Full text of Commercial and Financial Chronicle : November 24, 1949, Vol. 170, No. 4858

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NOV 25 1949
ESTABLISHED 1S39

Volume 170

Number 4858

New

•

Price 30 Cents

York^N. Y.y Thursday, November 24, 1949

a

What's Ahead in Business?

Of Worid Trade
By
Head

J.

H.

Division, Office
Foreign Agricultural Relations,
fJ. S. Department of Agriculture.

-

of

j Dr. Richter, noting low ebb of
J European foreign trade, contends

By MELCHIOR PALYI

i

Professor of Marketing, Stanford University

'

,

RICHTER*

European

The Stock Market Upturn

By DAVID E. FAVILLE*

Copy

Commenting on recent advances in stock market averages and activ¬
rWest Coast economist, maintaining business climate is good, preity, Dr. Palyi sees in it a behavior pattern responding to a basic
element m our economic and social picture, namely, return to deficit
diets, however, total business for 1949 is likely, to end up below v
level of 1948, and 1950 will be below current year. :• Sees good
(
financing and inflationary policies. Says stock market reaction was
business continuing when measured by normal standards, and con¬
} slow, but boom is likely to carry: with it low:grade bonds as well
tends, despite unbalanced budget and increased government spend- „> ;; as real estate, diamonds and similar hedges against inflation. Warns
&
Administration may reverse inflationary policies.
ing; our huge production potential is powerful anti-inflation force.
~

-

j

•

(balance in payments cannot be
/ The past year has witnessed some significant changes in our ::: The greatest puzzle of this postwar world of ours is—-not Russia,
provided by financial assistance ^ economy; namely a downturn in the business cycle last spring, and
the A-bomb, Titoisnv the British: balance of payments, the Welfare
on
emergency basis.-. Foresees: return from a seller's to a buyer's market. Unsold inventories, full; State, or the Truman election. Superciliously; they may be " termed
lasting dollar shortage and no f pipelines, and' over-expanded production facilities were disturbing "simple" matters. The real mystery is what is called the American
v..,
<§>b U s i n e s s « " •
:T i ~. deyelppmentsf;
substantial increase of U. S.: //
i
: uhfayorabielo
It is
.uw t cycle.
*
■$
EDITORIAL
imports.
r business prof^ (i | •my"srteriouB-v
,

f

,

•,

"-Y

i

!

If

listen

I

the-newspapers- anq
speeches _hy officials of

to

■

>

■,the United

.

,

'^tates

.

fo%

ciently

ket

and, generally,
of inter na¬

......

Europe
J.

H.

ans

assert

Richter

that

they must ex¬
in order to import. In
the United States we confess that
„

,

port
we

more

must

keep

on

much

import

more

the

same

(Continued
*

Address

on

very

story,

read

f

page 42)

delivered

by Dr. Richter at
Nov. 17, 1949, of the

the

meeting on
District of Columbia Institute of Certified
Public

Accountants.

pressed
views

by
and

Dr.

The
opinions ex¬
are
his personal
necessarily
reflect
lines of thought.

Richter

do

to

the

of

levels

1948.

In

spite of currency devaluations and
the announcement of Russia's pos¬
session of the atom bomb, business

looking

was

up.

Our slide-off

as merely an inventory
adjustment. Sumner Slichter told

us

the

recession
the

over.

In

came

would

midst

the

of

be

soon

this

aluminum strikes pre¬
artificial production.
Federal
Reserve
Board
figures
show that the strikes pulled down
the industrial activity index from
172 "in September to 152 in Oc¬
tober to the lowest point in three
coal, and
cipitating

an

(Continued

j

38)

on page

Camp Sea Food
Company, Inc.

'

Sold

Prof. Faville be¬

Funds,
1

Quoted

'

international programs

'

%.

planners to
(Am e r i c a p
business fore-,.,
tasters, w h o
have a hard

-.4

m

long been evident to the ] experienced eye!

This failure; time underr
|s taking; jstandiiig* that
the "Victo¬
place ih the world today is possibly more pronounced inj
rian"
scheme
this country: than* anywhere' else in the world Of major of
rhythmic
powers. It must, however, be said in all candor that; a num¬ ups and doWns
ber of the older countries long involved in world politics does not ap¬
Dr. Melchior
have of late not- always been, as perspicacious as might be ply. under
conditions totally different
understand: the. true inwardness of much that

expected. The fact of the matter is that it would be

a

good

thing for most of the peoples of the world to reconsider and
restudy the situation by which the world is faced in this

At the moment, one

r

regards what is known
of course,
in this

.

of the most striking examples.

of all this is found in the
:

\

/'■/

day and time.

policy of the United States

as

Western Europe. It has,

now as

favorite pastime of the dreamers

a

country—and in

others, too—to talk of

some

"United States of Europe."

However,

Freedoms—in

a

super-liquid

econ¬

geared to artificial Full Em¬
ployment.
In reality, the problem 'is not:
why we do not have the longexpected depression. The problem
is: how is it possible under the
prevailing circumstances, that even
such a minor interruption of the
_

,

that of the last 12 months

as

has occurred?

The

(

recent

"recovery" of the
stock market throws the spotlight

a

few there

very

from

omy

(Continued

who had any serious idea that the diverse peoples,

were

Paly!

those before the age of the Four

hoom

long been

often

hostile

Y?-:

on page

4.1)

traditions, and having marked local in.

(Continued

:

State and

..

Municipal

(550 Branches
across

*

inc.

36)

on page

Franklin Custodian

Common Stock
Bought

The

Municipal
Utilities
Association
Santa Cruz, Cal., Nov. 16, 1949.

Van

M

speaking different languages, bound by different and
-An address by

fore the annual Conference of the

,

is

to

good
steel,

prolonged

r

was

described

not

official policy or

?rose

highe&t

-

.

news

in order to

exporting. It sounds

like

David E. Faville

eco¬

rela¬

:

a

,

around

national trade

The

Realism, 6r: the W»ii| of It, in International Affairs

the stock hiar*

of inter¬

nomic

pleas¬
and what

than

to

jErom Russian

year

„

a

"ness. This fall

thereisaprobf

tions.

the

seasonal- -up¬
turn: in busi*

aware

tional

the

more \

of the fact that*

Tern

:

quarter

third

ing

suffix

-are

ip

:1 poked/like

"government £
We

tliosiej "experts,::

.

came

European

any~

especially

Then
of

G ovt

ve r it m e n

it-majrgins;

;

read

we

A Mutual Fund

Canada

.*Monthly Commercial Letter
upon request
•
(
-

common stock fund

Prospectus available'on request

preferred stock fund
bond fund

White,Weld&Co.
Members-New York Stock

; 40

Boston

r_

Prospectus on request

Dept. Teletype: NY 1*708

Street, New York 5

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THE CHASE

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i.

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An

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Distributors of Municipal

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Booklet available for

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Goodbody

& Co.

ESTABLISHED 1891

Established, 1899

MEMBERS NEW YORK STOCK EXCH.

'

-

(Incorporated)

!

115 BROADWAY

CLEVELAND
'

.

OTIS & CO.

.

Trusteeship a and Executorships

•

New VorJc
Cincinnati

,

Chicago

Denver

Columbusr Toledo

Dallas

Buffalo

105 W. ADAMS ST.

NEW YORK

CHICAGO

.

'

•

••.

1

Dominion Securities
Grporatioti
,

40 Exchange Place,

New York 5, N.Y.

:

Institutions and Dealers

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

111

Broadway, N. y., 6s

WOrth 4-6000

Teletype N V 1-702-3

* WHitehall 4-8161

Boston

Teletype NY 1-2706

Telephone; Enterprise .1820

2

MARKETS

TRADING

A

IN

By DONALD R. RICHBERG*

Municipality
Issues

that

New York 5

is

Teletype NY 1-683

in

a

You have all
the

of

read

of

adventures

Alice in Won¬

Rights & Scrip

derland

going

e r

frjcjlONNELL & CO.
Members

York

.

.

BROADWAY, NEW YORK 5
Tel. REctor 2-7815

The

through
Glass.
Oonald

R.

Richber*

But

probably

few
of you know
that when Alice
grew
up
she
married a man named
Giverri-

guff, who was commonly referred
;o as Mr. G. They had a son whom
;hey named Hally, with the fond
hope that some day he would be-

famous,

American Air Filter Co.

following

Alice..:'" "■*

Kentucky Stone Co.

what

BANKERS BOND E
Incorporated

about the

there,

who

in

in

one

It seemed as though

walk

a

to

the

see

red

roses

Utopia Gardens, which

the

is

popular resort for people trav¬
eling on that old winding road
that leads over the hill to the

a

i.

falling

be

to

lared
a

tive; running around investigat¬
ing things, that his mother finally

Inc.

■

Central Natl Bank, Cleve.

said:

"You

have

a

true

small

shirt,

The* midget

is

man's

himself

Trust Company

BOUGHT

—

SOLD

—

"Or maybe President!" shouted
Hally, running around gaily and
stumbling in and out of the red

QUOTED

WM. J. MERICKA & CO.
...

150
.

Incorporated

Broadway

Member

New York

Stock

rose

beds while his mother smiled

Exchange

Union Commerce Building

bushes.

Down,

bleed

at

VIRGINIA—WEST VIRGINIA
NORTH and SOUTH

dinner

of

by

Southern

low.";
"It

I?" asked Hally. /;

1856

•

H. Hentz & Co.

can

for

a

Members

no
New

every¬

York

help?" asked Hally.
you
bleed the tax¬

New

if

happens

Exchange

Stock

York

New

what

needs
can

enough for that?"

"That's

;

Curb

Exchange

Cotton

7^;':':

.

"You

Sec.

Exchange

;

Trade

of

other Exchanges

And

people who take care
of
themselves.
They
afe
fullr
blooded people who make money,
which is a wicked thing to do, so
the government takes most of the
are

payers

taxpayers'

spend

it,

people who ask

of

us

we

N. Y. Cotton

,

PITTSBURGH

DETROIT

CHICAGO

GENEVA, SWITZERLAND

taking
to take

you

Exchange Bldg.

YORK 4, N. Y.

NEW

from

money :r away

Then

them.
care

Boprd

Chicago

Inc.

Exchange,

New Orleans Cotton Exchange

the tax¬

see

York

Commodity

of your problems,"

one

answered

■

have is that

we

all

*

upward," ex¬
plained the midget. "As you fall
up, you swell up. Even a secre¬
tary like me gets puffed up."
falling

was

"What

are

you

secretary*of?"

demanded Hally.
"I am the Secretary

and

of

care
we

and

take

why

less

collect

Sec. for short."

than

for

sent

show

spend

us

long tp you," he added slyly."
"I don't like puns

Furniture

Ashe-

firm

of. Davies,
Richberg,
Busick
&
Richardson,
Washington, D. C.

j

unless I make

them," said Hally. "Tell me about
What do you do

these complaints.

"But I

are

laughed: "I just put
them on your desk. Then you call
a conference of Noble Bleeders."
"They
whose

.

they?"

are

hearts

and women
always bleed for

men

in

Sec.

alarm.

word!"

"We

don't

$35

failing; the whole

might fall in. Oh,

dear, oh,:

to

rose

a

shriek

as

INVESTED in

a

cascade of water poured
down upon them: "I told you the
roof was leaking. You didn't do

full year',

a

huge

subscription to the< Monday
and Thursday issues

anything about it."
The
tiny
creature
crawled
under
Hally's
throne,
above
which

The bleeding tax law
compels every citizen to give a
quart of his blood every month to
provide blood for the bleeders,

shouted:

no.

that

dear, it's falling now!"

people who need help."
"They must die, young.",

"Oh,

JSMSMSMSlSJ3M2M3Mc!ic®SI5I^13@EB

;

His voice

Sec.

DIgby 4-2727

of

little fellow,"'

a

mention

dare to think of

roof

Wizard

World."

only

am

."Don't

with them?"
Little

Imperial

New

Brave

cried

Liquid

let people make, you will

we

crowned

fall?",

and furthermore I be¬

—

money

the

midget, "because I'll be long

Refined

—

Exports—Imports—Futures

how to

more

wailed Hally. "What happens if I

with you;

Raw

you,:

"Well, I certainly couldn't .call
you
Sec. for long," said Hally,
giggling at his own joke.
"Oh
yes, you
could," replied

the

SUGAR

less

and

.themselves.

of

we

and

Y.

to take

fewer voters

you can

Hally. If

NEW YORK 5, N.

voters. But

more

care

STREET

WALL

99

spending;

are

every year

collecting

LAMB0RN & CO., Inc.

can't pay

we

the fewer and

who

be

now

We

more

more

are

from

That's

of Extra¬

bills.

our

mere

ordinary Complaints. Just call me

Beebe,

MUNICIPAL BONDS

month

a;

care of them.
/
are much bigger
.V'v.-V
us," assured the little ) "We have built up this great
man. '"That is
why we call you welfare state by taking care of
Mr. Big."
'J;
V/v;V'V more... people every year, until
now we
"But how did I get this way?"
have a safe majority inj
complained Hally. ? "Everyone at every election. The only trouble'

"Oh, no;

ville, N. C. October 24, 1949. Mr.
Richberg is now a member of the
law

CAROLINA

Established

than any of

Richberg

manufacturers Association,

can

bleeder

one

quarts

'•How

these big jobs?"

down, down

Mr.

for

government

payers
am

one

who needs help, which

"But

majesty, the roof is leak¬

"Who
address

no

could do for himself."

one

majesty,
the
factory
more wages." :
"Is * that my business?"
asked
Hally. "I'm only a little fellow.
Haven't you got some big men for

fright because a rising column of
hot air began: to check his fall.
*An

the

20

person

"Your

he fell; but ^soon he lost his first

Since 1932 Specialists in

here

anything

do

to

workers—so

20

"Your majesty, the farmers are
waiting.":.
"For me?" asked Hally.

indulgently. Suddenly he stubbed
toe on a large rock and fell
forward into a deep hole which
was
hidden by a clump of red
rose

CLEVELAND

Fairyland—the

is

possibly do it for him. We have
government bleeder for every

ing."

his

,

:

Midwest

you?ll be a Senator."

up

if

branch offices

pa¬

one

curiosity. Perhaps when you grow 7

Cleveland

Direct wires to our

State—and

:

compelled

body

"Where

Mobile, Ala.

bleed

Sec. explained

tiently: ;"This
Welfare

Birmingham, Ala.

,

,

"Your

people

don't

themselves?"

for

NY 1-1557

New Orleans, La. -

strange custom," cried

a

"Why

Hally.

breeches, red nylon stockings and
golden shoes, who bowed low and
said:

Exchange

Stock

York

St., New York 4, N. Y.

HAnover 2-0700

"What

dressed in' a
black
satin

man,

silk

25 Broad

blood."

was go¬

down

In front of him stood

room.

very

brown

poorhouse. Hally was -so very ac¬

Allianceware,

he

forever,
but after a while he got the im¬
pression
that
he
was
falling
upward,
just, as
anyone
else
standing on his head sees the
world upside down.
;4 > C :

ing

home knows that I'm a little fel¬

Alice took little Hally

One day
for

people
all

were

and some in another.

way

Bell Tele. LS 186

233-9

Long Distance

lived

wild about Hally"—some

Life Bldg.

KENTUCKY

how it happened,
to Hally in

happened

Fairyland, and
who

Wonderland.

than

Now I'll tell you
and

2,

:

7

f-

wonderful

Preferred

LOUISVILLE

lower.

lower and

New

so

hands want

enough, when he was only
a
small
boy
Hally
discovered
P'airyland—which was even more

Corp.

Floor, Kentucky Home

the foot¬
immortal

Sure

Common

1st

in

steps of his mother, the

Common

m

they can bleed for people with¬
out
losing
any
of
their
own

dropping

and

,

she found aft-

5%

on

Then, somehow, he found him¬
of the strange
self sitting on a soft-cushioned
country
that' throne in the center of a lofty pil¬

Since 1917

Black Star Coal

Members

he. kept

still

Yet,

few

a

into
Fairyland.
years

Specialists in

Steiner, Rouse & Co.

prom-<S>

ising to make
our
country
over

120

Bought—Sold—Quoted

to

Corporation

Stock Exchange
York Curb Exchange

Louisiana Securities

Knowing that you are all tired of business and politics, I am going to take you on a trip
Fairyland—to the National Welfare State of Mind.: This will give you a preview of what
may be the future of the United States, because we already have a national administration

New York Hanseatic

New

Alabama &

v

official conducts us on journey giving preview of our future apparent from Admin¬
istration's promises to make our country into a Fairyland. We are showed Nuthin, the great labor econ¬
omist, who tells us how to divide $100 among 10 people so that each one gets $20. We learn thai there
is no end to the problem of how to take care of everybody, because the inhabitants have discovered that
the way to solve every little problem is to create a bigger one. *
; '
*
'

and

New

.',V

^

rif
0

Former government

Department

BArclay 7-5660

Thursday, November 24, 1949

Trip to Fairyland via The Weliare Stale

Colombian

120 Broadway,

FINANCIAL" CHRONICLE

&

COMMERCIAL

THE

(2078)

the

wide

a

falling

leak

so

"Chronicle"

will

of the

give

yon

canopy' deflected

torrent,

"What

while

makes

ideas

Hally

the

galore and

pay

liberal

roof

dividends.

suddenly?"

'.

•

"The comical people are wreck¬

ing it," cried Sec. "They don't be¬
lieve

in

roofs."

*''v

"Why 'don't you call out the
police or the army to stop people
from wrecking ,my home?"., de¬ Commercial & Financial
*.
t
1 '••
manded Hally. "That's what my

■F. W.-

CRAIGIE&CO.
RICHMOND, VIRGINIA
Bell System Teletype: RH 83 & 84

r

father, Mr. G., would do if
happened in my country."

INVESTMENT

Telephone 3-9137

"This is your

SECURITIES

this

V

country," retorted

you can't stop commies
else from tearing down
they don't believe in
roofs. That's a sacred right of free

Sec., "and
or

Industrial

speech. The traveling commies
run
ground the country yelling:
'The sky is the limit! Down with

Bought—Sold—Quoted

Municipal

roofs!' That stirrf up

Memorandum

on

request

zippin & company
Chicago 4

striking.
That's another sacred right."

Incorporated

NEW YORK

Tele. RAndolph 6-4096




Tel.CG 451

don't people who
like roofs have a right to proteet
them?" asked Hally. - "Haven't I
"But,

any

CHICAGO
BOSTON

MINNEAPOLIS

PORTLAND, ME.

OMAHA

"You

PHILADELPHIA

KANSAS CITY

WATERLOO

MILWAUKEE

Sec.

why

roof

'

REctor 2-9570

: S.y

5ISI05I5I5IS15fSfSf5I51SIBISI515M51515IS33

right,"

shouted

a

:
have

"You

N. Q.

B.

OVER-THE-COUNTER
INDUSTRIAL STOCK INDEX

•

10-Year Performance of

35 Industrial Stocks
BOOKLET

ON

REQUEST

'

over my

right to keep

head?"

II

the working
against roofs.

strike

You know you can't stop

A.CALLYN«®COMPANY
208 South La Salle St.,

to

commies

,,t

-

..

f'

•*

when

Public Utility

Railroad

^

Chronicle
•

anyone

roofs

Mexican Eagle Oil

,

New York 8, N. Y.

25 Park Place

National Quotation Bureau
a

have

a

right,

but

FLINT

(Continued

on page

34)

it's

■»

|

Incorporated

46 Front Street

r

New York 4, N. Y;

Volume 170

Number 4858

THE

COMMERCIAL

INDEX
Stock

Market

Upturn—Melchoir Palyi___

Cover

___.

What's Ahead in Business?—David E.

Cover

|

Postwar Problem of World Trade—J. H. Richter__________Cover

Richberg

Some Natural Gas Aspects of the Petroleum Industry
—Winfield H. Perdun

'

*

V

but
v

S-281—George A. Sloan

—Clark Clifford

;

> ;

9

Business and the Government's Program—Clark Clifford

11

—

.

—W.

.

Create

Greater

Economic

of Federal Reserve—No Threat to Dual Banking

ers

•'

Private

V

'

•.

.

;

;

.

Enterprise

.Devaluation—A

•

*'•

.■

•

not

intend

1

(

'V

'

,

volume.

to

debate

the

I

marvels

to

which

philosophy,

Monetary Fund—H. A. Stevenson
.

Increased

Production

Prices

Lower

at

More

Desirable

High Dollar Value Output—Edwin J. Schlesinger.

—Seymour E. Harris.

v

-V-'j

What Will Compulsory Health Insurance Cost?

—Adolph

.a

^

25

—

Fred

C.

Treasury,

Smith

Act

Provides

INVESTMENT

contribution

it

of

James M. Cleary Sees Currency Cuts and ECA Making Europe

.

-

...

Self-Supporting

Now for the

L__.

Concrete

/

Evidence (Boxed)

,tion Dinner

anthracite and bi-

y
y,

.Fred Lazarus Forecasts Rise in Department Store Sales

18 f

-Cashing of Savings Bonds Exceeds Sales

19

in

j

Republic of Colombia Announces Terms of

*

As

We

See

and

It

Canadian Securities

Bargeron.l..

7

Indications of Business Activity.

.

Mutual

.

%

News About Banks and Bankers...

5

in

appeared

degree such

a

Adversely, affect

the

coal, oil,

to

energy

regard

these

sources

the

to

energy

1929

,

the

as

] Our Reporter's Report.

from

your

thinking

value placed

long-term

Our Reporter

ex¬

in

the

Since
of

use

than

the

'advance

in

industrial

Governments

1.1

12

production because of greater ef¬

Prospective Security Offerings

_l'

45-

ficiency in

__l_;

17-

Briefly,

18 ?.

1929-1948, the increase in the

19

£>f

on

*

J

Public Utility Securities

...

Railroad Securities

<

Securities Salesman's

t
-

Securities Now in

Corner.

:

Registration

44

'The State of Trade and Industry

.Tomorrow's Markets

Published

v

Twice

(Walter Whyte Says)..

1

Drapers' Gardens, London,
land, c/o Edwards & Smith.

'

The

(

COMMERCIAL

FINANCIAL

and

-

-

B.

25 Park

-

DANA

COMPANY, Publishers

9573

v

.

'

-

'•

•

Y.,

SEIBERT,

'

»

vertising issue) and
plete statistical issue
records,
gtate

corporation

and

•Other

Chicago

city

news,

Offices:
3,

Hi.

at

the

■

,

President

every
—

news

the

in

Act

United

Territories

Union,

Dominion

.•

Monday

ad¬

of

Countries,

8.

(Telephone:

Salle

State




St,,
0613);

and

per

Note-—On

the

La

Other

,

per

Monthly
$25.00'.

bank clearings,

etc.).

i25

$25.00

{com¬

market quotation

news,

with

a

We

price out of the best mar¬
was already a decade

are

the most vulnerable fuel for

ago

parable

j

If

delivered BTU basis,

on a

in

and

that

year

energy

that

use,

rate

(Foreign

Earnings
year.

Record

year;

of

the

we may

our

coal indicate

BTU.V Despite

—

supply of energy than either

oil, I believe that the past
experience of convenience of us¬
gas or

oil and

age for

gas may

effectively

support the argument that if their

supplies

adequate

are

attractive

remain

industrial

for

heating,

and prices
and

home

their

energy

gain relative to coal may be ex¬
pected

to

continue.

for

this

Three

made

New

York

reasonably be expected to

(Continued

on page

Your financial

43)

of 4.

advertising dollar

ojf

because The Times reaches

banking executives, corporation
officials,

professional and insti¬

tutional

security buyers—and

individual investors—in

Spencer Trask & Co.

"
'

Members

New

York Stock Exchange

Members

New

than
over

11,000

more

communities all

the U.. S.

York Curb Exchange

extra,)

Monthly,

25

Broad Street, New

York 4

50 Congress
'

extra.)

fluctuations

funds,

Joes the "work

Proved reserves of natural

(1)

gas can

PREFERRED STOCKS

HAnover

-

Street, Boston 8

Teletype—NY

Neto jfork SiauA

'

Hubbard

2-4300

in

2-8200

1-5
,.

of

in

ONE DOLLAR

basic

expectation are:

in

exchange, remittances for for¬
eign subscriptions and advertisements must
be

the

present reserves of
a far greater poten¬

year.

Monthly,

postage

Bank, Ltd.

Glyn, Mills & Co.

pro¬

High Grade Public Utility and Industrial

'

postage

Record

(Foreign

account

—

Williams Deacon's

have ap^ energy re¬
of
between
39,000-

quirement
41,000 trillion
fact

industrial

between

v

year.

Publications

Quotation

year.

Associated Banks:

project to 1P30 the rela¬
tionships which have in the past
we

existed

ASSETS

£155,175,898

...

of

per

TOTAL

by either oil or gas
when prices are in any way com¬

interested in offerings

S.

per

64 New Bond Street, W. 1

replacement

New

U.

$38.00
per

Charing Cross, S. W. 1

Burlington Gardens, W. 1

doing his

invested in The New York Times

"T'A

Members'

$35.d0

$42.00

,

49

:

does the work of four when it's

March

-

Bishopsgate, E. C. 2

8 West Smithfield, E. C. 1

I

-y ,

at

of

States,

and

Canada,

Other

,

and

of all forms of energy

B. Dana

office

post

under

Subscriptions
Possessions,

•

(general

use

.I. *A talk by Mr. Perdun at edu¬
cational meeting of the Associa¬
tion of Customers' Brokers, NewYork City, Nov. 22, 1949.

.

Every Thursday

compared

3

that

matter Febru¬

Subscription Rates

Bank
•

20-yearr.period

slightly less than

was

year,

per

1879.

Thursday, November 24, 1949

i

second-class

Pan-American

DANA

.

OFFICE—-Edinburgh

LONDON OFFICES:

100.0%

you

'

t

WILLIAM D. RIGGS, Business Manager
#

8,

as

1942,

N.

Place, New York 8, N. Y.

HERBERT D. SEIBERT, Editor & Publisher
WILLIAM

25,

ary

York,

REctor 2-9570 to

r

■*

C., -.Eng¬

.

Reg. U. S. Patent Office

WILLIAM

E.

Copyright 1049 by William
•V
Company

CHRONICLE

Reentered

-

38/

HEAD

Branches throughout Scotland

kets when it

reasons

48

—.

Weekly

the

utilization.

5

Washington and You........

-

e n e r g y

for

energy

2%

:

Incorporated by Royal Charter 1727

has increased
during the above
decade, including coal, which Mr.

duction
reserves.

energy has been at a slower rate

46

...

Royal Bank of Scotland

•

gas,

min¬

potential

consumption.

advance

upon

best to

extremely

on

usage

impress

natural

or

investment

term

the

me

John L. Lewis has been

I caution you, however,

eliminate

to

as

| Let

overall,-de-

broadly describe

we

-

our

J A high degree of correlation

y

46.6%

100.0%

!'• But, to shorten

and

12

:

51.0%

J

Coal

Mature of the frontiers of the sci¬

tial

Observations—A. Wilfred May

SAVINGS

BONDS

4.0

limitless

*

:

All

S.

14.3

the

ists between industrial production

10

42.4

we

some

U.

4.2%

44.9

3.6

from

holdings of mineral fuel

,

40

1

Funds

Bituminous

11.6

stems

today

21

From Washington Ahead of the News—Carlisle

'

1948

6.1%

Natural Gas____

with

8

Einzig—"British Fears of Dollar Devaluation"

-

■r

the

Water Power

long

8 <

...

Exchange

•.

1939y

viction

new

14

Stock

BUY

35.1

hot

27

-

;

Dealer-Broker—Investment Recommendations

.

at

•

\

Anthracite

33.8

eral fuels.

11

Louis

.,\'J

.

in these two periods

Petroleum

fnands for

1 Coming Events in the Investment Field

methods

;

should next
breakdown

future ; date,, and
perhaps more
than from anything else this con-'

(Svhich
.Cover

1,

these

-Rse

we

percentage

a

follows:

as

rea¬

a

at

en¬

these achievements will not have

46-'r.

Stocks

Business Man's Bookshelf..

I have

use.

energy consumption
of water power is

form

of energy use

these meth¬

as

developed, they will
change the trends oi

41

Bond Exch. Offer.

(Editorial)

Insurance

When and

are

the

look

nuclear

or

view to, say,
the; next-decade, let us agree that

Regular Features
Bank

radiation

•

know that the percent¬

we

relatively small,

eco¬

power

21'

-Peru Abandons Fixed Rate for Its Currency_•

-

solar

using

to¬

coal 11%, bituminous
petroleum 66%, water
77%, and natural gas 97%.

of total

age

seriously af¬

for

our

50%,

Since

the attainment of

1948

requirements increased

entific mind.

20

Devaluation and Currency Convertibility Discussed by
NAM..

.

Members St.

1939 and

Anthracite

our

power

will

17

Alfred P. Sloan Notes Expanding Duties of Management

disastrous,

sonably strong conviction that

Edwin G. Nourse to Speak at N. Y. Security Dealers AsSocia- f ;
f

Between

economic

types of energy

Marcus Nadler Sees Slight Change in Banking Situation.16

st.louisi.mo,

quirement exceeded the combined

coal

tirely

10

.

STREET

»

natural gas to our total
energy re¬

you

can be

ods

6>

; IBA Reveals Grass Roots Education Program

SECURITIES

OLIVE

The percentage increases by
the various forms of power were:

fission.

5

<

r._

509

.

60%.

from

4

;v

our
the combined
petroleum
and

history,

in

nomic methods

for

Financing

Private

Not

Housing

Contends

Stix & Co.

1 ■

tal energy

fected by

Repr.

.

i.

■

j In 1948, for the first time in

industrial

mineral fuels will be

;

Schmidt

YORK

Telephone: WHitehall 4-6551

Energy Use

.♦;

ther, I do not now assume thaj
within the next decade the use of

"

it.

in industrial

per year

i.

•

Petroleum and Natural Gas

total energy usage will grow. Fur¬

Monetary Management Abroad and at Home—M. S. Szymczak 23

for

WALL STREET, NEW

99
i»

expediency

22

cash

Securities Dept.

States

activity
with the uncertainty that mistaken
policies brought about by political

20

good

pay

Obsolete

dominance

How European Adjustments and U. S. Aid Affect Our Economy

fell

i

future, I feel that subject to the
risk ' of ' increasing * government

Than

______—

still

stock

you? Cheer up! We'll

on

bring

contribution
certainly in the wrong'busi- contripution of
ot
minous
ness.
Hence, in looking at the tuminous coal.
coal,

19

"infallible"

—^——:

are

Britain's Devaluation—Proof of Incompetence of International

that

down

I

|

has given birth. If any of you do
not believe in that

E. Meyers._ 18

^

•

energy requirements of the United

future energy us¬
think each of us

our

production

17

Potential Boomerang!—Simpson

"•

<

believer in the American sys¬
of free enterprise
and the

a

tem

-v

■

-.

the Run!—Bruce Barton

on

is.

15

\

IDOL
So

production.

do

age

„

\

...

i

-

'■

*

question of

14

System—Marriner S. Eccles

.

-

gain of 3%

Stability

Randolph Burgess

Added Pow

..

Can

THE FALLEN
.

involves basic assumptions by the forecaster as between the
pessimis¬
tic view that this
country has become a mature economy and the
brighter view that technological developments can continue to

*

Reserve

"i

'■

..Forecasting the future

I

Federal

1

'

reserves
may reach 300
Notes expanding market for natural gas. >

'T

past.

13

,

*:

■

and estimates total

reserves

about expansion comparable with*;1
the
remarkable
progress
of the

11

Wastefulness in Government Finance—T. Coleman Andrews-.

*

9

gas

} /i trillion cubic: feet.
'

.

;

•

,

portion of total gas needs/
discourages sale of this gas in interLists companies who are
probable holders of

commerce.

largest

15.520,000 Earn Less Than $2,000—Charles G. Brophy

p

,

National Gas Act

warns

state

The Present Status of Utility Regulation—Harry Miller__il_r. 8 ''

Our Liberty and

"

use of petroleum and
Mr. Ferdun predicts greater progress'in future. Sees

6

Cox__l^;7-

'

,

Albany

Chicago

Glens Falls

-

Schenectady

-

Worcester

3

TtnsTfin
AND COMPANY

petroleum industry supplying increasing

;

4

Current Problems of Job Creation—C. R.

B. S.

Co., Members New York Stock Exch.
' •

natural gas,

Preparation and Method in Salesmanship—Kelso Sutton___^.__

\

(2079)

After calling attention to rapid growth of

;
3

&

•

t

2

What's Ahead for the American Economy?—Cloud Wampler__

>

CHRONICLE

By WINFIELD H. PERDUN*

;

Partner, Laurence M. Marks
}

A Trip to Fairyland via the Welfare State—Donald R.

FINANCIAL

Some Natural Gas Aspects
0! Petroleum

Articles and News
The

&

"All

the News That's Fit to Print"

THE

4 "(2080)

FINANCIAL

COMMERCIAL; &

Thursday, November 24, 1949

CHRONICLE
TO

LETTER

THE

EDITOR:

Preparation and Method in Salesmanship
KELSO SUTTON*

By

Consultant in Salesmanship

■

a

Treasury/ Not Private Financing

methods of salesmanship, Mr. Sutton describes
lectures. Urges those becoming salesmen to
jobs. Contends, though "there is not much
be m^de a successful occupation.

of training and preparatiDn in

After stressing importance

of salesmen and then reviews contents of previous
forget about other careers and adapt themselves to their

types

There is

who

little story I

a

in business school

first year

selling," it

in

gravy

.

played

we,

he

me

asked

so

to

play another

with

game

him sometime,

c

at ihe

school, this

became friendly and

home

his

to

I

and

played ♦squash
pernaps
two
or three times

for

I was
dinner

i/..

sionally.

We
invited

week.

a

.

occa¬

'v

• ■ - •

a day in
of money.
Christmas time, he would go
Florida and during the sum¬

He had

At
to

worked

never

He had plenty

his life.

vacations he would be

mer

examples ol

failure

of

felt the

I

way,

travel¬

ing, but was never engaged in
working during those vacations.

oe

way

a

when

I

saw

those respons¬
ible

in it.

time.

legislation re¬
lating to socalled
public

ten

1

e'n t

the United States

and

•1937. The material

place, the husband was ad¬
'
that
very .' lew
cesarian
operations were successful at. that

company

in

his

However, both the husbano
the wife
still' wanted the

-

and

the

been

and

Finally, I heard that my friend
asked another acquaintance
where he could get a job and he
did

every

activity in

that

for

salesman

a

large

company.

less quali¬

it would be, or anyone

fied

to

make

out into business and
start in the terrifically

go
a

bad years of 1931 and
do

1932,

or

seems to me that any
should have done some¬
thing to prepare their men to go
out and meet the world and sell,
and yet that company didn't do it.

just

posed to contact.

him on
and put him out on the road. One
evening, I picked up the evening
paper and found his picture on
the front page.
He had gone out
this company took

But

the

floor window

tenth

hotel in Albany, and
end

of him.

of

a

that was the
I

'

He had everything to

..

live for, a

everything

about what
you sen, such as investments, mu¬
tual funds, commodities, and the
knowledge of how to go out and
sell it, what we have been talking,
have

good-looking boy, well-educated,
and yet he
ended it all. That
hit me pret'v hard.
At that time,
I was working on a newspaper,
selling space, and hav:ng quite a
struggle, as any salesman did in
day.
No o^e taught me
anything about selling and no one
had
taurtht
rrv
friend a thing

cerned, and that end of business

those

,

selling either.
through the sum¬
mers and had been beaten around
a
lot and opyld take that tough
business of learning to sell during
about

,

years,

lived

a more

but my friend had
r>**">terted life and he

just couldn't take it.
I thought a brut that occurrence
a
lot and the f°ct gradually be¬
came

has

the part of
just

That

salesman.

example of

on

a

man

the

failing in his

taken

of

has benefitted from such

opment.
Most

given by Mr. button, tenth in a
on ..Investment
Salesman¬

a

of

you

Navy—you
was

things.

men

the

the

know
a
"Gl"

way

devel¬

in the
the
Army
of doing
or

They

done.

just

ganizations
work
a

have

many

ever

done

an^

up

Very

And

some

few

them'
reason why
of

yet, there is no
they should not do that.

series

is all the

ship sponsored bv the "investment
Association of New vork, New

There

they should.

York City, Nov. 17, 1949.




I

was

reason

am

my
+he

own
man

going
about

housing proj¬

that

projects

fit

ho

low-rent

.the entry

.

and

is from the states that

of eminent domain stem. Power to

One of

do your

The

construction of the housing
ects out

proj¬

taxes. This is

of Federal

:

type of
feet

are

aathority
eminent

becomes

debt

¬

still

A

the

structed under the Housing Act

in the world why

reading Somerset Maugh¬

am's latest book the other night—

are

a

waiting,

They

^consist

thinking,

rather.

or

There

lot of wishful waiters in the

They sit around and
they wait fpr someone to come in
^ales

any

fieM.

buv something from them.

(Continued

part of the Fed¬
shown

will not be

the Treasury's public

debt statement. It will be a hidden

concealment

Its

is

accom¬

contri¬

against the dummies—local hous¬
ing authorities — of the political

.

.

.

will

the

annual

continue

to

service

bonds

of the local housing agency

regardless of the fail¬
to

or

operate

the

project

the

controlling

regime
issued

govern¬

actually
against the taxpaying pub¬

whereas they

ment,

are

lic. Nor is this fact altered in the

the

least whether the ultimate amount

not

the

bondholder

will

be

party to straighten out the errant

ol debt be

local

activi^s

wishful

on

a

plished by the devious device of
nominally issuing the bonds

vided in the Housing Act of 1949,

ers

housing agency under pow¬

reserved in the contract for

nancial
The

on page

27)

f

fi¬

assistance."

or

$7

$12,320,000,000,

billion

as pro¬

alleged

as

by

the

proponents of the housing meas¬

plain fact is that the Hous¬

-J

ure.

'

; w.

-

; - U

■-

1i :

Act of 1949 provides annual
appropriations, euphemistical¬

The figure of $7 billion is al¬
legedly predicated on the experi¬

contributions, of $303
a 40-year period or a
total of $12,320,000,000 which is
ample for servicing the housing

ence

ing
ly

called

million

of

payment in full

such

but

properly. In such event PHA and

Another kind of salesman is the

wishful

debt.

assures

construct

exactly that

the ground.

whose

,

more

$6,900,000,000 capital cost of
housing projects to be con¬
of

the

as

ure

•

irostiv

.

3949

course,

the

in the investment
They are snobs. Their

fellow

such

right of

states'

the

eral

butions

person

with you.

of

domain.

shocking fact pre¬
sents itself when it is realized that

is, of

coming.

you the irrnression that thov
condescending, just to talk

give

projects was noth¬

ing less than usurpation by

by the Federal Govrnment should
such rental revenues not be forth¬

to talk for just a
certain types
of
in

on

states

owned housing

ingly allow for such substitution
of funds when the contract with

He conveys the idea
you a favor in

not

used to fi¬

means

into making it
possible for the Federal political
authority to acquire land upon
which to construct Federally
the

what bondholder would not will

something.

business.

devious

nagle

possible that
the bond may provide that.the an¬
nual contribution may be reduced
in
any
year
by the amount of
rental revenues actually on hand
and applicable to debt service, but

I have observed

have observed

We

of condemnation."

talk:

"It

note

(please

precisely what Mr. Laemmel later
on
says in the gist of his sales
.

necessary

the word
'weapon') in public housing pro¬
cedure, and site
acquisition in
many
cases
would
have
been
quite
impossible
without
this
power

intangible, tionally all of the capital cost of

job that this

absolutely

an

weapon

Laemmel's disser¬

of Mr.

burden

private property has

condemn

proved

tation, the Act unequivocally pro¬
vides for payment of all of the
interest on the 1 bonds and addi¬

study and

of the states into
essential since it
th^ powers

this program was

in g

capital

private

by

us

authority as

by such

Mr. Laemmel states that:

key contentions made by the
proponents of the Act was that

his selling work.
He is "putting
himself out" to contact you and
sell you

de

are

postal employees and post offices.

the

doing

is

he

housing authorities

owned

and

the financing

not "Government" money.

career.
One of them is
whom I call Condescend¬

ing Conrad.

or¬

kind ^
standard method of selling ther*
setting

on

can

are

how

wonder

so-called

of

of

salesmen that

had a method, .£
special way
of 'doing
things
Sometimes we didn't agree that it
was the right way, but at least it
was
a way of
getting the work
I

Local

facto creatures of the Federal po¬
litical
authority.
The functions

funds

the

as

of 1949 provides for

doing the job.
If a
do that for himself, or

way

minute

were

Army
in the

of

source

public. Evidently the intended in¬
is that the Housing Act

Types of Salesmen

;

service—either
there

ized

I

con¬

'

offerings.
*Stenogranhif r^nort of lecture

place, ♦ as far as
operation are

paiity.

imply that the na¬

ference

try to reduce all these intagible
things that we have been talking
about to some kind of a standard¬

certain standardization

a

methods

apparent that that w&s the

epitome of failure
a

that in the

an
a

generally sup¬

the citizens of a munci-

to

the PHA

opportunity to talk
salesmanship.
I fee1
manufacturing end of

on

business

.

I had worked

those

strictly

the

it for
him, his work will be just so much
more pleasant and effective.

welcomed this

I

plied.

supplied them directly through
sale of its obligations to the

ury

get his management to do

certainlv

Therefore,

by

program

provided in the Housing which they perform and the hous¬
Act
of
1949
is
different
than; ing which they administer respec¬
would be the ease if the Treas¬ tively are so completely controlled

my

man

about here.

nice familv. money; he was a very

the

of

ects

humble purpose to strive
for that development, even though
it is a most difficult problem, to
It's

Tbev fail to differentiate between

knowing

of

kind

ethereal

just for its own
very
difficult thing

a

this

under

for constructing the

development of standardized pro¬
cedures has
never
taken place.

selling,

is

sake,

such

is

Selling

Neglected

yet, management does not
appreciate the fact that the func¬
of

joys the services

ture

method which has

a

experience can help you
WrrV *nore efficiently,

As

tion

that

nroven

been derived from long

Function of Salesmanship

to

will

that

selling

for

authority. Each is a "body corpo¬
rate
and
politic," has its own

personality.
My point here is that in the such would be the case.
The truth is, however, that, in
Army, iri manufacturing, in sur¬
gery,
in;; singing, in golf, .and any event as respects the saleabileverywhere else,> experience has ity of bonds, which is the sole

company

selling out on the road to the

type of retail people he was sup¬

of

It

merely dummies of the politi¬
controlling the Fed¬
eral Government. Their every act
is directed and controlled by this
cal authority

empt from local taxation but en¬

This would

basis for setting up
a standardized pro¬

a

and

are.

private capital."

into your own

sion times.

Now, if there was anyone in the
world who knew less about selling
than this fellow, I don't know who

as

au¬

wholly without capi¬
soul of their own. They

council, solicitor and mayor, is ex¬

housing

kind of

cedure

bad back during the depres¬

was

it

some

housing

Local

Act.
are

public. Such pol¬

your

use

storekeepers who
tough to deal with,
tough when business

job as a

Smith

C.

1937

icy will result in the furnishing of

selling work. You have
a
basis to go on, with these lec¬
tures.
You know, they are avail¬
able in the "Commercial and Fi¬
nancial Chronicle," and I would
do

Housing Act of
provisions re¬

almost all of the cost of low-rent

set up some kind of a
method of your own tc

you

standard

pretty

especially

tal
Frederick

the investing

to

advise, with the greatest sincerity,

retail

on

a

land

eventually

ing
were

this

at

by the Federal Administration of
a
policy which will promote the
sale of local housing agency bonds

feeling rather nervous

had

thorities

of ./ the
invest ment

sort of biting his lip,

was

the

in¬

time

advise
that
you
don't simply
a nice office somewhere to make
allow these lectures to slip by.
but his living as a junior executive.
Look back over them once in i
we didn't know why and thought
That adjustment was hard for
it might be simply because he everyone, but it was particularly while, so that you may really de¬
was
tired /, from
working hard hard for a man who had not rive some benefit from them.
Take a pencil and take down some
there at the business school, which worked before, a man who had
of the meat of these lectures and
was certainly a terrific grind.
taken the only job available, call¬
that he was

in¬

terest

stand*
ardized method created to get the
vworK
done efficiently. T would

terrific change in business

a

practically

In

There had

been

have

par¬

cites

Standard Method

a

by the same hand that wrote

lating to so-called low*reht. hous¬
ing in the Housing Act of 1949 are
substantially the same as those In

e a r-

the

these

practically all writ¬

were

"What

life there is some kind of a

customary

before the crash.

would
move

1

banking fraternity is the adoption
Create

accept, instead of step¬

a higher rank,
perhaps
investment
field, which

the

c

creating

laws

State

bodies

He says:

to be noted

The first thing

that

is

ticularly

today.

ping in at
in

r

-

ance.

are

low-selling1 level he had been

forced to

w

the

slum

case;

perfected and cesarian operation?
successful most of the time

himself, afraid to go out and meet
world, and also scared by the
loss of pride in taking a job at

the

o

for

housing

they had not yet
developed a method of performing
that operation that was successful.
Since that date, a method has been
that

In

room

during my visit to the businessschool, very nervous and near a
breakdown, lacking confidence in

the

fully

to

took

n0

him

able

be

to

comprehend this political housing
scheme and the evils that inhere

recalled the condition he had been
in

authorities

d by

p u r s u e

lions to do a very

in

local housing

of so-called

nature

to

seems

-ollow the line

quaiiijca_.
operation to take place.
It was
tough job, that
performed and although the wife
they had killed him. I
died, the baby lived.
;
w^th

out

gent

misleading.

He

back

vised

graduated in

were

about

way

'*■

'7

Vice-President, Chemical Bank and Trust
Company, New York, in a statement appearing in the "Commercial
& Financial Chronicle," Oct. 27, 1949, explaining "Guaranteed Local
Housing Bonds," makes assertions which are, to say the least, apt to
William G. Laemmel,

<

when he was a med¬
Before the operation

ical student.

1931, a and in the conditions into which
very bad year.
He couldn't find those college men entered during
a job.
He stayed on, doing some those years.
There was a great
other work at the business school adjustment called for; for a man
for a while and sometime during of very good family to come out
that year a mutual friend and t of college and be forced into a
paid him a visit. It was evident low position instead of entering
We

ideas

h's

,

occurred

around 1900,

with hundreds of othei
people;, failure not always exem¬
plified by such a tragic incident,
but occurring nevertheless.
a

of

which

tion

ever>

-flhat hired that young man and

4.

business

chap

private capital financing.
Editor, Commercial and Financial Chronicle:
'

writing—and .he .m^kes mention
in that book of a cesarian opera¬

day,

In

that lirst year

,

kind

same

collection

i

tragic

during

All

Sutton

But there are other

the

I did.

and

very

example.

of

game

squash,

selling—a

of

career

a

very-even

Ohio District takes exception to statement of William G. Laemmel
bonds issued under act mean program of

that local housing agency

r

would like to tell you, to begin today's session. During my
I played squash a lot and through that activity met a student
in college, quite a big shot as an undergraduate, tit just so hap¬

rather well-known
pened that <$>

was

Kelso

can

Congressman Fred C. Smith, Republican Representative - from 8th

j

over

bonds. Their

quality from the in¬
inheres en¬
tirely in these appropriations. In
the last analysis Mr. Laemn 11 is
simply promoting the sale of
Treasury issues.
(

vestors'

One

standpoint

must

understand

the

true

,

which has been had with the

low-rent
States
Housing Act of 1937.
I use the
word allegedly advisedly because
not.all of the costs of the housing

financing
housing

ot'

so-called

<

under the United

projects to be built under this Act
are
taken into consideration in

arriving at the $7
One

of

these

is

(Continued

billion figure.

the

interest

on page

41)

cost

•Volume 170

Number 4858-

THE

,

COMMERCIAL

&

FINANCIAL

CHRONICLE

(2081)

5

Sees

Steel

The

Production

!- Electric

Currency Cuts
And ECA Making
;
Europe Self-Supporting

:,(}< '•

Output

Carloadings
Retail

State of Trade

Trade

-'

-v

Commodity Price Index
Food Price Index
Auto

and

Industry

Production

•

Speaking

1

Forum

Business Failures

on

advance the past week with
the

steel

industry.

under the level for

country-wide basis made

a

the

most

a

the

decision
of
Great
Britah.
.to .devalue
the
pound
"as
dramatic
evidence
of - earnest-

significant rise occurring in

output, however, continued
the corresponding 1948 week.

hold

to

,

*

the steel strike

news

came

new

settlements

in

ne£s->of

-•

-

.

of the

Steel Corp. with the United

providing company-paid minimum
month, including Federal Social Security benefits
for workers at age G5 with 25 years' service.
It also provides for a
levy of five cents an hour for social insurance, with equal contribu¬

;7

not

.

fairly normal position.

.

,

i

buiu

James M.

Cleary

United

'■

added.

annual
:

r

Mr.

>

"America

market in

is

sudden

We

national

an

product of

approximately $250 billion in 1948.
In order for

In

the coal

dispute latest developments reported on Monday of
the present wfeek were to the effect that the trustees of the United
Mine
take

Workers'
up

miilti-million dollar welfare

fund

expected to

were

that day the question of whether payments should

on

tinue to be made from the fund in the absence of

con¬

contract with the

a

bituminous coal mine operators. : Such

bring about

a step, it was reported, could
break in the soft coal contract deadlock.
Should the

events

of

course

a

fail

to

produce this

result, the

Taft-Hartley

law

be invoked against John L. Lewis and the United Mine Workers
if the miners quit the pits again on Nov. 30.
President Truman now

counts,
worth

he will not hesitate to

1%

Meanwhile, states "Steel" magazine in its issue of Nov/: 21, evi¬
dence is piling up to show the short and long-term results of the
Lewis dictatorship.
Aside from the hardships inflicted upon the
miners themselves, the futile strike has caused a serious deficit in
coal stocks in

the northwestern

normally served by lake ship¬
ping.
The pressure for coal at upper lake ports may cause vessel
operators to carry coal up the lakes and return light—an unusual
uneconomical

and

In any event, a considerable tonnage
northwest by rail, at higher cost to consumers.

A

longer-term

result of Lewis czarism,

magazine adds, is
steady shift from coal to oil and gas.
In 1939, coal
supplied 51% of the energy in the nation and oil, gas and water
power supplied
the remaining 49%.
In 1948, coal accounted for
46.6% and oil, gas and water power 53.4%.

found

in

the

...

In wholesale markets the past week
total volume of orders fractionally.

commitments

and

for

7.7."

;

Spring and holiday lines constituted

part of the ordering.

a

large

Wholesale dollar volume for food continued steady in the week.

Although unit sales exceeded last year's level these
offset by generally lower prices.
The wholesale ordering of textiles continued

were

frequently

be

to increase in the

Many mills increased operations to fill large orders for sheet¬
Bookings were also large for many types of gray cloths; sateens,
army ducks and drills were frequently ordered.
Wholesale orders
for house-furnishings remained near last week's high level.
ings.

78.2% OF CAPACITY

With inventories unbalanced and short in many

items

steel

according to the" current issue of "The Iron Age," national
metalworking weekly, are revising their first-quarter production
of steel

they can

Most of the facets of the

1948 steel

shortage

he

le

are

scattered

here this week:

price increases

,

this trade authority states.

7 Though the steel industry expects to operate at 78.5% of capacity
this week, the effects of the strike are still
being felt in production
"and quality.
While some sheets have been rolled from raw steel in
process when the strike hit, most mills are now experiencing delays
on sheet rolling because of the
quality of the iron that has been made
since they resumed production.
This means there will be shipping

particularly

in

the

high

quality

steels

for

the

lion

margin at least.

ing

about

the

sale

Dillion worth of

"I

have

pound

it

been

was

think

United

asked

only

failure

to

sooner.

lems.

What

was

needed,

required

for

the

In

months

was

she

had

that

and

frequently

am

the

program's alleged anti-Communist effectiveness.

is

compelled to point out that

exports

asked

privileged throughout the world, and also specifically for underwrit¬
ing the industrialization of underdeveloped areas throughout the
world, have been broached, in speech and in writings, not only by
Henry Wallace, but by Earl Browder himself.
The Buying-Off-Communism Motive

The certain

inability of Point Tourism's promises to the world's
underdog to compete with those made by Mr. Stalin in areas outside
of our own hemisphere, has been clearly pointed out in a recent
article, "Point Four in Asia," in the London "Economist."

the contributor to Point Four schemes would be
thinking that, even where the spending of his money

"Above all,

mistaken in

is

a

and

whole.

it

did

our

on

Please

pro¬

remem¬

but what

before,

will

happen is that we will have a
larger
amount
of
counterpart
funds in the countries where there

successfully administered, it would serve as an immediate
to
communism," concludes the "Economist's" corre¬

"Paradoxically,: any change for the better in the
miserable circumstances seems to wake him out
of his fantastic lethargy only to render him receptive to com¬
munist whisperings that he ought to be getting more."
spondent.

been devaluation and, there¬
fore, the opportunity to carry on

larger

program

recovery

in those countries.
"Now

that

V:

Also

with

Communist threat,

countries outside the scope of the

Ihe-Point IV technique is

case-of foreigners'

a

political

or

ment.

77
own

On

ideological nature,
";v :77

the other hand, private

risk,

can

01

of losing its guaranty commit¬

77:77."'7

•,77

1

investors called

on

to lend at their

quietly but most decisively just refuse to supply their>
(Continued

on page

26)

Faith in the Future
This

*

•

firm, founded in 1886 and now in the third

generation, evidences its faith in the future
Investment Business
the
SEir

following

of the

by the addition to its staff of

in the offices indicated.

men

It 4LTIMOM&

YORK
'

Mark 11. Ilrotvn*

William G. Brooks*

7

Harris J. Martin *

7

PORTLAND,

Robert E. Buchsbaum*

nr.

Laurence

Staples f

LEW ISTOK,

ME.

(It SCt NN AT!

M. H. Dote t

E. I. Beyersdorferf

A. II. Doiv t

J. O. Sikcsf 7

the

broken, I think

has

jam

we

will

\

been

other
measures
come
into play within
the next few months, all of which
see

deep
drawing.
However, mcst of this steel is perfectly suited for other
products where the chemistry requirements are not so delicate.
Even though all integrated steel mills are back in production this

of trade in Eurooe.

week for the first time since the strike

/> 1YTO\

.

'

•

C. D. Etzlerf

PUIt. tUELPIII i

LBXINGTON

E. J. Grisivald t

;

which Great Britain has taken a"d

hard to get and will

months.

"The

cold-rolled

Iron

sheets

probably remain

Age" asserts.
are

worse.

ended, most steel products are
so for the next three or four:

Hot-rolled

Stainless

and

sheets

tough,

but

demand

are

are

aluminum

strong.
Certain cold-drawn bar sizes are almost impossible to find
and cold-drawn producers are promising four to eigfyt weeks' de¬
livery.1
7; ■' *
.'v 7.
•••
77:*
•*
The

,7

galvanized sheet suooly picture is the gloomiest of the whole
*-

(Continued




on page

29)

-

7-

:

will

help b*ing

"In

my

expansion

about

followed

course

same

gives added promise that h.y June
30, 1952, when Marshall Plan aid

ends, provided always that we do
our

share,

Europe

will

self-supporting basis."

rv

A. J.

Krabilt*

(*) Tramcr

measure

other countries

the

Frank Kales, Jr.f
(t) Ki^islaml l{<-f>rwitHiliv<-

opinion,; the

1he fact that nine

have

1

Asiatic peasant's

has

even

:

antidote

i

ber of dollars to buy what Europe

an

flag in these discussions,

matter of fact if anything

'

whal

a commodity pro¬
It takes just the same num¬

as

a

quite the opposite of anti-Communist ends would be served. Demands
in general terms for raising the! standards of living of the under¬

ol

ber that ECA is

needs

as

,

effect devaluation is going to have

gram.

,

place,

that

whal

was

exchange
becomes
primary importance.
7

as

prospective benefici-

the

of

But today the problem

bution,

our

scramble

aries to vote yea!

second

indicate

is not production but distribution
And when the problem is distri¬

"I

for

of

pointJ where

done.

was

this

over
<

enough food and industrial prod¬
ucts to carry on.
That was whal
was

1949 and budgeting of $676,000"

needed then

18

production, and our ef¬
forts were mainly directed toward
helping Europe get her production
a

millions to the UN's actual expenditure

$283,000 in

likely to do more harm than good. - In the
breaking of a formal agreement or more indirect*
action against our investors' rights, our government's policy will face
the Hobson's choice of either undertaking distasteful "interference";

action

have

not

to

but

I

been recently
devalue was

in our

have been correct in

we

the

This writer is loathe to wave the Red

the

devaluation;

would

May

•

,

proposed

States.

why

to confirm two

suggested

in my opinion,
solved our prob¬

into

came

ago,

.

7/

$2*&

real block. When the Marshall

any

.

would

talk¬

only

of

are

not devalued

has

that* the

We

seems

Point IV

'
7
the 'Russians' unhesitating endorsement
Politburo, no tyros in pro- or anti-Com¬
munist strategy
and who have so incessantly poured out their
condemnation of Marshall Aid, do not take seriously our faith in the
V

$15 bil¬

a

friends

to

1950), then small wonder indeed should there be
Wilfred

a.

1950.

year

to

of

foreigners' concept of USA-UN
as expectation of continued
largesse (in the present proportion of tens

of U. S.
of

additional Euro¬

in the

goods

pean

of

any

asked to estimate

are

States

would allow himself

gram

This time, however, there is a note of
caution.
Buyers are going slowly in ordering material ahead.
Con¬
version steel is being rolled for the automobile
industry and some
appliance makers are looking for it. The oil and gas industry—a big
conversion steel buyer last year—has turned thumbs down on it—at

delays,

if

Yet

national product in the

gross

United

on

by smaller steel companies.

least for the present,

States.

these critics

reason¬

ably expect to get during the first three months of 1950.
The gray market, the conversion deal and

efficient, they will
dangerous competitors of

United

the

uses,

schedules downward to match the amount

be achieved.

can

..

some

dollar

more

more

up

week.

STEEL OUTPUT RECOVERS SHARPLY TO

lower

new

increased

,

-

through extra

and

up about
that if European nations

the fact

Plan

buyers of apparel increased
An interest in specialties

na¬

"People get all worked

the

V

American

and

efforts

prices, this

the

«k

current

income

intensive

areas

operation.

of coal will have to go

of the

tional

constrained

feels

"technical assistance"

goods

to attract only an additional

rope

become

the law's injunction features.

use

of

must be sold in
the United States. It is
up to Eu¬

may

says

Europe to balance ac¬
additional $2% billion

an

General

;

,

note

sour

objections

depicting

the

had

the

column of last week.-If

11

richest

the

-of

impotent

■-

commentator

-and our-other UN

s

States,'
Clear,

the

the world.

gross

in

chronically

.

suggesting that this
exhibition of conformity by the Soviets

^introduce

sell their prod¬
ucts

the

this

But

ant

:

for

Assembly.

foi

measures

some

>

life

imaginative

Some producers are expected to be
products by year-end.
Cancellations
of duplicated tonnage will ease the mill
burden, while slower current
buying prompts the view mid-first-quarter will find the market in
demand for

; East-West relations, and also as a new lease of

necessity

.

ior

but- overall.'

inventory requirements.

current with

*

ropear

the

scarcity will
not
be
comparable - with that of
1948 * and
early 1949.
Importance * ot
ingot conversion deals is overemphasized in appraisals of the supply
outlook.
Except for sheets, strip, certain wire products, and pipe,
major product supply holds promise of quickly catching up with
swollen

u

countries

analysis of the current steel situation, "Steel," a national
metal-working magazine, states that, steel shortages threaten the
five-.months,

•

al

ahead

E

an

to

unique display of harmony last week, the United Nations
unanimously and without arty abstentions approved a program for
economic
development in conjunction with President
Truman's Point IV proposals.
This assent of the Soviet Union and
7;
Iter satellites has been hailed, with some surprise,
as
a
welcome-omen'of change for the better in
worldwide

...

jv

,

four

Point IV

on

the President's proposals

a

it

cute

on

for promoting American private investment abroad)
In

"immediate

The steel union disclosed that 45,950 of its members, employed
by 29 companies, were still on strike at'the close of the week.

next

(This is the second of two articles

Europe';
pioblcms.

v

In

a

ior

'

•

u I

de¬

valuation

a

tions of-2% cents each from the company and the employee.

b

warned

Steelworkers, CIO, following the pattern

of the Bethlehem Steel agreement,

pensions of $100

pur-

e"

p;o s

the part of the Crucible Steel Corp. and the Armco

on

The Russians Vote YEA!

Nov.

moderate

Over-all

\'-v" At tlie close of the week

By A. WILFRED MAY

Trade

Manufac¬

•

Association in Chicago on
16, J. . M. Cleary, 01 the
advertising firm of Roche, Wil¬
liams
&; Cleary, - Inc.;
praised

J

Industrial production

World

Illinois

tory'

%
7

the

at
the

of

be
„

on

a

W. E. MUTTON & CO.
•,

*

ESTABLISHED im

Members New York Stock Exchange

14 WALL

STREET, NEW YORK 5, N. Y.

>6

COMMERCIAL

•THE

(2082,1

cording

WAMPLER*

President, Carrier Corporation, Syracuse, N. Y.
*

So,.if

will break nation's financial back,
prominent industrialist calls attention to burdensome effects of wasteful government spending and in- r
creasing government debt. Sees possibility in cutti.ig down government costs and points out, because
government is not disciplined by competition, pow »rs of bureaucracy increase. Warns highly graduated
income taxes destroy incentive and curtail investments.
Deplores lack of statesmanship among both j
Asserting highly centralized big government is fast creating load that

*

.business and labor leaders,

:•;■•;f.;

of Carrier Corporation moved into a new fiscal year, we

as we

will takes
place. How¬ retains itself in power by deluclever, business
iug
the owners with doubtful

an

will then

of

and

up

half

last
the

free"—and

Items in Federal Budget

factory.

■

-|

'...

this

Next,

Now

economist

take

friend of

items

did

ours

some

that

Cloud Wampler

he

said

felt very

and

accounted

would

-

and this could easily continue for

But

wrong.

or

l

.that 1950

I

be—overall—an

can

that

Be

it

as

economist

when

may,

finished

had

How

if

ques¬

be

continue

we

nothing"

"something for

proach
paying

his

America

can

.really prosperous
the

our

with

forecasting, I asked him this
tion:

ex¬

.■!%'■:

cellent business year,
V,

ap¬

way?

our

i

Surprisingly enough, his

i

answer

"I beleve that economic de¬

was:

political

developments

that

sure

largely

will

velopments

before

govern

I

and

am

long, those who

believe

in taxing and taxing and
spending and spending will be
completely discredited."

Breaking

»

!

our

Financial Back

hope

*

he's

right but I
this brings
to the basic position which I
I

have my doubts. And
jne

wvish to take this evening, which
.is—bigger and bigger government,
and especially one that is highly

.centralized, is 'fast creating a load
that may well break our financial
back and, on top of this, seriously
impair the moral fibre of the

be

real'

no

lasting

or

In

recent

.

made

magazine

States

Government

question."
as

of

the

United

the

>

is

beyon'd

Certainly that is true
moment.

But

I

would

12.6

prises
>

the

to

Could

tune

of

be able to tell
anyone how to cut our national
defense expenditures. However, l
feel in my bonesr—and I suspect
you do too. — fliat somehow or
other, we ought to be able to do
an adequate job for somewhat less

some

takes

v

How long can an

main
ance

to

during its most

year?

prosperous
i

in

it

when

sound

do

in

18

of

out

years?
'

bal¬

the

last

20

institution

re¬

,V

How long can an

main sound with
as

fails to

large

as

a

debt six times

its gross take—in its

best year?
How

long

can an

institution

re¬

main sound that tolerates the ap¬

palling waste and inefficiency
vealed by the Hoover Report?

main sound when its management
*An address

by Mr. Wampler at
Meeting Program of the
Chicago Chapter of the American
Society of Chartered Life Under¬
writers,
Chicago,
111.,' Nov.
14,
Town

1949.




is very simple.

answer

Three-quarters of it comes from
income taxes and all individuals
have

to. pay

taxes

on

Maybe I

?

The Danger of High Graduated

Probably most of

venture

•

get at the heart of

can

capital

if

problem

you'll

.

bill

was

times

five

than

more

much.

,

as

what I kept in
1948 was only 25% in excess of
what I kept in 1939.
Hence,

this

However,
where
fcr

68%

the

business
ment

from

of

the

ven¬

But during the

capital type.

ture

1941

1935 to

investments

made

much

1943.

the brass tacks!

are

Consistently from
I

invest¬

an

was very

off in 194,3 than in

But here

whole

the

of

net

that

is

standpoint. 1

worse

no¬

was

excess

enough to compensate
rise in living costs-

near

a

Anyway,

a

!

„,.

past eight years T have made ex¬

actly

you

Perhaps

was

my

but I suspect

i<

investment—and

such

one

the amount

only $6,500.

is not typical
And certainly

case

.

it is.

like you and me who

is people

have, in the past, supplied most of
the money for

,

-

;

,

.

And this could be done.

put
aid

now

and

we

the

|

All wage and

salaries paid out;

veterans

If

can

every

'man

in

the

United

States cashed all of his individual

Certainly we may not continue; life insurance policies, the total
indefinitely to make gifts run¬ would amount to approximately
ning into the billions annually to $44 billion.
foreign nations. And as far as the;
Last year, the sum total of. all
.

some

program '

is

concerned,

of these days we might have

corporate profits was the greatest
in the history of our country. Ac-

Now for the Concrete Evidence
"

Defense Department] are going to get
along on this lesser amount [appreciably less than
at present, so it is said | because we know our economic system cannot afford to pay much more. ;
We not only are trying to get along on less, we
will get along with a whole lot less. Moreover, we
will get a lot more for our money; it will be a mat¬
ter of less money and more defense.
'

nation

con¬

"What will

this

is

amount

!

citizens

stance,- the,' five
Then

17%.

with the
big income should pay a bigger
percentage than we little fellows*
do."
So, the upshot of the whole
"Surely that

says:

business

is

he

getting

forced. to

is

citizens

less gang up on

who

one

guy

that the four

is

or

$10,000
a 40%

pay

tax, which supplies the necessary

the vote is
graduating
that it hits only

words,

the income tax
the

$10,000

so

who

maybe

working to make $10,000

was

to himself:
"Why should I
take the responsibility and do the
says

job that goes with these larger
earnings?
I'd be better off if I
d'dn't

work

so

hard

down to the $6,000

appreciative
To become dol¬
lar-conscious is not only good economics but good 1
military discipline for our military and naval men. ,.
We now have courses in economics at West Point,;v

And

earner.

result of this is that the man

the

Of

course,

and

moved

bracket."

worst

pitting of group
against group, class against classyeven race against race--in an ef¬
fort to gain political or economic
advantage. And one of these pittings has been and is labor against
thing

the

is

management.
wish

I

to tall?

the time

had

I

about this labor-man a ge
business!

But

ment

haven't and

1

so

I

proceed by merely pointing
out the result—which is disunity.
must

disunity is an awful thing,
only internally but externally.
If we continue to fight bitterly

And
not

ourselves, if we continue
the expense
fellow men, we most cert

among
to

take advantage at
our

tainly will not be

unified people.

a

Therefore, we will not long be
strong. And if America is not
strong, the peace of the world is
in greater danger.

Even more im¬

portant, if America is not
we

next
,

war

Now

should it have to come.

then, I

capitulate::
Here

are

we

we

strong',

to win the

be able

not

may

that

I am over-simplify¬

»•

the "very

that

of

other

In

are

Management

believe

I

of the $2,000 boys

one

four-to-one in favor of

.

Department

get to¬

gether and decide to tax everyone

$4,000.-

preparedness or even victory in battle
ask ourselves, if our free demo- ;:
system is crushed in the process?
!. /

"We in the Defense

raised

be

to

In the first in¬

through taxation.

and

'•!"■; '■'-IT'

V '

fifth

the

avail us, we must
cratic

a

$4,000; the fourth $6,000, and
$10,000.
Now then, the
cost of government is $4,000, and
the

getting $6,000

"We [the

.

that

assume

sists of only five citizens. Two of
make $2,000 a year;
the
third

something
must be accomplished.

veterans

Let's

foreign; by manufacturing concerns in 1948 ! thiese
totalled less than $47 billion, /
!
program.;

to

come

And it is here that

seek

would like to re¬
•' *
' ' %
of the elements

some

simply must consider as
to

what's

determine

ahead for the American economy:

of the need for national economy.

ing

situation.
But just the
same; the
illustration is sound.
And today incentive in America is
being destroyed through taxation
which smacks quite a lot of being

(1) Big government and its con¬
stantly increasing tendency to in¬
terfere in problems that cam best'
be solved at lower levels, in our

at

punitive.

communities

Annapolis, at our National War College, at the
Industrial College of Armed Forces,
and other
;

schools.
"Our

re¬

How long can an institution re¬

sad thing and a

a

thing.

(

re¬

its budget, as we have failed

And this is both

dangerous

,

r;

institution

The

Income'Taxes

expenses!

these

a

—

free."

"for

to

the new enterprises;
mately $45 billions, substantially! contains. Here it is in short form: that have been so largely respon¬
sible for the growth of our coun-.
higher thqn the 1949 figure and' ;! 'The yery best way to destroy
almost
exactly
ten
times that; capitalism is to "ap^.ly a gradu¬ try.
A few minutes ago, I referred to
money.
j
,
:
; whicli the government spent- in ated income tax."
J 932.
By no means do I wsh to insult the destruction of incentive as be¬
'Regarding inteiest on the na-j
Just to get this Federal ex¬ anybody's
intelligence, but we ing almost the worst thing that is
tional debt, I suppose this is some¬
penditure business into focus, let's; might throw some real light on happening in the^e United States
thing we can't do much about. In!
of ours. Obviously, I have in mind!
compare the $40 to $45 billioni one of our major national prob¬
fact, I would guess that our in-!
lems by examining the applica¬
with some other figures.
something that is an even greater
forest charges are
apt to work
evil and here it is.
^ ;
The annual food bill of the ria-! tion of the graduated income tax
higher rather than lower, unless
theory on a very small scale.
of course, v/e
reduce the debt.; tion is roughly $53 billion. }• ■;
Pitting Labor Against

How long can an institution re¬
it

citizens increases. More and

from?

almostva

tions:

than

rnent'

'

of

philosophy

opportunity to security
freedom

let me be quite personal
for just a moment.
In 1948, my gross income was
almost exactly twice what it was
in 1939.
However, my income tax

have read
be cut?
It seems to
vthaf ^in! the "Communist Manifesto," writaffirmative answer is inescapable.; ton by Karl Marx about a hun¬
Reference — the Hoover Report.; dred years ago.
But you might
an
Nevertheless, the Federal budg¬ not ! recall
extraordinarily
et for fiscal 1950 totals approxi-; pungent statement that this book

-L don't pretend to

like to ask Mr. Snyder some ques¬

main sound when it spends more

from

basic change

a

our

govern-

" now
then> where does all this
look.' money for big government come

careful

national

our

is

there

fact,

of

go'on "the

were

a

In

course.

evidence

Anyway, more and

people

ra0re

or

worth

.

competition.

ernment

erage

pro-

expenses,

because... there is less
for choosing a

reward

shift from
or

and

Men

is

employ.

should keep

Federal

billion dollars.

6.9

.

soundness ' of

.

>•

Incidentally,
in mind that gov¬
not
disciplined by

ment must

these
nomic welfare; and cost of gov-| graduated basis.
; ,
enment-controlled business enter-,

4.6

-

__

benefits;

out

example $1,346 millions for,
the proration and supervision of
business and economic activities;!
$2,339 million for social and eco¬

6.o;

this statement: "The finan¬

cial

j

—

Debt

Foreign Aid —-gr_

pros¬

article,
Secretary of the Treasury Snyder
a

on

other; |

For

"Billions

-

have and the more people govern¬

'

..*••;:

perity.

1

-

>

cutting

support

all

government must

these include some items-that are;

these

Veterans' Program i...

•

American people. And if this hap¬
pens—and it is happening—there
can

!

Interest

and

Well,

..

.

opposed to earning and

as

i

think

do

•

the

.

more money

money

certainly

-

•

lows.

in

injured; more people are told what to do
mentally arefand- pretty soon, we get to the
for
properly.
And, ; of; point where government by law
couse, this must.be done!
disappears:; and
government
by
Turning now to non-war costs,!. men takes its place. V

expenses!

category are

war

National Defense

'

Well, I don't know whether he's

the

In

items:

bolder

much

the

s'-j

to be more and more
follow
easier, safer

to

less

and

know, this big government
is pretty much as fol¬
The more government does,

You

.

really sheer gifts. Here L

those. who

vided

remainder—

the

for

obtain

either physically

other, with;

Federal

inclined

months at the going rate.

there.

down

channels

nine

than

cared

roughly $9. billion.

be highly prosperous years.
Following these, however, will
come some rather tough sledding

right

certain;

bludget for-

some way or

All other

war.

both

three years or so.

at

me

Federal

the

nected, in

sure

1951

1952

in

would

1949, which totalled almost exact¬
ly $40 billion. This was made up
of about $31 billions in costs con-;

long- range
f o r e c asting.
He

with

look

a

and

ex-soldiers—and

are

ducing

you

wish

then,; I

whittled

money seem

payroll and more and more
is spent.
The more and
mean to say that, under good na¬
more
people have to do more
tional
leadership,
the
veterans! and more.
As this happens, the
themselves would cooperate in re-j power of bureacraey over the av¬
that

that cannot be kept?

will
satis¬

year

be very

facts
our

citizens—in

offer something "for
by making promises

seemingly

administration that will face

the

give-away programs—which only

of

less

for

run

enter¬

1' '

Currently, this motivating force
being, chipped away here and

is

earnings of every incor¬

be

business

prises.'!',

,

the cost of government, the show
could

suf¬

been

capital for the de?

of

veJopmenc

porated business in the United
States ahd applied this rqoney to

we

ing

pick
the

the gross

flow of venture

took every penny of

we

have

ficiently large to attract a steady

situation

had a long
pow-wow with our consulting economist and he expressed these opinions. The first quar-;
'ter of 1950 will be a period of good business. In the second quarter, a considerable soften-;
we^k,

Last

*

adjustments.

fore inventory

incentives

these

of

Department

the

to

Commerce, the figure was a little
more than $32 bniions.
!
This is before taxes.
Also be¬

What's Ahead for the American
By CLOUD

Thursday, November 24, 1949

CHRONICLE

FINANCIAL

&

made to

in uniform in

all echelons

are

the relations of those costs to the financial structure

of

our

whole

economy."—Louis Johnson, Secretary

of Defense.

Many will be waiting with what hope they can
muster for concrete evidence that, at long length,
these elementary truths have really sunk in any¬
where around the Pentagon—or the White House.

the

destruction

This

;

//C;

being
appreciate the cost of national defense and

men

*

seems

to

me

of

i

incentive

to be almost the worst

women

and

by

men

and

working together.

{2) More and more government

thing that is happening these days

by

in this land of

by law.

ours.

From whatever angle you
the

has

been

view

history

of our country, you
will invariably find that progress

of living
cause

made

and

our.

standard

constantly improved be¬
incentives have

adequate

been offered to those who had

brains,
courage

imagination and
to do great things.

the

Perhaps

even

more

men as

(3)

opposed to government

Burdensome

taxation with
incentive

for

and

unsound

the result that the
men

to

do

great

things is being destroyed arid the
sources
of venture capital dried
up.

the

(4) The substitution of a secur¬

the

ity philosophy for the opportunity

important,

philosophy

that

(Continued

made
on page

America
27)

Volume

170

Number 4858

From

THE

COMMERCIAL

the

becoming

neck

for

global

a

X

News

-Scores deficit

pain in;

a

taxpayers, but it is a tremendous joy for the
thousands of government employees here in
Washington. They get;
off from
work
every
time a foreign ruler comes to visit us.j
Naturally, when we became a global leader
we
had to pick up the customs : of the global
of

the

past.

is

Aside

certain

a

There would

be no glamour in just givirtg a
"foreign ruler the money, just handing it over to
him.
This might
be all right with the more
sophisticated nations such as Britain and France,
one.

'

but

/

in

the

Latin

or

America,

parade and

Since

;

by

other nations
Carlisle Bargeron

and
;

boy,

acclamation

of

have

Middle

the

East

it up; with

wrap

a

the

on

part

the

of

world, there has been quite
> rulers
to Washington,
put on the dbgt
We' have

foreign
we

in the

shown that

y

,

from

must

we

of the

procession

a

rulers

lot of panoply.;
- /
'( ■
succeeded to the global leadership,

a

we

apparently
-

of

case

of

space

few years we

a

are

/quite

as cultured as the Old World in the matter of knowing how
receive a monarch; we have shown a keen'appreciation of the

j

to

;

military

and

pomp

splendor,

the gold

J aristocratic lorgnette.
""7

In

' "

I

.

Faris

braid
1

'

'

trappings
'

the

and

X

and London,
where the global leadership formerly
(though seemingly we've always had to pay the bill) this
'pageantry—the turn out of the military, the blaring of the trumpets
•and beating of.the bands, the flashing of national
flags and stand¬
,

resided

ards—was
touch

deemed

which

to

to .soften

necessary,

their

governments

the

taxpayers

about

were

to

up

for

accede.Our

the
own

government officials are proving /they were not. behind '* the , barn
when the brains were being passed out, because they have* • sqb-

'

to risk

It, fitted .in

•

youngster of

X

Wants labor monopolies under anti-trust laws.

X-

;•

Following V-J Day the country underwent a series of readjustments.
Industry after
industry caught up with the backlogs created
by the war and leveled off to normal peaeer1fne:.I'^es °* production. Since all industries did not complete their adjustments at thr
same
in

at a'

of

three
the

years.

It

d

largely caught
w' i t h the

up

can

demand, and
produced

hug
p1

e

C. R.

s u r-

v

fident

Cox

want

s..The

u s e

major

adjustments
in
supply and demand had then been
i \

■i Recent

paralyzing

coal

| and

impacts

/.

: steel

•

•

have

ment

perfectly)jwith ■

tained

American

goods

isted

and

worth

if

ca¬

esti¬

an

theoretical deficit

of

some

of

plants and
would have eff-

that

previous rate of in¬

our

dustrial expansion

people

their

accumulated

equipment

of

con¬

had continued,

unchanged during the last 26
years. As rapidly as feasible under
the

most
trying handicaps and
conditions, industry has been re¬
pairing, replacing, and adding id

more govern¬

in

amazing productive

it

billion

$80

improved

and

life, not

mated

increased

the

the' standard

seeking. I feel

an

pacity,

lives.

its facilities since the cessation of

working in hostilities. *
'
'
"
confidence with an ever-growing V
Solution of Unemployment
stock of the tools of production f,
Problem
'
and with a cooperative work

produced

genius

•

materials

have

cre¬

force/

ated further shortages and

an ad¬
ditional small backlog of deferred
demand. ;• As the country restores

i

'V

,

•;

economy some

':,fX

During

v../.
the

depression of the
1930's, we 'as a nation suffered
from conditions which prevented
■our; utilizing, fully the initiative,
enterprise, and genius of business
•management.
>how

additional

The solution to any unemploy *ment problem which may arise and
to the problem of increasing the

standard of

lagged

and

living is the judicious
progressive investment of pri-

and
ate

a

capital in

private

thus providing for new

remember

We; all

investment

.

V

un¬

(Continued

industry,
enterprises
28)

on page

?

momentum.

a

discuss

'

essential

barked; striking them/on the buttock and smirking comments 'on
their lowly station in life. He was tall,erect, rigid with . a,
crisp
military >rooustache, - He was, <in fact, the; image of the military officer
,on the whiskey bottles labeled "By Appointment of the King;"

done

intervention

tiative

on

give the

how

be another

get such goods and comforts
they must rely on industrial ini¬

in

almost every industry.
These interruptions of production
of

But although Ameri¬
industry then performed mir¬
acles of production, the war war,
fearfully destructive. Consequent
ly, even though the country main¬

to

the

It

leadership.

To

•

strikes

more

comforts of

postwar

completed.

that

chronic.

quickly and

can

to

are

to

war

put to work the fire in business

toward statism.

attain

people

living they

a

in

continue

purpose

production ' and

agriculture
had

uncover

provide
jobs in private industry because it
is my conviction that only through
private industry can the Ameri¬

heavy
a

became

took

provide1

be

my

should

employment

diffi¬

jobs.
intervention

to

to

the spiral

is

what

busi¬

more

government
these matters may

turn in

by

industry h

and

Hence,
in

Spring of

1949

increase

business

existence

than

However,

turn

for

high level
more

in

costs and make it

cult

activity

for

motion

ness

part continued

snobbishly and cast-laden the British officers
treated the enlisted men. This officer in charge had a riding whip
land he moved around behind the men.after every order he?had
a

.

:

C. R. COX*

capital investors and overhauling of laws relating to taxation and trade
regulation.
says social security programs should be kept within
ability-to-pay limits*

scribe^ to this softening up process, lock, stock and barrel. It is as
if London and Paris, in turning over the mantle of global leader¬
normal operations after conclu¬
ship, gave :>us- a guide bookydr/ a/mahiiat/instructing^ bur/g<weii1hin€ht sion of the
strikes, these deferred
./.officials in the art .of getting by with
'
demands undoubtedly will sustain
X*>X I; recall once watching a "change of the guard'* at the Tower production for a time and will
of, Londoto

By

financing, and

from giving "awayj
t i me,
pageantry about the
th e;
economy
role of global leader. I suppose this is one of the
for
the
most
wa.ys you can tell a global leader when you seej
.

there

7

in private in¬
employee. Calls for in¬

many

money,

(2083)

Asserting only solution of unemployment problem is judicious and progressive investment
dustry, prominent steel executive cites U. S. Steel investment of $8,000 for each
centive return

leader has undoubtedly been

"leaders

CHRONICLE

President, Carnegie-Illinois Steel Corporation

By CARLISLE BARGERON
Our

FINANCIAL

Current Problems of Job Creation

Washington

Ahead

&

I

V.

20

stood

fascinated by

minutes

then

and

the severity of the ceremony. It'required

the

guard

skelter for the guard hoiise. The
For

was

dismissed. and ' made /belter

officer swaggered off*

''

However, the momem
immediately in prospect does

turn

not appear to be

This announcement is under

enough to satisfy
.

nation

that

has

employment and

a

witnessed

full

reason

or

production that rightly earned
this country the title of "the ar¬

NEW

ISSUES

" /

visiting hours of the Tower.

democracy."
Thought
should be given to other methods
of - preventing * large-scale unem¬
ployment.'' :

"

'

The

:

•

v

{

good"
^my
not

way

reaction, until I learned, by chance, that it
denied it, we had more

rwe

was all a fake, had
told, that, oh, although
of monarchs than the British did/

been/good. When I made inquiries I
awe

was

The procession of foreigners to Washington with their hands out

/

.being what it has been, it-follows that

capital city has come
4o; have a continuous martial air. We seem forever acting, as host
.to King Eezelbub or some such. We have become quite suave and
gracious, too. '
.

..

If it, can be arranged,

-

,

our

.the lunch hour
event

they

the arrival of the dignitary is timed with
army of government employees. In this
extra time for their luncheon and urged to

the vast

of

given

are

foregather along Pennsylvania
parade..,

*

Constitution

or
"

...

Avenue

to

see

"being crowded beyond all reasonable conditions at that time of day,
/they can't; make it and are caught in a jam along the avenues just
.as

the

of

the

parade

cheering

The

thousands

visitor.

•

along.

comes

of

of

press

of

the

Washingtonians

f■/T-X/V-v

attaining the objec¬
Our industries, present and

'■i..

(Special to The Financial Chronicle)

ST.

>\

LOUIS,

Hellerud and
have

rud

was

King

,

Henry M.
Wayne E. Northway
—

become associated

Waddell &

of

MO.

Reed, Inc. Mr.

with

Helle¬

formerly Vice-President
Merritt

&

Co.,

Inc.,

.charge of the St. Louis office.




in

(Special to The Financial

ST.

LOUIS, MO.

Moeller
with

has

Hill

Building,
York

become

Brothers,

services

the population.
offer their serv¬
ices and they look to American
industry to find a market for,the
.v'V'«
Government vs.
Private

Employment

X.:X

"

St.

Mr.

Louis. Stocl^

Moeller

since

•

'

this

recourse

to

competition can be the
of all competition—for

tax

'is in a position to
private business to pay those

for

whom

it

sponsibility.
the

assumes
.

This

such

a

taxation

other activities which are

re¬

and
set

Ex¬
1930

-An

the

turers

N.

address by Mr. Cox

National

Electrical

Association,

J., Nov. 15, 1949.

before

Manufac¬
Atlantic City,

'

/

v

BONDS

,,J ? f \
^ ^c/iangejor \
.

$44,660,000, Series R
2?4% due April 1, 1981
198

The holders of the presently outstanding Series Q 2$4%, due 1976 and Series lv
2H%i due 1981, First Refunding Mortgage Sinking Fund Bonds of Consolidated
Gas Electric Light and Power Company of Baltimore are being offered the privilege
of exchanging such bonds for new First Refvmding;Mortgage Sinking Fund Bonds oi
Series T 2%%, due 1976 and Series U 2%%, due 1981, respectively. The Exchange
Offer and its purpose are more fully, set forth in the Prospectus, a copy of which may:
be obtained from such of the undersigned and other members of the National As¬
sociation of Securities Dealers, Inc. as arc registered dealers in securities in this State.To

exchange Old Bonds for New Bonds a holder should send his Old Bonds to one
the Exchange Form furnished by the
Company. Copies of the Exchange Form may be obtained from the following
depositaries and through banks or securities dealers. The Exchange Depositaries are;.
Bankers Trust

Company, 16 JVall Street, New York 15, N. Y.

„

Safe Deposit and Trust Company of Baltimore, 13 South Street, Baltimore 2y Md.
Old Colony Trust Company, 4d Milk Street, Boston 6, Mass.

,

The First National Bank
American Trust
X
v

are substantially the
competitive
sales.
In

as

•

i

of Chicago, 38 South Dearborn Street, Chicago 90> III.
Company, 461 California Street, San Francisco 20, Calif.

The

Company is not obligated to consummate the Exchange Offer unless 95% cf
principal amount of the Series Q and Series R Bonds is deposited for
exchange. The Exchange Offer will expire at the close of business on December 19,.
1949. If the Exchange Offer becomes effective, depositing bond holders will receive
l%% interest from the date of their deposit.
the aggregate

^

The

undersigned have been engaged by the Company to solicit exchanges and to
Exchange Managers in forming a group of securities dealers for the purpose of
soliciting deposits of Old Bonds pursuant to the Exchange Offer as set forth in
the Prospectus.
*
act as

~

,

^

New

has been with Reinholdt & Gard¬
ner.

of

■

/ of the Exchange Depositaries together with

/

the government
*

)

the

results

unfairest

George O.

the

.

•

$12,000,000, Series Q

)

-

Whenever

fact, the

associated

of

.

of

results of those services.

same

Security

members

and

changes,

Chronicle)"

—

■

the market outlets for

The unemployed

■

^

$44,660,000, Series U

tant factor in

are

/

| in exchangefor | 2H% due January 1,1976

H% due April 1, 1981

government

Gorge 0. Moeller With
Hill Bros., St. Louis

Wadded & Reed, Inc.

$12,000,000, Series T

of savings should be con¬
sistently encouraged as an impor¬

The

November 21,1949/

OLD

BONDS

2/1)% due January 1,1976

ment

/

'

Refunding Mortgage Sinking Fund Bonds

NFAV

cumulation and productive invest¬

price demanded
; There was a jarring note- in the Shah's visit, however; One!
by people for their services is too
of our irreverent newspapers sprung a story that the Shah's
repre¬
high *for their purchase by indus¬
sentatives in this country, thinking along with a lot of others that
try, the people thus unemployed
-Pewey would win last November, had contributed $2,500 to the
have been encouraged to turn to
'Republican campaign. :This seemed to give a touch oi commergovernment for employment, live¬
-cialism to what had been portrayed as a visit of
grand friendship.
lihood, or some form of support.

H. M. Heliercd Joins

First

the

calls for stimulating rather than
repressing the people's inventive
resourcefulness,
business initia¬
tive, and labor mobility; The ac¬

the

,

,

Exchange Offer

■

to meet

dustry, and commerce. The ac¬
complishment
of that objective

country then tells
that greeted the

XX/;Xf3^334:.'.

resources

major problems now
facing American agriculture, in¬

future,

But, in some instances, as in the case of the Shah of Iran, who
arrived at 4 o'clock, the government employees are let off an hour
earlier. They seem to make a bee line for home but the traffic

-

of Baltimore

those demands of progress is thus

the- tive.

.

and

manpower

one

■
■

Light and Power Company

redistribution of the nation's

•

long time why the British thought this was a
to advertise themselves with visiting Americans. Certainly
a

offering of securities for suit

as an

solicitation of an offer to buy, any securities.
means of the Prospectus.

made only by

Consolidated/Gas Electric

.

I "wondered for

or as a

of

.

out the

circumstances to be construed

complete scale

another, I continued to stand there. I sup¬
t A growing population calls for
pose I was- entranced; Then to my amazement, out came the'saihh'
a growing output of useful
men and the same officer to do the same
goods
thing all over again; The»
officer/ saw me still standing there and burst out laughing. What and services continuously adjust¬
they were doing, of course, was putting on a show • for touristing ed to meet the changing demands
Americans. The ceremony was^ repeated at brief intervals through¬ of an improving living standard.
some

no

offer to buy,

The Exchange Offer is

of

senal

or as an

)

The First Boston

Corporation

Harriman Ripley & Co.
Incorporated.

8

H+

The Present Status of Utility

Thursday, November 24, 1949

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(2084)

'f;

Regulation

*

,

•

> :

'j

^rV'v

fr

J

'V

-.j

Dealer-Broker Investment

By HARRY MILLER*

Ohio

Member, Public Service Commission of

Recommendations and Literature

^ ^

-

dehrmental
to both consumers and to shareholders. Says State commissions have handled job of local regulation
well and are working toward creation of public attitude favoring sound economics in regulation and are
giving thorough analysis of basic problems. Points out difficulties of utilities in obtaining new equity
capita! and attacks Federal policies of taxation and ownership of public service enterprises.
in field of utilities regulation as

Ohio Utilities Commissioner criticizes Federal usurpations

Connecticute Securities

—Chas.

that climate.-

When

a

speak of im¬
provement,
I
not
only
utility

Interpretation of the
Communication' Act as

the

also

in

small

Federal

ing

Then there

no

Organization

This

in

intervention cases, and the
tal Transit Case

us.

Harry M. Miller

The Nation¬

re

brings

Effective

an

Many of

joint fare mak¬

v

ducted

recent years, con¬

vigorous program for the

a

overall

improvement

utility

of

service and utility securities.
I

assure

can

that

that

program

«

election;

velopment of modern methods of

fornia

there

decks

ment

Bonds,
Highway
Bonds,
Olympiad,
Building
and
Park
Bonds
and a summary of the

commission
of

sake

for

methods

attention

tion

of

needs

Federal

State

and

>"\

-

?'

The

problem of properly regu¬
lating intrastate utilities is basi¬
cally a function of state commis¬
sions who

are

familiar with local

conditions and with each utility,
its
history and operation. The

both

principles

basic

the

to

between

ulation.

greatest need in regulation today
.s
for full cooperation between

of their problems, and cog¬

the

re¬

Commissions makes <for poor reg¬

dicate to you that the state public

of

should

problems facing commissions to¬
day. Controversy over jurisdic¬

I will discuss each of these four

nizant

We

does.

egulation which I call the "real"

points briefly, not for the purpose
of arriving at answers, but to in¬

aware

it

jurisdictional matters
be able to give more time and

,o

and

are

caused by

burden

solve these

problems affecting utility service,
operation, rates, and financing.

commissions

work

time

rhe

greater efficiency. Third, we
Should adopt sound economics as
the controlling element in our de¬
cisions. And, < fourth, we should
exhaustively investigate the basic

utility

control

these, matters should not take up

the

decisions

sounder

N.

The

putes in order to devote our en¬
ergies to more important things.
Second, we should strengthen our
commission
staffs
and
improve
our

which

and commission. This is

,ompany

should control their solution.

obtain prompt rate
settlements whether they be in¬
to

lecessary

The

Jurisdiction

let

and federal
For

between

out

state

the

years

and

Washington Office has
been spending a great amount of
time on jurisdictional matters. Al¬
though primarily an association
for the exchange of

or

this

neither the

cooperation of

:ules

in

solv¬

posed upon it a heavy burden of
work from jurisdictional matters
involving Federal encroachment
the

accounting,

other,

and

making

rate

functions

the

of

commissions.
For

mittees,

officers

worked

ments
in

an

tions

state

to

of

staff

have

number

of

the

Federal

Power

attempt

presented

and

com¬

a

on

to

clear

amend¬

up

Act

ques¬

jurisdiction.
our

They have
views before House

and Senate

know,

hearings which, as you
requires a great deal of

tional

is

jurisdic¬
by FPC's

on

interpretation of the Natural Gas
Act
one

is another example. There is
case before the U. S. Supreme

Court
which

tional

(East

now

involves

a

Ohio
basic

Gas

Co.)
jurisdic¬

question. Prior to this, the

„„
••

,

*An

Iff

Miller before

ciety

*

address

by

the

1

'*

'

V

/

Commissioner
New

of

York

Security Analysts,
York City, Nov. 16, 1949.




room

devised

for

and

under¬

So¬

New

standpoint,
and

more

equitable to have his complaints
service

on

local

men

and

handled

rates

by

familiar with the terri¬

tory and its people. It provides

utility operation, and gives

:'air treatment to
The

NARUC

should

be

able

to

major portion of its time

technical

and

doing much

to

criticism.

this

A.,

*

fy

.

List of

—

&

Co., 63 Wall Street, New York
'

Power

Light—

Opinion—

Wall

Street,

-

Central

people who will be capable of

seatic

and the

public interest is too im¬

York

portant

and

entrust

their

solution

incom¬

to

requires

government

generally, however,
is

in

the

com¬

Attitude

an

from

our

effective
sound

most bril¬

ester 14, New

and

recognition among the state com¬
missions of the need for applica¬

economics

of utility

in

problems.

There have been

Central

illustrated

Railroad—De¬

brochure

study¬

Co.,

&

New

Inc., 63
N..Y.

Wall

Street,

York 5,

Sept. 26-30, 1950 (Virginia Beach,
Va.)
Annual Convention of the Na¬

sis—The

First

Boston

Corp., 100
Broadway, New York 5, N. Y;

alysis
ness

&

of "Busi¬
Digest"—Loewi
East Mason Street,

in current issue

&

Financial

Co.,

225

Milwaukee

Shasken

^

Mexican

•

contrary

Eagle

Oil—Memoran¬

dence to that, effect in many quar¬

states' rights,

ters.

rights, as well
problem.
course,

as

a

Federal

commissions, of
have their proper sphere

course;

for example, one of the things
I have in mind is the fact that ad¬
ministrative
ence,

terstate character.

mitted

we

want ef¬

run

dum

ease,

and

conveni¬

sometimes been

to

per¬

override

have

Bernard Daniels.

(Special

"workout"

institutions

discussing

Service Co.

interesting

and

dealers

—

York

sociated

was

-

attraction.

J. P. Morgan

'he interstate

In

this

utility

regulatory function.
only can vital
services be expanded for
manner

consumers,

the

while at the

utilities

same

themselves

time

remain

vigorous and healthy. It is beyond

and

popular

Simplicity has much
Likewise, it has great
political
popularity
when
the
penality of simplicity is imposed
entirely on the utlities.
But in the long run, in a capi¬
talistic system, the consumer is
(Continued on page 30)

New

Hill

—

Calif.

of

Co. Director

regular meeting
Directors

of the

of J. P. Mor¬

& Co. Incorporated held No¬

vember 23, L. F.

McCollum, Presi¬

dent of Continental Oil Company,
was

elected

a

director.

With Slayton & Co., Inc.

Neville

is

The

Financial

Chronicle)

ILL.—J.

now

with

Wesley

Slayton

Company, Inc., 135 South La

&

Salle

Street.

With Waddell & Reed
(Special

Manufacturing Com¬

Street,

&

South
Los' Angeles 14,
Co.,

621

to

The Financial Chronicle >

CHICAGO, ILL.

Summary and Analysis—

Richards

Soring

Public

England

Ropkwell
pany

the

At
Board

6, N. Y.

performing

easy

'

(Special to

thing to do.

commissions

v.'
an

Hammill

South Spring Street. He
formerly with G. Brashears &

CHICAGO.

Federal

is

with Shearson,

& Co., 618

6, N. Y.

Service
Co.—.Special survey—Ira Haupt
& Co., Ill Broadway, New York

This

ANGELES, CALIF.—Wil¬

Ira

nomics.

;

Hammill

Financial Chronicle)

The

situation available for

Haupt & Co., Ill Broadway, New-

•

,

to

liam T. Crawford has became as¬

gan

New England Public

regulation, then the intra¬
state utilities should be regulated
at the local level, with cooperative

fective

between East 5th

With Shearson,
W'

eco¬

sound

a

announces

under the su¬
pervision of Henry D. Shuldiner,
resident partner. The office will
be managed
by-David Adelman

—

—Booklet

in regulating operations of an in¬
If

their
at least I think I see evi¬
have

the
branch office at 100

City,

& East 6th Streets,

Co.

2,

communities'

some

York

Place,

Exchange

40

at

located
New

member
Exchange,

Company,

&

of the New York Stock

the

sions.

a

Associa¬

Shaskan & Co. Opens

111.

is

Traders

Cavalier Hotel.

the

LOS
Johnson Service Company—An¬

believe

This

Security

at

and

Irving Trust Company—Analy¬

trends in the last twenty years. I

they.

Club,

Seigniory

opening of

coordinating ac¬
tions and exchanging ideas devel¬
oped locally by "home" commis¬

.

Meeting at
Montebello,

of Canada 34th Annual
the

Second Avenue

a

point of view, as well.
there is widespread

solution

York.

Zippin & Company, 208
South La Salle Street, Chicago 4,

a

to the function of

'

5-8, 1950 (Canada)
Investment Dealers Association

Local New York Branch

people. There

purpose,

Relieve

sound

La

Analysis—George D. B. Bonbright
&
Co., Powers Building, Roch¬

ley

bright, hard-working, ef¬
ficiently
organized
commission
is not necessarily enough.
Some
of our most dangerous doctrines
a

of

New York.

Bulletin

ing the situation—Harriman Rip¬

4

Economics

Favoring Sound

—

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

tailed

The Creation of

I

the

tional

/

&

Illinois

a

.

right di¬

Ill

be

Han-

120 Broadway, New

5, N. Y.

—Hicks

rection.

and

Corp.—

York

Chicago Rivet & Machine Co.—

^

that the trend toward better

must

Utility

New

good

!

good Salaries.

sound

Corp.,

—

Chicago Corporation

i

people, and good people command

liant

Annual

tion

help.
The
public' must
make up its mind to the fact that

come

j

(New York City)
Meeting and Election of
Investment
Association
of

Dec. 14, 1949

far-reaching, to

too

petent

loday

Public

Memorandum

doing
an
effective
job.
The
problems of utilities are too great

But

New York

Quebec.

level which will attract the kind

staffs

(New York City)
'
Security Dealers As¬
sociation 24th Annual Dinner at
the Hotel Pierre Grand Ballroom.

Dec. 9, 1949

„

&

and

Co., 36
York 5, N. Y.

New

ernment salaries must be fixed at

say

>

June

&

—Bache

-

-

.

Memorandum

May I

(Hollywood, FU.)

Investment Bankers Association

•

yl would be less than frank with
you if I did not indicate that gov¬

good

.

*

»

—Special Review—John H. Lewis

.

of

ing.

Dec. 4-9,1949

Annual Convention at the Holly¬

Aluminum Company of America

relief from declining
5, N. Y.
;
earnings if that utility cooperates
fully, presents all the facts quick-,
American
ly, and lays its cards on the table,

a

Security Traders Association of
New York Annual Election Meet¬

Montgomery

300

Money's Worth

over¬

■t{.;

ity seeking

tion

consumers.

S.

public utility stocks which appear
interesting—Geyer & Co., Inc., 63
Wall Street, New York 5, N. Y.

Today there need be no lag that
would impair the credit of a util¬

a

climate healthy for the most effi¬

devote

is

for

cooperation,

convenient

more

The

problems raised

"blanket"

From the consumer's
it

work beforehand.
The time consumed

ratemaking

for the confidence

cient

u

example, the NARUC

with

standing, that "home rule" offers.

ing rate, accounting and other
matters, the NARUC has had im¬

on

of

modern' office

come

convenience in regulation by some
Federal commission. There is

ideas, and the

members

democratic

our

Your

lag between the filing of a rate
and its completion.
The use
methods

&

(New York City)

Dec. 2, 1949

wood Beach Hotel.

the time

case

of

T.

the State
America,

of

criti¬

the

of

one

cisms of regulation was

mission

Contrast'

NARUC's

to

of life,

way

of

"sparring match" with¬

a

get¬

are

position

Street, San Francisco 20, Calif.

Historically,

:•••

doing violence to the public

:.nterest

agencies.

number

a

juris¬

discuss the

us

conflict

reductions. We can't in¬

creases or

Problems

dulge in
First,
dictional

State's financial statement and the

ting them.

they would have Fed¬
supplant traditional
regulation. In other cases it
is simply a question of legal in¬
terpretation.
; >
»

should clear
jurisdictional dis¬

of

Bonds,
Improve¬

ibre to

we

Field

Investment

In

Welfare

Harbor

General Fund—Bank of

state

ture course. First, we
the

Veterans

Francisco

San

fessional young men of high cal¬
staff and

Co.,

&

New York 5,

Y.

Cali¬

are

financial

eral

tion which should control our fu¬

Inc.. 70 Pine Street,

EVENTS

covered

cally regulated utilities. In some

four guide posts to ac¬

are

also

We realize the need to attract pro¬

our

Company—

A.? Saxton

Analysis—G.

COMING

instances

will continue.
believe

Broadway,

Power

Tidewater

Study-

—

and blind
the
recent

overlapping jurisdiction over lo¬

Speaking for myself, I

Co.

&
Co..
50
York 4, N. Y.

the State's

on

aged

following

program

have gone a long way in the de¬

the

eral commission certain dual and

gentlemen,

you,

of

economy

.

sioners has, in

Utilities

Texas

Dreyfus

Memorandum—

—

Bonds and the effect

O

:

&

Cohn

Tower, Indianapolis 4, Ind.

California—Report on the re¬
cently
authorized
School
Aid

getting a job done.
This means
Too much of the problem is developing people.
I am particu¬
caused by zealots in Federal bu¬ larly interested in this phase as it
offers the greatest possibilities of
reaus who insist that the language
of an Act should give to the Fed¬ increasing commission efficiency.

of Railroad and Utilities Commis¬

Stocks

Analysis—Kiser,
Shumaker, Inc., Circle
—

Study of the Bonds of the State

state commissions

our

60
Y-

of

program,

efficient job.

Co.,

Transmission

Eastern

Corporation

N.

overall

Railroad—

&

Quotation

"

jurisdictional problems.

•

Booklet recording

—

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

to the next step

us

sound,

a

Capi¬

ing, just to mention a few current

al Association

Do

Line

Hentz

Beaver Street, New York 4, N.

New

namely, the organization to do an

garding railroads, the accounting

degree

is entrusted to

to

Job

the Case Bill re¬

are

Industrial

Counter

-

stocks—National

Rail

n

t

cases

oeen

Analysis—H.

•

the telegraph abandonment
(Ohio and Georgia)
has
a time consuming burden.

se¬

whose protec¬
tion

trial

construed) would

now

brought

in the controversy surround¬

holder

curity

(as

7,

Haven

New

Bureau, Inc., 46 Front Street, New
York 4, N. Y.

entail.

out

but

serve

£

209

Air

Seaboard

Data

—

Co.,

10-year performance of 35 indus¬

which the full assertion of Federal
power

whose interest
we

state commission
great deal of time and
a

the

-

Stock Index

Fcdera.

any

to supervise and regulate
effectively the multitudinous de¬
tails of public utility regulation

elfort.

in

sumer

in

too,

con-

of

competence

Street,

&

Texas

Over

agency

the

NARUC, and

the

the

the right of

on

regulate industrial sales
state,
involved
the

state to

within

mind

in

have

Case,

Panhandle

Scranton

Conn.

<$"

4

I

W.

Church

have been attempting to improve

public utilities commissioners who for many years

interested parties the

send

to

Any long-range analysis of utility securities must consider the regulatory climate in
which these securities must sprout and thrive. I am here today as one of a large group
of

firms mentioned will be pleased
following literature:

It is understood that the

Westbrook
&

is

now

—

William B.

with

Reed, Inc., 332 South

Avenue.

Waddell

Michigan

Volume

Number 4858

170

THE

COMMERCIAL

&

FINANCIAL

15,

CHRONICLE

Our

By

third

of

families

and

individuals

less

earn

than

$2,000 yearly.

.Headlines this week report to the nation that one-fourth of the
American families and three-fourths of the individuals (not in famil¬

with relatives) are earning less than $2,000 yearly cash income,
one-tenth of the families and one-half of the individuals,

or

and

in

There

that

not

families,
than $1,000.
k

The

J riety of background, social posi¬
tion, and cultural value."
,
;

is

news

which

less<^

-

this

of

source

earning

are

the

report entitled "Low Income Fam¬
ilies and Economic
leased

J.

recently

Sparkman,

Joint

re¬

John

the

of

Low

on

the

of

Senator

Chairman

Subcommittee

Families

Stability,"

by

Income

Committee

A

income level
vision

individuals to be:

a

.

.

-

>

of Total >

No. of

that

no
as

one

a

adequate

an

di¬

and

Statistics

Labor

considers

an

adequate income for two to be

a

minimal

$1,365, and for four, toabe
minimal $3,004 (1947 prices).
A

,

third

variable

is

the

geo¬

'

Families &

Income Class

Individuals Individuals

Under $1,000

$1,000-

8,110,000
7,410,000

16
20

3,000_j—
5,00(U—

$3,000$5,000Over

* 17

$2,000

$2,000-

Families &

9,190,000
13,780,000

■

30

10.000

15

$10,000

7,040,000
1,140,000

2

;

.100

46,670,000

(Source—Bureau of Census).
On

the

reflect

these

surface,

substantial

a

figures

low

income

group within the borders of the
United States/ Of the 46,670,000

families

and

graphical differential in the price
levels

various

of

essentials.

family

budget

A fixed money income

spent in different

areas

will yield

considerably varying real incomes.
In June, 1947, the last date for
which
such "a
study
has been

■

cided whether this large-scale low

Sparkman

income group'

for

reality.
First,

that

is a statistical myth

"

'

must

it

be

remembered

"minimum standard of liv¬

a

ing" is a sociologically (arid often,
politically) determined standard,
which varies

fwith the

and

political

mon

belief that

economic
The com¬

climate.
a

minimum living

standard,: maintained by substan¬
tial governmental assistance, de¬
termines

real

per

capita

income

reverses proper

per

causality; the real
capita income is the predom¬

inant factor

in the determination

minimum living

of

The

standards.

of non-scientific
factors into minimal living condi¬
tions

pointed

was \

George J. Stigler in
titled

"The

("Journal

by

out
an

Dr.

article

en¬

of

Subsistence"

Farm

Economics,"

Cost

of

XXVII, No. 2).
Dr.
about

$140

prices),

minimum diets

(1944

person

per

was

r

Using the production functions
nutrients of various foods,

of the
Dr.

Stigler

mum

cost

determined

diet

per

accounted

was

the insistence of dieticians

two

dieticians.

fundamental

on

va¬

"There

are

objections to

so

ments of the dieticians as to mini¬
mum

sonal
shold

palatability,

variety

and

at present highly per¬
and - non-scientific,
and
are

not

be

presented

in

the

guise of being parts of a scientifi¬
cally
determined
budget.
The
second

reason

fam¬

group,

individuals, totals seven

and one-half million.

the

In

value

case

of

of

this

group,

income

non-money

the
re¬

ceived

by farm operators aver¬
aged $604 in 1948, at farm prices.

that

is

those

cul¬

Americans

of
of

.

.

.

.140

million

transcendental




va¬

Without

the

furnished

resources

petition
of

the

plow, no livestock to
raise, no manufacturing plants, no
machines or tools,
no
working
capital from which pay rolls can
be

met, materials and supplies
purchased, and taxes paid.
labor• the

factories stand idle

farms
the

—

and

enter¬

prise is useless to the community,
the capital is depreciated or be¬
total

is

a

loss; and manage¬
experience and skill

wasted asset.':'

a

Without

management

investor who

puts

the

and

resources

the work

both

the

the capital

up

man

who does

helpless to continue

are

the complicated processes of pro¬
duction and distribution.. Even a

primitive society must have tools
for men to use, whether tilling
the soil, constructing shelters, or

clothing themselves
And

children.
primitive society must

even a

or

have that direction which

"management";
So

the

revolves

through

and

problem

more

yielding logic constantly

upon

impede

another and,

one

;

::

conclusion

One

fused

interest, become

will lift

come,

in¬

low cash-in¬

families and individuals out

come

of

many

money

the

area

member

life. Already

waitresses, waiters, companions to
aged, and others, who ordin¬
arily
receive as income, K food,
lodging or both. ;■./ v//^ /;,
The

can

is

f

into inflexible industry¬
wide organizations and industry¬
wide collective bargaining mobil¬
izes tremendous power on the is¬

certain

—

re¬

one-sixth

other
comes

had

received

in¬

less than this* level in 1947.

Subtracting from the low-income
group * the
unemployables
and

aged, which

are

special problems,

these ratios show the low income

to be remarkably unstable,

dynamically shifting
position.
It

cannot

be

in its

a

that

the

poverty prob¬

lem, and the Sparkman Report is
the: first step in estimating the
size

and

condition of

this

group.

However, those in dire need are
substantially less than the 15 and
one-half

million

families

receiv¬

ing less than $2,000 yearly.
In

tendency
imposed settlements by
governmental action affecting all

toward

companies of

alike—large

a
or

particular industry
small or whatever

the relative

of

sue

share

of that

in the national income.

industry
have

striking

example in
coal. Despite the great technologi¬
a

improvements in coal mining

cal

of

governmental
relations?

labor

power

Does

any

thoughtful employer or employee
prefer governmental determina¬
tion

of

wage

and other employ¬
voluntary agreement

should

greater

consumption and lower through good faith collective bar¬
the use of coal has re¬ gaining? And if so. have they con¬
static

mained

its

while

doubled.
use

electric

of

in the

of

same

two

has

the

On

resulted

over

price

in

into

which

prices,

have

tension

decades

than

more

other

hand

the

has tripled

power

v/••/•••//'/:: •V

ago.

sidered

the

implications

to

as

where this will end short of statism?"

' //

'

And

period with the price

electricity lower today than 20

years

ment costs to

,

what about the drastic in¬

vasion of government mto certain
f

/•

(Continued

on page

32)

This announcement is under

£ :

saley

or as an

NEW

no circumstances to be construed as an
offering of securities for
offer to buy, or as a solicitation of an offer to buy, any securities. ' ;
The offer is made only by means of the Prospectus.

November 23, 1949

ISSUE

132,000 Shares

L:

:

,

Rochester Gas and Electric

pull, un¬
understanding and

is

there

Corporation

consideration for the interests and

spite of
terial

Common Stock

in the South. In
vast human and ma¬

here

our

the

resources

(No Par Value)

opportunity

industrial expan¬
well be limited if labor
management fail to work to¬
gether in a true spirit of inter¬
dependence.
large-scale

sion may
and

In

occupations

some

we

still

same

person or

by a small ho¬

such as a family
owned and operated business. But
in the complex situations which
result in our present economy, the
mogeneous group

three elements

are more

furnished

by

and more

three

separate

more

emphasizes the

pressing necessity for this spirit
of understanding
and inter-de¬
fense. Ultimate wage costs are

on

November 22, 1949,

rights will expire at 3 P.M., New York Time, December 8, 1949,
fully set forth in the Prospectus, j
' ■;*
t

as

f

During the subscription period the several Underwriters may offer any
shares of this Common Stock not required for the Subscription Offer, shares

acquired through the exercise of rights and any unsubscribed shares at
prices not less than the Subscription Price set forth above and not greater
than the highest price at which the Common Stock is then being offered by
others in the over-the-counter market plus the amount of any concession
dealers.'

•

;/';,:

;/

There has been another change
further

its stockholders of record at the close of business

which

to

groups.;k/ ■/
which

Subscription Warrants, evidencing rights to subscribe for shares of this
Common Stock at $29.50 per share, have been issued by the Company to

J

•

/;■

3'..;;''

<••/"

•" .<

/

The several Underwriters will pay
in thftse

cases

exercise of

fees to certain selected securities dealers
where such dealers have been instrumental in obtaining the

Subscription Warrants by the original holders thereof.

the

largest single element in the costs

denied

United States has

com¬

economic

a

not only of the relative share their situation—with no standards
employees in the income of a to guide such decisions.
particular industry, but on the is¬ ; Do we want this threatened ex¬

,

group

and

there is

of

no

the

determined,

social

sue,

find success, nor

not

accurately

its

,

find capital resources, labor and
direction combined, furnished by

been

locates

ployees

by

turnover, or internal vel¬
ocity, of the low income group has
but the Federal Reserve Board

and

survive in the long

even

for

of distress.

Added to this group are nurses

of

be¬

this is being materially altered by

in¬

an

important

the farmer's

"of

intolerable injury,
not merely within the- four walls
produce

the present trends of mass organi¬
zation. The aggregation of em¬

as

industries

within those industries. But all of

man¬

added

to

strikes

restraint

another? Or shall

one

vincible unit?

less

resultant

recognize their dependence

they

common

one

mechanism

trade

an
industry, but to the entire
public. The public can hardly be
expected to tolerate permanently
a
system of this kind which dis¬

different

tween

agement and investors. Shall they
who are thus tied together by un¬

destroy

the

and

now

about the

inter-relationships of labor,

and

the

Further, 'industry-wide

de¬

com¬

^

economic
more

call

we

coal, tex¬
were

free play of

supply and demand both

We

:

automobiles,

termined by the

business¬

to

Without

economy, such as

and

capital

savings of the
public generally, there can be no
fields

our

tiles

farmers,

by

and from

men

our

reasonable obj ectives of the other
two members. This is extremely

and

therefore in the price of the

Copies of the Prospectus may be obtained in any State in which this announcement is
circulated from such of the underwriters and selected securities dealers as
J
'

..

products
ture.

of

economic struc¬

our

may

legally offer these securities in such State.

/

.,

Formerly the relative wage

costs and therefore relative

of the

prices

different productive areas

The First Boston
"An

address

Gulfport, Miss,

by
on

Mr.

Sloan

Corporation

at

Oct. 26, 1949.

Wertheim & Co.

Lehman Brothers

light

of these objections to
tural judgments, while they ap¬ aggregate
income analysis, one
pear modest enough
to govern¬ should be cautious in accepting
ment employees and even to col¬ conclusions based on this
report.
lege professors, can never be valid Senator
Sparkman's
committee
in such general form.
No one can has written a useful and intelli¬
say with certainty the cultural re¬ gent work, but there can be no

quirements

in

income, at retail prices, is $1,138 average. This income in kind,

000-$2,000, one-sixth had received
incomes greater in 1947, and an¬

by

merging the physiological and the
cultural components of diet.
The
first is that the particular judg¬

prestige

ilies and

This

The

for

diet,

to

criterion.

cant

signifi¬

ports that, of the spending units

Dr. Stigler's concluding remarks
might be directed to all planners
of minimum living standards, as
as

that the

so

in 1948 with incomes between $1,-

,

well

kind

be

to

prestige of various
foods and palatability.
,
<
riety of

in

cash income level is not a

mini¬

a

person

yearly $59.88 (1944 prices).
difference

their income

the

Stigler noted that the cost

of most yearly

Committee, constitute,

large segment of the popu¬
lace, only a portion of total in¬
come, which is supplemented by
income in kind.
Farmers, farm
managers, and farm laborers re¬
ceive a considerable percentage of
a

The

injection

enterprise, whether
agriculture or industry.

ment with its

Washington,
D. C. at 100, in each instance, the
food price level varied 9%, from
105 in New York City to 96 in
Indianapolis; clothing 18%, from
103 in Minneapolis to 85 in Savan¬
nah, Ga.; housing 35%, from 65

American life—Management, Labor and
Capital—
together compose land, air and water. When combined
proportions they produce the proper balance. When separated into hos¬

common

comes

individuals, 15,520,000
or
one-third, ^are receiving in New Orleans, to 100 in Wash¬
less than $2,000 yearly cash in¬ ington, D. C.
Total costs of budg¬
come,
and 8,110,000, over one- ets varied as much as 12%, a
sixth, are receiving less than $1,- significant percentage in the deter¬
mination of sub-standard income
000.
/' /,
V;,
v "
However, closer inspection in¬ levels.
dicates that certain questions must
Furthermore, the cashancomes
be answered before it can be de¬ statistically
reported by the

or

their

made,' the price levels for -these
follows:/ With"

three elements in

are

essentials in selected cities, varied
as

SLOAN *

like the elements that

are

in their
necessary
tile groups there is no
balance, no<^
security and no usefulness for of

income.

Here,
the
number of people in a family is
certainly important. The Bureau
of

.

is

be used

can

between

inadequate

the Economic Report.
This report gives the distribu¬
tion of income among families and

on

factor

second

A.

Stressing interdependence of. Capital, Labor and Management, Mr. Sloan says major task before each
of us is protecting and
preserving our American way- of life from regimentations and dictatorship.
Scores industry-wide collective
bargaining, and attacks Spence Bill (S-281) as causing abandonment
of free enterprise system and
increasing rather than ameliorating unemployment. Says Bill subjects
entire American system to risks of mistakes of one
person and his advisors.

Writer contends aggregate income analysis exaggerates size of low ;
income class.

ies

GEORGE

Chairman of the Board, Southern Agriculturist

One-

group.

9

Liberty and S-281

By CHARLES G. BROPIIY

Sparkman Report indicates substantial low income

(2085)

doubt but that it will

in the

coming months.

be misused

Central Republic Adds
rSr.*r«<U

to

The

Financial

CHICAGO, ILL.
Barrett
staff
pany,*

of

has

been

Central

209

members

Exchange.

—

Edward J.

added

to

Republic

the:

Lynch, Pierce, Fenner & Beane

r

Salle Street,
Chicago Stock
,

George D. B. Bonbright & Co.

Little & Hopkins, Inc.

the

Com¬

South La
of

Merrill

Chronicle)

Erickson Perkins & Co.

• 1

Sage, Rutty & Co., Inc.

U

THE. COMMERCIAL

(2086)

learn

Davis With

Chesley Co.
+

with

Chesley & Co., 105 South La Salle
Street.
Mr. Davis was formerly
with

Adams

business

did

thereto

and

Co.

&

»

an

as

winning the

dealers a special
to i the 116,000,000

Fund has prepared for security
sales program designed to appeal

Wellington
fund

mutual

ex-G.I.s, who early next year will begin to receive the $2,800,000,000
in dividends from their National Service Life Insurance.

includes a suggested letter to be sent veterans by
dealers together with a new booklet, colorfully illustrated, which
tells the mutual fund story in very simple language.
issue of "Wellington

The current

to the special

tion

CORPORATION

RESEARCH

120 BROADWAY, NEW YORK

The

5. N. Y.

fit

to

what

a

,

may solve your problem as an investor.
number of ways.
By protecting the capital

"The

Income," is sized

save.

-

Now the time has

can

Dividend Shares

Nation-Wide

-

the advances

investment buying.

There is no evi¬

public partcipation in a speculative sense. Loans against
securities are insignificant. The available yields from common stocks,
as against high grade
bonds, continue to be exceptionally favorable
on any historical basis—and this may well explain the flow of invest¬
ment funds into the equity market. The capitalization of earnings in
dence of

Securities

instances is far from excessive.
"The summer recovery in business was fairly, impressive; and
tended to show that inventories had been scaled down to a point

■>

from

as

; "More than a million Americans have found the answer in the
shares of Investment Companies—also known as Mutual Funds. They

W2 billion dollars to work in these shares. Let us tell you,
security, income and gain this money is using investment 1
company shares to produce."

have put

IBA Reveals GrassRoote Education Program
Will conduct Public Education Forum

of America,

and partner of Dewar,
Texas, a nationwide grass roots
program has been projected to improve the public understanding of
the essentiality of savings and investment, in addition to launch¬
(I) Lecture courses open to the
ing the "IBA Public Education public or offered on a more reBulletin," a publication designed tricted basis in cooperation with
Robertson & Pancoast, San Antonio,

cational groups.

trade shows and conventions.

"The situation is not without its risks,

be

to

more

and individual firm
advertising campaigns, using in¬
copy and attractive il¬
lustrations having verve, sparkle
and

pan,

Hal H.

>

The gas

industry contemplates expenditures of $3,500,000,000 4or

Dewar;

Joseph T. Johnson

to- assist IBA groups and
member

ual

firms

in

individ¬

their

local

recent public education projects. More
economic survey conducted by the American Gas Association, Robert than sixty investment brokers re¬
W. Hendee, President of the Association, told its convention on Oct. sponsible
for guiding) the - IBA
Group public education activities
18;-1949, in Chicago;
;
•
!
will attend the IBA Public Edu¬
Mr. Hendee told the 5,000 persons present that the nation's total
cation
Forum on
Dec. 3 and 4
gas plant, valued at about $6,300,000,000 at the end of 1948,-"almost
at Hollywood, Fla., just prior to
certainly" would rise to $10,000,000,000'in the five-year period,construction.Jn the five-year period,) 1948-52, according to a

.

your

from

.

•

v-

investment dealer:

""

or<J
i PHILADELPHIA 2>AV

;

—

i.

fiveyear period, $1;800,000,000 is expected to go to expansion of natural
gas transmission equipment and another $1,200,000,000 to other naturallgas, construction. Of the five-year total, about $770,000,000 was
spent in 1948, and some $940,000,000 is expected to be spent this year;
Of

the

♦-

the

tion

the

of

Forum

is

1

Hendee

Association.

under

the

:•

.

.

••

:

to

prominent mem¬
are active in

e

of-gas appliances at the; record levels established in 1948.—From a
Gas

Industries

Fund

bulletin.

are

education program there

*■ included

ers:

York

the

Forum

Schram,' President,

Stock

The Modern Way to

Custodian-

pro¬

Exchange.?

! i

New

Invest
Holcombe Parkes, Vice-Presi¬
■?;: Arthur WiesenbergeFs recenf two-page ad in "Life" offers a free dent in charge of Public Relations,
.booklet called "The, Modern Way to Invest,". It commences:
National Association; of .Manufac¬
"The last 10 years have broughtta great change to most Ameri¬ turers, New York.
.
.
cans. More of them? have made'money, and more of them have saved
i {John
7Jr;;; Director,
Public ^Relations Council, Ameri¬
•money, than ever before. " 1 •
D j .
,' '
.r,
"One word sums up .this?,great j change in American life.
The can ; Bankers Association,-. New >
word is—investor.
In the last 10 years, the average American has York.' ,•
{':i;
7':./;
become an- investor' : •*.' ;• • v
..y
■ !.".
•
;
Dr/s? Rensis Likert, Director of
the ^Institute for Social Research,
p • "Which <means that most-df us have a new and complicated prob¬
lem on our, handstand we cannot afford not to solve it.. How to in¬ University of Michigan,. Ann Arvest our money? How to secure our savings? How to assure—and to bor.->
; v
i f.
increase—our income? How to make our savings grow
'h Kenneth Dale Wells;; Executive
"These are the questions of the dayo Millions of families must Vice-President, Freedoms Foun¬
•

f

.

m

•

,

INVESTMENT FUNDS

,

l,.,

;

investing their capital-- r!.

.

i

BONDS
(Series B1-B2-BS-B4)

(Series K1-K.2)

J '*

ATTENTION,

r*

'

lie obtained from

Write

4 Y

'

-

Keystone .Company
of' Boston
50

Congress Slreet




37

dealer
and

to

or

to

local investment ;i"

rial

Coelln, Editor and Pub¬

lisher, Business Screen Magazine,
Chicago. 7

Hugh W. Long

Company, Inc., 48 Wall
prospectus and other

?

scriptive material about

de?*.

•*-

each of the 18 geo¬

graphic Groups of the Association
appointed committees to formulate
Group public relations programs,
and these committees will report
on
A

,

Industrials Organizations,

V During 1948

your

St., New York 5, for the offi-

- -

Boston 9, ^Massachusetts

4

of
Wash¬

ington,,D. C.*.
Ott H.

Ic&onJ&nJM

"IAvestors/

'

T1 ie

i

QyianLaliann

Bond

(Series S1-S2-S3-S4)

may

(8) Distribution. of informative^
helpful;.!
the uninformed prospective in¬

and educational literature
to

well

as

as

to the

more sea-,,

soned securities buyer.

(10) Cooperation
a

of

Gro

u p4

with1, other .,;
commu

¬

variety, of. programs.;

(II) Use of; carefully written;
artistically prepared mailings,
pieces that have warmth and ap-r

and

peal

;

contrast

in

sional

to

the 7 profesn

jargon of earlier r

(12) Window "displays

dustry,

«

years^jj^i
to. fan:;

public with local in-i;

•

.

(13) Formal education classes4*
organized for member firm em- ;
more than twenty co-> *
operating universities . andcol-lv!
leges throughout the country.Ylf • '

ployees at

(14)i Providing j articles on in*'<7
to editors^ of ^ employee f>
!: '*:*• c frpp'sSJpt +

vesting

house organs.;;-.

-These activities

reflect, accord*

.

ing to the "Bulletin," that a grow- ;!
ing number of persons in the in*':.;;
dustry are taking to heart the factri;
that there is a big job to be done,;:
and that

they

are

doing something.

.

Director.of Research, Congress

•

COMMON STOCKS

Prospectus

..

dation, Inci, Valley Forge.:.; ., v
Everett M. Kassalow, Associate

PREFERRED STOCKS Y

literacy.

miliarize the

„

Certificates of Participation

(7) Enlisting the cooperation of

,

•

Funds

:

•

Emil

„

on

following guest speak¬

gram the

in¬

the press in reducing financial il¬

nity! in

bers of the IBA who

on

for the individual;, of-:
cooperation with ac¬
credited
institutions
of
higher
learning.
in

divisions of the business

its public

years for.
(PAR) Plan.

J j(6) Educational classes

Milwaukee Co., and Chairman of
thj?;; IRA Public EducationCom¬

said the industry

the Association's Promotion, Advertising
The objective of the PAR plan is to
achieve better methods of producing:and utilizing gas, and to foster
an industry-wide,-coordinated-campaign of promotion to keep
sales

:yston

of

,

vesting
fered

(9J. Establishment
Speakers Bureaus.

jfor the next three

V

direction

o

against.

unrevealing, dead¬

Joseph T. Johnson, President, the

"and Research

-

The

touch V as;

tombstone.

opening of the annual conven¬ vestor

had demonstrated its faith in the mittee.
by subscribing more than' $1,500,000 a year to the Association
In addition

Mr.

•future

$3,500,000,000 expenditure intended in the current

human

a

the traditional

Investors.:

Expansion ?-

t

formative

For the time being, many common
desirable than cash."—Written by Edmund

Three and One-Half Billion Dollar

programs.

(5) Joint

(1) The government authorities have

seem,

educational >

of

schools and edu-?

(4) Radio and television adver-

tisihig

but certain things seem to

indicated a policy of
easy money under present business conditions.
(2), The deliberate
pouring out of Federal funds in excess of tax receipts adds to pur¬
chasing power. (3) Forced liquidation of commodities, real estate, or
be clear.

Showing

(3)

Also, there is-the obvious possibility that further adjustments
place in important industries such as automobiles and steel;

as

Brown, Jr., President of Fundamental

prospectus

-

j 2 >; Exhibits and. booths at fairs,

films to various

stocks

'

r

groups.

of securities is not imminent.. (4)

v

-a,

civic, social, trade' or professional.

must take

Established 1894

u

According to announcement of Hal H. Dewar, President of the<„;

;i

Investment Bankers Association

domestic

regards international trade and

of devaluations

prices.

0\

Begins publication of

they had to be replenished. Employment and personal incomes
declining have been well sustained. On the other hand, busi¬
still has to reckon with serious labor disputes and the possible

effects

.'

Dec. 3-4, at Hollywood,

on

by Joseph ;T. Johnson.
Bulletin.:'.

over

while

CALVIN BULLOCK

making machinery work.' How 4

put this expert skill to work for your money?

you

:

where

ness

to work for you—and1

your money

skill,

much expert

as

for

many

Prospectuses
available

lows.: But

come

But making money work is just as hard to do, ;;

work, efficiently.

and calls for

high
is of

terms of the averages, is substantially
of the past several months

present market, in

the June

to have been the result of

seem

of ypur

By earning capi¬
This is not a hope.

by-product of security and income.

record.

Market Comment
above

■

"You have had to work for your money. You have sacrificed to u

j
to

-

Organization created the >■
problem of financing and.

a

Fla., presided

•

and they

By earning steady income from them.

tal gains as a
It is the

ordinary business envelope and in its 11 pages tells
The story is told in fast-

an

In

"How?

mutual fund is and how it operates.

moving, - easy-to-understand,1 nontechnical language with the
points-illustrated by lively pen-and-ink sketches. The booklet
the type that can also be used generally.

Bullock Fund

questions,

how much

booklet, entitled "Looking for More

new

into

in

through you, even
continuing source
of earning power

though the initial order is small, you will have a
of business.
These young men have many years
ahead of them.'?

SECURITIES; &

NATIONAL

News," calling dealers' atten¬

sales program, says: "If you can get veterans

community started now buying mutual funds

your

Prospectus -upon request from
your investment dealer, or from....

,

modern

.

organization has created the modern Mutual Fund-in *

that you

investments.

The program

^

are

modern way.

problem of safety for savers.

war.

"Just so,,

I

order

m

a

pool of War Savings Bonds, and solved the

Looking for More Income?

v

vidual dealer in Chicago.

ithi

They

them.

ansv/er

and solved the

By nENRY HUNT

prior
indi¬

.

to

\
"The modern way to solve problems is through organization. Or-?;
ganization created the mutual life insurance company and solved the
problem of protection. Organization created the mutual savings bank,

Lambert. L.¬

—

how

must be answered in

(Special to The Financial Chronicle)

CHICAGO, ILL.

Davis has become associated

Thursday, November 24, 1949

&, FINANCIAL, CHRONICLE„

REGISTERED

INVESTMENT

their activities.

The programs

by these Groups have
taken a' variety of forms; which
have been summarized in the IBA
sponsored

COMPANY

INVESTING ONLY

IN

BONDS

"Public Education Bulletin";

.

positive about it. ;v-

Sterling, Grace Adds
|

Three lo;Staff

Sterling, Grace & Co., 50 Broad ;;

Street, New York City, members /
of the New York Stock Exchange^ '
announce
that J. George Frings,
Henry

Bultman

and

Harold

P;

Moon are now associated with the

firm

as

Mr.

registered representatives;

,Frings ,was formerly with
Fitzgerald & Co!, Inc.

..

Volume

170

Number 4858

THE

COMMERCIAL

FINANCIAL

^Bv

vy

;

JOHNSON

This Week—Bank Stocks

CHRONICLE

>,

Possibly
far

so

one of the most significant facts in the recent sale of!
Transamerica is concerned is that it reduces the shares:

'

CLARK CLIFFORD*

Special vCounsel to the President of the United States

-

^

ship nation

maintain its predominance.

can

,

9

11

'

Stressing mutual dependence of business and government, President Truman's advisor asserts goal^i
government is to have business prosper and, instead of being critical, business should therefore assist
government.
Explains basic principles of Fair Deal, and ascribes present business prosperity to Ad¬
ministration policies. Concludes we are in vital period of world's
history, and with highest type of leader-

v

The recent sale
by Transamerica Corporation of 1,199,554 shares
of its holdings of Bank of America National Trust
and-Savings Asso¬
ciation provides an occasion for a few comments
on some .of the other
investments of this bank
holding company.,
.
'
,
stock

(2087)

Business and the Government's Program

Bank and Insurance Stocks
By II. E.

&

:

We hear

a

"

}

good many

great deal about the relationship between government and business.

a

as

Fof

*

years we have heard it. It seems to me we might together look at some of
2,336,321, constituting approximately;
22.82% of the total number of the outstanding shares, to 1,136,767 or: the fundamental principles that, exist. Perhaps this
might seem elementary, but oftentimes
it
is
wise to
return
to fund a-<£
approximately 11.10% of the total shares outstanding.
mentals,
The Federal Reserve Board has for some time been
among
the various segments of i That is being given attention; as
holding hear¬
I think it would be fair to say our
ings on its charges that Transamerica's commercial banking activities
economy—business, the farm¬ the farm program is being studied
that business and government are
"may have assumed monopolistic tendencies in five Western States
ers,labor, the general consumers. and unfolded.
"
;
held in Bank of America

where

Transamerica

has

from

investments

large

in

banking institutions.

here

to

We can't get along
business, and I don't be¬

stay.

The crucial issue revolves around whether or not Transamerica con¬
trols Bank of America. The contention of the Federal Reserve Board

without

has been

Bank of America are cne and the
conceded that the exclusion of Bank of America
from the Transamerica banking group would remove all grounds for

out

the proceedings.

some-day

that Transamerica

and

.'v■

Inasmuch as the recent sale of Bank of America shares .reduced
the holdings of Transamerica
by approximately 50%, there have been
that

reports
which

an

agreement might
the proceedings.

have

been

,could

or

reached

be

would end

;f;.-,:

hear

to

used

problem would have

a

government
would gain the

According to a recent announcement the Federal Reserve Board's
.anti-trust hearings against Transamerica will be resumed next week,
;Noy. 28. Because of the developments'nf the past month, some indi¬
cation of the future status of the proceedings should be
forthcoming

cendancy,
that

over

^business. I

rot. There is

a

this

life

Regardless of .the immediate .outcome of these hearings, however,
.Transamerica as a holding company with substantial interests in
►Western bank, insurance and industrial companies ?is an
interesting
situation

►

for

investors.

.

Although the sale of about 50%
America

its

investment

substantially reduced its holdings in this

rnaining. 1,136,7*37 shares with
lion

of

_■

still

constitutes

in

Bank

company,

the

of
re-

current market value near $50 mil¬

a

the. largest

single investment of Transamerica.
Another of its large commitments is in National
City Bank of New
.York which, at the end of 1948,* totaled 448,203 shares of the capital
stock with a current market value of
approximately $20 million.
y:In addition to these two large banking inyestrnents, Transamerica
controlled 47 domestic banking subsidiaries
opejating; 132 banking
offices in the five states of California,
Oregon, Arizona, Washington
;and Nevada.. These investments .were carried by Transamerica .at, a
figure of around $25,700,000, whereas on an adjusted book value basis
they were worth oyer $50 million.
•
'
k.
•
•„,
*•
..
,'
.

,

y;

Co.,

manufacture

of

resolve

can

a

that

r-'

■■''4

>

also

a

of government.

We

oblivious

think

I

your

drpmeht rieeds

^uslness'for
There pre
in

at

best

next -session

the

gress.

>■

We

have

are

-

rl'

to

be

that-across -the

of

board

fact

the

is

there

-a

general increase in the cost.of do¬

government positions.

of places ing^ business—transportation cost,
labor cost,

government that can be filled

many

so

of those costs

engines, castings and forgings, andV aircraft only by men who have had the over whiGh you, las executives,
^accessories are also controlled by ownership of-, a large* percehtage
have very little .control, because
training that you'men have had.
of the capital stock.
;
.
>
; ' i 'Y '
' *
*.
One ^fhe majoi* functions, it' they are fixed costs. Attention is
Jn addition to. the above, Transamerica1 has ^substantial blocks of
marketable securities including 38,937 shares of ^Citizens National seems'to
being given to that.
me, of'government is to
-

-

Trust

&

Savings Bank of Los Angeles, 34,897 shares of Fireman's
Xund Insurance Co., 628 shares of First National Bank of New York,
and 56,900 shares of Georgia-Pacific Plywood & Lumber Co.
*
i'l ;A quick survey of some of the accounting practices .of Trans¬
.

.

america shows that the

carrying values of the foregoing subsidiaries
and-investments are substantially below reasonable realized values,
possibly by as much as 35% to 40%. For example in the case of cer¬
tain of its marketable securities, carrying values are based on the
.quoted market value as at Dec. 31, 1931 for securities then owned
still

and

held

or

at cost

or

less if

maintain

H.

Now. Griff in & Co.

"

RALEIGH, N. C.

"Stenographic report of address in the relationship of the cost of
Mr. Clifford at the Annual farm
products as related to the
Dinner of the Grocery Manufac¬
turers
Association,
New
York general standard of living and
purchasing power of our people.
City, Nov. 15. 1949.

of

Griffin

phia National Bank, has been ap¬
pointed Chairman r of the Bank

dent

and

"

ISSUES

-

treasurer; E. J. Griffin,

vice-president, .and M. C. Mark-

IT. Raymond Peterson, President
of the Association, v..

Jr.

The Connecticut

functions

of

.

this

Commis¬

sion

are

most

important of the various

considered

sociation

clude

among

is

with

the firm

ing department.

First and Refundiog

in

?

,

the Commission since 1943 and

dent

Price

the trad-,

BANK STOCKS

and

Cashier

of

of our economy

or this particular
of individuals, or this pajv

group

ticular pressure area is -entitled
tq
a fair deal. It
says that every citi¬
and

zen

ievery

segment

;

.

.

The basic principles of the Fail
it seems to me, are best
Stated in the President's State of

Deal,
the

Union

message
in January,
I .refer to those because I

1949.

have some

acquaintanceship yvith

those messages.
There

.

the

set -forth:

.

basic

five

|n

BUYING ZONE

as

Copies
these

Tax loss opportunities in

American

of the prospectus may-be obtained
issues

may

as

,

(2.) Achieve

human
: >

and

(3) Conserve

natural

broaden

and

natural

and

expand

resources.

(5)

.

Laird, Bisseli & Meeds

(Special
-

Members

With H. P. Wood & Co.
to The Financial

BOSTON, MASS:

Burnett

is

with

H.

—

P.

120

Chronicle)

Co., 75 Federal Street.




York

BROADWAY,

Telephone:

Robert E.
Wood

New

Bell

&
...

■<L.

\

Stock

NEW

YORK

BArciay

5, N.

Y,

1-3500

Teletype—NY I-J248-49

A. Gibbs,

The First Boston

Corporation

...

~ >

Achieve

a

just and lasting

Briefly,

let's

look

at

-

Since

this nation

(Continued

on

was

page

"

Due November 1, 1984

Stock, without

par

value

Share

-from November 1, 1949

An any State fromsuch deqlers participating in
laws of such State.

Estabrook & Co.

Haram^n Ripley & Co.

Manager-Trading Dept.i

Smith, Barney & Co.

fr.corporatcd

Drexe! & Co.

Blyth & Co., Inc.
NtA-eipber 22,. 19/tO

■

v

,¥

'•

.

.

.

Kidder, Peabody & Co.
1

to

•

the

sigi

nil'icance of tnese five goals.

Chas. W. Scranton & Co.

Exchange

>

our

peace.

'

■-

j

greater prosperity.

legally offer these Securities under the securities

Putnam & Co.

>

our
.

Strengthen and expand
domestic
economy < in
order
(4)

achieve

our

resources.

...

Bank and Insurance Stocks

-!■

(I ) Secure the essential humait
rights of our citizens.

Trust Company of San Francisco.
———■

are

; "

102.23% and accrued interest

plus accrued dividends

"

>

.

•'

j

:

:

.

.

goals

-

Mortgage 2%% Bonds, Series L, due 1984
c:,

ous

r

Light and Power Company

1949

of

economy is entitled to a fair deal

.

Vice-Presi!

Senior

-

Price $51.50 per

its 1949-50 Chairmah, he succeeds

Kirck,

.

100,000 Shares $2.04 Preferred

operations*as well
management.
;
* '
i} Mr.
Kennedy; .'has served on

V.

v

"

;

-

as¬

its duties ^in¬
continuing
improve¬

as

a

the

ments of bank

E.

Dated November 1,

groups;-

the

j

$10,000,000

ham, secretary. Charles j. O'Neill,

The

•

-

sen¬

and

our

name

&r

Management Commission of the
American Bankers Association, by
.

to

citizen

every;
economy is en¬
fair deal
from! this

of

appears as a mutter oj record only and is utder no circumstances to\ be construed us an offering
"of these Securities for sale^or as an offer to-buy, or as a solicitation of an offer to buy,
any such Securities.
The offering is made only by the ;Prospectus.

NEW

Vaden,' Inc., Insur¬
Building, has been changed
to Griffin & Company, Inc. Of¬
ficers are George I. Griffin, presi¬

.Kennedy, Vice-Presi¬

Every

It is right significant. It doesn't
?ay that this particular segment

v

by

This
'

messag^

the last page

on

;

in¬

particular interest

a

interesting.

Announce-

—

that, the firm

ance

dent and Cashier of the Philadel¬

haye

is

subsequently acquired.

ment is made

ABA Commission
V; James

balance

men-;in-this particular

dustry

•

Kennedy Chairman of

reasonable

a

You

tq

thq

easy, popu¬

government."

Con¬

;V;•. ■"

conscious

call

that message appears the

titled

made

the

of

origin of it

segment

may

we

'•'

conceive
we

an

January, 1949,

judgment possible

decisions

-when

to draw on men in

any 'number

the

have

The

tence,

it

being made in order that

I

what

of

Jhat (receives close ? and careful
study, and at this particular time,
thorough investigation of that is

;

what

aims of

distortion of

might ^briefly

in

might
come
.to you, perhaps,, some of
you, jas a surprise; to know
the

economy.

you

I

In the State of the Union

goals

to

that

the

see

lar, now-accepted expression.
"

;;\

not

are

problems.

me

to

Fair Deal. That is

business will make

diesel

.

be

better ef¬

,

other sizable investments including $14,360,637
.real .estate .subsidiary, and $10,750,000 in Allied
Building Credits, Inc.; a wholly-owned home financing enterprise!
A number of relatively small industrial .companies engaged in the

In Capital

we

a

the effort to understand the

.Other interests of the .company; includes insurance companies
;i' ^
fciai
writing life, fire, automobile and inland and .ocean marine insurance.
These companies include, Pacific National.Fire Insurance
Co., Occi¬
: *1 "submit- that
that is not the
dental Xife Insurance Co. and Prepiie.r insurance Cp.^ and are also time perhaps for business to be
conservatively valued on the balance sheet, no consideration being critical: That is the time for busi¬
]given to the value of insurance in force with the life insurance sub! ness to; assist. Government needs
mdiary or the .equity in the unearned premium reserves of the other the-wise towisel of business. Govwere

time

and that

ness

with reference, to other segments

Not Be

good deal of

a

if

amount of time, that is given. We
Jhat. is one of the goals of
are conscious of the
fact, for in¬
government, that business should
stance, that the -tax situation today
prosper. When business prospers,
is of vital importance to business,
the: country prospers. Sometimes
that it impresses itself upon every
we enter areas of stress and strajn,.
when" that .goal of business en¬ phase of your .operations, that, it
affects particularly your ability to
counters softie conflict with other
goals that the gover nment A has get risk .capital; that is a ;matter

Should

perhaps

in

basic aims oi

some

Let

relate

stronger ; effort
to
understand the problems of busi¬

country for

Business

the

are

it.

that at this par¬

me

per.

I

There

has been

forth.

so

government will make

nation,
The major goal of business is
to make profits. You want to pros-"

our

with

has

government

your

there has -been

and

fort land

ists in this great

of

z

misunderstanding of it/ Perhaps

ticular

think,-

business
exist co-equally, so that as partners we can re¬
alize the great promise that ex^

t,

insurance subsidiaries.

what

damage to all of the seg¬
and labor and

It seems to

and government to

of

evening

this Administration? I think there

or
asr

vital and absolutely
in the economic

■at that time.

this

be to acquaint you

farmers

place

necessary

perhaps if I cab

service

ments; of industry

all agree that is tommy-

we

it would

segments rises

that

some

mind. What

cause

be

ancy'over

believe

render

economy.

of imbalance which ultimately can

that

comments

of those

one

I

maintained,

healthful

a

too much in an ascendency over
the other segments, we get a state

we

resolved—that ,is, whether
business Would gain the ascend¬
to

government

:;r

the-;5past

have

When

;

in

think

I

When that balance is
we

get along with¬

can

government.

-Also,

It has been

same.

;

lieve business

Coffin & Burr
Incorporated

founded^'
33)

•

;

CHRONICLE

FINANCIAL

&

COMMERCIAL

THE

(2088)

12

Thursday, November 24, 1949

Herbert Hunter to
Our

Speak Over Radio
D.
&
Company, members of New York
and Detroit Stock Exchanges, will

Reporter

speak on the subject, "How to
Analyze a Financial Statement,"
WWJ Auditorium on Monday,

Nov. 28, at

the

of

last

has

Hunter

Mr.

strong and advancing markets.

the past 15 years.
For two years
during the war he was assigned

most

Griswold Street considers him an

authority

.

The lecture is open to
and

the pub¬

complimentary admission

tickets may be obtained from any
broker

pacemakers

ment

out the market has been1 on the thih side^

ILL.—First Securi¬
Company
of
Chicago are

CHICAGO,

the longer

purposes.

bit

in connection with

.

.

.

mean

passing into the strongest hands.

holders of Treasury-

The

now

.

"

.

.

it is indicated,

proceeds,

being put mainly into short-

are

*

term issues.

.

banks

for

BOSTON, MASS.
Shevlin

New

York

Conrad B.
affiliated

with Hunnewell & Co., 49 Federal

Street, members cf the New York
and Boston Stock Exchanges. In
the past he was with Edward A.
Monahan and R. A. Gallagher &
l':

Co.

sellers of the eligible issues, particu¬

are

the

four

(Special

to The

Porreca
with

has

Chronicle)

Financial

MASS.

—

.

The 2V4's. due

.

.

largely

from

Raymond &

Co.,

affiliated

State

148

-:>r;;

Street.

banks,

that all offerings

so

among

the

1956/59

out-of-town

in the de¬

also coming into the market,

again

herein

but

commercial

sizable

more

are

sources,

banks

is

.

.

demand

the

sizable

than

more

enough to take pare of all this bond that is offered.

.

This sell-re¬

funding operation by the deposit institutions has had a favorable in¬
fluence

upon

longer? Some

prices'-oF eligible
others

say yes,

opinion

of

issues,

say

but

it

will

it is about over.

.

.

much

contnue

what make prices fluctuate, and

are

by large institutions of the re¬

stricted issues along with a little more than token liquidation by the
authorities could halt, if not reverse, the upward trend of the mar¬

However, there is nothing on the horizon yet to indicate this

take place immediately.

...

On the other hand,

some are

wondering if recent small sales of the longer-term obligations by the

u. s.

stantial

sharply.

TREASURY
★

.

★

tend to move up

of

tomers

buying which has been going

on

in the market, pen¬

the principal buyers, along

with savings institutions.

BILLS

NOTES

.

.

V:

.

BONDS

.

that

more

kets

than passing

attention, with

followers of the money^ mar¬

some

looking for the low-income short-term issues to be continued,

with five-year

maturities about the longest to be expected

over

the

.

.

.

This would keep interest cost down which is one

thing the authorities seem to be very conscious of.
side of the

;

since

INCORPORATED,

'

'

Telephone WHitehall 3-1200




.

.

On the other

short-term debt, which is very

sizable, will not be allowed to increase too much more.

refundings.
The

15 Broad St., New York 5, N. Y.

Teletype N. Y. 1-3690

they believe the

look for issues other than, bills

8c Co.

.

picture there are many who do not go along with these

conclusions

years

even

and

They

certificates to.be used in future

that

same

that

the

will

.

.

.

care

seven,

of called

twelve
or ma¬

A definite pattern, including longer-term

obligations, it is held, will be worked

out and put

in operation

prepared for the heavy savings bonds and

maturities in 1951 and 1952.

other

Bank

hence¬

in

be¬

and

these institutions

in

Scott

Mr.

1920.

director of

a

1906

with the Chemi¬

when

merged

were

Born and
City, he

64.

employ of the. Citizens

Bank

associated

came

Doehler-Jarvis

Corporation,
New
York,
and
Manufacturing Co. of

Clinchfield

Marion,
the

C., and

N.

Postal

New

the

Life

York.

Trustee of

a

was

of

Co.

Insurance

He

member of

a

other
v./.'-.,"/"V

Lawyers,

Bankers and

clubs.'
*

if.

>.

•E. C. Gersten, President of The
Public National Bank & Trust C<*.
of New York, a n nou need that

Raymond Clark, Thomas J. Eichler, Robert P. Graham and Henry
E

Executive

'Podsen,

Assistants,

Credit and Business Development

Division, main office, have been
appointed Assistant Cashiers and*
that Herbert

Griffin, Administra¬
Assistant, 161st Street office,
appointed an Assistant

tive
has

been

Manager.

Company

office

Company* of

York

New

•

:V:-": •'.*;■

Approval
Ycrk

State

.

r

given by the New

was

Banking

Department

Nov. 10 to plans of the Fidelity

on

Deposit
to

from

street

office

across

White

Plains

Bank

The

at

2196

four

locations of

new

Trust

Co.

will be:

While Plains Road, 360 East

2196

1254 Southern Blvd.

East

410

138th

National

Street.

of Directors

former Board

Bronx

will

Bank

The

of

the

act

as

Company

of

New

increase its capital stock

$200,000 to
$300,000, par
$100. On Nov. 14 the Department
announced the filing by the Fi¬
delity Safe Deposit Company of
an agreement incident to the mer¬
ger of the York town Safe Deposit
Company into the Fidelity Safe
Deposit Company and authoriza¬
tion

issued at

was

the

same

time

Advisory Board for Manufac¬ for the opening of a branch of
Trust Company Bronx of¬
the Fidelity at 500 Seventh Ave¬
fices. An item bearing on the ac¬
nue in
connection with the mer¬
quisition of the National Bronx. ger of the Yorktown Company
Bank by the Manufacturers Trust
into the Fidelity.
'
■
c
appeared in our issue of Nov. 3,
an

turers

page

^1770.
appointment of Franklin P.

Johnson of the

Security Analysis

Company

as

Assistant

an

is announced by
Gibson, President of
the trust company. Mr. Johnson is
a native of Manchester, N. H. and
a graduate of Washington and Lee
University. After five years in the
investment banking field he be¬
D.

Harvey

associated with Manufactur¬

came

Trust Co. in 1934 and

pointed

was

ap¬

Assistant Secretary in
During World War II, he

1942.

an

the

Army Transpor¬

The
the

commercial
After

and
the

the Chemical Bank & Trust Com¬

York

host

was

Tuesday night, Nov. 22 at
of the

ner

of

a

on

din¬

Quarter' Century Club

the bank held in

of

which

Doubtful

actively em¬
ployed and 47 have been retired.

At

the

meeting,

President
of the

which

Ralph

Miss
of

the

evening

preceeded

G.

Edith

Adams

club.

was

Peterson

the

A

as

feature

announce¬

ment of the winners of the

Essay
titled, "My Bank—My
Job." held under the sponsorship
of the club. Two classes qf prizes
were
provided with those under
Contest

constituting one group and
over 22, the other. Contest¬

tiiose
ants

were

force.
and

limited

Prizes

deduction

for

$2,231,670
$835,000 for

to

of

Dominion and Provincial Govern¬

taxes

and

writing

$395,475

bank

rate

of

balance
forward
count

.10%

of

per

$301,1951
Profit

to

which

now

the
carried

annum,

was

and

Loss

stands

at

Ac¬

$1,-

355,705. Capital $7,000,000, reserve
$10,000,000 remain unchanged.
Total

deposits

increased

of

/

$388 605,000

$30,000,000 for the

over

period under review, v,,i.".'-

are

election

an

profits

Debts,

amounted

year

before

the Starlight

membership of 215

a

168

appropriations

premises. After distri¬
bution of $700,000 in dividends at

^ :

Jackson, Chairman of

New

loans.

to
Con¬
tingency Reserves, out of which
full provision was made for Bad

a

of

of

Toronto,

position, substantially higher de¬
posits and a notable increase in

off

pany

Statement

Bank,

Canada, issued to shareholders to¬

ment

N. Baxter

Annual

day showing results of the Bank's
operations for the year ended Oct.
31, 1949 indicates a strong cash

atre of

Operations.

79th

Dominion

tation Corps in the European The¬

22

maturities of five,

longer will be used to take

turing securities.
in order to be

...

j

...

opinion is held

and

the

At

entered the

was

of

age

in

Safe

succeeded
next few years.

the

York

Bronx

The club has

refunding operations of the Treasury have been in for

Future

as

Ball Room of the Waldorf-Astoria.

EYES ON TREASURY REFUNDING

Axjbrey G. Lanston

21.

officially

latter insti¬

Trust

&

tional

The pension buying has

CERTIFICATES

open

.

.

.

n6t been in large blocks, but a number
of smaller ones, and there is no question these are the kind of
purchases that mean the securities are passing into strong hands.
...
Savings institutions have been a little less vigorous in new
money purchases than recently, although
there has been con¬
siderable trading from the shorter taps into the longer issues.
.

at

cal

Summit,

of

York, died suddenly on Nov.

forth be served at the former Na¬

funds, mainly those administered by trust companies, have

been

recently

the close of business Nov. 18. Cus¬

served with

.

As to the

sion
★

offerings will be made, if prices should
.

offices of

being discontinued after

way was

ers

that be should be taken as a mild warning that more sub¬

powers

17

Vice-President,

There is little doubt that selling

is going to

^

Department of «the Manufacturers

...

WILL FEDERAL ACT?

...

Nov.

on

announced

was

17

branch office at 652 Pelham Park¬

Trust

ket.

;

'

was

of the

Nov.

on

The

.

far the bulls seem to have had the best of the argument.

so

Joseph C.

become

bank

Company, would

it

Bank

New

three

of

banking

which

149th Street,

mand.

a

acquired by Manufacturers Trust

and

commerical

the larger

Differences

Raymond & Co. Adds
BOSTON,

term

a

announced

Manufacturers

companies

.

—

as

Manufacturers Trust Company-of

Road.

BULLS IN DRIVER S SEAT

among

1

.

.

have been absorbed without making very much of a dent

become

has

Group

by

.rK

stantial

Chronicle) ./

reelected

in

larly the 2's, but the demand for these securities has been very sub¬

With Hurmewell Co.

class

a

-LHarvey D. Gibson, President of

the

Insurance

as

beginning Jan. 1,,1950.. /

time

Some of this is already going on with savings
letting out issues they acquired not so long ago. . .. .

high ground.

last 20 years.

The Financial

1

bank; and Lewis

was

chosen

was

years

tution

...

cially the ineligible, if prices should continue to move into newhanks

ac¬

cident prevention and has been
prominent in civic and American
Legion affairs in that city for the

(Special to

Group

branch offices

building recently by dealers and traders and this
are

New

class B director of this bank. Each

York,

of line than for general market stability

.that securities

Bank,

the National Bronx Bank, of New

There has been, according to reports, more than a little

inventory

in

Y.,

N.

that

particularly

obligations will be sellers of the more distant maturities, espe¬

Traffic Commissioner of High¬
Park

It is being pointed

The authorities have supplied

.

Chairman

Bank of New York

Avenue

Manufacturers Trust

Company and Yantis & Company.
He has a statewide reputation
land

j

cal

Scott

D.

Vice-President of Chemi¬

a

National

the Board,
Johns-Manville Corporation, New

through most of the rise,

It is also the opinion of some that large

to date he was with Brailsford &

as

of

does not

1945

From

1945.

banks

J.,

18 stated that:

H. Brown, Chairman of

concerned.* Large institutions have

are

ineligible obligations.

tain issues from getting out

1921
Webber, Darch &
Company from 1933 to 1942. He
reenlisted in the Navy right after
Pearl Harbor and retired. as a
in

offerings

as

H.

Robert
N.

educated

A director of this

the market with only minor amounts of the longs more to keep cer¬

Stuart & Com¬
to 1933, Vice-

of

Commander

far

as

Lewis

and

Traphagen,

Fifth

ber

There are many

abstained from selling issues that have been in demand,

pleased to announce the election
of Edwin L. Gilroy, as Vice-Presi¬
dent of the company.
Mr. Gilroy
from

especially

directors

York, N. Y., was elected by mem¬

market followers who believe the rise is not based upon.sub¬

stantial enough ground to carry much further..r

A.

with Halsey,

C.

member

.

of

re-*-

B director, whose
Dec. 31, 1949, the

Nov.

on

and

highs that have been registered in the govern^-

new

market, considerable caution still prevails.

money

'

President

...

election

of the Board,

.

.

.

bank

of

Bank

Winthrop W. Aldrich,

director,

John

STABILITY OF PRICE LEVEL QUESTIONED Vv/;'

First Securities Go.

pany

terms

..

Reserve

announcing the

class
expire

York,

Edwin Gilroy Joins

was

.

the

A

Brown,

although more profes¬

in

succeed

to

class

Nonetheless, securities are being

.

are

.

Despite the

ties

.

institutions to keep them in line with the rest of the market.

'

change.

.

Detroit Stock Ex¬

the

or

of

1956/59.
The 2%s due 1960/65 continue to rule the partially-exempts,
although the 1958/63s are also being well bought. ... Despite
; considerable switching from the short-term issues by certain
deposit banks, there is still a good enough demand from other ;

nancial statements.

lic

suits

previous

eligible leaders, with many buyers taking on the 2l4s due

fi¬

of

subject

the

on

ability of

the Victory bonds, as they have been in
of the market climb.
The 2V£s due 9/15/67-72 are the

The

Federal

York

have been creeping into the picture recently.

sionalism appears to

The
New

put away, with investors the largest buyers,

renegotiation.

Contract

War

to

CAPITALIZATIONS

quotations have pushed on to new

present other times, when

highs.... Also there seems to be more skepticism over the

for

work

Bankers

and

OFFICERS, ETC.

REVISED

Volume has expanded, although it is still

.

.

.

NEW

enough yet to give the market the same breadth which has

the market to maintain the uptrend than has been around in

engaged

been

analytical

financial

longer-term issues.

NEW BRANCHES

the constructive side

on

having been made under the leadership of

in the wake of new tops

been

sponsored by the Michigan Asso¬
ciation of Customers Brokers.
in

obligations continue

Prices of Treasury

not sizable

8:15 p.m. This will be
a four-lecture series

By JOHN X. CHIPPENDALE, JR.

5

the

at

News About Banks

Governments

on

CONSOLIDATIONS

DETROIT, MICH.—Herbert
Hunter of
Watling, Lerchen

to

the

clerical

of

$250.00, $100.00
$50.00 respectively were

Commercial loans and discounts
in Canada
a

aggregated $157,047,000

record total for the Bank while

Dominion,

high-grSde

Provincial and! other
securities
totalling

$158,481,000 showed little change.
Cash assets totalling $83,009,000

almost

represent

21%
of
the
public and

Bank's liabilities to the

immediately

available

assets

of

$249 055,000 are over 62% of such
liabilities.

.

Total

assets

now

ex¬

ceed $426 000,000, the highest ever
nublished

in

the

of

the

will

history

be

Bank.

The

Annual

Meeting

awarded to the winners—three in

held in Toronto. Canada,

each grouD.

day, Dec. 14, 1949.

Wednes-i

Volume

170

Number 4858

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

allowed

Wastefulness in Government Finance

trfbution

.'V.

By T. COLEMAN ANDREWS*

V'

Member of Hoover Commission

Government

on

ple.

the
is

$4 billion

""

billion.
we

Now

really

have

a

—the

greatest

in all

our

in

workers

important

an

garded

excited

his¬

cause

advocate

about

the

project if they

it

the

expected to accomplish what they

business

tory—one that

had set out to do,

worthwhile had

of

founda¬

very

tion of
s

was

try

also

think

that

about the fiscal

get

ment in this country,

has

—•

lhat

fighting mad
—mad

to

our

t. Coleman Andrews

to

us

throwing

.

.

of

$1.7

design

billion

.

last

year

expected deficit of from $5 to $8
billion

this

deficit

of

year

from

in the cards for

clear

.

for

erned;

the

to

return to the
sion from

.

.

of

as

im¬

govern¬
the

gov¬

the

for

governors—at first

creeping, but

plunging,

now. a

tyranny' and

oppres

our; country
168

fou»ht

themselves

Less than

after

200 years of free¬

unreckonable

ages

will to be free. We

short-lived

our

is

are

the

giving

freedom.

If

up

there

spark of resistance to slavery
left in us it is indeed so dim a one
a

to

as

be

hardly

it be

can

that

discernible.

Or

merely do not

we

comprehend what is happening to
us? Take ycur choice. We should
be

ashamed

as

of

one

and

choice

a

co-founders

through the

be¬

this

of

that

saw

ages

down

had lived

men

by and under the sword, and that
the

of the

power

rived

from

Prior

sword

control

to; the

of

de¬

was

the

founding

purse.

this

of

country, the only people who had

masses

forced

were

live.

to

written, it
so to

eral

was

was

deliberately framed

limit the poweirs of the Fed¬
Government that

control of

Talk about government

finance"

economy? Where may we find
either today? Our government has
financial

no

talks

with

policy.

One

day it
inflation

about

deficit

it

talks

nancing
What

preventing
financing. The next
about
using deficit fi¬
to
prevent
depression!

miracle-worker spending
become in the minds of the

has

a

of

managers

public

our

affairs,

in the minds of all too many
of the people as well. And to talk
and

about

government

farcical,

because

economy

in

the

is

economy

there

isn't

any

management

of

national affairs. Economy was
lost in the shuffle long ago. I re¬
our

ladies

peat,
are

gentlemen:

and

We

flirting with disaster, and the

time

.

more

has
than

to

come

do

something

Perhaps

just talk about it.
you

just excited. I

think

that

I

am

excited, in all
the meaning of the word; and I
make no apologies for it. More¬
over, I aim to get you excited if

I

can.

*An

arn

One of Richmond's business

leaders

once

told

address

before the

a

by

group of

Mr.

half-

Andrews

Virginia Manufacturers

Association, Richmond, Va., Oct.
22, 1949.
' ~ '




with

we

can,

lot

a

in¬

.

the. establishment

of limited

is left of

long hold

on to

what

rights as individuals
certainly cannot hope
to regain any of those rights that
already have been taken from us
—and

our

we

against

as one

takes

powers.

Jefferson

and

to

contempo¬

sory

propositions with which

presently
were

are

toying;

convirced

that

if

we

of

these

that

.

.

forcibly

class to curry the
another
that claims

of

hands of the people.

raries also

,

his

and

"

.

The

we

ac¬

inmate

an

.

.

that makes

.

a

social

of

wise,

12

bers

from

three

—

House

members

permitted the Federal Gov¬

ever

ernment

to
of

worthy

the

fieedom would

the
individual

land,

of

the

while

it

Thus the Commis-

to be

was

non-partisan, and,
be,

may

from

some of the
Commission's

the

and

find

recommendations

Commission

were

This

accounts

turned

in

thoroughly objective

a

report.

members

of

the

Commission

Chairman, and the
Commission, officially designated
The Commission oi Organization
the

of

Executive

Government,
known
Mr.

the

as

Branch

Hoover

for

those

around him

a

by

group

business

gathering

;

of more than

and

professional
each chosen for his knowl¬
of, or experience in, some

men;

edge

name

*

.

particular
this

of

aspect

ment's "affairs.
group

He

into

the

govern¬

then

divided

t^sk

forces

surveying of one or
departments the responsi¬

more

bility of each task force.
The

•

result

the

was

most

—Department of Caldas f 4

ownership

of property was as¬
This right is being openly

sured.

challenged

all

over

day, but nowhere
in

so

America

Department of Cundinamarca
An offer is

to¬

vigorously

as

Washington.

(Continued

on

page

Government's

gift

wealth

where

to destroy personal
bring us to the point
every
generation would

means

of

mendous

exactions

that

or

tre¬

left for the accumulation

of

is

sav¬

In

been

tradi¬

England

private wealth has
been destroyed to the point where
it is incapable of further promo¬
tion of private enterprise.

the

50-odd

Of all

million

people in the
British Isles, less than 250 of them
have

Seven Per Cent

Department of Antioquia

of $20,000 per
Think of it, ladies

in

gentlemen!

every

That's only

200,000 people!

We

7% Thirty-and-One-Half-Year External Secured Sinking Fund Gold
April 1, 1927, due October 1, 1957, First, Second

Department of Antioquia

Bonds, dated
and

'

\

-

bereft

of

individual

free¬

the people of England.are

Private
even

i,

'

{

V'

■

' '»

' ' /•>. '

•' i—

—

V" '; *

passionate devotion to
successful

is

our system
To be personally

to

be

suspected

of

fraud, corruption and exploitation
of others.
Big business, regard¬
less of its virtues, and in spite of
any

benefits that it confers

the

people

as

consumers,

upon

is

1928, dated

Sinking

Secured

Sinking

7%

Sinking Fund

Bonds,

Gold Bonds,

Fund

1947.

Fund

Bonds,

Gold

1926, due October 1, 1946.

Secured

External

Secured

1, 1927, due November 1,

Twenty-Year
October 1,

7%

dated

1948,

dated

.

Gold

Bonds of

June 1, 1928, due June 1, 1948.

Twenty-Year 7% Secured Sinking Fund Gold Bonds, dated May 1,
1927, due May 1, 1947.
i
1
i
1
Twenty-Five Year External 7% Secured Gold Bonds of 1926, dated
December 1, 1926, due December 1, 1951.

Municipality of Medellin

External

Municipality of Medellin

6V2% Gold Bonds of 1928, dated June 1, 1928, due De¬
1954.
"
'■

cember 1,

As set forth in the prospectus:

re¬

The holders of the outstanding bonds of each of the above

issues, with all matured unpaid coupons, are entitled to receive in exchange therefor

Thirty-

of July 1, 1948 and due July 1, 1978, of the
equal to 120% of the principal amount
of such outstanding bonds. Payment of principal, interest and sinking fund installments of each
issue of the new bonds is guaranteed by the Republic of Colombia.
Year 3%

Sinking Fund Dollar Bonds, dated

as

issuer of the bonds surrendered, in a principal amount

At the time the

enterprise is under at¬
by many who profess

of government.

Sinking Fund Gold Bonds,
1959.

.

"

today.
tack

\

■;

6V2°/o

Twenty-Year

dated November

-j. ':.t''
Valle del Cauca

Municipality of Cali

are

coming to this point in
America, and when it is reached,
we
will
as
certainly find our¬
as

External

'yL-

,u

Secured

Twenty-Year 7% Secured Sinking Fund Gold
Series A, dated October 1, 1928, due October 1, 1948.

Department of Valle del Cauca

„

Department of Valle del Cauca, below.

External

Department of Tolima

(Cauca Valley)

Twenty-Year External Secured Sink¬

May 1, 1928, due November 1,

Department of Santander

i

See

External

Department of Cundinamarca

Department of

Series.

ing Fund Gold Bonds, dated January 1, 1926, due January 1, 1946.

Department of Cauca Valley

•y'' (Cauca Valley)

Third

Seven and One-Hall Per Cent.

Department of Caldas

one

rapidly

dom

Twenty-Year External Secured Sinking Fund G"->ld

Bonds, dated July 1, 1925, due July 1, 1945, Series A, B, C and D.

income

an

year or more.

and

'

Bonds

ings, by which the growth of pri¬
vate
enterprise has
tionally financed.

Prospectus dated November 23, 1949, to the holders of

a

Municipality

The

little

MurJcipojity of Mede!!in

'

and

have to start from scratch;
income tax laws make such

,

—c

•

,

Department of Valle Del Caoca

,*

the following Bonds:

Department

—

Department of Tolima

being made by the above listed Departments and Municipalities and by the

Republic of Colombia, by

Taxing Away Private Wealth
Federal

.'O-v—

4

new

bonds

are

delivered in exchange, the January 1, 1949, the July 1, 1949

matured coupons will be paid, but there will be deducted from such pay¬
ment an amount equal to one-eighth of 1% of the principal amount of the old bonds surrendered
as a contribution to the expenses of the Foreign Bondholders Protective Council, Inc.
and any subsequent

,

•*

Copies of the prospectus and of the form of letter of transmittal to accompany all sur¬
rendered bonds can be obtained from the New York Agent for the new bonds, Schroder Trust

Company, Trust Department, 61 Broadway, New York 15, New York.
Eduardo Zuleta-Angel
Dated November 23, 1949.

thor¬

ough and comprehensive inquiry

Municipality of Cali 4

Department of Santander

Department of Antbquia

Rights whereby the rig it
to acquire and feel secure in the

of

and

the

made

provi¬

Constitution and the

sions of the
Bill

the

began the work of

Commission

300

of

familiarly

became

the Hoover Commission.

COLOMBIA

REPUBLIC OF

be¬

were

'* in¬

nevertheless

of the

independence.

dissents
findings

spired by political considerations,

themselves

right back where they
fore they won their

have

some

as

alleged, that

MUNICIPALITIES

AND

disappear and the

would

the

of

offer. The offer is made only by means of the prospectus.)

DEPARTMENTS

control of

get

economy

people

an

mem¬

Representatives, three
from the Senate, three career of¬
ficials of the
government, and

that essays to save the rest of the

proposition^and

(This is not

bill

creating this Commission provided

.

contempo¬

nec¬

that it should consist of

that if the people

saw

rec¬

deemed

desirable.

and

essary

it

as

.

be

security while
squandering the people's sub¬
stance to such an extent that there
can be no
security, social or other¬

cepted thtPphilosophy of the ad¬
vocates

.

one

abolishing poorhouses while
rapidly qualifying itself to be¬

they

and

.

class

from

favor

his

findings, and make such

ommendations

and became its

the

of

its

the

Setting Class Against Class
We cannot

;

to

study

(

discretion, the remedy would lie
not in taking the people's discre¬ —if
we
continue
to
tolerate
a
tion from them but in informing
government that not only smiles
their discretion by education. Here
upon, but brazenly practices, dis¬
again was another con vie non that crimination 4
that
sets
class
led

to

As most of you know, ex-Presi¬
dent Herbert Hoover was one of

>

wholesome

government of this country

appoint¬

Commission

a

the organization of tne Executive
Brancn of the Government,
report

but it

more

financial

tae

have shown thus far.

the price¬
he knew of

a

of

ment

country's
autnorize

fortitude
than most of
those from whom the people have
the
right
tc
expect
leadership

depository of the ultimate
powers of society save the people
themselves, and that, if we should
ever
think the people not suf¬
ficiently enlightened to exercise
control

to

the purse strings would be in-the

selves
;

think

take

safe

their

the

•

the

ately framed

and

I

to

testinal

myth

the!

whether

complete loss of self-deter¬

going

of acceptance of the kind of illu¬

The

No Financial Policy

is

issue- is

that

ourselves from ulti¬

save

mination.

and conquerors under whose rule

and estate tax laws were deliber¬

.

can

come

Thus, when the Constitution

en¬

destiny

our

immediate

mate

us

that

our

firmly

about

siion

raries foresaw the probability that
we would lapse
into some degree

other.

f

observation

com¬

up

disaster

ruptcy at home.
About three years ago,
Congress
became
sufficiently concerned

three citizens.

we

or commerce.

less
no

of

given

so

determine

the

than any segment of indus¬

Jefferson also left

yoke

until today the

one

is

the

economic

13

spending itself into bank¬

that

vociferous

sufficient funds for ample living
were
the kings, despots, tyrants

the

of

as

independence

our

make

his

of

bondage; then back to bondage
again! It doesn't seem possible,
but that's the way it is. We have
given up the vigil. No longer do
we
have
a
firm
grip on our
destiny as individuals and as a
people. We have all but lost

that

warned

economy

Jefferson

irony, ladies and gentle¬

men!

Jefferson

government

years ago.

dom

particularly
Government.

•

which the colonizers of

free only

What

from

benefit

.

could

government

benefit of the
a

$10 billion

one

as

agine of evolution
ment

another

.

to

next year

pattern

a

.

S7

plight of govern¬

and liberty or
profusion and servitude." Jeffer¬

an

...

excited

.

deficit

a

.

.

time

the

get

Federal

must

we

to

us

preserve
.

son

$256 billion of debt

surpluses in only two of those 17
years, and those two by accident
rather than

.

tween

All of you know what the situa¬

is:

"to
.

weignt abound as citizens.

tion

the

of

Thomas

enough

cause

start

for

come

the

by

is

it

is not
We already

We have

one.

or

servants

That

but

one.

under

day
will

people

from

while

trenched in control of the factors

big

has already reached
proportions that take from the
people a greater part of their in¬
come

immediate
far

the

the

issue,

government

government

I

ment.

about

most

the

be

government.

rights

big government, not¬
withstanding ttie fact that
the

lot of wisdom in that state¬

a

which you and
I have got to

mad

accom¬

positive action. I think that there

of

government—
one

been

ever

plished until somebody got excited
enough about it to be moved to

our

stem

y

because nothing

the

are

the

of

world

plignt

that

say

government
of

will

people

pulsion.

advocates of

threatens the

destruction

the

are

is

issue

servant

the

being evil merely be¬
big. Yet those who

as

civic project that they had to get

dis¬

would

who

many

fundamental

—

hearted

mm*

crisis

the

of

than $40

per year to more

■<$>

are

whether

the

after another in our Federal Government,
Each of these emergencies has cost us a lot of money. The cumu¬

lative result has been to jump Federal
spending from

citizen

rights of

the government would

paramount

be

For 17 years we have had one
emergency

spurious.

goods, the

This already is happening."

There

and

most of them

to gain
production and dis-

emerge as the master of the peo¬

continuously fluc¬
destroying private

destroying individual incentive. Deplores policy of setting class against class and gives"
illustrations of wasteful Federal expenditure. Estimates government waste at $3 billion
annually, and
concludes only item in Federal Budget that cannot be reduced is interest on
public debt, v
-

of

appear and

Hoover Commission expert, asserting Federal Government has no financial
policy, but
between an inflationary, and deflationary attitude, charges current taxation is

government

>.-v the individual

Economy

tuates

wealth

the

control of the

1

c

(2089)

Ambassador Extraordinary and Plenipotentiary ot the
Republic ot Colombia to the United States of America.

#

35)

CHRONICLE

FINANCIAL

&

COMMERCIAL

THE

(2090)

IL

Thursday, November1 24, 1949

Federal Reserve Can Create*

Canadian Securities

Greater Economic Stability I

By WIJXIAM J. McKAY
It

is

political and
international

Commonwealth on the one
f—Aeighbor on the other. In the past domestic market; this can best be
cecade the Dominion has attained accomplished by the adoption of
between the British

steer a middle course

hand

her

and

southern*;-—

great

.

and the re¬ a more vigorous immigration pol¬
independence of out- icy. An increase in population will
Xook in itself militates against the lead to more intensive exploitation
the
Dominion's ' enormous
Acceptance of a completely subor¬ of
adulthood

ttiatiohal
sultant

;

Chairman of the Executive Committee, The National City

affairs.

holds traditional method of central

of natural

wealth

resources.

This

In

Says, in order to realize high

today's search for economic stability we ought to reassess the position and opera¬
System, for I believe it can be the most powerful instrument

the

government possesses for avoiding booms and busts.
effective

formerly safeguarded her econom¬
ic future. Following the break¬
down of the historic U. S.-British-

newer

exchange triangle Can¬
ada is faced with a serious prob¬
lem in the settlement of her interr
Canadian

national balance of

payments. The

Agreement no longer
adjustor of

Hyde Park

Serves as an automatic

S.-Canadian trade account.

the U.

offshore

ECA

Dominion
tute

have

the

in

purchases

ceased- to consti-1

important Canadian export
end of the period of

an

The

Idem.

be

could

the

e

funds

devaluation

tic

of

the

would

d

e

but

,

tend

coun¬

to¬

commit¬
them-

ted

deter the

selves
to the
repatriation of exist¬
W. R. Bur* est
shortages in this ing capital.
Canada moreover is
principle that
country now further operates to at a youthful stage of development
the
Govern¬
.reduce the volume of Canadian where an expansion of foreign in¬ ment must intervene in economic
exports. On the British side the debtedness is by no means detri¬
life, not only to see that
the
dollar-shortage has led to drastic mental. Instead of resort to ex¬
game is played according to rules
cuts in imports from the Dominion change controls and trade restric¬
that are fair for all, but also to
and' it now appears that it might tions for the
protection of ex¬ seek to avoid sweeping instabili¬
«?.ot be possible even to fulfill the change reserves and the mainte¬
ties which bring with thern the
terms of the U. K.-Canadian Wheat nance of a stable
exchange level, excesses of speculation on the one
Agreement.
.
Canadian
long - tenn ' interests hand, and the distress of unem¬
i
Great as is the desire here to would
be
better
served
by ployment on the other. By educa-r
satisfy Canadian requests for a recourse
if
necesary
to
direct tion and the accumulation of ex¬
bilateral trade agreement, political external loans.
Canada further¬
perience and wisdom the business
and economic conditions no longer more offers an unrivalled field for
and
agricultural communities
permit the implementation of spe¬ investment not only in view of
ought by themselves to reduce
cial arrangements of this kind. her
wealth
of
undeveloped re¬ some of the causes of
instability;',
When consideration is given to the sources but also on 1he merits of
since the war they have demon¬
British
side
of
the
picture the the Dominion's unblemished debt
strated
their
ability
to
do so.
prospects for success in obtaining record. The experience south of
to

imr-induced

economic

safeguards
Until

dimmer.

minion

was

appear even

the Do¬
from the

recently

separated

Commonwealth

British

.Sterling

Area

v

the

and

virtually

only

by

the difference of currency. Now to
til intents and purposes

divorced

completely

Canada is

from

the

financial

British

economic

system.

Henceforth it would apCanadian-British Com¬

that

<>ear

and

the

£edti'ori

of

mained

steady

the

bond

market'

but inactive.

re¬

The

internals also displayed little ani¬
mation' but there
of

indications

were

weaker undertone. Free funds

a

broke

sharply

ffom

the

recent

peak level and the corporate-arbi¬

be

trage

on

a

purely business basis.

rate

also

was

lower.

It

would appear that the period of
these tradir
sustained strength of the Canadian
ttonal links and the recent change
free-dollar during
the summer
for the worse in the U. S.-Cana¬
dian

weakening of

economic

calls for

atmosphere

thus

reorientation of Cana-

a

and financial pol¬
With greater obstacles ahead
in the path of an expansion of for¬
eign trade it is now more than
ever
necessary
to take steps to
broaden
the
totally
inadequate

cain economic

icy.

CANADIAN BONDS

months

mand,

in

result

tourist

de¬

conjunction with the

ex¬

as

a

of

traordinary flow of U. S. funds to
the

Alberta oil-fields, is now

new

being replaced by

a

action

by

a

aggravated

seasonal
rumors

displaying

strength in the earlier sessions es¬
pecially in the paper, base-metal,
and
Western
oil groups, subse¬
quently reacted following mild
selling pressure. The papers how¬

stock-split

rumors,

also

three

other

and

own

moved

against the general trend.

methods

different

ters makes
and

plan of fixing prices

a

rationing goods,
and compels the people to follow
it. Except in a completely totali¬
tarian country like Russia or in
and

wages

time

war

methods

these

SI-

work well. They grow'more and

difficult

more

which

enforce,

to

life-blood

the

are

economic system.
rent to

LOS

to

The

Financial

A N G E L E

Thomas

H.

Keller

our

They

and

Dale

—

B.

with

Crowell-, Weedon-& Co., 650
South Spring Street, members of
the Los Angeles Stock Exchange.
Mr.

Keller

was

formerly

our

abhor¬

are

l"he

fashionable

most

idea

in

ing

economic

recent

"compensatory spending'' theory.
A
whole
metaphysics has been
developed

precisely

on

but

how

In

policy

fiscal

a

to

way

course

important economic: influence,
not
always a salutary one.

Experience

ot

recent

the

to

-

years

belief

is

that

in- the

stabilizing in¬

should
nomic

the Theory,, spending

be reduced when

goose

creased

in

the

eco¬

hangs high, and in¬
depressions. So far,

trading department of Mcrgan &

A. E. AMES & CO

about

Co.,

doing since this theory gained of¬

was

INCORPORATED

with

which

Mr.

Mersereau

ficial

also associated.

crease

and

TWO

NEW

WALL
YORK

STREET

5,

N.

With Waddeil & Reed, Inc.

Y.

(Special

to

The

BEVERLY
♦

WORTH 4-2400

NY




1-1045

Financial

HILLS,

sanction'

the

has

struments of

also

been

in

in¬

to

budget in bbth booms

depressions.

them

succeeded

Budgets

are

in¬

politics, -arid to make

economic

tools is

ask-

CALIF.—

Reed, Inc., 8943 Wiishire Boule¬

vard.

have

we

Chronicle)

Raymond B. Reis is with Waddeil
&

all

*A

statement

submitted

to

the„ Economic

by

the

Mr.

Burgess

Committee

on

it

vigorously and effective¬
be free

must

controlling

deflation

or

take

to

credit

action

volume

in

which

will inevitably raise or lower interest
of

be

can

in¬

rates, and hence the prices

Government

securities.

tightening

no

There

loosening;

or

ot etedit Without affecting inter¬
est rates.

They

eter of credit.

Neither

'"

the Reserve

can

be treated

the thermom—~
i

are

just

as

Systerm
of the po¬

one

litical instruments of the Admin¬

istration. The wise executive wilK'

More important

substantial-

the

still, it influenced
of the
investment

activity
The

market.

Federal

Reserve

history
of
attempts at credit control—
some
more, some less successful.
There are great advantages in
trying to influence economic fluc¬
tuations through tiie money sup¬
ply. In the first place, it can be
done.
The central banking
sys¬
tem has the power to change the
price of money arid-to influence
System

has

now

long

a

the volume of money.
The second advantage

action

monetary

influencing

as

business

this

is; that

You

racy.

don't

what

to

have

dc,

but

the

tell

to

borrower

lender

or

the

create

you

conditions under which he makes
his

decision. If

own

the

we

must have

form of government

form

best
is

in

all

control

our

control
experi¬

through

money

because that involves the least in¬

with

terference

individual

the

the

freedom

his

make

to

of

own

choices in his economic life.

ments

from

in

to the power of

as

any

does well

economy

illustra¬

to examine the dramatic

tions of the results of recent basic

changes

in

values
and
Belgium, Ger¬

money

credit

policies

many,

and

in

Italy. These
cases,
but
they

treme

were

ex¬

revealed

vividly the improvement that can

large

fashioned

The Federal

States

for

I

and
a

of

Reserve

mechanism

our

good oldmedicine.

closes

monetary

in

System is
United

the

management,

money

suggest that today it offers

better

hope for successful Gov¬
influence

ernment

stability

than

products

newer

toward

busi¬

of the
economic

any

the

of

laboratories.
But

if

Federal

Reserve

System is to realize the high pur¬
pose

lor which it was created, it

will

require

the American
directly from

from

and-

more

Congress and from the other

arms

of

port

and

Government, better sup¬

cooperation

in

three

(1). The prestige to attract able
men.

of

The symbol of

the

the standing

the salaries
which are paid ihe Federal Re¬
serve Board..The salaries recently
System

is

the Congress would
condemn the System to a position
approved

by

of many Govern¬
agencies. They
should be higher.
as

simply

ment

one

regulatory

(2). Independence
During the

war

Report,. Washing-j essarily. became
ton, D. C. Nov. 18, 194*9.
' for enabling the

bias.

of

action.

the System nec-

instrument
Government to
an

a

judg¬
free

and

Only

so

can

it do promptly some of the hard

;

things that have to be done if in¬
flationary tendencies are to be
checked before they blossom intothe

booms

that

often

so

induce,

depressions.
(3). The Reserve System needs
certain measure of cooperation,
from other Government agencies.

a

the

inflation,

recent,

ample,

the

for ex-.
System and,

Reserve

the commercial

banks

were

con¬

ducting a vigorous: campaign to»
resist
inflationary
extension of
credits. At the same time: other*
Government

lending a gen c i e s
pumping out credit vigor¬

were

ously

and

freely.

activities,

The

of these other agencies partly off¬
set

restraining

the

Reserve

of

action

taken

by

System. Some plan
coordination of the activities

of lending agencies along the line*
ot '• the: proposed credit council
warrants thorough examination.

will

we

prestige

of

act

the

to

the

restore

Federal

Reserve

System, to give it greater inde¬
pendence and better cooperation
from other Government agencies,!
I

believe

new

in

used

worth which have

in

with

success.

with•

statement

on

mittee's

which

extent."

over

more

issue,

have

an

had

granted

been

eration."

then
an

any

the

as

moderate

occur,

to

require¬

sidestepping
issue which
and/re-

new

powers:

and put in op¬

Mr. Sproul further says,

long

sions

re¬

said,- "a request

remained,

once,

the

to

reserve

powers was

real

allow

pres¬

made for more

were

ments. Mr. Sproul

"So

just

our

used to the necessary

With- respect

powers

the

for

adequate, provid¬

are

are

quests which

would

.

have

we

I should think

they

for

"..

report,

of inflationary situation-

through
passed,

Allan

by

156 of this Com¬

page

recent

the type

them.

use

expressing agreement

the

Sproul

been

country

There must be free¬

courage—to

here

am

after

country

dom—and

to

any

at its Com¬
market operations:

open

of tested

ed

need

not

has

the discount rate instruments:

and

I

does

it

powers. .It

mand

emerged,

special directions.

its

objective

political

ent powers

the

that

so

be

can

System

of independ¬

measure

Of action

If

Any skeptic
money

the* Reserve

to'

ence;

In

of using

method of

a

method is consistent with democ¬

people,

to

in the
History
of the

into

yield

the

cording

money.

has

long

in and out of the London market.

economic, control that its fluctua¬
fluence in the business cycle. Ac¬

too

tions, influenced the flow of funds

tions will become

a

changes

years, the Bank of England,
changes in its discount rate,
or by its purchase, or sale of bank
acceptances or Treasury obliga¬

ness

economy.

is of

continued

surely,

role

peacetime. If the Reserve System

by

this country

for copibatinstability is the

business
of

regulation

For

follow

the budget car) be so subjected to

Mersereau have become associated

CANADIAN STOCKS

of

democratic notions of

discouraging

Chronicle)

S', CALIF.

and

the freedom of the individual.

an

With Growell, Weedon
(Special

don't

been

That

ly to check inflation

of this instrument.

use

swiftly,

war

is to act

instances

many

successful

ence

somebody at -headquar¬

The Federal budget

Keller & Mersereau

corporation

for

the

the

economically.

de¬

affecting
is

through

money

control

—

of

of

records

some

manage

provincial

.third

and

un¬

be done.
the
traditional

can

supply and cost of

booms and depressions.
One of these is establishing direct

checking

that will stabilize the

municipal

Govern¬

tried in recent years

they gradually choke off the free
of tlow of initiative and enterprise

further devaluation of the offi¬

cial dollar. Stocks after

Our

ments have

spite all that

finance

enough

often

them

more

————r

will

themselves

individual

ing instability.

re¬

ever, led by Abitibis, held firm
and
Consolidated
Smelters,
on

government

a

amply demonstrates
duty to exert a positive influence
the efficacy of the open door to
for
greater
Economic
stability.
immigration and foreign capital. Too often,
alas, Government has
During the week the external been the chief offender in creat¬

monwealth economic relations will

The

Government has,

Nevertheless,

border

balance

old

to

are

cumstances

fluctuations
and

The

nature.

tradition that
be balanced. Cir¬

the

budgets

The

have

day

sistently

them¬

other

tries

ing much of human

be

can

——

best practice will be to fortify in¬

methods

This

Properly used, it

—

—:

never

selves.

parity of the Canadian dollar. A
lower exchange level would stim¬
ulate the influx of new foreign
investment funds and

s

proved

to

pound,

further adjustment of the

a

been

have

might also be advisable, especially
in view of the impact of the dras¬
make

gaag-

which

s

t i

It

border.

the

across

t

j

highly adver-

movement

free

policy
of the

any

have

that

restrictions

the

of

impede

now

fiscal

this

that

doubt

tnai. <£~

or

readily achieved by the

removal

of

little

is

purpose

tions of the Federal Reserve

in turn will

There

banking, practicd for

years by Bank of England, can be made most
of its creation, Federal Reserve System requires:
(1) prestige to attract able men; (2) independence in its actions; and (3) a certain measure of co¬
operation from other government agencies. Holds system needs no new powers.

effective.

place greater emphasis
count on the previous system of on the necessity to attract U. S.
agreements and
conditions that investment capital.
Canada moreover can no longer

B^nk of New York

Prominent New York banker, reviewing methods «s?d in recent years to check booms and depressions,

new

dinate role in international

By W. RANDOLPH BURGESS*

v

both
oconomic; is forcing a change in the status of Canadian
relationships. The time is gone when Canada could
that pressure of events,

clearly apparent

more

now

as

a

System

cannot

changes

in rates',
result of its deci¬

or
tighten credit,:
it cannot in fact accomplish
ease

easing

credit.
powers

or

A

...

to

a-

tightening

resort

increase

quirements would, in
only conceal

cr

to'

reserve

my

of

special
re¬

opinion,

delay recognition

of this central fact."

,

Volume

170'

V THE: COMMERCIAL: & FINANCIAL CHRONICLE

Number 4858
S

.

It is

Added Powers of ^Federal Re serve

perfectly simple/So long as
System is expected

/No Thieat to Du all Banking

support * the

Federal'Reserve; System

of

System

Recommends: (1) removal of discrepancies and unification in reserve rerequirements for all banks; (2) clarification role of Federal Reservet System in relation to government
lending to business; and (3) unification of agenciis concerned with bank supervision. Says FDIC has
been used to ^discourage'membership in Reserve System and to* weaken monetary* policy. Advocates " 1
^reducing Federal Reserve Board'to five members aid increasing their salaries. * Supports proposal for
National Monetary Commission.
. (

'

,

'

know in response to the invitation>to discuss issues that have been
raised during the study initiated by your Subcommittee in the field of monetary, credit and
fiscal policies. I shall be glad to try to answer such questions as may be uppermost in your
as

you

fnind,

like

first

to

sent

for,

and

pre¬

<

apply1 the principles

Government

fof

'objectives

Hoover

-the

Federal agen¬

Commission to the

your

ment which I

concerned y with * banking,
monetary ■;/ a n d " credit i ? policy.Bankers believe in the objectives

hope may an¬

of the Hoover

ticipate

short

a
f

answer

cies

state-

some

your

ques-

t i

o n s.

M y

views

are

results "of

herring sof* the dual
banking system is always brought
up to obscure' the real merits' of
the
fundamental ' questions ; in^

the

|15

of par¬
ticipation^ in
.developin g

red

administra¬

in the proper

Volved

credit

tion of fiscal, monetary and

policy, which concerns commence,

/
.and carrying agriculture; industry and the pub¬
policies of the Federal Reserve lic" as a* whole"it ^ is by' no-means
System,/ preceded by long experi- the sole concern of bankers.
•
ence
in.»private bankings under
The major responsibility of the

i out

-

•

well

as

author-

national

as

ity. and membership in the Fed-,
eral Reserve System.
■
• "

;

.

.1 therefore could not, fail to be

of fhe vigorous opposition:
has - so; often / been- voiced

aware

.

that
•

against;

«:

**

with re-.
authority: over
banking.
Jrdcent iyears itt has
sefemed that* nearly evfery /recom- the coimtry 'because they, together
mendation* emanating' fromi the
with the Federal- Reserve: Banks,
proposals

new.

spect' to ' Federal

■

V Federal 'ReserveT Board; has

the

the money

banking system, bAs one who
his business life in f hat

"dual

■

been

which
supply is increased; or

decreased.-

It is of paramount

assailed

■

as a

threat to destroy

has spent

-

system,! I/; have* been:-unable to
see^theoustification for such .agi-

the institutions through

are

im¬

portance to the entire country that
someone have- the imeans^as well
as: the

ability to discharge this Ire-'
tation.
y •"/;{f:/'"///;///'■<;• sponsibility.* It cannot-be left to
V. > Our commercial banking system the voluntary choice of > some 14,individual / fand -competing
:is composed *bf banks that receive1 000
y" deposits
subject. to withdrawal banking institutions." It cannot be
upon
demand, make' loans, and split up among the various -agen¬
•

■'

perform

services.

other

About

half of the total1 dollar amount iof
>
'

posit " Insurance
Corporation.
holding 85% of the« resources 1 ;of • the
banking "system
are in the Federal Reserve System

direct

are

•

another Federal agency.

■

is the dual banking system.

have

While

they,

bank credit.
is

city

prevailed
lishment, they

before- its

depend

nevertheless

to

»■ oppose

is

banking

economy.

but

is

of

a

fair and

non-member. -.There

a

addition

In

much more
serve":* requirements
to

member'

ap¬
are

adequate

banks. '

required to

is that the Federal

•

of

are

the
sub¬
re¬

than ' non-

Member

with

balances

required reserve

spondents.

Thus to

Mr.

Fiscal

Joint Committee

Eccles

on

be¬

on

ber

Monetary,

Policies of

22, 1949.




C.,

the

banks

certain

per¬

opposed

am

of

very

intrusion

an

—

private

really

which the public has demanded fci
the past because private banking

leadership failed.

instrument

I

for

curbing overex-,
pansion of credit. >'■ It means' that
initiative

the

reserves-

the

in

which

creation

form

basis

a

gress

at

will

-

thus

obtain

able

to

In

Congress

J

view

Reserve

means
means

arm

would

are

mercial

intends

System

functions;'then

re¬

can

it

you

benefit to* all

of

com¬

for example,
public; to offer!the credit -facilities !of'-the
situation, Reserve Banks on equal terms tc
to

have

perform

its

should by .all

with

be

banking'

•

as,

the

this

of

System, -f there * might
W011 •* be
changes in "Other relations of the
Federal
Reserve - System
which

'they

reserves

if

To-the

in''the* Federal 'Reserve

ship

others

or

monetize

debt.
the

policy.

principle of equitable
requirements applied Uni¬

formly without regard to member¬
,

those-responsible for carrying out
national monetary
extent that banks

fit'to enact into legis¬

the

reserve

oil

-

add'that whenever Con¬

sees

lation

of

which credit can be pyramided rests
with banks or others and not with

may

alternative

of applying restraints. The

with the Reserve Banks,

With

together

further

'the

in

ments

These

system.

their

maintain

which

banks

all

reserves

improve¬
-collection

check

with

city

corre¬

instances

some

re¬

"way to do that lis
through revision and modernisa¬

only effective
tion

of the mechanism of reserve

requirements. \ The Congress will

ficial

changes

and "'other1 bene¬
could "well" be

brought about with great-advan¬

tage to banks and to thegeneral.
;

a

carry

vault

the

Federal

non-

receive direct

only to member banks jof
Federal Reserve System im¬

>

limited

the

cash

counted

none

of

toward

/

to

Business Borrowing

The role of the' Reserve-System

in relation to

^

government-" lehding

indirect

compensation for/a pose upon them a wholly unfair to business also should "be 'clari¬
part of their reserves. and inequitable burden which be-* fied. "This is particularly impor¬
These-discrepancies are most-ob¬ comes the rrtore intolerable as tjhe/ tant as to the functions exerdsed
vious
and
difficult
to i explain* need arises to increase reserve re¬
in that field by the Reconstruction
When two- banks, one a member
quirements as a-means of curb¬ Finance b Corporation "and /With
and the other not, are doing the
ing/ overexpansion of credit.
Of respect to- the -authority 'of the
same kind of business as. competi¬
course, organized banking and its
Reserve Banks to extend credit to
tors on 'opposite * corners of - the
spokesmen,
chiefly
large • / city industrial»! enterprises under' sec¬
or.

Member banks there¬

town.

same

fundamental;revision of ;the ex¬
isting basis for bank reserve re¬

quirements. They should be based
oh the nature of4 deposits rather
than

location;

mere

they * would

be ^ somewhat I higher

inter¬

upon

bank

tion

fied

thing

you

in'time

will
to

the

has

much the

same

effect

as

changing needs'of the

econ¬

the

Federal-Reserve

proposed in S.'408, the

the Board in'1948.

Committee
of
by

/

~

y

unquestionably a need
for such an agency as 'the Recon¬
struction Finance" Corporation in
There is
.

emergency
ernment

periods for direct gov¬

lending for projects out¬
private credit, bur.

side the field of
I have

always taken the

position

'government/should mot
compete with or invade the dothat

protect private banking and meet

given consideration because it

.

Banking and Currency

never do any¬
safeguard and

be

of

The * latter should be

as

in" 1947,' and 'the*'enactment:
which was again recommehded

of the Federal Deposit Insurance
Corporation. :/If you /abide by
their counsels or wait for their

leadership

13b

mbdjbi.O
favorably reported by the^Senate

Act.

Federal Reserve Act and creation

deposits than upon other de¬
mand deposits. - Vault cash should

,

the

//(Continued on page 16)

/

de¬

posits at reserve banks.
In any such revision of reserve
requirements it is of primary im¬
portance to take - into account thefact that

tracting

they are a means of con¬
expanding the liquid¬

or

ity position of the banking system
and
of' making other credit in¬
•-

effective/Reserve

more

of

banks

expand

may

or sil¬
purchases, or, return of cur¬
rency from circulation, or bor¬
rowing from Reserve Banks, or
Federal
Reserve
purchases
of
government
securities
through
necessary open

market operations.

PERSONALIZED

ity

over

whisky in

with your own

requirements to

reserve

BOTTLE
•"

America's richest

There should be sufficient author¬

a

handsome gift

v.-

carton

choice of 3 golden initials

permit taking such developments
consideration

into

sary..

when

the

of

function

ments

as

In

the

misunder¬
bankers of

reserve

require¬

of expanding or

means

a

contracting
credit.

among

even

neces¬

/.

.

There is 'widespread

standing

supply

of bank

sharp contrast .with
State reserve requiremehts, those
.

j

to

Federal

member banks under
Reserve Act are pri¬

to ? affect
the
credit—that is to
say; the money supply. The Fed¬
eral
requirements are not pri¬
marily applied for the purpose of
providing a cushion to protect the
marily

designed

individual

of

bank.

They4 are' not

America's
smartest
r

....,*,/Vt./

gift idea

basically reserves in that sense at

all,

incidentally the Reserve

but

Banks
them

do
to

not

buy

and/can •: not1 use
government securi¬

ties.
Federal* Reserve Handicapped

i 1 y-carry

meet

deposit

which

can

be

statutory reserve

•

Clarify Federal* Reserve Role ir

substantial

balances, mem¬

n e c e s s a r

balances with correspondent

banks,
-

considerable extent

public in

Apart from these

withdrawals, and in addition'they

Nov.

;

banks

some

the Economic

Washington; D.

In

member I banks may

'

by

Subcommittee

"Report,

handicaps

onerous

carry

Reserve Banks.

and

balances carried

availability

non-interest-bearing

in

cash

Credit

i

centages of their demand and time

deposits

other proposal

fore

/

,

other

to

all insured commercial banks. The

'

Reserve T

in

membership/ members

ject

system of reserve requirements to

'•"Statement

should they
bank is a

Federal Reserve System

Proposals

proposal for the equal

plication

issues,

that the System is-de¬

means

generally

amount but >--may ■ also
entirely of vault cash and

consist

.of

a

Requirements

Two

the

nor*

whether

one :

from fits

"

v

to

of

away

-Discrepancies

the' entire

proposals—more than any
others—stir up this agitation. One
-

reserve

are

lower'/in

the

y

Opposition

or

no

of

Banking

bank

quirements not only

fectuating monetary policy/v• V; applied

be far more effective in carry¬

all

,

area,

or

re¬

good1 reason for-such distinc¬
tions from the standpoint of ef¬

measures

ing out' its intended functions —
functions that help to protect not

only

outside

is

on

member

'con¬

'that
would enable the Reserve System
stantly

it

cities

central

a

in a reserve "city: or

or

downtown

estab¬

in;

located

whether

these

conditions

the intolerable

of
•

They should not de¬

they do now on whether a

bank

that

that

out

most urgently needed to
excessive
expansion of

are

restrain

serve

tion

•

reserve

ineffective at thewery time when

most vociferous supporters would

who are'its

that those

seriously contend for the abo¬
lition of the Federal Reserve Sys¬
tem, with the consequent restora¬

'■

field

ver

require¬
inequitable; unfair and

ments are

not

>

the

through large gold inflows

Reserve

pointed

existing <bank

as

sure

am

non-member

funds

Requirements

pend

I I

On the other hahd,

struments

'

Others

'

the

under the

control of Congress.

Defects- of Existing

Approx¬

imately 5,000 Of these banks op¬
erate under4 Federal charters, is¬
sued by the Comptroller of tne!
/. Currency, and about 9,100 under
charters from'the 48 states.
This

the

undoubtedly

Reserve Board

Federal

-

that it should be in

intended

.

The i framersv ,of

.

Reserve Act

Federal

deposits

Banks
'

cies of the Federal and State Gov¬

ernments.

insured/up to
$5,000r for ; each depositor by a
Federal agency,' the Federal ?De-;

P bank

much

banks, do not want any change.
fore* bear * an uhdue * and unfair,
They never do. / Throughout the
Feideral Reserve System is that of, share
of the responsibility for the
long history of banking reform'in
formulating / and
administering execution of national creditpolicy. this
country—and it is still very'national monetary policy. It does
There should be a plan under
far
form complete —. the. same
this -chiefly. through.- the' exercise
fctvhithfthe respohsibUity^foFbold-* bankers or their prototypes haVe
of »such influence as it may bring
ing reserve to promote monetary been for the status quo. Begin¬
to bear upon the volume, avail¬
and
general * economic -' stability ning with the National; Banking
ability and. cost ot'.commercial would be as
fairly distributed as Act
they have fought every pro¬
bank; reserves. ;> Ity must operate
possible.1 'This' would :rfequire! a gressive::
step," including the
through-the? commercial banksl of

;

State

requirements.

-

'

t

marketable

into

credit—to which I

,

The

years

"

Commission, at least

'

cumul ative

S. Eccles

ernment

that

applied to all other activities of serves of non-member banks mja.y not have done thd job at all if jit
be invesfced in U/S. Government fails to include all insured banks.
the . government—why r not > the
banking activities?
1 y/7 !
i ; and other specified securities.1 Reserve / requirements /' that, are

and

of

Marriner

extent

as

consideration

*'

the

support requires the System

purchase

the

I

-but

should

bond

government

to

prived of its only really effective

of Federal Reserve powers.

lam here

to

and

this

opposition of banks to proposed (enlargement

scores

such

whether'sold by banks or others,

of Governors of Federal Reserve

^Member, Board

Former Chairman

System

S/ ECCLES*

MARKINER

Ky

omy in such. a way as to avoid
still further intrusion of -the gov¬

the * Reserve
to

market

*

(2091) 415

•

a

The

can

make

make
to

Federal

creature

the

it

Reserve

of

the

it

weak

strong.. We

Congress

System is

Congress.
or

you

You
can

have recited

over

again the dilemma that

and

over

we

face.

PAPF DLLIiL/LL/ WNI^KY ® proof. 62^% grain
RIFNDFn VYniOM

l\n\\L

neutral ■spirits.

schenley distributors inc.,

new york city

16

THE

(2092)

COMMERCIAL :&

FINANCIAL

prolonged
discussions
delay or prevent agree¬

lead

Added Powers of Federal Reserve—

to

which

No Threat to Dual Banking System
Corporation, but you can join the

(Continued from page 15)
of

credit

institutions.

private ; banking

necessary

tioning

to

of

and

aid

When

is

facilitate the func¬
private
credit, then

such aid should

take the form of

Federal

Deposit Insurance Corpo¬
ration without joining the Federal
Reserve System."
The law com¬
pels
but

national bank to join both,

a

State bank has the option of

a

joining
one
or
the
other,
or
guaranteeing in part the loans
neither. I should like most earn¬
by private institutions, just
estly to Urge upon you the im¬
,as was done in the Y-loan pro¬
portance of making this a twogram of the Federal Reserve for
way street by providing that a
financing war production. That is
bank can be a member of the Fed¬
what S. 408 proposes. .The pro¬
eral Reserve System without join¬
found difference in the principle
at stake here ought to be obvious. ing the Federal Deposit Insurance
Corporation, in the same way that
a State bank is now privileged to
Unification of Banking Control
made

Agencies
In

relation

the

to

oe

second

ques¬

or organization, which I
mentioned at the outset, I leel

tion, that

•that students

of Government and

particularly those who endorsed
the objecti ves of the Hoover Com¬
mission ought to be more inter¬
ested than they appear to have
ibeen in the problems of organi¬
zation of the agencies of Federal
Government concerned with bank

supervision.
have

Some, however,

been

that

misled

there

is

no

into

field because the expenses

^agencies

not paid

are

in this
of these

from

ernmental appropriations.
The establishment of a
of

insurance

of

deposits

Federal. Government

may

thinking

problem

gov¬
•• -

system

by

was

the

one

of

the

great accomplishments of the
Congress in the direction of fos¬
tering public confidence in the

banking system.
I favored Fed¬
eral Deposit Insurance legislation
at

time when most of my fellow

a

bankers

were

denouncing it. But
I never expected, and I am cer¬
tain Congress never intended, that
this
protection
for
depositors
would

be

used

either

to

hamper
effective national monetary policy
or to give
any class of banks spe¬
cial advantages over others.
I re¬
gret to say that the Federal De¬
posit Insurance Corporation has
been

used to

discourage member¬

the Federal

member of

a

De¬

posit Insurance Corporation with¬
out being obliged to join the Fed¬
eral Reserve System.
The Federal Deposit Insurance
Corporation was designed in the
public interest and it should be
maintained for that purpose, but
this is not to say that the con¬
of three Federal

existence

tinued

performing

agencies

functions

allied

or

field

the

in

;

similar

of

bank supervision, regulation, sta¬

tistical and other services is j ustifiable. There is unnecessary dupli¬
cation and

triplication of offices,
personnel, effort, time and ex¬
pense. While the maintenance of
separate
and
often
conflicting
viewpoints may serve selfish in¬
terests, on the old principle of
"divide and conquer," if seems to
.

,

this

that

me

should

not

prevent

:mprovements wherever possible
in the organization of a govern¬
ment already overburdened with

complexity and bureaucracy.
this connection

In

credit

plus

as

nation

of,banks subject to Federal
supervision
have
been
offered,
ranging from the setting up of a
new agency, with no other respon¬
sibility, to maintaining the status
The Reserve System

currently

must have

information,
procured
through
examination;
bank condition reports, special in¬
vestigations, constant correspon¬
accurate

erly

member
State

banks,

na¬

information

current

which

is

about

invaluable

Governors

and. au¬

responsibility

for determining, within
limitations, the amount

thority

statutory

re¬

of

extending credit to
Reserve banks obtain

them, the

of

Board

tne

final

has

furnishing currency,
checks,
seeing
thai

and

serves,

shall

that

reserves

carried

be

by member banks at the Federal
Reserve

Banks, for discount rates
charged by the Federal Reserve

banks

for purposes

Banks

advances

for

member

to

of bank supervision. The Federal
Reserve is and must be at least as

banks, and for general regulation
and supervision of the lending op¬

vitally concerned with the sound¬
ness ol the individual bank as any

erations of the Reserve Banks, the

in

one

the

organization

Comptroller

the

or

of

responsibility and authority under

the

existing law for policy with re¬
De.~ spect to the government security
market, known as open market
operations, is vested in the Open

Federal

posit Insurance Corporation. Th<
Federal Reserve Act places in the
Federal Reserve a specific respon¬
sibility for effective supervision
over banking in the United States
Soundness of the individual

soundness

and

must go hand

the

of

in hand.

tions have become

Therefore,

conditions should be and is in the

banking as well
public welfare.
It has not
destroyed
the
effectiveness
of

curities

the

sonable

examination
of
Moreover, is it rea¬

of the

or

believe that the

to

the

responsibility that will

con¬

tinue to rest with the Federal Re¬

intel¬

System

serve

ligence of the officials of the Fed¬
Reserve

for

market

open

and

tem

to

weaken

effective

Reduce

with the

judgment of a seven-man
appointed by the President,
confirmed by the Senate, respon¬

Membership

the

HaiHer Sees^IighlChange in Banking Situation

Speaking to the Eank Correspondents group in St. Louis, Mo.,
16, Dr. Marcus Nadler, Professor of Finance at New York
University, predicted only minor changes in the banking situation.
Nov.

on

"The volume of deposits of the banks should witness

s

the

minor expan¬

a

States.

A

exports

increased

from

moderate

the

decline

United

in

States

•holdings

of

may;

•securities

by

not go far, however, because a
large portion of the exports from

c

ommercial

^banks and by
.-.a

crease

s,"

D

The drop will

country

is

the

in

United

States

While

r.

a

ports

;the volume of
loan

be expected.

this

moderate

Jin

from

financed

now

pected,

Government.

abroad

the

fact

be

may

should

"In

most favorable conditions

banks

should

cise

exer¬

Dr. Marcus Nadler
cause

com¬

petition
be

will

keener

j

put.

be¬

care

than

before

number of failures is

and

the

likely to in¬

crease."

;•

'

"There is no danger that the
gold content of the dollar will be

.changed," Dr. Nadler added. "Such
measure
is highly
unnecessary
under

.could

do

present

much

more

conditions
harm

than

good. The devaluation of the vari¬
ous

currencies in Europe will hot

exercise .any

be
ihe

under

even

imports

great

influence




.

•

.

"

of Governors. To the

ing

measures to reduce the

debt.

If

budget

we

in

prosperity,

cannot

periods

then

relative

of

constant

the

dollar.
on

increase

in

the

lead to

is not

a

a

public
decline

purchasing

power

This has

adverse effect

an

all those who have
on

the

A continued deficit and

debt ultimately
in

the

obviously

outlook for debt reduction

good.

public

balance

of

savings

the
or

their savings or on a fixed

income."

a

should be integrated with and

and

monetary

policy.. If directed

re¬

credit

and

in

often

tion

grew

with

when

caution

forces

„

nection

of

one

of the

..

,

be

that

executive

for

fixed

in

in this

President

the

con¬

of
a

a

di¬

officer.

[

of
are

of

is ^elected

He

nine

by

a

local

three

directors

of

appointed by the Board

Governors

and

the

other

trict.

In

addition

Reserve

the

fiscal

mental
not

as

System views the
principally from

sits

and

policy.

have

effected

by

related

mone¬

govern¬

Other agencies do

these

responsibilities.

Their differences of interest often

nor

the

responsibility to the Congress.

When

scene

conditions

tary,

rect

market operations,

standpoint of national credit

Neither he

directors of the bank have any di¬

requirements, discount pol¬

economic

be

of

the

Federal Reserve Board and

policy

market

open

the

in

concentrated

convinced in this

there

is

should

Board.

for

be

I

am

that

connection

need

no

tne

on

responsibility for

than

more

five

members, instead of seven as
present, and that the Congress
should recognize by more appro¬
priate salaries the great import¬
ance of the public responsibilities
at

entrusted

Federal Reserve

the

to

System, of which the Federal Re¬
is
the
governing
recognition would be
more likely to attract to the mem¬
bership of the Board men fully
Board

serve

body. Such

qualified for the position.

If, however, it is believed pref¬
erable

national

for

credit

and

monetary policy to be determined
in

functions

of

the

which

ernors,

abolished.

Board

body

Gov¬

of

should

be

The

governmental re¬
sponsibility of such a body should

salaries

should

be fixed by Con¬
whom they should re¬
port. May I point out that if the

to

gress,

the

of

Reserve

addition

in

to

Banks

performing,
chief

ex¬

im¬

their manifold duties

as

take on in
principal functions of
Federal
Reserve
Board,
it

institutions,

portant

addition the

the

functions

these

that

be

must
not

do

full-time seven-man
Board, and this would be another
reason for abolishing it, and sub¬
stituting a part-time Board com¬
posed of the twelve Presidents.
justify

a

views

The

I

have developed

have

expressed

out of a long ex¬

perience in and out of Govern¬
ment and they have not been al¬
tered
by the fact that I have
ceased
to
be
Chairman of the
Board

after

serving

in

that

ca¬

pacity for more than twelve years
or by the fact that I expect some¬
time

to

In

the

to

return

private

of

field

banking.

the

foregoing I have not at¬
to
include some other
important matters which may be
tempted

deliberations

considered

and

bv

in

desirable

record

the

it

do

to

be

Mon¬

such

for

that

event

its

1559

S.

memorandum

the

National

a

Commission

proposed

m

might well

in

to

be

apoears
so

in

to

order

couolete my statement.

a

as

Open

|

ever,

a

Reserve

Bank

member

Market

of

President

the

who

(Special

CHICAGO.
Roth

roll

the

are

Board

salaries

of

Governors,
appointed by the Presi¬

by the Senate and whose
are

fixed. by

ILL.

joined

Nicholas

—

the staff of

Company,

208

Fa-

La

South

Street, members of the New

York

and

Chicago

Stock

Ex¬

changes.

With Harris,

howmem¬

dent of the United States and con¬

firmed

has
&

Salle

he participates in vital pol¬
of

*

to The Financial .Chronicle)

Federal

Committee,

icy decisions with full-time
bers

Faroll & Co. Adds

to

of Governors.

supply and
cost
of credit,
which is directly affected by re¬

The

not

'

three Federal

the

open

should

the

six

supervisory agencies, the Federal
Reserve
System, is charged by
Congress with responsibility over

icy, and

into

made

functions

inroads

further

by the member banks of the dis¬

making the
appointment, the directors fix his
salary. Both of these decisions are
subject to approval of the Board

serve

principle is
not to be discarded, it follows that

etary

,

noted

five-year term

a

board

Federal Reserve

Only

be

mon¬

rector of that bank but is its chief

has

needed.

Responsibility

should

Federal Reserve Bank is not

inflationary
was

under

was

this

as
that
which
I
strongly support. Accordingly, I
would appreciate it if you would
permit me to file a supplemental

•

whom
Prim"!

Act

If

of interest to the Committee

It should

thus in¬
and
con¬

along

gone

Reserve

consideration.

setup.

monetary

deflation,,
examination policy

versely

on

Federal

place, I would agree. On the
hand, they accentuate the
major inconsistency in the present

worse,

tensifying

Board

man

extent, how¬

other

In fact, too
past, bank examina¬
became tighter when

oolicy

conditions

seven

one

policy.

the

policy

etary

.as

be effective

a

bility for overall credit and

credit

.though it
were not concerned with such pol¬
icy it could nullify what other¬
wise could

of

ever, that such suggestions recog¬
nize the principle that responsi¬

<

.

balancing the budget.and of tak¬

on! live

economic conditions in the United

Y "

"One of the great problems that
confront the country is that of

.a

,and

existence

Examina¬
tool of bank
supervision and regulation which

have constituted only a very small
fraction of the total national out¬

consider¬

able

that

ex¬

not

overlooked

granting

by

moderate increase in im¬

Nadler stated.

loans,

examination authority.

tion procedure is

sponsive to

sion, caused
primarily by

ex¬

ecutive officers of these very

of Federal

Reserve Board

board

sible to

Wilson

Woodrow

himself very vigorously
this subject when the original

can.

Suggestions
have been made
Congress, should be and I believe will appear in an¬
regarded as less independent than swers to your questionnaire, with
monetary policy.
There is no logic whatever in dence and contacts with the banks. a Bureau in the Treasury under a certain degree of logic in their
the
that the interrelations
present
provisions
of
law The System must have examiners one official whose deputies are support,
^which say, in effeot, to a bank: and other personnel responsible appointed by the Secretary of the between the considerations of pol¬
"You can't join the Federal Re¬ to
it; specially trained and di¬ Treasury. No single individual in icy governing open market oper¬
the Federal Reserve System de¬ ations
serve System unless you also
and those governing re¬
join rected for the purpose of procure
serve requirements, discount rates,
the
Federal
Deposit
Insurance ing such information. The Reserve termines its policies.
Since examination supplies.in¬ and perhaps other functions, are
as
to
justify transferring
formation essential to the right such
conduct of the business of the Re¬ these major instruments of policy
to the Federal Open Market Com¬
serve
System and since the Re¬
mittee, leaving to the Federal Re¬
N. Y. University economist looks for only minor expansion of
serve authorities must review re¬
depos¬
ports of examination of all mem¬ serve Board as such only matters
its and moderate increase in loans. Foresees no immediate
change
of
secondary
importance.
This
ber banks, it is illogical to argue
in dollar gold value.
that they should be deprived of all would not justify the continued

ship in the Federal Reserve Sys¬

President

pressed

Presidents

policy.

combined

Banks

ganizations which are the subject
regulation
by that agency.

of

nancing, with the continuance of a
be recognized by requiring their
budget of extraordinary size, with
operations
in appointment by the President of
major refunding
view and the prospect of deficit the United States and their con¬
firmation
by the Senate; their
financing, there can be no doubt

over¬

banks, and if is
absurd to think, as I understand
has been suggested to you, that it
would destroy the effectiveness of

supervision

With

maintained.

is

rapid growth of the public debt,
chiefly as a result of wartime fi¬

member

other banks.

part of representatives of the or¬

part by some of the Presidents
icy.
In practice the.y are the
of the Reserve Banks, then the
principal means through which
Presidents of all twelve Reserve
debt management policies of the
Banks should be constituted the
government are effectuated. They
are the
means by
which an or¬ monetary and credit authority
and
they should take over the
derly market for government se¬

bank

economy

Reserve supervision

increasingly

an

vital part of Federal Reserve pol¬

interest of sound

state

know, there is no other major
governmental power entrusted to
a
Federal
agency
composed
in

These opera¬

Market Committee.

Federal Reserve concern with the
maintenance
of : stable economic

as

Those decisions, which must be
obeyed by his bank as well as by
the other Federal Reserve Banks,
affect all banking. So far as I

other hand that

While

of

banks maintain their

they could

remedied.

be

supervisory
Through their daily

collecting

in the question

so,

out its defects and how

National

authorities.

member

whether
the present structure could be im¬
proved. I feel that I should point

otuer

and

activities

present

in close touch in
ways with all
as
well as the

are

Reserve Eank Presi¬
I do not suggest that the

five

banks, receive

copies of examination of all
in

of

Board

the

system has not worked.
It was a compromise
and your
Committee is interested, and prop¬

member

banks,

of

members

seven

.They examine

their 24 branches.

and

respon¬

Committee is composed

dents.

ministration by utilizing the facil¬
ities of the 12 Reserve banks and

eral

qua.

the

and at Lie same
time decentralizes the actual ad¬

this

and

Market Committee,

the Open

which

policies;

Federal

various sug¬

to Where responsibility
should be lodged for the exami¬

gestions

and

tional

question

to the

now

composition

sibilities of the Board of Governors

System is in position to determine
be pursued by exam¬
iners; to coordinate them with

State

.

turn

me

the

of

policies to

all

,,

ments.
Let

main

Thursday, November 24, 1949

CHRONICLE

Congress.

(Special

to

The

Upham

Financial

Chronicle)

"

CHICAGO,

ILL.

—

Robert

L.

Block has become associated with

Harris.

Upham & Co.,

135 South
formerly
with Wayne Hummer & Co. and
La Salle Street. He

John Nuveen & Co.

was

^

Volume 170

Number 4858

Public

I

Private Enterprise On the Run!

Utility Securities

By BRUCE BARTON *
Batten, Barton, Durstine & Osbom, Inc.

By OWEN ELY

Asserting we are in midst of social and economic revolution, prominent advertising executive and former
Congressman cites as outstanding tremendous changes: (1) end of the American Republic;
(2) declin¬
ing private enterprise system; and (3) "political power has moved across the railroad
tracks," i.e.
labor dominates political action.
Urges business, in relation to employees and government, cultivate

Niagara Mohawk Power
Niagara

Hudson Power's dissolution plan, which involves the
recapitalization of its three major operating subsidiaries
in New York State, was approved
by the SEC in August and by a

merger and

"sweet and reasonable spirit of humility,"

Federal Court Nov. 1.

The SEC made only slight changes in the plan
previously submitted, the principle one being conversion of Ni¬
agara's second preferred stock into 3.9 shares of the new class A con¬
vertible preference stock compared with 4 shares for the first pre¬
as

ferred.

;':T;/ v■ V'-;

;

The plan is scheduled to become effective Jan. 3, and the stock
of the new merged company
(temporarily named Niagara Mohawk
>

Power)

is

traded

now

around 21 *2.

over-counter

The old stock is at

on

when-distributed

a

15^, which reflects

basis

payment of

The

an

assessment estimated

stock is

new

at about

expected in future to

many speeches about public relations are unrealistic. They do not face the facts.
What are the facts?..:V;'.v:y■ V.■ ■
'< ■. V/
»-■.
We are living in the midst of a social and economic revolution.
We don't like to admit
what has hap¬
-

is

and

pened

ment

nappe ning;
but when we

a

$1.10-$1.20.

personal

you

sell,

forces

;

prog¬

the

ress.;:',''/

:,

future when the construction program requirements and the need for
retained earnings in connection therewith may lessen."
stock is

selling at

6V2% yield basis, assuming
When fully seasoned, and based on
of present market conditions, the stock might logically
to sell between a 6% and a 51/2% basis, which would
of 23%-25V2, respectively. Stocks of companies of com¬
are currently selling to yield 4.8-6.6% with an average
a

that the $1.40 rate is maintained.

continuance
be

expected

prices
parable size

mean

of about 5.7%.

Of course, yield, is dependent on other factors than size, such as
the equity ratio, the percentage pay-out, the return on the rate base,
the price-earnings ratio, and other factors. No mechanical formula

for determining yield is possible, because there are always individual
variations in the investment picture. For example, Niagara Mohawk's
convertible preference common is a negative
factor, while the fact
that the company has compiled with the strict requirements of the
New York

Public Service

Commission

in

writing down plant and

increasing the depreciation

reserve, is a plus factor. Marketwise the
Corporation will release about 1,453,000 shares of
stock of Niagara Hudson to its own stockholders Dec. 1 is an adverse

fact

that

factor.

United

Nevertheless,

judging

from

experience

otherjutility

with

stocks, it appears likely that Niagara Mohawk's yield will improve
somewhat in relation to the average utility yield as tirrte goes on and
the stock becomes better known to investors.

•'Wv-'i'

Proposed Merger of Ohio Edison-Ohio Public

.

t

The

comply with the Holding Company Act. The price would be $35 mil¬
lion, or $17.50 per share, payable by an underwriting grqqprwhich is
raising the money for Edison. First Boston Corp., Lazard Freres &
Co., Union Securities Corp., and Wertheim & Co., have been ,selected
to underwrite up to 1,144,000 additional -shares of
Edison common stock, which will be offered to Edison- stockholders
on a l-for-2 basis. Ohio Edison is
currently quoted (Npv.^y^ai 31%
group

and before the recent announcement it sold at 33.

-

has

Eventually it is

contemplated that the two companies will be merged.
the pro forma earnings statements in the preliminary
which makes allowance for increased Federal Income
taxes payable after Ohio Public Service leaves the Cities Service
on

prospectus,

System, it is estimated that earnings

on the fully merged company
Aug. 31 would have approximated $2.82.
This compares with earnings on Ohio Edison stock for the same pe¬
riod of $2.95 and on Public Service of $1.53 after 13 cents deduction

for the 12

months

ended

for the higher taxes.

'

Republic.

be

•

Representative

,

government

and established by

forefathers began to fade out with
the adoption of the 17th Amend¬
ment to the Constitution in 1913.
That

amendment, as
wiped out the Senate

know,
delib¬

you
as a

erative

body
representing
States, and made it simply a

the

Republic

ended

fear

The

not

of;; autocracy,

by

is rule by pressure groups.

When I first went to Washing¬

ton, I spent some interesting eve*
with the prmcipaF New
Dealers.
I was genuinely curious
and
eager
to understand/ their

nings

I did not admit for

point of view.

pro forma capital structure would approximate
debt, 15% preferred stock and 30% common stock equity.
Ad¬
justment for known intangibles would reduce the equity to 26%.
Ohio Public Service plant account has not been reduced to
original
cost since utility regulation in Ohio does not require original cost as

rate base.- Eventually, over a period of years,

the entire plant ac¬
uniform original cost basis, however, to

might be placed on a
meet possible requirements of the Federal Power Commission.

minute

me

that

in

were

less

I

the

and

in

the

liam

ANGELES, CALIF.—Wil¬
S. Wells, sales manager of

the Los Angeles office of

Hoffman

Spring

&

Walston,

Goodwin, 550

Street,

members

South
of

the

Exchange

and

New

York

other

Exchanges, will be admitted

to

Stock

partnership in the firm Dec. 1.

Admitted

to

limited

in the firm, whose
in San
E.

neo

main office is

Gombell, Clarence P. Cu-

Dec. 1.

retire
,

from
'

annual

Investors

lowing

League,

board

elected:

C.

Daniel W.

of

meeting
Inc.,

of the

the

directors

Canby

than

were.

in

'How,

democracy, which is
by pressure groups,

a

government
are you

going to stop deficit

ever

financing?'"
They

me

,

.




the

firm

liJSm,

is

mistake, there¬

revolution

a

has

on

a

private

the

of the U. S.

it.

principle that-ability and

determined

wa£ produced and who got
new" economy operates or
that* fundamental

The

principle

decisions

who

on

has

what

what prices it is sold
t are
mined by ' public policies.

from

years

now

and public poli¬

will~6e^pre elaborate than it

todajrafid Will limit the discre¬

oF&haJehient

tion

talk,

our

us

to

face

republic

and

citizens

are

of

fol¬
was

a

democracy in which the place and
the prerogatives of businessmen

vastly changed and restricted.
in

long time is Professor Sumner

H. Slichter's "The Businessman in
a

Economy,"

Laboristic

in

the

September number of "Fortune."
said

I have

under

he calls it

in

64%

The

backer and Mrs. M. C. Walther.
was

led by

we

second
talk

•

,

am

and

of all wages

is

that

private enterprise system
decline with Jhe pas¬

The

began
sage

1913.

to

of

the income tax

When

once

the

in May,
govern¬

Mr. Benjamin A. Javits who inter¬

challenge to the proxies
as a

basis for

*An address by
fore

the

Mr. Barton be¬
Grocery Manufacturers

pay

salaries in

75% of all

and

salaries

in industry
roughly 57% of the

produce

income.

So

we

indispensable

and

But

as

we

bers

seven

(six

or

holders

in

factor

a

political life

maintain

America's
num¬

million stock¬
15

workers);

unionized

we

are

un¬

When

talk about public relations at
convention of businessmen like

we

this,

think in terms of speeches
pamphlets, advertisements and so
forth.
Most of such activity is
we

Let's
a

as

say

either be

described in my

"hollering down the

whether,
and

some

points,

ought to ask less.

We
a

at

sort

of

it right out loud—in
state

we

mus

pressure group or we

domi¬

bring

and law into some

have

changed

can

'

attitude

our

whole lot since 1932.

\

We

all

are

thinking different thoughts and
making different speeches than we
did

in

the first days of the New

Deal.

But

have
late.
two

trouble

our

changed

too

is that

little

we

and

too

By and large, we have been
behind the march of

years

i

events.

'

;

Professor Slichter

'says:, "While

winning a large part of the bat¬
tles, business is losing the cam¬

paign."
In

:

approach

our;

ployees,

to

our

to

our

em¬

suppliers, and to

the agencies of government let
us,
first of all, cultivate a sweet and
reasonable spirit of
humility.

We

are

We

a

favored group.

very

are

a

decidedly

minority
\;1. • -.:
>,

people

want

we

allies

as

the

people who, in a democ¬
racy,, are going to decide who of

shall be allowed to do
business,
much business we shall be
allowed
to
do, and how much
us

how

shall

we

be

allowed

to

"'i:

Let us stop
talking about that
part of the social revolution which
is gone beyond recall.
\
,

Let

face

the facts, and
courageously for the future.
us

plan

Dr. Nourse to Address
On Economic Policies
Dr.

Edwin

of

the

visers,
be

nual

Nourse, who

Executive

President
will

G.

until recently as Chaiman
Council of Economic Ad¬

served

of

Office

the

guest

the

of

United

States,

speaker at the

dinner

of

the

New

an¬

York

Security Dealers Association to be
held Dec. 9 in the Hotel
was

Pierre, it

announced.

Dr.

working

harmony

with

Nourse's

defnite

talk

interest

will

all

to

be

of

concerned

with the economic policies of this
country, the announcement said.
Present at the dinner
of

honor

will

be

as

leaders

fields of finance and

guests
the

in

industry.

economic law.

The reigning pressure groups in
this

country

of

the
A. F. of L. and C. I.
O., the five
major farm organizations and the
American

are,

Legion.

If

course,

we

are

to

Association of America. Inc., New

have

York

honest-to-goodness personal, mod¬

City, Nov. 14, 1949.

and

it

,,

group

a

can

groups to ask less and give more,
it must first sit down and decide
how
it
can
give

/

pressure

more

If business is to
play any success¬
ful part in persuading the
pressure

million

organized and ineffectual.
a

that

begin

us

of

:

few in

are

against

as

are

part

America's economic life.

rain barrel."

the private

business

and

national

we
don't for a

pessimist—it

a

make.

t

r

organized

what used to be

fact

the rail¬

across

;

,

childhood

about

too

the United States and
We

country

I get from my
country, but how
much more can I give to
my coun¬
try.
' "■
■'

are

still

are

Forbbs; Mrs. Jessie R. Muni; Col.

possible contest.

of

only- if all of
think not how much

money

road tracks.

living in and

"handout" state.

a

has moved

power

We

us

political action

a

But if America

kind

achieve

The

-

admit, is that political

group"' state;

are

Enterprise Not a Reality

Private

(2)

we

"pressure

a

of

most

stubborn to

with is that

peace

have ceased to be citizens of a

when

the majority

the

character
1:0

"Across

Is

Tracks"

(3) The third stubborn fact
which

vital

make

and
we

Power

Railroad

history, not reality.

a

be

group.

lins; Capt. Thomas B. Doe; B. C.

posed

convention.

can

points."
Political

is

hand out good advice

now, and

all want it to be—and

at many more

enterprise system we are talking

held by

am

deter¬

Ten
the framework of

government* rtries
cies

in

what' is" produced, and at

comes,

is

The

different principle.
enterprise operated

willingness^^ buy«"
the

It

an'advertis¬

much

oc¬

it is still going on.

based

what

hire

more,

.

plenty of

first fact for

the

So

Balderston;

opposition

us

,

,

that

wages

'

gave

swer.

Bell; G. Rowland Col¬

An active

a

Professoi

must have as allies enough
nant
pressure
groups
to

Francisco, will be Gordon

will

the

partnership Allan M. Pope; Edward V. Ricken-

Behr, Clarence J. Coberly, and

Minna

At

of

some

Says

curred in the economy

average

I said to them:
"I am prepared to join you fel¬
lows if you will just give me an
honest answer to one question:

they

are

Investors League, Inc.
Elects Directors

LOS

And

"Let there be'no

fore,

revolu¬

a

standing for

are

more.

Slichter:

like

The best article I have read

To Admit Wells

we

much

degree

family

and

man

men

slightest

interested

American

a

Wafston, Hoffman Co.

But

50% income tax.

on

their sad- expe¬
rience with the. kings of- England;
and the fear of democracy, which
engendered

He'said there woulc.

Well, there has been
tion.
for

people

50% in¬

a

revolution.

a

Free

democracy—some¬

a

American

stand for

1940

in

..is

nonsense.

present economy is quite different
from free private enterprise ana

„

now

"The

never

tax."

come

retorted angrily

and that

with the third election of-Franklin

have

20%

or

sec¬

popular assembly.

D. Roosevelt.

man's

a

10%

stuff and

was

where

work.

easy

to

minute think I
Borah

cried:

would

as

our

1% of

take

can

that this

.>■

be

in

50%.

He

we

it

Senator

will

easier

to

or

.,

but they never gave me any an¬

-

The combined

count

is

writing for a
long time, are these:
(1) The end of the American

55%

a

a

take

political

some ads and
them in the newspapers. It is
easier to get up, the way I

at

Barton

Bruce

which

What

much

run

can

food

ing agency to write

the income tax in

on

income

brought,

The

cer¬

the State

and

ond

is

the

communities

not

is

lias

the
1909,
someone—it may have been Jo¬
seph H. Choate—argued that if

the revolution

one

After the acquisition from Cities Service is completed, Ohio Edi¬
an exchange offer for the one million
remaining shares
of Public Service held by the public, on somewhat similar terms.

Based

You

changes wnich

conceived

business

your

longer private.
may
recall that,

with

and
the

in

men

the

grow

live.

we

enter¬

no

debate

ndous

historians

but

tainly

of

amount

who

.

will make

Details of the exchange offer are not yet available.

prise,

we

three

tense.

recently proposed, subject to regulatory-approval,
the two million shares of Ohio Public Sprvic^Jbeld by
Cities Service Company, the latter being required to dispose'of it to

son

pro-

make

r e m e

considerable

a

thing very different. ^The,Found¬
ing Fathers had two'"great -fears
Service which were almbst equally in¬

Ohio Edison

a

our

grams,

republic, but

to acquire

to form

thinking

con¬

employees, with the

earnings it decides
appropriate—you still have the

faster

earnings, respectively. The SEC forecast
slightly higher level of dividend payments in the

new

tact with

opportunity and right to exercise

shall

the

est, day-to-day, face-to-face

to

to
revise

and

accounts,

your

and face up

about 74% and 81% of these

At 21V2

come

women

and

a

to

examine

and

it

<

per share (as estimated by the SEC) or about $1.72 after com¬
plete conversion of the class A into common stock. It is expected to
pay $1.40 per annum initially, which would represent pay-outs of

$1.90

"prospect of

right

take whatever

admit

our

average

an

the

office,

your

share of your

do

of about

earn

had

into

it,

close arbitrage
basis, since each share of old stock is exchangeable for 78/100 new

on

Too

these

as

allies

it

means

Donald G. Geddes Dead
Donald G.
ner

in

York

the

been

Geddes, limited part-*
Dodge & Co., New

Clark,

City, died

age

in

of
the

for 59 years.

80.

at
Mr.

his home
Geddes

investment

at

had

business

COMMERCIAL

THE

(2094)

18

FINANCIAL

&

Thursday, November 24, 1949

CHRONICLE

Devaluation—A Potential Boomerang!
By SIMPSON E.

MEYERS*

Vice-President, Foreign Division,

Brunswick-Baike-Collender Company

The

of

stressing uncertainty of effects

Mr. Meyers,

devaluation, points out its inflationary forces /

currency

potential boomerang." Cites its effects on prices in Argentina and Mexico, and con¬
devaluating countries, including England, must reduce their standards of living in order to reap

and thus

tends

sees

in it

a

benefit from devaluation.

•

No

of

the international monetary situation as« result of devaluation. One appropriate
analysis would be "SNAFU"—you all know that this simply means "Situation Normal--

accuracy,

<S>-

Fouled

All

(which
is equivalent to two pounds two
ounces) could be purchased for

Devaluation
of currency is

u

tina, costs $1.50. Scotch whiskey
procurred at $2.50 per bottle,
and now costs rnOrq than $5.00.

Labor

reasons

s

d

tion

was

ful

-'tan J:;.

*

pointed out by Professor

pis recent article in

the Novem¬

issue of the Harvard Business

Review, for the reason that their
domestic economy at that time re¬

expansionist hypoder¬
mic provided by depreciation. He
pointed out that at that time the
British could produce additional
exports out of unemployed re¬
quired

an

sources,

As

Simpson E. Meyers

rela¬

Seymour Harris, Professor of Eco¬
nomics, Harvard University, in
ber

and

inflationary tendencies,

results

beneficial

secure

overfull

with

Now

thus
from

their currency changes.
view

In

have

these

of

which

things

happened,

already

well

as

unforeseeable events to follow,

as

tion

have

workers,

than

more

In

chaotic.

is

my

situa¬
.opinion,

siqce

living.

success-

as

ing, they will then, and only then,
be able to stave off the natural

1947, and yet the j jt wm remain in that state until
working people have less left after the day comes when all the world
paying" their increased costs of currences are stabilized in such

e-

pound back in
1931. This ac¬
tively

liv¬

the international monetary

doubled

its

value d

working

countries,

standards

lar

causes.

England

the

for

rates

of their

their

reduce

classes,- as'well as the white col¬

and due to di¬
verse

in Argen¬

of meat

electorate

the
to

was

to

time for vario

despite the

steak,

same

overbundance

used

time

The

85c.

perience. This
device has

from

steak weighing one kilo

a

not a new ex¬

been

1947

it at a cost of 75c. In

joy

Up".

em¬

ployment (and with guaranteed
security from the cradle to the
grave) the most that can be ex¬

a

all

you

know,

the

of

one

major reasons for President Peron's solidity with the Argentine
masses is due to the many bene¬

the lower
the
arbitrary

fits he has secured for
One

classes.

was

increase'decrfees issued from
time to time. Hd took a page
from President's Roosevelt's po¬
wage

litical

philosophy

and went him
Roosevelt

President

better.

one

promised the voters two full lunch
buckets, but President Peron
merely issued a decree (and made
in many

retroactive

it

instances)

industry was forced to
Not to be out¬

whereby
increase

wages.

done, President Truman

borrowed

England's Labor
pected is a moderate rise in their
total output.
'
V
/*/ Party political philosophy, which
He makes the further important really got them all the votes they
point that unless Britain is able needed, and is telling the Amer¬
to produce more for export to the ican people that if we perpetuate
dollar area without permitting a the Fair Deal party in office, every
a

from

page

.

fashion

as

permit free con¬

to

vertibility from one currency to
another.

conclusion.

In

knows

no

one

do

know

well

that
We

reiterate

I

the answers.

unless Britain,

that

as

other dollar starved coun¬

as

■rise in its sterling costs, the addi¬

be smaller

would
that

much

required

and would

harder to

move.

be
That

is, said he, it would be that much
more difficult to make additional
sales above what could have been
-secured

under

conditions,

pre

since

-

devaluation

the competitive

advantage resulting from the
.lower, dollar
price
of sterling
be cancelled

would
of

the

goods.

rise
;

A

Here

in

to the extent

sterling

prices

of

to balance their international ac¬

In this event, the

counts.

U, S. A.

most unappetizing choice of
either continuing dollar aid, such

has

a

the Marshall

as

Plan, or letting
countries, which are

these

all

equally
as* we

opposed to Communism
fall by the wayside.

.are,

Possibly it would be more appro¬

let them fall into
hands of Communist Russia.

priate to say,
the

wisdom which

The

the American

we

have in

a

nutshell the

tion of its currency. I now refer
the

ugly spectre known as in¬
? V'

:

flation.
I

have heard many definitions
inflation, but the best
explanation I have yet heard is

•of the word

in

story told about two promH

a

nent financiers who were

talking

things

over during the lush 1920's.
One of these gentlemen had fin¬
ished telling his pal about a deal

just completed. It seemed he had
sold a highly pedigreed hunting
dog for $100,000 and upon being
asked whether or not he had re¬
ceived

cash

for

his

purpose,

his

reply was "Oh, now, but I did re¬
ceive two beautiful $50,000 cats."
.

acute

as

I have seen actual evidence of

peoples of two countries. One is

.Argentina and the other is Mex-i
ico.

visited

Argentina

■"..rll,.w»

w*

on

one

Thos. Alcock Joins

Although • nary

a

or

single

Schwamm Co.

Dept.

in

ducer

cost

or

cent

the

to

com¬

prices

within the first month of

atiOn.
a

all

all

rates

frozen

at

pre-devaluatiqn prices, Therefore,
hotel accommodations in Mexico
at

this time

truly a bargain,
but
in general, all : other costs
have risen appreciably since 1948.
The October issue of

of

*Talk by Mr. Meyers before the
Illinois Manufacturers Association
World Trade Forum, Chicago, 111.,
Nov. 16, 1949.

success

Thomas

with
way,

will

Another

incentive

to

accepting the exchange offer is that the
bonds will be stronger than that of the
present 4s, 1952. In addition to $44,177,000 of the 4V2s-4s, 1969 pro¬
vided for exchange of the 4s, 1952 the company proposes to sell

mortgage position of the

new

$2,000,000 additional par value for cash. Funds from this sale will
be used, along with treasury cash, for the redemption or payment
of all of the balance of the non-equipment debt of the company. This
debt, including Collateral Trust bonds and liens of the Greenbrier,
Cheat & Elk Railroad, are outstanding in the aggregate amount of

With the retirement of the Collateral Trust bonds and the .Green-*
brier, Cheat & Elk liens, the new bonds will succeed to a first lien
on the property covered thereby.
In all, the new General Mortgage
1969 will

4%s-4s.

have

a

first lien

about 210

on

miles

of road

not

covered

by the lien of the present 1st 4s, 1952. Parts of this addi7
mileage to be covered are highly important. Included is the
Connellsville Extension which provides a connection V with Pitts¬
burgh & West Virginia. Also included is the line which enables the
company to reach
the important and productive Sewell Seam of
:

into

"//-/;/:•

f

of devaluation. *

necessary

they might

steps,

and

new

He

business

depart-

was'

a

prove

to

from

low

;

of

point

Top executives, economists and
i Federated
Depart¬

ment Stores,

Inc.,

of the

one

New

that

York
the

show

no

on

Nov.

"next six

predicted

8,

months would

further drop in employ¬

from

and
more

its " low

than

point

of

Own Finn in Ft. Worth

recover

as

dealers in Texas municipal bonds.
Keller

Mr/

from

its

pre-strike

low

point of July, 1949. The U. S. will
TEXAS—Henry not be faced by a further drop
Harry Ratliff have in employment and production.

underwriters, distributors and

utive

-

WORTH,

in the Sinclair Bldg. to act

fices

was

formerly
of

Vice-President

the First Texas

Exec¬

William

However, it will not show a large
increase, he said. Business will be
competitive instead of "boom¬
ing." Mr. Paul Mazur, member of
Federated's
and

Board

senior

Brothers,"

Ratliff was

stated

Corporation

ahead

liam N. Edwards & Co.

v

personal expenditures: and
expenditures for eapital
;

........

purposes.

partner

of

Directors

of

investment

business

might

even

in

the

Phila. Bond Club Gets

Lehman

bankers,
period

improve slight¬

4

Slate for Officers
PA.

—

The

nominating committee .of .the Bond
Club

of

Willard
&

Philadelphia

has named

S.

Boothb.y, E. H. Rollins
Sons, Inc., for President. Nom¬

inated^, for
other
offices
were
Norbert W. Markus, Smith, Bar?ney

don

& Co., Vice-President; Gor¬
Crouter, DeHaven & Town-

Crouter

send,

&

Bod.ine,

Secre¬

tary; and Russell M. Ergood, Jr.,
Stroud & Co., Inc., Treasurer.
Named for governors were:

Lo-

ring Dam, Eastman, Dillon & Co.,
one

year;

Hemphill,
sons

ner,

Lawrence

Noyes,

& Co., and

M. Stevens,

Graham,

Par¬

Raymond J. Kee¬

Rambo, Close & Kerner, Inc.,
latter

ly, adding: "Most unlikely possi¬

the

bility of all is that business will

prior thereto was with Wil¬

i

crease

ifiar-1

taxes which' de%.

high

that .PHILADELPHIA

Keller & Ratliff Form

and

and

na¬

tion's retailing groups, meeting in

,

formed Keller & Ratliff with of¬

kefs,

business

July, 1949."
According to Fred Lazarus, Jr.,
Federated president, business will

Keller

autos; t re m endqus.crops

which hang ominously over

directorsof

recover

FT.

twelve months."

to

out, include rapid reduction pf the
housing shortage.declining -."dg."
mand for

-

July, 1949,
;

drastic tailspin during
six

next

../"Factors which still call for--sepju*
tion, the retail executives point

full

for

is

organized and managed the mu-. ment and/ production
nicipal bond department.
^
f business in 1950 would

N. Edwards & Co. Mr.

dis¬

go

the

Stores;
outlook

says

'f'"'*'-

previously assor
eiated with the New York office
of A. M. Kidder & Co. where he

to

as

*

Broad¬
New York City. Mr. Alcock
be in charge of the firm's

sales

and

tasteful

R. Alcock

Schwamm & Co., 50

ment.

with

the

prior sinking fund there will be a secondary,
sinking fund equal to 20% of the net income of the preceding year.
However, the company may, at its option, deduct npt exceeding $1,-.
250,000 from said net income before computing the amount of the
payment due. Net income over the past 10 years has averaged $3,681,000. After deducting the optional $1,250,000 provided in the plan
this would have left an average of $2,431,000 net for computing the
secondary sinking fund. The secondary sinking fund of 20% of net
would
have
averaged
some
$486,000 per annum, equivalent to
slightly more than 1 % of the maximum amount of new bonds to be
outstanding. K v /

/comeback

Unless all the devaluing coun¬
tries, including England, are able
take

In addition to the

Inc.,

"Business

Conditions," issued by the Federal
Reserve Bank of Chicago, which
discusses the British 'pound de¬

to the

are a number of favorable angles to the exchange offer,.
thing, the interest rate is to be 4V2% for three years—to
Oct. 1, 1952 which is the maturity date of the present bonds. There-,
after, to Oct. 1, 1969, when they mature, the new bonds will carry a
coupon rate of 4%.
Secondly, the new bonds will have the benefit
of a sinking fund which the present bonds do not have. There will,
be a prior sinking fund of 1% of the maximum amount of bonds
theretofore outstanding.
This sinking fund will be contingent on
earnings but will be fully cumulative..
'
'
one

/Federate^

are

room
Hotel cost

r

bond the
viewpoint

There

For

/Fred Lazarus, Jr., President of

employees,; and

hotel

i

than they could be as a three-year bond.

Sales Rise Forecast

devaldj!

such
requests could not be denied.
As
a
result, costs to - produce were
increased, which in turn served to
further raise
the selling prices,
which again increased the cost of
living
index. - Truly / a
vicious
spiral. Fortunately, Mexico recog¬
nizes the great value to her dollar
economy as a result of tourist dol¬
lars spent in her country.
She
ordered

declared

17, 1950 and

long been held by many rail analysts that as a 20-year
1st 4s, could be regarded more highly from an investment

Department Store

Naturally, this resulted in

to

being

upon

Considering the nature of the exchange offer terms, and con- .
sidering that the whole matter has been discussed in detail with :
large bondholder groups for a period of months, it is believed in
most quarters that success of the plan is virtually assured.
It is
expected that holders of a large majority of the bonds will deposit
their holdings. Success of this plan, with the consequent alleviation,
if not elimination, of the 1952 maturity problem should have a highly
beneficial effect on the overall credit standing of the road. It has

bituminous coal in West Virginia.

request for increased compensa¬

tion

contingent

is

either the pro¬

store in

retail

offer

The

operative by the Board of Directors on or before Jan.
subject to authorization by the ICC and stockholders.

tional

seller, practically
Mexico raised its
not less than 20%

every

Directors.

of

released

were

,.

locally

processed

Board

1952

4s,

1st

of the exchange offer

$6,544,000. In the present operation, then, the company contemplates
reducing its non-equipment debt by $4,544,000 to $46,177,000.

went fCom"4.85 to approxi¬
mately eight to one U. S. dollar.

hotel




men.

peso

valuation, points out that within
two
days
after " devaluation,
wholesale prices of many impor¬
tant
industrial commodities, in-*
me the equivalent of $4 U. S. per
day, Including a light breakfast. eluding cotton, non-ferrous metals
and rubber, rose 15% to 20% in
The identical room on my trip
last winter cost $7.50, and if you! terms of sterling.. Therein lies
wanted breakfast, you could en- the greatest danger, in my opnion,
I

my trips in 1947. My
at the Alvear Palace

free

comparable.
I visited
Announcement is made of the
Mexico in August of last year; Association of Thomas R. Alcock
which was thirty days after Mex¬
ico decontrolled its peso.
The

what devaluation has done to the

•

while
in Argentina, is

situation in Mexico,

as

this

solving

somewhat

a

boomerang to any
nation which endeavors to balance
its international trade by devalua¬
to

not

in

problem, will determine the out¬
come
of our struggle to live as

want

l'ear, they don't even have to
work to get it.
/•;/•/
The

people /employ

modity had increased a fraction of

Potential Boomerang

potential

one

in addition to security from
and

manufactured

\/

V

citizen in the land can relax since

terms

.

tries, are able to sell more to the
United States, they will be unable

.

tional quantity of exports

to holders of Western Mary¬
officially last week. They were
somewhat more liberal than had been discussed with institutional
holders a few weeks earlier.
The plan will be entirely voluntary.
Those who do not accept the offer will retain their mortgage
security unchanged and will preserve all of their present rights.
The offer will remain open at least until the close of business
Dec. 19, 1949 and may be terminated at any time thereafter by the
land

,

,

position to evaluate at this time, with any degree

in all this world is in a

one

Maryland Exchange Offer

Western
The

terms.

'

two

for

three

i"'"-''

year

-Volume 170

Number 4858

THE

COMMERCIAL

By JOHN DUTTON

FINANCIAL

CHRONICLE

=========

By

IS IT LISTED?

Last week

pointed out that

policy of salesmanship which
baspd upon the ultimate in service to your clients will enable you
to "bdntrol the entire account. When this desired end is achieved

,

a

then place in that account almost any security that you deem
Whether or not the security in question is listed or un¬

you can

desirable.
listed

becomes of only minor importance to
your customer. However, when such confidence is established it is naturally
even more important that
you continue to maintain such a relation ¬
ship. This can only be accomplished by GOOD PERFORMANCE. It
.

devaluation, and concludes
Monetary Fund as an instrument in producing inter¬
n-national exchange stability,
;Says British exchange regulations were circumvented, and contends legis¬
lated currency devaluations
merely foster international political controversy and ill-will. Scores at¬
tempts to force rigidity by exchange controls and urges U. S. to reverse its
potectionist policy.
year 1948 was notable for the substantial recovery from
grounds for satisfaction in that industrial production was
running well, the overall export trade was making great strides and the overall balance os

the crisis of 1947.
i

is also necessary to constantly educate
your customers. They should
the meaning of over-all management of a diversified

grades and government bonds. They will know that fluctuations

this

is

accomplished,

you

faced

are

with

the

of the over-the-counter securities that you want to sell
tomers. Remember you

make

service

set

a

fee.

must sell either unlisted

or

selection

to

'

SOONER OR

certain

It

LATER

YOU WILL LIVE TO REGRET

stocks of smaller companies

IT. There

that today just do

■

not have

a

chance. When you see that the Federal government alone

is taking 38£ out

of

every

dollar of net from these small struggling

'

business

firms

"product and
>

that

in

trying to build up a new
business; they are practically licked before
cases

many

a prosperous

to

are

they start.
•
-:
j
Go through the unlisted quotation sheets and pick out the issues

;of companies that are capitalized at $1,000,000 and under, check their

Recession in U.

is

true

Throughout
tioned,
and

a

prob¬

lem

existed

sterling

with

tional

dollar

the

These

area

tional

cov¬

by Mar-

shall

fun d

Aid

H.

A.

trols.

of the fact that Marshall Aid was
to taper off and was scheduled to
cease in the middle of 1952.

with the hope that they would
someday reap a large return for the greater risk they have taken.
iMark well the lines which state, "Our sales are up, our net'profit
who

holders

bought

these

shares

less

much

were

to

many

be

change, I am afraid these companies bad better put it straight, before
unless tax policies of our govern-

-ment.change we cannot tell you when.we can pay dividends, if ever"
} -rt That is the situation regarding small companies. -That is why you
new

no

prevail despite all the manager* aiid their nonsense'in Washington.;
When this time comes, when even a smaller business recession comes;
about as-it mav in the next year or two, it certainly would be unwise
to have your clientele loaded up with" stock issues of small, struggling
^ companies that for years have been bled to death by an iniquitous
federal tax on their earnings, and that are left high and dry without
sufficient reserves to meet payrolls and stay in business during times
of slumping sales and falling prices.f
THIS CONCLUDES THIS SERIES ON CERTAIN ASPECTS OF
THE UNLISTED MARKETS'. Beginning, next week we go back to
.'some selling procedures, that .are now working well for certain
■

stoppages

and

services.

It

not

was

dealers.

-

-■

;'=

'

-

;

\

- ■

tions

were

.;

■

.....

no

small

around $8(17 million,

;
r

v It

has been

revealed that dur¬

by the banks to-prevent

inflationary

of

gence

a

resur¬

forces,

it

the undertaking of the
task to increase savings

may mean

serious

bond sales. Postwar campaigns to

promote > the

sales,, of

.

savings

the months of September

•

dollar
-

area.

<•

„i

months

$786

are

estimated

million,- while

at
re-

demotions amounted to approximately $807 million. This is a reversal of the situation for the two

about 25%

of the gross

is subject to re-,
holders of obliga¬
tions, the current excess of re¬
demptions over sales may require
national

secure

no

lem—deficits

were

upon

the
own

currency

areas,

exports will, in relation to. the
physical volume of such exports,
suffer
same

the

year

in

of

August,

around

the

sterling

the

the

dollar

tend to

speculative
complete: v

two

and sell

area

ing

the

war

postwar years.
T

1

'

Masius

;

the

or

-

>.

immediate
<

.
!

to

..

■■ ■"»

i-

•

debt

the

not

existing
and

areas

surprise.

To what extent, if any,

v

between
redound

only £10 million

in,the first haff of 1949—the dol¬
lar gap, despite Marshall

pressing

a

on

one.

Aid, be¬

To meet it,

Britain's

gold

and

1949

to

£406

and,

at

the date of devaluation,
low as £ 330 million. An

were

as

million

at

June

30

improvement to the tune of ap¬
•

proximately £20 million
ported

as

at Sept.

United

States

is

generously

to

carry

United

There

load,

in

Britain's

drastic

step

were

merchants,

alists

and

turned into

found
a

most

extent
a

gave rise to
criticism in

a

Shock

of

the

further

shock

resentment and
other

the

same

ent, denials in official quarters in

and

labor

defeat

the whole

devalua¬

plan, can be averted by the
unpopular methods the country's

In

exchange

price

degree
this

as

meantime, and
in

of

new

From this it

somewhat cheaper
officially fixed one.

can

there has been
turn

world's

changing

at rates

t-han the

„

future,

the

"free markets" has been
hands

as a pos¬

the

for

some

of

be concluded' that
no

confidence

immediate
in

that

re¬
cur¬

of¬
rency.

of

The
tion

pros

have

c:

and
been

nauseam but it
ex¬

change urate juggling will achieve
its
objective
of arresting
the

&

proposing and which

criterion

sterling

that

however,
Britain.

wholesale

the

sible

open

the

are

have already caused internal dissention and dispute.'
r
r

\

and

countries

lowered

and

ficial ,»dollar

Whether

raised

tion

devaluation

their currencies, not all.
to

to

ens

forced to resort to defensive

lead

been

already showing additional rest¬
It will be interesting; to
see
whether the spiral of infla¬
tion, which unquestionably threat¬

action.'

ain's-

the affairs of other countries. The

leaders

was''itself

were

risks :of

*

Within a few days all the;
and: sterling-tied;
in 1947; when inconvertibility of 'sterling* "area
countries, as well as several noncurrently-earned sterling was, de¬
sterling area ones, followed Brit¬
creed.

from the serious blow it1 received

self-ex-

insidious

lessness.

many.'

The

the

sequently

Personal hard¬

was re¬

to, the

deliberate

to

is

people of all
their affairs

Extent of Devaluation

30, largely due

m-

the United

eral other commodities have sub¬

ship was also brought to the doors
of'

concern

in the price of the British
ioaf, which synchronized with the
drop in the price of the pound, was
a significant omen.
Prices ot sev¬

state of serious dis¬

ruption overnight.

>

inflationary

rise

of

traders.; industri¬

business

descriptions

■'£*

ing of its deleterious reaction 'on

disturbing.
In some parts of the
globe banks and stock exchanges
temporarily suspended activities,
and

».

this financial policy, to say noth¬
'

i

consequences

'■

devaluation is

as

Kingdomi's

a

principle.

The immediate

■;

of the first order, one can

posure

"

?.

trie

of them in the

the

also

but view with

tendency to call the tune would
be, understandable, even if regret¬
table

is

aspect and,
flation

playing the
the

those
to

The Inflationary Aspect

part of: world banker and helping

from

Be Partner in

Exchange firm of McMannus

did

more to

this- would

and

one,

enlarge the economic rift

already

drive

of' it

these

Seemingly she

therefore, but pursue her in¬
to purchase more from

can,

strong

a
was

declines

percentages.

tentions

finally approached

annum

enactment

£630 million in 1947 to £110 mil¬
lion in 1948 and

x

physical volume of which her

the

future sterling
in
swept far beyond the

and

;

per

This

prob¬

reduced

but

old game that all

hard

market

for

York

picture

Thus, while the overall balance
a

by




-

ad¬

device

can play.
sterling
cost
of
United
Kingdom imports from dollar and

favorable rate

early in the

movement:

the

of payments ceased to be

De-

export

new

The

pur¬

to

protectively.

to

is

cons

^

of devalua¬

discussed
is difficult to.

ad

in¬

scribe

to
the
theory that this
manipulative device of placing; a

revised and dearer exchange rate

Mackey, 1 Wall Street, - New
world's- amounting dollar indebt¬
tab on the dollar really gets down
City,, on Dec. 1. Mr; Masius \* * Part of .'the address, of Mr* edness and put a rosier complex¬
to the roots of the problem.
has recently been active as an in¬ Stevenson
at
the
22nd
Annual ion on the balance of international
At best it seems but to offer
dividual'floor broker arid prior Meeting of Shareholder® r-f
payments is a Question of such
j
some new financing by the Treas¬
thereto was a partner/hu J* F.1 clays: Bank
advan(Canada), Montreal,'complexity'.as to defy a really possibilities of fleeting
ury and a likely increase in the Reilly & Co.
i Can., Nov. 15, 1949.
(Continued on page 31)
logical answer.
demption

>

free

..diverted

more

•

fact that

goods

cheap

were...

when

20%

.

:
; From then onwards there were
occasional rumors of an eventual
"years- 1947 and 1948 when sales McManus & Mackey
rate cut and these recurred more
'are
computed at approximately
Harold M. Masius, member of
i
$12,249 million and redemptions the New York Stock Exchange, frequently with the passing of
at $10,249 millions. In view of the
will be admitted to partnership in time. They were met by persist¬
-

and

mar¬

transac¬

advice to encour¬
currency!
The United Kingdom1 age devaluation was. offered, one
income and price structure tended cannot say,) but,: as the dollar
to become too high vis-a-vis the shortage is: a world problem and

.

around

market"

States political

>

-

the bulk of the latter have

valuation

this added fuel to the fire

normal,

extent

covering' of short sterling
and bonds, particularly under present
positions.
■>
J
October/redemptions of all series conditions when goods are plei\tiFaith in the exchange value of
of savings bonds exceeded sales in fulVand. prices, falling, have not
the pound never really recovered
? the
samey period.' Sales for the had the success experienced dur¬

-two

with

discount

by a commercial
policy which canalized trade with

came

'C

•

.

,

amount of bonds owned

and October redemp-

while sales jn period were $78$
/ ,■■ .' million.

ing

Conti¬

Black

system.

"free

increased

New

surpris¬

dollar reserves
steadily reduced
of government obliga-1
her holdings below what could be
tions by the commercial banks.
considered the minimum level of
Inasmuch as the objective of the
financial safety. They ebbed from
Treasury Department is to hold
£471 million at the end of March,
down the

Cashing of Savings
Bonds Exceeds Sales
^ September

in

countries failed

an.

and

level with vast outpourings-on so-i
cial

other

and

All

On top of' this, government ex¬
penditures continued, at a high

holdings

•

devalued

hoping for a
of exchange.

desired. There,

v;

drawings

;

as

also

ability to export has largely de¬
pended,
will,, for
purposes
of
prices. On top of this, legitimate rough discussion, cost her around
hard currency buyers of sterling "30% to 40% more than hereto¬
goods, anticipating the exchange fore, and the dollar and hard cur¬
cut,
postponed
their purchases rency revenue derived from her

politicians who now control this, country will be able to do when it
comes. They will be snowed under, in an ^y&lanche of economic!
sterling area* and' soft
realities that will not be denied. The law of action and reaction wills
countries..

'

other soft currency competi¬

tors,

against the pound
ing, therefore, to see the United
benefit of neither
Kingdom become a high cost area,! mgde .eventual sterling devalua¬ !
long run. ;;>■
tion almost inevitable, and final
to' a condition that was
aggravated to

speculative stocks. And remember this, someday there ris going
"be another business depression in this country. There is nothing lite

.

over

Control

and strikes and also grounds for

financing for small business. That is why dealers who
know the risks involved in this business today are shying away from',
see

"

con¬

and sold there at sacrificial dollar

is up, but taxes

-their stockholders and -say, "And

•/

.

United States and other territories

-

?

of

vantages

tions

have taken so much of our working capital that we holding the view that there was
have made bank loans to handle the increased business and for tnat; much
concealed
under
employ¬
rreason dividends cannot.be paid,1 at this time.'! Unless tax policies
ment and misdirection of labor,

<

valuations.

ish

emphasis and, in
its force. More-*

unofficial

a

interna¬

ket

Over, the general attitude of labor
left

40%, and to other countries, suen
our own for
example, by thai
same
percentage less the offset¬
ting percentage-of their own de¬

sadly in them support of the Brit¬

spent

soon

balance

long-termed

p authorities

ventions,

chased

with

her

respect to these circum¬

In

nental

but

sterling

indebtedness to the
States by approximately

sterling, ac¬ (
She has gained no worthwhile
through divers
in¬ or lasting export trade advantages

other dollar assistance. The
main;
preoccupation was to reduce the
dollar gap quickly enough in view

fact,

in

1

divestment of

complished
genious circumventions

Stevenson

and

s

by heavy

way

points

as

recurred.

demonstrated

were

salient

current

United

a

apprehension

practical

was

roughly
ered

fact

contributory
factor—ominous signs of interna¬

area

deficit

in

sterling'

.

,

and

reces¬

this

the

sheet cost of all

particularly

more

few

a

stroke of the pen she has

a

increased

men¬

sion in the United States set in—
was

group,

immediately strike the mind.
By

period

Kingdom

Contrasted with the 1948 picduring one of the most unprecedented periods of prosperity
has ever known (which covers the period of the last ture, developments in 1949 were*
three years). See how much more they have had to borrow to enlarge however, extremely
disappointing.;
'inventory; see how much even the successful ones have had to pay The disinflationary policy inaugu¬
over to the tax
eaters in Washington, and to their state and local rated in April, 1948 was continued

.

the

but the United

records

.'governments. See how many have had to go to the banks and borrow
to meet enlarged payrolls, buy- new machinery, and carry increased
inventories. Read the letters of their presidents to their hardy stock-

Contributory

a

after the late 1948 business

and

In Britain's particular case and
her. role of leader of the ster¬

ling

S.

Factor

this country

•

in

wane.

sight

dollar

or

•

common

England but confidence continued

ment.

But UNDER TODAY'S CONDITIONS it is either FACE THE FACTS
OR

rea¬

sonable

cus¬

your

•

are

in¬

was

of achieve-

the funds, or else

charge an extra commission on listed issues, if you are going to make a profit out of your business.
Certainly it does not rest as a pleasant task upon the writer of
this column to bring up unpleasant facts concerning unlisted' issues.

•

were

are

expected. These are academic considerations but it is surprising
how few investors have such a clear view of their assets'which are
invested in securities.
after

There

t ernational

within

to be

But

n

payments

list of securities. They should know and understand the meaning of
stable assets which you will constantly advise them to
keep in high

•

In the United Kingdom the

U

understand

'■*

(Canada)

to Britain's currency

u?

it is indication of ineffectiveness of International

v

we

IS

STEVENSON*

Canadian banker reviews circumstances which-led

(Fourth Article)

i,

A.

H,

President, Barclays Bank

/

'

**

(2095)

Britain's Devaluation—Proof of Incompetence of
International Monetary Fund

Securities Salesman's Corner
'

&

York

.

20

THE

(2096)

Thursday, November 24, 1949

FINANCIAL CHRONICLE

.COMMERCIAL &

be considered

Increased Production at Lower Prices More

(30)
chasing

Output

Desirable Than High Dollar Value
By EDWIN J.

August,
bought

slow

is increased unit production with

the

because

banks,

steel

of the

still

further

and

The bulk of

coal

prices will have to head up¬
indefinitely. With the new

strikes,

does

not

the major cor¬

that

porations used
real states¬

ties.

ward

machinery installed since the end
of the

dur-

manship

keeping
dends d

o w n,

in the face of

the heavy net

earnings
1948

the

Had

dividends
been

com-

how

would

dends

1949 divi¬

the

disappointng

by

been

have

con¬

(2)

sultant spectacular

was

with

might be noted that the consum¬

in¬

ing public possesses more sound
common
sense
than is generally

cannot be said about the way

handled by

terest rates, have been
the

When the

government.

during

earlier

the

1930's,

in

those

In

the

of

years

have

been

business

the

made

by

hardly audible and in¬
terest for a period of years stead¬

a

ily declined. Of course, the huge
refunding® offered
nice profits
with little risk, but the long-term
future of the country called for
real

some

opposition

to

easily

volume, but

price level.
Profits in 1950
may closely
approach the 1949
figure.
However, these predic¬
tions are likely to be knocked into

were

rates

cocked

deficit financing

if

hat

continues. Deficit financing is in¬
excusable during times other than
war

serious

and

depressions.

In

continuation of deficit fi¬
nancing during other times can
only result in sapping the vitality
of the nation's economy and end¬
fact,

interest

kept artificially low. While

it is true that the government is
a considerable amount of
annually by the low inter¬
est its bonds carry, the net sav¬

saving

a

ing in, financial disaster.

would
were

presently

on a

This is for the

be

Now, with

times

many

reason

that

We
^

days

about

the

hope

in¬

an

years

these

(2) Things
nor

billion.

as

never

they are" made to

Nothing, however, is said that this appear.
figure, if attained, would most
(3) A decline in commodity
probably be based on still further prices should be welcomed instead
inflation. While one is at it, why of feared, since this is less dan¬
stop with the figure of $300 bil¬ gerous than a price advance.
lion and not go on to $500 bil¬
(4) A portfolio should be in
lion, or even more? It would seem shape to withstand
foreign and
that the sound tiring to do would
domestic disturbances.
be to try to hold the national out¬
(5) The lows of 1932 need not
put around the present*'dollar
be anticipated; on the other hand,
level with a steady increase in
the lows of 1942, if reached, need
unit production. This surely
would

seek

not be feared.

be much healthier than to

constantly: higher

a

volume,

with

a

-

(6) Seasoned

dollar

bought at attractive prices have,

likely decline in

over

unit production,, and would work
in
the
direction, of - gradually

ter

the years, given a much bet¬
of themselves than

account

low grade stocks.

squeezing inflation out of the eco¬
nomic picture.

stocks

common

'

-

Price

Level

will

days, the country

rations

reach

a
postwar level of
it must b,e amarent that
a certain amount of price stability
must be ultimately attained. This

prices,

as

postwar plateau of prices may not
be

more

than 20%

or

25%

above

the 1939 level, if that much.
fact that wages have

been stead-

.

lly increasing,

The

than

are

more

attractive

buys

selling at depressed levels
when

enthusiasm

carries

them

to the higher ranges.
Ex¬
perienced investors like the Swiss,
Dutch and British have the forti¬

tude

to

follow this

policy in

ac¬

(8) Individual

they

fortunately
may

realize

investors

near-term
best

may




increase

can

put

their

it

future,

to

the

In

nomic

of

face

than

that

they

in

money

in

savings

at

should

business

in

Well

(17)

rec¬

otherwise, management now rec¬
ognizes and accepts the fact that
there is something in business be¬
side business itself."

Continuing

the

to

"Human

steady flow of propaganda.

broken

Stocks possess a factor of
style with corresponding influ¬
ence on prices.
(18)

The

tion.

continues

Now

change

Inflation

does

not

neces¬

follow

^inflation.

Interest rates play

(23)

of life

than

may

the
a

size

The

With

(25)

the

population

business declines.

(26)

(27)
in

does

The

common

and

the cash
ful

human progress

of

on

not

shift

with

each

mqrket.
percentages invested
stocks, preferred
together with

bonds,

hand, need most

care¬

:

are

intelligent; however pa¬

patriotic; however they may be¬
lieve in the American system—
and they so believe—nevertheless
far
too
many
find themselves
largely
illiterate
in
economic
matters; that is. in their under¬
standing of the fundamental facts
by which wc live and progress.
'

I believe there is

here.

Human

The imnortance

of

sitting
over

"L

•

(29) Until mime corporate bonds
from

on a

15

to

25

a

real danger

progress

today

is

definitely in jeopardy by the
progressive encroachment on its

very

.

with cash awaiting buying oonor-

with

enterprise

triotic they may be—and they are

FREEDOM. We
losing gradually, but surely,

greatest asset

sell

free society

a

which

in

the

of

they

ap¬

,

.

consideration.

(28)

In

sense.

climate

in

production system.
And to a large extent it is created
by political action. However in¬
telligent our people,may be—and

A predetermined invest¬
policy should be followed

turn in the

stocks

material

ness

proaching 150 million, a huge call
for correctly priced merchandise
will exist even during temporary

ment

rules

operates influences the effective¬

of the national
debt, which seems to be accepted
as entirely normal, is an unsound
plank in the country's economy.
:

course

the

realized.

(24)

number of the

by which we live and pros¬

"Economic relationships govern

a more

presently

be

knowl¬

per.

important factor in the country's
economy

is

mean,

existing

the

fundamental

of

the greatest

policy, ex¬
be expected to decline.
give-away

ports may

of

I

edge and the dissemination among

With the tightening up of

(22)

America's

this

By

expansion

frontiers

It

clear.

crystal

years

to

run

3%% to 4% yield basis,

part of an investor's cash should

are

liberties.

our

the

down

It

is

are

—

not

We

ROAD
so

are'

TO

much

moving

SERFDOM.

today that we

concerned with, but it

trend

affect

of

today

as

tomorrow

concern

and

it will

that

weakens

is the
surely

causes
our

us

confi¬

if

progress

dom,

to

is only

to

with
when
their

surrender

we.

our

all-powerful

an

must

We

nomic

that

remember

individual freedom

and

free¬
state?
eco¬

freedom, political freedom
are,

to a'

large extent, inseparable.
"To

mind there is a great
techniques that will tell

my

lor

need

the people at the grass roots level,
in language they can understand,

economic truths that
well being. It must be
told time and time again, and in

the

simple

govern our

many

different

By so doing

ways.

not only make a contribution

we

toward the acceleration of human

ance,

of

but,

progress

preserve

we

ready made.

prime import¬
the gains al¬
>

.

\

,

High Place of Research

,

„>

.

"I have mentioned the import¬
of

ance

expanding the frontiers of
knowledge — pure

fundamental

in

research,

wealth

ever

words. What¬

other
we

produce can

may

distributed

be

all

out

free

initiative, their talents, their am¬

according

to

any

we may elect to use. But
do is to take from some

pattern

the

sarily follow deflation, but defla¬
must

the

is

keystone
upon
progress rests? Of

opinions differ. But from
point of view the answer

stands

that hu¬

exercise

It

freedom.

were

men

^

in¬

indelibly

•

progress is synonymous

human

com¬

or

human

J- find

we

my

investors' emo¬

with the

What

ask:

me

KNOWLEDGE.

(21)

of

cause

scribed thereon the fact
man

course,

yardsticks used to
the desirability of stocks

tions.

tion

let

which

The

measure

various

into

down

foundation

"

(20)

the

is

back the pages qf

turn

be

may

economic
or
material
progress and social and political
progress.
They are interwoven.

func¬

to

progress

ponents,

and

supply

of

law

still

demand

Mr.

address,

his

Sloan saicl:

subject to

are

accomplish the

objective, at the same time recog¬
nizing the human values and re¬
lationships involved, is the for¬
mula for social gain. Expressed

deflationary

alive

be

to

investors

that

economic formula for ma¬

terial progress. To

simultaneously.

work

at

forces

progress

is the

ognized as a normal development.
(16) Since
Labor
Day,
1946,
the stock market has given indi¬
cations of considerable confusion,
with inflationary and

eco¬

and stability of
community. A great change

the

eco¬

be

a

now

actions
society

has taken place. To produce more
and better things more efficiently,

abnormalties

and

excesses

Sloan, Jr.

policy level upon
whole in terms of the

nomic

during the period from April,
1942 through October, 1948, a de¬
cline

this

production of bitions and the incentive of in¬
goods
and dividual advancement that civil¬
services," Mr. ization
really
began
and
has
Sloan
com¬
since developed. Can it be possi¬
mented. "It
ble that this was all wrong? Can
has expanded
it be possible that now we shall
its
responsi¬ be better off in terms of human

the

as

al¬

the

the

bilities. It

though in no sense timidly.
(15)

P.

it¬

to

considers the impact of its

prove

may

carefully

proceed

are

situated

Alfred

a

society

self

risk, (c) credit
and (d) equity risk.
(14) Barring war, the country's
long-term future may be viewed
optimistically.
In respect to the

the years.

.

and

rate

,

limit

can

(a)
in¬
risk,

ope¬

in

free

such earnings

many

tunities has worked out well

quiring securities.

more

'

thought should be given to
purchasing power risk, (b)

which

(7) The purchases of seasoned

when
One of these

rating

and

terest

that all

•told

history

agement

price
'

downward

In weighing the retention,
purchase of securities,

(13)
saJe

as

is 4 reaL-

.

fantastic.

were

stocks of soundly managed corpo¬
A Normal Postwar

,

1949 Industrial Award of the

the

,/^r-l when man-'

on

:

securities,.

good

as

*

greater progress* and security, V

,

(19)

important. Dur¬
ending Novem¬

are

poor as

Mgf.

acknowledging award

to stem a' normal

means

healthy

of receiving

this

•

<

termining whether to buy or sell

in mind:

ber, 1948, little thought was given
to
unit consumption, but since
then a changed outlook has de¬
veloped.

raising

of

the national output to $300

more

ing the lush

much less inflated condi¬

hear " considerable

much

come

tion.
.

matters

steadily keener, the question of
maintaining unit volume has be¬

banks, with the result that the
country right now would, be in
very

the

(1) With competition becoming

larger part of the financing would
then
have
been
done
through
sources
other
than
commercial

a

to 1950, here

an eye

of

vestor should have

much

a

some

are

government bonds
3% to 3)4% basis.

business.

Vize&tdday'as
..never
before

by

.

a

Matters of Interest to Investors

ings to the people of the United
States

•

(12) The 1948 earnings should
yardstick in de¬

fact

money

greater

and *

the

writing securities. The protests, if
any,

1949 dollar

the unit volume will depend upon

under¬

of

business could

1950,

reach the

strong and sustained pro¬

a

should

test

accredited to it.

gov¬

pegging interest

started

ernment

-arHficial

it

And

money.

consequent -

a

such

govern¬
i the
use
of

insistence

mental

goods are being produced for the

same

the

unfortunately

finesse,

of

not be used as a

possible

of

down

Society of Industrial Realtors in Chicago, on Nov. 19, Alfred P. Sloan,
Jr., Chairman of the Board of General Motors Corporation, outlined
the expanding responsibilities of industrial managers. "The time has
long,
sincei—:—~———
—
——
passed — and dence in our future* And we are

coun¬

*

economy

trend.

least

high degree of

a

foouhtry's

The answer is
when
the
consuming public is
convinced that the best possible

decline in 1949.

will

sums

community.

(11) Very questionable whether
there will
be any gain" to
the

plateau of prices.

While the handling of the divi¬
dends

American securities.

It may be asked how it will be
known when we reach the postwar

how stocks might
have advanced in 1948 with a re¬
and

trast

with

slowing

the occasion

On

•

the prices

influence

tools.

(1)

to imagine

it is not difficult

will

tries

$l,047a? mile compared with costs
of laborers using pneumatic hand

J. Schlesinger

Edwin

mensurate
with earnings,

-

foreign'

competition i from

may

-oped by a subsidiary of Pullman,,
Inc., for use in the maintenance of
railroad track, which is estimated
-to result in a saving of $965 to

that. year.

of

advancing,

• ;

(10) The resumption of prewar

decline
by a much wider margin than now
appears likely. A case in point
i»va power blast cleaner, develinstead of

.

demand.

and with the- increase

war

smaller

this country for de¬

in

subject to die laws of supply and

it seems reason¬
able to anticipate that unit costs,

1948

•

used

fense purposes

$1.32.

^9) Interest is a commodity and

in the know-how,

in
divi¬

; ing

v

be

of Industrial Realtors, says management can no longer
limit itself to mere production of goods and services, but has further
responsibility of promoting economic progress and stability of

opportuni¬

mveownent

less aggressive,

of Society

2%,

paying

cui'itiiUy

awaiting

mean

(32) Whenever Russia becomes

1814 the dollar

Chairman of the Beard of General Motors, in

12

next

'

inflation.

to

AIM' Sloan Notes Expanding, Dalies of

be

may

months.

•

and in 1939

fuel

to that extent add no further

1929 $1.07, in 1932 $1.57

$2.18, in

declines.
Points out increasing dollar value national output may mean merely
and that prime economic objective should be to return to normal postwar price
plateau. Lists matters investors should keep in mind.

appropriate at this time of th? year to refer to some past occurrences and
try to project one s mind into 1950 with the thought of what may be anticipated during
It

to

may

in 1896 the purchasing power was

price

inflation,

more

dollar,
during
be well to

in 1965 $0.77, and
On the other hand,

$0.66,

in 1920 $0.66.

Schbsinger contends what is needed to maintain prosperity

sound,

it

1949,

will be used to pay off obli¬
gations previously incurred and

year

pur¬

the
$0.66

at

remember that in

SCHLESINGER

Investment Counsel

Mr.

of

power

stood

which

the

after the first of the

veterans

to

considering

In

Some of the money going

(31)

though presently

as

invested in such bonds.

we can

and

give to others. The only way
expand the volume of
all hu¬

we

can

wealth for the progress of

through technological
capitalized by a virile
industrial economy operating in a
healthy economic climate. And
right there a great opportunity
is

manity

progress,

itself.

unfolds
of

like

the

achievements

The

atomic energy,

have

electronics and
im¬

the

captured

agination of the people. They see
as

before

never

the

of

wonders

science. The postwar era

is to be
a
research age. The possibilities
yes, the probabilities — of trermendous developments are before
—

us.

Medical

plishing
better

health

and

life.

of

span

is

research

miracles

accom¬

in promoting
extending the

Even

the

cancer,

levied by nature on
humans, is now for the first time
greatest
under

Given
and

curse

heavy
talent

time, does

that cancer

attack.

scientific
facilities,

dare to say

anyone

can

resources

survive, in the fi¬
of con¬

nal analysis, the challenge

centrated.

coordinated

and

sistent scientific efforts?

ing

technology

per¬

Advanc¬

accomplishing
living. Better
understanding of the relationships
wonders

in

is

better

of economics and the processes

production

bility.

insures

The

greater

problem

,

is

possibilities, but to adjust
tional

policies

potentialities

in
can

order
be

not

of

sta¬

the

our na¬

that

the

capitalized

Volume

170

in terms

of

Number 4853

human

progress

happiness.

1

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

and

terms of gold only, linked up with

v,;

a

of our

mucn

edge

fundamental knowl¬

which

on

foreign

the

imagination

of

young minds with
vote

their

lives

to

^

the

"Such

the

is

-

real purpose

is

progress

of life.

the

final

to

as

Human

objective.

be

the question whether

over

devalued is followed

while American
of

Expanded

ster-

in

London

talyst.;

ling,
British
opinion is

:J

opportunity.

The incentive is
individual progress and

twofold:
a.

responsibility to the society of

which each of
:

"That

is

it. But there is
cant

factor

is

us

the

a

part.

one

as

1

see

highly signifi¬

great

influence

which I have not. mentioned.
It
involves the relationships between

nations; of
of

groups within nations;

individuals,

and in many other
ways.
And it stands out dramati¬
cally in everything we see; in

everything

read; in everything
hear, and wherever we go. It

we

has

the

man

we

It has the poten¬

progress.

tial

to

power

tion:

Such

vior.
the

to accelerate hu¬

power

To

destroy

is

human

appraise

services

of

civiliza¬

it

social

a

beha¬

requires
philoso¬

pher who can penetrate the in¬
tangibles rather than of an indus¬
trialist who

for

must confine himself

the

to

more

realities.

to say

me

that it

Suffice
seems

it

that

vided

tion

to 7

as

whether
the

de-

a

the

dollar
\

goou

tiling

from

be

a

w?

•

,

:

v;'.

SL

M

tive

I

;

i
Dr. Paul Einzig

dent

And

recovery.

pound

a

mere

much divided

be

tion

ques¬

opinion

is

the ques¬

on

tion whether the dollar
to

progress of human behavior. The
reason
for that I believe to; be

is

likely

devalued as on the ques¬
whether it should be de¬

valued.

of the orthodox school

the

paign

objective

covery—the

Monetary

man

consider

weaknesses, the vicissitudes, the
and, let me add, the

greatenesses of human reactions."

National

cam¬

most

on

them

of

of the main argu¬

that campaign as dis¬
antediluvian. In particu¬
Professor
Spahr's
favorite

ments

of

tinctly
lar

for

F

agree

the

Committee

Policy,

some

"moralistic"

argument

upholding

the

the dollar amidst

l»E

fully

of

against dollar de¬
valuation by the American Econ¬
waged

omists'

emotions

to

honest"

pleading

"honesty"

of

world of "dis¬

a

currencies

is

considered

the

competi¬

is

It

pose.

tne

removed

50%

subsidy to American

shipbuilding

i'or

tnat
longer

no

pur¬

very

considered

ness

for

the

protecting American busi¬

interests,

though this
perpetuate the
present abnormal "dollar gap" of

•would

tend

Britain

and

other

most

coun¬

other

hand,

in

many

quarters in Britain it is believed
that

the

advantages

of

dollar

a

devaluation, even irom a purely
Britisn point of view, would more
than

oulweign

The

possibility
of

sence

its

disadvantages.

that,

the ab¬

in

devaluation of the dol¬

a

lar* the American economy would
drift

into

spiral,
It is

vicious

a

is

that

United

deflationary

much concern
depression in

causing

feared

the

a

would

States

have

world-wide adverse repercussions

business, and that it would af¬
fect Britain's dollar position even
less favorably than a devaluation
on

III the Future

tatives

Mark H.
and

E.

the

trainees.
O.

its

to

staff.

Brown, Harris J. Martin,

Robert

joined
J.

trainees

and

E.

Sikes

Buchsbaum

have

New York office as
I. Byeresdorfer and
are

with

Cincin¬

the

nati office, First National Bank
Building, as registered represen¬
E. J. Griswold and Frank

tatives.

Kates, Jr., are with the Philadel¬
phia office, 1421 Chestnut Street,
as

registered representatives. Wil¬

liam G. Brooks in

a

in

trend

of

representative in the Dayton, Ohio

their

J. Krabill is

a

trainee in Lex¬

ington. Ky., Hernando Building.

out

in

of

date

of

so

restoring free

be

to

and

for

the

intellectual

in

in

favor

of

London

of material

'Henry
limited

Leon

withdrew,

partnership

in

from

Franken¬

the

a

the ground that it would

the

competitive
goods
It is

concern.

capacity
is
causing

feared

that

combined influence of Amer¬

ican producers and exporters con¬
cerned

might result in

somewhere

to

$3.50.

is

While

that

&

Co.,

Oct. 31.

j

New York

City,

on
'

the

Richard J. Hannaway has opened

will

a

decision

the
fair

is

$3.00

generally

rate

through

prices.
rate

rise

a

This

of

a

and

ad¬

of $2.80

al¬

safety margin,
course

in

reduced

British

fall

would

it
of

that margin

become/materially-

through

a

it

next few months

in

prices

Americar

mean

$3.50 would be

isfactory

Rich'd J. Hannaway Opens

between

expected that in the

and

bush

agree

to

dollar de¬

a

as

that
unsat¬

the rate of $4.03 wac
few months earlier. It is pointed

out

as

that,

valued

after
the

all,

Britain

urgent

in

its

favor,

which, in view of President Tru¬
man's

that

unlikely.

seems

during

1950 dollar devalu¬
might help to bolster
sterling, which is in need of

ation
up

statement,

scares

such

in business

as

argument
devaluation of the

American

the

which

progress.

well

as

of

on

restore

country

spearhead

In official

circles

a

con¬

hopelessly

as

respects rightly claims

many

mitted

Frankenbush

likely that Con¬

to decide

were

support, as it is already los¬
ing ground on the unofficial mar¬
kets abroad. The

ican stocks
at a

There

British financial

more

devaluation of the

l'kely
dollar.

is, of course, no likelihood

another

of

sterling,

years

of

devaluation

second

of

to

*

unilateral

at

devaluation

York

at

220

Broadway,

City, to engage in

ties business.




a

New

securi¬

valuations
the

by

flow

of

trade

yet eased

as

markedly.

market

transactions
eliminated.

by Great

Britain

Wnen

payers.

said, ."the

this

export

put in

were

the

central

private American foreign investare made—or both."

men.s

Theodore

Young

R.

Young

to exercise control

foreign

7.'07

nation's

over a

exchange

holdings—
which should tend to strengthen
the
reserve
positions
of
these

"thereby better the op¬
portunities for free currency con¬
vertibility."
*
However, free convertibility re¬
quires more than that, continued
the

study;

it requires that costs
prices are allowed to be es¬
tablished by competitive forces,

and

which

in

turn

"implies

T.

the

City, to

system, and import and

quota

that

ex¬

business.

port licensing, are eliminated."
"Devaluation is a long step to¬

with

R.

Young

in

engage

Mr.

the

Young

policies

more

goal, as it will tend to
increase competition on the interational markets," the NAM report
said. "But this effect of the de¬
valuations

readily be offset
if the inflationary
pressures on
the domestic markets, caused by
the devaluation, are allowed to

formerly
Young & Gersten and Young,

Aal & Golkin.

"It

is

for

domestic

this

reason

fiscal and

are

so

that the

financial

po¬

important. If further

government restrictions and reg¬
ulations become necessary as a
result

of

devaluation,

the

course

free

then

difficulties of achiev¬

convertibility

currency

it

as

R.

Dickson

S.

&

Co., Inc.,

impact

of

devaluation"

said, "should not be an¬
alyzed in terms of export possi¬
bilities
merely,
but
rather
in
terms of greater opportunities for
convertibility. If this is
achieved,
little
has
been
gained by the 'drastic' devalua¬

currency

not

Mr.

has

been Assistant
charge of the
municipal department of the
Brophy

Vice-President

in

firm's New York

Street.

.

7'7,

"

office, 30 Broad

7//

y::.

American Securities

pessimism
on

-

a

second
But

indicated by the
dollar ? securities

London

is,

to

say

the

least, grossly premature.
Most

people when talking about

a

dollar devaluation have in mind
devaluation in terms of

sterling and other

cies. Few people envisage

balancing her trade with the Dol- oibility of

a

gold

as

curren¬

thepos-

dollar devaluation in

Corp.

Securities
Corpora¬
tion, 25 Broad Street, New York
City, announces that John I. Bentley and Allyn A. Bernard have
joined the firm's sales department.
Mr. Bernard was formerly with
Graham, Parsons & Co.

7 American

tions."
number

the

of

volume

indicate

factors
of

exports

valuations percentages, the NAM
study found.
Production-cost

increases

Wm. Cummins Joins

and

imports may be affected less, re¬
latively, than indicated bv the de¬

Edw. G, Taylor Go.
CINCINNATI,

OHIO—Edw.

areas"

tend

may

to

less

study

shift

in

the

from

devalued

enced

is

more

case

of

scalers in mu¬

•

may

nicipal .bonds,
announce

the

Unitec

De¬

Cum¬

Mr.

-

mins

had

years'

31

has

ex-

perience

has to pay "

r

The study noted that a substan¬

percentage of our exports

for by

Sales

partment.

currency

because "customs duties,
transportation costs and insurance
charges continue to play a vital
role in the prices 4he American

paid

also

Manager of

the

This is especially so, the report

novv

act

as

in

added,

tial

He

will

depreciation.

consumer

as

Secretary.

continued,

by

Wm.

of

Cummins

countries that have
likely to be influ¬
by consumer choice

and sales efforts than

appoint¬

ment

some

"expensive"
the

G.

Taylor & Co., Inc., St. Paul Bldg.,

offset,' wholly or partially, the
sales-price gains, it pointed out.
High import prices from "dollar

the

some years.

an¬

that Frank J. Brophy has
elected
a
Vice-President.

nounce

Enlarges Sales Staff

the study

countries,

did .during

1945-49, there might be
devaluation after

V.-P.

Of R. S. Dickson Go.

of

increased."

"The

Frank Brophy,

been

themselves.

assert

licies

may

the

less the

or

securities

was

ward this

goods

in

is forming

Theodore Young & Co. with office
at 40 Exchange Place, New York

banks

and

quoted

aid
ends, it
volume auto¬

better position

far

a

if

Possibly

come.

pursue

-

other

matically will decline, unless for¬
eign rations can earn dollars or

States, the volume of imports of

premium

and

important question

Therefore,

been

explained,

it should

the

re¬

fiscal and

on

virtually

Labor Government should win the

same

eventual

says

will depend

The study said that because the
devaluations were "drastic" black

to

a

can

move

economic

have not

purchases

well as

Treasury and
pressure by Ameri¬
opinion, for the purpose of

largely

and

for

of the United States
moral

the

the

rot

rate

any

under

olfices

on

of

general election next year* and it

de¬

insistence

over

the

sterling is considered
a

fiscal

of

A

indicate that in

than;

convertibility.

results

decided

systems are being main¬
tained, and in this respect the de¬

that

20%', com¬
corresponding
quotations in'Wall Street seems to
a

sterling

Britain's dollar position.

devaluations

currency

control

quoted in London

are

with

circles

fect of the devaluation of

To Form Own inv. Firm

Amer¬

fact "that

premium Of

pared

States, without nullifying the ef¬
on

exceptions, the foreign exchange

Hopes are entertained, neverthe¬
less, in official circles in London

favor

vertibility into gold

lows for a

Retires From

would

United

Theodore

in

monetary

office, 42 North Main Street, and raising the sterling-dollar parity
A.

considered here
gress

de¬

a

flationary recession in the

policies of devaluing nations.

research of the NAM, it was
pointed out that with only minor

tion

numbers

prevent

of

expansion im¬
plied by a devaluation. Even they
consider, however, the movement

against

much

Hotel.

of

argument

opposite

all-round de¬

an

would

Currency Convertibility

do¬
poli¬
devaluing nations, it
was
emphasized. In a study on
devaluation, prepared by Erik T.
H. Kjellstrom, associate director
cies

ing

lard H. Dow and A. H. Dow in the

office, DeWitt
C. D. Etzler is a registered

general

be

mestic

are

dollar

Maine

the

recent

Eventual
will

valuation even if the Administra¬

office, First National
Bank Building. Laurence Staples
is a registered representative in
the Portland, Maine office, Bank
of Commerce Building, and Mil¬
Lewiston,

with

the

American

trainee in the

Baltimore

sympathy

en¬

Bretton Woods

banks and

•

the

On

of

4

*

even

to

nrIdly amusing by those who re¬
IS
in ember that the same
plea for an
"honest" dollar was put forward
of
the dollar.
During the first
not so very long ago with equal
half of 1949 Britain and the Ster¬
enthusiasm and sincerity by the
i W. E. Hutton & Co., 14 Wall
ling Area had a foretaste of what
late Professor Irving Fisher when
effect an American trade reces¬
Street,' New York City, members
of the New York Stock Exchange, arguing in favor of a dollar of sion is liable to produce on their
fluctuating gold value and stable
has .announced its faith in the fu¬
exports to the Dollar Area.
ture of the investment business commodity value. The Conserva¬
tive wing of British economists is
Generally speaking it is not
by adding 13 registered represen¬

Expresse

the

to greater currency

it

sake of

valuation

nations may help those countries'
exports, a more
is whether devaluation will leat

have

devalued

be

devaluations

scheme. Yet such

of recent currency devaluations
economic

lar

might

co-ordinated

21

According to the Research Department of the National Associa¬
tion of
Manufacturers, although attention has centered upon how

impossible, therefore, that the dol¬

tries.

apparent.
Human progress has
been dominated by scientific; dis¬

abstract—while hu¬
behavior is subject to all the

Truman

While many British economists
with

increased

limit

time, British

as

the

cellor sought to ridicule the idea
In the
meantime,, however, Presi¬

•

while throughout 1949 American
opinion had considered a devalua¬

now

offset

capacity of Britisn goods on
the American market, tne Chan¬

economic

the

oi

a

interna¬

of

the devaluation

possibility of ti.e United Stales
introducing countervailing duties

point Of View

of

Press comerence on

a

after

aay

to

point of view,
from
the

tion

counteract

.

or

tion

to

j

an

American

tional

steps

|

point of view,
from

take

sterling a journalist asked" Sii
Stafiord1 Cripps whether there was

I'

British

a

Bui

effect; of 'sterling devalua¬
by devaluing the dollar.

When at

of' c

would

of

sults

not the dollar should

or

considerable interest.

to

now

clear

that the evolution of human
prog¬
ress
has
far
outdistanced
the

I

I

of

visaged under the

Survey of National Association of Manufacturers

iar
Area, and tnat it would be
absurd if the United States were

sharply di- 7.

valuation

formula

of

of

with

possibility

Devaluations and

second

a

experience of the
British decision weak¬

the belief in the

much

i

of

or

opinion had been practically unanimously in favor
<$>-

devalua-

a

tion

knowledge is the ca¬
A free society is the field

circles

LONDON, ENG.—The lively controversy that has
developed in

the United States

philosophy

my

Fund/The

tary

with exception of few ultra-orihodox

repre¬

on,the International Mone¬

unilateral

sterling devaluation. ;-V..

of

cause

says,

shares may indicate fear in British financial

urge to de¬

fundamental science.
*

ened

Monetary Policy,

on

brilliant

our

an

sented

members, most British economists regard gold convertibility arguments hopelessly out of date. .Points out
London prem.ums.on U« S.

>

have failed
apparently to fire

we

currencies of all countries

..

mttee

associ¬

names.
We have been better ex¬
ploiters than creators." Somehow

1 '

'

devaluation in
gold of sterling and the

of

Dr. Einzig, noting British interest in discussions
regarding dollar
devaluation and campaign against it
by Economists' National Com-

7

have relied for

we

progress has been
in
the
past
with

ated

By PAUL EINZIG

must be done. Too

human

corresponding

terms

Creators, Not Exploiters

,

■;iv'"But MORE

(2097)

is

the

secur¬

ity

business

and

is

'

Wm. Cummins

kr

cinnati
He

Co.

and

northern

own

,

well

in Cin¬

Kentucky,

recently with A. E. Aub &
manager of the trading de¬

was

as

partment. He is

American tax- ington,

Ky.

a

resident of Cov-

How

European Adjustments and
U. S. Aid Affect Our Economy
By SEYMOUR

E. HARRIS*

Economics, Harvard

Professor of

decline in

a

our

paring for an equally large pro¬
portionate gain in the next few
years which will enable them to
pay for their current imports. Un¬

University

he

export

By

tinuing

reduced

States

level

1947

dollars)

relations upon

5.4

lars,

proposed

the

on

the taxpayer

governe

t),

n

manufac¬

can

to

and

a nts
(through

mar¬

ket and

espe¬

cially abroad).
The
(2)
Magnitude of
the
Adjust¬
ments

S. E. Harris

Dr.

1947

compare

and, say, 195x.
From

of $10

excess

an

exports to

billion of

of imports of
$2 billion in 195x is a measure of
the

an excess

adjustment

required.
This
means that industry will have to
make
these
large
adjustments
telescoped within relatively few
years.
(The government is pro¬
tecting the market of farmers.)
These

$12

crucial

A

Trade

in 1947
S633 million in 1952-53 (1948prices); of meat and dairy

of

made

this

inflationary

the

is

country

in

manner

which the United States will

troleum

likely to be pleased with a rise
petroleum production from 102

bal¬

of

its accounts with other coun¬

ance

tobacco, from $222 to $151 mil¬
Nor are producers of pe¬
products in this country

lion.

confronting

problem

from $1,216 million

in

tries.

the
interested countries. First, foreign
countries may restrict their im¬
set.
ports and thus save scarce dollars.
(6) The Required Adjustments This is not the best possible solu¬
Are Not Likely to Be Made
by
tion, for the resulting decline in
1952
Without
Further
Aid
or
trade
impairs living standards
Loans—First, because past expe¬ abroad and deprives exporters in
rience does not suggest it.
Not the
Three ways are open to

1947

billion

be

may

put

United States and other dollar

long period of dollar shortage, countries of markets. Second, the
the rise of Europe's exports to the
foreign
countries
may
expand
United States of but $160 million
their exports and thus earn the
in 1948 against a rise of national
dollars
they need.
European
income for Europe (exclusive of
countries are charting their econ¬

the

billion, or roughly
1%; or the rise of U. S. im¬
ports of 5% against a rise in real

USSR)

$9

of

omies with

but

terms of income of

view to equilibrating

a

their accounts

largely in this man¬
But cries are already being

ner.

67% since 1938;

against the
intensified competition from

raised in this country

in

463

=100);

war

to

nor

1952-53

(pre¬

producers of rele¬

vant items in the United States at

rise

a

by

production

OEEC

countries in machinery and

47%

of

ment

Over the years 1947

countries

seek

an

expan¬

South

$L25

America

and

billion in the non-participat¬

ing sterling
ket

area.

A resultant loss

billion of sales in

and

of

our

mar¬

of sales in

billion

$2

Leavening

total

Factors—A
home

sales at

cilitate

the

rise

would

adjustments.

fa¬

Con¬

tinued prosperity in 1948 reduced
the strain associated with a de¬

cline of $5-$6 billion in the
of exports in

that

excess

A prob¬

year.

lem of adjustment which might be
insoluble under depressed condi¬
tions might become soluble under
continued prosperity.
Again, infar

agriculture will bear part
of the burden, the strain on indus¬
so

as

try would be reduced.

agricultural

cline;

this

might

billion

be

offset

de¬

by

Increased pressure to cut agricul¬
tural imports.

(4) Directed Allocation of Fac¬
tors of Production—At the very
-

least, the government should help
industry and labor make the re¬

exports

of

excess

and,

since

net

inflow

$15

Despite

reduction
creased

should

here

tariffs

in

restriction

and

in¬

imports;

has

<

foreign

imports

foreign

of

by

exports

or

ex¬

American

example, before the Senate
Appropriations Committee. Sena¬
tor McKellar, defending the to¬
bacco growers in his state, was
indignant that the French would

the

flooded

been

is

occasion

the

of

by a re¬
American

For

larger rise in money wages
here—despite all
of these the
States

by

expansion

an

up

sellers.

much

United

sales

curtailment

or

exports

despite

termi¬
possi¬

ports at the expense of domestic

and

reduce

whether

European sales

of controls abroad to raise

made

business

depressed their im¬
ports; despite the widespread use
exports

being
of

a

to

soon as

as

duction

large

taxpayer

as

wants

But he also resents the dollar

ble.

abroad, which

facilitated

have

the

foreign aid

deficit

gold of more than

of

billion.)

therefore,

nate

1914, this country has given away
at least four-fifths.
(I include a

Actually,, and
would

exports

foot the bill

want to

(7) Dollar Shortage the Peren¬
nial Problem—Of more than $100

not

with gold and the world is short
of dollars.
Europe's failure to cut,

EC A funds to buy Amer¬

use

ican

tobacco; the typewriter man¬
ufacturers. professing strong sup¬

costs and

prices; the United States
port
absorption of gold in increased,

for

the

ERP,

were

equally

irritated at the loss of markets in

transactions and monetary,

hoards,
Europe; and Senator Wherrv de-.
required rise of
nounced the unfair competition of
labor and
capital into domestic prices; the continued gain of pro¬
European textile manufacturers
industries and discouragement of
ductivity here;, the unwillingness
in
the United
States and else¬
flow of labor and capital into ex¬ to
allow Europe to devalue vis-awhere.1
port and import competing indus¬ vis United States; the political and
tries.
Undoubtedly the unwillingness
military turmoil in Europe with
quired adjustments; movement of

(5)
Aid
It

The Case for

(and)

or

would

required

be

a

the

to

adjustments of $14 bil¬

that is advanced, the larger
of imports required
to

rise

cover
more

financing

in

charges.)

The
adjustment

concentrated

relatively "on imports)—all of
these and other factors clarify the
persistent dollar shortage; but do

additional
payer;

and

burdens
so

long

on

the

tax¬

as government

hence,

spending remains at high levels,

rope

the additional pressure on govern¬

forth

ment for

*An

foreign aid is not likely

address

by

Dr.

Harris, at

this policy—and
increased exports by Eu¬

consequences

and

reduced

imports

bring

to

devalue

here,

pressure

agitation

for

higher tariffs, sub¬

sidies to exporters, etc.

The un¬

willingness to swallow the pill of

Fall

Meeting of the Academy of
Political Science, New York City, increased
Nov. 10, 1949.

of

I




side

competition

strengthens

from
case

out¬

for

billion,

the

Agricul-

indeed not

are

is committed

support
In

sumer.

fact,

a

agricultural

the

od

con¬

widespread

the

support for foreign aid
in

to

at

program

of the taxnayer

expense

so

non-agricultural for

government

farm

a

as

programs

in

stems,

areas

part, from the favorable effect of
these programs oil demand for
agricultural products.4
The

effects

of

the

mestic and foreign

American

loss

of

markets

industries

is

do¬

upon

another

Even

matter.

under
relatively
conditions, the Amer¬

prosperous

ican manufacturer is not likely to

stand

bv

as

From

exaggerated.

the United States ex-

by

declined

exports

of

cess

*

$5

almost 45%; and at un-

or

-

changed prices the decline was at
least $6

billion,

transition

This

half.3

than one
was, how-':

or more

achieved in a period of prosperity and rising prices; and in¬

ever,

tact the U. S. Government through

controls in part
of

forced reductions

general,

of

excess

an

billion
will

problem

the
(or

be

not

*

wiping

of

of $11

exports

currently)
so
nerious

billion

::6

y

In

exports upon the economy,

nearly

7
Persistence of Shortage of Dollars.
This
is

problem

old

an

he loses $2 billion of

exported
of

(4%

goods

t

$100 i

than

more

the period)

of

come

dollar famine

of

Why has the United

one.

of the in¬
in excess of

.*

the last 35 years and
received in payment less than one
imports

over

seventh.

(I

imports

exclude

gold which
us.)5-

little

of

are

of

to

use

£
abroad *

Why do not prices fall
and rise in this

country, with cor¬
of exports and *

rective expansion
declines

of

imoorts

abroad

declines

of

exports

and

and

of '

rise

imports in this country. This fail- *
ure

of adjustment is

ficult

the

more

dif- *
this

rince

understand

to

country, especially in the last 15;
experienced

has

years*.

vigor¬

a

movement

union

trade

ous

and,

rising wage rates; and since dui-

J

ing this period the outside world
seriously increased Ms :estrictions
on
trade
whilst
this ;
,

has

country has reduced tariff barriers

substantially. In the last 10 years,
for

example wage rates rose much >
rapidly in this country than <

more

in

by recourse to;
especially exchange

Europe;

controls

and

and

the

control

world

outside

latecl its exports

;

timu-

and import com- >

peting industries. It did not rely >
exclusively on price adjustments. ;
these

All

should have re¬

factors

deficits.

dollar

duced

Among the explanations of this

billion of foreign isales and
$3 billion sales out of a
total production of $60 billion of

apparent failure of Ricardian gold ;
movements
to
correct
the
per- f

manufactured

sistent

$8

about

shall

we

quired

goods. Actually, as
the adjustments re¬
much larger.

see,

are

Perhaps the

•

strongest

for

case

shortage of dollars

the

are

following:
The

(1)

dollars

demand

unusual

has

largely

tor

met by

been

the world through gifts and, bet¬

countries

ter, loans arises from the possible

in

difficulties' of

World

his

in

than they
and
they

sellers

qua

taxpayers;

qua

make

markets

more

noise

than

and less vocal group

I

to

not

am

can

large

of taxpayers.

implying that the ad¬

justment

problems

business

injured

foreign

the

lose

for

by

competition

American

intensified
are.,

not

se¬

rious.

up

the

transition

of

-

War

net

importing

example, it
this

may

country,

exports

nation.

For

be necessary for

with

of $11.3

an

billion

excess

in

of

1947,

eventually to countenance an ex¬
cess of imports of $2-$3 billion, the
excess of imports to cover payment
for

financing past loans by this
This vast change would
jreflect the effects not only of Eu-

country.

indeed

not

at being
They are
asked to stand by while Europe,
are

thrown

after

to

a

60%

two years
1 Senate

the

happy

wolves.

gain

in

exports

(1947 and 1948), is
hearings

on

in

pre-

Foreign Aid

Ap¬

pp.

46, 70-75, 194-200, 340.

II

II,

Lend

2 United

for

Nations Economic Commission

Survey of Europe
Actually, should
devaluation reduce dollar prices of West¬
ern
European products by 20%, the re¬
quired
increase
would
be 400%
($80
million to $400 million).
'
3 Ibid., pp. 182-3, 192.
4 Although total export trade was only
about
5% of national income in 1948,
exports of nonagricultural products were
about
15%
of * income
originating
in
manufactures; and for individual items
the percentage was of course
in many
cases
much larger.'
,
.
Europe,

1948,

pp.

Economic

192, ,216.

in [
for¬

various

and

In

addition,

of

outflows

the

large

-

term capital,
this country, and notably in

from

long

-

twenties provided
with

world

the outside
Insofar

dollars.

as

-

foreign countries obtained dollars
through gifts and loans, they did
not have to bid up the price of

.

have

and

did

not

lease

in

Loans

Lease

are

instances.

the

I,

programs in post-World the most important

eign aid

a

dollars.

of

War

War

to

t

competitive industries
are ultimately des¬
tined to take away their markets

short

World

this country from a net exporting

Those who watch the ECA

build

abroad which

propriation Bill, 1950, June 1949 (81:2),

the

turaTindustries
vulnerable

be

can

ac¬

from

ousted

more

-

oyer five years puts the responsi¬ to export less and import more
bility upon a limited segment of vis-a-vis the rest of the world.
American
economic
life—export Europe's competitive position and
industries and those competing for markets must
improve.
This is
imports. Unfortunately, the long- the way to solve the problem. But
range program is likely to mean we are not
prepared to take the

ments

1947 to 1948,

part for the acquies¬
cence to large amounts of foreign
aid.
Those who profit from in¬
creased sales abroad, and protec¬
tion
of
domestic
markets
gain

businessman

American

counts

less

(8) The Crucial Issue—We have

:oans.

The difficulties of these adiust-

putting dollars at the disposal of

the

be

economy to spend more on serv¬
ices and less on goods- (and hence

not solve it.

textiles.

products,

than in the ab¬
foreign aid or

more

continued financing of the rest of

of

accompanying destruction of in¬
Program— dustry and loss of foreign earn¬
make the ings; the tendency in an advancing

lion in trade 20-50 years than $12
billion
over
five
years.
(The
more

than

Long-Term

Loan

easier

rather

products, bread grains, tobacco,
typewriters, machine tools, cin¬
ema

ultimate
rise of

and

of continued

billion

of $1

of exports

(say)

North and Central America,
in

now

imports would have to be $2 bil¬

States

$1.1

years

the

period,

longer

reduction

to 1952-53,

.

(3)
in

the

sion of exports of $1.05 billion in
billion

5

or

110%; of crude steel, or 30%; pf
cotton piece goods, or 18 %.?
OEEC

the

prewar;
of
under conditions of high omploy39%; of dyement as under those of depression.
of aluminum, of

tools,
of 42%;

required rise of U. S. im¬
other markets to Eurooean com¬
against about $60 billion of income
ports from Europe of 400% (with abroad
by American export inter¬ petitors telescoped within a pe¬
originating in manufacturing. The a reduction in dollar prices of
ests and even American import riod of a few
average loss
of sales would be
years may very well
20%)
to balance
Europe's ac¬
bankrupt many American firms
20%; and in many industries the counts; or should the balancing competing industries.
The fact is that the American and seriously damage the status
proportion would be much higher. occur
largely in other overseas
A loss of sales of this magnitude
voter shows
schizophrenic ten¬ of industries dependent upon for¬
countries,
the
terrific pressure
dencies in his espousal of foreign eign markets for 10 % or more of
would bankrupt many firms and
here to devalue as our exporters
economic policies. He does not the
even industries.
' lose markets.
markets—e.g.,
fruits, dairy
the

or

from

over

machine

stuffs,

equip¬

and

1952-56

years

transition

out

of

.

We

—

or

Adjustments?

periods.
Should
depression develop in the fifties
and sixties, then any rise in out¬
put associated with increased for¬
eign aid and loans would be off¬
in

losses of sales

this

Continued Aid

greatly contributed
output; for the

de¬

to

are

products, from $277 to 338 million,

increased

an

America

Centra]

and

con¬

required to 20-50 years; but with

lion

North

from OEEC countries from

49
II

dollars.2

a

large loan program,
this country might stretch out the

(and)

lowing:

to

aid

foreign

our

billion

on

a

is suggested by the fol¬
Imports of bread grains

quired,

cline

the last 35 years is

rise to North
being from

America

ERP

the

for

sence

riod.

one

major gifts and loans were

meijch

in

of

over
that it has not

program

Ameri¬

upon

fact,

culiarities

or

turers

In

output.

2-10

dol¬

the

preparing

That serious adjustments are re¬

stretching out the adjustment pe¬

demand and
of the pe¬

increased

yield

to

support

some

by

The choice that lies before this

large adjustments in international economic
(continued foreign aid by government), or upon private mves-

to

billion

10.(5

to

Central

(1948-49

non-participating

countries

putting the burden of the

(with

tors

by 300%.

exports

to

1.05

oj the Adjustments?

Who Is to Boot the Bvunt

rises

to

their

ra'se

and

$60

20% of the total output.

1951-53, the OEEC
(Marshall Plan) countries propose
to

today pro¬

billion worth of goods,
the amounts involved may be

duce

unless export trade to

or

into

converted

be

can

United

From

The Issues

(1)

have to be borne by

would

ment

the manufacturers who

dollars,

■

adjust-f

the world. The brunt of the

fortunately, this will not solve the
problem of dollar shortage unless
Europe's earnings in non-dollar

and

country is between

rope's attempts to balance her ac¬
counts but also those of the rest of

countries

^

surplus, through European adjustments and our foreign aid,
will cause a loss of sales by American producers of as much as 20% _and still would not remedy dollar
shortage. Foresees in future intensified competition through rebuilding European industries under
Marshall Plan and looks for agitation to increase tar ffs and other devices to keep out exports. Holds it
is doubtful Western Europe can solve imbalance in international trade through devaluations.
Dr. Harris contends

Thursday, November 24, 1949

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(2093)

22

gold.

To

that

dollar

shortage

dollars

was

to

re¬

extent

the

concealed and

treated, and the required adjustments were not forthcoming. Pro¬
visions

of

dollars

reduces

gift

dollars
the

or

Midyear
Economic
1949,
President, July,
for

ments

6 See
p.

5.

Report
p.

39^

to

of
the
-Adjust¬

price changes mine. - European Recovery Program,
.

my

"

(Continued

-f

on page

,

loaned-

pressure

'

5

.

37)

Volume
'•

'

ilLU

170

'

Number 4858

'

-•

i

THE

■
'

COMMERCIAL
'

'

'

'

4

'

&

FINANCIAL

^

'

>

CHRONICLE

wide

Monetary Management Abroad and

at Home

Federal

Reserve

Governor reviews

and indicates how financial instabil¬

in

warns

we

v

There

are

confronted

are

alone

■<:_

with

difficulties

which

that

follows rather

flation

than

tries within

leads

in

end

change,

reasons

the

then

function

of
m a

nagement
to

proper

a

n

three

after the

years

V. v-V';r; v.'

V

Germany
The

;

d

of

most

r

Repressed

was

Szymczak

of > motley
in
the economy

lies

somewhere

two

between

these

extremes—probably the

correct; view

to

more

take—then

the

monetary policy is one of several
important factors that; influence
the

of

course

ment

and

economic

the

develop¬

degree of stability

which characterizes such
ment.

/j':

i/-; i'vL

Postwar

..."

.

develop¬

Problems

'Monetary

AT

.

There is general agreement to¬
day,
IA believe,
that
monetary
-

management is essential to
nomic
stability." And for ^

eco¬

good

.

reason.

We have

through

an

tive

period

Like

all

ly

of

world-wide

major

the Second

recently passed
disrup¬

extended and

in

wars

World War

financed

war.

history,

part¬
creation of

by

was

the
short
by

money—in ■
inflation.
Since the war, all the major par¬
ticipants have been seeking to ad¬
just their economies to swollen
money supplies.
They know from
hard experience that stable prog?

is impossible when economic
activity is driven and distorted by
less

inflationary

pressures.

had

expanded

a

to

money
amount

about

that

needed

the

in

the

effects

of

1949

would

under

of

the

conditions,

and

perhaps

been

twenty

the level of economic

Attainment

duced

the

"

existing

supply

of

mark

for

16

old

Economic

ones.

activity picked up immediately.
Previously, with moriey virtually
worthless, incentives for harder
work

and

better

almost

were

lacking,

entirely

Restoration of
system

management

sound

monetary

fresh

a

incentives

provided

with

that

of

the

a

year. «

While

has

economic

of

• ;*

.»<

-

Western

long

a

Germany

*

-

"j

still

way to go to

complete
the standard

recovery,

living

of

its

population
at
present is probably not appreci¬
ably lower than" that of other

able to contribute

eral

rehabilitation

Europe.

bilization

the gen¬

to

of

Monetary

not

than it

to

destruc¬

now

before the

was

sequently,

wartime

output is

our

greater

war.

Con¬

in the United States,
subjected to neither unduly

were

we

repressive postwar measures, like
the price controls
or
rationing,
excessive

nor

price

open

inflation.

wage

The

and

problem

of

dealing with monetary expansion
becomes"extremely difficult only
when- accompanied
by a sharp
drop in the available supply of
commodities, such
most countries of

Far

East.

After
most

Continental

stabilization,

the

World

War, in
Europe, mone¬

of

tary management had been
fronted

with

It

more

took

to restore

stability
That

of

a

decade

a

monetary

most

important

Europe.5

reached

was

only

of

nations, and
Germany, had experi¬

uncontrolled

that

money

situation;

half

Continental

number

especially
enced

con¬

kind of

the

stability

after

tion

than

some

in

countries

similar

a

reduced

almost to

hyper-infla¬
the

zero.

value

of

By compar¬

ison with the events following the
First

World

monetary
*An

War,

the

management

address

radical

results

of

following

was

and

by

the

rea¬

Sta¬

by

a

of

government
economic activity

of

substanial

grants

under

European Recovery Program.

Without

financial

however,

stabilization,

action

to

decontrol

would
our

have been impossible and
economic aid would have been

largely squandered;

Szymczak

Monetary

Stabilization
and

In

in

France

Italy

less spectacular way; simi¬
developments
have
taken

lar;

in

France

and

Italy.

both
countries, monetary
expansion had been about
as

in

In

overas

bad

Germany, but the economic

consequences were less

disastrous,
mainly because controls hampered
economic activity less seriously.
In
Germany, inflation was "re¬
pressed"; that is to say, effective
controls

prevented

prices

and

wages from

rising. In France and
inflation came more into

Italy,

the open: the authorities were un¬
able to keen prices stable.
The

continuous rise in prices hampered
the revival of production less than
the
kind

"repressed"
that

However,

inflation

prevailed
the

French

and

of the

tries

ditors

intensified

delphia, Pa., Oct. 24, 1949.




Phila¬

strict

monetary

ports was cut in half, from $800
million to $400 million per year.
In

both

countries

essential

was

ERP

assistance

to

bridge the re¬
maining gap and was helpful* in
blocking
further
inflation; but

rise

in
in

of

the

Germany.
im¬

prices

in

Italian

world

difficulties.

export indus¬

trade

and

thereby

balance-of-payments
These

difficulties,

largely

tion. "

Difficulties

Monetary

•,

in

the

;

United Kingdom

An example of

;

is

different kind

a

provided by the United King¬

dom.

The

economic

situation

in

that

country, which is more de¬
pendent than any other upon for¬
eign trade and international fi¬
nance, is too complicated to per¬
mit easy generalization. Few ob¬

doubt, however, that the
repressed
inflation from which

servers

the

country

since

the

played

been

of

the

important

economic
1938

has

end

an

suffering
has

war

-

role

difficulties.

in

its

Between

and

1946, the
supply
of
in the United Kingdom
about three times as much

m'oney
rose
as

prices

and

while

wages,

pro¬

duction
remained
virtually
changed. A large inflationary

ation

of

production

present,

one-third.
sures

and

increased

and

wages

incomes

money

plus

the
in the

accumulated buying power
form of liquid asset holdings

to

the available supply of real goods
and services
either by cutting

the

by
re¬

disturbing not
only the possibilities of domestic
progress but especially the pros¬
pects of attaining a balance in

down

the *

v

through

a

volume

currency

of

money

reform of the

German

type, or by permitting
the price level, but, not the wage
level;

to

rise

as

In

France

and

Italy. Therefore, the only alterna4
tive for Britain

was

to reduce the

entire

monetary level of the do¬
mestic
economy., in
relation to
world market prices by curtailing
the

value

stable

the U. S. dollar*

currency,

Reestablishment
international

t

" Britain's

of

balance

be

may

achieved

through; the effects of
on
imports and ex¬
the import side, the
rise in the domestic price of dol¬
lar imports may keep dollar im¬
this

action

ports.

.On

ports down by increased reliance

the> market*

upon;-

mechanism

rather than by arbitrary and dis¬

turbing rationing. In other words,
people will buy fewer imported
goods because imports have be¬
too

come

of

expensive, not because

government

controls.

On

the

export side, the main result is an
inducement to producers in Brit¬
ain

and

to

divert

equivalent of
yields about

a

100 dollars now
pounds to the
producer, instead of 25
pounds, exports to the dollar area
have
become
more
profitable.
Moreover, by increasing the mar¬
gin between costs and prices, de¬
say

36

British

valuation
makes
possible more
aggressive competitive efforts, in¬
cluding price competition. Brit¬
been cut,
to British
at least in relation to in¬
in

not

prices,

comparison

ternational

dollar

prices.
It is
might be
endangered if British labor were
to insist on increasing wage rates
in proportion to the devaluation
true

or

if

these

that

increased

acted

to

taxation

counter¬

incentives for manage¬

the

ment

results

raise

exports.

But

if

a

substantial rise in British domes¬

tic costs is avoided, there is in¬
deed hope that devaluation may
inflationary situation
in contribute towards the realization
Britain, as usual, reflected an ex-' of British financial stability.
cess of consumer capacity to
buy
It is pertinent to observe that

ing levels of prices. As
there

was

demand

for

domestic

Since

a

result,

particularly

a

strong
for the

imports

use

hard

and

of exportable goods.

of

imports is
very existence
of the British people, Britain has
experienced
great
difficulties,
a

essential

for

core

the

despite stringent controls, in keep¬
ing imports from rising.
At the
same time, the country has been
confronted by a growing inability
to meet the competition of other

exporting
markets.

nations
As

long

foreign
the world¬

on

as

.

;

The first problem grows out of
the danger that too great a sta¬
bility in the supply of money and
credit may lead to recession, or
at

least

many other countries decided to
join the British in devaluation,
including
such
countries
as

France

and

Italy which had al¬
ready curbed the danger of in¬
flation. If they had not so joined,
the improved competitive position
of

the

British

exporters

have threatened the

French,, and

too

flationary
The

situation.

second

v*

problem

r

relates to

the fact that not only the quantity
but also the

affects

composition of credits

an

economy's
happens that

often

credit

is

credit

insufficient.

ample

progress.

It

short-term

but

long-term

In

that

case,

the

oversupply
of
short-term
may
lead to inflationary
symptoms in some parts of the
economy
while the scarcity of
long-term credit may lead to re¬
credit

cession

in

other

parts.

Deflationary Tendencies in West¬
Germany and Italy

ern

Some

success

Italian

observers

?

believe that in

Western
Germany and
monetary 1 management

in

Italy

has

re¬

cently over-emphasized the ob¬
jective of stability of the -motiey
supply, and that the gains of sta¬
bilization may
thus have been
jeopardized to some extent. These
two

countries have received

high

praise

because of their manage¬
ment of money and credit*
Both
nations have been able to end a

period of inflation without cata¬
strophic disorganization of their
economic

structures.

In

both

countries, however, some recent
tendency toward a slowing dowp
of recovery and a re-emergence
of unemployment has
appeared
In

neither

of

these

countries

this tendency be

could

mainly

explained
ultra-prudence
in

by

monetary management.

Italy has
overpopulation for
many years, and unless it findg
new
ways of utilizing its excess
manpower, the problem probably
will
not
be
solved
except by
large-scale emigration. Just for
suffered

that

from

rapid rate of indus¬
extremely impor¬
tant to Italy's further recovery.
Weather conditions, affecting the
supply of hydro-electric power,
may also to some extent be re¬
reason

a

trialization

sponsible

tion.

is

for

temporary

stagna¬
how^

critics contend,

Some

the disinclination of
the central banking authorities to
that

ever,

refinance
a

share

that

sufficient credits

in the

as

result

a

bears

responsibility, and
of

this

policy,

Italy has not been able to utilize
all the possibilities opened by the
aid

granted

under ERP.

;

The situation is similar in Ger¬
many.
cess

of

After the astonishing suc¬
the currency reform of

June 1948, production moved at d

breath-taking
1949,

when

1936.

By

renewed

until March
reached 90% of

pace

it

that

time

the

inflationary

fear of
develop¬

the

central

authorities to
upon
the struggle

concen¬

ments

had

induced

banking
trate

over-expansion of

agains.t

money.

Mone¬

tary management, aided by

other
influences,
indeed
preventing
infla¬
tionary tendencies during the fall
of last vear from developing fur¬

which

in

ther.

industrial

anti-infla¬

precarious

to

shocks.

This

de¬

indicates plainly

how

great

velopment

progress.

contributing

bilization has been too recent and
still

slow¬

unwarranted

economic

succeeded

tionary policies have had to date.
both countries, monetary sta¬

is

an

of

would

In

stand

to

down

expanding economy needs an
expanding supply of money and
credit, and the lack of necessary
expansion may bring about a de¬

throughout

the sterling
larger part of
their total production to the ex¬
port
market at existing dollar
prices. In other words, since the
area

the

.

The

the available supply of com¬
modities and services at prevail¬

shows, in my
curbing of expan¬
money supply does

tant.

of. the. domestic cur¬
rency in terms of the world's most

Britain's international trade.

over

in

—

if

factor

a

mestic

ish domestic costs, have

Even so, upward pres¬

prices

on

mained

1946

further

that

An

po¬

necessary, the continuastringent wartime con¬

Between

I
at¬

financial

complete the task of mohetary
management.
Two
additional
problems are particularly impor¬

precipitating

un¬

tential thus remained unabsorbed

trols.

a

National Association of Bank Au¬

Comptrollers.

the

imports remaining constant. Thus
the excess of imports over ex-i

and made

paired the competitive position of
by Mr.

at the National Convention

and

accompanied

reduction

restrictions

place

.

First

course, was not the only
son for that sudden
change.

in

Europe and the

'

countries

occurred

as

of

than

of

subject

result

dissipated if it had not been ac¬
companied by financial stabiliza¬

ravaged countries of Europe.
Also, our productive capacity was
tion and

the

that aid would have been

both, raising the level of pro¬
duction by two-thirds within less

be

comparison

from a month¬
ly average Of $110 million in 1948
to $28 million in the Summer of

It

ing

recent

was

one-fourth',

for

wartime monetary expansion,
although dramatic, was moderate
in

deficit in the balance of trade
cut to

money by more than 90%; most' policies" of the government. Be¬
holders of currency and bank de¬ tween 1947 and 1948 the volum^
of exports increased by 40%, with
posits i received 1 only f one
new

thermore, the country is well on
its way to becoming again a lead¬
ing industrial nation, and should

war

result, the

activity ac7
1949.
tually existing immediately after
In Italy, financial stabilization
war. Western
Germany's cur-*
rency reform of June, 1948 re¬ was virtually achieved in 1947, as

of
postwar finan¬
stability has been difficult
enough in the United States. But
our

a

the

possible, as a matter of practical
politics, to adjust the swollen do¬

an.even-

the

Western European countries. Fur¬

cial

In

exports

mately constant.As

economic

times the amount consistent with

25%.

movement,
the
rose
by 40%
while imports remained
approxi¬

the'

have

r

about
of

element

in

wave of currency de¬
What happened may be
explained this way. It was im7

production

of

stability
play in economic rehabilita¬

tion.

! very im¬

a

valuation.

harvest.

good

a

industrial

decisive

more "

volume

times

normal

by

rose

of

v

inflation

portant

dle

supply

ten

en¬

system.

was

Between that period and the mid¬

'

S.

difficulties

Kingdom

Change in Dollar-Sterling Rate

war.

_

M.

the

United Kingdom

ed

noteworthy example

monetary stabilizaplace.i
If we tion is that offered by Western
asqnnip Vh n f' Germany.
In that country wartime ) government expenditures
the function
ub-. ordinate

s

by

United

stopped after the middle of 1948.

in

success

be at least partly

can

the

its domestic monetary

accomplished in part by
restrictive credit policies and
by
fiscal measures; in part it reflect¬

ex¬

proof,

think, of the crucial role that

sion

(the sterling

currency

countered in its effort to stabilize

was

ample

not

sterling

which

from

gives

tainment

use

coun¬

In France, postwar inflation

perience

and

fell sub¬

opinion,

This

.

down

area

lar shortage in the countries that

more

received

was

countries since the
r:

:v

'•

■

than

slowed

of Credit

Recent European monetary

economic

them, have plagued all European

hostilities, and there are
for believing that post¬

Monetary Stabilization in Western

keep
in its

money

tries

coun¬

inflation has been curbed for

war

good.'

monetary

is

of

in most

Curbed

was

economic

This time, in¬

indeed.

very good

money

of Excessive Monetary
Stability; Supply and Composition

must

explained
from having to pay
foreign exchange to other

Britain's

of

On the area) thus

the Second World War have been arising

Problems

difficulties and the so-called dol¬

monetary management

hand, if*

assume)

economy.

stantially. ! Unfortunately, it Was
impossible to bring about a drop
in imports.1 The balance-of-trade

cannot solve.

then the administration of
money is about the most important task of government.

pride

management,

different attitudes toward the role and importance of what is called
monetary management. If we assume that money leads the way in economic development,
oiher

serious

no

stability in

markets

exports to the dollar

many

we

23

one
country affect not only that
nation itself but the entire world

slacken, however, the rise
exports which had been the

just

one country may affect entire world
economy. Says curbing of expansion in money supply does
complete task of monetary management, since stability in money supply may lead to
recession, and
quality as well as quantity of credits affecfs economic progress. Stresses international
aspects of U* S.

and

problems of financial

so

gan to

ity in

management

was

the sale of

problem of
for
exports.
When the world export boom be¬
was

finding

System

not

monetary

goods

to permit

as

virtually any exportable surplus,
there

postwar monehry problems

of

scarcity

pressing

By M. S. SZMYCZAK*

Member, Board of Governors, Federal Reserve

(2099)

K

with¬

soon

But

production

stopped its rise and did not

reach the March level

August

1949.

creased

to

again until
Unemployment kir-

more

(Continued

than

1.2

on page

million,
24)

24

COMMERCIAL

THE

(2100)

FINANCIAL# CHRONICLE

&

Thursday, November 24, 1949

results

Abroad and at Home
(Continued from
9%

or

of

tne

force.

',

As

23)
labor

page

employed
•'

in

Italy, the rise in unem¬
ployment in Western Germany is
attributable in large part to causes
which

could

not

be

remedied

monetary

management.

flow

million

8

of"

Eastern

by
in¬

The

refugees from
has disturbed

Germany

the balance of the

population, and
unemployment
is
particularly
strong in those areas in which
the refugees have settled.
Some
analysts believe, however, that
not

one-third

than

more

plained

in

this

the

could be

total unemployment

of

ex¬

that

and

way

it

would

help to eliminate at least
part of the remaining two-thirds
if appropriate credits were

being

piade available to German indus¬
The

management of the
banking system has

man

Ger¬
good

to beware of credit pol¬
icies that might again bring about

reasons

slightest trace of

tion.

In

view

unstable

the

of

domestic

infla¬

new

extremely

and

interna¬

tional political situation

in

Ger¬

however, the (recent rise in
unemployment, with its accom¬
panying social tensions, is partic¬
ularly dangerous.
Reemergence
many,

of

for

loan

the

spector of unemployment
tjiat haunted Germany in the
thirties might sooner or later lead
an
overthrow of the present
administration and to dangerous
jponetary

experiments.

the

On

qther hand, the recent develop¬

ment

may be nothing more se¬
than, the inevitable conse¬
quence of the transition from an

rious

inflationary, to
anced

marks, but has been able to grant
loans
of
only 0.4 billion. This
situation has led to an increasing¬
ly large role by public authorities
in

financing

investment,

new

largely out of current rax reven¬
ues.
The prominence of govern¬
ment

financing contrasts heavily

with

the

the

of

intention

Ger¬

government to return as
fully as possible to a free econ¬
omy based upon private initiative.
Moreover, the government itself
has recognized that the existing
man

taxation

level of
stacle

is

economic

further

to

serious ob¬

a

prog¬

sapping incentives for

ress,

labor

investment.

and

both
only

The

part of public investment that is
taxation utilizes the

not based

on

counterpart

payments,

namely the payments received by
the local government from pur¬
chasers
of
goods
imported
by
means of U. S. aid. These funds,

however, can be invested only ac¬
cording to a program which has
to be approved by our Economic
Cooperation Administration. Ac¬

the

cordingly,

release of these
funds is a complicated process.
Counterpart funds, moreover, will
available

not be

after the end

the European Recovery

Reestablishment

tioning
is thus

goals

well-func¬

a

domestic

capital market
of the most important

one

fiscal

of

in

Germany,
many
other

which

of

of

Program.

as

to

example
also

many

of

the

of

shows

the

Ger¬

importance

composition of the supply
credit.

new

that

agree

vestment

Most

lack

of

economists

sufficient

in¬

is

frequently thfe cause
of unemployment. Often the in¬
sufficiency of investment is due

to lack of opportunties for
able expansion, or to a

profit¬

scarcity

of

and

manpower

but

sources;

cjitiohs
the

under

it is often

lack

natural

present

re¬

con-

ascribable

to

long-term credit.

of

In

countries

which
suffered; from
wartime destruction and from in-*

the

problem

utilization.

Not

help

may

us

the

and

very

the

they

war,

an

union. Since then, their
economic fates have taken very

large

of

part

is

It

true

that

a

differences

these

may be explained by events be¬
yond their control. Belgium was

liberated,! in

either

may

reflect¬

as

during the war, has been
greatly facilitated not alone by

the other
hand, has been confronted with
great difficulties in meeting the
capital requirements of its in¬
vestment program and has felt
compelled to retain a system of
strict government controls over
most phases of its economic life.
Furthermore, it has been alio-,
cated a very large amount of aid
the

under

Recovery

European

Program while Belgium not only
has not received any net assist¬
but has undertaken to pro¬
credits for
less
fortunate

ance

vide

aid

Netherlands

the

follow

Despite

nations.

European

1944

outrun

the

of

ingness

the

the

will¬

to

hold

public

large amounts of these assets as
liquid reserves.
This willingness
to hold liquid reserves permitted
rapid

a

reconversion

and

mendous increase in

during

the

tre¬

a

civilian out¬

following
without completely upsetting our
price system. We are all aware
years

did

have

prices

and

we

rise

in

substantial

a

but

wages,

it

might have been much greater if
monetary management had not
taken measures to keep the in¬
flationary tendencies under con¬
trol.

Only as a
heroic
efforts
Netherlands
people

and

suffered

truly

months

somewhat

come

internal

external

and

nearer

to

financial,

stability.
Problems

Monetary

of the United States
Let

us

of

sults

now

our

recapitulate the re¬
hurried

review

of

monetary management in Europe.
The

example

of

Western

Ger¬

France, Italy, and Belgium

many,

has demonstrated the overwhelm¬

Monetary Management
monetary
manage¬
period could not con¬

ment in this

centrate

exclusively
upon
our
problems. The United
a lasting
prosperity only in a world which
in turn enjoys a reasonable de¬
gree of stability and prosperity.
domestic

State could re-establish

therefore

was

of

our

vital

for

the

financial

own

that

war

re¬

aid

we

in the Rehabilitation of the chief

and Far Eastern countries.

in order to
quate utilization

ensure

and

had

over,

grants,

ourselves

mestic

of

we

More¬

the ade¬
loans

these

interest

to

in the problems of do¬

financial

countries

stability

which

to

of

the

extended

we

aid.

Our
influence
upon
financial
developments in foreign countries
rests in considerable part upon
our voice in the use of the coun¬
,

terpart funds.

These funds rep¬
local cur¬

resent the payments in

is

It

-

that

true

during the past

months

industrial

our

production declined by 12% and
the number of our unemployed,
although still at a low level, was
almost doubled. In recent months,

in sales and
evident,
although output is now being cur¬
tailed by strikes. The devaluation
ol many foreign currencies may
however,
in

upturn

an

production

pose

has

been

short-run problems in

some

international trade before

our

ficulties
we are

of the

with which

task

confronted.
domestic

our

Monetary management alone can¬
achieve
these
results, but

not

without

they

monetary

management

not likely to be reached

are

at all.
States is aft present

The United

the

leading

expressed

approval.

countries

enough
their

these

that

so

use

or

In

funds

many

large

are

decisions

to

as

have funda¬

non-use

free

world, both because of its mate¬
rial

because

and

resources

of

dogged adherence to the principles
and practices of free enterprise.
Our economic fate will determine

the economic and

political future
other nations. We must
steady economic progress,

of many

achieve

inflation

without

pressions,

serious

or

only for

not

our

the economic and social

un¬

the

of

country

sake

especially

as

employment, stable values, and a
rising standard of living.
Eco¬
nomic progress involves the ab¬
sorption
of an
ever-increasing
number of workers together with
an
ever-increasing productivity
per worker in a way that will not
lead to unsustainable expansion.

faith

and

well

as

foreign experience it has long
been recognized that the objec¬
tive
of
monetary
management
must be to regulate the supply,
availability, and cost of money
with a view to contributing to the
maintenance of a high level of

made by the purchasers of

programs

its

long-run benefits become appar¬
ent. These facts indicate the dif¬

the goods imported under our re¬

rency

Second

the

World War.

lief

ing importance of financial sta¬ der the
grants of the European
bility for achieving and main¬
Recovery Program. The counter¬
taining prosperity. The case of
part funds are legally the prop¬
the United Kingdom has shown
erty of the local governments. But
us how fundamentally a financial
the governments are pledged to
disequilibrium in a major coun¬ dispose of them
only with our
try effects the international fi¬

very little war damage while the
fjationary developments in the Netherlands was liberated many
postwar period, private savings— months later and only after heavy
which normally form the basis of destruction.
Belgium's
colonial nancial relations of the entire
lpng-term credit funds—are gen¬ possession, the Congo, remained
world. However, the examples of
erally at a low level. The' gap under
Allied
administration Western
Germany. Italy, and Bel¬
therefore has to be closed either throughout the war and in
post¬ gium have indicated the necessity
to the banks with the help of the war years has become extremely
for
supplementing stability by
cpntral banking system, or by prosperous; Indonesia, the main
the guaranteeing of a
steady flow
public
authorities.
Large-scale overseas territory of the Nether¬ of credit so as
to avoid the dan¬
creation Of long-term credit by lands, was for many years under
ger
of
interrupting
economic
the banking system is
domination
and
has
generally Japanese
growth. Finally, the development
considered to be unsound and un¬ been
ravaged by civil war ever of Western
Germany and the
safe banking practice. It has in¬ since the end of the Japanese rule
Netherlands has shown the spe¬
herent : dangers of
inflationary so that it has become a burden cial importance of a sufficient
qver-expansion and is likely to rather than an economic advan¬
supply of long-term credit as a
be followed by a neriod of con¬ tage, to
the
mother
country. source of expansion and progress.
traction, made more difficult by Moreover, the Netherlands has
Each one of these countries has
ffozen bank assets. Large-scale been hit far more severely than
tried to solve: its problems in a
credit creation by public authori¬ Belgium by the impoverishment
diiferent fashion. I am anxious to
ties usually either has inflation¬ of Germany, with which it had
emphasize that my discussion/of
implications

beginning

From

Domestic

our

Conclusions:

the

between

and the middle of

our

International Aspects of U. S.

It

capital
result of
have
the
in
recent

stable

more

twelve

success

country's

been

middle of 1948

government bonds and

still

a

The supply

other time since

that

must

whole.

of

that

on

the economy as a
of money has

velopment of

1949 than, at any

mally balanced economy. In any
case, the Belgian currency is to¬
day, next to the Swiss franc, the
most coveted European currency.
Netherlands,

making

the

put

The

been

management- have

adjustment to A more normal level
of demand, entailing a reduction
in
output and prices* that had
risen out of proportion to the de¬

productive ca¬
pacity but also by the high degree
of public confidence in money and

trevnendous

our

ing deflationary troubles or as
indicating a transition to a nor¬

resources.

agreement to form

turns.

developments

interpreted

has

economic

different

These

ment.

sion

this end, we made very substan¬
tial loans and grants to European

two

after

an

stability than most of its
neighbors and to dispense with
virtually all wartime controls of
private economic activity. As in
so
many other countries under
conservative
financial manage¬
ment, however, there have been
some
recent signs of slackening
progress
and rising unemploy¬

investment program may prove to
be in the long run, it certainly

countries

long

reached

cial

by the recent

importance of
long-term credit

are

tors, Belgium soon was able to
regain a Higher degree of finan¬

trading countries of the world. To

neighboring
similar
in size, population, and economic,
social, and political conditions.
European

War, had to finance the
to a large extent
by infla¬
tionary methods.
Postwar read¬
justment of our economic system,
despite the vast monetary expan¬

repressed in¬

Belgium

Netherlands

result of all of these fac¬

a

miliar symptoms of

the

of

World

flation. Advantageous as its large

example

understand

to

Western

of

coun¬

Second

the

Long-Term Credit Problems In

Western Germany

;

the

countries

Low Countries

The

country. The

in

from

recover

caused

Another

involved

conversion from

war.

Long-Term Credit Problems in

own

war

As

be

our

policy of strict austerity
and has shewn until recently fa¬

European

seek

distortions

credit policy
it must also be in

and

reasonably bal¬

a

situation.

rapidly increasing popula¬

a

States, like all other

tries

tion.

has so far received
applications for 7.4 billion

so-called

tries.

the

vestments,

in

United

also

but

to

reinforce

the rest of

of

de¬
own

the

in

the world

principles

stand.

for which we

G. Harold Pearson With

Rauscher, Pierce & Co.
TEX.

DALLAS,

—

Harold

G.

associated

become

has

Pearson

Co., Mer-

with Rauscher, Pierce &

mental effects upon financial sta¬

bility,
In

expansion,

these

stagnation.

or

decisions

we

are

con¬

,

ary

(if based

on

def¬

icit finance)
or : requires
that
faxes:.be maintained at, or in¬
creased to, very high levels; But
high taxation tends further to re¬
duce

private savings and

ment.
used

and

for
of

Both
with

are

the

at

methods
the
best

In

Western

of

to

fully and

Netherlands.

capital

out

authorities

cen

facilities

refinance

to

300

other Western
of

that

kind

Belgian

high

struction Loan

Corporation, which




and

pace

also

industry

degree

to

most

of

rather

than

investment.

as

by

ambitious

of

all

for

become

authorities,
hand, embarked on

programs

in

permitted

Netherlands'

the

a

reform

European attempts

demands

destined

has the function of financing in¬

adopted
<

geared to the satisfaction of
sumer

in

Recon

currency

1944, which set the

other

The

promptly

successful

ipillion marks, or about $72 mil
lion, of medium and long-term
credits, but this sum is very small
relation to needs.

rabidly than the
To %ome
extent,

more

as

government

should

not

criticism.

deal

must

be

Every
with a

complex social and political situ¬
ation, and a policy that seems

which

with

the

the

was

very

main

problem

subject

of

discussion, namely tlffe choice
insisting upon strict sta¬
bility in the supply of money or
permitting a moderate expansion.
In the first case, we may invite
stagnation. In the second, expan¬

our

between

sion

go

may

too far

and

end

in

inflationary spiral.
Wise de¬
cisions involving the use of coun¬
an

terpart
credit

funds
for

claim

can

some

inflation

in

Europe, but difficult questions

re¬

main

to

stopping
solved

be

threatened

now

progress and

by

in
a

The

on
one

the

o*

investment

also

to

provide

be im¬

may

two

stoppage in

by rising unemploy¬

ment.

also suffered from inflation in the

past, nevertheless

perous

to

contrast

whichf has

government controls,
to

not

the

had

.Netherlands,
serious

agement at home.

inflation,

1948,

which

same
man¬

The threat of

darkened

our

prospects in the pros¬
years from
1946 through

was

downtrend

followed
in

our

by

a

slight

economic

ac¬

.

.

briefly

the

application

-

of

Building,

Mr.

as

Pearson

corpor¬

was

for¬

merly with Merrill Lynch, Pierce,

prior thereto

with Dallas Rupe & Co.

C. R.

MacGregor Opens

MENDHAM,

MacGregor is
curities

Corey

N.

Lane.

the past was a

J.—C.
from

Russell

in

engaging

business

a

se¬

offices

on

MacGregor in
partner in Auchin-

Mr.

closs, Parker & Redpath.

;

in-

tivities, which began in the Winter
While the problems them- of 1948-49. This downtrend, how¬
are
the
same
the world
ever, may be hailed as a neces¬
over, the solution that would be
sary and inevitable readjustment.
right for one country might be The pent-up demand for goods
wrong for another.
V
\ / and services that had not been
for
It remains only to consider very available
many
years
was
a

trader.

was

economic

to prefer

ate

Monetary Management

To

a
lesser degree, these
problems confront monetary

seems

cantile Bank

Fenner & Beane and

Domestic Aspects of U. S.
,

hyper-inflations in one
generation, and in Britain, where
the currency has never become
worthless, / France,
'which
has

in

Continental Europe,

and

after

inflation

a

outsider

pursue. The danger of
inflation, for-instance, appears in
a very different light in
Germany

to

to

war

the

con¬

overcome
as rapidly
possible the destruction caused

the

to

G. Harold Pearson

countries

possible to

Germany the

permitted

that Belgium has recovered more

differences

interpreted

nancial management. The Belgian

long-term credit institutions. Very
recently, the central banking sys¬
tem, after long deliberation, has
been

these

surprising

caution,

^

similar

not

substitutes

be

banking authorities have been
extremely reluctant to extend re¬
and

r

best

to

tral

discount

therefore

opment also may be due to a dif¬
ferent course of economic and fi¬

have

poor

formation

is

It

however, the difference in devel¬

greatest

private savings.

invest¬

close economic ties.

very

fronted

,

these

bound

to

disappear.

Labor

and

v\

Arthur Hess Dead

.

Arthur M. Hess, a former mem¬
ber

of

the

New

York

Stock

Ex¬

director of the New
York Hanseatic Corporation, died
change and

a

at his home of heart disease at the
age

of 74.

Volume 170

Number 4858

THE
U

COMMERCIAL
*

«

,

&

FINANCIAL

CHRONICLE;

*

t

WhatWillX^

perience. Jay C Ketchum, Exec¬
Director; says it is impossible
for either voluntary or
compulsory

InsuianceCost?

utive

By ADOLPH SCHMIDT*

/

insurance to

,

offer

medical

Vice-President, T. Mellon and Sons
Pittsbuigh Representative, A. W. Mellon
Educational and Charitable Trust.
.

at low

|

.

#

and their estimated
costs,

insurance

capable of calculation.
effect

on

concludes all estimates

Warns placing burden of

incentives, but

urges

industries

cost

business by

on

old time

secure

proposals for compulsory health
faulty and such costs for future are not

on recent
are

taxes will

more

have

problems of our generation is how
preventive, diagnostic and curative

had

the

est

earn-

own

of

tice

many

in

groups

United
for

ex¬

and

lic
Adolph Schmidt

(S.

1679 and H.R.

'

forms for the past 13

by

the

and

that this
bill
is
legislation has drawn from

sponsors

measure

the

of

opponents

Administration

number of counterpro¬

a

posals

based

rather

than

on

individuals

to

and

Flanders

Bills

1970)« call

for

unable to pay
the whole cost thereof." The Hill
S,

(S.

1456

and

Federal-State

subsidies to voluntary, non-profit
health insurance programs to in¬
enrollments and to

crease

the creation of
plans.
age

-

the

of

voluntary

new

,

Because

encour¬

,

comprehensive estimate of

con¬

troversy

over compulsory health
insurance, it is surprising that the

Administration,
the
Medical
Association

American

other

the

and

„

numerous

health

proposals agree.
more
things than they
on. They agree that:

the

$0.6

health

which

initial year.
is

It

insurance

that

the

pay¬

f

basic

Administration

studies

has

de¬

disagree veloped the financial proposals in
its most recent compulsory health
insurance

bills

S.1679

H.R.

and

(1) We have well-trained phy¬ 4312. Total
compulsory coverage
sicians, well-equipped hospitals, would
embrace initially 80-85% of
and that our medical services and
an
estimated 150 million popula¬
skills are technically as good or
tion in 1950.
Counting only the
better than any in the world.
first $4,800 of an individual's earn¬
ings in a year, the estimated
(2) We need more physicians,
dentists

more

hospitals, and

and
a

nurses,

nationwide

more

of publicf health units.

age

(3) Our existing medical
ices

are

r

not

serv¬

evenly ^ distributed

amount

taxable

of

earnings

on

There

opinion,

is

a

...

•

sharp difference of

however^

everyone

■

shall

be

as

to

whether

left

free

to

choose whether he wishes

insurance

an

or

to join
prepayment plan

whether the arrangement shall

or

be compulsory as part of the social

that experience shows that

of the families that need
proteetiori of health insurance

many

the

most

are

not

getting it today and

will not get it if it is left entirely
up

cal

to them. The American Medi¬
Association, however, fears

that

compulsory

ance,

which it defines

would eventually

sickness

insur¬

taxation,
place the pracas

in

is

1950

billion.

$133.7

In

14th

by Mr. Schmidt at the

Hygiene

Annual

Meeting, Pittsburgh,




ofi each

included

Estimates

1948

ol

fur¬

were

also

and

for

of

195x,

as

were

when

expected to have
of

reasons

enlarged

personnel and facili¬

ties, and increased public demand
for

service.. The

significant cost
may be summarized as fol¬

data
lows:

—1948—

„$36.81

.

—195x—

:

of

$132

per

of

physicians associated in group
practice.
' • (V • ? ]
J :';V:' ;ti ■ •: ••
Experience

in

Germany, New
Zealand and European countries
generally, indicates a substantial
increase

after the

the

of tax paid health serv¬

cost

initial years in

ices administered by governments.
But the cost figures are influenced

not

only by • increasing benefits
by inflationary forces result¬
ing from World War I or World

but

Hence, they

quoted

or

be used

can

only with

great care.
Also, conditions in other countries

$49.83

.

price

a

per year, including Blue
charges of $45, or $11 per
month.
It
accomplishes this by

War II.

/

successful

at

care

from

of the next three benefit

additional 14% is taken

general
is

erage

85-90%

4%

estimated
of

the

of the

and

revenues

to

cov¬

expand

population.

to

Such

taxable earnings

same

would produce $5.3 billion for the
Personal Health Services account.
Th

Social Security Administra-

1 This

sion

of

data

entitled
cial

study

conta;ned

"Medical

Insurance

of

Research

curity

a

by

revi¬

Care

for

Personal

from the Bureau

to

Statistics,
the

Social

Committee

increase

late

1948.

the

Se-|

rate

from

of

$224.5

of
of

with

a

Current

early

1946

billion

in

late

$4,800 maximum.
Business—U.

Commerce.

be

remembered

steadily

July,

10%

national

the

health

total

cost

insurance

of

cannot

be determined with accuracy until
the system has been in operation

for

time. It contends, how¬

some

that

ever,

should

be

pay
roll deductions
sufficient to meet the

major portion of the

basic

costs.

Bevan,

disclosed

that

the British National Health Serv¬

ice is

costing the British taxpayer
£300,000,000 a year. The original

official

estimate

of

for

cost

the

first year of operation of the over¬
all compulsory system inaugurated

July 5, 1948 was £264,500,000.
Costs wiiUcontinue to rise in fu¬
on

ture years

since the Health Minis¬

underwriter, although it believes
definite limits to this obligations
—ranging from 15% to 25% of the

try is planning- to construct 2,000
health centers at
£187,000 each
and 69,000 additional hospital beds

total

at

cost

of

the

program—will

undoubtedly be set by Congress;
Numerous

organizations

and

■

individuals take exception to the
Administration estimates, al¬

approximately one-half

are.

those of the United States.

available.
tion

and

Unfortunately, opposi¬
figures
are
rarely docu¬

mented

either

method.

to

as

source

or

Dr.

George
F.
Lull,
Secretary, American Medical As¬
sociation, has recently stated, "In
the

opinion of

and realistic

qualified

numerous

students of the

sub¬

ject, compulsory health insurance
the

United

States

Ultimate

would

annual

in¬

costs

Resources."

long-term
ments

By
in

trends

of

projecting
many

national

our

seg¬

our

essary to supplement the pay roil
taxes. Total ultimate cost is esti¬

mated at from 8% to 14%. If Con¬

should

gress

Health

must be added to
cost. The
mate

just to get the system in
eration; and an eventual 8
10%

op¬

to

bite out of the people's take

to medical
for

care,

the

was

1950

that

pre¬
we

(at

prices) but should be spend¬

home pay." 5 He believes that the

administrative

costs

would

alone

from

$2,000,000,000 to $3,000,000,000 or more annually. The
$18,000,000,000 figure is apparent¬
ly arrived at by assigning the 1948
per capita costs of Veterans Ad¬
run

ministration

categories
tional

medical

to

in

care

anticipated

an

population

of

all
na¬

152,000,000.

The deluxe Veterans Administra
tion

standards, of

much

been

more

course,

medical

¬

include

than has

care

contemplated in any Admin¬

One

check

made

figures

the

on

to

date.

is

computations

Administra¬

provided
of

the

by

the

Michigan

Medical

Service, the largest vol¬

untary

prepaid

group

medical

care

in the country, with 1,300,-

that

would

we

spending nearly 9.2 billion
on

to

all forms of medical
it

make

000,000

possible

Americans

time to have
of

medical

$2.5 billion
cludes

of

to

matchless

year

But

care.

for

all

155,-

living at that

would

mean

an

billion,

$11.7

with

added

be

a

minimum standard

more.

that

crease

likely

a

care

expenditure

or

This study

only

to

an

what

produce

in

economic

con¬

3%
we

in¬
this

1960,

machine

of

services

and

food, clothing, housing and medi¬
for

living Ameri¬
can, get rid of our slums, take all
our children through at least two
years of high school, develop our
river valleys and make our forests
self-perpetuating. This study fur¬
care

ther
more

every

pointed out that
than enough basic

000 subscribers and

10

years'

ex-

S.

p.

21,

Affairs

September,

Pamphlet
1949.

No.

to

18%

$18

covered

on

billion

$150
to

would

billion

$27

Senator

be

;a

Wagner

ad¬

to fi¬

necessary

his

original comprehensive
security ' bill /covering:
health, disability, welfare, and oId
age pension benefits7 The mag¬
nitude of such

an

$18 to $27 bil¬

lion pay roll tax is apparent when
we

realize that it amounts to 45%

to

67.5%

total

of

the

$40

government

and

and

billion

on

g£

now

revenues

obtained from taxes

individuals

corporations, and from excises
customs.
.' V:

From

the

economic

it is most unfortunate
notion

standpoint,
to find

the

widely prevalent that
governmentally provided medical,
so

health

"free."
in

services

would

be

The program as

envisaged
legislation is to

the

proposed
for hospital and medical care
through taxes.
And taxes must
pay

from the

come

people and the
economy.

The

pro¬

pro¬

we

of this increased expense will find

its way into his selling prices, and.
the

general

public largely com¬
people of moderate or
small income, would thus be taxed
indirectly
through
increased
prices. The employees' take-hom©
posed

would be decreased by

pay
so

of

that they would have that much

less money with which to pay th©
increased prices.
The consuming

public

as a

much

less

have

money to
voluntarily
other commodities—pos¬
sibly better nutrition, in itself an

spend

on

important
Then

man-hour
means

-

safeguard

there

is

amount to be

the

derived

output,

permitting

encouraging industry to put

health..

of

unknown

supplied by the gov*
general revenues,

from

ernment

which would of
from

course

further

personal

income

customs,

and

have to be

increases in

taxes,

excises*

corporate

income

The important point is that

taxes.

the incidence of these taxes would
be

wide-spread
that the

so

economy,

over

the entire

medical

serv¬

ices would be anything but "free."
Good
ill

of

health

health

6 New
p.

York

9.

7 "Social

turn

whole would have that';

and
are

resources,

and

increasing
in

the initial

social

1949,

and

to

of

which

nance

No.

152,

12%

mitted would

ily

which
5 Public

1949,

rate

equipment to do
this; that the answer lies in stead¬
manpower

pay roll tap*,

cover

In this connection it is* in¬

are

could turn out enough goods
to provide adequate

ours

cal

istration estimates

tion

$10.6 billion -to do an ade¬
job. By 1960, this study

estimated

esti¬

an

resulting total tax esti¬

of

rolls

amount

National

>

to his costs of operation. It seem#
certain that a good portion or all

would be spending $8 billion
1947

a

Act,

might reach,

war

years

regard

pass

■

Insurance

mated additional 4%

and further inflation,
1950 and 1960. In

economy

barring

diction

on

this

Even

posed initial 1 xk % levy against the
employer would have to be added

in

the

on

and

total cost, since these
anticipate that a gov¬

this ductivity of the

life,

study endeavored to forecast what
levels

minimum

■,

and benefits.

the

not

and

In

1947, the Twentieth Century
Fund -published
a
monumental
survey entitled "America's Needs

though
they provide the
only
comprehensive documented study

ultimate tax rate

ernment contribution will be nec¬

£5,000 each. These two items

to £719,000,000. At present
British per capita health expendi¬
come

tures

Social Security
pertaining to this

teresting to recall that 18% is the

On Oct. 6, 1949, Aneurin

Minister,

at

bill

recent

rolls.6 Acturial

pay

of ,6%

estimates

Health

...

-.

Se¬

maximum, .'depending

coverage

is

Social

the

an

rolls

pay

the

of

most

of

bill show

tion admits that

'

'

this

estimates

year.

,

.

billion

Survey

23.

of Labor Statistics

Index

of

today.

J1 3.24 %

>

Edu¬

on

1

"

De-Ttment
p.

Bureau

Price

1948

3 $148
4

the

in

Consumer

must

member

a

persons) $4.59 billion $6.22 billion
3.10 %
4.20%

2.39 %

and

Labor, U. S. Senate, July 8,
1946.
Seventy-Ninth Congress, 2nd Ses¬
sion, Senate
Committee Print
No.
5."
The 1948 report allows for a 6 m:ll:on
population increase and an over-all 33%

and

in past years are not comparable
to
those
in
the
United
States

persons) $5.37 billion $7.27 billion

1946

report
Insurance—A So¬

Reoort

and

Board,

in

Program

Health Services.

cation

developed

was

It

vivors Insurance will rise

pay

ing

Foundation's

Pa., Nov. 17, 1949.

Insurance

York, after

quate

2.4.t

*A report

Health

the

years

tax

paid into the Personal Health

years, an

pension

that the cost of Old Age and Sur¬

of

be

each

the

to

features.

Greater New

ranging from $10,000,000,000 to
$18,000,000,000; a 6% paycheck

In

disability

hand, the current

other

Plan of
two

the first three benefit years, 314%
of this sum or $4.7 billion would

to

Industrial

cost
was

costs.

designated

volve:

security systems. Mr. Oscar Ewing,
Federal
Security Administrator,
argues

In

year, 5, 10 or 15 years
benefits first became avail¬

in

Service Account. The sponsors in¬
(4) A system of prepayment or dicate 1 Vz % from workers, 1 Vz %
insurance-1 is
the
best
way
of from employers, and not more
handling the costs of * medical than Vz% from general revenues.
.

the

for these services

which payroll taxes would be lev¬

throughout,the country.

care.

of

Education.

allowance of 5 to 7 xk % for ad¬

ied

cover¬

study
services:

future

the

;

*

^

,

these

of

under

in

program

*

>

from

billion

excluded

are

compulsory

many

on

about $1.4 bil¬
drugs, eye-glasses, appli¬

voluntary
ments

with

groups

3.28% of

is accounted for by
some

appli¬

ing

On the

charges

this

figure of $7.41 billion and the es¬ Whatever difference was involved,
timated Cost of $5.37 billion above the government would make up as

and

and

year

home

Oct.

Administration

and

increased by

National Health

per family cost of $185.00.
The
$2 billion difference between this

of

drugs,

care,

a

and

pay roll tax.
5, 1949, the House e£
Representatives passed, by a vote
of 333 to 14, a liberalized and ex¬
panded Social Security Act, add¬

On

administrative efficiency througn
panel capitation and prepayment

resources

ex¬

$226 billion of national income, a
per capita cost of $50.70, and a

ances

dental

Se¬

estimate

Per capita

lion

,

heated

nursing

in

fi¬

Federal

cost

after

Security Administration released

was

package for $160

throws

through the
curity Agency by a

roughly 8 % of

a

a

search and Statistics of the Social

This

and

nanced

be

Cross

able,

$7.41 billion.4

same

would

family

costs

proach. The National Health Bill Tot.
civilian population (146 million
(S. 1581). sponsored by Senators
Per cent of national income 2
Taft, Smith and Donnell, would Labor
force coverage (125 million
make
available
Federal
grants Per
cent of covered earnings
(not to exceed $200,000,000 in the
In comparison with these offi¬
initial year)
to the states on a
matching
basis "for extending cial estimates, actual expenditures
medical, hospital and dental serv¬ for medical care during 1948 were
ices

the

both

Research

,

ap¬

nearly 6%. Ketchum
regards this figure as too high to
attract many takers. Ewing offers

since

gram,

curity Advisory Council, puts the

"voluntary"

a

^'compulsory"

a

$228 including
hospitalization — a

year—or

of

Harvard,

nished for late

May, 1949, the Division of Re¬

a

pro¬

a

Cross

costs

cal

ministrative

compulsory
as they
spending for medical care now.

penditures for

OlcJ

Age and Survivors Insurance

Blue

future

it stabil¬

the benefits

a

neces¬

the

the

izes. Sumner Slichter of

are

In

of

ior about 50 years until

payroll deduction scheme

years.

President

much under

as

of

compulsory

must

with

1948

.

insurance

experience,
confounds both of these figures.
HIP delivers comprehensive medi¬

an

sponsors

begin
assumption that the pub¬
be willing to
pay at

an

sity be considered in conjunction

care

the

Estimates

would

least

!.

,

4312) has been before Congress in

"must"

late

the

item of service there

Cost

health

medical

cost

The financial cost of

(6)

also differ sharply
cost of voluntary

estimating costs, the

with

insur¬

estimates

figures
about $180 a

(4) Home nursing; (5) Laboratory,
medicines
and
appliances; and,

techniques in

new

of national health insurance

compulsory

the

at

Social Security

t

Their

ances.

Program

t©

following
(1) Physicians' services; (2) Hos¬
pital services; (3) Dental care;

compulsory insurance.

In

current

Insistence

r

"■

The

service,

relative

The

Administra¬

many

of

The Administration

the AMA

legislative

bill

quality

care.

the

on

and

propoials. The

ance

This problem has

■

included

the

development of

tensive litera¬

health

'

Insurance

or

price and income levels.1

in

medical

ture and many

tion's

•.'■■■•;

--

more

and would strifle research and the

pro¬

an

v

■

under

ration

the

a

duced

"

medicine

complete government con¬
trol, would create serious deterio¬

States

has

population

less

long
period of time.
It

of

are

-

Health Insurance Costs and

still

total cost of

Foundation stated, "One of the trouble¬
to make available to the entire

services of modern medicine."

•

^

,

attention

we

machines

work.

$4,000
,

1947, the Rocke?eller

some

the

would

cost and

and*, better

.

25

for Detroit families earning up to

deadening

loyalty of workers by instituting their

solvent.

it

more.

comprehensive

to prepay full

year

health insurance programs.
In its annual review of

care

remain
show

able Trust, commenting

11

.

(2101)

si

'

,

21,

Times

the

avoidance

dependent
Magazine,

on

Oct.., 18,

"
Security Taxes"—Publication
Council for Economic

Research

Security, 105
cago 3, 111.

West

Monroe

Street,

"

(Continued

on page

26)

Chi¬

THE

(2102)

26

COMMERCIAL

FINANCIAL

&

CHRONICLE

i

What Will
(Continued from

Compulsory Health Insurance Cost?
(gainfully employed

25)

page

of at

people

for

healthful

and

economic

and

social

recreation,

education,

factors,

personal willingness to take

a

The

these statistical gains be¬
tween the end of 1947 and 1948;

pies in

believed

that

the

of

one

reasons

ing is involved in this question of
for the current financial problem
good health.
With the multiplicity of taxes of the United Mine Workers Fund
which now confront every busi¬ is that physicians were paid by
the fee-for-service method. Capi¬
ness undertaking, and their dead¬

structure to

jeopardize our
high standard of living. If that
should happen, there is little use
of talking about expanded medical
care, better housing
or more of
anything felfce that contributes to
good health.
On Oct. 24, 1949,
our

Mirrister

Prime

Attlee

of

would

be the ultimate

alization
sion.

gressive.
that

It is

an

of

costs

production

that

so

Brit¬

in

compete

the

world

markets.

One of the economy moves affect-

the

ing

National

British

Health

Gassett,

masses

unions

labor

the

find

answer

of the revolution

of

the

Further

in nation¬

medical

currency

whatever

guaranteed under any of the com¬

pulsory

bills.
Services may be
granted or withheld by the regu¬
lations of the
Administrator, but

that the

ent

future

and

majority of people could

estimates of cost all-out

cooperation

elimination

of

The

United

of

doctors,

unnecessary

"jok¬

States

more

thoritiese

have

warned

a

if

that

legislate

Congress should

com¬

the

should be

program

least 10

at

set

commodity which

a

done in time.

ev-

1

.

I

Observations
(Continued

from

5)

page

;

*

capital to foreign borrowers if and when they do not fulfill creditor
responsibilities.
;
What Is It?

Debunking

of

the

Program's

anti-communism

value

leads To

reiteration of the question "What is Point IV?"—now in the light of
the President's proposals and his own and others' subsequent com¬

mentary.
Is it to be confined to American projects and American
direction with the brunt falling, directly or indirectly; on the ExportImport

Bank; is the money to come from bankers motivated by
expectations of a safe return of their capital plus worthwhile equity

returns;

or

from businesses expecting

adequate profit

an

on

their prod¬

ucts; or in conformity with State Department dictation for political
motivations; or through the UN and its agencies?
Is the lending
policy to follow past Export-Import Bank practice in preponderantly
taking shape in the form government-to-government loans, or in
loans to government agencies, or in being used
projects directly competing with private enterprise?

for

government

operated system will fall of their

In the original broaching of his program the President todk
pains to rule out "exploitation for foreign profit," a catchy slogan
but leaving little doubt as to the governmental direction of the op¬

own

erations.

weight. It would also be

pulsory system, the effective date structive if
of

ration, is

are

profes¬ afford both. A constructive Amer¬
inflation ican approach would be to make

unreliable.

essence

interesting point

benefits

no

today has ers/ in service contracts, and of¬
physicians, dentists, nurses fering membership to farmers, the
Government would trim its ex¬
and hospital facilities per capita self-employed and individuals who
penses by $784 million in order to than
are hot in occupational
any other large nation in the
groups-—•
head off inflation and reduce the
world.
Even so, competent au- that arguments for a governmentain's manufactured products could

philosopher, Or¬
has pointed out

Spanish

y

-

by means of continued
deficit voluntary prepayment
plans so at¬
financing would render both pres¬ tractive in every way —
through

Great

Britain announced that the Labor

isfies this need,

_

ening effect on incentives, it is a tation is the method which would
serious
question of how much most likely be adopted by the par¬ there is no tax limit. Adoption of
further we can go in adding on ticipating
physicians themselves the compulsory program v would
burden
after
burden
without after the program was under way. drive the voluntary programs out
bringing on enough breakdowns Payment by government salary of business because it is unlikely
in

tega

that the

If government sat¬
the loyalty of the
will be to government. If

wants.

eryone

a com¬

through union-managed programs,
which this generation is experi¬ the loyalties will flow to labor
(000's Omitted)
encing is that the masses of the leaders. Likewise, if industry can
^^0.
1947% 1948 20th century insist upon receiving find the solution through sound
expense
52,584
60,995 as a
right all those material en¬ programs developed in the volun¬
expense
26,247
34,060
joyments and prerogatives which tary American way, some of these
expense-8,898
12,895
cal service to be delivered and
only the middle class possessed in old loyalties will return to indus¬
This is an excellent illustration
this has not
been
specified in
the 19th century. Adequate medi¬ try.
Members of the Industrial
of the
way in which the American
pending bills. Where cash sick¬
cal care at reasonable cost, espe* Hygiene Foundation may have one
people through voluntary action
ness
benefits are introduced,
of the great opportunities of this
meet their own problems.
when
a
serious
illnesf
Fur¬ cially
malingering increases markedly
generation in helping to determine
these voluntary plans strikes suddenly or is of long du¬ whether
and adds to cost. It will depend on thermore,
industry can get the job

of oneself, are exampoint. All of this is the
role of public health.
Its goals
such variables as the method of ate true insurance. For a specified
are the prevention of disease and
the
proper
organization of all payment of physicians, whether premium, definite medical bene¬
fits are guaranteed by contract.
community services to foster the by fee-for-service, capitation or
They are competitive and experi¬
positive health of the people. In salary. The first is regarded as
the most expensive, and it is be- mental, hence dynamic and
essence our whole standard of liv¬
pro¬
proper care

reducing the demand for

pulsory system.

shown

other factors than medical!the emPloyee and
care to
individuals by physicians |.f
from those who are self-employed.
and hospitals.
The prevention of
I wish I could be more definite."
disease, lessening the risk of ill¬
Hospital
Cost will depend primarily on
ness,
proper nutrition and diet,
Surgical
sanitary
housing,
opportunities the quantity and quality of medi¬ Medical
many

to

Thursday, November 24, 1949

zations
those

the

could

con¬

If

voluntary organi
develop

individuals

plans

for

''

;

►v

-

*

.

exploitation

by us is to be abolished, why should not the
governments
which
are
seeking
American
investment,

foreign
instead

of the United States government, post the necessary guar¬
of the act xhey be_
population who cannot now
estimated to save lieve this would be a minfmum afford
J-o join these voluntary? ^;^At any rate, one "net" implication of the President's proposals,
year Britons hence* |
period required to train the addi- plans. They should also strive td
j is the prospective nationalization of all foreign investments (irre¬
forth will have to, pay 14
cents, tional personnel and construct the find the answer to the question of
spective of the blind spots of many of our exporters and investment
for each prescription received
expanded facilities without which how premiums will be paid
bankers). However, there is one

Service

the abolition

was

of

prescriptions,
$28 million a

bala"c®

h's

liabilities against his assets if he
is to remain solvent.
Does this

If a bal¬
sheet could be struck* for the

United
like?
of

States, what would it look
A

comprehensive appraisal
assets
of
the

the

physical

United
made

States

and

curacy

if

has

done

bee"

never

with

would take

outmoded

great ac¬

long

so

as

to be

when

completed.
Nevertheless, a recent study made
by Robert R. Doane, Chairman of
the

World

Assets

Audit

Associa¬

tion, Inc., and published in the
March, 1948 issue of "Dun's Re¬

view/' provides
the

a

possible clue to

over-all

figure.
His
study
private productive,
public, institutional, and individ¬
ual
consumer
physical assets in
shows that

our

the United

States

valued

were

$501 billion in 1946.

at

Against this

figure, the net public and private
debt

of

the

United

States

(i.e.,

gross debt less Federal trust funds

and state and local

stood
lion

sinking funds)
approximately $400 bil¬

at

in

1946.8

This

net

debt

was

composed of Federal—$230 billion;

State—$2 billion; Local—$12 bil¬
lion, and Private—$156' billion.
This ratio of debt to physical as¬
sets is 80%. On the basis of 39,138,000 families in the United
States in April, 1947, it amounts
to

over-all

an

average

debt

per

family of $10,200 against over-all
average assets of $12,800.
Future Costs Are Not Calculatable
From

the

evidence

available

to

date, it is apparent, that the cost
of over-all
surance

with

compulsory health in¬

cannot

be

determined

degree of accuracy. A
recently
received
from
Frank G. Dickinson,
Ph.,D., Direc¬
any

letter

tor

of

the

Economic
ican

Bureau

Research

Medical

of

of

Medical

the Amer¬

Association,

th

d

te

be

stated,

promised

services

could

not

delivered.
Because of the substantial

ference

of

opinionwwhich

dif¬

exists

between various groups regarding
method and results, it would seem

wise that

a further period of
study
experimentation be gained
before any final decision is at¬
tempted. Once the important step

and

is

taken

it would be

possible to
the

reverse

vested

it

rapidly

created.
fateful

im¬

because

interests

such

a

almost

which

Prior

step

to

it

of
are

taking

might

be

better to learn to walk before

we

The

run.

has

Brookings) Institution

announced

taking

that

it

is

under¬

two-year comprehensive
of
medical
care
which

a

study
should

shed

additional

light

on

the

problem. Let Rhode Island
and California continue to
experiment with their limited-benefit

compulsory

systems

in

now

ef¬

fect.

Let Kansas further
develop
its excellent program of
building
rural clinics and
attracting doc¬
tors

to

be¬

can

defend

an

estimate of

$10 to $15 billion at present price
levels for a thoroughly compre¬

hensive

program

sickness insurance.
to

require

a

of

compulsory

It would

seem

contribution from all

8

Survey of Current Business—U S.
Department of Commerce, October, 1949.




families of

antees?

unemployed members during de¬
pression periods.

would

gram

combine

voluntary

prepayment insurance plans with
group practice by physicians, to
provide comprehensive diagnostic,
curative and preventive services

the

to

members.

covered

known

program,

Such

the

as

black. This is
a

pattern which may
for other

a

great

promise

communities and for industry*
The degree to which health

in¬

has already been taken
of for the workers in indus¬

surance

care

try is indicated

by

the

think

plunge ourselves.

of

If

taking

the

Ad¬

ber

is

ture

urgent, let it stimulate

courage

private
ment

the

various

organizations

with

different

and

states

to

en¬

and

experi¬

administra¬

tive methods to the end that sound
solutions to a national

problem

be obtained

may

It

would

seem

sooner.

*

sensible

to

ob¬

benefits

and

because

factors
and

of

among

within

in

the

near

fu¬

competitive
industrial unions

industry

itself.

One

the

nation

loses

some

$27

billion in national wealth through
sickness and partial and total dis¬

ability^

It should be

one of the
industry to reduce

serve

objectives

surance

that figure substantially. It is rea¬
sonable to suppose that the pro¬

the further
development of
the numerous
voluntary health in¬

plans.

Their

recent years has been

growth

in

spectacular.

Blue

Cross

rolled

over

plans

have

now

en¬

31,000,000 people.

gain in 1948 alone

was

The
3V4 million.

The

Health Insurance Council of
the Institute of Life Insurance re¬

leased

of

ductivity

of workers may be so
by adequate industrial
health programs, that the savings
increased

could

more

than offset the cost of

these

voluntary plans.

If the in¬

dustrial plans should become uni¬
versal

vate

and

In his
Truman

investors.

'*

ECA Report to the Congress

cited

its

of

one

as

■

•

.

„

j

November 15, President

on

"highlights" the ECA's confinement of

its operations in China to supplying rice for the rationing programs
of

Canton

and

Swatow,

China

Rural

Reconstruction

fertilizer for

Taiwan.

and

"The

work

the

became

China," the President reported.

Taiwan,
of

major

the

petroleum

for

Commission

on

and

Joint

activity in

ECA-supported

-

The already-existing extent of the overlapping of agencies has
been

revealed

newly

this

week- by

the

resignation

Shepard

of

as

chief of the High Commission Finance Division in Ger¬

over

the renewed conflict of interest between the AMG-High

Morgan
many

Commission and ECA operations.

-

Cultivating Our Own Slums
In

these

days

be futile

may

of

"isolationist"

criticise

to

any

"fascist"

and

foreign-aid

cultivating-one's-own-garden. But it

may

epithet-hurling

program

on

it

grounds of

be pointed out that Presi¬

the

estimate has been made that each
year

.

To promote private foreign investment by guarantees of and £
participations in loans and other investments made by pri

(b)

the fact that

family. It seems reasonable to be¬
lieve that such industrial programs
will increase rapidly both in num¬

ministration believes that the need

of the three principal purposes of
in its Articles of Agreement, are:

To assist in the reconstruction and development of its mem¬
ber countries by facilitating the investment of capital for
productive purposes;
:

South

have group health insurance pro¬
grams for the employee and his

we

(a)

of New York

City since
1947, has approximately 200,008
subscribers and is operating in the
have

The first two

the latter Institution, as set forth

Insurance Plan, whose per
family

boroughs

along with the Export-Import and International Banks

constituted.

now

cost of $132 was mentioned earlier,
has been in operation in all the

tions, report that their companies

before

as

Health

144,-

years

nesslike basis,

a

hensive medical

some

worse.

-

000 persons on their state welfare
rolls. Let us continue to
study the
British
experiment
for
several

to

To get private capital risked abroad, we are to
permit individual and business investors to keep any possible profits,
even

but

60% of the sample panel members
for the Wage Earner Forum, spon¬
sored by the McFadden Publica¬

care

respect in which this hybrid propo¬

sition is

shift the losses on to the taxpayers. The state is to
It would be well to
experiment
bc^foresworn
further with the program recomf from any embarrassing profits.
\
'
mended
by. the
Committee
on,;
Irrespective of the degree to which it is intended that the new
Medicine and the Changing Order program is to be governmentally rather than
privately financed, or
established
by
the New York the international organization participate, it is not clear why the ob¬
Academy of Medicine. This pro- jectives could not be reached jointly by private investors on a busi¬

them.
Let
Washington
taxpayers appraise the re¬
sults of
providing free compre¬
state

"Nobody knows what compulsory
Starting from scratch in 1930, the
sickness insurance will cost. I
lieve I

and

the

by

the

apply to governments?
ance

later th

free|o£ adoption

dent Truman himself has

invested by industry to expand our own productive facilities; and
and

the next few years, are made

of persons covered in various cate-

ministratively

gories Of Voluntary insurance had

sound, they should go

and

ad¬

professionally
a

long

way

his

Keyserlings have been castigating

our

own

he

steel and elec¬

trical industries for not expanding

their plant quickly enough—ob¬

jectives assuredly rendered all the

more

we

send

our

We

difficult to the extent that

capital abroad.

agree

with Presidents Roosevelt and Truman that there are

under developed areas within our own borders—East, West, and par¬

ticularly

South—calling

attention-with-capital.

for

released Senate's Joint Economic Committee Report

currently

The

("Sparkman Re¬

port") shows that this country still has one-sixth of its families

Certainly

ing less than $1,000 annually.

bring

the

South

up

to

the

billions for the cleaning-up

rest
of

of

our

many

our

America
munist

by

is

a

mighty good practical

menace—a

many

fact

Americans!

evidently
,

/

billions

country's

are

level,

earn¬

needed to
and

more

urban and rural slums.

And, incidentally but not unimportantly,

comprehensive during

a
report in August, 1949,
which estimated that the number

pleaded the necessity for $50 billion to be

means

better

an

economically strong

of combating

understood

the Com¬

by Stalin than

Volume

170

Number 4858

THE

COMMERCIAL

that

Preparation and Method
(Continued

wilj, help

^

Salesmanship

from

4)

page

step,

CHRONICLE

to interest the

you

person and make your
Our next topic was

vincing"

In Securities

FINANCIAL

sale.

■

the

"con¬

past

have

their

wait

may

been

fruitful, but today I
think
many
people
will
in to see them.

don't
come
-

times,

Another fellow

is like

He

me.

i call

what

is

«Toe," just
that lie

in mind

I have

who used to work for

one

a

busy all

so

"Hasty

the

time

never

got any selling done.
That sounds paradoxial, but it's

their

immediate

jobs.

That

simply

mix with your work.

doesn't

situation

the

of

Then,

.

of
A Review

going to give a very brief
review, now, of what we have

in

covered here:

man

about

sincere

anxious and worried

so

making

lot of calls and
getting around his territory that
he wouldn't accomplish
very much
during any particular interview.
a

also

going

talked about

them.
there

salesman just has
to adjust himself into.
If you fail
to do that you will find yourself
a

The

most

that

was

objections

all

where

go,

you

the

are

they

brings them
We

sale.

a

ont
'

on

earn

living.

your

It

It

be

can

You start closing

make money for

provide a com¬
It furnishes a

certain amount of

Collective

Bargaining:

Aircraft

heed

Corp.

Lock¬

the In¬

and

ists—National

independence,

a

switching fronr job to job, worry¬ from the very beginning and with
ing about whether you ought to every particular selling point you

certain amount of freedom that

ington

You

that you neglect to do a good sell¬

ing job.

your

6,

C.—Paper—$1.00.

D.

Corporation in New Jersey, The
—Business

Politics

and

1875—John

1791—

William

Cadman, Jr.,
Harvard University Press, Cam¬
bridge 38, Mass.—Cloth—$6.00.

a

salesman, and you will be advance you try to get agreement
losing too much time -occupying on it before you go on to the

Planning Associa¬
Street, N. W., Wash¬

tion 800-21st

very

can

and it can
fortable living.

"closing," how

industrial Peace Un¬

or

uauses

der

ternational Association of Machin¬

Briefly, those are the various
steps of the sale, the way I see
them.
I might conclude by say¬
ing that selling is a good way to

you,

to

on

touched

pleasant.

man

up.

went

to close

is

come

Remove them before the

up.

joist

off

back in again at a later date.

every¬

the thing to do

to take them out before

than

knocking

and

"departure,"
and the proper timing and always
leaving the way open to come

getting

time

on

'.V.

We

important point

if you

in

order.

objections, differ¬

will

selling which

very

We

some

would be

a

his

sale.

a

commitments rather

of

objections, the brushoff, the stall, the valid objection,
and so forth, how to take care of

entertain if he is going to be a
salesman, that theie is a certain
specific environment to the job of

in

approached

pricing
everything else

We talked, first, about a man's
adjusting himself to his job. You

but instead of
sitting down and
doing a complete job with one
buyer whom he would call on, he

work

He

quoting

discussed

the removal of

have obtained agreement

the sale, so you
cancellation, or so
thdt you don't have the man leav¬
ing you after giving you just a
single order.
You are going to
sell him for a complete program

ent kinds of

I'm

manner,

truth.

the

to

came

"We

and its relation to

remember
we
spent quite
time talking about the men¬
tal attitude that a person should

the

we

price.

it

every point on
won't receive a

talking with.

you are

27

sale you have to make
is a solid one, that

a

that

sure

you

the localizing of
your
appeal, ;making sure that
everything you say fits into the
,

•

In

make

you
;l

(2103)

Don't be

1

so

There

hasty with

work

be

is another kind of sales¬

that

man

your

I

call

the

"Timid

Twerp."

Th'ese timid fellows

afraid

do

to

are

real selling.
I
selling, and not just going in
and talking with a man, not mak¬
ing these social calls, not going in
and sitting down there and
merely
any

mean

next one.

mind with these thoughts.

Once you have decided to be

salesman, for goodness sake, be

a

salesman

and

what you are
Just

then

forget about
going to do in life.

keep on selling.

self-adaptation

There is

the

to

role

of

a
a

salesman.

what

you

have

help

do

you

sales work.

your

The

"Timid

Twerp"

salesman might just

type

of

well quit.
fellow doesn't decide that he

If

a

really going- to do

selling, there i£

no

sobae hard

staying in

use

the game, because it's too tough.
Another type of salesman is

whomr I

just call plain lazy, the

fallow, who

sticks

neighborhood

Recently,

I

Boston

and

salesman up there

a

m Milton.
in the heart of-Bastbn.
me

own

exclusively.

to

lived<.

he take

his

to

almost

went

traveled .with

who

one

to sell?

Where did
We

worked in the rieighborhood right
around-his
home.
I discovered
later

that

although

his

territory

was

practically all of Boston, the

only

place he worked intensely
right around his own home,

was

which didn't happen to be

a

productive

either.

neighborhood,

very

That is a typical example of the
lazy .salesman.
Other salesmen
-

stick

to their same old
There's a lot of busi¬

accounts.

somewhere else, but it takes
a little more nerve to
go out and
try to get it, but that's the thing
that

will

bring

surely

your

vol¬

ume up.

another

man, and

this

type.

We

all

types of sales¬

please don't ever be like
That is the "Griper."

did

service, but
grtpe.

griping

some

a

in the
salesman shouldn't

Some of these salesmen start off

by griping about their bosses; then
they are griping about the money
they are making, they are griping
about the bonus they aren't earn¬

ing, about the automobile allow¬

griping about this, that and
next
thing.
I just wonder

ance,

the
how

a

ipind

in

person

can

that

of

think of getting
with that negative

attitude written all
I

frame

ever

business

any

him.

over

believe that the

best

thing a
chronic

something to gripe about.

•

salesman

Another

really

a

couldn't
it

and

worked

sober,
and

I

met

was

was

from liquor,
Once,
I
who, when

him.
man

one

of

the

smartest

quickest thinkers I ever knew,
liquor alone,
that

cost

both

of

those




men

personality.

preparation.

discussed

The

about getting
out to meet the people who you
go

going to sell

are

strengthening

and

your

up

to the point where, in

second

attempt to close the sale
you will be successful.
We went on to say that when

effecting the

contact with your prospect.

The fourth step,

going

fit

into

lAittericaxt

comfort and

efficiency for working.
We also discussed
social

on

situation

customer

your
an

balancing the

between

that

so

meet

equal footing.

Next

was

the

prospect, what kind

up

of

is, the extroverted

a

or

from

of your
person

the

in¬

steady
a

psy¬

chological make-up they have, so
that you will know how to ap¬

"divide and con¬

t

What to Do About It
Now

then, what

have

think

all

that

the

going

we

are

I

but

answers,

I

provide some
important ones. And here
in what might be called
reverse English:

they

can

are

dedication to the truly focal point,
which is practical politics of the
grass roots variety.

(2) I
of

distressed by

am

government. How

do

men

Then,, the actual canvass open¬
ing.
We talked about starting in
kind of

social intro¬

a

about how important it
the customer's full atten¬

lack

who

know

you

many

devote

large amount of their time to
seeing that good people are nomi¬

any

What I

public office

people
to

mean

political

and

that

elected?

are

here is that

say

fight

stiil possess.

appalled by the lack
statesmanship on the part of

of
so

many

of

us.

Take, for example,

depends

upon

the

in¬

man's

attention, and in order to get the
customer to buy, you have to be
he is interested in what you

selling.

We

the

development

sales
we

use.

the

canvass

and

presentation,

of

actual

from that point

covered the

demonstration, the
or anything
have as a selling aid

of your literature

else that you

your

York

16, N. Y—Paper.

Knox Dish Rep. for

And

we?

lar

when
happens to hit
yet

community,

our

own

particu¬
especially

our

or more

business

know what

economy

an

—

uation

well,

you

Distributors

am

labor leaders. Take, for

example, the Taft-Hartley Act. I
know for a positive fact chat this
law

is

And

are

not willing to stand up

and

be

counted.

they'll lose

bers, especially to

a

they

are

some mem¬

rival union.

Here, I want to make this point

unmistakably

clear.

One

Appointment

Group

Knox

District

as

William S.

of

Representative
East has been

prevails in

there

over

welfare
free

we

state

is

Group,

s

blood

has

The

been

In

the

words

of
I

in

am

far

of

the

wage

further

not

of

been

You

At}
De¬

on

Vice-

a

o

f

Paulding, Inc.
use

of
William S. Knox

more

presenting

payer.

the

new

in

President

lease

in

New

since

inactive

to

Navy,

"You cannot bring about pros¬
perity by discouraging thrift. You
cannot strengthen the weak
by
weakening the strong. You cannot
help the wage earner by pulling

down

lanta

as¬

cember 1. had

result

that must be made:

case

his

duties

nobody.

someone

than

Knox,
will

sume

a

life

closing, I would like to

skillful

,y

Mr.

to

out

the

And

n

ties.

who

for

very

drained

industry.

is true welfare for

the

able

are

I

p o n s brs

England.

substituted

enterprise.

British

which

he

re¬

from

duty

the

served

Lieutenant-Commander.
the

he

war,

with

the

had

been

Girard

York

his

as

Prior

a

to

associated

Trust

Co.

and

the

Boenning Co., both of Phila-»
delphia.}' } ;

can¬

brotherhood

of

by encouraging class hatred.
You cannot help the poor by dis¬
couraging the rich. You cannot es¬

Mfrs.

Trust

Promotes

,

man

tablish} sound

rowed

security

on

bor¬

You cannot keep
out of trouble by spending more
than

money.

you

and

by taking

courage

initiative

You

permanently

and

cannot

by

help

doing

for

inde¬
men

them

they could

should

and

do

for themselves."

Gentlemen,
was

his

on
we

Trust

that

announced

Johnson

And

could

this

if

just be

have

I

almost

a

just
hun¬

Abraham Lin-

philosophy

of

need

P.

Security Analysis
has been appointed

Assistant Vice-President.

an

Mr. Johnson is

chester,

a

native of Man¬

New

Hampshire and a
graduate of Washington and Lee
University. After spending five
years in the investment banking
he

became

associated

with

Manufacturers Trust

Company in
appointed an Assist¬
Secretary , in
1942.
During

ant

was

World War II, he served with the

Army
the

Transportation

European Theatre

Corps

in

of Opera¬

tions.

substituted for

"something for nothing," then
would

Company

Franklin

of the

Department

1934 and

what

written

dred years ago by

coin.

Manufacturers
has

field

what

read

Harvey D. Gibson, President of

,

You cannot build

earn.

man's

away

have

no

fears

Langdon Littlehale
Appointed bv Mosler Safe
Langdon R. Littlehale has been

whatsoever

as

to what's ahead for

the American economy.
Can the

a

say

and Assistant Director of Sales of

H.

that the

answer

is

tough "Yes." For the American

people

will

make

the

right

choices, provided they are well in¬
formed

appointed Director of Advertising
The Mosler Safe Company, Edwin

j ob be done?

I would

top-side union officials. And yet,

afraid that

one

exactly what happens when

see

regarded highly by many

For

three

that phony bill of goods that rests

good for everybody but me!

many

of

increase its

that

happens. Economy is

Likewise. I

existence

rapidly bringing our
country to precisely the same sit¬

in govern¬
Well, we're all for it, aren't

ment.

they

reviewed

As¬

sociation, 12 East 36th Street, New

trend that is

the matter of economy

of

terest

With

Bankers

power.

pendence.

we

am

tion, and then of developing that
That

ship and

ents that

attention into

interest.

seeking to

character

appalled by the
lack of statesmanship on the part

is to get

the

has to be won
if we are to take advantage of
the fine basic economic ingredi¬
a

move

delivery.

our

personal sacrifice in the fight

(3) I

Next, the establishment of the
proper attitude,
and
the inter¬
relationship of the attitude be¬
tween
buyer
and
seller; your
attitude, as something aside from

some

Kentucky,
50c.

Relations

Bank's

done

to do about all this? I don't claim
to

proach and talk to them.

with

of

Ky.—-Paper

cj
of
Group Securi¬

of

good

your oral

University

this—men like you and me have
all too little to combat the

quer.'*

these

through life, or whether
by intuition.
You are
of

search,

announced by
D i s t ributors

way

to what kind

F.

Summing up—and I assure you
that I take no pleasure in saying

runs

as

ill

Traylor—Bureau of Business Re¬

Lexington,

6)

page

Tax
Orba

—

philosophy

he

clients

Production
UUd-iy*/

for the South-

his

your

Whiskey
Kentucky

member¬

for

analyze

ton, Ky.—Paper $1.00.

great labor unions with each

nated

to

become very success¬

ful in this work.

Research,

(5) The pitting of group against
group, which is just another way
of, stating that horrible political

troverted type, whether he thinks

going

work, he

Rac¬

Jennings—•

around

for good

sizing

to

Wilson
Business

major current problems revolves

and

you
you

willing

and

Economy?

(Continued

the readying of

your

has

IKhat's Ahead for the

attitude, the preparation for
in and seeing the person

would

a man

intelligence

is

of Tnoroughbred

of

University of Kentucky, Lexing¬

There is not much

selling, but if

can

Eureau

Your

(1) I am concerned over the
difficulty that people like us have
in providing funds to conduct the
you are going to try to sell.
fight that must be waged and
The next step we talked about won. In total, I suppose, we pro¬
was the approach—how to get in,
vide a lot of money for so-called
and how to arrange the chair you
good causes. But this is disbursed
are going to sit in, and other ma¬
—or dispersed—in so many differ¬
terial things around the room that ent directions. There is no real
your

because all of your
productive effort depends strictly

yourself.

Taxation

ing—Rienzi

per¬

Schools—American

very

The third step was

of

responsibility connected

gravy in

a

deal

with selling,
upon

sales canvass, to try to warm

him

locat¬

was

In other words, how

going to

you are

sure

a

the
we

work.

your

are

ruined

step

back

your prospects and organizing

brilliant person, but he

but he couldn't leave
and

ing

keep away
for

sale,

a

duction,

could do with a
griper is to fire him, just get rid
of him. and that will really give
manager

him

of

next

he

There's

that

canvass

That's what I called the first step

strictly

ness

•

the preparation of a
fit your own

would

I met him

Milton!

time about

some

you

great

a

great. A shift from "Freedom" to

Salesmanship

We talked for

as

is

in

ing, if
going

happy in selling.

is

"For Free."

tb sell.

Steps

redevelop¬
didn't close the sale,

be

can

There
sonal

We talked about the

a

Then, we talked about getting
all your tools ready for
questioning somone.
It
means
selling,
going in there and tb go to work getting your sales literature, your
cfa him earnestly, doing sbme sin-' selling kit, and every other selling
aid that your company provides
cere, honest, down-to-earth sell¬
ing work and nothing else, where you with, and keeping them all
you are trying for an order and
ready, having your pencils and
you are convincing him that noth¬
pads; and your prices, and up-toing else in Jthe world matters but date literature and everything to
that he should buy

lot of other workers do not have.

a

and

have

at

least

some

Mosler. Sr., President, an¬
Mr. Littlehale, who was

nounced.
an

of

account executive and member

the

Plans

Board

of

Albert

Frank-Guenther Law, Inc., adver¬

tising

agency,

until

he

joined

Mosler, will make his headquar¬
good leadership to which they can

our turn. }

ters at the

company's main office

in New York.

!

£8

THE

(2104)

COMMERCIAL

FINANCIAL

&

CHRONICLE
ing

be properly cut in several

can

Current Problems of Job Creation

directions.

ernment should be one of encour¬

sideration.

(Continued

from

7)

page

and for the expansion of

existing
ones with the attendant job cre¬
ation and added production.

agement of capital investment by

security lies in abundant pro¬
duction and full employment. Any

individuals.

course

public does not fully
importance of private
and
investment
to
the

<

standard of living and to the pro-!
vision

of

opportunities for
ployment. For example,
United

the
Corporation
than $8,000 in its busi¬

States

uses

more

ness

for each

rolls.

In

Steel

employee

others

High

pay¬

the

in¬

employee is larger;

is

it

its

on

industries

some

vestment per

in

em¬

smaller.

in

investment

It

is

this

tools

the

of

production for each employee in
total

the

force

labor

dis¬

wnich

tinguishes America from most, if
not all, other countries. With such

generously

equipment,

wonders have

provided,

been accomplished.

Our economy has prospered. Our
social order has benefited. Actu¬

ally the poorest third in
try

better

are

our coun¬

off than

the

ma¬

jority of the people in the rest of
world. It is important that we

continue
flow

stimulate further

to

of

capital

into

which made this standard of liv¬

ing

possible.

ent

scale

is

only

living

may

It

through
iin additional flow of capital into
.industry that we can permanently
fetter the lot of those whose pres¬
sidered

of

as

be

con¬

comparatively low.

Statisticians inform

employment" in the United States
means

working

a

force

of

millions of people, or 40%
a

total

population

mately
lions

one

In

of

sixty
out oi;

approxi¬

hundred and fifty mil

¬

view of- the

necessity of
providing for the needs of all, it
is
imperative that opportunities
for useful employment be kept at
the highest possible mark. In our
economic
looked

system, industry is
the backbone of
it affords a liveli¬

upon

as

employment,
hood

the

tor

large majority of
the working population. Therefor
*

It

should

be

kept vigorous, pro¬
gressive, and strong, able to ex¬
pand to meet the needs of a grow¬
ing nation. The effective use of
human

our

resources

which

afford

oppor¬

tunity for the dignified employ¬
ment of productive labor. Let us
emphasize opportunity and work
as

something ranking ahead cf

curity and retirement
latter may

out

in due
course,

becoming

den.

Here

tion

that the

be provided in proper

and

measure

so

se¬

we

with¬

an unbearable

need

the

wisdom, careful analysis,
rational judgment.

Fair

Return

for

Investors

What then are the broad
aspects
of the present situation?
'

My general thesis is that in¬
vestors should be permitted to ex¬
pect

sufficient

a

return

their

on

investments to induce them to risk
capital in new business ventures
and

in

the

expansion

lished

enterprises.

ment

has

They

reach

of

This

estab¬

require¬

Financing

budgets, the Federal government
now
returned to deficit fi¬

that is, it is spending
more money than it is collecting
through taxes. The deficit is fi¬
nanced by borrowing. This bor¬
rowing operates in one or both of
two
ways.
Through taxation it
may divert funds from private in¬
vestment into governmental ex¬
nancing

—

penditures, or it may cause infla¬
tion by putting government obli¬
gations into the commercial banks
and drawing checks against the
balances

thus

deposits

created

method
money

The

created.

by

this

printing press
in the economy. Tnese ar¬

cause

the

When

prices

taxed

direct

second

like

are

tificially created dollars
to purchase goods and

is

bank

bidding

as

used
thereby
of prices.

up

are

bid up everyone
effectively as though
are

had

taxes

levied.

been

Every dollar buys less and less

prices

rise.

as

That

portion of the
individual can¬
not buy because his money buys
less, goes to the government in re¬

goods which the

its

for

turn

artificially

created

dollars. At the present time gen¬
eral
uncertainties are offsetting

inflationary effects of deficit

financing. Savings
government

going into

are

debt

when

they
creating or expanding
private enterprise. But the scale
should

of

be

anticipated

for

both

deficits

ill

bodes

private investment and

the avoidance of further inflation.

In my opinion, the cure for this

problem is

forthright cut in gov¬
expenditures. Crop price
supports should be cut to produce
only that level of supply which
a

ernment

the

country needs. Neither the
standard of living nor the public
welfare can be permanently en¬
hanced

of the

population

to

another

encourage

part of the population to produce
things for which there are no
markets.

1

'

.

I

unemployed. The revitaliz¬
ing of private industry will do
more in the way of creating jobs

than

additions

payrolls
ter prise

devised,

public works will
to

more

con¬

course

for

investments
investors
tax

wise

not

all; after dividends are paid to
stockholders, the dividends are
again subject to personal income
The

Y-Y;

have

in

<

our

government, both Federal and
State.
Second, the Federal tax

Third,

Congress should define the trade
regulation
ment

authority of govern¬
agencies. Fourth, labor mo¬

nopolies

should

the

way as

same

be

regulated in
business monop¬

olies.

Fifth, the government
should forego the use of partisan
measures

politically
.have

no

which

may

seem

to

be

expedient,

sound

but which
justification. Sixth,

ip the interest of national welfare
and

security, the attitude of




believes

the

to'earn the means witn which to

-his

pay

debt.

is

It

for

government

in

such

way

will

come

that

a

that if

are

when

loses

he

expand business and jobs,

takes

the

entire

loss.

If

wins, the government takes

of

reason

where

ven¬

he

be

not

produced.

excessive

business

is

not

taxation,

expanding

it should. It is to the interests

as

taxation

gov¬

of

dividends

dou¬

should

step in the progressive reduction

least

of

income tax laws which exempted

standard of

our

living. We need
effort in doing those thing?
which will create a dynamic econ¬
less

and

omy

effort

in

building

storm cellars.

and

the

for

like

—

should

budget

be

the

were

cost

of

a

nearly
low

re¬

cottage.

that the building

was

person

for

a

penal

startling thing about the

quest
as

girls'

a

the

dividends
income

from

taxes

dends had

capital

gains

duced.

much
house

income.

should

demonstrate
a

stu¬

divi¬

Taxes

also

be

as
on

re¬

of

business

is

the productive

expand

ment

that

re¬

sufficient flow of funds
the

nation

We do

not

at

equip¬

healthy

a

the subtle¬

need

ties of

Keynesian economics or of
alien philosophies to know when
worth

a

of investment

a

to

dollar's

be worth

dollar. We need look only at the

a

most

personal

such

adjustments
should be made in existing laws
and policies until security prices

exceeded

amount

early

Progressive

quotations

family,
the

normal

because

co^ri&e investor considers

as

cost

re

of

already been taxed

and the indicated
past maintenance costs per person

a

provisions

corporate' net

Social programs — pensions,
sickness insurance, public assist¬
ance,

to

the exchanges. And
if the investor is unwilling to pay
dollar

on

for

a

dollar's

worth

of

War

recently

upset

long-established

business relationships.
Anti-Trust

man

in

The Sher¬

Act

passed

was

1890; the Clayton Act and the
Trade

Federal

Commission

Act

were

built in different parts of the

were

tionwide basis.

over
a
long period of
find that they are badly lo¬

cated because of these new inter¬

offices.

If capital is to flow

freely

into

industry it must be guarded
against regulations which^ Con¬

specificaliy "author¬
Congress
should
clarify
regulatory statutes with sufficient
gress

never

ized.

bureaus from

cf

building up empires
economics
under
vague statutory provi¬

personal
of

cover

Investors and businessmen

sions.

entitled to know what is per¬
missible before,
not after, mil¬
are

lions

in

dollars

of

have

been

spent

developing plants and jobs for
American

the

people.

recent national

The

in labor matters suggests that la¬
bor

monopolies

have

reached

a

point where regulation under the

appropri¬

now

Uniform fixing of wages and

ate.

like for all

employers in

an

industry regardless of location and
individual condition is not in the
Such labor price
fixing tends to disrupt the econ¬
omy by weakening or bankrupt¬
ing many producers. Undoubted¬
ly the government would prose¬
cute a large industrial company
public interest.

for cutting

prices and deliberately

driving small

competitors out of
However, the govern¬

existence.

as

-

vide

course

means

standard of

form

cost

increases

the

force

the
higher costs may
smaller companies in

these

that

fact

whole

a

on

notwithstanding

industry,

the industry to the wall.

For

ex¬

ample, during the recent hearings
in the steel labor

closed
nies

that

case

require

it

compa¬

more

many

of

steel

than

panies.

Yet

do

the

that

the

man-

of

a

larger

union

dis¬

was

small

some

hours for the production

a

balanced

appor¬

of the resources of the
nation. Nor do they recognize that

going too far in

tions

in

they

may

decrease

to

pro¬

pursue one

tionment
in

necessary

seeking

some

social

what

ciate that

security

security. The only

and

a

rising

living.
I

ton

com¬

took

cutting

of

current

deficits.

said

may

taxes

in
I

I

appre¬

type

the

one

of

have'already

suggested that government spend¬

of the

consequence

granted

largely
of

power

monopolies, often aided by
government, have. not been

inflation

caused

For

example,

studies
the

of

States
been

Steel

Corpora¬
v

significant in¬

no

the

in

crease

prices.^

studies verified that

Those

there had

of

recently made
productivity in

we

labor

United

tion.

workload

on

our

employees for two decades.
Not
additional or improved effort by
the workers, but rather the pro¬
vision of

in

more

efficient

explains the

increase

and

new

equipment,

which

production

had

made

higher wages possible.
It

be true that prices for

may

commodities

many

to

cover

raised

be

can

increases

wage

fringe labor benefits in

and

a

period

of acute shortages without

serious
activi¬

impairment of production

ties, but prices usually cannot be
raised

serious

its

cover

business.

prices

to

to

it

in

stay

raise

must

rising

cover

conse¬

enterprise

an

costs

Hence

when it raises

price

conditions

business

Obviously

quences.
must

normal

under

without

cosis.

But

may

well

prices, it

the former rate
of production out of the market,
of

part

a

simply

because

cannot

afford

customers

some

to

higher

a

pay

General patterns of wage

price.

increases, vacation programs, pen¬
sions and insurance plans, and the
like
a

tend

restrict

to

national

scale

markets

due

to

the

on

fact

those labor costs. When

these patterns sweep

through basic
they: affect
thousands of end products ih di¬
verse
ways.
Some
individual
products may be priced entirely
industries

other

As

de¬

is

re¬

products

direct consequence

a

and
marginal

higher labor
production,

such

of

Market

market.

for

duced.

steel

like

the

of

out

mand

lessened

costs

companies
may
fail,
marginal
plants of large companies may be
closed, marginal departments of
operating plants may suspend op¬
and active departments
and plants are apt to have less
work than formerly.
When conditions of this kind

eration s,

lieves

pattern

of

labor

would
A uni¬

set for all
basis.

monopoly

on

a

This

permits

segment of the labor force to

benefit at the expense of the rest
of

the,population.

These

on

adequate return is not
the money already in¬

are

mat¬

V

.

,

such

to ; be
avoided, the government should
be anxious to follow a, policy
which will encourage private in¬
vestment in business a^d which
If

stagnation ?is

will. vi arantee
investors.

a

fair deal for such

;y7-.V"
y:.

Uncalled

t

.

Y•

U

Business

Quite

:

'.*■/Y'Y'M '

Harassment

for

compa¬

such costs

was

an

assured
vested.

the

the large companies

as

though

take-it-or-be-struck

question the
face

small

such

put them out of business.
form

have

some

direc¬

create conditions which
total

In

adequate jobs

been

develop, the investor, along with

no

monopolies

labor costs

is

have

of the war,

end

(

others, is injured.
The economy
stagnates because he will not ven¬
ture more money when he be¬

take

labor

—even

which

.

in¬

notice of

to

seems

ment

objective
without weighing whether such a

the

a

nies must pay the same additional

They

;

which through
their heavy demands impose uni¬

ment

not stimulate that flow of invest¬

grams.

which

creases

since

must pay

experience

phies imported from Europe will

connected with social welfare pro

7

,

ihat in the long run the customer

fortunately, this example is typi¬
people

im¬

an

The several rounds of wage

country
years

position

many

serveu

in

maintaining
industrial peace notwithstanding
that it imposed its own patterns
of working conditions and pay
practices upon industiy on a na¬

have

Trade regulation decisions have

investment, then all the philoso¬

thinking of

Board

function

justiiied by increases in worker
productivity
and
consequently

Government Regulations

dents spend to go to college. Un¬
cal of the

Labor

portant

revenue.

be removed. We should return at

ble

that this

—

corrected. The

of

conces¬

sions. During actual hostilities the

less

condition

be

estab¬

repeated

increases and fringe

the

Labor Monopolies

by

the

to

lishment/ of so-called, patterns

eventually produce more, not

a very

point

a'

setting
in¬

oi

wage

-

nearly a decade business lias been

will

providing useful employment is a
first step in failing to meet the

more

Yet

of

labor

has

of the profit.
reached

(pattern

other labor benenis. For

creases or

is exactly what this country
been doing.
Proper tax cuts

the

first

un¬

by levying taxes
that national in¬

of the working man

a

equally

realistic to try to obtain revenues

works programs as an escape from

and

in

imprison¬
debt, because it deprives
prisoner of the opportunity
now

anti-trust laws is

us

No¬

ment for

of every segment of our* economy
—and particularly to the interests

per

First, national economies should
be adopted in the
operations of

laws should be overhauled.

body

production.

the
unemployed. Easy con¬
templation
of
unlimited
public

The

I

plain facts

investor

an

rate.

do

increased

levy income and excise taxes precision to prevent government

quest

changes

healthy scale. The
is a part of this

a

Which reduce the amount avail¬
able for stockholders. But this is

ried the statement of

1 What

on

problem. The federal government
levies a 33% tax on corporate net
income. State governments like¬

economic forces.

rnind?

the

too low to attract

are

structure

Congress that, attempts to
alter the natural
adjustments of

or

:7y

emphasis, therefore, should

on

of pretations of Acts of Congress.
re¬
Huge investments have been en¬
placement costs. These stock mar¬ dangered because of the
personal
ket prices indicate that re urns on
philosophies of a few men in high

expanding. Recently
the newspapers of Pittsburgh car¬

■

be pur¬

than

national

wage

Our

;

labor monopolies is tnat
a

produced before it is spent.
be

the at¬

Congress.

Rounds

Wage

subjected

main

next

our

Closely allied to the subject of

Government will increase, not de¬
National income must be

crease.

resent; and the book value
those assets is much less than

programs are

because it is usually
govern¬

ment

public,

book value of the assets they rep¬

to

ness

the

In

can

less

much

have

for

of the Federal

reasonable profit.

a

leading corporations
chased

We

not be looked upon as made-wont

dollars

tions the shares of stock of many

share

citizens. Public- works should

our

expanding produc¬

revenues

passed in 1914; yet only recenty have the courts made illegal
certain
pricing practices which
Taxes
enabled a company to meet the
I am of the opinion that tax re¬
delivered price of a more favor¬
vision is a must in revitalizing our
ably located competitor. Suddenly
economy.
Under present condi¬ large numbers of
plants which

possibility of

large

tribute when left in the hands of

accordance

private business produces a flow
savings are
made. It thereby makes further
expansion possible and it thereby
provides the means for creating
additional
jobs
and
a
higher
standard of living. The industrial
possibilities of this country are
still unlimited. All they need is
the incentive of fair play and the

money con¬

living than would the

in

,

consumer

of income from which

of

standard

our

is,

without dictation.
of supplying the

spent

ceiving

to

that

with the votes of

he

such

people
by

what

the most democratic process ever

realizes the extent to which these

broad

produces

tures to

tribute

government

do. Private en¬

want. It expands and contracts

meet real needs, and then
case

to

ever

can

na¬

healthy

a

well engage

can

of

been

•

,

fewer

I Public works should be under¬
taken only as they are required to

only in

V

people.

our

The number cf government em¬
ployees should be reduced. Proper
reduction of government overhead
does not mean more employed buc

taxes.

'

Given

economy with

goals

ters that

tention of

con¬

has

reduction in the

a

tion, the

rela¬

the

by

income.

of

busi¬

into

tionships of government

caused

tional

deficit

of all

kept within the country's ability
to pay. I doubt that the public

ramifications.

many

interferes

whicn

major

substantial part

A

current

these

two

tne

not

problems which face

bur¬

applica¬

of

and

of action

the

However, such cuts in

are

decreases
rather than increases the security

requires the

encouragement of all constructive

enterprises

■

has

the

that "full

us

y;

...

brief period of balanced

a

the

industry

■■

.

Deficit
After

the

saving

v_'\;

spending

with

I think the

realize

real

Thursday, November 24, 1949

-'

■

of

y;yy "•

important as the sub¬

as

is

the

reasonable vand

fair

jects

already

need

for

a

mentioned

co-operation between government
and business.
An atmosphere of
hostility toward business should
permeate the various agencies

not

of

government.

tacks

on

freouent

Unjustified

business have
in

the

past. "

been

at¬
too

Bigness,

Wall Street control, and excessive

profits have been the favorite ac-

Volume

170

cusations

without

;

Number 4858

of;

the

generation

can

before

more

or

that

recover

(Continued

switching

A

of

to bait business

the

baiting

but there is

are

groups

.!

'

*

-i,

;
IV.,

••

_r:^In .condusioh,-I wish., ogain to
emphasizeof

our

pressing national iu:oJolems of emT
ployment and of living standards
can; be^nttairied
through forth¬
right precognition'o£ the impor¬
production and the ma¬
jor part played by the investor
in expanding our economy.
Our
governmental fiscal, tax, and reg¬
ulatory policies must be such, as
will encourage the individual to
save
and
risk,
because
only
through the expansion of business

the establishment of

dustries

can

reach

we

duction goals.

to

expand.

to

apply

nomic

It

established
has

is

well

time

tested
to

which

was

estimated

at

Institute.

This

eco¬

of the

and

which

kwh.,

according

to

the

Edison

Electric

output reported for the corresponding period two

an

estimated

115,683 units from

cars

DALLAS, TEX.—Allan B. Rog¬
and Paul Warwick, Jr., have

2,000-unit

decrease

in

truck

output,

mainly

due

to

formed Texas Investment Co. with
Commercial Build¬

originating distribu¬

tors and dealers in local and

un¬

listed securities, oil royalties and

leases, specializing in mutual fund
shares. Mr. Warwick formerly was
head of Paul R. Warwick, Jr. &

prior

thereto was
Group, Inc.

The weeks' total compares with 120,718

car

Y.

Leon

—

G.

was

partner in

a

change
the

and

New

of

firm

a

Butler,

York

New

mem¬

Stock

Stock

Exchange

Herrick

&

Mar¬

City, died of

shall, New York

a

involving liabilities of $5,000

from

but

164,
58,

New Chgo. Exch. Members
CHICAGO, ILL.
Committee

Stock

Exchange

—

of

The Execu¬

The

Sidney

and

Armand

concerns

suc¬

were,

week with

the

the

above
of

$5,000

108

or

of

decreased

more
a

year

R.
G.

Loeb, Rboades &

low*

seasonally active the past week. Price

range and showed little reaction
crop

despite
forecast issued early rot

Nov.

on

1

conditions, the Crop Reporting Board esti¬
:

has

elected

to

Castle,
Erpf,

Chicago,
M.

Carl

Co., New York

City.




was

slower than for several weeks.

ports

of

were

also firm. Imports of apparel wool*
and Philadelphia during the

Boston, New York

ended' November 4 totalled 2
977,800 clean pounds, compared
5.203,300 in the previous week.

RETAIL AND WHOLESALE TRADE MILDLY
HIGHER FOR WEEK
BUT UNDER 1948 LEVELS

Aggregate retail volume rose slightly during the period ended
Wednesday of last week. Dollar sales remained slightly below last
year's level, but consumer buying rose somewhat in those localities
on

most affected

by the recent strikes, according to Dun & Bradstreet.
summary of trade.

Inc., in its latest

increased

appreciably

last

Fall promotions, the demand for
week.

fur-trimmed coats
Interest in

less, also declined, dipping
however, more than twice the number in
below the pre¬
which held steady

were

exception of construction

Casualties

even

with

a

areas.

In

the

West

South

were

above

a

year

Central

Region failures

year ago.

was
above seasonal expectations in
vicinities and buying of coats slightly exceeded last week's
,

but dollar sales

following

as

a

The wholesale food price

earlier,

a

were

of food increased moderately The past
slightly below the level for the compar¬
consumer

recorded

It marked

a

A

year

ago.

sharp

a

a

general easing in food

15

from

$5.74

decline of 10.8% from

drop

in

eggs

sum

oc¬

stores. The

many

dealers participated

in

discount and packaging pro¬

sparked

.

The retail purchasing of television sets and refrigerators was
also large. Furniture sales in many cities were at an
unusually

high level for this time of
Retail

volume for

year ago.

year.

the country in

the period ended on Wednes¬
estimated to be from 4 to 8% below that of a
Regional estimates varied from the levels of a year ago by

day of last week

was

the following percentages:

\y^VTV!i

'

1

East and South —5 to —9; Midwest and Pacific Coast —2 to

—6; New England

+1 to —3; Northwest —3 to —7; and South-

v

-

west—10 to—14.

The over-all dollar volume of wholesale orders
the period ended

on

Wednesday of last week, but it

rose

was

slightly in
moderately

below the high level for the corresponding week in 1943. The num¬
ber of buyers in attendance at wholesale centers was somewhat

higher than in the previous week.
T
Department store sales on a country-wide basis, as taken from
the Federal Reserve Board's index for the week ended Nov.
12, 1949*
decreased by 9% from the like period of last year. In the

decrease of 2%

a

a

of 8%

date

the

from the

was

preceding;
registered below the like week of 1948.

12, 1949, sales registered a decrease
corresponding period a year ago and for the year to

decline of 6%.

a

week

•

Retail trade in New York last week

the $6.37

fvef

week's

total of the price per pound of 31

,

for meals

many

was an increase in the consumer
buying of house-furnish¬
ings and major appliances last week. A large demand for items such
tableware, lamps and mirrors helped to boost dollar volume close
to last year's high level.
•'
'
'

was

stimulated to

a

de-

hy seasonal influences, hut its progress when compared with
was less favorable than the week preceding.

the like week of 1948

-VA;-

The index represents the
foods in general use.

demand

dip in pork and lamb prices in

For the four weeks ended Nov.

index, compiled by Dun & Bradstreet,

drop of 1%,

.

j

as

week

WHOLESALE FOOD PRICE INDEX GENERALLY EASIER

Inc., turned downward last week, reflecting
prices.
The index fell to $5.68 on Nov.

of

There

lines; the rise was
services, but moder¬

in the Middle Atlantic, Pacific, East North Central and East
Central Regions, but dipped
slightly below the 1948 level in

ago

amount

slightly.

rose

The retail unit volume

.

curred

More concerns failed than last year in all

the Middle Atlantic and Pacific States.

increased

men's suits

able period last year. An increased

to

or

and trade groups

An

sportswear, including sweaters and skirts, was bought by women;
low-priced dresses were also popular. The demand for handbags and

Small

ago.

sharp in retailing, construction and commercial
manufacturing and wholesaling.
Weekly declines occurred in seven of the nine major geographic
regions;
The only exceptions to the general downtrend occurred in

According

to

the

Federal

Reserve Board's index, department
City for the weekly period to Nov. 12, 1949,
by 3% from the same period last year. In the preceding
decrease of 4% (revised) was registered below the similar

store sales in New York

,

decreased

WHOLESALE, COMMODITY PRICE INDEX REFLECTS
CHANGE

Chicago

membership .Walter I. Cole, Beecroft-Cole & Co., Topeka, Kan¬
sas,

remained

They

decline.

heart attack at the age of 79.

tive

Domestic

seasonal

was

the

with

ate in

Ex¬

limited partner in

York

Butler,

new

/

South African markets

prewar level of 308 in the

Casualties
138

held

Butler Dead

Wellman

the

of

were

narrow

June, 1946.

hitting

irregular and slightly higher

.

nearly all other

ber

after

were

Considerable activity wasreported In Australian wool mar¬
kets; prices trended higher prompted by
aggressive buying by
Russia and Japan.

week,

South

Ruth & Palo.

Arthur

prices

and scoured woolen wools

similar week of 1939.

at 18.

Co., Liberty
Bank. Building, members of the
New York Stock Exchange, on

Arthur W.

firmer

motions.

comparable weeks of 1948 and 1947 when 126 and 84

cumbed, failures continued well below the

vious

&

Mr. Ruth

crop

high level of canned food buying was sustained, but demand for fresh,
produce declined fractionally. Tne sale of beer and ale rose last

year ago.

a

week, Dun & Bradstreet, Inc.,
Although considerably more casualties occurred than in the

reports.

the similar week last year.
Failures in all industry

Ruth will be admitted to partner¬

Dec, 1.

poor

Trading in the Boston raw wool market remained
relatively quiet
last week, although some dealers
reported fair business consisting
mostly of small weights. The movement of greasy worsted wool*

;.

Commercial and industrial failures fell to 183 in the week ended
Nov. 17 from 222 in the preceding

failures, those with liabilities

Doolittle Go. Partner
Doolittle

This

week

r

BUSINESS FAILURES IN ALL GROUPS LOWER

with

Leon G. Riith to Be

in

a

low level.

output for the current week was made up of 94,932
17,222 trucks built in the U. S. and 2,210 cars and 1,319

and

to 45 from

ship

low ground since

new

Cattle

.'

Based

the

trticks in Canada.

ers

BUFFALO,, N.

before.

week.

many

The total

Formed in Dallas

and

result of profit-

reflecting

mated the 1949 crop at 15,524,000 bales.

period.

r

Co.

the

as

advance,

higher-than-expected Government

the

revised figure of 114,856 units

a

closing of Willys-Overland, was offset by slight increases in
volume by General Motors and
Ford, the agency said.

Texas 'Investment @o.

Distributors

irregular

to

With the continuation of
many

According to "Ward's Automotive Reports" for the past week,
production in the United States and Canada advanced

to

A

as

the

apparel

motor vehicle

ex¬

in the previous

ing to act

continued

somewhat

were

movements held in

years ago.

AUTO PRODUCTION ADVANCES MODERATELY THE
PAST WEEK

well has

possibilies for

5,644,435,000

represented an increase of 209,880 kwh. above the
preceding week. It was 17,535,000 kwh. higher than the figure re¬
ported for the week ended Nov. 20, 1948 463,939,000 kwh. in excess

pansion.

offices in the

somewhat

were

values

for the week.

week

IN SEVEN WEEKS

to

old-

an

so

its virtues

unlimited

prices

into

Electrical production for the first time in a
period of seven weeks
1946, showed an increase when compared with the corresponding
period in 1948. The amount of electrical energy distributed
by the
electric light and power industry for the week ended Nov. 19

alien ideologies

remedies

system

lard

decrease of 235,856 cars, or 27.1%, below the corre¬
a decrease of 242,460 cars, or 27.6
%;
in 1947.

a

ELECTRIC OUTPUT EXCEEDS 1948 LEVEL FOR FIRST TIME

pro¬

a
controlling factor in the
winning of World War II.
It is

and

Cocoa

Chicago sank to further

under the similar period

was

fashioned

move sharply upward,
the
pound, the highest level in

While dressed pork prices at New
unusually small receipts, live hog prices r.i'

sponding week in 1948, and

in¬

new

our

It represented

Business must be

abandon

Coffee futures

taking.

a

.

recognize that the profit motive
is the mainspring of American in¬
dustrial superiority.
It is time to
recognize that
this superiority

time' to

this week

Loadings of revenue freight for the week ended Nov. 12, 1949.
during which industrial labor difficulties continued, totaled 635,823
cars, according to the Association of American Railroads.
This was
an increase of
56,842 cars, or 9.8% above the preceding week, due
principally to the termination of the coal strike on Thursday, Nov. 10.

permitted to make and retain a
reasonable profit as an induce¬
ment

prices continued to
rising to 51 cents

.

^

tance of

and

Steel Institute announced

weakness?

slightly above the October 1 forecast, and well abovelast season's total of
14,868,000 bales. It,was 37.3% above the 10-year
The Institute stated that the actual rate last week
was higher
'
average of 11 306,000 bales. Farmers'in most areas
appeared to be ofT
than originally figured and reported and that
it accordingly had. j
fering cotton more freely; Domestic mill inquiries showed some in¬
revised the former rate upward this week to
57.4% oU capacity. T crease
with-demand-covering both prompt and forward shipment.
This week's operating rate.is equivalent to
1,441,600 tons of ! Export
buying improyedf.With sales reported in moderate volume,
steel ingots and castings
compared tq 1,058,200 tons one week ago.
j i Loan entries
A month ago the rate was
continued^#1 rise,! totalling 187,900 bales
during the
9% and production amounted to 166,000 J
week ended Nov.; 3,
tons; a year ago it stood at 99.2% and 1,788,100 tons, and for the
'Thfis'cbmpared with 145,100 and 143,000 bale? in
; the two
preceding weeks.' For the season through Nov.
average week in 1940, highest prewar year, at
3, loan entries?
1,281,210 tons.
amounted to 710,500 bales,
comparing with 1,970,000 bales to the cor¬
CARLOADINGS RISE BY 9.8% ABOVE PRECEDING WEEK
responding date a year ago.
j/-. •. /. « • •
•
•
-•
*

in our

^

fc'-3

coffee

recent years.

the operating rate of steel companies having
94% of the
steel-making capacity for the entire industry will be
78.2% of*;
capacity for the week beginning Nov. 21, 1949, an increase of 20.8
j
points from the preceding week.
^
V
''To

Conclusion

V

Iron and

showed

.

favorably situated
^

Spot

Santos 4s grade

that

*

population..

no

The American

couraging investment, it is a dis; service to every element in society and most of all to the less

!

for the most part firm this week,
sign of the runaway market speculators expected.
were

Wheat

expected government buying failed to material¬
ize.
The
domestic flour market displayed a
steady undertone
throughout the week although buying continued on a hand-to-mouth
basis.
'_y.,. "■

Spot cotton markets

prices

scrap

substantial reduction in

a

estimate.

crop

29

as

the week

carried to the point of unduly dis¬

"•

close

advices from producing countries.
York moved higher on

are

Steelmaking

But when

accusations

or

are

highs for the season, aided by
government

toward the

iron Age" points out.

or to level unjus¬
charges against the Ameri¬

industrial system.

mills

Generally, their

politically expedient at times

can

some

newer

new

latest

inventories have been cut by that amount and some six weeks of lost
output has been thrown ahead of steel mill delivery
schedules, "The

enterprise and to the conse¬
furnishing of jobs and a
higher standard of living.
It may

tified

5)

page

the

(2105)

made at only three mills.
Although car stocks in
dealers' hands have been
rising rapidly, automotive men are optim¬
istic on sales. ... But during the strike they ran far five to six
weeks
with less than 10% of their normal steel deliveries.

quent

i be

the

over to

sheets, which

ness

.

Industry

for the galvanized sheet buyer, this trade
paper observes.
Detroit buyers expect the big pinch to come in wide
cold-rolled

,

handicap to the vig¬
growth of American busi-

orous

from

struck

worse

distinct

a

CHRONICLE

electrolytic galvanizing process.
Deliv¬
ery promises on orders placed now often run
past next Fourth of
July, though virtual completion of the grain bin storage
program
ana collapse of
freight car buying keep this picture from being even

Congress, without real
facts in support thereof, tends to
destroy those investments.
This
is

FINANCIAL

steel products list. Production has been hurt
because

he

investment.

basic hositility against business by
government officials, or by mem¬
bers

&

The State of Trade and

present

to

When the investor

puts money into an enterprise he
knows tnat he may have to wait
a

COMMERCIAL

demagogue,

attempt

any

the true facts.

THE

FOR

LITTLE

Moving in a narrow range throughout the week, the daily whole¬
sale commodity price index, compiled by Dun & Bradstreet, Inc.,
finished at 244.70 on Nov. 15.
This contrasted with 245.47 a week
;

.J;

earlier and compared

with 271.10

on

the corresponding date of last

year.

Grain markets

remained

strong

were

while

mostly steady to firm. The cash corn market
all futures except the December delivery

week

a

week

WEEK

of

For the four weeks ended Nov. 12, 1949, a decrease
reported under that of last year. For the year to date
volume decreased by 8%.
"

of

8%

1948.

was

NOTE:—-On another page of this issue
most

comprehensive

the reader will find the

of business and industrial statistics
showing the latest week, previous week, latest month, previous year,
etc., comparisons for determining the week-to-week trends of con-'
coverage

clitions, by referring to "Indications of Current Business Activity.*

30

COMMERCIAL

THE

(2106)

With

The Present Status oi
(Continued

from

served best if his

utility is treated

fairly.

<

t

The

«

application

of sound eco¬
principles is particularly
important in a period of violent
change, such at tnat which we are
now witnessing.
Rules of thumb
which do rough justice during
long periods of stability have no
place in a period characterized
by rapid changes in volume, in
nature of the load, in operating
nomic

respect to, or has been injected
into the thinking with regard to,

depreciation in rate making, than
possible.

seems

In
has

making, the deduction
the gamut from (1) no de¬

rate

run

duction at all, to (2) deduction of
an engineering determination,
(3)

what they were

portant than formulae.

lum

principle
effective
regulation looks to a healthy util¬
ity industry. Only a healthy util¬
ity can give good service at the

the process hasn't been free

lowest overall cost to consumers.

regulation.

The

,

broad

general

and

sound

leged the accountants should have
accumulated

the

tures

Reference,". 49 G2.)

for itself, I need not tell you that

utilities in Ohio

business

our

known

-The

are

progressive,

healthy,

as

from

tion

the

of

This

has

regulatory
problems which I would like to
outline in view of your particular,
interest

let's

(1)

the

should

...

first

In

conservative

had

have

structures

in

cash

general, being about 35% debt,
and 6*5% stock and surplus, for
Class A utilities reporting to

be

FCC

(1947

made to determine to what extent

matters, that will bring us to the

in

Stock

competitive

Moody's

If

What

know

these problems?

are

there

are

the

You

I would

many.

like to mention just a few which 1
think
the commissions and
the

should

committees

NARUC

ex¬

illustrate the kind of work

to

and

ahead.

problem
is
ninetenths of its solution. I am not go¬
of

a

ing to give you solutions today—
in fact, I don't have them—but I
hope I can leave with you the
impression that we of the regula¬
tory bodies at least understand
the
problems which must
be
solved.

(Ay Depreciation
One

Accruals—

of

the problems is the an¬
provision for depreciation.
The basic question today is this—
"Is depreciation of cost adequate?"

nual

Or

another

stated

way,

"Is

dollars in half
I confess I don't
know the answer, but if the prob¬
lem is so important to steel and
nallyr invested
price dollars?"

other

industries,

that

they

are

doing something about it, the
utility commissions
should not
wait longer to begin a real eco¬
nomic study of the matter.
Even in a jurisdicition which

now

recognizes reproduction, cost new
as

basis for determination of a

a

rate

base, depreciation has never
on a value base. The

been accrued

companies themselves have ac¬
cepted this doctrine.
It worked
pretty well in periods of relative
stability in the value of the dollar.
But

if

construction

costs

con¬

tinue

to rise, the utilities, and
regulatory commissions, will
ultimately have to take a look at

the

this problem.
.:«/ This

.:■/■..' v'"

portion of their earnings in their
business.
Industry in general has
been paying out a much lower
percentage of its earnings. It has
been plowing the' balances back
into property and plant.
In ad¬

few industries
have
made special provisions for de¬
preciation, r
V
The President's fact - finding
board

a.

seemed

to

aoprove

the

practice in the steel labor dispute.
It this is sound economics for the

steel industry, then the utility in¬

dustry should at least

entitled to
In

From

missions

study the

subject so that it will be pre¬
pared in the event of any further,
substantial, inflation.
I

the

are

some

done.

commissions,

it
and expendient.
riod

As

This

different

a

is time

It

for

to

take

bad.

Of

sales

pe¬
an¬

of

electric
the

our

for

ure

encourages

results

for

sumers

major problem in depreciation. It
is the determination of the

tions

amount which should be deducted
for rate base purposes.

which

than

eight states
of
one

Ohio.

their

exception is

Louisiana

substantial

quantities,

uses

of natural

gas.

47%

Ohio leads all of

(b) What

to

answer

ultimate

utility securities.

/,

this

same

of

&

>

Now take

erating
is in

Exclusive

common

a

In

of

to

>
*

the

.

Financial

.

51.
-

It

:

was

.

$9 billion construc¬

60%

..

com-

about

tion to each of these factors»_and

investment)

to many more

added

investment in

com-i

It is

equity.

on

this

basis,

'•

vital

as

-

nance

thq

revenue,

earnings

*

-

.

the

:

are

of

preservation

is
of

preservation
vital to

the

of good
mainte¬

private ownership.

(2) Earnings
t

-

.

/
.

What, then, about the prob~
lem of earnings?
No

'

/

"

examine the ove^x
all results of rate hearings be-.
one can

•

fore state commissions since the
the

heavier debt structure. As a per

total

to

service

this prosperity

of

'

capital structures

industry,

percentage of total return avail¬
able for common equity during

cent

/

good service, and in the utility

I

oeriod has been
only by in¬
creasing
the
leverage
factor;
through the introduction of a

_<

'

Sound

easy

-

I have not men-

tioned.

-

maintained at.59%

1946-

of October this year.
(E.E.T.
mivately-owned
electric utilities).

pleted

o|

increase, of

an

inS'

industry

program

the marketing agents of
utility securities and the regu¬
latory commissions must/give
increasing and competent atten¬

to see
from these overall figures why
.the industry
as, a
whole has
turned strongly to debt finance
mon

look at the capital

expansion

amount

I: $752 million in book

v-Actually,
a

the

-:

utility owri-

ers.,.

During the

stock and surplus rose

billion,

of

•

>:

The utilities, the

This is half of one per cent on

tion budget for the 6-year cost

•

$5.6

ratios.

and / trends

nature

'ity's business.

1946-48.

period

company's

competition with the util-

...

from

cf the

the

5. i
ratios.

The

represent? an increase;
$4 million available for com-?

mon

of

factor

The trend of operating

1948,

and

company.

security owners.
The- actual operating

This

same

growth
utility.

The nature

million;

$526

)

,

.

,

The income tax rate.

during
earnings for

1947, $531 million;
$536 million.

corporate

electric, utluty

alone has

v: war

1946,

v

of the

The

interest

the

-

size

characteristics« of
the
company's- customers.
The cyclical characteristics of
the particular utility.
The' economic health of the
utility industry involved...

'

for these years were as

-follows:

common

.

of

capital ratios. To men¬
only. a few, consider

The

generating plants.

construction

of

on

The

bookkeep^

It"

research.

for

consideration

a

these:

share of the recent construction

meeds.

The

ing

will be offset
improved gen-i
efficiency since a big

'

This is

Need for New Capital

interest^

factors and their bear¬

many

tion

earnings
for
increasing
interest during

This

°

field

involves
•

.

..

(2)

fertile

of

Fortunately, the interest dur->

by
railroads /was
debt
according to the

"Commercial

2/10

in large part by

re¬

period the

new

ownership^'partic;-

(c) How
conservative should
the capital structure, be Mr
each type of utility? This-is a

ing construction

87%

were

some

these:;

type capital strap*-~
coi^ucive in/the

tiire

...

financing.

Chronicle."

All

power

year

big stake for investors.

100%

con¬

of these;
large por¬
by hydro.

.

)

generates no cash
to aid constructions

entry

sold

corporate is¬
The $2.8 bil¬

them¬

rates to

generate

ing

1949) 42% of all the

billion

o'f

construction.

financing

only eight other states

with lower overall

see

made

(a) What type capital structure
produces the lowest overall
,money cost?%

include

amounts

corporate issues in theTJ. S.

During

study of privately owned electric
utilities, by our staff shows that,
are

The

reported

Last

group

money

in the next lean period.

$1.3

:*•

the,

selves, A recent comparative rate

there

million in
million;

to $558.5

incremental

an

infernally

to Sept. 30,

efficient oper-;

speak

$532

increase of total gross
This

common

period (Jan. 1, 1946

new

;

The

to

basic questions such as

of' $4.4 : million.

The

*

this entire

appli¬

ation.

like

1 % return on added plant.

to

"

and

commission

both

an

allows

ing may be a wholly excessive
proportion of debt, with the at¬
tendant risk of financial fail¬

overplayed.

and investor. Its

consumer

cation

by

results

guides. These may
I would
a
thorough-going

not be sound.

may

.

sult of this construction financ¬

a

The

companies.

spectively.

were

sound

up

income

(1946 and 1947) show 83% and
86%
for
debt
securities, re¬

The method of price trending has

with

we

study

million at
year
end;
$2.8 billion as compared

$17,757

hundred

one

subsidiaries

in the U. S.

method,

been accepted

in

property
and
plant
rose
$14,952 million in 1946 to

with

debt securities, only 13% were
stocks.
The
two.
prior years

about the time lag caused by tak¬

been

of

stock

owned

lion of securities sold

the expense involved in the value

have

often

thinking needs to be
capital structures. Too
look only at composite

on

averages for

1948, an increase of 5% over
However, the investment

1948,

unreported

the

"utilities"

sues

Arguments
pricing,

Much

from

companies would im¬
prove these ratios slightly, but
the picture with respect to "all
types" of utilities is much more
unbalanced financially than for

the

and

debt, and

parent

reproduction
less depreciation method,

inventory,

been

course,

percent

the

value method* It meets the test

ing

Capital Structures

done

an

and fac¬

the subject;

on

common

was

of

butions to the literature

lotion by/private

has

This category
includes every utility, except
railroads, being comprised of
electric, gas, telephone,- tele¬
graph, water, etc.

alarming aspects dur¬
inflationary periods. It may
prove equally alarming during a

economics.

1946. $546
rose

solution

in

utilities

only 16% stock.

assumes

sound

1947 and

84%

the

all

ing

a

million in

*

The overall trend is.

common

can

these
problems by reasearch and contri¬
help

broadest

ing. It is politically popular, but

of

in

*

gentlemen,

you,

1946.

"Simplicity of administration"
which original cost thinking
was, in part, based, is an over¬
emphasized principle in rate mak¬

new

think

I

in

upon

cost

^available for

capital

In the last four years

of all new

use

what

on

proper

without

financing

the utilities.

during, the postwar con¬
struction period 1946-48, inclu-:
sive.
^Reported
net
income

Its

to

us

impairing existing investment in

(1)

increase
for

Capi¬

brings

of the new money securities for

base.

we

available

Utility

of

level which will per¬

a

essential

mit

srtock

depends
a

structure.

ity of the original cost type rate

In Ohio

of rates at

or

by

deterioration*

is

seriousness

other look at the economic valid¬

it

Requirements"

* Constitutes

convenient

was

in

are

now.

amount

Capital

to

1946

First, the establishment of some
principles
to
determine
a proper capital

B electric

steady

in

structures; and second, the fixing

aver¬

utilities in the U. S. have had

AGA and, EEI, p* 61 >.

com¬

engulfed
industry. In a period
of
relatively stable prices, and
with price controls imposed by the
Federal government, and a war
going on, there wasn't much that
could be done by the utilities, or

we

apparent

Problems

tual) data;

The; Glass A; and

10.3%

what constitutes

,

reached a debt ratio of
50.7% in 1948 ("Financing Util¬

much of the

But

•«.-

from

per

a

has de¬

regulatory problems related to
capital raising.
As I see them
they are these:

Finally, what is the earnings
picture?
i

group,

base

cost

needed, to be

One group,

as

revenue

sound

soon

The Earnings Picture

(3)

„

income

gross

Formation—That

tal

consumer's welfare.

the "combination" manufactured

the Hope case, the trend:

After

debt

straight-

or

points.

percentage

expediency which seemed practi-i
cal, at least for the short term.
}

(By Depreciation for Rate Base
Determinations—Tvere is, another




(combination

the use
of a cost type rate base with its
accounting reserve deduction for
depreciation, quite a number of
utilities accepted it for reasons of

toward

the

1948

53.)

p.

the

of money, it affects the
health of the industry, and the

manufactured, mixed and na¬
tural). rose from 0.1% to 6.5%

fostering

wore

to

1947

.

% in 1948.

(E)

in the

can

increase in the

an

to

(Per A. T. & T.
Annual Report to Stockholders.)

age cost

ratios of all gas company groups

earn.

1930's when

the

8.7

means

the Class A & B
is es¬
be 50% Bonds, 15%

now

EEI,

net

of

clined

of

will happen for

1948 and

ity

utilities

cent

change the entire utility indus¬
try's
capital
structure
ratio
unfavorably.
This happened in

Stock

in -1946

a

System)

balance, i.e., if
securities are

itself

increment

17.3%

major segment of the
telephone
utilities
(the Bell

timated to

parties concerned

which

on

tal

Preferred and 35% Common.

period of deflation.

is particularly significant
so small a

because utilities retain

dition,

base

rate

For

sold, the very size of the capi¬

the

Statistics).

(FPC

surplus.

Right

(C) Original Cost vs. Value—
Another problem which de¬
serves continuing attention is the

it

to recoup origi¬

sound economics

all

Common

debt

as

in

AGA and

electric group's structure

are
to be treated equitably and
fairly, which is the end result of
sound regulation.

It has been said that the recog¬

/

nition

if

done

37%

and

proper

changed

■

1949
also.
Now, as commissioners,
we are concerned because this

to

be

of

stronger utility groups — was
Bonds,
16%
Preferred

operating the property built by
depreciation funds and, again, the
problem of what it costs to re¬
place the property.
I merely point out these factors,
inherent ir? the economic approach,

haustively investigate in the days

utilities—one

electric

many

cent of

per

has

V'in 1948. (Per "Financing Utili•.ties Capital Requirements," by

marts.

money

a

1948; mixed gas com¬
panies, 14.2% in 1946 to 11.6%

by

generated

as

revenue

17.7%

capital formation is

in

too

capital structure
ratio of the nation's Class A &
B

such

not

the

1947

be

and this must be sought

Public Utilities).
In

must

in

avalable for

nccme

stock

companies,

capi¬

amounts

1948;

6.1%

(including interest dur¬
construction): natural gas

ing

sales of securities to the public,

47%

basic

from

data

Tremendous

do.

net

gross

industrial groups

to the extent

utilities

telephone

"fixed

in

6.9%

to

companies,

follows

gas

heavy

1946

gas

The

tal" type businesses with slow
capital turnover rates, it is not
possible to finance, internally,

find

we

these

in

common

to spend less.

groups expect

setting.

Ratios and
of Flotations

Capital Structure

The

full equity in

studies

the factual

at

and

-

1946 to 5.0% in 1948.

utilities
(and. railroads too) expect to
spend more in 1949 than in 1948
but all other major industrial

capital structures today?

simplicity is a
any
method
impair property rights.

reserve,

But

In what condition do

for

a

look

field.

this

in

electric

the

as

during the 1946-48 pe¬
gas
companies,

mixed

,

cent of to¬

natural

7.9%

and

enterprise of the
nation will have expended $8.7
billion on new plant and equip-

some

Volume

But

defense

raises

depreciation reserve funds are in¬
vested in property, the relation¬
ship of uninvested funds to the
working capital allowed, whether
the utility is earning a full rate
of return, compensation for risk

face

v

companies

gas

as a per

capitalization has declined

riod:

electric

11.0%.

straight

follows

(D)—The

get rid of our troublesome juris¬

which

combined

shrank

common

to

income

gross

tal

for

13.8%

For

business

..gas

,

companies, too, and our consumers
enjoy good public utility service.

dictional

problems
utilties today.

from

the

predominately sfeamv gener¬ >>.*ment
ating states. I think the -record ^totaled $3.3,:-billion during the
years
1946-48.
("The
Utility
of low rates to consumers speaks

simplicity of administra¬
been overemphasized in

the customer has

problems,
to improve
the quality of our staffs and our
operation, and to find, generally,
a widespread acceptance of sound
economic principles in regulatory

available

to
telephone
annual -expendit
for new plant and equipfor the Bell System alone
respect

utilities,

the

With respect to the theory that

fortunate enough to

are

we

known

had

deduction

the

of

case

reserve,

which may

Problems

If

they

political influence. Here again, in

Thorough Analysis of Basic

;

if

doing. The pendu¬
indeed swung far, and

has

weak
IV

wv

Capital Structure "r, ment by th.ijs year and over this
4-year
period
of
expansion.
deduction of an accumulated ac¬ Problem~~Another problem with
(SEC Release No. 889—Statis¬
counting reserve for depreciation, which you gentlemen are quite
tical Series.)
and (4> to the deduction of a familiar is that of capital struc¬
It is important to note that
computed amount which it is al¬ tures.

ratios, and in plant expansion.
There is a growing recognition
that fundamentals are more im¬

controlling

«r.

Utility Regulation

More confusion has arisen with

8)

page

Thursday, November 24, 1949

FINANCIALjCHRONICLfc

A

:

war

there is

without
a

concluding that
pretty general recog-

,

Volume

170

Number 4858

nition of the need for adequate

.earnings.
But

'course,

of

are,

problems.
v
m'v:Qne is a political problem. It
,:

.

the

,

education

the

and

marily

pro¬
can

is

It

pri¬
problem of the utili¬

a

themselves.

,

„

Another problem is

tion

con¬

fairness of
Commissions

posed rates.
do little about this.
ties

of

to the needs of the util¬

sumers

ities

competi¬

with

other
forms,
or
of the particular utility
This is self-regulating
'in the long run, but its influ¬

be recognized and
by commissions.

must

considered

Another important element is

efficient

management

the

of

utilities.

Security owners have
something to say about that. We
ought to insist on the develop¬
ment of high type management
personnel, and the achievement
of maximum economy

tion.

This is

in

opera¬

sounder way to

a

of

'

is

in

the

the

final

competition

analysis it
for

money

which will
largely determine
the • rate of return commissions
allow

must

utilities—and

utilities and
must

owners

to

see

and (2) unequal on
as a whole
with consumers
corporations. Since

all

other

in

capital

business

relation
(due

to

volume

their

to

it

the

of utilities

that

there

is

public acceptance of the result.

a

in

revenue

tions

of

Federal

Policies

of

taxes,! this

about twice

of

revenue

tions

as

Bank

a

great

as

whole.

of

on

Government

Utilities

the

on

of

in¬

multiple

a

The in¬

consumers.

healthy compensation of balances

having

of

fluence via

international

policy,

and

enervate

of

exchange

large and, taking the longer view
in her own best interests

and
private utilities

to

generally.

The projected

construction

vs.

pro¬

grams of the utilities will
the general standard of

improve
living and

utilities

increase

would

recent

increased

an

stock

ings at

their

study 7 of
rate

a

of. available

15,5%.

("The

com¬

fits

of

sound

regulation, of

healthy utility industry will

earn¬

Effects

sound

regulatory job. In a
proper business climate the bene¬

expressed

reductions of

understanding of these

problems is necessary to perform

vide

at

to

modification

With regard to those
pegs, it is
beyond the powers of the human
mind to calculate
the

value

of

any

though

accurately what
of the world's

things

such

values

constantly chang¬
Supply and demand deter¬

mine

the

relative

values.

although

it

unwitting

one,

even

have

may

been

the

benefits

of

pro¬

maximum

*

In

this

dollar

price

as

in

all

other

utility

tasks the state utility commissions

around

the

the

For

And

lem

there is

now

I

would

like

a

final probmention.

to

now many of
of business have

men

laboring

frustration.

under

These

feelings

is the impact on utilities of FedOral Government policies. There
two major movements.

are

feelings

-

abroad. This

by the shock of de¬
a
swing of opinion

valuation and

favor

reversion to free

of

national

of

ment

Federal

Government

trading

much

relieve

to

current

ration

of

balances

in

business. The other ii the increas¬

nently

ing burden of taxes on private
(Continued frOm page 19)
companies. Each .makes the job of!
tagesr^af it wul do much to re¬ ly than Britain, but this severity
regulation' of Utilities a complex
lieve the sterling area predica¬ failed to prevent the large scale
affair. The current trend, toward a
ment by giving the required im¬ circumvention of them which pre¬
socialistic Federal Government is
The surrep¬
petus to dollar-producipg exports cipitated the crisis.
illustrated by the developing so¬
seems doubtful.
titious

needs

cialization of electric utilities.
i
The • Federal Government col-,
leets about 10% of the Class A
and B electric Industry's revenue
in taxes (income and electrical
energy). This reacts, two ways.
First it gives rate advantage to
tax, exempt, publicly owned utili¬
ties, and second, the" continued

high ' level

burden

tax

the

on

the business utilities

consumers of

prevents the fullest utilization of
electric

service.

The

consumers

the

burden of these utility
taxes whether they know it or
not, and, in addition, help subsi¬
dize Federal projects out of their
personal income tax.
pay

-•

The competition of tax exempt

utilities ; becomes apparent
Federal

tax

alone, if

we

on

exemption;

the

basis

capitalize such taxes

at! W& °* revenues" and assume
a plant' turnover rate of four. If.
invested' at,: say 5%,> and com*
pounded annually'; the taxes not

paid could

the entire plant
in "about 23

recoup

Investment

^rears. - ^

'

Although

provision

is

some¬

times made by the publicly-owned

Utilfty for local taxes, the busi¬
ness

utility

den

of

assumes the full bur¬
state and local taxes in
all cases. This amounted to an ad¬

working

what

was

in

effect
a
free
exchange market
competing with the pegged one
finally burst through the mesh of

ex¬

indebtedness,

that the

of

the

the

import policy.

During

'

_

nna

^jclo}v

world

the

generations

the

two

fast

•op

International Monetary Fund, for

arouse

incompetent to
carry out several of the purposes
instance,

proved

^a?"mafor

scale

three

States

rising

international

tend

discord

to
and

ill-wffi "Tliese ate scarcely tfye

days in which such risks can be
and' taken with impunity. Continental
through its recent acid-ex¬ references to Britain's new dollar
change rate test with/ anything rate as a "trade war rate" and a

for

which

it

was

designed

came

but

flying colors.

Particular mention might here

a

ex-foe

but whilst this

permitted
countries

has

European and other
rebuild their indus¬

to

tries (most of them are producing

in excess of pre-war figures), the
United States still has her internal
markets

carefully
external

protected
producers

against

retaliatory action in deferring

that she has done so much to help

compliance with its contracts for
meat supplies to Britain are but

to

the

their feet.

Her heavy

debtors can only

re¬

of

and

an

alike,

currently

much

the

States has developed its material

South American Republic's quick

be made of the Fund's

of

goods

external

pro¬

larger propor¬
accruing from

industrial

the reduction

imports
United

from

rehabilitation

in the world's

Canada

the

and

States.

In one respect Canada's own po¬
sition is analogous to that of most
other countries in that she her¬
a

United States

on

current trade

self suffers from
dollar shortage

balance, The consequences of this
shortage have been aggravated by
the

universal ones,

self

protection would

mand

and Canada's
seem

to de¬

departure from the tra¬
ditional triangular pattern of in¬
a

ternational trade which has served
her

so

successfully

up

to

now.

During the transitional period of
such a reorientation of trading she
might logically expect to be ex¬
posed to some vicissitudes of for*
tune.

These, however, would be
temporary and not of a nature to

cause

qualms or serious anxiety.

*

Underneath

controversy

and

the

pounded dollar conservation poli¬
cies. These policies call for the
disposal here and in the United

,

agreements in the first place. The

dollars and purchasing power,

can

which can only be replenished by

cuiv'olir

tei^tro^Hpoiifical

will

peace

be judged in the light of the
world's shortage of North Ameri¬

tion

in

and

to

and
energetic population of the United
resources

inter¬

progress,

concord

Canada's immediate outlook has

it

States

or

sane

remain in jeopardy.

\
past

return to the

a

economic

national

proportions

United

help

healthy system of free multi¬
lateral
trading,
without
which

complementary aid of application of
of

turn- should

and

international
payments to perma¬

manageable

in

and facilitate

final resto¬

outstanding way.
Under the stimulus of two major
Agreements
?
wars, which incidentally had shat¬
control. The volume of its ster¬
Britain's desperate action has,
tering effects upon Europe's in¬
ling-dollar transactions at rates
however, served a purpose in that
dustry, the United States has rap¬
it has thrown the spotlight on theW0r"
officially pegged idly built up an industrial ma¬
clAu/hr
hut
one slowly but
surely undermined chine of
general frailty
of international
overpowering proportions
the latter and provided a striking
and productivity.
agreements and also on the im¬
She is now by
example of the way in which the far
the world's most profilic pro¬
potence of the financial institu¬
inflexibilities of
exchange rate
tions set up under international
ducer, has accumulated a tremen¬
planning
and
inconvertibility, dous international indebtedness
auspices to regulate the world's
with their disregard of the wellvarious exchange rates to a set
towards
herself, holds approxi¬
known
fundamental
economic
scale.
It has proved also, if there
mately 70%* of the world's visible
laWs, defeat theii* own ends, as supply of
were ever any doubt about it, that
gold and
enjoys a
such international exchange rate predicted at our meeting here a standard of living conspicuously
contractual cooperation is almost ybar ago.
superior to that of any other
wholly conditioned by economic
country, with the exception of our
Devaluations Stir Up International
own. All seek her currency. She
nationalism
and
therefore
col*
v
Iil-Will
is so distinctly .wealthy and in¬
lapses under the strain of any
A
country's intern^Vjpolitical pres¬
perhaps
somewhat
over¬ fluential that she might almost be
sure. This is not so much a reflec¬
looked;) but important-aspect of said to have cornered prosperity.
tion on the sincerity of contract¬ such financial
Since the war the United States,
antics as legislated
ing nations as it is upon the sa*. Cteva]qa%P^>s that they entail in- with Canada, has generously ex¬
gacity of th01r planning
tended financial aid to friend and

Frailty of International

inability to
enue in 1948, Ypu are well aware fulfill its plans to restrict and to
in your business'that the Federal regulate as to both quantity and

ditional 7% of total operating rev¬

of

discussions.

the way to the re-establish¬
ment
of free exchange markets

current

revison

a

other

several

pave

and would
do
the pressure of

dollar

clear

seems

One is the continued encroach¬

of

to join in the

impeding a more ample flow of
goods into the United States from

were

July, 1949,

Britain's Devaluation—Proof of

with

moval of the obstacles at present

of

.

It

place

greatly to be hoped that this
cooperation will lead to the re¬

long time

a

'

-

just taken

representatives

stand ready and able to do their changes became evident.
T>art in finding the solutions
Although liberation of currency
Obviously, formulae of income needed to obtain the best service dealings would go a long way
taxes are erratic,.and wholly un* atthe right price.
towards fostering healthier inter¬

23.)

P.

•

It is

the world's

in

have

powers

time.

been

i

•

of increasing United
States im¬
ports. Preliminary talks have led
to an extension of invitations to

free

at

prevailing

•

•

view to finding ways and means

a

the

versus

even

entailed

•'

cials

an

obtruded when the

sterling

fixed

was

market

intensified

consumers.

0$

Higher Income Taxes on Electric
Utility Enterprises" by H. B.

for

rate

new

some

policy

sations between Canadian, United
States and United Kingdom offi¬

par¬

fact,

tial recognition of this

A

too, the

Washington is evidently think¬
ing along these lines for conver¬

are

static but

ing.

that

this

at

Ways to Increase U. S. Imports

currencies is in relation to
any other currency. By the very
of

'

■

of

the im¬

the world

of

sacrificing
of her present advantages.

some

many

a

utilization and lowest rates to all

the other extreme. The "average"
Avas

be jeopardized by in¬

A proper

large

75

extreme/to 52.2%

one

ability to obtain the
supplies of v risk capital

not

taxes, poor fiscal policies
and competition by, the Fed¬
eral Government.
r!

earnings ranged from

low of 5.7%

a

aid

an

hole

one

mediate interests

.

tax

in percentage
mon

be

creased

depending % upon
,!■ ?;

a

should

and

individual of,

among

pay-out ratios.
In

needed

would

security,

from

pegs

appear to suggest that in

trying to make the tail
the dog.

never

this

ries the attendant responsibilities
that position. This fact would

United States might consider

utilities,

of

order

from

the world's finan¬
cial and economic leader and car¬
now

wag

private

utilities'

widely

extremely delicate
to take, but that

one

balances of payments. To
attempt
facilitate liquidation of such
balances by hazily jumping the

to the economy of the nation. The

result

trade

an

country is

national

vary

it

reverse

doubt

by canalizing
it into politically chosen channels
and thus piling up
unmanageable

being borne by investors. The im¬
pairment of the investment value
which

and

af¬

present

strong protectionist
must find any decision to

and difficult

diffidence

her

up

31

a

provoke

example, that the income tax rate
is raised from 38% to .45% and is

stocks

built

another is

consumers

arid

On the other hand suppose, for

common

Con-

to

consumers

Financing Utility CapitalJRequirements, by AGA and EEI.)

of

payments.

trarily, pegged currencies and in¬
convertibility, as we have seen,

ferent

(National City
1949

impairment

(2107)

creasing level of taxation by the
Federal Government is thus
grossly unequal and discrimina¬
tory to consumers served by dif¬

to

a

April,

the

incomes, place

burden

percentage
it does for corpora¬

as

Letter

vestor

corpora¬

amounts

making applied by regulatory

prevent

With respect to

whole.

a

as

CHRONICLE

Rate increases required to shift
increased taxes to maintain prior
levels of return to
investors, and

inherent

than

taxes

FINANCIAL

commissions.

capital turnover), they
higher percentage of -gross

Dorau and J. R. Foster,

Impact

rate

low rate of
pay

&

related to the standards of sound

consumers

compared

electric utilities the effect of such

"

But

COMMERCIAL

utilities employ large amounts of

improve return than by increas¬
ing rates.

utility

when

income

„

sources,
service.

ence

creased taxes;

the

.

there

involves

THE

a

any

tendencies to

short-term recession which may

be

visualized lie the solid foun*
our country's astound^
ing natural resources. Every year
reveals them in increasing abun¬
dance, The past three or four
years have been ones of particu¬
larly striking discoveries, and we
dations of

assuredly rely upon the rapid

can

extraction and exploitation of this
vast dormant wealth
in such a

way as to put the soundness-of
Canada's economy and the wel¬
goods. Services
fare and steady prosperity of its
6f
state
a relatively unim¬
and : municipal >■. utility ments of gold. !|t has failed con-?"
It is much to be hoped that this
people beyond any question.
bond? from taxes on the interest spicuously in its efforts to prevept, recent financial catastrophe will portant part, and little of the
received.
This exemption gives the huge commercial and private persuade the advocates of rigidity world's? gold stocks remains in
publiely-owned utilities an addi¬ acquisitions of this precious metal and control that although prices non-American hands and what Richard J. Buck to Admit
is desperately needed
for
tional competitive advantage of whieh have been taking place, can be fixed by legislation real does
Herbert L. Pratt will be ad¬
obtaining capital at lower rates From time immemorial mankind values cannot, and that persistent currency backing purposes. So it
mitted Dec. 5 to limited partner¬
has deemed gold to be the most defiance to this economic truism is by payment in goods alone that
than is possible for business utili¬
ties of similar credit rating.
dependable form^and store of must lead to further disturbances the large outstanding V currency ship in Richard J. Buck & Co.,

Government

exempts

purchasers

price

the

>

international

move¬

two

of

the

actions that

many

were

regrettable

re¬

noticed.

services, gold
can
play but

_

.

Another

factor

commissioners

utility
well

consumers

as

taxes

is

of

concern

to

the

impact on
of the present as

proposed increased income

all

oil

shifted

to

impact of

corporations. When
utility consumers the

an

income tax is

(1)

unequal

on consumers served by
different utilities within the util¬

ity

group.

spect

to

This applies with

existing

as

well




as

wealth,

and faittr"in

it

has

be¬
why
gold to the tune Of hundreds of
millions of dollars per annum has
come

instinctive. '^That

is

been changing hands all over the
world

at

prices varying between

$45 and $50 per ounee in contra¬
diction of Monetary Fund's con¬
trolled price of $35 per ounce.
No

country has applied its ex¬
iu?l change regulations more rigorous-

re¬

of

a

nature

similar

to

duce their current

the

ones

lately experienced.

obligations by

or

dollar balances can be eliminated
or

reduced. It seems therefore that

unless the United States opens

Objections to Pegged Currencies
It cannot be too often repeated
that exchange markets, free as to

rate oscillation and

converibility,
inspire
commercial
confidence,
stimulate international trade by
swinging
it
into
economically
sound

directions, and facilitating

doors

all
for

freely

the

to

foreign

assistance

rehabilitation

York

City,

members of the New York

Stock

39

fective,

and

equilibrium
form.

foreign

Exchange.

United

:

;

v

/

James F, Linehan Co.

in¬

the debilitating dis¬

will continue in
The

New

Broadway,

given
BINGHAMTON, N. Y. -^i James

will remain largely inef¬

dustry

rious

imports,

hitherto

of

her

se¬

States,

F.

Linehan Co., Inc.

in

a

is engaging

securities business

from''

fices at 446 Chenango Street.

of¬

COMMERCIAL

THE

(2108)

32

CHRONICLE

FINANCIAL

&

Thursday, November 24, 1949

ternational Bank and the Export-

Our Liberty and
from

(Continued

■'

■

•

prospective unemployment — or
else the Bill would not have been

■*

•

#

• •,

post-war

difficult

these

In

free

*

•

civil¬

years the relationships in a
ized society have become

strengthen and
improve it to the end that it will
be of increasing service to all the
people.
Only in this way shall
we succeed in avoiding an inflex¬

more

understandable and the choice of

relationships

imperative.

more

clearly the al¬
proceed with
the American system of freedom
of
initiative
and
opportunity
based
on
personal liberty and
Now

see

can

we

Will

ternative.

the

"cold

sia,

the

Or

A

deep

children

Constitution
of the United States.
How shall
we
handle i: the
question
of

And

In the hands of the
power?
people, through their elected rep¬
resentatives, or in the hands of
the
dictators?
By
negotiations
and mutual fair play and the dis¬

cial

cipline of intelligence? By respect
lor human dignity?
Or by cen¬
tralized control and its inevitable

ican

the

wrote

who

tors

our

we

it

to

our

children

durable

as

and
compulsions?
questions are promptly
answered in the American mind
These

of

leadership.

in

this

While

purposes.

such

for

Act

the

observation

old-fashioned
I,
nevertheless,
feel that it is extremely unfair to
subject any President to such
may

be regarded

and

outmoded,

as

pressure.

further

Act

increases

the

here

flush

ply?

to increase infla¬
thoroughly corrupt¬
ing influence. They are like a
drug which, once started, can

not

sup¬

money

only

tend

creasing doses.

ing of automobiles, for example,
has been made good, automobile

recommended

industry

after, all, is not a thing of
itself. Its productivity contributes

try,

only to the welfare of those

not

as

fit.

activity,; in the backlog industries
to diminish, with consequent disemployment. When deferred buy¬

But indus¬

holds all the answers.

This

goods,

specif.ed

of

tion but

responsibility of Amer¬

industry as though

curement

backbone of
the period of inflationary recon¬
struction /since the war. As the
backlogs are made good, the most
natural thing in the world is for

Too

us.

about the

can

of the coun¬
try for public works or for pro¬

plies have been the

be met by each and
many people talk

bility must

both

goods

demand

May I repeat that this responsi¬
all

advisers,

money" which the Bill allows the

uncertain future.
it to the peoples of

economic

and

selected

President to make at his discretion

moral inspiration and so¬

ica for

his

and

an

owe

of

abroad. This big but non-recurring

it to

owe

owe

their

and

face

each

other nations who look to Amer¬

inefficiencies
/:-

We

another.

one

We

authorized

That the Bill should be regarded

rather than ameliorate amounts to be paid to veterans as implementing inflation must be
unemployment. My reason for this and the length of time they are to concluded from the lending and
feeling is that S-281 fails to focus receive such amounts. Unemploy¬ spending authorization it contains,
upon
the
real problem
with ment compensation is also boosted, which, if the usual political tend¬
v/hich our country is confronted. and the time it can be received is encies are to be respected, is only
the beginning. The Bill also really
World War R ended with im¬ doubled.
disavows a balanced budget, while
mense
The
backlogs of demand for
grants of "rocking-chair

responsibility

here.

billion

$2.2

aggravate

in our

is fine
life.

of

sense

involved

is

they

so

which

that

prove

American way of

sel

he may see

and im¬

to preserve

us

of

Fund

employed by or dependent upon
the government lor income, and
that it would otherwise tend to

power

before

Emergency

which the President, on the coun¬

re¬

throw into any area

Soviet Rus¬

with

war"

major task

and all of

ances¬

which

of

I

view

such

spectfully differ. If this Bill is en¬
acted, I believe it would add sub¬
stantially to the number of people

Asia and especially

in Europe and

or

concerned

perpetuation

some

With

written.

today with the postwar problems

planned system of gov¬
ernment?
The alternative is not
new.
It is the old, old problem
tarian

to

As deeply concerned as we are

totali¬

United States and turn to a

always

through arbitrary force.

the Republic of the

scrap

we

ible

we

government?

representative
will

mitigation of

would result in

strive

enterprise to
which I shall call your attention?
of

other fields

S-281

or guaran¬

tee additional

respect this system, even while we

9)

page

nature

indicates that any Presi¬
dent, whether Republican or
loans, running up to Democrat,
must
necessarily be
60 years, of $11 billion. The Presi¬ subjected to great pressure to use
dent is given an Unemployment the selective spending powers

Import Bank to make

identified with industry
but to all of us, regardless of the
nature of our occupation^.
Industry is essentially the ser¬

directly

based

normal

abandoned

be

never

continue

be taken

to

must

but
in

ever-in-

is

increased

be

to

lending,

and

spending and
unbalance.

budget

provide

And yet the Bill does not
for the
"over-balancing"

in

budget

the

of

periods.

prosperous

How, for example, can a 60-year

by Damonides at
the time of Pericles. In order to

employment be unmade when em¬

his

increase

popularity

Pericles

re¬

decided that he would make large

placement demands.
Such reces¬
sion
in
backlog industries can

gifts to the people. Then the $64
question arose as to where the

only be effectively countered by
diverting the manpower and re¬
sources of our country
into pro¬

from—how
was the plan to be financed. And
Damonides, the cynical old philos¬
opher, came up with the jackpot
answer.
He
said,
"Make them

more

on

On such occasions there

lessened.

grants are given on pretty
much the same principle as that
Such

buying will and should recede to
levels

are a

pretending to advocate one as a
national policy. This is so because
a
balanced budget is specifically
rejected whenever employment is

to

was

money

loan made when there is some un¬

ployment

More than

higher?

is

that, common sense tells us that
once
inflationary policies have
adopted, the apparent need
and big spending in

been

deficits

for

come

prosperous

periods is

great as

as

first, that our most
in lesser periods of prosperity. In
possession is personal
prosperous
periods, the govern¬
ducing new things that people do
liberty
and, second, that such
ment finds, as the Bill gives evi¬
not have and will want, presum¬
liberty
is
only possible when vant of the consumer who must
dence, that it must boost its pay¬
I ably made by new enterprises or presents from their own prop¬ ments to individuals in order to
coupled
with freedom to own provide the necessary orders.
and operate a farm or business, am referring now to the millions expansions of existing companies erty." That, in my opinion, is what
equate their buying power to the
in the hope of making a profit. the effect of S-281 would be.
freedom to choose and practice of people employed in agricul¬
higher price levels which the pre¬
It also means that the shortage
ture,
in
stores
and
shbps, in
It is a deception to represent
a profession, and freedom in de¬
vious deficiteering provoked;
areas
with
which the proposed
that these immense payments will
termining
for
whom we
will teaching, in the medical profes¬
while in periods of lessened em¬
—<we

say,

priceless

liberty means
physically in¬

short,

In

work.

sion, in law offices, in government

things except as a punishment to
one man for having done them to

itself. The welfare
of
industry,
therefore, and its
ability to provide employment
depends on the economic health
of agriculture and all other seg¬
ments of our National life.
And

another.

the welfare of the

that

may

one

no

jure or confine another or take
his property without his consent;
not even government can do these

doctrine

totalitarian

The

puts

political, social and economic

all

power in the hands of one man
who
must
necessarily exercise

disastrous

The

dictator

decrees who

have

what and who shall
what — always under the

the end result is not for the wel¬

of

fare

the

except

anyone

dic¬

hands of

in the

being is

human

any

intoxicat¬

heady and

a

ing beverage; it always results in
in master complex, v
this kind of philosophy we

To

with

Americans respond

ditional

of

system

thought and action.

centive

freedom in
Under it we
of the indi¬

rewarded

are

tra¬

our

the * initiative
vidual citizen.
Ability
spur

in¬

and

and power

by competition and by
restraints of supply

is curbed

natural

the
and

stupid

and profit and

demand

The

loss.

chastened by the

are

natural laws of this system. They
pay

for their mistakes and start
and more modest,

afresh—wiser

they

their
are

worthy,

are

experience.;

pretty apt to

Our

has

of

The arrogant
land in jail.

of free

ful in raising our
has

it

American

standard

/people
the
highest
living and personal

of

dignity among, the nations of the
world, accompanied by less
drudgery and more leisure, ad¬
vances
in public education and
public health and gradual prog¬
ress

erty.

toward

All-

achieved

elimination

of

this

under

and through the

tural

laws

work

*

labor

and

This

for

—

a

pov¬

have

economy

discipline of

the

honest

of

we

free

law

of

wages,

na¬

honest

the law

of supply and demand, the law of
competitive endeavor, and the sav¬
ing grace

of the ability of human

beings to work together. We




to

ing

traditional

our

calls

management.

for

than

more

of

way

life

merely pas¬

It calls

for af¬

frequently being made
Washington—under the guise

posals
in

are

of promoting the public welfare—
which

follow the pattern

must

already

is concerned are in the proc¬

bill

ess

of melting

most

inasmuch

a^ay

caused

by

they will

their

concentrated

being taxed to a point
where they have little left for in¬
vestment
in job-creating enter¬
ready

in

encouragement,

told

dustry

that

steadily,

even

dramatically, becoming

are

rela¬

step, to

totalitarian

centralized

a

state.

basic

the

Perhaps

of

fallacy
simply

political

July 15, 1949, there
in

troduced

Senate

the

a

the

Bill

business

control,

business

itself

known

Act

about this

of

elections.

The

determine

outcome

the

course

country for years to come.

In my

opinion the provisions of
essentially abandon the
of
free
competitive

stimulation

It is little more than

proposal for vast Federal inter¬

vention irt" the decisions of what
be

produced, when, where,
(presumably)

in what amount and

what

same

be

price

or

time such

At the

wage.

intervention is to

implemented by enormous gov¬
lending and spending.

ernment

It may that the American people

would

we

have had

political pow¬
through forty-eight

like to

take

the

long step

scattered

slates.

We have had hundreds of

would

authorize.

mistake about it.

toward socialism which, I believe,

the imperceptible

freedom-loving

accurate, they might be willing to
accept this Bill if its implicit
promise of the avoidance of pro¬
nounced and

would

prolonged unemploy¬
actually be fulfilled.

I assume some

that

what should

produced, and

be

terprises and states which do bow
to the administrative will. This, I
submit, is not the fostering of free

competitive

enterorise.

It is

the

of a planned welfare
leveling down of liv¬

beginning
state with

S281,

if

people

may

put

into

believe

effect,

provide unearned income

tures to

to

those unemployed.

notwithstanding, S-281

Its title

be

cannot

regarded

Bill to»

a

as

promote economic expansion.
It
is a Bill to check the most re¬

expansion

period
of
world has

markable
that the

ever

seen

a

ing standards.
This Bill pays lip-service to

the

encouragement of

Bill to make the postwar

—a

locations permanent

executive

the

in

vest

—

in

Wash¬

ington powers which no man is
wise enough to exercise, and pow¬
which are too great to be en¬

ers

trusted
In

even

to

nation

a

wisest man.
million

the

140

of

half-a-million

people,

corpora-;

tions and swarms upon swarms

of

spending-bent government agen¬
cies, there is so much variation
in success and failure, in prog¬
ress and
retrogression, in happi¬
ness

and misery,

in optimism and

pessimism, that anyone can proveanything he wants by merely se¬
lecting his
statistics. Therefore
when
this
Economic Expansion.
Act

consid¬
statistics:

(S-281) comes up for

eration in the Congress,
will not be enough.
It must be shown

that this pro¬

defeats itself for it would
render permanent the very con¬
gram

ditions that it seeks to cure.
It must

be shown that we can¬

underlying these proposals,
lations and influences, carrying there is a philosophy which comes not squander ourselves into pros¬
on the nation's business. We could
out into the open, as in the spe¬ perity.
It must be shown that further
afford to experiment — even to
cial privilege tax provisions, of
expansion of the economy will de¬
make mistakes—because we did
governmental control of the prices
on
fostering the dynamic
not hazard our destiny on a single and profits of competitive enter¬ pend
factors in our socicety, including:
throw of the dice.
But if S-281
prises.
the initiative and energy and re¬
and the philosophy back of it are
Further, there is evidenced in
sourcefulness of all the people
to prevail, the entires American
the Bill the naive supposition that
who possess those qualities.
system would be at the risk of all the inherent difficulties of our
It must be shown that initiative
the mistakes of a single man and economic system can be solved if
and
energy
and resourcefulness:
his advisers.
we have enough "experts" making
be
discouraged
and even
Only a great national emer¬ enough "surveys" at the cost of can
killed with excessive taxation, ex¬
gency; such as war, could possibly enough millions and hundreds of
governmental planning,
justify,
even
temporarily,
the millions of dollars, and channel¬ cessive
granting of such uncontrollable ing up their voluminous reports to undue concentration of power in
at the expense of
and dangerous power as this Bill
be reviewed and acted upon by Washington!

this Bill represents, /; To be more

ment

to

as

But,

this Bill

at

President and his advisers

subject in the main to local regu¬

will

it

subject

well

our

to

the

Government in Washington. Here¬
tofore

upon those who
the decision of

not

thousands of business enterprises,

1950

could

is

Federal

to

bow

do

sharp contro¬
in the next Congress and in

versy

a

government, in directing the com¬
petitive affairs of the community
The intervention is enforced by

undoubtedly

the

of

the

in

of

even

of

er

because

the

always paid in the

by the people themselves.
This Bill must be regarded as a
tremendous
intervention by the

private enter¬
prise by providing for loans and
subsidies and capital markets in
times of a contracting economy.

I want to talk to you

be

and

as

1949.

Bill

of economic and

States

Expansion

by

concentration of

—

power,

in¬

was

United

(S-281)

Economic

stated

be

can

concentration

On

are

in¬

by giving selected tax advantages
or loans or direct subsidy to en¬

saying that it is a startling symp¬
tom of our present problem of

by

on

cine.

S-281

step

taxes

maintaining taxes

more

oi the filling up

which

insidiously,

because

all

abundant by reason
of non-recurring
backlog demand.
In my opinion
this is exactly the wrong medi¬

tively

laid down in other countries and
lead

decep¬

end

public expenditure and greater

expendi¬

ployment, it must boost

dis¬
h Bill tosubstitute government control for
merely concealed sales the initiative of free men and to>
cruel

taxes. They are

taxation for the artificial stimula¬

items

of

the most

have

tion

Basically, S-281 promises great¬

of

corporations. And there you

will

least, to their non-discouragement.

tion

No—we will probably be
that these taxes will come

from

prise.

at

or,

because

out of taxes. Who

the taxes? They cannot come
out of the rich. The rich are al¬

the
backlog
industries is to prove transitory,
then
national policy must shift
basically
from
preventing
and
discouraging the accumulation ol
real savings and their venturing
in new or expanded enterprises
to

recipients

come

pays

backlog demand. Finally it means
that
if
the
virtually inevitable

disemploymcnt

the

hurt

not

as

so-called shortages

of those

were

er

responsibility for defend¬

productive and enterprise.

capacity.
More than
developed for the

consuming
that

because

enterprise
incomparably success¬

system

been

are

we

wide public

a

limita¬ firmative r watchfulness. For pro¬

Absolute power without
tion

unless

sive/acceptance.

tator.

ineffective, or

be

to

may

understanding
the interdependence of capital.,

of

But

social betterment.

guise of

in¬

of

legislatures

prove

have

V

State

our

well

shall produce

if

of

even

planning

health

dustry. Therefore, even the wellintentioned. Acts of Congress ano

his bureau¬

of

people depends

economic

through

concentration

crats.

'

the

on

power

this

and

-

and in industry

countries

have

the totalitarian

/' As

a

make

no

steos by which

people
been
camu.

in

moved

other
into

/

an

year and

the

(at

President and his

their

discretion)

additional
cause

$4

billion

handful

a

to
a

the RFC, the In¬

of

economic

and the President

is

There

no

advisers

such short cut to

or

contemplate

not the Bill does not

present too great a temptation to
an administration in nower to use

provisions

for

"buying

up"

border-line election districts. Or¬

dinary

and

and
questionable
contrasted with oppor¬

local governments,

emphasis

security

as

on

tunity.

One must also

its

state

undue

himself.

wisdom!

whether

<

starter, S-281 substantially

authorizes
advisers

spend

And

This is one of

understanding

of human

great strength of our free
enterprise system is that it stimu¬
lates to the greatest possible ex¬
tent the self-starting quality in
men.
It
releases
that
willing
The

surge

of energy—that driving in¬
which creates the thing

itiative

Volume 170

that

Number 4858

call progress.

we

THE

That is the

They look to

thing which has brought forth in
lifetime

our

in

vances

the

tremendous

science—in

tralized

and

would

tion and transportation—in medi¬
cine and public health. Last but

how

not

wages we can

least

in

these

dangerous

times,

it has given us the
potential which is so vital to

safety

./'.r,v

our

more

ters

time there has been

own

in these vital mat¬

progress

than

there

nearly 2000
born,

has

been

in

the

since Christ

years

was

v;;X-:'•

There

is

:'■.

good

freedom—from
to

men

for

reason

Progress

progress.

the

choose

right

their

of

own

pations and to carry them
from

the

deadening

all-controlling
The

zsnd

is

of

bring

all

of

and

payers

us

voters

to

shorter

that

be
in¬

whether

once

I

am

child

of
of

my

neighbor's industry and prudence.
This,
according to
Dr.
Isaiah
Bowman, one of the great educat¬
of

ors

our

time, is the deadly epi¬

today

besides which the drought

£he

and

dust storms are

but trif¬

ling episodes.
rebuild

a

shattered

its

revitalize

peoples

But it
tax¬

decide

for

successlul

enactment

But

prosecution

mission

our

socialism

and

national

bankruptcy.
There

is

Bill, which
all

the

to

Bill,

greatest

our

must not forget in
considerations.
I re¬

we

of these

fer

Bill

of

Rights,

fre¬

quently mentioned in public dis¬
cussion and yet so little under¬
stood.
i\
'
The Bill of Rights was added to
the

Constitution-

of

the

United

It is not enough to concentrate
a
single material goal of at¬
taining and maintaining high lev¬
on

els of erhploymeht.

True; enoughf

jobs for all

provided—by

be

can

edict in:

a dictatorship — but at
sacrifice! Full employment
government decree falls far

what

by

a

short of achieving the maximum
productivity of that employment.

energies

to

other

ernment of unlimited powers.

the

of

which

Southerner

knows
and

what

Any

Thomas

Andrew

Jackson

thought about centralized power.
They knew that the only real
individual

of

enemy

to

are
infinitely more lasting and of
greater benefit to mankind.

Too

unrestricted
of

harder

for it lacks the singleness

States because early American pa¬
triots \ distrusted
a
central gov¬

'Jefferson

those

who

liberty was
the hands

in

power

knowledge

Their

govern.

history told

of

them
had

often

it

least

directs

the people's

purposes,
not
is war itself.

And

always it demands the sur¬
render of valuesmore precious to
free

than their jobs.

men

It may be urged that S-281 will
result iri full employment.
But,
if

even

true, employment is not
in itself. The real end

end

an

productive

is

employment.

against their

High
production is what creates high
standards of living.
I

behalf of the people
early statesmen set about to

Everyone is employed in Soviet
Russia.
There
you
have
"full
employment."
Indeed
everyone

how

often

turned

governments

such

powers

people.

own

Acting in
our

restrict the authority of the Fed¬
eral government and to limit the

and functions of its lead¬

powers

ers. The first ten amendments to
the

Constitution, known as the
of Rights, provide that hu¬

Bill
man

rights

dom

shall

individual

and
be

free¬

against

secure

the

encroachments of government.

have

distinguish

civilization

taken

our

and

privileges for
forget, however,

We

rights

and

privileges

are

easily lost. The fact that the peo¬
ples of many countries have lost
their

individual

liberties

to

he

is

work at

the

assigned,

job to which

like

beast

a

of

burden, in. Soviet Russia. But that
does

not

that

mean

better

are

fed,

better housed

the

better

people

clothed,

comfortable and

or

happy. Even after paying the
rifice of their

much

are

Schemes

for

off in all

worse

which

reaucracy

sac¬

liberty, the Russian

these respects than
of our country.

we

these

granted.
that

to

come

American

has

people

This protection of personal lib¬

erty has

the people

are

*

.

'

substitute

private

free

men.

No

should

scheme—however

well-in¬

of Rights into being. Eternal vig¬
ilance is still the price of liberty.

end

statement

admonition.

not

was

It

was

a

allow

surplus

,

.

we

all-powerful

an

and

earnings

that

us

tax

of

deadly
:

prophets tell

government "> to

army

idle

an

a

"L

warning.should

away

our

employ

bureaucrats

to

run

an
our

business, watch over us, and keep
us happy.
TheyX would have us
"givd up bur birthright as free
under

men

the

achieve

can

trolled
eral

us

main

and

:

the

men

some

been
such
to
a

be

can

re¬

protected

government
and

hazards

<

who

us

have

hornswoggled into believing
They seem willing

security

in

lies

gives the individual the right to
for
or
employ whom he
pleases and the same liberty in
choosing a profession or a

work

any

and

ups

downsi

to

the

government

the-control

over

the

vain

hope that

in

that

direction.




But

if

hold fast to

we

I

individual
I

freedom.

have faith

tion

the

of

strive

in

n

the

people

always to improve
individual

and

I

of

am

convinced

that

interdependence

management

prevail

in

and

the

as

spirit

between

employees

will

our

understanding through intel¬
ligent collective bargaining must

never

give

to

way

determination

of

governmental
the

price

of

labor.
am

States has demonstrated and must

continue

that
der

to

prove

an

economy

a

to

the

of free

world

limited

checks and
cessful

in

ployment

men

un¬

government
of
balances is more suc¬

providing

useful

em¬

than
a
governmentcontrolled economy so completely

we

the

a

government

phases

long-range

can

same

of

and, at

expand

various

natural

our

program

conserve

time,

Expansion

Ameri¬

the

Our

of

fourth

all

Our

resources.

Economy

major

expansion of
we

our

greater

in

aie

about

preservation

of

our

American freedom arid
security.

that

pros¬

they have

as

today

ever

in

are

Most

to¬
good shape
been. The farm¬
as

excellent

of

them

condi¬

have

mortgages

paid

great

strength

their

off,

That

the

the

tant segments of our
economy

day

tion.

sure

is

economy so that

have

may

goal

perity.
I think that we would
perhaps all agree that the impor¬

stitutions here at home whioh in¬

to

great

they have
money in the bank, they are get¬
ting good prices for their crops.
lends

to

our

economy.

Labor

mental

in

importance.

freedom

dom

of

of

We

believe

thought and free¬

expression

and

freedom

of

religion, those elements that

are

We

banks are higher than they
have been.
Business is in

shape

nave

.

problem.

serious

a

Housing

housing

means

a

greai

deal with reference to the morale

the strength of our people. In

and

city

every

in

this

nation

blocks

us

much

so

more

today
perhaps they have ever been
It so happens that in this
country today some of our citi¬

and

blocks

of

slums

still

exist.

than

There criminal tendencies

before.

veloped. There the morale of the
people is low.'wXx'X; '.vi *'•'

are not
enjoying equality of
opportunity or equality of educa¬
tion, or equality of the right to

zens

vote.It

is

serious

a

and

com¬

problem., We do not intend,
do

nor

day

we

or

some

expect, to solve it in

a

But

year.

must

progress

each

be

a

year

made

in

seeing to it that we do not have
a
group of second class citizens
in this country.
" ""
There

is

haps

a

even

the

broader

a

ethical

in

one

than
con¬

regarding

the

citizenship,

democracy is

world

today.
peoples of other countries
with

per¬

moral

and

that is that

trial

base,

practical

more

sideration
and

on

The
watch

It is in those

ernment

private
building up proper
housing for our people because of
the

morale

factor

in their lives.
i4'1.'

•

•».'

X

'

*

The

'■

health

it

will

be

difficult

to sell our concept to
peoples of the world.

for

the

us

other

matter

of

Our second goal is the goal of
of oui human and
our individual resources.
Strength
a

country rests to

tent

the

upon

people.

"

great ex¬

a

strength

Of

its

'

analyze

we

sources,

them

women

under

human.

our

find

we

that

re¬

have

we

is

security.
Men and
have a right to operate
governmental system

a

in

which they can have, if they make
ihe effort, a concept that will lead

security

in their days of old
their days of illness or
unemployment, and we have a
in

age,

broad social security program that
can

go a

long

ing this.
The

I was,

young

of

last

when

of

second

'element,

great

a

education

of

a
people de¬
extent upon a

and

that

war

are

education.

that

is

people.

could

We,

fail

to

your

as

sit

cannot

govern¬

back

and

receive

a

see

proper

We, as your govern¬
ment, cannot sit back and see chil¬
dren fail to receive

a

proper

edu¬

cation because of the unfortunate
fact that they are born in an area
or a
state that is ill-equipped at
time

to

provide

that education.

that.

we

Today

are

to.

The
to

see

educated.

hope

entitled

have

no

Federal

step in
that

to

achieve

two million of

some

children

means

and

They

with

and through Federal aid to

education

go

them

to

Government
vcur

a

not

The

found that

we

had

and

'

to

has

government

than

a

new

earn¬

■

Business earned $12 billion af ¬
ter taxes in 1946.
That was a new
record.

4

billion

into

shall

not

go

The

medical

of

care

on

basis—that is,

proper

insurance

an

that they shall pay

for it by the month, so that when

adversity

strikes

and

have

you

serious illness in your* family, you
don't go into bankruptcy to take
of it.

care

That is the basic

'xX'X

ciple of it.
As

we

ists

today,

back

and

and

continue this program of

natural

our

re¬

the

world

today.

We

which

can

mean

so

the

farmers, with whom
you men deal.
We have programs
of reclamation, so that arid land
which

now

was

once

becomes

unproductive

of

irrigation
bountifully produc-'

processes

live.
have

flood

control

plans,

have

plans for the de¬
velopment of the great hydroelec¬
tric

we

power

products

which

f

an

that

there
is, to

brakes, that
the decline that started.

up

that

their

grain and their live¬
prices were going down,

stock

they

went

down

down, and

timately

you

and

down

they

burned

corn

ior

v;'/.'

.

When

and

will remember ul¬

fuel.

working

men

were

thrown out of their jobs, they had

types

no

their

that
in
we

of

compensation—then

purchasing

down.

There

went

power

elements

were some

present in

were

our economy

the beginning of this year that
felt in Washington exerted a

good deal of influence.
At

the

beginning

there

perhaps
the

we

boom

this

were

depression,

of

year

a

period

type

of

feeling that
coming out of
and going into

was

no

one

knew how much, certain elements
our

the

began to operate.
price of farm products

economy

the

after a bit they hit
prices, and the pur¬
power
of
the
farmer

support

chasing
staved
V

up.

When

•

men

were

work because

thrown

of this country.

In the.North west

portion of this
years
ago
there

out of

orders fell off, un¬

employment insurance started. We
had a
minimum wage law that
helped to some extent to sustain,
the wages and thus the purchas¬
ing power of the working men
in this country.
V
.

We

in

ieit

considerable
have been
cern

Washington

a

extent

now

to all of

of

that

we

coming

looks good
chants
let
too low.
up

that

a

what

very-

might

matter of serious

con¬

us.

Government

can

develop new industries in various
areas

bottom;

those elements retarded to

■

We
and

found

we

any

any

of

broad programs of soil con¬

through

had

we

started down,

nation in the position which we

to

came

When

and you realize obviously
important that is to us as

much

1929

wasn't

major goal is the de¬

sources,

in

citizens,

So that when the farmers found

in

servation

In

break

seme

have

our

prosperity. We thought wo
doing pretty well, but when

there

this nation to meet its great task.

occupy

looL

you

of

the

development of our natural
resources, we believe that we add
immeasurably to the strength of

velopment

as

1929 and 1940

perhaps particularly to busi¬

when

the

how

because

compare

of interest to all

are

prin¬

^

takes

will find elements there that

you

basically

receiving

government

some of its policies have con¬
tributed to this condition that ex¬

slow

is to provide our citizens with the

opportunity

;

that

more

discussion, of it now,

a

1948.

satisfaction in this situation
that exists.
The government feels:

attention

'<■!":

1

the

weren't

One phase of that program is a
highly controversial one, that is,
insurance.

in

some

more

,

health

after taxes

Now,

aura

not receiving

are

corpora¬

record. Cor¬

in 1947.
In 1948, interest¬
ingly enough, another new record
was set.
Corporations earned $20

nessmen.,

Xv,

i

1947,

new

taxes

were

with

medical

in

porations earned $18 billion after-

funda¬

hospitals,

more

Again

tions set another

The gov¬

a

Health Program
the result of

people

our

people

our

re¬

have

more

now.

be

•'

J

mental interest in that.

would

ap¬

them

of

the basic physical

pass

'*

providing
doctors,

our

country today,
help j was
very
little industry; now
children are I there are great industries there
'because of the development of

with

those

schools

is

summoned

we

jected?

the

Today

education.

our

people

our

one-third

examination

a

the

millions of pur children
not receiving a proper

are

to it,

1946

business

Situation

to the service in this

men

Our third

strength

children

toward achiev¬

way

to

ment,

in

set for

was

\.v-

'X"

vital

proximately

'

pends

who,

that

Government Takes Satisfactioa in

'

.

„
»

r

fact is that what it does

As

record

I
think
perhaps
who do not recog¬

many

fact

present

concern.
Wasn't
it astounding, weren't you amazed
as

nurses,

development

is
^

■

which

of

today.
are

ings.

Health of People a Vital Concern

ernment offers a

zens,

that

\;

•

it operate here for all of

citi¬

assist

in

democracy operates in
this nation, and if we can't make
our

de¬

are

that the gov¬

areas

means*to

enterprise

really incredible interest to
how

see

there

nize the

ever

good

,

before

plex

in

ployed. Wages are good. The sav¬
ings of the individual in this couniry in our savings accounts in

(Continued from page. 11)
human rights have been of funda¬

;

today is

good condi¬
Almost 60 million are em¬

tion.

Business and the

this

convinced that the United

that

so

ers

oppor¬

end

is

with the maintenance of those in¬

initiative

the

to

'

-

characterized

'effective judgment
of
people throughout this great
will
let
nothing interfere

land

There

push
growtn

ultimate
the

determina¬

American

risk-taking

r

:

■

has

through 'the

power

dams.

constantly
economic

33

of

way

Finally,' I have faith that

basic

our

that

repre¬

our

enterprise throughout the de¬
velopment of this country.

faith that, our gains in this
Republic will continue and accel¬

erate

which

can

there will al¬

economy

be

firms

which

and

which

'■■■£)}:' f---\

war.

hydroelectric
building
of

independent farms

backbone of

forward

have

there

business.

I

nonsense.

lives

cion and tax discrimination which

tual

we

face.

large part of

their

the

for the civilized world lies in that
freedom
from government coer¬

would

still

among

surrender

for

that the only
United States and

They

that

The sad part of it is that there
are

in

ways

to

convinced

the fed¬

burdens

all

we

con¬

the

be well-intentioned.

to
am

hope

in

country and that
the techniques of arriving at mu¬

paternalistic

which

that

life

I

cease

for by

paid

believe

free

a

from

illusion

Utopian

a

government.

have

by

and

future

service

alleviating

in the thousands of

business

life

for many,-many years the date of

of

'}

compulsion schemes

False

depending upon "fear incentive"
compulsion, we can put off

and

ccme a long way.
We still have a
long way to go.
Human beings
High production comes from have a right to expect certain
the intense and willing effort of base elements in their life. One

tentioned—can substitute compul¬
sion for willing effort. And all

X

sent the

initiative

government that brought the Bill

'

to follow this course, rather than

result in full production.

never

I have fath

big and little

encour¬

and

any

increasing

another and in

one

human suffering in other
parts of
the world.

aging the peoples of other nations

„

bu¬

constantly
remind
us
to
keep
alive the spirit and concept of

That

in

<

one

to

(2109)

of

of

of purpose of war. Yet its rewards

accept

and

more

whether, as we see happening in
England today, it. would speed us

and

resourcefulness

be

can

1

J

today is

define

we

to

difficult

to

room

world,
and

war.

of

no

for cooperation.

dividual freedom

requires a sense of mis¬
sion, akin to the spirit required
the

is

equally convinced that by
continuing to function under in¬

realize its fullest economic
poten¬

in

there

CHRONICLE

am

and

sS

FINANCIAL

that

room

tunity
$

to

no

I

&

individual

o r

and

demic sweeping through the land

this Bill would really do that, or

toward

1

the

heir

a

the

and

catechism

new

^

ourselves

v

A

Catechism;

child of sin and the

am a

government

us

produce, what
charge for it, what
pay, and what prof¬

make.

can

asserts

tell

can

regulated

stable- tialities

a

citizens,

as

can

of

They

wages.

heir of Hell." The

To

honest

an

about

we

special

government

we

an

to

are

expanding economy.

for

free

on

■

government.

fully credited with
to

free

occu¬

hand

authors of S-281

tention

this

from

comes

we

had it "I
■

the

much

The

our

and security in this chaotic

world,
In

its

war

let

cen¬

guarantees

jobs

—in manufacture—in communica¬

price

for

government

prices,

agriculture

increasingly

an

privileges and

ad¬

COMMERCIAL

economists
are

out

of

in

this

to them.
their

the

say

process

and

1950

Many

mer¬

inventories

get

They had to build them

because the purchasing power
(Continued

on page

34)

34

THE

(2110)

COMMERCIAL

Government's Program
(Continued
of

maintained a very
steady piessuie, and so orders are
coming in, manufacturing is pro¬
ceeding and is picicing up. 1950
fifth

Our

:

goal
world

of

peace.

Twice in this last generation we
were
confronted
with
terrible

At the end of the last war

wars.

,

determined

this roof wrecking."

is ' the

great

achievement
•

world must know that we are too

too strong

be

to

it seemed,

to be defeated.

I think that it

that because he is your
you

time—it

a

in

was

January of 1947—it seemed to me
then and it
it

l

that

me now

be that

may
v

to

seems

perhaps the darkest time
we had.

was

.

recall in January of

tending

1947 at¬

all-day conference in
the J. Pentagon' Building, for we
an

had received word that the British

pulling out of Greece and
their
aid
to
Turkey.
stopping
Thinki back, if you will, to the
were

>•:

situation that existed then.
An «aggressor

nation,

by
one- had
taken Estonia, Latvia,
Lithuania'/ Poland, Hungary, Bul¬
garia, Romania^ "It was an omi¬

&
•

one

list.'The pressure was build-

nous

ing up

Czechoslovakia. No one
knew where it was to go. Greece

•

on

vital

of

importance in the
'Mediterranean. - Turkey was i of
transcendent importance in
the
Middle' East, and here the word
comes'that the British must pull
was

•

"

out.

•'!

\

'Truman Doctrine
think

I

But

word' went

Jan.

on

out

this

from

1947,

12,

nation

that

brought a'thrill of hope to
all the free peoples in the world,

-•

^

When* the President

-

Congress

•

'

ered

'

went

the

to

March 12 and delivmessage that ■'later'* be-

on

the

known'as the Truman Doc¬

came

is,"

since'that time.

daily

the
in

him, I suppose

believe

I

President,

might value to some extent
opinion of one who has been
daily contact with him. There

has

been

has

distortion.

some

been

coloring

some

that exist.

attitudes

There

of

the

But that

al¬

happens. I find a man of un¬
questioned honesty, integrity and
modesty. I find a man who is able
to engender in those around him
a
deep admiration and a sincere
ways

affection. I find

as

precept* the accomplish¬
greatest good for the

his major

is

care

ment of the

"Oh, the
Hally.

"I

wish

and

I think

I

could

"That's

settle

Secretary at once blew a
big blast ♦ on a little horn that
hung
around
his j neck,
.and
into

the
foot

of

It

came

Hally's

to rest

throne

There

Boo¬

he?

The

minute

next

horrible

a

to him.
/

Ho

can

tains and cities and- then swooped
down to a landing in the court¬

•

■

i.

..

;

whispered

to

I do? I have

retain
It

their

freedom."

brought

real hope. It pro•/ vided a
spark that could add tocourage and building up in them
." the thought that real practical aid
would

come

the

sage

later, for in that

President

mes¬

further

said,

"The major form of aid that
is economic and

we

must render

fi¬

nancial aid."
So that started there the build¬

ing of what I like to think of
'five
*

v

great pillars of

policy.

First

came-the

Truman

Doctrine, then came the Marshall
Plan; then came the North At¬
lantic Treaty, then came the Mili¬
tary Assistance Program to Europe, and then last came Point
Four of 'the President's Inaugural
Address—each taking its place in

«

-

a

broad scope* each
the free- people

demonstrating

to
-

as

foreign

our

that

we

that

•

we

our

of

the

in this to

were

world

stay and

would not withdraw from

responsibility

as

did after

we

isay/nothittg

.

the First World War.
I

;,

believe that the

exceeded

what

results

might

we

have

have

—

.

.

January",1947, because, bit by bit,
it

seems

we

a

fabric

of

have

been

security

weaving

throughout

could make

would' be

the free- nations

of the world,

that in the event

a

tion

continue

its

knows

that

chooses

to

gressive

tack,

moving

against

it

totalitarian

one

these

all.

And

while

tinue, I

am

sure,

with

we

port, every effort to find

can

which peace,

a

real

a

elements

natural
and

re¬

-

there

'We

are

a

people

faith. We believe that if

with
we

a

fol¬

ag¬

basic operation of our system, we

by

can

supr

basis
peace

ultimately be founded, in the

concept and protect the

give the world the leadership

that it needs.

'

of the

out

beyond

low that

meantime, the nations of the




great

above

/is? one
greater than all the rest—the basic
strength we have is spiritual, for
we believe here in the dignity of

peal to

is,

we

the
can

can

highest

power

receive

the

and the confidence
to meet the

we

we

ap¬

there

strength

must have

shouted
oners

so

they
dough

a

that lie ahead.

years

old

of

the

ful
cut

ten

ship

materials,
thousand

time

last

down

to

a

one

year

a

when

bakers

from

80,000

loaves.

The

all

at

once.

as

choke

us

After

opposed
must

do

to
our

If

must

it

of

course

it

to

die

it must,

death

a

ten-minute ovation Mr.
"As I said, the

easily found. Even his majesty,
Hally G., could have found it if
were given time enough. But
we cannot wait for years to have
our just demands satisfied. The

he
i

j

millennium

Builder boys said we were cheat-

our

ing them by paying only 80 loaves

must

tomorrow'

•

has T)een

motto. To reach that goal we

do
I

the

impossible

their

larger number of
of

tithe

loaf

one

thousand balced. So

every

loaf with

everyone likes crust.

of

carried Turn

who

Bakers

the

and round, singing:

round

We've

v.

.

us."

- :
time with

-

stood < for

Boohoo

a

hand

upraised, evidently > (intend¬
ing to make 'a ispeech. Then he
thought of a more dramatic'ges¬
hurled

and

ture

chains

handful

his

of

Builders, who.had

the

at

all been stricken unconscious and

clearly harmless.

were

1

;

*

•Having set the Builders 'Tree "
Boohooj now swung his arm to¬
ward Hally in a magnanimous ac¬
ceptance in advance ofrrHallys
anticipated -decision*
?
T'What

I ^do??

do

Hally.

..

whispered
.

-

-

(J

Sec. instructed him: "Raise your

right hand and point to the-Qreat

Dipper. That /jmeans you -make
sometning a law. Your real ,title
Fairyland is 'The Great Dip¬

in

per.'

proclamations begin: T,

All

Hally G.. The Great Dipper,pour
out the

following blessing for the

people of Fairyland.".'I

"But

can't

ithe

see

Dipper. I

don't know where it is."
"That makes

no

;

>

difference. You

just point at the sky and'every¬
body knows what you mean."
1

So

right
the

Hally/ trembling,-raised his
hand and pointed ^toward

stars.

Immediately there

was

terrific'ex¬
plosion. Iially felt himself hurled
out into space and, miraculously,

a

blinding ilash and

onto

the

a

of that great1 Blue

back

Bird which then carried him with

breath-taking speed far away to
a large city dominated by a mas¬

sive, domed building on a hill. In
the plaza in front of this building
was
assembled
a - vast .? throng
which greeted Hally with thun¬
derous cheers as the Bird dumped
him
on

a

gracefully into a throne chair
platform high above the, pop¬

ulace.

'

*

;

there beside him was*That

T And

faithful little Sec. who thrust into
his hands

thick manuscript and

a

whispered:

t

'

"Your
are

now

Inaugural Address. -You
Imperial Wizard of 'the

Brave New World."

very

solution of the present problem is

im the

baking

we

Nuthin continued:

dread¬

day's

So

or

.

slowly and mercifully, by meth¬
ods befitting those who are, above
all things, humanitarians."

loaf out

baked

We had

socialism

until we 'are
all labor leaders

officially

eventually,
let

behind him as he
platform. "Please,

years.

not

are

best not to destroy private owner¬

man

a

every

next

be

we

and,

course

communism.

.

hearing! - We- are < the
B u i Id e r s
who
organized
the
Builder Boys to build this beauti¬
ful bakery; and we promised to
pay the' Builder Boys for their
us

national

communism

ready, of

in chains whom Boohoo had

mounted

for

ready

brows of

Majesty!"
leaping
group of little pris¬

small

a

more

must

dragged along

give

and

Your

from

out

100,000

challenge of the

more

sweat of the

"Please,

work and

We believe that if

con¬

your

our

But

na¬

it# moves

against

upon

so

Bakery

other men."

man.
-

built-this

government. Another1 would be
our
economic
system.
Another
sources.

hoped back in those dark days of

grave., But,

who

much

is plenty for

„

democratic form of

a

got plenty of Nuthin and Nuthin

-

our

re¬

the smaller* -loaf—
I hope
you like my cr ust."
/Amid thunders of applause"Mr.
Nuthin gracefully
vaulted! from
the platform ionto the shoulders

.

seals/ and one- thing and another yard of a vast buildijig like* a
asked ahgrilyf :
on* it,
a
very impressive docu¬ fresh-baked apple pie.
T
"You've done it plenty of times
ment.-It- happened that the letter
"Consolidated
Bakery," n ex¬
before," retorted Sec. "You have
camfe from Ibri Salid. The President
plained Sec. "Oh dear, oh dear,
opened' it • and' let out a* great it's so quiet, I'm afraid they are said nothing that made sense over
and over again and got a big hand
chortle. It just- tickled' the life out all on
strike again. Yes, here they.;
ifTrom the voters. The trouble is
of
him, because the' salutation come!"
that you are scared now."
was, "Your Magnificence."
The* sound
of
marching fee^
I?nv scaredland- so are
"Well," he .said "what do you grew louder and louler as a great
you -or you'd' have? a rspeech rail
think "of that! Somebody writes
army of men in while aprons and
prepared for me.
Now who
me
and calls me 'Your Magnifi¬
caps paraded into the-courtyard,
is this man?"
cence.' "
:; led by a very small iat man with
A thin man, who was' almost
Well, all it did was amuse him. a red .face and bristling black
three feet tall and had a head as
Other men might think, "Well, it eyebrows.
big as a football, was ascending
is. no more (than I am due."
"Boohoo!" roared the army.
the platform, and at sight of him
An amusing'little sequel to that,
"That's
Boohoo
the
Chief all the Bakers burst into cheers.
perhaps was t that Within a few Baker," said Sec.
<10X20=100
:
days after receiving that letter the
'
"Isn't he a little man," observed
President issued a statement that
? "That's Nuthin, the great labor
Hally.
he favored the admission of some
"Wait till he speaks," warned economist," explained Sec. "He'll
100,000 persons- of the Jewish faith
Sec. "He swells up to five times tell you how to divide $100 among
into Palestine. A week later he
10 people/so That each one can
his
natural
size
whenever < he
got another letter front Ibn- Saud,
get $20."
;
speaks."
•
and this time the letter started,
'This problem is a very simple
Sure enough, as Boohoo strode
"Dear Sir."
one,"
Mr. 'Nuthin
was
saying.
up
tov the
platform
on- which
We are at a vital period in the
"You U downtrodden
Bakers, are
Hally was standing he kept get-,
history of the world. We have
ting taller and fatter until, wher| rightfully demanding more bread
made
certain
technological ad¬
he finally began to speak, he was; for less work. You should have
vances i which
really; dwarf the
1
much bigger than Hally and tow*'' it!" '
concept of man. We have found
ered over him in a most menac¬
After the crowd had» cheered
a
means, perhaps, by which we
for live minutes he resumed: "On
ing fashion.
'
can destroy the worid. As a result
the other hand I can see the dif¬
"We want more bread!" Boohoo
of these advances, and as a re¬
ficulties of the foolish Builders
sult of changes that are taking bellowed. "My people are starv-who persuaded the Builder Boys
ing. We want more bread."
I
place all over thev world, men
to build this Bakery and to give
are engaged in revaluing their be¬
"Why
do
they stop making their work and their materials
liefs and their concepts and'their bread if they want more bread?'*
in exchange for a promise that
standards. This is the time, per¬ whispered Hally to Sec. But Boo¬
they would receive one loaf out
haps more than ever before, when hoo answered him:
of every one thousand baked. Of
the world needs the highest type
"We want more bread but less course
that
is
the
inevitable
of leadership. But one nation can work.
My/ people are dead on weakness and injustice of the
supply that leadership—that is the their
feet
after / working
like capitalist system. It fastens a load
United States. Fortunately we are slaves six hours
.a
day and on the backs of the workers that
strong. There are many elements four days a week, just to make
they must carry from the cradle
in ? our
strength. ? One of them dough for those greedy Builders to the
would be

that they should

per

"What

•

trine/ for if was there * that he
•said, Tt must be the policy of this
natioft to support the free peoples
of the world who are'fighting! to

tell the

and

nothing to say."

...

also

they should be very happy. Also
there will be i much more Crust

.

"Then say it," answered Sec.

"How c&n

/;'/

Builders

in

of

out

silence

/

»

Sec.:

earth.

the

loaves

terrifying threat of Boo¬
hoo./. All ? eyes were? turned on
Hally and he had the feeling that
if he failed
to >rsatisfy ? Boohoo
something dreadful might happen

was

back.

was

shorten the work

is the most efficient pro¬

on

receive

after this

and
its

rushing through the air, clinging
to the bird's soft feathers, with
the little Sec. hanging on to his
coat collar. They flew at terrify¬
ing speed across fields, and moun¬

leter/ it came in to him
one morning in
a staff meeting.
It was done - up with ribbons and

proclaimed

Baker will bake, but

a

can

Builder Boys

loafer will loaf, until we all
starve together. Multum in parvo.
That is ray sine qua non!"
'
-

on

onto

be able to produce
loaves of bread to¬
they did yesterday,
little more work: So

joice. With this vastly increased
production of half loaves—I mean
full loaves—the Builder Boys'will

every

huge Blue Bird flew

a

room.

is his basic and inherent modesty.

a

right,"

as

worker

doesn't settle it and

,

promptly

floated

ceived

it

hoo, "not

The

go

Then

many

very

ducer

I

someone

to

from

"Let

get something to

somehow

ago, and I use this as an
illustration—' the President re¬

quote,"

incorrect

an

accurate observation."

an

eat."

Hally

years

jornt-^it's cursed

go

perhaps one of the most
appealing traits of the President
Some time ago-4his is some three

of

out

Bakers

six to five hours and
the output of loaves per day will
still far exceed all previous rec¬
ords
of
production, thu3- again
demonstrating that the Fairyland

supposed to settle this
stopped,""
row?" asjsed 'Hally.
/

rain -has

cried

the

greatest number,

is

"Am

somewhere

as

day

whispered Sec. to Hally, "but it's

right of
:

all."
T

time

of by government.

the most sacred

would

with

spite that I was ever born to set
it right.'"
•
- -

•

who has

a man

taken

they
twice

The

work.

less

his

direct

Boohoo

the Builders

and

full

a

back to work at six o'clock:

you

morrow

bread

for

bread, beginning -at- six
o'clock this evening. Let the great

just paper money."

more

standard

the

as

of

loaf

prisoners. "Money is all you want.
My people want more bread —

long ago that
picketing is a form of speaking?
It's just a way of telling other
people where they get off. The
right to picket is just a right of
free speech, which is more- sacred
than anything except the right to
be

bread

shaking the chains that clung to
the thin ankles of the scrawny-

know that the Great Court of Fi¬

That

;

fat parasites
interested in!" roared Boohoo,

are

nal Confusion ruled

only once before I came to
House in 1945, and I

White

were

remember

it

ident

the-

I

—not

"Money is all
what,

our

"Oh, yes; but we had promised
the Boys bread that they can eat

Hally.
T "Because v! that's

day. v We

a

Bread—Not Paper Money

.

snapped the little Sec. "Don't you

the

100

of

another cut in

stand

it.

use

help to you if I said- a word about
the President. I had met the Pres¬

have worked with

governments of the world
ready for peace, that almost
any sacrifice would be made to
achieve a lasting peace. And yet
that proved not to be so.

wrong To

"Why do you call it a free
speech
picket
line?"
inquired

might be of some

I believe to all of us,
that the peoples of the world and

'

and

frightened

Something About the President

looks good.

-He turned and spoke directly to
can't
■ v:,;.V:'::
pay."
' Hally.
; *
Fairyland Efficiency
"Didn't
I
force
the
price of
bread up?" roared Boohoo.
""Your Majesty, just
issue an
order establishing half a loaf of

instead

2)

page

The commies
have put a free speech picket line
around the building and they will
beat up anyone who tries to stop

from page 33)

the public

from

(Continued

-

Thursday, November 24, 1949

Fairyland via The Welfare Slate

A Tiipto

Business and'the

t

CHRONICLE

FINANCIAL

&

today/'

Then

G.

Hally

stood

upland

read his Address which told,

first,
going to trans¬
whole
country Into

about how he
form

the

Fairyland

was

which

—

people

surprised

a

who

thought
that it was
already' Fairyland.
Next, he told about what h£'-had
planned for the rest of the world
great

—so

many

it

would

all

become "like

Fairyland.
Hally
own

was

very

wearied by his

speech before he got through

1 with* it;

but

the

people' kept

Volume
fltt

-

a

170
J

•

cheering,
doing

kii

'

1

• -

.

he felt that he

so

all

Number '4858

■

THE

COMMERCIAL

intd

sing a song; and this
song they sang:

In this land of the

the

was

on

No

budgeting speed
Archimedes;

.he

hear

a

Willi

makes

'

less

the ocean;

.

tried

"

v

>

proving

:

;r divide it; c
didn't make it:

•'

the

comes

super-re-

creation, include
own nation,

•j

$0'(tll

about

nothing to do

,<

the

one-

with

finance.

On

other

fice

an

of

floors

at

are

costly of¬

on

a

Wood-

a year

.

maintenance

.Twenty

.

.

all

can

under

ers

cost of running
Government i was

them.

Thus

they

are

that

in

the

it cost
government in 1928.

to

the

run

1

save

everything; but
cash;

person

We will mix everyone, so we hope
CVou will like hash;

We will

soar

J jdead when
And

brave and the

Mankind
<'

crash;

we

from the

so,

..

.

world

be

whatsoever

ica's

tax

year

for every

bill

does!

child

in

$371

per

woman

and

averages

the

Amer¬

man,

country—well

by

the

G.

Washington.

the

on

These

not

are

at

just

'

As

the
out

away,

the

lights

people

faded

and

some

and

the

Hally felt very lone¬
the high platform with

on

only little Sec. and the Blue Bird.
"We

work

and

home

go

farmers.

Sec., "be¬

must satisfy

you

We'll

and

now

sleep," said

tomorrow

cause

the

must

have

to

pour

come.

abstractions: They are

.

,

You pay a Federal tax of 20%
theatre tickets, cosmetics, light

The Post

Office, which does

business of $3 billion

have

a

annually will

i

something out of the Big Dipper
which will satisfy the farmers or
there

a

tion."

will

be

how

no

end to this problem
care
of every¬

take

to

body?" asked Hally,
onto

the

back

and dragged

"There is

problem
little

Sec.

he crawled

as

the

up

Blue

behind him.
end to any

any

the

as

them

Blue

through

the

Bird

sky.

pack of cigarettes take

a

loo^: at them and reflect for
upon

a
the significance of

the fact that the tobacco

only

7

cents

and

man

that

the

gets
r£st

save

$150 million.
Two different government agen¬
cies surveying construction sites
of dams a half mile apart on the

(Special

SAN

John

to

The

Financial

C.

CALIF.

Lackey, Jr. has rejoined

has

Herrick.

recently

Waddell

&

Washington

to /spend* money

ways

falling

are

each other thinking

over

been

day,

up

and

new
new

to

BRIDGEPORT,
ton.

McQuade and
have

become

Hincks Bros. &

though

Chronicle)

CONN. —John
Earle

W.

Min-

affiliated

with

Co., Inc., 872 Main

Street.




inventories al¬

property

agency has a record
of their nature or whereabouts.
no one

The

Bureau

force

the

United

spend itself to destruc¬

years

government,
cost

ago

all varieties

omitting

debt

the

average family
annually. Today,
making the same omission, it costs
an

than

$200

family about $1,300.
beyond this is the alarming

average

And

fact
tives

that
and

at

this

moment

legislatures

execu¬

are

seri¬

ously proposing projects which, if

enacted,

would

add

one-third

petuate themselves,
will unless
vidual

The armed services

dissension
rule

split by

are

by the

threatened

and

That's

employee

one

for

32 Indians.
The Army tore down a camp in
Alaska that cost $16 million.
It
shipped the' lumber to Seattle,
Wash. The Department of the In¬
terior got the lumber in Seattle
and shipped it back to a point 10
every

miles

from

where

it

origi¬

came

nally.

demand

ment

Depart¬
Agriculture seeking ad¬

of
on

the best type of fertilizer
his soil.

on

use

20%

takes

the

operate

All the

different.yt

answers were

It

He got answers

more

to
Depart¬

Office

Post

ment's fleet of motor vehicles than

it does to operate
vate

large-scale pri¬

transport fleets.,

might and
Congress call a halt

that

the spenders?

on

As I have already told you,

Citizens'
Hoover
take

Committee

Report

left

off.

Spurred

the

To1

turn

out

the

Paper Work

its

of

maze

Federal

848,567, typewriters.

owns

£35,000

persons

on

the

About

Federal

use

time

full-time basis. This

or

that

typewriters

the

government
typewriters for every

who

on a

part-

means

owns

3.6

employee

uses one.

The

paper

purchase
more

paper

least

at

the

dollars

billion

a

times

four

It takes

to

government

year.

a

long for

as

pay

veteran's

a

it does

claim

a

Citizens'

orders

each

1.5 million

costs
And, by

year

than $10 per order.

the way, half the purchases are for

items costing less than $10!

Forty-seven Federal agents rep¬

resenting

seven

different agricul¬

Mr.

by

Hoover

Committee, the
Congress adopted at the ses¬

81st

sion that has just ended five laws
on the Commission's Report.

based

Saving of at least $134 billion in

if all of

us

rights

courageously assert
citizens

as

Worse than that,
it takes four times as many people

had

could

result

a

installed

an

such, and,

as

and

developed

accounting system

as

not produce

a

re¬

liable statement of whereat stood

financially.

In

recent

one

year

Secretary reported a surplus
% of a billion dollars when, in

fact, there

was a

billions.

deficit of several
,

,

Startling as these facts are, they
only a few of the hundreds of
similar facts that a study of the
are

The

economies

obtain.

All

in the

yet to be acted
of

manner

sprung

opposition
within and

both

up

that

government

sledding

for' the

advocates of economy. One de¬
partment head, who unqualifiedly
agreed1 with every recommenda¬
tion

the

of

Task

Force

that

studied his

department, now says
will resign'if a single one

that he

of

til

e' recommendations

os

is

adopted.

Obviously the staff and
employees Of his department have
done

a

thorough job

him.

on

On the

outside, one of the great
national organizations has raised
its

them

our

not. going to be easy to

are

upon

order

Report reveals.
One of
startling things about
is that' they are true of a

our

put

inherent

recommendations

Hoover ?

most1

and

shoulders to the wheel.

insurance

private insur¬

a

company.

dues

on

vent

their pri¬

to

by 25 cents
provide

campaign

a

government of our own choosing
—a government of the choosing of
a people who may justly claim to
be the most efficient in the world

per

funds

year

to

designed

in

carry

to

pre¬

In

the management of
vate affairs.
in

and

and of the
to be raised
this spending would be

spendings

proposed

the adoption

of any recom¬

mendation that affects the depart¬
in which its members are

ment

interested.

!

addition, there is plenty of
that "Yes
But," attitude, also'
—

One end result of the actual

both within and without the gov¬
ernment. The average department

taxes that would have

head agrees that everybody else's

to

department

cover

government would be¬
major, if not the only,
of credit and capital for

the

that

the

come

source

economic system.

our

ought to be rorganized, but not his. And 011 the out- *
side, state and local Chambers of
Commerce

tions,

and

other

organiza¬

in

discouraging numbers,
witling to go along on every¬
thing except those recommenda¬
are

$3 Billion Waste

that he estimates that

reduce

would

least

at

recommenda¬

Commission's

the

publicly
adoption of

Hoover has stated

Mr.

$3

billion

expenditures

annually

and

perhaps more. I often have won¬
dered how much he would reduce

responsibility for

them if the sole

eliminating

if

that

doubt

no

and

waste

this

were

the

that

the

wastage far

ex¬

Remember
that, with the exception of inter¬
est on the public debt, there isn't
a single item in the Federal budg¬
et

billion

cannot

that

member

also

a year.

be

savings

total

lhat

us

thinking in

are

put the

good of all first.
Some

Encouraging Developments

However,

there

are

some

en¬

couraging
developments.
Manynational, state and local organi¬
zations
to

have

themselves*

pledged

support the Commission's

rec¬

ommendations. Among these is the

United

States Junior

Chamber of

Commerce. This virile and enthu¬
siastic organization of the leadersof

today

and

tomorrow

has:

mission's recommendations1

by

Mr.

great iiV relation to

Indeed,
the
saving of this amount would not
reduce the budget to
anywhere
near
the level that may be re¬
garded as the maximum amount
should

of

many

too narrow terms. Too few

GOV¬

LIVING BEYOND

estimated

Too

adopted the support of the Com-^

OUR INCOME.
The

accumu¬

Re¬

reduced.

THAT, THE

ERNMENT IS

ing will be done if the

lated local protests are heeded and
the general welfare
is ignored.

pos¬

reduction would be a
great deal more than $3 billion
per year. At any rate, many of us
who worked with the Commission
sible,

tions that affect their pet activi¬
ties and projects. Obviously noth¬

extrava¬

given to him. I have

Hoover aren't

work on

to

Commission

ready have been made possible by
these laws. This is but the beginv
nirig of what can be accomplished'*

ceeds $3

Government

the

organized

was

where the

over

the

for

the annual cost of government al¬

a

believe
Government

they surely
in our indi¬

as

collective

year—one-third of the total Fed¬
eral
budget —demand twice as
much ($30 billion) while wasting

a

gance were

money

re¬

per¬

military "clique"; and
the Army, Navy, and Air Force
which together spend $15 billion
of

tions

the

those

as

rise up

we

and

and

tion.

Indian' Affairs

of

has 393,000 Indians under its ju¬
risdiction or care. It employs 12,-

payroll

Twenty

less

(Special to The Financial

of

"Some" work

said:

tion."

of

"Two With Hincks Bros.

shall

we

States

with

Reed.

when he

ago,

service,

W.

lion

from five separate offices.

in

informa¬

adequate

we going to do about
going to stand by and

are

we

ported by the Commission to

the

boys

while

300 Montgomery Street. Mr.

Lackey

costs

bureaus

to

—

the staff of First California Com-1
pany,

estimated

government

States,i38% of the workingman's

where, even including this coun¬
try, gave us fair warning quite a

Chronicle)

FRANCISCO,

with

up

Some

income is taken for taxes, and the

we

J Rejoins First California
J

—came

$75 million apart.

vice

have discovered that taxes; which reminds us that old
Comrade Lenin, who, as he lies
the
way
to
solve
every
little
in the great mausoleum in Red
problem is to create a bigger one."
Square at Moscow, is worshipped'
by ■ all the Communists
every¬

"because

river—at $250,000 per survey

same

A farmer wrote to

Yes, right here in these United

without

ture

the

goes for taxes.

Bird

Fairyland," answered

Sec:,

hurled

of

never

in

buy

you

moment

,'

■

"Is there
of

counter-revolu¬

a

make decisions of the gravest na¬

of

better equ foment could

gram.

And next time

must sometimes

State Department

deficit this year of about
$500 million. Better management
a

bulbs, luggage, jewelry and furs;
15 % on sporting goods and films,
telephone bills and railroad
Then there is the income

the

and

Are

allow such conditions

rough

269 persons to administer its pro¬

tickets.

However, Mr. Hoover's estimate
gives us something definite to
work on—right now. The question

presage

The govern¬

on

ta x—remember?

the President

that

be

times $3- billion annually.

the

facts, in terms of hard-earned in¬

ended

song

faded

theories

or

ing foreign policy, and communi¬
among them are so con¬

would

without

over

Potomac

several

reduction

And, perhaps worst of all, it was
found that the government never

short expe¬

a

$27 bil-

pandemonium

people;

the

has

voluntarily

persons

$1,000 for the average family, The' maintain supplies of
equipment
the average citizen: works 47
days a sufficient to last for 50 years. All
year to support the extravagant told the
government owns

of

saved

income

,

v

free,

shall

Hally

great

-

high we'll be

up so

Who pays for all this? Every
in the country with any

we

and general welfare of the

cations
fused

get

function and activity
not necessary to the health, safety

to make the payment.

500,000

at' least

-

won't save.oiir

today engage in operations affect¬

to

courage

inate every

ance

their work

•

i

Forty-five out of the 60-odd top
agencies of the Executive Branch

and

than

money

a

million.

the

pruning shears and elim¬

as

>

more

—

only

out the

it?

million irvone year
few years later at $132

ac¬

authorized to deal

on

quit1 annually after
rience in the work.

wasted-r-

we

drain

and

only had

we

es¬

was

of

and

only with reorganization of exist¬
ing functions and activities. If

is: What

reservoir

a

timated at $44

question

functions

was

that

Commission

1948

down

securities.

tivities. It

The appeal of a career in U. S.
Government service is so slight

grasp—remember

Who Pays?

We will

35

Commission did
the

of

policy

up

well, because it affects your ment
employs more than 2 million
life and the- future of your
young^ civilian employees.

poured

military personnel
apiece.
government pays interest
on
its own money. This happens
when government corporations in¬
vest their surplus funds in gov¬
The

The cost of

with

made

encouraged to build

it

Hoover

houses for

ernment

deal

forces recklessly.

It is hard to understand a figure
like the last one, but here is one
we

year.

Supervisors are rated and paid
according to the number of work¬

year

a

$129 apiece—to say nothing Of

910

obsolete

charges of $29.00 per year when
they might be stored in cardboard

per year,

billion a year.
Today
the cbst is about $42 billion.

found

-

tons

kept in steel cabinets

country.
spent

of

uselss records and documents

$4

$4

The

,

Lincoln

years ago, the
the
Federal

sters:

be saved by the great

may

Hally G.

year to run the

-

,

beat ail

equal

Narcotics, which have

Thousands

Washington

of $338 million

our

" '

cOuper-hoop-looper

were

its

Bureau of

manage¬

Wilson spent $5 billion

that

he

George

a

the

during World War I.

gander;

J. Caesar, he tried it, but couldn't

To

question

Branch of kthe

in

only $523 million

he'd

but

would

age

b. William McKinley fought the
containers in warehouses at $2.15
Spanish-American War and spent1

Alexander, he turned

it,

they

of

are

Treasury Department has
jurisdiction 7 agencies,
including the Coast Guard and the

v

1

difficult p^ject might be;

.

who

group

under

national affairs:

our

average

as smart as he.
To conq uerihe world We'd agree

'

regular recipient of govern¬
money. \ If all of those of

The

its

Abraham

.

row

Napoleon would take

population

half of the number of
people who
voted in the last Presidential elec¬
tion.

the

disclosed.

beyond

exists

cost

million

But' they weren't

vow

Forces

of the

person

Government.

what

ment of

stop the sun moving,

•

Task

7

every

one

confusion

■

'

;•

working

right hand is do¬
ing, and that an appalling state of

It

1

em¬

hand, fiscal agencies
properly belonging to the Treas¬
ury, are scattered throughout the

m

really ffight'ning;

And

of

than

more

married,

I will tell

work

of the astounding

are some

indicate

know

Bold Ajax said, lightning was not

out a

the

that the Executive

For' you cannot depress Hally G.;
Canute had a notion to push back

a

University.
about

more

They

quicksands of debt do
,

a

this

facts that the studies of the Com¬

equal

one

of

ment

Committee later.

.

<■

The Greek

every

the Union and headed by
Robert L. Johnson, President

you

when

V'^y(7 'H-

not flee)

Quite

from

women

is

reacting) he adds ganized, that its left hand doesn't

Ivw

Joshua

and

men

mission's

three. '

And

organized, consisting

uniforms

in Alaska at $58,000

every 8 of the

little

A

government is inappropriately or¬

*by subtracting,

From the

ployee to

Dr.

new

a

gurgle
Circle;

the

Einstein

And

he's

Commis¬

the

to

government

one

at

out

of

payee,

Euclid

squares

paid

was

Here

You'll

,

be

is

budget

requested

Army

funds for 829,000 tropical

22 persons in the
Worse than this,

States.

there

not

elimination

single county in Georgia.
The

em¬

people of the country.

-G.;
In

$1,900

pay

one«government

every

attention

serious

state in

found Hally

we

United

that

of Tepnple

payor

till

knew

one

is

Report

A miracle worker is he.

the

annually.

There

were

sion's recommendations, the Citi¬
zens' Committee for the Hoover

:.»'.■} :

provided,
make

ever: been

had

existence, but, in order to make

would

bottle by Doc

a

'■ V?

tnat

ployee to

certain

from old Plato how
not to deflate—oh,
By 'Socrates guided, with billions

to

member that the

spending J tural field services are devoted to
adopted the the service of 1,500 farmers in a

family would

projects

of

brave and the'

He. learned

How

fill)

our

average

its report to Congress, it went out

by the great' Hally

raised

was

to

If these

of

.

:.;y

Aristotle.\

annually

the

branch

made.

G.;
\

executive

After the Commission rendered

free

Re

more

of taxes

the

government

7

Hal{y G-

ruled

CHRONICLE

Wastefulness in Government Finance

to

are

FINANCIAL

was

right.

Finally, he reached the end and
then/a hu^e, band began ho pl^y- ?.£*; (Continued from page 13)
a: tube? a nd * all Vthe people-began;

We

&

-

expenditures.

the.
Federal
Government,
spend annually. But re¬

as

their No. 1 project for this year.

They call it "Operation Economy."
I think we can feel especially en¬
couraged
Citizens'
have

the

that the efforts
Committee

of the*

going to1

are

support of an organiza¬

tion

with

that

this

local

units

the
one

energy

and

have

strated in the

so

and

its

numerous

(Continued

vigor
anci'A

state

often

demon¬

construc-

on page

36)

26

(2112)

ment's

(Continued from page 35)
and highly successful proj¬

j

As We See It

Wastefulness in Government Finance

t.,

Can

have undertaken
in the public interest.
I have had the greatly cherished
privilege of working with the Vir¬
ginia Junior Chamber of Cominerce and its local units through¬
that

ects

State

the

out

plans

they

support

Can

the

founded.

was

legislation

campaign

that

to

propose

these

young

men

I found little
feeling that our

put on,

to1 warrant

in

me

drift toward

tarianism
there

of the

aware

it

Is

would

halted.

be

resented this

drift, but there
few who dared

powerfully
the' risks
do

Oh,

plenty of people who

were

involved

in

were

take

trying

to

next

few

older

us

days, and

somewhat

and

men

ashamed

I

of

women

reluc¬

our

tance to stand forth like real
and

men

decisive

and resist in

women

numbers the evil forces that have

have

These

government
that
country great.

of

made

the

against

themselves

arrayed

principles

our

believe in
their country and its system of
government. They believe in in¬
young

dividual

men

freedom.

They believe
in private enterprise as the sur¬
est

route"

with

believe

that

rendezvous

man's

to

his -ultimate
the

They

destiny.

qualities of re¬

straint, of integrity, of conscience
and of courage still live in the
people of America and that it is
not

qualities
dies

to

late

too

these

summon

Finally, la¬
they aren't

action.

into

and

gentlemen,

They
them

and

that,

least

at

shed

to

difference

job that
proud of

going to do
the people

are

make

cause
ers

I

will

suspect,

apathy and in¬

apd get in there and

opportunity
them

with

cooperate

to

the

and

is

Citizens'

Commit¬

will give
,Shem your wholehearted support,
Because they will be carrying the
ball for you and me. The least
wef can do to help is give them
our
blessing and the encourage¬
presented,

you

yoke

of

bondage

to

a

powerful

and

I believe that if you

search

the

for

will rea.ly

intellects

your

souls

and

your

to

these

answers

questions, you will surely answer

of them in the affirma¬

every one

tive.

morality of the government's

the

policies. You
recall,
I
that the Tennessee Val¬

present
am

sure,

ley Authority was established as
flood control and navigation

a

project, with production and dis-t
tribution ;> of electric
power
as
only

incident to these objec¬

an

No

tives.

faster

a

people have
than

one

had

ever

that

the

Even

them.

on

put over
of

member

who

Senate

sponsored the
creation of this organization ad¬
the

mitted before he died
from the

beginning

that it

a power

was

proj¬

ect, and that the only reason for
calling it a flood control and navi¬
gation project was to
t h e
constitutional

of

contains

prohibition, but the advocates
the mask of flood control

wear

navigation. They espouse their
multitudinous power projects with

ladies

Now,

gentlemen,

and

I

don't know what you think about
what
I
have
said
to
you
this

morning

about the

or

♦said

it.

gard

I have

way

my

Maybe

of

some

you

re¬

presentation as just an¬
speech. However, I hope

other

because
was

never

anything

I

that I

serious

more

in

you

about

assure

sin¬
everything

life. I

my

indifference

brazen

Con¬

the

to

stitution.

Quite

controversy is going on

a

right now over the development
at Buggs Island and the proposed
development by the Virginia Elec¬
tric & Power Company at Roan¬
oke

Frazer

talk about flood control and navi¬

certainly

They, most

do

All they talk about is power

They are resisting
Electric & Power

development.
the
Virginia

Company's proposed development
at Roanoke Rapids not because it
with

will

interfere

and

navigation

on

the

some

heard

themselves,

of

many

that

feel, as I
people express
the
American
you

people will never give
liberty. I tell you that
already given
it.
are

More

than

direct

up

a

up

their

we

have

large part of

million

25

people
of

beneficiaries

the

philosophy of government that
now
prevails in Washington, in
the form of direct regular
Of

hard

treasury

cash
—

from

the

that

cash

receipts
public

has

control

flood

the

Roanoke

solely because it would
they claim,
with the
development at Buggs Is¬

interfere,
land.

'ievies;

and

it

is

the

announced

intention of the Administration to
add

millions of others.

recent

objects

of

the

The

most

govern¬




command

my

first

of

that

others
were

could

cited

be

rate

least

time

privilege of individual
anything to you,
that if you really believe in

and

means

founded—then
that

NOW

with

we

either

of

choice

the

fighting to preserve our rights or
accepting the loss of them and a
return to the tyranny from which
forefathers saved us.

our

assure

.

if we don't stop it,
surely engulfed
the people of

work here; and

will be

we

disaster

as

were

as

about

running out, I will stop with
that one, but before I conclude, I
would

like

to

causes

much

call your

A

But

natural

integrity

government and

there

attention
just

issue

quote from
of

the

which

here

are

we

is

assembled

whose courage has

a man

inspired the world defied no less
a tyranny than that by which we
ultimately will be faced if we do
not strike it down before

it attains

full maturity.

Patrick Henry held
liberty dearer than life itself, ana
he had the courage of his convic¬
tions. He dared to defy tyranny

publicly.
Can it possibly be that we are

ourselves

show'

to

"Sept.

30

President

—

of

the

is

unwerthy

of

before

stand

to

in

to

us

suspicions, distrusts and special interests, that we have no

understanding of European conditions and problems.
equally bad is the fact that any continued pressure
by the United States of America in advocacy of such a de¬
velopment in Europe is inevitably interpreted Widely in
those lands as "foreign interference" with domestic matters
•—and foreign interference at that by a nation geographically
What is

far distant.

upon

Western

enslaved

become

the

courage

for

want

of

with

rights

to

which

God forbid that
ourselves

so

we

which hope of success
any very large de¬
gree.
The temptation doubtless is to bring additional
pressure upon these countries by means of grants and
the like, but it may well he doubted whether any such

rested

us?

should prove
of simple

destitute

gratitude.

course

in

excess

to The

(Special

premises

upon

going to be realized in

\
-

will succeed.
Earlier Errors

J.

FLA.—

BEACH,

is

Harpster
&

Thomson

Of course,

Chronicle)

Financial

DAYTONA
Wallace

with

McKinnon,

105

Broadway.

Joins A. M. Kidder Staff
(Special

to

The

Chronicle),

Financial

borne

.

MIAMI, FLA.—George Tavantis now connected with A. M.
&

Alfred

Co.,

duPont

I.

Building.

R.F. Griggs Adds
.(Special

run over

with

is

the

R. F.

•

,

,1

'-i

.

■

.

'

-V<'
.-it

■

■

j,

i

•"
.

iou«vU"''
i-

our

thinking is not fully

the nature of conflict

Germany attacked Russia after hav¬

most of the remainder of Europe, or perhaps

Germany attacked Poland in 1939 or
popular to say and to think in those
early days that the world was confronted with a unique
dictator in the person of Hitler, who had, ambitions to con¬
quer the world, that he had managed to make peace with,
or
perhaps to make cohorts of, two other unprincipled ty¬
rants and thus clear his path of important obstructions
which had

hampered

The cry

for

Griggs

Company, 35 Leavenworth Street.
\

of

should say when
earlier.
It was

WATERBURY, CONN.—Stanley
Duane

error

This has to do with

which broke out when

Chronicle)

to The Financial

in mind.

even

zis

Kidder

this situation will not be clear in all of its

basic elements if another

ing

Kaiser,

$30,COO,000

not

& McKinnon

Kaiser-Frazer

of

are

With Thomson

"Times":

F.

Europe would take

obvious that the

kindly

a

providence has endowed

was

the direction of

resist, at
whatever risk might be involved,
those who seek to deprive us of

sutficient

course,

very considerable strides in
becoming "one world" as it were. It
has always been more than doubtful whether the ideas
and the ideals of the European Recovery Program would
or could succeed
in any event any more than the Eco¬
nomic Recovery Program of the New Deal had done a
decade or more earlier in this country. But it is now

by Henry and the other fear¬

patriots of his day? Are we
going to stand supinely by and
permit ourselves and our posterity
to

the hope of success for the Marshall
in very substantial part founded
the notion that, economically speaking at the least,

Now, of

Plan, so-called,

less

our

reported
to be
in
Washington attempting to arrange
loan

quite evident that, however
must be regarded, the

inevitable all this

real

unworthy of the priceless herbage
of freedom that was bequeathed

Corporation,
"a

Visionary Idea

become

doubly difficult, since it is obviously not to the interest
of the Kremlin that any such development occur. It is also
obvious to the European, steeped in his local traditions,

world

the

Oct. 9, 1949

York

Edgar

the

even

now

as we have conceived it, is not of this world.
Even
the specter of the aggressive communists to the East is not

inspiring exam¬
ple of personal courage and thus

rather for¬

that

New

or

has

enough to weld these disparate peoples into anything re¬

situated,

how

cibly suggests how iniquitous and
powerful is the policy of govern¬
ment largesse.
I

it

notion,

we

wonder

to

one

-

A hundred and

recent series of events that

one

the world,

very effective military resistance to Russia, par¬
ticularly if the "integration" was both economic and
military. Here then was a situation which could scarcely
fail to revive with great vigor in this country the no¬
tion of a "United States of Europe."

you

state, where the government was
to give everything for nothing, it
didn't work in Rome, and it won't

should have been
former ally under the rule

any

that it is later than
you
think. Rome fell because a
hearty race of free men, fell for
the
dreamy idea of a welfare
I

our

particularly in Europe, and that the state of affairs we
were responsible for creating in that land made easy vic¬
tims for the Soviet imperialists. It was, of course, obvious that a united Western Europe was essential for

RIGHT

laced

became apparent, as

of the Kremlin had vast ambitions throughout

must con¬

we

are

soon

fully anticipated, that

short, if we truly believe in the
principles of government upon
Which this government of ours
was

on

they could become self-supporting again.

It also

right to acquire and be secure
in the ownership of property—in

clude

the globe with resources sufficient to
obligation to see that these people at
saved from extermination by want until such

power

were

as

the

if

time; Since my time is

to

late years,

the task, were under

/

there

been

taken from you and me and others
in
the
form
of
exorbitant
tax

at

freedom

t

Perhaps

let me say to you with all

earnestness

that if the

River but

power

/

other

ladies and gentle¬

In conclusion,
men,

have

project, and who fight the
application of the Virginia Elec¬
tric & Power Company for the de¬
velopment
at
Roanoke
Rapids,

.

be welded into

however, in this country, and in some
important countries, the day-dreamers have been in
loan
has
been granted'; to the
the saddle. We appear to be in the midst of one of those
motor car manufacturer.
cycles of popular' thinking when a program—preferably a
"Oct. 5—Henry J. Kaiser's steel
radical, if not revolutionary, program—to change all things
company signs a contract with the
steel
union including the
basic forthwith appears to be generally regarded as essential to
lecommendations
of
President "constructive" thought.
Two world wars have given im¬
Truman's Fact-Finding Board (6
petus to this type of philosophy both here and abroad. Under
cents an hour for pensions and 4
our
leadership—we had 'almost said compulsion—the war
cents
for social insurance, with
in Europe was fought "to a finish," and in the process untold
the employer bearing the full cost
destruction was inflicted, leaving millions of people quite
of both programs).
"Oct. 6—RFC announces a loan
incapable for a time at least of avoiding plain starvation.
of $34,400,000 to Kaiser-Frazer."
This state of affairs led us to feel that we, about the only

land

gation?

process

real "United States of Europe."

a

Day-Dreamers to the Fore
Of

application
pending before the board and no

except that 'there is no

this glorious and

Do

This is just one aspect of what
believe
that
that is precious to us as individ¬ I regard as a low degree of moral¬
ity in the administration of our
uals and as a people is in serious
jeopardy.
V
^ national affairs. There are plenty

have

on

was

those who ob¬
tained approval of the Buggs Is¬
Rapids.

very

cerely

make

to

magic

some

anything approaching

had no statement
reports that Kaiserseeking a large loan

eighty-four years i sembling a nation or a close confederation of nations. It is
ago, in little St. John's Church, clear, moreover, that in several of them, the communists
on the next hill to the east of that!
themselves have 'so infiltrated as to make any such task
on
which the meeting place in |

public power no longer bother

to

RFC

Official of the

—

said the agency

Home.

still

Constitution

The

1

by

prohibition

prise.
that

"Oct.

tcrests, could

circumvent

against setting the government up
in competition with private enter¬

not

ment of our moral support.

not,

the

politicians who regard themselves
endowed with superior wisdom
and the "Divine Right of Kings?"

their eld¬

of

some

their

a

pitch for the cause of sound gov¬
ernment. I hope that when the

tee

a

and

afraid.

will

perfectly clear that

Then I think we must consider

♦shan't be at all surprised if they
make

-

as

something about it.

The .Junior Chambers of Com¬
merce
will
swing .into
action
the

expense

'

self-appointed

/

'within

not

favors
of

that

tiie

at

policy of favoring, first one mi¬
nority group after another even¬
tually
will
put
every
citizen

form of totali¬

some

well

as

groups

majority?

under

•

■

the

few
made

to

government will not support
own
status quo and other

other

with which these young
men
are attacking the job of re¬
awakening the people's devotion
to
the principles of
thrift and
provident living, and to the loveof individual freedom, upon which
was

that

beholden

made

are

their

and vigor

country

who are

believe

possibly

you

who

those

they will put on, and I can
tell you that it is a real inspira¬
tion, and a source of great encour¬
agement, to see the enthusiasm

Until I

when

livelihoods?

program

that

our

half of those

than

more

believe that
posible

are

(Continued from first page)

Corporation.

;

possibly

you

elections,

the

are

power

qualified to vote are made, either
directly or indirectly, dependent
upon
the government for their

ip developing the

the

for

fair

for

grab

teachers.

school

iive

Finance

Reconstruction

the

from

;

many

of his predecessors.

in 1917 had been to make the world safe;

democracy.

It

was

broke out—indeed the

not

long after World War II
in one sense had begun

process

Volume

in

170

Number 4858

THE

early years—when under the leadership of President

Roosevelt

we

from Hitler.

were

When the thieves fell

made heroes of

one

of them and

life's blood to enable
in

the vain and foolish

"liberated"
The

ultimately

of them to

by which

soon

of

gave

we

confronted

are

in

realities.

failure

was

capture Ameri¬

markets is in part due to the

in

our

the

ing

importance of services

national

and

since

in

imports

on

services

serv¬

less

are i

internationalthan

domestic

trade,

the

gains
income

with

of

rising
are
correspondingly disappointing. I

do not

believe that United States

tariff

policy, at least since 1933,
largely account for these fail¬

can

•

in

Since,

increas¬

an

percentage is spent

important

Whatever

income.

rising income,

a

ices

Europe

to

to

ures

pierce

the

American

market.

How

European Adjustments and
V. S. Aid Affect Our Economy
(Continued from page 22)

r

adjust to

weakened international

a

position .////V V»"■: /' ■
the

of

ments

period, the econo¬
have expected price

mist
■

might
adjustments

which

the

-corrected

would

have

dollar

shortage.
Despite large loans and gifts, the
pressure on dollar markets was
reflected
in
large rises in
the
American gold supply. In
1913,
gold reserves in this country were

but $1.2 billion, or 25% of the
world's total. By the end of 1948,
this country's $24,5 billion of gold
amounted

reserves

to

70% of the world's

Actually,

they

as

these

be¬
the countries requiring this
medicine
to
correct
disequilib¬

cause

rium

have

take

full

gressive
sider

not

allowed

to

the

of

thirties.

Domestic

might have justified

pressures

our

policies; but our international po¬
sition did not require a devalua¬

Similarly, it is doubtful that
Europe will be able to

Western

gold

whereas

United

States real na¬
tional production is 1948 relative
to 1929 or 1937 rose

by two thirds
since the pre-war, imports in real
terms rose by but 5%.
Again, of
$27.1 billion of U. S. consumption
of

55

manufactured

1937,

Europe

her

total automobiles
exported by the

larger percentage

current

imbalance

by-

These

Europe
seas

the world

use

unless

the

measures

balance

a

in

decline

in

prices

largely

was

rigidity in wage, capital, and gov¬
ernment costs and (related) rigid¬
ity of prices. The inflowing gold
was not
however, sterilized here
as was often contended by Euro¬
pean economists. Surely a rise of
all bank deposits from

$12 billion

in

June, 1914 to $161 billion in
December, 1948 does not suggest

sterilization. The failure of prices
to rise adequately is /explained by
considerations
—
note
a

other

sevenfold

rise

and

of

one

wholesale

I'

Why

in

J

the rise of prices in

was

this country so modest?
the

of

cause

deposits
times
in

1 Vz

prices."

-

much

First, be¬

greater

•

in¬

in product and transactions
—thus the gross national product
crease

in dollars

almost four times.

rose

Therefore,

in

part

5%

demands

the

rise

in

made

by increased
output and transactions- In part,
the explanation lies in the tend¬

of the public to increase its

ency

proportion of cash holdings to
tional

income

as

the

na¬

standard

of

living rises. Whereas the volume
of deposits

but

was

third of

one

the national output in 1914, it was
two thirds in 1948. The large rise
in

monetary supplies, both rela¬
tive to price movements and rela¬
tive

to

output, reflects the large

relative

absorption of cash in

an

advancing society.9
(3) Failure of price adjustments
under

a

gold

standard

is not

an

explanation of disap¬
pointments with price movements.
adequate

Countries short of dollars did not

have to rely

direct assaults
to depress
prices. They could reduce prices
■of their products abroad and raise
costs

upon

prices

'

competitors

at

allowing their exchange

rates to fall.10

ation

order

their

of

home by

upon

in

and

of

have

Actually, depreci¬

v devaluation

Reserve

policies

Board,

and
Monetary Statistics (BMS), 1943, p. 542,
snd
Federal
Reserve
Bulletin
(FRB),
August, 1949, p. 1008.
|
8 BMS, p. 17; FRB, August, 1949, pp.
SS5 and 989; and Bureau of the Census,
Historical Statistics of the United States,
1949, p. 233.
9 Basic Facts of

Banking

V

Employment and Pro¬
duction; Report of the
Committee
on
Banking and Currency, September^ 1945,
Midyear Economic Report of
the President. July, 1949, p. 87.
10 Cf. my Exchange Depreciation, 1936,
Chapters 1 and 2.
''
p.

11;

overseas

billion

income.

tier

coun¬

about

or

Europe

less

consume

by

reduce

raise

and

will
save

billion.

rise

A

of

by
ac¬

all

$1

ment. The

recourse

to the

pricing

it somewhat easier for the plan¬
of Europe to move labor and

ners

of

over¬

the

of

United

exports

to

the

United

be

to

(5)

made

dollar

explaining the
shortage is that

when foreign countries

the

approach

equilibrium,

goal

of

begin
dollar

the

goal somehow
moves
away. In part the explana¬
tion is the steady relative
gain of

and




:

from

to

prewar
per

1948

man

in

decline

in

the

was

latter

Whatever the merits of the Wel¬

than

fare

State, the advance must be
up if dollar equilibrium

explains

be achieved.

7 out of 9 countries in

proper

the

of

cir¬

United

success

devaluation

States

of

in

tariff,

subsidiary
policies.
Europe

exchange
not

balance

her

accounts

if

their, efforts to double sales here,
and
much
more
important, in

other

non-participating

countries
is countered by a devaluation of
the dollar (1933-34 is a reminder),
excessive

farm subsidies, dump¬
ing of America's industrial prod¬
ucts abroad at less than full costs.

The dangers here are genuine, es¬

pecially
should
velop here.

depression

1938

wages

countries in

had

risen

1947

in
and

1948 vis-a¬

substantially

dollars

is

more

in Europe than in the United
'
■
*
'

States.13

(6)

The position that disequi¬
can continue for long pe¬

librium

riods

time because the

of

United

States maintains technical superi¬

ority and advances more rapidly
and because wage adjustments are
sluggish has become increasingly
popular. According to one econo¬
mist, the varying income elastici¬
of

demand

for

imports

con¬

equilibrium.!4
IV

the

failure

of

Eu¬

1948, Europe's trade, both
exports and imports, was below
By

orewar

in 1938 dollar volume.

In-

rope

share

of

the

This

ket.

is

United
in

that with

visible

States

due

part

mar¬

to

the

large losses of in¬

income,

with

large

de¬

mands for imports both because of
the

devastation

of

war

and

the

large import requirements of full
employment economies, and (re¬
cently) high prices of imports,
the European countries' exports
have to rise greatly vis-a-vis im¬
ports.

Thus,

the British goal for

1952-53 is coverage of 92% of

ports

with

exports;

in

1933,

im¬

the

vailed

doubtedly

States—the

latter

11 H.

M.

Office, European
reoperation:
Memorandum Submitted to
OEEC
Relating
to
Economic
Affairs,

to the greater
of sales in Europe
and other non-European countries
That Europe's industrial produc¬

to

Stationery

in

ports to the United States remain

35%

through

the

British

her

of

invest¬

im-r

of

excess

an

also

means

1947

relatively unchanged—a small rise
exports substantially offset by
a
rise in, export prices—stresses
the obstacles confronting Europe
in its camjDaign to sell more to
this country. Another way of put¬
ting the problem is to compare a
rise in 1948 of $9 billion in na¬ the
United States
and*-oversea.^
tional income for Europe (exclud¬
countries. This is a pressure which,
ing U.S.S.R.) in 1947 dollars and as already noted, vexes American
an increase of less than $200 mil¬
export interests; but in a highly
in

.

in

lion

dollars and

current

about

inflationary

The'$100 million

under

about 1% of

was

Relations

Trade

of

not

was

export trade to the United States

Europe

,

the damage

economy

great as it would be

so

depressed

conditions.

;

Countries

Overseas

and

Volume—1938=100
1948

1947

1948

1947

•

Vis-a-vis Canada and United States
Vis-a-vis

all

countries—

overseas

Survey of Europe in 1948,
Table 16; British InformaService,
Labor
and
Industry
in
Britain, September, 1949, p. 141.,^
13 Economic Survey of Europe in 1948,
107, 226.
J.

Morgan, "The British Com¬
monwealth and European Economics Co¬
operation," Economic Journal, 1949. pp.
307, et seq.; C. Kindleberger in S. E.
Harris, Postwar Economic Problems, 1943,
pp. 376-381; Foreign Economic Polity for
e
United
States.
1948.
Part
V; and
"Dollar
Scarcitv,"
Eronomic
Journal,
June, 1947, pp. 165-170.
,/S

100

98

91

192

137

in

1948,

pp.

all

frcm

81

countries.--*

overseas

Adapted
66-67.

Economic

114

107 V

Plans of the OEEC countries

re¬

:

70

Vis-a-vis Canada and United States

Vis-a-vis

105

for

Europe,

had

not

Commission

million

flect continued efforts to cut im¬

deteriorated.

ports from this country; and once
point to the important de¬

rise of

more

'

next few years.- Although
imports (constant prices) of
these countries are to rise, their

/'

Economic

Survey

of

trade

terms

Another adverse

movement of 10 % would

cisions that will have to be made
in the

require a

exports of 30% additional.13

18 Economic

Survey of Europe in 1S4GM

211-213.

pp.

total

North

imports from
America;
billion

i;n

1947

1952-53/;a

Centra'

and

to decline from

are

$7.3
billion in

$3.8

to

in

decline

volume oi

48% of 1938.From

Conn.

Light & Power*Securities ok Market
Offering

.

.

from

1947

OEEC

side world

$10.6

to

1952-53, exports

countries to the out¬

are

to rise from $5.4 tc

billion; those to North air"
America

Central

to rise

are

from

billion to $2.10 billion.

$1.05

The

United Kingdom anticipates $1,455
of exports and reexports

million

the

to

Western

Hemisphere

1952-53, or $800 million or

120%

Of this rise of

above that of 1947.

$1,200

million, the United

is

account

to

foi

for

$145

States
millior

to

million). Imports
Western
Hemisphere

from

the

over

this

from

about

period

lion.17

to

are

$1,900

$2,900. to

mil¬

.-.-V.

;/./v-'/r':/;/-'

According

decline

■

the

"Economic
Commission for Europe," Europe's
to

first and refunding
mortgage 2%% bonds, series L,
due
1984, and 100,000 shares ox
no par value $2.04 preferred
stocky
of
the, Connecticut
Light
aniV
Power Co. An underwriting group
headed by Putnam & Co., Chas.
r

,

W. Scranton &
&

Co.

102.23%, plus accrued interest to
yield 2.65% and the stock at $51.50
share, plus accrued dividends

per

to return

bonds

When

counts.
to

a

ac¬

viewed in relation

10% annual rise of industrial

output in the last few years, the
do not seem very large

amounts

Overseas exports were but

15%. of

of trade. In 1948, the

have

would

been

improvement

not

$2

but

$3

Survey of Europe in 1948,
pp. 97.
112, 235.
16 Ibid., p. 58;
H. M. Stationery Of¬
fice, Economy Survey for 1949, Cmd.
7647; and National Income and Exnenditures of the United Kingdom, 1946 to
1948, Cmd. 7649, p. 17.
17 Economic Survey of
n.

and

191;

Ccooeratipn;
OEEC

.

.

.

United

Europe in 1948,
Kiiipdom, Eu-ooean

Memorandum Submitted to

1949

to

1953,

pp.

41-43.

the

sale

preferred

of

the

stock,

,

to¬

gether with other funds will be
applied to financing the
com¬

pany's extensive construction pro¬
gram, started in 1948 and extend"
ing through 1951,
This program
construction

normal

lish
1951

gas
f

and

capacity

to

the

reestab¬

to

demands

the

meet

for

company

by

reserves

,

electric,

and water service,

The series L bonds are redeem¬

able

at

ranging
from
before Oct. 31,
1950 down to 100% after Oct. 31,
105.10%

1983.

The

share

per

prices

on

or

new

on

at

or

at $54.50 per
Nov.

before

$52.50

stocks

preferred

be redeemable

will

1,

share

per

1954;
on

or

1959, and at; $52
share thereafter, plus accrued
Nov.

1,

dividends in each case.
The

15 Economic

:/'/•;.

from

and

upon

international

3.96%.

Proceeds

includes

balance Europe's

Co., and Estabroolr
offering the bonds at

is

exports expanded by 30%, per an¬
num over the years 1947 and 1948.
An increase of s'milar proportions

1949 and 1950, plus an

made Nov. 22 of

was

$10,000,000

$340

($195

21S, 221,

14 D.

126

145

115

before

41

86":

128

95

EUROPE—

would be the movements in terms

p.

M

UNITED KINGDOM—

../

then

1948.

>:on

pp.

in

eign assets were but $120 million,
or
6% of gross domestic caoitat
formation; in 1947, $630 million,
or in excess of 30%.
For 1949, the
forecast was exclusive reliance or»
domestic savings.!6
Figures below show both the
large gains of the United Kingdom
in pushing exports
to overseas
countries.and the general pressure
in Europe to restrict imports from

ex¬

Europe's industrial output, Crucial

7572,

Kingdom

12 Economic

pp.

This

1947.

1948, gifts and loans from abroad
sums realized by sales-of for¬

;

Cmd.

of

and

Balance of Payments,
1S48, Cmd. 7648, 1949, p. 3.

>949-1953.
United
1946

re¬

reduction

a

ports by the end of 1948 they were
on their own.
For the entire year

un¬

16% and

he¬

were

20%.

financed

related

rise by

of

whereas

ments

profitability

tion should

and

had

expanding exports to

the United

however,

that

the dif¬

as

improvement, in invisible transac¬
tions of $600-$800 million, would

Recent Adjustments

and the outside world gen¬
erally to capture an
adequate

rose

These figures

well

as

was

By the end of
1948, the British had wiped out
a $3
billion deficit that had pre¬

in the years

ties

tribute towards this'continued dis¬

de¬

(4) Another and related expla¬
nation of the persistent shortage
of

though

why,
13

of

That

output.

average hourly earnings adjusted
for changes in output per man had
risen 42% in 1947 and 29% in 1948

the

of

1938),

Britain's

rise of exports of 47%

a

prewar

imports

more

monetary, income tax and

solving
the dollar problem depends upon
extension
of
European markets
and that, in turn, depends upon

will

out

vis

industrial

for

75%, the

even

less than in the United States, the

new

and

United

output,

increased

spending policies,
this

favoring

industrial

the

by 27%; in Europe de¬
clined by 10%; in agriculture, the
rise in the former

given

over

rose

government

Even

the

dollars

Source:

Another point of consider¬

substantially. That means
appropriate wage, profit, tax and

cumstances

follow

pattern

ficulties

able importance in

1

did

by but $0.2 billion.

elsewhere.:12

States

is to

flected in

States declined by $1.3 billion, and

Obviously, the major gains would
have

output

slowed

the

not

(88%- of

prewar.

efforts

with

States

save

below

roic

Europe's trade,
(91% of 1938)

and

imports

still

imports.

exports to the United States

to

exports

and

with overseas
countries: imports from the United

States.

productivity in this country. Thus,

policies.

in

States.15

1948

by

adjustments

general

a 20% cut in dollar
prides
would still require a rise of
400%

to

billion

both

were

tional industries. But if consump¬
tion
and
investment' are to
be

spending

United

ex¬

capital into the required interna¬

not rise

the

Even

in

$0.9

United

Even

Europe's exports

billion and

"Cntinued

incentive (devaluation) will make

problems.
her

Kingdom, less than $300 million.

even

in

But

of

output to expand exports

the

to

-

but

rise

by
a
corresponding
consumption and invest¬

serious

to the United States in 1948

output

help; but only if it is not

rise

a

dollar deficit of $3 bil¬

a

Yet

companied

fact
7 Federal

her

to

$5-$6
will

$5-$6

will

a"hd

and (or) cut investments

more

monetary supply was absorbed in
the

by

world's

kept in bounds, then prices must

bank

but

implemented

which

Europe's imports
exports vis-a-vis
tries

the

might expand

lion.

is

of

exports by 60% and still

perience

it

by $2 b till on—
primarily by a rise of $2.2 billion
in exports.
An improvement in
invisible
account
(mainly ship¬
ping) of $0.7 billion was offset by

$100 million in 1947 dollars in the

are

tion is that devaluation is of little

induce

in
but

United Kingdom. Yet this
country
accounts for almost one half of
the world's income and a much

devaluations, In part the explana¬

to

for

$161 million, or 0.6%. The corre¬
sponding figure for 1948 is esti¬

movements,? prices did not rise
sufficiently vis-a-vis the rest of
the dollar account. In Europe the
explanation of the disappointing

products

accounted

automobiles.

tion of the dollar.

solve

explanation, the
clear.
For
example,

devaluation, States purchased 707 out of 61,300,
or
little more than 1% of the

American

1933-34, which erased part of
the gains of European devalua¬

tions

the

are

advantage of their ug-' mated at 0.2%. Again, in the sec¬
exchange policies. Con¬ ond quarter of 1949, the United

the

'

been

of

than

more

reserves.

despite

effective

so

':' '..-1V\ 1 might have been, inter alia

/:'%•/"

.

(2) In view of the gold move¬

:

have not been

of total

countries

point to the vigorous efforts made

Whatever
facts

prewar.
In 1948, Eu¬
had reduced its deficit with

overseas

37

the gain in national income.'
In
short, Europe (exclusive of
U.S.S.R.) used but 1% of her rise;

were

above

rope

with

(2113)

deed, both exports and imports in
once

increased

the other

overcome

of this earlier blunder.

consequence

case

can

we

percentage

CHRONICLE

relation to overseas countries

This

do in existing circumstances, it is to be hoped that
look about us with
eyes capable of seeing the

may
first

we

(as in this

event)

FINANCIAL

64%.ii

notion that in this way we had
the world.

"saved"

or

dilemma

direct

a

we

one

out

any

&

corresponding

told that the world had to be saved

they would surely have done in

is

COMMERCIAL

Power

Light

Connecticut
Co. engages,

■

.

and

principally ir>

production, purchase, trans¬
mission, distribution, and sale of:
the

electricity and gas for residential,

commercial,
nicipal

industrial, and

purposes

Connecticut.

mu¬

in the State of;
-

;

38

the

Tomorrow's

49.60.

doesn't

so

tion

and

I'll agree it's en¬

insur¬ couraging, but no more than

The chances that.

*

.

.

Smelters

American

man¬

complished before the market
is many days older.
aged to hold at the 47 stop
sjc
V.v"' i'fi
price, so you're still long.

heartening to

improved only approximately
8% in the last 10 years. In the
has

period, the trend of wage
costs
per
unit of production in
manufacturing has advanced more
than 13 times as fast as produc¬
same

lines despite

But

"up" signs.

suspicion it may well be the

a

such

Markets

last week

as

if it does, I have

even

signal for

reversal in the

a

down
the

Until

list.

long

in

either

•

inflation

of

rising

are

but

ing,

still have our huge

we

give you heartburn, ul¬ senior average with resultant breaks its stop, advice is to production potential and tremen¬
hold, but no new commit¬ dous farm output as powerful
cers,
not to mention losing headaches to late comers.

can

your
tances.

friends and acquain¬
I
hardly sent last

sfe

%

weeks

Some

More next

I quoted
brokerage sources to the ef¬
market up and turned around,
fect s that
even
though the
leaving me with a handful of
averages were up the major¬
theories to hold on to.
ity of accounts .didn't show
sjc
#
*
-V,";'
the same rate of gain. In fact
I've seen such markets be¬
many accounts held stocks at
fore. I know how aggravating,
column

week's

ago

the

when

in

anti-inflation forces. Also the cur¬

ments.

; #

'

rent

Thursday.

ment

[The

views

article

necessarily at

not

do

this

in

expressed

coincide

time

Chronicle.

those

with

any

of

the

mention,

can

The one major
get out before a new

I suppose I
myself lucky that
still in on the long side.
markets that zig up one
starts.

move

and

I'm
But
day

weren't
week

w^o

the

are

souls

liest

those

of

long

'

are now on

stepping in
and

last

the week before, but

or

A few

who

them

the

the long side..
days of strength,
will

die

California, they were off only 3%.
interesting feature of retail

An

a

trade this fall is that unit sales in

lines are topping last year
although dollar sales and profits
are
less, due to reduced prices.
The typical situation in retailing
today is that stores are itaking
shorter mark-ups to preserve vol¬

forecast at this time

a

many

as one economist has put it,
''likely to get caught with his pre¬

is,

down."

Your

program

committee, however, had the fore¬
sight to get me gewed up last

August,
with

here I am to discuss
concept of "Where

so

you

not

be

,

cast.

Whether such, new participa¬

it

probably

beginning of ly as
move remains to ation

mean a

of

a new

be

seen.

up

;A hungry public on

the rampage
with.

isn't

one

to trifle

a

be lower* in

phenomenally good yearrone of
best we are likely to see in

have already

time to

some

and better than

come

fact that

»in-the

If

you're a follower of the
Dow Theory you've already,
read, or heard, that the rails
now
have to go upV through

agriculture is likply to
hold
the
consumer
ability
and
;willingness to spend at high lev¬
els.

Also the

makes

continuing cold

the

government

for-defense

more

war

spend

business

as

ex¬

penditures slacken

Pacific Coast

and

this

sustaining factor in

our

economic

'

activity.
Except

for

is

a

adjust-;
strikes, the busi¬

temporary

ments due to the

Securities

climate

only
low

on

It is quite

A

Schwabacher & Co.
Members'

New York Stock Exchange

Wires

(Associate)

that

we
are
back: in a buyer's
market for cars, but there is one
important .difference in the pres.ent
buyer's
market
as
distin¬

guished from former markets. The

tomobile manufacturers have been

volume of busi¬
ness, but despite the record out¬
put, prolit margins are much the
:same
as
in comparable volume
periods before the war. Thus, re¬
pent Pacific Finance Corporation
figures on automobile manufac¬
turers operating profits as a per¬
centage of sales, computed before
depreciation and -income, taxes,
doing

than

11%

20%

be¬

-

are:

10%

the

tion.

on

a

24

year

in 1948. Any price cuts
that

cars

likely

to

may

nation's

12%

of

tive pressure

new

Public construction

face

pro¬

are

of

reduce prices
profit in the
material and labor

high

a

costs. This situation is not

construc¬
was

ahead

by competi¬
rather than through

ability to lower costs. It is going
to be very difficult for, any of

high this

population,
all

be

forced

be

peculiar

to a-u tomobile manufacturers

44%

above 4948 for the first six months

either, but

of the year.

industry.

be applied to

can

all

Offices

San .Francisco—-Santa Barbara

Monterey—Oaklai?H—Sacramento
Fresno—Santa Rosa

in 1936, 10.7% in 1941

13.1%

and

highs and building
increased
activity.
dim g
to
figures
sup¬

Motors,

making
in 1936, 22,1% in 1941 and
in
1948. Chrysler's figures

an

tion will reach

duced

' Teletype NY 1-928
Principal

General

1948

the

c c o r

more

record

a

The

:

nation's

full

J

year

Over

retail

a

V

Ions -neriod

of

years




sales

including

automobiles

and

•

productivity

per-man-hour

,fias

cope

to

Means

Prevent

of

Loss
;

V

.

to those who believe
can

only

-

be

prevented

that when

say.

the

government

pression
away

we give

of

amount

de¬

prevent

to

necessary

shall also have given
individual free¬

we

much

so

dom i

that free enterprise will be
thing of the past.
A govern¬

ment which undertakes to run the

has

economy

controls.

to

We

set

up

lot

a

of

it happening to

see

economy today.
agricultural votes,
the government
has gone along
with a policy of high food prices,

agricultural

our

In

order to get

.

but
to

it finds that in order hot

no a

completely bankrupt in the

go

it must control what the
produce. And so the

process,
farmer

whole

can

economy
gets more ahd
involved, .until we are .all

more

in danger«of

highly articulate and extravagant
offspring in the form of a tre¬
mendous national debt, rampant

$8

a

of

maze

In

the

being confounded in

complexity.

face

of

deficit

billion

in

i

,

at least

$5 to

a

government

spending this year, the prospect
-for higher taxes next year should

trade unionism, and a farm popu¬

not

lation that has discovered you can

taxes

foo,

to

Freedom.

<

them, but in the last 16 years we
and a New Deal,
both of which begat some husky,

be

Since additional

ignored.

are unlikely
,Congressi opal election year,
on

•

individuals

in

a

long as you don't worry too much

it

'is

abpujt rthe 'future.

ministration. will' again pump for
tax levies on. corporations. €jprporr

your

as

For those who would like to see

;

probable, that'

the-

Adr

political action to throw off the .rations, don't- vote. In £his,. conr
nection I would like fa read you
yoke of government activity in
ah excerpt from an editorial by
our economic affairs, it is discour¬
William E. Robipson, Vice-Presi¬
aging to hear from no less a per¬
son
than
our
ex-President Mr. dent of the New York "Herald
Hoover

that

in

eighth person Tribune.1'
"A man
population is a

working

our

six

and

one

half

times

'

/.
ot

^

v

.

acqumntance
happens to be a .capitalist. This
man- ?is now. 6.4 years pid.. He: bag

government employee/ According
to Mr. Hoover, those of us who
were
taxed $200 for government
service in 1929, now pay $1,300
or

■

every

accumulated

nriy,

.

a very

large fortune,

and has retired, from active busi¬

what

ness

ywe. did 20 years ago. It .seems that
wherever
the .government, takes

a

A poor boy from
family,
he
was
well
with • initiative, imagir

operations.

poor '

eouipped

hand, ..everything becomes more nation, ambition, an appetite for
responsibility, r and, an enormous
He • started
Politics and economics usually capacity ,for_ work.
don't mix too well.;As you know, with a* meager education but he
Dr. Nourse recently resigned as repaired that as he went. along.
head of the President's Council of He built a big business from nothr

a

so.

Advisers

Economics

that

observed-

because

President

the

jng, and, out of profits, .he helped
build other big businesses.
•.,

he
was

_

playing politics with the Council.
Instead of following the economic

iA

suggestions of the Council, he was

try.

seeking
and then
for

it:

.

an

knew

economic justification

made

laws

Economic

don't

in

re¬

land.

ized

that you
the national

and

than

economy

two

and

two

seven."

..

—

him

not

I

building
new

newsprint,

and undeveloped

told him that, for an in¬

his

associates

could

build

around
gross

100,000 dons

he

,

a

pro¬
year.

a

prices, that would give

sales of roughly around

$9,000,000. On the $9,000,000 worth
of sales, there would be a gross

•

■

of

At current

editors has

four

make

-

duce

remarked: "Dr. Nourse knows that

>

Alaska

newsprint mill that "would

put in to it, or as one of San

Francisco's newspaper

in

vestment of around $30,000,000,

did. He real¬
can't take out more

as

timber

effort to determine the posr

an

mills in the

Dr. Nourse

just

the

of

sibilities

kind of treatment.
Any self-respecting economist
knows it and is likely to react

you

He referred to the recent re¬
of
government - surveys

ports

spond to that

from

asked me what I
about the newsprint indus¬

"He -recently

political angle first,

the

of political profit, before taxes, of around $2.*
After taxes, he would
manipulation makes me think of .500,000.
have available for dividends* $i,«the story x>f the desert thief who
'\
•
:
i
was .brought
before an Arab 500,000 net profit.
sheik for punishment. The sheik O "Out of his $1,500,000 in divi*
sentenced him to death,., but the dends, the government- gets an¬
The

current

trend

.

other.

$1,270,000 in income taxes—»
friends and his prospec¬
tive
partners --would
be.-in • the
85% tax bracket.
So, in that .first

thief

pleaded for leniency prom¬
ising the sheik that if he would
him

give

camel

a

teach
to

year

the

talk. 'The

of

grace,

sheik's

that

since my

-he

prize

sheik agreed

,

J

can

power

hardly

cake and eat it

around

Power

answer

the

have had a war

would

;

1

gradual and
notice

so

socializa¬

through government intervention,

always finds
than to im¬

you

.

panies, California home construc¬

of

New York S, N. Y.

to

generally recognized

year. For the first, mine months :the companies to
of this year, California with 7%' and still maintain

,

San Francisco Stock Exchange
Chicago Board of Trade

COrtlandt 7-4150

11%

j

plied by the market research de¬
partment of the Paraffine Com¬

14 Wail Street

17-year

a

of the total
interest was accounted for in
the automotive shares. •

on

little

a

(showing

Pacific Coast Exchanges

New Xorh Curb Exchange

14, short selling

I short

the whole is good, Show
with-overall industrial production ■20.4%
ness

•

Oct.

on

market reached

(present market has a much higher
social security plans, encouraging break-even point for the. indus¬
(high wages, and paying large sub¬ try than markets in the past. An-

seen.

Orders Executed

1950. It is. obvious at

I high, and that

sidies for

Private

bol¬

least that the stock market oper-r
ators think so, as shown by .the

ithe

.

il

refunds

perhaps hitting as near¬ ever, that automobile sales, which
on the true
situ¬ have been such a sustaining iacof business today. 1948 was tor in retail trade this year* will

for rthe several years imme¬
diately preceding.'Total business
I
-realize\ the
foregoing: {for 1949 is likely to end up as
sounds like a complete turn¬ iless than it was in 1948 and prob¬
ably 1950 will be below 1949. Yet
about in my advice. Before these are
tremendously prosperous
you're convinced of it, let me years as judged by pre-war stand¬
hasten to add, that while I do ards—years supported by a large
not shrug off the obvious, I do ibacklog, ,of capital needs and a
high and well .distributed pur¬
not believe this market is go¬
chasing: power. The continuing
ing up much further than government policy of fostering

-

insurance

anyone

any

v"

GI

that

be

depression

a

than to stand up to
Ordinarily these inflation¬

mild

still

Depression

In

groups

processes are

ary
so

up on some

them.

,

taxes. It usually finds it
to yield, to political pres¬

them.

relatively good, however.,

year, was

tion will

you

us

stering sales. It is probable, how¬

with

sure

with

back

be next

would

is

1950

observed
.least business was 10% ahead of

easier

have

100%. The retail outlook for early

company,

[optimistically
what

is

pose

paying

extravagant

Government

is something else

large democracy
easier to spend

it

some

the perpetrators
disappeared fromi the
Unfortunately, we the peo¬

will

ple

with

this decade, nor
A

for

comes

scene.

inflationary, .not just this- year,
this last 50 years.

is

that

me

the
be

programs,

a

run

or
may

have

again. The fundamental economic
undercurrent in the United States

identical

on

and
that
at

his

in

being undersold

merchandise

receding volume

business

of

are selling for $2.95
last
year
for $3.95.)
competitive situation of

sold
old

The

Here?"

From

(They

what

my

We Go

Do

ume.

The
the verge of' | looked businessman who recently
over the

on

more

attempting

below 1948. In northern

7%

were

clouded economic horizon. Anyone

dictions

new

friend¬

fact

In

friends.,

lot of

is

result

the

and

levels for

high

the first nine months of this year

if one is in store. Add to this
uncertainty as to what the
government will pull out of the
next

likely to remain

the
balance of 1949 and when the pic¬
ture is all in will probably be off
only about 8% from 1948. Cali¬
fornia department store sales for

the

hat

are

relatively

at

up

ness;

danger.

climbing back through
the old highs and establish¬
ing a new high on the move
(at least in the industrials) the
a

made

limited, the dan¬

dead,
or I

fashion. When the

same

will

and business

it; is
as

to

seems

the

,

political leaders operate in

tion

danger.

;un

The long

television sets

production

be

to

further normal slide in busi¬

any

In

market has made

have

now

during the winter months which
would normally have been slack.
Such activity is likely to put off

and zag down the next, show
a
basic weakness that in it¬

self is indicative of

half years. Lost

a

will

as

ger
of a
devastating inflation
spiral is not an immediate short-

Business?

m

long as govern¬
financing
is
no

deficit

(Continued from first page)

can

account

base,

greater than
borrowing is

What's Ahead

be.

deflationary.
Although inflationary dangers are
still present, with our large bank
credit

It

be

said

year's time

a

be dead,

today's

definitely

is

com¬

making

can't,"
in

may

may

captial expendi-

trend in business
.tures

camel

time
of

I

course

thief, "but

our

business spending, and our down¬

ment

presented as

are

sickening,

to

fein is to

They

those of the author only.1

,

they

first

•

--Walter Whyte.

•

not

year's deficit in the govern¬
is offset' by a decline in

for

camel talk."

"Of

of

Fears

thief's

a
foolish commitment, say¬
"You know you can't maka

about the

again with our unbalanced budget
and increased government spend¬

worth

be

ing,

dead."

«

Inflation Prospects

would

that

such

sheik

which goods

at

it

talk

led away, one of the
rades ridiculed him

the

got

■

and is still

26 ^

to

Grande

Rio

Denver

camel

sparing his life and granted him
the year's moratorium. As he was

lifting iin prices
must be sold.

-

hesitant bulls. Continue side¬

techno¬

through

increasing

been

logical improvements and better
operating methods. But the proc¬
ess
is a relatively slow one and

tivity increases, with the resultant

•

that this may be ac¬

are

even

re¬

minus the commissions

taxes.

❖

By WALTER WHYTE=

The

gain has merely brought
accounts up to a posi¬
where
they're
about

even,

half or

an

seem

mountable task.

Current rally

v

48.80.

ing another point and

Wliyte

cent

were these

tops

writing they're
Obviously add¬

At this

about

Says—
ee

rail

March

The

Markets
Walter

highs to confirm
action of the industrials.

the old tops.

near

or

their March

Thursday, November 24, 1949

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

(2114)

if the thief could make the

I

year

of operation, they have $230-,-^

| 000 npt after taxes; and the gov-1

ernment

has,

in taxes,..$2,270,0Q3

Volume

170 ..Number

4858

THE

«—a

million from corporate taxes,

in

and

$1,270,000 from income taxes.

improvements."

"Now

assuming there is

cession
ket

in

for

newsprinte
will

owners

stays

the

corporate taxes and from
income

taken

$22,700,000

years'.

in

responsibility

and

government

limes

the

with

profit

risk,

no

"•But

of

several

bracket)
such
at

the

70%

partners

time

the

The

mill

around

the

The

they

cor¬

by, in-

33%

was

goal

of

economy. //.■/.'
•>,

President

asked

for

somewhat,

at

property

is

and the willing^
Congress to help finance

of

on its., medical schools.
$17,500,000.: ,v. The President asked for repeal
So that now the total of the gov¬
of the Taft-Hartley Act. He didn't*
ernment's 'take' in < taxes of all
get that but he got a new floor
kinds is over $40,000,900/
under wages in the 75c minimum

now

on

books

our

works

to

agitation for

expanding American

production.

in

Here is

in

vestment

written to

nationalizing future industrial de¬
velopments by a system of confis¬
cation.
With this, out goes incen¬
tive—one of the main elements in
the

y

American,

in

try

I

for

answer

to

"My dear Steve:

his colleagues. -

our

pathy.from
need

v

him

you

and

still1: got his
out

or

me.

"I

no sym¬

But

.

his-capital:1;

track

tem)'/

of

the

lea d

munist. What;
more

one

side

of

economy

their

might

mouths,

must- derive.

is

Reference

"That is

this

raise production costs

for

factor

and

the

pound

is

cure/for

sales for

a

while.

export'- problems

are

more

biggest

dollar-

getter

has long been Scotch
Whiskey,
but that'is largely because U. S.
companies have done a whale of

job-of merchandising to" keep

Scbtch, Whiskey
among

a

the, top

near

whiskies consumed in the

United States.
,

There has been

rent of

talk that,

.

undercur¬

an

now

that

(not the

.

■

A

Profits

:

,

other

of

note

<

warning

i

:

should

be

sounded

the

careful and

and

a

company

prof it-wise-

-

ashamed

of

going., to

have

itself.

that is
should

to1itundertake

omy.,

our

Jhe/ President of the

dollar

is

Furthermore,

prohibited

by

devaluation

dollar does not make

law.

of: the

hand experience

it

of

years

and

I

in

we

"When

billion

of

you

packaging

per,

activity in
and

tury.,

Mc¬

"It

,

"

,

is

our

basis

for

a

business.

has

-

resi¬

and

out

into

movies.

We

carrying East
a

nobody

While*

we * are

'old

am

indeed.

The Pacific Coast

enough

-

to

Let

us

turn

now

to

a

talk about

remember better

dren) are

Lines

so

into

over

low

160's
170's

as

compared

for this year.

good business

■

are

-

the

immediately for-' •*
future, and particularly

The 1920-21 dip made little

pression,on

us

here.

out

im-1!

r

the*'

In

1929

to

come

went down less than for the

1933

rest of the

recession

country.

slump

Western

in-"/

natiop. In the 1937-38

the

than

severe

drop

for

V3

was

the

rest

less

/

the A

of

-

; / One of the characteristic stories
of the West is that of a Californian

is

is

questioned by

\

Easterner during

an

/

the 1920-21 depression.

"How", said the questioner, "is "
the
setback
affecting 4 you out'V
there?"

our'

/;

raisins,

be

and

figs.

We supply 90%

^

of

all

the

the

farm

and

home
and

-

the

of

has

standpoint

of

96%

of
Less than 20%

urban population.
of

people actually live on

our

farm.://...,;//
We have

r-;

/;

•

,;

a

"

v

more

autmobiles than

state

other

any-

,"//
and

are

so

far

ahead
catch

that New York will

Akron

close

a

facture

of

race

in the

automobile

manu¬

tires.

...

talking about products we
must not forget our tourist crop,;,
for it is these tourist visitors from
our

stems.

The

war
»

.

as

-

a

whole.

Although, \
activity in California is J
a

years/

The-strength of rthis>'area: lies

in

its

rich

and

-

/

market,

!l

represented by ,a new and virile

/

growing

population

growth, and charac*by original and thinking
;'womenwhose ^living
standards are substantially aboveterized

and

men

the

&

average. -

Kenneth Sweet

PHILADELPHIA, PA.

neth

comes

who

Opens/

Own Firm in PhHa. v
-

influx

population
tourist

,

" runs

In

which

a

currently 12% below 1948 peaks, /'
it is well over 200% above
pre-*/

never

Los'' Angeles

up.

v

to*

likely to be-slower
snapback faster than, fot

nation

business

Our farmers

percentage

the

the

biggest kilowatt hour con¬
in the, country. / Yet for
large farm activity we are

our

after 7

seem,

California is

of its lemons.
is

son,

"We

While some more cyclical ad--justment is likely within the next
couple of years, any downtrend in4

the canned

California

deliberation,

having a more than unusually
quiet boom."*

of the

nation's wine production, 50%

/

"Well," said the native

some

apricots, prunes/walnuts

_

.

pushed

they strong in the West and in
California.,
•
/

great fruit
and vegetable industry.
We still
produce most of /the/country's

the

brighter

prolonged::

/

are

pe¬

the third state in the nation from

..

*

road

the
have

-

there

on

will; be

$200 biL

Reserve Index/'
Activity is likely to

low

in

seeable

3,000 tons of
and at low rates

sumers

inflation

•

of

assets of

exceed

fall

forces for

strong

years ago..

Then

the

The

dreamed about five

even

^

s

Federal

the

with

over

year

to

today

/

ratios

1949's business

The

in

be

The Stand¬

stemming from

are

sorry

for. We at any rate can remember
when we -were fr4e and honest.

profitsfor, 1948*

1950.

refining plants at El

Western- Air

flowers

1940

because
this

of Industrial

have

Segundo and Richmond are set
up to turn out over 500 diversi¬
troleum.

relation

>

doubled

^

;

agents and what not.
Co.

1949

much of

fungicides, detergents/; paints,
glues,
water: proofing
wetting
Oil

in

»♦

be

Business

strikes

development
of tremendous proportions, turn¬
ing out disinfectants, insecticides,

ard

i

failures,:

activity next: year,
probably will be within 5 to 8%
of

chemical

a

debt

exceeding

lion.

longer citrust fruit,

no.

the

bank

could

individuals still

big way. Utah now
supplement its coal,
sheep.
Here in Cali¬

fornia, it is

and

debts to savings. Liquid

a

and

in¬
un-.

savings

broader

Idaho

farm electrification.

If it
accel¬

to

appear

credit,
low
savings, large

without

steel. to

process.

comes*.? we
am

inflated

similar
not

small

Consumer

dents still have the potato on their
license plates but they now go in
for food processing and other in¬

mechanized

erated

I

the

do

conspicuous by their absence.

are

other indus¬

providing

are

>

trade//Devaluation of the dollar

cen¬

,

.

children

bring

1930's

employment

pa¬

containers,

numerous

would nullify that

1950, it may well go on long
enough to do us such damage that

•r?

to

overall

extended

comes,

aluminum plants, food proc¬

new

foreign prices more; in line with
our./ prices,
and thus stimulate

turn the whole lot of them out

we.shall not recover, in this

was

The

sense.

picture/*— the Pacific Coast and
tidies our chil¬
particularly California. You have
not; and you can?t stop
heard Wbput, how the population
remembei4 that $13 billion is being them from
reading the papers, and
.in the United 'States has' grown
plowed back to provide; workers the danger is * that
if : they get in the last ten
years, but do you
with- better tools, and better plant used to it,
they may come to think
realize that 25% of the population
surroundings in/which to. work, it is all quite norma#
/
growth of the; whole nation has
and to make" better products: for
'/ -"Everybody^who
been in- taken4 place right here in Cali¬
aii
v 3*/.\ the * States' in" the • lastl
year; tells fornia.
Wh are now second only
"The,} reinvestment / of
prof its me /thatvit - is like gqing ?,out«of to New York. «There
has been a
has made possible vastly improved prison into the fresh
air;,and that 54% increase in, the number of
living standards^for all of us over even- in a week or tw& you feel
people in this state in 10' years.
a long period Of years/
better and stronger
j /vf//
phy$Cally and We are /still getting new/immi¬
') "When the Administration talks mentally .over with ymmfc
grants at the rate of over 500
$20

greatly expanded

and 90%

hard

the

on

depression

a

the

of

over

hangs

place

an

following pertinent" ob¬

servation:

*

indefinitely here,-but unless

Graw-Hill
made .the

longer

fruit/and 25% of the
vegetable pack in addition to sup¬
plying 50% of the nation's oranges

can

econ¬

The Pa¬

area.

no

know. I don't believe it will go on

job tc emphasize the
indispensebility of profits as the
maim spring of progress^ and the
of

industrious,
enterprising-people—

,

present at this time. In examining
our
many weaknesses we should

The

whole purpose pf the devaluation
of foreign currencies in the first

be
is

educational

successful operation

of^the

I have had first

suc¬

Business

can

expense

—three

that

I would
like to point out that such a
hap¬

pening is 'not/possible without
Congressional action, because the
lowering of the gold content of

against the growing at¬
titude in many quarters that cor¬
porate-earnings are: non-essential,
cessful

devalued, we will
morning and find

the

Corporate

on

are

have

only mean a steady
loss of liberty and a steady favor¬
ing of the thriftless and idle at

and

means

Wrong Attitude

Communists; there

1941.

high

a

be said that condi¬

may

for

that

lumber and the apple crop. A

on

fied products

>

iip: Communists worth mentioning
here) mean well, but Socialism

a

tions

afraid

outbuilt

flourishing wine, furniture, plas¬
tics and apparel/industries, "tire
manufacturing and automobile as¬
sembly plants.
The oil industry
no
longer provides just fuel and
transportation but has blossomed

up

trial profits that the life of the
country is sustained

as

since

conclusion

picture,' it

business

Northwest

tries

>vake up some
out dollar devalued too.

people when

aren't

have

interests tin this

is

any

keep business activity at

activity in not overlook our hidden
strengths.
has been .greatly aug-*
The overstocked retail shelves of
by the growing diversity
1929, the heavy farm mortgages;/,

essing and

be

to

West

mented

of

British trade

matter Of fact it is out of indus¬

the

the

We

and

States

of

cost

will

countries

of

other

people

our

death of it. Most of the Socialists

welfare

elsewhere.

stability

■*

level.

new

oil

a

I

of

Britain's

country and. in Western
are
just about sick to

Europe

Britain

have
been
poor
merchandisers,
reluctant: to spend money for ad¬
vertising and sales', promotion..

,

other people

in

Great

.

by poor marketing
practices than by high prices. Ex¬
cept in rare instances, the British

danger for all

million

in

large part of the

caused

us..

And

many

country; another is inter-*

Britain's

much

a

democratic nations.

of in¬
being detrimental to the

as

real

a

us

good*,

con¬

stantly made to the profits
dustry

Socialist

go

all

trends

spirit that in*-

buy and try

innovation

cattle

I

is that you
in a feeble

sentimental, wav like

persistently ridicule and disparage
business and the productive enter¬
prises, from which that soundness

social

the

to

In

dustries in

going Com¬

to

seems

i seriousidanger

of

is

speed

lost

time.

be any serious dan¬

ger of you in America

e v s

soutid ? and
out (of

have
of

quite agree with what
written, I don't really believe

while .speaking for the need of a
prosperous

I

between Russia and America. Al¬

can

costs

need

years.

problems though devaluation may

though I

that there

The:' Administration

that

passage

-

the fact

lqrig-term

in

very

was

/*/%/

•

immersed

so

interested in your last
letter with the printed comparison

was

industry.'.
resents is absolutely necessary to
a continued growth and evolution
of the. American production sys¬
a new

been

than

•

is

The

as

building program is
cleaner and more daring

faster,

headaches.

the' to* 14,000,000 in this State
by 1960. /
But it must be remembered that. *
spirit that made them the meeting of these needs helps <
move

in six

spend

Our home

of

Britain

their

aware,
not

influx

these are just a few of the civic
problems created by this popula¬
tion-influx promises to
add up

ordi¬

area

its

well

are
<

water, more utility fa¬
cilities, more schools and hospir
tals, more highways and bridges;

things.

ation

'

.

wretched Steel Bill to nation¬

alize/industry

we

He's

and we are
What he rep¬

money,

have

,

Great

higher; the third
a

of

same

the final cost to the consumer.
It is not likely that the devalu¬

He says—

"Now L don't ask you; to- shed
any! tears over- my-rich friend or

The

One

taken up by our distribution costs
and profits margins, which tend
to j minimize
actual
production
cost prices as the main factor in

coun¬

a

letter

a

in

foreign jgoods

discussing our
economic and political? situation.

produced the American system.

He needs

to

Englishman

an

residents

our

? production

inflation

thait

.friend in this

a

thanks

in

even

like

high
existed

which will

package of
food he had. just received and in

which

character

country,

t,

would

read a letter from

method of

a

this

old

cific

social benefits

more

months

new

more

for--more

world

much in the'first

as

six

of

nal

.v
In connection with the constant

/

de¬

narily spent

a

«

people,

that

many
be performed.

to

without

new

into

move

more

39

Of course, as you
people in the

houses, home
furnishings and what-not/People
that

little

in that

need

them

about

wage.';''':.".::

stroy all incentive for future in¬

who

duces

having a
.from
Great
there are three

are

just

are

services

the

though the drop will
by continuing for¬
as

there

there

country—young men
coming families who have

with

before the recent
devaluation, and
which Great Britain has
done little and probably will do

another

"Here is how the tax legislation

1

of

here

imports

When
t

area in the produc¬
utility industry
brackets 20-45. than* the, this •• population

age

move

though,

the

.

which

$25,000,000; and

sale'collects

curren¬

factors likely to prevent it.

construction

ness

of

Britain,

tion
rest

exports will be off

eign aid.So far
rush

tal

tax

//:•'

bevcushioned

com¬

our
population,,, as
against the rest of the

people in this

probably stimulate U. S.

imports, while

(2-115)

country, is a young population and
growing younger..* We have more

and

//

Devaluation of foreign

cies will

socialized

a

^

-

their mark to make in the

Devaluation's Effects

.

pulsory
health
insurance
last
January., He didn't get that* but
he did get Federal Aid for hospi¬

pay

government

appraises

a/dyed : in the i wool,
stamped in the cork, blown in the
bottle Republican.

during the past year, though
the change is so gradual we notice
it only in looking back.

one

to

the

nearer

died,

(since

have approached the topic
afternoon from the
stand¬

this

state

not

inheritance

sell

to

taxes.

that

owners,

is

aware

point, of.

perity just when we need it most.
;
Little by little we have crept

ten

responsibility—

necessary

the

in

are

the

only

must be well

thermore
measured

1

-

risks.

If, in ten years,

of

be

may

the

taken

government

through yet.
it

of

no

the

all

.

has

by

provided

and

things
'

outside money. ,
Let us turn now to the matter
.
If you give profits the
of .foreign
axe, you
currency
devaluation
cut out the drive behind our
and its probable
pros-,
effect on our

/ •. //v.-'"
•u'
"The owners have taken all the

The,

was

cultured

much."

so

now you

CHRONICLE

that I

more

funds

^FINANCIAL

pleasant

value

By

pay

expenditures

ternal

the

we

-

porations

per¬

*/

•

all

so-called

vestment

will have
those
ten

taxes,

for

on
plowed-back
for new plants and
equipment." In 1948, 67% of in¬

profits to

net after taxes, $2,300,000 net profit.
The government,
in

and

more

the'first

ten years,

sonal

need

"Business therefore has to rely

mar¬

up,

take-out dn

they

(the'
capital;)

re-- ."venture"

no

business, and the

raising, money

COMMERCIAL

Sweet

S.

Sweet

has

Ken.,.,

formed

Investments

with

IL S.
offices

.

about I

.

raising

remember

alone

v

corporate

that

already

taxes,

Federal

taxes

take

at .least .38

cenjts,- out of each dollar a
poration earns. Then if the

out to its stockholders

part of what is left in divi¬

com¬

ket is

personal

so

stagnant today that

even

the

highest of yields,

com¬

panies are having great difficulty




better than

-

take care; and Socialism is
every¬
where in the air nowadays,
just

like

the

frost,

and

ns

deadly to

Two

"usually

once,
years ago census

ventured

,

the

prediction

that we would have a 10,550,000
population in this state by the end
of 1949.
Within the past, month
they have given out figures indi¬
cating a population right now of

my

in-1, sloppy /British: brand
of-pink
corner taxes
of : the
stockholders Socialism. Very few of us are in
may
take up to 77% of those danger of being swallowed up by
dividends.
Under
these
condi¬ lava from a
volcano* but we are
tions,, few people are willing to- all in i - risk -of
getting nastily
invest in industry. The stock mar¬
nipped by the frost if we don't
Federal

day.1;

experts

but beware like the plague of the

pays

dends,/the

with

every

advice Steve, and fight it with
all your might. You aren't in
any
real5' danger ' from Russian
ideas,

pany
any

cor¬

"Largely, that, is a refulj; they
think of better food, but alsft very
largely of true freedom/So take

10,665,000.

when he

for

stays
All

Year

forniaover
a

comes

comes

Surveys

good. '

during

15 million

as

nation

by the

Club of Southern

Cali¬

.war
showed
people itching for

Increased population means in¬
the

business activity

creation of

through

ern

in

were

a

look

at'us

as

available.- In South¬

California
the

retail

every

trade

is

fifth
a

dollar

tourist's

markets, as¬ contribution.
|
suming ability and willingness to
Then there are the service in¬
buy;., Our individual per capita
dustries.
Fifty percent of busi-.
wealth
for
the
Pacific
CoasL
States is from a quarter to a third ness activity is in taking in each
new

-

above the national average.

Fur¬

other's

the /Western

i

Saving■*Fund

Building. Mr. Sweet
with

was

Hornblower

formerly

Weeks

•

^

...

and

Penington, Colket & Co...

LouisJ. UrtandWith

transportation and desti¬

'

creased

aLi

the

chance to have

soon

:again/> and

the third time he

washing

!

so

to"

speak.

Ladue & Co.,
(Special

Chicago

to The Financial Ohronicle)

*

•

CHICAGO, ILL.—Louis J. Ur-.
land

has become

associated

Ladue

&

Street.

Mr. Urland

in ' the

with,

Co.,- 11 South La Salle
was formerly
Foreign,, Department /of

Turley & Tegtmeyer.

;

COMMERCIAL

THE

(2116)

40

FINANCIAL

&

CHRONICLE

Thursday, November 24, 1949

Indications of Current Business
The

following statistical tabulations

shown in first column

either for the week

are

month ended

or

on

that date,

Latest

Previous

Month

Week

Ago

Month,

78.2

"57.4

0.9

99.2

Nov. 27

1,441,600

*1,058,200

166,000

AMERICAN

1,788.100

oi

Equivalent to—
castings (net tons)—-:

Steel ingots and

zinc

Stocks

(bbls. of 42
gallons each), —Nov.
oil

Crude

condensate

and

output—daily

average

Gas, oil,

and

average (bbls.)
(bbls,)————
,——
(bbls.)
—
distillate fuel oil output (bbls.)

Residual

fuel

oil

Crude

to

runs

stills—daily

output

output

—

5,185,150
15,127,000

5,135,600

17,686,000
2,092,000

2,114,000

6,849,000

7,814,000

12
12
12
12

—Nov.
—Nov.
—,-Nov.
Nov.

—

Gasoline output
Kerosene

Nov. 12

(bb'.s.)——

terminals, in transit and in pipelines—
unfinished gasoline (bbls.) at
Nov. 12

5,043,550

5,314.000

5,324,000

18,460,000

17,978,000

5,769,000
17,311,000

1,865.000

2,665,000

7,196,000

6,752,000

7,595,000,

7,723,000

7,659,000

9,069,000

and

at—.

(bbls.)

Kerosene

——.——

Gas, oil,

fuel

104,257,000

102,767,000

28,399,000

27,758,000

92,038,000

86,952,000

79,351,000

(bbls.)

oil

69,192,000

69,081,000

OF

of

103,577.000

FEDERAL

of

Nov. 12

freight

(number

635,823

578,981

583,913

871,679

(number of cars).—Nov. 12

freight received from connections

516,168

518,055

506,766

U.

of

'

S.

Private

47,002,000

62,894,000

59,946,000

100,309,000

64,287,000

58,648,000

Nov. 17

87,657,000

54,745,000

51,459,000

63,294,000
49,093.000

12,652,000

9,542,000

7,189,000

14,201,000

Nov. 12

7,100,000
1,263,000
2,500

2,680,000

2,390,000

12,370,000

To

North

1,130,000

1,259,000

1,153,006

To

South America

•'•■2,400

1,800

147,600

State

Nov. 12
Nov. 12

(tons)—

and

COAL

316

Nov. 12

Electric

(in

output

.*315

290

346

5,644,435

Nov. 19

5,434,555

5,430,338

Europe
Asia

Africa

STREET,

INDUSTRIAL) -DUN

AND

INC.

(net

(net

Corn,, all

5,626,900

BRAD-

&

r

.Nov. 17

—

222

183

AGE

COMPOSITE

Finished

steel

(per

Pig

(per

PRICES:

lb.)„

..Nov. 15

J3.7Q5c

3.705c

3.705c

S.

$45.88

$45.88

$45.88

$46.91

$26.50

$43.00

.-Nov. 15

$29.53

$28.92

Electrolytic

(E.

Export
Straits

Flaxseed

tin

(St.

York)

(New

Lead

MOODY'S
U.

St.

S.

Louis)

17.550c

23.425c

95.000c

95.000c

96.000c

103.000c

12.500c

13.000c

13.000c

21.500c

12.300c

12.800c

12.850c

21.300c

.Nov. 16

at,

16

.Nov. 16

_i_

9.800c

9.825c

9.250c

Bonds—

17.500c

corporate —U—v-

103.90

Nov. 22

115.24

115.24

115.04

111.25

Nov. 22

Aa

121.25

121.04

120.84

116.61

Railroad
Public

Group

Utilities

119.41

119.00

114.46

114.27
106.74

103.64

Nov. 22

109.24

109.42

109.42

Nov. 22

117.00

116.80

116.41

119.82

119.61

119.20

115.63

MOODY'S

BOND

YIELD

DAILY

U. S, Government Bonds—

Average
Aaa
Aa

corporate

•

,_Nov. 22
Nov. 22

2.89

2.89

Nov. 22"

2.59

-i.

w—.

"r.r"'

2.60

NOV. 22"

2.93

3.35

2.21

V'A

2.68

v

"

F-in

;r;'5 r.t

2.70
■

2.90

,

2.94 i

————

Railroad

.

Group —

MOODY'S

:

Nov. 22

Public Utilities Group..
Industrials Group

-

3.2i

NOV; 22

2.80

2.66

2.67

-

COMMODITY

3.35

2.81

Nov. 22

—

•

"

.

3.20

Pecans

2.69

:

-

3.08

GRAY

——

-

Nov. 22

—

343.9

343.6

.

Production

—

182,831

Nov. 12

207,837

.

activity—

of

orders

.Nov. 12

(tons)

__

OIL,

PAINT AND DRUG
AVERAGE=100

REPORTER

PRICE

y

.Nov. 12

—.

275,815

208,450

92

94

469,423

444,302

191,375

203,035

94

422,552

YY'-Y

190,406

.■i

MONEY

96

of

As

125.5

125.6

LOT

DEALERS

FOR

AND

THE

ODD-LOT ACCOUNT

SPECIALISTS

ON

THE

126.1

144.4

STOCK

?•I"

Number

Dollar

;

value

|

.

Customers'
.Number

of

Customers'

Dollar

value

other

short

total

of

Short

sales

shares—Total

PRICES

All

NEW

'

'

-

■

S.

DEPT.

—

and

farm

.

212

f

654,991

■

29,504

!

894,510

6,484

.

,

i

781,526

769,453

648,507

885,816

$26,597,740

$21,501,537

$31,873,918

273,210

263,590

242,250

v'.307,410

273,210

'263,590

.2421250

307^410

273,020

253,810

(short

sale

355,258

1,048,303

1,031,963

$27,412,379

$27,392,645

tons).——.

end

at

of

1.050,948.
597,678,

341,657

453,270

month

...

(000's omitted)__

30

YIELD

AVERAGE

STOCKS—Month

2,598,789'

(15)

$28,117,874

OF

Oct.:

of

6.19

J

■

——

yield

6.20a

6.06

5.80'"

——

4.41

——,

—

—-

(200)

5.93:

8.66

5.99

(10)

6.39

8.35

—

:———

—

MOTOR

VEHICLE

3.10

4.45'

3.21

6.11

6.31

;

——

PLANTS

'

Total

IN

r;A

number

FACTORY

U.

SALES

4.52

3.1&
-•

5.82:

of

MANU¬

of

vehicles.—

motor

Sept.:
626,180

657,664

413,537'

534,493

557.370

301,170»

91,389

99,850

298

444

1,14*

£8,573,000

£4,267,000

£104,779,00a

i

Number of passenger cars.—,
.Number of motor trucks^
.(Number

FROM

(AUTOMOBILE

S.

ASSOC.)—Month

of

—

—

coaches——„4_=—:—

NEW CAPITAL ISSUES
MIDLAND

PORTLAND

111,224

of

Production

-.359,200

(BUREAU

Oct.-

OF MINES)—

September: .I.

(bbls.)

from

Stocks

end

(at

GREAT BRITAIN-

IN

LTD.—Month of

BANK,

CEMENT

:r

18,715,000 '

18,605,00O»

22,778.000

23,633,000

19,938,000-

10,799,000

*14,390,000 J
879

———.t—,t—_ —19,187,000

mills
of

(bbls.)

month)

151.5

151.5

156.5

156.7

159.6

1NUV
Nov. 15

'

152.1

159.8

*159.3

160.5

144.8

144.8

136.7

137.6

Nov. 15

130.3

130.3

131.2

Nov. 15

179.3

144.9

136.8

0

—

164.0
"

(bbls.)———.

—

92',i

'

7,061,00a
;s' 939 '

169.4

169.3

Nov. 15

189.4

*189.3

115.9

115.7

175.4

"
;

!

153.6

MARKEt TRANSACTIONS

IN

DI¬

RECT

AND
GUARANTEED
SECURITIES
U. S. A.—Month of October:

OF

Net

sales

Ne(t

purchases

$1,659,950

—

$4,572,750

__——ii—^

'

"

$120,000

147.4

■

137.6

169.2

173.6

189.3

133.5

"

STATES

EXPORTS

AND

IMPORTS—

►

"

BUREAU OF CENSUS—Month of September

203.2

116.5

UNITED

V
.

•

»

(000's omitted)—
Exports

$904,300,000

—

Imports

530,500,000

-

$880,700,000

490,600,000-

$925,400,000

560,300,000

•

UNITED

Grains

STATES

GROSS

DEBT

DIRECT

AND

"

Nov. 15

Livestock
.

;

•Revised,

,Tni»
date.

to

154.1

187.8

191.8

213.1

•

152.1

212.0

172:7

I GUARANTEED—(000's omitted):
of

Oct. 31

225.4

As

239.3

General

206.2

197.1

•

Computed annual

;

$256,805,409

$256,708,917

$251,553,310

4,-737,054

—

—

5,698,886

3,995,15&

"

Nov. 15

218.2

fund

balance

1

Ir.

—

"

Nov. 15

figure,

kui

'

...

Hides and skins

tn

154.1

.

Nov. 15

Meats

1941

696,915

426,032

—

use

*.

Shipments

!

215,070

14

(Special indexes—

rs
pears

872,013
445,381

r

—

tons)

(25)

Month

Nov. 15

war*

COM¬

.-8,694

$27,614,340

Nov
Nov. is
15

foods

materials

Metals and metal products

•

23.207.

Nov. 15

and

Building materials

^

177,667

LABOR—

—-

lighting

OF

(125)
(25)

TREASURY

—

than

29,716

,

_

Fuel

27,270

Nov. 15

products

1,035,773
$38,803,504

y

182

Nov]

Nov.

commodities other

Textile

(DEPT.

Capacity used,;'■■■
OF

Lj,

products

Poods

All

Nov'

Nov_

' ;

••

V

'

-—Nov!

commodities

Farm

28,895

Nov

III—

:

SERIES—U.
J

190

6,741

"

——

1926=100:

130,215

34,751

*-

■

23,389

;

776,194

IIII

-

/

"I

27,460

6,206

-I

——

—

,

625,857

$23,460,428

-

787,732

——„-i-1

Other sales *
;
Round-lot purchases by dealers—
Number of shares
WHOLESALE

——

—

FACTURERS'

I—I—IIIII—1 Nov'

sales:

i

20,648 '

$29,985,726

Nov'

~

.

'

769,079

Z__——Inov
I—III
-Nov.

——i—___

%ales

25,158

29,061
166

Nov.

.

sales

'

,

784,627
$31,314,619

Nov.

sa'es_;

other

26,648

',T.....;r

'•

sales——---.

Round-lot sales by dealers—
Number

968.

August:

WEIGHTED

Average

N0V'

shares—Customers'

Customers',

of

own

COMMON

Banks

jjov

.

„

—

purchases by dealers (customers' sales).
Number of orders—Customers' total sales—
Customers' short sales

.

247';-

835

'

Odd-lot

•'

/ ^
'V

N0V>

shares

of

214,..

'—

CIRCULATION—TREASURY DEPT.

IN

Insurance

orders

of

i

3,044r-.

230

216

(bbls.)

tons)

Utilities

Y.

65,352

26,334.

(tons)

tons)

(short

Industrials

ODD-

EXCHANGE—SECURITIES EXCHANGE COMMISSION:
Odd-lot sales by dealers (customers' purchases)—
Number

N.

OF

88,407

36,001

.

(tons)————

orders-for

Railroads

STOCK TRANSACTIONS

r

75,114

'_*—•

CASTINGS

(short

September

394,769

200
Nov. 13

30-

49,819.

123,388

-

—

—

producers

MOODY'S

-'i

9,422

43

(bushels)—

crop

States)

sale

(short

167,198

INDEX —1926-36

.

10,064

—

6,847

13,790.

2,85(5

(5

IRON

Unfilled
.Nov. 12

——

(tons)

Percentage
Unfilled

(tons)

7,625-

7,920
11.955

•

•

„—

For

NATIONAL PAPERBOARD ASSOCIATION:
received

,

—

49,511

For

403.7

/:...

Orders

1,981,730

•6,195

(tons)—

The

1946 to 1948 inclusive.

weights used

are

based

iwcigu uuue runs.
on

the

average

sReflects effect of
five-day week effective




,

205.8

204.3

„

201.1

tThe weighted finished steel composite

product

shipments

Sent. 1,

1949.

for

the 7

years

1937

to

was

revised for

1940

inclusive

the

Net

$252,068,355

and
-

•

•

•
.

2.2355^

2.224 9

2.2229

:

debt

"Revised figure.

%

rate

•>

49,806.

52,284

—

seed

(pounds)

Shipments

336.8

'

and

—

MERCE)—Month

2.87

\
*

INDEX

445,850.

-V-': 3.36

•..■'f

2.83

;

220,201
2,338,47a

'

3.53

3.20

"

3,584

2,004,358

—

v

20,833:

3,418

—_———

—

States)

Cranberries

3.16
1

Baa

7,627

21,007;

386,832

(gallons)

States')

(12
(3

29,309.

-

8,107

215,222

(gallons)—

(bushels)

Apricots

34,083:

37,725
25,678

(tons)

Cherries

2.82

12,848

1,845,705

——

(tons)

99,846;

12,339

—

(tons)

14,868

99,119

—:

(bushels)

(bushels)

Grapes

3.10

»

2.61

3.35

,

Pears

2.45

2.90

'

2.93

Nov. 22

.

2.68

Nov; 22

———

—i.

•'

2.18 \:.

—

A
'

2.18

81,170;.-;
131,644

131,784

—

(bushels)

commercial

Peaches

AVERAGES:

————-

———

(pounds)

Apples,

.

52,533:

15,524

syrup

Broomcorn

Hops

"

41,153

—

(bushels)

(pounds)

Sugar beets

26,388.
6,324

*

87.491

:

beans

syrup

317.037

18.831

—

5.240

Sugarcane for sugar

111.62

Nov. 22

234,025
:

——

poiatoes

Sorgo

106.56

—

—v

—

Group--.—

Group ———-I--,

t

—^

(bushels)

Sugarcane

253,566
1,491,752.

1,321,075

(poundsi

Tobacco

110.15

106.74

Sweet

115.04

114.46
106.74

Nov. 22

——

Industrials

119.41

Nov. 22

Nov. 22

———————————————————————.

Baa .J

for

44,742:",

192,356

—

—

Potatoes

298,308

.

38,996

„—

—

100.75

990,098.

231,352

——'——.

—

Peanuts

104.36

104.42

1,288,406.

894,874

(bales)

Soybeans
Nov..22

—

1,126,226

(bushels)

grain

3,650,548.7:

3,357,618

—-

Hay,
Hay,

PRICES' DAILY AVERAGES:

BOND

Government

Average

18.425c

.Nov. 16

1——

at—

Louis), at———i

(East

18.425c

——

all (tons)—
wild (tons).
,(il—;
—'
Hay, alfalfa (tons)
Hay, clover, and timothy (tons)———„_
Hay, lespedeza (tons)
Beans, dry edible (100-lb. bags)——!
;
Peas, dry field (100-lb. bags)—

23.200c

.Ndv.

—

17.325c

.Nov. 16

at—
(New York) at——;

18.200c

20,638.

REPORTING

(bushels)

(bushels)

Cotton

18.200c

181,847

7,388
—_

r

(bushels)

Sorghum
Nov. 16

64,560

!

;

(bushels)

Buckwheat

QUOTATIONS):

at

refinery

Lead

Zinc

M. J.

&

refinery

690,531
488,026.

—:

CROP

—

(bushels)

(bushels).
(bushels)

Rye

copper—

Domestic

286,171

DEPARTMENT OF AGRI¬
of Nov. 1 (in thousands):

spring
(bushels)

Rice

METAL PRICES

358.119

328,255

tons)

(net

tons)———

(bushels i

Barley

3.720c

..Nov. 15

ton)—
Scrap steel (per gross ton)

67,873,000)

—

anthracite

(bushels).-

all

Durum

Oats

gross

iron

232,963,000

90,541,000

54,127

MINES)

tons)_^

Other

BON

300,841,000.

316,290,000

tons)

All spring (bushels)—'.

126

181

OF

tons)——.

(net

U.

Winter

(COMMERCIAL

$648,434,00a
347,593,00a

225,442,000

i.

America

(net

PRODUCTION

CROP

Wheat,
FAILURES

403,478,000
406,831,000

382,382

Central

CULTURE—As
'

280,662.000

272,820,000

—

and

To

*

kwh.)

000

of

—

(BUREAU

tons)

BOARD

EDISON ELECTRIC INSTITUTE:

EN¬

—

i—w

Municipal

EXPORTS

SYS¬

AVERAGE=l00

TEM— l«J«3-3y

$810,309,000

of

——-——

Month of August:
.
U.
S.
exports of
Pennsylvania

To

SALES INDEX—FEDERAL RESERVE

STORE

$678,000,000

DE¬

S.

Month

—

—

Federal

(net

(tons)

DEPARTMENT

$189,600,000

$553,482,000

U.

—

—

construction

117,449,000

$123,240,006

To
^

6,930

47,373,000

construction

Public

Nov. 17

(U. S. BUREAU OF MINES):
and lignite (tons)—

coke

6,828

REPORTED

NEWS-RECORD —Month

Nov. 17

anthracite

$107,141,000

BRAI),STREET.

PUBLICLY

construction

$121,542,000

coal

Pennsylvania
Beehive

U.

.Nov. 17

Bituminous

$101,080,000

6,867

—

THE

IN

CONSTRUCTION

$111,289,000

*

Federal

COAL OUTPUT

$101,848,000

SYSTEM

NEW

&

omitted >

$217,758,000

municipal

and

48,130

GOVERNORS

COMMERCE

OF

GINEERING

-y-y

constiuction

State

35,009

—

thousands)——

CORPORATIONS

S.

Nov. 17

Public construction

34,808

$725,700,000

(tons)

September———

—

ENGINEERING

Total

construction.,

S.

U.

Private

CIVIL

NEWS-

RECORD:

Total

44.431

_

ENGINEERING

—

period
OF

67,402

85,203

October:

>

CONSTRUCTION

ENGINEERING

of

STATES—DUN

DIVIDENDS

BY

705,416

cars)

'

«

CIVIL

70.71G

70,077

97.841

;

RESERVE

(in

September TOGO'S

Revenue

70,392

51,761

(tons)

INCORPORATIONS,

PARTMENT

loaded

end

at

INC.—Month
CASH

RAILROADS:

Revenue

(tons

lbs.)

2,000

period

October

BUSINESS

grades

64.399

of

orders

THE

Month

62,415,006

:

at

ASSOCIATION OF AMERICAN

Ago
Year

Month

—

'26,413,000

92,117,000
68,527,000

output,, all

of

DEBITS —BOARD

BANK

91,795,000

27,622,000

Nov. 12
Nov. 12

and distillate fuel oil (bbls.) at

Residual

end

UNITED

———Nov. 12

...

INC.

lbs.)'
(tons

at

Unfilled

5,674.550

Stocks at refineries, at bulk
Finished

smelter

2,000

Shipments

INSTITUTE:

PETROLEUM

ZINC INSTITUTE,

October:

Slab
of

AMERICAN

Month
Previous

Latest

Nov. 27

(percent of capacity).

steel operations

month available (dates
are as of that date) :*

or

of quotations,

cases

Ago

1

Indicated

in

or,

Year

Week

INSTITUTE:

STEEL

AND

IRON

AMERICAN

Activity

production and other figures for the latest week

cover

$251,010,031

«>
.

.ji.

i

4

$247,558,163:
■' -

-la.

Volume 170

-

Number 4858

THE.-COMMERCIAL

-—

direction, and credit controls

The Slock MarketUpturn

laxed

this problem.

in

spite

It has happened
history's best-adver¬

of

tised

The

stock boom

weakness

May of the

same

rences.

after.

was

Tariff
wide

reductions

plus world¬
devaluations

currency

should

be

threatening to dry

up

March, 1946.

ered,

but

real

a

This

levels,

domestic

tures

And

such

Strikes

goods.
almost

foreign
amplitude
early .1946,

of

an

equalling

should

be

investors

encouragement

no

speculators.

or

to

The fact

that ihe fourth round of

increases

wage

post-war
virtually suc¬

is

expenditures

the

tuted

essential

war-time

deficit

"only,"
normally
a
highly discouraging factor. The
same holds, and more so, for the
reassertion
of .organized
labor's
monopoly- power, and of its ruth¬
less use—Taft-Hartley or no TaftHartley Act. :
The

r

tion

been

welfarism

Administra¬

of

and Congress, together with
preparations and A-bomb ex¬

war

plosions, ought to serve

as warn¬
ings of what is. coming sooner or
higher taxes and far more
regimentation:
The
shadow
of
later:

pure

dence?

nation's

year),

cessation

eign

(which

recovery

generally believed

with

and

of

the

lend-lease,

spending

early

to

stop, disregarding relatively minor
temporary disbursements.

in

the

to

extraordinary rate of capital in¬
vestment
The

'

at; home

obvious

abroad.

and

tendency

to

perse¬

cute Big Business for its bigness,
if all other reasons fail, is a fur¬
ther

symptom

diagnostician

of

the

body

nothing of diamonds and simi¬
"hedges." We shall see, be¬
fore long.
y
:
■

Roughly,

the

deflation

May Be

lasted

Uncle

three

years. As is generally
known, the net national debt had

been reduced by $8V2

self

billion, tak¬

and

of

record

boom.

a

Nay, it broke when

the

big strikes of 1946 were reach¬
ing their end and that boom got

under way.

Now, at the outset of

big strikes, in the face of

some¬

a

what reduced general price level,
and of a near 30% decline of net

profits

far this year against the
period of - last, year, the

forth.'.

latest count

meant

a

rise

points in scarcely
months.
Of
tions.

like

about

■

stock

30

than two

more

'V;;^'

•

course,

(Nov. 22).

of

;v:'A.-'*

p'y

market

gyra¬

and

when

effects

him¬

reverse

course,
so

prob

the

become

-

new

"hot"

no

do

not

expect collectivism to

this country in the visible

sweep

it

is

stability,

dependent

hap¬

on

hazard

movements
of
gold.
In
reality, the gold movements were
not nearly as haphazard as they
appeared to be to the ignoramuses
shaping our monetary philosophy.

Far

haphazard

more

than

any¬

thing that could be attributed to
the gold movements are the

tortions
which

in

in

the

substituted
and which

con¬

politicians'
1920's

for

-

thinking
we
already
movements,

gold

embraced to

we

a

vast¬

ly increased extent in the 1930's
of

Early

this J year

Mr.

.■

Truman

cies

of

had

been

the

Federal

Government

reversed, too. The

fiscal year ended with
little

less

That

much

than

a

$2 billion

could

last

deficit of

be paid

"only."
out of

the

Treasury's balances without
affecting the monetary volume.
But the Federal deficit is grow¬

ing. It has passed
lion

mark

a

fresh $2

October

bil¬

on

after

1st,

conserva¬

tively -that it will reach $5

to
$6 billion in another nine months.
It may very well, reach
$8 or $10
billion.
The
essential
thing
to

visualize
mild

is

the

fact

that

a

very

uncertainty than is good for the
of a soundly functioning

If

heat?
for

the

years

the prospective satisfaction of the

pent-up demand and the "filling
of the pipelines" — what would
make
any
one
think that new

shortages
arisen

justify

or

in

demands

new

have

a

volume

a

that

woula

great expansion of pro¬
duction at good profits?

Apparently, something

more

cisive is at stake than the

diate,

short-term

business.

:

attempts

eral of which

such

as

underlying political trends, capi¬
tal values which used to be

For

one

one

of the

recovery, sev¬
have witnessed,

thing, the

mar¬

heavily over-sold and the
might have been running

For another thing, the
fraternity might be re¬
laxing emotionally in the convic¬
tion that nothing much more un¬
pleasant is likely to come from
this Congress, or maybe even from
the next one, than what already
cover.

financial

has
■

been

seen.

Whether

pends

or

not

such

v'on

the market de¬

short-range

—

or

short-sighted—considerations, the
fact

is

displays

that
a

its

behavior

definite

time-relationship to
ment

in

our

and
a

pattern
visible

basic ele¬

economic and social

picture.




sure

idea:

that

a

depression must not

be allowed to

happen!

Using the Printing Press

inflation still retain, or
again regain, that function if only
in

a

selective

more

bound fashion.

time-

and

;

/

Treasury, Not Private Financing
(Continued from page 4)

the money which the Treasury
raised by deficit financing to
pay
on

so-called annual Federal contribu¬

tions.
of

Furthermore, the financing

the

projects

built

under

the

1937 Act is still
ture.

mostly in the fu¬
that standpoint it is

From

wrong to resort to that

experience
yardstick for determining the
ultimate cost of the housing to be
built under the Housing Act of

as

a.

1949.

'

v

-

1

,

r,

y

.

.

It

.

from

will

be

which

the

agencies

bond

a

taxation

by

exempt
States in

the

issuing

local
located."

are

housing

Why are these obligations ex¬
empted from taxation?:
Here is
vividly exposed the basic artifice
by which total ' political power
over

the economy,

variously called
Communsm, Socialism, Statism,
New Dealism, Fair Dealism, Wel¬
fare State, etc., is being acquired

In any event, common
honesty
demands that the figure of
$12,-

in

320,000,000 should be taken as
representing the minimum cost of

property of all producers and

the low-rent
until

least

housing program, at
experience
actually

proves

of annual
appropriations,
"contributions," provided in the
Housing Act of 1949 that will be
raised
by deficit financing will
amount

and

part of the Federal debt

a

bear

against

sion. That much has become per¬

cost of the

month

or

two

cornerstone

Service

ago.

of

State,

That

is

Welfare

a

the

State,

Full

Employment,
Security, Stabil¬
Economy, "econ¬
omic dirigee," Laborism, Corpo¬
rate State—by whatever name the
philosophy goes that governs our

housing projects.

But whatever the

of this

the

United

tagem

States.

consists

in

The

stra¬

expropriating
re¬

distributing part of it in the form
of subsidies—something for noth¬
ing—to individual producers on a
selective basis.-.

will not appear on the

public

debt

should

lives and futures. It means, in ef¬

fect,
that
wages
have
to
rise
above, and farm prices have to be
maintained at or close.to, "parity."
That means, also, that profits can¬
not dry up, fluctuate as
they may.
The reaction of the stock

mar¬

ket was, and is a very slow one.
For a long time, it did not under¬

stand? obviously, that in such

an

economic system deflation can be
but a very short-lived experiment.
But

once

the

budgetary
every

deficit'

evidence

indicating that it will stay with
us

for

reserve

a

be

be it

Treasury's
but

as

hidden debt.
overlooked

It

that

moral

bankruptcy-

ment."

v -'

.

"govern¬

of

receive

lowered again, open market oper¬
ations reversed in the
inflationary

Holders

bonds in the ratio of

new

amount

bonds

for

$1,000

each

of

amount

off

entitled to

are

principal
old

of

new-

principal

bonds.

The

new

bonds, dated July 1, 1948 and due
July 1, 1978, are guaranteed as to
principal,
interest
and
sinking
fund by the Republic of Colombia,
Schroder

Trust

Co.

has

been

appointed New York agent to han¬
dle the exchanges. 1
offer

is

the

of

being made to
following bonds;,
,

(1) Department of Antioquia—
20-Year

External

Secured

(2) Department of Antioquia—
7%

30V2.-Year

Secured

External

Sinking Fund Gold Bonds, dated
April 1, 1927, due Oct. 1, 1957,
First, Second and Third Series. '
Department
20-Year

of

.

External

Caldas—
Secured

FREDERICK C.

'i Nov. 18, 1949.

'Obligations including interest
thereon, issued by public housing
agencies in connection with lowrent housng
or
slum clearance
projects
shall be exempt from
taxation

now

or

Year

Greene.

York

York
Stock

nounces

that

member

of

ing

Fund

Nov.

1,

Gold

Bar

has

him.
in

60

Bonds,

1927, due Nov.

Beaver

-

with

will specialize

study of special
.

York

associated

Wershil

to The

Bonds,
Oct.

dated

Oct.

ANGELES,

Department

(8)

Dean

Valle

of

Del

1948, dated June 1, 1928,

June

due

1, 1948.

(9) Municipality
Year

7%

Gold

Bonds.

due

Secured

May

(10)

of Cali—20Sinking Fund

Dated

May

1,

1927,

1, 1947.

Municipality

-25-Year

of

Extenrnal

7%

Medellm
Secured

1926, dated Dec. 1,

Municipality of Medellin
6xk % Gold Bonds o£

CALIF.

Witter

./

..

,

to The

Financial

Chronicle)

HARTFORD, CONN. — Gordon
B. Pepion has become associated'
with E.
T. Andrews & Co., 75
Pearl
Street,
members
of
the
Boston Stock

Exchange.

income Funds Adds
(Special

R.

to The

Financial

Chronicle)

HAVEN, CONN.—George-

Williams has become affiliated

with

Chronicle)

1928, due Dee.

,

E. X. Andrews Co. Adds

Income

Funds,

152

Temple

Street.
—

With Merrill Lynch Co.

&

(Special

Co., 632 South Spring Street. He
was

due

(Cauca- Valley)—External
Secured 7% Sinking Fund Gold

Thomas M. Mclnerney has become

With

1926,

1,

1, 1946.

Cauca

V

Financial

dated

(7) Department of Valle Del
(Cauca Valley)—20-Yeax
7%% Secured Sinking Fund Gold

financial

With Dean Witter & Co.
(Special

*

1, 1947.

Cauca

i, 1954.

B. 'Wershil,

New

become

Mr.

the

Philip

Secured Sink>

—External

City, member
Exchange, an¬

the

secured

(6) Department of Tolima—Ex-«
ternal 20-Year 7%

(Special

Street, New
New

7%

1948.

(11)

;

previously with E. F. Hutton

SAN
B.

to The

Financial

Chronicle)

CALIF.—John
now with
Merrill

MARINO,

Huntley

is

Lynch, Pierce, Fenner & Beane.

& Company.

hereafter im¬

Joins Fairman Staff
(Special

Doubtless

that

bonds is exempt

it

means

interest

on

Joins Smith, Ramsay Co.
(Special

that:

minimum

20

Sinking Fund Gold Bonds, Series
A, dated Oct. 1, 1928, due Oct. I,

.

.

posed by the United States.'"

.

External

1926, due Dec. 1, 1951.

Philip Wershil Joins
J.

'

-

(5) Department of Santander—-

1928. dated June 1,

David

6!&%

1959.

Gold Bonds of

SMITH, M. C.

V

Cundina-

of

Secured

Sinking Fund Gold Bonds 1928„
dated May 1,1928, due Nov. 1,

Washington, D. C.

connected

"

.

of

some

them in political issues.

LOS

that the Housing Act of 1937, as
amended, provides:

and

least

at

External

—

NEW

Congress."

all

invest

to

(4) Department
marca

V

"It will be a bond expressly
exempt from Federal taxes by Act
of

political
itself at

the expense of economic power to
the point where investment op¬

situations.

•'

Mr. Laemmel says:

long,

long time—once
requirements had
been

a

States.

$1,200

Bonds of

since the
has -aggrandized

course,

David J. Greene Staff

concealment of public debt is the
cardinal symptom of financial and

.

reappeared, with

may

statement

be

not

Of
power

ultimate cost

political housing

stated- will

Planned

This

charge
interest

have to be added to the

ized

or

interest

taxpayers.

cost will

.

fixed

a

certainly, it cannot happen
as long as the
printing press can
be used without danger of explo¬
fectly clear by this time, if not

Zuleta-Angel,
Colom¬
Extraordinary

United

Sinking Fund Gold Bonds, dated
1, 1926, due Jan. 1, 1946.

become

Most

each

Jan.

sufficed to
into raising

groups are united in that one

of

Ambassador

the

outstanding bonds

hedges

against

•

Womb-to-Tomb

was

bears

for

we

of

'

the pre-election flurry of

last year.

ket

at

imme¬

prospects

V,;

Perhaps this again is
futile

in¬

bian

bonds

announced Nov. 22 by

Sinking Fund Gold Bonds, dated
July 1, 1925, due July 1, 1945,,.
Series A, B, C and D.
-v!,

duced

much

discounted

unemployed,

dollar

was

Eduardo

to

exchange their se¬
30-year 3% sink¬

capitalistic system.) But given the
prevailing circumstances and the

has

recession, with less than four

million

of

7%

that

re¬

holders

health

market

the

to

new

to more

up

radiate

are

psychology, the

mass

offer

to'

fund

debtor

holders

adds

portunity in private enterprise is
disappearing, persons still having
savings to invest are perforce in¬

elections,

of

ing

The

which

the contrary. This is espe¬
cially true considering the largescale deficit financing in which
motives of which can never be drive
this country
ascertained. But if the boom pros¬ further the mountainous national the Treasury is now involved, and
Administration
pects of 1946 proved to be chilly debt.
and
Con¬ more particularly the Law-Keynes
in effect, hojv can the moderate gress, Democrats and
Republicans, philosophism of unlimited deficit
business upturn at present, one farm interests and business, labor financing via the printing press
which might be purely "seasonal," organizations and all sorts of
held by the political planners. The
pres¬
sultants

Colombia

1940's.

so

•;>:

three months of current fiscal op¬

193 at the

because

gold

incompatible with do¬

mestic and international

formal

(3)

erations. It is estimated

This

We have been told that the

A

approximately $34,000,000 princi¬
pal amount of outstanding bond&
of certain Departments and Mu¬
nicipalities of the Republic ol
curities for

almost mythical pre-1914 age.

standard is

Exchange of Bonds

7^2%

tive and instalment loans, and

in

over

migh

of
do

of

41

Republic of Colombia

margin requirements for specula¬

Dow-Jones industrial average has
moved from a low of around 163

1946, and again in 1947, to

not

character.

■

enhancing

so

same

we

by pressures exerted through loan
examinations, by raising the bank

eco¬

years

but

anything customary under
truly unmanaged and undi¬
gold standard of the now

All

longer make political capi¬
tal. Or the profits
may be taken
out of the
inflation, such as by
price controls. But inasmuch as

further enforced

requirements,

Sam

again,

will
inflation's

Reserve

reserve

is

rected

Reversal of Policy

a

ably

ing the bends out of the bank and

was

Ihe

and

right.

was

p

;

8%.

lar

words, the market went

proposed legislation to cope with
^ J inflation.
By June, he had to re¬
£
But; the stock market shows a
verse
himself. In the meantime,
resiliency which it did not show
the financial and monetary
poli¬
in two and one-half
nomic would overlook.":

around

down in the expectation of a de¬
flation. And the market

conscientious

no

is

common

say

and

In other

of

But such a boom is
likely to carry
with it low-grade bonds and
pre¬
sumably also real estate values, to

for¬

supposed,

was

shares

sudden

our

so, a new era of stock boom

ahead, which should not be sur¬
prising when the average yield on

was

in until

the trend. It

even

due

scarcely intelligible

is

agricultural, mineral, and
fields

a

behavior of the financial fratern¬

prospect of world-wide

over-production lengthens in the
industrial

think that it provides

■the otherwise

System portfolios. Open
market operations to deflate the
liquidity of the banks added to

; the

I

coinci¬

fairly rational explanation — and
not merely a rationalization—of

of

apparent

this

man-hour

per

inflationary shots-in-thebeing not only promised

are

ity. If

10

have

the

new

fiscal system. Add to it that with
the ending of the war, with the

economic

cents

in

swings

cyclical

but actually delivered. Could it be
that this parallel is a

consti¬

element

to speak.

so

buoyant, or at least livenedif with interruptions, as soon

arm

while

ceeding in one form or another, if
raising average unit costs by 5 to
would

revenues were

comparatively high
military expendi¬
being cut to the bone.

were

with

markets

as

ob¬

maintaining

American exports and to flood the

composure

deflation

new

bound "to- be followed by another
inflation. ■ That
means
violent

than

to

close

loans)-~the

its

future, j:very

it is

in

and there¬

the

(as in the

(2117)

short, the market is de¬
pressed, or dulled, while deflation
is pending or is under
way. And

self-respect,

up,

that Federal

server

in

set

regained

re¬

In

the time when it

evident

became

break
year

removed

consumer

CHRONICLE

the normal,
Rather, they
might be called political or man¬
agerial cycles. They are likely to
be short and sharp, much sharper

and

first

in

February
It quickly recov¬

"depression," or "recession."
What is more, it happened in the
face
of very
disquieting occur¬

or

not

market

war-time

indicated

if

instance of

(Continued from first page)
on

FINANCIAL

.

at

the

from income tax.

to The

to The

Financial

Chronicle)

Financial Chronicle)

SAN DIEGO,

CALIF.—Steward

Smith is with Fairman & Co., 530

BRIDGEPORT,
Helen

M.

CONN.

—

Mrs„

Whitney has joined the
staff of Smith, Ramsay & Co., Inc.,

207 State Street.

42

(Continued from first page)
backward.

and

One

is

the

complement of
the
other.
is a
perfect meeting of
Yet the problem persists
—Europe does not export enough,
There

minds.

the United States does not import

enough.

Why is that, even though
agreement on the goal?
Why is the whole problem so im¬
portant? What is it all about?
there

is

In the progressive sectionalizaof our thinking, our work,

tiori
our

to

daily life, it is

conceive

difficult
broadly. -We
very

issues

have become too specialized.

We

just take it for granted that there
be

must

do

ever

eign

foreign

trade.
Hardly
stop to think that for¬

we

trade

is

part of the only
system in which nations can have
possession of the various areas of
the

world,

with

varyingly

natural

endowed
without

resources,

constantly disputing each other's
rights to such possession.
If

actually did have
with no frontiers or

we

world,
other

one
any

stumbling blocks erected by

national

sovereignty to impede
of
labor, goods, and
services, there would obviously be
no problems of international
the Tlow

trade.

International trade would

Simply not exist since it all would

tively speaking, it is still at a low
ebb.

of

volume

The

world

ex¬

1948 has been estimated
like 95% of prewar,
about 85%
on
a
per
capita

ports in

at something
or

Even these figures do not

basis.

the

show

of

extent

the

lag

of

exist;

this problem would have
parallel in an economically and

politically unified world.
just

as we

Surely,

have it in this country

or any

other country, there might
temporarily
be
unsalable
sur¬
pluses of some commodities—pro¬
duction

I

think

it

without saying
larger volume of interna¬
tional trade would enable higher
all-round living standards than a
smaller
volume.
Obviously,
a
larger volume of trade would sig¬
that

goes

a

dustrial

countries in
of

overseas

materials

on

Europe, for

food

and

raw

which to build their

United

market

States

its

for

thus

abund¬

American aid to Europe can¬
be measured in dollars and

ance.

not

assume

that

of

ciation of America with the Brit¬
ish Commonwealth of Nations

with

Western

where

in

Europe

American

aid

example, the demand that the for¬
eign countries
a

close

general
has

which suffer from

shortage should

the

to

try

by earning more
dollars rather than by saving dolgap

larsr-which

is

saying 'that

they

another

of
export

way

should

to the United States rather

more

than

import less.

have

a

measure

foundation

£nd

alone

dollar

imports

If

which

on

from

to

want

we

of the precarious
the

world's

United

the

States

made

possible

and cents.

the

survival

of

rest,

we may recall that, in 19481949, the dollar earnings of for¬
eign countries paid only for about

To them the historical

the West's survival is
immediately important.
Nor must we forget that even in
aspect

of

even more

levels.

by

-

The United

natural

States

environment

is

or

interest of the United
all

other countries

States and

concerned.

If and when the adjustments in
trade

throughout

the

world,

of
made, it
is most likely that a certain dollar
shortage will still remain. It will
which I spoke, have been

probably be covered by a con¬
tinued outward flow of funds from
this country—be it in the form of

grants or of loans or of investment
in specific long-term development
projects in under-developed
tries.

Whichever

coun¬

such

form

assistance may take, one thing is
it

certain:
more

will

which

will

world

with

count.
make

can

provide
a

be

to

on

the

flow

a

basis

stable

outside
dollars-r-

of

small—on

however
can

have
and

secure

which

they

Only such stability
possible the abandon¬

ment of those emergency measures
and
restrictions
that
are
de¬

structive of trade and

counter

run

not

geo¬

graphic necessity forced to have
more
than a trickle of import

strictly economic terms the aid to trade. At the same time it is the
is essential,
Europe cannot be adequately rep¬ world's most efficient industrial
they resented in terms of the sums
and
agricultural
producer.;
In
did before the war—even if total
disbursed: since these disburse¬ such a
position it seems altogether
production and hence living ments
make possible the importa¬ improbable ■ that
this
country
standards for an increased popu¬
tion of key commodities whose should • in
the 'near
future
be
lation are to be only maintained
availability
alone
mobilizies willing and ?able to expand its
at prewar levels, to say nothing of
within these countries domestic
entire

production, it

desirable increase.

This is to be

explained mainly by two sets of
One is the rise in

imports

on

a

vast

factors of production which

would leled • scale."* >
idle, they multiply
; It
is true that, while
the effect of American aid far be¬
otherwise

general prices since prewar days.
The other is the loss in foreign

be

yond the
vided.

original amounts pro¬

no

bad from previous investments

income

that

countries

European

abroad,

A

,

measure

cient"

increase

ports is

•

of the imbalance in

international economic relations is

over

a

likely

in

improbable,

a

"suffi¬

American

of

multilateral

convertibility and

trade

horse.

is

It

*

quite

restoration

the

balance

on

burden

bear the

the

of

it

once

Will

the part of

countries that must

the

would

probable that

of

require sacrifices

the

now

putting the cart before the

mean

has

adjustment, i Btit
been brought about,

world • will,? be

ready for a
expansion in pro¬
trade and living stand¬
ards.
That is, if the holocaust of
another great war can be averted.
•

fresh

start

on

im¬

some increase

longer period

of

time

will V contribute

and

resumption

andunparal¬
%. duction,

.

justments in prices, in production,
£nd in employment, by industries,
equilibrium would be restored and
re¬

the
a

that they export more than

circumstances.

major impediment would

creates

the present state of interna¬
tional* imbalance.
There is, for

of

all, is almost commonplace. " But
the sooner the position is thor¬
oughly
understood
and
acted
upon, the better it will be for the

to the basic policy' of economic
common
sense
for
nify greater specialization among those free institutions that are the
which
this
two-thirds of United States ex¬
countries and greater specializa¬
country stands.
content of our civilization.
We ports.
The remaining third the
tion would mean greater all-round
When we have reached such a
should have no sympathy for a United
States has largely given
efficiency and therefore larger
situation, international economic
penny-pinching
view
of
great
production and hence greater pos¬ historical trends and decisions. away. A very great expansion of relations will have been restored
American imports and other ex¬
sibilities for larger consumption.
to a reasonable and manageable
On the other hand, it would be penditures
abroad would, there¬
But it is not only in this sense
It is at that time that
equally wrong to measure the fore, be necessary to balance the balance.
that
the
world
today requires worth to our
friends overseas of accounts if our
convertibility of currencies and
exports in general
relatively larger trade than the
multilateral trade will again be^
American aid in terms of dollars are to be
maintained at present
world of yesterday.
For the in¬
come
feasible. To expect a full

there, and after

main to producing as much as or
more
than people have
buying

In

we
can
appraise in
$3 or $4 or $5 billion
annually
the
worth
to
this
country
of that friendly asso¬

a

number of ad¬

if

sense

terms

higher living standards.

might have to be cur¬
tailed here, but could be expanded
a

individual volition.

situation, I believe, it is
economic
and
political common
a

sirable volume that would enable

a

obvious

ternational trade would then not

own

cents alone. It would be naive to

behind

trade

from

the problem of in¬

their
such

de¬

international

example, which depend on imports

no

Thursday, November 24, 1949

CHRONICLE

markets; hence, they also imply
larger general imports or reduced
general
exports by the United
States, or both.
For the dollarmigrations are unlikely to be of This aid is the counterpart-of the
short countries outside the United
great importance in this respect so-called dollar shortage through¬
in the foreseeable future.
Those out the world; by and large, the States, such developments would
industrial
countries
are, me^n larger exports to the United
forced
transfers
of
population older
that have taken place as a result temporarily, unable to produce as States, smaller imports from the
United
States,
and:/ generally
of the war have not lessened, but much as they are accustomed to
larger trade among themselves.
intensified
the
problem of re¬ consume; the younger and more
vigorius United States, on the
In conclusion;" I should like to
sources distribution in relation to
population.
Looking at interna¬ other hand, produces more than say a word about the more general
tional trade, we find that, rela¬ its people choose to consume of implications for the United States

be internal trade as much as trade
is today within the territory of the
United States. But even in a less
sense

FINANCIAL

&

Problem of World Trade

Postwar
forward

COMMERCIAL

THE

(2118)

is
to

Cons. Gas of Baltimore

relieving economic imbalance
the extent to which Europe's im¬
throughout v the
world.
There
ports of goods and services have
A Lag in Europe's Trade
power.
should also be possibilities of en¬
The Consolidated Gas Electric
been
paid for by essentially
Before the war Europe's exports
couraging travel abroad and Light & Power Co. of Baltimore
Sharing Resources by Migration
temporary types of finance. Im¬
of goods
expanding expenditure on other is offering the holders of the
and * services to nonports in 1948 worth $17J/2 billion
In a world organized on na¬
invisibles.
Certainly we must see presently outstanding $12,000,000
European countries paid for 80% were
paid for by exports to the
the problem and do our utmost to Series
tional, not international, lines, of its imports—20% were paid for extent
Q 2%%, due
1976 and
of only $12 billion—leav¬
trade, production and consumption out of net- income from European
help foreign countries to earn $44,660,000 Series R 2%%, dug
face an entirely different situa¬ investments abroad. Such income ing a gap of $5V2 billion which more dollars so that
they may be 1981,
first refunding
mortgage
was
covered by such temporary
tion. Tfieonly way in which our was largely fixed in money terms
able to buy and so that a larger
sinking fund bonds the privilege
forms of finance as grants in aid
volume of world trade may con¬ of
.world, which is precisely thus and to this extent would not share
exchanging such bonds for new
and a net flow of loans received
tribute
to
the
welfare
of
all first refunding mortgage
organized, can share its resources in an increase in general prices.
sinking
mostly from the United States.
and the fruits of its productive Even with an
nations.
But we must be under fund bonds of Series T.
unchanged income
2%%, due
Conversely, the existing imbal¬
efforts is by migration of people from such
no
illusion
about
the
realities. 1976 and Series U 2%%, due 198f,
investments, Europe's ance is also illustrated by the
from areas of merger resources to
With every increase in most types respectively.
export volume would have to in¬
;
foreign transactions in the United of
areas of more abundant
crease
imports, a vested producer in¬
resources,
substantially to cover the States.
To exchange old bonds for new
Only two-thirds of United terest must
be adversely affected.
,and by trade—in which every na¬ costs of an unchanged volume of
bonds a holder should send his
States exports of goods and serv¬
tion gives as well as
And
you
know
what happens
takes; in imports at greatly increased ices were
old bonds to one of the Exchange
paid for by goods and
other
words, .pays for what it prices.
It is one
In actual fact, however, services received from other coun¬ when that happens.
Depositaries together with > the
buys.
Special factors arise from Europe's foreign income from pre¬
thing to tell the other fellow that
tries.
The rest was financed by
exchange form furnished by the
the existence of national bound¬ vious
he should put up with increased
investments has greatly de¬
United States assistance to other
company. Copies of the exchange
aries.
Social and economic con¬ clined as a result of the war.
foreign competition right here in
form may be obtained from the
parts of the world and by the
siderations by influential groups Some of the European countries
his accustomed home market; it is
liquidation for
dollars
of the
following depositaries and through
of
the
population in any one have even become
debtors
to
quite another if we are to acqui¬
banks or securities dealers.
The
countrv may urge upon the gov¬ countries overseas and this situa¬ dwindling reserves of gold and esce in such developments our¬
other assets that foreign countries
exchange depositaries are: Bank¬
ernment a
selves.
I mention these circum¬
policy of restricting tion sooner or later will call for
hold.
ers Trust Co., 16 Wall Street, New
immigration or emigration.
stances not in a critical vein, but
Or net outgoing payments for inter¬
York 15, N. Y.; Safe Deposit Trust
vested interests will veto a policy est
in order to emphasize that the
and
amortisation
on
these
Financial Assistance No
Co. of Baltimore, 18 South Street,
of more liberal imports in one
Permanent Remedy
prospects for increasing United
debts.
Thus, Europe should have
Baltimore- 2,
Md.;
Old
Colony
States imports must be appraised
country, of hiore liberal exports a surplfts of exports of goods and
Trust Co., 45 Milk Street, Boston,
In the long run the balance in
in the other.
with a measure of

Makes

Exchange Offer

.

Or, in periods of
•distorted international balance

•among the countries of the world,
governments may have to restrict
and ration imports because
they
must be fearful of

losing their last
if trade

currency reserves

moves

services rather than

imports
It

is

estimated

on

its

own

to

over

prewar

fourth
levels.

much

as

current

ward other

that

to

do

as

they, need to fulfill their
payment obligations to¬
countries.

•considerations
stacles

exnort

and

economic
not

and

within

a

tially

These

possible

They

on

the

volume

of

total

levels,

or

countries alone would
to

by

one-

one-half over present
Exports to non-European

to

even

have

increase by from 20 to 100%
either
prewar
or
present

over

ob¬

realism.

international

accounts

provided

exist

are essen¬

of ' international
economic relations.
They would
have no parallel in an ecnomical-

of world trade at which
is to
a

true

be reached.
measure

Here

of the

a

be

American

assistance

by
on

an

cannot

financial
emergency basis

which is far too insecure to per¬

mit

building

upon

it

a

in

international

economic

lag in inter¬

By

increase in foreign
exports to the United States does
an

not depend upon the goodwill of
the American people or upon the

rela¬

tions, the countries that at present
have rely so heavily on foreign aid will
have to take measures to become

If

we

thus realize that

a

possible

increase in United States imports
and

other

will

neither

expenditures

more
can

rapidly

abroad

fully
imbalance
in
international, economic • rela¬
the' alternative
becomes
their standards of living.
The tions,
clearly apparent; if exports are to
recent currency devaluations pre¬
be substantially maintained,
pare the way for steps in both
United States aid to foreign coun¬
directions.
Both imply intensified
tries through g-Fants or loans will
competition for American pro¬ have to
contirytg; or if grants and

nearly self-supporting. They
dot this only by increasing
That this lag in trade has not
their productivity or by lowering

national trade.

large,

more

balance

we

and

frugality
and' virtuousness
of
permanent structure of national peoples
abroad, but on economic,
patterns of production and inter¬
institutional, and political circum¬
national trade.
If the world is to
stances - and
social
propensities,
make progress toward the pre¬
both
in the United
States and
sumed
goal of eliminating the
abroad, that are apt to change
grave imbalance that now exists
only slowly.
-

levels, depending upon the volume

problems

country.

that, to stand

are

development
cannot

war.

exports by one-fifth to one-third

against them and if they cannot,
reason,

surplus of

feet, Europe would have

increase

for

whatever

a

it had before the

as

alleviate the problem of

nor

6, Mass.; the First National Bank:
of
Chicago, 38 South Dearborn.
Street, Chicago 90, 111.; American
Trust

Co.,

464

California Street,

San Francisco 20,

Calif.

7-.

not obligated
to consummate the exchange offer
The

company

is

unless 95% of the

aggregate prin¬

cipal amount of the Series Q and
R bonds is deposited for exchange.
The exchange offer will expire at
the close of business on Dec. 19,
1949.

If

the exchange

offer be¬

effective, depositing bond
holders will receive 27s % interest
comes

from the date of their

deposit.

The First Boston Corp. and

:

Har-

riman Ripley & Co., Inc., have
been engaged by the company to
economically, socially, and politic
solicit exchanges and to act as ex¬
minute ago that a calley, upon the situation in the
world
change managers in forming a
organized along national countries which obviously import
lines can share its resources only more than they can afford is, of
group of securities dealers for the
purppse of soliciting deposits of
through migrations and through course, due to thefinancial aid
trade. Looking at the situation as which the United States has ex¬ ducers—within those countries, or loans are to be reduced, exports old bonds pursuant to the ex¬
it exists today, we all realize that tended during and since the war. in the United States, or in third will likewise decline.
*
:
This, after change offer.

ly and politically unified world.
I have said

a




thus far had serious repercussions,

Volume

170

Number 4858

THE

COMMERCIAL

satisfy

be

3)

page

Actually, some natural gas
authorities, much more well qual¬ JHere the local
ified than I to discuss

probably increase by around 3%
at least the early

as

of

transmission

lines.

There

tural

companies

likely

serves

Tne annual

of

reserve

natural

our

gas

re¬

prepared by the Ameri¬

as

Gas Association in conjunc¬
tion with the American Petroleum

can

'institute
lows:
fect

j

breaks

down

our

,

about 75% of
gas associated with

reserves;

about. 15%

•dissolved

of

10%

our

I

oil

to be

and

reserves,

about

gas

'reserves.

our

of

the

ently leaned heavily to the view¬
that salability of reserves
.

of

was

prime importance and for

rdhis.

concerned, will

are

use

substitute for gas
and enriching, or

discovered

quirements of these eastern states

should

here

be

attention:

your
very

petroleum
oil.

"failures"

as

industry's

Prices

existent

and

from gas

It

that

in

the

were

Walked

many

continue

search vfor

insufficient

were

totally absent, markets

are

oil

com¬

you

to

or

non¬

of

BTUs

away

the

be

natural

only

of

trillions

suffering

standing with

areas

gas

without

losses.
In
in
general

reason .many are inclined tofeel that the committee's estimates

At

what I estimate

of

and

'i

Expanding Markets

disappointed if at this point

gas "reserves

Lines

the

end

lines
is

in

the

railroad

mileage

more

Atlantic

and

England states comprise the
of

the

kerosene

and

New

cream

oil

range

market. In 1947

States.

United

than

were

Central

transmission

gas

more

10%

miles

1948 there

of

251,000 miles of

*

The

the entire domestic sales of these

That

point-to-point products
and is 100,000 area. As

than total oil pipe line

you

than 60%

of

concentrated in this

was

this

stances

more

know, in most in¬
type of oil is dis¬
small fuel oil dealer

summer and

43

winter months,

would

appear obvious
investment of $1 billion

that the
or

more,

which would be required to han¬
dle

such

would

an

not

that there

economic

in

load,
forth¬

or

also remember

must

thousands of homes

are

have

ments
and

unbalanced

be

coming., We
which

substantial

invest¬

oil

that

heating equipment
long as the price of

so

heating oil remains within reason¬
able range compared to the
price
of gas,
many of these home own¬
ers will not rush to
scrap their oil

burning equipment.
The

of

open arms,

Transmission

it

can

of natural

accomplished

gas

stands

annual absorp¬

form

fuels

some

it

grow,

that the

hundreds

in

cannot

reserves.

to

reason

tion

(b) Because prices are becom¬
ing attractive and markets are

not going

are

various oil
companies to. be. There are ways
of obtaining these "estimates and
no doubt many of them have
al¬
ready f occurred ? to you' and are
being used by .you. I think it is

of the Gas Association has appar¬

point

extent

large portion of our
present natural gas reserves were

petro¬

case

fortunate

hope that

the"

our

committee

reserve

the

do not tell you

I

In making these reserve

estimates

of

natural gas as a
oil in reforming

.

and

probability of an increasing por¬ we reduce this to its natural gas
the full exploration and tion of light hydrocarbon reserve equivalent, it would indicate that
development costs of which have discoveries, i.e. distillate and gas this area is now consuming in
BTUs
somewhat less than one^
already been paid out of past fields. ■
-v.;;V;'•••VV
fifth of the national average.
earnings.
1
5 : -r •

re¬

gas,

trillion
trillion

situation

own

manner

companies with large shut-in gas

nonassociated gas, or in ef¬

dry

this

usage

its

upon

the

as

utilities, each

reserves,

into these categories as fol¬

serves

in

this

they will convert their customers'
appliances and go to the distribu¬
tion of straight natural gas.
Even though the total fuel re¬

called to

results.

of

there is throughout the United States, the
panies that share in such types of today
a
broadspread
conscious average domestic and commercial
reserves have made it their policy
search
for
gas
which
will
be consumption of gas per customer
is 75,000 cubic feet of 1,000 BTU
not to divulge estimates of their fruitful of
gas reserve discoveries.
gas reserves. Gas reserves repre¬
(c) Because in our search for oil gas annually. The average con¬
sent an important
and in some we are drilling more deeply, we sumption in New England and
cases greatly understated, or even
are encountering
greater pressures Metropolitan New York has been
unrecorded, value in the balance and higher temperatures
which only 25,000 cubic feet of approxi¬
sheet. This is particularly true of engineeringwise
point
to* the mately 500 BTU gas annually. If
of

most

Broadly speaking,
these might be classed as dry gas
"reserves, gas reserves associated
with
oil, and gas reserves dis'estimates

the

far

300

of reserves.

Much

gas

174

not

points

(a) A

the

in

as

that

'

what securities

or

unfortunate

is

are

States.

"solved in oil.

companies. cubic feet

that

share

to

but

depending

gas re¬

said

rather

you
are
undoubtedly
in
determining
what

gas,
interested

three kinds of gas reserves in the

United

is

feet

industry will become an in¬
creasingly large supplier of na¬

The fiist

to existing and yet undreamed

gas

estimate

cubic

as

leum

supplier of natural

a

their

well

Benefit

assumption

our

publicly

ambiguity
as

viewing oil securities under

this

is to romance concerning the for¬
ward outlook for the petroleum

industry

will

In

ways

today.

the

What Petroleum Companies

V

in which
discuss the subject wnich

may

of

have

serves,

Three
'

(3) Large supplies of foreign oil
be available to help satisfy
.U. S. needs for liquid iuels.

I have chosen lor

fearful

certain of the other oil

will

-one

be

aiso

of the Natural Gas Act

part of the next decade.

two

England.

territory has long been considered
the top oil market of the nation.

tions.

as

of tnese

^annually for

are

New

of

Industry

enterprises. It is true that many
might at some future date

a

There

(2119)

falling di¬
rectly within the definition of oil

strong demand that may
.well increase a%-10% annually.
(2) Domestic availability of liq¬
uid ' hydrocarbon
reserves
will

i

difficult to class

CHRONICLE

Pennsylvania, New York and most1 tween

Some Natural Gas Aspects of Petroleum
(Continued from

FINANCIAL

&

last

market

in

which

oil

expect competition from natu¬

ral gas

ket.

is in the residual oil

This

is

of

one

the

mar¬

markets

which has been steadily increasing
at the expense of coal over the
Natural gas is too superior
to be used for boiler fuel

years.

fuel

a

purposes and it is doubtful if utili¬

ties

in

New

the

Middle

Atlantic

and

England states will be

mitted

to

take

substantial

on

quantities of natural gas

low-grade

per¬

purpose..

for this
1

The manufactured gas industry
has within recent years
developed

equipment for the manufacture of
high BTU oil gas. The initial cost
of

the equipment to manufacture

this gas

is low compared to other

methods and there

are

vantages to both the

ad¬

many

utilities

gas

and their customers.

So far as the

companies

gas

are concerned, the
of interchangeability
between high BTU oil and natural

wide

range

gas makes the former very attrac¬
tive as standby and peak-shaving
During the 12 months tributed by a
from a combination
oil and ice equipment.
generally agreed that the largest ending June 30, 1949 the Federal
It is perfectly con¬
holder
of : gas
Power Commission authorized the truck. In this
reserves - in
the
respect, the market¬ ceivable that under certain con¬
construction of slightly more than ing of heat for household use has ditions high BTU oil
petroleum
industry. is
Phillips
gas can be
Petroleum,, followed closely, by 7,000 miles of natural gas pipe not advanced much over the horse made and sold in many sections of
Humble, and then by Standard of lines. This construction will in¬ and buggy days and literally hun¬ the country at a cost less than that
Indian a
Magnolia t (Socony- crease the daily gas transmission dreds of thousands of housewives of natural gas delivered at the city
.Vacuum), Texas, Cities Service, capacity
by
2,600,000,000^ cubic daily or weekly purchase range gate.

mileage.

,

of dissolved gas reserves are very

•low.

X,

-

l^realc
national

the

order

owned

calculate

to

or

down

estimate

reserve

the

in

and Gulf.

My off-hand opinion is feet and when completed will have
covered by these cost about $600,000,000 and will
.leum industry, we do so for the estimates might be from a neigh¬ have output calculated in BTUs
.reason that we attempt to measure
borhood of 15 trillion cubic feet equal, to 446,000 barrels of oil. To
the forward position of the petro¬ at the top of the scale to perhaps look at,it*, another way, the lines
leum industry
as a
natural gas 6 to 7 trillion cubic feet at the authorized -during just this one
supplier, I. think- many
people bottom of the scale. No doubt as year can annually tranport energy
have attempted to make this esti¬ the saleability factor is taken into equal,,to .163,000,000 barrels of oil.
mate and if one uses as the base greater consideration by the in¬
We are all aware as to where
the estimates of the American Gas dividual companies , in estimating
gas
has been going. For many
•Association for our total reserves, their gas reserves, you will find
years it moved from largely the
he would probably come to the a
demonstrated
uptrend in the Panhandle of Texas and Okla¬
amount

controlled by the petro-

that

the

range

oil

for

cooking,
water-heating,
space-heating. Prior to the

and

early 1930s coal and coke domin¬
this

ated

dustry

conclusion

panies

leading

directly

count for
national
mate.

that

50%

natural

; Should

of

ac¬

our

total

reserve

gas
-

com¬

indirectly

or

about

oil

thinking further and increase

the

possible

philosophy of saleability
which
may
have
been
taken into account by the Ameri¬
can Gas Association, it is possible
not only would our reserve total
be greatly expanded but that the
of

this

expansion

might

be

credited to the gas reserve holding
of oil companies. As

along

this

would

come

would go

we

of

road

large oil

more

thought,

we

to the conclusion that

ultimately the petroleum industry
would supply an increasing por¬

*

Relationship
and

our

estimate by increasing the
of dissolved gas to remove

bulk

or

one

companies.

Between, Petroleum

told

two ways

were

Industries

Gas

earlier

I

reserve

Item

of

reserves

the gas

esti¬

projectour

we

available data concerning

y

i

that there
in which we might
you

look at the natural gas

homa to

markets in

the Chicago-

by

for

these

but

the

oil

in¬

aggressive promotion
eliminated solid fuels

practically

in

uses

that

market.

A

great majority of these
have

dwellings
connections already and

gas

.

.

market

many

within

are

more

distribution lines
vious

that

straight

reach

that it is ob¬

so

either (mixed

will

natural

of

be

gas

or

petitor. The change will not come
overnight but if the pace of the

the Appalachian areas and

shift

thence

from

coal

to

kerosene

and

range

oil is

lated markets of the Atlantic Sea¬

criterion, the oil
industry will have to look forward

board states. A few

to

pronounced

eastward

into

witnessed

the

the

position of Paso's line

highly
years

popu¬

ago

completion

from

West

we

El

of

Texas

a

any

decline

in

its

Like

kerosene

and

the

attention

of

range

analysts the Far West. The markets of the installations are in these
eight
years, particularly the
deep South have long been served states and better than 55% of all
last two or three years when all wih natural
gas and the continued the centrally-heated dwellings in
many

some

of Wall Street and the hinterlands

have become natural gas conscious
to

large degree. To

a

more

a

pressing

there is

me

and

development

of

Southern

as

United

such

companies

Natural

Gas

and

Gas

Corporation

bear

New
I

England

said

that

predict

in

heated

by oil.
it was impossible to
advance
the
losses
are

industries.

be

probably

the

That

On

point out to

described
The

leum

hand, I would
that two .risks are

the

one.

'y

has thrived

extent

decade

which

to

the

in

next

ience to the
to

thought, ability of natural gas will un¬
be no favorably affect the fuel oil seg¬
the Natural Gas Act ment of the petroleum industry.

of

this

line

in

all markets where

real problem of the petro¬ it
has
become
available
based
industry as to natural gas is upon the combination of conven¬

less the increased avail¬

you

in

problem

which

«

other

the

•involved

in

way

things will work out.

will

or

of

the

gas

user

and of economies

supplier

and

porter. We used to take

trans¬
rule

6,600,000

are

and that

already

heated

by

additional 700,000
space-heating customers are
expected by this winter, it would
follow that the availability of ingas

an

new

oreased

Gonzalez,

Humble

Oil

&

Refining Co., to Mr. E. Holley Poe
Holly Poe Associates, and to

Mr. E. deGolyer of deGolyer and
MacNaughton for the use of many
of their ideas and remarks,

largely
a.public nature, which I have
incorporated in these words of

of

mine.

/•

To

summarize

would

,

the

the

.

situation,

I
that it is evident that

say

petroleum industry is going to
a fight on its hands to main¬

have
tain

of

some

its markets

the fuel revolution

through
having.

we are

supplies would bring
into
many
homes
today
use
gas
only
for

dismal

as

may not
might at first

one

as

be led to expect when he lets his

imagination
natural gas

hand,

it

run
concerning the
industry. On the other

should

be

remembered

that the present and most likely
future gas earning power of many

petroleum
to

their

from

companies
present

oil

in

leum

power

and

so.

be

cannot

cne

the

relation

is small

likely remain

Therefore,
that

in

earning

operations

will most

immediate

witness to the manner in which it which various fuels would suffer,
concerning the relation¬ has been received in those areas. but if we start out by saying, that
tion of the total gas needs of the ships of the petroleum and natural
There appears to be little reason, of 20 million gas-using homes in
natural gas transmission and dis¬ gas
industries than this briefly if
any, to doubt that natural gas the United States, approximately
tribution

for

of E.

be

oil,
the oil industry and that the one the Panhandle
to California and heating oils find their best market
which I have just described was
few, if any, would have agreed a in New. Jersey, New York and
perhaps the more romantic one decade ago that we would be New
England and, for example,
than the one that has pccupied
carrying gas from those areas into more than 45% of all oil burner
over

economist

Conversely, the situation

kerosene market.

and

to the work of Dr. R. J.

the

com¬

a

Detroit area. More recently it has
in increased volumes into

moved

I would be most remiss if at this

point I did not give much credit

aggregate the

sure

petro¬

industry

through

its

in¬

creased

sales

natural

gas

will

be able

to

losses

as

To

completely offset such

may occur

kerosene
oils.

of

.

in the form of

household

and

what extent

heating

downward

a

adjustment in the price for petro¬
leum

its

products will tend
some
future date
natural
of 1938, which would so clarify
We are in the midst of a fuel one hundred miles. More likely cooking and to a
slight extent gas remains to be seen. From an
the status of petroleum companies revolution. The natural
oil company standpoint, any down¬
gas indus¬ today the figure is in the neigh¬ refrigeration. It is quite obvious
as
vendors of
gas
in interstate try is engaged in the greatest in¬ borhood of IV2C per 1,000 cubic that under present conditions it ward price adjustments are likely
be
commerce, and the present large
vasion of any fuel market that has feet per one houndred miles and would
economically imprac¬ to have an unfavorable effect upon
oil company holders of reserves ever been conducted at
tical to build the gas lines which earnings and one might assume
any one yet the expansion of natural gas
namely (1) that there
amendment to

and

those

heir

oil companies who

additional

to

therefore

would

them

commit

may

gas

be

to

fall

reserves

unwilling

interstate

to
gas

transmission systems because they
would be fearful of being classed
as

natural

companies

gas

the meaning of

within

the Act; and

(2)

that increasing reserves of natural
gas

.oil

will

be found

by other than

companies in perhaps

reflection
for gas
many

a

of the conscious

that is

now

direct
search

under way by

companies which it would




time

in

industrial

our

history.

This invasion is backed by proved
reserves of 174 trillion cubic
feet,
an

increase

of

nearly twelve-fold

in 29 years in the face of an

eightincrease in consumption. We
have in the past often heard the
Cold

alarmists' voices raised

insufficient
doubt
or

you

lor

and

about

our

and

no

reserves

I

will

hear

like voices raised about

reserves.

of

oil

the

We

can

petroleum

itself

on

both

let

these

measure

that

as

it

a

cost

lc

transport 1,000 cubic feet of gas

gas

heating

gas

which

would handle the load if all homes

pipe lines continues.

using oil were to convert to
gas. Today, in New Eng¬
are
having, it is impossible to ex¬
land alone this would require two
actly determine in advance the
lines each capable of carrying the
amount of losses which will be
combined capacity of the Big and
borne
by
existing
fuels.
His¬
Little Inch lines familiarly known
torically it is known that coal,
which

has

the

least

desirable

utilization features and which
has

almost

the

we

and

nullify

some

that

at

of the advantages of

the

loss

of

heating oil mar¬

now

highest

now

kets could become quite large
fore

as

Texas

Eastern

If

Transmission

Jersey and
New York were included, it would
take
five
pipe lines of similar
Corporation.

New

speak
ques¬

in

gas

record

to

natural

In the fuel resolution which

price, is
likely to suffer most. However,
let us look at the position of oil. carrying capacity.
Natural gas will soon be available
Without going into

our

the

industry
of

these

to

thumb

quantity in New Jersey, eastern

of load

the details

balancing requirements be¬

a

real

delivered

fight

BTU

on

a

\Vould

be¬

price per
get

under

"

way.

t

With Goffe & Carkener
(Special

to The

KANSAS
Bennett

is

Financial

CITY,
now

Chronicle)

MO.—Dick F.
with

Carkener, Inc., Board
Building, members of
cago Stock Exchange.

Goffe

&

Trade
the Chi¬

of

44

THE

(2120)

■.'

■

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, November 24, 1949

■

III
•

American Natural Gas Co.

V

:

>

INDICATES ADDITIONS SINCE
and

operation.

shares (rio par) common stock (in¬
cluding 27,680 shares which may be acquired in stabil¬
izing operations). Offering — Offered to present stock¬
holders of record Nov. 23 at the rate of one new
share for each 10 held.
Rights will expire Dec. 12.
Oct 28 filed 304,485

•

PREVIOUS

ISSUE

to 'convert to automatic dial
Officer 240 W. Monroe Street, Decatur, Ind.

property

additions

Manufacturing Co.
(letter of notification) 7,380 shares of common
(par $1). To'be sold on behalf of a stockholder

stock

through C. B. Richard & Co., New York.
(about $2.50).
;
7" ^

Underwriter—Glore; Forgan & Co. and W. C. Langley &
Co. (jointly).
Proceeds—To invest in common stocks
cf two subsidiaries, Michigan Consolidated Gas Co. and
Milwaukee Gas Light Co.
, ■
/•<;-

working capital.

Health Ins. Co. of N. Y.

Id

Ampai-American Palestine Trading Corp.,
Ybrk

Ncw

.'Nov.

.

3 filed $6,250,0CG 10-year

,

i

-

•'

*

,

e

3% sinking fund deben¬

200,000 shares ($10 par) Class A stock. Under¬
writer—None, but securities are to* b<e sold through ef¬
forts of directors and employees. Stock is to be offered

•

-

Apple'Concentrates, Inc., Meadowbrook
"
Orchards, Sterling, Mass.":
8 (letter of notification) 12,500 shares ($1 par),
"Price, $10 each, Underwriter—Perrin, West & Winslow,
Xnc., Boston. To buy plant, machinery and equipment,

Nov.

17

Insurance Co., Of Florida, Miami, Fla.
Sept. 7. (letter of notification) 12,000 shares ($10 par)
common stock.
Price—$25 each.
Underwriter—Atwill
& Co., Miami Beach. To complete formation of a stock

-

insurance company.

L.

Burton

Co.,

New

velop mining properties.

-

Proceeds—To

,

($100 par) value preferred stock and 6,000
shares ($1 par) common stock (of which 2,000 shares
will be purchased by underwriter at par). To be offered
in units of one share of preferred and two of common
wertible

;;

$102 a unit. Underwriter—Sterling, Grace & :
Co., New York. To acquire oi\ leases and drill wells..
stock

#

at

Black

Diamond

Gold

&

Properties,

Lead

Inc.,

Tucson,' AH'Z.
■
(letter of notification) 75,000 shares of capital
Price—$1 a share. No underwriter. To improve
properties, develop the mine, and furnish equipment.

Nov.

14

stock.

Broadway Angels, Inc., New York City
(lc par) common stock and
£00,000 management shares of 0.1 of a cent par value,
to be sold at 50 cents and 12.5' cents respectively. Under¬

Nov. 14 filed 2,000,000 snares

writer—Hugh 'J.

Devlin,

New

York.

Proceeds

—

For

working capital. Business—To back theatrical produc¬
tions, distribute tickets and act as an agent for talent.
Burd Piston

de¬

stock, to be offered at $8 each by Albert H. Bates,
Vice-President, and two members of his family. Under¬
writer—Paul H. Davis & Co., Chicago.

rmon

•

Carney-Pacific Rockwool Co., Seattle, Wash.

'Nov.

5

xiotes

or

writer.

notification) $100,000 first mortgage
participating certificates. Price, par. No under¬
To provide Working capital and retire current

(letter of

indebtedness.

New- York.
Nov. 21

stock

/

"

♦

Underwriter — Competitive bidding., Probable bidders:
Halsey, Stuart & Co., Inc.; Morgan Stanley & Co.; Equit¬
able Securities Corp.; The First Boston Corp.; Union Se¬
curities Corp.; Merrill Lynch, Pierce, Fenner & Beane
and Stone & Webster Securities Corp. (jointly); Blyth &
Co., Inc. Proceeds — To redeem outstanding 3 M>% first
and consolidated mortgage bonds and repay short-term
bank notes.
Bids expected Dec. 14.
J
Central

Power &

Light Co. (
G)
Nov. 15 filed $5,500,000 of sinking fund debentures, due
1974. Underwriter—Competitive bidding. Probable bid¬
ders; Halsey, Stuart & Co. Inc.; Union Securities Corp.;
Carl M. Loeb; Rhoades & Co.; Kidder, Peabody & Co.;
Glore, Forgan & Co.; Merrill Lynch, Pierce, Fenner &
Beane and Salomon Bros. & Hutzler (jointly); The First
Boston Corp.; White, Weld & Co.; Shields & Co.
Pro¬
ceeds—For improvements to facilities, to repay outstand¬
ing notes. Bids#expected Dec. 6. r :
i *
/
•

Christians

(H. C.)

..

Co.

mon

stock.

500 shares ($5 par) com¬
To be sold at $135 each. No underwriter. For

common

Office, Johnson Creek, Wis.

stockholders.

No

:

Price, $1

(par135c).

share.

per

Underwriter

Detroit Edison Co., Detroit
filed

14

t;

underwriter.

For

plant

•

Diamond

•

Bros#

.

,

.

.

.

./

Nov.

9

,

stock.

Co., Trenton, N. J.

Inc., Memphis, Tenn.
notification) 10,500 shares

($1

•

Dorr

■

Nov.

•

14

Co., Inc., New York
(letter of notification

(par $50). Price par.
additional compensation to employees.
preferred stock

No

of the company,

its subsidiaries and associated compan¬
$44.50 per share. Proceeds—To be added to treas¬
funds and used for corporate purposes. Underwriterv,:

;

■>

(Ky.) Gas & Electric Co. (11/29)
$41,000,000 first mortgage bonds, due 1979.
Underwriter—Competitive bidding.
Probable bidders:

10:30

(CST)

a.m.

Steubenville,

Major Television Corp., New York:
Nov. 14 (letter of notification) 276.205 shares of common
stock

j
■

Oct. 27 filed 1,000,000 shares (5c par) common stock.
Price, $1 each. Underwriter—Tellier & Co., New York.
Proceeds—To purchase, improve and operate the Fort

Pbwer

filed

2

Corp*, St. Petersburg, Fla.

new

share for each five held.

•

expire Dec. 21.

—For construction.

Oct.

31

stock.

(par $10)

28,500 shares

Underwriters—None,

other

than

com¬

•

..

■

.

of

machinery,

Co.,

purchase of inventory, finance
vr,

v..;;-

(Minn.)

:

Buikfing Trustees, Boston
(letter of notification) $150,000 30-year 6% d$12,000 shares (no par) common stock. To

bentures and

in units of one $100

for

gage now

$100.

debenture and eight shares

No underwriter.

To satisfy a mort¬
held by the Provident Institution for Savings,

Boston.
•

Mercantile Acceptance Corp.

of California
(letter of notification) 1,274 shares of 5% series
first preferred stock ($20 par). Price, par. Underwriter
Nov. 15

—Guardian

porate

Securities

Corp.,

San

Francisco.

For ^cor¬

.'V

purposes.

Grace

stock

(W; R.) & Co., New York
(letter of notification) 2,400 shares of common
(no par). Price, $105 per share.
Underwriter—

Blyth & Co., Inc.

m

Proceeds to selling stockholder.

Texas
*•;_
,
-'
of. notification) 140,000 certificates of
right (one for each share of stock outstanding), which
can Jbe exchanged for a new issue of common stock at
the rate pf 14 rights for one share. This common stock
will have a $10 par value and will be sold to present
stockholders at $30 each.
No underwriter. For capital
and surplus funds.
Gulf Insurance Co., Dallas,

Nov.

New York

,

Boston

Philadelphia

Pittsburgh

San Francisco

Private Wires to all




offices

Oct.

Cleveland

15

(letter

Gulf States Utilities Co.

Chicago

<

•

Nov. 22

•

New

Massachusetts

of stock

pany's officers, directors, employees or agents. Price to
present stockholders will be $10 per share until Dec. 2,
1949, at which time the balance of shares unsubscribed
will be offered to general public at $10 per share. Proceeds-^-To be' used for further expansion of telephone
facilities.

.

Nov.. 15
be sold

Telephone Corp.
(letter of notification)

common

stallation

&

Finance acquisition and in-

pansions to phone system.

Rights

Underwriters—Kidder, Peabody & Co.
and Merrill Lynch, Pierce, Fenner & Beane.
Proceeds

Underwriter—Mencher

Citizens Telephone Co.
Oct. 17 (letter of notification)
1,600 shares (no par)
common stock.
To be sold to stockholders at $47 each.
No underwriter. To buy new switchboard and make ex¬

242,000 shares
one

25c).

Price, $1 per share.

Mankato

($7.50 par) common stock.
Offering—To be offered stockholders of record Nov. 30
at the rate of

(par

York.

sale of tubes and sets.

Steuben Raceway.

Florida

Nov. 29.

• "

•

Ohio

Nov.

:

Lehr Iron &

ies at

.V

32,160 preferred shares
Price, preferred $1 and com¬
Increase capital
plant of

&

1

Eastern Harness Racing Club, Inc.,

shares.

underwriter.

Halsey, Stuart & Co. Inc.; Lehman Brothers and Blyth
Co., Inc. (jointly); The First Boston Corp. Proceeds-^To redeem outstanding bonds; buy Louisville Transmis¬
sion'Corp.; prepay bonds of a predecessor, Louisville
Lighting Co., and for general purposes. Bids—Bids for
purchase of the bonds will be received by company at
Room 1100, 231 South La Salle Street, Chicago, up to

shares of 6V2%
To be issued as

175,000 shares of common stock (par $15).
Offering—To be offered to stockholders and employees

er—None.

Auto & Auction, Inc.

Louisville

Nov. 4 filed

ury

(PS.)

(letter of notification)

Nov. 2 filed

Co.

Chemical

Dow

par)

;

(3,1.93

^

Steel, Inc., Akron, Ohio
Nov. 14 (letter of notification) 1,000 shares of $6 cumu¬
lative ($100 par) preferred stock. Price, par. No under¬
writer. To pay current and long-term liabilities. Office,
655 W. Wilbeth Road, Akron, O.

each.

dent, and eight other stockholders.
Price—$8
Underwriter—B. F. Ward & Co., Memphis.

i

Corp., Huntsville, Ala.

corporation.

by James K. Dobbs, Presi¬

be sold

To

17

90c.

mon

Houses,

(letter of

common

at 105 W.
(CST) Dec. 5. :

company

Oil,

and 4,716 common

capital for expansion.

Dobbs

Lancaster

Nov.

18

Provide

Klamath

•

■

(letter of notification) 3,000 shares of 6% pre¬
ferred stock (par $100).
No underwriting. Price,-par.

Nov.

by

to 11 a.m.

up

In©#, Lewistown, Mont. - - > Nov. 10 (letter of notification) 1,700 shares ($100 par)
common stock.
Price, par. No underwriter. To explore
and develop potential oil or gas properties.
Office, 307
Montana Bldg., Lewistown, Mont.

•

699,743
Offered

additional construction.

received

..

—

shares ($20 par) common stock.
Offering —
to stockholders of record Nov.
9 at $20 per share on the basis of one new share for each
10 held. Rights will expire Dec. 5. Underwriting—None.
Proceeds—To repay bank loans for construction and for
Oct.

be

Chicago,

facilities, tools, dies, jigs, etc.; the balance for working
capital. Statement effective Oct. 3 and amendment to
registration statement effective Oct. 31.

#

(letter of notification) 300,000 shares of common

Florida

Citizens Telephone Co., Decatur, Ind.
Oct. 21 (letter of notification) $250,000 of 4V2% pre¬
ferred stock.
Price $100 each.
To be offered initially
to

■

;

will

May 10 filed 5,000,000 shares (3p par) common. Under¬
writer—Greenfield, Lax & Co., Inc., New York. Price—
$1 per share. Proceeds — To purchase additional plant

George J. Martin & Co., New York. Working Capital, etc.

-

Nov. f4 (letter of notification)

working capital.

•••

,.

bonds

Keller Motors

100,000 shares of com¬
To develop

Securities Gorp., Brooklyn,
;:
f'
.7;•

Realty &

the

Adams Street.

No underwriter.

<■;v-"-

V-X.

•Dansker

•

Central Illinois Light Co. (12/14)
, ,
'Nov. 18.filed $12,;500,000 first mortgage bonds, due 1979.

Price 5c each.

& Co.; Lehman Brothers; Blyth
Co., Inc.; W. C. Langley & Co.; Union Securities Corp.
Glore, Forgan & Co. (jointly); The First Boston

of

Expected early in December.

(letter of notification)

mines.

Ring Co., Rockford, III.

Nov. 7 (letter of notification) 2,500 shares ($1 par) com-

18

stock.

mon

(12/5)'
mortgage bonds, due 1979.
bidding.
Bidders may in¬

Corp.; Smith, Barney & Co.; Halsey, Stuart & Co. Inc.
Proceeds—To pay off $1,500,000 - of 2Vs% promissory
notes, for construction, and to reimburse the treasury
for construction expenditures.
Bids—Bids for purchase

;

"-Copper Valley Mining Co., Salt Lake City, Utah

Nov.

Light Co.

and

Mines, Inc.

York.

&

Underwriter—Competitive
&

'

•

Power

clude Kidder, Peabody

stock, *

liam

for technical services and other corporate purposes.

Iowa

Oct. 31 filed $7,500,000 of first

(by "amendment) 800,000 shares (no par) com¬
Price—$1.25 per share. Underwriter—Wil¬

mon

(12/8)

poses

16

Consolidated Caribou Silver

Nov.

Piilp & Paper Corp., New York

Corp.. New York. Proceeds^—For general corporate purand to expand facilities.

'

To be offered at $200 pen class
A shares in units of 25 class A shares (and one class B
share as a bonus). No underwriting.
Although techni¬
cally a public oifering the incorporators view the of¬
fering as a private financing because only a limited
number of substantial investors will be solicited.
•

*

'

Hudson

(voting) Common stoOk.

economic de¬

Barclay Oil Co., Inc., Mt. Carmel, III.
|
Oct. 13 (letter of notification) 2,000 shares of non-con-

Broadway, New York.

Nov. 13 filed 120,000 shares of Series B cumulative pre¬
ferred stock ($25 par).
Underwriter — Lee Higginson

Commerce Publications

Nov.

tures and

>t $11 per share. Proceeds—To be used for
velopment of Israel.

-

70

Corp;, Rochester, N; Y.
(letter of notification) 2,500 shares of class A
preferential common stock and 100 shares of class B

.

/

.

;

requirements.

Hanover Bank & Trust Co., Room A,

at office oi Central

Price, marked
J

(letter of notification) 4,000 .shares of common
.stock (par $2). Price (est), $3.50. To be sold in behalf

American Progressive

•

1949 construction

Bids—Bids will be received up to 11 a.m. (EST) Nov. 29

Colorado Oil & Gas Co., Alamosa, Colo#
:'
Aug. 30 (letter of notification): 250,000 shares ($1 par)
common stock, of which 200,000 will be sold for com¬
pany and 50,000 shares for N. O. Yeakley, a controlling
stockholder, at $1 each. Underwriter—W. C. Hifchman
Co., New York. To lefcse properties, drill wells; and for

Nov.

*

term notes and finance

Nov. 18

cf stockholders.

*

Beane; Storifc & Webster Securities Corp.; Kidder, Pea¬
body & Co. "arid White, Weld & Co. (jointly); The^First
Boston Corp.
Proceeds—To repay $6,500,000 of short-

Clarostat

1979.
ders:

(11/29)

:r

filed $10,000,000 of first mortgage, ponds, due
Underwriter—Competitive bidding. Probable bid¬

27

Halsey, Stuart & Co. Inc.; Salomon Bros. & Hutz¬
ler; Lehman Brothers; Merrill Lynch,. Pierce, Fenner &

BROKERS

c*c°

C«v

DEALERS

UNDERWRITERS \

fcOSTO*

••

.

Volume

170

Number

4858

THE

COMMERCIAL

holders

on

l-for-20

a

expire Dec. 13.

NEW ISSUE CALENDAR

•

Rainier

November 29,

Louisville

Co., 11

1949

lative

G^s & Elec. Co., 10:30

(CST) .Bonds

a.m.

Southern Co., 11:30 a.m. (EST).__-:__..-__Common

National

about Dec.
-

preferred

($26

par).

To

be

sold

Now

,

.

Preferred

V/ Rojim & Haas Co.__.___

•

i

;

Reed Prentice

v

stock.

common

Sutherland Paper Cp„ Kalamazoo, JVIich.
1 filed 34,400 shares of
cumulative preferred stock:!
($100 par) eqnvertible into 2V2 shares of common stock *
prior to 1960. Underwriter—Harris, Hall &
Nov.

Corp.^Worcester, Mass.
10,000 shares ($2.50 par)

Co.,

Price, $7.50 each. To be

working capital.

debentures,

working capital, etc.

presses,.,

New York Central RR._.____.____Equip. Trust Ctfs.

Rohm

Nov.
be

Preferred

."-December 13, 1949

United Telephone Co. of Pa

Preferred

t

Central Illinois Light Co.___

for

.::j'•> V

»

,

Co., Los Lunas, N. M.
(letter of notification) 150,000 shares ($1
par)
stock. Price, par. No underwriter. To drill
two

16

common

oil wells..

..

.

Oct.

These

for-three basis.

securities

to

are

be

offered

as

bonus

a

to

em¬

ployees.

\

fering—Offered

by

Electric

Bond

stockholders of record Nov.
for each eight held, and at $12
own

&

9

Share

share.

a

Of¬

Co. to its

at rate of

one

New

York
for

not

Middle South Utilities,
Inc., New York
Oct. 28 filed 686,295 shares
(no par) common stock.
•

share

Rights expire

$25 and

sold to take
•—None.

of fractional stockholders. Underwriter

care

Proceeds—E. B. &

retire bank

loans.

S.

will

/'

the proceeds to

use

'J

' \

'

■

,

>' '

•

New

England Manufacturing & Supply Corp.,
Haven, Conn.
Nov. 10 (letter of notification) 9.400 shares of 6% cumu¬
lative convertible preferred stock ($5 par) and 19,580
shares of class A ($1 par) stock and 7,180 rights to buy
New

class

A

shares.

The

preferred

stock

$5 each and the class A at $3 each.

will

be

sold

at

Underwriter—E. F.

Bigoney & Co., New York.
To finance inventory com¬
mitments, carry out sales program, and for general cor¬
porate purposes.
•

16

stock.

filed

up

Offering

to

Up

—

shares

1,141,995

to

fered to stockholders of record Dec.

share

new

for

each

Underwriters—The
&

Co.,

Union

Proceeds

To

—

held.

two

Securities

1 at the rate of

Corp.,

Corp.,

of

the

one

Dec.

Lazard

19.

&

Ohio

Public

Service Co.,

Cleveland

—

bidding
requirements and has concluded an agreement with Ohio
Edison Co. whereby the latter will purchase the Ohio
Public Service stock for $35,000,000, the sale
being con¬
tingent on Ohio Edison financing to provide the neces¬
funds.

Financial

advisor

to

Ohio

Edison

Co.

9

Penberihy Instrument Co., Inc., Spokane, Wash.
Nov. 14 (letter of notification) 1,7U0 shares ($10
par)
writer.

To

stock.

raise

capital

turing.

for

...7.A,.'-'3

Price,

industrial

and

70,000

stock

shares

($100 par).

of

No

par.

glass

under¬

manufac¬

V..;

.

Pennsylvania Electric Co.
Oct. 6 filed $11,000,000 first
mortgage
series

D

Underwriters

-

:

.

bonds, due 1979,

cumulative

—

to

be

sold

non-assessable stock.

underwriter.

To complete

generating facilities and
Anchorage, Alaska.

22

bonds.

-

.

'

preferred
Competitive bidding.

Carolina

Universal Winding Co., Frovidence,

—G. H. Walker & Co., Providence.
•

a

Electric

&

Co.,

filed

Inc.;

in

redeem

Co.,

Columbia,

Nov. 23

a

like

amount

of

stock

common

companies.

stock

j

invest¬

Bids—Bids

will be received by the com¬

Southwestern

.

later this month

or

early December.

:

stock.
new

with
at

To be offered present stockholders at rate of
share for each four held and at $27.50 a

remaining shares to be offered

$30 each.

surplus.

No underwriter.

to

To increase the

the

ferred stock.

The
in




new

internal

Power

Co.

sources.

The

time

and

nature

21

stockholders will

vote

of

the
.

Cincinnati Gas & Electric Co.

mined later.

195$

1

-

SERVICE
i'

'

SORG

SINCE

Food

"X

Sf»

Dec.

80 SOUTH ST., NEW V0BK

30

011

Of the 2,500,000 shares now

but 6,000 shares are

Fair

authorized, all

outstanding.

Stores,

stockholders

Inc.

will

vote

on

a

proposal to raise

the authorized
000.

PRINTING CO., Inc.

construction, additions and improvements. Offer¬
ing—To to be offered initially for subscription by stock¬

Electric

expects to raise approximately $2,500,00$
capital in 1950 to finance its construction and

company

financing has not yet been decided.

ionminrim

If

indebtedness from $5,000,000 to $12,000,-/
proposal is approved company is expected to;

issue and sell $8,000,000 debentures. The increase is de¬
signed to retire $2,700,000 3J/2% outstanding debenturesand
to finance expansion
of company's supermarket;

7,N.if.

chain.

bidding: Probable bidders: Blyth & Co., Inc.; The1 First
Boston Corp.: Ohio & Co.; Harriman
Ripley & Co.; Glore,
Forgan & Co. Proceeds—To be used to pay part of the
cost of

Proceeds—To selling stockholder.

expansion program.
The 1950 construction program is
expected to cost $5,000,000, with about half the money to
be
provided through depreciation reserves and other

«

($100 par) cumulative pre¬
Underwriters—To be sold at competitive

California

Dec.

company's

(12/1)

notification) 1,000 shares (no par) stock,

authorizing 3,500,00$
additional shares of common stock, some of which will
be offered early in 1950 in connection with an $85,000,000
-construction program. The exact amount will be deter¬

one

Office, 107 Cone Street, Atlanta, Ga.

Public Service Co. of
Indiana, Inc.
Nov. 7, filed 142,354 shares

not

Prospective Offerings

stock.

•

public

their

Younker Brothers, Inc., Des Moines, la.

•

expiring on Nov. 15, 1949.
Underwriter—Reynolds & Co., New York. Offered this

share,

any

for

a balance offered to the public at
underwritten, but Navajo Corp^
principal stockholder will purchase any shares not taken
by other stockholders up to 0 total of 83,749 shares. The
offering also includes 1,223 Treasury shares, making total
offering 84,972 shares. Working capital.

Issue

& Co., Des Moines.

of scrip

*

Progressive Fire Insurance Co., Atlanta, Ga.
Oct. 28 (letter of notification) 10,000 shares of
capital

exchange

4

Nov. 4 (letter of

Stokely-Van Camp, Inc., • Indianapolis, Ind., ;
(letter of notification) 937 shares ($1 par) com¬
stock, sold at $11,375 each. Proceeds to be dis¬
holders

in

com¬

stock of

common

'to be sold at $27.50 each. Underwriter—T. C. Henderson

mon

to

holders of

Grape Juice Co., Westfield, N.
31: (letter of notification)' 83,749-commbn' shares

$284,001.

/

Investment

Co., Amartllo, Texas
Nov. 16 filed 62.500 shares of 5% ($20 par) cumulative
convertible sinking fund preferred stock. Offering—To
be offered, together with cash, in exchange
for^ three
outstanding series of preferred stocks. Underwriters—
First Trust Co. of Lincoln, Neb.; G. H. Walker & Co.,
St. Louis; Schneider, Bernet &
Hickman, Dallas, and
Dewar, Robertson & Pancoast, San Antonio. Proceeds—
To buy outstanding preferred stocks and for working
capital.

to

single holder leaving

Brothers; Harriman Ripley & Co.;
Corp. and Equitable Securities Corp.

Proceeds—Additional

unspecified number of shares of

Offered for subscription by stockholders of
in ratio of three new shares for each 11
shares held at $13 per share. Rights expire Nov. 25. The
total offering price will amount to $1,104,636 of which
/$820,625 (approximately 74%) will be offered ■ to a

Lehman

subsidiary operating

an

to be offered

record Nov*

Nov. 17

Bids expected

.

(par $2.50).

.'

office, 20 Pine Street, New York, up to 11:30
(EST) Nov. 29.
/'x,
V\/v/

tributed

-

'Welch

pany at its

der, Peabody & Co.; Smith, Barney & Co.; W. C. Langley
& Co., and Glore Forgan & Co.
(jointly); Harriman
Ripley & Co. For bonds: Halsey, Stuart & Co. Inc.; Har¬

'

ThrHty Drug Stores Co., Inc.
holdings. Underwriter—None.

outstanding

stock.

Lied

stock

mon

Co., Wilmington, Del. (11/29)
1,500.000 shares ($5 par) common

for purchase of the

a.m.

Inc., New York

ness.—Investment fund.

Carolina

Securities

(jointly).
ments

Fund,

.

Gas

Underwriter—Competitive bidding.
Probable bidders:
Morgan Stanley & Co., Kidder, Peabody & Co. and Mer¬
Lynch, Pierce, Fenner & Beane (jointly); Blyth &

Union

Line

•

$22,200,000 first and refunding mortgage
Due 197.9,
Underwriter—Names by amendment.

Southern

•

Ripley & Co.; The First Boston Corp.; Equitable
Securities Corp.;
Kidder, Peabody & Co.; Kuhn, Loeb
& Co., Lehman Brothers and Drexel & Co.
(jointly).

Value

Nov. 22 filed 800,000 shares ($1 par) stock. Underwriter
—Value Line Fund Distributors, Inc., New York.
Busi¬

Oct.
28

R. I.

notification) 6,500 shares ($5 par) com¬
stock/ to be sold at market (about $9,625) by
Charles E. Mason. Jr., Chestnut Hill, Mass. Underwriter
mon

bonds.

Oct.

Un¬

■„....

Nov. 4 (letter of

filed

Proceeds—To

Probable bidders for preferred:
Kuhn, Loeb & Co.; Kid¬

riman

'/•

To be offered at par.

Peabody & Co. Proceeds — Plant
'
,'; ■:' 1

Walgreen Co.

South

Nov.

,

Kidder,

expansion.

mill, power
buildings. Office, Box 1719

camp

.

($100 par).

derwriter—

Price—15 cents each.. No

construction of

,,

(12/13)
10,133 shares of series A 4V2% cumulative

.preferred stork

Mining Co., Inc., Alaska.
(letter of notification) 333,333 shares (10£ par)

14

X

■

17

Nov. 22 filed

Snowbird

common

For development of mining
properties.

Mining Development Co., Salt Lake Cityv

United Telephone Co. of
Pennsylvania

al

at

Mine.
•

,

v

(letter of notification) 200,000 shares (10c par)
common capital stock.
Price, par.' No underwriter. For
^corporate purposes.

Mining Co., Hailey, Idaho
Nov. 8 (letter of notification)
250,000 shares (25^ par)
common stock.
Price, par. Underwriter— E. W. McRoberts & Co., Twin Falls, Idaho.
To develop the Snoose

Nov.

Corp., Chicago

.

/NOV.

Snoose

•

common

Utah

is

Morgan Stanley & Co.

non-assessable

Price—Preferred

United

i .)

rill

Oct. 21 filed 2,000,000 shares ($7.50
par) common stock.
Underwriter
Cities Service Co., which is selling this
stock received SEC exemption from competitive

sary

•

-

Co.

Public

Service Co. from"*Cities Service Co.

Ohio

& Co., Boston.

and

Freres

Wertheim

stock

common

(par $8) common
shares will be of¬

/Rights expire

First Boston

buy

common

South

1,144,000

stock.

common

Ohio Edison Co.

.

v

Reserve

July 27 (letter of notification)- 270,000 shares of commonstock. Price—$1 each. Underwriter—Edward
W. Ackley*

Rehabilitate

)

stock.

common

,

$7.75. Underwriter—W. R. Olson Co.,
Fergus Falls, Minn. To retire bank loans.
! [
; 7

•

Nov.

shares.

par)

are to be issued in
partial payment
35,Q00 outstanding shares of capital stock,
Co., an oil producing company.
;

United Minerals

Inc., Fargo, N. D.
"
Oct. 12 (letter of
notification) 2,000 shares of 6% cumu¬
lative preferred stock ($25
par) and 15,500 shares ($5
par)

dividend, of which 30,000 will be

purchase for investment

unsubscribed

any

; ,t* J

,

($25

of the Los Neitos

Smith,

Dec. 8. Bond and Share plans to distribute 150.010
shares
a

agreed to

resale

filed

for all of the

Breswick & Co.,

enlarge, modernize and equip dryers, etc.

to its stockholders

as

has

Rights expire Dec. 28.

17

(Calif.)
600,000 shares

Proceeds—The shares

:•/

Mercantile Acceptance Corp. of California
(letter of notification) 1,000 shares of 5% first
preferred stock, ($20 par). Price, par. No underwriter..

stock in Zenith Radio Corp. at rate of one share
five held.
Underwriter—None. Proceeds—For

.

Say re & Fisher Brick Co., Sayreville, N. J. /
Nov. 18 (letter of
notification) 106,584 shares of common
stock (par $1).
Price, $2 per share. Offered for sub¬
scription by stockholders of record Nov. 23 on a one-

•

each

Union Oil Co.

•

Nov.' 15

...

working capital and the promotion of Zenith's "Phone- '
vision" device, whereby television users
could pay a
special fee for costly television programs by calling Ibel
telephone company and asking to be plugged in.
" \
i

•

Price, by

San Antonio Oil

Nov.
___„___Bonds

common

14

sold

amendment.

1949

Teco, Inc., Chicago

21 filed 100,000 shares ($10
par) common stock.
Offering—These shares are to be offered to holders
of,

Haas

Kidder, Peabody & Co., both of Philadelphia.

:

December 14,

&

•

Nov.

.

Co., Philadelphia (12/5)
filed 60,000 shares ($20
par) common stock, to
by Mrs. Phoebe W. Haas, wife of the company
President, Otto Haas. Underwriters—Drexel & Co. and

*"•

....,

(Inc.)y

Chicago. Offering—Stock is to be offered to commont
stockholders of record Nov. 21 for a
period of 16 days at
the rate of one share for each 10 held.
Proceeds—To move*."
and rebuild a paperboard
machine, for additional manu- ;
facturing and warehouse space, for a new boiler and for'

serially 1950-1959. Price, par and interest Under¬
writer—Oscar Burnett .& Co.,
Greensboro, N. C.
New

'•

Lt<L, Toronto, Canada
common stock.
Price—$1

share (U. S. funds). Underwriting—None. Proceed*
—Funds will be applied to the
purchase of equipment,,
road construction, exploration and
development.

due

Debentures

December 8, 1949

Un~

per

,.

December 7, 1949

Hudson Pulp & Paper Corp.___„_r._.

common stock.

Robinson Tag & Label Co., New-York
Nov. 2 .(letter of
notification) $100,000 5%

1949

Central Power & Light Co.

;;

Sudore Gold Mines

S.

December <6,

($1 par)

& Co., and Baker, Si- 1
Proceeds—Sale being made by •

&

June 7 filed 375,000 shares of

sold by Charles:
Pay.son, New York. Underwriter—J. P. Marto & Co.,
Boston, i
V;'
■ '>••

......Common

Steiner Paper Corp., 3:30 p.rn.(EST).__Capital Stk.

v'\';

a

,

Nov.. 18 (letter of notification)

Spring Corp., Adrian, Mich.

Co., Detroit.
eight stockholders.

(letter of notification) 5Q0 shares of
-capital
($1 par). Price —■ $27. Underwriters
Ralph S.
Young, Colorado Springs, and J. A. Hogle &
Co., Den¬
ver.
For working capital.
,•
,»
./

Iowa Power & Light Co.___-.____________._Bonds

;■/

$50

monds

—

Inc.i.__

December 9r 1949

.

at

Green

45

derw-riters—George A. McDowell

14

,

-:

Stubnitz

Nov. 7, filed 183,339 shares

"<

\

Insurance

stock

(2121)

l,* the right "to

v

stock

December 1, 1949
"

Public Service Co. of Indiana,

basis

/

;

CHRONICLE

share, of which $25 is capital and $25 is contributed sur¬
plus.. .No underwriter. To increase capital and
surplus.
•
Realty Co., Denver, Colo.

(EST).____-Boncls

a.m.

FINANCIAL

Co., Seattle, Wash.
(letter of notification) 2,000 shares of 6% cumu¬

Nov. 14

Gulf States Utilities

&

'

'

Probable underwriter: Eastman,

Dillon & Co.

!
f

.

.

Oct.

Chicago Associate

London Associate

MtCOmKK aad HENDERSON, lot.

Iowa

Public Service Co.

26 announced that corporation plans to issue and
early in 1950 $5,000,000 of preferred stock, the net

The IEAGRAVE PRESS, Ltd.

sell

(Continued

on page

46)

<

46

(Continued from page 45)

Thursday, November 24, 1949

CHRONICLE

&,FINANCIAL

COMMERCIAL

THE

(2122)

Underwriters

Niagara Mohawk Power Co. issues and will add cash to
the stock.
United then would sell the 189,263

,

for construction costs, etc. Probable bid¬
& Co.; Harriman Ripley & Co. and
Pierce, Fenner & Beane (jointly); Kidder,
Peabody & Co. and Blyth & Co. (jointly); Equitable Se¬
proceeds to

ders:

A.

pay

C.

shares

Allyn

•

Kansas City
25 company

Power & Light Co.
announced that it plans to sell $10,500,000 of additional common stock and $20,000,000 of
funded

Proceeds would

securities.

of 500,000

Ex¬

the Stock

on

•

Public Service Co.
on authorizing

Indiana

class

a new

shares of cumulative preferred stock and on

is

(jointly); Smith, Barney & Co.

Boston

Corp.

~

San

prefer¬

offer

some

Co.
Nov. 21 company plans repayment of some $2,000,000 in
bank loans early in 1950 from the sale of additional
Minneapolis

Gas

York Central

RR.

(12/7)

•

Niagara Mohawk Power Corp.
,
Corp. has announced that it plans to exchange
Niagara Hudson Power Corp. stock for the hew

on

Bank of Peru

Central

Reserve

heretofore.

as

It

is

Office

the

of

the;

Super¬

intendent of Banks for the day on
which
said
certificates
expired.
The

Central

provisions of article 8;

Peru

is

hereby authorized to ex¬
validity of the
certificates
of foreign exchange
not
freely convertible to gold,

reported that the change in Peru's
foreign exchange policy was made
with the knowledge of the Inter¬

tend the period of

national Monetary Fund and is in
accordance
with
the
report
of

with

Nov. 5, 1949 of the Economic and
Financial Mission in Peru.

Bank of Peru may sell
in the
market, in the form of certificates,
the foreign exchange purchased

The translated text of

eight

articles

of

the first
decree-law

the

discount of 2%.

a

Article 5—The Central Reserve

in

Article 1—The official parity of

the

net

the

amortization

be

previous

of

the

of

Article 2—Producers

of all the

Republic will continue to be
obliged to deliver to the Central
Reserve Bank of Peru the foreign

under paragraph

shelves

y

receive

may

deliver the

foreign

exchange

referred to in Decree-Law

10905.

State

will have

preferential right of purchase

of

the certificates to which the pre¬
vious article refers and will exer¬

Office

the

of

6—Until Dec.

Article

31

of the

certificates

in the

recorded by the Office of the
Superintendent of Banks on the
previous
day,
the foreign ex¬

change

exclusively

required

cover

foreseen

expenses

in

of

available

the

market

as

recorded by the Office of the
Superintendent of Banks for the
on

which the

public,

case

have

of

not

the
been

used

in

payable

foreign

will

Peru

holdings

of

revalue

days this
month

to the holder of the certifi¬
cates; with a discount of 2%, the
equivalent in soles at the net
pay

commercial
cates

in

of

purchase

banks

of

the market,

by

the
as




the

its

gold

burst

a

rather

decree-law.

fare

sparse

of

close

the

of

these

deals

Tuesday

on

any

rate

only

a

books

were

open

or

Stock Placed
A

to

stockholders at $29.50

market
finally
to the prices
*
*

hands
rail

,

for

:

dealers who will
in the

well

D.

back.

■

convertible deben¬
s^as put on the
Nov? 23, at a price of
2%

This

market,

issue

Light

&

attraction / of

added

conversion

with

its

ance

with

the

provisions

previous article.

certifi-jthe

present year,

of

the

At the end of
any surplus in

recorded i the account which may not have

refunding
100,000

dividend

.

along

bonds

shares

of

preferred

in point.

share moved out

so

sought

many

who

found

themselves

stocks

at

quickly that

participation
in

"shut-out"

;

Next week should find things

bit

more

will

interesting
be

-

since

bidding

Two

Big Equity Deals

Seasoned

$51.50

short order.

bankers

short-'

The company expects;

from

additional financing

to!

expansion. The company is»
capitalized
with
$53,657,000
of.
funded
debt; 170,000 shares ofv
preferred stock and 967,000 shares;
cover

of

stock,

common

v

/

.r*

/

With Slay ton

*

on

.

public utility

.

/

,/

ST.

aope^r to be encoun¬
tering any difficulty in market¬
ing/substantial-'blocks of addi¬
tional common equities.
in progress,

are now
the^largest invoiv-

by American Natural Gas

Co. at

a

price of-$28.25

a

Slayton

Three With

—

L.

&

Ezekiel A.\
Wroughton:

Company/
/

'

\

share.

Waddell;

& Reed-

- •

:

(Special to-Tjrr Financial. Chronkx*)

KANSAS

op^pitions

ing 216,805 shares of new com¬
mon

Oliver

and

with

Inc., 408 Olive Street.

..

Two such

LQUIS, MO.

Straw

fco. •

CMomcxEf

compa¬

nies doHhot

J

&

/ " (Special to" The "Financmi.

are

•.•r-r* .:

senior stock offered

taken in th^jir entirety.;.

new

The bonds priced, at 102.23 and

a

the sale will be

that it will have to raise $15,000,-:

debenture, carrying the

,

Power

been

acquire from the Bank in accord¬

from

term debt.

privilege^ were reported to have

a

George!

Beane;

000

and

the

Fenner &

B.

Proceeds

Co.'s $10,000,000 of 35-year 2%%<

cases

Co.; Merrill. Lynch/

Bonbright & Co.; Little &
Hopkins, Inc.; Erickson Perkins &*
Co., and Sage, Rutty & Co., Inc.
;

$60,000,-

first

were

&

Participating-*
The First'

are

Lehman Brothers;-

Corp.;

Wertheim

Pierce,

equipment

ing will be distributed in the fol¬
lowing manner:
V

•

of securities

solicit subscrip¬

underwriting

Boston

profit in national currency accruT

$2.04

continue

■

announced that

Connecticut

The

•

tions and sell stock.

the

figure/

some

-

managers of a group

issues

is

will

-September,

chance at the $6,000,000 of Central
Hudson
Gas
&
Electric
Corp's
tures.

shares
share.'

The underwriters will be dealer

up

that

a

offering, which represents the!
company's first financing effort'
since its ownership passed into
the hands of the investing public'

relatively short time be¬

was

Market

on

syndicate headed

used to retire $2,000,000 of

ten-year

a

' ' :1

-J;

Electric Co. of 132,000 new

Jl.Q0.90 to jrield abdut 1.90 to ma¬
sub-7 turity.-/; / -•*
scriptions had been closed.
4
These
fore it

$29.50
•

by The!
underwriting*
offering by Rochester Gas and!

an

Another Fast One

»

■

7

First Boston Corp. is

indication

no

so

at

'J

■

People around the Street were
reconciled > to the fact that they
were not going to get much of a

several

appeared

of

new

Rochester Gas & El.

virtually bare of

a&ainst

one

-

last of

to

$10,000,000

week

a

for

out in speedy fashion. At

move

and

only

000

as

of

rate

•'.';>».
>

a

activity. next week.

small

exchange at the lowest
quotation of certificates in the
market for the three months prior

present

holi¬

While the current period was

foreign

the

three

is proving to be

year

of

■

underwriters of corporate securi¬
ties, but it promises to close with

its

,

rate

at

share for each seven held at the

The

estimated

now

exclusive

productive

of

way

the

trusts,

cur¬

during the period of their
(a) 25% will be credited to a
validity, on their expiry the cor¬
special account of the government
responding foreign exchange will
which
will
use
said
funds
to
r&nairi automatically and defini¬
attend to the greater cost of for¬
tively in possession of the Central
eign exchange, in relation to the
Reserve Bank of Peru which will
old official' rate, which
it may

mean

-holders

underwriters'

was

-

being offered to its stock- 7

share.-

,V'£b'

of unsold corporate

below

Article 7—The Central Reserve

to

purchase is made.
the

are

distributors'

.in

to
the

Bank

4—In

will

cases

Shelves

and

the

its

is

It

with

of

ten held.-

ester Gas & Electric Corp. com-

been shaded to
the Duquesnes, indicat¬

that

total

November

the-ratio

mon

.

originally set.

market,

to,
the

of

as

indi¬

7 '.'

on

/

now

worked

of the

currency at the net mean rate of
purchase by the commercial banks

Article

Left

„

up

ing

Banks, on the previous, day, plus
a surcharge of 2%.

in

offered

share for each

until Dec. 8.

rency.

certificates which

Wednesday

new

last

present General Budget of the Re¬

day previous to that

being
record

clean

recorded by the
Superintendent of

as

pay exporters, for the certificates
it acquires, their value in national

in

is
of

that the price had

cise this right through the Central
Reserve Bank of Peru which will

the certificates

stock

O

same

purposes.

7

.'V-V-.;

There

sues.

as

3—The

''.l.'/"

commercial banks for certificates

market,

and

Brothers;

the

anything in the way of unsold is¬

ernment, at the net mean rate of
purchase by the commercial banks

Article

7-"

Dealers

(b) of the preT'

vious article.

Sons;

now

on

are

existing debts, and the balance

erations.

price not lower than
mean
purchase price by

which the

of

Co.

the last remnants from recent op¬

be

&

Co.

&

by other holders.

.

will

Rollins

Drexel

this instance holders also may.
subscribe for any stock not taken!

ally its available holdings of gold
brought .out
and foreign exchange at the low¬ Co.'s; 30-year; 2%s,
several . weeks ago,
est quotation of the certificates iff by; bankers
the books
the.market in the course of said had > been; sold J and
closed just about cleared away
period and the profit resulting
these -revaluations

H.

E,

Corp.;

.(jointly);-Lehman

close

the $15,000,000 of Duquesne Light

from

Inc.;'

(jointly); VL C?

shareholders

bonds.

involves

:>Announcement that the

present year, the Central Reserve
Bank of Peru will sell to the gov¬

certificates

put up

Little

credited to the account established

Prob-i

Co.

&

The second big stock offering
issue, $10,000,000,
for bids by Gulf J involves 132,000 shares of Roch¬

Utilities

8—The Central Reserve

a

from the sale of their export prod¬
ucts
for
the
entire
amount
of
Bank will

these

will-be in the running.

be

-Vo -'.v.

Peru will revalue annu¬

and

This

of $51,000,-

mortgage

for other corporate

of Peru.

Stuart

Bros. & Hutzler.

total

of

Co.

Co.

&

applied in part to repayment

:•

Bank of

Noyes

cated. Proceeds in both

State to the Central Reserve Bank

Article

a

day and five bids

-

the debts

of

Salomon

&

Securities

in the

the sol is suspended.

exchange which they

with

accordance

article, at

follows:

the

with

Rhoades

Loeb,

(jointly); Union

smaller

States

of

Bank

Reserve

The

will

in accordance

revealed that Texas]

body & Co. and Smith,'Barney & Co.

utility

groups

[and] from the periodic rerr

was

Halsey,

one

?

the opera¬

it

In

tions to which articles 4, 5 and 6
valuation

bonds:

it is indicated that at least four

differences

(c) 50% will be applied to the

day by the Office of the Su- <♦>
perintendent of Banks. All foreign oy

the

the

cover

to

Langley & Co. and Glore, Forgan & Co; (jointly); Carl

largest

refer

each

to

to

which may result from

According to the text of a decree issued on Nov. 11 by the present
provisional government in Peru, the policy of maintaining an official
parity exchange rate of the Peruvian sol with foreign currencies
is abandoned and henceforth the. rate of exchange is to be fixed

livered

used

be

for

Electric Co. 30-year bonds and

special account which will only

a

SEC application covering!
subsidiaries to finance;

in

program,

$41,000,000 of Louisville Gas &

25% will be reserved by the
Central Reserve Bank of Peru in

buy and sell foreign exchange at rates
quoted "for the day/7

of

The

(b)

Bank of Peru shall both

exchange resulting from exports
however, is to continue to be de¬

000

provided
for in para¬
graph (c) of this same article;

Light Co.

advanced

The First Boston Corp.; Blyth & Co., Inc.; Kidder, Pea-'

^

Tuesday for

used, will be applied to the

be

$7,000,000 of bonds before August, 1950.

bidders

able

purpose

Nov. 5, with
knowledge of International Monetary Fund and on recommendation
of an Economic and Financial Mission provides that Central Reserve
provisional government,

extent of

tentative approval to the proposed

to

Light plans permanent financing probably to

Hemphill,

Currency

&

construction

M.

been

A decree of the present

Iheir

Power &

-

changed shares, it is believed, will be redeemed at $75
a share, up to a certain amount, through the sale to
an
underwriting erouD of Additional shares of the new-issue.'

about Dec. 7.

Peru Abandons Fixed Rale for Its

loans

preferred. It is expected that the terms of the transac¬
tion, still to be determined, will encourage present pref¬
erence
holders to exchange their shares.
Any unex¬

United
its

bank

offering next year of a new non-convertible preferred
stock in exchange for company's outstanding series A

1, 1951-1965. Probable bidders:
Halsey, Stuart & Co. Inc.; Harriman Ripley & Co., and
Lehman Brothers
(jointly)*; Salomon Bros & Hutzler.

Power

Oct. 28 Texas Utilities Co.

Biyth & Co.; White, Weld & Co. and Shields &

Nov. 4 directors gave

„

.

Texas

Sharp & Dohme

annual instalments Jan.

Bids expected

Justice, 120 Broadway, New York, by 3:30 p.m.(
(EST) Dec. 5.
L
*
/'>vV- v7.'

(jointly); The First Boston Corp.; Halsey, Stuart &
Co. Inc. (bonds); Merrill Lynch, Pierce, Fenner & Beane;
Union
Securities Corp.; Lehman Brothers and .Bear,..
Stearns & Co.; Salomon, Bros. & Hutzler.

Company will receive bids Dec. 7 for the purchase of
$9,600,000 equipment trust certificates due in 15 equal

him rat!

purchase' from

the

merit of

Co.

bonds.
New

was announced that the company plans to.
time in 1950 an issue of permanent securities,

the net proceeds of which are to
be used to retire then outstanding bank loans. Probable
bidders:

•

it

either stock or bonds,

Co. will be underwriter.

&

15,

bids for

Attorney General as a result of'
vesting action under Vesting Order dated Jan. 20, 1948/
pursuant to the Trading with the Enemy Act. All bidsj
must be received at the Office of Alien Property, Depart-;

-

Diego Gas & Electric Co.

Oct.

ential stock issue as part of a proposed new financing
program.
New financing will retire outstanding bank
loans and strengthen working capital. Maynard H. Murch

sealed

inviting

The stock is held by the

The First

Magnavox Co.
Dec. 12 stockholders will be asked to authorize a

(12/5)

Paper Corp.

Attorney General of the United States of America

public sale, as an entirety, of 575 shares of capital stock?
of the corporation.
The 575 shares constitute 100% ofi
the issued and outstanding capital stock of the company.'»

: ^i

Traditional underwriter:

expansion program.

$6,500,000, the aggregate of capital gains in the '

Steiner
The
-

is expected to be in the market shortly
equity capital to finance its construction and

new

corporation

next month on a basis of One,
The issue is expected to amount,

rights

past three years.

Nov. 8 company
for

issue

to

to about

Republic Co:; Blyth & Co., Inc.;
Lynch, Pierce, Fenner & Beane. ■>

Public Service Co. of Colorado

Investment Corp.

Street

16 stockholders were informed that the

share for each ten held.

5%

underwritten by Central
Merrill

and

.J,/,/.>'

Jersey Gas Co.

State

intends

Company plans to refinance the 211,preferred by offering new preferred
(dividend not to exceed 4J/2%) in exchange on a share
for share basis.
Unexchanged new preferred .will be
of

shares

380

y •

.

16 United Corp.-asked

Nov.

3,500,000 shares.

1952.
Company plans are to sell $5,000,000 of common stock this
year and the balance probably would not be issued until
1951. Probable bidders for bonds: Halsey, Stuart & Co.
Inc.; The First Boston Corp.; Glore, Forgan & Co. and W.
C. Langley & Co. (jointly); Lehman Brothers and Bear,
Stearns
&
Co.
(jointly); Equitable Securities Corp.;
Kuhn, Loeb & Co.; Salomon Bros. & Hutzler and Union
Securities Corp. (jointly); Shields & Co. and White,

v\

Sons

&

Brown

the SEC for exemption from'
bidding, rule in its proposed sale of'
154,231 shares of South Jersey Gas Co. capital stock.
r
•

will vote

Alex.

the-competitive

■'.//7;7

!!/.•

South

Nov.

increasing the authorized common stock from 3,000,000 to

000,000 expansion program planned for completion in

Weld & Co.

Northern

Dec. J 5 stockholders

$55,-

used in its

be

Mohawk

Niagara

A

shares of the common.

curities Corp.

Oct.

Class

of

change or at competitive bidding and would market on
the Exchange over a period of six months about 142,071

Merrill Lynch,

include

may

Drexel & Co.

obtain

.

Cole, Milton S. Johnson & Charles
Snow have become associated

E.

with

Waddell- &

Baltimore

v

CITY, MO.—Ogan N.¬

Reed, Inc.,

Avenue.

1012

THE

Number 4858

Volume 170

(Special to The Financial Chronicle)

(Special to The Financial Chronicle)

"PORTLAND, MAINE
L,

Robert

—

Smith

has become associated
Nathan C. Fay & Co., 208

with

Middle Street.

He

Carl K. Ross &

with

formerly

was

&

FINANCIAL

CHRONICLE

William E. Griffith Opens Frank C. Prescott III Opens

Joins Nathan Fay Co.
.

COMMERCIAL

E.

8543

business

from

offices

DIVIDEND NOTICES

at

Ninety-first Street.

St.

LOS

ANGELES, CALIF.

Frank C.
in

DIVIDEND NOTICES

of¬

fices at 3920 Wilshire Boulevard.

Co., Inc.

Louis, Rocky Mountain' & Pacific Co.

Raton, New Mexico, November 22,

—

COMMON

Prescott, III is engaging

securities business from

a

The

above

DIVIDEND

STOCK

Company lias

NO.

declared

a

TEXAS GULF SULPHUR COMPANY

1949.
102

dividend

of 50 cents per share on the Common Stock of
the Company tb stockholders of record at the
close

of

business

December

15,

December

1,
1949, payable
Transfer books will not be

1949.

closed.

DIVIDEND NOTICES

DIVIDEND NOTICES

P. L.

BONNYMAN, Treasurer.

The Board of Directors has declared a dividend of 75 cents per share and an additional

dividend of 50 cents per share

.EATON & HOWARD
POWER

New York 6,

Two Rector Street,

V

STOCK

PREFERRED

t

A

dividend of

Stock

ferred

share,

BACHMAN G. BEDICHEK,
Assistant Serretctry

share

per

stock FUNII

Preferred

Stock

Company

'were

of fifty cents

Pre¬

and a dividend of $1.25

($6)

Light

&

the

on

payable

per

stockholders

of

record

December

5,

($.50) a share,
Dec. 24, 1949, to

on

shareholders of record at the
close of business Dec. 2, 1949.
24 Federal Street, Boston

of American
declared
on

November 21, 1949, for payment January 1, 1950,
to

KENNECOTT COPPER CORPORATION
129

The Trustees have declared a
dividend from realized profits

N. Y.

DIVIDENDS

the $3

on

Power

$1.59

COMPANY

EIGHT

&

Broadway,

New York 5,

N.

November 18, 1948.
twenty-five cents (25c)
special cash distribution of one
dollar
and fifty
cents
($1.50)
a
share have
today been declared by Kennecott Oopper Cor¬
poration,
payable on December 22, 1949
to
stockholders of record at the close of business
on
November 30,
1949.
i

share

and

a

,

.

B. CHEROUNY, Secretary.

A.

1949.

ness

W.

D.

the close of

at

busi¬
MERCK

JACK, Secretary and Treasurer

INTERSTATE
POWER

AMERICAN MACHINE
AND

COMPANY

METALS, INC.
A

dividend of 15d

will

dubuque,

share

per

iowa

Notice of Common Dividend

be

paid on December
27, 1949, to stockholders of
record at close of business

The Board of Directors has de¬
clared

December 9, 1949. To obtain

share

dividend, holders Of Voting
Certificates

should

exchange same for
Stock promptly.

Capital

Trust

mon

20,

stockholders of1 record at
the close of business December 12, 1949.
A regular quarterly dividend of $1.00 a share
on
the
$4.00 Cumulative Cohvertible Second'
Preferred Stock of
this corporation, for
the
quarter ending December 31,
1949, has been:
declared payable on January 3, 1950," to stock¬
3,

January

holders

1950,

to

record

of

at

the

of

close

of

37 %c

on

oscar

12, 1949.
quarterly dividend

A

December

12,

November

22,

share

a

on

Treasurer

MERCK, President.

1949

COAL

12, 1949, to shareholders of record

on

the

mailed

PORTO

howard c. wick,

Board

of

Directors

Babbitt, Inc. has declared

of
a

T.

B.

regular

quarterly dividend of 30c pet share

Secretary

the Common Stock of the Com¬

on

:V>V; j/"

payable

pany,

on

January 3, 1950

of business

December 10, 1949.

on

the distribution of
on.

December

12,-1949 to the liolders of record at the close of
business on November 28, 1949 of American
Shares issued under the terms of the Deposit
Agreement ""dated June 24, 1946. " The net
amount payable in United States funds will be
published when ascertained,
By order of the Board of Directors.
H. E. DODGE, Secretary.
New York,

N. Y., November 17, 1949.

'

LEO

'

quarterly dividend of 50c per
$25.00 par value 8% Preferred Stock outstand¬
ing; and a dividend of One Dollar per share on
the outstanding Common Stock; all payable on
January 2, 1950 to stockholders of record at the
close of business on December 15, 1949.
F,

Pittsburgh,

;

At

November 22, 1949

Penna.

of

Board

the

meeting of

a

:

v

,

a

of

Btock

payable

December

on

1,

Board* also

The

dollar

one

($1.12%c)

the

,

&
COMPANY, SUCESORES
Company, Sucesores, have declared
a
second
and (final
distribution
in
complete
liquidation. Such distribution will be made to the
common stockholders of South Porto Rico Sugar
Company by Banco Popular de Puerto Rico as

Substituted Trustee under a Trust Agreement
between American Colonial Bank of Porto Rico
and Edwin L. Arnold and others dated-April 18,
1917 and will amount to $2.31 per share on the

outstanding common stock of South Porto Rico
Sugar Company: The distribution will be made
by Chemical Bank & Trust Company as Agent
for

the

Substituted

1949 to the
South Porto

twelve

mon

record

declared, a dividend of
and
one-half
cents

A

(20c)

Jr., Secretary.

on

the Com¬

Slock of this

Corpora¬

per

share

C.I.T. FINANCIAL CORPORATION

was

declared

holders of record

per

e

December 10,

be mailed.
;

.

1949.

•

•

November 22,1949.

i

.

'

FRED W. HAUTAU, Treasurer

,

payable

December

on

of

business

quarterly

dividend

clared

on

of

close

(40c)

its outstanding

on

payable

January

1,

the

close

of

1950

record

Preferred Stockholders of

at

December

business

.

L. G.
PAUL RAIBOURN,

,

November

1949

16,

Nov. 30,

In all

Treasurer

,

Company, both

1

at

the close

Broadway

j. b. McGEE

,

Treasurer.

41 year of

CLARK, Treasurer

consecutive

November 22, 1949

SOUTHERN CALIFORNIA
EDISON COMPANY

Industrial Loan
preferred dividends

'

Corporation

PHILLIES ;

TWENTIETH CENTURY-

declared by
the Board of Directors, as follows:

Dividends have been

ORIGINAL PREFERRED STOCK
DIVIDEND NO. 162

FOX FILM CORPORATION

CUMULATIVE PREFERRED
STOCK

November

per

A

share

per

share

••

,

(for quarterly period ending
December 31, 1949);

;

7

i

Dividend Notice
The Board ol Directors of Cities Service Company on

16, 1949 declared

a

Novem¬

regular quarterly dividend of one "dollar

share on its $10 par value Common stock, The board
a special dividend of one dollar ($1.00) per share
such stock. Both dividends are payable December 19, 1949
per

also declared

stockholders of record

as

of the close of business November

dividend

cash

share and, in
stock dividend
stock

of

of

stockholders should
notify the Company, at its office, 60 Wall Street, New York
5, N. Y., of any change of address, giving both the old and
addresses.

payable in

a

per

10%

common

the

Company. Bearer
scrip certificates will be issuable in
Both the cash and stock dividends
are

payable December 30, 1949 to
at

close of

business December 5>, 1949,
•

quarterly" cash dividend of

*<■

The Board of Directors has

of

on

December

1,

authorized the payment

hcldprs of
Kingdom)

50 cents per

1949.

been

share

inal Preferred

Stock, payable

holders of record

on

Stock

on

5, 1949.

to the stockholders of record at the close
of business on December 1, 1949.

27 cents per

cash dividend of $.50 per
share (or the equivalent in sterling at the
rate of exchange on date of payment to
holders of record residing in the United
Kingdom)
on
the outstanding Common
Stcck of this' Corporation has been de¬
clared payable December 20, 1949 to stock¬
holders of record at the close of business'
on December 1,
1949.

quarterly

share

on

Cumu¬

lative Preferred Stock, 4.32%

Series, payable

on

December

31, 1949, to stockholders of
record

on

December 5,1949.
T. J. GAMBLE,

November 18, 1949

f

Secretary
■

DONALD A. HENDERSON,

Treasurer.

stock¬

December

Philip Kapinas
Treasurer

:

Orig¬

on

December 31, 1949, to

record residing in the United
the outstanding Convertible
of this Corporation has
declared payable December 20, 1949

Preferred

of the

following quarterly dividends:

A quarterly cash dividend of $.37% per
share (or the equivalent in sterling at the
rate of exchange on date of payment to

A

lieu of fractional shares.

November 17. 1949
W. ALTON JONF.S, PreUdfnt

%.lV/i

addition,

stockholders of record

•

prompt receipt of the dividend,




.

A

4.32% SERIES

DIVIDEND No. 11

1949

$1.12'% per
sterling at the
exchange on date of payment to
holders of record residing in the United
Kingdom) on, the outstanding Prior Pre¬
ferred Stock of this Corporation has been
declared payable December 15, 1949 to the
stockholders of record at the close of busi¬
ness

.

CITIES SERVICE COMPANY

17,

share (or the equivalent in

COMMON STOCK

-

new

stockholders of record

Beneficial

I

assure

to

of business December 1, 1949.

St

tkeasuhkk

Philadelphia, Pa.
Nov. 18,1949

$4 Dividend Series of 1948 j

To

An extra dividend of twenty five
(25£) cents per share also has been
declared, payable January 9, 1950,;

phases of television

DIVIDEND NOTICE

25, 1949.

1, 1949.

pay¬

business December 5, 1949.

rate

-

at

December

dividend of forty cents
share and a special

able December 20, 1949 to stock¬
holders of record at the close of

15, 1949.
,

a

Stock of the

Cumulative Convert¬
Stock has also been

5%

$.811/4

to

business

year-end dividend of forty cents
(40c) a share on the Capital

1949.

share

a

$3.25 Dividend Series ol 1946

on

of

The Board of Directors has de¬

22,

CUMULATIVE PREFERRED STOCK

($1.00)

close

1

Americas NSfcfyar

...

ber

1949, to stockholders of record
the

TECHNICOLOR, Inc.

of

Preferred

declared,

The transfer books will not close. Checks will

-

the close

five
(25 f) cents per share also has been
declared, payable December 15,

of

able January 1, 1950, to stockholders of record
the close of business

of

record

,

share in cash

the Common Stock

C. I. T. FINANCIAL CORPORATION, pay¬

at

of

Company at
15, 1949.

29,

December 1, 1949.
An extra dividend of
twenty

1949. Cheeks will he mailed.

pl. Dividend on Common Stock
on

stockholders

Sugar

December

December

December 15, 1949, tc stockholders
at the close of business

of record

61

Common

to

Dec. 15, 1949, to stock¬

quarterly" dividend of $1.00

per
shares of

B

Stockholders

the

regular

ible

tion

A

at

$.25

A dividend of
twenty cents

Class

Common

December l,

mon

has been declared

and

payable
to

1949

per

S. A. McCASKEY,

Stock

Stock,

stockholders of
the close of busi¬
1949.
at

,

:

Rico

on

thirty (30^) cents
share has been declared, payable

New York 6, N. Y,

Laboratories, Inc., this
a dividend of $.50
share for the year 1949, on its
outstanding shares of Class A Com¬

share on the $4.50 Cumula¬
tive Preferred Stock
of the Corporation,
payable December 15,
1949, to Preferred
stockholders of record at the close of busi¬
ness on December 1,
1949.
*
V

A dividend of
per

day has declared

1949.

22,

common

on

Trustee

Allen

of

per

Common

Corporation,

the

December

Directors

of

•

Du Mont

B.

Common

to

record

-

on

Board

The

(50c)

declared

SCHALL, Treasurer.

Allen B. DuMont Laboratories, Inc.

Directors

dividend of fifty
per
share was

1949,
cents

M.

HUBERT EDSON, Managing Partner,
November 22, 1949.

W. GEISMAR, Treasurer.

of the Allegheny Ludlum Steel Corporation
held
today,
November
14,

this

a

of business

Allegheny Ludlum Steel Cerporation

COMPANY
22, 1949.
day declared
share on the

November

RUSSELL

the net amount of said dividend

to stockholders of record at the dose

SUGAR

Russell &

The directors authorized

'

ness

RICO

The Board of Directors has

one-

half percent (7%%).

QUARTERLY DIVIDEND
The

and

seven

Tennessee
Corporation

*-v

Union of

New York,

November 17,1949

1949 subject to the withholding of the
South Africa non-resident share¬

28,

Company of

Trust

by Guaranty

coftpoftatlott,

November 15, 1949.
SOUTH

Shares of the Company payable Decem¬

holders tax in the amount of

84th CONSECUTIVE

Transfer books will not be closed. Checks will

-

bkmncsscc

O'okiep Copper Company

ber 12, 1949 to the holders of Ordinary Shares
of record at the close of-business November

preferred stock of this Company outstanding,
payable December 15, 1949, to the holders
of record of said stock at the close of busi¬
ness December■■■ 1, 1949.
'
:•
<
-V

dial,

close of business, on December 1, 1949.

Secretary-Treasurer

nary

-

(134%)

and three-quarters per cent

MORSE G.

Vice-President and Treasurer

Charles E. Beachley,

Dividend No. 13

dividend of one

a

the close of business Decem¬

COMPANY

meeting held today, declared a quarterly
dividend of 75 cents per share on the Com¬
mon Stock of the Company, payable on De¬
at the

at

ber 2,1949.

at a

November 21,1949,

The Board of Directors today declared a divi¬
dend oftwo shillings per share on the Ordi¬

street

new York 8, n. Y.

ord

Checks will be mailed.

"

v

(501) per share on the outstanding
capital stock of this Corporation
has been declared, payable Janu¬
ary 3- 1950 to stockholders of rec¬

PITTSBURGH

•

There has been declared

A cash dividend of Fifty cents

Limited

;Company,
church

ucc

Treasurer.

1949.

CONSOLIDATION

cember

1949.

GEORGE W.

Solberg,

November 16, 1949

SIMPSON,

COJRPOBAtjOJT

ANJ) CAJRB02Y

The Board of Directors of

business

the Common Stock of this corporation has been
declared payable on January 3, 1950, to stock¬
holders
of
record
at
the
close
of
business

outstanding Com¬
Stock, payable December
1949, to stockholders of

A.

N. Y., November 17,

Union Carbide

this corporation, for the quarter ending Decem¬
ber 31,
1949,
has been declared payable on

American Car and Foundry

he

New York,

December

closed.

v'..:„v

QUARTERLY DIVIDEND of One Dollar and
Twenty-live Cents ($1.25). per share on the
Common Stock of this Company has been de¬
clared - payable at the Treasurer's
Office, No.
165 Broadway, New York 6, N. Y., on Monday.
December 19, 1949, to stockholders of record at
three o'clock P. M., on Monday, November 28,
1949.
The
stock
transfer books
will not be
closed for the payment of this dividend. *
J.

dividend of 15$ per

December 10, 1949.
The transfer books will not be

ac€

dividend no. 128
A

CO., INC.

A regular quarterly dividend of 87V2C a share
on
the
$3.50 Cumulative Preferred Stock of

the

a

on

record

H. T. McMeekin, Treasurer.

&

•

SOUTHERN PACIFIC COMPANY

Y.

A cash distribution of

a

■

the Com¬

on

pany's capital stock, payable December 15,
1949, to stockholders of record at the close
of business November 28, 1949.

DIVIDEND NOTICES
AMERICAN

47

(Special to The Financial Chronicle)

WOODHAVEN, N. Y.—William
Griffith is engaging in a se¬

curities

(2123)

.

.!

1

5

,>

'■

.

A

.

48

(2124)
-

BUSINESS BUZZ

contradicted

flatly

Senator-*

Douglas's assertion that legisla¬

on...

national

freeing

tion

lead

to

to

separations from

many

Federal

the

banks

state charters would

convert to

system,

Reserve

a

.

;

position also taken by the Fed¬

Behind-the-Scene Interpretations
from the Nation's

Board.

Reserve

eral

And You

Capital

last

held

year

conversion

he

considerable apprehension over

WASHINGTON, D. C.—There is
committee

Senate, both
will lump all
Federal supply bills into a single
appropriations
measure.
This
means
that supply bills will not j
t>e passed separately and piece¬
Houses

meal,

the

for

next

year

freedom

the

during

ably

advocates

Administration policy of giv¬

to the Commies in China.

way

of

Subcommittees

somewhere.

,

invasion

-

f
-

t

hearings on separate appropria-

Channel

held

Europe

a

Blancke

bills,

total

that will

sum

be ap-

<

7proprialed for the entire gov- \
ernment. Then that sum will be j
-divided

^

^

up.

budgetary picture,

whole

the

sA

France is

again

are

ernment.

lines.

hold

has

Cannon, it is reported,

Mr.

.

the

spending to

down

written to members of the Appro¬

should

appropriations
looked

bills

subcommittee

all

that

proposing

Committee

priations

over

and

first

be

by a special Appropria¬
Subcommittee of five, to

written

tions

ne^t
ranking Democrats, and the
top
ranking
Republican
Rep. Cannon, the

.consist of
two
two

•

members.
This

bills

mittee

of

subcommittee

special

would

five

subcom¬

the

review

into

and whip them

tentative shape for final approval

by the full committee. This is sup¬
posed to be a necessary device to
save the full committee from attempting to do the herculean job
of
having
to
decide countless
items submitted by the subcom¬

O

mittees. V' •:.; ;

•,7'V;.•••!

£. "■,)7

However," members
of
the
were quick- to note
with

that

V

and 1:

Democrats

two

to

7Republicans being mem¬
bers
of
this highly strategic
committee, Rep. Cannon would
two

appropriations recommen¬

dations.

Hence, Chairman Cannon would

probably become the most power¬
ful single member of the House,
casting the

by

deciding vote on

'all controversies

to where,

as

in

given cases, the pruning knife of
economy would be applied,
and
where the liberality of the;''Fair
Heal" would prevail.
In

a

sense-,

derly
wants

over

Russia

IF

does

move

before Western Europe, with eco¬
nomic

and

Spain

Rhine, then
have

the

that

S.

U.

the

military

when Napoleon

forces

at

was

to

England
the

on

the

entire House, and

not

like

many

it, Democratic

This

plan,

or

do

Re¬

unless

777

sea.

Ru

i

s

s

n

On

the

standing

to bring about economy by 'it¬

slightest

might

with

it

the

hint

Spain

City

its

Europe likewise
hesitates

ment

extending

any

mittee

j

do not like

help to Spain.
'

there has

$

Monetary, Subcom¬

far developed:

so

(1) The Monetary subcommit¬
tee hearing
is so far largely a

with

show,

Chairman

H.

Paul

Douglas monopolizing
most of the questioning. After the
first day,
Senator Ralph Flan¬

fmother

large-scale

Democrat, and one of the
assiduous
spokesmen
for

Texas
more




he is sticking by

the Junior. Investment
Brokers Association.

question

Senator

welcome

not

Douglas go
such

from

impor¬

the

party

line. Will Douglas be forced by

political
the

pressure

party
will

line

to give

way

take

and

author

noted

tracts before he

came

leans
strongly toward the Federal Re¬
Board

serve

line of greater pow¬

He would

ers.

the

Senate; ""obviously

■

Board

power

favor

giving
to examine the

even

national

banks, a power not
ly sought by the Board.
(4)

Senator

considerable

Douglas

attention

open¬

focused

upon

him¬

by his almost solo role in con¬
ducting the subcommittee's hear¬
The Senator insists that al¬

"liberal," he favors only
such part of the welfare state as
though
can

a

be financed within

budget.

He
with

break

thus
the

balanced

a

infers

a

other

sharp

Administration

,

gradually
and

way

Re¬

the

turn

•

become

more

conservative?

group for
nominated
to be Vice-President. Sydney G.
Duffy of Blyth & Co., Inc., was
proposed for Secretary and Dean
Witter, Jr. of Dean Witter & Co.r

Director of the

gram

current

the

year* was

Board for the

Executive

the

en¬

suing year are Joseph Allen Lee,
Jr., of Union Securities Corp., H.

Jr. of the New York

Frank L. Mansell

Curb Exchange,
of Lee,

Higginson Corp. and Ed¬

F.

ward

Clark,

of

Jr.

Swenson,

Dodge. & Co. Norman de Planque
of

W.

man

tee

Hutton & Co.

E.

perpared

which

OtheT

members

Lawrence

the

S.

McDonnell,

P.

Quinlivan,

A.

slate.

William

are

Donal

•Goedecke,

is Chair¬

Nominating Commit¬

of the

Charles P.

comparatively little
official, J. L. Robertson,
principal Deputy Comptroller of
the Currency,-distinguished him¬
self by a flat-footed, uncomprom¬
ising opposition to Douglas's pro¬
posal for using bank examinations

nominated to

for Treasurer. Those

Jr.. and

Stetson.

(5) A

known

as

self

ing.

he, like former Senator

publican,

Douglas,an. Ill¬

Senator

Democrat and

to

all,

it

Joseph H. Ball, Minnesota

Administration. -

of

from here. The left-wing crowd

defections

Grady Black, Jr. of. Morgan
Stanley & Co;, who has been Pro¬

Vernon Lee,

the

a

device to contract

credit.

ly and

or

expand

Robertson disagreed flat¬

to his ground

stuck

even

though the. Senator lost his tem¬
and asserted
aminations were

that bank

per,

asserting

a

was

Riverside Cement

Spokane Portland Cement
Oregon Portland Cement 7
Coplay Cement Mfg.
Glens Falls Portland Cement

for

policy of bank

opera¬

tions "dictated by what some top

economist in

Cement Stocks:

ex¬

vehicle

no

Washington thought

<*oinfto happen."

LERNER & CO.
Investment

Securities

Square, Boston 9, Mass.

10 Post Office

Teletype BS S3

Telephone HLbbard 2-1930

Mr.

Robertson,

incidentally,

IIAnover

Teletype—NY 1-971

2-0050

"small

business," initially passed
the
hearings by. Rep. Jesse P.
Wolcott, ranking Republican
member
of the House Banking

duce

Firm Trading Markets

a

are

All Issues

to, and to intro¬
practical historical

serve

same

issue has

The Federal Re¬

Board, faced with the obso¬

lescence

of

its

functions

while

FOREIGN

v

..7,

has been prevalent

years.

Executive &

YORK

5

Underwriting Offices

WALL

STREET

Whitehall

4-4540

(-AM. MARKS 4 TO- MC. t
;

as

NEW

Tel.

(2) With regard to Federal Re¬

policy, the

Hill, Thompson & Co., Inc.

70

up

little

some

'

FOREIGN SECURITIES

the "Fair

background into the discussion.

for

amphibious

as

Bankers and

Vermont
out.

raises

where will

Republican, took
Rep. Wright Patman,

ders,

been drawn

In view of the official line that

This

tant

to

Congress

this stand next year.

does

,

one-man

the hearings that

market

giving

81st

or

to " the'

hearings of the four-ring

serve

^

Ran¬

open mar¬

the

of the

Douglas made it clear at the
conclusion of the first phase of

preoccu¬

bond

using

budget, and

of "liberal"

State Depart¬
to ire them by

*

if

the

From

return to

a

(3)

and the

Franko,

the

Senator Douglas's

Dr.

ket operations, a balanced Fed¬

inois

ideo¬

Socialist governments

the

with

session

first

of New York,

System from its

serve

the

logical grude against Tito. How¬
ever,

somewhat helpful.
^

Bank

over

heresy in this respect during the

dence from the political arm of

S.

to

forgotten

has

U.

their heads

the Reserve System of indepen¬

ideological
the ex¬

its

forget

grudge

self, its operations should prove
..

W.

as

puts farm aid, foreign aid,
aid, and welfare expendi¬
tures as objectives of greater pri¬
ority than a balanced budget. The
left-wing
crowd
were
shaking
arms

and

*

other hand, such out¬

witnesses

which

.7

banks,

dolph Burgess, Chairman of the

eral

this,

knowing

s,

bloody murder if there

scream

the

a

Dealers"

as

commercial

v i

and

possible for

subjugate Spain from the

to

tion plan. While few would rely

.

for

Committee, is keeping an eye on

procedural method such
the single appropriation bill,

require¬

consumer

on.

which would make it

the hearings to see what

any

over

pation

junking of the single appropria¬
on

pow¬

advocate the freeing of the Re¬

knocked over, could lead to the

^

loans

Russia does not have naval forces

of

additional

specific
credit,
to guarantee small business

tional

ram¬

Furthermore, it is pointed out,

is

or¬

bonds,

Executive Committee of the Na¬

page.

her

an

Federal

powers over reserve
of non-members,

power

so

maintaining

and

more

ments

the

may come to
importance to

had

it

able

is

aid,

arms

Russian

contain

to

ers,

to

market for

controls

time

.

this would prob¬

ably make Mr. Cannon the most
influential single individual in

publican.

committed

Joint Economic Committee circus,

„

tough choice to make—the Blonde can't type at all!"

a

H.

Spain is a rugged
which would be difficult

Hence,

probably cast the deciding vote
on
scores of politically impor¬
tant

it

made

1947

in

occupy.

tent

committee

by, Stanley A. Russell,7Jr.
Blyth •&. Co., Inc., President of
the Association, which was formed
made

"It's

Pyrennes,

country

for

tentatively

be

the

she

if

Even

of the slate was

". 'Announcement

sia

prospective revenues of the gov¬

of his< firm.

department

buying

If Rus¬

approached these after occu¬
pying France, she would be at the
extreme
end of tenuous supply

&nd

14,

of

S., in
The
a for¬

barrier.

midable natural

Dec.

on

Cornell University,

graduate of

Mr.. Noyes i's associated with the

overrun.

mountains

Pyrennes

held

to "be

election
A

tural beachhead" for the U.
case

'■*/» In theory this will give a com¬
mittee a chance :to take a look

presented tpi the membership .for

Spain, however, presents a "na¬

1

for the

action at the annual meeting- and

;-v"; 177V7V-t

to do so.

Co.

&

Parsons

been- nominated

has

Presidency of the Investment As¬
sociation of New York on a slate

777

by the Reds.

for

as

7?

of 7 Hemphill;

Noyes

Graham,

Noyes,
has

the

to

Noyes Nominated

By N Y Inv, Assn.

Hence, it is not

force.

national deAnd, it might be added, the Ad¬
Commerce, • Justice, State and j ministration anticipates, judging
Labor Departments, and so on. j by a volume of statements, that
the Reds would have no great dif?
However, the Appropriations
Committee will not finally pro-* I ficulty in the next four to fiv&
pose any sum for any agency
years overrunning the Continent
until it is ready to* determine
to
the
Channel, if they, chose
toe

,

B.

the

on

feasible to consider an effort to

as

retake

tions

1

dropped

bomb

heretofore, will continue to hold

♦

of Europe

invasion beach could wreck the

will

economy

amphibious invasion

re¬

large

another

that

line

atomic

little easier time getting

a

.

pretation from the nation's Capital
and may or may not coincide with
the "Chronicle'8" ovm views.)
f

rising criticism of

Add this to the

The

Behind this is the theory that
the

liave

state sys-

the

(This column is intended to

icated upon the theory that one

..

into

banks

flect the "behind the scene" inter¬

is not possible is believed pred¬

v

:

by law, would freeze state-char¬

session of

next

7., 77, .V:

7„:

were

will be needled consider¬

approved until all appropriations
are
considered
together in one

-

a

Congress for its Spanish policy.

ing

measure.

system

would only be
question of time before states,
it

terns.

will *be

'51

fiscal

for

banking

passed,

tered

department's

agency or

allowances

not

Adminis¬

bomb, the

atomic

tration

the

stead, no

to

departure from the

of

national

vasion is not possible because of
the

has been traditional. In¬

as

de--

want

not

that if this legislation allowing

appropriation bill the Congress is going to try in 1950.
By a simple policy decision of'V
the House Appropriations Com- ] invasion of Continental Europe
amittee and by a formal resolution ! comparable to the Normandy inapproved

did

national charter basis, and said

a

Chairman Clarence Cannon of the House Appropriations
is reported to have worked out for handling the single

that

force to maintain banks 011*.

use

£he plans

Robertson

bill.

clared

Douglas7
charter*

the

up

50 Broad Street
7

.

SECURITIES

SPECIALISTS

•

1

Trading Department

120

New York 4, N. Y.

AFFILIATE: CARL MARKS & CO. Inc. CHICAGO

Tel.

BROADWAY
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