends on the
accident

profits

earnings.

tax

In

excess

relation

to

earnings.

kind

the

war

An

little

has

derived

war

of capitalization

of form

previous

or

of

semi-

or

war

in prospect it is, of
imperative not only that

economy

course,

expenditures be

unnecessary

revenues

be in¬

sometimes

urged

curbed, but that
It

creased.

that

an

is

profits tax is

excess

tax but that the need for

bad

a

revenue

is

sufficiently great to justify even
such a bad tax. This view clearly
implies that there are no practical
alternatives
view is

this

to

tax.

Such

a

World

of

contracts

be

can

government

most

a

effective

instrument for directly and selec¬

tively reducing
its.

But

confined

direct

to

business. Part of
the

excess

government

objection to

our

profits tax is that it hits

derived

war

derived prof¬

war

derived profits are not

war

profits

only hap¬
accidently. A

hazardly and even
simple increase in the

corporate

tax *ate

equitable

in

and

would be

addition

more

would

be

not

drag

a

on

dustries and not merely the more

socially useful
porate

rate

places

this

rate

higher than it
War

38%

from
at

the

cor¬

to

45%

18%

level

a

family income splitting) is not yet
back

to

Thus

no

in

the

World

War

II

level.

the corporate rate seems justi¬
until another increase in the

individual

basic

is

rates

impera¬

tive.

Excess Profits

an

profits

is

tax

should

structural

World

an

enacted

excess

considera¬

be

given to three
improvements to the

War

II

pattern.

Provision for Relief.
War II law contained

vision

(Sec.

tended

to

a

The World
relief pro¬

722)

which

modify

the

was

in¬

inequities
inevitably resulting from the ap¬
plication of a very high rate tax
based

upon

an

arbitrary formula.

general this provision

was

in¬

tended to permit reduction of the
tax

in

the

case

of

panies and in the
nies

whefe

the

growth

com¬

of compa¬
"base
period"

case

regular corporate

in¬

(c) In the invested capital op¬
tion

there

should

crimination

profits.

capital

be

against

dis¬

no

borrowed

compared with owned

as

capital.

Resolution by its Board of Directors
points out dangers and
difficulties in devising an Excess Profits
suitable

to

levy that will be
existing situation.

enactment of

Taxes.

profits

excess

the

The

of
ar¬

excess

profits tax

In

of

support

its

profits tax,

an excess

the committee discussed corpora¬
tion

profits.

;

which would be applicable to 1950

Preliminary reports of $10 bil¬
lion corporate profits in the third

and

quarter

of

1950

tion

an

already existing busi¬

1951.,
full

text

of

the

resolution

reads:

tax

deduction

an

Chairman.

fair,

nor¬

mal,

reasonable,
not
exorbitant
profits during peace, preparedness
It advocates endeavor to

war.

achieve

boom

reflect

continua¬

also scare buying
by the Korean War,
the committee asserted.
Actually,
military orders are as yet no con¬
siderable factor, it said, adding
that it is possible that, because
of required
conversion, corporate
ness

"The Chamber favors

or

of

touched

and

off

on

must

be

.

profits

excess

World War II
defined

as

in

tax

effect

profits

excess

the

excess

(1)

average

in

tax

of

the

were

can

be

used

'excess
to

profits'

restrain

type,
un¬

any

warranted
profit-making
from
earnings defense undertakings.
"It
is impossible to devise a
period, or (2) a given
percent of "invested capital." But defensible excess profits tax suit¬
invested capital was arbitrarily able to the
existing situation or
either

over

earnings

in the base

defined

100%

as

of capital

stock

and

surplus plus 50% of borrowed
capital. No one would seriously
that borrowed capital is not

there

(What

for

excess

tal

is

reason

is

argue that

borrowed capi¬

on

undesirable than

more

earnings

stock

on

ing

than

more

levied
tion.

on

highly

form

of

provision

unequal

tax

capitaliza¬
resulted

burdens

of

in

capital employed and
earnings were the same.

actual

an

determination
return'
pany,

profits tax

is

for

A

war.

true

is

an

method of

effects

of

each

'reasonable

a

individual

com¬

impossible task.

an

"It

economically unsound
taxation, with harmful
production

upon

"It

both

of

military goods.
discriminatory and arbi¬

is

capital

borrowed

or

invested

as

whether

part of

capital.

so-

To

do

is

un-American

in

its

discouragement of growth.
"It

removes

production

form

and

sentially
time

in

bad tax

a

(a) It is

it

laid

in

for

even

war¬

unwise and poten¬

burden

inverse

prog¬

on

tends

relation

to

the

to

utility of enterprises

be

con¬

cerned.

burden

It

is

is

only

ac¬

to

cost

efficiency in

deterrent

pro¬

a

reduction and

duction.

(d)

is

a

stimulant

to

adven¬

It

must

inordinately

3 Peter

of

necessity

complicated

be
and

our

corporate

about 15%.
same

would

wasteful

This would be around

proportions

"It is

War II, but below the proportions
of World War I.

"Net income after taxes in 1950
be

close

to

has announced

the

produce

Aug. 24, 1950.

of

rev¬

as

a

prior

the

over

continuance
form

disruptive

of

effects,

enterprise

of

upon

system

this

its

the

pri¬
and
its

prevention
of
the
progressive
improvement of our economy.

are

simple

the

the

by

its

Finance,

C. Alvord,

Committee
of

which

on

Ells¬

of Washington,

Mr.

who

has

been

a s s o c

i

a

ted

Board

1910,

will fill

the

vacancy

created

by

the

death of Lyon Carter.

N. Y. S. E. to Close

Sat. Dec. 23
The Board of Governors of the
New

Both Chamber resolutions were

worth

in

and

activities of

government."

Federal

Albert P. Everts

and equitable
available to finance the

essential civilian

Ex-;

with his pres¬
ent firm since

de¬

with

the

Everts,

capitalized

tax,

Governor

a

change.

"Once adopted, there is a threat

long

Paine,

of

peace year.
-

office

Webber, Jack¬
son
& Curtis,

any

companies.

ways

a

Boston

"It is

vate

P.

Everts,

partner in the

to

upon

election

Albert

of

contributes

administratively unwork¬
cannot
wisely be de¬

structive

levels

of Ji Y. Stock Exch.

basically inequitable, be¬
ing the only form of tax which
penalizes
the
failure
to
earn

of

national

the

Robert P. Boylan, Chairman of
the New York Stock Exchange,

and

favors

of

Everts Elected Gov.

prac¬

predetermined amount of

It

9%

around

enues.
,

1947 and

as

1948, and 1941-1945, during World

materials

of

It

manpower.

able

income

represent

re¬

undertakings.

utilization

proposed
Guy Evans, We Don't Need An
Tax, "Commercial and Fi¬

Profits

nancial Chronicle,"

of

cost of national preparedness

full of contradictions.

Excess

defense

encourages

in

"More

It

monopoly.
(e)

for

profits during
Its

cidently related to "war de¬
rived"
earnings. Many indus¬
tries would largely escape
(railroads) while others would
be heavily burdened even with
no war stimulated earnings.
(c)

mobilization

pended

an

The

1950,
taxes

incentive to expand

because

roadblock to expansion.

a

"It

es¬

that:

tially dangerous drag
ress.

in

of preparedness.

profits tax is

excess

lion

before

full-year national

a

figure of about $230 bil¬

strongly to inflation and the cost

Conclusions

(1) The

in

sources

It is

tices

capitalization.

"Assuming
income

of 1947-1948."

titiously decreases the reward for

otherwise would be to levy a tax
not on "excess profits" but on the
of the

larger share of total

no

income—again

It

tion

all

represent

national income than in 1948.

nies.

acted it should provide for the in¬
of

year.

will

clusion

en¬

by the business slump of
Despite the rise in
corporate earnings this year they
that

trary and is particularly injurious
to small and expanding compa¬

greater effort and employment of
capital.
It discourages participa¬

excess

torted

the

civilian and

tax

when

even

If

the

This

differential

a

all-out

an

profits tax would require

excess

capital.

This provision amounted to-noth¬

to

even

borrowing?)

anyone

earnings
any

excess

other

increased

Neither would

(b)

nevertheless,

and the permitted base.

a
balanced
budget
by
earnings a part reduction of less essential
expen¬
paid to the ditures of
the government and by
income may be reduced before
Treasury as ordinary normal and
increasing its revenues.
defense
earnings
are
reflected.
surtax. Any new excess profits
"There are no indications that The committee went on:
tax should define excess
profits
any significant proportion of cor¬
"Increases
in business earnings
as
the
excess
of
actual
profits
porate profits this year or next this year show not only the re¬
after the ordinary corporate in¬
will be
sults of plant expansion
attributable,
directly
or
and, in
come tax over (1) the
average in¬
indirectly, to defense undertak¬ some
instances,
higher
selling
come less taxes in the base
years,
ings.
prices, but also the benefits of
or (2) a percent of invested
capi¬ 0* "Efficient
procurement
lower
policies,
production costs from mod¬
tal less ordinary corporate taxes"
ernization
government
con¬
and
enlargement
of
that would be payable on such in¬ repricing ' of
tracts,
and
other
administrative
capacity.
come.
restraints, combined with heavy
"It
must
also
be noted that
What Is Invested Capital. In the taxes, apart from an undesirable
comparisons with 1949 are dis¬

which

social
Structure of

dif¬

profits

come

should

excess

the

the

Chamber of Commerce of U. S. Opposes EPT

four

present further increase

fied

If,

II

was

individuals (in view of permissive

relief

might be done (alterna¬
tively)
by
defining
excess

The

high rate tax

a

during World
By contrast the rate on

II.

previous

at the income subject to
This has the effect of levying

called

in

of

between

after

im¬

riving

owned

ones.

The recent increase

Such

This

this

the normal tax and surtax in

as

production and
development. It would hit all in¬
great

ference

con¬

profits

the

as

are

Tax

permit

invested.

of

the

We

War

not

argue

nonsense.

Renegotiation

Act.

definition

or

the average profits of

over

two

did

of

Tax

The

II

tax on taxes. Excess

a

should be measured

is

tax.

Alternatives to

pattern:

opposition to

Should

infla¬

(b) The law should not result
in

the

be inherent in the basic formula

hap¬

years.

briefly

of

symptoms

given to the fol¬
in the structure

compared with

II

of actual

excess

the average of any
two of the previous four years.

be

any

all

cases

War

the

as

29

over

many

excess

is to freeze rela¬

effect

There

as

profits
profits

probably
In a resolution, adopted
ways by which this could
by its
accomplished. One would be Board of Directors on Nov. 17, the
to simply provide that the excess Chamber
of
Commerce
of
the
States
condemned
the
profits might be measured as the United

both

In

freeze.

formula.

tax

excess

tain a "relief provision" com¬
parable to Sec. 722 of the World

of the Excess Profits Council

tax

be

changes

the

(2005).

r

considera¬

an

enacted

(a) The law should not

of

presented

cases

is

tax

World

the

recently testified2 that
provision has proved to be

tion.

In

prices.

of

because

has

tionships that need to be dynamic
if we are to do the best possible
job of waging war on the pro¬

that ought to

dynamic that it is a logical
part of a general freezing of the
economy. It is argued that it is
reasonable

uneconomic than

more

no

eco¬

be

because

man

profits

excess

an

price-wage-rent

tion
an

work

of

pened. The former Acting Chair¬

circumstances

Tax

It is sometimes urged that while

to

If, nevertheless,

should

lowing

an excess

these

under

put

in

as an Adjunct
Price-Wage Freeze

made

complexity of

but

profits could not significantly ex¬
pand. Perhaps the best way to

Excess Profits Tax
a

almost

was

profits tax possible of rational administration.
If an excess profits tax is en¬
it is a freeze of all wages, prices,
acted then we should not repeat
and rents. Even here it might be
argued
that a
real wage-price this experience with an unwork¬
able "relief provision." The relief
freeze would largely make an ex¬
cess
profits tax unnecessary in should be inherent in the basic
would

con¬

production

provision

tion

necessity to
decide not only what did happen

circumstances which

any

be

and

would-be inevitable. Moreover, if

either peace or war.

to

prob¬

political point of view
it may be that under such cir¬
cumstances an excess profits tax

on

one

cess

we are

only concerned with

are

(2)
profits

impossible of rational application.
It is the universal
testimony that
this relief provision simply could

From the

Past depreciation must be taken

into

intended

a

a

a

accounts long con¬

sidered dead and perhaps running
for decades.
If properties

back

were

event

any

op¬

It has been found that this well

sup¬

a

not here concerned with this

write

to

Capital
expendi¬
have been charged to
but not included as a de¬

charged

policy. In

resulting

utilized

may

expense

All

have

may

assets.

tures

merely

be inflated by write-

may

or

is

freeze

approach is through sound

fiscal

in

avoidance

related lines of

or

a

(1936-39) was not typical of
erating performance.

the

that the prin¬
tax

was

especially when

it

case

such

better

the consoli¬

of

time. There is

war

recognition of the fact that

pression of symptoms and that

the

principal

in

even

some

<

York

Stock

determined
will

23,
Dec.

be

but
30.

that

closed

will

on

be

Exchange has
Exchange

the

Saturday, Dec.
open

Saturday,.

30

Financial Chronicle

The Commercial and

(2006)

.

.

Thursday, November 23, 1950

.

>'/
Continued

expenditures—that is, by whether

from page 13

is

tjiere

surplus

a

NSTA

Notes

credit.
if the System can sell

further expansion

of bank

Moreover,
securities from its portfolio it may
the stage

set

for

traction of such credit.

THE SECURITY TRADERS ASSOCIATION

Bowling League standings of the
tion of New York

as

of Nov.

17

are

OF NEW YORK

Security Traders Associa¬
follows:

as

Won Lost

(Capt.), Kaiser, Growney, Gronick, Rappa

Leone

17
15
14

(Capt.), Krasowich, Nieman, Pollock, Gavin

Burian

(Capt.), Manson, King, Voccoli, G. Montayne

Mewing (Capt.), Klein, Flanagan, Manney, Ghegan

14
12
12
12
12

H. Meyer

(Capt.), Smith, Farrell, A. Frankel, La Pato
Bradley, Montayne, Weissman, Gannon__
Hunter (Capt.), Lytle, Reich Kruge, Michels
Serlen (Capt.), Gersten, Gold, Krumholz, Young
Goodman
(Capt.),
Casper,
Valentine, M.
Meyer,
H.
Krisam (Capt.),

(Capt.),

Whiting,

O'Connor,

DeMaye,

Last

being

Thursday

week

one

when

as

have started out
the banking

group

a

reserves,

excess

14

the decline in reserves or it must

9
6

15
18

Reserve Banks.

system must either decrease loans

deposits by five or more times

and

borrow

Thanksgiving the
bowled for. Hank Serlen

(Josephthal & Co.) bowled like a champ and came up with a 212
single game and a 562 series winning a turkey, George Leone
(Leone & Pollack) was runner up he too won a turkey, with Flan¬
agan (John J. O'Kane, Jr. & Co.) and Jacobs (Sidney Jacobs Co.)
winning the wet stuff.

be

to

Banks do not like

except

borrowers

periods,

temporary

rrpke

very

so

they

The

indebtedness.

such

to

to liqui¬

adjust their affairs and

re¬

involve contrac¬
sales of invest¬
both types of action.

adjustment
tion

for

and

effort promptly

every

date

the

from

funds

reserve

may

lending,

of

ments,

or

However, it is important to point
out here that the Federal

does

not

increase

net

other

of

Underlying Strength of Rail Stocks

Action of the railroad stocks in the past

*

has again
stressed the validity of the bulls' side of the argument. Periodically
in recent trading sessions the market as a whole has shown signs
of developing a stagnant, or even reactionary,^ tone. Consistently
it has been brought back to life by a buying surge in the rail
equities. Last week, for instance, seven of the 20 most active
stocks on the New York Stock Exchange were lails and practically
all seven scored large percentage gains. A good part of the activity
has been in the highly speculative issues, with many new highs,
but investment grade stocks have by no means been neglected.
week

or so

Despite the sharp gains that have already been scored, analysts

tent

of

paying

had

extras

directors

been

or

declared

an

tributions of both
to current and

an

over the
dividend

names were

increasing

forward with

came

expected,

Last week two

near
news

added to the list of railroads

Southern Pacific
extra of $0.50 and Kansas City Southern
extra of $1.00. Even with these extras, dis¬

of these

the regular rates.

roads

remain

conservative

curity

One factor in the recent renewed

independent strength in rails

If such a tax is imposed (and there are some who be¬
of the changed political atmosphere it may not
there is little question but that the railroads will at least be
in a relatively sheltered position. Throughout most of the industry
invested capital bases are high.
A tax based on invested capital,
then, would allow the railroads generally to earn more than they
now are.
Even a straight average earnings base, figured on post¬
war years, would leave a large number of roads favorably situated.
profits tax.

lieve that because

be)

The

tax

picture, however, is not the only

structive attitude toward the rail equities.

important factor.

Some

a

As stated above, dividend

So is the trend of earnings.

bullishness.
will be

sharp

measure

spur to

of

activity in this

what

reason

It is not
news

for

Decisions

come.

be expected is to be found in the
October report of Chesapeake & Ohio, the first road to report. It
reported net income for the month of more than $5,000,000 con¬
trasted

with

conditions

a

in

some

may

of

more

than

$3,000,000

a

year

ago

the

is

column

this

deficit

coal industry were chaotic.
Presumably
released, directors of that road will have

constructive dividend

when
before
taken

action.

Reserve

purchase

sell

or

cannot

the

vigor

the

and

and

market operations

open

always

con¬

by the

be tempered

an

or¬

Rate—Changes in

the

derly, functioning market.
Discount

rates

Reserve

are

able

the second

to

avail¬

measure

Federal

the

discount

Bank

to

Reserve

with open market operations. This
is because it is desirable to ad¬

operations.
reserves

If

as

a

banks

result of

mar¬

open

ket operations, it may not be de¬
sirable to permit them to replace
those reserves by borrowing at
the

Federal

Reserve

at

Banks,

least, not without an additional
penalty by way of paying an in¬
discount

creased

to

if
to

This addi¬

rate.

penalty is both

member

bank

a

deterrent

borrowing

and,

incentive
repay the indebtedness at the

borrowing is done,

an

earliest possible time. At the pres¬

time

more

and

banks

adjust

reserves

frequently by purchasing
selling short-term 1 Treasury

securities than by borrowing from
the

Federal

ing

credit.

such

terms

Reserve

and

the

Reserve

can

Banks

borrow
may

be

of Korea stemmed

of the

have been laid to rest.
essential

a

recession

Now such fears

With the troubled foreign situation making

important at certain times.
rate

are

serve

looked to

as

one

Fur¬

evidence

opinion of the Federal Re¬

regarding the general credit

situation.

vast

rearmament program, it is now generally con¬
high level of industrial activity is assured for from
two to five years. Under such conditions the railroads can hardly
help but report high earnings for an extended period. This is par¬
a

ceded that

Reserve

a

ticularly true in view of the steadily improving operating effi¬
ciency noted in recent months.




the

true if
current

over

ex¬

thus to reduce the

debt and

held

flationary movement.
In such a
it may be unrealistic to
expect a Treasury cash surplus.
situation

.

fiscal

when

Even

and

debt

management
policies
are
fully
appropriate to the economic situa¬
maximums of 14,
tion, however, monetary policy
20, and 26%. In the period Au¬ still l
as
an
important
part to
gust, 1948, to June, 1949, it had
play
in
maintaining
economic
authority to raise them to maxi¬
stability.
Monetary policy alone
mums of 18,
24 and 30%.
is especially designed to influence
If reserve requirements should
the
extent
of

corresponding

be raised from

17%

to

dollar

of

of, say,

average

an

average

an

reserves

of 20%, each
would become

rather than $6 of

the basis for $5

the banks had
to begin with, they

Unless

deposits.

excess reserves

would be forced to decrease their
and

loans

ingly

correspond¬

deposits

to raise new reserve bal¬

or

ances

ties

sell securi¬

banks and

on

imposes

borrow

or

The

securities.

selling

by

fact that they need to

acts

as

penalty

a

deterrent.

a

Furthermore, each new dollar of
reserves received would form the
basis

for

fields

of

lending and,

—

In

credit, the Fed¬
the

sets

Reserve

with

of

terms

stock

the

while
taxes

for

Reserve

to

act

increasing

for

means

expenditures

and

decided

It is possible

stability.
Federal

the

for

desirable part
achieving

a

program

any

economic

are

being

is possible for
the change to be in much smaller
It

upon.

steps and to be reversed if condi¬
tions

change.

management

Although debt
policy can be more

flexible than taxation and expen¬
diture

by

policies, debt management

ures.

.

Monetary-Fiscal Measures
Already Applied

in

*

<

j

actions

number of important

A

exchange

credit, where margin requirements
are
set; and consumer and real
estate credit, where, under emer¬

relatively narrow scope as
witn monetary meas¬

a

compared

directly affect the demand
conditions for the affected credit.
are

Further¬

policy makes it
of

terms

fields

spending

funds.

the flexibility of monetary

more,

I said before, these

as

private

borrowed

policy is limited by the structure
of the debt outstanding as well as

credit expansion.

Selective Credit Measures

eral

of

amount

smaller

a

and

deposit

and fiscal area
already been taken to com¬
tne
present
inflationary

the

have

bat

monetary

down payment
percentages and repayment peri¬
ods
are
regulated.
These fields
lend
themselves
particularly to

situation
by curbing private
expenditures.
One of the most
important has been the increase
in
individual income
taxes, by

this

which

authority,

gency

type

regulation

of

because

of the excessive pur¬

some

terms of such loans can be stand¬

chasing power is being absorbed.

ardized.

This

and

By an increase in margin
payment requirements

down

increase

tax

in

down

cut

at

means

expenditures

larger payments both
of purchase and

the time

sub¬

proper

a

is

eral

the

of

All

actions

Reserve

are

of

Fed¬

the

taken under the

authorization of Congress, and the
Federal Reserve endeavors to keep

informed

Congress
to

the

on

meas¬

applied. In its Annual Report

ures

the Federal Reserve

Congress,

summarizes

the

rise

them.

to

members

and

taken

steps

conditions

economic

the

requirements
of

are

influencing

positions

giving

^Furthermore, the
Board, the offi¬

the

of

cials of the Federal Reserve Banks,

bank

further

siderations

of

economic

With present income

levels, we can and we must Cover

by taxation the level of expendi¬
anticipated for the next few

tures

years.

But

if

even

balanced

cally

eliminated.
Some of the
will
be
paid with funds

taxes

their

stream.

be

situation.

will

views

on

ready

to

economic

the
of

Fiscal

and

Debt

Management Policy
I

am

ment

not

that

operate

independently

a

mo¬

To

can

not

other

of

policy.

For

maximum effective¬

monetary, fiscal and debt
management policies should work
ness,

nomic

activity

ability and willingness of banks to

between

by

is

the

Treasury

of

eco¬

greatly

in¬

relationship
receipts and

private expen¬

plant expansion which
swell the total expenditure

the

additions

These

be
credit

must
and

extent that

to

ex¬

offset

by

the

balanced, however,

budget

is

monetary

Some steps have already

portant.
been

measures.

become much more im¬

measures

taken

monetary

in

the

and

application of

credit

restraints,
in

and others may prove necessary
the future.

With

The level of prices and

all

into the expendi¬
Furthermore, there

increased

monetary

policies,
particularly .tax
and
fiscal policy and debt management

while

way

penditures

policy

suggesting for
monetary

spent,

ditures for

stream.

Role

The

than

rather

saved

government expenditures will

will

Congress

a

and

not automati¬

are

which would otherwise have been

ture

always

are

moneta ry

measures

to go
explain the
actions taken and to express their

visers

before

have

should

we

budget

credit

find

economic

System's

stability

certaniiy
demand that govern¬
ment receipts at least equal ex¬

ad¬

the

and

fluenced

and

thus

a

but

be

penditures.

sequently.

the

reserve

other

on

to make the

Requirements—Changes hand in hand.

reserve

third

beginning,

will

the

However,

which banks

on

repay¬

thermore, changes in the discount

largely from widespread fears that

between minimums of 7,
10, and 13% for country, reserve
city, and central
reserve
city
member banks, respectively, and

losing

are

only the near-term picture that is impressive with
respect to the railroads. The bearishness toward the industry that
prevailed virtually from the end of World War II to the invasion
of major proportions was inevitable and imminent.

inflation.

increases
necessary.
There is no
and by a shortening of the period
credit
in general.
The discount of
reason
under present circum¬
repayment of real estate and
rate is the rate at which the Fed¬
consumer
loans, some purchases stances why tax increases snould
eral Reserve Banks lend to mem¬
are
prevented. Those purchasers not keep pace with increases in
ber commercial banks. This meas¬
expenditures, so that a balanced
who are able to meet the require¬
ure
is really a joint instrument
budget will be obtained.
Con¬
ments are more likely to have to

from

not

to

power

influence availability and price of

in key

industries would be tolerated.

the

has

now

posits

These

ignore

government secur¬

necessity for maintaining

ent

is

of

must

was seriously disrupted not only by troubles in the
industry but, also, by the steel strike. The steel strike in par¬
ticular had repercussions on virtually, if not actually, every road
in the country.
It is also expected that these highly favorable
year-to-year comparisons will continue well into 1951 as labor
troubles still plagued the coal industry early this year. Presum¬
ably, under present emergency conditions,-no prolonged strikes
economy

coal

It

in

market,

scope

tional

The industry generally will not show as wide earnings im¬
provement in October as Chesapeake & Ohio which is largely a
coal road.
Nevertheless, sizable gains are anticipated for most
roads in the final quarter of 1950 compared with a year ago when
our

to

just discount rates in accordance

time to

market, open

requirements on demand de¬

certain

economic conditions. But the Fed¬

ity

Reserve
vary

government se¬

with the direction of open market

is conducive to

some

the

con¬

a

This latter consideration

group

in

by

partly

determined

the most

for

even

operations,

market

market.

Federal

has unquestionably been the start of hearings on a proposed excess

as

Treasury securities are made with
primary consideration to general

in relation

prospective earnings.

such

degree the ex¬

some

open

may
be
conditions

appreciation is still in prospect
As

taxes

potent

very

a

combating

particularly
of

excess

be

can

in

is

operations

market

currency

sold, and to

eral

terms.

the economy.

on

other special penditures is used to retire bank-

or

circumstances in the

reserves

developments,

and

ditions

favorable.

bank

to

movements.
Furthermore, both the type of se¬
curities which are purchased and
gold

for the most part are of the opinion that further substantial

price
and intermediate
continues highly

on

bank

in

merely

act

may

offset the effect

market

bring about a

decline

or

It

reserves.

Reserve

open

on

carry

operations only to

Factors

borrowing needs

are

and discount supply of money in the economy.
them.
There
are
Bank
reserves
will be changes may not be feasible on a
circumstances,
of
drawn down
either because the large enough scale to bring about course, under which it is impos¬
the
desired
change
in
bank
re¬
sible for fiscal policy to serve in
banks use them to purchase se¬
Under such cir¬ the
curities themselves or because de¬ serve positions.
desired
manner.
For
ex¬
cumstances,
an
increase
or
de¬
positors write checks on the banks
ample, high expenditures required
crease
of
reserve
requirements
to
pay
for securities purchased
by a defense or war emergency
from the Federal Reserve. Unless may be appropriate. The Federal may
be responsible for an in¬

10

before

usual Turkey and wet stuff prizes were

willing¬

13

Greenberg (Capt.), Sullivan, Stein, Wechsler, Siegel

Treasury

When the
a

11

(Capt.), Weseman, Tisch, Strauss, Jacobs

Kumm

open

measure

prices and high yields, it
encourages
purchasers to buy

Banks

Work-

meister

do

as

operations and discount
However, there are times
because of large Treasury

This

low

with

Frankel

Donadio

7
9
10
10
12
12
12
12

adjustment

flexible

issues,

to

surplus on the part of the

A cash

rates.

government securities

to sell

ness

at

TEAM—
Bean

Federal Reserve shows

lend themselves to

not

do

bank

market

multiple con¬

a

ments

deficit.

a

bank or; to noninvestors likewise
has ah
sold

being

require¬ important effect

Changes in reserve

lend.

■

refunding

and

new.

Anti-Inflation Battle Report

or

securities, both

Whether Treasury

a

view

to

limiting

the

availability of credit and affecting
its

cost,

Banks
rate

the

Federal

Reserve

their

discount

increased

from

D/2%

to

l3/4%

in Au-

Volume 172

gust.

As

Number 4962

.

.

The Commercial and Financial Chronicle

.

result of the System's

a

anti-inflationary

market

open

interest rates in tfte
rose, with yields on short

operations,
market
and

intermediate-term

ment

securities

about

±4

generally

up

since the middle

1%

of

govern¬

pricing

distributed

with

the

Steps

and

been

establishment

down

payment

maximum
der

to

taken

granting of consumer
estate credit directly by

real

the

have

the

of

minimum

requirements and

terms

to

authority

maturity un¬
the
Defense

of

Production Act of 1950.

Sept.

18,

Effective

Federal

the

Reserve

demand

materials

actions

and
at¬

are

relation to

supply.

is too early

fects

the

of

various

may

bank credit

to judge the ef¬

which

credit

and

monetary

also be needed and
for this purpose it may become,
necessary
to - request additional
authority of Congress in order to
restrict the availability of reserves
on
which multiple expansion of

tracted to the production of goods
for which demand is greatest in
It

also

control

and

Additional

goods
are
purchasers

to

strongest

manpower

of August,
P

mechanism,

still

(2007)

will

taxes

to

flation

increased

be

substantially before

many

keep

and

our

economy

months.

down

mum

maturity

credit.

payment

As

revised

Oct.

lb,

provides for minimum down
ments of one-third on

piurchases, zo%

pliances,
and

private lenders.

At

the

ing Administration
ened.

Minimum

now range

from 5%

veterans

costing

under

50%

houses

for

on

costing

over

house,

the

The

21%

maximum

Over
cars

the

homes

new

defense

our

on

estate credit

demand

are

to

needs

Regulations

goods

be

be

for

the necessary

duction
these

civilian'

of

credit

Sampson Rogers, Jr.

Buhse

E.

controls

were

IH?

if

ty.

fSSr

-

>k.

in

of

M.

Ross,

Co.; Armand Fon¬

Nicholas

have

been

William H. Higgins,

—

Paine, Webber, Jackson & Curtis;
George B. Deacon, Thomson &

rise

this

moderate

San Francisco—Charles G. Hci-

neke, Dean Witter & Co.

stocks

these

of

owners

many

our

more

Novak, Drysdale & Co.

Chicago

months
obser¬ McKinnon.

two

that

belief

from

restrained

been

not

Seo.ttle

—

William

H.

Parsons,

Inc.

Securities Dealers,

of

is

Buhse

Mr.

National

the

of

Governors

Association

partner

a

Merrill, Lynch, Pierce, Fenner &
Beane.

Detroit—A1 Curley, Bache & Co.

gains had been wiped oat

collect

not

did

ment

taxes

on

these

of

by appropriate debt

Dean Witter &

Philadelphia—William

H.

Ar¬

nold, Eastman, Dillon & Co.

take their profits and the govern¬
Charles H. Pinkerton

Warren H. Crowell

kets.

be kept down

to 400% in

changing conditions. The re¬
sult—the security-holders did not

the

can

York—Richard

New

by

nominated Chairman of the Board

also

would

of the

spiraling prices, crippled war pro¬
duction, and black or gray mar¬
expansion

University

selling by the holding period. Be¬
fore six months had elapsed much

established in 1932.

Monetary

Governors

the Associa¬

It is

year.

and

had

If

would have

we

or

Meek, Francis I. du-

■■

'

; WASHINGTON, D. C.—Howard
E.
Buhse
of Chicago has
been

result

same

Leeds, Persh¬

in

space

this

vation

if

effect, other devices would have
to be developed for
accomplishing
the

of

Columbia

change

short

early

jp

pro¬

not

Oilman,

Co., N. Y.

Thomas B. Meek

an¬

judgment," Mr. Meek pointed
"For e x a m p le, television

the

•

with

goods.

Pont &

e-

the

William

Co., Chicago.

Chairman Executive Committee
—Thomas B.

Governors

at

Hutton &

Treasurer—Milton

meeting

the

F.

ing & Co., N. Y.

stocks advanced 100%

m

durable

lower levels of

Secretary—E.
E.

his

the

—

Philadelphia; Raymond J.
Goodbody & Co., Detroit.

Co.,

Laude,

out.

designed to bring

consumer

&

Com¬

b

Huhn, Bache & Co., N. Y.

George W. Martyn, W. E. Hutton

of

in

Collins,
Chicago.

Regional Vice-Presidents

and

Tax

M.

Executive Vice-President—Jack
B.

vestors'

n

Frank

—

Hornblower & Weeks,

National

"This

met.

and housing into line

B.

of

and real

consumer

are

Howard

H. Fulton

Wallace

fewer
built

President

Club in New York, on Nov.

years.

can

to

Thomas

are:

Officers

had

gains

ac¬

cording

Governors

and

meeting

hold¬

months'

capital

chosen at the

taine, Merrill, Lynch, Pierce, Fcn16.
ner & Beane; Robert J. Davidson,
the tax laws
Fahnestock
&
Co.;
Donald
C.
would have permitted investors,
Blanke, Eastman Dillon & Co.;
large and small, greater exercise

to

repay¬

ahead

six

tion

other durable items and

and

fewer

20

period

the

of

for vet¬

for

of

present

nual

nonveterans.

time

is generally

ment

11%

for

1950

fore

$24,250.
On a $9,000
minimum down pay¬

and

erans

during

remarks

nonveterans

ment is set at about

effect

mittee,

tight¬

$5,OUO

in

its

payments
houses for

on

for

officers

Other

Chairman of

same

were

three

a

period

Brokers

Veterans

and

down

ing

I

time, the terms for Federal Hous¬
Administration loans

if

revenue

would
have
$250 million in

least

at

Association

ing the terms of real estate credit
of

government

gained

the

for

issued Regulation X defin¬

serve

Brokers elected.
The

President of

repayment generally at 15 months.
Effective Oct. 12, the Federal Re¬

judgment and thus increase

profits. New officers of Association of Investment

Meek, retiring

ap¬

furniture,

on

exercise greater

to

their taxable

months,

pay¬

the maximum period

sets

it

automobile

household

on

15%

and

nominated for Officers of HASD

consumer

on

Investors' Brokers, contends shorter holding period would per¬

instead

maxi¬

and

for

Capital Gains Tax Were Shortened

Meek, retiring president of National Association of

mit investors

been

free.

issued Regulation W setting mini¬
mum

Thomas B.

been taken

have

need

Period in

future unfolds we will know more

indirect

fully what measures will be re¬
to combat inflation.
If the steps quired to meet it and we must be
which have been taken thus far prepared to obtain authority for
prove
to
be
insufficient, then and to apply necessary measures.
further measures must be taken With resolute and timely action
promptly.
It seems clear that we can win the battle against in¬
measures

Says Treasury Would Have Gained If Holding

As the

be based.

can

31

of

ber

of

Exchange, a di¬

Stock

A.

a mem¬

Governers

of

Board

of

L.

He is

Finance Com¬

rector of Seaboard

of Delaware
Metropolitan YMCA, Los
pany

and the
Angeles.

profits."
"The potential increase in taxes
from a shorter holding period is
evident from study of the

reports,"

ury's
tinued.

to

Hawaii Impf.

con¬

in¬

1942

clusive the holding period was

18

Group

Offers $14 Million

Treas¬

Meek

Mr.
1935

"From

Chase-Devine

Chase

The

National

Bonds
and

Bank

C. J. Devine & Co. jointly head a

and
estimated
capital
native months
group which is offering $14,000,ber of its Executive Committee. of
Baltimore,
attended
public gains collections for these eight 000
Territory of Hawaii 1.80%
Sullivan, schools
there
and
took
calls for sales of securities to non- He will succeed John J
night years were only $275 million. In
public improvement bonds, due
at
Johns
Hopkins Uni¬ 1942 the period was reduced to Dec.
bank investors.
Should new bor¬ Bosworth, Sullivan & Co., Den¬ classes
1, 1953-1970, inclusive.
The
six months and in the next three
rowing be needed under present ver.' Election of NASD officers versity, joining his present firm in
bonds
are
offered at prices to
circumstances, the funds should for 1951 will take place at a 1921. He was made a partner in years the Treasury's take is esti¬ yield from 1.15% for the 1953 ma¬
mated to have been $1,341 million,
1929.
He is a former President
Governors' meeting Jan. 16.
pe obtained if possible outside the
turity to a dollar price of 100 for
a
gain of over 1,000% annually.

management policy.
At the pres¬
ent time the economic situation

banking

funding

system.

As

much

through
vestors.

The

which

will

offering

are

of

attractive

insurance

as

companies

decrease their willingness to
business
and
real
estate

make

loans

to

and

local

and

purchase

corporate
securities.

government

Chairman,

&

same time, it will decrease
the necessity for the sale of gov¬

securities

to

banks

in

direction

opening

through

this

up

fall

of

the

more

Series F and G savings bonds to
institutional investors.

not

are

Taxes

not

involved
credit.

in

are

than

also

jare

the

But

measures

table

for

consumers.

painless.

restrictions

the

are

painless

are

Neither

purchases

on

regulation

credit

taxes

and

much

more

inflation

much

of

itself.

equi¬
They

our

free enterprise economy

than

are

price and

rationing.

and

wage

They

controls
leave

amount of freedom

a
for

market processes to operate.

They

stabilize

level

the

general

by

influencing

of

expenditures.

time,
vidual

they

accordance
mand

and

the

leave

items

du

Buhse

Chien,

was

free

price

total
At

amount
the same

and

Wisconsin,

is

44

the
and

is

fluctuate

with

in

changes in de¬
supply.
Through the




graduate

a

Uni¬

the

of

versity of Minnesota Law School,
Class of '29.
He is a member of
Sigma Phi Epsilon and Phi Alpha
Delta.

ship

Hornblower
&
graduation,
Mr.

Joining

Buhse

upon
was

admitted

to

partner¬

He is a former
Chicago Associa¬
Stock Exchange Firms and

in

1943.

Chairman of the
tion of

District

the

of

Wide

Nation

8

No.

He is

of the NASD.

a

Committee
director of

Service

Food

Public Service Official

He is

a

World War I naval

air corps veteran.

partner in his firm
a

member

of

Exchange and

the

He has been a
since 1935, is

Midwest

Stock

director of Ave¬

a

State Bank, Oak

nue

Park, where

he resides.
Crowell

Mr.

Angeles and is 45.
uate
at

of

Los

University
Angeles.

born

He is
of

His

in
a

retired

Public

Service

utility for 44

largest
his

retirement

also

1947.

in

until

years

He

was

prominent in national utility

organizations and a director in
corporations.
When the
Public
Service Corporation was
several

in

Mr. Young was
elected its first Comptroller, and
later Vice-President and a direc¬
formed

1903,

1939, thereafter be-

tor in 1917 to

Executive

coming

Committee

Chairman.

Los

grad¬

California
firm was

affairs

civic

trustee

of

Rutgers

Eastern

the

the

of

as

a

and

College,

had

been

National

Com¬

Young

Mr.

President
mercial

acting

York University

member of New

Council,

Association,
the
States
Gas
Conference,
Gas

American

Accountants

Electric

Gas Association,

also

a

tric Institute and Treasurer of

tion.

-

Electric

Light

comparable.
"The
charge that speculation
would be fostered by the shorter
period does not hold water in the
light of actual events. The great¬
est speculative spree
in our fi¬
nancial history occurred in 1929
when

the

months

holding period was 18
and
estimated
returns

from the

capital gains tax in that

and in 1928 were over $100
It is our

year

million less than in 1945,

opinion,

based

millions

of

The

the actions

on

investors

bonds, in the opinion of the
are legal investment for

savings banks and trust funds in
New York State and for savings
Connecticut and Massa¬

in

banks

chusetts.
In

opinion

the

cipal and interest from all present
Federal,
State,
municipal and
local taxes, except estate, inheri¬
tance and gift taxes.
Associated in the

and

Securities

"It is

months'

regrettable that the three
provisions was eliminated

from

the

floor

of

been

passed

recent

by

It

having

House

our

be

and

Finance
that

hope

included

legislation

for

in

the

of raising additional rev¬

to

fense

is

will

tax

new

purpose
enues

the

tiie

on

after

by the Senate

measure

any

bill

tax

Senate

the

approved

this

years,

meet

our

mounting de¬

expenditures,"

Meek

Mr.

Frank

M.

Weeks'

elected

President of

tion for the
first time,
from

Collins,
Chicago

San

Hutzler; Union

Corporation; Drexel &

Merrill Lynch, Pierce, Fen¬
&
Beane;
Paine, Webber,
& Curtis; Blair, Rollins
& Co. Inc.; Equitable Securities
Corporation;
Reynolds
&
Co.;

Co.;
ner

Jackson

Hornblower

Marks

M.

&

Laurence

Weeks;

Co.; Hayden, Miller

&

Co.; Roosevelt & Cross, Inc.;
Stranahan, Harris & Co., Inc.; W.
&

E. Hutton &

Co.

Inc.;

Green,

ing,

F.

Co.; W. H. Morton &

Smithers &

S.

Ellis &

Weeks

Co.

Stubbs;

&

(Inc.);

Central

Provident

Savings Bank & Trust Co.;
Securities

the

Associa¬

For the

Governors were elected
and

Seattle.

Co.

Co.;

Anderson; Whit¬

office,

was

are:

Bank;

Hornblower

coming year.

Francisco

&

Bank

Co.

&

Savings

&

Bros.

Republic

concluded.

&

Trust

Salomon

offering group

National

Devine

J.

C.

curities prices.

of

Chase

The

with

Harris

period

a

the
both prin¬

counsel

of

bonds are exempt as to

of

traders

and

group,

that a
longer holding period tends to en¬
courage wide fluctuations in se¬
over

the

Associa¬

the 1969-1970 maturities.

these years are

Railway

Association, and the

Vice-President of the Edison Elec¬
National

Average security transactions for

Committee.

Besides his interest in New Jer¬

American
was

Young,

clair, Nov. 15, at 79 years of age.
Mr. Young served New Jersey s

sey's

is a graduate of
University of Wisconsin Class

of '20.

the

of

Corporation of New Jersey, died
at Mountainside Hospital, Mont-

.

Mr. Rogers, 53,
the

Sacret

Chairman

and

resides in Winnetka, 111.

prices of indi¬
to

Percy S. Young Dies

Percy

born at Prairie

old.
He was educated in
Minneapolis- public
schools

compatible

more

with

maximum

Mr.

twelfth year as executive

director.

Fulton, Washington.

Weeks

Summary

Steps taken to combat inflation

his

Watts & Co., Baltimore;
Executive-Director,
Wallace
H.

years

monetary expan¬
beginning has been made

A

this

partner,

has been nominated

Mr. Fulton

for

a

Club of Baltimore.

of the Bond

Baker,

with

accompanying
sion.

Treasurer,

Angeles;
Pinkerton,

H.

Pinkerton, 49, and

Mr.

Rogers,

Sampson

Los

Co.,

Charles

At the

ernment

Vice-

are:

Jr.,
partner, McMaster Hutchinson &
securi¬ Co.,
Chicago,
and
Warren
H.
to such Crowell, partner, Crowell, Weedon

as

investors

nominations

Other

re¬

possible should be done
sales
to
nonbank
in¬

ties

Hornblower & Weeks and a mem¬

of

First

Chicago; Wood,

Gundy & Co. Inc.; E. M. Newton
&

Co.;

Andrews

&

Wells,

Inc.;

Magnus & Co.; McDougal and Co.,
and F.

Brittain Kennedy & Co.

32

The Commercial and Financial Chronicle

(2008)

We See

As

Taxation

still unsettled five years

cases

of

after the end of active

Non-Corporate Business
ex¬

clusively conducted by organizations taking the corporate
form.
There are a great many enterprises conducted
either as partnerships or as sole proprietorships. One of
the most noteworthy and one of the most numerous of this
type of business is the farm. If the stockholders of General
Motors should not profit by war or defense, then it would
seem to be true also that the farm operators should not.
Nor are all those who may benefit from war or mammoth
defense efforts engaged in business in the ordinary sense
of the term.

Far

Americans

more

work for

salaries

or

wages than own their own enterprises. If the stockholders
of du Pont must not earn more in wartime, or defense time,
than

in

peacetime, by what line of reasoning

it be
employees of that giant enterprise are

claimed that the
entitled to

earn

an

personal income taxes were
increased too and that in this way the wage earner and
the salaried employee quite generally were prevented from
profiting by war in either the first or the second World
War.
Or that, similarly, the unincorporated enterprise
was limited in the
profit it might make and keep. It is
a fact, of course, that
personal income rates were raised,
and that as a result many of the lower income brackets
paid more taxes than ever before. The fact remains, how¬

to

doing. It can be said with some truth
good social grounds for avoiding too heavy
a tax
burden on these groups, but it would be difficult
to find any good reason
why they should profit by war—
assuming that owners of corporate stock should not.
are

But there

is another side of this situation which

is

all too

frequently neglected. The politicians never tire of
talking about the necessity of preventing or controlling
inflation. They have a regular field day at it when war

threatens

or

when

war

comes.

They have not permitted

the current crisis (if that is what it is) and the
prospect
of

large outlays for defense to slip by without having their

say once

more

about inflation and the rest.

enough. Rising prices are never popular with the
consumer, and it is, by and large, the consumers who settle
political controversies. Even the financial authorities let

at

is far from what it was
of

time

the

(6) Factory hours, now averag¬

into

entrance

our

much ing about 41, can be increased
(They averaged 46 during World
better shape in the quality of our
War II.)
manpower. Then both the skills
(7) Some release of machinery,
and spirit of millions of workers
War

had

II,

are

we

dull

become

unemployment.

in

long

through

Now

work

our

force is active. Workers have been

They
have
adapted themselves to industrial
requirements. In the matter of
equipment, too, we are also in
better shape. Much that will be
needed for the defense program is
using

already in

use

has been care¬
for
use
when

or

preserved

popular notion, and it has been revived of late
in one
degree or another, that by "mopping up" savings,
through the sale of war bonds inflation can be avoided.
This is true, however,
only under very special conditions
which do not often exist and which are not

They certainly could never exist
so
long as interest rates are artificially fixed and so long
as the so-called central banks stand
ready to absorb gov¬
ernment obligations at
any fixed figure approximating the
price at which such bonds were placed in the hands of the
public. They are still less likely to exist when the pur¬
chaser of such bonds, as for
example war savings bonds,
told that

are

they

may

be legitimately presented for

demption at the end of the crisis
in the

consumer

re¬

and the proceeds used

items,

are

distinctly

follows, then, that taxes must be levied

situation

with the

tion.

as

respects the availability of goods clearly in
to be avoided.

rationed, either directly by fiat

or

If

to be

consumers are

indirectly by reduction

in the

of prob¬
mobilization planning.

separate

sets

or

total

of

the

(1)

today's situation.

will

by
can

consumer

(2) The problems that probably
will arise if further

the

defense

expansion of

becomes

program

necessary.

if

total

mobilization

should

defense

be "saved" and added to current income at

probable that we, as a
nation, can raise the levels of
military production to those con¬
sistent
with
present appropria¬
tions

and

crease

at

the

the

armed

same

in¬

time

three

forces to

million men, both without serious

disruption of the civilian econ¬
omy. A further expansion would
begin to strain our manpower re¬
sources.

commitments of

Million

Expanded




all-out national

an

emer¬

gency.

Finally, present policies call for
effort to discourage indis¬
advertising; to encour¬

the full utilization at their
highest skills of all workers, in¬
cluding minority groups and the

physically handicapped; to de¬
in-plant training and up¬
grading programs; and to institute
a plan for voluntary transfers.

velop

at least

Our manpower program,

period of partial mobili¬
zation, must be carried on within
during

a

other

to

be

For the

long pull, taking in the
possibility of a need for total
mobilization, we have estimated
the basis of the rate of worker

on

participation at the

of the

peak

in 1944 that the present

labor
approximately 65 million
could be expanded by some five
million more workers, including

war

force of

those who would be in the armed

can

force

capacity
tion

can

lion

workers

the

sources

upon

which

currently

draw

some

from

the

1.5 mil¬

of

group

unemployed.

that

con¬

can

both

civilian

have
recent

to

allow

for

and

abilities and

those

most

of

each

of

contribute

mobilization

total

third

The

program.

skills

will

which

the

to

which

utilization

full

assure

will

military,

opportunities

the

is

the

that

government will develop and ad¬
minister manpower programs

de¬

the

high birth rates
can

be

utilize

more

handi¬

capped workers.

We can draw upon youth.
Job opportunities and the opera¬
(4)

tion of the Selective Service

Sys¬

and

informed
for

can

intelligent

an

have

basis

the

of action.

course

it

circumstances

these

Under

motivations which

influences and

in

tions

decisions

worker

labor

the

and

ac¬

Man¬

market.

agement must realize that a wide
volved

motivations

of

variety

in

worker's

a

change his job

in¬

are

decision

Another

is his take home pay—wages

the

resourcefulness
contribute

to

the

and

support

consideration, of

individuals

to

hours

of

achievement

of

with

the

of

to

to accept new
employment. One of the most im¬
portant of these is the opportunity
to exercise his skill and training
and to advance up the job ladder,
This is basic to job satisfaction.
or

signed to enlist to the fullest pos¬
extent

is

especially important that manage¬
ment give careful thought to the

sible

work.

He

is

course,

and

concerned

working

conditions,

the mobilization program.

safety, adequacy of in-plant eat¬

In putting these principles into
practice, several broad policies

ing arrangements, transportation
facilities, particularly where in¬
dustrial

being followed:
meet

panding
ployers

the

demands

of

ex¬

defense
industry,
em¬
being urged to place

are

their orders for additional workers

with local offices of the State

em¬

ployment services. Clearance with
these offices is particularly desir¬
able before there is any out-ofarea

The

public employment offices

revising

are

their

activities and

demands.

Special
attention . is
directed toward constant

appraisals and reappraisals of the
labor market situation, not only
market

Equally important is the consider¬
ation

of job

area.

influence

that

even

with these few motivations

more

workers.

studies, analyses and reports
being geared to provide in¬

formation for the solution of de¬
fense-connected

Local public

It

manpower

prob¬

employment offices
are paying increased attention to
servicing employers receiving de¬
fense contracts. They are recruit¬
ing needed workers and encour¬

is

needs

care

obvious

to

be
given to the
personnel policies,

of

hiring methods, and supervision of
the

work force.
summarize:

To
own

Both

their

in

and the national interest, em¬

ployers should make complete and
detailed inventories of their pres¬
forces.
They should
military status of their
employees
and
determine
the
draft vulnerability of each. De¬

ent

work

check the

information

tailed
All
are

security, tenure and
will
the
mobility of
the

retirement. This undoubtedly

emphasis in
revising their

efforts in others to meet the new

labor

plants are located in an

outlying section of the community.

adequacy

recruitment.

lems.
can

country to

in achieving the
manpower objectives of the de¬
fense program if they are well
fully

cooperate

affect

nationally but in each important

More
women
can
be
brought into the labor force, but
(2)

fact

he

program.

some

draw to expand our work

shall

which

in

in the

serve

tribute most to the total mobiliza¬

are:

(1) We

expected to

workers of the

the

on

Mobilization Program

To

Labor Force

(3) We

later

aid

The national manpower

are

Five

A

recruited.

some

production; for civil de¬

fense; for agriculture; for essen¬
tial civilian goods and services;

individual

is

goods

again be available. The thought that funds not spent
during a war or during a defense effort

man¬

will be about the
same.
They will include the de¬
mands for th'e armed forces; for

The second is that all employers,

(3) The problems of planning
today and tomorrow in such
way that we will be on a sound

be

consumers

nature

our

power resources

will

will limit the number who

day when

upon

The first is that each individual

either will go into the black market for such

hoarded in anticipation of the

the

mobilization,
demands

The problems arising from

broadly

be

follows:

as

we

or

limited, expanded

a

defined

our

might

quantities of the goods available, then thought must
foe given to the task of
taking in taxes those funds which

goods

zation in

age

Whether for

being

mind, if inflation is

produc¬

mobili¬
zation program has been develop¬
ing along the lines of three gen¬
eral principles.

lems in

They

we

It

participating in the planning
of a
manpower program which
might be required for full mobili¬

criminate

have considered three related but

services. The

goods markets.

The Department is like¬

duction.
wise

the loss essential civilian

for

re¬

garding induction into the armed
forces, recall of reservists and
national guardsmen, and the con¬
servation
of
key
or
"critical"

a "free labor market." This means
on the right
countries.
that there exists a high degree of
which make us
The broad base of all our cal¬
freedom of individual action on
stronger now than we were 10
culations and our planning has the
part of workers to participate
years ago. But we cannot afford
been that of voluntary
coopera¬
in the labor market, to shift be¬
any smugness about them. Meet¬
tion, truly national in character tween jobs, to accept or refuse
ing our manpower needs will not
and scope.
employment. I know we can rely
be easy. As I have indicated, we

These

likely to exist

in the calculable future.

Defense, and the

side of the ledger,

It

a

Labor,

of

Service System, is par¬

every

skills.

their

become necessary.

There is

Department

material and labor can come from

base

key to inflation control.

labor market.

will reenter the

will

hardly afford to decide these tax issues with¬

The

workers for essential defense pro¬

a

can

local

develops,

tablishments.

retired,

(5) Some older workers,

pool of unemployed

our

derstanding of the problem than is sometimes the

We

for, workers

public
employment - offices are
giving top priority to defense es¬

recruit¬

tem will combine to speed

provide

out reference to the
consequences upon what is known as
the inflationary potential. The fact of the matter is that
taxation in war or near-war is the

and

where intense competi¬

areas

Selective

for

and Inflation

In

tion

from page 15

grass grow under their feet in such a contest as this
and we could wish
they revealed a somewhat better un¬

Taxes

pirating

turnover,

hoarding.

ment.

manpower

no

case.

minimize

working closely with the National
Security
Resources
Board, the

plants with large defense con¬
While

All this is

natural

communities and to

tion between

i

tracts.

needed.

dreamed of

needless wholesale migra¬

courage

Planning to Meet Manpowei Needs

had

ever

,

ticipating in policy decisions

fully

that there

on

conversion

being made to dis¬

are

Department of
Continued

that wage earners by and large earned and kept
(so far as the tax collector was concerned) more than they
ever,

iet

perience?

World

Let it not be asserted that

The burden, or at
must, moreover, be distributed

something about taxation from ex¬

not learn

we

■

Efforts

to the consumption

eye

Can

can

more?

problems.

at times when the supply

being

employers

to

similar

and

staffing

spending pattern. That
is to say the taking away of what little remains to those
in the very high income brackets would have relatively
little effect upon the demand for ordinary goods as com¬
pared with a tax which spreads its impact over the great
rank and file which in any event buy the goods in question.

with

Then, too, it is to be observed that business is not

like it or

we

goods is to be shortened.

consumer

least the additional burden,

hostilities late in 1945.

t

accordingly, whether

not, fall heavily on the consumer

let the reader take note of the number of World War II
tax

must,

available

made

is

assistance

Technical

Must Tax Consumption

r

It

Thursday, November 23, 1950

.

skills.

delusion.

a

.

aging better utilization of worker

for lost time, is sure to be a snare and

date to make up

Continued from first page

.

should

be

gathered which will enable them
to

present

reasons

ments

study

detailed

when

are

logical

and

requests for defer¬

made. Employers

their

manpower

and determine where

replacements.

they

Where

should

resources
can

get

necessary,

they should institute in-plant and

out-plant training courses for the

Number 4962

Volume 172

expansion

skilled

of

.

.

.

The Commercial and Financial Chronicle

manpower.

They should work with the local
offices

the

of

public employment
should let these of¬

service. They

fices know of their manpower re¬

quirements

their

and

problems,

and should make use of labor de¬

and

mand

supply

reports

other information

available

concerning

market

labor

and
there

condi¬

tions. And finally, industry should
it

make

of

matter

a

policy

that

local labor

supplies be exhausted
attempts are made to re¬

before

cruit outside the

local

Out¬

area.

voluntary coopera¬
nation-wide. We want to
means

perhaps
called

before, we are
give evidence of

never

as

to

upon

sponsibility and

its

with the

concern

commuting

ex¬

can

of

when local supplies exist.

which

of

portant

industries,

citizen provision "for the common

records

just

close

their

in

ranks

Constitutional

effort

calls

exercise

privilege

said, the

pres¬

industrial

for

ef¬

I have included

ever,

not of

Timing

this connection

Woodrow
are

"The

some

Wilson

of

words

come

mind.

to

highest and best form of

efficiency is the spontaneous

co¬

Dewey

of
consistency
being reached about

nine

apart

example

1929, 1937, and 1946.
Certainly the net conclusion to

1919,
be

reached

of

these

one

from

Stock

I

believe

is

that

no

the importance of
is a simple fact that,

deny

timing.

It

when

major decline sets in,

a

stock,

common

no

how

matter

no

high grade, is entirely exempt.

the

However,
individual
fected

lies

certainly

a

stocks

are

It

is

the

basis

to in¬
the

of

I
I

type

a

We

come

part of
of

our

selectivity.
of

art

the

to

now

A

stock investment.

strong-minded

investor would
by con¬

excellent

secure

It depends

My experience tells
cellent results

two

to

years

major

results

generally

before

downward

places

An

the

in

much better

than

ex¬

secured

impor¬

with

long

by

which

first in

investor

policy will

that

program

selectivity

tance.

such

a

faie

run

the opportunist

and proponent of timing.
In

is

this

discussion

whether

the

question

that

well-

a

even

tion that purchases could be made
at

extraordinary bottoms, such

in

1932, 1938

reinvesting.

were

swing has

1936.

certain

as

or

purchased at the midpoint of
As you have noted from the

chart,

a

June,

1932,

to

bull market began
and culminated

in
in

Nevertheless, March, 1937.
Many high-grade
years
of experience, I stocks reached their maximum
must tell you that this is a theory levels in December, 1936. There¬
which to my knowledge has rare¬ fore,
assuming a point midway
ly,
if
ever,
been
successfully between the high and low points
of
practiced. Certainly no investment
1936, is, I believe, a very failtrust
in
the country
has ever approach since it assumes the in¬
more.

30

from

I do know individual in¬

done it.

vestor

purchased stocks at fairly

vestors who have, in a broad way,

high

been willing to act on the

even more severe,

of

theory

making substantial sales when

the market

is high and when the

general buying public is optimis¬
tic

It is

enthusiastic.

and

rare,

find
individuals
enough to enter on a
selling program near the

however,

.

broad

They generally

top of a market.

prices.

stocks
solute
in

The

high that each stock reached

1946, which
The

the

second test is
since it assumes

purchased at the ab¬

were

last market

to

courageous

was

the top of the

cycle.

first

indicates

table

market

as

a

whole

how

has

pro¬

gressed since the midpoint of 1936
and the

high point of 1946. Those
figures are compared with the
of missing the closing prices of Sept. 30,
1950,
last few points; they visualize a
which aie close to those now pre¬
wild
extreme
top
which
may
vailing. I am using two types of
never come to pass.
I have found
indices, the Dow-Jones stocks con¬
much
more
courage
to
buy at sisting of 30
industrials, 20 rails
low points.
Even that can be and 15 utilities, and the Stand¬
done only when the investor has ard
and
Poor's
index
of
416

capital

about

fret

they

gains

taxes;

afraid

are

foresight to have ade¬
cash on hand when bar¬

displayed

stocks.

quate

am

gains appear.
The

that

is,

therefore,

timing if well executed

certainly

Between

sure

indication

conclusion

achieve
is

can

extraordinary

designed
assumed

placed

these

whole.

one

65

the

can

of

the

two

secure

lists,
a

market

I
good

as

a

As you

midpoint of
stocks

$1,000

of

will note, from the
1936 the Dow-Jones

improved 37% and

the

the

for

As

a

But

is

very




The second table shows the 100

below

a

declined

would

in

each

have

pomt

that each stock

1946.

By noting what the $1,000
each

reached

stock

is

currently,

we can 'secure a
what selectivity can

of

ture

in

worth

pic¬
ac¬

be

of

years

market

domi¬

a

by the best issues.

The

chart

covering

sonably high-grade industrials in¬
cluded

in

the

Dow-Jones

improved

ages

improved

38%,

while
Since

1946, the

30

each of the 100 issues selected.

the 416 stocks declined

dends

have

aver¬

29%.

only

high

assuming

aver¬

simple
and illuminating way.
You will
note that since 1936, the 30 rea¬
a

the

that

all

We

been withdrawn,

and

that all rights have been sold. The

Industrials

Jones

I

divi¬

cash

point of

do

not

improved
to

want

possibility that

the

Dow-

7%;

1%.

exclude

the

other
than the leaders, there have been
among stocks

differences in results

a
are amazing.
few well-stablished companies
maximum value of wherein results were fully equal
the original $1,000 is $4,571; the to the best among the leaders.

present

studied

be

and

The list should
analyzed

ture.

tain
Let

as

a

X-ray pic¬
Out of this procedure cer¬

physician examines

an

conclusions

become

give

some

me

you

evident.

of

them:

(1) On 10 stocks out of 100, the

original

would
now
be
$2,500 to over $4,500.

$1,000

worth from

There
have

done

On 40

would

$1,380

now

and

other
be

stocks,

worth

$2,500,

$1,000

between

which

would

still be better than the Dow-Jones

has

better; however, these

often

sionals,

been

but

done

seldom

by

by

favor.
a

re¬

of

It may require patience for

two, but the percentage

year or

results

excellent.

are

Goodrich

and

Container, two of the three
stocks with the best records since
1936, are examples.
Both com¬
panies had no better than fair
records prior to 1936.

who

is

stock

can

An investor

genuinely far-sighted
even

whose

be

be

intrigued with

full

visualized

realization

in

potentialities

possible

as

few

a

weeks

of
or

months.

(6)

Industries

and companies,
beings, are born, suf¬
fer growing pains, reach
maturity,
and utimately wither.
In buying
stocks, it is usually best to invest
like human

in new companies, or even
during their years of uncertain
infancy.
Purchases
should
be

not

timed

to

with

accord

greatest

growth.

years

of

Furthermore,

certain industries lend themselves
to

greater ultimate

certain

potentialities;

managements

onstrated

superior

have

dem¬

abilities.

The

discovering genuine growth-

type companies is the best single
key to common stock investing.
Now

you

recall that early
raised the point as

may

in

this talk

I

to

whether

there

is

method

a

of

combining timing and

selectivity
to be alert to opportunities
without being completely in and
out of the market too often.'
I
so

as

believe there is, unless the cor¬
porate earnings picture is changed
by a severe excess profits tax.
I believe the greater

portion of

an

investor's

common
stock
funds
should be devoted to growth
type
stocks.
Occasionally it will be

to

necessary
some

the status of
or

make

changes,

as

industries reach maturity, or

more

a

company

attractive

changes,

situations

are

conclusion that
small

a

basis.
Capital growth of unusual
proportions can frequently be se¬

It is my

cured, for example, by purchases

policy of buying
medium

and

companies will,

profes¬

amateurs

in the art of investment.

over

a

grade

period

time, work to the uninformed

of
in¬

vestor's detriment.

Industrial averages.

from

On the other 50 stocks, the
results would
have
been
below

that

some

com¬

exceptions.
To unearth this presented. The minor portion of a
type of investment opportunity is fairly active stock fund can be
difficult, but it can be done. It handled on a more opportunistic

Certain

(3)

been

even

opport¬

leading

are

into

(2)

have

the

among

panies in industries that have
cently been temporarily out

art of

the

this fact in

proves

Sept. 30, 1950 of this $1,000
invested at the 1936 midpoint in

are

favor¬

past few

Standard & Poor list of 416 stocks

tually accomplish.
as

60%

as

less

even

the

witnessed

ages

high

Some

more.

much

speculative companies, the re¬

or

because

the

or

since the high of 1946.
If we were to consider, not the
100 leaders, but a list of marginal

able,

of

70 stocks
In fact, on

as

unities

a

there has been

industry stocks

consumer

likely to be safer.
(5) Watch for buying

should not

about

average.

33

are

100

find that

we

market,

the

Dow-Jones

one-third,

sults

at

of

the

decline of 25%

have

stock,

in

and

averages,
were

nated

second,

list

a

Here

than

follows.

other

analyzing

conclusion
our

arise

figures. Some

in

made

situations

which

have

just, passed

through a period of
Examples
are
?.be
utilities, paper and ruboer

difficulties.

rails,

stocks during the last ten years.
Varying percentages of the com¬
mon
stock fund can be kept in

cash from time to time, awaiting
buying opportunities. There will
investor
always be difficulties for someone
is
confine his
ages.
in industry; if they appear tem¬
purchases to one of the leaders
(4) On 27 stocks in this highin
character,
purchases
in each group. The first company porary
could be profitable. Furthermore,
grade list, an investor's capital
has often performed best, such as
would actually be worth less than
even
in
the holding of growth
General Motors,
American Can,
in 1936, despite the 37% rise in
stocks an investor should
Sears Roebuck, and International type
the averages.
take at least partial advantage of
Business Machines. At other times,
the probability that the shorter
the second or third company, sucii
Results of Best Grade Issues
as
Dow
Chemical, Standard of five-year and certainly the longer
Now let me show you some¬
nine-year cycles provide a pat¬
California, General Mills, Good¬
thing surprising.
Among the
tern whose historical significance
rich,
National Steel, or Philip
stocks providing the poorest re¬
cannot
be denied.
The investor
Morris, has proved most advan¬
sults are the best grade income
should be guided accordingly.
tageous.
A company showing a
type of issues, stocks enjoying the
My over-all conclusion is that
strong challenge to the current
highest ratings, stocks which gen¬
leader is often the best buy for the far-sighted investor will serve
erally constitute typical holdings
interests
better
the
astute
investor.
by
paying
However, his
recommended
by trust
depart¬
buying into small situations in maximum attention to the matter
ments
of
banks;
for
example,
highly competitive fields is sel¬ of intrinsic merit rather than de¬
A. T. & T., American Can, Con¬
He could
dom successful.
In times of de¬ pending upon timing.
solidated
Edison, American To¬
clining business, such companies be benefited in his selection of
bacco, Chesapeake and Ohio, and
can
seldom
maintain
adequate growth oompanies by those who
Woolworth.
Furthermore, these
profit margins, dividends show have spent years in such work.
stocks are among those which had
much wider variations and poor If he is kept alert to opportunities
the best records during the trying
market results follow accordingly: as they arise, he will find that his
seven years preceding 1936. There
common
stock
investments
will
(2) Beware of fields where the
is a lesson in this fact.
ultimately result in satisfying his
industry
has
matured
and
where
On
fourth
the
table, I have
further growth is relatively lim¬ original major purpose of achiev¬
taken the same list and reclassiited. This is the reason why many ing augmented capital valuation,
field the 100 stocks by industry
and increased income.

the

Dow-Jones

Industrial

of those

(1)

are

as

follows:

the whole,
generally wise to

aver¬

On

an

1936 favorites have become sources

groups.
of

Please note the character

group

performances.

^Chemi¬

cals, rubbers, steels, oils, dairy
products, and insurance companies
all did exceptionally well.
Can
companies, tobaccos, finance com¬

of

capital losses by 1950.

With Investment Research

(3) Beware of situations where
the

(■Special to The Financial Chronicle)

profit margin is too substan¬

tial.
harsh

It

almost

always

competition

and

results

in

years

of

panies, motion pictures, utilities declining profit ratios. This has
been true, for example, in pro¬
generally poor. Decidedly
varying results were shown by prietary drugs and tobaccos.

BOSTON,
Connors
search

is

Mass.
with

—

Donald

Investment

B.
Re¬

Corp., 53 State Streets

were

average

practical matter, good timing

better

investor

difficult Standard and Poor stocks 29%.
drugs,
beverages, autoinvestor
to From the high point of 1946, the banks,
achieve. He is much more likely Dow-Jones stocks improved 3
accessories, merchandising stocks,
to be too bearish at the low points, and the Standard and Poor list railroads and mining companies.
The point is that good selectivity
and too bullish at the high points. declined 1%.
results.

is

as

100

and

in

appear

on

100

our

an

is

that

can

result

of

tremendous

years,

leading stocks.

stocks, first at the mid¬
point of the 1936 range for each

The

though pur¬
at relatively high points
market, can serve his pur¬
list,

bring

been

have

skeptical individual minimum is $474.

a

convinced

be

can

selected

prices down by 25% to 50%, and
sometimes

heart

the

to

come

Our third table shows the value
me

be

can

intelligent

an

the

on

differentiation.

1942. To provide
centrating his investments at pe¬ a test, I have, therefore, deter¬
riodic low points, generally five mined upon two buying levels, in
years apart, selling
stocks after order to be as conservative as
somewhat less than a three-year possible.
The first assumption is
upward move, and waiting close that the securities to be analyzed
The

of

results

have

differences

out

This

important. It
in relatively short pe¬

four

market

changed.

extremely

of

almost

second

discussion—the matter

Reviewing the consistency of pose of achieving, without too
the cyclical variations shown on much trading activity, substantial
all three charts, a convincing case
growth in capital value over a pe¬
can
be made for timing as the riod of years. It would be unfair
most important single key to suc¬ to work on the unlikely assump¬
common

now

invested

discussion— chased
the matter of selectivity.
in the

cessful.

90%

entire

twice

The Matter of Selectivity

,

this

of

part

analyst

perhaps

on

list.

materially better
than the general market. The test

world's rarest gems.

af¬

Therein

varies.

important key

very

vestment.

second

which

degree to

common

agree

is

New

but

every

with

stocks, 10 have
improved 25%' to 64%, about 20
more
still
improved 7% to 20%, which

the

Exchange,

almost

same

secured

of psychological
independence which is one of the

examination

an

charts

three

can

involves

the

for

for

includes

on

table

riod

To be fully

comparison

have hardly

ages

shows how

constitute major investment fields.
would

free people."

listed

table—the

their

reasons

list

last

the high point of 1946. Remember
that since the 1946 high, the aver¬

were

question; namely, the
degree to which a program of in¬
telligent selectivity
could have

emphasized
major tops

—

The

the

not

are

York

these:

a

which

the

and Dakin, in a book on Cycles,
published in 1947, stressed the
average
40-month rise but also

years

1936

in

Selectivity
In Buying Stocks

two-year average decline.

to

bank stocks and investment trusts

operation of

vs.

though

prior

best.

few stocks

a

leaders in im¬

among

representative,

15

page

the

How¬

ficiency of the highest order. And

We

from

were

this will appear later.

the

Continued

and 1946.' Only a few
have been •omitted due to

of

go

workers

1936

groups

States

They

that

immigration

re¬

indirect

own

strains

and

penses

with

community

both

lack of investment calibre.

ent

must

include

the power that can be engendered
when the people of the United

defense." As I have

Industry

own

selected

for our test. They sound group preference.
However,
substantially all of the to secure results that are genu¬
important industry groups and inely satisfactory, it is necessary
tion,
most of the leading companies.
understand
and
follow
I to
the
carry
forward this mobilization
have
eliminated speculative situa¬ sharp differences that
for defense in the free American
continually
tions and companies to which a arise between companies in the
way. American solidarity in emer¬
gency is written indelibly in the prudent investor could not have same industry.
We now come to our fifth and
pages of our history. Once again, reasonably given -consideration in
It all

ly

procedure.

stocks

Voluntary Cooperation Needed

side recruitment is usually a cost¬

recognize its

(2009)

is certainly in part a question of

Joins

(4) At the top of the boom, be¬

Slayton Staff

(Special to The Financial

of the

Chronicle)

'

cyclical industries, in¬
ST. LOUIS,' Mo.—Elmer A. Purcluding railroads. At low points,
sell is with Slayton & Co., Inc.,
they may be sources of growth
•
;
and profit. - At high points of a 403 Olive Street.
ware

r

34

The Commercial and Financial Chronicle

(2010)

position increased sharp¬ for long-term or short-term
ly. Part of this was due to the -holding, and what is meant
fact that the averages were by
the terms "short-term"
flirting with their 1950 highs. and "long-term." Everybody
The assumption being that if has different definitions.
❖
*
-f
they failed to go through then
they would back off. Whether
Timing is something else.
or not such
reasoning is sound For example I like the oils,
isn't for me to say. I feel that
heavy glass stocks and a cou¬
some of this short selling may
ple of specialties. That doesn't
be a little premature. It may
mean they won't be cheaper.

Markets
Walter

Whyte

Says—
==By WALTER WHYTE =
I

When

week's

last

wrote

column, I anticipated that the of
market would be at

by the time
this hasn't

a

upward

new

new

read it. So far

you

#

#

I've been
the

the averages

that

man

Standard of

who buys

snapped back from their re¬

market

nent

way make for good reading. Here's
and also allow¬ where timing comes in. If a

1931

to

ing for intermediate reactions. reaction is indicated, buy the
cent lows and shot up again.
My answer to such a question stock at a lower figure. The
But that was all. This doesn't
is all bound up with timing, dividend will probably still be
mean that
this is the begin¬ and what each investor is safe but the
yield will be

On the con¬ looking for.

ning of the end.

*

*

trary, it probable means that

One

*

!'«

Chronicle.

still

I

current

market

ad

stock is

a

bought

They

presented as
only.]

are

those of the author

I could think up

would

the result of something

be

The State oi Trade and

gained through long years of

with

figures that could stand up. In
fact, these

by

a

have

reasons are

backed

kind of intuition, and I
yet

find

to

stick that

can

measure

that.

*

#

*

yard¬

any

During the past week the

annual rate of $284,000,000,000 in

A record

Sept. 30

Department of Commerce, the above figure
of production in the previous quarter by a gain

the

to

exceeded the pace
of

$14,000,000,000.
The

principal

factor

in

the

advance

was

attributed

the

to

post-Korean spurt in buying by consumers fearing shortages and
price advances.
,
.

ing into

spending

in

the

September

quarter

American

soared

to

a

of

than

more

This

permit valuations turned sharply upward
temporary letdown that occurred in September.

to

the

$520,255,660,
a

new

during October
according to Dun & Bradstreet, Inc.
This
high for that month and was exceeded

in

and

was

36.9%

greater

than

the October,

Last

month's

rise of
1949, figure of
for a

Building permit values for 215 cities for the elapsed 10 months
continue to

run

Curb

Exchange tAssociate)
Stock Exchange

14 Wall Street

week

a

Private

Teletype NY 1-928

Wires to Principal Offices

Francisco—Santa

At 102.7% of

Fresno—Santa

meetings

The

One

As

in the wage-price picture may come this week.
is sure—if wages go up steel prices will go up too,

Per

100

Shares

Plus Tax

Mission

Corp. @ 64% Dec. 18 275.00
@ 70% Jan. 24 425.00
Gillette Razor @ 48% Jan.
6 287.50
Republic Stl.. @ 45% Jan. 25 325.00
Chrysler

....

Explanatory pamphlet

on

request

during

Members Put &

Calls

Brokers &

Dealers Assn., Inc.

50

Broadway, N. Y. 4, Tel. BO 9-8470




of

tons

recovering

was

on

new

capacity, the rate

1,978.900 tons;

then prevailing when

the

from

year

a

of the

most

steelworkers' strike,

was

ago,

stood

it

78.2% and 1,441,600 tons.

Electric Output

Extends Advance to Set New Historical
High Record
energy

distributed by

kwh.,

6,728,334,000

according

to

electric

the

industry for the week ended Nov.

power

at

electrical

of

amount

18

esti¬
Electric

was

Edison

the

Institute.
electric

The
historical

light and power industry this week

The previous high record

high record.

set

new.

a

established

was

week ago.

a

It

1

154,250,000 kwh. higher than

the figure reported for
the previous week, 1,083.899,000 kwh., or 19.2% above the total
output for the week ended Nov. 19, 1949, and 1,101,434,000 kwh.
in excess of the output reported for the corresponding period
was

two years ago.

;

freight for the week ended Nov. 11, 1950,
according to the Association of American
Railroads, representing a decrease of 22,572 cars, or 2.6% below,
the preceding week.
v
The week's total represented an increase of 203,789 cars, or
32.1% above the corresponding week in 1949, but a decrease of
revenue

839,612

cars,

32,067 cars, or 3.7%

Auto

below the comparable period of 1948.

Combined motor vehicle production in the United States

Model changeovers and

duction of

the current week was made up of 92,666 cars
22,199 trucks built in the United States and a total of 5,999
and 1,634 trucks built in Canada.

For the United States alone, total

a

year ago.

consumers

of

next

will be cut back 30 to 50%

year.'

Steel

producers

In

future, "The Iron Age"

adds.

Their

estimate

on

needed for essential civilian programs will also have to
more

programs

This

a

car

means

are

that

Commission

Commerce

Interstate

order

approved.

regular customers without the magic num¬
soon be getting 30 to 50% less steel.
a ghost of a chance of
getting on

customers won't stand
books

without

steel producer.

the

was

of*

order

on

purchasers.

car

£

Business Failures Rise in Latest Week
Commercial
ended

Nov.

below

a

&

Dun

industrial failures

and

16 from

year ago

126 in the similar

Casualties
from

89

a

government

help

or

rose

-to

170

in

the

week

in the previous holiday-shortened week;

135

Bradstreet, Inc.
Casualties remained slightly
when 183 occurred, but continued well above the
1948 week.
Failures were 45% less than in the

involving liabilities of $5,000

week

ago

but did not reach the

utter benevolence

»

rose

to 126

1949 total of

138 in

or

more

Small casualties, those having liabilities under
$5,000, dipped to 44 from 46 in the previous week and from 45
size

this

a

group.

year ago.

)

-

All industry

other

and trade groups had weekly increases in failures

Both

lines.

failures than

more

The sharpest, occurred in retail trade
54; the increase was moderate

35.

construction

a year

ago.

and

commercial

service

had.

Declines from the 1949 level were

reported in manufacturing and wholesaling..

in failures during
in the Pacific
against 43, in the Middle Atlantic which

Six of the nine major regions reported rises

week.

The

which

States

most

notable

had 57 as

increases

occurred

against 48, and in the South Atlantic where casualties
rose from 6 to 17, the area's highest total in four months.
A mod¬
erate increase from last year was reported in the New England,
54

South

as

Atlantic, West South Central, and Pacific States.

Wholesale Food Price Index at Highest Level in 7
Continued upward pressure

tonnage
be raised

priority orders will

new

purchases

slashing railroad freight rates on new

have

will vary among products and pro¬
adding up known requirements mills can estimate
carryovers
fairly accurately.
They are also setting aside the
maximum on each product which they must accept for DO
orders,
although they expect these limits will have to be raised in the

of

new

Tuesday of this week
automobiles by approxi-/
mately 12%, and to become effective Feb. 20, next.
It is under-,
stood the reduction will involve savings of $10 and up for new

the

except manufacturing

The amount of cutbacks

ducers.

the

to

in

quarter

•!

-

stimulus

added

An

where casualties climbed to 80 from

first

114,865 units,!

output was

against last week's revised total of 153,695 units, and in the like,
week of last year 111,779.
Canadian output in the week totaled
7,633 units compared with 7,314 units a week ago and 3,373 units

had

And

United States last week.

Total output for

quarter of this year.

bered

parts shortages combined to drop pro¬

and trucks in the

cars

now

the

and

according to "Ward's Automotive Reports;"
totaled 122,498 units, compared with the previous week's total of
161,009 (revised) /units and 115,153 units a year ago.
Canada the past week,

the

near

on Parts Shortages and
Changes

Output Drops Further
Model

decided the cutbacks will be necessary because of defense
orders,
essential civilian orders and
heavy carryover of orders from fourth

as

THOMAS, HAAB & BOTTS

based

amounted to

to

Steel orders of civilian

•

Pac.@ 18% Feb. 20 $275.00
Schenley Ind. @ 37% Jan. 24 325.00
Bethlehem Stl.@ 44% Jan. 18 375.00
Armco Steel. @43% Jan. 13 425.00
Atlantic Rfg. @ 70
May 23 £25.00
Elec. Auto Lt. @ 44
Feb. 20 350.00

asserts.

prices, steel firms could not possibly absorb wage in¬
being negotiated, so the estimate of $6 to $10 a ton
raise with the
probability towards the high side still stands.
creases

Canadian

ago,

smaller capacity

the

industry
at

is equivalent to 1,980,800

rate

corresponding week of prewar 1939 when 308 businesses failed.

were

this trade paper

•

Capacity

break

thing

Rosa

SPECIAL CALL OFFERINGS

A month

ago.

on

reported

Unchanged This Week

Even though
adjourned, contact between management and
labor heads was kept
open, according to "The Iron Age," national
metalworking weekly.
the

Barbara

Monterey—Oakland—Sacramento

operating

102.6% and production
based

The steel wage negotiations continue this week.

New York 5, N. Y.

COrtlandt 7-4150

San

larger

than the hitherto record total for the entire 12 months of 1949.

Francisco

Chicago Board of Trade

ago.

well ahead for the comparable

Steel Output Scheduled to Hold

York

San

week

a

ingots and castings for the entire industry, unchanged from

steel

all-time

The cumulative 1950 total is $4,714,419,031, as against
$3,298,693,729 a year ago, or an increase of 42.9%.
With two
months still to go, permit valuations so far are one-fifth

New

week

94% of the steel-

100% of capacity.

week's

1949 period.

Exchange

this

announced

current week will represent 10th consecutive
week in which steelmaking furnaces will be operated at an average

.

building

of the current year

Stock

Institute

Output for the

cars

October

$379,954,952.

Members

Steel

beginning Nov. 20, 1950, unchanged from

for the week

of the preceding three months.

pace

on

York

and

Iron

making capacity for the entire industry will be 102.7% of capacity

and

27.4%

New

approximate

an

No one can know where he stands until require¬
against production./

trot.

a

The

quarter were only $2,000,000,000 above the $12,000,000,000 annual

May, June, July and August this year.
volume compared with $408,266,993 in September,

Schwabacher & Co.

even

that the operating rate of steel companies having

high gait of $198,500,000,000 yearly.. This was $13,000,000,000
above the June quarter rate.
Defense outlays in the September

marked

Pacific Coast Exchanges

Congress;

by

ments become known and are matched

new

only

ExecuteS

allotted

funds

placed on steel distribution. These creeping controls are now turn¬

.

.

Consumer

came

Orders

of

set by national production of all goods and services.

was

According

following

Securities

limits

the quarter ended

The estimated costs of permits issued in 215 cities

Pacific Coast

the

figure would be better than the piecemeal way controls are being

earlier.

experience. I doubt if I could
back up a single reason

Industry

appreciably larger volume was sold than a year

an

any given luture period, this trade authority notes.
'
people don't understand why military departments have
what they need and what they can buy within

determined

totaled

I
noticeably;

Steel
not

Loadings of

5

page

infinitum. But all the rea¬

sons

will

for

Carloadings Reflect Further Contraction in Latest Week

dangerous
into reasons Continued from

a

I could go

one.

the and whether

consider

timism

what

to

grams

mated

safety; an¬
we will see more strength, for
Right now I think the
other
wants
yield; another cream's off the market. Hold¬
a longer period of time, before
seeks profits. To give an an¬
ing back would therefore be
any reversal worthy of the swer would be slightly ridicu¬
the prudent path to take.
lous.
No one column could
description will occur.
[The views expressed in this
*
*
possibly handle all these prob¬
article do not necessarily at any
lems. To add to these, there
time coincide with those of the
Despite this left-handed op¬ is the added burden of taxes

still have to estimate the essential requirements
called upon to fill. As things stand now, there
from the government or the military as
be required for defense or essential civilian pro¬
indication

definite

no

light and

wants

man

is

The

greater.

Thursday, November 23, 1950

.

which they will be

down to, say

figuring

uptrend,

back

New

50, he has to fig¬
asked if I thought ure the loss against the divi¬
was
in a perma¬ dend and
the result won't

%

It's true

Short

surge.

Jersey at 85 for the divi¬
highs covering can be a powerful dend, will probably find it
impetus for advancing prices. safe. But if the stock goes

happened.

*

have within it the seeds A

even

.

Steel people

short

Tomorrow's

.

Dun

&

Bradstreet

,

■*

Weeks

in food prices last week lifted the

wholesale food price

index

as

of Nov.

14 to

$6.58, the highest since Sept. 26 when it stood at $6.61. Although
still well below the post-Korea peak of $6.69 on Aug. 29, the
current

last

index represents a

week

year ago

The

and

the week

rise of 0.9% above the $6.52 recorded
15.8% above $5.68 of a

before, and is

at this time.
index

represents the sum total of the price per pound

Volume 172

of

Number 4962

in

foods

31

general

.

.

The Commercial and Financial Chronicle

.

(2011)

and its chief function is to show the

use

Unlimited Income Taxation

general trend of food prices at the wholesale level.

tinued,

Opens

"that I

the

that

merely

Wholesale Commodity
^

daily wholesale commodity price index

sharply last week, closing at 304.15 on Nov. 14.
almost 5% in the past three weeks and

again

rose

index

has

rently

is

only

1.5%

January,

1948.

The

Flood Gates to Govt.

Price Index Moves Sharply Upward

The Dun & Bradstreet

climbed

The

■

cur¬

Chicago, points out taxing
ment have

dom and have

ago, and with 244.70 on the corresponding date last year.
Grain markets were unsettled at times but the undertone
remained firm with

In

article,

was

largely

Joint?"

of

t i

President
the

The official estimate

be drying out nicely.

the crop said to

'

1950

the

corn

crop

Aided

1

of

by

u

position, coffee
declining prices.

registered

to moderately

sugar

latest
to

a

year

told

spending

for

.

suffering

house-lurnishings,

£

the
_

from

restrictions and increased excise taxes on many items,
declined moderately in the week. While total sales volume con¬
tinued to be slightly above last year's level, the volume of some
individual items dipped below the level of a year ago.
In general,

and television sets were

in limited demand, while

shoppers' requests for housewares, furniture, and floor-coverings
were steady with
or slightly above the previous week.
Total retail dollar volume in the period ended on Wednesday

to 6% above a year ago.
from the levels of a year ago by the

estimated to be from 2

Regional estimates varied
following percentages:

V

and Northwest +1
+4; and Southwest and

Midwest,

England,

New

+2 to +6;
+ 4 to -f-8.

South 0 to

to

+5; East

Pacific Coast
.

overall volume of-

wholesale ordering was

and moderately more than a year ago.
,
.
,
Department store sales of a countrywide basis, as taken
Federal Reserve Board's index for the week ended Nov.

week,

from
11,
1950, advanced by 8% from the like period of liTst year. No change
recorded for the previous week from that of a year ago. For
the four weeks ended Nov. 11, 1950, sales showed a rise of 4%
from the corresponding period a year ago and for the year to
the

was

registered an advance

date

sales,

advanced

in 1949.

'

of 5%.

York last week, stimulated
estimated 5% above that of the

trade in New

Retail

.

•

an

record,"

Beacom

Mr.

con-

-

•

.

by holiday
like period

,,

Federal Reserve Board s index, department
store sales in New York City for the weekly period to Nov; 11,
1950 declined 2% from the like period of last year.
In the pre¬
ceding week a decrease of 8% was registered from the similar
weekof 1949. For the four weeks ended Nov. 11, 1950, no change
was registered over a year ago, and for the year to date, volume
advanced 1% from the like period of last year.
According to the




DUTTON

of

one

He

This is

it!"

open

and

we

willing to

full share

pay my

of what must be spent to save our

of life.

way

we

In return, however, I
entitled

are

from

for

the

to

assur¬

government that:

our

time

being

and

let

and

new

in

dams

new

the

West wait;

"(3)

public

We

will

debt

and

hold

the

down

for

pay

our

ur¬

as we go along;
When these days are past

will

not follow

his

little memo that

failings

worst

friend

a

that

was

he

ofen spoke

nice fellow and he took the attitude

very

was a

a

just

as

Great

Britain

by

nationalizing industry in
country."

this

be

obvious," Mr. Bea¬
concluded,
"that the self-

restraint

I asked him about it one day, and he

his desk.

over

that

me

the

on

authorities is

part

of

great need.

a

taxing
If Con¬

kills the goose that has laid

gress

golden eggs, the socialists and
planners will jump at the

our

State

chance

to

take

"It

is

time

faith

in

the

by which

over.

to

reexamine

fundamental

our

truths

in this country have

we

traditionally lived."

harm

no

done, but he finally decided that he was

was

He was amazed to find
out that, although his conversation was always discreet when it
involved keeping confidences, people instinctively shied away from
him when it came to handling confidential matters.
If any busi¬
ness is personal, it is the securities business.
You probably know
more about people's affairs than anyone in your community except
the doctor, and possibly some lawyers.
That is why it pays to
be a good listener and to always stress the importance of your
confidential relationship with your clients—even (should the op¬
portunity arise) to those who are not clients.
Here is a sample of how this will work out to your advantage
in prospecting and in using radiation.
I know of a case where a

F. V. Nixon With

being marked by his friends as a talker.

salesman

met

of modest

he could

and

means

not do

any

had a brother and he
prospect.
He insisted,
though, that this salesman should not mention the sources of the
lead.
In a few days the brother was contacted over the telephone
kindly

r

man

a

with

business

and

who

the

had

name.

referred to this salesman

as

friend, but that the friend asked that he not mention
The salesman was polite, and said that although it was

made, the brother said, "Why not stay for lunch, my brother
sent you to see me will be here; in fact, he is at the front
This

now."

door

customer then

ities

brought

laugh

good

a

tions.
the

The

all around.

new

However, he also told me that he had asked you to keep
of your information about me confidential. Well, you've

give you a few more good
This he proceeded to do, also insisting that the sales¬

it all right, and I think I

prospects."

Sometimes

we

don't realize

others just by asking.
fellow—when
make

from
can

ask

we

can

we

When

we

that

we

can

learn

so

much

his

in¬

own

Angeles.

0. G. Johnson, Inc.

Formed in

Spokane

SPOKANE, Wash.—O. C. John¬
has

son

formed

O.

C.

Johnson,
Eagle
Building to engage in the securiwith

Inc.

offices

ties business.

past was

vigne

a

&

in

the

Mr. Johnson in

one-sentence

can

Co.

and

conducted

business

in

his

Spo¬

kane, Wash, and Greenville, S. C.

H. G. Schmitt Opens
FLUSHING,
Schmitt
73-18

has

N.

Y.—Harold

G.

offices

at

opened

186th

Street to engage in a
business.
He was pre- *

securities

viously with John G. Perry & Co.

J. O. Scott

remarks;

then

we

listen.

That keeps

us

securities—his

When

ideas.

we

more

is

gain

momentum

as

go

along.

Some¬

The best instance I

can

remember

was

the time I had

(and I think I had worked for about six months
but when the

said:
are

man

"Look

was

writing out

here, how

talking.

can

Now that

a

an

order

that account),
check I started to talk again.

from

R. J.
Mount

until / have

opened

burgh

has

North

Fulton

securities

the

keep

my

South

office

Avenue

to

at

211

engage

business.

Raphael Co. Opens

I write this check correctly while

I've bought those bonds, give

to

488

Vosburgh Opens

me

a

big mouth shut,

something ivorthwhile to say!"

N.
Y.—Raphael.
engaging in a se¬

BROOKLYN,

Hashinsky
me

at

Vernon, N. Y.—R. J. Vos- "

in

curities

Lord, help

securities busi¬

a

on

chance to pay for them."
"Oh

in

offices

Glassell Street.

know the answers,

we

engaging

ness

help him solve these problems. When he knows we are
he will talk.
Talking is like any other mental and
we

Opens

ORANGE, Calif.—John O. Scott

talkers

activity:

1

the

partner in Edwin La-

investment

own

ask questions we flatter the other
we have the stage.
If we ask,

times too much so!

you

he conducted

vestment business in Los

from

business we
do if we ask for prospects.
Ask about a man's problems—
about his investment objectives—ask about his health—his

physical

He

has

with

thereto

make statements

overtalking, and it is amazing how much

children—his

not

California

519

Nixon

Mr.

not mention his name, etc.

man

we

as¬

reason

source

lived up to

—

become

recently
Edgerton, Wykoff &
Co. and Gross, Rogers & Co. Prior

and that he thought you could give me some good sugges¬

you

Company,

been

I told you more than I have told
hardly anyone in this town about my private affairs is that I
tested you.
My brother told me that he had a good talk with
said, "The

Calif.

V. Nixon has

Street.

one

agreeable and they made an appointment.
After the interview was successfully concluded and the sale
who

FRANCISCO,

sociated with Pacific Coast Secur¬

a

as

putting both of them at a disadvantage, that he would prefer not
to call if it meant breaking this confidence.
The brother was

was

SAN
Francis

man

name

been

Pacific Coast Sees.
(Special to The.Financial Chronicle)

in going over some suggestion he had

might be interested
a

this

However,

brother's

that he

told

made to

his

him.

offered

was

n

virtually un¬
changed in the week, as bookings increased in many s0^ ?°„s
lines while they dipped for some durable goods
Total dollar
volume of orders was slightly above the level for the correspond¬
ing period a year ago. There were slightly more buyers attending
various wholesale centers last week than during the previous
The

what

destroyed. Like you,

be done.

credit

of last week was

security of the individ¬
comprise the nation.

understanding as he. He told me
he believed that he could go through life blurting out the first
thing" that came into his head, and because he thought that his
statements were always meant in a kindly way, that no harm could

increase in

^

rebuild

then
much

as

temptation

to keep my big mouth shut unless I have

me

that every one else was

noticeably above that for

,

to

reason

impulsively.

moderately more apparel last week than in

.

large appliances

good

Lord, help

Usually

alter appreciably from

and

spend

subsidies

the

a

.

canned goods did not

and

the objectives of the welfare state

squandering of national

of mine has

Much of the increase was attributable
cool weather and the imminence of

previous week.

destroy first Eu¬

economic

waste and

"Oh

Cooler Weather

Thanksgiving buying was apparent in the marked
products and fresh produce.

Consumer

have

am

com

ago.

The selling of

to

I

"I should like to make clear for

By JOHN

demand for poultry

.

again
others

the

spend

we

to

than expected gain in the

previous week; dollar volume was

around

that

Korea,

now

"It must

The demand for Fall and Winter suits, while not
increased, continued at last week's fairly high level.
Housewives throughout the nation bought a slightly increased
amount of food in the week.
Food sales were moderately above
the level of the similar period in 1949.
a

turn

ances

Securities Salesman's Corner

combination of generally

Shoppers bought
the
.

mankind

and

rope

"(4)

buying last
volume was moderately above the level of the
in 1949, states Dun & Bradstreet, Inc., in its

the Winter holidays.

sight.

for armament to

think

was

pro¬

a

concerned

am

sad commentary on

a

of

sense

needed.

what

I

ing not merely for the general se¬
curity of the nation but for the

freedom

Approaching Holidays

of trade.

summary

to

"It is

we

slight rise in country-wide consumer

week

comparable

end is not in

basis of equality among

the

only is our personal
diminished,
but
also

and the announcement

Responds Favorably to

and

week; total dollar

effort

some

needs and to col¬

for

money

fence.

gent needs

of an unexpectedly
large increase in the export quota.
Trading in spot markets was
moderately active with sales in the ten markets totaling 244,300
bales in the holiday week, compared with 364,200 the previous
week, and 414,600 in the like week a year ago.
The Nov. 1 Report
of the Department of Agriculture estimated the 1950 cotton yield
at 9,945.000 bales, or only 76,000 bales larger than the forecast
of a'month earlier, and well below trade expectations.

There was a

n-

not

this week with spot
level in 30 years.

sparked by a smaller

November crop estimate

Trade Volume

un¬

i

Gov¬

a mad dog
neighborhood it is

the

spend

is great in
"(1)! We will not squander our
determine what the resources by undertaking more
'traffic will bear' and then to levy than we can
accomplish;
taxes for the purpose of provid¬
"(2) We will suspend some of

indi¬

tax

taxpayers

revenue

concept,

in

to

about the rates of tax because the

prices were up sharnly

Domestic cotton

'

to

on

the

uals who

comes,

higher.

was

Beacom

lect

Congress

16th

vidual

values remained steady.

quotations reaching the highest
The rise

H.

Thomas

that

proper

a

for

taxes

made

its

was

1913,
Mr.
Beacom
the results are

Under

Now

Amendment

from the old principle

ernment

given

the

der

Trading, in
raws was rather quiet as most refiners have already covered their
needs, for the balance of the year.
Aided by strong vegetable oil
markets, lard scored a substantial rise the past week despite
increased hog marketings and heavy lard production. Hog values
continued to work lower with current values around the lowest
of the season.
Steers and lambs, on the other hand, were steady
refined

loose

tective

pro¬

that

assessing

gauge

limited

Congress

accomplished.

the effects of

on

16th

cry

only.

Amendment

gains after several weeks of
and

Haw

of

Na¬

warned,

n

the

"a far

Bank

power

be

can

adopted
in
pointed out

because of the

advances in the cocoa futures

statistical

favorable

a

since

Chicago,

111.,

than

gressive increases in income taxes,

of

First

tional

was

in the week.

market late

moderate

moderate

for

accounted

position

of Nov.

as

9,
H.

per¬

do, that when

you

is

by

encouraged

Commenting

Beacom, Vice-

placed at 3,105,436,000
bushels, a loss of 12,500.000 bushels from the Oct. 1 forecast, and
272,000.000 bushels less than last .year's yield.
Except for moderate activity in hard wheat bakery flours
early in the week, the domestic flour market continued dull. A
decline in warehouse stocks of cocoa and a tightening in the spot
of

more

Mo.,

Nov.

Thomas

on

sharply last week, averaging over 60,000,000 bushels per day, as
against 42.000,000 bushels the week before. Excellent weather con¬
ditions for corn picking .and cribbing prevailed during the week,
with

as

only"

revenue

mitting Government to undertake

St.

at

o n

Louis,

demand, and continued dull domestic flour
activity on the Chicago Board of Trade increased

export

Sales

the

before

Conference

Trust

is

resources

of the American Bankers Associa-

in the cash

hesitant at times, reflecting weakness

was

slow

demand.

market

in the

Out

Mid-Con i inent

due to relatively small
country marketings and good potential outlets.
Wheat

discussing the topic, "Are the

Times

oats, and soybeans.
Strength

I do not enjoy having
income drained away for for¬
eign wars, I recognize the neces¬
sity for war measures and I know,

limitation of individual free¬

destroyed concept of "taxation for

joint
paying

are

"While

granted by 16th Amend¬

powers

severe

we

my

wise

highs for the season established for corn,

new

already led to

because

of

out

are

high taxes.

rThomas H. Beacom, Vice-President of First National Bank of

the all-time high touched in midindex compares with 297.79 a week

below

latest

Extravagance!

not protesting

am

times

35

is

business

from

offices

at

237 Nassau Avenue under the firm
name

of

Raphael Company.

36

The Commercial and Financial Chronicle

(2012)

The following

Indications of Current

latest week
week

Business Activity
Latest

<

102.7

Nov. 26

capacity)

steel operations (percent of
Equivalent to—
Bteel ingots and castings (net tons)
Indicated

„

Week

STEEL INSTITUTE:

AND

IRON

AMERICAN

1,980,800

Nov. 26

or

statistical tabulations

or

month available.

month ended

on

Previous

Month

Year

Week

Ago

Ago

102.6

102.7

1,980,800

78.2

1,978,900

1,441,600

output

Kerosene

and

oil,

Gas,

Gas, oil,

and distillate fuel oil (bbls.) at

Residual

fuel oil

(bbls.)

AMERICAN ZINC

5,896,450

5,861,750

5,185,150

116,018,000

6.117.C00

6,124,000

5,127,000

20,090,000

17,686,000

2,220.000

2,309,000

2,366,000

2.092,000

8,466.000

8,747,000

8,874,000

6,849,000

8,636,000

8,454,000

8,426,000

7,814,000

20,156,000

Slab

zinc

end

at

output, all grades

104,350,000

103,807,000

103,577,000

29,003,000

29,115,000

28,555,000

27,622.000

period

of

INDEX

100

=

(tens;

FOR

IN

As

—

__

All

of

and

bakery products
——

Dairy products

86,721,000

86,886,000

80,959,000

92,117.000

Eggs

45,140,000

44,689,000

42,826,000

68,527.000

Fruits

862,184

888,559

635,823

Revenue

839,612

(number of cars)

703,746

CONSTRUCTION

ENGINEERING

—

727,383

722,248

514,028

construction
Private construction
Public construction
State and municipal-;—_

Nov.
..Nov.
Nov.
Nov.

16
16
16
16
Nov. 16

S.

U.

—
—

Federal

-

176.8

124.8

"124.6

121.2

electricity ar.d refrigerators--—
Gas and electricity

141.8

140.9

137.0

97.0

97.0

97.1

Other

196.5

194.4

185.9

148.0

147.4

141.5

195.4

189.3

185.6

158 8

158.1

155.2

3,105,436

3,117,967

3,377,790

1,010,069

1,010,069
746,537

1,146,463

740,537

269,532

269,532

244,795

33,457

33,457

II

fuels

Ice

117,449,000

House

100,309,000

Miscellaneous

87,657.000

23,345,000

9,161,000

4,826,000

12,652,000

-Nov. 11

—

CROP

furnishings

PRODUCTION

BOARD

*152,400

142,100

3,000

U.

all

S.

all

Wheat,

Winter
All

DEPARTMENT

OF

of

thousands)

RESERVE SYS¬

342

Nov. 11

322

315

318

ibusr.el)

spring

Oats

•

INSTITUTE:
000 kwh.)

6,728,334

Nov. 18

Barley

6,574,084

6,502,540

5,644,435

INDUSTRIAL)

AND

—

SRON AGE COMPOSITE PRICES:

xr

Finished steel (per lb.)

Pig

3.837c
$4J.69
$40.75

N°v*

——

Nov- 14
Nov. 14

ton)

(per gross

iron

170

Nov- 16

(busiiel)

Flaxseed

Rice,

Scrap steel (per gross ton)

165

135

3.837c

3.837c

183

3.705c

$49.69

$49.36

$45.88

$41.67

$40.67

$29.58

PRICES

J. QUOTATIONS):

& M.

(E.

refinery

Export
Straits

at
York)

(New

tin

at
Lead (St. Louis) at
Zinc (East St. Louis)

at

(New York)

Lead

—

24.200c
24.42oc

S°V'i=

J, .^C

all

Hay,

wild

Hay,

Hon)

alfalfa

(ton)

Hay,

clover

and

lespedeza
field

16.800c
17.o00c

"

Baa"-"".*'""""'"
Railroad

'

-

Group

Public Utilities

"H?

;ov-

-----%»;■ -J

1

4

Group—

—

Industrials Group

<100 pound bag)____

18.200c

Sweetpotatoes

24.425c

24.425c

18.425c

Tobacco

155.000c

5,111.375c

95.000c

Sorgo

D.

S.

}«•«

17.000c

16.000c

12.750c

Sugarcane

16.800c

15.800c

12.550c

Sugarcane

17.500c

17.500c

9.750c

10165

101.48

104.45

115 43

115.43

115.24

119.82

119.61

121.25

Nov. 21

1J 8.80

118.80

118.60

119.41

114.85

114.66

114.85

114.46

Nov. 21
Nov. 11
Nov. 21
Nov. 21

109.24

109.06

109.06

106.92

111.62

111.44

109.42

115.82

115.82

117.00

119.00

119.00

119.82

HHi
315.82
119.20

for sugar

sirup

beets

Sugar

and

corporate

Ana

—

---

^

Railroad Group

Public Utilities

Group

Industrials Group

Peaches

Production

Cherries

(12 states)

Apricots

"3

states)

Cranberries
Pecans

(5

21

12,657

12,296

41,702

41,702

38,546

29,395

29,395

24,657

7,987

7,987

8,571

16,419

15,916

21,554

2,902

2,902

3,267

281,133

275,256

222,305

1,771,320

1,676,890

1,875,825

426,782

401,962

59,491

59,658

54,232

2,013,165

1,950,124

1,970,376
6,012

'

•

Death

Matured

2.67

2.66

Disability

2.71

2.71

2.72

2.68

Annuity

2.92

2.91

2.93

Surrender

3.22

Policy dividends

2.91
3.21

3.07
2.86
2.69

2.37

3.22

3.34

3.08

3.09

3.20

2.86

2.86

2.80

2.70

2.70

2.66

487.4

467.8

343.3

482.1
100 070

199,278

321,394

231.419

182.831

236,142

237,498

207,837

233,,487
101

{Joy 11

Nov. 11

Nov. 11

102

102

94

752,556

444,302

10,197

26

44

58,288

58,288

50,730

320,499

120,104

133,742
74.818

2,662

(ton)

231

231

250

(ton)

198

193

968

941

840

110,688

109,731

128,174

$115,933,000

$131,433,000

$115,711,000

35,834,000

38,190,000

36.027,000

8,542,000

8,658,000

19,077,000

21,090,000

19,856,000

52,607,000

57,024,000

49,674,000

(barrels)

PAYxMENTS

INSTITUTE

—

of

OF

148

TO

LIFE

September:

payments
payments
values

Total

(BUREAU

MINES)

OF

7,641,000

48,456,000

45,943,000

47,329,000

$280,449,000

$302,338,000

$276,238,000

—

of

September:
production of recoverable metals in the

Mine

Copper

774,891

13,262

36,404

endowments

OUTPUT

6,796

11,770

2,520

benefits.—

METAL

7,300

52,407

INSURANCE—BENEFIT

LIFE

2.59

Nov. 21
Nov. 14
Nov. 21

at

16,128

99,305

12,657

30,657

(pound)

2.17

Nov. 21

Nov. 11

(tons)

152,630

9,869

107,870

2,539

states)

2.89

Nov. 21

Percentage of activity
Unfilled orders (tons)

184,091

9,945

107,870

30,804

(torn

2.88

Nov. 21

(tons)

received

40,113

52,407

(bushel)

Grapes

United

Orders

36,776

26

(bushel).

crop

(bushel).

Pears

2.39

Noy

ASSOCIATION:

PAPERBOARD

RATIONAL

38,022

9,795

(torn

2.67

2.37
2.88

Nov. 21

INDEX

COMMODITY

5,184
43,664

13,549

commercial

Month

MOODY'S

13,697

4,817
35,224

7,260

(ton)

(pound 1

2.88

Nov. 21
Nov. 21

seed

(gallon)

(ton)

Broomcorn

Nov. 21

AVERAGES:

Government Bonds

Average

22,509

35,224

6,226

„

INSURANCE—Month
*

299,954

,

4,740

430,591

(bushel)

ipoundi_-j.
sirup
(gallon)

POLICYHOLDERS

MOODY'S BOND YIELD DAILY

'

(busheli

(bushel)

24.200c

Apples,

MOODY'S BOND PRICES
.

;

(bag)—

beans

for

(ton)

(pound)

24.200c

Hops

DAILY AVERAGES:
U. S. Government Bonds
Average corporate

timothy
(ton)

Beans, dry edible
dry

205,931

1,322,924
238,104

196,344

(ton)

Hay,
Peas,

236,075

1,483,975

*

Nov. 15
Nov. Id

at

(busheli

grain

(bale)

Hay,

38,364

236,075
299,954

bag)

901,668

1,483,975
22,509

pound

Potatoes

Nov. 15
Nov. 15
Nov, Id

;

bushel)

<

(100

Soybeans

Electrolytic copper—
Domestic refinery at

.___

Ibiisneii

Peanuts

METAL

1 bushel)

"busheli

Cotton

DUN & BRAD-

INC.

STREET

.

(busheli

spring

Sorghum

(COMMERCIAL

FAILURES

AGRI¬

(bushel)

Buckwheat

(in

Electric output

(in

1

(busheli

Rye
1ZDISON ELECTRIC

Nov.

187.2

REPORTING

(busheli

Other

STORE SALES INDEX—FEDERAL
AVERAGE=100

TEM—1935-39

CROP

—

(bushel"

Durum

(DEPARTMENT

185.3

148.3

72,659,000

1,264,000

245.6

182.7

185.9

77,485,000

7,183,000

157.5

185.2

190.5

;

___

183,265,000

1,081,000

169.7

257.8

211.0

62,085,000

11,500,000

169.6
204.2

175.5

187.7

52,924,000

587,000

173.0
203.0

176.5

158.9

39,831,000

*11,410,000

173.8
208.5

328.8

$217,758,000

11,000,000
787,000
155,000

34,808

187.5

_

sweets

$260,750,000

Ncv. 11

69,062

159.0

oils

and

$101,916,000

Nov. 11

(tons)

Pennsylvania anthracite
Beehive coke (tons)

97,666

64,436

236.7

and

CULTURE—As

.Bituminous

51,761

10,267

199.8

Corn,

(U. S. BUREAU OF MINES):
coal and lignite (tons)

64,399

75,241

232.6

$214,949,000
118,639,000
96,310,000
72,965,000

OUTPUT

DOAL

71.057

9,108

183.1

Rent

ENGINEERING NEWS-

79,997
81,156

194.7

Clothing

RECORD:
Total

Ago

193.0

vegeiables

Fuel,
•CIVIL

Year

Month

184.6

and

Sugar

Nov. 11
Nov. 11

Previous

15:

""I

Meats

Fats

(number of cars)
freight received from connections

Latest
Month

CITIES

September

foods

Nov. 11

loaded

of that date:

MODERATE

LARGE

items

Cereals

105,465.000

end

FAMILIES

j;>:J5-19:;y
All

(tons;

at

PRICE

INCOME

period

Beverages

freight

are as

(tons of

___

of

orders

CONSUMER

ASSOCIATION OF AMERICAN RAILROADS:
Revenue

either for the

are

INSTITUTE, INC.—Month of

smelter

;__Nov. 11

at

of quotations,

cases

2,000 lbs.)
Shipments <tons of 2.000 lbs..i__

5,910,700
19.466,000

(bbls.)
(bbls.)
.——
distillate fuel oil output (bbls.)
Residual fuel oil output (bbls.)
Nov. 11
Stocks at refineries, at bulk terminals, in transit and in pipe linesFinished and unfinished gasoline (bbls.) at
Nov. li
Kerosene
(bbls.)
at
Nov. 11
output

Gasoline

in

or,

—

11
11
11
11

Thursday, November 23, 1950

production and other figures for the

cover

that date,

Unfilled

Nov.
Nov.
Nov.
Nov.

.

October:

AMERICAN PETROLEUM

Nov. 11

.

Dates shown in first column

Stocks

INSTITUTE:
Crude oil and condensate output —daily average (bbls. of 42
gallons each)
Crude runs to stills — daily average (bbls.)

.

States:

(in

(in

fine

Lead

(in

short

Silver

Zinc

tin

(in

tons)__

short

Gold

___

_

ounces)

tons)

fine

ounces)

.____—

tons)

short

*.

76,645

*80,199

f 62,729

229,852

*224,067

34,072

*36,015

$165,982
134,159

3,414.925

*3,739,878

+2,369,579

54,269

*56,114

$49,433

$27,118,010

$27,010,000

$27,393,000

£44,158,000

£7,825,000

£8,537,000

$1,351,480

*$1,285,016

$782,944

MONEY IN CIRCULATION—TREASURY DEPT.

DRUG REPORTER

OIL, PAINT AND

PRICE

of

As

INDEX—192G-3G
-oJ.z

JNOt.l/

AVERAGE=100

137.5

138.4

125.6

LOT

DEALERS

AND

SPECIALISTS

shares—Customers'

of

Number

Dollar

sales—i

Odd-lot purchases by dealers (customers' sales)—
Number of orders—Customers' total sales
short

sales

Customers'

other

sales

Number

shares—Customers'

of

Customers'

short

Customers'
Dollar

value

total

4
4
4
4
4
4

Nov.
Nov.
Nov.

sales

other

4

Nov.
Nov.
Nov.

sales

-

32-430
956,170
$41,629,903

4
4

Nov.

sales

-

Round-lot sales by

4

•

35,054

39,129

26,648

1,058,610

1,182,139

784.627

$44,640,123

$52,921,967

$31,314,619

42,548

29,061

28,175
282

36,060
276

314

166

27,793
808,505
14,012
794,493
$32,513,266

35,784

42,234

28,895

1,044,301

1,233,440

787,732

10,451

12,011

6,206

1,033,850

1,221,429

781,526

$40,534,080

$48,142,457

$27,614,340

dealers—

286,510

326,910

396,460

273,210

sales

Nov.

4

sales

Nov.

4

286,510

326,910

396,460

273,210

Nov.

4

358,880

347,990

379,880

273,020

Nov,

shares—Total sales

4

PRICES

NEW

SERIES

—

U.

S.

1926=100:

DEPT.

value

of

Market

value

of

Net

products

168.7

151.6

181.3

177.9

157.1

Nov. 14

171.6

172.6

163.0

154.1

223.0

225.5

223.8

187.8

Nov. 14.

176.5

173.6

Textile
Fuel

,

170.0

183.1

Nov. 14

Meats

..

171.1

Nov. 14

Grains

All commodities

.

Nov. 14

Livestock
Poods

other

products
lighting

and

Metals

and

Building

farm

and

figure.

and

foods

173.9

159.6

Nov. 14

240.7

237.6

240.9

213.2

Nov. 14

162.7

162.2

160.8

144.9

.

Nov. 14

165.4

*164.4

162.2

137.9

materials

Nov. 14

135.4

135.3

135.4

129.8

products

Nov. 14

180.1

180.6

177.8

167.4

—Nov. 14

217.8

*218.2

221.4

189.9

Nov. 14

135.1

133.7

131.6

115.8

materials—

Chemicals

•Revised

metal

than

allied

products

^Includes 498,000 barrels of foreign crude runs.




in U.

S

on

Govt,

S.

71,613

338,655

288,329

771,484

*738,698

585,517

88,524,310

88,673,390

72,630,605

118,416,553

118,860,724

132,221,476

195,965

204.162

152,038

687,679

678,754

419,724

$5,848,750

$5,017,500

$275,000,000

$275,000,000

$275,000,000

255,936,999

257,215,671

256,777,727

21,761

19,862

27,681

$256,958,761

$257,235,533

$256,805,409

IN DI¬

SECURITIES

GUARANTEED

of

122.232

361,264

:—

other collateral..

A.—Month

S.

123,341

issues—

shares™—

MARKET TRANSACTIONS
AND

U.

,

bonds—---

borrowings

RECT

balances

debit

October:

$1,659,950

sales

purchases™——

STATUTORY DEBT LIMITATION

GOVT.
of

As

Oct.

omitted):

(000's

31

amount

face
anv

—

•

be outstanding

that may

time

one

:

Outstanding—

4

All commodities

listed
listed

Member

TREASURY

Oct.

free credit balances—

borrowings on U.

at.

OF LABOR—

customers'

Member

Total

Farm

Oct.—
of

customers

hand and in banks

on

Market

Total

WHOLESALE

of

accounts—

margin

net

to

extended

Total of

U. S.

shares

carrying

customers'

of

Credit

Net

purchases by dealers-

Number of

firms

Total

OF

Other

Round-lot

LTD.—Month

omittedi:

(OOO's

Member

Cash

Short

Number of

—

GREAT BRITAIN-

EXCHANGE—As

STOCK

YORK

31

NovNov.
Nov.

value

Customers'

NEW

purchases)—

total

BANK,

omitted)

IN

ON

EXCHANGE

Odd-lot sales by dealers (customers'
Number of orders

(OOO's

31

MIDLAND

ACCOUNT OF ODDTHE N. Y. STOCK
COMMISSION:

STOCK TRANSACTIONS FOR THE ODD-LOT
EXCHANGE—SECURITIES

August

CAPITAL ISSUES

NEW

gross

Guaranteed

public debt
obligations not

Treasury
Total
'•

nublic

gross

debt

obligations*

Deduct—Other

Grand
Balance
able

face

the

-

-

outstanding public debt obli¬

total

i'ndp""

•Revised.

by

and guaranteed

not subject tc debt

gations

owned

J

limitation

outstanding

amount

of

obligations

authoritv

$Monthly average 1949,

711,040

714,012

752,571

$256,747,720

$256,521,520

$256,052,837

18,752,279

18,478,479

"18,947,162

issu¬
-

-

r

•

1

.Volume 172

Number 4962

The Commercial and Financial Chronicle

...

Continued from page 16

ganda—the sooner they will quit labor is
working against their own best does not
interests.

Ripping the Seams

Economic Security vs. Economic

Independence

Of Onr Economy
laboratories and

skilled tech¬

our

of

the

nicians to design such story book
miracles as a 'portable' landing

threats.

craft

the

aircraft.

for

called

We

did

It

so.

most

A theme common to most of the

manifestations of bureaucratic po¬
litical

and economic thinking is
inflationary the substitution of the economic

potent

Then, why is it continued?
Well, it is also true that if aid to
farmer

were

withdrawn

and

security of the individual for the
economic independence of the in¬
dividual.
The last thing in the

farm

compulsion economic thinking of the fellow*

concerned,

automatically

increase

industrial output, On the contrary,
we know from experience, the re¬

its

management

our

to

ingenuity,
efficiency and know-how, to build,
experience,

Death.'

'Merchants

as

Today,

of

count.rary,

the

two

have

com¬

a

which

makes

the

are

after

branded

I think it is about time that the

people's

eyes

violent

hand

were

antithesis.

is

the

opened
On

to

the

mendacity

a

one

difficulties,
kind

there

as

endeavor

of

are

where

in

any

human

beings work together; There al¬
ways have been and there always

the
crackpot will be. But anybody who fries to
of

Demagogues and their
policies. On the other is the

prac¬

tell

us

that all the fault is

on

the

planners of the Welfare State are
willing to toss in his direction.
Bureaucracy vs. The People

of

a

bureaucracy is

the

side or the other is either
assumption that only the bureau¬
abysmally ignorant of industrial crat knOws what is best for the
any sort of proof of the inherent history, or is a special pleader people, and that the entire execu¬
genius of American initiative and who will not spoil his story for tive and legislative machinery of
the government exists solely for
enterprise, of the indestructibility the want of a few facts.
of the system—and of the capacity
The culpability of the special the purpose of imposing his will
of the American businessman to
pleaders lies in their deliberate upon them. The bureaucrat, to
absorb punishment—he need look
playing of one class against an¬ put it most charitably, is an opin¬
no further than
to the ability of
other; in their deliberate and con¬ ionated fellow. You and I would
business and industry to rise to stant
emphasis on the areas of be fortunate indeed if we could be
any occasion and to meet any and disagreement between the two in¬ as sure of anything as he is of
all produtcive demands made upon stead of the far
He might well say,
greater and far everything.
it, despite the obstacles that the more important, areas of agree¬ with Gilbert and Sullivan's Lord
Chancellor:
perverse ingenuity of government ment between the man who in¬
tical.

can

of

acumen

leaders.

If

one

industrial

our

were

to

put in its way.

vests

third

hypothesis is that

his labor

and

the

man

who

invests his savings in business and

industry.

Agricultural Economy
A

one

demand

Price-Support Sapping Our

As
cer¬

tion,

a

footnote

it is worth

to

this

observa¬

mentioning that
tain occupational groups should if we are
gulled into accepting the
have
special
consideration,
in¬ class-against-class
theory about
cluding a financial bonus. This is capital and labor, it is pretty hard
a

slice of the national income be¬

stowed
upon
them by Federal
largess, a bonus taken out of the
pockets of the rest of us through
taxes
we

and

the

forced

are

higher prices that
to pay for food¬

stuffs. I refer, of course, to the
Government's Farm Price-Support

Program,
is

based

a

bounty system which

a
fear not of having
little, but of having too much.
This quixotic attempt to suspend
the law of supply and demand has
always had the blessing of the

on

too

bureaucrats, including the benison
of

Henry Wallace,

finally

managed

to

the

man

who

plow himself

under.

It is true that the Price-Support

Program has sapped the founda¬
tions of our agricultural economy;
true that farmers have

been pro¬

the

American

ducing

more

than

capacity to consume; true that the
government
has
sold
potatoes
for

less

than

the

cost

of

the

they came in;
true that
Price-Support is responsible for

bags

the current
deficit; true that it one

almost one-quarter of

national




"The
ment

Law

is

the

true

embodi¬

of

everything that's excel¬
lent; it has no kind of fault or
flaw, and 1, My Lords, embody the

Law."
Now if

a

sums

on

all

sorts of

The way to stop

ures.

and

stride

This is the economy

economy

twenty

it

knows

built almost two billions

dollars

worth

boosted

that
can

study of the history of

new

and

turned out $89 billion

of clothing and

and

roads

production

hundred million tons

a

to

year,

worth

convenience goods.

Meanwhile,' that

not

economy was

only feeding us, but also a good,
part of the rest of the world,
while having plenty left over.
As I said in the

beginning of my

little

seem to be a
fashioned
politically

talk,

I

old-

and
eco¬
nomically. That is why, when 1
look at what we have, and at what
the bureaucratic advocates of the

State want

Welfare
still say,

give us, I

to

"Make Mine American.'"

Joins Fred Blake Staff
(Special to The Financial Chronicle)

LOS

say,

ANGELES,

Srole

R.

Fred

D.

is

Street.
Albert

&
He

E.

Calif.—Harry

associated

now

Blake

was

Van

with

215 West
formerly

Co.,

Court

and

we

and

can't

don't

have

should call

to.
a

But

we

Crowell, Weedon Adds

halt to the

(Special to The Financial Chronicle)

quixotic expenditures, so dear to
the

of

steel

jeopardize the De- Floyd A. Allen & Cto.
Program." The answer is

we

dense

its

one

with

may

an

since 1945 built
homes, produced
million
new
cars
and
new

trucks,

deficit

You

which the

destroy;

which

four million

—is not to fix prices, but to stop

financing.

would

bureaucrats

Sixth

"But

Axis

the

from

so¬

inflation-*-

Administration

the

world

then without losing
met pent-up civilian de¬
for goods.

mands

cialistic and semi-socialistic meas¬

hearts

projects

of

that

the
are

United States into

a

planners, for
turning
the

LOS ANGELES, Calif.—Fred J.
Radwick
has become connected

Welfare State.

with Crowell, Weedon & Co., 650
South Spring Street, members of

Dangers of Excess Profits Taxes

Finally, implicit in the over-all
attitude

unsound

so

and

powers,

financing, the spending of astro¬
nomical

the

save

State

man's master and not his servant;

World War munity of interests which comple¬ economic
security is a poor sub¬
as
'Oligo¬ ment each other. Far from being stitute for economic
independence.
natural enemies, capital and labor The slave laborer in a Russian
"Now it seems to me that not are natural
partners, uniting their prison camp is secure; goodness
even the government can have it
talents, skills and resources in the knows, no one in the world is
both ways. If bigness is necessary field of
production for their mu¬ more secure than he is. He is fed,
in War, it is certainly desirable in
tual benefit and for the common
clothed, and housed; also—he can't
the uneasy peace of this Atomic
good.
escape his chains. Neither can the
Age. If bigness is a virtue in times
Of course, capital and labor have American who
gives up his birth¬
of security, it can hardly be a vice their
differences, as what partners right of independence for the
in times of plenty."
have not?
Of course there are crumbs
of subsistence
that the
II, they
polists.'

welfare-staters that is

incentives, leads to slow¬ that it is coming apart at the
downs, sit-downs, and walk-outs. seams. On the other hand, only
an
economy with great vitality,
Congress took a dangerous step
when it gave the Administration and one right in its fundamentals,
could have survived the onslaughts
such broad authority—dangerous
made upon ours during the past
and not justifiable, even on the
two decades. And please note that
grounds of emergency. The sus¬
it not only survived but took on
picion of many thoughtful persons
responsibilities:
It helped
is that a certain element in the new

settle

ernment

denounced

travelers, the crackpots, the par¬
lor pinks, the reformers, and the

moval of

prices were permitted to world the bureaucrat wants is a
administration, aided and abetted
to their normal level, the nation of
independent men and
by the hangers-on—the fellowpolitical repercussions would prob¬ women. He wants to jockey the
travelers and others of that stripe
to man and to operate vast new ably blast the New Deal-Fair Deal
citizen into position where he —are only too eager to regiment
steel-making plants for the gov¬ right out of power, a prospect must come, hat in hand, asking our
economy still further, and will
ernment.
We did so.
And the which the bureaucrats view with to be made a
beneficiary of the use any means, including war, or
no little apprehension.
government sang our praises.
You must elaborate
socialistic
scheme
of the
threat of war, to gain their
"But when the war was over, remember that much as the bu¬ welfare
legislation that not only end.
all this was conveniently forgotten reaucrat
loves his
fellow
man, affects his life "From The Cradle
You may remember that in midin Washington.
The government his first love is his job. He is his To The Grave," but also helps to
July President Truman asked for
no
longer acclaimed us.
It be¬ own best friend.
perpetuate the bureaucratic re¬
broad
powers
over
production.
labored us severely—not because
gime whose largess supports him.
Capital and Labor Relations
Sweeping as his requests were,
we
were
too
big—But Because
Now there is no gainsaying the
Congress actually gave him more
Still another hypothesis — and
We Were Not Big Enough. It de¬
fact that government has an obli¬
than he asked for.
Mr. Truman
nounced us because we could not this is really a sine qua non of the
gation
to help those of its citizens now has the authority to control
produce instantly all the steel new economic dispensation—is that
who because of mental or physical
wages, prices, production, distri¬
that was needed to meet the pent- an impenetrable barrier separates
handicaps cannot help themselves. bution, and credit at his own dis¬
up demands of a world that had the interests of capital from those
Neither do 1 know of any one
cretion. The supposition is, and I
been starving for civilian goods of labor. To change the figure a
who
objects
to
governmental quote Mr. Truman's speech of July
for four long years.
It urged us bit, capital, as I have already in¬ measures that cushion
the rough
19, "To prevent inflation and run¬
to expand our plants and facili¬ dicated, is cast in the role of Si¬
spots caused by severe economic away
prices we shall have to.im¬
mon Legree, while
ties. And we did so.
labor, of course,
dislocations.
But when so-called
pose certain restrictions upon our¬
"Today, this too is forgotten, is poor old Uncle Tom.
welfare legislation is carried to selves."
but the government continues to
Here again, the New Deal-Fair the extreme that it removes ini¬
Look
who's
attack us. It now appears that we Deal
talking!
Such a
philosophy denies demon¬ tiative from its recipients, roos
are too big, and that we have been
statement
comes
with ill
grace
strable facts and flies in the face them of
any desire to stand on their
all the time.
So history repeals of
principles. The interest of capi¬ own two feet, and destroys their from Mr. Truman, because in this
instance restrictions, like charity,
itself. After World War I, those tal and labor are not
poles apart, self-respect, we are coming peril¬
should begin at home.
who had produced the weapons
Inflation
despite the constant yammering of ously close to that theory of gov¬
must be laid at the door of deficit
that defeated our enemies were the economic Mahatmas.
On the
upon

all

use

31

(2013)'

of course, candidates
for Congress are asking us to en¬
dorse
their
alleged wisdom in

Right

now,

the

Los

Angeles Stock Exchange.
previously with DempseyTegeler & Co.
He

passing an excess profits tax or
higher corporate income tax bill.
These gentlemen know their poli¬

was

Joins

Holton, Hull

(Special to The Financial Chronicle)

tics, but not their economics. The
LOS ANGELES, Calif.—Francis
excess
profits tax did not work J.
McKeadney has joined the
well in World War II, nor will it
staff of Holton, Hull & Co., 210
work well now, for the simple
West 7th Street, members of the
reason,
as
Beardsley Ruml has Los Angeles Stock Exchange. Mr.
said, that "Nobody has ever been McKeadney was formerly with
able to devise a good one."
The Floyd A. Allen & Co. and John B.
politicians also choose to ignore Dunbar & Co.
—if they know—the true nature
of corporate taxes, for which the

corporation is only a collector,
middleman

between the

Pacific Co. Adds

a

ultimate

taxpayer—the consumer—and the
government. Right now, we want
more
production and more tools
of production, and this comes in
large
part from
corporate net
earnings after taxes. Why kill the
goose that lays the golden eggs?

(Special to The Financial Chronicle)

LOS

ANGELES, Calif.—Charles
Schmipff is now with Pacific
Company of California, 623 South
Hope Street, members of the Los
W.

and particularly of
Angeles Stock Exchange.
dictatorship—reveals
to choose the banner under which anything at all, it is that power
is intoxicating; that power, in a
a very considerable portion of our
Staats Adds Two
The United States is undertak¬
grows
on
population
should
be
enlisted. manner of speaking,
(Special to The Financial Chronicle)
ing
a vast armameht program, but,
what
it
feeds
on; that power, once
Why?
Because with
enterprise
LOS ANGELES, Calif.—Ross M,
large as it is, it will not place an
and initiative being what they are
assumed, is reluctantly surren¬
Draper;
undue strain upon the productive Campbell and E. BHce
dered if it is ever surrendered at
in the United
States, the same
capacity of our manufacturing in¬ have been added to the staff of!
person
is more often than not all.
William
R.
Staats
Co.,
640
South
dustries which, according to Mr.
I make this observation as pre¬
worker and capitalist. He is likely
Street, members of the*
Truman himself, is "60% greater Spring
to own his own home, to have one liminary to a brief comment on the
than it wak ten years ago, when Los Angeles and Midwest Stock
or more insurance
policies, and a sweeping powers that Congress
the Axis dictators threatened the Exchange.
the Administration
when
savings account laid by against gave
world."
It seems to me that if
the proverbial rainy day.
If he the Korean incident developed
government is aware—as it cer¬
With Wagenseller Durst
isn't an investor, I don't know early last summer. Theoretically,
tainly should be by now—of the
what you would call him.
Or, Congress was justified. Govern¬
(Special to The Financial Chronicle)
tremendous potentialities of Amer¬
let's look at it this way; Half of the ment must have more power in
LOS ANGELES, Calif.—Edgar
ican industry, it would assist and
families in the United States own, time of war than in time of peace,
encourage industry to provide a Wilson Smith has joined the staff
or
share in the ownership of, a because strategic materials must
large part of our military needs of Wagenseller & Durst, Inc», 62ft
business. Forty-five of the larg¬ be allocated, credit must be kept
out of increased production, in¬ South Spring Street, members of
est
manufacturing
corporations in hand, priorities must be estab¬
stead
of
contenting itself with the Los Angeles Stock Exchange. *
and businesses have a total of al¬ lished, and so one.
Nevertheless,
merely diverting goods and serv¬
most 3,000,000 shareholders. About controls concentrated in the hands
ices from civilian to military use.
one
American adult in six puts of a few men may do as much
Two With Mitctum,
Such a suggestion, however, wouiu
his savings into business. It seems harm as good. During World War
(Special to The Financial Chronicle)
not meet with the approval of the
to me then, that the line of de¬
II, for example, food rationing
bureaucratic planners who, having,
LOS ANGELES, Calif.—Thomas
marcation which the economic Mr. kept prices down, but it also drove
been given the authority to con¬
S. Barlowe and Arthur G. Plots
Fix-Its try to draw between capi¬ many foodstuffs into the black mar¬
trol, intend to use it right up to
tal and labor is largely artificial. ket. The wise course, it seems to
have become affiliated with Mitthe hilt.
The sooner those who are being me, is not to prevent people from
chum, Tully & Co., 650 South
Our economy is sound — the
victimized by it recognize it for getting food, but, if necessary, to
It is the Spring Street.
what it is—bleeding heart propa¬ produce more of it. In so far as soundest in the world.
government,
the

drift

to

'*

UttRT" I""*""1""

»

..

TuIIy;

38

The Commercial and Financial Chronicle

(2014)

•

Securities Now in Registration
Aeronca

Oct. 2

Carolina

Oct.

unit of notes). Price—$2.121/2 per $1
Underwriter—Greene & Ladd, Dayton, O.

2

share for each $1

(non-voting)
holders

Office—Municipal Air¬

,

Nov.

shares of preferred

Hollywood, Calif.
filed 80,000 shares of common stock.
Price—At
Gold

1

Mines

Corp.,

Carolina

($1 per share). Underwriter—None. Proceeds—For
further development of mine and for working capital.
Oct.

&

Co.,

Proceeds—To

retire

per

5,784

Telephone

Co., Carnegie, Pa.

of

stockholders

share

$1). Price—At market (about $1.12^ per
Underwriter—Hemphill, Noyes, Graham, Parsons

Dec.

None.

Proceeds—To

New York. Proceeds—To Charles R. Anthony,
Board, who is the selling stockholder.

which

were

effective

Chairman of the

Price—At

12.

used

Nov.

shares

five

each

for

record

stock

now

basis

on

of

offered

one

bank loans the proceeds of
for construction program.
Statement
repay

17.

Nov.

INDICATES

ADDITIONS

28

at

ment.

Underwriters—Alex. Brown & Sons of Baltimore,
Proceeds—

Md., and Kidder, Peabody & Co., New York.
For expansion and improvement program.
•

Deardorf

Oil Corp., Oklahoma City, Okla.
(letter of notification) 20,040 shares of common
(par 10c), to be offered at, rate of 40 shares for

Nov.

17

stock
each

Abbie-Conner

interest

held.

now

Price—$25

Underwriter—Tellier &

acquire

fractional

a

for

Co., New York.

undivided

working

interest in the Abbie-Conner tract.

.

new

held; rights to expire or\
per share).
Underwriter—

($100

par

22

Thursday, November 23, 1950

.

the rate of one share for each four shares
held;
rights to expire Dec. 12. Price—To be supplied by amend¬

Proceeds—To

& Telegraph Co.

.

SINCE PREVIOUS ISSUE

each 40 shares.

Oct. 26 filed 20,825 shares of common
to

(par

share).

shares held

Price—$2.50

stock (cost $121,464) and to increase

(letter of notification) 62,000 shares of common

19

stock

14.

Dec.

capital stock and surplus.

par

American Cladmetals

rights expire on

1;

2l/z

share for each

one

Underwriter—None.

share.

port, Middletown, O.
Alhambra

Nov.

on

stock

common

basis of

on

(N. C.)
100,000 shares of class B
(par $1) offered to stock¬

Insurance Co.

Casualty

(letter of notification)

unit of notes.

working capital.

Proceeds—To in¬

capital of company and to finance time sales.

crease

notification) $50,000 of 4% convertible

promissory notes and 50,000 snares of common stock
(latter to be reserved for conversion of notes on basis of 1

Proceeds—For

Underwriter—None.

($100 per share).

Middletown, Ohio

Mfg. Corp.,

(letter of

.

Diversey

Chicago, III. (11/28)
10 filed 143,000 shares of common stock

Nov.

Price—To
F.

Corp.,

be

Eberstadt

supplied

by

(par $1).
Underwriter—

amendment.

&

Co., Inc., who recently acquired a 75%
company from Victor Chemical Works.
Business—Chemical specialties.
stcok

interest

in

.

Nov. 9 filed
to

Central

Electric Co.

American Gas &

in

exchange for

stock of Central

common

American

Nov.

filed

10

97,121

to be offered

rate of

Investment

each

Underwriters
&

(par $1),

stock

shares owned;

rights ex¬
Price—To be filed by amend¬

pected to expire Dec. 13.
ment.

20

—
Kidder, Peabody & Co., Alex.
Glore, Forgan & Co. Proceeds—To
retire preferred stock and for general corporate purposes.

Sons and

American

Rock

Wool

Corp. (12/6)
90,000 shares of common stock (par $5),
of which 52,263 shares are to be offered by the company
and 37,737 shares by certain stockholders.
Price—To be
Nov.

filed

15

filed

Underwriter—Bacon, Whipple

by amendment.

Co., Chicago, 111.
retire

notes

&

Proceeds—To company to be used to
balance

the

and

Business—Manufactures

and

added

sell

to

general

funds.

installation.

thermal

at

Central

$4.95 dividend from Lehman Brothers, Equitable Secur¬
ities Corp. and White, Weld & Co. (jointly). Statement
effective June 12. No further decision reached.

(11/29)

of

rate

share

one

for

each

10

shares

Price—To be supplied by
Corp. and

Proceeds—For construction program.

Illinois

Public

Service

Corp. (12/5)
Nov. 13 filed $6,000,000 of sinking fund debentures due
1970. Underwriters
To be determined by competitive

Probable bidders: Halsey, Stuart & Co. Inc.;
The First Boston Corp.; Salomon Bros. & Hutzler; Leh¬
man Brothers; Kuhn, Loeb & Co.; Glore, Forgan &
Co.;
Blyth & Co., Inc., Kidder, Peabody & Co., and Merrill
Lynch, Pierce, Fenner & Beane (jointly); Harriman Rip¬
ley & Co., Inc. Proceeds—For construction program. Bids
—To be received prior to 11:30 a.m. (CST) on Dec. 5 in
Room 2154, 20 No. Wacker Drive, Chicago, 111.
bidding.

Central
Oct.

Power

&

Light Co.

10

on

basis

of

share

one

for

each

6.6

shares

Price—$40 per share.
Underwriter—None.
Proceeds—For
working
capital.
Office—70 Washington St., Brooklyn 1, N. Y.
•

Atlantic

24.

Oil

Corp., Tulsa, Okla.
Nov. 13 (letter of notification) 48,046 shares of capital
stock. Price—At par ($5 per share). Underwriter—Con¬
tinental Corp., Tulsa, Okla.
Proceeds—To purchase oil
and gas properties.

Co., Worcester,

Mass. (11/28)
Nov. 10 filed 100,000 shares of common stock
be

worsted fabrics.

Big West Oil & Gas Co., Dallas, Tex.
Sept 5 filed $1,760,000 of 5% sinking fund debentures
due 1965

(convertible into

common

stock

on

basis of 200

shares for each $1,000 of debentures). Price—To be filed
by amendment. Underwriter—H. M. Byllesby & Co., Inc.,

Chicago, 111.

Proceeds

expenses and for

—
For drilling and development
working capital.

Birmingham
Oct. 17
stock

(Ala.)

Fire

(letter of notification)

to

Insurance

Co.

10,000 shares of

common

be

offered to present common
stockholders.
Price—At par ($10 per share). Underwriter—None. Pro¬
ceeds—To enlarge insurance business.
Office—221 No.
21st St., Birmingham, Ala.

Brown Trailer Co., Denver, Colo.
Nov. 13 (letter of notification) 1,900 shares
stock to be offered to trailer distributors.

of

common

Price—At par

their

annual

stock

common

on

up to 10% of
payroll deduction plan. Both
Jan. 29, 1951 and are expected

a

Price—To

to reimburse

loans and

(CST)

on

the

company

be

received

in part for capital

Corp.

11:30

to

(12/4-9)

&

Blosser; and Sills, Fairman &
Harris; both of Chicago, 111. Proceeds—To reduce bank
loans.
•

Composite Stock

Fund,

Inc.,

Spokane, Wash.
capital stock (par $1).
Price—At net asset value per share, plus distribution
charge. Underwriter — Murphey Favre, Inc., Spokane,
16

Wash.

filed

189,500

Proceeds

—

shares of

For

investment.

Business—Open-end

investment company.

and

for

working capital.

(letter

•

Earl

Nov.

Underwriter—None.

Proceeds—

Business—Farmers'

coop¬

for 507

Cooperative Grange League Federation
Exchange, Inc., Ithaca, N. Y.
Sept. 28 filed 500,000 shares of common stock to be sold
to cooperative members.
Price—At par ($5 per share).
Underwriter—None.

Proceeds—To

reduce

obligation

Cooperative G.L.F. Holding Corp. Business—Farm
operative. Statement effective Nov. 10.

to
co¬

Cooperative G. L. F. Holding Corp.
Sept. 28 filed 25,000 shares of 4% cumulative preferred
Stock to be sold to patrons of Grand League Federation

Exchange.

Price—At

par

Proceeds—To

($100

reduce

per

share).

bank

Underwriter

debt.

Business—

Property holding
and financing '"instrumentality for
G.L.F. Exchange, farm cooperative. Statement effective
Nov.

10.

Products Corp.

notification)

340,000 shares of com¬
Price—75 cents per share. Under¬

(par 10c).

(letter

Marts, Dallas, Tex.
notification) full oil and

of

in Travis

acres

Underwriter—None.

County, Tex.

,

gas

Price—$15

leases

per acre.

Proceeds—To drill for oil and pur¬

Office—National City Bldg.,

Dallas, Tex.

Air

Lines, Inc., New York
1 filed 100,000 shares of common stock
(par $1),
offered to employees, excluding officers and direc¬

Nov.
be

tors.

Price—$13

Nov.

share.

per

ceeds—To increase

Underwriter—None.

working capital.

Pro¬

Statement effective

10.

/

Ekco

Products

Co., Chicago, III.
Oct. 12 (letter of notification) 8,461 shares of common
stock (par $2.50). Price—$13 per share.
Underwriter—
None. Proceeds—For working capital.
Office—1949 No.
Cicero Ave., Chicago, 111.
>
Factors Corp. of America
Nov.

6

>

(letter of notification)

$250,000

of

10-year

6%

debentures dated Dec.

1, 1950, and 5,000 shares of com¬
(par $1), of which the debentures and 3,500

stock

of

stock

debenture
to

and

sold

be

$1,140

per

are

14

be

to

shares

Proceeds—To

offered

of

L.

Leonard

to

unit and $10

expansion.

stock

in

units

and

of a $1,000
1,500 shares are

Zeidman, President. Price—
share. Underwriter

per common

increase working capital and for

Widener Building, Juniper and
Philadelphia 7, Pa.

Office—606

Chestnut Streets,

association of the feder¬
Price—At 100 issuable in multiples of 100.

ated type.

of

Russell

13

—None.

others."

share).

working capital.

of indebtedness to be offered to members of the Associa¬

"to

per

writer—Olds & Co., Jersey City, N. J. Proceeds—To pay
balance of purchase price for building ($20,000) and for

Cooperative Association, Kansas
Mo.
Nov. 14 filed $1,000,000 of 5-year 3V2% certificates of
indebtedness and $2,000,000 of 10-year lVz% certificates
and

rata basis; rights

(40 cents

par

Address—P. O. Box 2£15, Los

Duggan's Distillers

shares

tion

pro

Proceeds—To pay creditors' claims

mon

To be added to general funds.
erative wholesale purchasing

a

Underwriter—None.

to

Nov. 20 filed $1,500,000

Nov.

on

Price—At

Eastern

Acceptance

stockholders

to

expire Dec. 15, 1950.

Nov. 28 at office of company in Chicago, 111.
17.

Colonial

by

Drayer-Hanson, Inc., Los Angeles, Calif.
3 (letter of notification) 255,033 shares of common

Oct.

stock offered

chase leases.

up

be supplied

Proceeds—For work¬

ing capital.

a.m.

Bids—To

Statement effective Nov.
•

Underwriter—None.

amendment.

stock

Halsey, Stuart
Inc.; Carl M. Loeb, Rhoades & Co.; Kidder, Pea¬
body & Co.; Union Securities Corp.; The First Boston
Corp.; Blyth & Co., Inc., Harriman Ripley & Co. Inc.
and Stone & Webster Securities Corp. (jointly); Lehman
Brothers and Glore, Forgan & Co.
(jointly); Merrill
Lynch, Pierce, Fenner & Beane and Salomon Bros. &
Hutzler (jointly).
Proceeds—To repay $750,000 of bank
expenditures.

(par $15),

subscription by employees

wages

offerings will terminate on
to be made on Jan. 3, 1951.

mon

bidders:

Co.

—None.

•

to be offered for

27

Probable

City*

(par $5).
supplied by amendment.
Underwriter—
Kidder, Peabody & Co., New York. Proceeds—To cer¬
tain selling stockholders.
Business — Manufacturers of
Price—To

200,000 shares of

maximum of 125,000 shares will be offered to

a

stockholders of record Dec. 21, 1950 at rate of 1
share for each 50 shares held, the remaining 75.000 shares

Oct.

bidding.

Consumers

Bell

(1/3/51)

common

competitive

ord

Nov.

Co.

Angeles, Calif.

(11/28)

Underwriters—Straus

held; rights to expire Nov.

10 filed

$10,000,000 of first mortgage bonds, series
C, due Nov. 1, 1980. Underwriters—To be determined by

Casting Corp.
Nov. 3 (letter of notification) 1,320 shares of common
stock
(no par) being offered to stockholders of rec¬

Precision

Nov.

of which

filed

23

junior subordinated sinking fund
debentures due Dec. 1, 1958, and 30,000 shares of com¬
mon stock (par $1), to be offered in units of
$500 of de¬
bentures and 10 shares of stock.
Price—$500 per unit.

Arwood

Dow Chemical

—

&

Arkansas Power & Light Co.
May 23 filed 155,000 shares of cumulative preferred stock
(par $100). Proceeds—To be applied to (a) redemption
at $110 per share plus dividend accruals, of all the 47,609
shares of outstanding $7 preferred and 45,891 sares of
outstanding $6 preferred; and (b) the carrying forward
of the-company's construction program. Bids—Received
by company up to noon (EDT) on June 19, but rejected.
Only one bid was made of $100,003 per share/with a

Corp.

Underwriters—The First Boston

amendment.

Blyth & Co., Inc.

(11/30)

stockholders of record Nov. 29 at

for

Brown

Illinois

of

shares of common

common

share

one

Co.

Service

held; rights to expire Dec. 12.
'

Underwriter—None.

share.

common

17

Nov.

about

Ohio Power & Light Co. on the basis of 72/100ths of a
share of American Gas common stock for each Central
Ohio

Public

Illinois

13 filed

267,600 shares of common stock (par $10)
to be offered to common stockholders of record on or

(par $10),

stock

116,662 shares of common

be offered

Nov.

Fanner

Manufacturing Co., Cleveland,

Ohio-

(12/4-5)
Nov.

15

filed

150,000 shares of

common

stock (par $1).

Price—12 per

share.

stockholder.

Business—Manufacturer of metal products

Underwriters—The First Cleveland
Corp., Cleveland, O., and A. C. Allyn & Co., Inc., Chicago,
111.
Proceeds—To C. Greif Raible, President, the selling
for

industrial and

•

Farrington

commercial consumption.

Manufacturing Co., Boston, Mass.'
Nov. 15 (letter of notification) 906 shares of 5W% pre¬
ferred stock (par $50) and 1,812 shares of class A com¬
mon stock
(par $10) to be offered in units of one pre¬
ferred

and

two

Underwriter

—

common

shares.

Price

—

$60 per unit.

Chace, Whiteside, Warren & Sears, Inc.,

Boston, Mass., who may purchase 200 units at $56.50 per
Proceeds—For working capital. Office—76 Ather-

unit.
ton

St., Boston 30, Mass.

Culver

Corp., Chicago, III.
Oct. 23 filed 132,182 shares of common stock

(par $5),
shares are to be offered to stockholders
and 127,364 shares to public. Price — To stockholders at
$5 per share and to public at $6.25 per share. Under¬
of

which 4,818

writer—None.
•

Proceeds—For investments.

Realty & Securities Corp., N. Y. City
Nov. 20 filed 300,000 shares of 6% cumulative convertible
preferred stock (par $5) and 300,000 shares of class B
stock

(par 35

cents)

to

be offered

in units of

preferred and one class B share "on a best-efforts
basis."
Price—$6 per unit. Underwriter—Dansker Bros.
one

New York

Boston

Philadelphia

Pittsburgh

San Francisco

Private Wires to all




offices

&

Chicago

Cleveland

Co., Inc., New York.

Proceeds—For working capital.

Expected after Dec. 15.
Davison

Nov. 7 filed
be offered

Chemical

Corp.

128,533 shares of

to

common

(11/28)
common

each

12 shares held.

Price—To be filed by amendment,

along with dividend rate.

Dansker

common

Fedders-Quigan Corp.
103,402 shares of series A cumulative con¬
vertible preferred stock (par $50) to be offered to com¬
mon
stockholders on basis of one preferred share for
June 21 filed

stock (par $1) to

stockholders of record November

Underwriter—Smith, Barney

&

Co., New York. Proceeds—To pay promissory note,
complete purchase of a new plant at El Monte, Calif.,
and for additional working capital.
Statement may be
withdrawn.
It was reported on Oct. 5 that company
to

has completed
•

purchase of El Monte plant.

Felters

Co., Boston, Mass.
(letter of notification) 1,750 shares of

Nov.

14

stock

(par $10). Price — At market (estimated at not
than $10 per share).
Underwriter — H. C. Wain-

more

wright &

Co.,

stockholders.

common

Boston, Mass. Proceeds—To two selling
Office—210 South St., Boston, Mass.

Volume 172

"

Number 4962

.

.

.

r[. Fterid* Telephone
Oct. 27

of

ly); Harriman Ripley & Co. and Union Securities Corp.
< jointly)* (2) For preferred: Drexel & Co.; Smith Barney
& Co. and Goldman, Sachs & Co. (jointly); Carl M. Loeb,

NEW ISSUE CALENDAR

$10), being offered first to common stockhold¬

record

Nov.

of

rights to expire Dec. 2.
Price—To stockholders, at par, and to public, at $11 per
share. .Underwriters—Shaver and Cook and Florida Se¬
curities Corp., St. Petersburg, Fla. Proceeds—For expan¬
sion program.
.
>
as

15;

November

28,

Rhoades & Co.; Glore, Forgan &

1950

&

Bell Co. of Worcester,

Common

Mass

Central Power & Light Co., 11:30 a.m. (CST) Bonds

_

•

Farm

Glenmar

Proceeds—For

working capital.
Oil

Great Lakes

which 259,616

Stock of

holders at rate of

shares

Tide

Price—At

Herff.

Herbert

Office

lands.

Power

Wisconsin Public

Co.

10:30

offered to the stock¬
seven shares held

are

11

29,

1950

Service

Common
RR.

Equip. Trust Ctfs.

30,

1950

New

Colonial
Fanner

Acceptance

Com. & Debentures

Manufacturing Co

Common

Providence

noon

Co.,

Eastern Transmission

(EST) Common
Preferred

(EST)__Bonds

noon

Common
5,

1950

Central Illinois Public Service Corp.,
11:30

a.m.

(CST)_

Union Electric Co. of

...Debentures

Missouri,

December
American

(EST)__Bonds

noon

Rock

Wool

6,

1950

Corp....

Common
Bonds

to repay

International Mineral & Chemicals Corp..Common

Underwriter—None. Proceeds — From
$2,000,000 term bank loan, to be used
bank loans, for improvements to properties and
share).

Hooper Telephone Co., Hooper, Neb.
Aug. 18 (letter of notification) $30,000 of 3%% bonds
due 1970.
Price—In excess of 102%.
Underwriter—

December

December

Idaho
Nov.

noon

(EST) _Pfd. & Bonds

.Common

Schick, Inc.

(par

Shoes,

13,

Common

December

$1^7 Price—At current market (about $1.10

Francisco

Louis-San

St.

15,

1950

Equip. Tr. Ctfs.

Ry

Proceeds—To two selling stockholders.

Roast, Inc., Boston, Mass.
207,000 shares of common
stock to be initially offered to stockholders; unsubscribed
shares to public. Price—At par ($1 per share). Under¬
writer—None. Proceeds—To finance the purchase of 100
automatic
coffee-roasting machines.
Office—84 State

January

'

'

'• J

.

International Minerals & Chemical Corp.

(12/6)
Nov. 14 filed 200,470 shares of common stock (par $5).
Price—To be supplied by amendment.
Underwriter—
White,-Weld & Co., New York. Proceeds—For plant ex¬
pansion.

Chemical

Dow

(letter of notification)

St., Boston, Mass.

be

Power

bidders:

Probable
Inc.

by

Light Co.

&

(12/4)

First Boston Corp. and Blyth

& Co.,

White, Weld & Co. and Merrill Lynch,
Fenner & Beane (jointly); Kidder, Peabody &

(jointly);

Co.; Lehman Brothers. Proceeds for construction pro¬
Bids—Expected to be received up to noon (EST)

gram.
on

Dec. 4.

Mission

Hawthorne, Calif.

Appliance Corp.,

July 24 filed 50,000 shares of 6% cumulative convertible
preferred stock. Price—At par ($20 per share). Under¬
writer—Lester & Co., Los Angeles, Calif. Proceeds—To
retire bank loans and install machinery and equipment
proposed new plant to be located east of the Rocky
Business—Manufacturer of gas and electric

in a

Mountains.

water and space

heaters.

Mississippi Power & Light Co.
.
May 23 filed 85,000 shares of cumulative preferred stock
(par 100). Proceeds—To be used to redeem at $110 per
share plus dividends, the outstanding 44,476 shares of $6
preferred stock and for construction and other corpo¬
rate purposes. Bids—Received by company up to noon
(EDT) on June 19 but rejected. Four bids were made
as
foUows:
Union Securities, Corp., $100.10,per share
with

$100,551 with

$4.80 dividend; Lehman Brothers,

a

First Boston Corp.
(jointly), $100.30 with a $4.90 dividend; and Blyth & Co.,
Inc., Equitable Securities Corp.^ Shields & Co., White,
Weld & Co. and Kidder, Peabody & Co. (jointly), $100.19
with a $4.90 dividend. Statement effective June 12. No
$4.85 div.; W. C. Langley & Co. and

Power Co.

3,

1951
Common

Co

Sept. 25 filed $10,000,000 of 25-year sinking fund deben¬
tures due Oct. 1, 1975.
Underwriters—To be determined

Telephone Co.

(letter of notification) 2,830 shares of common
par) offered to common stockholders of record
Oct. 7 on a pro rata basis; rights expire Dec. 15. Price—
5

Inc.; Blyth & Co.: Union Securities Corp.; Merrill
Lynch, Pierce, Fenner & Beane; Kidder, Peabody & Co.
and Smith, Barney & Co. (jointly); White, Weld & Co.;
Lehman Brothers. Proceeds—To repay bank loans and
& Co.

expansion and extension of gas and electric proper¬
Offering—Originally scheduled for Oct. 31. has

been

postponed for at least six to nine

rary

bank

been arranged.

Oct.

•

Lucky Stores, Inc. (12/12)
Nov. 15 filed 160,000 shares of common stock (par $1.25).
Price
To be supplied by amendment. Underwriter—

Nachman
25

amounting to

borrowings

share. Underwriter—None. Proceeds—For work¬
ing capital. Office—203 9th St., Lorain, Ohio.
per

Halsey, Stuart

by competitive bidding. Probable bidders:

stock (no

$20

(par $1).

stock

filed

30

ties.

Oct.

common

amendment.
Underwriter—
Lehman Brothers. Proceeds—To two

supplied

Minnesota

for

Lorain

(12/13)

New York City

Inc.,

77,400 shares of

1950

Inc

Infra

Nov. 3

Shoes,

filed

20

Montana

Miles

share). Underwriter—E. F. Hu.tton & Co., San Fran¬

cisco, Calif.

Miles

further decision reached.

December

/'

working

Indefinitely postponed,

selling stockholders.

a

(letter of notification).40,000 shares of common

3

stock
per

Bonds
1950

12,

Common

Metropolitan Edison Co.,

Proceeds—For working capital.

Maryland Mines Corp.

1950

Lucky Stores, Inc

Co., Jersey City, N. J.

Sept. 18 (letter of notification) 100,000 shares of 18 cents
fcumulative convertible preferred stock (par $2). Price—

share.

11,

Carolina Power & Light Co....

Proceeds—To retire

'temporary loans. <'

per

.Common

Pennsylvania Salt Mfg. Co

working capital.

Wachob Bender Corp., Omaha, Neb.

a

Nov.

Preferred

Corp

Wilcox-Gay Corp.
December

notes and for additional

Proceeds—To pay

Pierce,

Co.,

Washington Insurance Co

Southwestern Gas & Elec.
Texas

1950

Corp

Minnesota Power & Light

Insurance Co.,

4,

Newark, N. J.

150,000 shares of common stock (no par).
Underwriters—To be determined by competitive bidding.

Cleveland Union Terminals Co

$3

Bids—
12.

to noon (EST) on Dec.

Underwriter—Clark, Dodge &

basis.

one-for-five

a

Oct.

this offering, plus a

Loan

up

9

Co.

Eq. Tr. Ctfs.

York, Chicago & St. Louis RR
December

preferred stock, to be offered for subscription by comthe basis of one preferred share for
each seven shares of common stock held. Price—At par

Hub

5% gold bonds

(letter of notification) 5,200 shares of common
stock offered to common stockholders at $50 per share
Feb.

Wertheim & Co. and
Common

ihon stockholders on

for

Expected to be received

capital.

American Investment Co. of Illinois

Department Stores, Inc., N. Y. City
filed 40,000 shares of 5% cumulative convertible

per

follows: $1,247,500 to retire

as

1, 1951, and for construction program.

Price—To

Hearn

($25

due June

on

Common

Corp

Corp.,

November

Philadelphia
Oct. 2 (letter of notification) 64,000 shares of capital
stock (par $5).
Price—$4.50 per share. Underwriter—
Jenks, Kirkland & Co., Philadelphia, Pa. Proceeds—To
increase capital and surplus in order to offer additional
lines of insurance, including automobile casualty and
liability coverage. Financing may be abandoned.
Nov. 17

used

York Haven Water & Power Co. 50-year

Middlesex Water Co.,

Bonds

Missouri-Kansas-Texas

Co., Greenwich, Conn.
Sept. 1 (letter of notification) 8,000 shares of $1.50 pre¬
ferred stock (no par) and 9,777 shares of common stock
(no par), to be offered first to stockholders. Price—Of
preferred, $25 per share, and common $10 per share.
Underwriter—F. L. Putnam & Co., Boston, Mass.
Pro¬
ceeds—To retire bank loan and for working capital.

•

shares will be

mon

Corp.,

(EST)

a.m.

per

Greenwich Gas

Fire

Service

Federal Water & Service

Rapids 2. Mich.

Hamilton

Preferred

(CST)

a.m.

November

share). Under¬
certain oil and gas
Michigan National Bank Bldg., Grand
($1

par

Common

Co._.-___,_

Central Illinois Public

Proceeds—To develop
—

Water

284,616 shares of capital

<jn Nov. 20 (rights to expire on Dec. 11) and 25,000 shares
are to be issued
upon exercise of stock option held by
writer—None.

Common

..Common

Pennsylvania Power & Light Co

share for each

one

Corp

Diversey Corp.

Co. and W. C. Langley

(jointly); First Boston Corp.; Harriman Ripley &

Co.

Co., Inc. and Union Securities Corp. (jointly). Proceeds—
From the sale of the aforementioned securities and from
the sale to General Public Utilities Corp. of 24,220 com¬

-

Chemical

&

(letter of notification)

Oct. 26

Inc.,

>

Chemical

Davison

Sterling, Va.
Nov. 17 (letter of notification) 490 shares of 6% cumula¬
tive and participating
(up to 10%) preferred stock.
Price—At par
($100 per share). - Underwriter—None.
Products,

39

White, Weld &Co. and Equitable Securities Corp. (joint¬

Ocala, Fla.

(letter of notification) *27,200 shares of common

stock (par
ers

(2015)

The Commercial and Financial Chronicle

months. Tempo¬
$10,000,000 have

III.
6,000 shares of common

Corp., Chicago,

(letter of notification)

$10). Price—$15 per share. UnderwriterWhipple & Co., Chicago, 111. Proceeds—To Mit¬

stock

(par

Bacon,

Inc., the selling stockholder.

chell. Hutchins & Co.,

—

Kaye-Halbert Corp., Culver City, Calif.
Oct. 6 by amendment filed 120,000 shares of class A con¬
vertible common stock (par $1). Price—$5 per share.
Underwriter—Sills, Fairman & Harris, Inc., Chicago, 111.
Proceeds—To pay off promissory notes and for working
capital.
Lancaster

Oct.

23

Chemical

(letter

Corp.
100,000

shares

of

6%

(cumulative, if earned) convertible preferred stock, be¬
ing offered to common stockholders of record Oct. 18
a pro rata basis; rights expire Nov. 30.
Price—At par

on

share), payable in.cash or at rate of one com¬
mon share (par $1) plus 50 cents in cash.
Underwriter—
None. Proceeds—For working capital. Office—620 Fifth

l($2.50

per

;Ave., New York 20, N. Y.
-•

Lawrence

Aero-Mist

Greenfield,
Nov. 17

Sprayer

Corp.,

'•

Leadvilie
14

Lead

—

To

Blunt Ellis

be

per

share.

Underwriter—None.

Corp.,

Denver, Colo.
15,000 shares of

(letter of notification)

common

stock

(par $1). Price—75 cents per share. Underwriter
'—None. Proceeds—To James Redman, the selling stock¬
holder.
I

None.

Proceeds

Mines, Inc., Kellogg, Ida.
Oct. 27 (letter of notification) 400,000 shares of capital
stock. Price—37lk cents per share. Underwriter—Stand¬
ard Securities Corp., Spokane, Wash. Proceeds—To pur¬
chase controlling interest in Pine Creek Lead-Zinc Min¬
ing Co., for development costs and working capital.

McCoy-Couch Furniture Mfg. Co., Benton, Ark.
16 (letter of notification) 12,000 shares of common
Price—At par ($25 per share).
Underwriter—
None.
Proceeds
To repay RFC loan^and to increase
working capital. Address—P. O. Box 312, Benton, Ark.
McDonnell Aircraft Corp.,

St. Louis, Mo.
Oct. 23 (amendment) 80,000 shares of common stock (par
$5). Price—At market (estimated at $17.25 per share) to
be offered over-the-counter. Underwriter—Brokers and/

Proceeds—To five sell¬
Statement effective Nov. 1.

dealers may be underwriters.

ing stockholders.

Mercantile Acceptance

31

Corp. of California

—

To

10

19,500 shares of common

(letter of notification)

$5).
Price—$15 per share.
Proceeds—For working capital.

(par

None.

eral

Francisco, Calif.

Casualty Co., Keene, N. H.

Peerless

Nov.

business.

manufacturing

operate

Office—2000 Russ Bldg., San

stock

Mascot

or

stock.

Oct.

& Simmons,

—

Proceeds—For working capital.

Nov.

supplied by amendment. Underwriter—
Chicago, 111.
Proceeds—To the
executors of the estate of Henry C. Lytton.
Offering—

Price

stock.

Mass.

Price—$10

Lytton's, Henry C. Lytton & Co., Chicago, III .
Nov. 17 filed 83,000 shares of common stock (par $1).

Oct.

(letter of notification) 588 shares of class B stock

par).-

(no

Proceeds—For working capital.

•

Expected in early December.

notification)

of

Blair, Rollins & Co. Inc.

Duplicator Co.
(letter of notification) 3,000 shares of common
Price—At par ($100 per share). Underwriter—

Niagara

Underwriter-,
Office—19 Fed¬

Street, Keene, N. H.
Pennsylvania Power & Light Co. (11/28)
9 filed 475,409 shares of common stock (no

Nov.

offered

be

to

28

Nov.

filed

common

par),

stockholders of record
with an oversubscrip¬

rights to expire on Dec. 13. Unsubscribed
be offered to employees. Price — To be

tion privilege;
to

shares also

to

one-for-seven basis,

a

on

by amendment.

Underwriters — The First Boston
Drexel & Co., Philadelphia, Pa.

Corp., New York, and

Proceeds—For construction program.

Pennsylvania Salt Manufacturing Co.
15 filed 124,879 shares of common stock

•

Nov.

offered

to

be

on

basis of

to

one

common

(12/6)
(par $10)

stockholders of record Dec. 6

share for each seven shares held.

Price—

supplied by amendment. Underwriter—None. Pro¬
ceeds—For improvement and expansion of plant facil¬
To be

ities.

.

Oct.
•

Lee Oil

Nov. 8

stock

& Natural Gas Co.,

(letter of notification)

(par 25 cents).

Baltimore, Md.

156,611

shares of

common

Price—50 cents per share. Under¬
& Co., Baltimore, Md.
Pro¬

writer—Mitchell-Hoffman

ceeds—For expansion and for general corporate purposes.

Lockheed Aircraft Corp.,

Burbank, Calif.

Nov. 6 filed 33,875 shares of

offered

officers

and

capital stock (par $1) to be
employees who have been issued

,stock options exercisable on Nov. 26, 1950. Price—$22 per
share.
Underwriter—None. Proceeds—For general cor¬
porate purposes.




5

ferred

stock, 5% series.

Underwriter—Guardian
cisco.

1,395 shares of first pre¬
Price—At par ($20 per share).
Securities Corp. of San Fran¬

(letter of notification)

Proceeds—For

corporate

purposes.

Office—333

Montgomery Street, San Francisco, Calif.

Metropolitan Edison Co.

(12/12)

Nov. 7 filed $5,250,000 of first mortgage

bonds due Dec.

1, 1980, and 20,000 shares of cumulative preferred

be determined

stock

by com¬
For bonds: Halsey, Stuart & Co. Inc.; First Boston Corp.; Carl M. Loeb,
Rhoades & Co.; Drexel & Co.; Kidder, Peabody & Co.;
(par

$100).

Underwriters—To

petitive bidding. Probable bidders: (1)

Penton

Publishing

Co., Cleveland,

Ohio

$1.50 convertible class A
(par $25), being offered to holders of presently
outstanding 20,078 shares of $100 par 7% preferred stock
on basis of 5^2 shares of new class A stock in exchange
for each share of 7% preferred subject to acceptance
Oct.

17

filed

80,000 shares of

stock

12,000 shares of 7% preferred, nor by
The exchange offer which be¬
effective Nov. 16 will expire on Nov. 24. Price—At

by not less than
more
came

par.

than

14,545 shares.

Underwriter—Maynard

H.

Murch •& Co., Cleve-

Cnntimipd

on

naae

40

Chronicle

The Commercial and Financial
40

..

Thursday, November 23, 1950

.

(2016)

jrorn

land, Ohio.

Proceeds—Toward redemption of 7% pre¬
and payment of accrued dividends.
State¬

ferred

stock

39

page

Nov. 2 filed

effective Nov. 9.

ment

Pig'n Whistle Corp., Los Angeles, Calif.
(letter of notification) 4,000 shares of $2 cumu¬
lative convertible prior preferred stock (par $7.50). Piice
-

Kov. 10

—$8

selling stock¬
Office—945 Venice Boulevard, Los Angeles, Calif.

Proceeds—To Steven Kormondy, the

holder.
•

Underwriter—Fewel & Co., Los Angeles,

share.

per

Calif:

Proctor

2,100 participations in Profit

than

more

and
participations in Stock Purchase

but not in excess of $100 per annum,

pay

1,200

participant contributes regular sums
deducted from pay, to be offered to employees during
1951.
Contributions, plus other funds, not expected to
exceed $2,000,000 to be used to purchase not more than
35,000 shares of common stock of the company. No new

Plan,

which

to

a

stock will be issued in connection
•

(letter of notification)

Nov. 10

with the plans.
Co., Mesa, Ariz.

Benefit Insurance

Producers

an

indefinite number of

evidencing subscriptions to not more
than 300,000 shares of capital stock (par $1) of Producers
Finance Co. of Arizona to be offered to purchasers of life
trust

agreements,

insurance

the

from

issuer.

agreement,

terms of

Under

dividends to be paid

subscribers assign to trustee future

on insurance policies, and the trustees use
dividends to purchase stock in Finance company.

by the issuer
such

Underwriter—None.

Proceeds—To

secure

capital to

ac¬

tivate Finance company.
Producers
Nov. 3

stock.

Co.

Finance

(letter of notification) 300,000 shares of common
Price—$1 per share. Underwriter—None.
Pro¬
Office—26 West First Ave., Mesa, Ariz.

filed

10

preferred stock (par $10), to be offered to common stock¬
on basis of one preferred share

holders of record Dec. 4

shares

expire
Dec. 19. Price—To be supplied by amendment (expect¬
ed to be between $48 and $55 per share). Underwriters—
The First Boston Corp. and Wood, Struthers & Co., both
of New York, and Brown, Lisle & Marshall of Provi¬
for

each

five

dence, R. I.

common

held;

rights

will

Proceeds—To be added to general funds.

Quaker City Fire & Marine Insurance Co.
Aug. 2 (letter of notification) 10,000 shares of

capital
stock (par $20) to be offered on a one-for-four basis to
stockholders of record Oct. 20, 1950, with the rights
expiring Dec. 4, 1950.
Price—$25 per share.
Under¬
writer

—

shares

Unsubscribed

be

to

offered

publicly

120 Broadway, New

Cluett and Dana,

through Burton,

Y. Proceeds—For working capital.
226 Walnut Street, Philadelphia 6, Pa.

York,

Office—

N.

Sept. 21 (letter of notification) 25,000 shares of common
(par $1).
Price—$3 per share.
Underwriter—

stock

Smith, Talbott & Sharpe, Pittsburgh, Pa.
Proceeds—
For purchase of additional machinery and equipment and
working capital.
Office—507 Liberty Avenue, Pitts¬
burgh 22, Pa.
•

Republic Supply Co. of California
6 (letter of notification) 21,000 shares of common
stock,"to be offered initially to stockholders. Price—At
par ($10 per share).
Underwriter—Dean Witter & Co.,
Los Angeles, Calif. Proceeds—For working capital.

Nov.

Inc.

Nov. 2 filed 200,765 shares of 4%

cumulative preferred
$100), being offered in exchange for outstand¬
ing 182,513 shares of 5% cumulative preferred stock (par
$100) on basis of 11/10 shares of 4% preferred, plus 30
cents in cash, for each share of 5% preferred stock, with
a cash adjustment for fractions; offer to expire Nov. 27.
stock (par

Underwriter—Merrill

Lynch, Pierce, Fenner & Beane, New York. Proceeds
—To redeem on April 1, 1951, the unexchanged 5%
preferred stock. Offering—Of unexchanged shares ex¬
pected Nov. 29. Statement effective Nov. 13.
•

Schick

Inc.,

Stamford, Conn. (12/12)
shares of common stock (par $1).
Price—To be supplied by amendment.
Underwriter—
Merrill Lynch, Pierce, Fenner & Beane, New York. Pro¬
ceeds—To certain members of the Schick family.

Nov. 20 filed 243,000

r

Seneca Oil Co., Oklahoma City, Okla.
April 27 (letter of notification) 225,782 shares of class A
eto'ck (par 50c). Price—$1.25 per share. UnderwriterGene,see Valley Securities Co., Rochester, N. Y.
Pro¬
ceeds—To acquire properties and for working capital.

•

Texas Illinois

stock

Productions, Inc.
(letter of notification) 150,000 shares of common

Price—$2 per share.
Underwriter—
Gunther, Newark, N. J. Proceeds—To com¬
plete films in progress and for general corporate pur¬
poses.
Office—321 So. Beverly Drive, Beverly Hills,
(par

$1).

Koellmer &

Calif.

Statement to be withdrawn.

Atlanta, Ga.
Sept. 18 (letter of notification) $191,500 of 5% subordin¬
ated debentures, series E. Price—At par. Underwriter—
For $100,000 of debentures, Allen &
Co., Lakeland, Fla.
Proceeds—To

reduce

bank

loans and for working capi¬

Healey Bldg., Atlanta, Ga.

Underwriters—
A. C. Allyn & Co., Inc.;
Bacon, Whipple & Co., et al. Proceeds—To finance pro¬
posed pipeline from Texas to Chicago.

Insurance, Inc., Atlanta, Ga.
Nov. 2 (letter of notification) 30,000 shares of
None.

Price—At

common

($10 per share). Underwriter—
Proceeds—To purchase stock in Southern Fire &
par

Marine

Insurance Co. and to reduce debt.
Ponce De Leon Ave., N. E., Atlanta, Ga.




Price—$10 per share.

shares).

scfibed

Probably White, Weld & Co.;

Water Power

Tide

Co.

(11/28)

shares of $1.35 cumulative preferred
$25), convertible on or before December, 1960.
be supplied by amendment.
Underwriter—
Union Securities Corp. and W. C. Langley & Co., New
York.
Proceeds—To redeem $4.25 preferred stock and

Office—79

'

,

Stuart & Co. Inc.;

Oct.

Carpenter Steel Co.
30 stockholders voted

Trusteed Funds,

indentures of trust

Moseley & Co.; White, Weld & Co.; Hemphill, Noyes,
Graham, Parsons & Co., and H. M. Byllesby & Co., Inc.

P.

Sponsor—

Management Corp., New York.

T. I. S.

Electric Co. of Missouri

Union

(12/5)

trust

by competitive bidding. Probable bidders: Halsey, Stuart
& Co. Inc.; Blyth & Co., Inc., Kuhn, Loeb & Co. and Harriman Ripley & Co., Inc. (jointly); The First Boston

S.

Lehman Bros.; Dillon, Read & Co. Inc.; White,
Co. and Shields & Co. (jointly). Proceeds—To
finance construction program and pay bank loans. Issu¬
&

stockholders' approval on Nov. 20.
Bids—To be received by company at 60 Broadway, Room
1901, New York 4, N. Y., up to noon (EST) on Dec. 5.
Offering Date—Tentatively fixed as Dec. 7.
ance

—

Subject to

Nov.

share).

per

1,000 shares of common
Price—At market (approximately $14.25

(par $1).

Underwriter—Shields & Co., Chicago, 111.

Proceeds—To John T. Beatty, the

selling stockholder.

Light & Telephone Co., Inc.

Western

14,870 shares of common
stock (par $10), to be offered to present stockholders.
Price—To be filed by amendment. Underwriter—None.
Nov.

(letter of notification)

6

Public

Service Corp.

was

(11/28)

first mortgage bonds due Nov.
1, 1980. Underwriter—To be determined by competitive
bidding.
Probable bidders: Halsey, Stuart & Co. Inc.;
First Boston Corp. and Robert W. Baird & Co. (jointly);

Co.

Union Terminals

Cleveland

(12/6)

asked ICC authority to issue $40,000,16-year serial first mortgage bonds, due

20 company

Nov.

of

000

to

1-

$2,500,000 annually. Underwriters—To be determined by
competitive bidding.' Probable bidders may include
Morgan Stanley & Co.; Halsey, Stuart & Co. Inc. and
The First Boston Corp.
Proceeds—To provide a major

$41,614,400 series
sinking fund bonds April

portion of the funds required to redeem

and C first mortgage
1, 1951.

A,

B

Colorado Fuel & Iron Corp.

3, the directors

approved a $26,200,000 moderniza¬

improvement program for the company's Min-

and

tion

Works at Pueblo, Colo., which is expected to
by 1952. Traditional underwriter: Allen
Co., New York.
nequa

completed

Southern Ohio

&

Columbus

be
&

Electric Co.

planning new equity financing before
the end of the year in the form of common stock. Pro¬
ceeds will finance a portion of the company's construc¬

March 9 reported

calls

which

program,

expenditures of

total

for

$45,900,000 in the years 1950-1952. Traditional
writer—Dillon, Read & Co. Inc., New York.

Under¬

Electric Manufacturing Co.

Emerson

said to be

reported that the company was

Nov. 20 it was

considering the issuance of an issue of convertible pre¬
ferred stock first to stockholders on about a l-for-8 basis.
Probable underwriters: Smith, Barney & Co.; Van Als-

tyne, Noel & Co.;
Oct.

Corp.

stockholders voted

31

stock

mon

Newhard, Cook & Co.

Williams

Eureka

shares

so

to

increase authorized com¬

(par $5) from 600,000 shares to 1,000,000
that company may be in a position "to act

promptly by broadening the scope of
erations."
Traditional
underwriters:
& Electronics,

Facsimile
Oct.

stockholders

2

business and op¬
Hornblower

Kebbon, McCormick & Co.

Weeks and

of

this

issue of 400,000

&

•

Inc.

(formerly Finch

company

authorized

Telecommunications, Inc.) voted to create an

shares of class A convertible stock (par

$1), all or part of which are to be publicly offered in the
near future.
Price—$2.50 per share. Underwriter—.Gra¬
ham, Ross & Co., Inc., New York. Proceeds—To
indebtedness to RFC and for working capital.

Corp.

repay

(11/29)

2, J. Howard McGrath, Attorney General of the
U. S., invited bids for the purchase from him of 9,000
shares of common capital stock (par $5) of the above
Nov.

corporation. Bids will be received at the Office of Alien
Property, 120 Broadway, New York 5, N. Y., on or before
11 a.m. (EST) on Nov. 29. (At present there are 976,303
shares of this class of stock issued and outstanding.)
Power Co.

Gatineau

Oct. 16 filed $4,000,000 of

Kidder, Peabody & Co.; Union Securities Corp.; Equit¬
able Securities Corp.; Otis & Co.; Merrill Lynch, Pierce,
Fenner & Beane; Salomon Bros. & Hutzler; A. G. Becker
& Co.; Carl M. Loeb, Rhoades & Co.; Harris, Hall & Co.
(Inc.); Shields & Co.; F. S. Moseley & Co. Proceeds—
From sale of bonds, plus $2,250,000 to be received from
sale of stock at par to Standard Gas & Electric Co., will
be used to repay $3,300,000 of bank loans and to finance
construction program. Bids—Expected to be received up
to 10:30 a.m. (CST) on Nov. 28 at the Harris Trust and
Savings Bank, Chicago, 111. Statement effective Nov. 16.

Proceeds—For con¬

done privately.

struction program.

Federal Water & Gas

Charlotte, Mich. (12/4-9)
Oct. 25 filed 500,000 shares of common stock (par $1).
Price—To be supplied by amendment.
Underwriters—
Gearhart, Kinnard & Otis, Inc., New York, N. Y., and
White & Co., St. Louis, Mo. Proceeds—To pay obligations
to all unsecured creditors. Expected early next month.
Wilcox-Gay Corp.,

Wisconsin

financing

bond

construction program.

Proceeds—For

of which it plans to sell

early in December at least $7,000,000 and the remainder
in instalments during the following six months. Previous

Specialties Co., Chicago, III.

(letter of notification)

8

stock

company

30-year first mortgage bonds,

Corp.;

Weld

announced it has asked New York
Commission authority to issue $12,000,000 of new

25

•

$25,000,000 of first mortgage and collateral
bonds, due 1980. Underwriters—To be determined

2 filed

Nov.

& Electric Corp.

Hudson Gas

Central
Oct.

tion

500,000 shares of capital stock.

filed

22

Fund

Industry Shares

Trusteed

Nov.

600 Commonwealth

plan C, aggregating not in excess of

Sponsor—Trusteed Funds, Inc.

$600,000.
•

Inc.
than

not more

filed

22

outstanding).

management has no present plans to issue any addi¬
tional common stock.
Traditional underwriters: F. S.
The

Nov.

Nov.

(there are presently 396,000 shares

shares

•

program.

the authorized
shares to 1,000,000

increase

to

stock, par $5, from 500,000

common

stock (par

for construction

W. C. Langley & Co. and First Boston

(jointl.y); Kidder, Peabody & Co. and Merrill
Lynch, Pierce, Fenner & Beane
(jointly); Lehman
Brothers; Equitable Securities Corp.
Proceeds will be
used for expansion program.
Corp.

Nov. 1 filed 132,000

preferred stockholders of International
Hydro-Electric System asked SEC to order-B. A. Brickley, trustee, to sell sufficient Gatineau common stock
to pay off a $9,000,000 bank loan. Probable underwriters:
Merrill Lynch, Pierce, Fenner & Beane; Kidder, Peabody
& Co. and Harriman Ripley & Co. SEC dismissed appli¬

Oct.

the

27,

cation

on

Nov. 13.

Aluminum & Chemical Corp.

Kaiser

27

Oct.

it

was

reported

Kansas Gas &

plans-new financing
Probable underwriter: The

company

(may be placed privately).
First Boston Corp.

Electric Co.

Oct. 10 it was announced

that proposed sale of $5,000,000

bonds, which had tentatively been sched¬
for Nov. 27, has now been deferred, probably until
Underwriters — To be determined by competitive

first mortgage
uled

Prospective Offerings
Algonquin Gas Transmission Co.
Nov. 8 the FPC said it was of the opinion that certain
of

the

New

England markets should be served by this

showing that it has an adequate amount
financing, probably about $40,000,000, likely to be 75% bonds and 25% stock, with com¬

company,

of

gas.

upon

Necessary

stock to be offered first to stockholders.

underwriter: Dillon, Read & Co.
Atlantic
Oct.

18

Probable

Inc.

City Electric Co.
estimated that about financing to the

company

$2,000,000 will be required in connection with
its construction expenditures from Sept. 1, 1950 through

extent of

Dec. 31, 1951

Southern

stock.

Natural Gas Pipeline Co., Chicago

stock (par $1),
to be offered to common stockholders of record Dec. 8
on the basis of one new share for each 7J/2
shares held.
(Peoples Gas Light & Coke Co. owner of more than 50%
of outstanding common stock will subscribe for its pro¬
portionate share of new stock, plus any other unsub-

mon

Southern Discount Co.,

tal. Office—220

2%%

300,000 shares of common

filed

20

Nov.

Simmel-Meservey Television
June 29

by amendment. UnderNew York. Proceeds—

expansion and to retire $10,000,000 outstanding
serial notes. Expected early in week of Dec. 4.

United

Price—To be filed by amendment.

(12/4-6)
stock

For

Ramie Products Corp.

Safeway Stores,

Corp.

shares of convertible preferred

(par $100). Price—To be supplied
writer—Dillon, Read & Co. Inc.,

•

Washington Insurance Co. (12/4)
80,000 shares of cumulative convertible

Providence
Nov.

Eastern Transmission

Texas

Nov. 14 filed 200,000

Price—To

of Arizona

ceeds—To activate company under terms of trust agree¬
ment.

& Electric Co.

$6,000,000 of first mortgage

6.

for Dec.

participant contributes 5%

Sharing Fund A, to which a
not

Cincinnati, Ohio

Co.,

Gamble

&

Nov. 16 filed not more than
of total

(12/4)
bonds, series D,
due Dec. 1, 1980. Underwriters — To be determined by
competitive bidding. Probable bidders: Halsey, Stuart &
Co. Inc.; Salomon Bros. & Hutzler, and Carl M. Loeb,
Rhoades & Co. (jointly); Lehman Brothers; Equitable
Securities Corp.; White, Weld & Co. and Kidder, Peabody & Co. (jointly); Otis & Co. (Inc.); Merrill Lyncn,
Pierce, Fenner & Beane and Union Securities Corp.
(jointly); The First Boston Corp. Proceeds — For con¬
struction program. Bids—Expected to be received up to
noon
(EST) on Dec. 4. Public offering tentatively set
Gas

Southwestern

Continued

which will amount to $6,898,000.

Carolina
Nov. 20 it

was

Power &

Light Co. (12/11)
reported that this company will be in the

market, probably in February, with an offering of $15,000,000 of new bonds. Previous debt financing placed
privately. If competitive, probable bidders are: Halsey,

1951.

bidding.
Probable bidders: Halsey, Stuart & Co. Inc.;
Securities Corp.; Merrill Lynch, Pierce, Fenner

Union

& Beane and

Kidder, Peabody & Co. (jointly).

—For construction

Oct. 31 it was

Proceeds

'

program.

reported company is considering

refunding

early next year of $16,000,000 first mortgage 3%% bonds
due 1970 (held privately by a group of insurance com¬

panies) and $5,000,000 of first mortgage
1978. (See also accompanying item).
Lone
Nov. 12,

3Vs% bonds due

Star Steel Corp.

reported that company may issue and sell
receive government con¬
a new plant.
Probable under¬
Straus & Blosser; Estabrook & Co., and Dallas

it

was

additional securities should it
sent

to

writers:

the

building of

Rupee & Son.

-

'

Michigan-Wisconsin Pipe Line Co.
July 25 company received SEC authority to borrow not
more than $20,000,000 from banks.
A permanent financ¬
ing program provides for the elimination of these bank

Number 4962

[Volume 172

.

.

.

The Commercial and Financial Chronicle

(2017)

Transmission

gram

Co., parent, to carry out a $118,645,545
expansion program, part of which will supply some of

(latter to American Natural Gas Co., the parent).
Previous debt financing was placed privately. If com¬

Northeastern's gas needs.
Traditional underwriters for
Tennessee: White, Weld & Co.; Stone & Webster Se¬
curities Corp.

loans prior to their

maturity, July 1, 1951, and such pro¬

will include the issuance and sale of $12,000,000
additional bonds and $3,000,000 of additional common
stock

petitive probable bidders may include The First Boston
Corp.; Harriman Ripley & Co., Inc.; Glore, Forgan & Co.

St. Louis, Mo.
Oct. 4 it was announced that plans to finance the instal¬
lation of additional compressor units on the company's
pipeline system in Arkansas and Missouri will be supplued later. The estimated cost of the new facilities is
$5,500,000. Previous bond financing was arranged for
privately through Union Securities Corp., who also acted
as underwriter for a common stock issue in April of this
(Mississippi River Fuel Corp.,

year.

Missouri
Nov.

1

Natural

Central

Gas

Co.,

Macon,

Mo.

asked FPC authority to build approxi¬

company

mately 60 miles of pipeline in Missouri at an estimated
cost of $1,200,000.
The project would be financed from
the proposed issuance of $1,000,000 of first mortgage
bonds and 2,000 shares of $100 par 5% preferred stock.
Missouri-Kansas-Texas
Oct. 16 it

RR.

700,000 of equipment trust certificates.

Probable bidders:

Stuart & Co. Inc.; Salomon Bros. & Hutzler;
Lehman Brothers; Harris, Hall & Co. (Inc.); R. W. Pressprich & Co.

Halsey,

Machine

Monarch

Nov.

9,

Dec.

20

it

Tool

Co.

announced that stockholders will vote
plan to increase the authorized common

was
a

on

stock from 250.000 shares to 750,000 shares and

splitting

the present 210,000 outstanding shares on a two-for-

up

basis.

one

If any new

financing, probable underwriters
Co., Inc., of New York, and
Hawley, Shepard & Co., Inc., of Cleveland,

will include F. Eberstadt &

Prescott,

Montana-Dakota

Co.

Utilities

asked FPC for authority to issue $2,800,000 of 2i/2% promissory notes to banks to provide
funds for its expansion program. These notes, together
11

company

with

$3,000,000 of notes authorized by FPC last May, are
refunded by permanent financing before April 1.
1951. Traditional underwriters are Blyth & Co., Inc. and
be

to

Merrill
Nov.

Lynch, Pierce, Fenner & Beane. Stockholders 011
will vote on increasing authorized preferred

27

150,000 shares and common stock
from 1,500,000 to 2,500,000 shares.
R. M. Heskett, Presi¬
dent, stated that about $10,000,000 will be raised within
stock from 100,000 to

the next six months.

National
Oct. 23

it

Corp., Chicago, III.
reported this company contemplates the

Video

was

offering of additional capital stock, the proceeds of which
are to be used to finance, in part, the cost of erection of

building and an additional $1,000,000
for new equpipment. Most of the funds necessary for this
expansion are expected to come from earnings.
a

new

•

$1,200,000

Natural

Nevada

Gas

Pipe

Line Co.

asked FPC to authorize construction
and operation of a 114-mile pipeline for the transporta¬
tion of natural gas, which,
it is estimated, will cost
$2,331,350.
Nov.

15

company

New England Power Co.
April 24 it was estimated that about $37,000,000 new
financing will be required to pay construction costs
estimated at $40,000,000 for 1950 to 1952. Present plans
are to issue $10,000,000 of new bonds and 70,000 to 80,-

Probable bidders: (1) For
bonds—Halsey, Stuart & Co., Inc. (2) for bonds and pre¬
ferred: Harriman Ripley & Co. Inc.; Lehman Brothers;
Kidder, Peabody & Co.; First Boston Corp.; Merrill
Lynch, Pierce, Fenner & Beane;
(3) for preferred:

000 shares of

W. C.

preferred stock.

Langley & Co.

New York,
Nov.

equal

dividend rate "as

14

it

was

company on

Chicago & St. Louis RR. (11/30)
announced bids will be opened by the

Nov. 30

on an

issue of $3,120,000 equipment
15, 1950 and to mature

semi-annually June 15, 1951 to Dec. 15, 1965. Probable
bidders: Halsey, Stuart & Co. Inc.; Harriman Ripley &

tional

common

stock.

lower

the transaction becomes

as

eco¬

Stockholders will vote

on

Dec. 4

authorized but unallotted

shares, $20 par, of 4% cumu¬
lative preferred stock to 165,000 shares of $100 par cu¬
mulative preferred stock. Probable underwriters: Har¬
riman Ripley & Co., Inc.; Smith, Barney & Co.; Lehman
Brothers.

Lighting Corp.
corporation
estimated
that
approximately
$24,000,000 will have to be raised through the sale of
securities next year to finance its 1951 construction pro¬
gram.
Traditional underwriter: Blyth & Co., Inc.

Nov.

13

Pipeline Corp.
June 30 company sought FPC authority to build a 2,175
mile pipeline system—from southern Texas to Washing¬
ton—at a cost of $174,186,602.
Negotiations for major
financing requirements are now in process of being
completed. Probable underwriters: White, Weld & Co.
and Kidder, Peabody & Co.
R. R. Herring, President,
011 Oct. 12 stated permission to build the line is expected
Electric Co.
Oct. 4 company was reported to be planning the issuance
early next year of about $10,000,000 new bonds. Probable
bidders: Halsey, Stuart & Co. Inc.; Kidder, Peabody &
Co.; Merrill Lynch, Pierce, Fenner & Beane; Union Se¬
curities Corp. and White, Weld & Co. (jointly); Equit¬
able Securities Corp.; The Firs.t Boston Corp.; Kuhn,
Loeb & Co.; Harriman Ripley & Co., Inc. Proceeds are
used to finance construction

be

Gas Transmission Co.
Texas natural gas by way of the Niagara border. The
total cost of the project is estimated at $6,000,000, of
Canada to export from Tennessee

will be represented by 400,000 shares
capital stock, par $5, and $4,000,000 to be raised by the

which $2,000,000
issue of bonds.

.

Co.

Niagara Mohawk Power Corp.
estimated that, through 1951, it will

require not more than $35,000,000 of additional debt or
equity financing in connection with its 1951 construction
which is expected to cost $52,328,000. This amount is in
addition to the sale on Oct. 31 of $40,000,000- general
mortgage bonds due Oct. 1, 1980. Probable bidders for
new bonds:
Halsey, Stuart & Co. Inc.; Morgan Stanley

Co.; Kuhn, Loeb & Co.; The First
North

Penn

Boston Corp.

Gas Co.

struction program.
Public

parent. Proceeds—To retire, in part,

proposed bank loans

$3,000,000.
Gas

Transmission

Nov. 8 FPC authorized company to

Co.

supply part of New

England with natural gas, and authorized Tennessee Gas




pected to exceed $1,500,000)

to provide some additional
Bids—Tentatively scheduled for bonds

working capital.

in first week of January.

Southern
Oct. 20 it

Union

Gas

Co.

plans to raise between
$7,000,000 and $8,000,000 through the sale of new secur¬
was

reported

company

ities next Spring.

Underwriter — Blair, Rollins & Co^
Inc., handled the financing early this year of $18,000,000
of first mortgage 2%% bonds and $3,000,000 of 4%%
preferred stock (par $100). Proceeds—To repay $3,000,000 of bank loans and for construction expenditures.
Tennessee
See

Transmission

Gas

accompanying item

Co.

Northeastern Gas Transmis¬

on

sion Co.

Texas

Transmission

Gas

Corp.

Nov. 9, it was reported that

this company is understood
to
be studying further expansion plans, although no
financing is considered imminent. Probable underwriter:
Dillon, Read & Co. Inc. New York.
•

United

Nov. 16,

Gas

Corp.

the Division of Public Utilities of the SEC has
of its holdings of 2,870,653 shares (26.95%) of
In event of competitive

to dispose

United Gas Corp. common stock.

bidding, probable bidders may include Lehman Brothers.
United

Sept. 25, it

States

(Del.)

Line Co.

Pipe

announced that this company had been

was

formed to build, own and operate a

petroleum product*

pipeline from the Texas Gulf Coast to St. Louis, Chicago
and other midwest markets to operate as a "common
carrier."
The initial financing has been arranged for

York, N. Y.,
poration.
Utah

Co.

of

Colorado

Power &

Oct. 17 it

the principal officers of the cor¬

Light Co.

announced that present

was

plans call for the

to offer approximately $12,000,000 of new bonds
about 200,000 additional shares of common stock in

company

and
1951

Service

are

to

provide

construction program.
competitive bidding.
(1) For bonds: Halsey, Stuart & Co.

funds

for

its

Underwriters—To be determined by

Loiseau, President, announced that "it will
to raise additional funds for construction
in the second quarter of 1951. The amount
estimated at about $7,000,000." Probable bid¬

Nov. 1, J. E.

Probable bidders:

be

Inc.; Kidder, Peabody & Co.; Lehman Brothers, and
Bear, Stearns & Co. (jointly); White, Weld & Co.; Salo¬
mon Bros. & Hutzler; First Boston Corp., and Blyth &

necessary

purposes

is

needed

ders

for

which

of debentures

$7,000,000

company

had

planned to issue earlier this year were: Halsey, Stuart

Co.
(jointly); The First Boston Corp.; Lehman Brothers;
Kidder, Peabody & Co.; Harris, Hall & Co. (Inc.). This
&

Inc.; Blyth & Co., Inc. and Smith, Barney &

Co.

latter

plan

abandoned last August.

was

Co.

Service

Public

of

Indiana,

Inc.

estimated that, in addition to the $40,000,000 bank credit arranged with eight banks, it may be
required, during the period prior to Dec. 31, 1953, to
obtain additional funds of approximately $40,000,000 in

Co., Inc. (jointly); Union Securities Corp., and Smhh,
Barney & Co. (jointly); and (2) for stock: Blyth & Co.,
Inc.; W. C. Langley & Co., and Glore, Forgan & Co.
(jointly); Union Securities Corp., and Smith/ Barney &
Co.

(jointly); Lehman Brothers, and Bear, Stearns & Co.
(jointly); Kidder, Peabody & Co., and Merrill Lynch,
Pierce, Fenner & Beane (jointly).

Oct. 31, company

order to take
•

the New

1

proposes
•

St.

of its construction program.

care

Service Co.

Public

Nov.

of New

Mexico

Mexico P. S. Commission approved an

financing

program

a

the

by this company, which

Francisco

Ry.

it

was

$5,500,000

Gulf

pany

and

Coast

off-shore

fields

is

now

in

Westcoast
Nov.

(12/15)

reported the company expects
of equipment trust

process

in

Louisiana

10, it

was

and

Com¬

of completing negotiations for

its major financing requirements.

to expend approximately $11,700,000.

Louis-San

20,

Valley Gas Pipe Line Co., Inc., Houston, Tex*
sought FPC authorization to construct
$144,500,000 pipeline project to carry natural gas from

June 27 company

Texas to markets in Indiana, Ohio and Michigan.

to sell
certificates, series
H, to mature 1951 to 1965. Probable bidders:. Halsey,
Stuart & Co. Inc.; Haris, Hall & Co. (Inc.); Salomon

Nov.

about

Transmission

>

Co.,

Ltd.

announced that Westcoast Transmission

Co., Inc., its American affiliate, has filed an application
authorization to construct approx¬

with the FPC seeking

imately 615 miles of pipeline for the transportation of
in the States of Washington and Oregon (this
project is estimated to cost $25,690,000). Both companies
natural gas

sponsored by Pacific Petroleums, Ltd., of Calgary,
Sunray Oil Corp. and other members of the "Pacific
Group" engaged in active oil and gas exploration and
development in Western Canada. The completed line of
both companies, to be about 1,400 miles, will, according
to
estimates, cost about $175,000,000, to be financed
75% by bonds and the remainder by preferred and com¬
mon
stock.
Underwriters—Eastman, Dillon & Co. and
The First Boston Corp.
are

South

20

an

of South

Probable
&

Jersey Gas Co

advisory report submitted to SEC provides
sale of entire holdings of United Corp. in the stock

for

Co.

Jersey Gas Co. (154,231.8 shares, par $5 each.)
bidders:
Lehman Brothers and Bear, Stearns

(jointly).

Chicago,

III.

announced- company plans issuance

and

Southeastern
June

12 it

sale of first

was

Michigan Gas

Co.,

mortgage bonds, debentures, preferred stock
stock in connection' with its proposed new

common

pipe line in Michigan to cost approximately $1,400,000.
Application is before FPC.' Southern

California

Edison Co.

W. C. Mullendore, President, announced that
company will have to raise $50,000,000 in new capital
within the next 18 months to finance its 1951 construc¬
Sept.

tion
in

27,

program.

new

bonds.

Total financing may involve $55,000,000
Probable bidders: Halsey, Stuart & Co.

Inc.; Blyth & Co., Inc.; The First Boston Corp.
Harris, Hall & Co. (Inc.) (jointly); Shields & Co.
•

Sept. 25 it was announced company plans permanent
financing following merger of the Pennsylvania sub¬
sidiaries of Pennsylvania Gas & Electric Corp./ the

Northeastern

finance, in part, the company's con¬

Proceeds—To

•

Oct. 24 the company

The First Boston Corp. Proceeds—To repay a $20,000,000
2% bank loan due July 1, 1951, and the balance (ex¬

New

require about $34,900,000

and

i

program.

next four years

(Canada)

announced that this company, a subsidiary
Gas Co., plans to build a pipe line in

Stuart & Co. Inc.;
Blyth & Co., Inc. and Kidder, Peabody & Co. (jointly);

of new capital over the
through the sale of securities.
It is re¬
ported that not over 75,000 shares of series preferred
stock may be sold late this year or early 1951. Traditional
Underwriters—The First Boston Corp. and Drexel &

will

Nov.

Niagara Gas Transmission Ltd.

Underwriters—For bonds to be determined by competi¬
tive bidding. Probable bidders: Halsey,

privately, with no public offering expected for at least
two years. E. Holley Poe and Paul Ryan, of 70 Pine St.f

Bros. & Hutzler.

Consumers'

Co.

Pennsylvania Power & Light Co.
Nov. 9 Chas. E. Oakes, President, stated the company

•

Oct. 20, it was

Gas

recommended that SEC order Electric Bond & Share Co.

within six months.

to

Natural

1,

Chirstopher T. Chenery, Chairman, announced
company will soon file with SEC a financing program
which is expected to comprise $17,500,000 of 20-year
first mortgage pipeline bonds and 155,546 shares of ad¬
ditional common stock (latter to be offered for subscrip¬
tion by stockholders in ratio of one share for each 10
shares held). Price—For stock to be announced later.

Northwest

Pacific

Higginson
Hall & Co. (Inc.).

of

a

changing each of the 1,076,900 shares of $20 common
stock now outstanding to two shares of common stock,
$10 par each; and on changing the 825,000 shares of

Co., Inc. ar.d Lehman Brothers (jointly); Lee

&

having

on

Corp.; Salomon Bros. & Hutzler; Harris,

of

soon

stock

nomically sound," and to finance part of the company's
construction program by the issuance and sale of addi¬

$8,000,000

trust certificates to be dated Dec.

of

of preferred

amount

par

Pennsylvania

Ohio.

Oct.

a plan was filed with the SEC, which provides,
part, for the refunding of the outstanding $6,500,000
5V4% cumulative preferred stock (par $100) with an

Pacific

(11/29)

reported company is planning ot issue $5,-

was

Oklahoma Gas & Electric Co.

Sept. 28
in

Southern

Nov.

41

Southern

Nov. 6,

Indiana

Gas

&

and

Electric Co.

the company applied to the Indiana P. S. Com¬
sell $3,000,000 of 30-

mission for authority to issue and

first mortgage bonds. Underwriters—May be deter¬
by competitive bidding. Probable bidders: Hal¬
sey, Stuart & Co. Inc.; Kidder, Peabody & Co.; First
Boston Corp.; Equitable Securities Corp.; Otis & Co.;
Carl M. Loeb, Rhoades & Co.; Salomon Bros. & Hutzler.
Proceeds—For expansion program.
year

mined

Western

Pacific

RR.

,

Sept. 5 it was announced company plans issuance and
sale of $22,000,000 3% first and refunding mortgage bonds.
Probable bidders: Halsey, Stuart & Co. Inc.; Blyth & Co.

Inc.; Lehman Bros, and Bear, Stearns & Co. (jointly);
Glore, Forgan & Co. (jointly).
Proceeds—To retire $10,000,000 first mortgage 4% bond*
and $6,133,000 convertible income 4V2% bonds dueiDl^
and over $5,800,000 "new money."
Union Securities Corp. and

Worcester

Sept. 25

a

plan

Massachusetts

County Electric Co.

filed with the SEC, the FPC and :he
Department of Public Utilities providing
was

other sub¬
following
which Worcester County proposes to issue and sell $12,000,000 of first mortgage bonds to retire bank loans of
the companies participating in the merger.
Probable
bidders: Halsey, Stuart & Co. Inc.; Lehman Brothers;
Merrill Lynch, Pierce, Fenner & Beane; Kidder, Peabody
& Co.; First Boston Corp.; Harriman Ripley & Co., Inc.
for the

sidiaries

merger with this company of seven
of New England Electric System,

42

The Commercial and Financial Chronicle

(2018)

remain unchanged.

Continued from page 5

clines

to

The advances ranged up to 140%, and the de¬

35%.

..

Thursday, November 23, 1950

.

gambling
the

being "hung-up" with

on

bonds for

spell.

a

Last

Mjonday's (Nov. 20) market performance typified a
single day's trend elusiveness. Five hundred and four issues ad¬
vanced while 360 were declining, one leading index showed a

Observations...

while

rise

business-value elements of the listed

in

successively changing attitudes toward the
market as a whole.
In' their "liquidity" concept the forecasters
make of a security a kind of counter in the ebb and flow of market

Even the

of World
ments

to

diverge from value, to outwit the market's other buyers and
sellers, to out-forecast their fellow forecasters.

or

as

a

on

as

is

confronted with

if

if

New

ered

as

an

obstacle

entity

thereto

at least

or

resulting from

that overall tent termed "the

market."

Between 1901 and 1936, while the market as measured by the
Dow, Jones Average of Industrial Stocks almost tripled in price
(64 to 184), a study undertaken by Robert A. Lovett of Brown

Brothers

Harriman

shows that concurrently

the 20 most popular
(as measured by their trading volume at

dividend-paying issues
beginning) suffered

the

the most

the

rail

popular issues

an

overall decline of 39%.

Although 13 of
of railroads, the industrial as well as

were

components contributed

The

to the

record

that

one-half

the

Institutions

not

and 21% in Standard and Poor's Composite Price Index (com¬
prising one-third of all listed stocks in number, and 90% in
market value); nevertheless over 300 issues are now selling above
Included among these

are

appearance.

And

what has

of

case

weeks

debt

now

IOV4

Abbott

44

3Vs

80

15 Vs

Laboratories

Chemical
__

is

reported,

But

again, it is

Composite Index, 7

over

groups

the

1935-39

10 of

Poor's,

price of the

average

and 38 advanced less than

over

a

dollar.
a

leaning

to

strength

has

ment

list, has been looking

up

a

bit.

Whether
reach

the

improvement

proportions

Nov.

ob¬

to

26-Dec. 1, 1950 (Hollywood,

Fla.)

preferred,

$4.10 dividend rate, ran out
decimals

in

reoffering

Convention

at the

Holly¬

wood Beach Hotel.

the

bidding,
paying the

group

price of $100.0699 and
at
$101,818
to
yield

a

Annual

Dec.

1, 1950

(Dallas, Texas)

Dallas Bond Club election of of¬
ficers.

4.121/2%.
Dealers

Dec.

figured

basis

that

would

a

have

4.18

to

1, 1950 (New York City)

buyers in, but with the basis fixed

New

Buffet

who

might

have

terested were, to say the

their

in

in¬

been

least, cool

York

annual

the

in

situation

same

the

Electric's

which

change

Luncheon .Club.

of

case

4.28%

bankers
at

pre¬

Kansas

Gas

preferred

for

paid $100,721 and
$102.25
to
yield

New York Security Dealers As¬

(Starlight Roof).

Here, however, the higher Dec. 8, 1950
brought buyers in and re¬

had been placed.

group

Louisiana

which

Power

a

have

to

week ago is report¬
that

issue

up

,

Annual

Dinner

at

the
/

_

(St. Louis, Mo.)

|

Mississippi Valley Group of
Party at the Park

purchased

&

cleaned

sociation

Dec. 21, 1950

Light Co.'s
$10,000,000 of first mortgage, 30-

bonds

(Pittsburgh, Pa.)

Pittsburgh Security Traders As¬

Pittsburgh Athletic Club^

Meeting the Call

year

1

(New York City)

sociation Silver Anniversary Din¬
ner
at the Waldorf-Astoria Hotel

4.186%.

yield

and

reception.

Much

&

election

Supper at the Produce Ex¬

Dec. 8, 1950
vailed

*'

Security Traders Association of

brought

those

IBA Christmas
Plaza Hotel.
Jan. 16, 1951

•

National Association of Securi¬
by quick action adjusting original
ties Dealers, Inc., Meeting of Gov¬
ideas on offering price.
The
the

initial

bonds

at

aim

to

was

reoffer

ernors

and

Election of Officers.

to

of

securities,

new

look

at

their

take

yield

another

calculations,

a

that the issue could
was

be

sold if the

15,

1951

Investment

away

bit

a

the

of

spread, presumably it
that

June

such

(Philadelphia, Pa.)

fixed at the 2.90 level.

So while this involved chipping

will

sufficient

make large investors, chief buyers

Stock

Exchange

918

rose,

305

declined

and

action

was

syndicate's
was

decided

better

than

of

Traders Association

Philadelphia

and

Summer

Outing

Dinner at the Manufacturers

Golf and

Country Club, Oreland,

Pa.

'

V

Two

POWER

Rector

&

Street,

A

was

dividend
of

at

the

on

22,

close
D.

Gianamid COMPANY

of

24c

American

declared

December

DIVIDEND NOTICE

COMPANY

York

G,

N.

Y.

H

0

DIVIDEND

INTERSTATE

per share
Power
&

November 21,

on
the Capital
Light Company
1950, for payment

POWER

1950,

to stockholders of record
business December 4, 1950.'

of

W.

LIGHT

New

CAPITAL STOCK

Stock

AMERICAN

DIVIDEND NOTICE

DIVIDEND NOTICES

26

DIVIDEND NOTICE

COMPANY

JACK, Secretary and Treasurer

A dividend of

(20c)
Preferred Dividend

mon

The Board of Directors of American
Cyanamid Company on November 21,
1950, declared a quarterly dividend of eighty-seven and one-half cents
(87V2<q per share on the outstanding shares of the Company's 31/2%
Cumulative Preferred Stock, Series A and Series
B,

payable January

1951,

to the holders
December 1, 1950.

of

such

stock

of

record

at

the

close

of

AnacondA
DIVIDEND

2,

of

tion

Dec.

the Com¬

Stock of this

Corpora¬

was

15,

1950

Anaconda
Cyanamid Company

on

November

21, 1950, declared

pany

A quarterly dividend of one dollar
($1.00) per share on the out¬
standing shares of the Common Stock of the Company, payable
December 23, 1950, to the holders of such stock of record
at the

close of business December
1,

1950;

and
A

year-end dividend of twenty-five cents (25(l) per share on the
outstanding shares of the Common Stock of the Company, payable
December 23, 1950, to the holders of such stock of record
at the
close of business December

Be ird

1, 1950.

,

R. S.

of

of

Directors

of

payable

to

One

Dollar

a

and

011

Nov. 30,

holders of record at the close

closed.

divi¬

at

the

close of business

Secretary and Treasurer
25

Broadway,

New York 4; N. Y.

,

COMMON DIVIDEND
TKEASCREB

,

.

*

—

Philadelphia. Pa.
Nov. 17, 1950

A dividend of 15 cents
per share
has been declared on the Com-

>

Stock, payable December
1950, to stockholders of

>

mon

20,

PHILLIES
America's

n

of business December
20, 1950.
The transfer books will not be

Fifty

December 1, 1950.

the 4.70% Preferred

($50 Par Value), payable January 1, 1951, to stock-

ber 21, 1950, to stockholders of

record

on

Stock

1950. Checks will be mailed.

($1.50)

per share on its
capital stock of the par value of
$50 per share, payable Decem¬

DIVIDEND

quarterly dividend of 58.75
per share has been de¬

clared

stock¬

Copper Mining Com¬

C. EARLE MORAN

KYLE, Secretary.

A

170

has today declared

dend
Cents

PREFERRED

cents

declared

holders of record

The

DUBUQUE, 10 W A

twenty cent9

share

on

per

November 22, 1950

Directors of American




NO.

business

Common Dividends

2.

total.

points

few

Utilities

successful

yield

AMERICAN

1.

the

in

York

The Board

likewise have
only some $4,-

with

readily

A

trick, according

company

ed

of

ray

move

$5,000,000 of

price that would Feb. 21, 1951
(Philadelphia, Pa.)
been the rule of late. The corpor¬ have meant a
yield of slightly less
Investment Traders Association^
ate
market for
seasoned
issues, than 2.90% to the buyer. But evi¬
taking its cue from the govern¬ dently there was clear indication; of Philadelphia Winter Banquet.

this year's market, we see that from Jan. 3,
1950 to the present, while the Dow, Jones Industrial
Average ad¬
vanced by 15%, of the 1249 round-lot common stocks traded in on
New

grade

basis that would permit reoffer-

(ranging to

composite.
During the past 12 months, November, 1949-50,
while the Composite group was rising by
11%, 15 groups declined
and 15 others have remained unchanged.

the

on

to

appeared to
shade "too rich"

sue

issues

new

bankers

able to

EVENTS

reaching

their bids for such
a

hope in the better behavior of the

full

the

issue,

on

ports indicated about half the is¬

Treasury securities market where

to 157, a

now

price" and underwriters quite evi¬
dently have not been able to gauge

But there is seemingly

the

Similarly,

a

211/4

showed absolute declines

42% by Canadian gold mining issues)

of "at

case

a

Michigan

COMING

issues

buyers.

reoffered

477/»

recorded by Standard and

groups

rise

would

they

47

Poor's Daily Index have fallen from 200

57%

that

interested in the latter type of

be

difficult to turn

Similarly, during this period, while the 50 stocks in Standard

a

been

recently

have

hint

to

Consequently things have been,
as
some
dealers put it "a bit on
the dull side," making it a little

these issues have risen.

industry

well.

as

140

Motors

the

of

case

Investment Bankers Association

four

to

the

week
a

States

a

The

40

50

emissions

ideas.

Minneapolis-Honeywell

Of the

to be gripping

appears

preferred stock

the

in

recent

in

1929

7]/4

in the face of

true

Hi eh

13V2

the

the

Gulf
with

Major life insurance companies, it

firmness

and

been

securities

Price

71

in

seen.

the yield side would have

on

4.20

Present

146

General

of

ideas

ing in line with insurance buyers'

Minnesota Mining

Amerada Petroleum

their

modify

they expect in yield on new
offerings currently making their

the following leaders:

Monsanto Chemical

Dow

apparently

what

v

age,

it has been
better part of a

the

for

security.

their 1929 highs.

make

ap¬

which

upon

impaled

bankruptcy, default or reorganization; and 75% of the companies
interrupted their dividends.
In the interval from 1929's peak of all time to the present, in
contrast to the 40% decline in the Dow, Jones Industrial Aver¬

still

market

unable to get off the "dead-

month.
will

issue

new

one-quarter of the issues suffered

or more;

And

Consolidated Gas Co.'s $20,000,000

servers.

disposed

issues shrank by 50%

to

potential

center"

"trend," overlook the
the constant divergences within

the

priced just

done

a

in

be

more

if

containing

as

are
still lagging with
indicating only
a
little
than $2,000,000 disposed of.

more

Preferreds

preferred

market

the

"Trend"?

$13,-

some

several

issues

shelves, remains to be

pears

A

consider

and

"close-to-the-line"

own

Those trying to time movements of the stock market consid¬

only

bonds

been

however,

The investor should realize that a prerequisite for his stocks'
good behavior is that he behave himself!

issue.

recent

000,000 to $14,000,000 of this $40,-

000,000

fancy of the greatest number of his fellow pickers.
❖

diffi¬

great

whole.

a

has again become engaged in a kind of game, aptly likened by the
late Lord Keynes to a beauty-election contest in which the con¬

pick the prettiest face not according to his
judgment, but on the basis of the one most likely to catch

the

parlayed bet. That is, the non-technician must
both external events and their effect on the market's
the internalist on individual stocks as well as the

kind of elite

to

off

000,000 undertaking.

a

New

tries

Power's

work

reports

forecaster

successful

movement;
market

25

as

declining.

were

right

impact 25 industry groups advanced

this process of style forecasting the investment community

testant

a

to

Similarly the smaller Atlantic
City Electric Co.'s $18,400,000 of

Korean

group.
In

move¬

advance of 40% b.y paper companies to

growing foible of what I call Blue Chip-itis; that is, the cumula¬
tive concentration on "good"—that is, popular—issues irrespective
of the price-value relationship, with major attention centered on
attempts to predict their future price behavior

in¬

no

From the time of the outbreak

1, 1939 to May, 1942, intra-market

able

new

be

than

in the status of Niagara

Mohawk

June-October

The

money should become lost in
"good company."
This pragmatic as well as psycho¬
logical motive, governing individuals in the handling of their own
as
well as other people's money, has resulted in the market's
other

threat seems to warrant

war or war

an

Meanwhile there is little change

reported

Bankers, it is reported have been

market trend.

II Sept.

culty of winning

if his

conscience

own

War

ranged from

others

overemphasis is the "window-dress¬
the investor to protect himself from potential criti¬

on

his

a

concurrent decline of 60% in gold mining; while during the recent

this vein of liquidity

ing" urge
cism

impact of

ference of uniform

realizing it no doubt, they are dealing in
prices in iieu of values, attempting to anticipate the extent to
which their fellow-public will subsequently cause the price level

In

registered

leading newspaper's market story.

Without

movements.

another

decline; all of which led to the
caption "STOCK INDEX DOWN.. BUT LIST IS HIGHER" on a

im¬

their

by

portance

share to be dwarfed

Other Issues Still Lag

NSfciqar

record

at

the close of business

December 8, 1950. The transfer books will not be closed.
Oscar soiberg,

November 20, 1950

^i'niitiiiiHBiiiiiiiniiiiiiiHiiiiiiiiiipn'jPiitiniitiinim^f^T'pr'fflTniir^F'i^

Treasurer

-

,

Volume 172

Number 4962

.

The Commercial and Financial Chronicle

.

.

(2019)

With Waddell & Reed
L.
with Waddell & Reed,

Anderson is
of

CHICAGO,

Colo. —Ralph

-HOLYOKE,
Inc.

Midwest Exch. Members

Financial Chronicle)

(Special to The

Kansas

Governors

111.—The

Midwest

the

of

ship

Walter

Cruttenden

Joins Fusz-Schmelzle

&

Cruttenden,

Co.,

111.;

Edwin A. Long, Russell, Long &
Burkholder, Lexington, Ky.; John
J. McDonald, Chicago, 111.

(Special to The Financial Chronicle)

BELLEVILLE, 111. —Russell G.
Bailey has become associated with

MIAMI, Fla.—Robert U.

ing.

Mr.

was

with

Baker
Don's

Investment.
Forrest

118

At

The

meeting of the Board of Direc¬

a

of

In New Location

declared
mem¬

ber National Association of Secu¬

Dealers, Inc. announce that

Company,
1950,

payable

December

on

stockholders of record

to

close of business

Beard

of

Directors

business

H.

D.

November

15,

C.

W.

New

Street,

York

members

Stock

DIVIDEND NOTICES

'

'

•

'

'

•

I

•

dividend of 75 cents per share on the Com¬
pany's capital stock, payable December 15,

1950, to stockholders of record at the close
of business November
27, 1950.
RICHARD T. FLEMING,

ROBERTSHAW-FULTON
REYNOLDS

CONTROLS COMPANY
Greensburg, Pa.

METALS

Corporation
declared

Mining Corporation

stock issued and out¬
November 30, 1950, payable De¬
cember 15, 1950, to stockholders of record
at
the close of business November
30, 1950. No

CORPORATION

on

fractional shares of

Hudson Bay Mining and
Limited, stock will be issued.

Smelting Co.,

The

Directors

of

Board

declared

has

GUS

a

and

an
cents

dividend

extra

of

ten

MRKVTCKA, Treasurer.

November

27, 1950

The Colorado Fuel & Iron

Both

eclared.

20,

lecember

the

were

to

1950

business

of

close

D.

Board

in

STOCK

of

declared
payable
on
stockholders of record
December 6, 1950.

Secretary

McGREW.

C.

Directors today declared

the

to

the

cent

a

holders

of

Ordinary

Resulting stock and scrip certificates
by Bank of the Man¬
hattan Company.

will be mailed

ALLYN

Directors' of

of

Board

Laboratories,

Mont

Du

of

amount

seven

The directors authorized
the

and

one-half

not

amount

per¬

the distribution of

of said dividend

on

December,

8, 1950 to the holders of record at the close of

business

December

on

Shares issued

1.

under the

of

1950

American

of the Deposit

terms

Agreement dated June 24, 1946. The net dis¬
tribution after deduction of the Union of South
Africa non-resident shareholders tax will amount
to

$1.03

subject, however, to any
in the official rate of

share,

per

may

occur

South

Africa

funds

prior

Charles E. Beachley,

Secretary-Treasurer

B

to

H. E. DODGE, Secretary.
November 16, 1950,

New York, N. Y.,

QUARTERLY DIVIDEND of One Dollar
Twenty-five Cents ($1.25) and an EXTRA
DIVIDEND of Fifty Cents ($.50) per share on
the Common Stock of this
Company has been
declared payable at the Treasurer's
Office, No.
165 Broadway, New York
6, N. Y., on Monday,

20,

holders

The

for

December

per

shares

quarterly
share on its

of

5%

Preferred

ible

declared,
the

15,

has

1950

6,

1950.

Stockholders

close

of

1951

business

of

transfer

books

An

record

dividend

extra

share

December

on

the

no

par

of

ers

of record

ness

on

$.25

15,

Richmond

The

(25d)

The

regular

thirty

value Common

DIVIDEND

*

The

of

Board

November

declared

EXTRA

at

the close of busi¬

and

share

a

of

one

of

cents

the outstanding

on

share
the

on

the Common Stock

Company,

payable

January 2, 1951 to stockholders
of record

at

close of

the

A

busi¬

of

record

A

the

at

December

11,

close

of

the

on

has

stock

December
record

RICHARD

outstanding

been

21,

December

11,

payable

holders

to

close

of

has

Y.

stock

been

ary

2, 1951
at

J

of

Fifty

cents

this

Corporation

stockholders of

to

rec¬

the close of business Decem¬

ber 1,

of

of

the outstanding

on

declared, payable Janu¬

ord

Secretary
November 17,1950

share

per

capital

BULLWINKLE

(450

common

declared

1950,

the

at

1950.

business

1950.

dividend of forty-five cents
share

a

November 30,

ness

dividend

cash

(50(?)

ending December 31, 1950,
payable January J, 1951, to holders

Checks

the

1950.

r.

KENNETH

H.

HANNAN,
Secretary

business

1950.

will

be

mailed

Manhattan

by

Bank

of

Company.
DILLARD, Secretary

FINANCIAL NOTICE
OF

DIVIDEND

OF
W.

P.

A.

20.

Southern

California

CENTURY

Edison

Company

New York has declared
of 20c
of the

per

share

on

an

extra

TWENTIETH GENTURY-

■

FOX FILM CORPORATION

DIVIDEND

at

the close of business December 1,1950.

quarterly
share

per

ferred

cash
the

cn

Stock of

declared

dividend

this

payable

December
of

in connection with the

not be

closed

»

CUMULATIVE

at

4,

DIVIDEND

f

1950
the

to

close

1950.

per

the outstanding Convertible Pre¬

on

this

Corporation has been

payable December 20,
of

record

at

business on December 4,

1950

the

to

the

close

of

under

Paper

an

Inc.
on
the
terms
herein set forth:

First

PREFERRED

SERIES

'

NO. 15

5%

1966

(herein

Twenty-five Year 6 %
July
1,
1955
(herein

inal

share

of the

quarterly

of

cn

this

the

cash

dividend

outstanding

Corporation

has

payable December 20,

1950

record

December

at

4,

the

Orig¬

Preferred

Stock, payable
December 31, 1950, to stock¬
holders of record

on

Decem¬

ber 5, 1950.

$6

close

of

$.50

Common
been

per

Stock

declared

to stockholders
of

business

on

Cumu¬

Stock, 4.32%

the

holders

October
clude

(herein

of

part

called

the

Stock)

at

31,

their

of

the condition Is
securities
outstanding on
accorded the right to in¬

the

all

1950

be

securities

Seller

in

the

sale

on

the

same

terms.
the

On

the Buyer the condition is
$600,000 face amount of the
Bonds, $200,000 face amount of the Notes and
80,000 shares of the Stock be deposited with the
undersigned for sale under the Agreement not

"hat

part

less

not

1,

1950.

Mortgage
Bondholders and
other Se¬
holders owning Stock Purchase Warrants

'expiring
-ender

than

December

than

First

curity

of

April

1955)

1,

deliver

and

said

are
expected to surWarrants
with
their

Series, payable December 31,

other securities without additional consideration.

1950, to stockholders of record

ffieir

on

All

holders

of

securities

ieposit

December 5, 1950.

securities
in

them

iDDlication

with
may be

desiring

to

include

sale
should
promptly
undersigned to whom
made for Letter of Transthe

the

on

A

1950.

P. O.
A.

Stock

share.

per

On

'ater

share

lative Preferred
A

on

Notes due
Notes) at

Convertible
called
the

60% of their face value, without interest, and

has

Common

authorized the payment

27 cents per

share

Mortgage and Collateral Trust Twenty
Sinking Fund Bonds due April 1,
called
the
Bonds)
at 90% of

Year

their face value with interest accrued through
November 30, 1950,

1950.

HENDERSON,

C. BELL

Vice President and Cashier

Wrapping

that

prices hereinafter stated for
Ing securities of A

following quarterly dividends:

quarterly cash dividend of $.37','2

DONALD

KENNETH

given

conditional

/

The Board of Directors

payment of this

dividend.

hereby

the

as

Pre¬

has been

15,

record

$1.12%

Prior

Corporation

December

on

of

outstanding

stockholders
business

share

of

The transfer books will

is

(E^crowee, (which Agreement is available
inspection at the office of the undersigned),
offer is made, and is conditionally
for
the
accepted
purchase
and sale
at
the

NO. 166

STOCK 4.32%

the 7,400,000 shares

December 15, 1950 to holders of record

Perforated

INC.

Agree¬
ment
dated
October
31,
1950
executed
by
Publishers
Financial
Bureau,
Inc.,
(herein
-ailed the Seller), representing Roger W. Babson
and
associates, and Isidor Baum (herein
called
the Buyer),
a counterpart of
which is
on file with
tne undersigned designated therein

a

ORIGINAL PREFERRED STOCK

dividend

capital stock of the Bank, payable

Albany

TO

SECURITIES

COMPANY,

for

PREFERRED DIVIDENDS

stockholders

City of

OFFER

OUTSTANDING
PRODUCTS

Company)

ferred Stock of

The Chase'National Bank of the

CONDITIONAL

HOLDERS
OF

iFormerl.-

declared




1950

CADBON CONDONATION

AND
per

dollar

one

half

-

quarter

A

Wallace, Treasurer

•-

BANK

20,

Union Carbide

today

dividend of 32 cents

a

that

HEW YORK

1,
•

NOTICE

Directors

50 cents per

CUT OF

Miracle

-

19, Virginia

dividend

seven

-

($1,375)

A

THE

December

on

H.

J.

Secretary

stockhold¬

New York, November 22, 1950.

HATI0MAL

close of business

the

COMPANY

5i/2%
cumulative convertible pre¬
ferred stock has been declared for the

the

OF

per

UTILITIES

December 4, 1950

Bruce H.

all phases of television

CHASE

has this date

dividend of twenty-five cents

a

share on the Common Stock
the Corporation', payable January
1951, to stockholders of record at

2,

COMMON DIVIDEND

of

THE

LOUISIANA

Board of Directors

declared

PREFERRED DIVIDEND

Checks will be mailed.

II

GAS

Dividend Notice

1950.

of

per

declared/payable

December 29, 1950, to

RAIBOURN,

1950

in

dividend.

1950.

will
SHREVEFDRT,

Common Dividend No. 173

Treasurer

15,

16,

Secretary & Treasurer
November

FOX

1950.

November

this

be

CORPORATION

WALTER H. STEFFLER

METALS

ELEVATOR

Stock has been
PAUL

at

27,

not

SIMPSON, Treasurer.

November

UNITED

Notice

Convert¬

1.

A.

will

to

"Y

COMPANY

been

Y.,

record

November

books

of

payment

N.

of

Monday,

on

transfer

record

business

OTIS

of

also

January

York,

Dated, November 16, 1950

dividend of
outstanding

Cumulative
Stock

payable

Preferred

to

1950.

regular

$.25

at

the

5,

to stockholders

M.,

J.

New

VOTICE

Stock¬
close

at

1950,
P.

stock

the

Dated, November 16, 1950

Decem¬

Common

to

record

of

business
A

payable

Stock,

1950

10,

o'clock

1950.

closed

have

this

Common Stock and Class

Common

ber

132

A

share on its outstanding shares

of Class A

COMPANY

NO.

and

day has declared a dividend of $.75
per

PACIFIC

The transfer books will not be closed.

Allen

Inc.

of

December

on

November 20, 1950.

DILLARD, Secretary

ALLYN
The

December

not be closed.

Shares

By Order of the Board of Directors,

B. Du Mont Laboratories, Inc.

shareholders

to

payable

of

The

divu

November 27, 1950.

B.

20,

the close of

at

Scrip certificates will be issued
resulting fractional shares.

Reynolds Metals Building

(7% %).

change which
exchange for

Allen

a

on

10

record at the close of business November
20, 1950 subject to the withholding of the Union
of South Africa non-resident shareholders tax

Directors of
'he
Colorado Fuel
& Iron Corporation,
held
a New York on November 21,
1950, the regular
uarterlv dividend on the common stcck of the
iorporation, of thirty-seven and. one-half cents
er
share,
and
an
extra
dividend of t.nrtyeven
and
one-half
cents
per
share,
were
the

share

the

on

Stock

December

COMPANY

No.

of

Corporation
ON COMMON

share

Per

declared,

1950.

of eight shillings per share on the Ordi¬
Shares of the Company payable November

nary

of

1950,

the close of business

at

declaring
per

Company, payable

The transfer books will not be closed.

Limited

dend

meeting

12,

by

cents

1, 1950. Checks will be mailed.

share

Per

stockholders

REYNOLDS

The Board of

DIVIDEND

record

three

extra dividend of

for

O'okiep Copper Company
Dividend

a

December

1950.

1950

21,

12lAi
been

close of business December
13,

at the

of

an

Common

Company, has been declared payable
December 28, 1950, in common stock
of the Company, to holders of record

cent

per

rate

the Common Stock of the

one

($1.10) per share, less
Wisconsin privilege dividend
tax,
on
the
capital stock
(without par
value) of the Corporation, payable December
15,. 1950, to stockholders of record December
T,
1950.
'4
L. G. REGNER, Secretary.
2.75

and

New York, N. Y„ November
21, 1950.

quarterly dividend of twenty-five cents (25c)
per
share
dollar and

dend

A dividend of ten percent
(10%) on
the outstanding common stock of the

Fractional shares will be settled in cash at
prices
prevailing on the record date. '«

DIVIDEND

dividend

quarterly dividend of 75

December

STOCK

A regular quarterly divi¬

COMMON STOCK

89

Mining Cor¬
a
year-end dividend in the
seventy-five cents (75c) 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 New¬
mont

annual

DIVIDEND

Reynolds Metals Building
Richmond 19, Virginia

On November 21,
1950, Nowmont

standing

$3.00

on

COMPANY

meeting held today, restored the former

a

Secretary

Secretary.

the

amount of

BRICCS & STRATTON

COAL

The Board of Directors has declared a divi¬
dend of $1.00 per share and an additional

1950.

ALEXANDER,

BECK, Treasurer.

Dividend No.

poration

PITTSBURGH

SOUTHERN

Newmont Mining

fBRIGGS&STRATTON)

He

CONSOLIDATION

COMPANY

J

The Board of Directors of

the

of

Exchange.

COMMON

DIVIDEND NOTICES

t

24,

15,

at

&

1950.

City.

At

has

November

on

December 5, 1950.

on

quar¬

ters, at 111 Broadway, New York

,

enteenth

the Common Stock of the

on

Gammack

DIVIDEND NOTICES

at

declared a quar¬
terly dividend of $1.50 per share and an extra
dividend of $1.50 per share payable on December
14, 1950 to stockholders of record at the close

of The Gamewell Company, held
today, Friday, November 17, 1950, a
special dividend of $.25 per share was

they have moved to larger

was

Singer Manufacturing

tors

rities

past

Company

^A^$ELL>

Drive.

Sidney Jacobs Company,

the
and

/ >

ORLEANS,
La.—John
has
joined the staff of

with

Co., 828 Sev¬

TEXAS GULF SULPHUR COMPANY
The

(Special to The Financial Chronicle)

Sherwood

in
Co.

and

DIVIDEND NOTICES

With Don's Inv. Service

Service,

DENVER,
Col. — Conant
K.
Halsey has become associated

Harney & Alexander,
Inc., of Miami.

DIVIDEND NOTICES

NEW

&

formerly

Co. of New York City.

officer of

an

Fusz-Schmelzle & Co. of St. Louis.

1

Alexander
Atwill

was

Alex¬

Dooly, Ingraham Build¬ with Boettcher

Jr.,

Chicago,

With Boettcher and Co.

ander has become associated with

Oscar E.

W.

Dooly

(Special to The Financial Chronicle)

Stock

Exchange has elected to member¬

City, Mo.

With Oscar E.

(Special to The Financial Chronicle)

of

Board

43

V

hale,

„•
November 17, 1950

Treasurer

*

^

to

receipt will be issued

entitling the holder

the
net
proceeds of sale of the
represented thereby OR the return oi
if the conditions of the Agree¬

receive

securities
the

securities

ment

are

not

fulfilled.

MANUFACTURERS TRUST

COMPANY.
Escrowee

Treasurer.
Ooroorate
45

B'-ever s+reet

New

November 1,

Trust Department

1950

York

15,

N. Y.

The Commercial and Financial Chronicle

44

..

Thursday, November 23, 1950

.

(2020)
rental

BUSINESS BUZZ

housing has frightened in¬

stitutional investors from thinking
of building big
their

Washington
Behind-the-Scene Interpretations

•

t

(This column is intended to

re¬

flect the "behind the scene" inter¬
pretation from the nation's Capital

/f

/f

and may or may not coincide with
the "Chronicle's" own views.)

A.

xJL f M/vA/

Capital

from the Nation's

•

rental projects for

account.

own

Bond Club of N. Y.
attitude

the

of

by the witnesses being asked
submit
their
testimony
in¬

up

C.—If the
of Republican members
House Ways and Means
D.

WASHINGTON,

to

dividually

GOP mem¬
bers of Congress will be disposed
to fight the Administration's ex¬
cess profits tax scheme on
prin¬

ciple.

this

Committee is any sign,

This

year.

an

proponent,

the fear of EPT's chief

hearings

the

scheduled

Reed

be held
Thursday,
announced by Clar¬

was

Drexel

Bartow,

Co.,

&

will

talk

Mr.

"Business

on

and

Foreign Affairs."

Philip C. Honnold Opens

Mr. Truman's only
in writing such a letter
to put himself on the

purpose

luncheon

this

on

and

subject

first

season to

President of the Bond Club.

already

had

committee

The

cowering in fear of op¬
EPT, not merely out of

it

W.

ence

enact a $4 billion EPT
retroactive to July 1.

Con¬

entire

the

when

was

gress was

posing

calendar

this

Dec. 7,

his letter to Chair¬

to

gress

of

at the Bankers Club on

Doughton calling upon Con-'

man

Chairman

its

at

meeting of the

little farce occurred in con¬
nection with the publication by
Mr. Truman of

Philip Reed

Reed,

York

New

incidents of

One of the curious

D.

the board of General Electric Co.,
will
address
the Bond
Club
of

out of order.

ruled

Republicans
almost to a man voted for the
"mandate" to take up an EPT
scheme and
pass
it during the
of

Philip

who

submitting it for the record being

Before the election,

balance

to Hear

members of the
might want it,

to

committee

Own Invest. Office

organized labor, but also out of
of fighting something with

thus

fear

record

superficial logic behind it of
"taxing war profiteers while our
boys are dying in Korea."

despite the election.

Philip C. Honnold is engaging in

the Presi¬
for the
sensibilities of his Congressional

a

followers, made the letter public
before he advised Mr. Doughton

C. Edgar Honnold.

the

elections

The

have

to

seem

given heart to the GOP members.
This courage arises from some¬
thing more than the discrediting
of the big union bosses. It stems
from the fact that this election,
opinion of many, demon¬
strated that it is possible to fight
in

the

great demagogic

with

something

appeal with facts and reasoning.
ported
sented

was

two

the evidence pre¬

who almost

witnesses,

by

sup¬

by

attitude

their

in

things. One

been

have

Republicans

opposed to the Ad¬
ministration's revised World War
entirely
H

were

EPT

plan.

they expressed
low

that such

the

was on

was

public

make

about it, or let¬

the

it

know

latter

was

on

is

the

EPT.

the

for

cidentally,

the

This,

in¬
be¬

difference

one

Senate.

and

House

in

line"

went "down the

In

it would under an EPT. They de¬

the

EPT
method of bringing in the taxes.

southern Democrats and conserva¬

And

thing and far more an occasional

sired

only

presented

they

vincing

the

fight

to

that

demonstrations

case

EPT would

con¬

some

harm.

work

not

Ways and Means Committee.

The

committee, with Democrats
voting solidly for and Republicans
solidly against, confirmed Chair¬
man Doughton's
ruling that wit¬
nesses
may
address themselves
only to testimony upon the Ad¬
ministration's EPT

or

substitute

a

were

kick
Chairman
Senate Finance

to
the

of

George

a

oppose

President

the

figuratively

the

to

been the singular

"coalition" in the

thing than the

EPT has
attitude of the
entire Democratic membership of

Republicans

solid

tive Republicans is far less a

If

of

"coalition"

the

House

Senate.

Another factor which has helped

Committee in the teeth with such

procedure,
react

being

mad in pri¬
sweetness

all

White

the

toward

would

George

Mr.

getting

by

and

vate

in pub¬

House

Speaker Rayburn,

Texan,

a

usu¬

did Mr. Doughton.
Despite action a couple of years
ago to take from Texas the control
acts

as

of off-shore

This ruling has been held con¬
sistently to the narrow interpreta¬

prive Texas of large school reve¬
nues,
Mr. Rayburn
"cried"
in
private but in public blacked Mr.

tion

that

a

witness

suggest

may

of boosting corporation

means

taxation

on

wartime profits by $4

billion unless the testimony is in
behalf

It

of

an

excess

profits

is exactly as if the

Congress

ticket

called

Democrats

determined
,
#

in

return

"EPT,"

for

and

to pay off the

a

are

ticket.

At times this narrow interpreta¬

tion got to be almost comic. Wit¬
in

all

sincerity trying to
advise how to tax high profits
were
told that they were out of
order. Then Republican Commit¬
nesses

tee members would appeal
the
ruling. Then there would be a roll
call, and all Democrats would
vote

sustain

to

witnesses
all

were

the
out

Republicans

overrule

Thus

stopped

the

ruling

of

vote

to

Chairman.

witnesses

in

that

order, and

would

the

hence

legislative boots,

to

de¬

a prac¬

tice which has lost him much in¬

find

the

middle

out

committee

what

the

say,

would

wanted

to

stumble

around

way

trying

of

trying

to

witnesses
have

to

to phrase the question

find
so

to
a

that

to

the

question

out

of

order. Then maybe it would end


\


abandoned

held when the
report was arranged for. However,
the new Congress obviously will

eration,
of

the Truman
Administration had not complete¬
within

left-wingers

ly recovered from the fright of

to

ask

the

Congress for all
of the pending "Fair Deal", pro¬
posals, and that he was not going
to

new

release (Dean

Acheson

from

Cabinet, -are not taken very
seriously here. Until the Truman
high political command decides
what

and

when

it

hash

will

up

something in the way of 1952
political merchandise, the Presi¬
dent is not

fered

going to

admit

to

way

in

1950

go out of

that

his

what

he

of¬

sell.

As

for

didn't

Acheson going to stay "period," it
is noted that for a long time be¬
fore

he

fired

Louis

son

sit

It

#

before the Federal Reserve

and Federal housing

giving

the

on

it

is

natural

a

Well-informed

Gray

ministration

the

free

units

100,000

over

commitments outstanding at pres¬

long time to come and that
Point IV's form of beneficence be
a

ent, and

and

could

end

ministration

had

U.

S.

was com¬

show

how

three

how

little
but

the

committed

to ITO, but to vigorous

tariffs

via

new

agreements,
in

U.

S.

HAnover

devised,

is

anything

that

volume

there

rental

of

system.
for

a

Mr.

Truman's

new

rent

de¬

control

law, it is asserted, will scare in¬
vestors out of investing in rental
construction beyond

trade

unilateral reductions

thing else that would make it

token

mand

only

tariffs, and almost

of

Raymond

held

vital

in

of

1949-50.

added

a

To

this

the

government

loss

if

rent

take

the
ulti¬

loss. Then, too, law¬

mately in

pos¬

suits to overturn

a

would

control resulted

any¬

A.

world

against

communism,

mem¬

Tuthill
McMann
will

be

Exchange

on

by

L.

the

to

7.

Transfer of the

Exchange

mem¬

bership of the late Frank S. Levi
to Harry C. Dackerman will be
considered
Dec.

Exchange

the

by

on

7.

Transfer of the

Gustave

Exchange

mem¬

ered

L.

Levy will be consid¬
by the Exchange Dec. 7.

D. D. Foster
PITTSBURGH,

Opens

Pa.—D. Donald

engaging in

securities

a

business from offices at 305 Juni¬
ata

Court.

-*440

For

Large Appreciation Potential
WE

SUGGEST

RIVERSIDE CEMENT CO.
CLASS
A

B

leading

in

STOCK

(common)
producer

of

fast-growing

cement

Southern

California.

Analysis
a

review

try

of

this

of

the

available

Company
Cement

and

Indus¬

request.

on

Selling about

$10.00

LERNER & CO.
Investment

10 Post Office

Securities

Square, Boston 9, Mass.

Tel. HUbbard 2-1990

"segregation" in

Teletype—NY 1-971

2-0050

Firm Trading Markets

Allied Electric Products

Garlock

Packing

Gisholt Machine Co.

FOREIGN SECURITIES
All

Issues

McBee

Company

Permutit

Company

r arl marks & po, INC,

menu

importance of defense of the

on

that on which

the

dust-jacket stressing

Co.,

Exchange

John

considered
Dec.

&

or

credit

multi-family
are

expectation
a

ance

lowering of

reciprocal

how -liberal

housing will be constructed out¬
side the government loan insur¬

Admin¬
not

which construction
of

severe

restrictions

the

them, the Ad¬
no
thought of

months. ;So
was

Transfer of the

under way before 1951.

Regardless

imports and exports of merchan¬
dise approaching so close to a bal¬
ance as they have in the last two
istration

upon

cannot get

incorporated therein.

ills

Wolfe

in

of

report recommended in effect that

FOREIGN

was

well

foreign economic aid be continued

Gray

member

Bollinger,

30.

Foster is

here note

sources

multi-family housing can be built
in calendar 1951 under old FHA

for

be

can

housing, it is reported.
that

the

that

Board

officials

credit restrictions to the con¬
struction and sale of multi-family

the inflation at home.

So

will

Werle

gage

vast
scale appeared to be the principal
practicable means of maintaining
abroad

away

Edward

bership

application of mort¬

the

announce

of

more

or

all costs, and since
the Spence bill looked like a for¬

expansion at

possibility,

E.

C.

bership of Sidney J. Weinberg to

weeks

two

be

mem¬

of the Exchange, will retire from

argument for all the for¬

eign economic objectives the Ad¬
winter

will

#

&

:■!

the

I '

:

,

What Gordon Gray's report did
was to provide an "all under one
cover"

skeptical scrutiny.

Johnson, the

would not leave.
%

and the give-away ideas
Administration will come

They wanted to promote economic

or

the

the

under the most

"inventory readjustments" of 1949.

At the time Mr.

President Truman's press con¬
ference remarks that he was going

proposed International
little consid¬

Organization

Trade

Korean
and the

the

expected,

not

was

war

instance,

of the devices or

any

firmly

objectives

given the

for

Thus,

the

nor

Gray effort

1949-50.

of

economic

their
mem¬

Mr. Doughton would not rule the
answer

that the

organized officially in March,
1950, and its launching at that
time reflected what was worrying
the Administration in the winter
was

Exchange

Nov. 30.

on

partnership

neither the President
State
Department has

Probably

missioned to diagnose the world's

-

of

note

is

em¬

Edward

to

considered

Nov.

insiders here.
It

U. S.

its exports to the

Gray's report
braced all these schemes.

Gray

with

up

Gordon

So

report is not
too much alarm by

the

President also insisted that John¬

be

would

testimony, and Republican
bers

build

viewed

fluence with House southerners.

tax.

pawned
in
the
Union
Labor
hockshop
their
control
of
the
82nd

Truman's

oil and

Transfer of the

bership of the late Walter Drey¬

rest of the world to

sible for the

sales

slant.

money

ally

changes:

fus

1950-51

the tome a

giving

lorn

lic.

therefore.

no

appreciate Navy knots, and I do admire your dexterity,
Pendleton, but you're not going to like what
I'm about to say to you-—"

"I

Hence

On the other hand, Mr. Dough¬

Exchange

has announced the following firm

re¬

was

the way.

tween

with

Weekly Firm Changes

letter to the
even
telling

a

without

Chairman

the Congressman

hearings

Street.

formerly associated

New York Stock Exch.

way.

ported to be extremely angry that
the President would be so cavalier

ting

was

from offices
38th

The New York Stock

Doughton

Chairman

to

He

—

Mr.

him for comment.

as

Northwest

717

Okla.

CITY,

business

securities

at

Doughton heard of
when the newsboys asked

a

high as

letter

a

first

ton

tax take to go at least as

OKLAHOMA

none

respect

little

with

The

down

other hand,

the

On

dent

it

backing

as

Almost

corporation income

total

the

invariably
willingness to al¬

was

SECURITIES

SPECIALISTS

50 Broad Street

Hill, Thompson & Co., Inc.
Trading Departmeat

New York 4, N. Y.

70 WALL

STREET, N. Y. 5

Tel. WHitehall 4-4540