Full text of Commercial and Financial Chronicle : October 1, 1953, Vol. 178, No. 5260

View original document

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

■

a
.vy '

Reg. U. S

Volume 178

UNlVg

Number 5260

New York 7,

P^irv

OPMICH SAN

AMERICAN BANKERS ASSOCIATION CONVENTION ISSUE

OCT

2 1953

Pat. Office

N.Y., Thursday, October 1, 1953

Price

Cents

Copy

EDITORIAL

Excess Profits Tax Lapse
And Tax Cuts in Offing

We See It

As
We have

apparently reached another of those
stages when to some a depression appears "in¬
evitable." This is, of course, not the first time we

Secretary of the Treasury

After

years,

spending

tion that in

can

case,

says

the

been

ques¬

distinct

improvement in

jof business during the
particularly: difficult, if
build up-a pretty good
stantial

of high

take

the

recession

which

moderate

its

hand, there has
other lines

is, however,

Sienkiewicz,
membership

The
American < Bankers Association ,held its
79th Annual Convention at Constitution Hall in

for

going

Washington, D. C:, from Sept. 20 through Sept. 23,

few

trying to do

sound,

not

is clear. If

areas

achieved

goal

our

over¬

size of the job itself but also because
realize that our economy is a very

sensitive

I
George

mechanism

and

Everett

must

proceed carefully, but always stead¬
ily, toward the goal we seek. Too

Humphrey

Continued

page

President

Ohio,

Homer

Reese

and before

drastic and precipitous action might
react badly in many ways. We must approach our
objec-

Livingston

bnerman Lirawdy

adjournment elected Everett D. Reese,
of

Park

the

National

Bank, Newark,

President of the Association to succeed

W. Harold Brenton, President of the State Bank

address

American

by Secy. Humphrey at the 79th Convention of the
Bankers Association, Washington, D. C., Sept.
22, 1953.

page

—

16,

In addition to the material

texts

of the 79th Annual Convention of

course

ninety-eight

present in this issue, starting

Association's

or over

is
working constantly to
strengthen all three pillars. Our goal

MORE ABA ADDRESSES IN THIS ISSUE

Chemical

herein.

given

night, it is not only because of the

♦An

others

comprises 16,873,

in each of these

gives us some concern. It
inevitable outgrowth of the psychology and
the philosophy from Which the so-called full empage

and
now

tion

have

current

Burgess,

percent of nation's banks.

Continued

Jff. Randolph

debt management. This Administra¬

any

state of affairs which

Secretary

pillars—a proper budget
properly functioning FedReserve
System, and proper

era!

will be

aspect of the

Deputy

Federal Reserve Governor Robertson, Secy, of Agricul¬
ture
Ezra T. Benson, Roy L. Reierson, Casimir A.

every

to achieve sound money. I
say
not hard but honest
money.

policy,
:

past.

There

Ad¬

Sound money is based upon three,:

relatively short-lived. Periods of
some
uncertainty such as this—and periods in
which we are regaled with forecasts
galore—will
doubtless come and go in the future as
they have
in the

Drawdy is elected Treasurer.

U principal

for expecting sub¬

appearance

intimately

moments about what this Administration is

and

makes

concerned

are

liberty this morning of talking

some

impossible to "prove" that

Humphrey,

tax system is under consid¬
Administration is dedicated to

day with the money problems of this nation; I

deterioration in business in the months

ahead. Neither is it

Sherman

►

past half year. It is not
one is inclined to it, to
case

President.

dresses by President Eisenhower, Secretary of Treasury

employment and production and
policies toward that end.

Since you as bankers

about equally" clear that certain indica¬
seem
to point to further decline in the

assurance

President, and Homer J. Livingston, President

of the First National Bank of Chicago, becomes Vice-

Humphrey indicates government
on road to reduction, and the

to be

will pursue

appears
tions

Brenton

further adjustments in

maintenance

some

volume of business. On the other

the

proper

appears

eration. Gives

segments of industry and trade,
of activity has been reduced
already. It

the rate

Excess Profits Tax will expire at end of year; Foresees
also an average of 10% reduction in income
taxes, and

of this sort have drawn
warnings that we are in
danger of "talking ourselves into a depression."

to disclose. There

(1)

debt management, Secy.

gloomy forecasts have proved correct; some¬
times they have appeared rather childish in
retrospect. This time, as usual, continued forecasts

'l^iat the future holds in the instant

Meeting held in Washington, D. C., from Sept. 20 through
Sept. 23. Everett D. Reese, President of the Park Na¬
tional Bank of Newark, Ohio, succeeds W. Harold

principal pillars of sound
budget policy; (2) a properly
functioning Federal Reserve System; and (3) proper

these

futur^ will have

designating

money:

and they were certainly
previous times. Upon occasions,

not unknown in

Annual Convention

By HON. GEORGE M. HUMPHREY*

have been told that serious trouble is in store for
us. On the
contrary, we have often heard such

predictions of late

ABA Holds 79th

the

other

American

addresses

Continued

the

made

Bankers

page

cover page,

during

Association.

the

State and

Bank
Trust Company

INDIA; LIMITED

Bankers

Founded 1824

Complete corporate and
personal trust facilities

the

Government

Office:

26, Bishopsgate,
London, E. C. 2

Branches

Pakistan,

India,

Coast to Coast

Ceylon,

Burma, Aden, Kenya, Tanganyika,
Uganda, Zanzibar, and Somaliland

Bond Department

Protectorate.

Capital
Capital

Paid-up

£4,562,500
£2,281,250

Fund

Reserve

and

OF NEW YORK

description of

exchange

and

Active

Net

»99

WALL

NEW YORK

Listed and Unlisted

STREET

Commission

t. l. watson & co.
MEMBER3

Raw

—

Refined

—

Liquid

New

York

Stock

Telephone

WHitehall 4-6500

Teletype NY 1-1843
DIgby 4-2727

PERTH AMBOY
t
■

other Western

Denver
Spokane

NATIONAL
(

OF THE CITY

BANK

OF NEW

YORK

Cities

Maintained

and

Brokers

CANADIAN

Central Vermont

BONDS & STOCKS

Public Service Co.
COMMON

Executed On All

WIRES

TO' MONTREAL

Goodbody
MEMBERS

NEW

NEW YORK

available

upon

request

DEPARTMENT

Teletype N Y 1-2270-X

115 BROADWAY
BRIDGEPORT '

Booklet

Exchange

New York 4, N. Y.

Orders

CANADIAN

DIRECT

50 Broadway,

NEW YORK CITY

'""N.

Canadian Exchanges at Regular Rates

American Stock Exchange

Exports—/m ports—Futures

Banks

SECURITIES

Inquiries invited

sugar

Markets

Dealers,

CANADIAN

SECURITIES

5, N. Y.

•

Salt Lake City
Los Angeles

Bond Dept. Teletype: NY 1-708

THE CHASE

ESTABLISHED 1915
Members of All Principal Exchanges

50 BROADWAY

business.

Trusteeships and Executorships
also undertaken

LAMB0RN & CO., Inc.

•I. A. H0GLE & CO.

THE NATIONAL CITY BANK

£3,675,000

The Bank conducts every

banking

ST^N.Y.C

Direct Private Wires

Authorised

Correspondents in all
parts of the world

Bonds

Kenya Colony and Uganda
Head

30 BROAD

Municipal

NATIONAL BANK

YORK

AND TORONTO

STOCK

1 NORTH

Co.

EXCHANGE

Doxraox Securities
Orporatiotj
40

Exchange Place, New Yoxjs 3, N. Y.

Neu)

and other

111

Teletype NY 1-702-3

WHitehall 4-8161

Boston

York Stock Exchange
Principal Exchanges

Broadway, N. Y. 6

WOrth 4-6000

LA SALLE ST.

CHICAGO

IRA HAUPT&CO.
Members

Teletype NY 1-2708

Telephone:

Enterprise

1820

admi

BUS.

LIBRARY

The Con

(1214)

WE POSITION

The Security I

and

TRADE

Like Best

A continuous forum in which, each week, a different group
^Carrier Corporation

in the investment and

*New York State Electric & Gas

for favoring

reasons

(The articles contained in this forum

they to be regarded,

are

Alabama &

Selections

Their

of experts

Motor Co.

White

particular security.

intended

are not

be,

Spingarn,

Heine

President,

nor

offer to sell the securities discussed.)

as an

GEORGE

HEINE

MAX

KU1INREICII

Mutual

Vice-

Co.;

Cor¬

Gulf Interstate Gas

New

Vice-President Mutual Shares Corp.

tion—George A. Kuhnreich, In¬

Hyde Park, N: Y.

One

oil

American

small

the

Counsel,

vestment

Hyde

New

Park, New York. (Page

Big Horn-Powder River Corporation

5l/4% Preferred Stock

White Motor Co.

Counsel,

Investment

Partner, Spingarn, Heine & Co., N.Y.C.
Members New York Stock Exchange

Central1 Hudson Gas & Electric

tain

and

include

types,

Puget Sound Power & Light

heavy

Southern Production

Stromberg-Carlson

New York Hanseatic

line

Corporation

While

overrid i ng

royalties to

maker

oming, contains over
11.000 acres
the Com-

Motor,
of

Max

Heine

utes and
ices

liner

Specialists in

units

type axle

the

unit

serv-

Freight-

West.

new

introduced in

was

1952.

Rights & Scrip

accounted for 34% for commercial

sales.

Military trucks, trailers, and
aircraft

14%

rect

York

New

American

120

REctor

through 43 dibranches
and
470

distributors.

110

nual
1952

2-7815

capacity of some 25,000 units;
shipments totaled 15,035.
acquisition of

The

Autocar

in fall of 1953 rounds out its line
of heavy

American Furniture Company

Alabama-Tennessee Natural
Gas Company

shares of its 5 /4%
The

issue

June 30,

Company

callable

....

until

102

101 to June 30,

LD 33

„.

this

the sinking fund of

10%

featuie

While the dividend is payable out

profits

whpn
when

«md
and

Board

fund

the

Directors,
absolute

company

company,

HPPlnrpH
declared

lone

thp
the

hv
by

obligation of
funds

are

available or^

legaHv available f
legally
tor that DurDose
purpose,
charter

The

INACTIVE STOCKS

that

Industries

sinking fund payments

be met

Wringer

even

may

if the company is in

°m t6 Prr£en'ed diI-denf'
Motors Co., according to

White

Apco Mossberg

2.60

York 4

Telephone
3-2340

WHitehall

f natural gas.

■

Gordon Graves & Co.
30 Broad Street, New

Successful-wildcatting is not a
experjence

new

completed 5 additional wells Creek

'area of

LUNN LAMINATES, INC.

Wyoming and now

Manufacturer of the

Big Horns acre—

cast and south of

age.

unitized

' /

•

this

the

under

field

sportscar,

River,

Illinois

and

new

"Corvette"

•

Company.

direction of the Texas

Uorns production moves Big Horn's total recoverable rethi P1?,1,n!. Pl8? Ll?® whlC5 serves at Fiddler Creek are estiat
mated
million barrels.
Wood

"Fiberglas"

Chevrolet's

body-for

for

Underwriters

...

Laminates, Inc.

Lunn

m0nth, drilling will be re-

struc-

Hovenweep

in the

sumed

°th?r eastern refining centers. ture of San Juan County, Utah.
°nly recently> the Plains Pipe Big Horn holds a 100% working
Line found itself unable to handle
in

interest

area.'

this

5,000

some

in
must

acres

lease

this

While

S. D. FULLER & CO.
New York 6, N. Y.

39 Broadway

Telephone WHitehall 3-0066

fr°m the Clareton field and it is
classified as wildcat acreage,
now asktng the Wyoming Public the salt strata and reef conditions

S-erVif build
to Commission for perm is- under the property are regarded
line to its
having £av0rable implications.
a

sion

new

Investment

Wyoming. Big Horn's high gravity

date

j,een

wiidcats

twQ

drj]'ied

Hovenweep. The

£u0dne "?l^mmands 8 P"Ce °£ saturated sand in
The Southwest Claret0n discov"
has had a dramatic impact on

ery

was

one

Call

not
for

commeTda5! SSLTte othe^blew
force and
in

with

Opportunities

in Japan

have

our
on

considerable

current

write

publications

Japanese securities

YAMAICHI

term Hpht h,ip thiough
debt due

farm

Autocar will add

Roch. & Pitts. Coal Com.-Pfd.

io^
1956

The acquisition of

$16,000,000.

excess

of $9,-

in net current assets above

000 000

Previews Inc.

'noKin+iflc
a
es.
have

been

consist-

ently profitable since the depresOBSOLETE SECURITIES

am0unted to only $9,000.

1953,

revenues

By June, stopped the flow. At the present
exceeded $44,000 time, this latter well is shut in

and are expected to show further but not abandoned.
substantial inci eases. 'With pipe
The capitalization

of the com—

consists of 5,500.000 shares
tion of the new line within three of capital stock and a 4V2% $348,or
four months,
it is estimated 000 mortgage note payable to the

line congestion eased by comple-

Gperations

J. B. Williams Com. Pfd. Bds.

pany

that revenues could be

eomVanywa^satS

Brokers

111

compared with current liabilities

> ears.

may

you

six months

period

was

Office&Tokyo
&

1897

—

48 Branches

Investment

Bankers

Broadway,N.Y.6 COrtlandt7-5680

N.Q. B.

nn°n ™r°n llTr/wg ab0Ut De- anannUal rate0f $1'000'000- Crude
n'" oil production, it
000,000
the last few
be observed,
in

else¬

Established
Home

Empire Trust Co. As of April 30,

running at

fense product business in the last

DEPARTMENT

market

Yield to maturity

^i'd "over ^dozen"weuT north .haL 16', producing weJ'S jn. Lhis
pieted over a dozen wens norm, fieid. steps are now being taken

City,

interest

SECURITIES CO., LTD.

Chicago Dock 8c Canal

and

month
May> 1952> Big Horn's substantial amount of oil before
net interest in Sross revenues the use of too heavy drilling mud

find

Price 78

the company's revenues. For the subsequently produced on swab a

Inmx

Bright Star Battery

1% Dec. 1, 1970

working capital of $53 000 000 and

Boorum & Pease

Try this department when

Registered

the June 30, 1953 report, has a net

Billings & Spencer

fail

oilrf

provides terminal facilities at Lance Creek,

expressly

Massachusetts

spacing per wen.
AUerl Enterprises, Inc., is cur¬

sinking the rapidly expanding flow of oil

the

present

Taxes

Commonwealth of

Pany

30
30,

net

acre

1958 -cheduled to retne
1958 scheduled to retire 71?
]01ns
the Platte Pipe Line and
the entire issue by June 30, 1967. connects
with
Denver,
Kansas

Lynchburg, Va.

from

Income

offices

$100,000

to Big Horn. In
considerable portion of the „J948, the company brought in the
acreage. Subsequently; the Com-i{jisc(Jvery
well
jn
the Fiddler
derlie

to begin to operate before-

year

June

Scott, Horner &
Mason, Inc.

significant

stock is

Dan River Mills

American

Basin in several years." The

preferred stock,

1955, at

branch

our

exempt

f()r this year. Also undery consideration are additional drillings in

^
flnw Aq baS
cently Pr°P°sinS the construction
J™ JIiTnl2hoursAt of a natural gasolll}e plant for the
** £]Journal'' ProcessinS °,f Southwest Clareton
Sin
of the gas* Preserttly' gas 1S
flared
described the well as one of the
in ^he field, and with the com™,°f '^-"^"thp^Powder °River Pletion of this plant, Big. Horn
??
Powder River should reailze additional earnings

1956, and thereafter at 100.

Commonwealth Natural Gas

Ambrook

tiin Wh?f.Ctl^.Mlthici11S/CBR jfnn sands which from believed to unthe Newcastle
tion
White Motor issued
86,500 is Produ^.edu are

Trading Markets

Tele. LY 62

duty vehicles

d y u y verucie^

George a. Kuhnreich

discovered the Clareton^ field[in
mid-January 1953.
initial test

There

distributors.

overseas

Federal

pany's most important leases, lnis ^ j0jn^ ieases with Union Oil.
consists of a 100% working intersjnce Bjg Horn has a heavy
in ®00 f,reV.in
in
the
du'y r'® under
t'me contract,
approximately 2,880 acres in me its drilling program should be ex?°~*kw©st Clapton fie , an a pe(jRed. The average drilling time
^0% interest in
PP
,
required for a well is 20 days, and
J'8?0 a^sr,
J
n/rnlifomia costs amount to abouta foot*
Union Oil Company of Californ
Drilling time and costs are conHi ihe. same tr^ ifni inintlv siderably less than in other areas.
Thunder area. B^
There are no production restric™.lth an independent oil °Peratoi, tiong in Wyoming other than 40

The Cleveland plant has an an-

Exchange

BROADWAY, NEW YORK 5
Tel.

distri-

Canadian

and

also

are

Exchange

Slock
Stock

handled

factory

dealers

Members
'

contributed

parts,
sales.-

1952

Domestic

bution

frfCpONNELL & CO.

service

Replacement parts and

tank

Since 1917,

Interest

ember, six additional wpllsAn the
50% owned leases are scheduled

White distrib-

York 5

Teletype NY 1-583

BArclay 7-5660

interests.
Weston
County,
Wy-

is it ion of
Sterling

Stock Exchange

120 Broadway, New

Mobile, Ala.
wires

Direct

being

specialpurpose units,

Associate Member

1951

NY 1-1557

New Orleans, La. - Birmingham, Ala.

stantially, all

100% working

from

available fun^s are
utilized to finance
a
stepped-up drilling program. Fol¬
lowing
the - completion
of, the
E. W. Wakeman #1 late in/Sept¬

the

Exchange

St., New York 4, N. Y.

Hflnover 2-0700

sharply in the past eight months,
and cash flow has increased sub¬

ranging

The

was

broadened

Established. 1920

25 Broad

have expanded

revenues

ac-

units.

ery

leases

American Stock

Members

and
lighter-weight
models,
and
city and sub-

truck-tractors, in concab - over - engine

Trucks and

ventional

buses.

Stock

York

New

Members

—

urban deliv-

Monterey Oil
Polaroid Corporation

leading

and

trucks

producer

Steiner, Rouse & Co.

independents, Big Horn-Powder production should show additional
River Corporation has made rapid gains.
progress in building up crude oil
Results of this year's drilling
production. It \«
activity are summarized in the
table below. Particularly notable
also has ac- '!
has been the Mary Wakeman #4,
quired interwhich came in on September 1 for
ests in some
an
estimated daily flow of 1,920
42,000 acres of
barrels.
'
Rocky Moun-

i£

Co.

Motor

White

Units, Notes & Common

American

Bought—Sold—Quoted

Big Horn-Powder River Corpora¬

request

Central Public Utility

Louisiana Securities

514% Preferred
Heine, Partner,

poration, N. Y. City (Page 2)

Rights & Common —
on

Participants and

Stock—Max

^Southern Union Gas

Prospectus

Week's

This
Forum

advisory field from all sections of the ^country

participate and give their

^Pacific Gas & Electric

erctal and Financial Chronicle... Thursday, October 1, 1953

increased from

9.9% of to- approximately

daily average of

278

barrels

for

assets

amounted

$139,000

OVER-THE-COUNTER

of $l3+3'<?10n°o n^h?ch+

INDUSTRIAL STOCK INDEX
-

where.

Our

slogan: A hid for

talTnbevaie%bt
that
I

•
in

believe

ft,
of the

■
view

anything of slightest value.

juiy>1952 to each barreis f°r juiy
875 new completion,
1, 1953. With

14-Year Performance

1953.

large mandatory sinking fund and
.i

the

5Y4%

George A. Rogers & Co., Inc.
Our 26th

Year

present

preferred

stock

Broadway, N. Y. 5 WOrth-4-6930

the

White

attractive

than

most

other

stocks

ferred

basis.

similar

r :•

yield

NoBbis.

Date

well

Mary Wakeman £1__

Mary Wakeman #2__
Sedgwick A-l
Sedgwick A-2
Sedgwick

pre-

35 Industrial

Initial Flow—

yield

Motors Co. is comparatively more

120

generous

A-3

#4"

9,.1953

589

Mar. 27, 1953

264

1 day

585
895

1 day
1 day
1 hr.

Jan.
.

Test

loS

May 21, 19o3
June 7, 1953
July 13, 1953

12 hrs.

Pipe size

folder

Stocks

request

%-in. choke

2^nAubLne
%-in. choke
%-in. choke
27/a-in. tubing

^
/

National Quotation

Bureau?

Incorporated

46 Front Street

New York 4,

N.Y.

Number 5260

Volume 178

The Market

The Commercial and Financial Chronicle

,..

(1215)

Today and Tomorrow

INDEX

KENNETH WARD*

Articles and Newt

AND COMPANY

The Market Today

while business machine is slowing
falling apart at the seams; but in
any event stocks at today's prices represent unprecedented
amount of assets, dividends and earning power.
Cites mar¬
ket's extreme selectivity, with long-standing bear movements
in many groups. Specifies following bullish factors: (1) Mar¬
ket's conservative valuation of past high earnings; (2) Low
Marked analyst

asserts

down, it is by

dividend

(3)

payouts;

Pump-priming

weapons

—Hon

Our

;

After

hesitation

some

lost,

but once
Iwas confused

with

the

and

markets

ntly

news

probable

will not admit

other?

certainly

have heard

than

opinion

more' expensive

than

in the stock market and any

opin¬
today is with

ion I express to you

that

humbleness

the

has

devel¬

STREET, NEW YORK
4-6551

Market—Leroy M. Piser 13
We

Socialistic Trends and Return to Solvency

Styles Bridges.,-^.

—Hon.
Faults

Specialize in:

Tennessee Gas

—W.

Randolph Burgess

feeserve

Pipeline

Board—J. L. Robertson 20

Sienkiewicz

Transcontinental

Current Picture

A Banker Looks at the

—Casimir

Rates—Roy L. Reierson

Objectives of the Federal

Transmission

....Cover

Public Debt

Virtues of the

The Outlook for Interest

Texas Eastern

Offing

George M. Humphrey.

and

would

Progress in Agriculture—Hon. Ezra Taft Benson

of the stock

Market

Signal

Registered

variance

BURNHAM AND COMPANY

Members New York Stock Exchange

Addresses

Eisenhower

Convention

JOHN F. REILLY, Manager
Unlisted

Acceptance Address of Everett D. Reese, New ABA Pres..

☆

;

W. Harold Brenton Optimistic on Continued Prosperity._

Although the Dow theorists, of
which I am not one, have been at
considerable

American Bankers Ass'n Holds 79th Ann. Convention...Cover

President
Bear

Out—Henry B. Arthur

Excess Profits Tax Lapse and Tax Cuts in

thought
in

WALL

Telephone: WHitehall

ABA Addresses and Convention News

exception, for nowhere is" pride

Obsolete Securities Dept.
11

Transmission

have recently seen
penetration of levels

witnessed at this stage
market cycle.

Kenneth Ward

quite frank

which I did not believe

Biggs

downside

time

some

stating that

confusion

bearishly

rescue"

fast!

Current Thinking at the SEC—Chairman Ralph H. Demmler.

velopments of recent months much

but

has interpreted de¬

averages,

changing

con s

—Sen.

uncertainty with which many bus¬
inessmen are viewing the future.
The stock market, as measured by.

erratic

—

especially those which have
stimulated by sizable mili--

good deal about the new business

these past few
such

expenditures. We,

you

been

tary orders and

days." Who of
u s
during
years

reduce wasteful

been

"three

budget in 1955 and

witnessing signs of a
letup in industrial lines of busi-

never

was

We Must Stop

have

Our cash will

Stop Competing With Business
—Hon. Sinclair Weeks____
L____,

The Government and Municipal Bond

ness,

replied, "No I

Cobleigh

The Boom Flattening

to balance the

ness.

Chains—Ira U.

Investing for the Professional Man—Edmund Brown, Jr

if he

lost in the wilder¬

Because of obsoletes?

Grandchildren—Roger W. Babson.i

—William

adopted by the Administration in
Washington in its determination

ever

con-

the hills."

was

MAN ON A TIGHTROPE

Depression

Williams.

Federal Budget and Corporate Profits in a Business Decline

'Just recently I felt a little like
Daniel Boone when tie was asked
,

Government Will

eludes "this is not the time to follow the crowd and rush for

Walter

Links in the Food

(4)

Continuing defense spending;
available to Administration—and

and Tomorrow—Kenneth Ward

Why I Am Not Looking for

means

-llCHIfdSlfll

page

Stock Exchange

Market Analyst, Hayden Stone & Co., Members N. Y.

Trading Dept.

Panel Discussion

Uniform Commercial Code

☆
15 Broad

—

recent

oped through making many costly

years,

Texts of Resolutions Adopted at Convention

unanimous in their belief that last

Backgrounds of New Top ABA Officials

month's action provided a definite

New Heads of ABA Divisions and

Telephone

Teletype

DIgby 4-1400

mistakes.

Street, New York 5

NY 1-3370

task

The

never

market

easy

difficult

sually

analyst,
has been unu¬

one,

during

all

past

the

market

bear
Dow

they

believe

signal.

are

now

Under

who use the gan in January, this year, but was
part of our fore¬ not confirmed until August or
casting tools, have made an unu¬ eight months and some 32 points
sual number of errors, especially in the Dow-Jones industrial aver¬
when we have based the action age after it started. It is obvious,
and

year

study of charts

the

market

rather

than

the

averages

movements

individual securities.
Last

the

November

Security

suggested

Analysts

their

Conference that the stock n^arket,
as
measured
by the Dow-Jones
averages,
273-275
and

should

level

101-102

vance

290-295

108-110

the

above

the

industrials

rails

the

by January

around

and

hold

for

therefore, that if
market it is

and

ad¬

or February to
the industrials

for

the

markets,
have

the

lookout

horizon of

for

signs

letdown

mild

the

over¬

all business

readjustment, and an
intermediate
top in the market,

but that I doubted
see

reaction

that

would

below the

255-260

level on the industrials and
on

the rails.

the
295

95-97

Remain

High

Editor)

Dan River Mills

Shull Replies to Philip Gans on Gold

Frederick

(Letter

Awards

Empire State Oil

Price

—

Purchasing Agents Cite Softening Prices

Great American Industries

Johnston Oil and Gas Co>0

theory,

Dow

stocks before

many

bull market

Before

some

that I
at any

use

the Dow

projected conclusion on the

effect

tors, some

verbal.

the

market

Price
reflect

different fac¬
fundamental, some tech¬
many

You will recall

that nical and quite a few psychologi¬
topped cal. It has been my experience
in January and that the rails over the years that a careful cor¬

reached

high above 112.50 about
I

pretty lucky in that forecast.
Thereafter, the stock market be¬
was

to decline to the accompani¬

relation

weighing

all

these

them

factors,

balance

one

Bank

and

Business

(Editorial)

Cover

Stocks

Insurance

—56

—

Securities

Canadian

♦

—

Investment

Dealer-Broker

Ultra Sonic Corp.

...

Bookshelf

Man's

Recommendations

Singer, Bean
& MACKIE, Inc.

Einzig—"Inferences From Lowered British Bank Rate"..
From

Washington Ahead of the News—Carlisle Bargeron

Mutual

Current Business Activity.

Indications of
Funds

News About Banks and Bankers

Observations—A.
Our

Reporter's

Our

Reporter

Wilfred

Teletype

Prospective

May

Public Utility

Securities

Salesman's
Now

time

The Market

the

The

of the final conclusions of not
only on the course of the mar¬
long drawn otit Korean truce ket, but on the price of an individ¬
negotiations; of deflationary econ¬ ual stock. If I were picking the
omy measures of defense stretch
most difficult factor to judge with
outs
and
foreign
aid
cutbacks
any degree of accuracy,
*An

by Mr. Ward before the
Analysts' Society, Sept. 23, 1953.

Continued

page

Column not

BROAD

•

Pan American

Twice Weekly

Drapers' Gardens, London,7 E.
land, c/o Edwards & Smith.

and

DANA

Company

COMPANY, Publishers

•

Manchester, N. H.

Boston
•

Chicago

•

Nashville

•

Glens Falls

•

1953

Every Thursday (general news and ad¬
issue) and every Monday (com¬

Schenectady

•

Worcester

records,
state

corporation

and

Other

city news,

Offices:

Chicago 3,

111.

135

—,

market quotation

news,

bank clearings,

etc.).

25,

1942,

STate

Oklahoma, Inc.

second-class matter Febru¬

the

pest

office

New

Subscriptions in
United States,
U. S.
Possessions, Territories and Members of
Pan-American Union, $48.00 per year; in
Dominion
of
Caaada,
$51.00
per
year.
Other Countries, $55.00 per year.

Salle

and

Quotation

$33.00 per year.
Note—On
rate

Record

—

Monthly,

(Foreign postage extra.)

account

of the fluctuations

exchange, remittances for for¬

be made in New York

funds.

INCORPORATED

BROADWAY NEW YORK 6

•„

Direct

Teletype NY 1-2380
Wire to

PLEDGER & COMPANY

8t.,> eign subscriptions and advertisements must

2-0613);

WM V. FRANKEL & CO.
WHitehall 3-3960

Other Publications
Bank

the

South

(Telephone

Sterling Oil of

Subscription Rates

WILLIAM DANA SEIBERT, President

plete statistical issue

ary

to 9576

SEIBERT, Editor & Publisher

Thursday, October

Eng-

York, N. Y., under the Agt of March 8, 1879.

Place, New York 7, N. Y.

HERBERT D.

C.,

CHRONICLE

vertising

Albany

Sulphur Co.

TELETYPE N. Y. 1-5

Sulphur Co.

Reentered

STV NEW YORK 4, N. Y.

TELEPHONE HAnover 2-4300

available this week.

REctor 2-9570

York Stock Exchange

Mexican Gulf

COMMERCIAL

25 Park

New

Johnston Oil & Gas C©0

Reg. U. S. Patent Office
WILLIAM

Members

Hoffman Radio Corp.,

and You—By Wallace Streete

1-182G

Hiller Helicopters

PREFERRED STOCKS

Spencer Trask & Co.

Corner

Registration

Like Best

FINANCIAL

specialized in

The State of Trade and Industry

The

have

Security

Published

For many years we

Washington and You.

I^would

address

Securities

other

ment

Detroit

Offerings

Securities

inter¬

the

Securities

Railroad

Exchange PI., N. Y. 5

1-1825

Governments

Security

Report

HA 2-0270

....

vals, is about the best way to ar¬
rive at any definite conclusion,

against

theory, let

market, written
the

moment and give
background material
in attempting to arrive

movements

Liberty Products
'

See

Coming Events in Investment Field

further

commenting

digress

you

Regular Features

months.

Dow-Jones industrials

two weeks earlier in December.

gan

the

is resumed.

would

Contract

Construction

Bates Mfg. Co.

Business Taking Readjustments in Stride, says Murray Shields

one as

almost nine

about

averaged

levels

bear

Therefore, under this Dow theory,
we may have to
have more time,
five to six months, to consume,
and we will see lower prices in

the market

reached,

unusual

now

under

also said at that time, that if these
were

NYSE to Consider New Commission Rates

months late and the last five bear

rails.

we are

very

its bear signal

St^te Ass'n Section

the

theory, the bear market be¬

LOS ANGELES

IN®.,

The Commercial and Financial Chronicle... Thursday, October 1,
4

1953

(1216)

had

Why I Am Not Looking
Foi a Depression
By WALTER

which

strength in the

insatiable

consumer

There

factors

ten

are

WILLIAMS*

"Why I Am Not Afraid."
Current Strengths in

can

will

program

discuss

de¬

night

the

ous

barome-

eters

The

basic.

UULUUH

of the

current

number

productive

determination

unlimited

ngs

the pro-

limited

only

new

discoveries and the applications of

above

^ich

satisfy

♦/wjo.-Ardi.,
television is

ored

our

noted

have

the

insa-

the

spark

years, startling
themselves have been.

enormity of the Push being constantly given to the national economy by this one factor of growth
alone.
Imagine adding a population equal to two Canadas during
one
ten-year
period or threeWestern Germany, or

This

factor

growth

enormous

United Kingdom!

truly

and is

one

x-n

.v.

certainly not

Research in the technical field,

~
Diverse

National

Nature

of the adult members of our pop-

ulation thinks

transaction)
our
business
will find a rebirth of

(5)

terms of how he

vea

been

morteaee

booming.

address

Williams

before
the Sales Executives' Club of New Yorkf
New York City, Sept. 22, 1953.
by

Mr.

J. F. Reilly
firm

key

of
-

& Co.

Research:

moo

1932

who
we
we

could

were
were

to
to

not

possibly

emerge

tnrough

announce

were

time. He re¬
see how a de-

the dissolution of their

with, Burnham &

how

from the dede¬

which

truggling at that
viewed history to

see

September 28, 1953 and the association

personnel

recall

are

pleased to

JOHN

announce

Company.

that

businpss ha«

Today, the textile

hut

the

increase

the

output

possible to increase the standard
of

living of all of
nation

creased

and

people

our

individuals.

productivity

us as

In-

from:

flows

proved technical skills; (3) better

management;
ter

following will be with him in this department:
ROBERT W. PAYNE

health

that

and

business,

better manage-

all-around

our

MEMBERS

i t

other

and

on.
It is not
reporting sys¬
place of the
excellent machinery possessed by
any

the

take

different branches of

Governmentr-

gathering of important sta¬
These

statistics

serve

excellent barometers by which to

Burns!

na¬

of these economic reports
either by phone, tele¬

econ-

American
to

the pulse beat of business in
own respective activity and

upon

reasonable

the

consult

throughout the country who
to be in position so that
they have their fingers closely

con-

Recentlv

eronomv

our

happen

th^

ing upon the health of their naArthur F.

Rather it is the

ple

tngsthich haveTdire* bea*
tinnal

health

economy.

purpose

decline will

not

the

measure

tional

cur¬

their

community.
contacts

edgeable,

Dr.

Chairman of the

having

with

objective-minded

scattered

sons

regular

responsible, knowl¬
per¬

the

throughout

it is believed that valu¬
can be had which,

country,

able information
will

complement

other

supplement

valuable

information
tained through statistics.

ob¬

then,

Here,

are

•

ten

reasons

"Why I Am Not Afraid."
in his
to

No one
right mind would endeavor

forecast

the

future

with

any

There are al¬
ways too many unpredictable and
too: many
imponderable factors.
degree of accuracy.

can

one

God"

may

tell- what

"Acts

come

right, but nevertheless health. But with a recognition of
probably more prone to
thg many basic factors of sound¬
act in a manner to'guard against
ness and with alert ears, eyes, and
unwise actions which ignorance
would lead us into. Recently, there minds to those factors which may
downs
we

all

are

has been

ing

that
areas

there

extended

American Stock Exchange

5, N. Y.

three

are

which

efforts

toward the

economic reporting system
.

purportedly being established by
the Administration.
have

tended

T eletype
NY

exag-

bear
seem

adverse color, there

great

would

reason

good deal

with other than sober,

quiet con¬

fidence.

pleased to

announce a

direct

private wire connection to

AMES, EMERICH & CO., INC.

important
are
being

are

Chicago, Illinois
Effective October 1, 1953

with

budget and deficit financing. Con¬

stantly

deficits

running

auto¬

anced budgets are

Bal¬

Eastern Securities, inc.

essential to the

1-3370

120 BROADWAY

having
second

"honest

area

has

money."
do

with

The
the

operation of the Federal Reserve

BOSTON

HARTFORD

for

measuring the foreseeable future

our

accomplish¬
to

These reports

somewhat

money." The first

areas% has

these

publicity concern-

some

or¬

goes

that

will

better

matically result in inflation.

1953

decline

h^resSect

about

ment of "honest

15 Broad Street, New York

28,

well

graph, letter, or by personal con¬
versation, with different key peo¬

tnart, increasingly me
formed

Secretary
George
Humphrey's "honest dollarSec¬

September

the

somewhat

and

places

communities,

You have heard

lately

Burnham. and company

DIgby 4-1400

ever

that

expend

reason wny

retary Humphrey has pointed out

Telephone

defined

time

expected

(10> Another reason "Whv 1 Am

homes.

(8)

JACKB. WIELAR

(4)

relations; and (5) bet-

working conditions in
of

Exchange

becoming

well

dered

doing

except

ment-labor

New York Stock

process
more

been

20,

when

the

rate

goods and services per capita
just to that extent do we make it

Unlisted Trading Department.

JOSEPH F. KELLY

Jan.

and sudden impact upon

(1) improved technology; (2) im-

The

have

since

too

exnected

mav

our

F. REILLY

has become associated with
our

to'htfntotperTod
^Tharp dSe afthe fame"toe ^San?'

Manager of

some

along to upset
difficulty- Of course, if two or President's Council of Economic the very best of estimates. No
m0re
of
our
maior
industries
Advisers, whimsically stated that one can predict with any reason¬
we, as
able degree of accuracy as to what
becoming too our
opponents in the presentlyi—
' j
x
i_
we might then be confronted with
chart-minded, graph-minded,
conducted cold war will do or say
some
serious
difficulty in our curve-minded, and statisticwhich
could; have
a
profound
economy. Extra special effort on minded. Referring to the 1948-49
bearing upon the future. Never-:
the part of business itself, govern- business dip, he drolly observed
theless, despite a frank recogni-r
ment, and in particular those in- that had we not had all of these
tion of these imponderables and
dustries which might provide such charts, curves, graphs, and statisunpredictables, there are some
a
team of disaster should be on tics, we might have gone through
fields which can be assessed with
guard against that sort of thing that period and never known that
dispassionate judgment. We would
happening.
anything was going on.
be unwise, indeed, if we were to
(7)
Productivity
Gains:
Tne '
The fact that we are a better
put rose-colored glasses over our
Alladin's Lamp of our economy is informed nation as to what causes
eyes and refuse to see those fac¬
to be found in this word "proauc- our
economy
to tick makes us tors in
our
national
economy
tivity."
To the extent that we more sensitive to possible ups and which do not
point to complete
learn

since

ever

was

je5»inRgef0Tspeech froV aTan Thould

gression
♦An

word

defense

for

KLP

seller s market to a buyer s mar- stability. An illustration will sufket (already various segments of fice The textile business has had
our
economy
have experienced

«—u

iu-i

xi..

exactly that-trade. If each

^u^nationaf de-

Tn.

n0ePo

economy

meeting

are

time

presently live,'

that

not be obliged
outlays for

fiirPc

Xenece rThe co^inuancego n; quaX at
oT^h ch h~ has bee"
strot naxionai economy.
have sharoly laggedduring this lts do'drums w.h,ereas the mortstrong nation^etnomy
nave siwipiy idggea uu mg i
gage business, at least certain seg(3) The Wants of the People ?as1; c
ecade^or so w^ en e se> ei . ments of it> is experiencing some
Are Insatiable: The word "trade" ~
means

what

prospective buyer, move away economy 0Jt* ours> varied as it is 0my because of the decrease in
from mere desire to actual pos- as to geography, pbpulation and government expenditures. Busisession.
Here, then, is another kinds of business, nas in tne very ness will always adjust itself to
reason
Why I Am Not Afraid.
fact
of
Wlde dlversity
a
strong gradual changes; it is the sharp,
I believe that as we change from supporting factor for reasonable
unexpected changes which hurt,

this

by Mr. myself an<^>

Feb. 9.

Indeed,

be such tnat 11 sharp an adverse
!s not reasonaDie
expect too

This gigantic

Economy:

back

way

Our to

That

discussed.

was

*
'
the part of government expendi-

manufacturing and marketing provides another sound reason as to
"Why I Am Not Afraid."
;

reach

fense

way

kind

the

likelv

no.

fa^ge

they

was

Secretary

attended

Weeks,

tistics.

reasons

world in which we

*£

needed

others, at which meeting this
matter of economic reporting

in the

realistic*

;nj?

developments

meeting

office

...

1932,- even the least
imaginative of us today would be

the

very

"Why

ofbest

1 Am Not Afraid
(9) Defense Expenditures: Be-

There is stillj^ut-startle
and genius of the last 20

Sinclair

again restored to the

once

nation is one 01 pesi reasons

shaI1

half of the picture.

Growth: When salesmanship to cause me, the
we stop to
realize tjis great throb- possessor of insatiable wants, acbing nation bf ours gained 19 milually to go into action to satisfy
lion
in
population
during the ;hose wants. The desire to have
1940-50 decade and that estimates
^oods and services is there, but
indicate a 28 million gain in the good promotional salesmanship is
4U
1950-60
decade
one
grasps
the still necessary to make me, the

two-thirds of

„on,

that position

have sound, honest

can

bon is one

the next 20 years will

active na-

economy.

fourths of

™

xJ ^

tleman

m0nev

„

Population

(2)

nnwpr

the

approach

where

just starting. We

;.u,m.r.

Co., knows,
in

tem

imagination possessed by the gen-

The

lie ahead...Col-

*„«,*

Pont

held

that

years.

threshold of the devel-

barometers

continue to point to an
tional

gradually

liability- of the wants of each of safe in predicting that the devel-

Williams

Walter

man,

be placed on a have been down there in Washbasis. Some gains are ington with our minds naturally
already being had in connection atuned to the question of how best
with the efforts to obtain "lion- to maintain a healthy economy,
est money." Measured in terms of this matter of obtaining current
prices, the long 13*-year rise in expressions of sentiment through¬
prices, which is the converse way out the country has been discussed
of
saying that the
purchasing and informally acted upon.
power of the dollar has been deAt the present time, therefore,
dining for those 13 years seems there is no great departure from i
debt

enormous

expansion may

long-term

further
be had in this field

wants to the maximum

(4) Sales Promotion:!n number

various

that

pected

and

imuteu

xtent p
possible.
1

;

all,

most

the

stable economy that more of

simply

nothing

capacity

but

were

that are

obtainable from

our

the

ac¬

Suffice
say
that

tivity.
to

could

money

of uuic s
others

duction

ing the health

most—not

tional

Thus, he concluded that we
in for a long period of dark

ages

na¬

It is important for a

debt.

home

be that he could further want and
have.

the huge

the management of

his

there

what

wondered

and

of his ad¬

about

looked

those of others.

for

trade

sure

services

measur¬

business

delivery

before

dress

goods and services which them which have taken place dur-

for those of others

them

vari¬

tail

two

jng the 20 years which have in- to be at an end. There has been
is the means tervened since the making of this 5only a half a cent change in the
negotiating these trades, but gloomy prediction.
value of the consumer's dollar
fundamentally it is the production
in
this great field of research
during the past six months \as
of the goods and services by each
we
have moved
forward in the compared with a sharp decline of
one of us and
the ability to Trade
of electronics. It is to be exnearly 20 cents over the past six

this

The third area to which Secretary
Humphrey refers has to do with

lor

standing that
others

But, he said, as he
living room the

his

sat

had

that much

just

himself

for

more of

under¬

Economy:

Kinsman, Mr. Weeks,

because there was
which might give our
economy a lift out of the then decan produce the maximum amount pression.
Compare that attitude
of goods or services, he is storing 0j mind with the tremendous new
up

the

(1)

accompaniment of these policies,

of the Federal ReInflation was an automatic

domination
serve.

today, J. tWarren Kins- /
Vice-President of the Du-

still sub-

sequent lifts.

should

Actually,

of my fellow members on this

program

tended to be established artifidaily because of the Treasury

the
to

electricity

mobile and the radio as

economy;

discuss briefly as

list and

gerate the real facts.
one

develophelp us
emerge^M>m subsequent business
dips; the development of the auto-

panded research; (6) diversity of our national economy; (7)
continued productivity gains;
(8) the return to "honest
money"; (9) probable slow rate of decline in defense outlays,
and (10) an increasingly informed public.
like

of Government Bonds has

value

out

ourselves

lift

depressions;

ment

factors why he is not afraid: (1)
(2) population growth; (3)
wants;
(4) sales promotion; (5) ex¬

Secretary Williams lists

earlier

Under Secretary of Commerce

current

given

System without domination by
the Treasury. In the past, the

the steam engine
bootstraps
with

velopment

NEW YORK 5, N. Y.

PORTLAND, ME.

PHILADELPHIA

Volume 178

Number 5260

...

The Commercial and Financial Chronicle

Steel

The

COMING

Production

Electric Output

State of Trade

Trade

Auto

Industry

•

Field

Investment

Commodity Price Index
Food Price

and

EVENTS

Carloadings
Retail

(1217)

By A. WILFRED MAY

Index

Production

Oct. 13-14, 1953

Business Failures

Cleveland

Analysts

(Cleveland, Ohio)

Society

Great

Introducing Keynes to the Consumer

Security

Regional

Lakes

book-of-the-week, with

an extraordinarily lucid style and
marshalling of colorful facts devoted to the doings of the
consumer, will intrigue the investor and the businessman as well
as the economic expert.
omy n* a tv^auming nation can we re¬
main a producing one" is the keynote of The

ordered

Conference.
The trend

flect

week.

of over-all industrial production continued

to re¬
Oct.

slight rise in the period ended on Wednesday of the past
Compared with the like period one

year ago,

total output

For the first tjme .since 1945„ it stated,

fall

gain

much

senior

;

Hollywood Beach Hotel.

June 9-12, 1954

Investment
Canada

However, in the current week reports coming to hand state

V
contribu¬

Dealers'

save

invest.

But whereas

Keynes's reasoning stemmed from the .theory
that
unemployment
and
depression
were
caused

by the withholding of large-scale sav¬
ings from capital investment by business and
the large holders of capital; Mr. Mazur con¬

•

(Canada)
Association

Convention

Annual

hinges

cisions whether to

of America Annual Convention at
the

number of other important books. •
To this reviewer Mr. Mazur's

varying of Lord Keynes's
impact on the trade cycle
from the business community's use of its de¬

Investment Bankers Association

Nevertheless, the department declared, the nation's employ¬
ment siutation continued "highly favorable.'
Jobholders in nonfarm lines totaled 49,400,000.
This was 1,200,000 above August,
1952, and a newjiigh for the month. In most non-manufacturing
activities, employment was at record levels.

Brothers, long-time authority
department store finance, arid author of a

tion

(Hollywood, Fla.)

good? industries expand production to
payrolls, they added, failed to
expected, or reductions were greater than normal.
August

Raise
(Harper
& Brothers,
164 pp., $2.50), b,y Paul Mazur,
partner in the investment banking
We

York,

theme of the crucial

Nov. 29-Dec. 4, 1953

consumer

But

Standards

firm of Lehman

New York Beefsteak Dinner at the

employment, officials noted, usually scores a healthy
the late summer as factories reopen after vacation

demands.

(New York City)

10, 1953

Antlers.

Non-farm

meet

Meet¬

Governors

Security Traders Association of

the

than in June.

•

Exchange

number of workers in non-farm lines last month was no higher

increase

Stock

New

Nov.

Juty since the end of World War II, the United States Department

close-downs, and

ing.

Factory employment in August showed the smallest gain over

reported..

(Louisville, Ky.)

Firms Board of

Employment in industry was high and steady with claims for
unemployment insurance benefits lower and fewer than a year ago.

of .Labor

13-16

Association

moderately higher.

was

tends that abstention

having
tal

Jasper Park Lodge.

from

Wilfred

May

spending by the consumer is the key—

multiple effect (at

ratio of

to one)

over seven

capi¬

expenditures, and thence spread-eagling throughout the

econ-

that manpower

supplies are easing. Recent surveys by the United
Department of Labor showed the best balance between
job opportunities and available workers in two years. It reclassi¬
fied seven areas as having more plentiful labor supplies, and only
two as tighter. As a result, 18 areas of the nation are now classi¬
fied as having substantial labor surpluses; 85 as having surpluses;
76 as having a balanced supply, and three as having labor short¬

States

ages.

Georges Lurcy,
Stock

the coming "correc¬
tion" period expected by economists is already here, states "The
Iron Age," national metalworking weekly this
week.
This is
because steel is

only

the

This deferred to the fourth quarter
duction which had been planned for the third quarter.
Several

had

his

own

months ago

the

M.S.

page

power

at
a

and

the

United

specialized in

economics,

the

from

Carolina

gradu¬

University

with

1943

continued

his

sity where he
the

was

Gamma

rate equivalent

Sigma.

inventories

our

and

Mx.

Mazur vividly

America's

industrial

and intriguingly spells out the power of

astronomically high standard of living.
our

pleased

to announce

the consolidation of

production

miracles

has

feet

Hatfield Smith

•

fyte

ake

:*•

/ilea^ed to

Tlie following

are now

Herbert I. Markham

St. Louis, Missouri
Harold H.

Clarence E. Mailander

Isaac C. Elston, Jr.

Fort

Atkinson, Wisconsin
George II. Lough

Indianapolis, Indiana
Lake

Ford H. Kaufman

Arthur G. Lilly

foregoing
•'

.W;

are
-

Mahlon 0. Bradley
Madison, Wisconsin

Charles R. Dale

Merton J. Davis

resident in Chicago.

■

•

Coldwaler, Michigan

•

Manitowoc, Wisconsin

John F. Ellerman

Ernest A. Froh

Hornblower

Weeks

Grand

Established 1888—Our 65th Year

40 Wall Street, New York 5, N. Y.

Madison Ave., at 47th St. (17)

•

Rapids, Michigan

Members New York Stock

„

BOSTON

•

PROVIDENCE

NEW
•

YORK * •

PORTLAND

•

DETROIT

BANGOR

•

Harold H.

Emch, Jr.

Dl 4-6600

pl 1-1900

Exchange and other Principal Exchanges

CHICAGO

Milwaukee, Wisconsin

J acob H. Shoemaker

ClUJTTEpEN & CO.
Members New

Geneva, Wisconsin

Hiram C. Smith

LaPorte, Indiana

All of the

Pere, Wisconsin

Frank L. Wilcox

Springfield, Illinois
Stanley B. McFadden

Franklin b. Evans

Giger

Rockford, Illinois

Carl E. Harris

Henry E. Greene

William E. Davis

Harry A. trees

John J. Marxham

dean d. Francis

associated with

Negaunee, Michigan
William R. Davey

John G. Coleman

Arthur w. Wakeley

l/iat

Paul H. Gates

Limited Partners

Paul H. Davis

announce

Kaiamazoo, Michigan
James H. Tolhuizen

York Stock Exchange &

209 S. LaSalle Street

CLEVELAND

•

PHILADELPHIA

PEORIA

•

ROCKFORD

Lincoln

Denver

Indianapolis

Other Principal Exchanges

CHICAGO 4, Illinois

Milwaukee

DEarborn 2-0500
"

Omaha

St. Louis

page

Registered Representatives

Clifton P. Walker, jr.

following:

Louis i. Cross

purchase

October 1,1953

Pekin, Illinois
John S. Coleman
Luther dearborn

"Mass

clay.

1944,

Norman B. Baum

General Partners

Paul H. Davis

But—this idol created by

Continued

Walter L. Cole

Paul H. Davis & Co. and Hornblower & Weeks
and the admission of the

of businessmen,"

capacity and the sensational results in our

Chicago, Illinois
are

anxiety

increasing

the

author's appealingly-stated thesis.

October /, igjj

✓

tb^production, then the economy is headed for1

period of hesitancy, recession, or even depression as a result of

•

How¬

is not being converted into purchases

power

Beta

im¬

result, the economy is likely to run with

studies

i;
r:

member of

society

honorary

pur¬

further

"When the conversion of purchasing

1943

From

between

author

well-operating eight-cylinder engine.

when purchasing

rising
is

power.

smoothness of

ever,

is,

that

into purchases takes place, the process creates additional

^hasTng
the

—

purchases—our

actual

and

of economics at Columbia Univer¬

prediction took into account an expected decline in
half* when it was estimated operations would average about 91%
of capacity. Considering production deferred by strike, orders on
on

1940

Lurcy

came

degree.

Mr.

This
the second

Continued

North

tons of ingots.

study

ating

some pro¬

"The Iron Age" estimated steel produc¬

tion this year would be close to 112 million

1933.

Honor,

partner

consumption

and

power

.power

plements and refines Keynes.

1920

senior

States

capacity.

by about 4%.

Officer of

banking firm in Paris from

shade below the third quarter, this trade

During most of September a wildcat
strike at the nation's fourth largest steel plant shaved the national
rate

born in

was

and

rated

Legion

been

Steelmaking operations in the third quarter averaged about
of

whoj

international banker, an

authority notes.
91.6%

Lurcy

chasing

Hpspil

aftefi a/short illness.

City,

Mr.

the books and expected to come, fourth quarter steel

business will

aiT Roosevelt

Paris, France, was a well-known

bellwether industry, often used to evaluate the

Since orders of steel consumers are in anticipation of future
needs, they already reflect the manufacturing outlook. Judging
on

Exchange firm of Halle &

York

general business future, it adds.

by orders

partner of the

Stieglitz, died Sept. 30, at the age
of

the steel industry is concerned

incontrovertibly pointing out the absolute schism between

purchasing

;

As far

Georges Lurcy

Chronicle

The Commercial and Financial

Thursday, October 1, 1953

...

(1218)

Many articles have been writ¬
ten
about the continuing rapid
U.

increase

which

now

population,
over
160,000,000.
They all read
S.

bullish

and

vein

are

presented

for

cause

great future
pro s peri ty.
This

week—

however

will

—

present

another

side

this

story

namely,

—

the

what

mean

Roger W. Babson

first

that

reason

fewer

deaths

Deaths

among

fewer-Zwhile
livin/longer,

tw your

and

are

now

proportionately.
babies are rquch

almost

everyone

due to better food,

medical care. Also the
statistics given me

following
the

Editor

tion"

are

"Mass Transporta¬

suggestive.
which

was

real

less.
to re¬

These facts would appear

quire

automobiles,
will

this

hope

could

care

take

talk

schoolhouses

Present
of

ity

present

the

ago,

new

population by being operated on

overbuilt.
needed
not

persons.

was

may now

number

depends

which

The

roads

born

not

Middle

of my ancestors

prosperity.

population

large

alone does
In

may

fact,

make

had 21 chil¬

enjoy prosperity, much

at¬

tention must be devoted to spirit¬

Higher Taxes Possible

ual

Some Day

training, the

al¬

importantly placed in our
scheme of things, since they pro¬
as

retail, vital viands man

follows that

It also

managed, food chains,
the necessities they

best

and

leading,

our

because

our

durable busi¬
enterprises,with a rather im¬

most stable and

ness

and

by packing
canned goods.

future

The

the chains is by

dull

drab.

means

the suburban

our

kets

areas,

big cities, new supermar¬
blossoming in ratio to

myriad

the

year,

day

food

growth

tainty.

•

Safeway Stores

A. & P. and

and

almost a statistical cer¬

chains

development of

homes;

would seem to sug¬

the

that

gest

new

9,500 more mouths

in our country every

feed

built-in defense against
vagaries of the business ^fycle.

Especially
peripheral

are

the addition of

pressive
the

pastries, etc.,
their own brands

ing their own bread,

the

cannot do without.

sorts

chains

are

today,

reviewed

rapidly

for sell, have tended to become among

poverty. For our grandchildren to

has

million

make

Africa

and

chains,

vide,

Asia

major

food

that

Cobleigb

Ira U.

thought. We have only
in

agricul¬
a

suggests to

most

our

all

industry,

children to be

train

that population

know

house

travel

families,

the

Another

of houses

upon

increased population"

(highly profitable) as
chow mein, and
meat
pies.
Some
have gone vertical by mak¬

items

ury

frozen fish fillets,

ture

future prosper¬

pos¬

expanded sales of such lux¬

made

woodlands

less wasteful.

Street, Gloucester, Massachusetts,

only 13

"public"'

into being. Fourteen

due

food; which
always

made

has

incomes

national

sible

has

must especially be pro-

about "great

unless
two shifts. Our

Our

trees.

better

much

first

the

note

everything,

waste

tected-j-yes, and even the fish of
the oceans. It is utterly foolish to

not

but

true;

necessarily.

"musts."You'll

To have this large increase in
population with a high standard
of "living, we must conserve our
natural
resources.
This
means
to

to
all

1953 permitted

controls in

price

any

change

-v

roads, avoiding
more tele¬ from oil
refrigera¬ and soils

tors, television sets, etc., etc. I

Switching over from labor
merchandising,
the end of

profit ratios in a
Homo
the number of lines, especially meats:
and the sustained high level of
Sap's Material

trouble.

schools, more

houses, and even

suggest

general manufacturing.

the

moment

Conservation and Character
,

the ho¬

rizon

cure a disease.
These Funds will not remedy the

minutes. I have

be very much

this will

ing

for by someone.
is like depending

aspirin

upon

dren.

years

Wall Street"

they are to

goods

paid

ways

eight Otherwise,

figures on the probable increase
the
number of families;
but

one

1940,

Since

results

now

addition, one immi¬

seventeen

every
no

there

COBLEIGH

Taxes should decline some¬

buy.

grant enters the U. S. every two
minutes and one emigrant leaves

shorter hours, saner habits, and
improved

above

the

baby being born every

21 seconds. In

that there
births. The second

are

now

the

for

By IRA U.

Author of "Winning in

the

phones,

reason

price

§econds and someone dying every

grandchildren.
The

been formed.
than 150 million

All

one

may

children

the

people

ex¬

Increase

sky." All such benefits must
be paid for by the younger people
in the form of taxes or a higher

have

Links in the Food Chains

"from the

Some topical notes about a popular defensive type equity
U. S. today, 63% what next year, but the decline
—grocery chain shares.
,
will not be permanent.
do not remember World War I.
Until this year, 52% did not re¬
71/2%, a1 particularly impressive
Even the Welfare Funds which
Food, shelter, and clothing in
member
a
Republican Admini¬ organized labor is now demand¬ roughly that order, have been the showing. Add to this the fact that
stration in the White House.
ing will increase prices unless the basic economic priorities of man¬ grocery help, being usually rather
workers increase their production kind for thousands of years, and unskilled,
commands about 25
Don't Be Fooled by Figures
there's noth¬ cents an hour less than is paid
accordingly. "Security" must al¬
Of

future

pected

the

Security,
come

blue

BABSON

By ROGER YV.

does not

money

Our Grandchildren

Social

even

background.

much for

Let's

Grocery chains are big business. look at two or three specific com¬
and the arousing Together, they do, today, 38% of panies. Next to Atlantic and Pa~
population increase which good habits,
old customers have died.
More
all the retail food selling in the
within the souls of all people a
cific, the big daddy of them all
than 17 million marriages have comes from living longer presents
United States with total sales, I
(annual sales above $3V2 billion),
desire
to
work
and
produce.
taken place; More than 30 million a problem for our children. When
believe, running now at above a comes
Safeway Stores, Inc., which
babies have been born. More than parents or grandparents receive Hence, the great importance , of' $13 billion annual rate. The most
has parlayed a declining number
/
Old-Age Assistance, or Pensions, churches.
impressive factor in their growth of stores into a substantial in¬
one-third of all present families
(and gross) has been the-steady crease in business volume.
For
"Ijlossoming of supermarkets. Pri¬ 1943, Safeway net sales were $588

come

The

depression

marily

This is not

Offering Circular.

Offering

by means of the
purchase of this Stock.

The offer of this Stock is made only

Circular, which should be read prior to any

313,200 Shares

Right now, after two decades of
with no frills, no deliveries, no
weeding out little ones, and de¬
credit, and a minimum of person¬ veloping
and adding big ones,
alized
service, the supermarkets
Safeway operates 2,050 stores all
numbered a lowly 300 in
1932; self-service (about 140 of them
but

these

shares
which

rights will expire at 3:00 P. M., Eastern Standard Time, on October 13,
1953, as more fully set forth in the Offering Circular. The issuance of
these shares is

subject to approval by the Comptroller of the Currency.

Subscription Price $45

they in Canada) and it has just ar¬
To ranged with the construction firm
card of Webb and Knapp for the build¬

annum.

per

things

behind
basket

double

wheeled

four

and

the

NYSE,

pays

cents quarterly,

and down
of cookeries, and

deploy

yielding over bl/z% on current
quotations.. Safeway common has
long files of frozen food freezers, paid dividends for 25 years in
winding up in the groove at the a
row^ and there was a 3-for-l
cashier's counter.
Believe it or
split in 1945. If your preference
not, the supermarket is far more runs to preferreds, there's a very
important than Superman!
good straight $4 pfd. selling
between canyons

17,000.

$3
particularly,
fine
earnings for
Think
of
1953, perhaps even doubling the
time you
$2.01 earned in 1951 on each of
sweep into a parking lot as
big the 2,874,-351 common shares now
as a ball field; then place yourself
extant.
This issue is listed on
million

Rights, evidenced by subscription warrants, to subscribe for these
have been issued by the Rank to the holders of its Common Stock,

since,

years

them gross well above

among

($10 Par Value)

burgeoned

qualify
as
a
respectable,
bearing
supermarket, it should ing of 100 new markets, the last
gross at least $250,000 annually. word
in
grandeur, design, and
The average one sold $800,000 of
efficiency.
victuals in 1952; and the virtuosos
Safeway should come up with

Common Stock
,

the

have

National Bank of Detroit

designed gro¬ million; in 1952 they had almost
trebled to $1,639 million.
i.

depots, to provide food to the
masses
at
rock
bottom
prices,

cery

ratios of the big around 85, and a convertible $4.50
be of some in¬ pfd. which, at your pleasure, you
Their average inventory is may relinquish, receiving in lieu,

The operating
terest.
turned

highest known price at which Common Stock is then being offered in the
over-the-counter market by other dealers, plus the amount of any con¬
cession allowed to dealers.

The

may

about 15 times

over

profit mark

average

year.

cur¬

rently runs around 18%, and

chains

food

of Common Stock at prices not
lower than the Subscription Price set forth above (less, in the case of sales
to dealers, the concession allowed to dealers) and not higher than the
The several underwriters may offer shares

op¬

appears
to run
near
3%
of gross,

income

erating

somewhere

with

varying

three

safe

may

pretty good yield.

First Nat'l Stores, Inc.
A more

Labor

Cost

thing of

note

Low

legally offer this Stock in compliance with the
securities laics of the respective States.

Another

chains is the labor bite.
knows
MORGAN STANLEY & CO.

BLYTH &

THE FIRST BOSTON

CO., INC.

CORPORATION

CO.

HARRIMAN RIPLEY &

IIOIINBLOWER &

WEEKS

Incorporated

KIDDER,

PEABODY & CO.

LAZARD FRERES &

MERRILL LYNCII, PIERCE, FENNER & BEANE

LEHMAN BROTHERS

CO.

PAINE, WEBBER, JACKSON & CURTIS
k

SMITH, BARNEY & CO.

FIRST OF MICHIGAN CORPORATION

SCHAPIRO &

(

CO., INC.

are

small

Everyone

price in

our

labor

relation

those

com¬

outlays
total

are
sales;

sectional entry, and one

most consistent

the

industry

Inc.,

Stores,

performers

is First

National

which operates 847
England, about 600
service. Because of

outlets in New

them

the

self

compact territory
units can be supplied
five
central
distributing

rather

served,
from,

plants.
cellent
trends

all

First National is an ex¬
example of the vertical
mentioned above, since it

in¬ operates its own bakeries and bot¬
creased
labor
costs
won't
dent tling plants, and sells some 170
net earnings too drastically.
The items under it own "FINAST"
chains we're discussing come off label.
'
0
•J
and

where,

consequence,

well in this respect. Salaries
generally fall between
12% of gross (as against
50% for railroads, 55% for gold

and wages

First

National

management

esteemed,
and
earning
power here displays probably the
fewest peaks and valleys of any
mining); and Safeway, for 1952, major enterprise in the industry.
got
this
ratio down to below In the decade from 1943/52 net
10% and

September 25, 1953.

one

seeking

panies, where

very

WATLING, LERCHEN & CO.

the

food

economy - (except
perhaps
the
price of gold) that shows no ten¬
dency to weaken is the price of
labor.
" Hence
increasingly
in¬

vestors

GOLDMAN, SACHS & CO.

that

of the

Quite

durable performer

is a pretty

territory served.
Copies of the Offering Circular are obtainable from only such of the undersigned

common.

way

and

management

to become a Safeway
shareholder! At all events, Safe¬

highly*

Nn,

'■

r
Volume 178

sales

Number 5260

from

went

$424

million

$2.24

per

$164

and

million

net

share in

The Commercial and Financial Chronicle

...

which

1943

its

bond

in succession
Split 2-for-l
in

years

$1.25.

1951, the shares

now

$2.00—

pay

below 50% of net;
a

schedule, which, if adopted, will require
amendment to Exchange's Constitution.

property.

and

notice

sent

submitted

members

allied

promptly to the
bership for balloting.

the New York Stock Exchange on

Present commission

Sept. 25, the Board of Governors
of the Exchange has set down for
consideration

the

established

since

policy

Thursday,
Oct.
to adopt a proposed
on

schedule

commission

15,

Fair

Stores,

the

Food

most

Inc.

to
If

the

One

growth
trade

situations

has

been

dramatic

the

Food

new

the

make
the

rates

the

Board
an

Consitution,

were

November,

time

there

1947,

has been

the

proposed
would

schedule,
computed

same manner as they
today, but would produce an

proximately
revenue.

18%

sale

the

commission

the

same

50%

for

odd

commission

Commissions would

con¬

tinue
of

be based

money

the

involved

amount

trans¬

next $3,000

plus

1/10%

involved

Plus- $5.00

for

Plus

for

$3.00

lot

$1.50

for

Commission

about

7V2%.

charges

for the

clearing of members' floor

trades.

+ $i5.oo

1/10%

+ $35.00

Odd Lot

The
any

The proposed schedule for each
or

odd lot is:

minimum

$50, with

per

minimum
ever.

—

share.

$42

million
$300

over

million

Sales per

1943

for

this

supermarket

rate

The

offer to sell

nor a

solicitation of

per

offer to buy any of these Bonds

offer is made only by the Prospectus.

year.

king-size, averaging over $1,900,a year.
This, mind you, is an

000

for the whole chain—not

average

just

single unit performance.

$75,000,000

; One-third ■ of
owned, the rest

type leases.
; The
rapid

Stores

has

nancing
zation

the

outlets

are

non-escalator

rise

evoked

Fair

Food

fi¬

extensive

that

today's capitali¬
of $25 million in

consists

International Bank

debt,

75,185 shares of $4.20 pre¬
selling around 95 and 2,377,907
common
shares
quoted
ferred

and

Development

today

on NYSE at 261/8.\ The in¬
dicated cash dividend is 80 cents
a

but there

year;

dividend
this
of
'

5% stock

was a

declared

Aug.

Three Year Bonds of 1953, Due October 1, 1956

A per share net figure

year.

around

seems

reasonable

possibility for 1953.'
Food
Fair," over
a
15-year
stretch, has racked up fantastic
market gains for its original and
non
selling shareholders,
and
forward motion here gives no in¬
dication
of
stopping at today's
sales
line
of
scrimmage.
Food

Interest Rate 3%

Interest

payable April 1 and October 1, in Sew York, N. I".

Fair has been much better than

fair equity.
Others

We've
field

today,

fits

Industry

only skimmed
selecting

which

display

investment

merit

....

Price 99Vs% and Accrued Interest

the

over

three

out¬

considerable

Safeway

for
yield, First National for stability
and

Food

there

Fair

for

growth.

But

lot of other good ones

are

—

—Kroger, Grand

Union, National
Tea, Penn Fruit, American Stores,
and

fast moving southern entrw

Winn

and

for

Lovett.

means

If your search

Copies of the Prospectus

defensive

sibilities

shuts

the

door

may

these Bonds in

securities, you
certainly ought to look this group
over; and today's buyer here by

he obtained from only such of the undersigned

pos¬

MORGAN STANLEY &

CO.

THE FIRST BOSTON

portfolio.
J. P. MORGAN &

Wm. L. Burton Adds

William

THE CHASE NATIONAL BANK

CO.

BANKERS TRUST COMPANY

CITY BANK

OF NEW

YORK

THE FIRST NATIONAL BANK

Burton

Street,

New

FIRST NA TIONAL BANK

Co.,

members of the New York

NEW

City,

MAN UFA CTURERS TRUST COMPAN Y

CHEMICAL BANK & TRUST COMPANY

YORK

Stock

Exchange, announced that Hamp¬
Sealy has become associated

with

the

with

Barmonde,

and

firm.

was

formerly

Gilliland

Co.

Newburger, Loeb & Co.

The

DETROIT,

Financial

Mich.

Chronicle)

—

GUARANTY TRUST COMPANY OF NEW

Robert

BLYTH &

CO., INC.

IIARRIMAN RIPLEY &

Kanney

Baker,

have

joined

Simonds

the

Co.,

Exchange.

OF AMERICA

DREXEL & CO.

CO.

GLORE, FORGAN & CO.

KIDDER, PEABODY & CO.

GOLDMAN, SACHS & CO.

LAZARD FRERES & CO.

SHIELDS &

COMPANY

MERRILL L YNCII, PIERCE, FENNER & BEANE

SMITH, BARNEY & CO.

STONE &

SALOMON BROS. & HUTZLER

WEBSTER SECURITIES CORPORATION

UNION SECURITIES CORPORATION

staff

Buhl

Building, members of the Detroit
.Stock

BANK

Incorporated

Cook, Eugene O. Hess, and Charles
J.

YORK

N. T. & S. A.

LEHMAN BROTHERS

Three With Baker, Simonds
(Special

OF CHICAGO

Sealy to Staff
York

ton S.

CORPORATION

Incorporated

THE NATIONAL

H. S.
Broad

legally offer

compliance with the securities laws of the respective States.

higher dividends and
higher market quotations. Chains
may become expanding links in
your

as may

September 29, 1953.

commission

maximum

transaction,

really

are

$2 Less

would be retained.

Stores

This announcement is neither

5.00

WHITE, WELD & CO.

The present $6.00

Incorporated.
Here
the
entire
emphasis has been on big (11 to
20
thousand
square
feet)
selfservice supermarkets of which the
company now operates 165.
Net
sales have literally rocketed from

+ $

single transaction would not

exceed

$1.00

100 shares

mutually agreed

y2 %

$5,000 and above

There

increase in

would

100 to $1,999

over-all increase from present

levels

also

$2,000 to $4,999

brokerage

rates would be revised to provide
an

Amount

Money Involved

floor

lot,

odd lot.

follows:

Under $100

and

$5,000

above

round

The proposed schedule may
be described

grocery

Fair

•

money

of money invested

lot.

round

approves

woud

first $2,000 of money involved

VzVo

liquidat¬

ing transaction would be

Clearance

estimated over-all increase of ap¬

schedule

and

plus

the regular commission plus $2.50

rates,

in much the
are

amendment

which

commissions

It is easy to see why
which have been attached to the
selling at 49 is "one of the
notice.
An
amendment
to
the
top quality equities among food,
Exchange's constitution would be
chains.
effective.

mem¬

change.

Under

new

rates

FST

necessary

less. There

discount.

security for one account are made
on
the Exchange within 30 days,

new

purchase

the

members

thus continuing
meeting
long tradition of plowing back
whether
good slice of earnings into the

Funston, President of New York Stock Exchange,

consider

According

1914; and I believe for

these

paid

without

volume

special feature of the new
schedule would provide that when

dividends

miss since

might expect to find
preferred.
It has

you

cash

paid

gives members notice that Board of Governors will meet Oct. 15

qualities

incorporated

single security (1,637,138
common) a lot of the

shares
in

has

.would

$6.74

was

G. Keith

First National

action of 100 shares

NYSE to Consider New Commission Rates

was

last year.

into

(1219)

how¬

and Financial

The Commercial

(1220)

and lately the

spot)

strong

Successful Bidders for Housing Bonds

Awakening

Rails

there's been joy

Then too,

Recommendations & Literature

the railroad
issues
have
again asserted
themselves as potential mar¬
for

the

Automobile Industry—Leaflet—Joseph

New York 6, N. Y.

way,

Co., 10 East 45th Street, New York 17, N. Y.,

The

Exchange Magazine, 20 Broad Street, New York 5,
Equities

Higher Yield

Broadway,
How to Be
•

—

York

New

Tabulation

—

points above the mid-Sep¬
and would seem
to have ho important- barriers

by the

just ahead. It is believed that
the next important resistance

N. Y.

Sutro Bros. & Co.,

120

$10

102

(on sale Oct. 2)—

Rogers—In the Oct. 16 issue of "Collier's"

upside is in the 99-

the

Week—Donald I.

they would encounter

level

N. Y.

Wall Street Financier on

area.
*

15 cents per copy.

Investment Opportunities in
rities Co.,

Japan-^Circular—Yamaichi Secu¬
showing

up-to-date com¬

parison between the listed industrial stocks used in the DowJones Averages and the 35 over-the-counter industrial stocks

Averages, both as to
a
13-year period —

used in the National Quotation Bureau

yield

and

market performance over
Quotation Bureau, Inc., 46
York 4, New York.
National

♦

American
Wall

randum

60 Beaver

American

Co.,
are

for

Carpenter

Corporation—Analysis—H.

Hentz

Corporation—Analysis—Eastman,

Street,

Co., 44
memo¬

Co.,

New

York

5,, N.

Dillon

available

Also

Investment.

Paper

Co.—Memorandum—Central

South La Salle

Central

Allyn &

list of Common Stocks for Appreciation and Common

Stocks

209

Also available is

Street, New York 4, N. Y.

Broad

Vermont

Republic

Co.,

Street, Chicago 4, 111.

Public

Service

Co.—Booklet—Ira

Haupt

Co., Ill Broadway, New York 6, N..Y.
Combustion
&

Engineering—Data in current bulletin—Abraham

Col, 120 Broadway, New York 5, N. Y.

bulletin

are

Lorillard

data

Also in the same
Continental Oil, Hercules Powder, P.

Phelps, Fenn

Mitchell of

John

and

Inc.

(left to right): Orlando S.

in picture

Co., George Levind of
the

Mitchell.

Blyth & Co.,

law firm of Caldwell,

Company, Revere Copper & Brass.

}

•

report—Gordon Graves 1
York 4, N. Y.
Diamond Alkali—Memorandum—Auchincloss, Parker & Redpath, 52 Wall Street, New- York 5, N. Y. Emerson Radio & Phonograph Corporation—Analysis—Stanley
Heller & Co., 30 Pine Street, New York 5, N. Y.
Foremost Dairies—Analysis—First California Company, Incor¬
porated, 300 Montgomery Street, San Francisco 4, Calif. Also
available is a progress report on American-Marietta, and a
report on Southern California Water Company. In the cur¬
rent issue of "Views" are brief analyses of Arizona Public
Service
Company, Southwestern Public Service Company,
Bank of America, Franklin National Bank, Permanent Ce¬
ment Company, Phillips Petroleum Company, Tennessee Gas
Transmission Company, Kaiser Steel Corporation and White
Commonwealth Oil Company—Progress
&

Co., 30 Broad Street, New

Eagle Oil Company.

Fuji Iron

Steel—Analysis—Nikko Securities Co., Ltd., 4, 1-

Japan. Also avail¬

Interprovincial Pipe Line Co.—Memorandum—G. E.

quality and growth

Co., Royal Bank Building, Montreal, Que.,

recommend

and

Land

Louisiana

Exploration

Leslie &

Canada.

American Enka

National

Company—Analysis—Bruns,

Street, New York 4, N. Y.

ConWapon—Analysis—Aetna Securities Cor¬

Homes

poration, 111 Broadway, New York 6, N. Y.
Corporation—Bulletin—T. L. Watson & Co., 50

Steel

National

Company—Analysis in current issue
Financial Digest"—Loewi & Co., 225 East

Paper

Nekoosa-Edwards
of

Troster, Singer & Co.
2400

Members:

Security Dealers Association

Trinity Place, New York 6, N. Y.

"Business

NY 1*

analysis of Public Service Company of New Hampshire.

Resort

376

Also in the same issue is

Street, Milwaukee 2, Wis.

Mason
an

Airlines—Bulletin—De Witt Conklin

Organization, 100

Company—Analysis—Lerner & Co., 10 Post

Office Square, Boston
Seaboard

Oil

9, Mass.

of Delaware

—

Slocks with the

past three weeks

Visking

but several

specialties came to the fore.
Co.

Bullard

was

issue, spurting more

strong

than two

points yesterday on news of
a $1 cash dividend and a 10%
stock dividend. It had partial¬
ly anticipated this move,

in a
al¬

rise which now measures

points in little over

most six
a

week.
United

made

& Chemical
gain for a low-

Dye

wide

priced issue. It was in demand
reportedly on reports the pre¬
ferred
(around
63 M>)
was

called. Another wide
Wednesday was HeyChemical, also low-

being
den

priced, it ran up almost three
points at one time in heavy
volume, on news of a new

—

Bache & Co., 36 Wall

drifting lower yes¬

Before

the

terday,
rails,

industrials

measured

Standard

Motter

Corporation—Analysis—Cruttenden

lost

from last

& Co., 209 South

Aircrafts

Prop

activity in the

aircrafts, which carried over
into

and Tuesday
Tuesday, as on

Monday

(and which on

inc.

26% and
of the
the decline

summer's highs.

The burst of

Street, Chicago 4, 111.

and
the

18%, respectively,

Corporation—Bulletin—O.

Poor's daily in¬

recovered

ground

Study

Associates, 500 Fifth Avenue, New York 36, N. Y.

Uptick Label!

La Salle

Ami

Oil

bit

prices of the

best

the

Street, New York 5, N. Y.
Transcontinental

days of a steady climb for the
utilities. A good number of

dexes,

Broadway, New York 5, N. Y.
Riverside Cement

in¬

antibiotic.

Broadway, New York 4, N. Y.

HA 2-

days of advance for the
dustrials and rails, and

stepper

Nordeman & Co., 60>Be£ver

upswing ran
Wednesday after six

the leaders backed away a

chome, Marunouchi, Chiyoda-ku, Tokyo,
able is an analysis of Nippon Express.

For

Marshall,

out

from

England Electric System.

Viscose

15
a

New

Phenolic

Brewer

Housing

$100,000,000 of New York Federal

Others

bonds.

Authority

that their group was the suc¬

•

Street, New York 5, N". Y.

American

New

cessful bidder for over

Trimble

Co.—Memorandum—A.

Optical

Street,

Front

to Investment Dealers

nouncing

The market's

left), of Lehman Brothers, an¬

from

(second

Morse

Frank

Ltd., Ill Broadway, New York 7, N. Y.

Over-the-Counter Index—Folder

at
than

group

Exchange—12 issues, $1.00—Dept. B., The

Stock

York

this

index

tember lows,

Exchange—Pocket magazine issued once a month

New

runup

around 95 is now more

Dept. CF.

Bay Street, Toronto 1, Ont., Canada.

330

Monday's

generally by the rail
Measured by the Dow-

Jones

outlook—Ross, Knowles & Co.,

Canadian Business—Analysis of

in an uptrend

—

led

issues.

pre-packaged, balanced retirement program combining
dollar annuities with equity securities—Kidder, Peabody &

ing

time.

was

Program—Booklet for employers describ¬

Balanced Retirement

leaders

this

Faroll & Co., 29 Broad¬

Street,

ket

send inteirested parties tne

another bullish corner

firmsfanentioned will b& pleased
following literature:

understood that the

oils.

aircrafts and the

Dealer-Broker Investment
It

October 1, 1953

Chronicle... Thursday,

provided one of the
of the advance)
stemmed from reports that
Friday

Transcontinental Oil Corp.
Gulf

THE MARKET... AND

Sulphur Corporation

By WALLACE

mainstays

YOU

Washington was readying
some
new
important con¬

STREETE

tracts.

Sweet Grass Oils Ltd.

The stock market extended
its recovery on

rotating lead¬
ership this past week. It was
a
good performance of stead¬
ily inching away from the
mid-September
low
levels,

L. D. SHERMAN & CO.
Member: National
30 Pine St.

Association

Securities

WHitehall 4-5540
I

Teletype NY 1-2233

and

Dealers, Inc.

New York

City 5

for

the

industrial

aver¬

index, the
ered

the

so-called

market

first

set

encount¬

several

supply areas. (These
reportedly 265-267—270272 and 275-280.) Coming up
from a 254.36 low set on Sept.
14, the industrial section in

are

Apparently what was

awaited

was

the decision an¬

that the
allowing Boe¬

nounced late Monday
Air Force was

ing to establish a second man¬
ufacturing source for its B-52
jet bomber. Boeing and North
American Aviation, which is

also involved in the program,
least, it was a smart the past week has had such
stepped right out in heavy
distinguished leadership as
enough rise to approach an
demand as a result.
area considered to offeV some
the electrical equipments

ages, at

"sales

resistance."

;

(mostly General Electric), the
In climbing to around 265 chemicals
(Allied and Du- Groups Ahead of the Market
The aircrafts, along, with
in the Dow-Jones
Pont), the motors (Chrysler a
industrial^

Volume 178

Number 5260... The Commercial and Financial Chronicle

(1221)

such

industries

baking

tobacco,

public

and

utilities,

Of course,
there has been a
steady outpouring of propaganda

From

have fared far better of late
than

the

general

;

Washington

market.

"Some of the air issues (United

Aircraft)

highs

have

touched

stepped-up
Bethlehem
in the

to the fore

came

ministration
supposed

steel group, some de¬

mand

being created by the
suggestion of several advisory
services that it was a good
switch

that

section.

based

this

gov-

emment's

Sharon Steel

have

into Bethlehem.

cut¬
may

caused

too much

;

With the

nomic
in

Washington spot¬

light turned

coun¬

any

rate, the indi¬

packers, shares of companies cations are
that the
Ad¬
probably get
ministration,
a new
going over. The aver¬ instead of
age price of
meat packing proceeding with
in this trade will

declined

into 1942; there

from

1938

followed

sev¬

Carlisle

Bargeron

the cutback next

year, may reverse itself and go
for even larger

military spending,

Neither i Mr."

Wilson

Mr.

nor

profitable years with the Humphrey, so far as I know, has
of shares up into 1946; changed his views about the ne-

group

then

since

there

have

cessity of the budget being put in

been

order.

unprofitable

seven

with the shares
'

seems

have

Pentagon
military spending

cut.

put dollars above secur¬
It is surprising how the press

generally adopted this theme
how

little

economizers

press

have

the

support

had.

The

Ad¬

which

has

been the justification
pouring out billions of
dollars, has been soft-toned. It is
for

our

were

prehensions

wrong in our ap¬
that contingency,

over

but

now
we
really are in peril
because Russia will just
drop the
bombs directly over us, to such
an

extent,

indeed,

that

suffocated that

radical

-■

■

come

tremendously alarmed

But their attitude towards

different form.

sweeping

over

Western

Europe if any upset in employment.

Nevfr Issue

*
.

textile

In,,the
turned

grouping

Woolen

American

•,500,000

strong and active this

past week. Both the common

and. preferred
chalked up
good gains while some other ; *
elements
in
the
grouping

{particularly, the
ducers)

big

having

were

time of it.

pro-

Territory of Hawaii
1

2.90% Public Improvement Bonds, Series A, Issue of 1953

bad

Woolen made the-

volume

ten

rayon

times in the

Dated

September 15, 1953

period.

several

Due

September 15, 1956-73, Incl.

Principal and semi-annual interest (March 15 and September 15) payable in New York City at the Bankers Trust Company,
or in Honolulu at the office of the Territorial Treasurer.
Coupon bonds in denomination of $1,000.

❖

Foods' Good Performance

Among selected groups
vigorously resist¬
ed selling pressure in the re¬

In the opinion of counsel, exempt as to

both principal and interest from all present Federal,
State, Municipal and Local Taxes, except Estate, Inheritance and Gift Taxes *.

which have

cent

decline, and which have

found

favor

new

the

up-

in fthe

Improvement Bonds, authorized in compliance with the acts of the. Congress of the United
States, in the opinion of counsel will constitute valid and legally binding obligations, of the Territory of
Hawraii, payable from the consolidated revenues of the Territory, and said Territory will have power to levy
taxes upon

of rate

the taxable property therein for the payment of the bonds and interest thereon, without limitation

amount.

opinion, Legal Investment for Savings Banks and Trust Funds in New York State

These Public

has weathered
several profit-taking sessions
to keep its uptrend alive. Pet
Milk managed a new high.
group,

our

swing, is the food stocks. Gen¬
eral Foods, one of the leaders

AMOUNTS, MATURITIES AND YIELDS OR PRICES

Groups Vulnerable to
'

Tax Selling

;

$305,000

1956

1.85%

sharp de¬

305,000

1957

1.95

prices this year
liquidation of "this type could

305,000

1958

305,000

1959

view * of" the

cline in share

well be the heaviest in

ers.

common

1962

2.45%

305,000

1963

2.55

305,000

1969 @

2.05

305,000

1964

2.65

305,000

1970 @

2.15

305,000

1965

2.70

305,000

1971

2.95%

305,000

1972

3.00

315,000

1973

3.00

305,000

1960

2.25

305,000

1966

2.75

1961

2.35

305,000

1967

$305,000

2.80

1968

2.85%
100
100

(Accrued interest to be added)

stocks down 20 % or

from

$305,000

305,000

some

according to some trad¬
There's quite a list of

years,

their

best

1953
The above Bonds

levels. You'll find them in the

and

air

transportation field, ' in
chemicals, coal, farm equip¬
ments, metal, petroleum, rail¬

are offered when, as and if issued and received by us, and
subject to prior sale
approval of legality by Messrs. Wood, King 4" Dawson, Attorneys, New Yorlc, N. Y.

The Chase National Bank

road, rail equipment, rubber,

Harris Trust and

Savings Bank

Salomon Bros. & Hutzler

Direxel & Co.

steel, sugar and textile cata-

gories.
This
an

other
[The
article
time

Incorporated

tax

selling gives an
opportunity to
profits he takes out of
market operations.

investor

offset

Mercantile Trust

Blair, Rollins & Co.
*

views
do

not

expressed

Chronicle.

necessarily at

Laurence M. Marks & Co.

They

are

Green, Ellis & Anderson

Central Republic Company
(Incorporated)

this

Andrews & Wells, Inc.

any

of the
presented ai
~

Malvern Hill &

Hayden, Miller & Co.

Company

Incorporated

those

those of the author only.]

Equitable Securities Corporation

Company

St. Louis

coincide. with

New York.

may

won't be

change.

present low levels.
-

able to retaliate.

undergoing, ministration, instead of citing the
From my digging around in the
They have be- economy as an accomplishment, Administration's
ivory tower, try¬
over has been forced to defend it with
ing to separate the realities from
Russia's having the
H-bomb, if such unconvincing statements to the fevered
thinking, I don't be¬
she doesn't have it
now, she will the effect that although^we have lieve men like
Messrs. Wilson and
have it by 1956. It seems that al¬ a less
costly military we have a Humphrey share the fears which
though we are way ahead of Rus¬ more efficient one.
they seem to profess. I think they
sia industrially at this
time, Rus¬
It seems strange that in all the are more concerned over
the eco¬
sia is fast' catching
up with us. agitation
no
one
has raised the nomic jitters which their econo¬
This on the part of a
country that question of whether'the
Military mizing caused. They didn't have
next to China is the most back¬
can
the very loyal support of the mil¬
assure this country of safety
ward in the world.:
from an atomic or hydrogen bomb itary in the allocation of the cut¬
It seems fantastic but the imattack
regardless of how much backs. In the Air Force the re¬
-•portant thing to the American*
money it is given. The answer is ductions and cancellations of or¬
taxpayers, inasmuch as we are that it can't. Former
Chief of the ders were seemingly placed me¬
not living in world realities but
Air Force, General Hoyt Vanden- ticulously so that the thud of re¬
in fancy and imagination, is that
berg wrote in the "Saturday Even¬ duced business activity would be
an Administration that seemed to
ing Post" a couple of years ago the most pronounced.
have been heading away from the ^
that regardless of what sort of
It stood to reason that so much
world tensions on which
preced¬ protection we had the Russians
spending could not be stopped
ing administrations' had subsisted, could
get bombers through. It is without its having a
temporary
is reversing its field and apparinteresting to note, incidentally, effect
upon the economy, witjioui
ently is going to embrace the same that
practically all of the re'eent
fears about Russia which, the Trusome
business readjustments
propaganda has been around Rus¬
man Administration so
assiduously sia's
ability to deliver a devastat¬ ing necessary.. But if the stock
cultivated.; This - means* higher
ing air attack on this country. The market is any barometer, the un¬
taxes, not lower ones, although
the higher levies will come in a earlier propaganda about her first easiness is" being eased with* little
a

years,

declining to

the

eco¬

alarm

this

try.

to the meat

capabilities

upon

military

destructive

military spending

Ad- undergone,

Russia's

over

feeling

that

One

back

;

circles

real fear
that nation

within

concern

any

suggested switch: from Jones

Laughlin

has
and

since

from

omizers

By CARLISLE BARGERON
It is difficult to tell whether the

Russia

effective slogan was
coined to the effect that the econ¬

ity.

their best levels for 1953.
*

ever
was

Ahead
the News

new

have moved close to

about

September 30, 1953

First Securities Company
of

R. L. Day & Co.

Chicago

Freeman &

Company

The Commercial and Financial Chronicle... Thursday, October
10

1, 1953

(1222)

of the diversified busi¬ which it has slipped in recent
conducted by the years. The government was never
Its
Federal Government which pres¬ intended to be in business.
one

every

Government Will Stop

ently

competes with the owners,
managers and workers of private

future business activities:
judge each proposal as
to its merits in serving the public.
We do not want the Federal Gov¬

by bloated government to take over
services better performed by private enterprise takes some¬
thing away from the people, Secretary Weeks discloses new
Administration is carefully scrutinizing all activities conducted
by Federal Government which compete with private industry.
Promises, wherever feasible and as quickly as possible, to
take Uncle Sam out of competition with private business. Terms
it disturbing for umpire to judge himself as a player.

ernment

consider the strength

enterprise

competitive

private

possibilities for the ad¬
vancement of the well-being of
its

and

Americans.

One

the

most

impor¬
issues

tant
our

operations which should
by private enterprise.
In the case of major projects—
such as multipurpose dams—the
business

and

earth

The

success

that

this:

way

every

history,

the

American

Eu¬

has won—and

the

Weeks

Sinclair

off

instrument

people have lost

con¬

used

and

themselves

the

reward

people

themselves

government,
the for their "own individual effort
government has taken more and and to give themselves the best
in goods and services which only
more control of their lives. Stand¬
ards of living have gone down. competition among producers can
their

Human rights have been crushed.

When
Nazi

the

hoodwinked

German

people of

Iron

and

Curtain

countries awoke to their betrayal,
it was too late.

That

must

Last

November

people

—

the

less

American

freedom

bigness

less

and

government

happen here.

never

public decided
for

burdens

from

government—less controls by gov¬
ernment—

less

into

ernment

intrusion

gov¬

the field of private

business.
Since

has

then

been

dom

As far

tion.
no

can

barge

run

the

for

reason

Corpora¬
see, there is

than there is for it to

govern¬

line

run

today
truck¬

the

also

Commerce

whether

Department

examining the

are

of the functions

ques¬

not

many

performed by
the Federal Government in mer¬

builders and bankers.

Certain air¬

the

Administration

carrying out that free¬

mandate.

endeavor¬

are

swiftly

Uncle

take

oosible.

Sam

want to

out

and

owners

to construct them.

war

reason

There

for Uncle Sam to

own

and operate them now.

competi¬

private business—whose
workers can render

tion with

the

The

*An

give

address

fore

Nat'l

New

York

judge

hijnself

just can't be

the

player. It

dono^

Let ^me give you a concrete ex¬
ample. A privately operate^ pub¬
lic
service company,
which, al¬
though by charter, by law and by
regulation is in the public serv¬
ice, is held accountable for its acts

government

commission.

That commisison is the

umpire.

However, when the government
itself

organizes

umpire

hand to

accountable. Once in

may

company

the public in any field there

serve

hold

Congressional

while there

investi¬

gation. But there is little machin¬
ery for continuous scrutiny of the
manifold

actions

ment

business

one

but

this

govern¬

enterprise by

any¬

officials

government

themselves.
-'

The

gentlemen '

running

the

government-operated company

subject to the
enterprises.

They

are

human frail¬

same

ties that beset managers of

private

frequently
subject
to
an
empire-building
complex and too often are willing
to take things easy and coast.

that

there
the

for

was

also

Federal

private

Secretary

Industrial

Weeks

Conference

City, Sept. 23,

be¬

Board,

not

are

with those in government-

business

owned

know that

Administration

felt

reason

Government

desirable economic services faster,

take oil lands covered with water

cheaper and better than ponder¬
ous bureaucratic government.

away

lean

the

For

example:

can

If—as

do better than either to

well-clothed,

well-housed,

and

provided with those extras which
give us here the really abundant

It started to turn

1953.

some

critics

now

whine—

give-away program, then
I think the public will say, "Give
us a lot more of such programs."
that's

years,

less

directed

scribed

this

still

country
less

and

circum¬

by the limiting factors of

central

government

other.

;

than

any

;
to keep it

prove

that

better

Jan. 20.

not

set up

established

to do business. It was
for certain most im¬

limited purposes

but

who wrote the Constitution.

ment is

the

loom ahead.

piles

the public

usually
when

business

en¬

Fathers

did

by accident.

not

was

own

little

faith

State

local

and

others.

are

peo¬

Business

on earth until that time had
experienced.

ple

Constitution

The
to

preserve

written

was

these unique liberties

.more

Federal

goods

people, including freedom
government inter¬
ference in the ordinary * business
central

affairs of their lives.
It
ers

is
of

bureaucracy, more
and taxes and

Constitution

that document

created

result of their

experience with liberty for more
than

150

that

even

maintain

unique liberty for

Constitution

this

functioned

has

years.

interesting

rapidly
INVESTMENT

BANKERS

This

Members New York Stock Exchange and Other National Exchanges

[DISTRIBUTORS '

nomic

authorized

BROKERS of BONDS, STOCKS, COMMODITIES
•

Phone LD-159

better

under

the chief

eco¬

much

better

government, past or
by this

course,

not

business

any

reason

why

success

for

future

people else¬

SECURITIES

prefer special situations
and large

control blocks

Harry & Myron Kunin

that

mean

statement I
segment

every

servant

the

ftiiva/e

403 W. 8th ST. LOS ANGELES 'TU-5630

that despite human short¬
comings it has performed its func¬

tions

infinitely

better

central government can.

than

that,

central

that tries to do
do

its

set

was

would

live

and

serve

Executive branch

baseball
cans

game

play it.

story is

one

hope to take the

\
But

players

...

Members
^

make

the

people

each, other.
was

estab¬

American

„

of life

Stock

„

York

New

Cotton

disturbs

-V
game

Exchange
Exchange
"

Chicago
New

Board

Trade

Cotton Exchange

Orleans
And

Inc.

Exchange,

Commodity

other

N. Y. Cotton

the

Exchanges

Ameri¬

considerably

Exchange

Stock

York

New

United

the

Player
it

H. Hentz & Co.

well.

the

which

under

1856

government

functions

Congress

States
rules

Established

any

everything cannot

primary

The

than
And

CHICAGO

and

every

Exchange Bldg.

NEW YORK 4, N. Y.

Disturbing for Umpire to Turn

Federal Government out of rpany
the
business
activities
into

SOUTHERN CALIFORNIA

where in the world.
That record

con-

page

mean

The

the

prospects

public has.
given the American people great¬ lished to administer these rules.
two
together
umpire
the
opportunity, greater well-being The

prosperity than
•

adoption

distribution

services

any

than 160

changing circumstances.
300-year experiment with
servant

Federal

Continued

•

and

of INVESTMENT SECURITIES

Home Office: Atlanta

its

private business

Established 1925

UNDERWRITERS and

after

and

can

•

years

Federal
Federal debts
more

public has always been perfect. I

interesting that the writ¬
the

development, more

operation,

present.

for the
from

be served
Federal ownership,"

gov¬

the American people in the

production ; and
than

free

the public interest can

charter, license, and by other laws

serves

They have
American

Business, in

When the Constitution was adopt¬
regulations," to serve the pub¬
ed, the American people had en¬ lic. Under our statutes and under
American conditions, business
joyed more than 150 years of.r.a

that no other

the

enterprise system that they think

and

kind of liberty

is still another.

sense,

affairs.

their

of several servants of

one

public.

ernments

Founding

wise

these

What

deficit

served

-only bv

It is

those

•

evidence

Secretary

cent

prise

keep the average family well-fed,

portant

Private Wires

who

terprises are owned and operated
was
to take any other land that
by the people themselves and not
of belonged to the States.
by the Federal or any other Gov¬
Government Belongs to People
Commerce and, of course, with the
We believe every one of these
ernment.
In America the government be¬ approval of the President, I sold acts benefits the public.
But, as is always the case, when
This Administration intends to
longs
to
the
people.
So
does the Federal Barge Line for nearly
one
suggests
keeping
Octopus
private enterprise. Both should be 12 million dollars after it had been limit the Federal government to •Government out of competition
money
for the public in its essential functions and to in¬ with
used for the people. The Federal losing
private industry,. the wor¬
government
can
perform some 12 of the last 14 years. By remov¬ crease its efficiency in the per¬ shippers of Big Government weep
services better than private enter¬ ing the Federal Government from formance of these functions. '
and wail and gnash their teeth,
In spite of the fact that the wel¬
prise—postal service, for example. river transportation we think we
These critics of decentralization
benefited
taxpayers, ship¬ fare clause of the Constitution has
State and local government can have
have no confidence in the ability
run
schools better than the Fed¬ pers,
barge
workers
and
the been stretched to distortion in re¬
of the American people to handle
eral Government. Private enter¬ public.

supply.

The Administration is studying

(

enterprises,

they have the taxpayer

from the States than there

our purpose
so.
Public Benefits When Government
competitive life.
Itf is our aim to reverse the 20Stops Grabbing Jobs
enterprise more opportunities and
Every move by bloated, greedy
,year trend towards centralization.
more incentives to make the lot
Let us explore further why and
government
which
takes
over
It is our determination to give a
of everyone better.
services
better
performed
by how the public benefits when the break to the owners and workers
For this uniquely American
Federal Government stops grab¬
private enterprise takes
some¬
of private enterprise.
^
competitive enterprise system is thing away from the people. The bing the jobs which competitive
;; Our reasons for ,thife change are
the greatest instrument designed tide in that direction had been enterprise can do better.
Our Federal
Government was quite simple. The Federal govern¬
running strong for two decades.

ing

umpire grabs

hitting the ball.

disturbs

now

ing line.
In

the

umpire's
judgment of the rules if he tries

have sold

And

Waterways

opment of the natural resources of by financing of ship construction
the country.
It is my hope and ' may- be
worked
out
between

continue under government op¬
the people. It is
invented, devel¬ eration. But, where possible, and

people, for

oped

before.

Wherever

extent

the

the people are

trol

that

while

the bat and starts

after

nation Big
Government

than

Inland

the

tion

with

accord

policy is in

the

considered belief that, trans¬
other lated into action, this policy will
serve the best interests of all the

person on

is that in

worse

As I said earlier,

;

clared:

not think

once

than any
port control towerg have been re¬
turned to city governments where
earth a combination of
people of the United States."
the criteria indicated insufficient
powerful human rights.
As
for
current
government- national interest was involved.
Among these American rights
V; The necessity for profits: and
business
activities*' I •
The
are:
freedom
of
religion,
free operated
Administration
and
the the pressure of competition con¬
elections, free speech, free press should expect that those which > Congress have decided to sell the tinually drive !the manager of a
are justified and feasible and be¬
and free enterprise.
government-owned
plants for private
enterprise.
In
private
There business you make good or you
Free, private enterprise is an yond the present means of states ." making synthetic rubber.
or private enterprise to handle, to
was a
national defense reason in don't stay in business. But this is
economic system of the people, by
greater

Free

The

tragedy of

nation

discussing the recent power

"This

abol¬

Finance

its death is mourned,

Reconstruction

Corporation.

ment
-

policy statement by the Secretary
of the Interior the President de¬

of life is

that

modern

those

justified

economically

are

plan

will

feasible.

and

based on the fact
American enjoys to a

Govern¬

rope

has

Administration
the

arrangement where¬

tion

vs.

not

principle that the states and
with television antennas sprout¬ local communities, private citizens chant
shipping and civil aviation
and the Federal Government it-; can be
ing from nearly every roof and
returned to. private enter¬
55
million
automobiles on
our self should cooperate in an effort
prise or to municipalities. We are
actively to encourage the devel¬
highways.
hoping for an
living

B i g

ment

Administration

Americans the highest standard

genera¬

People.

This
ished

be handled

by man to advance his own ma¬
terial
well-being.
It is giving

take.

to embark on

any

record

goocL.lt should remain in business
can perform neces¬
sary functions which private en¬
terprise cannot or will not under¬

shall

Asserting that every move

business

only where it

As for

SINCLAIR WEEKS*

Secretary of Commerce

Let

overall

industry.

Competing With Business
By HON.

activities

ness

DETROIT

GENEVA,

PITTSBURGH

SWITZERLAND

Number 5260

Volume 178

The Commercial and Financial Chronicle

...

XI223)

rate

Federal Budget and Corporate
Profits in a Business Decline
Vice-President, The Bank of New York

greatly

later,

Our

v. In

the

Tin recent months of the likelihood reasoned
of

business decline in the United

.States.

However,

there

has

.....

been

little

the

ef-

1
15

the

years

Federal

has

budget
>ecome
a r

g e

very

de-

jendent

lersonal

and

corporate

in-

taxes

:ome

'or

revenue.

The
William

effects of

Biggs

nU^,oSir!f«S
Federal

profits
It

•

most

recent

1948-1949—to

the

1953

activity.
declines

the

and

mated

those

This

tax

rate

roughly

present 52% rate

months

Board-Index

The decline,

year.

the

Tow,

small

which

not

seasonal

July
the

and

allowance

and

been

part, reflects
in
the .index,

vacations

Some

August.
of

the

assumed

Revised

projecting

*This

fall

for

has also

year

o®

,•;:!>*;

estimating

estimate

The
The

adjusted to

June

Federa.

end

assume

in the

profits

occurred

periods

two

have

and

corporate profits

based

are

the above

The

Using

base,
has
0f

1949-Type

declines

same as those

estimates

been taken to

mean

in industrial
sw.

30,

has

1954,
for

the

from

the

are

of 1938.

Excess

tax

rates

the

were

obtain

cjines

tion<,

used

Tax

effect
come.

decline

Again

personal

in-

have
1954

frnm

was

increase

rovpr

other

profits

grees

recession.

subtracted

tbp

emphasized that no
prediction is intended — we are
merely applying the experience.of
previous declines. We have no

Federal

tax

„i

-i

same

ceipts

the

in
in

event

similar

have

estimated

take

place,

and

duration

this

tion.

not

way

declines

the

of knowing

boom

unreasonable

Finally,

the

make

expecta-

timing

averaging

each

fiscal

any

decline is certainly unpredictable.

years

ending after June 30,

arises

from

the

fact that

be observed
taxes in

decline have the
on

net

;

have made

arbitrary

follows

inJ?
Place the 10% perthe

l
neZrt

higher

year

official esti-

will represent the net savings
arisin£ hom the end of the Korean
war>
after allowing for
increasec* Korean rehabilitation

S u.Xu

•

year.

costs-*
Otherwise
expenditures
have been left unchanged from

,the.offidal estimate1

June

on the in¬

lowlng reasonlnS:

the

(a) The Administration has
nounced

that

the

Projection of

♦

the s,affy. °1

c.oun,try' ?n<J.tha.t

^i
^a^en* Only a major change in tha

and

because

most

corpora-

*Table tions
have
fiscal
years
ending
1938-type December 31st. Such corporations,
cushioning because of the Mills plan to speed

from
a

same

corporate

profits,

tax

corporate

payments,

*Trf

will

billion,

profits.

Corporate

course, are

This advertisement is not

The

offer to sell

offer to buy these securities.

■lJ

New Issue

rates, of
higher in 1953 than in

elimination of Excess Profits Tax

porate

solicitation of

tax

f the

receipts

or a

offering is made only by the Prospectus.

which
profits

reduces

tax

the

accrued,

54% of estimated pre-tax

cor-

$15,000,000

Indiana &

Michigan Electric Company

from

corpo-

First

Mortgage Bonds, 3%% Series Due 1983

Due September 1, 1983

Dated September 1, 1953

1949-Type Decline

(Dollar figures in billions)
Actual

Estim.
.

Estim.

'1949-Type

1953

Decline

235

Industrial Production Index (19351939 = 100)
'

Estim.

Decline

in 1949

from 1953

from 1948

-215

8.5%

Price 102.31% and accrued interest

8.5%

Wholesale

Commodity Price Index
109
(1947-1949 = 100)
Income (before tax)
$285.0
33.0
Personal Income Tax (Federal)__
-

Personal

103-4

5.0

$280.0

1.7

Copies of the Prospectus

28.0

15.0

the undersigned,

20.0

13.0

21.0

(before tax)_—

42.5

34.0

Corporate Profits Taxes (Federal)

23.0

may
as

be obtained from such of the several underwriters, including

may

legally offer these securities in compliance with

17.0

Corporate Profits

Profits

Corporate

Profits Taxes)

(after

Federal

17.0

19.5

of the respective States,

Union Securities

Corporation

Goldman, Sachs & Co.
<

(Dollar figures in billions)
Actual

Estim.

Decline

Estim.

Industrial Production" Index (1935-

the securities laws

Projection of 1938-Type Decline

Calendar Years

—

TABLE

1938-Type

Decline

in 1938

1953

Decline

from 1953

from 1937

235

185

21.0%

•White, Weld & Coo
'

A. G. Becker & Co.
Incorporated

Francis I. duPont & Co0
..."

Equitable Securities Corporation

T.'.

Laurence M. Marks & Co.

Wholesale Commodity Price Index
109

Income

Corporate Profits

Tax

(Federal)

(before tax)

—

Corporate Profits Taxes (Federal)
Corporate

Profits

(after

Profits Taxes)

$285.0
Personal

an¬

June

30, 1954,
budget, as prepared, cuts defense
and foreign aid expenses as much
as they can be cut consistent with

tablei

Calendar Years

$2
after

over

year

uaate, pn the assumption that this

tnh1p„

declines

There

veaFsTas^ sfnee

Ml
cor-

earlier period. The Excess
business decline will Profits Tax is now due to termialthough the extent nate on Dec. 31, 1953, It is the

any

whether any

any-

production and prices. Neither

taxes

15%

1953 readjusting for the

before

31,

year).

annual windfall to

the 1954 fiscal

deductions

decline from estimated

change in personal tax rates due
one else whether declines in peron January 1.
sonal income, personal taxes and
Corporate tax rates were also
corporate income before taxes will the same in 1949 as in 1948. But
be like those in previous periods, tax liability dropped sharply with
of knowing than

It will

income decreased only nominally, effect
We have assumed the

budget

in II below that

1948, although personal

0/2

^°n the expenditures side of the

from

two

made further

?i-

personal

1949 from

It should be

better way

However,

1954

their total

Treasury

10%" each

re-

ratPrfof the
from
EVm i»l»n
Tnnp
iq<v> +n
Tan
1Qr
ouiie ou,
iu jcui
COm~ visions of the 1938 tax
absence
Joss carry-backs proNearl^ all of the d'ecline in
per-

payments declined nearly 15%

Dec.

repein^the"redur- reduction of about $2 billion from

receints

SIS® J

1938

There

bave

have assumed the

percentage decline from 1953

jn personal income tax receipts

basis

corporate

Jan.

pay

1955.

rnrnorate Profits Tav anrl

ripHvpH

taxes of the rather sub-

stantial

vnarc

1.1
of

1950. This windfall will be lost in

fiSc|l ye™ending

and

fiscal

are revenues

Profits

periods
have
been modity prices, and 1.7% in
in
laws, ac- revenue will be reflected in the
applied to the 1953 sonal incomes. These are the same counts for the fact that
corporate
on
the June
estimates. Then, by adjusting for
percentage declines as in 1949 earnings after taxes showed a 30th
after the precedingcalendar
the
present tax structure it is compared to 1948.
larger decrease in 1938 from 1937 year. This is because personal
possible to obtain some idea of
Personal
tax
rates
were
the than
corporate
earnings before taxes are now on a pay-a^-you-go
what will happen to the Federal same in the
1 Qtlft
on/4
1 QdQ
to.vnr
^
)a
'
in
years 1948 and 1949. taxes.
'
after taxes under two varying de-

billion

In-

individual Income Tax receipts

arbitrarily

budget

10%

resulted

ending the

estimates

our

estimated"

porate profits tax rates from 1937
production, to 1938. This increase, plus the
now,

Profits Tax

Excess

have

Federal

year

been

calculations.

our

ceipts under the two assumed de-

decline

mViAineoin

^°Utr 5% in

been

slow-down of the 1949 type

8.5%

1953

our

42.2

1.7

after 6-30-55

Budget

eluded in this budget

same in 1937 and 1938, and hence
the reduction in the item of "per-

same

Decline

$26.3

1954 income by June 15, 1955.

official

current

basis

com- budget for the fiscal

ype ec me
recession
would

These

comes.

Personal

estimates of production and prices,

percentage

same

taxes

1.5

.54.5

de-

lev^ of personal incomeOur esti- sonal ,solely from the tax paid
just over 110. and per-? arises Federal income leverage
mates of
and

2.0

represent a decrease from the 1953 Dec 31 1953 Also it is assumed in the
five-year period 50% of
estimate of 21% in industrial pro- that the
scheduled personal in- corporate
income tax payments
duction and 9% in wholesale com- come
tax rate cut of
10% wm will have been pushed into an
modity prices, and personal inbecome effective on Jan
1
1954
earlier fiscal year at the rate of

the

109, compared with the current

2.0

reduction

Receipts

1953, and Personal Income Tax reduction

pared with 21% actual in 1949.

10%

year

the

for

extractive

1949-type

fiscal

Loss of Mills Plan windfall fiscal yrs.

for'the.A. 1938-type

fully adjusted to the

impact

balance

full

$14.0

ones,

Tp be noted is the fact that
corporate profits after taxes would

has

dip

summer

for

Individual Income Tax and Miscellaneous——

For .cline.

1953.

which

about 235 inthe Fed-

Reserve

adjust

J-JT4.

each* during

11.0

large corpo-

carry-backs,
rate

$11.8

Corporate Tax Receipts

the

assumes

30%

loss

about

$6.0

■.

Decline in

$68.5

1.0

Deduct—

average Federal cor¬

profits

1938-Type

June 30, '54 $68.5

5.0

of :i industries.

production,

average

esti-

level

average

The

1937-

production, prices, personal incomes, personal taxes and
pre-tax

sonal

declines—those

business

averaged abouE 240 for the first show a decline of only 13%,

eral

1949-Type

^Official Estim. of Receipts for fiscal
yr.

■

proposed here to relate the

experience

1938

•

six

assumes

half of the year, is expected to be
lower in the last half, and thus

therefore, well worth

iwrUnrintf
P
S*

reduction

last

receipts
legal termination,

rations/and

thl Wholesale Commodity Price Index

budget
are,

prices,

instance,

(In billions)

out

1953 produc-;^ With these
considerations in though not as much
tfe have assumed mind, let us examine Table I, bei949_type decline.
v

pointed

the
1949-type and in
1938-type recessions we have

g 50%.
-

whole

1938-Type Declines

both

porate

estimat(r)g^

some

specific
ast

1953.

tion and

some

appraise

CAmD

the

Adjustment of Budget Receipts to 1949-Type and

decrease

TABLE in

de¬
also

Tax

several .lower average

esti-

rate

Profits

is to establish ,)makes' some

estimates

•

indices\for

basic
..

effort

n"n,,oion

step

profits.

estimated

corporate and indi- v"

initial

the

decline

Excess

There has been much discussion

business, and
hence in earnings, will eliminate

vidual income taxes, receipts from which would be substan¬
tially reduced in event of business depression. Sees removal of
excess profits tax cushioning corporate
earnings in depression. ^

assumed

surely

revenue on

1953,
the

cushions

after-tax

Pointing out corporate profits in business recession are likely
to be less jolted than the Federal Budget, Mr. Biggs reveals
•heavy dependence of Federal

in
in

50%

cline. This reduction

By WILLIAM R. BIGGS

profits

mated

$263.0

33.0

9.0*

9.0

7.7

22.0

33.0

42.5

22.5

47.0

23.0

11.2

—

Folger, Nolan

The Ohio Company

Singer, Dealne & Scribner

Bosworth, Sullivan & Conpany, Inc.

Reinholdt & Gardner

Incorporated

—

October 1, 1953

Federal
19.5

11.3

42.0

51.0

The Commercial and Financial Chronicle..
12

Thursday, October 1, 1953

(1224)

cates but it may prove

Investing fox the Piofessional Man
JR.*

By EDMUND BROWN,

Co.,

Planning Dept., Penington, Colket &

Manager, Investment

professional
(1)

men,

are

investment

problem

which
the

cerns

Now

come

the

question

objectives will differ widely securities, or diversification, or
so
the plan must be ad¬
any other device because of the
justed to the purpds^? of the in¬ magnitude of the risk. There are
dividual.
some
managers
of
investment
The first step is to determine
companies who feel they, can best
the size of the fund. It will not serve their shareholders
by sell¬

sum

include

in¬

dividual

money

aside for special purposes,

has

how

have

important than selection of

more intense
competition, and recounts elements of both
strength and weakness in looking ahead. Stresses valne of
advertising in creating and maintaining consumer demand.

It. surprises

timing, or taking advantage of
the swings of the market. There
are some people
who feel this is

for

realize

securities set ing securities and going heavily
such as into cash at certain periods. But
college education, or a savings ac¬ the record is very much against
set aside for
count set up for emergencies, or this
investments—
procedure
(with very few
for a trip to Europe, or for Christ¬
whether $20,exceptions) and the better perEdmund Brown, Jr.
mas
gifts. The investment fund formance has been shown by those
000,
$50,000,
should
be independent of these who
$100,000,
or
kept invested in well selected
things, except that the ordinary securities.
more. We are not concerned with
'
*
which

are still on top
of a prosperity boom,
"flattening out," with business outlook good
at least until early
part of next year.
Says more attention
should be paid by businessmen to trends in their own com¬
pany's condition and their own industry problems. Looks

wide

offer

Fund

—and

con¬

Though stating

Dr. Arthur finds

Tri-Continental

their

period of
years. It is a
problem

Economist, Swift & Co.

The

requirements of Dr. "A"
and
his family will differ from
those of Dr. "B" and Dr. "C"—

without undue
over

The

portfolio, con¬
sistently and
risks,

Purposes

Individual

The

companies,
and of

investment

such

stocks.

these

Wellington

Adjusted

Plan

ment estate or

concentrates

which

one

Question of Timing

invest¬

than

and (6) the
diversification.
of time allowed
attaining the desired results.

for

Flattening Out

By HENRY B. ARTHUR*

Texas

period

probable

The Boom

risk

portfolio

any

diversification,

the

spread

securities

which includes du¬
Company,
Mont¬
gomery
Ward,
National * Lead,
Douglas Aircraft and Union Paci¬
fic is
presumed to be stronger

requirement of income;

concerned with
of the
professional man. And this means,
as I see it, the problem of building
Today

the

acceptable
quality which represent distinctly
a

lists and discusses as factors
(2) risks;
(3) price fluctuations in stock market; (4) setting up of
liquid reserves; (5) diversification, and lastly (6) the time
element required for desired results.
for

considered:

seeks

Pont,

analyst, in outlining plan for building up an invest¬

ment estate

among

different fields of endeavor. Thus

Members, New York Stock Exchange

Investment

tion

to be very

Diversifica¬

diversification:

poor

sometimes

short

had

with

ing and selling are probably
striking that these,

age.

Business Cycle Analysis

business cycle
was

e x

years

prior to World

stories

War I.

neither

I sup¬

that

pose

1933

a-clear-cut,

though the

even

that

numerous

success

cited

can

have

been

haps I should say
"doing," and then

well-understood p henomenon is
about as
y°unS as what
people

has

the past 25 or

over

are

dra¬

nor

as in the case of advertising.
By 1929 we were already learn¬
ing many things but we weren't
doing .much about them. Since

could define
as

research

cycle
made its

matic

business cycle

which

business

area

contributions

rience

p e

the

analysis,

rare

Recent

Development

Thinking or
talking

event

problems that

to us to be hoary with

seem

experience

"doing." Per¬
have been
"learning"

afterward. In any event, there can
be no question that we know more

about the business
H.

Arthur

did

the

cycle than we
generation ago even though

short-term
stocks

in individual income from the fund may be
Now, how shall we set up a
speculations, but employed as the owner sees fit.
portfolio today, with the market
The
second
step is to decide
plan for administer¬

"plays"

casual

rather with

how much income is needed from

ing the total fund.
'

The first essential is to adopt a

plan for managing the fund. With¬
out

plan

disastrous.
better

man

his

any

may

plan

plan. The profes¬

may

savings

results

Almost

than

sional

the

decide to invest

periodically
well

the

managed invest¬

the

fund:

now

future

some

and

-—

needed

income

the

whether

6% ?

4%,

2%,

date.

elderly widow will want the max¬
income

imum

expense

value

even at the
instability in the

now,

some

the

fund.

the

other

extreme, the doctor with a good
income and high taxes will be

at 258 in terms of the Dow-Jones

advertising business would
acterize

ing."

Both of them
than

Industrial

arWManV

nF; E

stockfhave^dedtned
stocks nave aeuinea

25 to 30%, or
average
In

much more than the

of leading industrials.)

assumptions

are

these:

are

char-

advertisnot much

old

years

even

though experience with advertis-

busings Iew. of. ,tbe ectm«mic

Lng and experience with
1920, we
"crises,"
inflationary
Mississippi

current

will

company

whiqh contemplates
the broad field of investment and
which

and

the

re-

"panics" show
"bubbles," like Sross

bubble

ment

one

considers
of

(1)

the require¬

income,

(2) the risks in
varying quality, (3) the
price decline in the mar¬

stocks of

risks of

(4) That a business recession of
except those
liquid reserve. During some sort is in the making today,
the past six years we have seen but that it will be cushioned by
declines of 15 to 18%
in long- government spending and tax re¬
in

most

used

for

term

securities

government

municipal

and

lief.

measure-

There was no reliable figure to
such stand-by measures as
national product, national
or
the inc(>me> personal income, disposagather ble lnc°me, farm income, and the

heard about
about

(1) That EPT will expire and Squth Sea bubble, but I
established
primarily in building corporate taxes will not be much frbm the literature I have seen
investment fund. That is one plan. interested
excess
of 50%
in the years that the idea of economic gyraAnother man may decide to put up the fund and reducing his tax in
This assumes no
all-out tions wasn't more than one of the
all his savings in Federal savings exposure. One individual may be ahead.
minor
hazards
of
life
prior to
bonds, from time to time, so long willing to hold a substantial war.
amount
of
cash
and
invest
it
1895, or perhaps 1873. Going back
as he does not need an immediate
(2) That personal and capital
prior to 1900, it seems .clear that
income from these savings. That gradually over a period. Another
gains taxes will be no higher and
the ravages of war competed with
immediate return.
is another plan. A third man may will want an
probably lower.
acts
of
God, famines, plagues,
concentrate on a given security, This requirement of income is of
(3) That the growth of popula¬ floods, and the
like, for first place
such as Gulf Oil or duPont and controlling importance.
tion will have a tremendous effect
among the large-scale risks of our
Having decided the income re¬
buy the shares regularly over a
on
spending and employment, as ancestors.
Business
depressions
quirement, we can turn to the
period. And so on.
the children born during the past were a minor
consideration altype of securities to be employed.
But
the more
successful
plan
decade tend to approach maturity,
Tnere are risks to be considered
though we must realize that for
ment

are al* pretty scared about
whether we have the answer to
the "$6.4 Question" of what to do
shout it.
1 decided recently to look at a

depressions dates far back through ments that weren't currently
centuries.
available in the statistics of 1920.
Before

approaching this problem we
to make certain assumptions.

have

Our

only

down

Average:

"scientific

like.

These

relatively

are

*nven**ons-

much

recent

sur-

didn t then have a
current index of industrial proAction, of building construction,
of employment and payrolls, of
corP°rate profits, investment, re¬
Pr*s*n£>

tamed ear«i«gs, consumer credit,
or
the
balance

international

payments.
An

economist

measurements

meager

these

would

minister without

"The

people there

without

today

feel

a Bible. :

measures

did

was a chronic,
have in 1920 included such items
cyclical, condition of de¬
as individual
commodity prices in
pression.
the
market
reports,
stock
and
It was only 25 years ago that an
bond
prices, a few records of
advocate of scientific advertising

many
not

bonds. That is to say, a change in
(5) That the present trenas of wrote that research and scientific ba"km£ data» commodity exports
inai
tne
oresent trends oi
whole, (4) the advantage
easilv add a great and imports, gold stocks, governthe interest rate presents a risk interest rates and business
activity ^
of setting up liquid reserves from
° ^ U1® easuy aaa a sreat
receints
and
expenditures
which may be almost as serious are on tne deflationarv side- and deal to the effectiveness of adverthe aeiiationary siae, ana
™ receipts ana expenditures,
are on
time to time, (5) the advantages
because of anv miracle and the various data from the deas
the fluctuations in sales and
that
further
inflationary
price u;ing
no* Pfcf"f3 OI aa? miracie cennial Q
auinauennial
census
*An address by Mr. Brown before the
movements
tS'
7u
Tj
earnings of an industrial company. movements will he slow to de- of researcb, but (t° USe his words) bf . j
will be slow to deCentral
Pennsylvania
Dental
„becausg of the nearly complete During World War I there had
Society
Turning to the common stock
Bedford, Pa., Sept. 24, 1953.
' '
darkness in which advertising is be?n inauSurated a cost-of-Irvmg
list, there are wide variations in
(6) That because stock prices forced to operate." "Consumers do lndex' supplementing the wholequality. One would expect a are not greatly inflated in terms
noYknow ~wha~t"they^wa^or*why sale price index that had been in
steadier income from an estab¬ of
earnings and current dividends, they act" he said.
TRADING MARKETS
"•* existence since around 1900. But
lished utility (such as Philadel¬
they will not be so vulnerable as \ Anyone of us could cite h good aSAde *rom a few Price indexes, we
phia Electric) or a food processor
weIe' Jpl examP*e> in 1929, many instances to demonstrate ™ere ,f®ktiYeIy* .devoid'
■ "fefcSouthern Advance Bag & Paper
(such
as
General Foods)
than 1937, and 1946.
how
advertisers
have
emerged
Dnagme'it—-only 253 years
from a producer of heavy machin¬
(7) That many enterprises in fr0m the darkness of a generation 1 fAnd
Grinnell Corp.
become a part
ery
or
a
fluctuating commodity America arc still canahle of subaarKness oi a generation Qf an index of birth rates when we
such
as
copper
or
sugar.
One stantial growth in the creation of ago> helped by the accumulation are born, of IQ when we go to
Kalamazoo Vegetable
would
expect
more
growth in new
products for a growing popu- of knowledge, and research in the
of Nielsen, Hooper, Gallup,
Parchment
earnings and dividends from Gen¬
iation;
and
that
improvement of techniques.
I"

ket,

as a

Keyes Fibre Co.

eral

Electric

worth. You

than

can

from

Wool-

plan for consistent

income

large,

BOENNING & CO.
.

Philadelphia 3, Pa.

or
for
growth. By and
the company with a long

dividend record and

holders, in due course, will benefit
accordingly
,

The

company

whose record is erratic

moderate

retirement

Penna. RR.

4y4s 1984

American Dredging Com.
Bethlehem Hotel Units

Leeds &

Lippincott Units

Walnut Apts. V.T.C.
Phila.

be safer to buy Dow Chemical,
yielding less than 3%, than U. S.
Steel
which
appears
to yield

The

Memb,er$ Phila.-Balt. Stock Exchange

Pennsylvania Bldg., Philadelphia
Teletype
PH 375

N. Y. Phone
COrtlandt 7-6814

Investment Stocks

5.00

Other

diversified
a

step

set

and misunderstood. The man who

"buys

few

^ggjesraan who

eventually

from

"tasteless."
what

the

cynical friends says,

housewife

wants,

for this

plan is

to him who

power

radical

every

(Special ' to The

LOS

Financial

Chronicle)

change

and

serves

years.

has

become affiliated

—-—

our

knowledge ~

sbould- The advertising

man, I am

sure, would have something simiiar
say about his own

business.,

many more

facts, He

even

baby

diet

tbam- But the problems don't stay

put. New problems keep cropping
™
™r
—
up
The only tMng sure js tbat
when

the

sales

manager

has

two

ulcer, it always perforates the ad-

Your own examples of out-

^^tising budget , wherever -the

few

weeks, instead of

ANGELES, Calif.-Joseph standing jobs of

Durikel

we are doing as good a job of ap-

brought about in knows what to do with some of

infants where meat

the

enters

know any economist who believes

Another instance is the He has

^he feeding of
now

apparently Plying

This • is

-■

credtiye[advertis--.
4

along will With California
lot of certifi¬ South Sunsmuir Avenue.niv?September 21, iss3.

comes,

have

the selec-

remark,

of securities

With Calif. Investors

be misused

can

primary importance.

principle which

of my

one

substantial item at ages as young
up

Diversification

list.

Return

Needless

Diversified List

her well.
Over-all

predominance of want enough blind spots left to
smiiea over xo a pieaunuxiance ux
necessarv nlitX v/Vum
products which are now almost expectations
but j don,t

6V2 %

Stocks

exp^nVJ^Tnf

rate when we die.

We do have the knowledge and
iar(j flavor completely the measurements. Of course, we

savory

tion

Setting Up

2039

.Samuel K. Phillips & Co.

4V2%

Bonds & Preferreds (Tax

III

nearly 9%. Who knows?

Transportation
3-6's

2V2%

exempts, if desirable)___ 20

de|th

ening which used to be valued for

Yield

Liquid Reserve

have seen short-

—
11—
universally colorless, odorless, and

Approx.
I

case, we

means

follows:

and operates in a

highly competi¬
tive market. Consistent growth of
earnings will offset many other
risks, if this can be found. It may

0ur own

present plan, therefore, for

investor

strong com¬
with a business or professional inpetitive positipn will rate higher
come
and no immediate prospect
(regardless of the stock yield) than
a

school,

"their st^re-

•

•.

bombardment nf 'fact<stn

hUrtS

ct^tQi1

anri

Volume 178

Number 5260

...

The Commercial and Financial Chrojiicle

(1225)
with their

The Government and

offered

Municipal Bond Market

Otherwise,

By LEROY M. PISER*

government securities

come

keep

rather

with

respect

the

each

importance

given

"The

Municipal
would
to

have

talk

Another, factor is that the relative
and supply of various types of bonds

add

but

few

title
also

about "T h

has

Money Mar¬
ket." The

security market.

and

the

nicipal
ket

Jointly

which

try to analyze the Gov¬
ernment security market in our
own shop, I would like to describe
to you how the Government mar¬

best

with

municipal market op¬
They are both dealer mar¬
kets,
and
a
dealer
market, of
course, is quite different from a
erate.

fact,

shorter-

term

Govern¬
Leroy

Piser

broker market.

securi¬

ment

constitute

the

ojpe

The main differ¬

is that dealers

ence

ties

ket and the

money

market.

Market

Before I get into the manner in

mu¬

considered

the

Bond

are

Most

bills

are

most

empt

tax,
In

from

are ex¬

Federal

now

amounts

income

52%

of corporations.

case

Another

is,

reason

the

which

the

The

that municipals

thing to bear in

mind

tomer

the

don't

principals

will

call

around

yield

buyer.

vidual
is

issue.

the

with

One

credit

each

factor

rating that

indi¬

this

given

to the issue.
not

are

All municipal bonds
alike.
Those with the

that

have

clined

dealer

had

long

riod

would

one

position

continuously throughout that
have found it

original

nine points. Any

some

who

and

maturity

five

longer-term issues.

pe¬

restricted

are

very

nonbank

investors

between

Bonds

years.

art

Some of them

matter

for

dividec

are

and

short

position1 values

size

acquire

municipals,

such

Some

New

City and New York State issues,
a greater
marketability than

little

known

school

district

another part of the country.

Also,
over a

these

factors

period of time.

will

vary

When busi¬

ness is good and credit
ratings are
generally
considered
high,
the
differentials
among
individual
municipal issues will be relatively

small.
credit

the

When business is bad and

ratings

less

are

differentials

will

out

York

have

favorable,
larger.

^American

Securities

Business

sponsored

because when
in

considerable

issue is

size

find that

one

factors.

mar¬

ket the price of that issue is fre¬

may

quently temporarily depressed in
relation

ottier

government

The long-term

dominated

principally

called nonbank

institutions.

The

se¬

This

announcement

not

market

transactions

market,

that

sometimes

days

financia

largest

single

offer to sell or a solicitation of an offer
offering is made only by the Prospectus.

Worcester Gas

the

therefore,

versity, Ne\r York-jCity^^ept. 2,

First

work

Since the end

assets

1945,

the

companies

by $31

holdings

increased

have

total

All

the

$41

the

Dated

part of dealers are net; that is, we;
charge no commission for execut¬
ing a transaction, as they do on a
stock exchange.
The means by
which we pay the overhead of the
business
the

make

and

difference

profit is

between

the

balanced

their

During the past year their sell¬
ing has been at a much smaller
than

rate

was

past

the

year

total

bid

may

case,

offer

are

transaction

that

99 4/32

for

issue/

8/32,- in which

able to execute
those

4/32

make

transaction.

prices,
the

that
actual

assets

dealers

are

mentioned

have sold

government
end

earlier,

total of $10

securities

since

During this same
period sales by mutual savings
banks totaled $1 billion.
These
sales

the

were

started

the

decline

important factor in

bond

prices

shortly

after

the

bond

market

these funds continue to

grow, we

expect them to be of in¬
creasing importance in the long-

may

term

market.

Corporate and Individual
Bondholders

Nonfinancial corporations, gen¬

erally business corporations, hold
principally
savings
notes
and
short-term

marketable

govern¬

ment

securities, principally bills,
which, as I said earlier, are gen¬
erally issued, to mature in three
months.

Corporations

Continued

hold
on

buy these securities.

Due September 1, 1973

HALSEY, STUART 4 CO. INC.

transac¬

BROS. 4 HUTZLER

DICK 4 MERLE-SMITH

STROUD 4 COMPANY
INCORPORATED

September 30, 1953.

these

paqe

may be obtained in any State in which this announcement is-circulated from only such
of the undersigned and other dealers as may lawfully' offer these securities in such State.

SALOMON

pur¬

chases by pension funds and State
and
local retirement funds.
As

Prospectus

particular/

Another factor in the long-term

Treasury

■»

that

end

war.

Price 101%% and accrued interest

The

the

1945.

Corporation

September 1, 1953

they

billion of

continually/ in touch

life

companies
have
in¬
by $5.1 billion and their

the

more1

insurance

incomer

tions, however, the spread is

the

During the

the asked quotations that we
have on each issue.
For example,we

some

earlier postwar years.

and

have

They

investment

in
bid

in¬

assets

billion.

Series B, Due 1973

transactions

life

billion,, but their

private

have

Mortgage Sinking Fund 4% Bonds,

the transaction.

Uni¬

1953.

the end of the War.
of

Light Company

A Massachusetts

i^ may take

longer

com¬

in government securities.
That position was reversed after

$3,000,000

good

funds

wha

The

York

War.

insurance

by somewhat different

offered

the

New

the

life

cus¬

by the Association of Stock Exchange
likely to be 1/64 or 1/32, insteadFirms, Investment Bankers Association
of 4/32.
■
of America, National Association of Se¬
curities
Dealers,
American
Stock
Ex¬
The Dealers' Activities
'
change and the New York Stock Ex¬
change at the Graduate School of Bust-"
In order to establish a market,
ness
Administration
of

during
the

panies placed $14 billion of their

creased

different

negotiated.
A good
them are of such large

difference
*An address by Mr. Piser at the Third
'Annual "Forum on Finance" of The Joint
Committee on Education representing the

mortgages and corporate
that they were able to

securities

find

can

tne

exceeded

organizations,'
issues.;, A dealer may; depending upon the value of tax- private assets
by $5.4 billion. As
long position, for in¬ exemption to the
a result they have sold
organization.
only about
stance, in a particular issue that
;. All of these different
$300 million of government secu¬
segments
has been offered in the market
of the market are interrelated tc
rities, compared with a peak of
in large size.
This may prove to
$3.3 billion in 1948, $1.8 billion
some extent, but each one is also
be a profitable position to
take, dominated
in 1950, and $2.4 billion in 1951.
in the other

several

marketability of the issue.

War

period' government securities.

fact, in running' into those that are
fully taxable
position, a dealer, for the most* and those that are
partially taxpart, will have a long position in
exempt. The latter have different
issues

the

ownership to ' position by selling $10 billion of

The latter

add

other

particular issue.

entials.

the

may

of the
Government

and will have the greatest differ¬
is

had

position.

see

many

factor

new

they

amor¬

from

customers would be interested

our

highest credit rating naturally sell
at a high price ami a low yield
Another

that

beginning
the

tne

words,

maturities

case,
we
will take only a
portion of the amount offered and

tomers

vary

and

want
our

portfolio

creased

maturity of up to one
and notes are issued with

small

buiiaing

that

in regard to municipals is that the

will

moment,

particularly

those securities to

other
and

year,

of course,

tization

insurance

Cer¬

adjust

ernment securities.

lion.

original

three montns.

indebtedness have

plant and machinery
holdings of
private
assets actually declined
by $2 bil¬

from May 1952 to June 1953,
long-term Treasury ■ bonds
de¬

During

such

residential

new

tificates

mature

billion.
was

their

issued

holders
of
in most of the transactions
long-term
Treasurythey curity issues. The dealer also may
through which
bonds are mutual savings banks.
handle.
For example, when they
acquire a short position in an is¬
their reserve posi¬
purchase a security from an in¬ sue that has been
Running them a close second are
tions in the money market. In this
temporarily in
life insurance companies. Pension
vestor, they increase their inven¬
large demand and consequently
talk I am going to try to give you
funds and State and local govern¬
tory of securities; when they sell the
some detailed analysis of the Gov¬
price of which has risen in
to an investor, they decrease their
ment retirement funds are large
relation to other securities in the
ernment security market and some
and growing holders of govern¬
inventory.
There is no market¬ market.
©f the factors that influence the
ment securities. Other holders in¬
place similar to a stock exchange,
money market.
A great many types of govern¬
but
each
dealer
is
in
clude fire, casualty, and marine
constant
The first point that I want to
ment
securities
are
outstanding insurance
touch with other dealers, check¬
companies.
make to you is that the rate on
with
the public. Nonmarketable
ing the markets that other dealers
These
institutions
generally
government securities constitutes
securities
consist
principally of
are
making, and is in constant
consider government securities a?
the basic rate for all interest-bear¬
the familiar savings
touch with customers.
bonds, sav¬ residual
investments
or
invest¬
ing securities. The yields on other
ings notes, and two investment
The reason for a dealer market
ments of last resort.
This means
bonds follow rather closely the
series of Treasury bonds.
In the
instead
of
a
broker
market, I
that they prefer to hold higher
yields on Government securities.
think, lies in the average size of government security market, we
Differences arise because of dif¬
yielding mortgages and corporate
the transactions and the fact that trade only in the marketable is¬
bonds.
It is only if they have
ferences in credit rating and the
sues.
Transactions in
the
nonmany transactions are negotiated.
funds that they are unable to put
greater marketability that Gov¬
For example, if a bank comes to marketable securities are directly
into private loans and securitier
ernment securities have as com¬
between
the
investor
and
the
us and wants to sell $10 million or
that they will usually buy gov¬
pared with corporate and munici¬
$15 million of a particular issue Treasury Department.
ernment securities....
pal securities.
of Government securities, we may
Nonmarketable securities, how¬
For example, between the end
not immediately have a buyer for
ever,
do have an influence on
Municipal Bonds
of 1941 and the end of 1945, the
those securities, but we are very the government market.
For ex¬
period of World War II, the net
,
I don't want to spend very much likely to purchase the securities
ample, a few months
time
on
the
municipal market. anyway, take them into our posi¬
a^o.the amount of savings coming into
"One important point, however, is
Treasury increased the rate on the hands of life insurance com¬
tion, and hold them until such
that municipal bonds almost in¬ time as we can
sell them.
Per¬
variably yield less than do Gov¬ haps we don't know of any cus¬
banks

that

result

media

important

and

acquire
Bills

the

bills.

ury

amount

some

mar¬

can

Government

The

market

Government
bond

increase

depressing

and in relation to the Government

rea¬

ratti¬

marketable securi¬
ties the shortest issues are Treas¬

the market, and

l^ad

the

is that the

son

savings

this costly operation tand might very-'
of years, and the remainder are
effect on well have had his capital either*
eligible for purchase by commer¬
municipal piarket as a whole wiped out or
seriously impaired.' cial banks.
come

has

The

Treasury

I in the market will also influence
words their yield.
In recent years a very
large supply of municipal bonds

Market,"

and

was
$12
period there

illustrated by the fact that
during
period of a little more than a

individual

been

Government

Bond

that

and

that

issues,

been reueemed in

Among

year,

subject

not

panies
tnis

being able to judge the' market is

investors and institutions.
The

did

notes,

rate

other

ueaier

tne

market.

buying and
selling prices that they quote.
Trie

savings

time

brougnt tnem into bettei
relationship with the rest of tne

the

that

large volume.

non-

tnereby

f'avoramy witn those

notes had

are

Prior

compare

continually
back and forth,

prices

marketable

se¬

are

security, anu

relatively more attrac¬
relation to marketable se¬

yields

that

checking

basis rate for all interest bearing obligations. Gives
influencing municipal bond prices, and describes how
the government security market and the municipal bond market
operate. Illustrates different types of government marketable
of their distribution among

that

notes, which

tnem

curities.

the

allow

which enables all of the
dealers to

manner

bid for tnem.

may

other dealers and

consti¬

tive

tney Hold. Dealers
also constantly in touch with

are

factors

securities and the

savings

marKetat>ie<
maae

able to find securi¬

they

transactions

Mr. Piser discusses the government securities market largely
in the light of factors that influence the money market. Stresses

tuting

that when

change the inventory of those
curities

are

ties wnen there is

Vice-President, Aubrey G. Lanston & Co., Inc.

importance of yield rate

customers,

possinie traue comes in, tney are
to place securities tnat are

auie

The Commercial and Financial Chronicle

for

Stop Socialistic Trends
And Return to Solvency
U. S. Senator from

House of

business is

the Ap¬
Committee . of the

what

stons

Bud^t

the

could

that

the

Shields> Vlce"™!1nitst "Sf ndlogitcaItgaifns oft|the past are,but

Econ°mist o f

Bear

United States

the

Company

had been levied by years of incomplex prob- flationary fiscal practices. In my
Jems of econ- judgment, great strides have been

thought to the

nomic
the

accomplished
less than candid if I

deliberaof

tions

our

leave

«tr£neth

fnd

thP

the

Murray

have

to-

far

the

between

new

Business

the past 20

invention
labora-

our
use

by our

management

become

years

professional in attitude,
experience and education than

greatest

the

was

case

that
is

before. It has become

minded

growth

long

fact

has

offers

the

for

lag

something

consumers.

reassurance

Shields

technology
we
shall

that

tories and its effective

during
past

the

Administration

nrpfprred

time

busi-

months

management
assurance

research

now

a n

convinced

dividends.

pays

highly skilled in using ad¬

-vanced techniques :of promotion,

rather to take that budget, revise > Business, Mr. Shields stated, has
u and im
e
upon:ktf/'Accord- * produced and sold more goods—
the new heads'^'depart-tin dollar as well as in physical

labor relations, production, conT
and administration. It has a

0U-r pr<wlei?annotna°^id °thecon" ments and agencies df/the'Execu-^terms—to civilian consumers than new ^determination to -maintain
of nnwise nolitical arid tive Branch of GovermrienUwere ever before. It has lifted its pro- sound
financial; standards. It is
sequences of unwise poiitical arid
requested
to
re„examine -their"ductive,efficiency to still another careful to base capital expendir;
^ iv S a^surance however needs and to submit revised esti- new high. It has put in place more ^ure Programs on sound market
^ f Jal and SiS mates for the consideration of the new, capacity than Un any 12 research-a science which hardly
^nnin* has been made
'
Congress. This was done.prompt- iiac
months' period in our history. ^ existed more interested in merIt It is a quarter of-a century ago*
ginning has been made.
^

rif

/ov/rrment

*» +
Bridges

Sen. Styles

havp

Administr^

rfniih 1 i
republi-

niir
our

to sug-

Congressional leadership had the
magical quality of curing all of

conthan

uprevj0US

ness

entirely and begin anew, as we

Q11C,

were

simple

gest that the
change
in

me more

firmly

Committee

vanced

st0pped

although there admittedly is mu

today,

lion

the

nation's

but

well

be able to reduce still further the

power,

provide

eco--

accomplish-

without impairment of
necessary
functi0ns. In view of
omy
which made toward-these goals by t e ^ese considerations, it was deface this na- Administration and the Congress
dded not to discar^ the budget
The

gains

record

ment

spending

unnecessary

sheer

monies, to remove the deficit tbat there are services which must
the Appropriations Committee of from our public budget and to ^e perforrned without interrupIhe United States Senate, I have lessen the burden upon corporate ti0n. It was necessary then, that,
devoted many
hours of serious and individual taxpayers which an orderiy transition be made and
capacity as Chairman of lie

less

appreciated'fact,
according to Mr. Shields, is that

exhibition

ligations which must be met and
In

foretaste of vastly more produc-

much

as-

that

serted

ob-

fixed

are

theManhattan live progress in the important
Bank of Another vitally future.
the

HMHI

the

that

wiil

there

than in past.

our economy

^ an address before the Sales learn what our scientists are doing

tremendously complex under¬

taking,

rapid growth of

flub of New York in in their laboratories will obtain
New York Clty on S6pt' 22' Mur" dramatic evidence that the tech-

available

Government of

im-

the budget situation .in
you

considerably

general

which portends

power,

taken to

time

demonstration of economic

see

short

mind

prove

Represe^tives and my

nilUor

Chairman of the Senate Appropriations Com¬
mittee, he is giving serious thought to complex problems of
economy, Sen. Bridges cails for immediate end of Socialistic
trends which threaten nation's solvency.* Says Eisenhower Ad¬
ministration has made a good start towards that goal, and we
can have a new era of prosperity by restoring a "sound dollar."
Mentions his bill to restore gold standard as inflation curb.
Stating that,

Club the negligible impact of recent adjustments in

budget, President Eisenhower re¬

propriations

Taking Readjustments in Stride!

Murray Shields, Vice-President and Economist of the Bank
of the Manhattan Company, tells New York Sales Executives'

the Senate Ap¬

when

quested the Chairman of

Appropriations Committee

Chairman, Senate

that

recall

chaos.. I

financial

propriations Committee was first
confronted
with
the - Truman

BRIDGES*
New Hampshire

Business

which

leading

By HON. STYLES

bureaucratic mismanage¬
many believed was

the

ment

We Must

Thursday. October 1, 1953

...

(1228)

.ecu

ritv
rity and wnll heint? of the neooles
and well-being of the peoples
i,,
^
of this great nation, depend
in
Let
me
full measure upon preservation of moment to
the system of free enterprise nancial
picture as we saw it on
"determined that" the Govern-'tar than in
which you, the leaders of New
january 20th of this year, the
Fneland industry
so ably
j
A"
7^""+ ^meni oi tne united states snail year. It has
England industry, so ablv reore- d
repre
PreSldent Eisenhower took
operate Qn a businessIike basis, government,

any'prior peacetime cerned not as much in a quick
added materially toTJ1*0^ as in building, durable and
business and

con^ontinuing business institutions.

without waste or corrupt prac- sumer inventories. And the sig- Pnvate business is, of theiefore,
.
we
nificant
done sure to "lvp "s a
expansion
jn the game manner that we ni(jcant fact is that it has do- s"rR tn give us 3 great evnansinn
ing.
America
has reached the th
congress
Budget
reauests tlces; m the same manner that we nmcant tact is mat it nas done
b
e
and there
g
J
would run a private enterprise, all these things simultaneouslylon8 run ana to leave itcrossroads of decision, and there
crossroaos
ot decisiondecision; ano tnere {otaline oveT$79"willon. Included would run a Private enterprise;, all these things simultaneously.
totaling over *r
$79 billion. Included A
thpep rpvic^d estimate* 7
aa-h
+u
•+
self less exposed to trouble during
is
but one choice.
We must rethis huge amount was an in- As soon as tkesc revised estimates
-, In addition, the bank economist Deriods of economic readiustturn to the precepts which have „rprnpn4.
pitcepis
WlllLIl iicivt;
„„ornpr.4.
annrnvimatplv
^IftVo
puiIllcU UUl, UUalllcab 111 llllb CI
nf nnnroximatelv ^lOV? ™ere Presen.ted> the Appropria-,'■ pointed out, business in this coun- P
J
ments.
raised our republican form of gov- hi11inn
This does not mean, Mr. Shields
nf
DPr^anent aDoronria- tl0nS Committees took,.up their-try has during the past year acernment to the heights we know pl_?n iLnL
iiciguis
we
iyu^w
l "! whirh the work and Proceded to complete in commodated itself without serious warns, that we have reached the
«nl1pd
vvvyiIY
"i commoaaiea lisen wnnoui seriou
today. We must stop and stop im- pp^'rp ° h^
cnntrol• as
in- less
than four months what' difficulty to a iiuiiiuci of far
ls
—x—Congress had no control, as in~ normal'fl7rnmnfiVhpd" in sTy UIU1^1'f
in
* number
of a depression-proof
normally is accomplished in six reaching adiustments The l»l xpi- Utopia
mediately
the
socialistic trends
SS reaching aojusimenis. The mone^ economy for we c^uld experience
reaching adjustments. ine money
eluded in this amount were inter- to piffh: mnnth«
interThP
nf
mone„
which have been insidiously en¬
est
the national qloi, leiu iub !?•
national debt
refunds
© ^ontkf- Jke.ins"PcessJ a± markets have shaken off the artimoderate denression or"a"fairlv
est on
tne
t^ls
is reflected
the addimere
there

Let

° ^lee'

misundeistand
misunderstand-

?r{;
had
had

Admimstratinn
Administration

nresented
presented

XTL7rk

r\r\

nh/-\i

nnf

to
to ttjces

manner

turn

lilt;

ciiinitiiii

lilt:

nvpr

•

q,,ppp^

veloping thjs ymwv/uj xxixk, ci creepwrvjt/Aiig
nation, like a
ing paralysis for the past 20 years.
You may
recall that a form of
communism, the ultimate reflection of socialism
was
attempted

mnk-ine-

OOP

nmonntPd

billion,

$68.6

was

examined

...

vei

„

miserable failure and
nearly fended in the literal
was a

unless

duce

fruits

enjoyPthe

they could

their

propnations

incentive to pro-

additional

facp

incrpasinp

snnnlips

some

rendered

wag

$59

committees

reduced

cut
*-ut

the

made
nmuc

was

wao

nrices

has

hppn

pliminatpH

Lw
tew

at
ai

outlays and

a pause in

business

and

balance

store

consumer

purchasing
to

re-

inventories

and

"cudnce io inventories ana
t0 permit demand to grOW up to
our greatly expanded capacity.

need 'or additional funds became; the highest importance that the The growth potential does

over

this $59 billion by another $4V2

the',

cases,'where

industries
lnaustries retrenchment has
retrencnmeni na^.
been the order of the day. It is of

f" ^
that1'removed°someaof

eral> howeveri it was found
substantial savings could be made
wjthnnt

imnairmpnt

^enS fuSn

and

danserous

«iM

the

sources-of

aa"fer"ul> purees oi

Pnvern-

billion. Thus the total appropria-

labors,

thp

instances,. The post-Korean inflation in a
thorough and precise ac- number of individual commodity

counting

mately $9% billion The Congress,
principally through its two ap-

committee, no
v-wiiuuii-,'cc> liW
al,
In ,other

Ad-

long as they could be supported
by the industry of others; the in-

dustrious had

sliehtlv

realized.

wjjere

TppYxi-

saw

(

Eisenhower A

Fispnhnwpr

thp

roeiiit

As result, the
d

fazy

ncf6reason KS

The

m°aera^e aepression or a xairiy
;
serious recession in the event that
.

Agricultural prices have declined

n]ation of the effects which would

pooling the common wealth the Administration and the Con
distribution among all gress with a severely critical eye,
colonists, energetic and lazy
'

the

of
U1

money

by P^uunoi ine enecis wnicn wouia m tne race oi increasing supplies.

r>™

equal

alike,

period
pel 1UU

w"hout full and serious contem-

annrovirriatplv

nies in

for

long
lOIlg

was

wmtr:i <ainuunieu iu appiuAinidicx^

pnrlv polo-

our

the
lllc

numer-

"spending'

The Truman

penment oi one oi our early coio

ficialities of
liLldllUi

^10na^ cu^s ^kat ^ have described, arbitrarily enforced cheap

1 should like .to make it clear with credit now somewhat more it became necessary for our busithat this reduction in spending costly and moderately tighter than ness to accommodate itself to a
not
made
caoriciouslv
or
has been the case for manv vears
budget,
"f >„{{ Q„^
"
•
i? f
•
I
J years. Slmuitane0us cut back in defense

into

lniancy oi mis country wnn
almost disastrous results. The ex-

retire-

debt

miscellaneous accounts.

oug

in thp infanrv of this country with
in me

^primpnt

for

navmpnts

fund

into

navmpnt

r»nllor>toH

voc

ta-CS volume

jury to our security of economic'
profound truth which was tion was something in excess of well-being. The formula which'
learned by those early peoples is $14 billion under the budget re- 0ljr committee used in reducing
one
which deserves our earnest quests
conceived
by the prior appropriations was a basic, sensThe

buslness volume-

mean,

which-however, that there is no possipotemialfy'bility whatever that we sha11 ex"
imbalance

porience "another 1929," that any

imoaiance ^

COntraCt'°n °£

-° re?fUStment W'" ^

both brief and temporary and will

Su.ch a demonstration of eco- but set the stage for another great
nomie power, Mr. Shields con- perjod 0f progress and prosperity
tended, suggests that we may be ^
nniip,v«
thp

dangers which America faces and

the largest appropriations cut
that has been made by a single
Congress in the history of the
United States or pf the world. It

the edge of an historically sig- ana indl wun buunu policies me
nificant period when the trends of long term trend of growth in the
the budget practice each
of us iong term growth in our economy future can be considerably more
employs in the management of can be considerably more rapid
-d than that of the past
our individual households.
than those of the past. There is
1
;
'.
,
every reason for confidence that
Security of Nation the
with genuinely stimulative poli- Sam Stallard Joins
First Consideration i;., - cies on the part of government,
Our first consideration was for business and labor the recent and

will continue to face in the months

it striking, by

the security of the nation. No re-

ahead,

that the total valuation of my own ductions were made which would medical, metallurgical, industrial
State of New Hampshire, is in have the effect of injuring our and management technology will

consideration today.
to
a

The

An economy Administration.

final

figure

strong must be nurtured in represented a reduction of nearly
climate of free and unencum- $21 billion from the total amount
be

initiative.

bered

appropriated by the previous Con-

Communistic totalitarianism has
thrown
and

its

the

fore

gauntlet

our

feet

challenge is squarely beWe must recognize the

us.

and

bility which is

responsi-

the

accept
ours.

Sress and, as a matter of interest,

was

the
Strides Toward Eisenhower Goals

President

this

economy;

sive

Eisenhower

nation
a

return

promised

dynamic and

program

ditionally free society
systeni of checks and
its

progres-

to be sure, but one

within the framework of

and

stable

accent

our

tra-

balances

individual

this

that

sented

reduction

repre-

This huge

saving, amounting

^ djd to about 20%

of the Truman

en-

Budget,
was
accomplished only
His principal objectives
through teamwork and cooperaunmistakably clear.
They ti0n
between
EisenPresident

create

and

preserve

toP redP
y dr ' m+rGfh
unwarranted^vn^ndftn^nf6nnh
expenditures
pubNew

N«^t"i'.n/c„unncifrpSum.ei°."
Hampshire, Sept. i*8, 1953.

some

or consciousour homes the protection

deliberately

ly deny

prospective

gains

keep the United States for years,

for

decades,

and

perhaps

near

the top of the list of "growth

countries"

the

Dean Witter & Go.

in agricultural,

world.

This

CHICAGO, 111.—Dean Witter &

Co., 141 West Jackson Boulevard,
announce
now

that Sam M. Stallard is

associated with their munici,

tmpnt

neighbors. We can and should an- qUately financed by government J
sls\ however, that the fire de- and business, and staffed with the
Partl?\ent be so operated; as - to WOrld's most competent scientists,

P[ovlde .us,^^ith the fullest.^possiprotection against ' potential

wac.

Eastern Securs. Wire

Thus it is that hardly a day passes
w|tbout

the

announcement

To Ames,

Emerich Co.

danSer f°r the fewest number of. potentially significant new indusEastern
Securities,
Inc.,
real determinati°n on the psirt of dollcirs. That was precisely . our try or of a ' substantially new
Administration and Congressional intention with respect to the de- source of raw materials, or of new Broadway, New York City,
bower

and

the

Cangress,

and

leaderg tQ inyegt thig nation with
a

th.

one.

of our municipal fire department/ true because we have succeeded p
department, ne was
on the hopeful theory that; fire in organizing research into a pre- formerly Chicago Manager for the
20% Reduction of Truman Budget will never, threaten us or, our dictably. productive process, ade- White-Phillips Company,

were

effective

defense preparations. It must be
agreed, I think, that none of us

saving to the taxpayer of would

amount which is 30 times that

terpnse.
were

and

respects it might be compared to

valuation.

its

with

of illustration,

neighborhood of $750 million,

and

way

ible

sound

economy.

substitute
business

Our

orderly

goal

was

fiscal

and

practices in government

Eisen-

President

^
.

hower told the nation in a recent,
Continued

on page

machines and techniques capable

of reducing real costs materially

and

widening our

nQunce
.

markets,. wire

120
an-

the installation of a direct
.

connection to Ames, Emench

38 Anyone who takes the trouble to !8c' Co?, Inc. of Chicago. 4

Volume 178

Number 5260

The Commercial and Financial Chronicle

...

(1227)

Let

by eliminating any offices, are not clear. Autonomy punish fraud is no deterrent to
the two pre- of regional offices represents de¬ legitimate enterprise.
Eisenhower Commissioners—Paul sirable decentralization up to a
The Acts provide for enforce¬
Rowen and Clarence Adams—and point. However, the independence
ment via investigation,
discipline,
of action which .this permits has
the three
new
appointees—Sin¬
criminal prosecution and injunc¬
clair Armstrong, Jackson Good¬ resulted in insufficient liaison be¬
tion. The enforcement
machinery
win and myself. The Commission tween
the
regional offices and is stirred to action either
by pri¬
is in harmony as to all basic ob¬ Washington
and among the re¬ vate
complaint or Commission in¬
jectives.
Its members have had gional offices.
The reconstituted
vestigation.
Many violations are
frequent informal, long and seri¬ Commission hopes to provide for
turned up as a result of so-called
ous discussions at which
they have more effective coordination of re¬ broker-dealer inspections.
When
explored
each
other's
thinking. gional office activities and for the Securities
Exchange Act of
Naturally, there are shades of core accurate knowledge in Wash¬ 1934 was under
consideration in
opinion, but I can assure you that ington of what is happening cur¬
Congress, there was some thought
the
Commission
is composed of rently in the regional offices, and
given to having regular inspec¬
five highly normal middle-of-the- to do these things without mak¬
tions analogous to bank examina¬
roaders.
As
such, we all have ing Washington a bottle-neck.
tions.
This idea was abandoned
„

Current

Thinking at the SEC
By RALPH H. DEMMLER*

explaining the tasks

sion is

now

being undertaken by the SEC, its

"blckdrop"

thinking and acting.

against which the Commis¬

Says there is

no ground swell of
sweeping change in the Securities and
Exchange Acts, and both Democratic and Republican members

public demand for

of SEC are in
harmony as to all basic objectives. Discusses
legislative and reorganization programs now being studied.' De¬
cries suggestion

SEC be supplanted by

a fraud statute, and
perform its statutory duties without
adding unnecessarily to complexity of capital formation.

concludes aim of SEC is

The

Securities

and

Exchange

SEC

regulation.

Business,

start

distinction

Chairman, Securities and Exchange Commission

Chairman outlines the

between

considerable

blood

Effective

administration

the

regional offices is the key to ef¬

Second,

corpo¬

pragmatic

veins.

our

legislative

pro¬

fective enforcement. And you may
rest assured that the Commission

Commission, as an administrative rate, legal, underwriting and ac¬ gram:
body charged with the regulation counting
In the hearings before the Sen-' proposes
morality have improved'
a
sensitive, important and as a result of conformity to stand-. ate Banking and Currency Com¬ vigorous
dynamic segment of our national ards
imposed by the Acts and by; mittee on the confirmation of each
economy as the capital markets, the
Commission
acting
there¬ of the three new Commissioners,
should keep examining
and re¬ under.
; it was made quite clear that Con¬

'of such

enforce, the

program

law.

detect

and

its

place

provision

the

for

substituted

was

investigation

premises.

(4)

not

are

Task

necessarily t o d a y's. Stampeding
buffaloes
no
longer bother the
transcontinental

traveler.

its

and

staff.

The legislative direction is such

Continued

and

page

.Wealth' bf' experience to
bear

the

problem.

Commissioners

new

tial."

been'

the

•

Commission

colloquy

the

not

Commission

speed

also

said:

most

"There

inherent

was

between

each

the

nominee

and the Committee that the Com-;

mission,-because of the technical
nature of the subject matter, could
any

Representative organizations in
fields regulated by the Com-.

essen¬

the

are; of>

mission

formulating a definite
for., legislation and for
should; rule
changes. Some items of the
keep in mind the basic fact that.,
program have been forwarded to
the Commission is an
outstanding, the Commission. As
programs are
example of the 'independent com-,:
formulated, representatives of the
mission
in

bring to

The

course

V a

three

coming from

has

whole

and

gress

the legislative arm of government.

Com-} However,-

administered,^ that

critics

tion .where

The

Commissioners
who1 hold
their,-appointments from the pre-,

^Administration,} have

the

conscientious, and that the Com¬
properly act as a catalyst in
mission r generally * conducts
its
legislative program. •
work with dispatch and
expedi¬

;

.Vioiis

well

that

"concede that its staff is able and

has a special
responsibility to ap¬
praise the work and the attitudes
agency

found

"on

the

the}: new national Administration
the

Force

notably

A five-man ;Commission with
three Commissioners appointed
by

Hoover ,Commission's,"

misison

two

The

•

weaknesses •!..•;

some

evaluating

are

but

program

them,1,

one

at its best."•?
'■ vv-:'/.''
participating ' organizations will
(5) The Commission in the Acts-,; confer with the Commission in an
administered by it is given unusu¬ endeavor to
It goes without saying that the
determine
areas
of
Commission as presently '"consti¬ ally broad powers to make rules agreement. The Banking and Cur¬
and regulations
which have the rency 'Committee of the Senate
tuted does not intend to
sabotage'
force
of
law.
This
the statutes it administers.
rule-making and the Interstate and Foreign
The
power is characteristic of admin¬
Commerce
Committee
of
the
Federal securities laws are not in

the

outside

should''}furnish

some

freshness of outlook;

the

hands

their

want

talk

Commission

istrative

enemies.

about

how

the

approaching

its

task and to indicate in

fairly

agencies,

which!

quasi-executive 'in
ment

functions,

their

are

enforce¬

quasi-judicial

decisional

functions

spe¬

quasi-legistlative in their rule¬
doing.
paint the back-' making functions. The ingenuity

first, let

drop

against

which

takes place:

action

our

the

American

business

munity constantly creates new
problems with which conventional
legislation must necessarily deal

' '

(1) .The statutes administered
by the Commission have not been

The

Public

Utility

Holding Company Act of 1935, the
Trust

general

the

and

all.

have

This

dation

has

the

over

leaving

terms,

sented

(2)

public

changing

is
in
as

There

than

are

100

and

the

demand

for

regulations

may

prescribe-

the Commission

propriate in the public interest or
for
the
protection
of
investors.
The

Public

Utility Holding Com¬
Act provides that the Com¬

pany

mission

order exempt both companies and

There

are

vocal

some

Commission.

representative,

The

are

representative,

many

sponsible

informed

and

re¬

people

who think that the Commission in

certain
time

powers

zeal;
by

from

beyond
an

staff;

.Commission

dominated

both

staff

.high-handed;

and that the Com¬
mission has been careless of other

peoples'

posing

time
on

writers
paper

and

money

issuers

useless

and

work. There

im¬

under¬

duplicative

are

also many

representative,
responsible and
informed people who think that
some
legislative
changes
are

granted
provide such

power

creates re¬
curring problems which will never
be solved to the satisfaction of all:

There

(a)

here and
literal

danger

rules to old

new

rules,

adding
revision

revision

jungle

there, until a
regulations has

markets

Calvin

Chairman

Bullock

case for spelling out
statute a proper practice

the

furnishing

(See
New
•

page

intended

Third,

Can you
page

•

diversify by buying

one

listed stock? (See

9.)

How to
of your

pro¬

use common

stock investment

as a

basic part

retirement plan.

Which industry
that have

includes

less than 48 companies

paid "non-stop" dividends for at least 20

years?

be.
•

What's the revolution going on in food

•

regulations—forms

Why the trend to employee stock plans?

retailing?

—details:
It is recognized that a consider¬

able part of any program will be
effectuated by rule changes and
form
a

changes. Entirely apart from
willingness to consider sugges¬

tions

regulated

YOU'LL FIND THE ANSWERS to

issue of the New York Stock

-THE EXCHANGE.

Commission

Presidents of top

ligation

analysts,

acknowledges an ob¬
own part to initiate
steps to improve and simplify its
its

regulations and

own

forms.

This

corporations, chairmen, editors, market

authorities

better informed—whether

is easier to affirm
carry out.
Each change

than

rule

necessitate
ment

that

strong

form

and

likely

change

some
or

form.

Each

given

usually

up
a

Commissioners

meeting

among

you're

logical

been

and

This

exchange
jblished

the

newsstands

enclose

check

agenda of specific and

with

below

conferences

such

pocket magazine is

not sold

Guiding the

discussion
been

to keep

old at investing.

12 issues for $1

de¬

themselves

staff members.

exclusive

way

have also had frequent conferences

with

write

quick

new or

require¬
finds a

have

an¬

fender.
The

investment

articles for THE EXCHANGE. It's

responsibility
of

questions like these in this
Exchange official magazine

the

groups,

full

strike

down

abuses

they

There will always be

room

develop.
(c)

detailed

not

both sides

proposals.

examine,

ana

for

dollar bill
the

with

specific

power

back

their

respect

set under

Demmler

Forum,

1953.

New

before
York

coupon

year's

sub¬

scription.

the

recommen¬

specific

matters.
Out

these

emanated

some

proposals

being abused.

which

discussions
of

the

shall

have

specific
discuss

THE EXCHANGE
20 Broad Street,

Magazine, Dept. B

New York 5, N. Y.

Enclosed is $1.00 (check, cash, money order).
Send

the next 12 issues of THE

EXCHANGE.

Name.

Approach to the New Job

and
ac¬

—

Certain Com¬

report

Commission

dations

argument

So much for the

let

our

customed to the pattern

the

think the "movies" are dead as an investment?
12 of this issue of THE EXCHANGE—the
York Stock Exchange official magazine.)

Do you

later.

capital

corporate issuers have become

City, Sept. 24,

strong

the

which

talk

•

missioners have been delegated to

shown to exist.

(b) Rule-making power imposes
duty of restraint but it also
imposes a duty to use the power
a

whether

The

speculate

for

(3)

have

grown.

to remedy defects, am¬

has

however,

power,

and

experience

from

Securities

The existence of this rule-mak¬

ing

the

judgment of stocks

will be offered to the Con¬

other rule

biguities

impracticalities

the

under

from

lations.

necessary
Act

provi¬

exemption by its rules and regu¬

and

have sometimes been

exemption

to the Commission to

statutory

of regulatory

been

that

time

its

excess

it has

that

its

has

areas

gone

stems

certain

.or

$300,000

registration
Act

.regulation

from

sions of the Act.

who advocate the abolition of the

Commission and the repeal of the
Acts administered by it. And there

rule,

transactions

elements, perhaps

than

necessary or ap¬

ministered

the

for

the Commission* spectus which will make that doc¬
expressly granted rule-making-, ument the medium of information
power. For example, the Securi¬
for the prospective investor that

repre¬

ground

above.

premature and in¬

to what kind of legislative pro¬

gram

condi¬

sweeping change in the Acts ad¬
by

appropriate
as

ing in contravention of such rules

approach

there

meet

ties Exchange Act forbids stabiliz¬

which

would

instances in which

administers.

Neither

swell

Acts

that

regulation

the

Commission

basic

Committees mentioned

to improve your

of years

number

the

securities

Act

foun¬

some

the
"

ation.

amended

observation

accepted

been

furnishes

for

Congress

not

advised

cleared with the Chairmen of both

tions and particular types of situ¬

Act of 1939, the
Company Act of 1940

Investment Advisers

1940

details

Indenture

Investment

kept

gress with or without the Com¬
the* mission's blessing. Certainly there
as a quasi-- is room for some clarification in
legislature the job of filling in the the statutes. For example, there

substantially amended since their administrative
agency
enactment.

com-v.

This general method of
has been informally

progress.

in- approach

and

cific terms what it is
But

will

House

job.

First,

discuss

Fourth,

backdrop. Now

our

approach. to

the

philosophy

organization

and

programs:

The Commission has under study
the

the present Commission:

Address_

organizational

set-up of its
of staff. Lines of command, particu¬
larly with respect to the regional

City.

discretion of the Commission.

examining -its
major
Yesterday's
problems

Zone.

State.

and Financial Chronicle... Thursday, October 1, 1953

The Commercial

(1228)

of the Public Debt

Faults and Virtues
The

has a fine col¬
portraits
of former

Treasury
of

lection

which

Secretaries,

banker, in discussing faults and virtues of the
broad economic point of view the faults of
present huge debt outweigh its virtues. Points out our ability to carry the
debt depends on growth, nourished by a free dynamic economy. Reveals
shape of the National Debt, and lays down as principles of debt management:
(1) avoidance of inflation or deflation; and (2) avoidance of impairment of
dynamic economic growth; Says debt reduction is traditional American policy.

historic
office, I asked
the

for

por¬

Glass,

of Vir¬

and

hangs

he
the

behind

looking
my

over

shoulder.

him

out

eye with¬
quailing, I

satisfied.

the
W. R. Burgess

sound

believed in

Glass

Carter

vigorously,
tenaciously,
and, at times, explosively.
The
Federal Reserve System, which he
fathered,
is this country's best
money,

sound

for

instrument

money,

suggested

Humphrey

Secretary

of two

constantly reminds

principles.
sound, honest money

One is that

always, is cherished and
promoted
by distinguished men
of both parties.
today,

The other is thc.t the

role

be realized only

can

Treasury's

maintaining sound

in close and

System.

Retserva

That

servants than the men

and women

in the Federal Reserve Board

Banks; they have proved
more,

and

it once

they have worked with
in recent months.

the Treasury
For

years,

known

have

the

public debt, but in the past nine
months, since I became her slave,
I have learned more of her tricks.

one

every

of us as

markets and dis¬

sorts of
*An

tough

however,
remind
ourselves that this character, like

debt

the

should,

girl with the curl on her fore¬
can be good as well as hor¬

Burgess

public

part,

which

symbol

and

is, in
great war

today

debt

partners won.

our

in this room is
the debt in the
Savings Bonds or other

Almost everyone

holder of part of

form

These bqnds
most prized and
satisfying possessions. In this un¬
certain
world,
they give us a
Treasury obligations.
are

among

sense

They

may

our

and

assurance

fairly

security.

the

called

world's best investment.

The,.interest
ernment

debt

paid
is

not

the

just

gov¬

cost

ican

Bankers

C.f

Sept.

Association,
23,

In candor

before

the 79th Annual Convention of the Amer¬

Washington,

ever,

point

1953.

would admit, how¬

that, from a broad economic
of view, the faults of our

Dealers in

General

banks

and

millions

and

borrows,

indivi¬

borrow

duals.

the

it has no elbow room to
it is constantly off

year,

turn

Treasury has

too often in the course of

money

longer-term

hands

the

in¬

vestors.
.

run,

the

that

steadily

around;

Even

balance.

of Treasury borrow¬

stream

uous

the market off
a
contin¬

worse,

terest.

itiative. ..."

strength
surely, the

The

big.

^Tiat is

lesson of history.

There

third course—to in¬
increase the national

b,y price inflation that the
relatively
smaller.
That is a form of partial repudi¬
income

Facts

our

and

won't seem

flate—to

Our

men,

grows

head,
rid.

long

depends on growth. If we
a
dynamic economy of

free

increase.

Mr.

than

nourish

She seems to be
always under foot.
peace.

old

people.

address

the

debt

investment

turbs the

to the people; it is income to mil¬
bird to han¬ lions of individuals, either directly
dle. She pokes her way into every
or through life insurance and sav¬
cranny of American life, and she
ings accounts.
When rates rise,
goes around interfering with all the benefits as well as the costs

She

taxes

collects

dealing each time with thousands

Past differences in policy ing leaves no space in the mar¬
the only real
between
the Treasury
and the ket for the Federal Reserve Sys¬
solution is gradually to reduce the
Federal
Reserve
Board
have tem to opterate, when it needs to
debt. That is the American way.
rupts the flow of our economic
to
encourage
inflation. make a policy move to resist in¬
We have always done it before, helped
life when she gets out of hand. In
Henceforth, I expect that their flation. The Reserve System can¬
the war, she and her wicked eco¬ and I believe we will again. Until
single purpose shall be to serve not serve two masters at the same
we live in a more peaceful world,
nomic side partners caused infla¬
the whole Nation by policies de¬ time; it can't lend necessary aid
tion, and, even since 1946, she progress in this direction will be
to Treasury financing and, at the
though
we
have started signed to stabilize the economy
and they got out of control and slow,
and encourage the free play of our same time, tighten n^oney to check
moving in the right direction.
put the cost of living up 35%. She
inflation in the broad public in¬
Also, our ability to carry the people's genius for individual in¬
breaks into the money market and

co¬

operation has been present in full
measure this year.
I believe there
is no finer body of devoted public

money

daily cooperation with a free Fed¬
eral

payments

present huge debt far more
offset its virtues.

taxpayers.
But her most serious
misbehavior is the way she dis¬

the

yesterday.
Carter Glass

public debt levies interest

The

and

arojand
look

Treasury

out to pay its bills
money out of the market

money

—takes
as

the

which

balance and keeps

turn

can

tions
pumps

our

ginia,

that from

Public Debt, finds

trait of Carter

wall

prominent New York

Former

into

of the Treasury

Deputy to the Secretary

Wnen

moved
m

retains a
That
apparently simple statement cov¬
ers a lot of territory.
It is short¬
hand for a seething mass of opera¬
which

money

fairly stable buying power.

available

are

offices.

its

furnish

honest

RANDOLPH BURGESS*

facts

The
debt

are

of the

shape

the

matter

of public

rec¬

inflation

the Treasury has had to

In 1953,

finance

tions

redemp¬

and

maturities

billion and a
billion.
Thus,
equal to one-fourth of the

$60

over

deflation.

We want to

both.

avoid

ord.

the character, the

amount,

placing, and the timing of public
debt moves add up to pressure for

The

second

great

principle

is that it should
impair -the dynamic

debt management

aid

and

not

deficit of $9 to $10

growth of the economy. It must
not impede the free flow of funds
a sum
national debt had to be financed into business enterprise. Its poli¬
ation,
a
reduction of the real
in a year. Before the end of the cies should encourage savings, for
value of our bonds and our money.
year, we shall have gone to the
saving provides the capital basic
That is what has been done—and
market, either for refunding or to economic growth.
what we are stopping.
We want
raising cash, nine times, exclusive
growth and not inflation.
Operations in 1953
of weekly offerings of Treasury
Meantime, before we reduce the bills.
In
accordance with
the fore¬
debt, we have to live with her.Nearly
three-quarters of the going principles, our problem in
The Program
1953 was not just one of finding
debt matures, either definitely or
out
what
securities the market
In his State of the Union Mes¬ optionally, within five years.
would take at what rate, but it
sage on Feb. 2, President Eisen¬
A substantial part of the infla¬
was
also one of making an ap¬
hower, in dealing with the na¬ tion,
which doubled the price
praisal of the economic situation
tional debt, said:
level and cut the buying power of
to make sure that our operations
It is clear that too great the dollar in half in 13 years, was
would stimulate neither inflation
a
part of the national debt be¬ due to financing too much of the nor deflation. This meant, in fact*
comes
due in too short a time. debt
at
short-term; through the
deciding our policy in cooperation
The Department of the Treasury banks and so creating bank credit,
with the Federal Reserve System,
will undertake — indeed has un¬ in
effect, printing money.
The whose
duty it is under the law to
dertaken—at
suitable
times
a total money supply, currency and
administer the money supply with
program of extending part of the bank deposits, swelled from less
these same objectives.
debt
over
longer
periods
and than $65 billion in 1939 to $195
B,y any objective test, the coun¬
gradually placing greater amounts billion in December 1952. This
try 'was at or near the top of one
printing press operation doubled
of the greatest booms America had
the price level—the cost of living
ever known.
The production in¬
—more than doubled the price of
dex of the Federal Reserve Board
a
house—of a piece of beef, or a
was* making
new high peacetime
suit of clothes.
Every person in
records month by month and was
the country was hurt in one way
10% higher than the year before.
or
another and especially people
The national income measured in
who saved or who lived on fixed
inflation
dollars
was
steadily
or
sluggish incomes.
The only
climbing
and
was
$20 billion
gainers were the speculators or
larger than a year ago.
the pressure groups which kept
There
was
full
and overtime
their own incomes a jump ahead
employment.
of the trend.
Private bank
credit was still
These facts, with which you are
rising, particularly in the fields
all familiar, were the reasons for of consumer credit and real estate
the President's program of ^debt
credit, in a way that was giving
debt

seems

Obligation Municipal Bonds

Municipal Revenue Bonds

management.
Two

WATER

•

ELECTRIC

•

Now

HOUSING

which

lifted.

as^td^the

words

few

framework

TOLL BRIDGE

Heavy deficit financing faced us,
and
direct controls were being

Management

SEWER

to many careful observers.

concern

Principles of Debt

debt

man¬

It is not just a
problem, nor is it just

agement operates.
mechanical

•

and

problem of finding markets. The
national debt is woven into every
a

corner
can

our

done

qALLEN &

the

impact
of

debt

de¬

the

country

but

economic life.

the

a vacuum

And I suggest that

which form

principles
the objective and the

framework

for

there

New York 4

two

are

great

decisions

the

debt.

Reserve

judgment of the Federal
there were still

System,

inflationary

pressures;

the

Re¬

serve

Banks raised their discount

rates

early

was

What

this

all

added up to was

that the Treasury

its deficit and

the
general

the year and

pursuing a
policy of credit restraint.

System

ought to finance

handle its refund¬

ing in such
increase in

stand

their own feet without
Reserve
support
and

Federal

which would

non-bank

be taken largely by

investors.

Accordingly, we made an anal-

The first is to avoid inflation or

deflation.

diminished exports.

In the

wa.y as to avoid an
bank credit through
our operations. This meant financ¬
country's
ing
with
securities that could

management

debt

Therefore,

cannot be conducted

Established, 1922

with

the "Whole financial
and on the
welfare of all the people.
ous

life

30 Broad Street

economic life. What

pends on the stream of incomes
and expenditures and savings and
investment. And, in turn, what is
done with the debt has a vigor¬

Municipal Department

offsetting ten¬
in some agri¬
due to large crops

principal

The

dency was weakness
cultural prices,

That

means

to manage

the debt in the interest of sound,

lysis of the availability of funds.

Continued

page

Volume 178

Number 5260... The Commercial and Financial Chronicle
f

(1229)

STEEL

can

many

jobs

well

Early skyscraper says goodbye. Pittsburgh's
Carnegie Building, built in 1895, was one of
skyscrapers. When it was
recently dismantled, practically all of its
America's very first

structural steel framework

in reusable condition

was

found to

convincing evidence

that U-S-S Structural Steel

durable backbone for any

provides

strong,

building.

1\\
Ww

-Ml
2

Going around in circles.

Here you see a huge coil of stainless steel tubing being welded in a
15,000-gallon, stainless steel vessel which will be used by a leading pharmaceutical maker for the
fermentation of penicillin.
metal for

Corrosion-resistant, sanitary U*S'S Stainless Steel

thousand vital jobs in almost every

industry. Only steel

can

proves an

so many

jobs

ideal
well.

Up she goes!
pedestrian
in Los

Angeles

busy Freeway
This
site

When this final

overpass
was

was

span of a new
for the Romona Freeway
ready to be erected, the

closed to traffic for 2 hours.

huge 136-foot section

was

hauled to the

by truck, then lifted by three

the concrete

cranes onto

buttresses. United States Steel

fabricated and erected it.

'4'':

t:
y.:

j."-- ;•

Transporter for "Atomic Cannon."
84 feet

long, yet

can

Designed to transport the Army's nefo 280 mm. gun, the T-10 Transporter is
make right angle turns at city street corners where streets are only 28 feet wide. With its two

independently-powered tractors, it can move forward, backward or sideways. The generator-powered gun, the
Army's largest caliber artillery piece having complete mobility, will fire either conventional or atomic shells.
U. S. Steel furnishes carbon steel and a
special alloy carriage steel for this equipment.
For further information

on any

product shown in this advertisement, write United States Steel, 525 William Penn Place, Pittsburgh, Pa.

This trade mark is your guide to quality steel

UNITED

STATES

STEEL

AMERICAN BRIDGE..AMERICAN STEEL & WIRE and CYCLONE FENCE..COLUMBIA-GENEVA STEEL..CONSOLIDATED WESTERN
STEEL..GERRARD STEEL STRAPPING..NATIONAL TUBE
OIL WELL SUPPLY..TENNESSEE COAL & IRON..UNITED STATES STEEL PRODUCTS..UNITED STATES STEEL
SUPPLY..OMm of UNITED STATES STEEL CORPORATION, PITTSBURGH

GUNNISON HOMES. INC. - UNION SUPPLY COMPANY • UNITED STATES STEEL EXPORT COMPANY

•

UNIVERSAL ATLAS CEMENT COMPANY

J-UM-A

The Commercial and

Financial Chronicle

Thursday, October 1, 1953

...

(1230)

The Outlook lor Interest
become

has

rates

terest

By ROY L.

in¬

Appraising the outlook for

challenging task.
As
Government bond prices

were

the

range,

possible /'e r

in assess¬

ing the future
was limited by
the determi¬
nation

the

monetary

au¬
thorities
to

support

mar¬

ketable

long-

term Treasury

bonds

the bond market crisis,

money

RoT u Reiers°n

Even after the

and

'{rates

reached

Beaks

bond

not seen since

the Treasury and

between

Treasury's peak of 2.42% early in June. The more funds helped restore confia 2%% Victory bonds, which had dence and reverse the trend.
against any opened the year at about 95% and
Despite the tight credit squeeze

Federal Reserve to the

refunding
measure

provided

operations

of assurance

precipitous
declines
in
prices of Government obligations.
Some months ago, however, we
really

at the of the spring months, no signifiMarch, slipped to a low of cantly damaging effects have be8915/16 on June 2. At the same come noticeable in the economy.
quoted around 93%

were

end of

the sharpest time, corporate bond yields, espedally on new issues, rose spectacyears. This development was in- uiarly,
and yields on municipal
teresting,
illuminating and
in- obligations also
moved sharply
structive; in assessing the future, higher.
experienced one

increases of interest rates in many

it cannot
The

be ignored.

Recent

Bond

Crisis rates and yields was
wiHf^nrpnH

The

tightening of credit in the

!^mgnnf only
able not nn!S

for

of the advance in

The rapidity

Market

fhf fact
the

accompanied

mnrphpnsinn

the financial markets.

It brought

that to mind earlier instances of credit
tightening such as in 1920 when

was

cies would

operate to bring about

jgressively higher level of in¬
terest rafes.

Beginning
about
April,
the
budget outlook began to

•reasury

deteriorate. The realization spread

-fhat Federal receipts were not go^ng to live up to expectations, and
expenditures

that

could

not

reduced as rapidly as some had

yields boom, or in 1937, when restricthe tive credit policies again contribearly 1930's but even more for uted to a substantial drop in bond
the
Federal Reserve in
March, the
rapic[ity
with
which
this prices. Consequently, late in May
1951, and the subsequent with- SqueeZe developed. The average and early in June 1953, the mardrawal of support from the Gov- rate on new Treasury bills, which kets at times appeared distressed
ernment
bond market, the con- kad moved around 2.06% in the and disorganized, until effective
tinued assistance rendered by the f jrst quarter of the year, rose to a Federal Reserve action to supply
yield.

2Vz%

accord

squeeze

probably even tnore importantly,
the market was apprehensive that
credit and debt management poli¬

credit

growing prospect of large Treas¬
ury
borrowings.
Secondly, and

credit and rising

Reserve,

eral
the

rors

which arose from the tightening of
interest rates last spring, New York bank economist holds
present indications are that demand for investment funds generally is likely to
show some decline in 1954, but increased borrowing by state and local gov¬
ernments may offset this trend.
Sees economic forces operating to produce
moderately tighter credit, but holds course of money rates will be governed
largely by the policy of the monetary authorities.
Discusses debt manage¬
ment problems, and reveals difficulties involved in attempting to sell long-term
Treasury securities in prevailing environment.
Commenting

pegged
Fed¬

the crucial

development

probably
in the realm of expectations.
In
the
first
place, there
was
the

the

creasingly
long

the

element

New York City

the spring,

yields

REIERSON*

Vice-President, Bankers Trust Company,

.in¬

Rates

tained in the face of a substantial
outflow of gold in the first quarter
of the year, contributed to the
pressure upon the reserve position
of the commercial banks. As a
result, the member banks continued their large borrowings from
the Federal Reserve banks, and
credit remained tight.
With funds scarce and loan demands high, the leading commercial banks in April raised the
prime lending rate from 3 to
3V4%. Shortly thereafter, the au-

Government
obligations, the decline meant littie more than a book loss which
by now has been partly recovered;
some financial institutions showed
sizable declines in the book values
For most holders of

thorities took the long-delayed
step of raising the rates on FHA
and VA mortgages. This action
was belated recognition of the
change in the level of long-term

anticipated. Consequently, it became evident that the deficit for
the fiscal year 1953 would be significantly larger than estimated,
and that the Treasury would be
required to raise more new money
than had been generally foreseen
earlier in the year. All this made
the financial community highly
sensitive to any prospect of a more
restrictive credit policy and more
aggressive Treasury funding operations.

In this environment, certain
pronouncements by the monetary
and fiscai authorities injected additional uncertainty into the mar^et piace in April, the Chairman
Qf the Board of Governors of the

interest rates andwaS designedto Federal Reserve System discussed
"
funds ^nto guaranteed mortgages* the transition to a free market in
stability, solvency and earning lunas into guaranteed mortgages, Government securities
He reb
P°wer
werf. not+. jeopardized, it contributed to higher bond iterated a point he had already
of ^eir bond
.

Throughout the entireinperiod, the
volume of trading
Treasury

yieIds. sa™ peno^^ Treasury that instead of trying Federal Re¬
the
made in earlier months'maintain
Injhe
to namely
an

"orderly" market,

bonds . remaineddecline in indicat- entered The expectation long some an "orderlv" market Federal Remoderate, auoted funds. the market 101 that term
policy should be directed
by Mr. Reierson before ™ postwar
.
,,
omeriv marxei. reaerai xte
Hie Annual Meeting of the Savings and
brought to a
in? Uldl
j
u
chnrt form dpht would be refund- toward
correcting
"disorderly"
Mortgage Division of the American Bankiqoo'c
when
pfforte
heinu prices was not accompanied by snort-term deot would pe retund
^ Association, Wa.hinr.on, D. C, Sep.. m a
t^ curb tne stock maAet any importantwere realized, Even ed into longer maturities, g™' phasized that/'only veryhe emliquidation. this that new long-term Treasury
diti
Furthermore rarely
2lCurD the stock; market where losses
wnere
realized,mis —
^,
frequently done to achieve &°nds would De ottered in iyo^
likelv to be a disorderly
tav
qavinas and to
reinvest tne
over the market
fy
tax
savings and
to leinvest the had been hanging beginning of the situation ir lywould require Fedthat
funds,at more remunerative rates. aI least since tne oeginning 01 tne
Reserve intervention for reapolicy.'
Nor do business activity, and emand had probably contribK^e than credit -5,"?.,
nWmentTnnear tn have heen nn- uted to the softer tendencies in sons other
bond
market in the
early Probably an even stronger imof the *be
fevoX affected; "most of th" months of the year. in the earlv Probably was created by remarks
hnnH nwket Treasury of- pression
Underwriter • Distributor • Dealer
business
indicators are
still a* ficials
a
appeared cognizant of the made in May by the Deputy to the
high levels. Because of the com- p^e^ilfng" unc^rtaM
de- Secretary of the Treasury, who
plexity Of the problem and the Prevailing uucei wmues,- l"e" u*.
.
offrepd that thp Treasury
time lags involved we shall orob- clsl0n to offer a new 3/4% loi?g"
? iy agreed ™at.tne treasury
term bond for cash subscription must finance itself in a free and
ably never be able to say with
April was preceded by a careful competitive market without Fed—TT"
An address

•

thp

nnstwar

inflation
intlation
halt, 01*

hpin«
was being
in the late
wiq

serve

were

and

—

was

....

ga?.

market

f§Securities of the United States
Government and its Instrumentalities

Ration'of^ the p^ospectWe

eral Reserve assistance, but also

nfthlinHm.nf icm »rtver.£iv
market. ' Furthermore, the new indicated that somewhat more ae¬
,thl i] nnf uf,in. money offering was limited to the tive Treasury competition for private investment funds would be
in
1954
esneci^lv since even modest amountthof S1 WlHon and """
wholesome; while assuring that
especially
th
t
f
.

State, Municipal and Revenue

had'^ome"1 to expect Pearedofattractive, issue announceThe was well
_*?•.? ment
the new

observers

Securities

decline in investment activ¬

some

ity in the period ahead.

small

Bonds, Preferred and Common Stocks
of

premium

Development of tKe Credit

offering

Squeeze

Corporations

went to a

trading on a
However, the

led

basis.

some

retrospect, the sharp rise in of outstanding long-term Governinterest
rates
appears
to
have ment bonds.
.
evolved out of a unique combinaThe enthusiasm for the new istion of circumstances and events, sue was short-lived, and was fol-

Company Stocks

Bankers' Acceptances

The

Reconstruction and

Development

at work were
activity and a

major factors

economic

peak
Securities of the International Bank for

moderately restrictive credit policy. combined

with

forts to improve

Treasury

ef-

the maturity dis-

tributiop of the Government debt,
but
the
effects
were
probably

Canadian Bonds

enhanced

much

Foreign Dollar Bonds

the

by growing anx-

financial

community

iety

over

the outlook for interest lates.

the credit squeeze
continued high and

The stage for
was

set by the

rising rate of economic activity in
the early months of the year.
vestment

els,

In-

proceeded at boom lev-

and although record savings
being
accumulated,
bond

were

yields

The

rose

FIRST BOSTON
CORPORATION

the

somewhat in response

sustained demands for

Philadelphia

Pittsburgh

Cleveland

of the

goais set forth by the authori-

ties; members of the financial
community generally recognized
the basic soundness and desirabil¬
lowed by a further and substan- ity of these principles. Nor were
tial weakening of the bond mar- the convictions expressed by the
ket. Although the offering/was authorities'noVel or startling; the
heavily oversubscribed, it soon Federal Reserve had been moving
became evident that many sub- consistently toward these objecscriptions ha-d been entered by fives ever since the end of World
speculative interests intent on a w,ar u indeed in December 1952,
"free ride" to quick profits.
Not- |nd again early in 1953, the Treaswithstanding this fact, the Treas- ury had successfully consummated
ury- decided
to allot in full all refinancing operations without the

subscriptions of $5,000 or less, and
to. make allotments to larger subscribers on a flat 20% basis, thus
treating
institutional
investors
and other firm buyers on the same
basis a§ subscribers who were
eager to liquidate at the first opportunit.y.' F u r t h e r m o r e, the

support of the Federal Reserve,
which fact was widely recognized,
However, since these statements
coincided with a period of tightening credit and large current and
prospective demands for funds,
they readily lent themselves to
disturbing interoretations
.
r

in-

Treasury had offered to

In addition, busi-

™rl0nainsa°J£

rates.0 ^ flrmmg 0f interest
Boston

asserted that "it
be at the end
queue."?*"
*
r
he also

not always

exchange
Th
financial community was
nonmarketable F and G bonds further troubled by certain com¬
ness requirements for bank credit
maturing in 1953 for the new 3V4S ments made by the Chairman of
failed to show the customary sea- at par, and sales by some holders the Board of Governors early in
sonal
decline.
Economic
forces who had accepted this exchange
May on the subject of member
were thus operating in the direeoffering added to the selling pres- »a/k
s

vestment funds.

New York.

should

Bank and Insurance

Treasury would proceed cau¬

tiously,

The unsettling effects of these
downward statements cannot be ascribed to
adjustment in the market prices any quarrel with the philosophy

when-issued

Industrial, Public Utility and

Railroad

received and the bonds

the

Chicago

San Francisco

the

same

time, the Federal

the money
neutral

additional reserves to
market. This so-called

policy, which

was

were

Jhe they
May, ^

were already selling at a
and this dealt quite a

discount,

anticipate normal seasonal re¬

quirements and be in a position
to meet them by adjustments in

blow to
market confidence,
liquid assets with a minimum reWhile all these factors help exContinued on page 29
main- plain the rise in interest rates and

Reserve authorities refrained from

providing

bonds Ali r?Sali
issued

Volume 178

Number 5260

...

The Commercial and Financial Chronicle

UNIQUE "DEPOT DELIVERY SERVICE"
transit items to proper

after

final

ment

has been made

transit

speeds

rail and air terminals,

evening consolidated check ship¬

"plus" to

—

assure

real National

City

faster presentation of

checks.

NATIONAL

CITY TIMES

SQUARE BRANCH MANAGER, Walter

J. Brotherton, right, talks

depositor—operator of the nationally-known Times Square newsstand at the crossroads
the world where hankers visiting New York buy their hometown newspapers. Brotherton's

to a

intimate

neighborhood is expanded by the

knowledge of large and small businesses in his

Bank's 67 other New York managers to encompass
generates a

the entire city. This city-wide coverage

"know-how" and specialized knowledge of New York's business

that is available to National

"communities"

City's correspondents for the asking.
ALMOST

THE

credit files
are

NATIONAL CITY puts the personal
touch into correspondent service
When

banker calls

National

City for

ser¬

vice he knows he will receive the attention

and

personal interest of an officer who is intimately
acquainted with his territory and its problems.
To learn

first-hand of the needs of their

correspondents, National City officers make
frequent trips about the country. In addition,
each district officer is a specialist in at least
industry or line of business—an invaluable
banking experience and knowledge on
which National City correspondents may freely
draw. And it goes without saying that our cor¬

HALF

MILLION

business firms all

National City
over

the world

being constantly revised and enriched by

Bank

men

National

the

scene

like Johnson Garrett,

City's Paris Branch Manager.

respondents enjoy prompt, efficient handling
day-to-day banking transactions.

of their

With 68 Branches in New York, 57

Branches

and correspondents in every commer¬

overseas,

cially important city of the world, National City
has unmatched facilities to keep bankers in
touch
and

with

up,
to

world-wide economic

conditions

developments.

Next time

one

fund of

call

difficult

banking problem comes
DELMONT

We welcome the opportunity
how we can help you help your

on us.

show you

the

customers.

financing, is
team

that

counsel

THE NATIONAL CITY BANK

PFEFFER, Vice President, one of

country's top authorities on

OF NEW YORK

municipal

key member of the National City

can

every:

provide correspondents with

banking problem.

Head Office: 55 Wall Sfreet, New York

Around-the-clock Transit Service

Participation in Local Loans

•

Collections

Safekeeping

•

Credit Information

Complete Foreign Facilities
MEMBER

FEDERAL

•

Bond Portfolio Analysis

Personalized Service

DEPOSIT INSURANCE CORPORATION

•

Dealers in State and Municipal Bonds

Complete Metropolitan New York Branch Coverage

Co-amercial and Financial Chronicle... Thursday, October 1, 1953

The

(1232)

Objectives of Federal Reserve Board
Today I would like to talk with

By J. L. ROBERTSON*

trustee to another,
something that seems very

Member, Board of Governors of Federal

you,

one

about

important

thing

the moment;

nature

common

is the corpus

trust.

There

that

deplores lack of understanding of efforts

policy, and

est rate

says

Federal

even

label

and

trusts

Your

Robertson

climate

overlap. We both

ours

judg¬
obligated to exclude
sound

and

prudence

ment; we are

prevailing tions

that

condu¬

cive to stable values,

steady

national wealth,

our

maximum employment,

and to

rising standard of liying paral¬
primary objectives of the
Reserve
System. Conse¬

the

quently,
I

you
over

must be as concerned
the widespread mis¬
perhaps

understanding—or,

accurately, lack of understanding
some
of the
efforts
being
of the Reserve System's trust— —of
made
to
provide
that sort of
a trust that must be administered
Money and credit are the corpus

benefit

the

that trust has

how

of all

How

peopjle.

can

activities

Ameri¬

can

distinct

bearing

should

scious

than

contribution

con¬

businessmen

most

Freedom

exercise

the

essential

values

who

to economic progress. Your

unique

from

of responsibility

providers
funds

—

and
to

users

both

Desired

clear

both

bank's

depositors

and

criticize lies at

its

that

cannot

preservation. One

benefit

and

criticism

intelligent

business.

entitled

has

tially

when

the

for

them

shrunk

substan¬

rainy-day

need

Consequently, criticism
to impartial appraisal.

underestimate

and

source

deteriorate and

values

You bank officers with trust

re¬

substance.

icy,

and

immediately

found

mind dwelling on the new "hand"

who, years agorv rode a vivacious
pacing mule into the ranch on

which I was working near Broken
are acutely aware of
vagaries of fluctuating values, Bow, Nebraska. To hear him tell

sponsibilities
the

because
which

ity

those

the

upon

out

carry

who

funds

pronounced

they have
have

your

the

abil¬

wishes

entrusted

Each

their

safekeeping

your

management.

effect

and

could

you

draw from your experience in the
recent

past

examples of

numerous

trust accounts which now fall far
•An

address

Mr.

Robertson

before

it—and

world's

best

still

can—he

the

was

cowhand.

said

that, like the rest of us, he had
always ridden horses until the
day

before

when

had

picked
up this mule, but that no horse
could compare with it. He regaled
us

with

must

its

qualifications.

admit

intelligent

the 79th Annual Convention of the Amer¬
ican
Bankers
Association,

much

dence

was

and

that it

gifted

1953.

that

the mule.

neces¬

berate

enough

say

the

terms.

bad

qualities

So, with the view of
brought

with praise when

over

it. It

was

underpinned

that

with

tapered

And

horse

strong

legs.

refused

saddle

even

astride

loudly

it,

let

him

alone

get

let

suspicions

must

Railroads

and

fairly criticisms

apparent that

based

them

some

do so,

the most careful attention.
ever, even under the

partial
be

appraisal,

based

personal
have

pinch,

been

How¬

lights of im¬

others

the

than

twice

loose

the

That

seem

told

which

instilled

interest

Monetary Policy Not To Be Used
Political

Football

Members New York Stock

mon¬

political football, because it

perhaps

his

family

the

people

the

is unfortunate
itself

well

that

grasp—and,

distortion.
ever

that

even more

longer

Private wires to

•

are

BOSTON
^

PHILADELPHIA'

CLEVELAND

HARTFORD

CHICAGO
SAN

FRANCISCO

been

from

year
as

government

billions

pay

for the things it pur¬
happened when infla¬

swelling

was

costs?

the

The

government

superficial

analysis

finds it convenient to ignore those

"the

great

corporations

You

are

such

that

the

most

group

tion"

investors

aware

the

result

"great
is

the

companies, which

corpora¬

insurance

simply in¬

are

larger

extent,

millions

insured

the American

realize

rank

very

Our

task,

and mine—and

yours

Reserve

policies

rather to

and

action,

but

help the American

ple get what they

are

peo¬

entitled to:

fair

understanding of what is
happening in the monetary field

and

why, and what the

tives

are.

know

that

may

alterna¬

who

man

does

misled

not

"tag" applied for prejudicial pur¬
poses, a tag such as the "hardpolicy"

money

policy"

or the "easy-money
something else. But

Americans

knowing

—

the

and the choices—are not

misled

facts

going to

Federal

anyone.

Reserve

Monetary Policy

What is the

monetary policy of
the Federal Reserve System? Its
policy—the only monetary policy
it

has—is

make

the money and

needs

for

much

operation and
growth—but not so

induce

to
to

inflation

line

is to

it that

see

with

The

the

goal

System,,

boom-and-bust

arise

not

deflation.

cause

purpose,

all

economy

normal

healthy

little

available

credit the

from

money

and credit causes, and to moderate

cyclical
from

movements

other

should
while
the

mind

that

must not underestimate

one

role

will

borne

stemming

(In passing, it

causes.

policy,

monetary

do well

not to

exaggerate it,

either. Even in economics "money
isn't everything." The whole mat¬
of

credit supply is only one
affecting the nation's wellbeing.)
The
eral

that

credo

Reserve

our

underlies

policy

conviction

and
that

values—in

the main

will

the

buy

same

stable

dollar that

amount

goods and services from

Continued

Fed¬

purpose

one

year

page

and

people. The

all know, will not
windfall from the change
as we

interest-rate patterns; in addi¬
tion to being recipients of interest

they

also

are

$60

payers

billion

time

interest

deposits,

and

the
percentage
return
on
capitalization of the American

banking

system

has

not

any
startling increase as
sult of high interest rates.

shown
a

re¬

We also know—even if the

de¬

our

interest

rates

are

little fuzzy

themselves, but

view

demands

the

are

great

higher

sense

simply,

volume

for

credit, an inevitable
accompaniment of a very honest
effort to re-establish the dollar
a

dependable

standard

Foremost in

resources,

experience, facilities. Located

for

than

century

di«

reclly opposite u.s.Treasury.

value,

Inquiries cordially invited.

with all the resultant tremendous

the

benefits

involved.

Let

economy.

bit

recent

every

That is, very

segment of

our

roughly, the basic

truth of the money-market situa¬

power

nec¬

hope the critics will join us in
it—is not to try to "sell" Federal

individuals

beneficiaries—the

years

employment

pro¬

have

tion in 1953. We know

because

it, but only

understanding

our

business and we have laboriously
thought about it—off and on—for
been relatively stable. Credit has many
years.
But the American
not been so easy to obtain, and people, generally speaking, do not
when obtained it has cost a good know about it. It is difficult to
at

buying

Edmund

thing

between the borrower and tens of

and

with

and

"The only

for the triumph of evil is
for good men to do nothing."

important

minds—that today's

But

the

arguments.

pol¬

factor

and

know

file

but

be ready to accept

essary

and' ter

the banks."

vital, to

attention

may

During the past two
.

that

values

real

problems

bad.

one's

phases

the

exemplify

;

longer has the jit¬

reasoning

monetary

apparently

these

real

task,

perform—and

consequences.

for

tailed

history.

year.

come

has

every

results

must

cycles

fact

for

es¬

complex prob¬

very

difficult

the

en¬

than the

—

con¬

Congress has set for the

end in

duction
„

difficult

effectively

States.

the subject

topic I have

with

United

that

task

constantly
jumping prices? And what about

any

single factor (other than war) af¬
the economic welfare of

concentration

Street, New York 5, N. Y.

millions

who wants to buy a home for

ters

important

fecting

icy

Exchange

every

"banks,"

It would be unfortunate if

missing

Sixty Wall

I—bear

But what about the fact that the
man

modern economy. Unfortunately,
too, certain of the superficial and

Hutzler

and

heavier burden because govern¬

and

costly today for a
home for his family;

termediaries, to

for the sake of appearing
striking at a political
adversary.
wise

obvious

Salomon Bros.

few

buy

gain,

paid

taxpayers—you

problems of money and credit in

pretty bad! We are
higher
interest rates

that

who

deal

Acceptances

Federal

looks

word, the fallacies

fears

the

ago.

years

man

what

single

Bank

of 4%; that when

borrower"—the

by a vocal
consciously or uncon¬
sciously distort facts for personal
few

There is

Preferred Stocks

the

countered

Canadians

"big

home,

his mortgage may

instead

the

buys

thorough study, close facts, and attempts to conceal the
analysis of information, and rea¬ omission with talk about higher
soned
judgment. Those deserve interest rates providing a bonanza
are

lends

Equipment Trusts

properly

monetary policy. When

Industrials

interest rate

chases,

pleased

Public Utilities

individual

tion

Municipals

instead of 3%; that when

money

brushed aside in order to appraise

U. S. Governments

they may have to pay 4% for the
an

ment has to pay

We
suspected he
was
talking out of personal pique.

stressing

aspect: that when public
issue
long-term
bonds,

the

was

animals.

constantly,

made
one

utilities

pre¬

bring about broader

now—or

coinci¬

been

superficial anal¬

are

unusually
animal—so

there

but

it, he went off mumbling
and
bitterly about both

Such

financial

our

not

1950.

others; no one of them
happened alone.

have

Yet

beauty, smart- make it

faced,

finely

government—borrows for 91 days,
said, none of it pays for that money at the rate
had previously of around 2% per annum—more

him,

He bubbled
saw

have

lated to the

could

from pasture a young sorrel horse.

did

about

etary policy should be made the
subject of demagoguery or used

home

easy

understanding

task which

It had, he

showed evi¬

wasn't

sufficient

was

uncertain

not

As
soon

him

cause

could

Washington,

C., Sept. 21,

fact,

ca¬

the rider out of the saddle

animal

the

For example, on returning from
Similarly,
you know firsthand the plight of my vacation recently, I read one
the borrower who, when economic particular blast on
monetary pol¬

decline, faces a far heavier burden
in repaying his debts.

was

kind of horse he said he

materializes?

conditions

dissatisfaction

its intelligence and

had been
should
people's looking for all his life. But when

—

funds

Its

breath.

same

small-necked, largeis chested, short-coupled, and well

and

freedom

not be entrusted with the

criti¬

borrowers
points up this rela¬ Sometimes this is not easy. Knowl¬
tionship. What does it profit the edge of a critic's past performance
man who builds a savings account
may lead
one—at times unjusti¬
in your bank if the buying power
fiably — to overemphasize the

of his

satisfying

the

base of democracy,

very

stable

position

make

cism.
the

Bankers

Criticism

Intelligent

administer
time your outset that I do not decry

ours.

and

the

raved about.

Let

same

to get

the

climate.

administer

you

have

the

tremendous bear¬

and at the

yours

lies

"harassed

comprehend.

sentials

dental. Each of the changes is re¬

di¬

one

changes

situation

only

pacity;

all subject to
duty of complete loyalty

Those

yses

are

than

simultaneously kneed

display

objected

deal

other, to being spurred and

in the

checked

tribute

trusts;

speed.

neck-reined

in administering our respec¬

same

for

purpose

too

the

time and

same

and

Federal

to the trust.

the

being

rection

lels the

tive

conflicting interests and pres¬

sures

ing

the

indeterminate

required to exercise care and expansion of

skill,

with

concern

bonomic

your

form,

—

the

right

original objectives of with its new rider as he was with
the
grantors because of drastic it. It apparently objected to being
contraction of the buying power ridden
by
one
who seemingly
wanted to go in
of principal and income.
opposite direc¬

benefici¬

aries

us:

public

only

Therein

Stresses chief aim is "greatest good to

short of the

relationship.

all

Burke said:

dramatic—

"struggling

and

fronts

greatest number."

cp-fiduciary

are

carry

Re¬

might

The

owner"

System.

One

being made to

now

behalf

taxpayer"

the benefit of all, Gov.

credo that underlies Federal Reserve

sity of maintaining stable values.

ex¬

ercised by the

serve

sensational

say

lem.

usteeship

trust which must be administered for

tears

and credit

money

objectives of Federal Reserve System. Refers to criticism of higher inter¬

out

ship
between
professional
t

whom

trustee, to

as a

sent

Robertson

close relation¬

and

not

whereas the superficial appeal for

Designating the Federal Reserve Board

some¬

the

present these facts

Reserve System

high

the

levels.

dollar

The

has

RIGGS
NATIONAL

BANK

«/ WASHINGTON, D.
FOUNDED 1636

C.
.

MEMBER

Federal reserve

system

federal deposit inslhance cowl

Volume 178

Number 5260

The Commercial and Financial Chronicle

...

21 v

(1233)
freedom would

Inferences From Lowered

rfDrirooiotind

The

immediate

Stock

British Bank Rate
By PAUL EINZIG

extent,
able.

Commenting

on reduction in Bank of England discount rate
3y2%, Dr. Eiuzig holds this action is indication

4 to

British official circles do
it is also calculated to
ment intends
t

nMnnw

•

dispose of

restore the
mu

anticipate

The

i_-

Sept.ai17

surprise.

as^a

came

For

complete

than

one

rea-

son,

was

unexpe^t^d.

Throuhout the
nrst

1 f

beptember

sterling^ was

ye a

J' declinbelow

ing

its

for

such

circum-

sterlingagS1 *VatG * G WGa nGSS °
Admittedly

from

purely internal point of view, the classical
weapon against a trade recession
js lowering the Bank Rate. If thfe
authorities could

the

gard

afford

international

u c

days
the

i o

re-

its

£ s

foreshadowed

fhe

the

autumn

seasonal

usually in favor of
the

Bank

Rate

duction.
of

The

wages

sence
easier

than

even

spiral

the

considered

Bank

exped-

Exchequer to authorize

Butler

considered

re-

Rate, and Mr.

grant the request.

expedient to

Admittedly to

large degree the reduction
nominal than

inore

was

bank

period,

Bate

was

bills.

while

was

For

the

prepared

was

discount

houses

Bills

large

holdings of

31/2%.

that rate

was

the

Bank
Bank

buy

Treasury

view

Treasury

regarded

the

Bills

the op-

erative Bank Rate, so that all that

happened
the

duced

Bank
at

Bank

the

Rate.

pains

change
did

Sept.

nominal

The

that

was

Rate

level

was-

the

actual

authorities

emphasize

re-

were

that

the

purely technical and
imply in any way a re-

was

not

laxation

restricting

the

policy

aiming

volume

credit,

Nevertheless, the banks reduced
Uy Y4 % their rate allowed on deposits and those charged on certain kinds of loans.

dined.

This

extent.

some

feet

Bill rates de-

should

tend

en-

private

courage

the

borrowing
to
particular the ef-

Bank

Rate

reduction

on
the market rate
of discount
should encourage foreign borrow-

ers

make

better

use

the

recently increased facilities for
sterling acceptance credits.
This
may

tend

pressure

to
on

afford
the

price

any

Ripley

Maples & Goldschmidt

Company,

Incorporated, 63 Wall Street, New
York

City,

announces

that

increase

sterling

the

Admits

SOUTH

Morgan
Glover has
become
a
member of the company's Municipal Department. His duties will
be concerned mainly with state
and municipal revenue bonds.

NORWALK,
...

fall

the

fall

British

throughout the world
Qf

increased

tion.

jj^g

Street, members of the
York Stock Exchange, on

Oct. 15 will admit Fannie G. Safir

interests

Sterling

Heavy-duty cables undergoing
cyclic-load testing at Anaconda
Wire & Cable Company's Research
Laboratory, Hastings-on-Hudson,
Neiv York. At lejt is a partial

result

view

competi-

Area

gold

is
at

re-

United

States in
effect

verse

British

that

policy

on
The

conditions."

Rate

might
have
to
be
raised to that end, instead of be-

ing lowered,
The
the

fact that

Bank

could

the Treasury and
England felt they

afford

Rale

this

interpreted
British

lower

stage
as

the

indication

official circles

slump

the

tieipate

States.

fact

that

not

an-

United

understood

received

Butler

Bank

safely be

may

reassur-

ing advice from highly placed official American quarters, and that
the Treasury is now satisfied that
the-

Washington

has

elaborated

fensive

Administration
far-reaching de-

against

measures

slump,

which would be applied

measures

unhesitatingly if American trade
were
to show signs of a serious
recession.

What

measures

secret

are

but

the

known

cial circles in London
about

their

this

able

that

have

lower

the

that

are

offi-

basis

the

authorities

Bank

should

justifiable

Rate.

This

ges-

government's

tion

pound

restore

the

alleged

the

near

inten-

fluctuating

future.

well known the floating pound is
part of the Commonwealth Eco-

nomic Plan. The Commonwealth
Finance Ministers' Conference of
1352 decided to adopt it simultaneously with the restoration of

Years

are

compressed into minutes in the

Cyclic Aging Laboratory of Anaconda's sub¬
sidiary, Anaconda Wire & Cable Company, at
Hastings-on-Hudson, N. Y. Here, through
rigorous 24-hour testing cycles simulating
actual conditions but

decidedly

more severe,

high-voltage insulated cable is tested for long
life, stability, and other desirable character¬
istics.

By such tests, Anaconda beats not only the

plays

"BEAT THE

understand-

significant also from another point of view. It is calculated to dispose of rumors about
the

Anaconda

satisfied

effectiveness,

considered

ture

here's where

intended

closely-guarded

that convertibility is not expected
for at least another 12 months, it

the

over j stories
high, which
capable of testing long samples
loads up to 200,000 pounds.

spite of the ad-

business

due

of the giant tensile testing

machine,

defend-

serve, Britain would have to defiate in,sympathy with the downward
trend
of
prices
in
the

has

been

suggested

various

ities felt justified in lowering the
Bank Rate it is because
they view

American business prospects with-

clock, but the calendar.

Vital engineering

years

of in-use operation

available in

This research

tomorrow

this

the

author-

to the government such

out

pessimism.
The
American
business situation is at present by
far the most important factor af-

Rather is it

fecting

sterling.

ate recession

would
gap

Even

in%he

moder-

United States

the

Sterling

Area

and

terpreted the drop in Wall Street
as
foreshadowing a trade reeession

has

d?u^tsKab?Jat

inevitably widen the dollar

would reverse the inflow of gold,
If the British authorities had in-

of some

severity they would

not have 4hought of- taking

.step

be disposed of by the Bank Rate
f®ductl°n" "^"d5
rea,son tha|
the authorities would not go out
f their way to weaken the detenses of sterling if they intended
to restore its freedom to fluctuate

moment

when

iso¬

continuing policy of planning for
a
policy unmistakably expressed

in Anaconda's

company-wide

pansion and improvement

program

such

ex¬

being carried
on at mines, mills and
fabricating plants. This
multi-million-dollar program is based on the
premise that as the nation's need for metals
now

and metal

sign, which would ordinarily take from 20 to

should Anaconda's

products continues

ability

to expand, so
produce them.
53273-C

in-

understood to be enwithout foundation.
The
never
even
been con1(?^a ^as, neXfr
bee
Any
fjdered by tbe Treasury
idea

typical of

...

data, essential in the evaluation of cable de¬

f®ntl0ns
tirely

now

less.

geared to the future is

lated "for instance."
Anaconda's

acquire, is

year or two, or

irJ? convertibility. Rumors attrib-

limited

prices,

American

the

The American Brass

AnacondA

Company

Copper Mining Company

Chile Copper

Company

Greene Cananea

Copper Company

Anaconda Aluminum

COPPER MINING COMPANY

Company

Anaconda Wire & Cable
Andes

—
,

ington

New

United

quarters abroad that the government is inclined to proceed with
floating pound without await-

spite

___

—

the convertibility of sterling. Now

such credits.
in

Conn.

Maples & Goldschmidt, 85 Wash-

garded as an indication that offiMr. Glover, formerly with the and Carrie Goldstein to
cial circles in London are not National City Company and partnership in the firm.

selling

recent relaxation of restrictions

Loans,

Indeed,

Unless

so.

level

sponding

Throughout that Mr.

operation

England

from

real.

only applicable to redis-

counted
Ihe

This

Harriman

Division, of the
Finance Corpora¬

ment, they would be inclined to
adopt
a
decidedly
inflationary
policy to that end. In the existing
situation, however, they could ill

Bank

request the Chancellor of

duction of the Bank

conditions.

money

ab-

encouragement

England

ient

re-

proceed-

was

Notwithstanding this the
©f

are

inflationary

unchecked,

ing

increase of

increases

ex-

factors

rather

Britain.

over

from

borrowing

through the
Treasury
Bills.

Although,
effects, it

Office

tion.

Harriman Ripley

Bank

indica¬

Agency

Reconstruction

British exports would lose ground
not only in the United States but

increased

pansion

Public

the

states is accompanied by a corre-

declined the volume of
credit

spreading

opin-

of many people a business rethe United States. Even

cession in

private

with

jn order to maintain full employ-

though

nected

der to Prevent the recession from

s^arp
three

Li.

■

the
an

rate, a
precisely
because the decision is widely re-

tone.

an American trade recession
lowering the Bank Rate in or-

Bank Rate

material

moment

Brown, Harriman & Co., has for
7
number of years past been con¬

aspects

+'
Street

before

lon

the

United

distinctly favor¬

confidence.

its

in the

fog situation they would respond

J?a~
fall

C adi

slump

disre-

wr}i
W all

*>r.

been

reduction

interpreted

steadier

afraid of
States.

tendency of sterling, through its
psychological effects it inspired,

fuiure.

near

would

of the

should have accentuated the weak

that British Govern¬

rumor

fluctuating pound in

tion

through

slump in U. S. Says

Eng.—The reduction which

not

iq any ca$e

response

Exchange and, to a lesser
of the foreign exchange

market has

Rate

from

mean

t^onri

depreciating trend.

Anaconda Sales

International

Company

Smelting and Refining Company

The Commercial and
22

Financial Chronicle... Thursday, October 1, 1953

(1234)

the Current Picture

A Banker Looks at
I

indeed a
vast economic panorama, and its
elements are many and complex.
To comprehend it and construct a

President, Central-Penn

take

truly

reviews

limit

efficiency and

and bank¬

First, I shall
make

some

the

banking capital.

velop

lion, or

ents

and. outlook.

Sienkiewicz

Second, I want
disci/ss

13%

Personal liquid assets

$17 billion.
of the

some

sig-

as respon¬

i.._

banking and
credit, or those vital parts that are
affecting our activity now and
will
influence
our
policies and

private investment increased to a $61 billion rate. New
construction has continued at a
record rate of $25 billion and pro-

practices in the future.

ducers'

nificant

phases

durable equipment at almost $28 billion.
Recently, how-

■

Business

Gross

Continues

Boom

ever,

business

The

Activity this

down

continues,

boom

has been at

summer

some

let-

deferment of projects of

general-construe-

residential

and

tion

the highest rate on record. Industrial

been

has

there

New financing is at a

type.

are

of these symptoms.

aware

The

overall

that

our

picture,

resources

are

now

Corporate earnings in the first
before and after

however,

hajf 0f this year,

em-

pie

at work.
National output

increased

quarter to

and

goods
the

second

record annual rate of

$372 billion, or almost 7% above
year.
This is a tremendous
volume.
It provides jobs and in->
come for over 63 million, or over
98% of our civilian workers. The

last

machine is certainly
rolling full speed ahead, and its

production

in the
This in-

i X'

1 r-7 '

rate

consumption

are

earlier

running

$230
this

billion

last

year.

due primarily to larger

year

and

*n ad'
1S ai? amazin£
recordThe foundation upon
ago! which this accomPlishment rests
bil- bas a sounc* c°reIt shows that

annual
thar

year

Tax payments have taken $37

system of private industry and

our

*An

address

Mr.

Sienkiewicz

and combined
dedicated to the
order, and stability of life. We hate war because
it destroys life and property. It
leads to oppressive debt and taxes,
It is in peace that we create what
Is finest in life—material and
spiritual.

Back of our past and recent accomplishments has been the abundance and efficiency of bank
credit. It has furnished the sinews
of business action. Without it, our
modern system of production and

initiative

be-

can

form or another because
this country to continue
strong. World tensions are unabated, and genuine confidence
among nations is still lacking.
on in one
we want

superb job for the

atomic age,

leader in this

United

channels, that sustains our free
and expanding economy and pro¬
vides j0b opportunities for our
growing population.
Qur banking system administers
this

tremendous

afford with

cannot

States

production

nrivate

amazing

willing

are

1953.

work

and

cynical challenge. "
No

army

will deny that as always

one

clouds

some

are

horizon.

nomic

our

must

eco-

watch

these clouds and take steps to rethem

move

For

whenever

example:

How

Pdin^ aP. our SI°CKS 0
$77

billion

our

necessary.

fast

are

goods. At

inventories

manufacturing, retail, and wholesale establishments are some $5
billion

higher

than

they

were

This rise, of course, accounts for a goodly portion of the

year

ago.

increase

our

national

output.

also

suggests that any drop in
sales would throw the present reIt

it
cutback in

lationship out of balance;
mean,

duction

fact,

decline

and

ment

may

pro-

employ' -.

setback would be disconeven if it lasted but for
a short time. But, as in the recent
past, the way would be cleared
for
a
more
stable
relationship

C. J.DEVINE &CO.
48 Wall Street, New York 5

Cleveland

•

Philadelphia

Cincinnati

•

HAnover 2-2727
•

Washington

St. Louis

•

Pittsburgh

San Francisco

about credit

have

tightness

high interest rates. The story

of credit

terest

tightness and higher in¬
is the story of war

rates

financing and economic disloca¬
tion, of inflation, of dependable
money and its buying power. Our
recent record
ture if

gives

clear pic¬

us a

look at it squarely and

honestly.
-

World

plies of

1 lot

At the end of that
of
checking deposits

money.

1945, the total volume

currency

and

one

and

was

incredibly

was

borrowed

and created large new sup¬

money

war

War

costly.

one-half

times

our

Recently,
individual

ready

system,
many more

consumers

property

living

iearned to

millions of

have entered

makes

sumers

have

them and our ex-

been

honesty

individual

advance

The inbusiness and
producers
and
con-

perience has
herent

and

standards.

serve

good.

effective

banking

possible
_

Bankers, of course, must assume
heavy responsibility for their decisions and acts. They occupy a
strategic and sensitive position in
our industrial society. This position

exposes

rate,

that the

amount

Other

about

accumu¬

spendable funds

truly enormous. Even though

was

productive plant

our

capacity,

running

was

could not produce
fast enough to meet the pent-up
demand

the

market.

Conse¬

quently, with the abundant supply
of funds

the

shortage

hand and the

one

goods

the

other,

prices for the available supply of
goods were bid up, and inflation
with

followed

ing

usual

its

devastat¬

effects, particularly
in

Production

increasing

was

the

fixed.

meantime

flation

was

not

have

would

and

caught^up with demand.
down;

those

whose incomes continued

But in¬

permitted

die

and

perpetuated;

was

prices, wages, and costs continued
to skyrocket. The most important

them

constant

fre°-uenlly t0
unjus iue<1 attacks,
Bankers often are excoriated for
their conservatism, lack of vision,

force

was

offi¬

the

maintain credit easy
and money "cheap," primarily in
the interest of Treasury financing
and
debt
management.
Such a
policy

may

during the
the

have been appropriate
but

war,

inflationary

followed the
in

banking portals and found
helpful means in bank credit to

their

increase.

expanded

assets

same

lated

the

liquid
the

product, as in
liquidity was al¬

when

perpetuating

Bie

aCqUire

national

gross

1939-1940

cial policy to

3 million economic

some

units in

Any

certing.

Boston

and

animadversions

Every

dream just assaults on our heritage and decisions and assume varied risks.
peaceful intentions. Until the lan- By far the largest number of loans
guage
of force is subdued, we- are to relatively small, individual
must be ever ready to meet any borrowers who make up the vast

there

come

gamut of discordant

and

volume of credit

efficiency.

R0JnUthnivt^rLMnfiinA^!^n Kwi a free.society. It shows that there not to have adequate protection business day individual bankers
Association, Washington, d. c., Sept. 21, are still enough free people who against sinister ideologies and un- everywhere
make innumerable

Chicago

Recently,

large, relative to the current value

creased sllSht1^u°ver a year aS°-

expendian

higher

iiri4h

extended

tures

4 olr An

but if bold steps are taken with
intelligence and promptness,
larger excesses; can be avoided,
find.
"
We are aware of all unbalancing
Back of this record is good or- symptoms,- and this very awareganization and courageous man- ness is probably the best means
agement. It reflects great strides of preventing serious economic
in better cooperation and under- repercussions. We may not be able
standing between labor and man- to
eliminate business ups and
agement. Both are beginning to downs entirely, but we may be
realize that efficient production able to minimize their severity
and fair exchange of-goods and and abate the cyclical fears of
services are the real forces that boom and bust,
make our free economy tick and
R
.
CreAU Prnvifips sinews of
help to sustain our high standard
Feonomie Activity«
and invest to keep our industrial concern going with the
best modern equipment we can

distribution could not attain the
heights, that it has since the Civil
volumes of sales, since the averWar.
age net profit margin per sales
rnrrwiinn iWrl Not Mean
The Present high level of prodollar continued unchanged. In^orrecuon eeu w oi wieaii
Auction and employment certainly
creased costs required larger volim;u»wmu
reflects the capacity of our bankumes
and
greater efficiency to
The Korean truce has often ing system to provide funds for
make reasonable profits.
been singled out as the beginning business operations. Loans of all
j
of the end of the business boom commercial banki to business at
™1JL
mainly because government ex- present exceed $65 billion, or al^
penditqres are likely,-to decline most four times the volume before
5 ®
fni'tl nf and s0 dePress our activlty. But the last World War and two and
\*s} 7aar/v
iZrLf the imPact of the tru£e has been one-half times what it was at the
+1
discounted long ago. Our defense end of that war. It is this credit,
wlr^inProgram may be changed in form mobilized by private sources and
corpoiate working capital has in- j^t not in substance; it must go
was

cisions and acts.

going into next year.

Personal

nv»A

its fulfill¬
unimpeachable

and

skill

notes

great momentum is likely to keep
us

period

crease

are

services

were

same'

ployed almost at capacity and the
maximum of our employable peo-

than

higher

taxes

closing months of
the first quarter

save

manufacturers' high level, despite uncertainties
sales, retail trade, personal in- and postponement of several large
come, and employment have been offerings.
'
close
to
the
peacetime records.
Government purchases of goods
True, here and there new orders jand services, at all levels, inhave fallen off; inventories are creased to $83.5 billion, or 27% of living.
larger than they need be; prices 0f national income.
Outlays for
Our individual
for farm products have softened; national security represent about energies are now
and collections have slowed down.
14% 0f total national output.
search for peace,
production,

people

unerring judgment, and
in administering the
They must be conservative,
and practical in their de¬

funds.

1 i-.

have

means

the

Their custody is

awesome,

utmost

willing to tive economy are bound to occur;

that

fidelity,

Occasional bumps in a free, ac-

products for the use of man. ~It
shows that we are still

continue large.

also

The

they

funds;
trust

demands

firm,

of personal income, and to make their dreams a real- ticipated in the
But, even so, personal saving con- ity through discoveries and inven- this year and
tinues to exceed an annual rate of tions of new methods and new next year.

de¬

custody.

in them.

indeed

serious recession ahead.

tliem

entrust

for

bitterly what it
the

violate

Important
business,

these

ment

Stresses good management

sibility of bank directors. Sees

social

who

banks

learned

difficulties faced

Notes significant shifts in bank assets and

for

bankers have learned how to pro¬
tect

abundance of bank credit, which provides the sinews of

in efforts to increase

com¬

ments

people

the

repose

economic activity.

ing-

zeal

excessive

thrifty

phases of banking and credit which will influence policies and practices of
bankers in the future.
Points out boom is still with us, accompanied by

vast and

justice, would lay their hands on
the
savings of the industrious,

complex economic panorama, Mr.
important business developments * and discusses some

before

responsibility

fiduciary

bankers to their depositors; or, in

.sketch to busi¬

scene

Sienkiewicz

must

ness

National Bank, Philadelphia, Pa.

great

artist.

the

their

Calling the

signi f ican t
composition
would

Such critics either fail to realize

SIENKIEYVICZ*

By CASIMIR A.

before us is

The scene

service

debt

The

but

charges

the

depreciation

the

en¬

the

dollar.

value

that
pennies

losses in the billions

tailed social

through

under

never

conditions
It saved

war.

of easy credit was
primarily through the
official
support of bond prices
and the encouragement of mort¬
policy

sustained

The Federal Reserve,

loans.

gage

with

reluctance,

ment

securities

bought

govern¬

maintain their

prices and uphold the fixed pat¬
tern of interest rates in line with
Treasury policy.
released
reserves,

large

As it did this, it
of bank

amounts

high-power

money

capable of expanding deposits or
credit five

Moreover,

six times.

the practice of peg¬

ging prices of government securi¬

guaranteed the
securities held by the

in effect,

ties,

prices

investors.

banks,

was

easy

for

the

for others, to buy gov¬

cupidity, depending upon the
ernment securities and sell theni,
after the correction. Equally dis- source
of censure. Some politiusually at a profit, in the con¬
turbing would be its effect on the cians, many promoters, and hosts
trolled market. When more prof¬
consumer's
buying attitude.
He of do-gooders and crusaders of
itable loan and
investment op¬
would probably curtail his pur- untried notions and panaceas arer
portunities appeared, government
chases
and add to his savings, as quick to strike at the bankers besecurities were
sold usually to
was
the case some months ago. cause they cannot get the funds
The

market

behavior

current

stock

dication

the

probably

of
an

readjustment

Federal

Reserve

the

for their dubious projects or be-

the

in-

the attack serves some ulterior purpose or gain.

prices and without loss

an-

cause

r\Ali/ixr

nnn

fixed

Number 5260

Volume 178

The Commercial and Financial Chronicle

...

(1235)

23
*

tice

kept-Aip until March,
when the great harm of
procedure was recognized.

were

1951,
this
It

also

was

recognized

that

the

prime responsibility of our cen¬
tral
banking system is not to
manipulate bond prices in one
segment

the

but is
whole

economy,

assist the economy as a

maintaining orderly conditions,
high employment and income
within

its

the

over

influence

and

means

supply and cost of credit.

The

problem of sustaining sound
money and relatively stable buy¬
ing value of the dollar is

tegral

of this influence

part

be¬

facilitates economic

cause

in¬

growth

and

all

protects

us—

producers, savers, and consumers.
Finally, it was recognized that to
this

in
the
fixed
income
credit, it must be dis¬ to be borrowed. Nonbanking in¬ on those
impartial, and courageous. vestors loaned $128 billion, while groups was truly impoverishing.
us
must
commercial banks and the Federal
appreciate the
In a period of about six years,
enormity of this responsibility and Reserve Banks furnished $86 bil¬
our
volume
of
money
supply,
give support with wisdom, candor, lion of borrowed funds. The war
measured
by currency and ad¬
and the spirit of public service. had to be won; and in the win¬
justed demand deposits, expanded
We all are in the same economic ning,
our
wh<ple economic and from $36.2 billion in 1939 to $102.3
boat.
financial life had to be rearranged
billion in
1945, or almost three
from neaceful pursuits to destructimes. Holdings of government se¬
Significant Shifts in Bank Assets ^ve purposes.
curities by commercial banks in¬
World
War
II
wrought great
It was the borrowing from the creased
spectacularly from $15.6
dislocations in business
and fi¬
banking system that meant the in¬ billion to about $90 billion, or
nance.
It
produced
significant flationary creation of money and 5.7 times. In
addition, the Federal
shifts in bank assets.
the consequent disruption of our Reserve
System
increased
its
You will recall that to meet the economic relationships.
Money holdings of governments from $2.5
financial needs of that war the supply rose from 45% to almost billion to $24.3
billion, or almost
Federal government had to raise 75% of national income. This was 10 times.
Bank
loans
also
ex¬
inflation in its most ~ destructive panded from $16.9 billion to $25.8
some $383 billion. Of this stagger¬
All

ing amount, $169 billion,
40%, was provided by

and

60%, had

$214 billion,

almost

taxation,

or over

job well the Federal Re¬

must have

serve

and cost of

creet,

form

because

when

various

ar¬

""a

that
was

cncuige

entire

our

turned

meant

banking
from

over

dividuals to

system of investing

institutions.

Moreover, the mag¬
nitude of financial figures was so
blown
up
that
former
more
modest

patterns

appeared

and

models

Immediately
strenuous

after

efforts

readapt

banking

erations

flated

the

and

market,

level

new

flexible,
and

in other

have

determined

bitrary controls; were removed, was to enable the investors to buy
prices skyrocketed and the effect government securities.

Continued

mar¬

become

demand

Securities,
public and private, now are being
tested as to their value and price
in

the

This

the

crucible

the

market.

in harmony with
form of our insti¬

process

spirit and

tutional

(

setting.
Federal, state,

ernments
business

supply

now

and

local

gov¬

competing with

are

for available funds.1 The

these

less

than

The

price

the

funds

has

demand

been

for

money,

them.

interest

has

rates,

risen, as is to be ex¬
The upward trend of in¬

pected.
terest

since

rates

the

has

war,

been noticeable, not only at home
but in most other countries that
still

have

action.

freedom

Only

choice

totalitarian

and

coun¬

tries

deny this freedom and

trol

the

life

economic

people with

iron hand.

Higher interest rates, of
lower

mean

bond

official

the

control

securities

stantial

Since
bond

over

have

govern¬

shown

sub¬

depreciation. Many banks

hold

that

course,

prices.

prices has been removed,
ment

con¬

their

large

amounts

gov¬

ernments in their portfolios do not
like it because of possible capital

losses.

Ironically

critics

enough, some
change refuse to

the

recognize this possibility and
tinue

carp

bankers
sible

for

the

they were respon¬
higher interest
rates,

relatively
present

though these rates

even

con¬

avarice

still

are

considering the
of the business

o w

stage

cycle.
While

••

inflationary forces seem
subsided, we are not

have

quite
real

balance.

that

sure

danger.

moment

Our
in

One

state

set

at the
uneasy

of factors—rise

prices,

consumer

out

are

economy

decline

farm

income, drop in the stock
market—suggests deflationary re¬
adjustment.
tors

Another

record

—

duction,

fac¬

set

employment,

income

pro¬

indicates

—

in¬

flationary strains.
The
have

impelling

fact

that

peace. Outlays on
security mav revive in¬
flationary forces at any time. We

must be prepared for this eventu¬

just
be

and

ready

must

business

major

restrictive

during the past
interest

acquired
readiness
ditions

setback.

the

meet
now

Our

credit

year

flexibility

from

anticipate
with any

cope

serious

the

policy
has been in

public.

Its

should

re¬

ury.

and

harbor facilities,

in the world.

docking
year,

Ocean-going vessels,

the

rate

of 12,000

have made the Port of New

York

gigantic funnel through

which pours

about half of Amer¬

ica's trade with the

rest

of the free

changing

con¬

world.

and the transporter—all

porter

depend
that

commercial banks

upon

organized to

are

financial interests of
a

the

Treas¬

it ignore the de¬
business and the need
can

our

growing population to have
jobs and income. In using its com¬
manding powers over the supply

It's

Such
with

cial and

accident that the finan¬

shipping districts

cated side
Manhattan:

hand. The

are

lo¬

by side in downtown
they work

hand in

"Big Three" of foreign

commerce—the

importer, the

ex¬

the

maintains close

working relation¬

ships with leading banks in the
markets of the world.

customers on

I] you have

a foreign

trade problem;

why don't you talk to the people

bank is Chase National

Chase?

headquarters in the center of

New

York's financial and

ship¬

THE

ping districts. From here, Chase
service

serve

national and international scale.

reaches

out

forward.

demands

Neither

mands

provide New York

with the greatest

mean

Looking at this picture broadly,
we
must recognize the fact that
the Reserve System, however in¬
dependent in its policies, cannot
ignore the overwhelming prob¬
lems

Side, West Side—piers, hun¬

secure

national

ality,

East

dreds of them,

through its

correspondent banks
extensive system
all 48

states.

branches and
ces

(the most

in the U. S.) into

Overseas, Chase has

representatives' offi¬

Europe, the Far East and

Latin America

in¬

were

interrupted somewhat by the out¬
break in Korea; but the
banking
billion, but most of this increase system as a whole was not greatly

forces.

supply

op¬

figures. These efforts

independence of

rates

war,
made
to

credit

interferences.

Interest

were

the

were

IGradually,
the
procedure
of
pegging bond prices was modified
and finally abandoned.
We now
have comparative freedom in our
kets.

dis-'

completely

new

established.

action and freedom from political

money

was

system

system of
lending money to business and in¬
a

and, in addition,

NATIONAL
OF
HEAD

THE

CITY

OFFICE:

Pine

OF
Street

BANK
NEW
corner

Member Federal Deposit Insurance

YORK
of

Nassau

Corporation

page

1953

Thursday, October 1,

The Commercial and Financial Chronicle...
24

(1236)

Progress in Agriculture
This

immense

duce

quantities o f
goods, includ¬
ing bountiful
supplies
of
food and

strengthen the agricultural

fiber.
Our

fundamental
Benson

reason

that

for

economic inadequate.
people.
n)
They

basic

the

lies

system

strength of the American
In recent years our

thinking peo-

agreed that there is
danger in the undue concentration
is

are

proaucis

government ownership. It

toward

inadequate because they
do not build markets
^
put products into use at fair

pie have become more and more
concerned about the rapid trend

generally

(2)

bedesir-

inadequate

are

they

not

permit

abIe

adjliments

should be willing

for themselves.

Construction Contract

L,nd Sueculation

port of farmers, and all citizens source of our present

strength. I

presented by the Congress*
urge you to continue to discourage
°ur ent!re economy is in the borrowing based upon the expec-

Awards Remain
set

It
that

American

old

the
the

private

that
tnat

private

iobs
jobs

Tiirprindpfe

principle

7eaveto

should

entermdse
enterpi lse

poused

was

President in Ws campaign
'
high time we had this

our

fall.

last

.T y
inade<l"ate
" are in a period of neither peace
c?us,e they fail to provide su f - nor war The adjustments to a
1"c«;n1t,ve
®elf-inrtiative peacetime economy must be met
and self-help upon the part of the labor, agriculture,groups: industry,
by all economic and finance. We
gr0Wer, the handler, the processor,

months could

awakening to the dangers of ex-

governmental

^ greaUy upQn bank_

making

farmers

assist

ers

adventures
(5) They are inadequate bein business, too great centraliza- cause
at times they price such
tion of power, and undue depen- commodities as wheat and cotton
dence on public assistance. In our out of world markets, and dairy
agricultural policy we seek to and other products out of domescessive

outside-the-bank agricultural actWities conducted by full-time
employees trained m agriculture,
1 understand that hundred of
banks are now operating such

adjustment
You hold one
o{ thg k'
to the door of agricul.
tb

year

thus far„

Dodge said that i!

ago

monthly total for the last five

the

produce income year after year. It
is m0re necessary today that it
has been for some years that
farmers accumulate reserves
and safeguard
cUfficient financial

Admonition to Bankers

month

the

record for the

top

and the e"d distributors;
must all work together to make
feasible country
W They are inadequate be- the change orderly and easily.
banks have much to gain through
£au.se they,do not enco"ragf the
of our agricultural re-

Reports" for

"Dodge

37 eastern states?
continued strong following July's
in

August

/0.

forth

High

awards

contract

Construction

shoulders

your

possible the responsi¬

grams.

rural

our

I commend you for the

bility for financing the farm pro¬

"ake place in ^ed conditions "
in^Vrm la^l^ commodRy
mentOWToonman% Americfnseare T fa/hm ,economy which ™iU In the past two decades we have prices. The real value of farm and
calling
Washington "o^ do for KJ.he farm6r °n 3 S°Under Passed to war again, and now v/e ranch land,its relative ability alfrom depression to war, to
depends today as
peace,
ways, on
to
them what they

wonderful oppor¬

strengthen

have done in the past.

you

much

Discourage Dana speculation
Now mat land prices have
leveled off, it is doubly lmportant for farmers and bankers alike
that speculative land loans continue to be shunned. That you
have done this m the past is a

(8) It must square with American principles.
The only program that can long
succeed is one that is oriented
toward sound objectives, that is
workable, and that has the sup-

Our desire is to work with you,

„.

create them.

remain
It is quite apparent to all of us
enterprise that present farm programs are

free

our

job

nancial stability.

(7) It must solve problems, not

Present Program Inadequate

economy

free

with

economy.

the you to give guidance to your farm
clients in planning for balanced
use livestock and crop production as a
not means to increase income and fi-

destroy markets.

ing fruit.
'

Our economy must

is free.

tunity

and to place upon

financial

favored

Moreover,

footing.
The rural banks of America are

have had to cope tical. it will fail. Remember
than
that o f with a severe drought. We have potato fiasco?
.
any other na- attacked all these problems deci(6) It must be geared to
t i o n
The sivery—and our actions are bear- rather than storage — build,
far

agriculture

help

means

solid

economy.

nomic order is

Taft

courage

eco¬

better

Ezra

nancial

inadequate, Secy. Benson
lists eight guides in formulation of future farm policies. Says nation depends
upon bankers to assist farmers in making their adjustments, and warns against
aiding speculation in farm lands. Praises work of ABA Agricultural Commis¬
sion, and urges bankers give time and assistance to rural young people to

Asserting it is apparent present farm programs are

institu¬

part in the

take

tions. We pro¬

in every state to
Foundation's fi¬
program. Continue to en¬
thrift, for this is one

bankers

urged

vital finan-

cities, big industries,

4-H

National

of Agriculture

Secretary

kind tribute to the
Foundation and

which he paid

EZRA TAFT BENSON*

By HON.

ourselves
build

pride

achievements.

our

land.

choice

nation,

bountiful

$1,414,751,-

average

the year's total' would tie
record-breaking 1952. The August
000,

total

$1,414,408,000,

was

finitesimal

* in¬

percentage under that

average.

less than
although only
August 1952. The

August was 21%

But
the

July

less

figure,
than

eight-month total is now $11,115,588,000, up 4% over the first eight
months
of
1952. Last
month it
5% at the seven-month stage-

was

struction

Dodge Corporation, con¬
news
and
marketing:

specialists who issue "Dodge Re¬

ports," pointed out that while the
August figures seem low in com¬

parison with the swollen July
We ProSrams.
thoughtful and
1 am gratified to learn also that totals, it is significant that they
held their own against the aver¬
constructive action in fulfilling many statebankers associations
counteract this dangerous trend.
tic markets;
your vital role.
are sponsoring credit schools in ages. A mid-year decline had been
We
believe in short that the
expected
and
seemed
to have
(6)
They are inadequate bestay with your farm customers, cooperation with their colleges
principles of economic freedom cause they tend to hold a price even when weather or economic agricuIture. Surely this is a sound started in June until July went
are applicable to farm problems,
umbrella over synthetic and sub- conditions make debt repayment ™ove ,to foster better understand- sharply up.
By classifications the August
iprai prosperity and security.

look

for

you

ln.
ri,
Inherited

Since

had

with

deal

office

^ake

have

serious

many

over our

Plainl

inherited them.

We inherited

falling farm prices

Wl11 Promote the welfare of all our

The£?m credit
^?u kn.ow;
farm credit

have

program

needed.

Essential Requirements

recently entered agriculture

is and contracted large debts are
finding it more difficult to repay
loans now than when farm commodity prices were rising. Both

farm markets.

new

problems. We did not create them;
we

to 95%

of parity in the two years

before

last

farm

Since

then,

prices have averaged 93
month

checked the price decline.
.

We inherited

declining
stocks of

tion

trade,

of
the

address
79th

excess

American

Washington,

corn.

Secretary

Annual

Bankers

Xhe

urogram

must

nrovide

economy

^ tul1/ Protect the

falling beef prices,

foreign

before

the

„.

cotton, wheat, and

•Summary
Benson

everv

....

(1)

for( ^ coLfaX ^
imP™ved farm

94%

have
...

oaritv

farmers freedom of choice.
it

be in the farmers'

must

interest.
m

milcf

system 1S aSam
be independent,
This is in fulfillment of a pledge

and borrower need to plan
carefully in meeting the adjust- umana last year, ine legislation
ments that have arisen because providing for greater farmer parof dr0USht and lower farm com" *tlclPatl0n "J tbe own£r?hlP and

Associa-

tical.

finnnninllv

nrnr>

^ mUSl De Financially praCIf it

modity prices' Bankers for the C°ntr°- °*
fa£m
mQst part have continued to carry was signed by the President on
their farm borrowers and have Aug. 6. We are happy to see the
gone to the limit in taking care credit system move back closer

totals

were:

Nonresidential, $545,-

851,000, down 29% from July but
up

1952; resi¬

August,

over

dential, $507,560,000, down 22%
from July and down
19% from
August,

heavy

1952;

engineering

(public works and utilities), $360,997,000, down 4% from July, but
up 24%
over August, 1952.
Individual

eight-m

o n

195$

with eight months
Nonresidential, $4,-

totals compared
1952

were:

262^75,000, up 13%; residential,
of their recurring credit needs. I to farmers.
$4,419,463,000, down 4%; heavy
am sure you realize the necessity
engineering, $2,433,850,000, up 4%•.
of meeting these credit requireGoals of ABA Committee
ments to maintain a sound agriThese aims that I have men-

prospects

The

tioned are, I know, in close agreeagriculture ment with the goals Set Up by the

culture.

interest.

Conven-

c„ Sep,. 22, ,953.

kn™

As guides in the formulation of banker

declining farm income. Farm future farm policies, I believe the
prices fell from 113% of parity following are essential:

and

January.

of agricultural problems. It

stitute products which in turn iess favorable. Many farmers who in*

Prnh,Awe
Problems

took

for

Fmnlnvmpnt

„nnri

Agricultural Commission
^ey are

the

exTremefy fmpor!

'^llnS aIT

not financially prac-

aims, not only for farmers
but for the whole
viding larger markets for the fu- country. In this period of adjustture. Our people want good diets, ment
through which every ele-

sheet is extremely
ulation is

even

Consultants

Municipal Finance

financing service for Governmental units.

rural

role

Financial

Planning

•

Years'

Public

Relations

Experience

Inquiries invited

effective
sound con-

soil-building

and

their

cornmuni-

local

programs

where farmers
program
can

New York 5, N. Y.

Telephone: WKitehall 4-3540

ment

our

need

mutual

the

economy

fullest

is passing,
of

measure

understanding

and

coop-

Agriculture, will not be outdone
in extending a cooperative hand
to

all

elements

economy

our

for the welfare of the entire nation.

support
We have been
talking about
improvement practices material things, but you and I
have paid good dividends in the know
that
material
possessions
past, and will continue to do so. are not our greatest asset. The
Credit
plans
designed
to
help greatest wealth we have in this
farmers change over to a diversicountry is our youth—our boys
fied, better balanced farming pat- and girls—-the future leaders of
tern are urgently needed in many thjs choice land.
T

70 Pine Street

bankers

and

soil

sound

Livestock production,

Wainwright, Ramsey & Lancaster

pro-

the individual farms and
in

tant

eration. We, in the Department

play

can

Credit

ties.

Financial

strengthen

encouraging

servation

ranches

Financing

The

now.

economy.

Bankers

grams on

Revenue

than

opportunity

derful
•

complete and unique municipal >

•

diets

better

rural banks are faced with a won-

our

We render

favorable. Pop-

increasing steadily, pro-

are

One of
problems right now is the
ing of livestock numbers

individual

the

g
7

le_
.

I am most happy to know that
s0 marW bankers are making it
the big their concern to work with our
balanc- young rural people. I was pleased
on the
to notice in the "Bankers Monthly"

farm with the produc-

of feed

that farm.

I urge

for

re»ource»,

facililiea. Located

than

century

di«

rcctlvoppoaite U.S.Treaiury.
Inquiries cordially invited.

Give some time and assistance

„

of pasture development,
greatly
aided by wise

lending practices.

tion

especially

embarked

FOREMOST in

experience,

months ago an article by
good friend Jesse Tapp, in

some
my

RIGGS
NATIONAL

BANK

./WASHINGTON, D.C.
FOUNDED

1836

member

Federal reserve system

•

federal deposit

insurance cokrl

Number 5260

Volume 178

The Commercial and Financial Chronicle

...

X1237)

1
.

TO THE

LETTER

change paper-money for gold, at

EDITOR:

Shull Replies to

Philip 6ans

demand for "redemption" in gold
was

Gold Price
Takes exception to statement that
he

reasons

gold

expressed for keeping
$35 v per i ounce
are

"irrational."

;

do, let us revalue the price in
keeping with today's price struc¬
ture"; but he names no specific
"price.":: Let's assume he favors

the face-value of the paper, went
into effect on schedule; and the
so

light

"to * occasion

$70

Chronicle:,

sufficient gold to restore
the dollar to the "honesty" of the

man—it
-

have

vwould be interesting

Mr.

Gans'

opening

•

sentence

Mr.

Philip Gans' letter to the "Chron¬
icle"1 (Sept. 3) gave me quite a
thrill, quickly offset by its closing
''/'.'"

words.

The

reads:-

"It

always

;

While
of

his

expressing

getting

standard"

—

approval* each ? dollar

on", the

"back

with which

gold,;

ounce

fully; each

agree—Mr. Gans says, "before

l/70th

worth

l/35th

world

FREDERICK

2009

New Haven 15,

payers

this

nation

Chapel St.

Conn,
September 25, 1953.

tax¬

demand

tion in

rendering effective its 1952

campaign
currency

pledge

convertible
Gold
of

$70,
an

restore

"a dollar

gold

basis"

—

George A. Searight, member of

the

the National Association of Secu¬

Standard, with the "value"

the

dollar

fine

ounce

firmly fixed at $35
of gold.

Opens New Office

our

Such forth¬

rities Dealers and of the

has

office at 115

new

will do

Martin

and

to restore confidence

prevent

further

"inflation"

the

announced

right action by the Administration

of gold?

and

sociated

Karl

with

P■ . sentence
on

$35

G. Berg are

Mr.

Searight.

why

STATEMENT

ounce

—they

are

WARY OOE
\2i>k MAIN STREET

JOW OR

WARY OQe
I2JH MA W STREET
ANYTOWHV U.S.A.

JOHN OR

irrational."

carefully
reading Mr.

ANYTOWN,

Gans'

letter,
however, I am
strongly

Frederick G. Shull

re¬

checks

CHECKS S

AKAtVSiS

cS«»

&OO0XO *
$25X0 1

a««^us

CHECKS

CHECK:

aST fOHwAso-^i

minded of the

2 56

saying of the "pot calling the
kettle black."
Let's try to
dis¬
cover just who is
really the "ir¬
in

one

this

tion

the

correctness

ment

that

were

11X0-

33XQ-

will

ques¬

state¬

23.to-

$00X0*
.

30X0-

80X0-

70X0-

—"a

UA813%

1*003X0

1,000X0*"
100X0-

0oaoo+

600X0

ag¬

*0X0-

6oxc-

50*00-

20X0-

10X0-

$00X0

■k

"value" without causing all own¬
ers of dollar-assets to suffer loss

heavy loss" in the

88X0-

lliXO-

9?J0O~

very

77X0-

the

price of gold
raised, all of us would
heavy loss"; for
you can't "raise" the price of gold
without its automatically "lower¬
ing" the value of the dollar, it¬
self; and you can't lower that
suffer

66XG-

55X0-

123^5+

to be

"if

1Q0X0-

75X0-

case:

No informed person

5QX0~

E5-CO-

old

rational"

;

owt>sits 4

BAiAKCK
-

8110 J

\ &U3 $6

t*00 Z

j Mlo%

gregate.
Mr.

Gans,asks:

"Is he

deluding himself
is

the

was

value

same

1940?"

that

The

(Shull)'

the

dollar

today

is:

answer

No,
there is no delusion, whatever, in
that view; for the dollar has never
changed in "value" since it was
set

$35

ounce,

the

sure,

1934.

outstanding

which

the

was

ruthless "devaluation" of the dol¬
lar

1933-34—and

quite

evident,

like to

see

War

which,

Mr.

Gans

nomic

would

the

"supply

mand"; but the dollar

the

"purchasing

dollar

that

shrunk—not

had

the

Better

being in favor
"going on the Gold Standard,"
adding,-."but imagine if we were
to do this, what would the results
be."
We
regret that he didn't
with

"rational"

ex¬

Mr.

Gans'

letter

are

matters

chasing

power"—which

"value"

versus

largely
"pur¬

have

already dealt with, herein.
As

his

fear

that

support

tory

can

swer:

When

Gold jStandard

the

"greenback"

very

the

1879, following
era, there was

$347 million of that paper-money
I

in circulation; and there
about $130 million
U.

was only
in gold in the

Neater records. Unaffected
Cuts Costs.

New standard

other

in clear

Saves

shortens training time

productivity

stationery.

experience of operator.

per

not

efficient

obtainable under any
of equipment . . .

use

machine.

original

with original jour¬

eliminating all carbon records.
use

use

of equipment

of floor space

...

of personnel

use

in effectiveness of Proof-of-

Posting Accuracy.
*

Savings vary according to system now in use
but your
National representative will gladly show
you how much you
can
save
in your bank with this advanced contribution to
Checking Account posting. "Call him today ... for quick
.

realization

mark #eo.

w, a, i»at. ofv.

extraordinary savings.

e/katumcU
ACCOUNTING MACHINES

Treasury. There were
"doubters," predicting dire conse¬
quences, at that time; but the law
re-establishing the right to ex¬

reduces

Unusual savings in stationery... statement-ledger

efficiency in
.

combination form, both

one

nal

by skiJI

of economy,

plan, through

good an¬

returned

personnel turnover.

Maximum

true gold standard—his¬

supply

simultaneous operation

one

simplicity of operation

haven't

sufficient gold, "in Fort Knox" to

New

planation of just what ."results"
he had in mind, instead of leaving
his readers to do the "imagining."
The next few points elaborated

all three in

ever had before
7-way proof of post¬
ing accuracy ;gives CONTROL beyond any other posting
plan.

Mr. Gans admits

Unit Plan!

Statement, Ledger and Journal

proof than banks

that

new

original print (no carbons).

dollar.

favor

with

never

original records in 1 operation.

temporarily

results

specialized posting machine

new

de¬

devi¬

power"

"value"

,..

before possible—results you
get only with National's new Unit Plan and National's

can

eco¬

and

never

Lower costs

National's
Now you can get

ated from its "value" of $20.67 an
ounce of gold.
In other words, it
was

50%

it is

from $1

rose

$4—due

law

Neater records

BANKS SAVE UP TO

Back in Civil

repeated.

days, "wheat"

bushel

Report better proof...

"purchasing power"

of the dollar has shrunk, due to a
combination of causes—the most

AGOING MACHINES

THE NATIONAL CASH REGISTER COMPANY,

Broadway. E. S.

gold should be

York,

opening of

the price of

Security

Traders Association of New

S hul l's

fully

esting to read
M

„>

inter-

letters

SHULL

Connecticut State Chairman
Gold Standard
League

today—the

be for the voters and

devices

Very truly yours,

($35),

lowering the "value"
highly-prized cur¬

the

economic

ob¬

most

other

prompt action by the Administra¬

per¬

the

all

would

than

lumped together.

American Dollar—is not the
prop¬
er
solution.
The
best
solution

of gold, than he is with
$35,
dollar

we? ounce

worth

But
.

rency

The

Foreign Nations

gold at the low price

this

answer

"Ironically

says:

can

Gold

Standard, is to be very,"ir-^ question: Would the average
rational," indeed.
son
be any better off with

Gans

govern¬

tain

ounce—which is the "irra¬

Mr.

ments of

strain, whatever, on the Treasury ! tional" price being strongly
urged
—the people wisely choosing
rto;? by producers of gold, and others.
keep their money in the bank, at That, of course, would, automati¬
interest, rather than "hoarded" as cally, * drop the "value" of the
gold, at no interest.
Today, we dollar from its present l/3§th of
have a considerably higher ratio an ounce of
gold to l/70th of an
of
gold
to' circulating-currency i ounce—a loss of 50%. Gold
being
than in that earlier
the one commodity recognized
period—$22
by
billion in gold, as against $30 bil- k
the; world as a whole, as the best
lion in currency;-and to say we,
measure-of-value yet devised by

haven't

Editor: Commercial and Financial

enough, only the central

CASH MGISTW

as¬

The Commercial and Financial Chronicle...

Thursday, October 1, 1953

(1238)
of their loans—mainly long term comparison. During and for some rate., The exercise,of these powers
affects all
banks.
Unless
banks
mortgages bearing relatively high time after the war, durable con¬
rates of income—and to the fact sumers" goods were not available have adequate reserves, they can¬
that their securities are of longer for purchase; but what was avail¬ not make loans of any type; and
maturities yielding higher rates of able could be readily bought by their customers soon find it out.

Continued jrom page

A Bankei Looks at the

Cnnent Pictnre
by this event except for

affected

pattern

•

indicate

banks

by classes

assets

the

return.

special signifi¬

The character of loans at larger

in spite of the

turbance

fact that

plant capacity and skill were
ample to meet the requirements
of the, Korean War and those of
our

the

the
of

consumers.

the

itself was
It was
original blow of World War II
great

has

that
our

But the impact on

banking structure

consequence.

volcanic

cut

craters

social life.

In spite of dismal predictions of
depression and unemployment, the

forces

our

were

economy

quickly rearranged and redirected
so
that
our
productive activity
turned up early in 1946 and has
been

going

ever

^ince.

Com¬

banks also have met this

mercial

They gradually have
investing institutions

changeover.
ceased to be

and again

business

have become lenders to
individuals.

and
loans

Bank

banks.

national

What this

analysis shows is that

banks in larger indus¬
cities have moved into the

$26 billion at the beginning
of 1946 to a large volume of $65.5

the larger

billion in June, 1953.

lending

Their hold¬
ings of government securities, on
the
other
hand, have declined
steadily from $90 billion to $58
billion.

This does not

the national debt

mean

that

trial

business faster than the
so-called
country banks.
More
one-half

than

their

assets

present are in loans, while assets
at country banks are still about

declining; on 60% in securities, chiefly govern¬
the contrary, if anything, it has ments, and only 40% in loans. Be¬
expanded further as the present cause of the heavy market de¬
difficulty in balancing the budget preciation, especially longer term
indicates.

certainly
go

Nor

that the banking

mean

back

prewar

does

system will
of

amounts

governments, it is extremely dif¬
ficult
to

switch

investment

from

lending without taking sub¬
capital losses. This con¬

stantial

government
securities in
their
portfolios. A substantial part of dition in turn affects bank
the

national

continue
banks

assist
the

must

the

will

bank

public

not

managing

debt, particularly i n
huge maturities—al¬

the next

Changes

but

prepared

$8 billion 5 of these

within

only

portfolios,

also

Treasury

refinancing
most

debt

the

are

due

months.

structure

and

fective,

Rise
The

ef¬

well

Debt

great monetary and credit

expansion

had

war

Equipment in
to
be replaced.

very

all of

Credit—Rise

homes.

homes

old

indeed,

know.

number of new
needed
equipment
to

their

stock

System have been

serve

increasing

families

are

period

during

and

also has raised

since

the

search¬

some

New automobiles

the

assembly

for

from

going through just such a
right now. The general
during^ credit powers of the Federal Re¬

had

began to roll off ing questions about our total in¬
lines; they were debtedness and its burden on the
greatly needed
because few of economy. Its magnitude is trulythem came on the market during colossal. The private and public
the war. This was the beginning debt now totals about $640 bil¬
banks.
When we go back to 1929 but
only by borrowing from other
of the rapid growth of consumer lion, or close to $4,000 for every
and earlier years, of course we banks—a
practice to be watched
find that the proportion of loans
credit,
and
commercial
banjcs man, woman, and child. It is more
by scrutinizing the borrowers' fi¬
to loans and investments was at or nancial
recognized their own market po¬ than twice as large as out national
positions.
tential in financing time purchases income this year.
well over 70%.
Term loans, secured by real es¬
;
of consumers.
The proportion of total invest¬
The Federal public debt on Aug.
tate, mortgages and ground rents
ment naturally gives us the op¬
In the second place, large as the 31, 1953, exceeded $273 billion as
owned,
chattel
mortgages
and
posite relationship. At central re¬
dollar volume of instalment credit compared with the postwar low
conditional sales, and leaseholds
serve city banks, the ratio in 1952
of $255 billion in June, 1951, and
as in the case of gasoline stations appears to be, it is only about 9%
was
47%; at reserve city banks,
of
total
personal
income
after the war high of almost $279 bil¬
and chain stores, are in the nature
52%; at country banks, 60%; and
taxes. This is about the same pro¬ lion at the end of 1945. The total
of
capital loans and constitute
at
all
national banks, 55%.
In
as
it was in the late private debt since the war more
intermediate bank investment, if portion
1945 these ratios were: for larger
than doubled,
rising from $155
they
are
amortized
within
10 twenties, when the dollar figures
banks, 73-79%; for country banks,
were
much smaller. The propor¬ billion to an estimated $330 bil-~
years or less, as
is usually the
lion. Obviously, this is an enor¬
84%; and for national banks, 80%.
tion of buying on instalment thus
case.
"
Holdings of government securities
has caught up with but not dis¬ mous rise of our total national
Perhaps the most spectacular
by all banks in both years consti¬
which
was
made possible
torted the former relationship to debt
expansion since the war has oc¬
tuted by far the greatest propor¬
through our large resources and
curred in loans to individual con¬ to total expenditures by the con¬
tion of total investments—about
an
efficient banking and credit
sumers.
sumers. The total volume of con¬
90%. In 1929 securities made up
Finally, past experience shows mechanism.
sumer
instalment credit has in¬
less than 25% for
larger banks,
Some of us are alarmed by this
creased almost five times—from that in time of any serious set¬
33% for country banks, and 30%
back
in
economic
activity, the expansion, while others are
$4.2 billion at the end of 1946 to

rapidly

expanded

sult of increased income
city banks has become increas¬
war
activities. But, with the end
ingly diversified. Many of them
of the war, goods began to flow
no longer fall into the old grooves
to the market which was hungry
and
classifications.
Many
soto fill up the deferred demands.
called
commercial loans are of

violent, short-lived price infla¬
cance.
In 1952 the proportion of
tion, which was superinduced by
loans to loans and investments at semi-capital nature in the sense
frightened consumers and busi¬
central reserve city banks roughly that they are not paid out of the
nessmen. Faced with the possibil¬
was about 50%, while at country
proceeds resulting from the sea¬
ity of a third World War, they
banks it was only 40% and at all sonal
conversion and marketing
rushed to buy everything, in sight
national banks it was 45%. In 1945 of
goods but continued on the
to
protect
themselves
against
these ratios were about 25% for books over longer periods through
shortages. The large amount of
the larger banks, 16% for country constant
renewals, with some re¬
liquid
assets on hand enabled
banks,
and
20%
for national ductions or even total repayments
them to create a substantial dis¬

with large amounts
on hand as a re¬

consumer

cash

earn¬

ings directly because the rate of
return

than

that

This
rent

securities is much lower
on

billion

1953.

Commercial
about

had

42%

banks

of July, liquidation
in July ment loans

of these loans or

instal¬ prompted to make a more sober
ef¬ analysis of its true meaning. But
of other all of us recognize the significance
but that the de¬ of the swollen debt for banking

consumer

goes on

much

fectively than in the

case

was close to types of credit,
14% of their total loans. This was mand for new instalment

billion,

$8.7
an

increase

which

almost

460%,

five and one-half times since 1946.
The

tude

expansion
in

this

magni¬

credit

consumer

has

declines

drastically.

their buying

curtail

credit

and borrow¬

total

ing. For that matter, commercial
also cut down

borrowers

business.

and

Consumers

their

its magnitude, the
to national

spite

relation

debt

income does not appear to
of line with

be out

previous records, ex¬

their business vol¬ cept for the last World War. Vir¬
tually all of this debt is internally
mand
for bank
credit thus ag¬ held, so that there can be no sud¬
event of a serious business let¬
gravates the situation, and the den heavy drain on our resources
down or recession, incomes will
banks are helpless as they cannot from abroad. Barring another ma¬
decline and consumers will be un¬
extend where there is no demand jor war and inflationary excesses,
able to meet their obligations. It
for it
the present volume of debt seems
seems to me that this fear is based
Some
would
have our credit to be manageable and digestable
largely on rationalization rather
authorities control the volume of if we can keep our economy and
than experience. The facts cer¬
instalment credit at all times to income going in high gear.
tainly indicate it to be the case.
The management of the public
its
overextension.
We
In the first place, it is unreal¬ prevent
is rapidly improving after
have made two attempts at such debt
istic to make
comparisons with
a control—one during World
War years of ineptitude and bad plan¬
the volumes during the war or
II and the other shortly after the ning. We are attempting to spread
immediately after it. The figures
outbreak in Korea. Both turned out our maturities in order to re¬
in that period were very low, and
out
to
be rather unhappy,
and duce the present inflationary vol¬
any contrast of the present figures
ume of short term or floating debt.
both were abandoned.
naturally
gives an exaggerated
The
basic
reasons
for
this We are making strenuous efforts
abandonment were:
(a) the re¬ to balance the budget and, next,
quirement of certain down-pay¬ to build annual surpluses in order
created

much

quarters. It is

concern

some

feared that in the

borrowings,

drop. Reduction in the de¬

umes

loans.

is not to say

ratio

banks

at the end

$20.9

that the

cur¬

earnings at country

is .not as

high as at larger
banks; ion' the contrary, in some
instances it is even higher,
But
this is due largely to the character

proved to be to begin reducing the debt as we
regulation of trade prac¬ should to lessen its burden and to
tices rather the selective control prepare ourselves for any unforemergencies. To service al
of credit; (b) the administration seeri
of
the
regulation was cumber¬ public debt of the size we now
have and to meet defense require¬
some, and the enforcement of its
ments means large tax revenues,
violations was wellnigh impossible

ments and maturities
a

Hcmca de
New York

Agencies

better

without

setting up elaborate ma¬

chinery and a large corps of Fed¬
eral

agents; and (c) purchasers
producers
objected to the

and

regulation

vigorously that Con¬

therein

and

lies

the

and

individual

for

real

burden

business

tax¬

It goes without saying that
taxes must continue at high

payers.
our

rates if

to service the debt

are

properly and make the necessary
finally cancelled the author¬
provisions for its gradual reduc¬
ity for this control, thereby re¬
tion. There is no escape from these
storing a free market for con¬

gress

stern

sumers' goods.
in

specific

controlling credit
of economic ac¬
instalment pur¬

areas

such

tivity,

chases and real estate, have been

extensively debated.

Call
to

expedite

arguments. In

...

your

controls

"your letter of
or

economy

and

end of the

war

low

level

was

at the

that the rate of

its expansion since

then is greatly

overstated, particularly in relation,
to overall productive activity. But
business

ings

individual

and

could

borrow¬

IN NEW YORK CITY

all

Dlgby 4-1140

153 Eost 116th St.—Phone:

can

be ef¬

lated

the

legitimate

needs of

business, it sustains the economic
It seems to me that the existing
growth, enlarges job opportuni¬
general control powers over bank ties,
and
makes
higher living
credit are adequate to influence standards
possible. If loans are

transactions.

51 Brood way—Phone:

regulations

fectively enforced.

collection

anco

ENright 9-3425

de A once

Ponce, Son luon, Moyaguez, Arecibo,

Guoyomo^ayey, Utuodo, Sonturce, (oguos,
(obo Roio, Arroyo, Aibonito, Aguirre

ability

and

Federal

YOUR LINK WITH PUERTO
:

•

Member

■' /*! - ■:
Federal Deposit

RICO

;
:V
:
insurance Corporation

types

these powers

PONCE, FUE1TO HICO

IN PUIftTti RICO

free

relatively

disturbing if they
should
expand faster
than the
controls
are
distasteful
to
the total economic
activity or ability
people. Without full acceptance to
repay
these
borrowings.
If
and cooperation of the people, no credit is
properly used and re¬

credit requests

credit

its markets, all specific and direct

Puerto Rico Market
or

is, at

There

present, little use in rehashing the

on us

in New York

requirements.
private debt

The volume of

The merits of

expand
'
.

bank

situations. Broadly,
deal with the avail¬
cost

Reserve
or

credit.

authorities

The
can

contract the volume of

credit

through open-market
operations and changes in bank
reserve

also

requirements.

tighten

of credit by

They

can

relax the control

changing the discount

efficiently
uidated

administered and liq¬
a
systematic manner,

there should be no
ous

cause

for seri¬

let alone alarm, be¬

concern,

cause

the

rate

which

our

credit has expanded since

the war.
Perhaps the most disconcerting
feature of the private debt struc¬
ture

has

been

proportion

the

continued

business

dis¬

equity

vNumber 5260;.. The Commercial and Financial Chronicle

Volume 178

(1239)

indus-

though
,

capital

issues

1946 has-been

since

■

basic considerations.

—

banks

reasonably well capitalonly about 13%. Such a small- The primary purpose af capital ized, there are
undoubtedly many
proportion
of
equity. financing accounts is to provide a cushion banks
whose
capital structures
means that our business is buildGf protection to the creditors of are low in relation to their deing inflexible debt service charges banks. Since bank liabilities are posit liabilities and risk
assets,
that may be unduly burdensome
payable in a fixed amount of dol- The solution in such cases obin
the event of any
prolonged iars> the burden of fluctuation in viously is to increase
capital funds
business recession. Whatever the
asset value falls on capital struc- or reduce the volume of risk astemporary advantages of debt fi- ture.
Capital funds must be suf- sets. Since no bank would want
nancing, it seems to be a dubious fjcjent t0 absorb losses without to
withdraw
from
lending acpolxcy not to seek proprietary or un(iue strain and
yet not so large tivities and hold a lot of idle cash,
Tisk capital and thus achieve flexas
unduly reduce earnings. This the
alternative
is to
raise
its
able positions to meet the uncerjs the core 0f the problem under- capital through (a) the retention

-7 Y^ture. -In the changed pout- iyjng bank capital

acal

climate, it is hoped that sound

™^dSSsh?rt?vCind Continued' in adequacy"oi
-

-^ith a ^relatively stable price
orderly production and

levei;

marketing

■

e^ate, am ine stocK mantel,
tne iyzu s, mgn incomes ana

tjonaj ratjos
tjve

are apt to be defec-

because

standards

added protection to banks,

re-

stockholders,

the

concept

these

*ssue to its
/rt\

tUn

own

nnlA

: I.. 1

_i.

or
j_

have no its are not large enough to acsatisfactory celerate the growth of capital in

really

earnings after taxes. At best, prof-

even

nliiHc

tVia

nQoanroc

tr>

Kit

maono

The

fact

structure

•

posits had to be abandoned when

Finally,

national wealth, in

our

than

the

debt,

Pnvate financial positions of consumers and businesses, while less
a little while ago, con¬
tinue strong. If the economy is to
^

grow, we should expect even further growth in private
debt or

The

secret

this

growth

lies in prudent handling of credit

the

lenders

the

and

of the borrowers to

capacity
liquidate their

obligations.

this

growth

pot

Under

signify

economic

trary,

credit

condition,
debt

serious

any

stability;

need

threat

the

it should indicate

nomic growth potential

con¬

the

eco¬

and pros¬

Tensil

Strength of Banks

Commercial

banks

deficient

from the

strong and in

the

tomers.
of

on page

their

capital

struc-

Efforts to find other measuring

devices were then switched to
ratios that related to assets which
reflect gains and losses rather
fban a flxed liability as deposits
do*
a resuffi we now have
^veraJ. approaches. One is to use
5
? ? capital funds to total
a^sets. A bank is supposed to lack
adequate funds if its ratio falls
below the national average.
But
how good is the national average
as
a
guide? There are likely to
be great extremes in

such

av¬

Their assets

the

United

last

war

Another emphasis is on the im-

portance

the relationship

tween capital funds and risk

beas-

sets, which are defined as "assets
whold" other than cash and government

their
the

.cus-

in the

obliga-

securities." The assumed ratio is
$x of capital funds to every

States

Treas-

$6 of risk assets., Query: is there

high quality.
are

ratios.

position to

good

demands

investments still
tions

Most of their

no risk attached to government
securities with fluctuating market
15%—are wholly or par- values?
Is it prudent to count
guaranteed or insured by them as substitutes for cash re-

A goodly proportion of their
Joans—estimated at $10 billion or
xtry.

about

tially
the

Federal

Government.

The

Federal Deposit Insurance Corporation insures a maximum of $10,000

for

each

sured

depositor

in-

most

tections

surance

important of all

System.
sort,"
of

the

Federal

"lender

under

the

existence

the

Federal

and

as-

Reserve

modified

FederaL

pro-

last

re-

provisions
Act, the

Reserve

Banks

provide
broad discounting facilities so that
under

stress

obtain

member

funds

asset

that

meet

the

them.

banks

against

they

any

may

demands

hold

made

and
upon

constituted, the Re¬
provides a great
credit bulwark against the uncertain future. Many of its parts can
serve

its

now

System

and

should

improved, but
unique framework, independand philosophy should be

ence,

foundation

any

com¬

rating,

loans

guar-

Government or its agencies, or
toans secured by government securities or by cash surrender value

°f life insurance. Used as a standard, th*s ratio obviously would
be misleading and would produce
spurious results,
According to still another test,

commercial bank has adequate
hasis if it has $1 of capital funds
f° $14 of total assets and $1 of
3

capital funds to $4 of risk assets.
Other ratios also

are

The services of main office,

branches, and

correspondents of Guaranty Trust Company
are

your

disposal. Complete facilities

available

to meet

every

are

banking need.

used to sup¬

plement this test. But what if

one

Please feel free

consult with

us.

ratio is favorable and another unfavorable? The use of ratios, singly °r in combination, cannot produce a reliable standard guide because

vigorously guarded.
The

grade

anteed or insured by the Federal

can

sound

determined

standard degree of risk in other
earning
assets? — for
example,
short term municipals of the highest

bank.

But

Or is there

serves?

relations

in each

different.

ratio may

Guaranty

The central difficulty with these
bank, of course, lies in its
capital structure—capital, surplus, attempts at measurement is that
we have no uniform definition of
undivided
profit, and
reserves.
mercial

Total capital accounts of all
mercial

banks

June

com¬

this

•

year were

lion,

estimated at $13.2 bil¬

or over

8% of deposit liabil-

Trust

sets.

But

even

formulate

if it

were

inclusive

of New York

possible
concepts

ities.' These accounts

have grown and contrive new ratios, we wouldi
substantially in the past 14 years,
be using mechanical gadgets
chiefly from the retention of prof- t° measure fluid situations,
its, but their growth has not kept
The problem- of bank capital:
pace with that of other factors.
, adequacy seems
to be a matter of
While- total capital
funds in- judgment, reached after a careful!
creased

91%

between

1939

and

1953, deposits expanded 181% and
loans and investments 237%.

Con-

study

assets. and

their

Capital Funds $380,000,000
140

Broadway, New York 15

Fifth Ave.«t 44th St.

broad

national

averages

60th St.

New York 21

Rockefeller Plaza 4it 30th St.

New-York 20

haviour under strained conditions,
No

Madison Are.

New York 36'

be-j
-

LONDON

32 Lombard St., B.C. 3

can

sequently, the relationship of cap- resolve this problem. Only each
ital to deposits and earning assets individual bank, with
intelligent
has. declined., Similarly, the ratio guidance, can solve it; and it;
of capital funds to total assets has* sKould ' b<
be the responsibility of

Company

the adequacy of bank capital and
no
uniform definition of risk as¬
to

vBusb House, W.C. 2

PARIS

BRUSSELS

4 Place de la-Concorde
-

probre-

Responsible

now.

^ure

generally

have emerged

are

Continued

erage,
and these extremes may
impair the validity of the average

perity.

meet

doing

are

have

Investors

are

banks

bank deposits became greatly inflated. If that standard had been

liquid than

credit.

continued, some of the strongest
prices, has banks would have
appeared to be

real terms and current
m°re

evprv^inVrip

cently have increased their capital
structures through successful flotations of stock, and many of them

With respect to selling bank
stock, there are, of course, many
difficulties, though they are not

SmS?™

and assets- National banks and been slow to buy it because it does

*Yiuirttain

that

means

-Tx

withholding so much idle cash the selling of bank stock
under changed conditions.
ably exaggerated. Many

relation to the growth of deposits insurmountable.

ga°ni

stocks,

rate, the less desirable is the stock.

reserves has been changed to in-

years

canftai°funds

outstanding

now

because bank

liquid earning assets, i
stocks is based primarily on earnWhile originally the purpose of ings. The higher the rate of earnrequired reserves was to| give ings, the better; the lower the

bencb marks for reference. The

credit

act

their own vaults without earning low
anything.
This
reduces
their creased capital dilutes stockworking
substance
and
limits holders'
equity, reduces earnings
earnings. Many nonmember banks, per share, and increases the divion the other hand, are permitted dend burden,
to put a part of their reserves into
The
market
appraisal
of
all

should support good business and

private

bank

not

most part, are selling betheir book values,
and in-

cent

—s

„

pust carry large amounts of cash ate as
in the form of reserves immobil- slow to
*ze<J at the Reserve Banks and in for the

additional stock

of goods; absence of, ^
national averages.
But even on earning assets, it is difficult to
imduespeculatiori in inventories, ^ Qr
individual banks,'.the tradi- add much to capital funds from
real
as

strong capital
strong equity is
'
capitef finds" should (c) the sate of capital stock to elude the reserves as a means by often ignored by many stockbe handled on the individual case- the public, or (d) a combination of which
the Reserve System can holders who buy shares on the
by-case method because variations these methods.
control the supply of bank credit, basis of high earning rates rather
|n sj^
g^gj.gpjjicai i^jcations " Even with conservative * divi- Perhaps jt is high time to take than on equity,
ban^s impair the significance dend policies and higher returns an?,^e^
flt this subject of
But the difficulties incident to
~

of profits, (b)

structures.

The problem of adequacy or in-

•

are

deprecifast either. Bankers also are

27 A*venue des Arts

Memfar Mwl Deposit 4m*twtc*Xo*p»f*tia»

The Commercial and Financial Chronicle

(1240)

Continued

jrom

paid

page

tlflfe

Cheap help is the most expensive supply the funds

■

managements

cordingly.-

tors

Bank

must

management

know

the

board

officers

and

interests

community

every

risk

direc¬

the

public
in

expect
the
of their legiti¬

assets.
and

ors

protect their

serve

structures

low

are

rela¬

tion to their deposit liabilities and

They

Business and individuals

well.

to do it; in other words,

pr0p0ses

look

both

what it is trying to do and how it

important part ot banK
assets. The underlying idea

such

tablish and operate a bank.

Bank

ital

necessary to es¬

directors
should
recognize this truism and act ac¬
help.

Current Picture
directors and

"This is the essence of sound and
individuals.
They are rea¬
most efficient
sonably well capitalized, although
builder of banking policies and practices."
there are many banks whose
Stockholders
and
good will.
cap¬
depositors

help and the greatest
public confidence and

Cll llftV
A Bankei Looks at the

bank

the

help

Thursday, October 1, 1953

...

„

steps

such

direct¬

cases,

managements should take

increase

funds

through

profits,

their

the

capital

retention

stock issues to their

new
stockholders

or
the sale of stock
banks to take care
increase risk
musj- dearly know what its obif, in ,their pf such an extension is that banks, jec^ves are ancj what policies it mate financial requirements to the public, or a combination of
Only a all these methods. Accumulations
judgment, the strength and ca¬ as quasi-public i n s 111 u 11 o n,^sbQUid follow. Probably no one promptly and efficiently.
of
valuation
reserves
help
to
pacity to serve the public should charged with sensitive responsi- ^as se^. f^^ this task more clearly competent management can meet
bilities, should be permitted to ^an
cushion of pro¬
be raised.
£-rsj. Comptroller of the these demands and follow the ad¬ strengthen the
In
addition
to
capital funds, supplement their capital strength Currencyj Hugh McCullough, in vice given by Hugh McCullough tection, and the present formula
for establishing reserves for pos¬
there
also
are
other
ways
to or cushion of protection in every 1863> in his letter to all national 90 years ago.
sible loan losses should be revised
banks.
What
strengthen the capacity of banks. way possible.
Good management will
Hugh
McCullough

should

hesitate

not

their capital structures

The

most

important method is to

■accumulate

v a

u a

t i

o n reserves

possible loan losses. A
policy should be to
certain pro¬

against

bank

sound

Some
the

could

portion of earnings in the form of

term

for bad loans.
the

Under

Dec.

1947,

Com¬

Revenue

banks

were
per¬
accumulate
tax
de¬

loss

limited

losses

fixed

and

use
experience, knowledge,
wisdom, and foresight that are so

ma^e sound loans,

tire

uc-

feave

made

this

loan

for

reserves

losses.

posits

relatively greater use of it would be to strengthen capiOver eightstructures
of
or tal
many
smaller

prosper,

method.

dollar

these

banks

of all

such

the

reserves

represents

over

70%

tant

«h

you

shall

bave

you

(1)

view

the

size

maturities

the

arid

ultimate

outmoded.
It is based on the 20-year moving
-average of loans and losses. As we

•frrirn

banks for its successful financing.

Jhowever,

move

away

becoming

Good

Bank

„

of the 1930's and

move

toward the

Banking
,

Problems of capital funds, valuation reserves, quality of assets,

of large loans and relatively
email losses, the ceiling for valua¬ personnel, efficient operations and

years

tion

declines.

reserves

The

for¬

and

-welcome

the

establishment

result

formula,

This

also

could

valuation
be

re¬

extended

investments, which make

serves

bank

men

and

will

women

run

Pay them

compensate them

the sound

well

principle that the well-

not

highest

truce.

market

them

of
man

dubious

accordance

banking

their

cession.

But

are

will

(2)

credit

Bank

sinews

the

for

the

bank

credit

have

credit

the

tight

that

though

rates

they are
stage

same

of the

and

business cycles in the past.
Federal Reserve policy has

The

procedures.

been

flexible, and its general ef¬
the

thus far has

economy

wholesome.

conditions.

ness

the total

its

can

now

Influence

volume

primary

credit

should

Within

task.

its

maintaining the integrity of the

dollar.

CORRESPONDENT

their

assets

World

War

during
II.

since

and

During

ex¬

the

HAMILTON NATIONAL...
valued association which

became

less

furnish the best

the

than

The

loans.

further,

volume

character

and

their
diver¬

but

overall

the

sustained, despite
creased costs and high taxes.
ings

trial!

well

(4)

consequence

monetary
our

credit

and

in¬

national debt, public and pri¬

The bur¬
den of servicing this debt is heavy
but manageable if we can main¬
tain our production, employment,
and income at high levels.
Our

HAMILTON
,

NATIONAL BANK

has

wealth

national

than

the

debt,

increased

strong.

MEMBER

FEDERAL

DEPOSIT

RESERVE

SYSTEM

INSURANCE

CORPORATION

The task is difficult, but
escape from it if our

individual

banks

ing system

as a

vide

financial

the

and

whole

bank¬

to pro¬

are

leadership and the

credit

necessary

sinews

for

the

growth and prosperity of our pri¬
vate economy and of the people.

Ralph W. Davis Go.
Formed in

and

111.

CHICAGO,
with

—

Chicago
A

firm

new

address starts business

new

today (Oct. 1) in Chicago's finan¬
cial district.
Ralph W. Davis &
Co.

its

opens

doors

Street

Adams

York

and

changes

West

commences

Dealer

the

New

Stock

Ex¬

Midwest

over

listed

known

180

and

Registered Specialist

Odd-Lot

and

nationally

securities.

General partners of the firm

Ralph

Davis,

New

York

man

Barr

merly

member

Stock
and

Exchange;

Scott

are

Davis,

partners of Paul H.

the

Ly¬

for¬

Davis

Co., and Mr. Alfred E. Turner.
Together, these partners have a
cumulative

total

years

membership on the Midwest Stock
Exchange. Mr. Leon Wheeler is a
limited partner.

Ralph W. Davis has been close¬
ly

associated

Stock

with

Exchange

he is

from

1945

and

Board

1947,

the

Exchange.

Stock

cago

years.

of the

known

was

Midwest

many

Governor

Chairman

Governors

when

the

for

former

served

Chi¬

Currently

Regional Governor of the

Association

the

New, York

Exchange Member Firms.
Barr

Governor

Chairman of the

the

mittee

E. Turner,

ernor,

mittee

many

and

ViceCom¬

Midwest Exchange.
a

former Gov¬

member

of the Com¬

Floor

The -firm
cialist

Stock

Lyman

Executive

Alfred

Procedure.

registered

Odd-Lot

and

Spe¬

Dealer

stocks, including: American

fi¬

Copper,

Bastian-Blessing, Bendix

Aviation,

Continental

Motors,

General

Electric, General Motors,

Illinois

Central,

Oak

Marshall

Manufacturing.

Pennsylvania

Field,

Packard,

Railroad, Pure Oil,

Thor Corporation, Trane and U.S.

Steel.

The large growth of debt
need not signify
any

Two With

credit

serious
FEDERAL

there

nancial positions of businesses and
individuals
in
general
continue
"

MEMBER

ployees.

Telephone & Telegraph, Anaconda

of
great
expansion,

vate, has risen greatly.

CHATTANOOGA, TENNESSEE

Bank operations, serv¬
customers, and goodwill of
public depend upon the qual¬
ity of personnel, officers and em¬
to

the

quality

has been relatively high and earn¬
a

the selection and training of bank

sity of their loans have changed

in individualized service.

invite

di-'

should

war,

investing
institu¬
tions; and even their loans were
largely made to help war financ¬
ing. But since the war, they again
have turned to lending so that
their holdings of
securities, in¬
cluding
governments,
now
are

they

bank

bank
objectives
and
They should work out
definite policies and programs for

(3) Commercial banks have
perienced
significant
shifts

RELATIONSHIP AT THE

good

crystallize

over

and ability it should assist

power

THING AS A ROUTINE

challenge

Both

management

long

result

still lower than at the

the

THERE IS NO SUCH

and

means

build

policies.

exceeding

interest

and

even

The de¬

and

been

with

risen

activity

war.

has

supply,

provided

economic

funds

term

•

offers

responsibility

directors.

bank

rectors

operations

services.

has

during and since the
mand

is to be expected in free

markets for goods and

been

is the

management

re¬

easily adjusted to changes in busi-

account is

management

financing.

the

serious

any

Competition

good.

strong,

fect

Every

Good

busi¬

buyers' mar¬
ket; and upon completion of the
correction, business again should

integrity

standards

inven¬

the turn

over

not

result

may

but

year

of extrav-

with

present'form

foreshadow

adjustments

setback

ness

are

bank,

pro¬

somewhat

Korean

stock

justments

making

method

defense

changes in prices, decline

the

"Pursue a straightforward, upit possible responsible for bank management.
right> legitimate
banking
busi:for them to continue building this
An
effective management will ness. Be not
tempted by prospects
additional protection and strength. mobilize
an
effective
corps
of of large gains to do anything that
inew

income,

peacetime

in farm income, and the behavior

people,

directors who

the

certain

g^llc Relations are the responsi-

boards of bank

The

changed

may

and ioyaity should not be tolerbility of bank management. Upon ated as aQbank officer or an emapplicable over a long period of the quality of management depi0yeee.
yearfe within certain limitations pends the quality of the bank, its
"Through capital
funds
and
regarding the total of such re¬ growth
and
development.
This
otherwise, make your institution
serves. I understand that consider¬
point is so self-evident that it
str0ng to protect your depositors
ation is already being given to need not be belabored here. But
and stockholders; to secure for it
this
subject; and banks should it should be driven hard with the j.be confidence of the
mula should be revised and made

tories, prices, costs, as well as in
productive processes.
These ad¬

require

habitS)

been

develop bank of£i.

enHre services.

agant

employment,

must go on, though its form

gram

Juc£ salaries as will and respectenable them
to live comfortably
abiy;

shows

corrective

and

(6)
sound

ice

influences

sense of responsibility.
i

„

picture

current

levels.

record

reservation

high character, ability, and

cers

Management Means

Sound

from the heavy losses

npirti^fln

..SelPect

dependence of the Treasury upon

under

business boom continues.

Production,

our

this ruling,

formula

The

depends

Conclusions

and

and trade have

prosper,

some

The

that the

"Protect your independence of
public debt, its lopsided schedule judgment and action. Keep aloof
of

reserves.

system

Summary

banks, and to encourage more about the integrity of a customer,
$50' million stable and fluid market for gov- s^0p dealing with him and close
ernment securities. This is imporreserves; and the
bis account.

amount

banking

en¬

its

becoming obsolete.

personnel.

excess

bad-debt

reputation of the

and thus would be

mine-tenths of the banks with de¬

bave

The

turn, depends upon the quality of
the management.

investments.

market

with

cordance

action.

performance
of
individual
banks—14,000 of them; and the
quality of that performance, in

changes,
"Diversify your loans and inself-adjustable, vestments to avoid undue concenBut not all banks have taken ad¬
The formula could be first ap- tration.
Control
your
discounts,
vantage of this ruling. At the end plied to government securities in- and do n0^ permit borrowers to
of 1952, only 45% of all insured asmuch as their depreciation haa eontrol
your policies,
-commercial banks had established been relatively large and beyond
"Work
with
your
customers
such reserves.
The larger banks the control of banks. The effect
ci0sely and intimately.
If they
mitted

ductible

and

the

capacity,

and
way 0f repayment. Avoid
These speculative plunges in loans and

fluctuate

and

success

and be sure the

borrowers have the will,

judgment,

because

for sound credit analy¬

necessary

sis,

percentage

depreciation.

would

reserves

develop

"Learn to know your customers,

time, could

one

any

bankers

early

thoroughly applicable to us of the
out to include present day. Let me brief you on
based on losses some of his admonitions:

depreciation of longer
securities. The total of such

those

reserves,

the

reserves,

ruling of the

of Internal

missioner

worked

valuation reserves

set aside each year a

reserves

loan

in said

formula, as

practical

case

ity.

threat to economic stabil¬

It should indicate the growth

potential of

(5)
InnnrA

(Special

our

economy.

Commercial
oonoAiTv

banks

SAN
C.
are

now

ment

Managed Inv.
Financial

FRANCISCO,

Schick

possess

The

and

with

Homer

Chronicle)

Cal.-^John
D.

Managed

Wilson

Invest¬

Programs, 41 Sutter Street.

Volume 178

Number 5260

The Commercial and (Financial Chronicle

...

(1241)

from

are

page

at work.

Continued

settling

New starts may thus
somewhat
lower

levels, and at the

The Outlook fox Interest Rates
liance upon borrowing at the FedReserve"

era!

this,

particularly

was

with the

Many bankers regard-

payments

steadily increasing.

reflected also the summer lull in

are

tov^avl

are

of the basic functions of the Fed-

eral Reserve

demands

seasonal

Their
the

concern

fact

that

for credit,
increased by

was

member

Reserve

was

in-

expected

was

the second half of the year.

firming of yields especially
to Not
ate borrowings expected
to

new

1953

this

financial

some

Federal

the

fostered

that the

quarters

Reserve

belief

bent

was

stantially,

that
it w a s
almost
completely disinterested
in the
problems of the Treasury, and that
the latter
a

The
Treasury's cash requirements may also be lower in
1954,

eiate.

Because

the

increasing

substa^ al but huge o«ermgs by the Treasury s borrowing requirements
through
the
first
prospect.

competition

af rising

private borrowers

2?
authorities

with

With

heavy

in-

^t b>ond prices will be und

AUythei

six

months of calendar 1954 will probably be less than in the corre-

engendered increasing

contributed

the evaporation
market confidence.
to

Furthermore,
led

these

increased

funds,

downward

demands

for

pressures

costly,

manage-

perhaps

wholly unavailable. Marginal borrowers were encouraged
to enter
the

security

rowers^
•

markets,

bor-

many

sought to anticipate their

their banks with

view to

cover-

ing possible future needs.
Para^
•
11
, i„>
■doxieally enough, therefore, high„

interest rates had, at least tern-

•er

move

ip,!pu. Jreasu^
in

below 1953 levels, factor,

age st that business
J*™ su™eys suggest thabu
w

11]iena

exoand

soending

pa*!

remain a substantial

savings

for

rerentmonth^aT

mpmnb^dw

^a^',

Wllll.„

wnn.ii

tivitv

u
In

|■ - .w

t-u
contributed
L-uiiLiiuutuu

nificanr^

the Treasury

The lower prices of
agricul-

ably result in less

seasonal

pected
even

net

remain

PVPnt

large

may. be

oorate

Obviously, if a
decline in personal income should
nronortions

some

j kely to decline, and

the

Fnr

however,
inflow

Qnme

de-

funds

the major savings institutions
pears in sight.
Weighing

these

corporand

to
ap-

the

jnvestment demands

yields

However

the

however,

ine

fact

pro-

imim

be surPrising f°r oet demands ?or
?^a"ds for

funds

1954

moderately
moderately

nomic

a^tivity remains
levels.
If

Ff®

conditions

forU!f protraJ^
v°jum^ of funds is accruing "o
buXess "o'ut'TVpVciation 6and
other noncash charges ^"nnfnf
and out of

the next 12 months

reinvested

for

comes more

and

bond

establish-

estaonsn-

Market

the

if
it

even
even

de-

eeo-

eco-

rash

avniiahie

short-

credit.

The large growth of busiquar-

19J52 is. not expected to be

repeated this year. Nor is the exPansion in consumer and real estate lQans likely to aggregate as
much as in the closing months of
&

10(_0

financing

will

«««££

were

bills

totaling

offered.

This

$4.5
pros-

pect reflects the recent failure of
Congress to raise
the
statutory

debt limit. The Treasury may be
able to meet its
requirements
through the end of 1953 by drawing down its cash balance. How-

extremely tight conditions

ever, it will probably prefer to
avoid an excessive drain on its
ket in the second quarter, me in- xunas ana xnereiore
kci in me secona quarter. The in- funds and therefore may raise new
vestment of liquid funds, by cor- money with:
vestment of
within the limit of the

norations

and

in the money

others

mar-

short-

term Governments further helped

around reduce

business

enr-

have

obligations or
to reduce their reliance upon bank

anticipation

The Outlook for the Money

investment

New Treasury

clearly evident.

term Governments

billion

Business

'therefore

ter

tod1 if

waM

either

should

ron

cSnSeems"o be?ha'twea?e

invest-

may

crease

aftermath

ness inventories in the last

passing through the cvclical peak

somewhat
of

crease

its

eco-

various

nom;c trends and factors

some further rise in 1954. that prevailed

long-term

and

substantiallv

exneeterf

year, when
versely affected by the steel strike

ahead

likelv

are

last

porations

the

second half of
they were, ad-

H Start

balance, however, it would not
nwi

dwindiinff sja_

profits

diminution in the rate of savings
+n

about

higher than in the

over the next year
The measures adopted by the
Borrowings by state and Federal Reserve and the Treasury
governments and authori- in June and July were soon re?iesV on the other hand' are not fleeted in a significant relaxation

anv

oftheirtaxes

some de-

owners

borrowers

10%

ex-

incomes.

assume

means

mnHpratP

business contraction and

cline in

ments under the Mills plan
that corporations have naid

first half of. the year than was the
high levels ease in 1952. Furthermore, corbe

may

' or so.

amortization

has
nab

harbinger

eLtoment^neat^vear
gidin,

business, home

tf the

1954~ ment funds

deoline

equipment ^cal

for capital

orders

institutions

the investment, markets ^AeAQi5-

.In Usur?mary .therefore,

a^e

?smaller

^^av^eTnprospect
p :? p

the bond

Many corporate

continue to increase.
Furthermore,
the exnerience of 1949 smmests

the flow of funds available

may be

show^ome ^rSrpro^^is^to'be^made^in

the

ments, as well as some state and
local authorities, apparently hastened to expedite them
borrowings lest new financing become
even

some time

they may

f101

conditions

intensifying

thereby

market.

amount of new financing

Looking beyond the turn o
in prospect also for the second
present lndications are that half of 1954, compared with the
^man(^s f01, inv®fi ®
??me Pen°d of the current year.
*be aggregate will remain larg However, it is clear that the

inter-

anxiety regarding the future and

make progress toward balancing
budget, a somewhat lower

piessure

iuture-

o°fnth°e

intenUons

been

vestment demands concentrated spending period of 1953. Furthermonths
over a short penod
it is
kely more, if the Treasury continues to

about to undertake

was

program

Personal income has

tors.

tural commodities and
greater use
of Government loans, will
prob-

aredci,reC/iptS in
be
he first half of the calendar
year,

tightening credit further and sub-

these

half-year periods.

crease

All

both

•

states, municipalities, turnpike auare

ly to be restrained by several fac*

ide^fal^gage^fbTntxTy'ear ^^g^th^r^d'pS 'the I^financTcrop moTme^
* be SOmeWhat bd°W —' *^
^

prospe^ ln1t^d^101^hst a^ad' borrowings is expected to be modalready led to some although any reduction in market

borrowings,

substantial seasonal

in bank loans

crease

bor-

encouraging

banks to reduce these
and that

bank

high, that the Fed-

rowings were
eral

meet-

amounts

same

Consequently,

and this has

to assist

was

insurance companies, on the other
hand, have risen by about the

The

new

still higher
toy have
statement as conflicting been for a good many yeais.. A
prevailing view that one large volume of new financing is

disturbing

amortization

gage

time mort-

same

helped

money

offset

market rates; it also
part of the squeeze

debt ceiling
..

?.Tng"
the

present

time

subject to the limit

the

debt

is'around

o£its.

These

factors

should

deteriorate

next l2 months or S0, requir
so, requireor

ments for investment funds

wou

be nJaterial!y sr"a"erJ

the

normaTseasoLrexpansio^in JiaMssues11^ Government5,
SSd "Z! UnZZTnS X

trust

ra^S fe faLPreciabaly, be" Presumably, of savings bonds"and
investment funds, low their levels of May and June, notes. Qn balance, therefore, the
the other hand is likely to be and in fact have averaged some- Treasury may be able to raise
wel1 maintained. Current savings what lower than in the early perhaps $2 billion, but not much
are at record levels a"d the sav- months of this year. However, more jn new money over the re.
Tl?e fl°w

expected to reduce corup*
borrowings in 1954.
security financ- y
ings institutions are accumulat- medium-term rates
are
only mainder of 1953- thi<? would hp
ing in the aggregate. This spurt
Housing starts have shown some jng funds rapidly. Mutual savings slightly lower than at
midyear about one-half the amount borin new financing was a further
^akn.e,s®
mo"
..-S bank deposits have increased 15% and so far show a rise for the year
i„cf
e
10{-0
■cause
of the rapid drop in bond difficult to determine whether this
more jn tbe first half of 1953 than
as a
whole.
rowed in the last quarter of 1952.
prices. '
reflects the relatively high level
d-d jn tjie same period of
Business needs for bank credit B: the Treasury decides to underAs the squeeze in credit condi- of starts last winter, congestion in
2952; for savings and loan associa- tend to rise seasonally in the take a new offering, it will
pretions showed signs of assuming the secondary mortgage markets,
^ons> tbe figure is close to 25%. latter part of the year, but the insumably favor short-term obligamajor
proportions, the
Federal or a real easing in the demand for Time
deposits
of
commercial crease in commercial bank loans
.Reserve departed from its previ- housing: probably several factors banks and admitted assets of life over the next few months is likeContinued on page 30
ous neutral
attitude, and early in
'May it began to provide reserves
7
~
"

porarily,

stimulating effect

the volume of

the

July

market.

money

billion

had

$1.1

over

'furnished in this
dramatic
ure

-bank
.about
in

and

the

significant

Board

late

meas¬

reduced

June,

WINSTtD

■nut

member

requirements

reserve

$1.2

been

manner.

announced

was

when

early

'*■

OFFERING

A WIDELY ACCEPTED

billion, effective early

July..
Around the

remove

ties

same

time, in order

of the

some

CORRESPONDENT

uncertain¬

the credit

overhanging

mar¬

SERVICE

kets, the Treasury announced that
-it

raise

would

new

money

of tax

some

billion of

through the

issuance

anticipation certificates

PANlELSON

TO NEIGHBOR BANRS

ma¬

FOR THE OVER-ALL

turing in March 1954, and not
through
longer term
issues, as
had thought likely.

some

duction

reserve

closely

was

The

BENEFIT OF

re¬

requirements

correlated

with

CONNECTICUT

the

"Treasury financing operation; ap¬
parently it was recognized that the

BUSINESS and INDUSTRY

of the large

Treasury bor¬
rowing
could
be assured
only
through the assistance of the com'mercial
banks, and it was besuccess

ilieved

that

quirements

tious
large

way

lowering

reserve

amounts

various

stimulate
ment

bond

and

reserves

the

;the

serve

Shippee

President

)

recovered
the

THE HARTFORD-CONNECTICUT TRUST COMPANY

the

Market

the

from

response

Federal

Re-

Lester E.

markets.-

Factors

lows

measures

both

money

prices

June

was

pronounced improve¬

Bond

which

The effect

measures

sentiment

Economic

"their

Chairman

to provide promptly the

3the banks would need.
of these

John B. Byrne

re¬

the most expedi¬

was

to relax

tight credit. In part,

the improved tone of the market

760

MAIN

STREET, HARTFORD

Member Federal Deposit Insurance Corporation

The Commercial and Financial Chronicle .;.

ThursdayOctober 1, 1953

(1242)

economic, downturn .will

Continued from page

lowed

tions, which

is usually at a

be forthcoming

may

the next month

ing" of'credit.'♦

1953

this

of Debt

Problems

The

seasonally low
in the

Management

substantially upon

depend

the

measures

authorities,

monetary

the

whose

ac¬

the

they probably would not

authorities have given
assurance
that the needs of the
Treasury will be met "without un¬
due strain on the economy," and
have demonstrated their readiness

applied by the authorities in
(tie
period ■ ahead.
The Federal
TReserve, like the monetary authorfcies in most major countries
world,

free

the

trying

crease

The

in¬

seasonal

that

bills

This effectively dis¬

squeeze.

the

essence

flexible

policy that the authorities
ever
alert to changes in the

credit
be

1953

1953, when production and busi¬
were moving
to new peaks,

ness

"they did not aggressively contract

^credit, but were unwilling to pro¬
vide

through
4tl

bank

additional

open-market

pursued beyond the period when
a change is appropriate.
However,
the authorities are engaged in a
continuous
nomic

reserves

operations

time when the need for cred¬

may

reappraisal

eco¬

trends and conditions; one

predict with a relatively high

degree of

9-month

and

distribution
the debt rather than )to achieve
maturity

the

any

poljcy

vigorous

record

appears

volume of private in¬

and the
Treasury

requirements
finance large

period of strong demand
the Treasury
some disadvantage
in com¬

ing.

snap

risk

the

its

inserts; Dynamatic drives,

•

Ohio

investors prefer to maintain

enhance

Bottle

to
In

tion.
to

community

financial

the

rather

than

Hayden Memorial Trophy Tourna¬
ment at the Baltusrol Golf Club,

of the

aims

Federal Reserve and

in its wake there
followed a clarification and reaf¬
firmation of the sound, sensible
the

and

Treasury;

standards

responsible policy

had

authorities

the

Pierce, Fenner & Beane.
ning score

was

the two teams.

representing
banking

A total of 35 teams

investment

York

New

participated in this year's

houses

Hemphill,

tourney.
The
team consisted

of:

Noyes

Jansen Noyes,

misconstrued.

come

period

the

For

(3)

ahead,

the

experience of

from

basic conclusion to be drawn

and Arthur S.

tinuing to follow a flexible

predicated upon the
the

economy,

activity

the

Three

The

(4)

Federal
to

continuing

out

men

shared

for

honors

gross

Corporation; William E. McGuirk,
Kuhn, Loeb & Co.; and Joe
Lee of Reynolds & Co.

Jr. of

H.
Co.

won

score

Washer, Dean Witter &
the individual low net

with

72, and William Dun¬

low

senior

Merrill Lynch was winner

kak of

with

net honors

75.

Gross, Rogers Co.

the

Reserve
funds

supply

seasonal credit needs and

meet

edged

with scores
of
80:
Charles Glavin, The First Boston

low

rate

and

requirements

borrowing

teams

place team from Kuhn,
Loeb & Co. which netted 318.

condition of

including

investment

winning

The

con¬

credit

Laundon.

the third

recent months

is that the Federal Reserve

E. Thomson,

liam Dunkak, James

(Special

to The Financial

Chronicle)

.LOS ANGELES, Calif.—James
E.

Edgerton, Eli Goulden, Herman
Lofgren, and R. C. Williams,

any

reduce

the

permitting

Jr.

become

have

associated

with

Gross, Rogers, Barbour,. Smith &

ties

deviate from this basic
unwarranted.

may

course

the money

the

ployment
levels

and

business

high

sustained

the

Treasury

However, the authorities may be
expected" to be alert* to avoid a
repetition of the earlier credit
the squeeze and the attendant unset-

finance

tlement

An energetic .funding
some

risks of

program
a

broad¬

economic

ities

will

the

markets.

downturn,
almost

the

author¬

certainly

were

formerly

partners

Edgerton, Lofgren & Co., with

which Mr. Goulden

activity in the

likely to display a mildly restric¬
tive attitude toward the market.

how

market

also entails

Lofgren

(5) Under conditions of full em¬

event, it is difficult

from

Exchange.1 Mr; Edgerton and Mr.

appear

aggregate, the Federal Reserve is

deficit.

Lynch,
The win¬
net of 315 for

Co. and Merrill

Noyes

been

endeavoring to follow, but

vigorous funding policy as
long as it must borrow large sums

N. J. The winning
represented Hemphill,.

Springfield,
teams

The

(2)

liquid posi¬

maintain

perceive

sue

Kenosha, Wisconsin < London, Ontario

Charles

25th Annual

the

win

golf teams tied

four-man

Two

seeable future.

under current conditions can pur¬

PLANT! OPERATED BY SUBSIDIARY COMPANIES:

Hayden Trophy

and

policies in effect, suggests
certain conclusions which may be

fiscal

supply to
grow
commensurately with the Co., 559 South Figueroa Street,
large volume of liquid assets; economy. Fears that the authori¬ members of the Los Angeles Stock

of short-term
Government obligations, and ris¬
ing interest rates may for a time

Creek} Lowton, Detroit, Marshall, Saginaw, Vat tar, Michigan
;

and

money

in Treasury.

competitive < attractiveness of
obligations. Furthermore,
American economy is geared

desire

PLANTS: Cleveland, Munition, Ohio

rise

substantial holdings

General Offices: Cleveland 10,

own

many

-4

precipitating

yields throughout the bond mar¬
materially increasing

dynamometers; and other similar products.
•

ket without

turbo-jet engine blades, tappets, hydraulic

the

brakes and

attractive

marking up the coupon rate. How¬
ever,
if the Treasury raises the
rates on its offerings, it runs the

rings, cold drawn steel; sodium cooled, poppet, and

valve lifters^ valve seat

issues

their

gray

Free valves;

the

markets, and of the monetary

and

heater-defroster units; leaf

spring washers;

peting with other borrowers. State policy. Since this policy presup¬
local governments have the poses
a
keen alertness to eco¬
advantage of tax exemption, and nomic developments, Federal Re¬
corporate
borrowers
can
make serve action is likely to remain

important industries, including motor

pumps;

Two Teams Tie for
operating
investment

which
sell long-term they had permitted at times to be¬
involved

attempting to
Treasury securities in the pre¬
vailing environment pertain to the
technical aspects of new financ¬

ades.

Conclusions

which

'erving the automotive, aircraft,

castings; rotor

cer¬

retard the deteriora¬

been

tion

dec¬

two

past

the

market

characteristic

conditions

Jr., Blancke
Noyes, Harold C.
experience, however, Strong, Jr. and W. Halsted Taft.
of the Merrill
Lynch
served to dispel some of the exag¬ Members
real improvement.^ However, gerated anxieties regarding the team were Caryl H. Say re, Wil¬

has

interest rates that were gen¬

low

erally

This review of factors

among

result

unlikely to lead to a repetition of
excessively easy credit and

the

terest rates.

for investment funds,

springs; stampings; permanent mold

recognized that the were soon corrected, and are not
this careful approach likely to be repeated in the fore¬

Some of the difficulties

iron

vent

must

need

and coil

un¬

vigorously as to pre¬
easing of long-term in¬

program

dence.

deficits.

truck axles and axle parts;

Treasury

again in
maturing

and

vestment

the

downward,

likely to proceed with its funding

certainty that signs of precluded, at the present time, by

EATON MANUFACTURING COMPANY

September, summarized as follows:
holders
of
obligations
(1) The credit squeeze and bond
were given the option of exchang¬
market debacle in the spring of
ing them for 1-year certificates 1953 reflected largely the exagger¬
or for medium-term securities.
In ated fears of sharply restrictive
the September refinancing, the re¬ credit
measures,
which greatly
sponse to the medium-term offer¬ magnified
the effects of basic
The conditions
ing substantially exceeded expec¬ economic forces.
tations, which is an encouraging that combined to bring about this
and
apprehension
sign of improved market confi¬ uneasiness

the

marine and other

investment demands fall
off and economic activity moves

tempted to "force" the market in
its refinancing operations; in Feb¬
ruary

With

large personal savings

Thus,

requirements.

money

even

Nor has the Treasury at¬

show the actions that economy and be prepared to adapt
may be expected when production their position
accordingly. Even
is at high levels and the labor then there
will be unavoidable
Yorce is fully employed.
Under time lags between the application
ihese
conditions the
authorities of credit measures and their ef¬
look a moderately restrictive posi¬ fects upon business. Hence there
tion.
Even in the early part of is a risk that any course may be
early

new

wholly

tificates.

some

economic forces will operate ire
then, however, the task is likely
the direction of higher bond prices
remain formidable, since any
in the course of 1954.
However,,
material reduction in investment
the problem of funding the debt
and business activity is likely to
will be a market influence for a
confront the Treasury with con¬
As a result, a
tinued budget deficits and further long time ahead.
moderate
business
downturn is

the Treasury has relied al¬
upon the issuance of

date,
most

high,

from

problem
been avoided. For the balance of
its new
money
requirements to

3-month

the

the credit

ities until

riding"

in the latter part

fears to the contrary
had contributed so much to

pelled

and

1952

the

bonds was apparent¬

"free

the

the current, year.

levels of

matur¬
relaxation of in¬
a n ds
gives the

in 1954 may de¬

funds

somewhat

cline

continuing,,
it is probable that we are moving,
vestment
d e m
through the cyclical trough of
Treasury an opportunity to move
Government bond prices and that
somewhat
more
rapidly.
Even

ly within the potentialities of the
and probably would have
been absorbed without difficulty
the

in¬

(8) Aggregate demands for
vestment

intensive effort to extend

market

had

the latter be unmind¬

can

overly zealous.

these risks
problems. The recent record
suggests that the authorities are
not likely to embark upon a more
debt, is mindful of all

The offering of a $1 bil¬

lion of 3x/4%

neither

and

operations have been charac¬
terized
by caution and circum¬
spection.

Federal

the

it must be.

should not dominate
Reserve System but

repercussions in the econ¬ ful of the problems of the former.'
omy.
Furthermore, if Treasury
(7) Efforts by, the Treasury to
operations take too large a share
fund, the debt, have so far been,
of current savings, they may well
temperate
and. restrained,, and
contribute to a downturn in pri¬
while the goals of the debt man¬
vate
investment and
hence in
agers remain unchanged, they are
economic activity.
aware of the many hazards to the
There is every indication that
economy, and are not likely to be
the Treasury,
in managing the

the Treasury's

1953,

far

it should be and

verse

debt

the credit requirements

the year.

economic downturn.

experiences

of the economy

out a flexible credit pol¬
icy. Such a policy involves re¬
straining credit in periods of boom
while discouraging credit liquida¬
tion and facilitating credit expan¬
an

for

provide

carry

sion in

the

more,

jwovides some clues regarding the
-credit policies that are likely to

*sf

relish a

rective action

months

recent

year;

proportions, they undertook cor¬
promptly. Further¬

Prospective Credit Policies
of

of the

repetition of this experience. Once
the deterioration assumed major

the economic scene.

record

quarter

second

Treasury and the Fed¬
continuing. This is

The Treasury

have

less

management

eral Reserve is

period, they would doubt¬
caused substantial ad¬

tracted

toward these goals.

sentiment

tions, in turn, will be governed
importantly by their appraisal of

The

the deterioration in financial
and in bond prices in

employed

tween the

for

debt

and

that effective cooperation be¬

ance

present environment, the second quarter of this year been
interest rates, espe¬ allowed to continue for a. pro¬

In the

outlook

eas¬

aetiori in* June-July give reassur¬

the credit markets in the

dent in

pronounced

coordinated " decisions

The

credit

business de¬
cisions concerning future capital
investments.
Had the trends evi¬

during

likely

are

(|>X

have sub¬

assumed to

generally

cially bond yields, depends not
the balance tighten the money market. In an
aggregate economy operating at or near peak only upon the factors operating in
levels of employment, production the economy and the response of
^substantially less than in the cor¬
and income, the Federal Reserve the Federal Reserve, but also upon
responding
period a year ago,
the
debt
funding
activities
of
nevertheless economic forces will is likely to continue to lean to¬
the Treasury.
Public statements
ward moderate credit restraint.
t»e operating in the direction of
However, the general pursuit of by the Treasury authorities have
-moderately tighter credit condi¬
stressed three main objectives of
tions.
Currency in circulation is a basically restrictive course does
debt management policy.
These
•rising to its seasonal peak in De- not preclude rapid and sensitive
are
(1) achieving a more bal¬
-ccmber, and there is a sporadic modifications in response to shifts
anced maturity distribution of the
outflow of gold
which, if con¬ in underlying conditions, and the
Federal debt; (2) avoiding reli¬
tinued, will add to the pressure Federal Reserve in the past sev¬
•on
bank reserves.
A decline in eral months has amply demon¬ ance upon Federal Reserve sup¬
business activity, if modest, is not strated its willingness to alter its port in the Treasury's financing
The easing of credit operations, especially when such
likely to have any important ef- position.
<fect upon this outlook for some around mid-year apparently rep¬ support would increase bank re¬
serves and thus impede credit re¬
reasonal tightening in the money resented in large part the reaction
(3)
market through the end of this of. the Federal Reserve to the ac¬ straint; and, as a corollary,
evidence that the having the Treasury compete free¬
year; however, a business down¬ cumulating
followed
earlier in the ly in the security markets and pay
turn would accentuate the sea¬ course
sonal
easing of credit in early year was having unduly restric¬ competitive rates for its funds.
important question is how
€.954. The course of money rates tive effects. Doubtless the author¬ The
under these circumstances is like¬ ities were surprise and disturbed rapidly the Treasury may advance
Uie Treasury

•«£

rates,

spring of 1953 remained large,
permitted economic forces to

Although the demands for bank
on the part of business and

<<s*edit

rapidly toward

interest

stantial effects upon

conditions.

ing of credit

Since credit demands

ebb.

so.

by a

The levels

their behavior
and their prospective trends are

economic character.

straint in favor of a decided eas¬

The Outlook lor Interest Rates
Within

be
rapidly fol¬
shift from credit re¬

either accompanied or

liams

werei

and

Mr. Wil¬

also associated.

•

P r

:■

i~.'»

Blyth Co.: Add* to Staff
•?■'

(Special a to * The Financial Chronicle)

^SAN FRANCISCO, Cal.—James
A..; Sanfprd^ ;has
ated with

shift Buildings

become

associ¬

Blyth & Co., Inc., Russ
v

•

Volume 178

Number 5260... The Commercial and Financial Chronicle

(1243)
Continued
:'

from

•

page
»

■

1953, dropped below 90 early

•}

>-■

June and

are

mow.back up above

931/2.

Faults and Virtues of Public Debt

■You

can't

tionary

move

from

financing

greatly aided in our
nation-wide committee

were

study by

of the American Bankers Associa¬

tion,

similar committee

Investment

Bankers

the

Association,

crease

ernment

bank

holdings of Gov¬

securities

hence,

and,

without any increase in inflation¬

due to that

ary pressures

From

time

cause.

the

ment.
not

infla¬

policy

sound one without some

readjust¬

Sound, honest

some

achieved

price, and

money can¬
without paying

is worth

the

price.

companies and
potential buyyields.
(e) Individual buyers of Savings

Bonds

ing

are

at present

have

this year, been buyE and H Savings Bonds

than

they are cashing in. We believe, with your cooperation, these
sales

can

increased

tially.

banks

and committees representing the have
been
most
helpful in the
savings banks, life insurance com¬ initial sale of new issues both
panies, and by other groups and through their own purchases and
individuals.
handling purchases for their cus¬

(d) Insurance

savings banks
ers

Looking Ahead
The steps taken so far in fund¬

substan-

sire to cooperate with their Government in this effort...
The speed with which the national debt can be re-distributed
..

will
of

have

the

ing the debt hardly show in the long-term
bonds, especially .ft
totals.
With this huge debt, get¬ times
when
other financing
is
It was clear from this analysis tomers. Steady absorption of bills ting shorter day by day, you have lighter.
that there were two pools of funds and certificates by business and to run fast to keep even. In 1954,
Lengthening the debt can apwe
shall still have to refund a
which we could draw upon out¬ other buyers has, in turn, reduced
ply to the banks, too, as well as
quarter of the debt.
side the commercial banks. There bank holdings.
to mon-bank
investors. In 1939,
In addition to the financing for
But it is not as oad as it looks. before
was
a
limited amount of longWorld War II, the average

depend

flow of

the

savings; the

rate
pres-

of demand for funds from,
other sources; and the state of the
sure

market.

money

free

A steady flow of funds such as
these will, over a period of
years,
absorb substantial amounts of

markets,

has

took
a

can't

the

force

Treasury

intention of doing so. I1»
long time, a huge war, and

huge defense

where
to

You

and

to get us

program

are.

will

take

timer*

re-adjust.

~ *•

fn this process we shall

have

objective,

our

and

money

always

sound
stability,-

economic

avoiding either inflation or deflation, and encouraging and not
new
term
money, a short and modest
money
available
in
the
First,
the
budget
picture
is maturity of Governments held by impairing
the
steady,
forward
hands of insurance companies, step has been made in stretching
greatly improved. The newly re¬ the banks was nine years. Today, growth of the country's activity. ;
out
.

savings banks, pension funds and
other
private and
instituational by

maturities in refunding issues

leased figures discussed
yesterday
by Secretary Humphrey mean that
one-year
and
somewhat there is real
investors prepared to buy a prop¬ tween
hope that we may be
erly priced long-term Government longer maturities. We should have nearly through with raising cash
bond. We, therefore, offered such liked to have moved further in to finance a deficit. Without new
this direction, but market condi¬ cash to
<a bond in April at the
going marraise, we and the market

giving

holders

choice

be¬

will be freer to deal with refund¬
yield,4 which was'the lowest tions did not justify it.
As it is, the few steps we have
yield at which it could be sold—
staken toward spreading out the
3Y4%.
The
bond*; was " substan¬
Second, the market has now
tially oversubscribed but, for two debt, together with other pres¬ shown evidence that it has weath¬
Jket

and

half

months

after

its

is¬

for

sures

funds

and

the

Federal

ered

it is three years.

The only other substantial pool
non-bank
funds
was ; in
the

hands

corporations

non-bank,
We

short-t

provided

would

attract

investors.

securities
that

money

of Treasury
bills
anticipation certificates.

The net result
able

was

and

that

finance

huge deficit without

any

to freer markets and

tic rates

tax

ago

realis¬

begun several

was

the spring of

1951.

For example,

have

the longest 2V2% bonds were sell¬

ing above 106 in April 1946, they

pet in¬

down

were

95 V2

Government securities

large

—

part of which may be considered

long-term funding, such as go into
pension and insurance funds.

years

and especially

year's

this

Fortunately also, the adjustment

since the ac¬
cord reached by the Federal Re¬
in the
serve System and the
Treasury in

which

form

been

other

and

e r m

the normal risks of investment.

January

(b) State and local governments
buy about three-quarters of a
billion

ments,

about

year

Govern¬

half of it for

pen¬

sion funds.

trust

funds

are

though not large buyers.

pen¬

steady

sound

productive
the

use

bank-held
smaller

were

would

less,

Government
and

better

debt

distrib-

uted

over a period of
years. The
experience of the September re¬

credit
the

markets. The stream of

nation's

larger than

savings

is hugebefore; the credit
the banking system

ever

base is secure;
is sound. With
surance

reasonable

sound, honest money of
stable buying power there is no
better

investment than

securities

of the United States Government.
bank's

and

other

Washington
dress:

words of George

his Farewell Ad-

"As

a very
important source
strength and security, cherish'
public credit. One method of

preserving

use

sparingly

possioie;

occasions

expense

tivating
ing

that

also

quently

avoiding
by

cul- >'

but remember¬

peace,

timely

ments to prepare for

prevent

disburse¬

danger fre¬

much

greater

disbursements to repel it; avoid¬

ing
of

likewise

debt, not

occasions

vigorous
peace

which
have

insurance

companies,
institutions,
individuals have
shown both their capacity and de-

businesses,

Hlan, *.° recal\

the

accumulation

only by shunning
but

time

expense,

as¬

The

Individuals and other
and

that

suance,

."A'-*

belief

our

readjustment to higher
dipped below par due .to Reserve policy of mild credit re¬ yields and is able to stand on its funding offers hope that, under
a
variety of c a u s e s, including straint, have caused' some jolts own feet without price
suitable conditions, this can be
props,
especially the huge volume of new and bumps in the market. Some of
Third, experience shows us that, brought about.
these have been unpleasant, par¬
financing by corporations;, states
over a period, there are substan¬
and municipalities, which put' in ticularly for holders of long-term
Summary
tial amounts of funds available for
the market $7 billion of new secu¬ Government
bonds, who have
There is every reason to look
investment in U. S. Government
seen the
rities in the first six months of the
prices of their bonds de¬
long-term bonds at fair rates. Let forward with confidence to this
year—a larger amount than ever preciate in the market. Most hold¬ me
name a few sources.
country's ability to put its finan¬
before. The 3V4% bond has now ers, including bankers, have taken
cial house in better order with¬
(a) Government trust funds are
the price change
regained a satisfactory position in
/in good spirit
out
any
serious
disruption
of
$3 billion a year of
and with understanding, as one of absorbing
the market.
a

debt policy will itself make lor
more orderly, the
dangers of in- greater confidence, stimulate enf lation
and
deflation would be terprise, and
contribute to - the'
reduced; the risk of interfering well-being of all the people.
*
with the steady flow of funds into
We can do no better at this time
The Government debt would be

exertion

discharge

unavoidable

occasioned,

wars

not

financial

ously

and

the burden which

throwing

the

upon
we

debts
may

ungener¬

posterity
ourselves

ought to bear."

V-

Steel, oil, or

butter-and-eggs... you're still probably just a

"man" in her eyes.

oil,

or name your

Do it the easy

that makes

feel

gift of perfume. It's the kind of investment

Leave it to l'aimant (the

that takes

care

you're too tongue-tied to utter.

magnet) to convince the lady of

of attraction. If she's not drawn to you through

this "irresistible force '.. .then she's
and you

a woman

woman's "interest' grow! A gift

of all the subtle flatteries

y°ur powers

bridge, boil her in

way! Try something simple...like giving her

large bottle of L'AIMANT. Nothing makes

feminine than

•

she wouldn't be impressed with any of the three.

Chances are,

You could build her

prize Aberdeen Angus after her.

"immovable object

might as w ell give the whole thing up!
PERFUME 50.00 to 2.65

Compounded and Copyrighted by Colv, Ino., in U.S.A.

(plus lax}

•»

The Commercial and Financial Chronicle

...

Thursday, October 1, 1953

(1^44)

more potent weapon,

7 fmm first rinriP

Continued Jrom Jirsi

paye

curity is
I

■

AftH

VWIil

IuA

resolutely and dollars a
toward it.
programs,

tive cautiously but

always press

margin
Budget

The

All1

■

flute 111 tltilliCf

TaY

ftlfttl

than

week. There are other mount
too, where the relative milit
is even greater
military, al-

of error
is

thd

for

pillar—and one which though there may
have already made substantial dollars involved.

The first
we

national se- substantial bearing upon the well- now appears to be is what road
on the the
being of our nation's economy.
to reduction. ThaL

matter of first concern,
mean

balanee between our
and our economic Secu-

must

achieved

ingenuity

not be so many me'nt pianning
Take the Com- ^ Americans

the

The abil-

manage-

and experience of
under the present

budget pillar,
well know,

take not 0nly estimate the size of the jng stronger defense for leSS money
more bor- vari0us crops but also just how
.
g
t
e
which in times the farm price support program
raDidlv as we would like but
of high employment and incomes is g0ing to work out in the year
murse is nlain
our obie'etive
lead to inflationary pressures and ahead and, even more important, .
.
.,
wp will arhipve it
unsound money. When a govern- how much of it will be handled
...
, .
,.
npppssarv
be
ment spends more than it takes b
the banks instead of the Treas,
,
f f
f
actions
in, it has to borrow to pay its
In the last fiscal year (1953)
°V"® f0wJrd u
bills.
When a government bor- ^be
budget estimate was about
'
rows
from the banks, it creates
million for Commodity
Thp Fpdprai
Rpcprvp
cvdpm
spending more than you

is,

in—means

and

rowing and debts

credit

the money

increases

supply, and thus helps cause inflation. This is what we are trying
check.

•

The midyear

budget

fiscal

review of the 1954.
showed some real

being made in getting the
budget in hand.
Estimated expenditures have been reduced by
nearly $6%
billion under the
snending estimates this Adminisspending estimates ims Adminisspending estimates this /vun
s

progress

found

tration

was
a

taking office

upon

In addition, income
overestimated by more than

January.

So that the pro-

billion dollars.

from

billion.

than $4

Fiffhtv

which were placed

from

the" government

three years ago
thp

ripxt

one

will come due in
two and must be

vear

inherited

These
make it1 impossible

paid for.
tions

dollars

hillinn

nnp

orders

COD

billion to less

$11

over

really been

has

deficit

spective
cut

obligato bal-

overnight,

but
will
be cut this year by more than $9
billion, according to present planbudget

the

ance

these forward obligations

even

ning.
Ac

cel.

For
few

planning to spend

are

years

time

first

eov-

our

in hand
the past'

finances

ernment's
the

have turned the cor-

aftpmntinff to

npr

budget review

midvenr

nnr

showed,

less this year

than in the year before. The sharply rising curve in
Federal spending has now turned
downward.

This is

balance

current

we
in

of this American people want and de-»

rection back in April by putting dous amount of money to be curout a 30-year bond at 3y4%. That rently pumped into the economy.
rate was higher than the rate for And furthermore it is the definite
previous issues, but it reflected p o 1 i c y of this Administration,
the going rate at the time of the through tax reductions, to return
issue as determined by the daily to the people for them to spend
current market purchases a n d for themselves all the real savings
sales of outstanding government in government spending which
securities. Earlier this month we can be reasonably anticipated, v'
bad an encouraging response to a
As I promised at the time, the

proposal which allowed a choice
between one and 31/2-year maturities in refinancing an issue of $7.9
billion. About $3 billion of the
total exchanged was voluntarily
P^ced in the longer term security,
It is our firm intention to offer
more intermediate and long-term
issues at opportune times in the
£redit but when the year closed
^eaerai neserve system -fut 0< Wg wm uge care> Qf
^ actually turned out to be about
The second pillar of sound course> not to press the market in
^ billion more. That is just one
, 1£La
Pr°P^rly functioning competition with state, municipal
illustration.
There are many, Federal Reserve System. This is and prjvate financing which is at
others.
another way of saying effective a
k Qf demand at the present
*
.
,
th ,
+h
monetary policy. The balance beEvery
M?wbsu^®{ ex_ tween the money and credit sup- Too rapid movement on our
dRures
further complicated ?
a
actual flow of goods
t ^
t-me jn crowding jnf0
penditures is lurxner compuw u m commerce-ls best maintained this market and increasing the alby ZtribXnof Zse expendi- by let«n« the price of money rise ^adv enormous dTm a n d for
°y the necessity for estimating by letting the price of money rise' read
enormous demand for
fbe distribution of those expcnui a^d faii with the demand for longer *
cxpendir
j
•
tne aistrinuiion 01 to month and and fall Wlth the demand for ,
J term x.-j- miaht vPrv
.
from
month uio&e
^L
ueuiaiiu iui
funds might very
tures tiom month to month and m0ney. At the same time orur Fedfrom monxn
monxn aim money Af
,? ti]1 f1]rfbPr nndnlv nrcss nn
,f _fi11 flirthPr nnitiiiv nrp« „n
even day by day in some instances eral Reserve System can and nn thp intprpct ratP^ fJ all ins Jo
th
intPrP<;t
for ail loans
—and preparing to have sufficient sbouid use its powers to keep the
H
dp
manv nthpr anv
funds on hand to be able to meet market for credit orderly and to prnmpntal anJ nHvJp hnrrnLrs
current requirements. You all ap- avoid excesses jn either direction, ®
nnnLnnHv tn nhSn Th p
preciate that that is why we can- tQ ayoid either inflation or defla. a^
obtain the

profits tax will expire or*
Dec. 31, and there will be no request for renewal; At the same
time an average of 10% reduction
in individual income taxes is
scheduled to go into effect, and it

excess

will become effective. ; Many fur-,
ther adjustments in taxes are now
under consideration by the Ways
and Means/Committee and the

Treasury for submission to the
next Congress. _
' :
The great additions to producbig capacity irt several lines which
have been stimulated by govern-

* *

ment action over the. past few
years are now becoming ^available- The volume of goods we
can now produce is far greater
now produce is far greater
than ever before Lower levels of
than ever before. Lower

LUdn evei uciuxe. j-,uwei xeveis ux
operation in some lines will devel°P m°re m^erial
velop more material than we have
ever had> and ** may wel1 be that
in some cases this outPut may be

a11 that the country needs for
awhile But does his mean catas.
not run our cash balances too tion.
necessary tunas.
trophe? Our volume of production
l°w—a point we made in the
ft is also our goal to move at and employment can be higher
debt limit discussion. It is someIn theL.,years Pre^dln| ,th® opportune times a portion of the than ever and we may stiu have
times hard to realize that if our parc
/ accord, e e era debt out of the banks into the some capacity in reserve. High
eash runs down too much, a few ^^/ation ran'triblrted ^ubstan
Private investors.
volume but good supply — that
days of unexpectedly heavy ex- aominauon, conirinuxea suDsian
Randolph Burgess, who is means competition, efficiency and
penditures, or an unpredictable tially to inflation by artificial known to most of you and who more value for the consumer's
shift of a few days in tax'receipts, ™a^* a^^ °LP(.e ^Irfng f^d is the Treasury's chief officer in dollar. Surely we have not demight easily force the Treasury to
JJ; , j w tt
r a
l this matter of debt management, teriorated in this country so that
do borrowing at a time when con- atter world war 11, the Federal wdj talk ^.0 you jn more detail and all we can see is calamity if the
ditions in the money market were Reserve System lost much of its more scientifically, I am sure, day of allocations and the ordernot propitious or in amounts that independence. It was used by the tomorrow about this very impor- taker is passing and we again have
might substantially exceed our Treasury to raise unprecedented ^an^ subject. Before I leave it, to develop a salesman.
estimated borrowings. Every amounts of money, and during the however> I wish to make known
It cannot be that Americans
bf'lk.er, knows that some real
to you my very great appreciation can fear a free competitive econelasticity in such circumstances is oversnaaoweo monetary policy. for the worj5 that Mr, Burgess is omy. That is what we have thrived
only prudent management. That As Iong as the war was on and dojn not on, for tt)e Treasury on. That is how we grew great,
was the basis for our request for government controls kept wages but for the whole codntry in his xhe neeessity for a little more ac.raising the debt limit.
there"/'/6/, ^mLi/trLhle R,?t very intell'gent. patient and wise tive selling never hurt anyone. A
We were not seeking to remove //' „-/, / (/ii////i./re counsel in this very difficult mat- httle more quality, a little more
any limitation on or deterrent to ///rv/H
wfthnm a?// nL/nr ter of handling our public debt, value for the customer has given
greater spending. We have demreleasing the Federal'Re- (Text of Mr. Burgess' speech on "snr
m/e //d'/t n/

very encour-

development.

aging
reach

Nearly three-quarters

that hope of re-

strengthening—is the modity Credit Corporation for ble ieadership° of our Defense
As you gentlemen example. In order to figure its net Department I am sure will devise
deficit financing—that outlays in advance you have to and provide'means 0f accomplish-

progress

WAAA»»2|

All

not

duction in expenditures and taxes debt matures within less than five mand. But in spite of all we can
must be abandoned. Quite the years or 1S redeemable at1 the do and all the savings we can
contrary. But the necessity for holder's option. One of the things make, a relatively small reduction
caution and planning and assur- we are trying to do is to extend is the most that we can hope to
ance that reductions
are justified ,/that average
maturity gradually, accomplish—quickly. That means
before
they are made is paraWe took a f*rst step in this di- that there will still be a tremen-

DvAflk TaV I aitCO
II Villi
iuA IlClVilV

T\/#tAC(C*
JjXvffSa

we hope, to everyone
insistent interest in and degetting our

onstrated,

can

0ur

our

mand for economy and

™ the excesses of the war
berve> ine excesses or xne war

Page

shfp^oZmoV/ofiZericans

16.-Ed.]

s/ml aZint^f human
fg/men^Zen/tt?/nZd inven™Z"

Horn the

irom the same amount or numan

The Current Outlook

po'wef

In the years from 1946 to 1951
Now 1 want to say Just a word ^bor
and tools has given
year,
the Federal Reserve was a pris- aboat 'h? eurernt
-us higher and
we
had
dared to hone for six have
+u
i
.,lcies wr *?ufl oner of l"e ireasury oolicv m ,
naa
aarea
xo
nope
ior
six
the
elasticity required to ?ner,..01 the Treasurv policy in crystal ball is no bigger or brighter that we Surely we are againfearful
y0urs
Indeed the comoosite living.
cannot do it not
Tt is
months or so ago.
nla
thp
:
thp hp t
Th
handling the national debt. In- , n
inaeea Ine composixe tnat we cannot ao it again, it is
p
tnem in tne oest way. ine
„otliro1
knowledge from so manyroom is the American part. Bankers, too,
locali- can do their way. You too can
The
budget
review
we
an- operation of the Mills Plan, with stead of .allowing the natural in- tieg reprsesented in this
nounced a month ago also is a which you are all familiar, reR
f
,
' ■
far superior to anything we know, and should look forward with
turning point because for the first quires the payment of 90% of the
ReSPr^inl
thP We are most anxious to learn from confidence.
Your service can be
time since 1948 we have total ap- corporate tax money in the first attention on making sure that the
The decline in the stock mar_ improved. You can do that little
tures

bvZhe /"nd Cof this"?,"seal m°ney'S WOr/h' ,Ut th66""36 WC
it will be much better than ZntV fZa? poUdes wf m/Tt

higher standards of

•

outlook. My

half of th^ next calendar year.
In accordance with the practices
J ^ + reductl0ns established by our predecessors
spending and taxation.
when
w

Thi'fnn^tc
^

both

f!ftnrP

+hf

.tS Thi^wf^nnMn ?he
?pi ^n[p^;c ^
best interests of the country as
a whole. It resulted in the absence

for your customer to help
sisn of disaster. I cannot believe him do his share. And if we all
tbat that .g go ^ may well be do all we shouidj America will

ket is heralded by some as a sure extra

ag tbe ^ear
jnRaRon de_
clines> some switching is taking
the accord of March 1951.
place from stocks to bonds or cash
As you gentlemen well know, which the holders have not dared

march forward on sounder ground
than we have had under our feet
for some time,
1 can assure you that this Gov-

the March 1951 accord, partly re- to make during the past period of
stored effective monetary policy growing inflation It may also be
to its rightful place in our econ- that, there is some fear of declin-

ernment is dedicated to the maintenance of a high level of employment and production, and it will

?+^Cr!f^ii?rVe/!lrarfJioeS^
^Sli
following spring. This makes omy- It laid the groundwork for jng earnings as certain supplies
believe tha^we Ivl a temP°rary increase in the gov- the policy which the present Ad- more nearly approach demand
UnaHv
Lr wavtowarH
ernment debt a practical necessity ministration is pledged to con- and goods become available. That
the budget underTonlro?
Of for a short pe^iod even though a tinue.
is nothing to shiver about. In our
this is all based
ecti
casb balance in the annual exI should also note that the Fed- great and growing economy some
mates—estimates which
bene Penditure is achieved, and under eral
Reserve System has no adjustment is constantly going on.
realized
but this business of Present laws there is no way to <4hard" money policy. It is a good Wherever adjustment is required,
estimating how much the gotfern- avoid tt'
'
J?oney policy It is free to allow let's, face it with confidence and
ment is going to take in and pay
The great and really important t.he demand ^or "10nfy ..to ,hava §et at 11
'
out has
great many pitfalls.
reason, however, why it is most !ts n0™al,and natural effect and
I do not believe in blind faith.
Estimating a year ahead in a difficult to cut expenditures radi- to supPly funds ta
pace w,th Ii trouble is possible, just the opbusiness this size is more than tally and bring both a balanced
d°r2aA
'nLv Zkes^ood P°S'te 'S indicted Keep your
risky and a small percent of er- budget and a tax reduction into f.° t at good money makes good eyes open. Seek out the soft spot
huge figures can mean quick being at the same time re- limes* '
and see what can be done about it.
the difference of
great deal of lates to
our
national
security.
Del)t Management
For over two years now, from
money.
Without due consideration for it,
The third and final pillar is Quarter to quarter businessmen
For instance, over 70% of our the rapid reduction of expenses proper^ debt management. As of have been expecting^and predict-

Pursue policies to foster that end.

iug some downturn. It has not

Because Americans have saved

For

the

this

encouraging start, the

Administration
to the Congress

deeply indebted

and to the various

departments and agencies of govfor

ernment

cooperation.

monev

their

wholehearted

Unless

some

unex-

plan

was

first inaugu-

must be issued in the last half of

the calendar year,

when only 10%
are received,
against the 90% to be received in

corporate

taxes

tb .

effective monetary policy un-

rated, tax anticipation notes in the
amount of several billion dollars

nnnn

course

are

ror

our

expenditures

are

for national

se-

would be comparatively

easy.

But

the moment our debt is more than

•'

Conclusion

conclusion

I have described what I con¬
sider to be the three pillars of
sound money. They are familiar
,a !
They are objectives
^ we 1.ave purs^
the months ahead The actdLet
most

d money is one { th
charees placed

imPortan™

upon this Administration. It is
important because sound money
iies at the very base of our national existence. Sound money is
fundamental for saving and the

creation of jobs,

billion—which is a terrific materialized in many lines be- we have developed our national
latively small estimating error can atomic Pearl Harbor hanging di- amount of debt. The manner in cause government and private resources. We have the scientists
mean
hundreds
of
millions
of rectly over our heads, and with which this debt is handled—that spending
has been increasing the managers, and all the people
dollars. For these programs alone the
knowledge of the Russian is, maturing issues refinanced and faster thart new productive capac- who make possible the production
we
are
spending about a billion capability to produce an even new issues placed — has a very ity came in. Government spending of
complicated machinery, the
curity programs, and

even

re-

with

the

real

possibility

$273

Volume 178

Number 5260

The Commercial and Financial Chronicle

...

•

(1245)
people

who

factories,
put

build

and

the .farmers

great

have

equipment to
the technicians,

use,

chanics
made

and

our

workmen

work

who

modern

such
me¬

who

have

ing and make possible further in¬ securities business when
prudence
which
will
develop dictates that customers should be
more employment and even
great¬ urged to act conservatively. Farer and
better things for a more sighted salesmen
over a year
vestments

ago

fruitful life for all.

great power plants and

were

Our national

these things and the employ¬
they provide would not have
been possible if the

utmost

security is also in¬
Sound money is of the
importance to it. Without

sound

money

people had not
finance them.

produces,

transportation

systems

possible.

All

ment

savings of the

Then

why

been

available

these

millions

Sound

keep on sav¬
is an essen¬

money

tial to keep people
saving money.
Without assurance in the worth
of their fnoney in the

future,

well

rate

the ability to obtain

income

saved, people
save

less

will

save

fair

when

and

all.

fears

one

that

without

the

that sound money
the
great
productive
of America will deteriorate,

two

won

the

America's

when

power

productive

mobilized
and

wars

greatest

that

aggres¬

throughout the entire world.
Sound money is the basis for both
economic

our

and

security. Sound
for the future
A

America.
nation

prosperous

means

military
is essential

our

money

which

—

continuing high

levels of
production—can

the

employment and
money he saves will be worth less only be assured
by sound money,
and less as time goes on or
may for prosperity that is not solidly
even
become worthless entirely.
based on sound
money is illusory,
The great productive power that
is in a pair of American hands

today rests in the fact that Ameri¬
cans

have

saved.

With

sound

Americans will keep

money,

sav¬

fleeting and
ter.

to end in. disas¬

sure

shall

counseling

continue

press

resolutely toward our goal of high
employment and sustained pros¬
perity.

their

clients

build up their reserves—we
wrote

few articles in the

ourselves at that time.
never

was

time,

even

subject

But there

nor

will there

ever
be one, when a resourseful
salesman who knows his business
has to sit on his chair in the office

and

can

business around for the

ways

why

excellent accounts

some

by using your knowledge of living
trusts and the possibilities of
pro¬
tecting families from the inroads
of

excessive

inheritance

This business
for

who make

men

taxes.

today is wide
a

open

profession of

work

man

with his head and

afraid

everything

and

are

accounts

new

converted

latter

into

investors.

You

Funds

income

for

that

can

long-term

sell

can

and

Mutual

there

are

thousands of people in
every com¬

munity who will buy
if you get out and
with

good

low-up

income

locate

them

advertising and fol¬

campaign.

You

sell

can

municipals to those who could
tax-exemption

who

and

use

don't

for

shares,
stock

19.732%

payable
Oct.

record

Detroit

a price of $45 per
313;200 shares now being

offered

basis

one

each

five

shareholders
additional

held

shareholders

22.

1953.

being offered for sub-,

now

well

the

outstanding^

bring the total number
outstanding to 2,250,006.
Upon completion of these steps
total capital funds of the Bank:
will be increased to

approximately
$92,000,000 from $72,998,687 as e*
Aug. 31, 1953.
Mr. Fisher has reported that the*

directors

expect

continue

present dividend

for

1,566,-

will

presently

the

370,800

The stock dividend will be pay¬
on
the
313,200 additional

Sept. 24 set

per annum on

the increased

ber

record

of shares

of $2
be

per

num¬

outstanding.

holders'

expire

rights
Oct.

15,

wide

group of
headed by Morgan
is
to

Stanley & Co.

underwriting the cash offering

REDWOOD
field

Aiken

Financial

CITY,

has

are

part of 684,000

Chronicle)

Calif.—Gar¬

joined

of Avery L. Eppler

shareholders.
These shares

(Special to The

the

staflf

Company, 183fk

Broadway.

By JOHN DUTTON

Leads Are What You Make of Them
leads

are good
leads—
that premise. But

let's start with

with

clients if you
don't
calls; you can't sell any¬
unless you have something
your

make the

among every 100 leads based upon

thing

inquiries received in

well
are

these
•SO

planned
advertising
there
just so many sales—no more

less.:

jno

response

Perfection

leads

sales.

many

would

only

will

produce

Anything less will

bring lesser results.
man

following

top sales¬

lead.

every

pre-telephone

and

believe

work,

only

were

and,

securities

quite

business

for

ap¬

and

he'll report. The best results
obtained through the

are

systematic

effort

which

toased upon the conviction that in

hundred

overy

just

so many

find

them

leads

there

are

sales—and you won't

unless

•calls.

the

Case History
The

following is

The Leads Were Good

After

the

meeting
two of

got

manager

Both

these

and

mer

the

agreed that
the

nor

that

had
of

market.

The

three

several

been
the

tion of what happens when

sales

Enterprise

They

not

were

work¬

they thinking con¬

were

over

to¬

the table.

of the people in

some

structively.
went

Individual

sales

men

were
producing
through the sum¬

bear

organization

ing,

the

his

men

right

them

hundred

sales

force

the
out

and

mem¬

that

had

GOLD COIN STANDARD?

excuses.

them

by returning to the

leads

assigned to

made

true illustra¬

Stimulate

any other for that matter.

bers

make

you

always

business

not

"sunny sky" business, neither is

sonal

application

You

sales

weather

frarikly, the

gether and he put it

he'll

These

fair

pointment, some by letter, some
toy evening telephone call or per¬
visit—but

it.

others

many

salesmen

addition, he will follow leads cor¬
rectly.
Some by personal calls,
some

sell

men,

They sorted
reassigned
these

GOOD leads

which had

been

organization goes along from day

rejected.

double-return cards that produced
about 3% replies.
Within three

day doing
the

the

old

same

thing

old way. As you
prob¬
ably are well aware the past sev¬
same

eral

months

have

been

high¬

weeks
eral

They

those

sent

leads

out

some

produced

accounts and

new

sev¬

INDIVIDUAL enterprise

sub¬

some

lighted by declining markets and

stantial commission checks.
Every

the

person sold

doldrums.

summer

Many

■sales

organizations, such as the
one I am
going to tell you of this
week have let
things slide along,
and instead of
keeping on the job
■and going ahead with
constructive
•efforts have neglected
as well.

advertising

Sorhe salesmen have taken the
attitude that business is not
good,
that summer
is the time
when

people are away, so why knock
yourself out bucking a trend. This
little
a

story

deals with

condition.

«of

the

just such
fact, when several

salesmen

the

organiza¬

tion about which I
you

had dropped

variety

Some

reasons

people

was

too

the

old

oven

that "the leads
trotted
which
some

out

ble

were

un¬

away,

work, .and
shopworn classic

were no

good"

sales
to

was

meeting

try and put

into things.

pep

meeting adjourned it

not caused

was

cumstances
men

build

office

week;-

you

by outside cir¬

but by the attitude
themselves. You can't

business

only

showing

once

can't

them

keep

twice

at
a

touch

interested

was

income.

when the medium
of measurement
money — is unreliable. And re¬
wards—paid in curency of shrinking value—are as
tenuous as the smokescreen created by the fire of

in ob¬

None

remembered that

had ever

anyone

question.
selves

Leads

can't

turn

The Federal administration was

ises of

will

this

same

group

will be made
and also

swer,
do

There

so.

about
out

such

those who

then

routine.

up
am

small

conditions

same

The President,

ent rightness of return to the Gold Coin Standard.*
Why, then, should legislative action on it be de¬
layed? The United States owns 65% of the world's
gold—$11 in gold for every $100 of currency and
bank deposits.

an¬

Mailing
or

Returning to the Gold Coin Standard will demon¬

letters

strate to

simple
discussing

The

jobs

men

are

who

those

doing busi¬
keep at their

day in the week. They
follow up their opportunities, and
their work is well done, because

We must

resume

without devaluation

delay.

every

keep

using it.

their

When

razor

you

sharp

* The
right to redeem currency (or

gold will help

anything else, you can be sure
that the only one who is
really at

fault is that salesman.
There are times when you have
to coast—there are times in the

your

end

find salesmen

times, the markets,
leads, the firm, the weather,

keep Americo

free

vote

osk

Senators

Congressman to work ond
to

restore

Standard.

that blame the
the

our mone¬

Inc. is a key organization, to contribute
ever-increasing benefits to all our people.

are

who

for

metal

many

large organizations.
ness

citizens that its government has faith

tary might—will encourage individual enterprise
and stimulate American industry, of which Kenna¬

but the

our

in them—will win the world's respect

one

exist

important Cabinet members, Sen¬

ators, and Congressmen have recognized the inher¬

Excerpt from Republican

The firm I
is

redeem currency for gold coin is
free economy. It gives the people

"Monetary Policy" Plank

following

this week

shrinking value. For example, Kennametal
—super-hard cemented carbide introduced in 1938;
has tripled the output potential of
metal-working
and mining industries. But, it is a losing battle.

not

who

procedure.

the samelieriod

fulfill these promises is by enactment

nothing difficult

some

few hundred cards

and

power

dollar's

sovereignty over government. When displeased with
government financial practices, they can automati-

the purchasing

Improvements in industrial productivity during
helped to mitigate the effects of the

prom¬

now.

The right to
fundamental in

leads

given several more mail¬
ings and then an additional follow
up

of the Gold Coin Standard. The best time to do it

that.

Now

elected

years,

of the dollar declined about 60%.

sensible economics and sound money. The

best way to

them¬

into

orders—you have to
salesmanship in order to do

use

people. During those

inflation.

called upon them from the firm in

currency

For twenty years the recently deposed federal
administration held this power away from the

—

interested in following
None had even

were

cally halt monetary inflation by cashing in
for gold coin.

retained. Calculation is impossible

the stock market.

they

evident that most of the trou¬

of the

hot

called

was

When the
was

(excuses).

said, the markets

favorable,
or

am now
telling
why their sales
sharply they gave

asked

were

taining

flourishes only when risk'

be calculated, and when earned rewards can be

can

Standard

Po., for

Gold

the

Write

Coin

The

Gold

league, latrobe,

further

information.

Latrobe, Pa.

The
of

the
o

league

patriotic
common

sound

association

citizens joined in
couse

restoring

monetary system.

Avery Eppler Adds

will

1953. A nation¬
investment firms

Securities Salesman's Corner

all

tho

sharer

Sept. 24, 1953, Charles T. Fisher,
Jr., President, announced. Share¬

know their many advantages. You

Not

of shares

Bank of Detroit Offer
Bank

au¬

spe~

able

and

Underwrites National
National

the

Sept. 24, and tb«*

amounting

000

The

were

Jare to be distributed as a
dividend
at
the
rate
cf

scription

Morgan Stanley Group

issuance

meeting

balanced

the side lines.

build

cial

at it.

Even if your profit
this business is small, you can

thorized

of.

it.

uses

additional shares which

advising the proper investments,
and who know that if you want to
do
business
you
have to work

Today you can sell short-term
municipals
to
those
who
are

open

bemoan his fate—there is al¬

provides who will

now

deterrent

has

sion

either going to

are

not

and

sound economy

power

have

of people saved and what must
do so that they will

ing?

volved.

WORLD'S LARGEST
to

Independent Manufacturer Whose Facilities are Devoted Exclusively
Processing and Application of CEMENTED CARBIDES

(1246)

Arthur

Henry

This Week

Greene,

Franklin

and

Mahlon

O. Bradley.

Offices formerly

Continued from page

Objectives of Federal

maintained by

Reserve Board

Paul H. Davis & Co. in Peoria and

Rockford, Illinois, are being taken

Bank Stocks

—

Evans

II. E. JOHNSON

Isaac

Wakeley,

Elston, Jr., Herbert I. Markham,
Dean D. Francis, Arthur G. Lilly,

Bank and Insurance Stocks

by .Hornblower

over

Weeks.

another—are

to aid living of many. You and I want
no part of that either.
Adherence
to present Federal

necessary

2.88% in the same Simultaneously the firm is open¬
the growth of the economy and
ing
a
new
office in Chicago's
major banks will be issuing their month of 1953.
improvement of the standards of
operating reports and statements
These changes in rates have Michigan Avenue, thus becoming
living for the people as a whole.
of condition for the period ended meant the banks have been ab e
fjrs| investment firm to operPlease note, I said "the people as
Sept. 30.
to employ their earning asse s a
ate
0ffjces jn the Loop area.
a whole." We do not dispute that
A total of 20 partners and 84 reg¬
The trends which have been in more advantageous returns.
the

Within

the

days

few

against

evidence throughout

As a result, earn¬

ating conditions.

ings for the third quarter are ex-

volume.

been the loan

outstanding

loans

1953

half

factor has
In the first

favorable

Another

the past year

have continued to dominate oper¬

ago. While the expansion since
July has been less than in 1952,
Judg- loan volume has still averaged
ing from the experience of the close to 8% higher than last year,
two previous quarters the gains
Thus despite some loss of deare likely to be modest as against
posjits, earning assets have been
quarter of a year ago.

earnings in the previ-

the level of

period although substantially

ous

higher than those of a year ago.
Of course there will be variations from institution to institution, with some banks because

conditions, actually
profits below
those of a year ago. The general
pattern, however, should reveal a
trend of gradually rising operatoperating
reporting

special

ing earnings.

the

area,

the New York City

should

gain

average
5%
and

between

somewhere

employed at better rates. Also,
since early in July, New York
banks have benefited from the
reduction in reserve requirements
from 24% of demand deposits to
22%. Larger operating expenses
have been easily absorbed and

operating earnings before
are substantially higher,

taxes

large extent reported earnings
depend upon the treatment

account.

this

known

major banks

in an extenof establishing tax
and losses by switching of Governcharging security losses will dis- ments
and
municipals.
These
tort considerably the reported fig- losses enable the banks to directly
ures.
Indications are,
however, reduce their tax liability and efthe operating earnings are cur- fect substantial savings. In many
rently about 6.5% higher than a instances it is an effective method
year ago.
of minimizing the impact of the
As in previous periods, the two excess profits tax.
most
important factors making
If such savings in taxes are in_
for improved earnings were the pll]fipfi in thp Parnin^ statement
It may be that differences

7M> %.

the

accounting policies and
methods ' of
accruing taxes

been engaged

have
sive

and other

western offices.
For

years

many

has

Co.

served

ity

program

midwestern

ple, but we must not forget that
our responsibility is not to some,
but to all of the people.
When one
is intent upon the

welfare of the people as a whole,
This activity will be
it seems strange to hear arguments
by
Hornb lower
&
which, stripped of their camou¬
The correspondent func¬
flage, are against a dollar of stable
being continued by the

Fund.

continued
Weeks.
is

tion

buying

newly formed firm of Ralph W.
Davis & Co., which will carry on

and odd-lot activi¬

the specialists
ties

Midwest

the

conducted

previously

change

Paul H. Davis & Co.

■

Joseph R. Carson
With Hemphill Noyes

ducte'd

fact, actually declined in
the general level

have,

some

instances,

is still above
For

rate

1952 the
York banks

New

maintained

was

practically all of

prime

pffppf

This

3.00%.

nnf>ratinfr

+hp

„nnn

Lie-

banks

WhTeUSe0™lugme°of
ments has not

such

have

yields

higher

The

better

most

rates

interest

the

important

Merges

are

With Hornblower
The consolidation (Oct. 1) of

Certifioa+es of Indebtedness is

of interest.

month
es

the

In August of 1952 the

rate

market

open

1.94%.

was

clined

12-

In August of 1953

index

yields was
Admittedly rates have de-

same

2.33%.

Government securi-

the oast month but the

national organization of HornWeeks

Chicago's

and
u

•

1TTTa

•

Kidder & Co.,
.
^6 Florida Avenue.

ig now with A

Paul+ H' Davls & Co brings into
George A. Winsor
existence one of the nation s
!argfst brokerage and underwrit¬
George A. Winsor, member of
firms The consolidation repre?e?.ts tb? culmination of a close the New York Stock Exchange,
relationship which has Paul H. passed away on Sept. 17.
existed
since the formation of
Davis & Co. in 1916. During this

a&°*

Weeks

The
to

—

same

pattern is

municipals where

applicable
index on

high grade issues provided a re¬
turn of 2.22% in August of 1952,

been

the

today

Co.
as

are

Paul

being

and

INSURANCE
STOCKS

three

general or limited

additional

offices

are

being added to the ten previously
operated by Hornblower & Weeks.
The new

Lynch Staff

and
Members

Members

II;

New

American

120

York

Stock

Exchange

partners include Paul H.

Exchange

BROADWAY, NEW YORK 5, N. Y.
Telephone: BArclay 7-3500
Bell

Teletype—NY 1-1248-49

(L. A. Glbbs, Manager Trading

Dept.)

limited

lowing

Dearborn,
A.

and

the

partners:

Louis J.

Trees, Hatfield

Cross,

fol¬

Luther

to The Financial

CLOUD,

Chronicle)

Minn.—Georg^S.

Knight has become affiliated with
A.

Lynch

Company,

Incorpo¬

some

would-be borrow¬

who could not obtain as much
credit as they would like. This is
ers,

Harrison

the

Even

Act

was

un¬

popular with smugglers and ped¬
dlers of narcotics—although they
were not in a position to vocalize
their

effectively.

opposition

age.

may

"Greatest Good to Greatest

evi¬

some

worth of

Number"

policy,

our

When you boil it down, we sim¬
condi¬
tions certainly did not result from ply try to apply John Stuart Mill's
utilitarian principle—the greatest
monetary
policy
alone,
and
I
would claim no more than this: good for the greatest number—al¬
ways bearing in mind that minor¬
conditions would hot have been
ities also have rights, unless what
so good over this period, or today,
they want is unduly injurious to
had
the
Federal
Reserve

desirable

per¬

credit

mitted

created with¬

And

others.

trolled

it is that the very

benefits

limited

limit.

out

Alternative—a

rated, 616 Germain Street.

uncon¬

supply

money

over¬

are

whelmingly

Freeze

The

Financial

are:

implicit,

times

Bien

^ ^ons

now

credit

fixed

the

disregarding

level,

This would

it.

reduce

fact that
credit in¬

for

money

growing economy. This

that
as-

Manager of

their Mutual Fund Department.

stunt

economic

contraction
employment,' and

growth and lead to a

production,

power;

one

that the ensuing
could be stopped

guarantee

any

and

point short of chaos. You
no part of that.

want

The other

alternative would be

to create credit without bothering

Sheri^

and

would

alternative

the

extent

absorbed

and

With Sheridan Bogan

would

announces

crease

St. Louis.

Street,

seem

directions at

both

downward spiral

Edwards

—

who

time.

even

about

PHILADELPHIA, Pa.

alterna¬

very

'alternative

"freeze"

Chronicle)

111.—William

with

same

One

critics

from

want

the

and

BELLEVILLE,

two

are

seldom
openly stated, in criticism that has
come
from two directions, some¬

Smith, Clifton Walnut

partners

tives

purchasing

A. G. Edwards Sons Add
(Special

Broadly—and

extremes—there

could

sociated with them

limited

alternative.

the

Walker, Jr., and John J. Mark- William Wilson Hewitt is now

New

and
employment
stable level of

needs

Harry dan Bogan Paul & Co., Inc., 1528

ham.

Specialists in Bank Stocks

status,

general

with

and

Speed-limit laws doubtless are
have had, unpopular with those who would
rather drive 80 than live to that
high level

policy, we

these

although

mean

Davis, who will have both general

Laird, Bissell & Meeds

That

prices.

dence of the

ad¬

partners of Hornblower & Weeks,

and

(Special

ST.

Fifteen former partners of

Davis

Joins J. A.

York

New

the Davis firm.

mitted

has

correspondent and has cleared for

BANK

Hornblower

period,

37-year

the in¬

of the people as a

outweighed by the
evils
not
only
unfairness
to
Credit or Its Uncontrol
fixed-income groups and an arbi¬
A. M. Kidder Adds to Staff
If
one
is
to
pass
judgment
trary and irrational redistribution
(Special to The Financial Chronicle)
fairly and intelligently on present of
purchasing power but, even
TAMPA, Fla.—Edward Buford monetary policy, he must consider
more fundamental, the uncertainty

average,for the quarter is still
substantially higher than a year
*:

belief that it is in

the

terest

—

Paul Davis

blower

relatively

^The

operating picture and should be
emphasized. As another example ,,
xvF ivotoo
of the change in rates, *ua return the
the
on

°f Lieut-

1946 with the

Colonel.

the

production

and

Carson

one-half
Federal Re¬

and

two

I said at the outset, a

of
Joseph

& Co- J"

yzinS s 1 a te m e n t s allowances ciose & Kerner, Inc. as Manager

current

prices.
course,

chosen

have

has been following its pres¬

ent monetary

improved the rate of return.

the

each

less

and

less

saved

dollar

today's

which

serve

and*? sucb nary, 1951, he
Pr?blems differently and in anal- became associated with Rambo,

S^est- ittfE&SSSr7 ^

which

entrusted—in

were

worth

years

S4,

changed in most in¬

the

stances,
tVi

not

have

save

year?
During

institutions

savings

were

Mr.. Carson

life insurance companies

other

•

yet
received the full benefit from the
the

Thus

the first

rise

except" a

nothing

equipment that have simply inevitable. I would doubt
the efficacy of any governmental
helped achieve for America the
decision that was not greeted with
greatest production in history.
What
incentive would there be catcalls by some group or other.

increased to 3.25%.

was

one reason

accomplishes

created

thus

credit

the tools and

^llaaeipnia
^ Manager ot
Vn

>Pal

banks

their

sb°"ld be made for such dlffer" 0f their Municipal Department.
ences.
Twin*
thp
war
Mr
Parson
Regardless of such consideraDuring the war, Mr.
s
better rates now prevailing.
At tions, however, the trend of oper- served with
the Army bignal
the same time rates on corporate ating earnings is upward and the Corps in the Mediterranean and
and municipal bonds as well as reports to be issued in the coming European theatres leaving service
spring it

that

You and I know

Uarson !.s "°w
associ;atea
7"1.!11

parn-

needs,-

economic

attuned

of their savings?

why this country has the highest
standard of living in the world

curlties exchanges, announce that
J056?/1 R■

ff^ct upon the °Peratmg earn s der\ Peabody

year ago.

rise—j

rates

fall—through the interplay of
the demand for credit and a sup¬
and

whole.
Naturally, our choice has not
PHILADELPHIA, Pa. — Hemp¬
is that many have saved, and their been, popular with some lenders,
hill, Noyes
Co., 1530 Chestnut
who could not obtain all of the
savings have been invested—if not
Street, members of principal sefunds
they would like to lend,
...
,
by them directly, then
by the

thefe is mt]e

frQm the lo

age, if not before.
Will they
helped by a cut in the buying

power

interest

letting

(1)

been

not

—pension

and

money

sufficient to
meet
all demands. And
this in
turn -has meant that the cost of
obtaining
credit has
risen. In
other
words, interest rates are higher. But let me emphasize that
the Federal Reserve System is not.
interested in promoting higher in¬
terest rates. The choice is not be¬
tween
"high" and "low"
rates.:
Rather, the choice lies between.

have

lies

supply

has

credit

Nearly all American fami¬
savings in some form ply

year.

policy has meant that the

available

—

level

buy

will

that

in favor of a
less each

and

power

doilar

Reserve

contributions, life in¬ and (2) on the other side, expand- '•
surance, savings accounts, savings ing the supply of credit to driveby
down
or
hold down —-interest
bonds, or something else—upon
even
though the excess
which they will be depending in rates,

Ex¬

Stock

IJd*u"eru- .
interest rates and ciu,ae,a \n me earnings Statement
Following
interest rates ana an(j fhe losses are treated as capi- f \ vp vpar(?'
3
bAf ter ayera.ge voluma months tal• items, the reported earnings service in
loatJf•
Although
in
recent
accordingly
On the other
1^tt
there have been sitfns that interest
xu
•
•
1
World W^ar II,
f
nave oeen signs max interest jlan(j where the tax saving is de- Mr
rarsnn
rates have reached a peak and
higher

less would

distributor of Fidel¬

western

and

Paul H. Davis

that keeps buying less
benefit some peo¬

dollars

and

old

will

fact that most of the

representatives will serve

the two Chicago offices,

Tax accruals will again cornmand considerable interest and to
a

For banks in

istered

averaged 10% higher than a year

pected to compare favorably with
those of earlier periods and the
same

1953

Financial Chronicle... Thursday, October 1,

The Commercial and

which

normal

can

operation

growth of the economy. But
time when virtually all work¬

plant, equipment, and natural
resources
are
already employed
ers,

and

instability that discourage the

planning, the effort, and the ini¬
tiative
on. which
our
economic

depends.

progress

have

would

Some

the

Federal

Reserve System support the prices
Government

bonds

par—or

II, when
^the Nation's survival was at stake,
higher.
we

did

The

War

that, as you know.
thus put under Govern¬
bond prices did keep inter¬
just

prop

ment
est

World

rates

low.

sequence

apparent

But

it had.

con¬

that

became painfully
the postwar period.

Marketable Government bonds not
a
decade or more
reality, interest-bear¬

for

maturing

became, in

ing cash; and their conversion into
credit, at the own¬

Reserve Bank

ers'

the
practical
pumping into the
a
virtually
unlimited
newly printed dollars.

option,

equivalent
economy

stream

was

The number of dollars rose faster

than

the

services,
the

volume

goods

and

price inflation was

and

inevitable result.

Under the

accord reached with

the Treasury

Department in March

production is practically at two years ago, this pegging ar¬
presently-achievable maxi¬ rangement was stopped. The ar¬
mum, additional credit can only tificial prop under the prices of
produce higher prices that benefit Government securities being re¬
and

the

few

and

lower

the

standard

moved, those prices declined. Con-

currently,
But

yields rose.

course,

the

significant point is that
lending
institutions
lost
their
eagerness to convert bonds into
Federal

Reserve

business

credit, and the
turning promises-to-

pay-in-the-future
cash

into

checked.

was

J>that

had

lendable

slump in the buying
dollar

of the

power

been

the

was

going

for

Now

last

June

yes¬

popularity, or
particular group,

section.

simple

benefit

any

faction,

done in the

was

est of all the

inter¬

healthy

cally
would

money

induced
I

bounds,

there
supply

so
overswollen

bring

„

not

say,

think, that the

Reserve

undertaking.

System

We have

-quarter

service

chalked
omnis¬

One

—

Rather

century

have

over

public

encounter

government.

claiming "superior

disclaim it.

claimer

yet

out

than

wisdom,

This dis¬

inherent in

the

policy

It is

of the "whole truth."
difficult; it is consider¬

ably duller, I am afraid; but it is
the only salutary course open to

and

must take it.

freely

functioning market,;
b.v the forces of a supply that
to meet economic needs

Congress has made it clear

that the guiding principle

lying

the

Federal

the

measure-

which

rise

can

source.

for

additions

Plant
Replacement
expenditures made for
to

property, plant and
equipment since Oct. 31, 1948.
bonds

credit

the

sinking fund at prices

peat

that

rumors

twist

statement.

superficial,
kind of

many

first

must

under¬

Reserve's

ac¬

recent

conditions,"

this

talking

principle,

and

sense

honesty.

utmost

who

technically

are

whom

should

hold

trust—

realize

must

the

that

v' *

today's

worthy of solution,

somehow

available

when

there

detrimental overexten¬

sion of credit.

We consider it

our

duty

action

our

take

within

competence to aid in averting both
inflation

and deflation, while see¬
ing to it that the economy is aided

expansion by

ade¬

quate but not excessive supply of
lifeblood

agriculture, and
job is

industry,

commerce.

simple

is,

might
for differences of opin¬
matters.

fact,

occasions, that

decision
infinite

factual

enormous

information,

How¬

the

pains

room

somewhat crowded!

gathering of
of

There

final

the
of

masses

the

analysis

that

information, and the for¬
mation of judgments and policies.
We make mistakes, but we do our
honest

best

make

sions, irrespective of
Even

"thesis,

.right

thinking of the American
When

that

the

comprehend

the

that

this

could
with

possible

the

centry. The complexity

civilization

our

upon

face the fact

not

prob¬

man

vote

intelligence. Let
twentieth

simple

average

and

they

agora,

few

citizens

the

and

deci¬

pressures.

approach

impossible

all of

contribute

impose

and

great responsibility

toward

public

en¬

The

its

American

life,

way

factories, its transportation, its

banks,
complex.

is
t

takes

master

only

phases.

But this

nism

frighteningly

almost

lifetime

intricate

than

ues,

operation, and its val¬
depend upon the intelligence,

the

determination,

the

spirit of
individual human beings. Eternal
vigilance
is
the
price of the
wonderful structure

call West¬

ern

civilization, which will stand
only as long as its people retain
cultivate

gave it

the

that

qualities

life—the simple virtues of

energy,

our pur¬

methods. When the Fed¬

System refrains from
buying Government securities for
rumors

fly about that

honesty,

courage,

and

Halsey, Stuart Group
: Offer Utility Bonds

have adopted a "hard money" pol¬

Halsey,

Stuart

associates

Co.

offered

Inc.

and

yesterday

icy; and when we enter the bill *(Sept. 30) $3,000,000 of Worcester
market again, a story gets around
Gas
Light
Co.
first
mortgage
that we have reversed our policy
and

out

are

'conditions.
•seemed

for
"easy
(Sometimes

there

'trading in the

was

rumor

money"
'

has

inspired

market than

'in the bond market.)

sinking fund 4% bonds, series B,
Sept. I," 1973, at 101.%% and

due

accrued

Award
the

The extent to which such mis¬

understandings .and rumors
disquieting to the financial
business
the

need

trustees

communities
for
to

our

united

proclaim

interest,
of

are

the

group

Sept. 28
Of

sale

the
of

yield

issue

was

competitive
a

net

bid of

3.90%.
won

sale

100.439%.

proceeds

from

the

proof of

bonds, $1,394,000 will
be used by the company to retire
an
unsecured
3%%
serial note

effort

due

the

and

whole

truth—and nothing but the truth.
We have seen in our generation

July 1, 1971 held by Cam¬
bridge Gas Light Co., an associate

company;

retire

tation, United Fruit Company has developed

operations in the public interest

$500,000
notes

will

payable

...

transpor¬

many

other

its thirteen hospitals

with their network of dispensaries... its grade schools and
the Pan-American School of

Agriculture, where

young men

from

Spanish-speaking Republics learn the practical tech¬
niques of land-use... its land reclamation projects by which
swamp

its

and jungle

areas are

converted

far-flung radio-communications

Americas

its extensive

productive

system

use

serving the

tropical payrolls and policy of

large scale local purchases in Central America.
Such
basic

are some of the factors involved in the
Company's
enterprise—the production of bananas and sugar for

the markets of the world. All of them
spell usefulness,
which for more than fifty years has been the criterion of

machine. Its

mutually beneficial commercial

mecha¬

continued

and

Hand in hand with its

operations in Middle American agriculture and

myriad

its

one

mutual trust.

eral Reserve

month,

Co., Inc.

mag¬

problems make this

our

and in evidence of my
there is considerable mis¬

poses and

Salomon Bros. & Hutzler;

Merle-Smith; and Stroud

HEALTH

...

nitude of

so,

understanding regarding

lems

that—

precisely what form of action
be.

and the

lightenment.

in purpose.
In practice, it is no
simple thing to determine exact¬
ly when action should be taken,

every

dealers.

met

ever,

Dick

other

participating in the offer¬

are:

solve.

easy

realization,

had

product

Also

ing

and

I (H

distribution—understand¬

for

usually

seemed

debt;

common

Athens

these

institution's cestuis que trust, but
for all the American people, for

economic

recent

this
only

all trustees not

are

those

to make credit less

continued
and

room

with

will consist

long-term

stock.

The

sales

350,000

and

about,

people.

cooperation

and

appliances,

direct

through

through
retail

sells

company

know

our

some

both

Census.

States

also

the

$5,928,450

years.

sure

be necessary or desirable for

ion

the

—

other, must permeate the attitude

say,

United

the

company

tion

fi¬

capitaliza¬

truthful

tem attempts to make credit more
available whenever that seems to

should

popula¬

1950, compared
with 407,000 in 1940, according to

outstanding

speak out with utmost clar¬

This

having

year-round

current

have been doing

make

Sys¬

and

Massachusetts,

approximate

tion of 453,000

and

$537,403.

was

the

probably
misleading

deceptive

the

suant

Our

nancing,

central

income

effect, to

public serv¬

us,

seldom

the

net

Giving

thinking and talking that

increasingly

ity

otherwise

All

are

credit,

and

in 28 communities in eastern

30,
$7,013,483

and
private citizens alike,
reject the glib, the easy, the

ants
must

too

are

give

baseless,

although

in its steady

rang¬

is engaged principally in the dis¬
and sale of natural gas

tribution

reported

the

June

speak out against the spreading
to talk carelessly and
without due consideration, to re¬

problems

redeemable,

were

ended

Pur¬

1953

Co.

for

revenues

months

Federal Reserve Act puts it.

easily

will

Light

Worcester

twelve

Although reluctant to play the
role of Jeremiah, I feel obligated

"sound

company's
Fund

ing of basic economic truths.

threat of

31,

Gas

Operating

ac¬

higher than its

public
interest, particularly
through
the
maintenance
of

progress,

Oct.

plus

case..

morality,

public

and

country's

par,

each

only in governmental actions and

tivities is the advancement of the

improvement

1948. The balance of the proceeds
will
be
used
to
reimburse
the

respect for tr.uth and candor, not

for

rather than to fix interest rates.
The

than a renewed

this country today

then

•

The

Nothing

is geared

the

interest

crued

Truth

For

what --web are

with

ing from 101.38% to

in¬

Renewed Respect at the option of the
company, at
and Candor
general redemption prices rang¬
more important to ing from 104.875% to par, or for

Importance of

letting interest rates be deter¬
mined by the forces of
demand;
and

greater power,

plant

subsequent

Boston,
were

tendency

cient supermen among us.
a

the

the long run,

connection

company's
program

Bank

1954, which

statements, but in those of private

flawless achievement in this

citizens,, for there—ultimately—is

bust.

Federal
up

fidence

lie

ex¬

further
shrinkage in the dollar's buying
power—and eventually a boom-

little

the

one

people and with
to keep the

purpose:

pansion of credit within economi¬

well; the slanted
statement, the crooked emphasis.
It is up to us to reaffirm our con¬

curred

done to win votes

not

was

National

due Dec. 31,

two and one-half years ago.

was

And it

First

"big lie," but—skillfully used—of

January.

(1247)

The

remember, that wasn't

terday,
It

only the awful power of the

not

us,

years.
-

Chronicle

Number 5260.. .The Commercial and Financial

Volume 178

used

The

United Fruit Company
GREAT

WHITE

FLEET

General Offices: 80 Federal Street, Boston 10
Pier 3, N. R., New York 6

•

1514 K St., N. W., Washington 5

(1248)

The Commercial and Financial Chronicle

have both increased since 1950, hand, the utilities

Continued from paue 3
')

has declined from 27 to 18 in this

FP1

Marl/ftl

TMA
-A ill#

Ifffl

IVldav Allfl
%?UUJr

ll&lZ&Jlvft

'else.
I

going to try to break down
these three factors into component
parts and finally try to fit them
am

into

JLet

is where the technician
comes in. He has devised literally
hundreds of methods — a whole
battery of tools that purport to
show us the way that stock prices

business releases from

earnings, and yielding over 6%.

will

!n thepast, when the Dow was
selling up in this area, stocks sold
between 15 and 20-times "earnings

no
system of interpreting
movements of the averages
yet been formulated which

com-

and

the

over

those

including
of

country,
the

from

Department

Commerce and other departments
in

and

addition

read

most

financial services, and

the

attend

nu-

analyst meetings in New
"York, that I have specialized in
;and spent more time in studying
inerous

the

technical

and thus,

srnyself

the

side

market

coining new words, I call
"securitician" or "tech-

jaalasyst."

You

Making

fundamental

much

Iiave

the debusiness pic-

to current

access

forecasts

than

better

what

figures and

the

highly im-

motor industry

jportant

planning for

ing and

You

do.

is thinkYou

1954.

have also been reading, as I have,

It is self-evident that

move.

and

the

continue

the rails.

Today they

selling

are

at about one-half those ratios.
So, it seems to me that we have
been passing thiough a relatively
appraisal

based

era

earn-

A*xall mar^e s aie drfferent, t at histoiy
sa^

d°es not repeat, and t at you se ^01T1 „a.ve.a meeting of the s me
fetors twice in the st c mar et.
°nfth/8 1 Wl11 agr+ee' except to say
that the speculative and investme+nt defeatism of today seems
lusp a? ""reasonable as the blind

and

have

two

trouble

with

those. This technical side of

mar-

kej.

enough

one

anaiySjs should

exclusively,

for

be used

never

technician

the

makes his greatest mistakes when
be

disregards

basic

fundamental

statistics and long range factors
vvbjcb affect our economy. The
use
f ^
technical
ap'proach
alone .makes

the

chartist

easy

With respect to a few individual
stocks, exactly a year ago today,

was,

the

was selling at 31," now 3/;
American Tobacco 56, now 72;
United Aircraft 35, now 38; Carrier 28, now 36, Continental Can
43, now 52; General Foods 49,
now 55, and yet Anaconda selling

Stores

then at 42 is

30; Celanese 41,

now

entirely that the'
market top made ,at 295 D.J last
January was the real top of the
bull market.
cannot

give

are

why

reasons

has

been so hard for the analysts and
f°r the technicians to discuss the
market as

unit and in ail

the benefit

you

after considering

entered

this business,

"Don't

which

and

prophesy. If you

ever

prophesy wrong, nobody will forget it, and if you prophesy right,
nobody will remember it."
First, from studying the fundamentals, and I am not an economist, I very much doubt that we
should expect

serious recession,

While the F.R.B. Index will prob-

ably

decline

around

210-220,

people will come to realize that
business is not going to collapse
in

These

1954.

and have

been

things

know

hearing about for

long time:

agree

(1) That corporation profits will
be down

but since the market has

0ver-valued

previous good
earnings by the well-known yardnever

sticks

mentioned

earlier

this

talk, the market cannot have very
far to go down if the business let—
Up does not exceed
my present

market reports, both weekly and
monthly, I have^ run the risk of
boring my readers by my rePeate<J references to extreme seActivity. They are also reasons
why it seems completely illogical
to talk of a complete bear market

(2)
Dividend pay-outs have
been extremely conservative for
a jong
time, about 60% overall,
and they are not likely to be cut
unless there is a drastic decline
in earnings. The end of the E.P.T.

ft thJs time w*?en
of
on the Exchange are
sel*ing below their 1946 highs,

for many corporations should tend
to offset a g00d portion of any
drop in earnings and thinning of

why the stocks

mark for the fundamentalist
directs a continuous line of ridi-

answering

gas stocks started up almost eight years ago in 1948, and
have been in a slow uptrend for
most of that long period of time,

These

prefer using just

of rny best
all the
technical, fundamental and psyetiological'factors at my command,
Let me say at this point, that I
realize that I am going counter to
the advice given me when I first

the now 22; Chrysler 85, now 64;
has Johns-Manville 74, now 59; Deere
32, is now 24 and Standard Oil of
accurately reveal the true situa- New Jersey 76 is now 68. So, I

other.

this point on? All I can do
this question is to

from

opinion

can

Iess than 5%. Even at the 1937 tion within the stock market and
and J?46 tops, the earnings ratio precisely and without error forewas about 20 times on the indus- cast its movements. Too many
trials and at around 11 times on theories tend to contradict each

!pgs'

all probably know

retailed
ture

Alarm

for

This

and never below 15 and at yields

low

Factors

setback

resisted

ent substantially inflated dollar, qustnes and lower in others. In when the Dow-Jones industrial
Today, hy all the traditional shop- fact, in the past 15 years there averages were selling at 270, it is
wo™ measurements, analysts are were only three times when stock interesting to note that Safeway
prices actually followed earnings.

keep

company

all

in-

up-to-date with
earnings outlooks, eco-

xiomic

profits,

some

estimating earnings on the Dow-

market

literally thousands of

deavor

rating earnings higher in

Jones industrial stocks for 1953 at
upwards of $25, even after higher
taxes, with a dividend pay-out of
$15 a share. Thus, the Dow.stocks
are selling less than ten times

reports every year, and en-

pany

constantly

action,

say

I read

vesting public which
changes its evaluation

at the onset, that while

forecast

a
me

ais0 influenced by the underlying
attitude on the part of the in-

take into account our pres-

started

strongly

necessarily follow earnings,'but is natural

the psychology of

was

recent

have

1 AmATfnW
These brief ^lustrations show indicate higher levels.
AVlllVAIVn that the price of a stock does not
Going back a little further,

physical assets per snare than
the market place and this factor they
ever have before, and are
perhaps has more to do with shap- therefore relatively much cheaper
ing security prices than anything than in former years, especially
that it

say

1949,

same period.

•

Thursday, October 1, 1953

...

expectations.

shslsfz
mV&totatta

pencils and have figured out

.your

what

such

setback should do

SB St £^S

KR.R In-

•tl:.e earnings of companies in vari-

pe"od of tl"le;

merited.

At any rate, when the complete
history ol this stock market pe-

nod is written

and you probably have estimated
rather
generously what the tax

I think that the
conclusion will be that the long
upward trend remained in force

cushion

regardless of the recent bear

associated

defense

<ous

would

industries,

individual

companies operating under
E.

bracket

when

large

this

in-

ket Dow signal, mainly
first

there

was

because

great

mar-

over-

speculation or period of over-valulation immediately prior to this
commodity prices as recent setback, especially in the
by a drop from 215 to second and third class securities,

equitable tax expires on Jan. 1 as
we expect.
You have noted a big
decline

xneasured

154-155 in the Dow-Jones index of

and secondly because

man^stocks

commodity futures during the past were not carried to the high price
two years.
You have considered .times earnings ratios that prewith apprehension the increases in ^ vailed
at previous bull market

ratesjvthe risin^lnyentories ;tops. I was interested to note re<0*1 manufacturers'
shelves, and the cently that one of our leading
large amount of installment credit statistical services is estimating
^outstanding. You are aware of the earnings on 125 industrial stocks
osoney

.•fact

that

while

defense

our

pro-

jgram will continue at a
-<that

«aff and

high level
big backlogs are falling

the

that

equipment
been

for

that

plant and
has

purpose

susbtantially completed. You

*iave
the

additional

been

alarmed

expansion in

that

this

much

levels

even

serious

decline

the

.cause

and

that

sales

dividing

line

-profit and loss to grow
In

general, then,

slowing
avowing

apart

down
a own,

the

would

between
narrower.

you

but
dui

than last
lost.

fully

are

not
not

foiling
ianing

1954

year,

Lower

1954 could
panies

which

better

all

may not be
projected for
that many com-

taxes

mean

might

report

higher

earnings in 1954 than this

net

The Technical Side

and

seams,

lies immediately ahead

that

liuiiieuidiexy; diieaa.

ims xesx

Now let us discuss briefly the
value of the study of the technical

the

Let

years.

miat

bears

jsame

years

have

two

the

equities

Dividend

ago

past

moderately
two

years,

$225

saying that
high
■

statis-

dividends
aiviaenas

satisfaesatistac-

are
aie

the whole storv our nrnhlpm<!
w« uxeiwnuxe story our problems

was

>fleems

that

todav"
-

and

are

this

rpnrpcpnt

iiincfrafo

PiPariv

recently

thp

rpaHinctmPnt

i tw

were

We are still spending huge
sums £or de£ense> about *50 b»lion even with the recently an"

nounced reduction, and this will
continue to be an important susthe 0verln inv^tment nTctnre
i
1
fJJtlJ? Zhirh taining influence.,
,ik
f
think
nf
the
+
^
1
V(4) We know that the AdminisDroacbes
fundamental ami tech" JS h^
i"1 very c^ose y
J tration has previously been comj
'
f
constant
technical approach, but in a some- mitted to a hard money policy and
k' You can
nrittv
7n dlffef^nJ way.'Who can nght- a baianced budget, but we hope
ith *
.
f
.
P ^
S S3y 11
w...
they can encourage a rotating ret
whv nnt'nw hnfh
millions who buy or sell securities adjustment with this- honest
'
both.
will react to the many events that money program, and there is good
Let me glve you one example, are likely to occur in the, fore- reason to believe that as experi^
^ver seven months ago. there seeable future. We can use all the ence(j businessmen, those in ,the
came across my desk a very ex- yardsticks of statistics and other Treasury Department! will
haustive and excellent study on measurements of the past and promptly put into "use some of-the
text"© industry with the con- some of the technical tools, but many devices at their command to
cfusl0n that the stocks in this sometimes a bolt out of the blue forestan a serious business slump.
fr°up were under-valued by all like the "Fall of France,' Pearl Tbe government certainly has a
fuudamental statistics. Yet, tech- Harbor,' the Korean War,
or reSp0nsible interest in prosperity,
was no evidence at even the election results m 1948 especially for 1954.
tlme that the bottom had give both the. fundamentalists and
These things we
know
espemontb

still

believe

that

important

The Psychological

thev

value

Finally

there

•

Side

the

i«

nsvoho-

see

work

with

technician

might interpret in terms of mass inves-

^usiness
been

hfvae delayed publication of this tor psychology. In 1946 the fun- „eL

going to have
recession which has

well advertised that busi-

men

havrbeen

cautious for

stocks

wjthin

•

«-1S p0

bull
in

mariqo7

storm

clouds

Tune that

gathering

While th^

vear

early

nuhl

dS Wlt"es^d in 1937 as June that yeai. While the pub
',n eacb,o£ ™hl.ch y?a,rs bc ?an 6° ]° wlld ?x£remes of op-

and t194®
most

witnp„pH

I ?PJU.

made

neriod

their

siv

highs

mnnthc

timism and

pessimism,

antiHnafpc

t h

the market

funriampntal

UL"tr1
woius, , peupie «*xc pieny
wel1 prepared for this recession,

and the hope that we ail nave is
inai

\nis ..\eLe"

beLDdCK.

market will not have such

U1
a

sen-

the present market wl"ch be'gan changes and often discounts them ous impact on business as to cause
"s Primary forward movemenf m a long way ahead." Quite) often co^orate earnings to decline
h
many, St°CkS made thff- chl"gefs
psycb°lo.gy are
thelr hlfts over tw0 years ag0' not timed to fundamenta changes.

others

over

year

ago,

and

often the stock market

very

Stee

thin generally LSd We
knnwEhmlftLl
d'1
vet

hnt

rore

„

7q'

•

-i?

mixineapuiis- time,

going from a low of 32

aircraft

and

tobacco

5 stock*

and

sentiment

this

discounting
from a study

ter look and see if I can read into

of all the factors, that this is pot

them some of the story that is un¬

phase, it

and

seems

---

e /Tev?rse textile stocks made their tops in the time to follow the crowd and folding before us. Sometimes the
case of United February 1951 and have since rush for the hills.
most logical interpretation of the

lLpoints below the high level

the

stocks started up in 1948 and have

lo earnings aropped from not stopped yet. The steel

♦

aJVipenasana.more; whose

PromIsed }°% cu£
individual
.taxes •n?x-t year wblcb wl" tend
to maintain and actually increase
consumer spending power,

IxampEes Sears' REeCck3
\°>discount it. This isT
,example' £h\ d™§ aad Fl what is carefully considered,
from 40 to 62. whilf earnings fell l0^L^all,Ub.m.-19o4ith„iE.a„n
a"d
The Charts

nrettv

^pij

from
eventual peace econintery ^v ^in ve^ iiuely eontfnue for
as

to-

don t know about that yet but it s
and still others have been in a de- will anticipate a fundamental hard to think of any^ business
more clining trend since January this change in the economic picture shock that we haven't pretty

nn«mr

rhVJHpnrie

onlv

^^ °"oncedinJ^ price levels
n^Ll .fiU
Established this P

many

sioned

JS
hPPn

earnings is often
eventually
disillu-

1As.ll11.ustrat®d irf the
L]
Airlines. Earnings have increased
added from $2.90 to .$4.03 a share since
hnnn^ini!'
ye* the current Price of 23

nvprinrkL-

mnrP

r>:

havp

stocks

earrhmx

stocks

earnings

sides

thev

and

value based

manv

but

asset

all

ite the
made

such

transition

economy

al1 characteristics of

and
ana

Honeywell

Unprecedented Values

people

loW

have

one

country's

the

war-Deace

ings

It is

tically provable fact that about
75% of the fluctuation.in stock

been

the

about

past

dealing

valued

during

now

the

pretation

Lnvine

prices is caused by changes in
earnings and dividends. If earn-

side of the market.

emphatically state misled

not

over

traded

low

are

jay?outs

over

mistakes

used

®tudy untd today when prices damentalists were predominantly nesa
Deei^' daa"ous; ior a
bear a much m,ore realistic rela- bullish both on business and the t„"Es 7IEca aied EEr Drof table
tlon to Pr®se?t Prospects, after market, but the stampede in the tones, aiscaraeoi less p 01 iau
over ? 20% decline during this fall threw The fundamentalists a tmra, nave eitected qperati g et
per'od- Certainly this market as little off balance, but not the treie^cies and have put t
a "h°le llas bad "one of the over- qualified technicians who saw the
m oraer so ro speax in

justmcnT pLod is gofngatoere" investor miking hisSklf com"
iolvA the ifrgument of the bulls "0^^'on^SLTd
and

having

teyhnical t®ols

many years and d

This test-

Actually
these

+eei? re?,
,,lrl. thls ^roup of the technicians more than they
stoc^s- Consultation and team- can immediately understand or

year.

tory and stay so, stock prices will
testing period for industry take care of themselves, but if this

severe
aix-s

any

that the business machine is

aware

quarter

productive

capacity has been made at the
ibighest cost in history; and at high
break

at the rate of $7.50 for the first

Eome

been in a declining trend. The
metal stocks made their peaks in
January 1952 and have been'in
a

very

substantial-decline

Dresser Industries, since. The oil stocks made

earnings ; and

dividends

ever

their
highs in July 1952. On the other

value of

What Now?
And now we come to the $64
question that you and everyone

vance.

else want to know the

divergent

What

the

market

answer

to.

stock does not follow

earnings, but discounts a declining
trend for many months in ad-

There is still
mixed

a very

pattern

widely
in

this

goipg- to do market. As I have previously in-

Volume 178

Number 5260

The Commercial and Financial
Chronicle

...

(1249)
dicated,

find

evidence

that

stocks and

good

deal

Aircraft, Republic Aviation, Boeing industry

individual

many

groups of

stocks

and

have

Douglas. The television stocks
to

appear

stocks

should

pretty well next

hold

year even

though

rebuilding a base lesidential building will decline.
bear market for some for
another
upward swing this btocks
favored
are
Armstrong
time, a bear market within a bull fall. Several look
especially at¬ Cork, Otis Elevator,
Pittsburgh
market.
We also see evidence of
tractive particularly, Admiral, Plate
Glass, Rubberoid and
weakened
technical
patterns
in Motorola, Zenith and Radio. The
Johns-Manville. If the economists
many issues which indicate lower
textiles, liquors, department stores, are right in
telling us that con¬
levels, and then there are some airlines, automobile, auto
equip¬ sumer spending power will reach
stocks that are already
showing ment, motion picture and mining a new high,
especially when the
signs of slowly bottoming out in and smelting are
among
groups 10% reduction in personal
been

preparation

for

The

vance.

renewed

price action of each

stock tells its

own

story.

The tim¬

ing of purchases and sales of in¬
dividual stocks is just as
impor¬
tant as the selection of the
stock.
One

thing

from

result

will take much
imarket to go

further

adjustment
strong

period
and
base for the next

trend.

also

bound

Dry Goods

Field

cannot

technical
and

ly looking well beyond the 1953
earnings results and would have
to suffer

some
pretty sharp drops
in earnings before
making present
prices look excessive. They would

upward

and

Federated,
the

strong

<of weakness.

In this

type of

levels

present

and

100-102

continues

which

mgs
who

are

discuss
At

I'm

292

April,

stared

one

March

22 points, the

from

281

270

only

second

the

May, de¬ sistance levels, and while it is dif¬
clining to 261
in
June,
or
20 ficult to
justify much lower levels
points, and the third leg dropped even on a.
further reduced basis
from 278 in August to 255 in
Sep¬ of operations, it is my belief that
tember, a 23 point fall. By co¬ this group will
prove unattractive
incidence, the volume and extent for much price
appreciation for
each

the

one

thrusts

has

these

been
A

same.

downward

the

present,

approximately should

fourth

downward

being.
leg of 20 points from the estimated doubt
.top of the current recovery from
the earlier September lows would
take the Dow-Jones industrials to

--approximately
I

not

the

all

240-245

sure

that

level.

are

and

From

that

Steel will sell much

Bethlehem
Steel

below

the

rubber stocks

ing

far presented a pretty

.strong "Maginot Line" on a sell¬
ing cliniax and strange to say
actual

-•some

selling.

necessitous

see

the

margin

rich

below

angle, I
Republic

38-40,

41-42,

31-32

are

time

below

level.

speakers

their

and I doubt

each of

open

firms.

these

•

-I

pro-

will

finan¬

and

below 55-57.

other groups.

that is the big $64 question mark
whether the 255 level will hold.

the
leading copper stocks were
selling about 14 points higher than

After

the

.again

another

setback

early

1954.

./great deal longer period of price
^readjustment and testing period
before the bull trend
renewed

six

months.
are

which

mf
^as

many

should

-upward

moves

broader
my

as a

unit

great

any

Unfortunately, this
there

switch

Some

Groups Considered

Looking at the broader view,
i:he' technical piattern indicates a

may

the

extent.

take four

meantime,

groups

have

can

stocks

worthwhile

during this period

reaccumulation.

Just

chart work during the past
shown that various

"two years has

tobaccos.
reversed

from

will

coppers

Stock

position

teresting

Today, the
and perhaps

tobaccos

chemicals

again.

I'd

look

the

phase is the

Investment

buys.

Merck

38-39

and

utilities
June

16-17,

Pfizer

lows

holding
on

the

Abbott
26-28.

above

nounced.

graduate of New York University

purchases and sales of
shares in the portfolio. These com¬
mittees meet every third Thurs¬
on

School
and

Mr.^« Hoffmann

Business

started

and

Wall

and

New

York

Chicago

and

1937

Morris Mather

Co.

and

light

income

com¬

portfolios very carefully and pre¬
pare
them for the next upward

phase

that

place,

I'm

and

that

will

sure

M Your

take

presently is

slow

process of reforming. From
timing phase, this unwinding or

readjustment

phase

has

good

chance of being concluded during
the last quarter of the year. Cer¬

Heavy

recession is reached. As I said be¬

fore, many stocks

duty

bearish

■I
III!

available at

are

f'J

Horse-

lii

In* protect'0''

is unrealistic.

now

with the

It is well to remember that booms

generally end

when

everyone

this

high¬

shrouded

gloom

with

pessimism

today.

remember you don't

ket

averages

individual

any

buy the

more,

Veedol

and

Above

all,

equipment stocks

ap¬

favored.

The

building

"Film of Protection"

buy

stocks.

Great

Forum Meet in
CHICAGO,
Finance

Gliicago

111. —The

Forum

starts

High - Detergency

mar¬

you

motor

Oct.

cleaner after

Women's
its

veedol

oil resists

High-Detergency

blow-by

horse-power! It leaves

19th

the

was

the

was

leading brokerage

investment
first

houses.

operating

Investment

Again, it
a

Wom¬

Program—W.I.P.

workshop experiment in which

stocks

are

actually

investigated,

studied and then actually bought
and

sold.

portfolio

stocks

engine

properties hold contaminants in

Don't

meeting
the

seals in

draining, because its deter¬

tive anti-corrosion film

the first women's

hold

ravages

acid"engine sweat"by forming a

Exchange and in

quarters of the

—a

waste

protec¬

metal surfaces.

horsepower! Use all the

power your car can

Trading Floor of the Chi¬

Stock

and

en's

Forum

organization whose

was

organization
on

The

your

enlighten
concerning finance and
subjects
for their
own

women

cago

pear

optimistic, not when the outlook

benefit.

1952.

are

oi?

1947 he

to bet the bankroll.
Rather,
it looks like the time to look over

purpose

36-37

time

women's

The farm

came

general this is not the time to

first

than

own

joined Paul H. Davis & Co.

sole

net

his

Vice-President

pretty strong technical position to
carry to new highs. I favor the
The

with.

Company ij,'

suspension. And it fights the

power

Finance

he" organized

firm, Hoffmann

gent

electric

Ingen & Co.

1923

Street

Van

ing

ac¬

pretty well over-sold. Sor^jp
following groups of stocks
should out-perform the averages such as Case are down over
60%
during the period ahead: aircrafts, from their 1951 high; Deere down
television, food and food chain, from 37
between present price and
drug and natural gas. Of these the
^aircraft stocks
have recently 20; Allis Chalmers between pres¬
ent price and possible
shown
new low of
outstanding
strength.
I

Co.,

and

tion than the industrials and
rails.
While slow, this group is in
a

least.

especially favor Lockheed, United

Wells

covers

The

have

averages

Davis

get frightened and sell long term
holdings. It is certainly not the

their

relatively better price

•clearly that

months

Mullaney,

year's program with its-first meet¬

shown

panies.

The

Paul

opera¬

Program

ing

ethical drug stocks look like
good

group is expected to be 10%

"few

buy

Cyanamid at 40, Mathdu Pont at around
and
Dow
at
31-32.
The

90-92,

CHICAGO, 111. — Arthur M.
Hoffmann, formerly manager of
municipal bond department of

the

then combine for
reports and vot¬

ieson at 33-34,

;again technical studies show very

facing a some¬
what similar period for the next

in¬

American

•groups of stocks have gone through
•extreme divergent price action, so

we are

the

profitable.

prove

the

Mullaney, Wells Go.

Chicago starting at

will join
Company.
in "Workshop methods.
South
La
Salle
Members
Street,, as
meet in committees for
Vice-President on October 1, Paul
study and
L.
consideration of investments and
Mullaney, President, an¬

price levels which offer and will
.picture, I would expect a further The
tobacco
stocks
strangely
continue to
offer sound
values
of backing and filling or enough appear in rather
high ter¬
and
attractive
dividend
base building for the next week or ritory and while
yields.
investment posi¬
Unless the business picture deter¬
10 days, and then another
upward tion should be held, this group
:move until early or mid-October
should have a moderate correction iorates much faster than antici¬
to 266-268 D.
J.
Then I would before new purchases can be rec¬ pated, a lot of this discounting
has already taken place, and to
•expect another testing period and ommended. Last year on this
date, be too

leading

Z-UUt)D,

Arthur Hoffmann With

John P. Chase, Investment

second

in¬

high¬
banquet at the Mid¬

Hotel in

135

period

that, the inevitable strong
.year-end rally into January, and

un«n
UUIU

forum is held be¬

Oct.
a

group edur

cational and worthwhile.

Consultant will speak on the "In¬
ternational Situation and Securi¬
ties."
tion

tainly the market should be start¬
ing on its upward course not later
21-22,
than
April 1954. As often hap¬
Good¬
pens, prices will probably be ris¬
ing before the low point in any

below

47-50

Brief comments

investing will find this

new

?d£ondi..ana wormwmie.
uiose mausines. information is desired, call tmo«
Dear-

are
interested m
with current economic

conditions and want to learn about

fields

industries and

who

sell below 39-

Switch From Tobaccos to
Coppers

short-term

keeping

some
of the high¬
lights of various groups of stocks.

The

gradually reach¬

an over-sold area,

Firestone

the

technical

.-going to have that fourth leg, but that Goodyear will
it is perfectly possible.
The 255 40,
U.
S. Rubber
level has

for

much

very

purchases

new

avoided

and1

stocks

few.

This

have

estate

Women

regular meet-

guests and a panel
vestment authorities from

The

Carrier under

name

periods of weakness. The
broken important re¬

steels

enrolled.

24-26; Montgomery Ward at
ket action all stocks will not make The oils show different
patterns. 50-52; Continental Baking at 18their lows at the same time.
Some are reaching
19, Bendix at 47-48; Freeport Sul¬
buying levels,
day, starting Oct. 15.
phur at 36-37; Climax Molybden¬
With
this
preamble, let's get particularly Phillips, Pure, Cities
The third phase of the Forum
Service, Socony, Ohio and Union um at 30-31; Vanadium at 28-30;
down
to
cases
and
discuss the
program
is the holding of ten
Oil of California. Others will
have Aluminum Corp. at 39-40; WestDow-Jones
averages,
groups
of
sessions
to
on
Personal
go
through
a
considerable inghouse at 36-37; Food Machin¬ weekly
stocks and individual stocks.
amount of work before
going very ery at 30-32; Lone Star Cement at Money Management to give stuThe averages, the often mislead¬
dents a basic
much higher and still other oil 23-24 and Columbia
understanding of all
Broadcasting
ing, deceptive and outmoded Dow stocks
phases of finance—banking, inat 36-38. If you're
such as Warren
looking for de¬
Petroleum,
industrial average, which does not
Texas
Gulf
Producers, Houston fensive issues, how about stocks
hegin to tell the story, has sold
such as Corn
and Texas look a little lower.
Products, American
down in a series of three
legs of
This group of
stocks, now yield¬ Tel. & Tel., Safeway, Scott Paper,
;about 20 points each during the
General
ing
over
6%
on
the
Foods,
Colgate Palmaverage,
.year
with the third leg decline should
be held for
American
long term, but olive,
Stores,
J.
C.
.•signalling a bear market under the additional
purchases are advised, Penny, Borden,
Swift, National
Dow theory. The first leg down
and
Eastman
especially in producing companies, Lead
Kodak
to
.broke from
mar¬

real

surance,

her leader-

program

selected

leaders

various

i V
end

6 p.m.

issues

four

developments in those industries

land

Issues

other

are:

under

Pining
phases.
^

three

cial

30; Cincinnati Milling Machine at
that there are many sound values not benefit under EPT
expiration. 36-38; General Motors at 48-50;
selling at depressed levels with They are entitled to some further Reynolds Metals at
38-40, Borg/good dividend yields that should recovery from present prices, but Warner at
60-62; Libby-Owenshe bought on
any further periods should run into resistance between Ford at 31-32; Worthington
Corp.
apparent

very

club

lighted by

interested in buying some time in
the period ahead if
they reach in¬
dicated prices

for

tween

Attractive
of

operatiop

bonds, and wills and trusts. This
many years of experience class,
the first of which starts
behind them under the able leadMonday, Oct. 5, is repeated from
ership of Mrs. Lorraine Blair, the time to time as new
students are

grams

overlook

number

With

department

pattern
of
Marshall
Gimbels at this time.

Other

the average are obvious¬

been

years.

Stores, Asso¬

earnings, with yields

re¬

lay

in™™,*
income

pvppcq
excess

of this

some

seep through into
stores. Favor Allied

ciated
and

of 7%

time for the

through

place, then

thrnncrh

SPPn

The rails,
selling at less than five
times current

basis, as
setback, it

recent

to
to

present time. A few comments on
three of these
groups is necessary.

apparent

overall

the

tax takes
marginal
maiginai

rails, and railroad equipment are
not particularly
interesting at the

study of these charts, and

this is that
a

perfectly

income

which appear
pretty well sold out
and entitled to a
good recovery
from current levels.
Steels, oils,

ad¬

has

deliver. Fill

your

crankcase every 1000 miles with VEEDOL

High-Detergency

motor

oil.

The Commercial and Financial Chronicle...

(1250)

Continued,

from

Reilly and Staff
Our

Join Burnham Go.
Burnham
Broad

and

Street,

members of

■Exchange,
John F.
has

New

York

the New York

Stock

announced

that

Reilly

become

their

of
De-

follows

the

dissolu¬
of

tion

Reilly & Co.
of Sept. 28,
with
Joseph
F.

Kelly, Rob¬
ert W. Payne,
Jack

Wie-

other

and

lar

John

key personnel
moving
to
Burnham and Company.

Reilly

J. F.

membership to reorganize
Kelly and Wielar

prior

with Mr.
J. Arthur
Warner & Co. for approximately
17 years. Mr. Payne until recently
was Trading Manager of the local

association
with

their

Reilly,

being

were

office of Courts & Co.

E. T. Gernon Joins
A. C.

Allyn & Co.

MADISON, Wis. — Edward T.
has
become
associated
A. C. Allyn & Co., 119 East

Gernon

with

Washington Avenue. Mr. Gernon
was formerly manager of the local
office of Ames, Emerich & Co.,

Inc., which has been

longer end of the government market continues to hold
of buyers of Treasury issues even though there is

activity in the intermediate and short-term
The 3V4% bond, and the longer-term 2!/2S, have been
in neck in the race for the market leadership.

greater volume and

obligations.
neck

discontinued.

Einar Graff,
and Roger A.
Stefany have become associated
with Francis I. du Pont & Co., 208
South La Salle Street. Mr. Graff
was formerly with Link, Gorman,
Peck & Co. Mr. Goldman in the
CHICAGO, 111.

—

Charles., Goldman

and Com¬

past was with Sincere
pany.

Joins White,

Long Bonds in Strong Demand
bullishness

The

favorable effect upon

LOS ANGELES,

the

gains being shown in the longer end of the list.
distant

with White,
derson was

Calif.—Paul J.
associated

Weld & Co. Mr. An¬
formerly with Hemp¬

hill, Noyes & Co. and Sheilds &
Company.

It appears as

repetition of
moving up,
everyone is a buyer and there are no sellers.
However, this does
not go on indefinitely because sooner or later quotations reach
levels where profits will be taken and when this does happen it
does not take too much time to take a good part of the profession¬
more

has brought about
exist when prices

maturities,

conditions that always seem to

are

market.

peril;

securities

some

This is the

changing hands.

professional

side

of the

situation which has been very instrumental in moving up quota¬
tions of these obligations.
There does appear to be, nonetheless,
a

real

feeling around that the peak has been reached

rates and this goes for the

long-term

ones as

well

in money
the short and

intermediate rates.

Rate

the most distant
of the
monetary authorities is looked upon as a factor that must be
watched very carefully because this will have an influence upon
what happens to long-term interest rates.
If there are to be no
repetitions of what happened earlier in the year, and there are
strong indications there will not be, then the peak has quite likely
concerned

are

been

the debt management policy

because

in long-term rates,

seen

of the money

according to many close followers

markets.

3Y4s of 1983 Moving Higher
Some of the holders of the 3V4S due 1978/83 believe that much

higher prices

are

This opinion is based upon
likely to be a reopening of the 3J/4%
rates should tend to decline, as it is

in store for this bond.

the belief that there is not
issue

because

interest

believed

they will, then the Treasury in future refundings and
financing will be able to use a lower rate than 3V4% for longterm operations. Such a development would have a very favorable

Unfortunately, it is little under-f
stood
or
appreciated that such

fense,

The uptrend in the 2V2%
as

bonds, the restricted issues as well
favorable effect upon the

of these securities because there has

always been

tinction

them that these bonds should

not inclined to

MUNICIPAL

do when

quotations

Other Issues Reflect

were

lower.

are

still very

even

issues.

Switches

the

come

continue to be

government

market

one

with

of the

main

not

few

sources

activity

institutions!

close.

anteed

INCORPORATED

housing bonds.

Joins

WHitehall 3-1200

HA 6-6463

Jong-range
needs; not only projection for the
present but security for the fuI

ture.

certain-, that

aim

our.

accomplished land that /we
a rigid bconomy without loss of strength.
^
was

Secondly, the reductions were
judged on the ba£is,:qf a dollar's
worth of return for every one of
the

doHarjfcwhich

taxpayers

This

spent.

seeminfjy

pletely. Yet, how
among

who

value

full

for

escaped

economists,

Deal

New

not

With Ellis & Co.

Slayton Staff

(Special to The Financial Chronicle)

ST.

LOUIS,

Grimmer
with

com-

there
insist on

are

many

dollars

our

was

evident

to ,have

concept appears
the

the

purchase of food, clothing and the

ingly,
that

life.

necesities

and

Accord-

tions
be

insistent

was

extravagance

removed,

end to such

the

other

many

payrolls,

has

Slayton

408 Olive

Mo.

—

become

Street.

Walter

(Special

affiliated

Company,

Inc.,

The Financial

Chronicle)

CINCINNATI, Ohio—Robert B.
Shott has become

Ellis

Building.

Co.,

connected with

Dixie

Terminal

encouragement

drains

be tolerated.

against
this

wen

war

can

longer

is not launched

by the Soviet Union in

the next few years, we may

that

suppose

proposes to
our

0wn

paVe

the way for

There is
but that

destroy

thereby
own defeat.

and

economy

Kremlin

the

wait while
our

question in my mind

Russia

would

pleased
see
this nation spend its way
into bankruptcy.
This will not
happen if there is a reintroducto

tion

vitai

working partner in the

nomic

American

eco-

of this country.
The
Administration
proposes

insure
•

life

present
to

industry

that
,

such

done.

•

...

]? \0S Ju

business transaction

(
^

in the public

the

^turned to private enterprise and
*° *he nation s tax rolls the Fed-

upon

crally-owned Inland

Waterways
Corporation a barge line opercharged ahog on certain rivers in the south

ing the monies appropriated.

an^ mid-west. This corporation
ha<^ been a constant burden on

of our formulataxpayers
losing money m
achieving
sound
reductions J2 of the last 14 years to the exa healthy atmosphere in govnearly $10 million. The
third phase

The

and

ini-

American

interest- That department recently

who, after all, are
with the responsibility of spend-

for

1933,

Administration

and

since

and

allowances

travel

waged by this

of capital and against the

use

overloaded

and

heavy

excessive

has been

government against the free flow

^ a5
e*amPle
Je. "ew
anc* on<~ which 1^u?"
.ra
economy to be found m
® veinment if only the effort is
and that there
ad6,ls m a recent transaction of
matters as top- £
Department of Commerce; a

committee

our

waste

have

but

inhibiting the flow of in.-

fare that

eliminated, that overlapping of
agencies and duplication of f'unc-

ernment, and the one I should Secretary of
to emphasize particularly to- a sales price

Commerce obtained
of $9 million for this
day, was based upon the mandate Property, which represented the
of the people as
expressed last highest price that had ever been
November that further encroach- offered. In addition to this amount,
ments by the Federal'Government jre quick assets of the Corporainto
the field of private enter- ll0n should net for the taxpayers
prise should terminate; except in approximately $2.7 million in cash
those areas where private enteranc* accounts receivable. The buyer
prise was unable or unwilling to has agreed to provide rnore workfunction or where, for reasons of
caS,1ua aiPoun^ing to $1 milnational security or national in- J1®11,
Thus> the businessmen in
like

terestr private
enterprise could
operate.
And even in these

insisted that governoperations should be supwe

plemented by contracts with private enterprise wherever possible,

Eisenhower Administration
an excellent business deal
for the public They provided by
contract for the purchaser to furmsh adequate services for the
small, as well as the large, ship¬

„

m°st

occuirences

decades,

•

Perhaps the

Socialism
.

the

agic

seriea

past

two

entire history,

our

the

per,

for

Planning

Stop

they arranged for the buyer

*° help

the workers by

over existing
jn short they

taking

labor contracts and
have removed the

g0vernment from competition with

£rivatp

Pntprnrise

have been those manifestations of

thinking and Planning
"New
Deal"
and
"Fair

the

has

cialism

planning for
begin planning

and

our

enterprise

capacity.
19

free

system

function

The

its

fact that
people

true

1952
in this

million

country were on one form or other
the public payroll is a sign of
that

should

not

ig-

Assuming that millions of

this group who draw Federal salaries
or
pensions are heads of

families, the total number of individual
dirert

Americans

eovernmpnt

Easy Task

The task of economizing

not

so-

danger

Economizing Not

a small one nor is it easy to acto eomplisli., Speaking from my perof private sonal experience, I cannot recall

to stop

come

make

The time

Administrations.

who

enjoy

suh<?idv

hp-

that the Appropriations Commit*ee haa ever worked harder , or
l°n&er hours than during ^ s recent session. Committee
members, Republican and Democrat ahke, labored from early
morning until late at night to
?c ,iev5 ? sound a*M economical
budget for each department of
government. The members of the
Committee and its several subcommittees worked Without stint

of their time and energies to pro^uce
which, I am convinced,
Dealers talk of the "welfare state." ]?aYe *ai(* the groundwork for efOur system of capitalism remains flcient anc* eoonomical operation
as our strength
only so long as it
government for the fiscal years
is permitted to operate
^t its full- t° come.
a

wonder

ST 2-9490

terms

dollars

dustrial capital. The guerrilla war-

tiative

feet of

think

comes

ST., NEW YORK 5

BOSTON 9

millions

what may be the more serious ef-

had

and

nored.

According to reports, there has been a fairly sizable amount
of the partially exempt issues changing hands with a large part of
the proceeds from the sale of these securities going into state and
municipal bonds. It is also indicated that not a few of the tax
sheltered treasuries have been replaced with the government guar¬

CHICAGO 4

ers

dis-

today, it was necessary and
continues to be necessary that we

over

making
important tax adjustments during the third quarter which has just

45 Milk St.

the

President

being .* an age of
fleeting instant of
confronts this na-

the Tennessee Valley Au-

thority not only cost the taxpay-

tion

much
though the more distant issues seem to have the
center of the stage.
Volume and activity is far larger in these
obligations than it is in the longer term bonds which means there
is a real close two-way market with size in the short and middle

231 So. La Salle St.

mind

the

bureaucratic excursions into busi*
ness

de-

socialistic

Confidence

The intermediate and short-term securities

in demand

term

15 BROAD

bear

which

danger

Deal"

& Co.

spending for
essential that

which

expressed.

never

down to the levels that they did reach.

were

Aubret G. Lanston

our

peril and not

feeling

have been allowed to
The price betterment
has enabled quite a number of the smaller banks who are the
largest holders of these securities to make tax switches which they

among

SECURITIES

multitude

the bank obligations, has had a very

owners

the

was

Congress

ment

Uptrend in !Vz% Issues

and

arnount

fields,

STATE

into

not

only real long-term treasury bond.

the

have

only

can

digress

problems which our national preparedness
entails.
However, in
d etermining thje nature and

leaders

rates

intrusions,

wealth and sapping our initiative',

President

There is, however, a bit of a hedge ^as far as

catory taxes to finance additional

[tension and eventual effect of bankrupting our

public treasury. In this program
we had the fullest support of the

Peak Reached in Long

effect upon the

JJ. S. TREASURE

time

watchfulness." I do not propose to

other

important buying of the longer
term treasuries, which means these bonds have gone into strong
hands, there has been, nevertheless, a great deal of "quoting up"
which has effected the prices of these issues with practically no
Although there has been

Chronicle)

become

has

the government market has had a very
quotations of these securities, with the larg¬

though the changed attitude toward the money market, especially

Weld Co.

The Financial

radio address that "we live, not in
an instant of peril
bpt in an age

introduced

Three With Du Pont

Anderson

attention

alism out of

(Special to

is having

substituted,

Also, there seems to be strong opinions around that it will be
purely a matter of time before reserve requirements will be low¬
ered again.

est

Reilly & Co., Inc.
Messrs.

rate

The

started .on
Wall
Street in 1924. In 1934 he formed
J. F. Reilly & Co., with branches
in Chicago and Boston.
He be¬
came a member of the Exchange
in 1947, and three years later sold
his

lower

the

Reilly

Mr.

is going through, as well as the abrupt withdrawal
of the Series "B" tax saving notes because the Series C issue with

security prices. The demand for commercial loans as well as for
mortgages and consumer's loans are expected to decline and this
should make more funds available for government obligations.

Stop Socialistic Trends
And Return to Solvency

though the "cleansing process" which some believe

seems as

favorable influ¬
ence upon the thinking of a great many operators in
the money
markets toward government securities. The reduced rate for the
new tax saving notes reverses the trend which has been in effect
since the present Administration took over. This surprise action
most likely indicates a more favorable rate for tax anticipation
bills or notes which the Treasury will probably issue in the near
future. The slow down in the economy is expected to bring with
it lower interest rates which, in turn, means higher government

partment,
This

page

We Must

the economy

Unlisted

Trading

Governments

By JOHN T. CHIPPENDALE, JR.

City,

has

Manager

Reporter

Company,

Thursday, October 1, 1953

shocking

that

It is little

one

heard

the

New

est

efficiency.

sion

terprise,

What is the significance of the
sweeping cuts in governmental
confis- expenditures insofar as our na-

Government intruof private en-

in the realm

compounded

The Commercial and Financial Chronicle... Thursday, October
-a,y?

tional economy is concerned? Does

shall immediately

2.4%

balanced economy—that is,

that

mean

have

where

expenditures

receipts?

immediate

reduction

tax

release

records

for

the

quarter

1953.

further, we

April-May-June
These records

established

were

production,

consumption and investment. This

individual

the

examine this

im¬

the

burden shall thereby

mediate

of the working population,

that

mean

optimistic

taxpayer's income for savings and

(1251)

million and one-half—or only Republican

find that the nation set three new

balanced

are

Does

1, 1953

■1

outlook

sustained

was

Platform

1952.

is essential, in my judgment, that
a public confidence in the currency of this nation be encouraged if we are to realize our full
economic strength.
Such confidence can be had, if we fulfill our
obligation to American citizens to
prevent further depreciation of

consumption? Unfortunate¬

for

program

management
those

will

until 1933. "It is asinine that foreign interests should have the
ing power, which necessarily is right to convert their dollars into
translated into greater consump- gold freely, while American citition, has resulted from the fact zens are denied the same opporthat prices
and taxes have re- tunity. I anticipate that hearings

fiscal

sound

which

lead

objectives in the end.

budget is balanced and to do this

reduction

expenditures

increase in
spending
This increase in purchas-

real

power.

aim. of course, to see that the

our

mained

the

this bill will commence late
this year or in January of 1954.
These hearings will provide the
come.
When
that
balance
is
Commerce Department concluded opportunity
to reexamine pubachieved,
further, reduction
of
its report by observing that con- licly
the deleterious effects of
non-essential
spending
will - in
sumption so far in .1953 is running continuous deficit spending and
turn
reduce
our
requirements.
6% or 7% higher than in the first in due course to chart a fiscal
the

extent

bring

necessary

lessening

any

assure

in on

cases, prices are much more
stabilized than a year ago.
The

half

tax

our

although

same,

some

those expenditures within our in¬

This, and only this, will

1952.

The

unescapable

burden.

observation

that

consumers

are

over¬

into

come

night?

not profess to be an oracle
things to come, and least of all

„

problem

the

have

are

relief

few

months?

The

the fact that
not1

only
but

within

the

lies

answer

I do

expenditures depend

ances

appropriations from
previous years. Unexpended bal¬
as

ginning

to make

than

this

me,

ent

adhere

have

that

lies

mentioned

have made

ahead.
than

but I think it is

previously,
good

The

own.

I
we

guess as

to what the
three years

the

unsound

New

money policy
Administration

Deal

order

enter

one

manufacture.

to three

The

No actual money lies idle, but the

appropriation
contracts

remains

until

fulfilled

are

stress,

while

drastically
this

Congress

reduce

may

appropriations

note

all

The spring decline in utility stocks appeared due to three
major factors: (1) unusually heavy offerings of new utility stocks,
either b,y direct sale or subscription rights, which had been sched¬
uled for some time and could not easily be deferred; (2) the sharp

decline in the bond and preferred stock markets due to Washing¬
to end the period of abnormally low interest rates,

ton's decision

and reports that holders of utility equities were
switching
municipal bonds and other senior securities—which reports

electricity and the earnings of the electric util¬
excellent showing this year. New high records
for electric output were established in the
summer, presumably
due to the heavy demand for air-conditioning,
TV, etc. Following
is the record of increases over last
year, for all the large utilities.
ities have made

Electric

Net

Revenues

Income

7.1%

January
February

9.0%

13.2%

3.5

6.6

8.1

11.3

3.4

8.8

9.1

7.5

April

3.4

11.3

10.8

13.3

20.0'

3.3

11.1

11.4

June

3.3

14.9

12.2

9.6

July

16.7

12.1

16.8

consid-

Eisen-

the foundation and
is doing the spade work required
for good legislation. The work of
the first session will bear fruit in
the second session which begins

*Not

been

robbed

is true

of this

this

worth

because the

dollar

gress has laid

in January of

1954.

praisal cannot

A final

that

fiscal

1955

appropriations will have

taken

effect,

expenditures

will

have been brought under control,
and
a
balanced budget—barring
national

crisis—will be

probability. Therefore,
our

distinct

put

fiscal house in order,

justify individual tax relief. Long
before this, however, and I think
it has commenced already, a pub¬
fiscal

policy

created.
the

most

—that

lic

of the honest dollar or,

government's

our

will

have

been

judgment, this is
significant point of all
my

invite and

confidence

retain

pub¬

financial

our

stability and in the wisdom of

our

government.
"The

real

ap-

Getting More

stated

"The

"Wall

quarterly dividend rate twice this year, and is now paying onefifth more than it did last year.
Other electric utilities which
have increased their quarterly rates include Pacific Gas &
Electric,
Detroit Edison, Pennsylvania Power & Light, Florida Power

Corp.,

and

not

long

dollar

respectable."

-S °s»rS
lit
It
it

cans,
cans

must

result

that

all

have

and

basic

our

must

The

York

effects

consumer

serv-

and

to used cars, and from real estate
to appliances. They found that the

ing prosperity. A prosperity based
upon
a
sound
fiscal
program,

worth

the

that

lead

therefore, more

our

sider this if you will in
the

statistics
United

month

leased

States

July

the light
employment in

—

the

for

the

Commerce. The July total of
sixty-three million gainfully

Wants

Gold

which

Standard

will

long

Restored

same

recently
Department
as

personal finances, is the type

prosperity

In support of my

re¬

over

the

convictions

necessity for a.return to na¬
solvency, I have introduced

tional
a

bill in the

average

of Aug. 31

price-earnings ratio

pay-out of 73%.

average

strong showing with respect
individual companies reflect diffi¬
a

growth, but earnings of some
higher gas costs and delays in obtaining corresponding
increases.
In addition, the industry suffered from another
warm winter which
greatly curtailed the house-heating load. Fol¬
lowing are the percentage gains over 1952:
culties with

M.C.F.

Gas'

Sales

Revenues

Income

13.1%

No. of
Customers

19.2%

10.0%

Net

January
February

5.1%
4.9

10.6

18.7

9.8

March

4.9

8.5

16.4

—2.0

4.7

13.8

22.5

3.2

April

4.5

17.6

28.7

37.9

June

4.4

15.8

26.9

18.3

30,

Shuman,

Agnew

Go., 155 Sansome Street, memof

New

the

Stock

Joins

York

and

San

Exchanges,

Eisele, King

to The

Financial

revenues

For

the

months

ended

June

gained 26.9%
and net income 18.3%. This showing was realized
despite an in¬
crease of 37.7% in the cost of
purchased gas due to higher field
prices. The gas figures are difficult to interpret, because they
include wholesale

indicate that the
and

if it

had

received

earnings would make
There

well

industry

retail

business.

However, the results

as a

whole is still growing

fair

break

weather

and

very

rapidly,

rates, share

excellent showing.

number

of complications and cross-currents, so
to study each company individually in order
to analyze current and potential share
earnings. Thus for the 12
it

are

necessary

ended

June

American

Natural

Gas

earnings

gained 33%, while those of Columbia Gas dropped 9% and Con¬
solidated Natural Gas declined 21%. Among the retail distributors

Brooklyn Union Gas share earnings dropped 41% (not quite cov¬
to temporarily unfavorable factors, while

ering dividends), due
Pacific

Lighting earnings gained 29%. Thus, it is hard to general¬
the gas utilities but there are probably a number of
in the list where earnings are temporarily depressed.
Yields average about 6.3% for pipe-lines, 5.4% for the integrated
companies, and 5.5% for retail distributors. The average PE ratio
ize

about

bargains

is about 12.7%.

Chronicle)

last¬

pnrhirp

Calif.—Wilbecome

Jr.,' has

with

whether it be in government or in

month of July of this year than at
the same period a year ago. Con¬

utility stocks

rate

that

Chronicle)

Agnew,

affiliated

(Special

and,

Financial

SAN FRANCISCO,

iiam

Francisco

prove

The

bers

stable

was

(Special

re-

period of

The electric

yield of 5.8%,

average

The gas utilities have also made

months

are

porters
compared
the
purchase
price of all articles, from steaks

Adminstration

with Davies & Co.

was

However, time will
the policies of this

adjustment.

were
formerly
Cn
Mr
Co.; Mr. cpher:
Scher¬

Taylor

Walston

Shuman, Agnew Adds

seems

re¬

dollar

Mr.

Stock

Dell'Orfanello

Mr-

ExchanSes^

Francisco

San

and

re¬

stimulation

Pine Street, members of the New

only

can

the

expect,

undergoing,

commenced

that

reflected in

12.7, and

Chronicle)

^AN FRANCISCO,, Cal"
W. Dee Scherman

man

Financial

The

and Milton E" Taylor have become
associated with Hooker & Fay, 340

consumption,

savings.

return
be

now

and

Dell Orfanello,

...

and

preserve.

additional

investment

will

fought

now

(Special

which
with
which

for

turn to the honest dollar

I quote:

"Journal's

freedoms

ancestors

Numbered
numbe e

is
is

properly

the

among
our

ices.

getting

The

nfL lh l
of our labors

tw
the benefits

number of others.

Fay

the

The ri°bt to work productively

Journal"

and

ago,

save

showed

May

Three With Hooker

iwlout,

;

Street

and

work

of 1952. but nevertheless it should

quite encouraging for holders of electric utility stocks.
Moreover, the electric utilities have continued to announce
frequent dividend increases.
Consolidated Edison increased its

you pre¬

armed gunman who enters a house

that
Is

Respectable"
The

who

showing is explained by the effects

summer

be made until the

thief to millions of Ameri¬

cans

Dollar

this remarkable

of work

half

fer, by inflation—which is just

can

lic confidence in

approximately

fiscal

and

available.

of the steel strike in the

of both sessions has been
what it was worth 15 years ago. completed.
I have every confi1956 these unexpended balances
This loss in earnings and savings dence that the record will be a
will have subsided, the current re¬
has been caused by the absence good one to look upon,
duction in
is

Some of

The first session of the 83rd Con-

have

—

May

years.

3.4%

March

tragic

the

President

judgment,

ered

Sales

are

its part effectively. In

into
were

probably exaggerated; and (3) some bearish forecasts by a promi¬
nent utility analyst regarding the potential disastrous effects which
a severe depression
might have on utility earnings.

„

cheerful

was still more than 5% below the August high and the rail
12%, while the utilities showed a net decline of only about 3%.

age

KWH

they saved, or
thought they had saved. It means
that
the
earnings of the fixed
income employee lags behind and
often never catches up with the
so-called cost-of-living index. All

previously
committed
balances, will not change sub¬
stantially from those of last year.
The

means

about half of what

still, expenditures, be¬

year,

cause

people who saved their money

surance

and this is the point I would like

the utility average declined only 5%. 'Based on the prices of Sept.
24 after the partial recovery in stock prices, the industrial aver¬

No. of

by putting hower has made remarkable progmoney into pension funds or in- ress
toward better government,

products have been paid for. Thus,
to

automobile.

during Aug. 13-Sept. 14 dropped
15%, while

the rail average decline approximated

and

Customers

money to buy the same
of goods—is just another

or an

I ask

—either in deposits or

the

and

shirt

that

the

about

start,

amount

funds

The Dow Jones industrial average

deception, scandals and all the
other debris of bad management,
be provided in advance in way of saying that we do not have A new Administration needs time
honest money.
It means that you to clean up these conditions and
that the departments may
into the necessary contracts. need more money to buy a meal, a new Congress needs time to do
to

-must

for

decline

in the stock market the utility
showing, declining almost as much as in¬
dustrials; but in the recent decline (which started Aug. 14 in the
Dow Jones industrial average) they made a much better showing.

you

time indeed to undo
mismanagement of 20

spring

mediocre

one.

—

years

During the

stocks made

The output of

,„

a G°011 start
illusions about the

faced with an accumulation
of unwise policies, excessive taxes,
is
earmarked
largely
for
long brought hardship and suffering wasteful spending, a huge national
lead-time items, such as aircraft, through inflation to millions of debt, subversives in government,
Inflation
the
need influence
peddling, secrecy and
tanks, ships, and atomic produc¬ Americans.

first fiscal year—amounted to $81
billion. This unexpended balance

tions which take from

EL^T

Utility Stocks Make Improved Showing

now.

July 1—the be¬ to reap its reward and that the
Administration's "honest dollar" has come into its

last

Utility Securities
By OWEN

to remember that there has
been a Republican Administration
However, it seems to and
a
Republican Congress in
that the program of the pres- office for little more than six
Administration is beginning months.
Six months is a short

from

There

variable factors in-

educated

picture will be two

present appropria¬
also upon unexpended

balances

economics.

too many

volved for
an

tions,

field

can

We Have Made

purchases.

That is, why should the
budget not be balanced immedi¬
ately and why should we not
tax

which

course

with safety and morality,

putting most of their increased in-

Why cannot this be done

Public

by wage and salary incomes run- the purchase value of their money,
ly, the answer is no to both of ning about $15 billion a year more We can meet this obligation by
these
questions.
Elimination
of during this quarter than for the restoring a currency that is conquarter a year ago.
The vertible into gold coin on demand,
wasteful spending is not an im¬ same
mediate
panacea
for all of our wages and salaries show an in- and thereby return a freedom encrease of about 8% and amounted
joyed historically in this country
troubles. It is only the formulation
retail

Congress which will

ST.

PETERSBURG, Fla.—Rich-

a.rc* S.

a.f b®conle as.s0"

£iated with Eisele & King, Libaire,
Stout & Co. Mr. Wessler was formerly with Barrios Investments

Lamson Adds to Staff
.

(Special

The

CHICAGO,
Lehmann
staff

has

Financial

111.

—

been

Lamson

Harris With Cruttenden
(Special

Chronicle)

William

added

Bros/ &

DENVER,

The

Financial

Colo.

—

Chronicle)

George

the

Harris has become associated with

Co.,

141

Cruttenden

Co., First National
and A. M. Kidder & Co; In the
past he was with Geo. Eustis & West Jackson Boulevard, members Bank Building, as manager of the
of the New
York and Midwest corporate department. Mr. Harris
Co.
Stock Exchanges.
was
formerly a partner in Gray

With Eldredge, Tallman
(Special

The

Financial

Chronicle)

With Coburn, Middlebrook
(Special

The

Financial

Chronicle)

Gray & Co.

Joins H. L. Robbins

CHICAGO, 111. — Arthur C.
(Special to The Financial Chronicle)
PORTLAND, Maine — Derrill
Langry
has
become
associated
standard.
with Eldredge, Tallman & Co., 231 deS. Trenholm has become asso¬
WORCESTER, Mass. —Harvey
Act of 1954" will have the effect South La Salle Street. Mr. Langry ciated
with
Coburn
&
Middle- M. Grant has been added to the
In
the same
breath, unemploy¬ of
curbing inflation and restoring was formerly with Harris, Upham brook, Incorporated, 465 Congress staff of H. L. Robbins & Co., Inc.,
ment in the nation reached a low
Street.
^
40 Pearl Street.
sound money, as pledged by the & Co.
em¬

ployed exceeded by more than a
million the figure of July of 1952.

restore

this

to the gold
"The Gold Redemption
country

The Commercial and Financial Chronicle...

(1252)

«Continued

from

the severest0 year-to-year declines
in our economic history. The de¬

page

production from the high
was about 33 Vh %
and

cline in
to

federal Budget and Corporate
Profits in a Business Decline
represent

about $3

budget.
(b) It would

illogical for

seem

in the face of

expenses

business

without

offsetting

Conclusions

decline

also

especially interesting con¬
can
be drawn from this

Two

making

clusions

reductions.

tax

analysis. The first is that the de¬
in corporate profits will be

(c) Lower operating costs
brought about by the lower price
level, which would accompany a
^decline in business, could hardly
be reflected in an important way
jn the June 30, 1954 budget, since
many items are ordered on longterm
contracts, and adjustments
in
government costs are usually
•slow. In the budget for the follow¬
ing year there would certainly be
•some
economies, but we are as¬
suming that there would be offsets
to such expenditure reductions in
larger costs for farm product price

cline

it probably will be Truman Administration in Janu¬
the decline
in pre-tax earnings ary greatly overestimated receipts
which, in any event, will reduce for the year ended June 30, 1953,

other

words,

programs,

in 1949 and

ent time.

that for

Thus

fluctuations

deficit
1ban

much

are

the

the. cash

post"

extreme

budget

deficit.

1938. Suffice it to say
of a better guide-

United

want

have

identical

assumed

those

event

declines

the

deficit

-since

this

is,

the

business

amount

and

profits

was

United

incurs

ment

the

times

Official

1953

Estim. 1954

$65.2

that

1949-Type

*$68.5

1938-Type

*$68.5

14.0

26.3

^Deduct Declines in Revenues
$65.2

$68.5

$54.5

$42.2

74.6

$74.1

74.1

2.1

—

Cash

deficit

Plan

end

Profits

when

1938-

When

occurs.

$72.0

the monetary

authorities will have

17.5

29.8

little

but

2.8

16.0

29.8

relatively

1.7
Dec.

31,

1953

and

10%

1.1

reduction

personal Income Tax

on Jan. 1, 1954.
fFrom Table III.
tTreasury Secretary
Humphrey recently estimated 1954 budget year expenditures at
$72.1 billion instead
$74.1

choice

easy

maintain

inflate

money

bank

policy and

deposits.

definite

evidences

begin to

billion.

appear.

1938-Type Decline

Federal Budget

Sr0dUCtJ°.n

<^5-39

==100)
Wholesale Commodity lndex Index (1947-49 =
Price
100)
Income

Personal

Corporate

Income

Profits

(Before
Tax

Personal

Income

Actual

Estim.

Decline

Expenditures

(For

Estim.

1938-Type

in 1938

in 1949

1938-Type

Decline

from

from 1953

from 1948

Decline

from 1953

235

215

8.5%

185

21.0%

103-104

5.0

5 0

99 0

9 0

$280.0

1.7

$263 0

33.0

28.0

15.0

22.0

33.0

42.5

34.0

20.0

22.5

47.0

47 0

17.0

_I_
13~0

21.0

42 0

510

III

*I_I

31.1
39.2

year

following)...

Estim. Deficit (Budget) (For fiscal
year following)
deficit (Cash) (For fiscal
year following)

Estim.

•

19.8

23.0

19^

19^5

17.0

65.2

♦GS.S

74.6

*74.1

172.0

9.4

5.6

§17.5

5.3

2.8

_I_

t54.5

§16.0

~
III

7 7

11.2
11 3

142.2

___

172 0

III

29 8

III

June$ 30, 1954 receipts adjusted

29.8

Profits Tax to Dec. 31, 1953. and 10% reduc-

follows:

1949-Type 1938-Type

(Assumes end of Excess Profits

•

Decline, in Corporate Tax
Decline

«n

Other

decline

(in billions)

Receipts....

$6.0

$11.8

rates!
|

5.0
1.0

11.0

reduction in Individual Income Tax and Miscellaneous

2.0

1.5

$14.0

$26.3

[on

Income Tax Receipts..!-..—^—,__u.

To adjust for full fiscal
year 10%

Estimated

Tax 12-31-53)

Receipts

basis of present

revenues
,

SOfficlal Estimate of 6-30-54

adjusted

follows:

^orDorat^tft/nin^KI.9?,?' lofs of,MUls
by about $1.7 billion In
corporate earnings,

Reduced

$2.1

billion

assume

and $1J

billion in

2.0

end of Korean War.

plan windfall will increase deficit by

1949-Type Decline

decline,; and

such

action

might be suicide for the party in
power.

The

Administration is in¬

new

deed

with'a

confronted

dilemma, and

terrible

clearly, not of
its own making. It has inherited
a
tax system peculiarly sensitive
declines

with the
tem

one,

business

activity,

from

revenues

that

sys¬

quite inadequate in the midst
great boom to meet the

rent

inherited

tures.

There

level

has

been

cur¬

expendi¬
dis¬

much

removing

elected

Republican

Congress,

"balance the budget"

platform. It will take
of

stop

great deal

insight and

and

$40

about

the

slow down the $30 billion
billion annual increase in

courage on the part
of Congress to reduce tax rates in

private debt merely to replace it

the face of such deficits.

debt.

If, perchance,

tax

well

with

However,
reduction would be the quick¬

est

and

size

cash

way

possible

deficits

the

budget
event

sumed

declines

matter

of most serious

vest

and

business

and

as¬

concern

similar increase
the

the

bubble

many

the

the har¬
escapism

extravagance in budget mat¬

ters. It is hard

the budget

years

public

boom

should

would be devastating.
Thus are we reaping

conclude that

one can

pricked, the effect

decline.

Certainly
the

effective

most

fight such

final

indeed to forecast

outcome.

$75,000,000 World Bank Bonds Marketed
Three-Year 3% bonds

are priced at 995/s%, yielding about
3.13%. Morgan Stanley & Co. and The First Boston Corpora¬

tion head
A

'new

underwriting

issue

group

of investment firms and banks.

$75,000,000 nancial

institutions

derwriting

which

$5,000,000

un¬

principal

struction

the

1956.
bonds
dicate

maturity

Five

date

million

Oct.

dollars

being taken by

are

The

financial

bonds

inter-?

est,

not

the

but

because of: its

syn¬

institutions

only because of» its isize^
significance, in/

relation to

the "increasingly

have

the

of the

shortest

seven

issues
coun¬

inter-;

any

•

third
to

issue

World

Bank

bonds'

brought out in the United '*
States on a, negotiated underwrit¬
ing basis. Previous; financing un¬
der

are

The present 3%

non-callable

prior

interest and will not be subject to
a

sinking fund.

over $2 billion at current levels of
1938-Tvpe Decline.

such arrangements./consisted
$50,000,000 in v 23-yearr:33/a% «
bonds in May of 1952, and $60,000,000 in 19-year 3 V2% bonds

October

both

Big Interest Abroad

Foreign

participation

will

substantial.

the

same

year,

issues

having been success¬
fully sold through underwriting
groups headed by the same firms
be managing
the
current
offering.

Total funded debt of the Bank,
been received, giving effect to issuance of the
originating in 12 foreign countries new bonds, will consist of
$643,whose governments are members
008,673 expressed in U. S. cur¬
of the Bank, to purchase an aggre¬
rency.
gate of approximately $21,000,000
Institutional Demand
of bonds for special funds. An ad¬

have

Requests

ditional

tto^tapeLonarfncome tax^of ^an^i31954 54, Assumes continuati<>n of Excess
VOfficial estimate

such

might

prolong and intensify any

bubble. A hard money policy may

21.0%

109

$285.0

Taxes)

fiscal

cline in business, since they
tend to

tions

1937

m.6

Corporate ProfRs Taxes (Federal)
Corporate Profits (After Federal Profits
Taxes)__
Government Receipts (For fiscal
year following)
Govt.

Decline

Tax)__ $269.7

(Federal)

(Before

1949-Type

219

expenditures. It

especially
difficult
to
make such changes during a de¬

April 1, 1956, are callable on and
after that date, at par and accrued

•

1953

1952

lower

and
be

bubble

bonds

Estim.

require

boom"

maturity of

Estim.

Personal

eventually

offering in 1947.

Corporate Profits and the

Estim.

•,

depressions) 'may
both higher

ones

taxes

depressions (in¬
big deficits in booms and

stead of

will

expenditures

surpluses in booms
in

try by the Bank since the initial

(Dollar figures in billions)

•

deficits

cussion about "the

recession

SUMMARY TABLE

1949-Type

and

it is

previously marketed in this

Effects of

have

that

bigger

national sales

national character. of the
In any
market!/
Holland. Proceeds of the financ¬ for dollar
securities; of the World!
event, it would seem that they
ing will be used in the general Bank.
would be likely to inaugurate an
,T-.V''/.. I \
Tv
operations of the Bank.
easy money policy when and if
The
current v: offering
is il the;
to

with

gear

and

5.6

Tax

into

kind. To put revenues

some

Windfall

Excess

estima/ed,

1949-

$74.1

fiscal years after 6-30-55—
•Assumes

tax of

budget/deficits

magnitude

system

revenue

difficult indeed to guess^what will

5.3

Mills

of income such

event

the

be the attitude towartftax reduc¬

super-boom

event

the

will not be easy, politically, since
it will involve finding new sources

be small.

the

Govern¬

9.4

Deficit

Boss

it finds

$74.6

Budget Deficit

Reform

ac¬

1938

large public works program, so
the net expenditure. Recline

would

nearly twice that

amount

type recession

(In billions)

Estimated Economies

is
a

amount of the issue.
In London,
and Development, gen¬ Morgan Grenfell & Co. Limited
erally better known as the World is acting on behalf of five banking
if this happens, what will be the
Bank, was marketed on Sept. 29 houses in London who are tak¬
effect
on
the
public's
buying by
a
nationwide
underwriting ing $3,500,000 principal amount5
habits and on its attitude toward
group of 147 investment firms and for
placement
with
purchasers*
savings, past, present, or future? banks, jointly headed by Morgan who are
eligible to buy them with
The question also arises whether Stanley & Co. and The First Bos¬ dollar funds. In
addition, Sweden
deficits of the amounts mentioned ton Corporation.
The bonds are and Belgium will each take $1,will not, in
themselves, act as being offered in the U. S. at a 000,000.
/ .oi
brakes on any decline in business. price of 99%% and accrued inter¬
The extent of the foreign partic¬
With such deficits to be financed, est to yield approximately 3.13%
ipation in the/ loan is of

Summary of Adjustments to Budget

Actual

business.

States

under

one

amount

June 30

three-year 3% dollar bonds of the
type decline, and one over three International Bank for Recon¬

TABLE IV

—

budget

billion

conditions,

Fiscal Years

decline

the

economy

decline

the

$9.5

one

States
of

public will be when

that

represents

the

symptoms

that

One wonders what the attitude of

earlier

The

periods. It is appropriate to note,
reality, more
significant than the budget deficit, however, that the 1938 decline in
cash

that

the

quiring

much cushioned by the elim¬
Under these conditions a decline
ination of the Excess Profits Tax ing members of the British Com¬
in armament and foreign aid ex¬
and by loss carry-backs. Incident¬ monwealth, the percentage of the
penditures could be expected in
ally, it is obvious that should the budget raised from income taxes
the year ended June 30, 1955. If
Excess Profits Tax not be ended (personal and corporate) is near¬
a
decline with unemployment of
on
December 31, the decline in er 50% than the 80% in the United
eight million or more were de¬
pre-tax earnings in the event of States. Because of this dependence
income
either type decline would elimi¬ on
taxes, revenues are veloping, it seems logical to ex¬
nate most of the receipts, so that especially difficult to predict. This pect that any cut in defense and
the effect would be the same. In is illustrated by the fact that the foreign aid would be replaced by
very

receipts. Whereas, in 1949 profits and the Eisenhower Administra¬
higher in¬
declined
more
than tion, two or three months later,terest charges, and probably new after taxes
those before taxes, in our 1949- again was
too optimistic about
public works programs or special
them.
aid to the states for such purposes. type projection the same pre-tax
decline results in a considerably
A
decline
in business and in
It will be noted that in the fiscal
smaller decrease in earnings, after
profits finds the government a
^ears
1953 and 1954 there is a
taxes, than in the comparable ear- deeply involved partner, so that
•considerable
difference
between
4Jie budget deficit and cash deficit. lie^ period. This also is, to a lesser its tax receipts fade very rapidly.
extent, the case in the 1938-type Thus it is that a relatively small
Tbis difference tends to narrow
decline of corporate profits. Here decline in business of the 1949and then disappear under our as¬
a 47%
pre-tax percentage decline type, results in an estimated bud¬
sumed
declines, since revenues in
pre-tax profits results in a de¬ get deficit of nearly $18 billion,
ifirom Federal payroll taxes will
cline, after taxes, of only 42% in while the 1938-type decline re¬
■decrease and unemployment com¬
our estimate,
as against 51% de¬ sults in such a
large shrinkage in
pensation payments increase with cline in the 1938
period.
revenues that the estimated defi¬
unemployment.
We
estimate
5
Good reasons can be given for cit becomes nearly $30 billion.
million
unemployed in a 1949These estimated budget deficits
lype decline and 8.5 million in the expecting the decline in corporate
1938-type decline, compared with profits before taxes to be either are disturbing as an indication of
greater or less than the decreases what
a nominal 1.5 million at the
may
be in store for the
pres¬
«&abilization

be drawn from affair the government is likely to
this study is the vulnerability of take other
steps to halt the de¬
the receipts side of the Federal cline. For
instance, if it should
budget to a business decline. In take the economy two years to
the last twelve years the United
reach a 1938 stage, one might as¬
States has built up a revenue sys¬
sume that the expenditures in the
tem which depends to the extent
budget in the year ended June 30,
of nearly 80% of total receipts on
1956, would be increased by pub¬
corporate and individual income lic works
expenditures. If a peace
taxes. No government in the world,
in Korea should be followed up by
to our knowledge, raises such a
a consistent Russian
policy aimed
large
proportion of its budget
to relieve world tensions, a real
from income taxes (personal
change in the international cli¬
and
corporate)
as
the
United
mate might occur in the next year.
States. In most countries, includ¬

the Administration to cut defense

further

ing conclusion to

and then to
is certainly

year

likely that in the early the United States economy. If the
decline the govern¬ long-term integrity of the dollar
ment's efforts to reverse the trend is to be maintained, the present
may perhaps be limited to mone¬ top-heavy dependence for revenue
tary policy. But when there are on income taxes must be adjusted.
seems

stages

evidences

and most outstand¬

The second

IV, the increase from
billion for the 1954 fiscal

to $16 billion,
nearly $30
billion,
startling.

two-thirds of the

over

Table

-apparently justify further econo¬
in these major items, which

mies

twelve

about

just

place

months.

shown

which must be financed. As

thus

international situation would

the low

took

Thursday, October 1, 1953

$20,000,000 bonds will be

distributed

publicly

privately

in four other European countries,
as
follows:
In
Switzerland, the

Swiss

Bank

the

conference

press

offices

held

Morgan Stanley &

Co. in New York City on Sept. 28,

Hall

Perry
that

Corporation,

that

addition

firm
the

stated

demand

Basle, from
abroad, extensive absorption
and the Credit Suisse, Zurich, are
of the issue by savings banks, pen¬
taking just under $10,000,000 for
sion and trust funds, is indicated
that market. In Holland, the Nehere.
derlandsche Handel-Maatschappij,
Commenting on subsequent is¬
N. V.
(Netherlands Trading So¬
sues, Eugene Black, President of
ciety) Amsterdam, is heading a the Bank, said: "We won't need

syndicate pf other banks ajid. f i-

money for. some

months, but

Volume 178

Number 5260... The Commercial and Financial Chronicle

(1253)
extraordinary
might

strength

market
of

elicit

taking

our

care

Union

the

Harris

needs."

ings

others:

among

America

National Trust &

Association.

Bankers

Blyth
The
New

Co.,

Chase

Inc.

National

Bank

Read

Drexel

City

Trust

National

Bank

Chicago.

First

National

Bank

the

Republic

Dodge

Guaranty Trust Company of New York.

Harriman

Aubrey

v..

Ripley & Co.,
Kidder, Peabody & Co.

Incorporated.

Lee

Co.

Manufacturers

Trust

Merrill Lynch,
P.

Morgan & Co. Incorporated.
City Bank of New York.
&

Moseley
Moulton

Wm.

Hutzler.

Shields

Smith,

Company.

Barney

Stone

& Co.

Webster

Corporation.

Witter

Wood,

the

vailed

Business

today

excellent.

Co.,
&

Curtis.

six

Co.

forecasting

pre¬

business

services,

advertising

I think an
would
under¬

man

what

stand

that

mean

suggest

that many firms might be just as
effective and much more happy if

they didn't have to look at wnat
Hooper
them

Period of
The

show

themselves.
Boom

the

phenome¬
cycles is worth

business

emphasizing because it enables
back

look

and

away

world

take

present

our

another

economic

without

being handcuffed
set pattern which we might

this

way:

The

Co.
Co.

let

it go at

that, and take

look at the longer future. This is

all

into

get

Looking ahead,

peak.

new

wave

births,

homcs, and pretty soon
cling rings, autos and
homes again.
least
ment

defense

favorite

rate-i^a-trpansion
(4)

(

ex-

surpluses

materials.

the

tall

under

ment

the
it

but

heading of invest-

does

into channels which do

not result

in the immediate outflow of goods
available
for
current
sale
to

domestic

the

represent,

other investment outlays, a diversion
of
our
present production

list,

other

but

should

perhaps

the

only

to which your attention

one

called

for

present

our

purpose is the fear that

psychology of retrenchment will replace
the psychology of boom that has

too

low

ready to

position

(1)

through

gone

Some

unprecedented period of boom in

the

years

past 12

The great ini¬

years.

tiating force

was,

mobilization

for

the
War
II,

course,

World

the

boom

our

factors
the

over

the

that

none

past dozen

wants

and again the remobilization after

future

mid-1950.

negative considerations I have
mentioned; the other relates, not

gave

longer present. With
respect to other factors, I am sure
are

rely in

the

engaged
ments

fact,

the

we have been
greatest arma¬

in the world's history.

race

(2) The second force which has
stimulated the present boom was
the

tremendous

advance

nology in various fields.
large

portion

equipment is
have

had

since

new

very

1940.

and

races

the

The

problem

for

going to be to find
we

the

future

ways

in which

bring the great economic

can

fields

economic
meant

prevent
clines.

All

large capital

this

invest¬

ment.

(3)

third

factor

behind

investment surge was
lation of deficiencies
over

from the

ages,

both

accumu¬

which

sumer

held

These short¬

producer and
goods, were made

acute

1930s.

the,

the

our

the enforced

con¬

the

balance

factors

possible for us to dispose of the
question of the immediate busioutlook

deferment

buying during the war period.
(4) A fourth factor has been the
of population. Beginning
million births in 1940, the

upsurge
at

2Vz

birth

rate

reached

the

armed

demobilization

the

forces.

rate

rate has held at near-record levels

since

1947. In

fact, the number of

births

recorded

ceeded

all

last

year

ex¬

previous records,

ap¬

proaching 3,900,000, and only the
accumulation
the
base

new

words, and

unquestionably in the
"flattening-out" area at the top of
are

boom.

Assuming

great new

other

unforeseen

clysm, it

seems

clear that

catching

ages and

war

with

catawe

are

babies

over

preceding 10 years made the
so
high that the ratio of

births to,population did not jeach

will have to pay more attention to
our

company's business, and

own

our

own

industry problems than

great swing in general busiconditions.

ness

and

1954

collapse

the

will

1953

summary,
year,

at least the

won't

see

overall

good

early part
widespread

employment

You'll

y/ill

first

category,

(1)

The

therefore,

continuing

assistance

grams.

creation.

that

(7)

want

pro¬

Advertising &

tool

Some

demand

people think it :i»

thing. But I'm satisfied

would

get

and<

hungry

that

around

would

you

Credit availability through
to

were

The

size

very

gov¬

can

the major elements in the Ameri¬

of the

budget as a factor in the
economy which is probably more
stable than private expenditures.
Price

supports

confident

that

contracts

will

are

should
we

some
cause

dealing

are

ferent phenomenon
of

but

things

with

pro¬

stick¬

which

push

weaker

are

not escapable
and

sound

our

gone

has-

dependence upon

rising

have

prices

the

for

well-being. Wages:

nearly

somewhere

commensurate with increase pro¬

those

ductivity, while prices have been
unchanged across the board

readjust¬
would not

consequence

main¬

can

accomplishments

end

continually

forces

than

toward

remain

solid

been

whole, is

expansive

are

stimulus to

the

con¬

busi¬

readjustment

quite impressive.
Even

growing

conditions that

our

short-term

decline and the list, as a

healthy but we ought to be wise
enough to accomplish them with¬
out plunging ourselves into major
and widespread liquidation. Dur¬
ing the past year or two one of

in the longer

produce
to

continue to

students

dif¬

than the kind

resistance

see

1932. The last two

they

among

tain

recognize

cyclical contraction which

duced 1921 and

and

continuing increase in our
standard of living. Certain kinds

the

will

ness

resist

sharp declines.
These

of life-

ways

markets

in this field.

think

fidence

(10) Legal minimum wages, and

foreign

that

its job

farm

for

economy which differentiates

it from many
It can create

products.

labor

chair

whether them

advertising or not. De¬
creation, however, is one of

mand

ernment

(9)

sitting

the

any

meet

emergency conditions.

(8)

padded seat in

you were

government- agencies

about

This means a substantial increase
through
a
liquidation. At in real income, in the standard of
the minimum,
this should be a living and in the market for the
source of great comfort, but I am
goods we can produce. It's our job
carry

our

economy

process

acute

sure

that

very

life is devoted to doing bet¬

ter

this

audience

than

year

Continued

from

whose

last, and

capture

still

that

satisfied

potential

that

and

the

have

equipment to do it.

page

implied

generation

effects

consequences.

tremendous

(2)

for

youth

investment

and

de-

demand

new

will

undoubtedly

have
on

put

basis

competition.

advertising
the

produce, rather than

sales
.on

the

Fiscal

availability
to support
This
I

and

makes

purchasing power
nation,

three

major items,

you

fourth,

will say ft

force of competition which is going to lead every one of us to try
to inaugurate improvements, to
better

ways

needs, to locate
of

our

grow.

great

new

is
a

markets; in
assets.

one

I'm

it will continue to be.
more

one

from which

many

things

which

should draw

con¬

other

productivity of the great machine is not automatic but is,

dependent

the

upon

purchase

its

product."

What to Do?
a

few

tion of spending to keep

version

reach

and

his

purchases

to the level of purchasing

all-important goal

purchasing

specific suggestions toward the activa¬

power

"realizing the

into purchases at

con¬

rate equivalent

production."
He cites the

importance of the stimuli of advertising, far be¬
of the national income, and

yond its present 2%

of installment

selling to stimulate the public's desire for ever-higher standards
of

living, and to make that desire effective he suggests

index

of consumptionHike

production.

He wants to enlarge the Council of Economic Advisers

to devote its efforts to

have

nessmen

overall

the Federal Reserve Board's series

analysis of consumption. He wants all busi¬

easy

full

access

current' information

statistical

facilities

supplying

covering the status of production,

Above
ment

all

take

—

whereas

the

intelligence to take
But

recourse

irrelevant

con¬

can

feel

will temper the changes

that lie ahead, and includes many

that

advocated

Mr.

Mazur

the

govern¬

would

rely

the consumption slack.

information

individual's

contradicted

and

intelligence

seems

fixing of policies pursuant

Furthermore reliance

incentives.
behavior

the

Keynes

investment slack,

the forecasting of

to his

consumers'
As

the

author himself points out in another

connection,o price cutting

may-

lead

either

buying

versely, rising prices
to

psychological

curtailment

are

elements.

stimulation;

and

con¬

likely to stimulate (scare) buying as

discourage it.
Avoidance of the Dirty Word
Mr.

Mazur

seems

anti-stagnation expansion
and

with

leading

toward

Keyserling-isb.

(in lieu of that dirty word inflation)r

enlargement of governmental controls, if not manage¬

Moreover, he

inflation;

may

even as

be advocating
may

along

over-obsolescence

be over-emphasizing the

power

independent decision by the individual in his venture spending.

good deal of comfort. It includes

very sure

matter

leitmotiv "[We] have paid too little attention to the fact

ment.

defensive list of items
we

cannot

the key

satisfying

This has been

national

assumed

assumption

that the

poli-

is intangible, but I am sure you
will agree that it is just as significant as the others. This item is the

word, to

dangerous

sumption and inventories.

monetary

like to add

would

•..

been

pace

known

a prosperous

suppose many

find

has

goods

assumption has made us so unwary of
economic
pitfalls
and
so
blind to
the
sociological
impera¬
tives of the American mass production
system."—along with,

cies which the government has
committed itself to employ, in
order
to
maintain
reasonable

sure

ceived.

rec¬

outlay

keep

with technology already
but not yet applied. v

and

course,

requires

tion, schools, public utilities, etc.,

and

Continued

(3)

production's

mass

power,

investment

and

Observations
of

rate increase with all of

the
ord

The

intensification

across

Veterans'

Mr. Mazur makes

incVudes* suchTartoT/asTlww-

mand.

There

important

insurance.

from having severe de¬

mcluaes sucn lactors as mese-

past short-

our

substantial part of our
abnormal defense needs.

1947

To .be
sure,
the
reflected, in part, the
coming of age of the generation
born during the prosperous 1920s.
But surprisingly enough, the birth

birth

few

What happens from here on? In
extremely
the short run, I feel confident we

high level of 3.8 million in
with

then get back to the main ring of
the circus.

fall.

economic structure.

loans.

will

biggest problem, it should

some

hope

huge
demands
comprising both
deferred needs, such as highways,
public works, urban decentraliza-

reasonable

ness

The

that

have

into

activity.

very

cushions

^ sweePs through the stages
°* growth and education.

machine

develop¬
synthetics, of just mentioned recede in impor¬
tance.
communication, of marketing, and
Having stated what I believe to
of
many
other aspects of our

ments

expecting an inanything, but rather to

in.

the birth

ahead.

when

tremendous

armament

upon

give-away
programs.
Therefore, we are faced with the
question of what new kinds of adjustment
or
maladjustment
lie

tech¬

productive

our

(6)

for

reasons

crease

foreign

for optimism that offset

reasons

Adiustments Ahead
Adjustments Ahead

be for the future.

may

We have

ease

consumers.

assume

what the implications of our pres¬

characterized the past decade,

ent

prescribed

provides

•

ment, the

fifth factor in 'the bbom

been

both

private plans.

should
of

(5) Credit restraints, either by
extremely liberaF^lenders or by the government,
eign aid programs of our govThere are, of course, many more
ernment.
Perhaps this does not items that could be included in

has

credits

personal

year,

I have spoken a good deal about
the importance of demand in our

noontime

and

iness

programs.
raw

and

Unemployment

ex-

as-

which

eral

run

Reappearance

various

Amortized

innerspring mattress

of them:

some

items may backfire

Reduction

off of foreign
wed- sistance programs.
little—^.(3) Catching up on plant

rate.

(5)

(1)

thd^ntfest-

weakness.

the

penditures.
larger
(2) Falling

The birth

first cousin

and
of

some

for

need

elements

we see

strength

are

better

runway and a takeoff point rather
than an

depres¬

severe

the whole

that

sources of worry:

this

bicycles,

schools,

Here

can

both

unavail¬

(5) Benefits to the aged and
surviving dependents, both Fed¬

the

Longer Outlook

are

estate

(4)

area.

Before drawing conclusions
These
elements
which from the specific sources of conmajor
will fol¬
have generated our unprecedented
cern
that
I
groove.
Let's
have
mentioned, it
shed the idea that the ups and boom all add up to a tremendous seems well to
present similar high
downs of business are merely an force which kept the demand for spots
on
the
constructive
side,
automatic sequence and
try to goods ahead of our capacity to These fall into two categories, one
examine where we are today and supply.
of which includes the affirmative

(3)

months

level

foi

Unprecedented

newness

non

Nielsen would

and

about

diapers,

referring

about

Let's

Struthers &

with would

last

our

Here

real

are
likely
moderately
downward for the major indexes.

Inc.

Co.

Flattening Out

1920.

Without

authorities

either

were

insignificant in 1929, when

(1) Insured bank deposits.
(2) Insured mortgages.

that

grope around

darkness

the

and

"guessing"

The Boom
us

recita¬

sion.

the

whole

The

relative

can

can pay

sum

Company.

Continued from page 12

confuse

need

you

monthly indexes
Survey of Cur¬
Business. They look good on

where

the

it, they

probably

If
and

try to keep in touch

Rothschild &

Dean

Securities

sell

Co.

Pollock

high.

Company.

Pressprich

all

rent

& Co., Inc.
Corporation.

Trust

think

buying

published in the

Lanston

record

something

don't

tion

Paine, Webber, Jackson
Phelps, Fenn & Co.

National

Bros.

Co.

Langley & Co.

Pierce, Fenner <fc Beane.

Higginson

Company.

Weeks.

Mercantile
-

Corporation.

Noyes &

consumer

make people want
for it.

Co.

Hutton

Brothers.

have

and

power

Co.

low,

that

entered

peace¬

Dominick.

Hornblower
W.

(Incorpo¬

Incorporated.

Securities

Hemphill,

Forgan & Co.
Goldman, Sachs & Co.

The

Hallgarten

Glore,

Salomon

Company

Merle-Smith.

Estabrook

City

York.

Freres

But at the same time others will
fare very well. The latest
figures
show unemployment at a

Incorporated.

Sons.

Equitable

Co.

First

able

business.

Incorporated.

Co.
Co.

Dominick

The

Lehman

Company

&
&

Childs and Co.,

Dick

Company.

Inc.

Co.

The

Lazard

may be replaced by rude
awakening and hard grubbing for
years

time

C. F.

Clark,
Bank

Dillon,

Co.

rated).

York.

Chemical

New

Brown

Central

Company.

and

Becker

Alex.

Trust

Allyn

Stearns

Marjy of the enviable wind¬
situations of the past several

fall

Trust Company.
Philadelphia National Bank.

items

taxes.

Company.
and Savings Bank.

Trust

Bear,

Sav¬

basis of how little it will cost after

Co.

Northern

The
A.

includes,

Bank

Corporation.

Trust

Ladenburg, Thahnann
The

The United States underwriting

group

Weld

American

future

our

Securities

White,

acceleration

However,
service

in this, his latest book, he

succinctly

making

temporay discussion agenda.

rendering

important addition to

useful

our

con-

The Commercial and Financial Chronicle... Thursday,

(1254)

las

SAN

The

Financial

Chronicle)

dore R. Bullock is now with C.

Devine & Co., Russ

Dallas

Commerce

and

Chief

and

Executive

Officer

the

stocks

q.j

xracerlab

STOCK SERIES

week

NATIONAL SECURITIES &

RESEARCH CORPORATION
Established 1930
120 Broadway

board

^iave

formed

was

all

areas

represented

Inc.,

the investment portfolios
tended to offset their speculative
effect.
foreign
exchange
twentieth century

problems

type,

Although the restrictions
during

one

—

tinued

growth

Mr.

Sharp said.

the

Fund

tact

with

National

Distributors

j0jned

the

aim

direct

Inc.,

.li-

Fisher Ames of Ames,

Bynum

a n

board

new

are

Daugherty,
Oklahoma

Black,

*f||H

the

throughout

Members of the

sale

l^rmerf V, ?fn
of Dallas,
known

mfe
Utilities

WjMMM, '< wau

P?k>TV-

>•

JgAtvm Bullock
'

-_J-'' JNEWYOUK
GENTLEMEN: At
me a

obligation please send

prospectus on

Canadian fund.

dar

board,

RuPe

Cornell is

•• •

■

and'Son-

member of the

The

will

group

Houston

meet

advise

CTnri.

.ono

the

management in regard to
investments in the area's indus¬
tries.
The

invests

which

extends

Arizona to
Arkansas
as

area

York, has b e e n elected
aspjG^. 0 *utaies, Inc., the
f
';unA''
'

Stock is also Secretary and Treas-

of Lazard Freres and head of the
investment advisory department
of the National City Company.

Mr;

Texas

roughly

Fund

from

Louisiana, and includes
Colorado, as well

and

The Fund, xivxw in no iiJLuii ycai
u„u,
now in its fifth year
x.

has

shown

phe-

Although

adopted only a' part of
which
I
described

pattern
earlier.
For

the

were' typically

made

the

conservative

„

approach of the

■

nv.ontl.nc

the

suffered.

well

realize

their

that

this

60%

account

below

ac¬

trusts

disastrous

ex,

of 1929, several efforts
w.er,e made to develop. different
kinds of trusts which would do a

that

see

asset value.

the

better job.

can

the

Great

Like any new

in-

Britain

basic

development,

Thus, the real devel-

opment of the fixeci trust occurred
after 1929.

This reflected the dis-

management, ;and

trust

fixed

trust was

had its problems, and not

one

effect, of

portfolio,

Penence

that

comingled

developed to satisfy

need.
is

often

vestment
were,

Common stock¬

"chain''

value

Following

week.

+h«

severely dur¬

very

investments

with

Sk rthfunM

leverage with market values often

funds

THUS,

almost

^vestment . trusts,inrine unitea
States suffered

centuated

the

made

British had no appeal for speculatively-minded Americans in the
twenties. Therefore, although they

ment for the selection and super-

were

twenties

entirely of common stocks.
The
reason for this, of course, was that

reduced

President, Commonwealth Investment Company

part,' the

had leverage-type capital structUres, but the investment porfolios

holders

By S. WALDO COLEMAN

vision

most
of the

trusts

1929-1932 ;period.
This
meant, of course, that their stock¬

Investment

Following is part one of n paper
which was read before the Society
of Mutual Fund Retailers in San
Francisco by Mr. Coleman upon
the recent occasion of the Society's
first mutual fund training course.
The second part will be given next

looked to

izing investment trusts in Amer-

ing

Company History

homa.

operation,

middle
,

holders had the

Texas, New Mexico and Okla¬

regularly
with

Fund's

the

idea

really

management.

the

based on
A

different forms of. investment an 0f ^be British and Scottish in- .specific list of securities was ap^orr\Panies' in<;iUi1-ri5 !?utua} vestment trusts succeeded. Out of proved in advance, and these were

ncfnJioti
diversification.
usroaian -fl UHQiS nomenal growth since its foundCi
-l ing-Assets have reached $11,600,- n.° new but has This principle
}?n s'.F...on sto°d the test
foundation
JL

the

Great Britain for ideas in organ-

investment

——:——

Vice-President, Strachan Shipping

with

"TIZLuI Co™mercial Resting
P
tv^Tv,
fvl0u.sJ,y' ^ waf

Dal-

A Guide

+r/Jv

development of the idea in this

formerly

until

y'J

;

'•

r.vrt

j3e_

was

„

DalIas

Company, Dallas; Ray O.
Shaffer, President and chairman'
of the board, Welex Jet
Services,
Inc., Fort Worth; Frank Strachan,

Address.

K, :ystOne

and

"fore that

twenties that there was any real

ica,
the

CHILD,

Service

Name.

^OVUS. STOCK, 120 Broadway,

companies

any, new

trusts were formed in the Uniled
States early in the twentieth cen-

country.

territory

associated
with the Dallas investment firm^

Public

Chairman of

PnmffiittPP

staff.

sim-

Southwestern

prpd

JOSIAH

for Television
Electronics,

Company, New Orleans; Jay Tay¬
lor, President, Baker & Taylor
Drilling Company, Amarillo.

CHy—

tries few, if

*
UUN PHY, Vice-Presiderd' was appointed Director-of
Researc"-

Th!^Co!S^r

the

v i

appointed

was

Finanpp

thp

formerly
covered

interactiongeologist

nnt'

dent

whole-

Dallas.

Company, Beaumont;
Herbert L. Nichols, chairman ol of

the

STMET

parkfr

■■EHzSH with head- Stone and Webster in New York,
H|K|quarters: in has been added to the research

li 0ar^'

public

amorV
\

Group

for

National

bodies

soon-

Southwest

consulting

rnwai^M
TvjpiLn

a s

Inc.,

represta-

^ve

City; John M. Bennett, Jr., chairman of the
board,'National Bank
DeGolyer

The

Association of Securities Dealers, have been formed lately.
Cn nH i ! THOUGH A FEW investment

Securities,

industries and economic

Southwest.

sor

company

Association- of

Companies,

ment

nauonai spon

con-

development

Group,
national

invest-

the

maintain

high personal taxes in those cou-

Com-

*** IT'blur

lait,er. sia0^ 'waJ

trusts

Invest-

Administrative

tionship of the

Scottish

and

with the

Chair-

mittee which supervises the rela-

sufficient

not

"It

con-

man

the

created

capital structure and the
very broad diversification of their
investment portfolios, remains the
same. However, on account of the

appointed

was

have

upon

in making foreign inthe basic pattern of

English

the

largest companies e n g a g e d in
in geophysical exploration for oil

invpst-

conventional

research

ment

and

rrmvpntinnal

boutnwest,

ONE

world's

(he

p^ent

the rapid

industrial

vestments,
__,

Chemical, and Seismograph ServCorp.

op-

erations.

added to holdinSs durlnS the Past

Polaroid,

ice

capital
leverage

Vice-President in charge of

American

General

Texas 1ua
;
'
Fund's
management, Dudley C.
PERSONAL PROGRESS
Sharp, President of the Fund, said. joHhf^B. CORNELL, Jr., h

Southwest

"Because of

New York 5, n. Y.

•

Banks,

Holcombe, New Yofk
representative for the

new

nrdprto
1

announced this

was

Morton

wholesale

The

dealer or

Banks

Prospectus from your

company

in Houston

MUTUAL INVESTMENT FUND:

Inc., mutual investwith headquarters

Fund,

ment

the

appointments:
;
JAMES E.GIBBONS, Vice-President, was appointed Exectuive

securities, including

sist

Texas

the

although

structures were

such

of eight lead-

ing Southwestern businessmen and
industrialists has been named by

NATIONAL

preference

common

after a meeting of the
Board" of Directors, the following

Incorporated Investors, announced

By ROBERT R. RICH
An advisory board

the

and

Therefore,

today

Building.

with

true

was

Club.

Bond

WILLIAM A. PARKER, President

Mutual Funds

Cal.—Theo¬

FRANCISCO,

Chamber

the

Joins C. J. Devine
(Special

October 1, 1953

is
of their early experience, however, the only ones that could be owned
of
these trusts developed

basic pat-

by the trust;

Once the selection

9,000 shareholders in 40 states and

?ime

various foreign countries.
Texas Fund
is
unique

u
some centuries by
insurance companies in their un-

tern which, in turn, had a bearing: of
securities was made, there
upon the investment trusts which
could be no substitution, regardwere later formed in the United
less of changes in economic con-

dejwnting.

States.

OOO,

BOND, PREFERRED AND
COMMON STOCK FUNDS

and

there

are

mutual

investment

that

limits

now

around

among

companies

investments

its

stocks
The Keystone
50 Congress

Company

Street, Boston 9, Mass.

of companies
operating
principally in the Southwest, and

offers

investors

everywhere

Please send
your

me
prospectuses describing
Organization and the shares of your

Funds.

ten

Sly" "growin^fndustries' a''ea'S

UNUSUAL CONCENTRATION of
investments in growth industries

Name...

Address.

City

rap

U-75

is
..

.....

State.

reported in the quarterly mes-

sage

recently

holders
Stock

mailed

Diversified

Fund.

share-

Growth

Approximately two-

thirds of the Fund's assets are in
the electronic, chemical and

drug

and oil and gas industries.

:*•—

issues,
.sparrh

many

xxxv-xuLic

reflecting
fnr

Equally

"unlisted"

management's

generally agreed that the

« is

I might mention

"Inetee"^ century''the. 1880^
trusts
Um"
SMXSK SMSnTSthSSLh*^
land.
They
organized pri- ISp
J^tnrf'rff
f^nd«
were

made in foreign

Britain
and it

was an

countries.

ioaay.
TTTF

exporter of capital,

thp

Cpnt+ich

faced with the problem

was

oPrihpH

of making foreign investments on
a sound basis. Through an invest-

prnnhasis

inpnmp

rp<=pr,7PC;

whiPh

wnxni

the'bMfen tSot'^ situations of£ t]?eir investments abroad. It was
Ahont
,u-'
?
P°SSI')ie
them as a group
About one-third of assets
to
employ professional manage-

a!rn;nct

wprp

Luiibiutueu

Sometimes,

even

hp
ue

con-

por

set

£or

aside

this

purpose.

very
Vti-Y

few

,eVCT"
open-

was

Continued

was

on vaae

Sec-

NVESTORS

they followed

ondly,

from

owned

A Mutual

Fund

Investment Fund
'

may

Stock Investment Fund

be obtained

from

investment

The

Parker

dealers

U-

upon request-

Corporation

1925*

They
1,500

ican

Thirdly, they had

company.

their

than

dlass of

one

capital

security in
Usually,

PUTNAM

structure.

ence

investment
to

outstanding in
common

New York

—

Chicago

—

Atlanta

—

Los Angeles

the

bonds

its

the
or

in
turn,
with the
In other words,

trust

same

would

own

proportion

debentures

capital

The

portfolio,

investment

about

FUND

addi¬

shares.

oJ -ffjoitotl

correspond

capital structure.

Lord, Abbett & Co.

.Oeorrje

■

than any present-day Amer¬

tended

Berkeley St., Boston, Mass,
FOUNDED

■

individual securities—a good deal

tion to their

Prospectus
200

500 to_l,000

they had debentures and prefer¬
A Common

Prospectus

policy

broad diversification.

very

Affiliated

structure.

it had

The

of
in

same

end comPanies were formed durtiueintioe
it
nnt until
ing the twenties, it was not until

inin

j,on o7 jbe investment income

a
a

agc'

lnssps

f,,tnrp

mnsidprpd

vyeLt;

evitable.

Pains

^ere set'aside other Although
there
age.

but

wprp

nrimarilv

was

Ganital

distributed,

large number of investors to combine their funds
and diversify

First

end companies. Their distinguishHping feature, of course, was the
all" redeemability of their shares and
on
the facl that .theY had 01?ly one
not
class 0^>fiecurity outstanding. In

Fntriich

mav

this

est in the management-type, open-

pattfrn

Sos'e^end'tust,[

i,tnn 1

knnwtndnv

Great

THE EARLY thirties after

fixed trusts' and semi"fixed trusts,
muiudl lunas there devei0ped a growing inter-

thp

marily to provide a sound means
by which investments could be

ditions, or developments relating
to the individual companies. The

COmpS n™ that 1 am intentionally referring popularity of this type of trust
Jornjed in Belgium in 1622 pc- tQ these companies as investment was short-lived, mainly because it
tually> veiy little is known ot the trusts not as investment com-"soon became evident that its insubsequent development of the panies or as mutuai funds. The Hexibihty was a great handicap

crrnxxrLh

r.no

parenthetically

Putnam Fund Distributors. Inc.
50 Sute

Street, Boston

Volume 178

Number 5260

...

The Commercial and Financial Chronicle

(1255)

With Interstate Sees. Corp.
(Special

The

Financial

Jr.

Park H.

—

should the excess profits revenue
disappear and individual income tax collections fall sub¬

Commer¬

stantially.

We See

Interstate

Corporation,

Securities

with

now

would be still greater

Continued from first page

Chronicle)

CHARLOTTE, N. C.
Dalton

Evidently,

Building.

tional taxes. Such

course

must

revenue

found to take the

down

dreamers

ment

compared

of that

since that time

THE FULLY

other

some

ployment act emerged. Although there was much debate
at the time, and the law as
finally passed was somewhat
watered

cial Bank

with

day wanted,

seems

what

many

to assert

some

the

public statement

that the Federal Govern¬

accepts responsibility for the general state of busi¬

place of these taxes. There is, it hardly
need be added, opposition to the levy of
any sort of addi¬
of fear of

reason

talking of

are

These

ness.

opposition is gaining strength daily by
depression. There are those already who

large deficit next

forces

same

are

busi-.

year as a prop to

acting to prevent

at the

developments which would result in extensive unemploy¬

very least to reduce the extent of any freeing of our for¬
eign trade. The list might be extended still further without
difficulty. We must hot permit fear of depression to lead us

ment.

into action which would further undermine

ness

ADMINISTERED
FUND

and' in effect

may

deem

pledges itself to take such steps as it
and sufficient to prevent untoward

necessary

our

economy.

of Depression

Fear

In any event,

lar

A Balanced fund

prospectus

from your investment

Distributors
63 Well

statute,

prising publicity organization of the Democratic Party and
to the sad
experiences following the collapse of 1929. The
Democratic fParty long suffered from some such
designa¬

Group, Incorporated

Street, New York 5, N. Y.

tion, and itjwell knows its
.

V
;

Practical politicians

and out of

•

Program

We have available

new

booklet for employers describing a carefully worked
out, pre-packaged, bal-,.

anced retirement program,

business

even

profit by the
advantages of a quali¬
fied retirement plan.
can

heart

the

Rightly

your free copy, mail this
advertisement with your personal

be certain

in what

any

part

of its members

are

of the Federal Reserve

authorities.

out for themselves would result in

business card.

pression. There is

Kidder, Peabody & Co.

those

reason

serious business de¬

to believe that at least

some

who

help shape Federal Reserve policy were not
convinced of anything of the sort. It may not be too wide
of the mark to guess that there were those who believed
that the real, perhaps the only, road to ultimate sound¬
ness in the business structure
lay along the route of what
may be regarded
as reasonable caution
in expanding
money supply.

Founded 1865

Exchange

Uptown Office 10E.45thSt.,N.Y. 17
MUrray Hill 2-7WO

not, is not without

wrongly, these officials were told by many,
some of them
quite influential, last spring that a continua¬
tion of the "independent" course
they had apparently laid

For

Members New York Stock

than half convinced of
many

degree the Ad¬
responsible, if at
all, but one can scarcely doubt that considerations of
basically this kind were and arfe behind the change of

tax

difficult

ministration

small

are more

of the
sophistries of the Roosevelt and the Truman years—or else
are of the
opinion that failure on their part to follow New
Deal and Fair Deal
prescriptions would be more than
ordinarily hazardous, politically speaking.
It is

combining dollar annuities
securities. It

with equity
shows how

grows a very serious danger.
steps may be taken which not only fail

Party, whether it likes to admit it
members who

chasing Agents finds situation tesembles that of 1948, "when
stage for recession was set, but holds there is now a better
inventory position.
A composite opinion of
purchas¬

Money Market Retreat

Treasury needed large sums which it
had to borrow somewhere, and when signs seemed to be
growing that a tight money market situation was in the
making, very large open market operations were under¬
taken, and on top of that member banks' reserve requirements were reduced. There also appeared thinly veiled
promises of further easing up of the situation as indica¬
tions seemed to suggest it later in the year. All this has had
obvious effects in the investment and money markets.
Whether it has made any great difference in the general
rate of business activity appears open to much more ques¬
tion. All in all, it would seem that any notion formerly
entertained of getting the national debt into longer and
more
workable form has been forgotten, possibly aban¬
doned for
may

*STCAabout
F

get the

...

recession.

ness

siderations

Exchange Place, N. Y. 5, N. Y.
-*For Prospectus

convenient

season

which,

one

suspects,

arrive. Uneasiness about endlessly growing
supply and continually mounting volume of credit
to have yielded to a greater uneasiness about a busi¬

There is

FUND, INC.
20

never

money
seems

CAPITAL VENTURE

refornls.

great danger too that the

will

get

in the

way

set of con¬
badly needed

same

of other

One of them is in the field of taxation.

tional

lack

Association

C-2

•moment

there appears

to be

likelihood at all of

continuation of the Excess Profits Tax

Address.

any

further delay

reducing individual income taxes after the turn of the

year.

These changes

The fact
&

.State.

•:

aty
>

mmmmmmmmmmrn

mmm

wTTfrni'—'

spending

may

of themselves be constructive.

remains, however, that the government is still
more

Purchasing

availability

Chairman

Over-all,

Robert

Di¬

contribute

conservative

the

investment.

material

stocks

believed

are

balance

better

materials,
prices, all

confidence

view

chases,

W i

chester

and

to
im¬

proved turnover position.

than it is collecting in taxes. The deficit

Employment

Re¬

peating

layoffs than new
hirings, a most unusual condition
for September. The principal reasons:
production
curtailments,

Company,
New Haven,

Conn., reveals
no
significant
improvement
in

students

situation

high employment

was

reported

returning to school
The

the

and

not

bad,

78% report holding to previous

August,

when

report

strikes.

September

over

Arms

rolls.

Overtime

adding to

pay

fast

some

disappear¬
plants have cut

under 40 hours

to hold their peo¬

ing
Robert c. Swanton

and

fall and winter

ple. Productivity is improving, as

upswing might be

books

Order

conditions

and

pro¬

only inched up. The
to be almost

has

duction

slow starter.

lower

are

seem

parallel with those of September,

the

when

1948,

stage

time
all

when

layoffs

Several

occur.

of labor

types

short

and

report

areas

available

better

selectivity. Other
ing for skilled help.
Buying

inven¬

Unworked

exception:

one

usual

and

look¬

are

being

was

set for the 1949 recession. There

Policy

Future commitment range

shows
tories, which have been under¬ practically no change from the
go i n g
reducing treatment for previous cautious view of the
several months, are much lower markets. Seventy-five percent re¬
and better balanced than in Sep¬ port holding to "hand-to-mouth"
to 60 days in the bulk of their
tember, 1948.
Prices are softening, led by cop¬ purchases.
This
policy
is
sup¬
zinc,

and

lead

per,

month.

this

Employment is lower, with slight¬
ly

layoffs than additions re¬

ported by falling backlogs, price
instability, ready availability, and
tight inventory control.

which
is
a
very
rare
for September. Buying

ported,

condition

policy

predomin¬

short-range,

McConihe Partner in

antly 60 days and under.
The

pressure

survey

for

business,

the

reports is sharpening in
line. Foreign competition
noticeable.

Purchasing

Winslow, Douglas Co.
Winslow,
120

members

off

American

during the fourth quarter but

still

uation
for

not

caution

October

spurt

high level. The sit¬
alarming but calls

and

watching.

will have to show

for

business

industrial

Commodity Prices
industrial

The

purchased

ma¬

terials

price

tember

again shows weakness and
Price

instability.
more

the

for

Sep¬

increases

balanced

than

creases,

structure

out

are

that

partner of the
Mr.

Mass

City,

York

and

Exchanges, have
Malcolm

Mc¬

general

firm.

McConihe

Vice-President

McEvoy,

York

New

Stock

announced

New

the

Conihe, Jr. has become

real

equal the fourth quarter of 1952.

Douglas

Broadway,

agents expect business will taper

and

formerly

was

Treasurer

Market

Publications, Inc.,
publishers
of
"Better
Living"
magazine. Prior to that he was. as¬
sociated with the investment firms
of

Dillon, Read & Co., Inc., Winthrop, Mitchell & Co. and Harri& Keech.

man

de¬

nonferrous metals taking

heaviest

decline.

The

long-

expected drop in copper and brass

prices has occurred. Still pending
is
the
disposition of the large

Rejoins Reinholdt, Gardner
(Special

ST.
Shaw

The

Financial

Chronicle)

Mo.

LOUIS,

William L.

—

has

rejoined the staff of
Gardner, 400 Locust
The declining order backlog
condition of many fabricators has Street, members of the New York
and
Midwest
Stock
Exchanges.
intensified
competition.
Foreign
Mr. Shaw has recently been with
producers are stepping up selling
the Mercantile Trust Company.
activity in this country.
Chilean copper surplus.

Reinholdt

Inventories

Unworked

Name-

Agents Business Survey Commit¬
tee,
whose

At the

write your dealer

mail coupon.

of schedule. Lagging order

books,

Yet when the

Wait A Minute!

ahead

ing agents, who comprise the Na¬

most all

National Association of Pur¬

rector of Pur¬

much impressed by all this,

to lay a basis for sounder business conditions but which
will, like so many of those of the New Deal and the Fair
Deal, lay up more trouble for the future. The Republican

Retirement

Business Survey Committee of

Swanton,

power.

are

|heir uneasiness

..That hazard? is that

A Balanced!

Purchasing Agents Cite Softening Prices

any

few years was an extensive business setback. The
Repub¬
lican Partyjias,
rightly or wrongly, now been well labeled
as the
Party of economic depression, thanks to an enter¬

request

dealer

quite without reference to

any particu¬
particular statement by any politician
or
any candidate for office, it is well0known that the Party
now in
power fears a depression and unemployment as the
devil fears holy water. The late Senator Taft is known to
have said that his Party's
greatest danger during the next

Group Securities, inc.

took

material

another

dip

the third month in
more

than

30%

succession that
have

reported

lower stocks. Those having inven¬

tory increases comment it is due
to seasonal

pickup, production cut¬

backs, improved vendor deliveries,

strikes,

and

With Milwaukee Co.

inventories

(Special

September,

suppliers

shipping

to The

Financial

MILWAUKEE, Wis.
Bischoff
staff

207
bers

has

of the
East

change.

been

—

Jack L.

added

the

Milwaukee Company,

Michigan
the

Chronicle)

Street,

Midwest

mem¬

Stock

Ex¬

The Commercial and

(1256)

Financial Chronicle... Thursday, October 1, 1953

from first

liens,

page

ABA Holds 79th Annual Convention

urge

receipts

Continued

taken to demonstrate to the world

stock transfers, and trust
and would bring within
its scope many matters not now.
covered by legislation.
The Code was adopted this year

Des

Moines,

Homer J.

Iowa.

Livingston, President of the First
National
Bank
of
Chicago, was
elected

the

that

today,
solved

only

Railroad

Georgia

Company,

Bank

ments

each

Eisenhower Addresses Bankers

our

1954. It

and

reach

therefore
are

our

July

Con¬
Mas¬
Hampshire,

legislatures
of California,
necticut, Illinois*
Indiana,
but

enacted.

not

was

New

and

lead

cooperative effort

expand

in¬

addition,

an¬

Rhode

and

homa,

have

Island

Backgrounds of New Top
ABA

the

ternational trade for mutual bene¬
fits in

also introduced in the

was

determination

our

ranking officers of the American
Bankers Association

Performed

Services

EVERETT

Banks:

tial

follow:

services which

all

groups

including

munity,

the

com¬

Federal

Gov¬

The

overwhelming ma¬
bank loans represents

extended

home

owners,

Everett

essen¬

individuals,

producers, and the

credit

are

REESE

President

Banking consists of the perform¬
ance

Officials

sketches of the new

Thumbnail

prosperity and security.

with the legislatures of Connecticut, ernment.
each Massachusetts, New York, Okla¬
jority of

meet
with

that

other,

and

economy

political
life,
other,
consult

great

elected Treasurer.

was

legislature,

effective

become

they are going to be
as "we each, all seg¬ sachusetts,

and

the
Trust

President

and

doing

going.
These are
interest America

are

things

Vice-President, and Sher¬

Drawdy,

man

where

Pennsylvania

the

by
what

and

scene

that all practicable steps be

who

Reese,

was

elected President of the American

Bankers Association at the

closing

session of the Convention is Presi¬
dent

The

Newark,

Reese

National

Park

Mr.

from

the

advanced

was

Bank

Ohio.

Newark,

American, made provision for study of the
farmers,
consumers,
and
small Vice-Presidency of the Associa¬
vention was President Eisen¬ all American, not representative .Code
by interim committees business. It is the
responsibility tion.
of any particular class or group which
hower. The President, in address¬
Mr. Reese was born in Colum¬
willN make recommenda¬ of every banker to intensify his
tions concerning the desirability
ing the First General Session of alone, but for all of us.
efforts within his community to bus, Ohio. He was graduated from
the Convention on Sept. 22, ex¬
of enacting it within the next two
Ohio
State
"So, for all these reasons, so
University in
inform
the
1919,
public
continuously
pressed his appreciation for the haltingly expressed, I assure you years.
about the services which his bank after which he served as an in¬
The panel which discussed the
splendid work done by the na¬ that this
and
I
Administration
structor
in the
School of Com¬
performs.
tion's
bankers
in
"helping sell are delighted that you are here. Code and its effect on the banking
merce
at Ohio State University,
Savings Bond Program:
The
and distribute the Government's
business are Robert Brome, Resi¬
We consider it a great honor and
1919-20; Georgia School of Tech¬
members of the American Bank¬
savings bonds to all our people." a privilege to meet you, to extend dent Counsel, Bankers Trust Com¬
nology at Atlanta, 1920-21; and
ers
Association
have
continued
His Administration,
he said, "is greetings, and to exchange ideas. pany, New York City; Carl Funk,
(part-time) at Denison Univer¬
their efforts to encourage individ¬
not one that sits up in an ivory
Drinker,
Biddle
and
"Now, my every sincere and Partner,
sity, 1922-23.
uals
to
buy
and
hold
United
tower of lonely isolation and gives best, wishes
He joined the staff of The Park
again for a most en¬ Reath, and Counsel, Philadelphia
States Savings Bonds. The Asso¬
words of wisdom that all others
National Bank
in
1921
and be¬
joyable Convention, and hoping Clearing House Association, Phil¬
ciation renews its pledge of sup¬
must obey or be wrong." Rather,
that you will come back again." adelphia, Pa.; Walter D. Malcolm,,
came its President and a director
port to this program in the public
he said, "we are here not only to
Partner, Bingham, Dana & Gould,
in 1926.
do our duty in government'Jaut to {EDITOR'S NOTE: Full texts of Boston, Mass., and Chairman of interest,
Mr. Reese was President of the
*
*
*
addresses
made
by
Messrs. the Committee on the Uniform
learn, and through such meetings
Ohio
Bankers
Association
in
The New President's
as this we learn a
Humphrey, Burgess, Robertson, Commercial Code of the Ameri¬
lot."
1942-43.
Acceptance Address
Benson,
Reierson, Sienkiewicz can Bar Association; Emmett F.
In the American Bankers Asso¬
The President's address in full
appear
elsewhere in today's Smith, Vice-President and Resi¬
Following the announcement of
Among the speakers at the Con¬

follows:

great

is, for me,
opportunity. It is

and of

myself,

and

successful

confident

enjoy¬

very

able

being

here gives

opportunity to
to you
something

their

than the

ritu

nhower

Pres.

1 i stic

the

welcome, no matter how
sincere they may be, which they

words of

gives me an opportunity
example, to thank you for
It

are.

lor

work

splendid

your

sell

Govern¬

all

$50 billion worth of government
obligations, we know that there is
in

and

country the incentive

our

determination

the

incentive and

save,

determination

responsible for

that have been

of the good things this na¬

many

banks

was

nation

the

cars

ones.

than

Mr.

are

Administration.
issue with

also took

Brenton

charge

iise.

the

bers

that

realize

our

Secretary

Treasury and other
the

mem¬

Administration

ap¬

before you to give you
thinking on certain
of
the
important
subjects
that
Interest you, but I want to assure
of all

that

Administration
the

all

answers.

Administration

this

that

It is

that sits

not

thinks
not

it
an

ivory tower of lonely
gives words of wisdom

that

all others must obey or be wrong.

here

not-only to do our
duty in government but to learn,
are

and through
we

learn

such meetings

this

lot.

Uniform Commercial Code

people, with your fingers
on the pulsebeat of the American
economy, come here and, by your
by

discussed

was

the

Convention

panel of prominent bank at¬

torneys.

The discussion

held

came.

"So

come

for

this

kind

before

the

secret

learn

which

and

what

others.

organization
ourselves can

enables
have

We should

learned

continue

our

crease

ple. If

usefulness

our

serve

them

the

peo¬

creased

required

business

finance in¬

activity.

the

time, its policy of permitting
tightening of credit condi¬
has

tions

been

couraging

effective

dis¬

excessive and infla¬

tionary expansion of credit.

policy has been

This

important fac¬

"It is essential that

per¬

bank¬

provide financial leadership of
the
highest type
and
help
to
inculcate
of the
and

clear

sound

understanding

finance.

the

are

Federal Budget:

tribution
can

that

make

the

depends

peace

The

largely

those

have

preventing

much

fur¬

any

balanced

Federal

sential

and

the

maintenance

stable

balancing

the

placed

budget

es¬

economy.

budget,
upon

emphasis
improved

Foreign

Trade:

only

it buys abroad.

sell abroad

nation

We believe that the United

can

the

much

gov¬

course

the

country. However,
position of world leader¬

enterprise

have

our

production

levels,

charge of

shaping

our

ship,

record

who

ernment

moral, military,
and
economic
strength. With employment and
at

must prove that

manage

affairs

our

maintain

such

good

ment and

under
a

way

levels

can

free

employ¬
activity without war or

the

ABA's

State

meeting

Legislation

The
is

Uniform

Commercial

Code

Conference of Com¬

Uniform State Laws

world's

nation

Committee
the

Small

Advisory Committee
Secretary of Commerce.

ness

HOMER

elected

American

the

Livingston,

Vice-President
Bankers

the

J. LIVINGSTON

Vice-President
Homer

and

Busi^-

Association, is President

and director of The First National

Bank of
Mr.

Chicago, Chicago, 111.

Livingston

Chicago

and

native

his educa¬
He was

received

its public schools.

School, Chicago, in 1924, with
and in 1952 was

L.L.B. degree

awarded

Washington and Jef¬
College, Washington, Pa.

ferson

Mr.
Livingston * entered
banking business with The
National Bank of
In

1930,

attorney;

1944, counsel; and
President.
in

1948

from

eliminate

from

enlightened and progres¬
sive banking system
must play
its part in maintaining full em¬
ployment

and

perpetuating a
ever
increasing pros¬
all our people. The

and
-

for

can

1950

1949

and

Policy
the

the

member

Commission

1953.. He

Bankruptcy

Credit

member

"An

1940

the

Federal

chairman

and

Subcommittee

1950.

was a mem¬

Committee

the

director

Bankers Asso¬

ciation, Mr. Livington

ing to reduce

democratic form of government.

1945, Vice-

President

and

Legislation

became

In the American

the
First

Chicago in 1922.

be became an assistant
in
1934,
attorney;
in

"We should support consistently
those in government who are try¬
expenses, cut taxes,
bureaucracy, and. foster

L.L.D. de¬

honorary

from

gree

served

Legislative

Committee and the Council of Ad¬

ministration of the Illinois Bank¬
ers

Association in

L Mr.
the

Livingston
executive

1944-45.

chairman

committee

chairman of the stock

a n

of
d

trustees of

creditor

freely, convertible currencies, and
stronger economies in the United
States
free

If enacted, it would
replace exist¬
ing state laws dealing with such

and

other

nations

the

that has been

ably carried

undertaken

and

by those responsi¬

ble for the Association's affairs:

tion

Law

Restraint

member

and
producing be a large factor in making our the Monon Railroad, a director of
continuing to open its efforts more effective. I hope that the Continental -f Casualty Com--,
increasingly to foreign I may be able to make some con¬ pany and the. Continental Assur¬
goods. Such a policy will help to tribution in
helping to accomplish ance. Company, and President of
create a larger volume of world these
the National Safe Deposit Comobjectives, as well as to
trade, the eventual restoration of continue other important
'
•
• - —
;
work pany.

greatest

Institute.

American

Voluntary

markets

proposed

the

Credit

ber

American Bankers Association

the

Oct.

1952 he served

member of the National

government assistance.

responsibilities

Committee and Council.

In 1951 and

perity

should live up to its international

Hotel, and in the future

Jersey,

New

Law

will

progress

future

our

Convention

graduated from the John Marshall

with

upon

City,

ABA

understand¬

and have such
we

world

Annual

elected

was

the

made

ing,

States

United
cause

con¬

Commission

1952. He
of

member

Policy

needs

with

The

1949 to

78th

also

was

served well by us in their financial

dollar

tion.

Com¬

itst in¬

tion in

ther

1952.

money

people

Credit

Atlantic

principles of

inroads of the government
stabilizing the value of the
and should help to sustain into the private banking field.
future employment and produc¬
"We must work constructively
tor

the

well, they

ers

time

the

Vice-President

will appreciate the important .part

Willard

will be part of the annual

knowledge and tech¬
niques of banking in order to in¬

improve

from

sound

was

you and thank you
subjects as negotiable instruments,
for your help and for you
patriotic .bank
collections, chattel mort¬
interest in the whole American
gages, accounts receivable, factors

the

during
the
member of

of this Commission from 1948

man

have

Credit

ception in 1944 to 1952, and chair¬
1952.

was

Business

from

what

Association is

through

period. He

States

and

thing

progress

in the Congressional Room of the

the National

Bankers

This

process.

and

the Federal

Council

Small

continue to put

as we

practice

learned.

the

mission

Federal

and
elimination
of
in
banking
practice efficiency
operating
procedure
that waste in every phase of govern¬
would be brought about by enact¬ mental activity. We heartily ap¬
prove the progress being made in
ment in various states of the pro¬

missioners
Thanks

the

Changes

your

wiser than when you

period

and

"comprehensive re¬
exchange
vision of private commercial
law,"
of thoughts among yourselves and
drafted under the sponsorship of
.with us, will leave us, we hope,
and

mone¬

System has properly

should

Discussed

-"You

presence

this

strong

flexible

in an
posed Uniform Commercial Code this direction.
isolation

and

was

high,

latest

first

you

there

and defended the
Administration's monetary policy
in tightening credit.
unduly

peared
their

that

ac¬

the Execu¬

three-year term

—1943-46—and

lives.

been

some

consid¬
now with

the

mitted such expansion of credit as

same

positions,

Developments
Reserve-Treas¬

importance

welfare

Reserve

Administra¬

bankers'

he served

tive Council for

policy—including flexibility
that private banking plays in their
bond prices and interest rates.

has

youth for individuals and for or¬
ganizations. The American Bank¬
ers

Adopted

tary

the
Washing¬
that

denied

Eisenhower

the

into

Federal

the

to During

period of
and 12

to a

new

used

Brenton

loans

Federal

erably

the

public
Harold

tion," and referred to the fact that
during the Democratic regime
there were some sixty odd bank¬
ers

State

"accord" of 1951 have demon¬

ury

Everett

following

develop,

long

transmit

strated

Administration

new

ton

Monetary Policy:

Brenton

Mr.

just

tions:

by the
throughout

months

the

Before adjourning, the Conven¬
adopted the following resolu¬

since

Mr.

educational

grow,

tion

opera¬

months

"Life

Legis¬

Chairman

Resolutions

not
"Beyond this, ypur coming here enough mortgage money available
brings to the Government a very for home building needs, citing
great opportunity for cooperative the large accumulations of savings
work in
this whole field of fi¬ in banks applicable for this pur¬
nances
and
the
soundness
of pose. He also denied the charge
money and its circulation and its that current interest rates were

has

Committee

23,

Reese delivered the

lation, served as moderator of the
panel discussion.

be¬

the

tion enjoys.

who

erity,

restrict auto

Pitts¬

Hazeltine, President of
of
Arizona, Prescott,

Bank

ABA's

adoption
SOrt
Of

rule

our

With more than 40 mil¬
them owning more than

people.
lion

bonds

savings

helping

the

distribute

and

ment's

Sherman

the

Ariz.,

He cited

tions.

Company,

Sept.

Association

ceptance address:

t ious

c a u

Trust

burg, Pa.

come

the

same

wealth

Bankers

Legislative

was

have

ers

express

Brenton,

bank¬

mitted

President

tion

though he ad¬

"But

election

his

the closing session of the Conven¬

Taylor, Partner, Taylor, Hurtt
Weisel, and Director, Common¬

tinued

pro s p

tion.

still

con

Conven¬

began, the retiring

plateau

for you a very

and

remain

National

sessions

Harold

Chase

American

business

would

wish

regular

Counsel,

Bank, New York City; and George

Prosperity

conference, expressed the

press

view

to the City
and

the

President

government

Before

the Convention

associates

Optimistic

Continued

•

you,

behalf

Brenton

Convention

pleasurable duty to invite

dent

before

appearance

happy

very

ciation,

issue.]

"My .brief
this

truly

■

„

text

swers

world.

tending the Reciprocal Trade
Agreements Act and enacting the

Custorfts;; Simplification

have

"You

We endorse and approve the ac¬
of the 83rd Congress in ex¬

Act.

honor in
your

honor

paid

naming

a
great
President of

^ne

Association.

He has long been active in Chi^;

cago
a

civic affairs and is at present
Hniversity of Chi-,

trustee of the

cago;

trustee

and

sioner

with, humility

this

and,., deep

treasurer/ The
Commis¬

Art Institute of Chicago;

of " the

Center

D i

treasurer,

Chicago
i

Medical
and

ty director

Chicago Boys Club,

Inc.; - and trustee '* of the Chicago.

appreciation
o

Volume 178

Number 5260

The Commercial and Financial Chronicle

...

(1257)
Child

Care

Farm

Society

and

the
Lcxob

Foundation:

/':• r.r'% i

SHERMAN

gust

Drawdy, President of
Georgia Railroad
Bank
&

the

Company, Augusta, Ga.,

elected

Treasurer

Bankers

can

the

meeting of the Association's
Executive
close

Council

Annual

the

held

Henry A.

Kugeler is

President of

Drawdy was born in Grove-,
land, Florida, and attended schools

•

the

newly

ABA's

busi¬

clerk in the Bank

examiner

and

position for

1933

:posit

continued

seven

jointed

the

Insurance

-Reserve

Federal

Arthur,

President

State

Cleveland

Bank

Analysts
13

Division; and R. Irby Didier,
of

State

Association

District

for. the

Henry A. Kugeler
i

and

**•-

;>>•#:

''I'jyv

and

cashier .and

later

Vice-Presidentand

tive

fairs

and

The

bankers'
served

the

-dent for

tion

W ml?>■!

Bankers

.*<■

jBP

Jl' Jr

••••

speaking
will

N. Baxter Maddox

Irby Didier

Asso¬

is made up of
banks, 2,450 branches, and

State

the

1950-51.

and

United

States

of the Execu¬
tive Committee of the State Bank
Division from 1950 to 1953 and of

Columbia,

the

Division's Legislation
Com¬
mittee from 1951 to
1953, Georgia
state
chairman of the

ber of the

Savings

Bonds

membership

1951

1953,

states,

the

Commerce

mission

and

from
of

zona,-

Com¬

ware,

member

Marine

1952-53.

..Georgia Railroad and Banking
Company; and a director of North
Augusta Banking Company, Jack¬

and

the

Section

.Bankers

State

the

100%

Illinois

Central.

the

years

are

once

Associa¬

5s, 1955, all that is left of the
formidable

term

near

rity schedule. The

trips

are

Alkali

Corporation, and
Rayon Corp. and
A

cock¬

all

matu¬

company

has

stocks
and

continue

the

August

that have

doldrums

earnings
been

state¬

attending the meeting

coming out

Chase National Bank

the past two weeks have been
somewhat mixed.
It is indicated
that for the

Class

carriers

Group Offers Bonds
Of Territory of Hawaii

whole August was probably better
than
last year.
This is

jor

true of

roads.

east

New

all of the

even

For
York

instance,

ma¬

the

Central

reported
year-to-year gain for the month
while both Baltimore & Ohio and
a

Pennsylvania had declines.

In the

of Baltimore & Ohio the

case

drop
quite modest but
for Pennsylvania it amounted to

earnings

are planned
Tuesday and Wednesday.

for both

means

to
on

a special dinner.
Special programs for the women

the

ments

analysts planning
Cleveland overnight

The Chase National Bank heads

syndicate
offering
$5,500,006
Territory of Hawaii 2.90% public
improvement bonds, series A, is¬
a

sue

1973

was

1953, due Sept. 15, 1956 to

inclusive.

The

bonds

priced

are

yield

from 1.85% to 3%,
according to
roughly $2.7 million or nearly
maturity.
These
bonds,
in
the
44%. Among the speculators who
opinion of counsel, will constitute
care
of this maturity.
However, had not been following results of
valid and legally binding obliga¬
the
company
has continued to a year ago very closely the per¬
tions of the Territory of
Hawaii,
buy in the bonds and presumably formance of Pennsylvania in Au¬

Next Convention To be Held

American

National Bank Division

the

Atlantic
the

City

will be able

final

Convention,

President: John W. Kress, Exec¬
.

Vice-President, The Howard

of what

care

ex¬

gust

quite

came as

There

payable

shock.

simple

explanation

in the maintenance accounts.

Last

emerging from the seriously
a
phenomenal job has
adverse influence of the prolonged
done, the management obvi¬
steel strike, and facing the pros¬
Bankers Association will be held ously considers it advisable, Or at
in Atlantic City, N. J., Oct. 17-20, least prudent, further to pare the pect of labor disturbances in the
coal fields, Pennsylvania last Au¬
senior
1954.
capitalization during this
gust continued a policy of cur¬
The last Convention of the ABA period
of peak earning
power.
Convention

J Savings and Mortgage Division

to take

adjournment balance
may remain without
the
newly
ercising the option.

elected President of the ABA an¬
nounced
that
the
next
annual

A. i Kugeler,
Denver. National

Henry

Bank, Denver, Colo.

utive

Few, if any, railroads have done
a comprehensive debt retire¬
ment job in the past 10 or 12 years

such

non-

and

Before

President,'.:The

mem¬

Alabama, Ari¬ 1941-1952,
inclusive, non-equip¬
debt
Arkansas, Colorado, Dela¬ ment
outstanding
in
the
Idaho. Iowa, Louisiana, hands of the public was reduced

Association follow:

President:

with

field

Diamond

Islands, Puerto Rico, Salvador and million of the road's new Consol¬
the Virgin Islands.
idated
Mortgage bonds to take

The officers elected for the four
tion

states

Brazil, Canada, Cuba, standby agreement with a group
France,
Great
Britain,
Hawaii, of institutions to purchase, at the
India, Japan, Mexico, Philippine discretion of Illinois Central, $12

divisions

Bermuda,

Inc.
*

The

The ABA has members in every
state in the Union and in
Alaska,

Depository,
Augusta
Lumber
Company, Castleberry's
Food Company, and Cato
Stores,
♦ .*

bank

one

ming.

Cash

New Division Presidents

bank is

every

the

Oct: 14 to attend

Illinois Central

resources.

District of

Association; and in five

only

stay

Michigan, Missouri, Montana, by $180,667,000, leaving a balance
Nevada, New Mexico, North Caro¬ as of the end of last year of only
lina, Oregon, Utah, Vermont, $151,234,000. This included $11,Washington, Wisconsin and Wyo¬ 899,000 of the old Refunding 4s

Mr; Drawdy is President of the

son

the

Clevite

out-of-town

99%

over

banking

states and

member.

Treasury

and

the

Antique Auto Museum.
Republic Steel has invited

Included

all the banks in

of the nation's

member

and

branches.

98%

over

tail party for both field trips will
be held at the Thompson Products

Railroad Securities

During the past year, the Associa¬
membership increased by
banks

Thompson Products Co.

tion's
83

and

to the Industrial

membership

14;253

will

Wednesday,

Co.

ing Departments Committee of the

Dinner

Statier, Charles M. White,
of Republic Steel Cor¬
poration, speaker.
President

are

Committee

boat, "Charles M. White/'

ore

planned

of the Federal

for

Hotel

Harry M. Arthur

Vice-Presi-

Division

Outlook

two management confer¬
followed by cocktails aboard

poration.

af¬

and of the Ex¬
ecutive Council from 1949 to
1952,
and a member of the State
Bank¬

rail¬

Cleveland,

the

170 members in foreign countries.

was

at¬

sponsored by Republic Steel Cor¬

are a

In the afternoon there

ences

The

Bank

expected

"The

Business."
v

1949, a member
Legislative Council

are

Cleveland,

Y,3

Georgia of the Organiza¬

Committee

West

and James M. Dawson of the Na¬
tional
City Bank of

1946-47,
a
regional
Vice-President
of
the
Organization Committe from 1947

ac¬

President

state

was

1947.

association
as

American

ciation, he

•

W$k

yw.

SPife

ll^B.

Georgia Bankers Association.

-In

Ajy-

First

Mr. Drawdy has long been

•

cashier," he

elected President in

.was

•'

it'

Great

Utility and Coal Forum; luncheon,
with Paul A.
Murphy of OglebayNorton
Co., speaking on "The
Outlook for
Security Markets,"

m, mm

•

their

Conference, Oct.

road tour of industrial

Wffl

Drawdy became associated
Georgia Railroad Bank
,& Trust Company in 1936 as VicePresident and Comptroller. After
;
being advanced to Vice-President

hold

The

—

Security

Scheduled for Oct. 13

; ■1

the

will
14

tend.

|gg

Federal

Ohio

Society

Regional

and

Middle

John W. Kress
'.

•

Mr.

with

earned

the Hotel Statier.
Some 75 to 100 analysts,
primarily
from
the
eastern
seaboard and

Section.

De-

Corporation,

Lakes

Trust

President

years.

Reserve Bank of Atlanta;.

ex¬

above

so,

(unconsolidated)

CLEVELAND,

shortly thereafter he became sen:ior examiner in the Sixth Federal
:

Regional Conference

Division; N. Baxter Maddox, President

Groveland, advancing to cash¬
ier in 1924. In 1926 he
joined the
Florida State Banking Department
as

$2.81

that

$1.00,

run

Bank

Savings and Mortgage Division; Harry

in 1921

Au¬

Cleveland Analysts

elected

National

Division; John W. Kress, President

V •**'

there.

ness

indicated

the

79th

banking

snOUJLQ

than

further

NEW ABA OFFICIALS

new

Association's

the

baUWTIlg

in 1952.

Convention.

entered

are

the

Mr.

and

pected to

was

Ameri¬

Association

uit:

that earnings will hold
up well
in the final quarter. Thus
for the
full
year
share results

Heads of ABA Divisions and State Associalion Section

Sherman
Trust

yxz<xiy

considerably better

DRAWDY

Treasurer

the

American

year,

While

been

from
of

revenues

will

the

exempt

consolidated

Territory,

to both

and
prin¬

cipal and interest from all present

Federal,

state,

municipal

and

local taxes, except estate, inherit¬
ance

and

Also

gift taxes.

participating in the offer¬

tailed maintenance work.
It was
City was in Common stockholders have been
ing are: Harris Trust and Savings
not
until
September that such
During the 1954 meeting of rewarded by successive increases
work was resumed at the normal
Bank; Salomon Bros. & Hutzler;
the
nation's
bankers, the
New in annual dividends from the orig¬
Jersey Bankers Association will inal $3.00 rate to the current pace. In August, 1953 freight rev¬ Drexel & Co.; Blair, Rollins & Co.
enues increased $4,896,056 over a
participate and share in manage¬ $5.00 instituted at the last meet¬
Incorporated; Mercantile Trust
ment of the Convention.
ing, and many analysts feel that year earlier, to $71,187,821. Pas¬
Company, St. Louis; Equitable
senger revenues dipped more than
another
to be held in Atlantic

Savings Institution, Newark, N. J.

1952.

State Bank Division

President:

Harry
M.
Arthur,
President,
Arthur
State
Bank,
Union, S. C.
Trust

President:

Division

Baxter

With Dean Witter Staff

Maddox,

(Special

Vice-President and Trust Officer,
The

First

National

Bank

Association

President:
ecutive

Bankers
La.

Section

Irby Didier, Ex¬
Secretary, Louisiana

(Special

FT.
Mann

announced

to the

convention tjhat

-16,873 banks, and branches-,

The

Financial

MYERS, Fla.
has

become

A. M. Kidder &

Ghiglieri,

President
of the
Citizens National Bank,
Toluca, 111., Chairman of the Asso¬
ciation's Organization Committee,

Chronicle)

—

Chronicle)

Denver G.

affiliated

with

Co., 915 First St.

King Merritt Adds
-

(Special

The

Financial

Chronicle)

cash left

liberally

over

for debt.

there
The

com¬

10% but with mail, express, and
other categories up the total rev¬
enues

rose

$4,271,882.
The alltransportation
costs

are

callable

This

was

the

reason

for

the

de-

only. The debentures feline in net.
For the full eight months the
were outstanding at
$34,743,000 at
the end of last year and the pre¬ picture is considerably better. Net
as

whole

ferred at 186,457 shares, $100 par.
There is considerable question as
to

how many holders will tender

their

securities

ered

reasonable

ment

but

least

prices
the

consid¬
manage¬

capital structure
-

appears

As for the railroads

income

for

the

1953

interim

assured,
a

whole,

Securities

Corporation; Laurence

The

gain of $10,338,674

was

derson;

nearly

with

Hayden, Miller

rities

Central

Republic

Com¬

(Incorporated); First Secu¬

pany

Company of Chicago; R. L.

Day

Inc.;

and Freeman

Co.;

Andrews
&

Wells,

Company.

With J. Barth & Co.
(Special to The Financial

LOS

equiv¬

standing. As comparisions in Sep¬
will

Co.;

Co.; Malvern Hill & Company

was

alent to $0.79 a share of stock out¬

tember

Marks

Incorporated; Green, Ellis & An¬

$25,766,126 compared with $15,427,452 reported a year earlier.

further

some

NOKOMIS, Fla.—Ernest D. Le- improvement in the already strong

were May has become connected with
members-of :the"ABA-on-Aug: 81; King Merritt and
Company, Inc.-

treated

stock, both of which

Membership Continues Upward
Barney

Financial

Joins A. M. Kidder Staff

Association, Baton Rouge,
; "
*

The

with

FRESNO, Calif.—Fred H. Kurz pany has called for tenders, which important
has been
added
to
the staff of may be made up to the close of were held under good control but
Dean
Witter
&
Co., Patterson business Oct. 15, of the debenture the aggregate of maintenance ac¬
Building.
1
4%s, 1966 and the 6% preferred cruals jumped almost $7 million.

At¬

lanta, Atlanta, Ga.
State

boost is not too far away.
stockholders
being

Even

ANGELES,

Harryman

ciated

with

has

Chronicle)

Calif.—Frank
become

Barth

West Seventh Street.

asso¬

Co.^ 210
was

for¬

of merly with E. F. Hutton & Com¬
normal maintenance pany.
.
a

period

Financial Chronicle... Thursday, October 1, 1953

The Commercial and

(1258)

the

tive

of Sept.

Bank effec¬

14. A branch was

established in the former

News About Banks

and

Trust Company.
«

BRANCHES
NEW OFFICERS, ETC.
NEW

Bankers

and

REVISED

r»!

The Board of Directors

Company

Trust

cantile

CAPITALIZATIONS

location

Germantown

of National Bank of

CONSOLIDATIONS

tiirard

title

and

charter

Trust Corn Exchange

Balti¬

Md. and of Safe Deposit
Company of Baltimore,

Md.

regular meeting of the
of Directors of The Na¬

Board

Bank

City

tional
held

York

New

Sept. 29, Leland S. Brown,

Vice-Presi¬
Vice-Presi¬

formerly an Assistant
dent, was appointed a
dent.

Gillie, Robert P. Smith and John
the New Rochelle

H. Walsh. From

Walter H.

Stevenson,

Holland

Dr.

Stein,

Gervin

Prezzano,

Jr.,

Joyce,
Edward

Plunkett,

Harold

John

Albertson,

Lester

would

board

Trust

Continued from page 10

and

Trust

the

of Mer¬

more,

and will

bring the total number of
outstanding to 2,250,000.
The stock dividend will be pay¬ Upon completion
of these steps
able on the 313,200 additional total capital funds of the bank
will be increased to approximate¬
shares now being offered for sub¬
scription as well as on the 1,566,- ly $92,000,000 from $72,998,687 as
000 shares presently outstanding, of Aug. 31, 1953.

Stanley & Co. is underwriting the
cash offering to shareholders.
4

held
on
proposal for
institutions.

meetings

separate

Sept. 25, approved a
the merger of these
The

form

Government Will Stop

agreement

merger

Competing With Business

approved by, the Bank
Commissioner of
Maryland and

has

been

proposal is being sub¬
the stockholders of the

the merger
mitted

shackled

trols
free

Young and Ralph T. Tyner, Jr.
The Rockefellers would be repre¬

people.

wrists

the

■

buying

Consumer

sales.

ment

services

goods V and

nondurable

; ;

./
r;. to the
respective institutions for their,
"Sneak" Nationalization Should
consideration and action at sep¬
So, in making your plans, take
graduation
Be Resisted
sented
on
the
new
board by arate meetings to be held simul¬
the following factors into consid¬
from
Northwestern
University,
Richard H. Mansfield and John
Nationalization of industry may eration:
:
:
;
has
been assigned to the Fifth
taneously Oct. 19, 1953.
E. Lockwood.
Avenue Branch since 1946. He will
The
(1) The ^momentum of current
merged
Trust
Company be rammed down the throats of
Directors of the
banks would will be State chartered and will capital and labor in some parts of business activities.. ' ; v>
now be associated with the Senior
Management of National City's serve on an advisory board and be known as Mercantile-Safe De¬ the Old World. But every open
(2) The expectation of certain
or
sneak move in that direction adjustments.^- Some of
Branch at 42nd Street and Madi¬ 'all officers and employees would posit and Trust Company, Balti¬
these al¬
here should be resisted by the free ready have taken place without
be retained, the banks said. Mr.
son Avenue.
more, Md.
Safe Deposit was orig¬

Mr.

who

Brown,

1930,

Bank

came

upon

both continue up.'

■<

United

Company of
surprise dinner
bank's President, Benjamin
States Trust

York gave a

New

to the

Strong, on Sept. 28. The occasion
marked the 20th anniversary of
Mr.

Strong's association with the

celebrat¬
ing its 100th anniversary. A large
silver
tray, inscribed with the
signatures of all officers, was pre¬
bank, which this year is

Trenary,

by
James
Vice-President.
sented

Mr.

5Strong represents the fifth
generation of his family in direct
descent

occupy

prominence

position

banking and

the

would

Birckhead

staff of the

officer

entire

The

❖

Chairman

the

first,
headquarters would be located

New

Tyner, President. At

and Mr.

later

and

Rochelle

White Plains.
!;!

Joseph A. Kaiser, President of
the Williamsburgh Savings Bank,

Chairman,

elected

was

Savings Bank Asso¬
ciation, at its Annual Meeting.
Five

Group

Newly elected Chairman of the
Group Five Executive Committee
is John W. Hooper, President of
the
Lincoln
Savings
Bank.
Elected

serve

Com¬

that

President,
*
#
*
Bay Ridge Savings Bank.
Eugene A. Colligan, Vice-Presi¬
Appointment
of
Charles
A.
dent, Long Island City Savings
Becker
as
an
Assistant
ViceB.

David

McVean,

President of Manufacturers
Company,
nounced

York,

New

Trust

Bank.

an¬

was

C. Flanigan,

by Horace

M.
Burns,
President,
Riverhead Savings Bank.
George

will

This

President.
Mr. Becker came to the

bank in

successive

Burns'

Mr.

year

third

member

Previously Mr Becker was the Executive Committee.
Re-elected for the fourth
associated with the Commercial
Bank

value of $50 per share)
and 100,000 shares will represent
the presently outstanding lpG^GQO
the

the

Becker will be assigned to

Out-of-Town

Business

Southern-Western

partment,

De¬

Di¬

vision.

ant

Trust

and

si:

dent of the

value.

the

vate

enterprise.

new

board

The

suc¬

Dime

composed

the

become

Chairman

Company, will be the
Mr. D. Luke Hopkins,

institu¬

Selected

from the old Peoples Na¬

tional board would be Mr. Birck¬

nors

tem

the

Company,

will

occupy

same

stocke, John R. Crunkleton, An¬
thony F. Dempsey, Gordon E. Kel-

lenberger,
John

Arthur
Motz, R.

Levering,
Opie and
senior offi¬

C.
S.

tion, and Mr. Levering will, in ad¬

Gover¬

of the Federal Reserve Sys¬
and National Bank of Ger-

mantown

and

head, Oscar A. De Lima, Leslie B. Philadelphia,

Board

Trust

Pa.,

Company,

merged

tate

dition, become Treasurer and Mr.
Crunkleton will also become Sec¬

uted

stock

rate of 19.732%

dividend

nationwide
firms

group

headed

1953.

of invest¬

Morgan

tion.

private

conjunc¬

enterprise

old-fashioned depres¬

sion.

possiblities

limitless

(6) The

for economic

stability and growth.

Among these positive factors are:

national

adequate

defense;

new

the most important

onljk will continue
defense ^mobilization

offer

Through

fluctuations
from

appraising the business out¬
look, I have some rough estimates
on
the whole third quarter that
In

end

will

week.

firmed up

These

data

and published

when complete returns for
period are in.
The picture
that I give you is based in part
on this advance information.

That

spend

sound

shows

health
It

has

and

has

strong

limitless

pos¬

about the future.

out

Wall St. Riders

income—is

Reelect Struckmann

going up. Personal consump¬
tion expenditures are expected to

meaning

that

the

con¬

market is still growing.

sumer

employment at 62 mil¬

Civilian
lion

"soft

rise.

still

mount,

to recognize

growth.
Basing my judgment on the
facts, I am a realistic optimist

sonal income—what the consumer
has

place

time.

per¬

picture

income, continues
means

take

they

sibilities for

per¬

to
that disposable

time

is realistic

constitution.

the

that

adjustments.

spots." It also is realistic to recog¬
nize all the facts, including the
fact that our overall economy is

later,

This

today

We should not blink our eyes at

ity in history.

will

minor

ber

people

enjoying the greatest prosper¬

sonal

repeat:
is

self enchances somewhat the num¬

competitive enter¬

our

prise system the American
are

let

climate

In going from controls to more
of the American econ¬
free enterprise, the transition it¬
its future possibilities.^

strength
omy

good. Of course, a fluid economy
is never static. Adjustments occur.

the

underestimate

conclusion,
economic

The

employment.

industry and
Never

stimulate

factor of all—
Americans

themselves.

1but also it will

services

new

confidence

the

functions of the old National Pro¬

duction Authority

abroad; and—perhaps

investment

Services Administra¬

not

necessary

—

seasonally adjusted

—

and

hours worked per week
have not changed much in recent

average

months.

Business activity
tinues at
of the

generally con¬

high rate. As a result

general expansion of sales,

have expanded
rates.
Inventories are rising, according
to our latest data, but we don't
profits

corporate
over

the year-ago

expect
this

large.&n accumulation
as
in the second

quarter

quarter.

equipment outlays
have maintained an upward trend
Plant

Struckmann

and

the

annual

meeting

the

Wall Street Riding Club, Inc., the
the third quarter. Al¬
following were elected officers for
though businessmen have indi-.
the coming year:
cated intentions „to spend some¬
Gerhard
H.
Struckmann
was
what less on new facilities in the
again unanimously elected Presi¬
fourth quarter, the indicated 1953
dent. He has held this office for
total is about 5% above last year.

through

the

payable to share¬

holders of record Oct. 22,

under ment

Government

with

prevent

re¬

the vast power of the

use

Federal

special nepds

and Defense

President.

share for each five shares held of

member

gencies.
(5) The further assurance that
the Administration will not hesi¬

of smaller products of research; new markets
created
by both migration and
business concerns.
In the Department of Commerce growth of population; wise poli¬
cies to stimulate world trade and
we are launching a new Business

position in the merged
institution. Messrs. John K. Brig-

:|!

!j!

tion

the

for

Executive
President of the Safe Deposit

and! Trust
the

new

directors

government.
~
' : ; " • ..
•:
The assurance that the, Ad¬
ministration has plans for emer¬
(4)

rectiorf

tion; and Mr. Butler, now Presi¬
dent of the Safe Deposit and Trust

Vice

Group Five Savings Banks As¬

comprise fifteen members.

mstructive action in this di-

Parrish & Co.; Thayer, Baker &
record Sept. 24, 1953, Charles T.
would be given to
Co.; Woodcock, Hess & Co. In¬
Peoples National shareholders at corporated; Brooke & Co.; C. C. Fisher, Jr., President, announced
following a special meeting.
a ratio of 1.9 shares for each share
Collings and Company Incorpo¬ Shareholders'
rights to subscribe
now
held, while New Rochelle rated;
Schmidt, Poole, Roberts & will
expire Oct. 15, 1953.
Trust shareholders would get one
Parke; Suplee, Yeatman & Com¬
These shares are part of 684,000
share for each share now held.
pany, Inc., and Wurts, Dulles &
additional shares which were au¬
The Hills Realty Company, con¬ Co. ❖
thorized for issuance at the meet¬
❖
❖
trolled by the Rockefellers, would
buy 36,800 shares
at $32.50 a
Girard
Trust
Corn
Exchange ing and the balance, amounting to
share.
Bank, Philadelphia, Pa., a State 370,800 shares, are to be distrib¬
The

also

This Administra¬

Administration has

and finance and in the re¬
duction of the unnecessary costs

tion has similar views and is tak-

shares, 53,200

would

segments

they

But

confidence in prL

supreme

The

the Board of the combined

savings

other

several

economy.

have

proved on Sept. 29 at special as of Sept. 24, are being offered retary of the combined institu¬
125,000 tion.
meetings
of directors
of
both rights to subscribe to
banks.
In general the officers of each
Meetings of stockholders shares of unissued capital stock at
were
set for Oct. 29 to vote on a price of $30 per share on the of
the
constituent
Trust
Com¬
the plan, with Nov. 2 the goal for basis of one new share for each panies will continue to hold the
three
shares held.
A
syndicate same position in the merged in¬
putting the merger into effect.
headed
by Stroud & Company, stitution and the personnel of both
The new bank, to be known as
Inc. has agreed to underwrite any institutions will
be retained
by
the Westchester Bank and Trust
unsubscribed shares at the expira¬ the combined Trust Company.
Company, New Rochelle, N. Y.,
tion of the rights on Oct. 13.
Banking and trust services will
would be financed partly by the
Sales of the stock will increase be continued at the three present
five sons of John D. Rockefeller,
the
bank's
capital
to
500,000 locations: Calvert and Redwood
Jr. They would acquire 20%
of
shares of $10 par value and give
Streets;
13
South
Street,
and
the stock, according to Oliver W.
Central-Penn capital funds in ex¬ Charles and Chase Streets.
Birckhead, President of the
cess of
$22,000,000.
The''combined institution
will
Peoples National, and Ralph T.
Other members of the offering
have a capital and surplus of $15,Tyner, Jr., President of the New
syndicate include—Drexel & Co.;
Rochelle Trust.
000,000, with undivided profits of
Kidder, Peabody & Co.; Merrill more than
The bank, with eight offices and
$2,000,000 and total re¬
Lynch, Pierce, Fenner & Beane; sources of
approximately $100,$62,000,000 in assets, would be the
Smith, Barney & Co.; Hemphill,
second
largest
in Westchester. N'oyes & Co.; Janney & Co.; Bid- 000,000.
❖
Sponsors of the fnerger have been
die, Whelen & Co.; Butcher &
National Bank of Detroit, Mich.
looking for other banks to bring
Sherrerd;
Newburger
&
Com¬
shareholders on
Sept. 24 set a
into the plan.
pany; Yarnall & Co.; Battles &
price of $45 per share on 313,200
The plans call for an increase in
Company, Inc.; Hallowell, Sulz¬
shares to be offered to sharehold¬
New Rochelle Trust shares from
berger & Co.; Blair, Rollins & Co. ers on the
basis of one additional
100,000 of $10 par value to 190,000 Incorporated; Boenning
& Co.;
same

the

Mercantile Trust Com¬

will

pany,

Stockholders
of
Central-Penn
New Rochelle, N. Y. under
discussion
since
July, was ap¬ National Bank of Philadelphia, Pa.

the

and

ture

field

the

Administration
money

give adequate support to agricul¬

the par

(of
share).

(3) The sound programs of the

Americans want gov¬
provide prompt assist¬
ance
in
emergencies and, until
other
means
may
be found, to

moved controls on prices and nonprincipal executive officers
strategic materials.
Trust Company will.
It recommended and the Con¬
be Messrs. Fred G. Boyce, Jr. and
gress set up a new Small Busi¬
Thomas B. Butler. Mr. Boyce, now
ness
Administration
to
provide
Chairman of the Board and Presi¬

pany,

disturbing the overall picture.

The

Savings Bank of Brooklyn.

and the New Rochelle Trust Com¬

the

Of course,

banks
in
Brooklyn,
George Pausch, now
A
proposed
merger
of
the Queens, Long Island and Staten cers of the Mercantile or of the
representing deposits of Safe
Peoples National Bank and Trust Island,
Deposit, will be Senior ViceCompany of New Rochelle, N. Y. $4,781,445,000.
Presidents of 'the merged institu¬
*

people

ernment to

Deposit"

Company

value of $20 per

Clinton L. Miller, Assist¬

Vice-President

sociation

par

shares of stock of the Safe

Secretary-Treas¬

year

urer was

pany.

Mr.

cessive

Com¬

Trust

and

shares of
of the par value of $20 per
250,000

share, of which 150,000 shares will
be issued in exchange for the 30,000 outstanding shares of stock of
the Mercantile Trust Company (of

1951.

National

will
capital

The.merged Trust Company
have

independent

and

United States.

1884.

of the merged

mittee were:

commercial life of Wall Street.

tile

stock
#

i'f

today

inally chartered in 1864, Mercan¬

purchases are at
level. Summer de¬

Durable goods
a

very

high

clines in passenger car
and
in

sales

are

production

offset by increases
eauip-

furniture and household

many,

years.
also was

many

Butler

Vice-President.
Guire

was

Mrs. Mildred

Mrs.

reelected
Helen

Mc-

elected Treasurer, and

Miss Ruth Bab, Secretary.

Volume 178

Number 5260

The Commercial and Financial Chronicle

...

(1259)

The

Indications of Current
Business

latest week

Activity

week
Latest

SlEEL

AMERICAN IRON AND

Indicated

steel

Equivalent
Steel ingots

operations

INSTITUTE:

(percent

Oct.

month available.

month ended

Month

Week

Ago

Week

capacity)

following statistical tabulations

§94.9

*95.1

(net tons)

Oct.

§2,139,000

oil

and

gallons

condensate

2,040,000

ALUMINUM

(bbls.)

fuel

oil

Residual fuel

oil

2,195,000

(bbls.)

Distillate fuel
Residual

fuel

ASSOCIATION

oil

(bbls.)

oil

—_

(bbls.)

AMERICAN

2,334,000

freight loaded

Revenue

freight received from connections

ENGINEERING

(number

cars)

10,278,000

8,956,000

8,525,000

143,740,000

143,407,000

37,358,000

.Sept. 19
Sept.

CONSTRUCTION

654,861

33,769,000

(no.

50,844,000

710,554

817,431

cars)

667,774

Sept. 24

$341,242,000

State and municipal-

101,561,000

181,692,000

79,260,000

Federal

Sept.
——Sept. 24

■_____

OUTPUT

(U.

Bituminous coal

lignite

Pennsylvania anthracite

'
*

Beehive

coke

STORE SALES

SYSTEM—1947-49

EDISON

Electric output

8,115,000

609,000

480,000

88,400

80,200

AGE

steel

METAL PRICES

INDUSTRIAL)

J—

(E.

—_—J_

11,574,000

550,000

891,000

96,800

90,900

102

100

t—

8,394,707

152

4.634c

$56.59

$35.33

29.700c

$37.17

83.750c

Sept. 23

13.500c

Sept. 23
Sept. 23

8,499,725

6,950,059

1,413,672

(tons of
83,241

end

period

(tons)
1

•

13.300c

$41.67

29.575c

24.200c

29.275c

121.500c

14.000c

16.000c

13.300c

13.800c

COAL

35.425c

81,250c

15.800c

10.000c

44,522

148

164

109

316

number

380

700

594

$17,139,000

$5,056,000

*7,410,000

2,386,000

11,282,000

3,868,000

2,789,000

1,077,000

1,210,000

5,255,000
1,816,000
1,809,000

$28,529,000

"$39,830,000

$16,322,000

40,275,000

34,870,000

*34,171,000

2,353,000

*2,475,000

2,704,000

429,500

724

$10,267,000
3,042,000
10,275,000

liabilities

*418,800

220,500

liabilities
service

liabilities

$42.00

13.500c

10.000c

32,327

•

August:

number

Commercial

81.000c

96,651

340

Construction

$55.26

28.900c
.

78,435

BRADSTREET,

liabilities

4.376c

$56.76

78,167

74,204

103,906

32,988

(tons)

80,825

69,250

117,897

pounds)

liabilities

4.634c

11.000c

liabilities

OUTPUT

(BUREAU OF MINES)—Month

August:

Bituminous-coal

and

94.70

94.17

92.85

103.80

103.13

103.80

anthracite

Beehive

(net

coke

107.62

108.34

113.70

95.76

Sept. 29

105.69

105.00

105.86

103.47

1Q2.80

103.13

97.94

97.78

98.25

Group

Sept. 29

101.97

101.31

102.13

Sept. 29

103.30

102.63

103.13

106.04

105.69

106.21

coke

Beehive

tons)
«

MINES)—Month of July:

tons)

(net

coke

6,759,085

*6,613,614

2,370,600

6,340,286

*6,127,421
*486,193

2,311,300

418,799

2,220,692

*2,129,468

3,297,471

$451,000

$429,000

$550,000

131.2

139.9

125.3

pounds)— _i—''" 82,705

tons)

(net

tons)

Oven coke stocks at end of month

109.24

Sept. 29

(net

(net tons)-

(net

tons)

59,300

108.88

Utilities Group—
Industrials Group

Oven

111.62

Sept. 29
Sept. 29

(BUREAU

Production

109.42

108.34

lignite

Pennsylvania

13.625c

Sept. 29

112.75

Public

MOODY'S
U.

BOND

YIELD

Government

DAILY

Average

2.87

2.91

3.01

3.52

3.56

3.52

_Sept. 29

3.30

3.26

2.97

3.45

3.40

3.08
3.23

;

•

3.54

3.56

3.88

3.89

3.86

3.67

3.62

____.

3.55

3.59

3.56

Orders

received

Unfilled

3.41

3.38

__"

(tons)

DRUG

AVERAGE

100

417.1

236,069

199,338

199,211

215,865

264,379

201,235

261,470

period-—Sept.

REPORTER

PRICE

-•.

552,959

507,572

105.62

105.77

106.00

100

467,535

the

floor—

Other
Total

Total

initiated

583,200

506,500

off

the

440,690

Sept.

139,100

121,890

119,790

21,200

12,100

12,940

r~Sept!

114,960

141,480

109,360

sept.

136,160

153,580

122,300

91,700

214,895

222,050

213,250

173,320
26,070

""3'

~~~

Total sales

39,850

40,950

230,783

332,995

271,733

384,855

1,041,425

992,630

913,625

163,160

137,920

175,240

109,010

~«pnt

Customers'

short
other

926,290

shares—Total

(customers'
total

Customers'

other

value

by dealers—

shares—Total

Short, sales
Other

Round-lot
Number
TOTAL

15,954

20,429

18,799

219

349

129

252

_Sept

Index

20,080

18,670

22,199

(000's

515,441

637,791

Member

4,343

8,926

628,865
$26,648,150

seDt

450,701

606,376

511,098

_Sept

$17,288,749

$23,640,404

$20,665,963

139,630

187,200

157,770

ultimate

(000's

—

Cash

139",630

187,200

1~5~7~770

213,390

209,030

288,950

215,880

foods

47,621,631

243,525

*220,669

252,849

250,507

*230,304

226,277

(AMER¬

INSTITUTE—Month

cars)

5,557

6,370

4,537

45,735

47,423

95,761

118.5

118.9

117.2

$1,682,105
27,022

$1,663,839

$1,338,244

28,648

48,188

285,220

286,289

342,050

640,535

649,685

674,753

—-

__—

(number
—

COMMISSION

COMMERCE

Employment at middle
average=100)

omitted):

—

extended
of

accounts—

margin

debit balances——

net

customers

—-—

and in banks in U. S

hand

Aug. 31

carrying

customers'

value

Market

credit

free

balances—

value

listed

j?
5

bonds

other collateral
IN

HOME

—

.__

U. S. Govt, issues--

FINANCING

ESTATE

110,750,141

listed

Member borrowings

July

and loan associations
Insurance companies

349,460

254,110

229,500

139,470

6,481,710

6,208,960

5,423,840

4,410,560

Bank

6,831,170

6,463,070

5,653,340

4,550,030

Mutual

and

trust

savings

115,885,633

114,506,240

100,009,822

100,279,485

100,536,928

129,436
1,203,892

141,345

103,577

1,193,868

959,518

$681,920

$585,995

NONFARM

LOAN

(000*s

BANK

omitted):

$699,037
131,587
323,320
127,282

Savings

—

companies
banks

256,713

Individuals

Sept. 22

110.7

110.8

110.7

' ' '

98.1

*97.8

97.5

105.6

105.1

109.8

92.4

94.7

95.1

114.7

104,994
245,535

institutions

259,821

262,814

223,196

$1,769,259

$1,590,319

—

112.5

.114.6

317,159

120,447
248,152

105.2

105.0

113,440

130,914
325,012

$1,797,760

lending

111.1

Sept. 22
Sept. 22
and

48,856,021

CONSTRUC¬

STEEL

at end of month

Market

REAL

777777Sept.
7__Sept.

UNITED
__

flncludes 723,000 barrels of
foreign crude runs,
against the Jan. 1, 1952 basis of
108,587,670 tons.

49,024,806

(AMERI¬

August:

CAR

(1935-39

Miscellaneous

26,855,991
$488,551,100

305,890

DEPT.

30,991,366

$549,247,000

at June

STEEL

OUTPUT—DOMESTIC

Railway

AREAS

products
Processed foods

farm

31,358,370
of

(tonnage)—estimated

BOARD—Month

commodities

commodities other than

consumers-

omitted)

customers—month

ultimate

—

Credit

(SHARES):

Farm

sales

firms

Total

213,390

SeDt

figure,

*113

NEW YORK STOCK EXCHANGE—As of

12,205

Commodity Group—

l, 1953

*121

(number

618,581

—sept!

•Revised

122

adjusted——

of orders

8,044

_______

of Jan.

*109

(tonnage)—estimated—

INTERSTATE

sales—

Other sales
Total sales

All

107

cars)

15,735

geDf

118

Member borrowings on

103

RAILWAY

458,745

—leSt

sales

76
75

August:

Meats.

Sept. 12

—

by dealers—

22,451

Sept. 12

;

PRICES, NEW SERIES
LABOR—(1947-49 = 100):

•

*104

STRUCTURAL

CAR

ICAN

Total

sales—.:

WHOLESALE

1947-1940

closed

August

MEMBERS

FEDERAL

—

27,361
760,597

STOCK SALES ON THE NEW YORK
EXCHANGE AND ROUND-LOT STOCK
TRANSACTIONS

All

FREIGHT

TION)—Month

$35,564,700

Short

19,973
574,818

$26,929,242

ROUND-LOT

Round-lot

unadjusted—

daily),

INSTITUTE

CAN

Contracts

—'—Sept. 12

.—___,

FOR ACCOUNT

Total

26,563
735,342

sales

purchases
of

19,608

sales

DISTRICT,

ultimate customers

Deliveries

Sept. 12

3,405,754

daily), seasonally adjusted—

June

FABRICATED

759,535

$31,196,337

___

Number

650,525

534,943

Dollar

948,855

1,124,095

$23,598,189

sales

Round-lot

Number

sales)—

sales

sales—

2,947,554

r..

$555,797,900

Backlog

;

short

955,463

,093,383

Sept. 12

83,771

FED-

June

sales

Customers'

BANK

from

Shipments

—Sept. 12

sales

Customers'

51,860

1,089,450

Sept. 12
;

orders—Customers'

RESERVE

seasonally

Month

—

orders

Number

127,910

77,100

ELECTRIC INSTITUTE:

Revenue

COMMISSION:

purchases!

*104,481

663,160

qp;.

value

Number
-

EXCHANGE

(customers'

Odd-lot purchases by dealers

—

SALES—SECOND

unadjusted

Stocks,

227,145

7777777sept.'

—

STORE

(average monthly), unadjusted

EDISON

201,075

244,820

qAn*

75,540

;•

204,970

Number

110,440

84,870

Sept

7~7

sales

Dollar

(average

84,300

EXCHANGE —SECURITIES

Sept.

Kilowatt-hour

^-777777

Number

106,985
(tons

floor-

purchases

Stocks,

7,400

STOCK TRANSACTIONS FOR
ODD-LOT ACCOUNT OF ODDLOT DEALERS
AND
SPECIALISTS ON N. Y.
STOCK

95,366

78,825

of 2,000 pounds)
stock at end of period

(average

80,410

Sept.

transactions for account of members-

by dealers

79,368

112,570

365,150

616,940

sales

409,430

668,070

____

sales

Odd-lot

580,585

•

102,110

——III—_1

sales

Other

648,690

703,470

____'_

—

Short

687,430
606,360

Total round-lot

*88,063

106,749

pounds)—

2,000

pounds)

RESERVE

•_

—'

Short, sales

;•

2,000
of

(tons

copper

Sales

qpn<-

initiated

purchases

Sales

_Sept.

transactions

Total

2,000

Sales

_Sept.

sales

Other

August:

fabricators—

DEPARTMENT

109.21

IIII_ Sept.

sales

Total sales

Average—100—Month of August:

Sept.

_____

sales

Other

(tons
to

ERAL
-

Sept. 25

Total sales

Short

August

INDEX—

sales

transactions
Total purchases

month

COTTON GINNING (DEPT. OF COMMERCE)—

234,715

523,839

Sept. 19

end

Other

Refined

registered—

Other

(tons

Refined

TRANSACTIONS FOR ACCOUNT OF MEM¬
BERS, EXCEPT ODD-LOT DEALERS AND
SPECIALISTS:
Transactions of specialists in stocks in which
Short

INSTITUTE—For

Crude

427.0

—

purchases

INC.—

BRADSTREET,

Deliveries

ROUND-LOT

Total

YORK—

Copper production in U. S. A.—

3.02

411.6

—

activity—_—

orders

PAINT AND

1949

3.39

405.9

—

(tons)'

Percentage

NEW

omitted)—:

ASSOCIATION:

(tons)

Production

Sept. 29
Sept. 29
—Sept. 19

INDEX

(000's

3.21

__Sept. 19

COMMODITY

COPPER

3.38

-'—Sept. 29

Group————
Group
—1
!

Industrials

OUTSTANDING—FED¬

BANK

(1947-1949=.l 00) —Month

3.53

3.63

NATIONAL PAPERBOARD

OIL,

3.58

Sept. 29
Sept. 29

—

MOODY'S

August

3.20

3.26
3.41

Baa

RESERVE

2.79

Sept. 29
—

Railroad Group
Public Utilities

PAPER

ERAL

DUN

Sept. 29
___'

.—

COMMERCIAL

106.21

(net tons)

CONSUMER PURCHASES OF COMMODITIES-

Bonds—

corporate

Aaa

103.64
.

AVERAGES:

* 9,275,673

6,582,513

alloy

July__

number

Sept. 29
Sept. 29

L____!

-i

Railroad

2,000

Manufacturing

156

COKE

——:

service

j
:

29.700c

28.225c

Sept. 23

—

including

tons)—Month

number

Construction

Total

;

117,600

7,624,747

182

4.634c

$56.59

—Sept. 22
Sept.

Baa

•*

products,

period

INC.—Month

Retail

aU-

77,200

160,876

INSTITUTE:

Manufacturing

113

-.8,539,557

182

Sept. 22

—

3,021,200

65,770

castings produced

FAILURES—DUN

Total

Sept. 23"
at_____

3,216,000

3,561,013

130,341

„

8,353,541

Sepc. 22

____,

____——

end

Wholesale

„L—_

3,787,659

55,109

August

output, all grades

(tons

Wholesale

QUOTATIONS):

corporate—

Aaa

Sept. 24

—

____

9,570,000
;

2——

MOODY'S BOND PRICES DAILY AVERAGES:
I
U. S. Government Bonds

Average

DUN

.___1

Louis)

for
of

(net

orders

BUSINESS

Lead (New York) at
Lead (St. Louis) at—

(East St.

—

——

15,759

3,320,467

Retail number

120

——-Sept. 23

Electrolytic copper—
Domestic refinery at
Export refinery at
Straits tin (New, York)

steel

smelter

Commercial

lb.)^_—

(per

Unfilled

Sept. 26

AND

STEEL

steel

pounds)

Stocks

RESERVE

Sept. 19

COMPOSITE PRICES:

Finished

2,000

Pig iron (per gross ton)-—
Scrap steel (per gross ton).

Zinc

Slab zinc

134,783,000

9,665,000

(in 000 kwh.)

BRADSTREET, INC
IRON

20,697,000

15,991,000

AVERAGE =-100

(COMMERCIAL

78,368

;

INDEX—FEDERAL

17,810

9,401,000

therms)

AND

and

stainless

Shipments

ELECTRIC INSTITUTE:

FAILURES

tons)—Month

Shipments

127,486,000

21,128,000

Sept. 24

(tons)

104,152

17,848

3,505,917

MINES):

(tons)

(tons)-

DEPARTMENT
>

IRON

ingots

(net

$317,149,000

61,850,000

152,481,000
131,784,000

_Sept. 19
Sept.

BUREAU

$214,331,000

58,132,000

165,701,000

Sept. 19

and

Steel

189,663,000
54,880,000

Sept. 19

—
___,

COAL

sales

gas

AMERICAN

and

$180,321,000

159,550,000

Sept. 24

Public construction
;

109,285

end of July'

719,147

—_____Sept. 24
Sept.

—:

(short tons)

AMERICAN ZINC INSTITUTE, INC.—Month of
August:

construction—

Private construction

•

July

therms)

873,596

595,572

gas

Mixed

112,472,000
53,484,000

NEWS-RECORD:

Total U.

;

gas sales (M therms)
Manufactured gas sales (M therms)

34,680,000

113,601,000

51,760,000

;;

ENGINEERING

—

Ago

aluminum in the U. S.

Natural

118,315,000

125,664,000

823,884

__Sept. 19
Sept.

142,334,000

36,799,000

126,189,000
52,164,000

—

Year

Month

MINES):

July:
Total

2,728,000

10,324,000

8,816,000

RAILROADS:

Revenue

CIVIL

.2,215,000

10,244,000

Sept. 19

of that date:

AMERICAN GAS ASSOCIATION—For month of

7,075,000

8,529,000

sent 19
Sept. 19
u__

—

(in short tons)—Month

23,980,000

9,804,000

Sept.
Sept! 19

——

at
at

7,109,000
25,182,000

Sept. 19

-r-Sept 19
Sept.

Kerosene

7,216,000

2,145,000

Sept. 19

6,518,350

24,858,000

24,687,000

—Sept. 19
Sept.
•

(bbls.)

6,618,700

output (bbls.)

output

6,506,100

116,992,000

Sept. 19

Stocks at refineries, bulk terminals, in transit, in
pipe linesFinished and unfinished gasoline (bbls.) at

are as

6,494,900

___Sept. 19
Sept.

Kerosene output (bbls.)——i
Distillate

(BUREAU

-Sept. 19
Sept.
__

(bbls.

average

either for the

Month

105.7

Production of primary

*2,144,000

of quotations,

cases

Ago

90.5

Stocks of aluminum

output—daily

each)

Crude runs to stills—daily average
Gasoline output (bbls.)—

or,

are

Latest

AMERICAN PETROLEUM INSTITUTE:
Crude

Dates shown in first column

Year

to—

and castings

production and other figures for the

cover

that date,

114.6

§Based

new

annual capacity

112.7

of 117,547,470 tons
i
'

;

■

Lii

STATES

BUREAU
(000's

EXPORTS

IMPORTS

AND

CENSUS —Month

omitted):

July
t.

•$1,374,000

Exports
Imports

907,900

*933,763

$1,027,000
839,084

The Commercial and Financial

(1260)

there
is

the

year,

float will increase rather

liquid

and

assets

against their Federal income tax
liabilities and any other need for
they may expect in
For example, a cor-

that

funds

the future.

Iporation

sell

may

bond issue,

.acquire the funds ahead of the
-expenditure for plant, and invest
late funds temporarily in governwient securities. Corporations are
large purchasers during the sec«ond half of
the calendar year,
their

-when

liabilities
"""
rapidly than their

income

increase

tax

will

reserve balance has declined below its reserve requirement and generally replenishes
its
reserve
balance by selling
short-term government securities,
Of course, when a bank gains
deposits, its reserve balance increases by more than the increase
in its reserve requirement, and it
may invest these excess reserves
in short-term government securi-

place

what

the

net sellers.
as individuals are con-

are

far

corned, the bulk of their holdings
are in the form of savings bonds.

They

holders

also

are

the

hanl,.

wh„„
serve

balances

tSities to^Individuals

th„ir

short-term

rttL*to otheTingv™or

would supply the of long-term securities to mutual
provide for savings banks and life insurance
£inancing both the Treasury def" companies., The main purpose, of
icit and the Private expansion of course, is to sell as little as posreserves necessary to

may
secu-

^iefto^ rirelurtoer^d

tothe

t0 commerciakbanks-

■

ey ra*e would rise further and
As near as we can see at this
tbat tbe bond market would de" time, the possibilities of selling at
important point here is that banks clme lu"aerlarge amount of securities to nonThe
Fec(eral
Reserve
then bank
investors
who
will
hold
Reserve Banks

thev

mav

bor-

row

concon

from the Reserve Banks. The
forced

from

borrow

will

holcfi

buying bills at an increas- them are not very great.

The

the

The

it e serve

Federal

either started

unless

Federal .Reserve

loses

....

bank

„

eral Reserve

rp_

less than their

are

have
nave

another

gahis

bank

that
tnai
fu77"

case

that

finri

"are

reaufrements thev
eovernmenf

reserve

sell

declined steadily and dividuals. V It also includes the
m m
At that time many in- sale m
of;';-short-term securities to

market

resulting sharply.

increases*Tn ^he'ir deposit? vestors doubted whether the Fed- corporations. It includes the sale

from

Market

the
me

In
in

usually of

requirements,

serve

through

largely

I
The Influence of the Money

long-

marketable issues.

tem

telephone,

affect

will

are

provj^g for increases in their re-

dealers in government securities,

commercial banks. At such times
the Treasury should try to sell
securities to nonbank investors,

purchases or sales by cor-

m rates on short-term governRight now we have a deficit in
ment securities.
" a period where business seems to
fairiy minor importance.
All of
During the first four months of be more or less in balance. In
tbese factors are continually inthis year, the Federal Reserve .that sort of situation, the program
teracRng
At any given time the followed a generally restrictive of the Treasury is to sell its secunet 0f aii 0f these factors may be policy. Member bank borrowings rities to nonbank investors who
eRher to increase or decrease reaveraged about $1.3 billion, the will hold £ the securities, particu¬
baiances.
In
addition
of rate on Treasury bills advanced larly to individuals. This includes
course
member
banks need
to from 2% to 2^4%, and the bond the sale of savings bonds to in-

victual tax payments. During the known as the money market,
half of the calendar year, This trading is usually done over
As

Thursday; October 1, 1953

may

porations. Altogether they give
us the background behind changes

had not

that

market

money

first

they

case

factors

other

tbe

These transfers of ownershort-term government
take

been the

had the snowstorm.

securities

than

easier

much

have

that its

ties.
ship

large

sharply,

and the money market as a

Municipal Bond Market
securities

whole
would

will find

you

that the mails are so delayed that

disappear during a prolonged
depression.
During a
boom period the
Treasury should have a surplus,
which it should use to bring
about a decline in the amount of
government securities held by

securities also will decline. If the
Federal Reserve offsets losses only in part, borrowings will rise,
and rates on short-term government securities will also rise. Of
course, we also have to take into
account other factors such as

when

example,

bad snowstorm, which

little hard to imagine at this

time

The Government and

For

rise.

will

Continued from page

Chronicle..

tnen

bank

who

investors

nonbank investors or the Federal
Jate'
J™™^ tL* Feda^e^Sor?d<5laS
Reserve Banks purchase govern- stentglwrd^ and to e Fed
aaahist their
4n financing the current deficit, there
are
various other
fac- ment securities in the open marTotal
holdings
by
individuals tors that result in gains and loses ket. As you know, if banks bor- ^qmrement P^ce" a|ess^°^_
pei^ obta^a
Jiave increased somewhat during of funds to all banks as a whole.- row for a long period, they are
ings at the federal Keserve de .treasury could,^pernaps, obtain a*
Ztr
increasea somewiwt uunug
w- a
*
v ^ likplv to take stens to reduce clined sharply, and money rates small amount from nonbank fi«xe past six months, but these We are part cularly interested in
likely to. take steps to reduce
*x.y
y
nancial institutions. If the long-

that'

will in addition to this continual flow
tiave to sell to commercial banks of funds among individual banks,
amount

the

reduce

purchases are only a fraction of

market in the future

monev

Oemmercial Banks as Government
Bondholders

banks until

connection with Federal

Reserve

Holdings by commercial
are
predominantly
in

*H>ltcy.
4>anks

Federal

second

changes in the amount of money
in circulation. A third is changes
in

stock,

gold

and

fourth

changes in float.
Federal
the

Reserve

deposits at the
increase

Banks

Treasury has withdrawn
commercial

from

securities.
ndCommercial banks need liquid-

«y for two primary reasons. First,
they need liquidity to take care
In

Co another.

our

complex

^
econ-

funds are continually shift ng
among depositors and go from one

«my

C#ank

another

*>art

commercial

Second

from

and

country

the

liquidity

one

another,

banks

need

order to meet the cus-

Comer demand for loans.
If

lrmauon,

there

only

were

one

com-

have

would

bank

par-

situation that af-

Wfc
honiro donn.nih,
fects commercial banks generally.

second

The

commercial

{actor

banks

that

af(ects

whole

trfhanCgeinatnheSamoSnrof°ceure
circulation>

rency

commercial

bank

vau^

cash,

genera

which

Uy^repTe^Tsh
from

curren

when
out

pays

to a depositoi.

rency

its

obtain„

cur-

it reduces its

will

curities to tne reaerai Keserve or

Resyerve Bank8

Currencv

from

"pays for°U

other

words

market and the short-term

government
reflect

effect it

buys the currency from the Fed~

—

«c.

The

mirn!*' policies

refunding

The refund ng

the

balances

reserve

hnldprs

reflected

erally

Vjj

at a considerable price aecnne tl0ns are between these two exfrom the t
you have a more difficult

finally

ob-

"I5,ket'

are

policy

gen-

practical

government

purchases

Reserve

secu-

the

securities or whether the Federal
Reserve forces member banks to

bonol.

If the Federal Reserve
Purchases government securities

freely, commercial banks can obtain reserves easily, and money
A1--

a b°°"? ,C,a"

* ^

reserves,

Reserve

sell

foten^al selfers who refunded should be sold as far as
"t'ea. and potential sellers who possible to investors other than,
af "nab£e ^ f'"d a ^ice decline f.ommercla> banks' When eondi-

tatoed banks are short of
by one mettodor.the other.
When
Federal

pndeavor

whether

security market will

essentially

then

^obtaining

Bank> it
by reducing its own reserve bal-

ance.

SS55E ?h0ulin0t-*2?
^°™co^'te15,"a ^ seCuritfes to dlffe.r.ent £rom,tbe PoI>«es already
stopped, the inflation will have to ^PfnC'f0°DV|ev "^ the market from mentioned with respect to cash,
be financed from existing de- be in sePPly '^ tbe ma^et trom financing..During a deflation the

money

the

use

—v.

impor^n^. factors in tne gov

commercial. banks and if the;_increase in total bank credit can be

by borrowing from the Federal
Reserve. The condition of the

Cicular need for liquidity, b

'most^mporTa^r^c^ors^n^he^govmost

uns ^

klnd of Pressure can be put on

short-term government securities.

may

the Reserve

«nercial bank in the country, that
•one

commercial banks
funds to purchase

Banks,

penoas

Jj? periods of inflation,

This, again, is

to investment in long-term

term market is reasonably staple,.
such institutions might be lnter-

banks
Af

•ending policies and in their poll-

term market is reasonahlv stahle

ested in another offering of longterm bonds, such as was made to
s*U securities or to curtail loans, requirements,
borrowings and them last spring, provided the
First, they are likely to sell short- ™oney ra*es have since nsen, hu size of the *fsue is not too largeterm securities. If a bank's hold- they have not gotten back-to the When ' possible ^purchases
ings of short-term securities or former peaks. , v
these sources and from jndiyidsecondary reserves are below the
Qnen-Market Operations
™
I
'
usua"y ™
J™?"]*}1?1
feelssituation of
necessary
From this discussion I think need to call
upon^commerciaf
to hold in view of the
*r°m tnis discussion i ininx need to call upon commercial
that Particular bank> it may sell ^at„
hanks for a considerable pajt of

A. commercial
bank, when its than it has paid out to them. At
Kquidity drops below the amount such a time we find all banks
wants to keep, may try
to pretty much in the same situation,
•raise that liquidity either by call- We find many banks in the mar«ng loans or by selling longer- ket to sell short-term securities
torn securities and investing the and 0nly a
few banks in the

cies

onlv

was

when Treasury

Commer-

these

hold

banks

the

Bank.

Reserve

securities

securities.

*jhort-term
jdal

last, be-

I want to consider them in

cause

deposits

Trpawrv

ireasury was oniy
reduce-temporary, and /since- later ontheir borrowing. In this event, the Treasury sold $6 billion of secommercial banks are likely to curities, which increased reserve

Federal Reserve Bank

One

these factors is the change in

Treasury

consideration

left

have

■commercial

their borrowing, or iney may get
little suggestion from their dralt ot the

these general factors in trying to

forecast what is to happen in the

deficit
deficit.

Treasnrv
Ihe Treasury

situation, and a mixed policy is
of
oi

expansion

blf

some

c+red!\ .J?ll£rJA01T„

During

busiLss r^cession

govcrnm^tsecurities ^ually wUl
^nvestorswm ha^e
1,
gjjed private
tethdr
a

wili

T
,

Drobably

,fHthp

re-

hive

Jdera,

Re.

level

and

the

trend

busi¬

ness.

Summary
In

conclusion,

I would like to>

try tQ bring alj Qf this together
and
indicate tbe fa^ors that I

think are important for you to

watchin studying toe government
spcur,lty market- Wlth resPeat to
the long-term
AUA

market,

perhaps

Caayments by one depositor
would

other

have

effLv-o

Che total funds at the disposal of

tnere

erai reserve,
wnen
decrease in money in

circulation,

iijjiw^

thereby £

and

ernment securities

i^nLTankUslaLwPnvkPr Si banks will generally depositFed- forces member banks to borrow.
the
banks, however, and some
vault cash with their
C4,000

excess

t>anks

always losing deposits

are

making loans, with the propaid out to some other
tbank.
The
individual
banker,
^consequently, has to keep a fairly
large amount of short-term secu-•rities that he can sell quickly at

eral

creasing

ceeds

The

a minimum

nnnn

loss.

The amount that

thf

Hp"

tvnp nf

^ S p P 5® omnnrA ^ff lnfnc

hint pvn^fc^ make.
Up
k
pects to

aw t e
Chat thp ba

know
know

you

.funds

commercial
ommercial

tisually reflected

to
a

transfer
bank

•Wnen

course,

banks

reserve

its

reserve

that

bank

very

gains

loses

reserve

^toss in deposits.
carry

drains

are

bal-

excess

reserves,

losing

deposits

balances.

reserve

third

reserves
a

commercial

whole, and

their

banks

decrease reduces

Reserve
bank

aCin
sent

Bank

that

through ct Federal
uuuugn
a rcuciai
for collection, the

deposits the check re-'

Ceives credit according to
time
schedule, but the bank on which
the check is drawn is not charged
until the check is

of
requirement
deposits,

amounts

a
bank that is
generally firids

actually collect-

by the Federal Reserve Bank,

When there is

delay in the col-

lection of checks, which often
,

curs

Federal

*eaerai

the problem

vnHnn!e?nMnrl

uncollected

items,

and

If
.,

float,

reserve-

will

balances

reserves

stitutions, ui order to determine

are

tlmt

Debt Management Problems

inffnJupp p^

Federal Reserve

the
t.

that

securities

maturing

during

the

government market, the most im-

The P°licy that the
lQwg -n managing

securities maturing in about five ties or by- forcing banks to

years or

less.

when there xs bad weather, than offsets losses from these fac-

increase,

nuts

second half of this calendar year, portant factors are the operations
Treasury fol- of the Federal Reserve and of the
cess reserves.
If, over a period of
debt will nonfinancial corporations. We
several weeks, the Federal Re- baye an important effect on the have seen how various factors,
i6Pti^ +1fpw government security market. As such as money in circulation, are
i^uA^?ntr J'
,ar® .P™', V a matter of general principle, continually operating in the monVJC™1n?
t«
during a business recession the ey market to increase or decrease
* ®
fuL
Treasury should sell securities to bank reserves. The condition oi
f*
commercial banks. This can be the money market reflects essenm »e money market and prob- accomplished principallv by sell- tially whether the Federal Reably in the short-term govern- jng '.short-term
securities .and serve decides to supply reserves
ment security market as well.
medium-term securities, that is, by purchasing government securi-

oc-

the

ftf

® ® J
.

Reserve to

reserves.

The final item °f importance in
the money market is float, which
is uncollected items. When a

balances

fraction. ^
Since most banks

in-

deposits

limited

their

thereby

important factor
is
changes in the gold stock.
An
increase in gold stock adds to the

check

A bank that loses deposits

ances.

tias

the
the

Bank,

and

commPereial banks, ^er
likely to

be net buyers or net
sellers of long-term Treasury
*
;
The final subiect that I want bonds- A growing factor in this
In trymS to interpret what 1^ f ..
.
thJT
,
dbt_, market is pension funds and State
likely to happen in the govern- management nolicies The Treas- and local retirement funds. Their
ment security market, it is 1mg
faced with a sub- Policies also have to be taken
Portent to watch, over a period of st/ntial cash deficit and a sub. into account.
weeks, the reaction of the Federal stanRaj am0unt of refunding of
With respect to the short-term
TnfiUMirp

Reserve

invp^tor^

in tbe bands of

tors, borrowings will decline, and
rates on

short-term-government

These

the types
commercial

are

tbat

banks,

fer,

such

can

bor-

Under boom conditions wc
generally exoect governmen

securities to be in supoly hr th<
preference market, the Federal Reserve t(

whole, generally pre-

although

row.

Volume 178

Number 5260

The Commercial and Financial Chronicle

...

(1261)

purchase only part of the offerings, and yields to rise. During
business

securities

recession
will

the market,
serve

shorty I believe that the
principal factors to watch with
respect to the government security market are the flow of funds,

willing purchaser

rising prices.

Federal
Reserve
policy, and
Treasury debt-management policy. I have also tried to point out

Finally, Treasury debt-management policy
should be adjusted
during a recession to selling the
types of securities that

that there

retiring

securities

held

owned

by different
I

vestors.

types
that

sure

you

in¬

will

f'"d ** ^udy of the government

characterized
budget deficit at a time of
high business activity, is a particularly difficult. time_ for both

different types of
securities
that
are

are

government

commer-

cial banks like and during a boom
to

2,139,000

government

in- demand

of capacity

serve.

and the Federal Re-

may

the Treasury and the Federal Re-

security market to be of help in

analyzing the markets for other

interest-bearing securities

jrorn

the rate

ago

ating rate

The State of Trade and
the

books,

seasonal

factors

and

opinions

was

90.5% and production 2,040,000 tons.

year

placed at 2,195,000 tons and the

was

105.7% of capacity.

Car

The percentage figures for the

of Jan. 1, 1953, the rate

freight for the week ended Sept. 19, 1953,
increased 113,330
cars, 15.9% above the preceding holiday week,
according to the Association of American Railroads.
Loadings totaled 823,884 cars, a decrease of 49,712 cars, or
revenue

5.7% below the corresponding 1952 week, and a decrease of
39,806
cars, or 4,-3% below the corresponding 1951 week.

amount

working days

about

are

double

normal,

that

kwh.

the

electric

distributed

energy

preceding week, but

increase of 728,794,the comparable 1952 week and 1,251,749,-

over

these

course

inflated

inventories

Automotive

preceding
troubles

entirely acci¬
Competitive drive to
big production race.
Result: It has seemed wiser to
Jiave too much scarce steel at
some extra cost than to lose markets to
competitors (or lack of
raw
materials, declares "The Iron Age."
dental,
reach

nor

the

they

First reports

optimistic.
than

Scrap

the

.fell $3.83

with

initial

ton

from

downward

the

trade

the

were

threatened

"The

for

ninth

the

Commercial
week

they

Corp. makes work their

slightly this week

way out of model

certain

Chrysler

changeover.

living

government's

costs

month

ended

0.3%,

Aug.

1947-49 average.

The level

year

moved

earlier

114.3%.

was

housing, transportation, food and medical
responsible, it was reported, for the latest rise.
fare boost

workers

contracts

months
wage

with

roads,

three

cents

rates

pay

fluctuations

and

$5,000

than

less

were

concerns

one-half

succumbed.

mildly
119 in the

decreased

numerous

year

Nine of the failing con¬

of $100,000, compared with

excess

14 last

The

index

represents

31 foods in general

eral trend of food

are

wage

the

clothes

casual

increase

volume

were

year

ago.

the

strike

lowest

year

which

February of this
adds.
-

■

steel

scales of 1,300,000

hour.

Under

changed

above

year,

every

prices at the wholesale level.

their

Gains

three

irregular

were

the week.

the

wise

last summer, states

with

prices fluctuating widely during
selling pressure

Wheat drifted lower under considerable

since

the

"Steel," the

■

Not

year

Activity
week before.
about

The

plentiful
These

adjustment

supply

include

and

Cattle

largest5 in

sharply

some

demand has put some products in
carrying some others in that direction.
products that a few months ago were the

tightest in supply, the above trade journal observes.
The
"

American

Iron

and

Steel

Institute

prices

announced

that

the

were

day,

per

soybean futures averaged
against 35,300,000 the week

year ago.

easier

seasonal

and

ago

substan¬

year

higher than in the

were

week.

Upholstered furniture and beti¬
ding

were

most

frequent

de¬

mand.

Small
appliance
volume
continued to be noticeably higher
than in the previous year. Pur-^
chases
of
television sets varied,

Marked

video

were

sales

increases
in

noted

Wash¬

ington, Seattle and Portland. The
forthcoming telecasting of major
sporting events
the

listed

was

for

reasons

the

Automobile

one

increased
volume

slackened

seasonally.
purchases were

Food

ately
and

above the

slightly

moder¬

preceding

above

the

week

year-age^

level.

Department

store

country-wide basis,
the

Federal

sales

Reserve

taken froxfe
Board's

i»-

dex, for the week ended Sept. 1%
1953, increased 6% from the level
of the

preceding week. In the

pre¬

vious week. :!!Sept. 12, 1953, a de¬
crease of 11% was reported fronat
of the

For

the

similar week of

four

weeks

1952.

ended

Sept.

19, 1953, a decline of 3% was re¬
For the period Jan. 1 te»

ported.

Sept.

19,

1953, department stores!
registered
an
increase odf

sales

3% above 1952.
Retail

week,

trade

New

stimulated
and

York

over

las*

According

bearish

factors

Board's

the

large

which will

move

into the

prospective

sales in New York City for
weekly period ended Sept.
1953, advanced 10% from the lilta
period of last year. In the prece<*~
ing week, "Sept. 12, 1953, a de¬
the

crease-

12%

from

(revised)

that

weeks

decrease of 7%

was

change

was

Wednesday of last week reflected marked increases

over

both

also stimulated

appetites and resulted in

upturn in furniture

reported. For

1953*

registered from thafe

of 1952.
♦Lfibor

Day in 1952 fell in the week
Sept. 6, whereas this year it fell
later. Therefore, the week emlk
ing Sept. 5, 1953, had one more trading
day than the corresponding week las*
year,
while the week ending Sept.
1953, had one less trading day than thai
week ending Sept. 13, last year.

ending
one

week

p\m Wo

sav

the previous week and the previous year.
Cool weather spurred
purchases of Fall and Winter clothing.
The lower temperatures

re¬

similar

the period Jan. 1 to Sept. 19,

volume of cotton

the nation for the period ended

was

1952, while for the four
ended
Sept. 19, 1953, &

loan.

most parts of

the

crop,

Preceding Week and Year Ago
sales in

Re¬

department

store

Trade Volume Shows Marked Increase Above
;

Federal

index

receipts for the week rose to the

included

promo¬

gain of abet#

year.

Hogs were fairly steady but lambs dclined
expanded marketings.

limited export demand, and uncertainty over the

Retail

coolwr

the volume of the sim¬

period last

serve

large

some

seven years.

slowness in cotton textiles.

operating rate of steel companies having 93% of the steel-making
capacity for the entire industry will be at an average of 94.9%

bushels

Spot cotton prices trended moderately downward under in¬
creased hedging pressure,*slackened mill buying and continued

steel

Purchases of all grain and

56,700,000

Other

Upturn in steel production in the week ended Sept. 26 stems
settlement of a strike at the Lackawanna, N. Y.,
plant of Bethlehem Steel Co., it points out.

Sept. 1 for milling, export or carry¬

the Chicago Board of Trade increased sharply the

before, and 44,500,000

largely from

reported at about 1,400,000,000 bushels, compared with

of this

high rate of capacity all
all-time high, continues

supplies of wheat

were

1,225,000,000 a year ago, and 1,086,000,000 two years ago. Corn
prices strengthened, aided by comparatively light country offer¬
ings and high premiums in the cash market. Rye and oats prices
were
relatively firm despite liberal receipts of Canadian grain.
Soybean prices declined moderately reflecting larger country
offerings of the new crop.
f.

output has been below 9,000,000 tons was
when production totaled 8,900,000 tons, it

only has output been at
but the capacity is at
this trade journal.

was

furnishing sales reflected

preceding

week

Total

will be 33% greater than output in 1952's comparable period
which was depressed by the steelworkers' strike.
This greater"
production is one of the reasons steel'supply is overtaking de¬
this

year

and

ago

ported

Slightly

Nevertheless, steel production in the first nine months

mand.

noted.

only slightly above
There

prompted by uncertainty regarding the Administration farm pro¬

year

apparel
Accessories

moderate increase above

10%

over

production

one

ago

••

soma

formal

tially above the preceding week

weather

daily wholesale commodity price index, compiled by
Bradstreet, Inc., moved steadily downward in the past
week to close at 277.35 on Sept. 22.
This was a moderate drop
from 280.89 a week earlier, and well below the 290.83 on the
corresponding date a year ago.

weekly magazine of metalworking, the current week.
September output of steel for ingots and castings will total
approximately 8,800,000 net tons. Since August
oniv otner
month

although

increase in spending for fur pieces*:
Shoe
volume
was
moderately-

ilar

Dun

being

preferences

express

was

sales

The

the week ended Sept. 26 was the highest
since the first week of this month but it
probably won't keep the
from

clothing. Consumers

continued

Lower Trend

Lower Rate

month

-f 1
per¬

back-to-school and

were

for

total of the price per pound of

sum

and its chief function is to show the gen¬

use

chiefly

Output Scheduled This Week

steelworkers'

increased

back-to-work

gram.

Steel production

Northwest

sales

Apparel

Wholesale Commodity Price Index Shows Moderately

Increased

care were

living costs. Officials said
boosts will cost the railroads $90,000,000 yearly.
Steel

and

—J— 5.

tion sales showed

the

Final lifting of
July 31 and the New York City subway

mid-August index,

will

the

match

Following the sharp advance of a week ago, the Dun & Bradprice index edged slightly lower last week,
bringing the figure for Sept. 22 to $6.71, from last week's $6.72.
The current number compares with $6.45 on the corresponding
date a year ago, or a rise of 4.0%.

factors.

were

On the basis of the
railroad

115.0%

costs of

Federal rent controls

index
a

the

street wholesale food

price index showed a rise in
establishing a further high record in the
The

+2 to +6; East and Soutk
+7; Midwest +4 to-fO;

Southwest

that

consumer

Coast

volume.

to ,152

Wholesale Food Price Index Eased in Latest Week

will be lost—due to this fire—before the

cars

declined

1952.

week.

In the second quarter this
year the total was 1,735,811 cars.
third quarter total would have been,
higher except for
^setbacks at Chrysler and
among the independents and the General
Motors fire which cost the loss of
50,000 G.M. cars. Ward's antici¬

The

failures

last

had liabilities

cerns

The

1952

by the following percent¬
England and Pacific

New

Moderately

preceding week, according
While casualties dipped only slightly

liabilities

157

when 37 small

ago

July-September,

year's end.

with

from

vious week

September production is expected to decline about 9% from
August, according to this trade agency, but it looks for total third
quarter production to be about 1,594,000— a figure surpassed by
only one other third quarter: the 1,898,783 in

estimates

comparable

regionally.

week, but remained above the
On the other hand, small casualties, those
involving liabilities under $5,000, fell to 16 from 25 in the pre¬

"Ward's Automotive Reports" states.

pates 120,000 G.M.

136

similar week

Industry production fell 8% last week due mainly to model
changeover troubles and parts shortages which harassed
Chrysler,

1951.

last week, compared
ago the weekly pro¬

year ago and the 1951 toll of 154,
down sharply 42%, from the prewar level of 264 in 1939.

were

Failures
to

rise

above the level of

Regional

ages:

182 in the

Bradstreet, Inc.

below the 156 which occurred

Apr. 7, 1949.

output will

year

7,528 cars last week, compared

industrial

and

ended Sept. 24 from

to Dun and

bottom to drop

Age" steel scrap composite price
per gross ton, being the sharpest drop
than four years, when the composite fell

cars

Business Failures Decline

holders

the

previous week and 6,220 in the like 1952 week.
Truck production amounted to 1,261 units last week, against 1,180
the week before and 2,384 in the year earlier period.

Iron

ago.

Home

below

? '

XwithCanadian the
companies made
7,083 in

consecutive

panic,

near

cause

volume, due mainly to model changeover
parts shortages which harassed Chrysler, "Ward's

and

better

consumers

fell

^rqq nn?!/
56,1

ton to $31.50

Car

material

market.

response

week

week's

it reports.

spiraled

sources

in scrap prices in

latest

United States truck production last week totaled 22,675, com¬
pared with 23,195 the previous week. A year ago truck output was

guesses.

resulted

the

106,819
115,454 in the previous week. A
duction was 103,925 cars.

outlook for steel business early next
year are
a few mills have been
opened on one

prices

Some

"distressed"

bad

has

had been expected,

week.

out

first

for

with

Order books of

products

reflect

customer

Changeover and Parts Shortages

output

Automotive Reports" stated.
The industry turned out

not

are

Output Drops in Latest Week Due in Part to

Model

journal asserts.

levels

the like week in 1951.

over

U. S. Auto

this trade

year

demand

Output Declines Moderately

kwh., or 9.6%

two months.

by Dun & Bradstreet, Inc., to be
from

ceptibly in the week. In greatest

Electric

000

example of inventory correction is the auto industry,
which holds almost
unbelievably overloaded stocks—especially
when measured against cut back
production. Current inventories

trade

selves, this prediction still looks good, it states.

Prime

The total dollar volume of retail
in the week was estimate*!

ago

oper¬

Loadings Rise 15.9% Above Preceding Holiday Week

Loadings of

000

Operations this week are scheduled at close to 95.0% of rated
capacity. Inventory correction, now at its peak, has been going
on for some time.
It should be pretty well
completed in the next

buying. The observance of thereligious holidays had little effect
on consumer spending.

varied from the

below

them¬

people

was

production

by the electric
light and power industry for the week ended Saturday, Sept. 26,
1953, was estimated at 8,353,541,000 kwh., according to the Edison
Electric Institute.
;;
i a ' v*
v\'
The current figure represents a decline of
41,166,000 kwh.

Industry

steel

current year are based upon the
capacity as
this year being higher than last
year.

well.

page

Sept. 28, 1953, equivalent to
ingots and steel for castings as against 95.1%
2,144,000 tons a week ago. For the like week a month

the weekly

The

Continued,

for the week beginning

tons

(revised),

The Commercial and Financial Chronicle.

Thursday, October 1, 1903

(1262)

if INDICATES

Acteon

B. C., Can.
stock (no par).

Gold Mines Ltd., Vancouver,

April 22 filed 250,000 shares of common
Price —$1 per share (net to company).

Proceeds—-To
Underwriter—M. H. B.

purchase equipment and supplies.
Weikel, Los Angeles, Calif.
• Allied Credit Card, Inc.,

Spokane, Wash.

Office—621 Columbia Bldg.,

Spokane

Underwriter—None.

American Independence

•

Carl

Blosser

Underwriters—Dallas Rupe & Son, Dallas, Tex.;
Loeb, Rhoades & Co., New York; and Straus,
& McDowell, Chicago, 111. Offering—Postponed

California Central Airlines,

Houston, Texas.

July 14 filed 50,000 shares of preferred stock (no par)
and 50,000 shares of common stock (no par) to be of¬
fered to commissioned officers of the uniformed serv¬
ices of the United States in units of five shares of each
class of stock.
Price—$495 per unit.
Payment may be
made in 36 equal monthly instalments of $13.75 each.
Proceeds—For
general corporate purposes.
Under¬
writer—None. Statement effective Sept. 16.

Hills, Cal.

100,000 shares of class A common stock.
($10 per share). Proceeds—To establish
a cattle industry in Israel.
Underwriter—

Price—At par
and develop
None.

if American Mining & Smelting, Inc.,
Spearfish, S. D.
Sept. 22 (letter of notification) 190,000 shares of common
stock (par 10 cents). Price—$1 per share. Proceeds—To
purchase machinery and for exploration expenses. Un¬
derwriter—N one.

^ Anacon Lead Mines, Ltd., Toronto, Canada
Sept. 28 filed 700,000 shares of common stock (par 20
cents—Canadian funds) to be offered for subscription by
common

the rate of

stockholders at

each five shares held.

one

new

share for

Price—To be supplied by amend¬

Proceeds—To develop mining properties.

ment.

due

Sept.

principal amount for certificates and 75 cents per share
stock.
Proceeds—To acquire five Martinliners and
the spare parts. Office—Burbank, Calif. Underwriters—
Gearhart & Otis, Inc., New York; and McCoy & Willard,
if Cameo Oil Corp.
Sept. 18 (letter of notification) 60,000 shares of common
stock (par $1).
Price—At market. Proceeds—To sell¬

Under¬

& Co.,

stockholders. Underwriter — B. G. Phillips
No general offer planned.

ing

New York.
•

Carolina Telephone & Telegraph Co.

Aug. 17 filed 33,320 shares of capital stock to be offered
for subscription by stockholders of record Sept. 16 in the
—At

one

share for each five shares held.

new

Price

Proceeds—To reduce shortUnderwriter—None. Offering—Temporarily

($100

par

term notes.

share).

per

Carrier Corp., Syracuse,

stockholders of record Sept. 22 on the basis of one

rights to expire on
share. Proceeds—For expansion
program.
Underwriters—Harriman Ripley & Co., Inc.
and Hemphill, Noyes & Co., both of New York.
Oct. 7. Price—$31.75 per

•

Appell Oil & Gas Corp., Alice, Tex. (10/7)
Sept. 16 (letter of notification) 300,000 shares of common
stock (par 10 cents). Price—$1 per share. Proceeds—For
drilling costs. Office—Appell Bldg., Alice, Tex. Under¬
writer—R. V. Klein Co., New York.

Applied Science Corp. of Princeton
May 21 filed $750,000 of 6% guaranteed sinking fund 10year debenture notes due April 30, 1963, of this company
and 75,000 shares of common stock (par one cent) of
Bradco, Inc., to be offered in units of $100 of notes and
10 shares of stock. Price—$105 per unit. Proceeds—For
acquisition of stock of two companies, who will borrow
the remainder to. repay bank loans and for working
capital. Underwriter — C. K. Pistell & Co., Inc., New
York. Offering—Temporarily deferred.

mon

Underwriter—None.

Bldg., Baton Rouge, La.
Duquesne Light Co.

Aug. 19 filed 100,000 shares of preferred stock (par $50).
reduce bank loans and for new construc¬

Proceeds—To
tion.

Underwriters

To be determined by competitive

—

Probable bidders: The First Boston Corp.;

bidding.

Kid¬

der, Peabody & Co., Merrill Lynch, Pierce, Fenner
Beane and White, Weld & Co. (jointly); Kuhn, Loeb

&
&-

& Co. (jointly); Blyth & Co., Inc.;
Bids—Originally scheduled to be re¬

Co. and Smith, Barney
Lehman

Brothers.

but on Sept. 16

11 a.m. (EDT) on Sept. 17,

ceived up to

announced bids will be received within 30
days from that date, bidders to be advised at least three
days in advance of new date.

the company

•

Excelsior Insurance Co. of New

York

(letter of notification) 30,000 shares of capital
stock (par $6) being offeree! for subscription by stock¬
holders of record Sept. 16 at rate of one new share for
Aug. 26

Price—$10
OfficeUnder¬

held; rights to expire Oct. 5.

each four shares

writer—None.

Fairway Foods, Inc., St. Paul, Minn.

May 8 filed $1,600,000 first mortgage lien 4^% bonds
to mature $40,000 annually from 1955 to 1994,- inclusive.
Price—At 100% of principal amount.' Proceeds—To con¬
struct new warehouse. Underwriter—None.
'

Petersburg, Fla. (10/8)

Florida Power Corp., St.

if City Gas Co. of Phillipsburg, N. J.
Sept. 28 (letter of notification) 240 shares of 5% cumu¬
lative preferred stock.
Price—At par ($100 per share)

Sept. 11 filed 211,416 shares of common stock (par $7.50)
to be offered for subscription by common stockholders

and accrued dividends.

about Oct.

Proceeds—To two selling stock¬

Office—57 Main Street

holders.

Flemington, N. J.

Un¬

derwriter—None.

writer—None.

if Deep Lake Gas & Oil Co.
(letter of notification) 300,000 shares of com-,
stock (par 24 cents). Price—$1 per share. Proceeds,
—To develop leases. Office — Louisiana National Bank

Sept. 24

being offered for subscription by com¬

(par $10)

share for each four shares held;

new

ISSUE

per

Sept. 16 filed (by amendment) 278,422 shares of common
mon

REVISED

share. Proceeds — For working capital.
Syracuse Savings Bank Bldg., Syracuse, N. Y.

postponed.

stock

ITEMS

•

for

ratio of

Aug. 24 filed

trust

1957, and 400,000
stock, (par 50 cents). Price—100% of
A,

series

Boston, Mass.

Life Insurance Co.,

American-Israeli Cattle Corp., Beverly

Inc.

Aug. 24 filed $600,000 of 7% convertible equipment
shares of common

Sept. 24 (letter of notification) 2,500,000 shares of com¬
stock.
Price—10 cents per share. Proceeds — For
4, Wash.

capital.

certificates,

mon

working capital.

Registration

Now in

Securities

ADDITIONS

SINCE

Cleveland Electric

Illuminating Co.
of preferred stock, $4.50
series, no par value, and 50,000 shares of common stock,
no par value, to be offered for subscription by employees
Sept.

filed

10,000

of the company and

8; rights to expire on Oct. 26.

Price—To be

supplied by amendment. Proceeds—To repay bank loans
and for new construction. Underwriters—Kidder, Pea-

Fenner & Beane,

body & Co. and Merrill Lynch, Pierce,
both of New York.

its subsidiary, Ceico Co., under an

Employees' Thrift Plan.

if Courtesy Loan Corp., Hammond, Ind.
Sept. 21 (letter of notification) $100,000 of 12-year 6%
subordinated debenture bonds, series A, in denomina-;
tions of $100 each (to be offered separately and in a
package together with $20,000 in common stock, of which
$8,000 is class A and $12,000 is class B). Proceeds—For
working capital. Office—5324 Hohman Ave., Hammond,
Ind.

10 shares held on or

of one new share for each

at rate

Sept. 23 (letter of notification) 60,000 shares of common
stock. Price—At par ($5 per share). Proceeds—For work¬

Underwriters — Woodard-Elwood Co., Min¬
and Harold E. Wood & Co., St; Paul,

ing capital.

neapolis, Minn,
Minn. '
•

.-ijA

(10/2) ...''

General Credit, Inc.

preference
stock (par

Aug. 24 filed 150,000 shares of participating
stock Xpar $1) and 150,000 shares of common

be offered in units of one share of each
Price—$5 per unit. Proceeds—For work-

five cents), to
class of stock.

Underwriter—None.

Iron Co.,

if Flour City Ornamental
Minneapolis, Minn.,

Armstrong Rubber Co.
March 31 filed $4,000,000 of 5% convertible subordinated
debentures due May 1, 1973. Price—To be supplied by
Proceeds—For working capital. BusinessManufacturer of tires and tubes.
Underwriter—Rey¬
nolds & Co., New York. Offering—Postponed.

NEW ISSUE CALENDAR

amendment

October 2

Credit, Inc.____

Johnson

Industries, Inc.__

(John

lArAstor 3-D Films, Inc., Phoenix, Ariz.
Sept.
mon

(letter of notification)

stock.

equipment.
Ariz.

100,000

shares of

com¬

Price—At par ($1 per share).

Proceeds—For
Office—1018 Title & Trust Bldg., Phoenix,

(J.

Preference & Common

Boland)

M'arto

Co.)

(Offering

to stockholders—no

:•

•

underwriting)

Kansas Gas &

★ Beneficial Loan Corp.
Sept. 29 filed 355,976 shares of

October 5
common

to be offered to common stockholders

new

with rights

for

each

to expire

shares held

Oct. 23.

stock

(par $10)

the basis of
or

about

Price—$24

Proceeds—For general coi-porate purposes.
—None.

per

Miracle

Hinge, Inc

Preferred & Common

(Walter

one

Oct.

United

States

(Mortimer B.

share.

(Monday)

Air

Aronheim)

Conditioning Corp

Burnside

& Co.,

320,000

Underwriter

Inc.

Common

Meeks &

(Gordon

Co., Newark, N. J.

14-day standby). Certain stockholders have waived their
rights. Price—At par. Proceeds—To repay $1,014,500 of
outstanding notes and for drilling expenses and working

Mississippi

Power
(Bids

10:30

$4,000,000

(P.

Bonds

CST)

a.m.

Co.,

Inc.)

$550,000

Morgan

Glore,
'■

Iowa

Klein

Electric Light &

Lunt

and

(Offering

Corp.

Co.)

Weld

Co.)

The

128,316

October

(Bids

noon

Picture

Florida

Power

Philadelphia

San Francisco

Chicago

(Offering

Peabody

Cleveland

•

Private Wires

all

offices

(Offering

Co.)

$300,000

211,416

Common

stockholders—underwritten
Fenner &

invited)

Bonds
$40,000,000

(Tuesday)

Beane)

Preferred

County Electric Co.—
11

a.m.

210,721

Government

EST)

$7,500,000

(Offering to

Merrill
shares

Lynch,

(Tuesday)

Debentures

Employees Corp

without underwriting)

stockholders,

December

Light & Power Co
to

Pierce,

November 24

Common

stockholders—underwritten
by
Kidder,
Co. and Merrill Lynch, Pierce, Fenner
Beane)

..Common

Corp

Rockland
•

to
&

(Wednesday)

November 17
Worcester

$1,500,000

Productions, Inc

-(Alexander Reid
*

Bonds

Equip. Trust Ctfs.
EST)

(Bids

Burton

Niagara Mohawk Power Corp

(Thursday)

Baltimore & Ohio RR

underwritten by Union

100,000

invited) $30,000,000

(Bids may be

First

—-Common
—

Corp.)

Public Service Electric & Gas

(Bids

October 8

(Tuesday)

stockholders

..Common

Companies

White,

(Offering

Securities

198,500

stockholders—underwritten
and

$25,000,000

Illinois Light Co

$300,000

Common

Allen

Debentures

EST)

noon

October 27
Central

Western Massachusetts
Boston

(Bids

230,000 shares

Class B Common

Strategic Materials Corp

Pittsburgh

(Monday)

Corp

Gas

Common

Power Co

Casualty Co

and

$300,000

Co.)

(The First Boston Corp. and G. H. Walker & Co.)

(Hamlin

Common

Stanley & Co.; Drexel & Co.,
& Co.) 800,000 shares

Forgan

■

-Common

Appell Oil & Gas Corp
V.

Common

(Wednesday)
United

(R.

Preferred

$750,000

Co,)

October 26
7

October

(Floyd D. Cerf, Jr. Co.)

Boston

(Tuesday)

Public Service Electric & Gas

$8,000,000

(Probablv

Brooks

$8,000,000

Anchor Post Products, Inc
:
(Offering to stockholders) $247,148

Debentures & Common

Inc

—Bonds

invited)

(Geyer

Bonds
EST)

a.m.

685,648

American Fidelity & Casualty

(Tuesday)

Co.—

Petrolane Gas Co.,

State Fire &

New York.

Co.)

October 20
October

(Bids

ing fund mortgage bonds due Nov. 1, 1962, to be offered
for subscription by common stockholders at the rate of
$100 of bonds for each 28 shares of stock held (for a

*■

$94,500

Mountain States Power Co..

Byrd Oil Corp., Dallas, Tex.
Oct. 22 filed $1,750,000 of 10-year 5%% convertible sink¬

Common

—

Reid

Bonds
$10,000,000

ESTj

noon

Rockland Light & Power

Co.)

George P. Breen)

Corp. of America———

(letter of notification)

$1,031,250

Long Island Lighting Co..
+——
Common
(Offering to stockholders—underwritten by Blyth & Co.,
Inc.; The First Boston Corp:; and W. C. Langley , r

(Bids

Zirconium

Picture Productions, Inc. (10/8)
300,000 shares of com¬
mon stock (par 10 cents).
Price—$1 per share. Proceeds
—For production of movies and TV stories. Office—246
Fifth Avenue,
New York.
Underwriter
Alexander

and

if Burton
Sept. 24

$220,000

Inc.)

Co.,

Electric Co
(Bids

•

(Wednesday)

October 14

400,000

•„

Line Co.—__Pfd. & Com.

California

First

(Tlie

Common

Preferred J

$5,000,000

Securities Corp.)

(Union

Electric Co.—

Nevada Natural Gas Pipe

$300,000

Southern New England Telephone Co

Underwriter—None.

Kansas Gas &
:

$750,000

—Class A Common

(Tuesday)

October 13

(Friday)

General

—Bonds

Monongahela Power Cc
(Bids

$500,000

(Tuesday)

invited)

$10,000,000

Volume 178

Number 5260 ...The Commercial and Financial Chronicle
A

(1263)
ing

capital.

John R.

Office—Washington,

Underwriter—

Boland, New York.

General

Oct.

Hydrocarbons Corp,
Aug. 12 filed $1,010,800 of 20-year debentures and 66,424
shares of
of $350

-stock.

stock

common

(par $1)

principal amount of debentures and 23 shares of
Price—$359 per unit ($336 for the debentures and

Foil

Hotel

and

land

★ Lunn Laminates, Ihc.
23 (letter of notification)

Sept.

new

($20 per share).
Underwriter—None.

Inland Western Loan

:
■«

...

Commercial's special
participating contracts, the

Cambridge, Mass.

June 30 filed
131,784 shares of common stock (par $1).
Price—To be supplied
by amendment (between $8 and

$9 per share). Proceeds—To
pay mortgage debt and for
equipment. Business
Research and development and
subsequent commercial exploitation in the field of ion

exchange chemistry. Underwriter—Lee Higginson
Corp.,
;

New York and Boston (Mass.). Offering—Date
indefinite.
Iowa Electric

Light & Power Co. (10/7)

Sept. 15 filed 230,000 shares of common stock
(par $5).
be supplied by amendment.
Proceeds
For

Merritt-Chapman & Scott Corp., New York
Aug. 20 filed 45,912 shares of common stock (par
$12.50)
being offered in exchange for 57,389 shares of common
stock (no par) of Fitz Simons & Connell
Dredge & Dock
Co. on an eight-for-ten basis. It is
proposed to acquire

construction

Corp.
•

program.
Underwriters—The First
G. H. Walker & Co. of New York.

ana

Johnson

Industries,

Inc.

Boston

(10/2)

Kansas Gas & Electric Co.

(10/13-14)

Sept. 11 filed 50,000 shares of preferred stock
(par $100).
Price—To be supplied
by amendment. Proceeds—To re¬
pay bank loans and for new construction.

Underwriters

—Union

Securities

Corp.,

New

York.

May

privately.

placed

Kansas Gas & Electric Co.
(10/14)
Sept. 11 filed $10,000,000 first
mortgage bonds due Oct.
1, 1983,1 Proceeds—To reduce bank loans and for
con¬
struction

:
:

Underwriters—To be determined
by
competitive bidding.
Probable bidders: Halsey., Stuart
& Co. Inc.;
Kuhn, Loeb & Co.; Blyth & Co., Inc. and The
First Boston Corp.
(jointly); Kidder, Peabody & Co. and
program.

Merrill Lynch,
Pierce, Fenner & Beane (jointly); Glore,
Forgan & Co. and Goldman, Sachs & Co.

Securities

(jointly); Union

Corp. and Stone

Webster Securities

(jointly); Harriman Ripley & Co., Inc.

be received up to noon

(EST)

Corp.

Bids—Expected

Oct. 14.

• Kansas Power & Light Co.
Sept. 24 filed 50,000 shares of common stock
(par $8.75)
to be offered to certain
of the
company's employees (in—
eluding officers) pursuant to a restricted stock
option
plan.
★ Kay

Jewelry Stores, Inc., Washington, D. C.
Sept. 28 filed 672,746 shares of
capital stock (par $1) to
be offered in
exchange for preferred and common stocks
of 71 store corporations which
operate 83 retail credit
jewelry stores.

Underwriter—None.

Kenwell Oils & Mines
Ltd., Toronto,
Aug. 20 filed 1,400,000 shares of common
Price

—

be supplied

Canada*
stock

by amendment.

Kropp Forge Co., Cicero, III.
Sept. 15 (letter of notification) 12,890 shares
$3

(par 33%

per

share).

cents).

Price—At

market

Under¬
i

;«

Roy A. Kropp, President.
& Co., of New York! and
Sincere & Co., of
Chicago, 111.
\

Underwriters—L- D. Sherman

Lone Star Sulphur
Corp., Wilmington, Del.
May 8 filed 600,000 shares of common stock

common

record

stockholders

May 8 on a share-for-share basis "as a specula¬
Price—To be supplied by amendment.
Proceeds—
For expansion
program.
Underwriter—None.

which

685,648

scription by
Oct.

common

common stockholders

Oct. 29 at the rate of

Natural

Gas

common

stock

(par $14) to American

Co., parent, for $3,010,000, to be used to

repay bank loans and for construction
program.
A group headed

Bids—

jointly by Halsey, Stuart & Co., Inc.,
Harriman Ripley & Co., Inc. and Union
Securities Corp.
entered

100.125

been

the

only

for

5s.

planned

banks

bid

This
at

bid

101.875

June

for

the

securities—

rejected. Reoffering had
yield 4.87%. July 6 com¬

was

SEC authority to borrow $20,000,000 from
3%% notes pending permanent financing which

is presently
★

being given consideration.

Miracle
14

—

Hunter Securities Corp., New York.

New York State Electric & Gas

share. Proceeds

construction.

To repay bank loans and for

—

Underwriter

stock

offered

(par $10),
for

sub¬

new

share for dach

new

The First Boston
Corp.;
Brothers; Wertheim & Co.; and Merrill Lynch,

Lehman

—

Pierce, Fenner & Beane; all of New York.
North Idaho Mines,

July

stock

)

Hinge, Inc., Monticello, N. Y. (10/5)
of notification) 200,000 shares of 7%
preferred stock

(par

one

(par $1) and 200,000 shares
cent) to be offered in units of

share of each class of stock.

one

Price—$1.10 per unit.
plant improvements, payment of debt,
inventory and working capital. Underwriter — Walter
Aronheim, New York.
Proceeds

For

—

cumulative

of $1.50
stock (no par), being offered to
stockholders for a 30-day period from

preferred

company

Sept. 21. Price—$24 per share. Proceeds—For
working
capital. Office—112 E. Locust Street
DeKalb, 111. Un¬
derwriter—None.

• Ohmart Corp., Cincinnati, O.
Sept. 24 (letter of notification) 13,500 shares of com¬
mon stock (par
$1) to be offered first to common stock¬
holders, then to general public. Price—$16.50 per share.
Proceeds—For

equipment and other general corporate
Underwriter—Estabrook & Co., New York and

purposes.

Boston.

(letter

of common stock

Mississippi Power Co. (10/6)
Sept. 4 filed $4,000,000 of first mortgage bonds due Oct.
1,

1983.
Proceeds — For construction program.V Under¬
writers—To be determined by competitive
biodirig. Prob¬
able bidders: Halsey, Stuart & Co.

Inc.; Union Securities

Corp.; Equitable Securities Corp. and Drexel & Co.
(jointly); Merrill Lynch, Pierce, Fenner & Beane; Kid¬
der, Peabody & Co.; The First
Boston Corp.
Bids
To be received up to 11 a.m.
(EST)
Suite 2000, 20 Pine St., New York 5, N. Y.

—

Oct.

Orange Community Hotel Co., Orange, Texas
Sept. 14 filed 8,333 shares of capital stock (par $20) and
8,333 registered 4% debentures due Jan.
1, 1984 of $100
each to be offered in units of

$100 debenture. Price—$120
struct

and

equip hotel

one

share of stock and

unit. Proceeds—To

per

building.

Underwriter

—

one
con¬

None.

(Subscriptions to 4,949 shares of stock
tures

and 4,949 deben¬
held by a group of citizens of
Orange formed
the auspices of the
Orange Chamber of Com¬

are

under

merce.)
Pacific

Gas &

Electric Co.

Aug. 26 filed 1,946,829 shares of common stock
(par $25)
being offered for subscription by common stockholders
of record

Sept. 15 at rate of

held; rights to

one new

share for each

seven

expire Oct.

6. Price—$33.50 per
share. Proceeds—To
repay bank loans and for new con¬
struction.

Underwriter—Blyth & Co., Inc., San Francisco

and New York.

★ Mon-Dak Oil, Ltd., Sidney, Mont.

•

Sept. 25 filed 7,800 shares of class A voting common stock
(no par) and 685,816 shares of class B non-voting com¬
mon stock (no
par). Price—$1 per share. Proceeds—For

Petrolane Gas Co., Inc. (10/6)
15 filed $400,000 of 6% sinking fund
debentures,
series A, due Oct.
1, 1968 (with common stock purchase

oil

warrants

and

leases

gas

and

notes.

repay

Underwriter—

None.

★ Motion Picture Laboratories,
Memphis, Tenn.

Inc.,

Sept. 21 (letter of notification) $50,000 of first chattel
mortgage bonds dated Oct. 1, 1953, and 5,000 shares of
common stock (par $1) to be offered in units of a
$1,000
bond

and

100

shares of stock.

Price
$1,100 per unit.
Office—1830 Exchange Bldg.,
Underwriter — Gordon Meeks & Co.,
—

Proceeds—For equipment.

Memphis, Tenn.
Memphis, Tenn.

Sept.

(par $1).

equipment.

Office—New Orleans,
W. Brooks & Co., New York.

units

Insurance

Co.,

Phoenix, Ariz.

one

stock

(par $1)
policyholders at $1.91 per share;
policyholders as may elect to apply their
common

and

new

coupon values to the purchase of stock at the initial sub¬
scription price of $3.93 per share. Proceeds—For expan¬

Underwriter—None.

Nevada Natural Gas Pipe Line Co.

(10/13)
Sept. 21 filed 25,000 shrares of $1.50 cumulative preferred
stock
(par $21) and 75,000 shares of common stock
(par $1). Of these shares, all of the preferred stock and

25,000

common

stock

each

one

common

class

are

stock

to be offered in units

stock
are

$28
be

per

unit;

offered

for

subscription by stockholders of record Sept. 21 at $6.25
per share; and the remaining 25,000 shares of common
stock

are

to be offered

publicly at $7

per

share. Proceeds

per unit. Proceeds—To

100,000

(par 50 cents) to be offered in

each

class of stock. Price—$2.50
liquidate liabilities and for work¬

ing capital. Office—220 Miracle Mile, Coral Gables, Fla.
Business—To process peat for fertilizer. Underwriter—
Frank L. Edenfield &
Co., Miami, Fla.

Rockland Light & Power Co.
(10/8)
Sept. 17 filed 210,721 shares of common stock
be

seven

Sept. 28 filed 900,000 shares of
to be offered to charter

stock

common

of record Oct. 7

Casualty

Underwriter—P.

Planter's Peat Corp., Coral
Gables, Fia.
6 (letter of notification) 100,000 shares
cumulative
preferred stock
(par $2.50)
and

La.

Aug.

termined
by competitive bidding.
Probable bidders:
Halsey, Stuart & Co. Inc.; Kidder, Peabody & Co. Bids—
To be received by
company at 231 So. La Salle Street,
Chicago 4, 111., up to 10:30 a.m. (CST) on Oct. 6.

Life

attached) and 75,000 shares of common stock
Price—At 100% of principal amount for the

debentures and $2 per share for the stock.
Proceeds—
To repay notes and for
working capital. Business—Dis¬
tribution of liauefied petroleum
gas, tanks and related

shares of

Mountain States Power Co. (10/6)
Sept. 18 filed $8,000,000 first mortgage bonds due Sept.
1, 1983. Proceeds—To repay bank loans and for property
additions and improvements.
Underwriters—To be de¬

during the period f)om

one

Co.

certain

215,000 shares of

25,000 shares of

(10/14)

are

Gas

Northern Illinois Corp.,
DeKalb, III.
Sept. 4 (letter of notification) 12,500 shares

sion of insurance activities.

tion."

Long Island Lighting Co.
Sept. 24 filed 785,648 shares of

Juan Natural

Sept. 21 (letter of notification) 748,000 shares of common
stock (par 10 cents).
Price—40 cents per share. Pro¬
ceeds—To develop and maintain leases.
Office—2135
Gold
Avenue, Albuquerque, N. Mex.
Underwriter

•

(par 5 cents)

subscription by

★ New Mexico-San

Michigan Consolidated Gas Co.
May 15 filed $20,000,000 of first mortgage bonds due
1978,
Proceeds—From sale of bonds, plus proceeds from sale

of common

(estimated at

Proceeds—To

to be offered for

Oct. 16. Subscription
Price—$13.75 per share.
retire bank
loans, and increase invest¬
ments in
subsidiary, including Worcester Gas Light Co.
Dealer-Manager—The First Boston Corp., New York.
on

Proceeds—To

★ National

(par $1).

Proceeds^—For

working capital and general corporate
purposes.
writer—To be supplied
by amendment.'

stock

privilege). Rights will expire
rights may be mailed on Oct. 1.

not less than 80% of said Fitz Simons
& Connell shares.
Offer will expire on Oct. 10.
Underwriter—None.

cumulative

common

•

new

★

Sept.

Sept. 17 (letter of notification) 300,000 shares of
class A
stock. Price—At
par ($1 per share). Proceeds—
To purchase
machinery and equipment. Office—115 West
Main St..
Millbury, Mass. Underwriter—J. P. Marto,- &
.£ Co., Boston. Mass.

one

oversubscription

Inc., Kellogg, Ida.
(letter of notification) 400 shares of common
(no par). Price—$125 per share.
Proceeds—For
exploration. Address—Box 298, Kellogg, Idaho. Under¬
writer—Robert G. Sparling, Seattle, Wash.

—

holders of record Sept. 29,
1953, on the basis of
share for each 10 shares held
(with an

per

Representative—George

Searight, 115 Broadway, New York 6, N. Y. Telephone
BArclay 7- 8448. Offering—Date indefinite.

pany sought

Price—To

★

New England Gas & Electric Ass'n
•
Sept. 2 filed 199,268 common shares of beneficial
interest
(par $8) to be offered for subscription by common stock¬

proceeds of which are to be used to activate
the company
in the loan and finance
business.

—

Sept. 23 filed 100,000 shares of capital stock. Price—At
Proceeds—For investment. Underwriter—None.

corporate purposes. Underwriter—B. V. Christie &
Co.,
Houston, Tex. Dealer Relations

Mass.

Corp.
Aug. 28 filed 337,118 shares of common stock (no
par)
being offered for subscription by common stockholders of
record Sept. 17 at rate of one new share
for each eight
shares held; rights will
expire Oct. 5. Price—$30.62 y2

(par 25
Price—$2 per share. Proceeds—For drilling of
exploratory wells, acquisition of leases and for general

Finance Corp.,

An additional
300,000 shares have been and are
in Arizona at $1
per share to hold¬

Ionics, Inc.,

(Glenn), Inc.

cents).

ex¬

being offered for sale
of

com¬

June 12 filed 10,000,000 shares of common
stock

—

ers

Boston,

Proceeds—For plant

July 2 filed 2,500,000 shares of class A
non-voting com¬
mon stock
(par $1) to be offered to present and future
-holders of Special
Participating Life Insurance Contracts
issued by Commercial Life
Insurance Co. of Phoenix.
Price—$1.50 per share. Proceeds
To develop and ex¬
pand company's loan and finance business.
Underwriter
—None.

(par five cents). Price—At market. Proceeds—To
Raymond Macmillan and Helen F. Macmillan. Under¬
writer—Lester, Ryons & Co., Los Angeles, Calif.

Phoenix, Ariz.

;

stock

share for each 5% shares held.

Price—At par

pansion.

75,000

★ Macmillan Petroleum Corp., Los Angeles, Calif.
(letter of notification) 11,500 shares of
capital

McCarthy

pipe line system and working cap¬
Vegas, Nev. Underwrtier—The First
Francisco, Calif.

California Co., Inc., San

market.
common

Sept. 21

★

—For construction of
ital.
Office—Las

★ New England Fund,

—

development.

Otis, Inc., New York.?:

★ Hawaiian Electric Co., Ltd.
;<1
-Sept. 25 filed 100,000 shares of common stock
toie of¬
fered for subscription
by common stockholders of record
one

(par 25 cents), represented by 75,000 war¬
presently outstanding. Price—$2 per share net to
company.
Proceeds — For working capital.
Office
Huntington, N. Y. Underwriters—S. D. Fuller & Co. and
Vermilye Brothers, both of New York.

of present
financing. Office — South Oak# and
St., San Angelo, Tex. Underwriter—None.
7^

Oct. 5 in ratio of

stock

mon

cost

and

rants

★ Gray Trailer Co., San Angelo, Tex.
;J
Sept. 18 (letter of notification) 540 shares of
corfimon
stock (nc
par). Price—$100 per share. Proceeds—To cov¬
.Allen

Corp.

—

Grand Bahama Co.,
Ltd., Nassau

loans. Underwriters—

—

Feb. 3 filed $1,350,000
20-year 6% first mortgage cdfrvertible debentures due
March, 1973, and 1,565,000 ihares
of class A stock (par 10
cents). Price—Par for deben¬
tures and SI per share for stock. Proceeds ——

13. Proceeds—To repay bank

stock. Price
At par ($100 per share). Proceeds—For
working capital. Office
603 Central Bldg., Seattle
4,
Wash. Underwriter—None.

Underwriter—None. Office—Oklahoma City, Okla.

Business

are

employees. Price—To be set by company

★ Lundberg-Carlson, Inc., Seattle, Wash.
Sept. 21 (letter of notification) 1,000 shares of

share for the stock). Proceeds—For general cor¬
porate purposes.
Business — Oil and gas development.

Underwriter—Gearhart

held; and the remaining 100,000 shares

Blyth & Co., Inc., The First Boston
Langley & Co., all of New York.

to be offered in units

per

construction.

seven

to be offered to

offered for

subscription by

common

the basis of

new

shares held

(with

one

(par $10)

stockholders

share for each

oversubscription priviledge),
To be supplied by
amendment.
Proceeds—To repay
bank loans. Under¬
writer—Merrill Lynch, Pierce, Fenner &
Beane, New
rights to expire

Oct. -21. Price

—

York.
•

Rockland

Sept.
due

Light & Power Co. (10/14)
17 filed $8,000,000 first mortgage bonds, series E,
Proceeds—To retire bank loans and for new

1983.

construction.
ment.

Underwriters—To be supplied by amend¬
Probable bidders: Halsey, Stuart & Co, Inc.; First

Boston

Corp.

and

Salomon

Bros.

& Hutzler (jointly);
Corp.; Lehman Brothers,
Bear, Stearns & Co. and A. C. Allyn & Co., Inc. (jointly);
Merrill Lynch, Pierce, Fenner & Beane; Estabrook & e
Co. Bids—Expected to be received about Oct. 14.
Stone

Webster

Securities

Continued

page

Continued from page

Royal Oil Co., Inc., Wichita, Kansas
$5).
development and drilling of leases. Office—1534 S. Mead,
Wichita, Kansas. Underwriter—Sills, Fairman & Harris,
•

—

Oil

Neb-Tex

Co., to

Office—Northwood,

None.

Boston

First

Schlafly Nolan Oil Co., Inc.
shares of comrrion stock (par

stock (no par),
offered for subscription ,
by common stockholders at rate of one new share for
each eight shares held on or about Oct. 6. The remain¬
ing 6,000 shares are to be sold to employees. Subscrip¬
tion rights expire on Oct. 21. Price—To be supplied by
amendment.
Proceeds—To be loaned to Western Mas¬
sachusetts Electric Co., a subsidiary, to be used to retire
up to $4,000,000 of outstanding bank loans incurred for
construction purposes.
Underwriters—The First Boston
Corp. and White, Weld & Co., both of New York.
of which

Securities Corp. (jointly); The
Harriman Ripley & Co., Inc. and
Co. (jointly). Bids—Expected to be
to noon (EST) on Oct. 26.
Corp.,

received

250).
and sell
to pros¬
pect for oil and gas and to develop and operate produc¬
ing properties.
Office—Mt. Vernon, 111. Underwriter—
X. H. Rothchild & Co., New York.
Offering—Indefintely

Aug. 26 (letter of notification) 1,700,000 shares of com¬
mon stock.
Price—At par (10 cents per share). Proceeds

postponed.

Colo.

United Mining & Leasing

share.
Proceeds—To purchase
leaseholds, royalties and producing properties,
Price—$4

per

122,316 shares are to be

Working Capital, Inc.

148,700 shares of common

Sept. 4 (letter of notification)

purchase

stock (par five cents) and 74,350: common stock
warrants to be offered in units of 100 shares

Colo. Underwriter—R. L. Hughes & Co., Denver,

City,

Corp.

mining operations, equipment, etc. Office—Central

—For

•'

•

(10/7)

Sept. 17 filed 128,316 shares of common

Goldman, Sachs &

March 25 filed 150,000

Massachusetts Companies

Western

•

Weld & Co. and Equitable

statement may be

Chicago, 111. Registration

& Harris of

revised.

Pulp

The offer will expire on

share.

(par $1).
stock of ; Co;/another subsidiary. Underwriters — To be deter¬
mined by competitive bidding.
Probable bidders: Halpay loans and for working capital.
sey, Stuart & Co. Inc.; Morgan Stanley & Co., White,
Iowa.
Underwriter—Sills, Fairman

April 23 filed 165,000 shares of common stock
Price
$5 per share. Proceeds — To acquire

Westv Virginia

the basis of lVs shares
stock for each Hinde & Dauch
Nov. 18. Underwriter

Dauch Paper Co. on

of Hinde &

replenish the treasury of United Gas Corp. and for other
gener&l corporate purposes, including advances of such
additional funds as may be required by Union Producing

Production Co.

Saint Anne's Oil

Sept. 28 filed 1,270,344 shares of common stock (par $5)
to be offered in exchange for common stock (par $10)

construction; and to

sidiary, to provide it with funds for

Inc., Chicago, 111., and Wichita, Kansas.

Pulp & Paper Co.

^ West Virginia

—

A United Gas Corp. (10/26)
Sept. 23 filed $25,000,000 of sinking fund debentures due
1973.
Proceeds—To purchase $10,000,000 of 5% sinking
fund debentures of United Gas Pipe Line Co., a sub¬

30,000 shares of common
Price—$8.25 per share. Proceeds—For

(par

Underwriter

Pa.

Philadelphia,

Street,

None.

Sept. 8 (letter of notification)
stock

Broad

So.

1953

Thursday, October 1,

The Commercial and, Financial Chronicle...

(1264)

of stock

(each warrant will entitle the holder to
purchase one share of stock at $1.25 per snare). Price—
$125 per unit.
Proceeds—To make loans. Office—55
Hilton Ave., Garden City, L. I., N. Y. Underwriter—None.
and 50 warrants

■fa Scudder, Stevens & Clark Fund, Inc.
i
Sept. 23 filed 150,000 shares of capital stock. Price—At
market. Proceeds—For investment. Underwriter—None.

United States Air Conditioning Corp.

Corp., Omaha, Neb.

Securities Acceptance

Sept. 14 (letter of notification) 6,000 shares of 5% cumu¬
lative

Price—At par ($25 per share).
working capital. Office—304 South 18th

prefererd stock.

.Proceeds—For

Waehob-Bender
coln

(Neb.).

writer—None.

it United States

Price

Wash.

30 cents

—

Office—West

Underwriter

per

909

Mines

—

Proceeds—For

share.

Spokane,
Financing, Inc., Spokane,
Sprague

Ave.,

"Wash.
•

Southern New England

Telephone Co. (10/2)
Sept. 15 filed 400,000 shares of capital stock to be offered
for subscription by stockholders of record Oct. 2 in the
ratio

one

new

for

each

then

Universal

held;

Southern

Aug.
'

Union

10 filed

Gas

Underwriter—None.

Co.

105,778 shares of

common

heing offered for subscription by

-of record Aug. 31

stock

the basis of

common

Ave., Miami, Fla. Proceeds—To increase
-capital and surplus, for expansion and to retire certain
preferred shares. Underwriter—Floyd D. Cerf Jr. Co

•

•fa Stewart-Warner Corp., Chicago, III.
Sept. 23 (letter of notification) 2,000 shares of common
(par $5). Price—$17.50 per share. Underwriter—

vertible

Sept. 25 it was announced company

None.

•

Strategic Materials Corp., Buffalo, N. Y. (10/7)
Aug. 31 filed 198,500 shares of common stock (par
$1)
to

be offered

at rate of
be

for

one

and

subscription by

other

indebtednesss,

for

pected in about 1 to iy2

the rate

of $27

per

Atlantic

for

other

Activators,

weeks.

general

corporate

Welex

J1'
Nov.
rosa

Insurance

Co.,

Phoenix,

Ariz.

(1?tter of notification) 4,244.37

6, 1953. Price—$3 per unit. Office—718 West GlenAve., Phoenix, Ariz. Underwriter—None.

t'^r Turbo Corp. of America
J^tock (no par).

equipment

and

Price—$100

per

working capital.

apd manufacture

one

Jet

Services,

share of stock.

ment.

500

share.

common

Proceeds—For

later

was

this

announced

proposed

that

debenture

year

used to

$75,000,000 to $150,000,000.
Pro¬
help pay for a $100,000,000 con¬

struction program for

Underwriters—Smith, Bar¬

authorized
ceeds—To

re¬

& Co.

debt
be

may

from

1953.
head group.

Aug. 11 it was reported

Price

—

one

Bids

—

by*the company at 2

Wall St.,

5, N. Y., up to noon (EST) on Oct. 8 for the

Hutzler; Kidder, Peabod.y & Co.

...

(

•

purchase properties in the: South.- . Underwriters—Probably Coffin & Burr, Inc., Boston, Mass^
and The First Boston Corp., New York.: Plan Opposed-

ceeds—To
*

Of¬

Consolidated Textile Co., Inc.,

is opposing the proposed

financing.

(par 50

Blair Holdings

Price—To be supplied by amendment. Proceeds

Underwriters

Manufacturing
June 25 it was reported company planned to offer and
sell 750,000 additional shares of common stock.
Pro¬

fering—Postponed indefinitely.

—Together with otht

received

Bates

tional shares of common stock and private sale of $55,000,000 first mortgage bonds, to be used to build a 1,030
mile crude oil pipeline.
Underwriters—White, Weld &

line.

(10/8)

purchase from it of $1,500,000 equipment trust certifi¬
cates, series FF, to be due in 15 equal payments of $100,r
000 each on Dec. 1, from 1953 to 1967, inclusive. Prob^<
able bidders: Halsey, Stuart & Co. Inc.; Salomon Bros,

1,125,000 addi¬

West Coast Pipe Line Co., Dallas, Tex.
Nov. 20 filed 1,125,000 shares of common stock

will

New York

(par 50
$50 debenture and

both of New York.

proposed divestment plan.
Baltimore & Ohio RR.

To be supplied by amend-

Co. and Union Securities Corp.,

company's common stock (held

by Southern Union Gas Co.) may be offered to stock¬
holders of the parent company on a pro rata basis under

due Dec.

June 24

funds, to be used to build pipe¬
White, Weld & Co. and Union Se¬

was

Corp.

announced company

plans to issue and

sell publicly $2,000,000 of convertible debentures.
ceeds — For development of Stan well Oil & ^Gas

Business—To

curities Corp., JUpth of New York. Offering—Postponed
develop
a new type of jet engine.* Office—121 ►vindefinitely.••

Refining Co. •"

will be around $60,000,000.
The
exact nature and timing of the financing are still to be
determined.
Stockholders voted May 5 to increase the

Inc.

Proceeds—From sale of units and

cento).

(letter of notification)

Co., New York.

construction.

new

issue

(letter of notification)

cents) to be offered in units of

Wall

stock units (par
be issued under offer of rescission to expire on

Sept. 23

r...

Office —14"

Street, New York 5, N. Y. Business—A patent holding
Underwriter—None.

•

purposes.

bonds.

17,

March

share. Underwriter—

West Coast Pipe Line Co., Dallas, Tex.
Nov. 20 filed $29,000,000 12-year 6% debentures
15, 1964,~ and 580,000 shares of common stock

or purchase of stock of
for development work and

company.

• Trans-Pacific
'

Inc.;

through
20-year

City Electric Co.

Atlantic

13,071 shares of common
stock (no par) being offered for subscription by stock¬
holders of record Sept. 10 on the basis of one new share
for each 12 shares held; rights to expire on Oct. 13. Price
—$17.50 per share. Proceeds—For equipment. Office—
1400 East Berry Street, Fort Worth Texas.
Underwriter

—

Thermal

arranged

B. L. England, President, indicated that the
early next year expects to raise $14,000,000 to
$16,000,000 through the sale of bonds and both preferred
and common stock.
Proceeds—To repay, bank loan and

Aug.

ney

Sept. 8

.*or advances to,

has

Aztec Oil & Gas Co.
•

further

-fr Thermactor Co.
Sept. 24 (letter of notification) 2,000 shares of
capital
stock (par $1).
Price — $100 per share. Proceeds
To

Company

company

—None.
•

—

place privately $20,000,000 of

The Empire Trust

the basis of one-half share of pre¬
share of common for each 1 Puget

share to holders who do not elect to

Corp., both of New York.

First Boston

Placement

^Anchor Post Products, Inc. (10/20)
Sept. 25 it was announced company plans to offer 32,953
additional shares of common stock (par $2) to its com¬
mon stockholders of record Oct. 20 at the rate
of one
new share
for each nine shares held; rights to expire
on Nov.
16. Price — $7.50 per share. Warrant Agent—

None.

exploration
properties and for additional working
capital. Underwriters—Hamlin & Lunt,
Buffalo, N. Y., and Allen &
Co., New York. W. C. Pitfield & Co.,
Ltd., of Montreal,
Canada, has agreed to purchase 50,000 shares from the
underwriters for distribution in
Canada. Offering—Ex¬

common

shares of
Underwriters—W. C. Langley

collateral trust sinking fund

one-half

ceive cash at

common stockholders
share for each share held. Price—To
amendment. Proceeds—To repay bank

The

and

bankers

same

stock

and

Co.

Private

preferred stock (par $25) and 1,088,939 shares of

Light Co.

Sound

new

supplied by

loans

ferred

plans to register soon

public offering an issue of about 200,000

preferred stock (par $25).

(no par) to be issued in connection with
the proposed merger into company of Puget Sound Pow¬
common

.stock

Co., Inc.

American Water Works

for

Finance

Washington Water Power Co.
May 7 filed 1,088,940 shares of $1.28 cumulative con¬

Inc., Chicago, 111., and Miami, Fla.

holders.

★ Wardenhoff Mining Co., Big Creek, Idaho
Sept. 23 (letter of notification) 3,000,000 shares of capital
stock. Price—10 cents per share.
Proceeds—For equip¬
ment and working capital. Office — Big Creek, Valley
County, Idaho. Underwriter—Jacob B. Vogel.

2nd

Co., New York.

Telephone & Telegraph Co.

directors voted to recommend to stockholders
authorize a new issue of convertible debentures
in an amount not to exceed $625,000,000 at a meeting to
be held on Oct. 14.
Price—Expected at par. Proceeds—
For advances to subsidiary and associated companies.
Underwriter—None.
Offering—To be made to stock¬
Aug.

•

41268 N.

basis,

share-for-share

that they

common

one new

State Fire & Casualty Co.,
Miami, Fla. (10/7)
Sept. 10 (letter of notification) 80,000 shares of class B
.common stock (par $1). Price—$3.75 per share. Office—

20;

American

Sept. 21

stockholders

Oct.

working capital. Underwriter—Geyer &

of common stock (par 15 cents) to be offered in units
share for each
18 shares held
(with an oversubscription privilege); ; of one share of preferred and one share of common stock.
rights to expire Oct. 7. Price—$18 per share. Proceeds
Price—$10.15 per unit. Proceeds—For working capital.
—For additions to properties.
Office—1301 Elm St., Dallas, Tex. Underwriter—None.
Underwriter—None.

;

rights to expire about Nov. 4. Certain
stockholders have waived their rights to purchase the
new shares. Price — To be named later. Proceeds — For

^ Universal Finance Corp., Dallas, Tex.
(letter of notification) 29,000 shares of 70-cent
cumulative preferred stock (no par) and 29,000 shares

(par $1)

stockholders

common

about

Corp., Los Angeles, Calif.
July 27 (letter of notification) 12,000 shares of 6% cumu¬
lative preferred stock. Price — At par ($25 per share).
Proceeds—For working capital.
Office—3460 Wilshire
Blvd., Los Angeles, Calif. Underwriter—None.

Tights will expire on Oct. 23.
Price—At par ($25 per
share).
Proceeds—To repay advances from American
Telephone & Telegraph Co.

stock (no par)
to be offered in exchange for the 15,000 outstanding com¬
mon shares of Aspinook Corp. on the basis of 16 shares
of Finishing stock for each share of Aspinook stock. The
offer is conditioned upon its acceptance by the holders
of at least 80% of the Aspinook shares. The stockholders
of the Finishing company will vote Oct. 13 on approving
the above proposal.

Exploration & Development Co.
Aug. 20 (letter of notification) 1,000,000 shares of com¬
•exploration.

(10/20)
is planned for between
Sept. 25 and Sept. 30 of 150,000 shares of convertible
preferred stock (par $5) to be offered for subscription
Aug. 26 it was stated registration

Finishing Co.

Sept. 23 filed 240,000 shares of

Silver Dollar

,/...

Fidelity & Casualty Co.

American

20%; and the option price to the underwriters for
the 220,000 additional shares is the market price, less
17V2%. Proceeds—For working capital and general cor¬
porate purposes.
Underwriters—Mortimer B. Burnside
& Co., Inc., and George F. Breen, both of New York.

personal property in New York State.
Box
175, Canandaigua, N. Y.
Under¬

and

Address—P.

Prospective Offerings

In addition the company proposes to offer 250,000
March 25, 1954 to holders of its common stock

less

—

stock.

Co., Memphis, Tenn.

stock, the subscription price under these warrants being
$3.06 V4 per share. The underwriters have agreed to pur¬
chase the 100,000 shares at a price equal to the market,

A- Segoyawatha, Inc., Canandaigua, N. Y.
(letter of notification) 3,630 shares of common
stock.
Price
At par ($5 per share).
Proceeds — For
working capital. Business—To buy, sell, manage or de¬

Bldg., Solon, O. Underwriter—Gordon Meeks

Center

purchase warrants which were sold on Feb. 26, 1953 in
connection with the sale of 100,000 shares of common

Sept. 28

Corp. of America

(letter of notification)

new

Co., Inc., to acquire an additional 220,000 shares of
stock (also to be offered for sale on the Exchange or
over-the-counter market at the then prevailing market

principal amount.
Proceeds—To repay loans and for
working capital. Underwriter—None. Meeting—Stock¬
holders to vote Oct. 9 on authorizing debentures.

mon

has also been granted to Mortimer B. Burnside

price).

(10/5)
126 shares of common
(no par). Price—$750 per share.;. Proceeds—For
construction and working; capital. Office—Solon

Zirconium

stock

Segal Lock & Hardware Co., Inc., N. Y.
-Sept. 4 filed $975,000 of five-year 6% convertible sinking fund debentures due Oct. 1, 1958, to be offered to
common stockholders at rate of one $100 debenture for
•each 250 shares of common stock held. Price—100% of

velop real

The remaining 60,000 shares, plus any of
shares not sold, will be offered for sale on the
Stock Exchange or over-the-counter market.

An option

•

Sept.

amendment).
the 40,000

—

•

American

Cruttenden & Co.;
Corp.; and The First Trust Co. of Lin¬
Underwriters

St., Omaha, Neb.

(10/5)

filed 570,000 shares of common stock (par 10
cents), of which 100,000 shares will be underwritten (in¬
cluding 40,000 shares to be offered to employees and dis¬
tributors and dealers at a fixed price to be supplied by
Aug.

newly acquired subsidiary.
■

•i'

Pro¬

Ltd.,

Underwriters—Blair, Rollins

&'Co Inc.- and The First California

Co.

yolume 178

Number 5260

The Commercial and Financial Chronicle

...

(1265)

★ Central Illinois Light Co.; (10/27)
Sept. 26 it

General Electric Co.

announced company plans to offer to its

was

stockholders of record Oct. 27 the right to sub¬
scribe on or before Nov. 13 for 100,000 additional shares
common

stock

common

l-for-9

basis

(with

oversub¬

scription privilege).

Unsubscribed shares to be offered
to employees. Price — To be named later. Proceeds—To
repay bank loans and for new construction. Underwriter
•—Union Securities

Corp., New York.

Jan.

reported

was

plans

company

sale

later

thii

of $10,000,000 common stock (in addition to $10,000,000 of 1st & gen. mtge. bonds sold March 10, 1953),
after distribution by New England Public Service Co. of
fits holdings of Central Maine Power Co. common stock.

Probable bidders: Blyth & Co., Inc. and Kidder, Peabody
& Co. (jointly); Coffin & Burr, Inc.; A. C. Allyn & Co.,
Enc. and Bear, Stearns & Co. (jointly); Harriman
Ripley
& Co., Inc.
Central-Penn

National

Bank

Phila.

Sept. 28 the Bank offered to its stockholders of record

Sept. 24 the right to subscribe for
shares

of capital
rights to

basis;

additional 125,000

stock (par $10)
expire
Oct.
13.

one-for-three

Price

$30

—

per

share. Proceeds—To increase capital and surplus. Under¬
writer—Stroud & Co., Inc., Philadelphia, Pa.

Central Power & Light Co.
2 it was reported company

March

sell

increase

the

authorized

"capital

stock (par $3.33Vz) from 360,000 to 750,000 shares.
There are 328,839 shares outstanding. No plan has been
announced for issuance of any additional shares. Under¬

writer—Probably J. Barth & Co., San Francisco, Calif.
Gas

System, Inc.

announced

company plans to issue and
sell later this year $40,000,000 of new debentures.
Pro¬
ceeds—To repay bank loans and for construction
pro¬
gram.
Underwriters—To be determined by competitive
was

bidding. Probable bidders:
Morgan Stanley & Co.

reported company plans

was

stock

may

financing

some

Sept. 21 it

was

stock

reported that plans offering to
232,520 additional shares of

competitive-bidding, bidders

—

may be:

de¬

W. C.

Detroit Edison Co.
March 24 it was announced company plans to issue an
unspecified amount of convertible debentures due 1963

interest rate not exceeding
offered for subscription by

stockholders. Proceeds—To retire bank loans and to meet
construction costs.
Meeting—Stockholders on

^authorized' the

new

debentures.

April '-14
Underwriter—None.

Eastern Industries, Inc.
Aug. 20 stockholders voted to create

preferred

stock

(par $10),

issue of 200,000

100,000

which are expected to be offered
publicly. Underwriters
'—Blair, Rollins & Co., Inc. and Cohu & Co., both of New
York. Registration—Expected in September.

Eastern Utilities Associates
.

.Feb. 20 it
.000

was

collateral

Maine

(3.89%) of the
Co.; 45,690.45

Power

stock

common

Public

Service

Hampshire; and 20,730.20 shares (2.72%) of
stock

common

Central

Vermont

Public

Service

Corp.

General Electric proposes to sell or otherwise dis¬
pose
of such securities within a period of one
year
from the date of such
acquisition (subject to its right to
apply for additional time to dispose of such
securities).
Government Employees
Corp., Washington, D. C.
March 18 stockholders authorized an issue of
3,000 shares
of preferred stock (par
$100) to carry a cumulative divi¬
dend rate not to exceed 6%
states that, under present

issued

annually. The management
plans, these shares will be

the growth of the corporation
warrants.

★ Government Employees Corp.
(11/24)
Sept. 23, Leo Goodwin, President, announced that the
company soon plans to register with the SEC an issue
of $500,000 10-year 4% convertible
junior subordinated
debentures (convertible into common stock at
the rate

share), to be offered for subscription by com¬
stockholders of reccrd Nov. 17 at the rate of
$100
debentures for each 15 shares
held; rights to expire
on Dec. 9.
It is expected that
subscription warrants will
be mailed on or about Nov. 24.
Price—At par. Proceeds
—For working
capital, etc. Office — Government Em¬
ployees Insurance Bldg., Washington 5, D. C. Under¬
writer—None.
mon

May

$7,000,-

the

Estabrook

Co. and Stone & Webster Securities
Corp. (jointly); The
First Boston Corp., White, Weld & Co. and

Kidder, Pea¬

and

latter

first

loans.

issue

and

$483,000
to

sell

Commission

$200,000

value

par

stockholders).

authorized

first

mortgage
stock
(the

common

Proceeds—To retire bank

Underwriter—F. L. Putnam & Co.,
Boston, Mass.

Hartford Electric Light Co.
July 29 it was reported company plans to offer to its
common stockholders
105,500 additional shares of com¬
mon stock on a l-for-8
basis before Dec. 31,
1953, prob¬
ably without underwriting. Stockholders to vote

Sept.

29. Proceeds—For construction
program.

Idaho

Power

Co.

the

financing period, the company would
repay $29,000,000 of short-term loans. Final

borrow and

financing details would depend

market conditions.

★ Illinois Power Co.
Sept. 21 it was reported company is planning to issue
and sell
$20,000,000 of first mortgage bonds. Under¬
writers
To be determined
by competitive bidding.
Probable bidders: Halsey, Stuart & Co.
Inc.; White, Weld
&

Co.

and

Merrill

Lynch, Pierce, Fenner & Beane
(jointly); Harriman Ripley & Co. Inc. and Glore, Forgan
& Co.
(jointly); The First Boston Corp.; Kuhn, Loeb &

Co.

Offering—Expected in November,

Long Island Lighting Co.
April 21 it was announced that company this Fall
plans
issue and sell an issue of about
$25,000,000 of first
mortgage bonds (this is in addition to 785,648 shares to
to

offered

October

stockholders

and

Proceeds—To

repay bank loans and for
Underwriters—To be determined

tion.

employees).-

new

bidding. Probable bidders: Halsey, ■
Blyth & Co., Inc. and The First Boston Corp.
(jointly);
W. C. Langley & Co.;
Smith, Barney & Co.
Maier

April

Brewing Co., Los Angeles, Calif.

18 it

announced

was

additional shares of
rate of four

share.

plant.

new

common

company will offer 400,000
stock to its stockholders at

shares for each

Prcoeeds

—

share held.

help finance

Price—$5
new bottling

Underwriter—None.

Manabi

April

Exploration Co., Inc., Houston, Tex.

was

announced

company

plans to issue and

sell

$1,000,000 of convertible debentures. Proceeds—To
finance development of oil
properties in Ecuador. Under¬

July 7

Milwaukee Gas Light Co.

May be determined by competitive bidding.
Halsey, Stuart & Co. Inc.; Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Beane and
Union Securities Corp.
(jointly).
bidders:

Florida

Sept. 11 it

that the company plans to sell

approximately $10,000,000 first mortgage bonds due
the

latter part of this year.

1983

Proceeds—To pay off bank

borowings and for construction
—To

purposes.

Underwriter

determined

by competitive bidding. Probable
bidders: Halsey, Stuart & Co.
Inc.; Kidder, Peabody &

Co. and Merrill
Lynch, Pierce, Fenner & Beane (joint¬
ly); Lehman Brothers; Glore, Forgan & Co. and W. C.
Langley & Co. (jointly); The First Boston Corp.
' "

★ Franklin National Bank, Franklin
Square, N. Y.
Sept. 24 it

was

approving

tional

reported

offer

expected to be received

company sought SEC approval of a bank loan
$9,000,000 the mature Aug. 1, 1954.- These borrowings,
plus retained earnings, are designed to finance
expansion
pending formulation of permanent financing
prior to
maturity of notes. Probable bidders for bonds:
of

Halsey,

about

$6,000,000 of bonds.

termined by competitive

stockholders
stockholders

will

vote

39,000

(par $10) on a one-for-ten basis.
writer—Blair, Rollins & Co. Inc., New York.

Oct.

addi¬

Under¬

Inc.;

Glore,

Forgan

Co.

and

Lehman

Co.; Harriman Ripley & Co. Inc.

Minnesota

Aug. 3 it

was

Power &

stockholders

will

vote

Oct.

on
increasing the authorized common stock (no par)
from 2,000,000 shares
(858,047 shares outstanding) to 3,000,000 shares and on approving a 2-for-l stock
split.
This will place the
company in a position to proceed

promptly

with

any

new

Immediate

necessary.

financing

offer

not

that

may

contemplated.

become
Under¬

writers—May

be determined by competitive
bidding.
Probable bidders: Kidder, Peabody &
Co.; Blyth & Co.,
Inc.

Sept. 9 it
suance

was

and

announced

sale of

that

company

is planning is¬

$10,000,000 first mortgage bonds due

be de¬
Hal¬

company plans issuance
and sale of about
$7,500,000 of preferred stock some time
during the first quarter of 1954.
Underwriter—Previous

preferred

stock offer (in 1940) was
handled .by The
Boston Corp. If sold
through competitive bidding,
probable bidders may include The First
Boston Corp.;/
Merrill Lynch,
Pierce, Fenner & Beane and Union Se¬
curities Corp.
(jointly); Blyth & Co., Inc. and Harriman
Ripley & Co. Inc. (jointly); White, Weld &
Co.; LehmanBrothers and Goldman, Sachs &
Co. (jointly);
Kidder,
Peabody & Co. and Stone & Webster Securities
First

National Bank of

Sept.

company

Detroit

offered

(Mich.)

313,200

stock

(par $10) to its
Sept. 24 on the basis of

five shares

Proceeds—To

additional

common
one

held; rights to expire

share.

per

Corp.

(jointly).
★

increase

stockholders of
share for each

new

Oct. 15.

capital

Price—$45

and

surplus.

Underwriter—Morgan Stanley & Co., New York.
New York State Electric & Gas
Feb. 27 it

Corp.

reported that company may, later in
1953,
$z0,000,000 first mortgage bonds. Under¬
writers
To be determined
by competitive bidding.
Probable bidders: Halsey, Stuart & Co.
Inc.; The First
Boston Corp. and Glore,
Forgan & Co. (jointly); Blyth
& Co., Inc. and Smith,
Barney & Co. (jointly);
issue

was

and

sell

—

Hemphill,

Noyes & Co. and Drexel & Co. (jointly);
Kidder, Pea¬
body & Co. and Salomon Bros. & Hutzler

(jointly);
Brothers; Harriman Ripley & Co., Inc.
Niagara Mohawk Power Corp. (10/28)

Lehman

Sept.

22, Earle J. Machold, President, announced
plans to offer and sell an issue of $40,000,000

pany

eral

mortgage bonds due 1983. Proceeds—To

loans

and

for

new

construction.

com¬

gen¬

bank
Underwriters—To be
repay

determined

by competitive bidding. Probable bidders
Halsey, Stuart & Co. Inc.; Morgan Stanley & Co.; The
First Boston Corp.; Kuhn, Loeb & Co.
Bids—Tentatively

expected to be received

Oct. 28.

★ North Shore Gas Co.
Sept. 21 it
sale

was

about

reported that company plans issuance and
$3,000,000 bonds. Underwriters—May be

determined by competitive bidding. Probable bidders:
Halsey, Stuart & Co. Inc.; Merrill Lynch, Pierce, Fenner
& Beane and Union Securities
Corp,
Brothers; Kidder, Peabody & Co.

(jointly); Lehman
-

★ Northern Natural Gas Co.
Sept. 23 it was announced company plans to issue and
sell

some

additional debentures later this
year. Proceeds
bank loans. Underwriters—To be determined

—To repay

by competitive bidding. Probable bidders: Halsey, Stuart
Co. Inc.; Blyth & Co., Inc.

Northwest Natural Gas Co.
March

reported that this company plans t©
finance its proposed 1,300-miles pipeline from Canada te
the Pacific Northwest by the issuance and sale of
was

$66,-

000,000 of 4V2% first mortgage pipeline bonds to insur¬
ance companies and other institutional
investors and $9,000,000 of 5% debentures and 1,400,000 shares of common
6tock at

$10 per share publicly in the United States and
Underwriter—Morgan Stanley & Co., New York.

Canada.

★ Oklahoma-Mississippi River Products Pipe
Line, Inc.
Sept. 23 it was reported this company, a newly organized
subsidiary of Sunray Oil Corp., plans to issue and sell,
both privately and publicly, some securities to finance
the construction of a 475-mile pipeline from Duncan.
Okla., to the Memphis, Tenn., area, at a cost of $22,000,000 to $25,000,000.
Underwriter—Dillon, Read & Co. Inc.
Registration—Expected in October. Offering—Probably

in November.
Ormond

March
with

...

Corp., Albuquerque, N. M.

was

the SEC

announced

issue

company

plans to

stock, which

FPC

authorized

will be offeree

Central Avenue,

N. E.,

Otter Tail Power Co.

Albu¬

»•

company

to issue

maximuD

$4,000,000 unsecured promissory notes to banks, the
to provide funds to temporarily finance the

proceeds

company's 1953 and 1954 construction programs prior t*

arranging for long-term financing. Underwriters—Ma>
be Glore, Forgan & Co. and Kalman & Co. '■
Pacific

July
sell

2 it
to

its

Telephone & Telegraph Co.
was

share.

None.

announced

stockholders

capital stock

owns

Monongahela Power Co.(12/1)

Underwriters—May

bidding. Probable bidders-

Brothers; Kidder, Peabody & Co.

Light Co.

announced

and sale

★ Narragansett Electric Co.
Sept. 21 it was reported that

June

Co.

(jointly); Smith, Barney & Co. and Blyth &
Co., Inc. (jointly); Kuhn, Loeb & Co.;
Kidder, Peabody

plans issuance

Stuart & Co. Inc.; Merrill
Lynch, Pierce, Fenner & '
Beane and Union Securities
Corp. (jointly); Lehman

nationally. Office—5003
querque. N. M.

Registration—Expect¬

sey,

Brothers

Stuart

Dec. 1.

★ Mystic Valley Gas Co.
Sept. 21 it was reported company

Power Corp.
was announced

Hutzler

ed about Oct. 30.

construc¬

by competitive
Stuart & Co. Inc.;

★ Essex County Electric Co.
—
Sept. 21 it was reported company plans issuance and
sale of; $4,000,000 30-year first
mortgage bonds. Under¬
—

Corp.; Union Securities Corp. and Salomon
Bros.
(jointly); Merrill Lynch, Pierce, Fenner &
Beane; Harriman Ripley & Co., Inc.
Bids—Tentatively
&

—

writer—Kidder, Peabody & Co., New York.

Probable

curities

mission
to

body & Co. (jointly); Glore, Forgan & Co. and Harriman
Ripley & Co. Inc. (jointly).'

writers

ders:

record

Connecticut

bonds

Under¬

writers—To be determined by competitive
bidding. Prob¬
able bidders: Halsey, Stuart & Co.

Inc.;

company

per

announced company plans sale of
trust mortgage bonds due 1973.

Proceeds—For construction
program. Underwritersby competitive bidding. Probable bid¬
Halsey, Stuart & Co. Inc.; W. C.
Langley & Co. and
The First Boston
Corp. (jointly); Kuhn, Loeb & Co.:
Kidder, Peabody & Co. and
White, Weld & Co. (jointly)*
Glore, Forgan & Co.; Lehman
Brothers, Equitable Se¬

To be determined

common

Throughout

Kidder, Peabody & Co. and Merrill Lynch, Pierce, Fen¬
ner &
Beane (jointly). Price—May be set
by directors,
with bidders to name their
underwriting compensation.
Registration—Expected late ip October. Bids—Tenta¬
tively expected to be received late in November.

(about $55,000,000 to carry
4%) which may first be

97,030.95

Central

of the

common

Langley & Co, and Union Securities Corp. (jointly);
White, Weld & Co. and Shields & Co. (jointly); Lehman
Brothers; Harriman Ripley & Co. Inc.; Blyth & Co., Inc.;

(3.89%)

common

com¬

be Dillon, Read & Co. Inc., New York.

one-for-seven basis. Underwriters

termined by

receive

that this company plans to raise
$184,550,000
finance construction of three hydro-electric
projects
on Snake
River, Idaho. If approved, the financing will
consist of $105,000,000 of bonds
through 1962; $27,400,000
of preferred
stock; and $52,150,000 of common stock.

^ Delaware Power & Light Co.
stockholders

stock

Aug. 6, officials of Blyth & Co., Inc. and Bankers Trust
Co., New York, testified before the Federal Power Com¬

later this year. Underwriter—For any preferred
mon

the

Halsey, Stuart & Co. Inc.;

★ Columbus & Southern Ohio Electric Co.
Sept. 22 it

entitled

Greenwich Gas Co.

★ Clorox Chemical Co.
Sept. 22 stockholders voted

Columbia

of $20 per

issue and

may

60,000 shares of new preferred stock. Underwriters—To
be determined by competitive bidding. Probable bidders:
Btone & Webster Securities Corp.; Lehman Brothers
and Glore, Forgan & Co. (jointly); Blyth & Co.,
Inc.,
Harriman Ripley & Co., Inc. and Smith,
Barney & Co.
(jointly); Salomon Bros. & Hutzler.

April 6 it

by New England Public Service Co. pursuant to tnat
company's plan of liquidation and dissolution. By reason
of its ownership of NEPSCO
stocks, General Electric will

Co. of New

year

★

company received SEC authority to acquire its
distributive portion of portfolio stocks
being distributed

Central Maine Power Co.

1983.

Aug. 24

common

plans to
additional

issue

company

1,004,603

l-for-7 basis.

Price—At par

(100

and
oi

pet

Proceeds—To repay bank loans.
Underwriter—
American Telephone & Telegraph Co., parent,

91.25%

Not expected

of Pacific's

outstanding stock. Offering—

until the early part of 1954.
Continued

page

The Commercial and

Financial Chronicle.

(1266*

proposed issuance ..and sale of 800,000 shares of common
stock (no par). Proceeds—To retire bank loans and for
property additions and improvements.
Underwriters—
Morgan Stanley & Co., Drexel & Co. and Glore, Forgan
& Co. handled common stock financing last March.

Continued from page

III.
Feb. 4 company filed an amended application with FPC
for authority to construct a 163-mile pipeline system at
an estimated cost of $40,269,000. Financing is now being
done privately through sale of $34,125,000 bonds. Un¬
derwriters—Glore, Forgan & Co. and Stone & Webster
Pipeline Co., Chicago,

Permian Basin

stock of this company,

Natural Gas

San Jose Water Works

U. Com¬
permission to issue and sell 40,000 shares of
convertible preferred stock (par $25) and for exemption
from competitive bidding. Price—To be announced later.
Proceeds—To repay bank loans and for new construc¬
tion. Underwriters — Latest preferred stock issue was
underwritten by Dean Witter & Co.; Blyth & Co., Inc.;
Elworthy & Co.; and Schwabacher & Co.
Sept. 15 company applied to the California P.

issue and

(convert¬

Underwriters — Probably

Offering—Expected this

Co., Dallas, Texas.

fall.

Aug. 11 it was reported company may do some public
financing (probably in the form of debentures) before
the end of this year.
Underwriter—May be The First

Delzell, Cnairman,;and James H.
announced that financing of its
1953 construction program, which will range between
$8,700,000 and $9,200,000, is being accomplished by means
of bank loans under a credit arrangement which will
mature in November, 1953.
Repayment of the loans at
maturity, plus the procurement of an additional $1,500,000 needed for the rest of the year, will be accomplished
either by expansion of the credit arrangement or by the
sale of first mortgage bonds. Previous bond financing
was done privately through Blyth & Co., Inc.

July 22, Thomas W.
Polhemus, President,

Electric

Service

Public

Boston

Sky Ride Helicopter Corp.
announced that the company contemplates
issue and sale of 1,490,000 additional shares of capital
stock (no par), following completion of present offering
of 10,000

Aug.

Wast Coast Transmission Co.

Sept.

bid,

101.614,

runners-up,
more

New

that

and

28
of

offered

was

about

the

101.61. It has become

bid

out

least three

digits after the decimal, but this
occasion

was

one

ond

bidder let
of

where

the

out

Four

Public

Service

Co.

plans to

company

issue

first

stockholders

Westpan Hydrocarbon Co.
July 1 SEC granted Sinclair Oil Corp.

an extension of,
in which to dispose of its
holdings of common stock in Westpan and the Southwestern Development Xo. Sinclair owns 384,860 shares

six months from June 21, 1953,

the

sec¬

practice slide.

five

bids

were

and

reported

plans

company

and

fofe

construction.

new

and

tative#;.

—

(EST)|pn Nov.
Yal&s

was

reported

crued

Cruttenden &

Co., 209 South La Salle Street,
members of the New York Stock

interest

in feach

This

involves

Indiana and the southwestern part
of Michigan. The Company serves
148
an

230,000 shares of

communities

ill

area

with

estimated population of 1,078,-

lerman, Manitowoc, Wis; Harold
Emcb, Jr., Milwaukee

Not that it could not control such

leelings

nGCGssity
the

rccjuirGd
the

moment

a?^u
aAe ?:vm? n,®
of their attention to the

it(

rank

impend-

World Series and you can bet

that

the

better

part

the

day unless something happens to
filter prcsGnt plsns
The

issuing utility will

new

construction, part of it

dignitaries.
From what

can

hear around

the Street the latter task has been

almost

Securities
are

the

in
end

utilities

Corp. and as¬

offering today (Oct. 1)

$15,000,000 of Indiana & Michigan
Electric Co. first mortgage bonds,
sight until along toward 3/s% series, due 1983, at 102.31%
of the month when two and
accrued interest, to yield
is not much actual busi-

slated

bring

new

3.50%. Award of the issue was
won by the group at competitive

mand.

bonas

Veritable
It

that

comnetin*

"banking groups

come closer to an
actual tie than happened to be the

case

bidding

for

tV^1*

Michigan Electric Co 's $15 000 000
of new 30-year first mortgage
bonds.

muwuve pieierita siock, ^>ii,ouu,

fhA

the following day.

000 will be used by

the

curities

and

Exchange

Commis-

(Canada)
plans to issue and sell

ment

trusts

actually it did not

—

recognize

even

their

existence.

company

idea
and
of

the

is,
all

1905,

panies

Act

was,

disclosure
regarding

issue.

any new

Securities

to assure full
pertinent facts

were

gated

life

insurance com¬
investi¬
legislative committee
thoroughly

by a
of the State of New

York. Repu¬
developed from this in¬
vestigation was a big factor in the
tation

furtherance

remarkable

their

growth.
The

step

was

law

designed to end manipulations on
stock
exchanges, and otherwise
to control the activities of brokers

and

dealers.

the

Securities

1934.

lished

was

the

This, of

course, was

Exchange

Act

this law which estab¬
Securities

and

Ex¬

change Commission.

or-

as-rrfiitual

mutual

the

market

the

fund

1937-1938

period.
Mutual funds

ing this period

suffered dur-

Jfpm unfavorable

typified the period prior to 1929,
the investment trust industry had
been
subject to a
great many
abuses.
were

However, most of these
to the industry being

due

publicity which si emmed from the
hearings and inv< ligations which young and the lack of experienced
personnel.
were
being cariaea i
were
uemg
carijed on for the
Out of the investigation of these
niirnn(;A
Hevel ming
a
Federal

developing

purpos.f.

which would Tegulate mvest-

merd

American Waterworks Co., Inc., construction purposes. The bal- THE
contemplates filing with the Sen ance
us®d *° pay *?r a po-J~

curmes and &xchan&e commis

Inc.

company

to report its findings to Congress.
funds.
industry did Under this provision, there began
not mushroom
oyfernight.
There a long series of hearings into the
was
moderate
gjowth, both in problems which existed in the
the number of filrids and in the investment company field. Partly
size of individual funds during because the industry had been so
the '30's, but this growth received new, and partly because of^the
excesses
which had
a
setback follow, ig the decline speculative

Meanwhile it is indicated that to prepay bank notes issued for

"Dead-Heat"

seldom

were

are

difficult of accomplish- bond issues to market.
sale on
Tuesday on a bid of
trying to get additional
United Gas Corp. is slated t0
101.614%.
quotas of some of the recent new
open bids for $25,000,000 of debenofferings
most
of
whirVi
Of the net proceeds from the
oiierings,
most
oi
which
have I*—
tures
on
Oct.
26, while Public saip of +he bonds and from the
Since pushed forward to command
Service Electric
Gas Corn
is
i
1 ca
?
? /S
sizable nreminmQ nnHor cimb
& uas corp. is sale of 60,000 shares of 4.56% cusizarne premiums under such de- »erv*c© fciectric
due to market $30,000,000 of new
mutative preferred stock $11 500
ment

known

The

Looking to Future
There

a.m.

ganized during 1932 and 1933, and

came

Electric Bds. Offered
Union
sociates

ness
one

Michigan

now

[n progress.

last

has been spent in scouting
desirable "ducats" for visiting

Indiana &

the

proceeds from the sale to finance

week
up

use

its

The
next
year,
Congress
adopted the Public Utility Hold¬
ing Company Act of 1935. One
more were formefi as the decade provision of this law directed the
progressed. Som^~.Qf them were Securities and Exchange Commis¬
trusts and some
w|re corporations, sion to make a study of the in¬
but before long ill of them be¬
vestment company industry and

Charles R. companies of thisf type

gripped Electric Light & Power Co., slated
different form of enthusiasm. for
offering about next Wednes-

common

other lines of endeavor, is

Lake Geneva, Wis.;

Dale, Madison, Wis.; John F. El-

additional

case.

generation, distribution and sale
of electric energy, throughout an
area in northern ^nd east-central

stock of Iowa

most

Bids—Ten¬

company

Undef&riter—Tellier & Co., New York.

Mutual Funds

2,000,(|&Q shares of common stock (par 1 cent). Price-—
15
ce||s per share. Proceeds—For working capital, etc.

same

deter¬

17.

Uranium Co.,

Sept. mit

received

thin currently that

industry, much the

Instead, the Securities Act of 193?
was aimed
at one of the culprits
Indiana
&
Michigan
Electric of the 1929 period—offerings of
Co. is engaged principally in the questionable new issues. The basic

Reg. Representatives
CHICAGO, 111.

scheduled

can

For the moment the underwriting

Underwriters—To

ipy competitive bidding. Probable bidders: Blyth,
Co.,|Inc.; Lehman Brothers; Merrill Lynch, Pierce,

amount, and at sffiSblM redemption
prices ranging from
102%% to
the
principal amount, plus ac¬

Cruttenden Announces

mined

l-for-13

issuance

registration statement with the SEC shortly with respect
to the issue and sale of 75,000 shares of cumulative pre¬
ferred stock (par $100). Proceeds—To repay bank loans,

bonds. Underwriters—May be
competitive bidding. Probable bidders:

Exchange and other leading Stock
stretched to three or four digits
Exchanges, announces the associaafter the decimal.
^on wjth them as registered repEven though the Ridding was resentatives of Norman B.
Baum,
extremely close,
the reoffering Walter L.
Cole, and
Paul H.
failed
to
stir
up
anything ap- Gates, Chicago; John S. Coleman

issue

new

(11/17)

1$ it was announced company proposes to file

cal¬
000.
It
also
fui|iishes heating
it proaching "out-the-window" per- and John G. Coleman of Pekin,
service in limited .'areas in South
readily
be
called
anemic formance for the bonds. Priced at Illinois; Clarence E. Mailander,
UT™
without over-emphasizing the 102.31 to yield 3.50%, the issue Rockford, 111.; Standley B.McFadFor the 12 months ended June
situation. There had been some was reported attracting consider- den,
Springfield, 111.;
Ford H.
30, 1953, the company had total
expectation that the New Jersey able numbers of small buyers, but Kaufman and Carl E. Harris, Inoperating revenues of $47,518,885
Turnpike Authority might bring with large institutions still hold- dianapolis; Merton J. Davis, Laand net income of $8;338,014.
its pending $150,000,000 of reve- ing off.
Porte, Ind.; Ernest A. Froh, Coldnue bonds
to market to kind of
water, Mich.; Jacob H. Shoemaker,
fill the gap in the period, but
Grand Rapids; James H. TolhuiLittle Business Ahead
Continued from
latest advices put that issue back
Qage
Next week will bring a con- zen,
Kalamozoo,
William
R.
at least another week.
tinuation of the veritable dearth Davey, Negaunee, Mich-; Harold
All things considered, however, of new
issues in the corporate H. Giger and William E. Davis,
it is perhaps just as well that the field. Right now only one offer- St. Louis; Frank L. Wilcox, De
roster is not overburdening, as it ing is definitely
scheduled, and Pere, Wjs.; George H. Lough, Ft. the thirties thaj^an appreciable
threatened to be a few weeks ago. that by the negotiated route.
Atkinson, Wis.; Hiram C. Smith, number were Tbrched.
Several
corporate

endar

(52.85^;) of the stock of each of the other two companies.

$4,000,000

less custom these days to

the

carry

River field to western Washington and 1
Oregon. Underwriter—Eastman, Dillon & Co., New York. :

Halsey, Stuart & Co. Inc.; Merrill Lynch, Pierce, Fenner
& Beane and Union Securities Corp.
(jointly); Lehman
Brothers; Kidder, Peabody & Co.

(10/20)

application with the

Canadian Peace

office,£$41 Stuart St., Boston 16, Mass.,

sale

;

000,000 of 3% to 4% short-term notes to the National
City Bank of New York; and about 3,500,000 shares of
common
stock for about $30,000,000.
Proceeds—To fi-'
nance construction of a natural gas pipe line from the-

Fennek& Beane; Equitable Securities Corp.

determined

filed

stated company may issue and sell $59,-

was

000,000 of 4% first mortgage bonds to insurance com- "t
panies (including Prudential Insurance Co. of America,
New York Life Insurance Co.; Northwestern Mutual Life
Insurance Co. and several Canadian companies); $25,r J

^ Suburban Electric Co.

Oct. 27.

company

April ,1 it

Underwriter—Dillon, Read & Co., New York.
Offering—Expected in January or February 1954.

Jersey Board of Public Utility Commissions covering the

The

program. Offer¬
late in November or early December of *
Underwriters—To be determined by competi- ;
tive bidding. Probable bidders: Stone & Webster Securi- ~
ties Corp.; Blyth & Co., Inc.; Merrill Lynch, Pierce, Fen¬
ner & Beane,
and Kidder, Peabody & Co.
"

Worcester County Electric Co.

basis).

(jointly); Morgan Stanley & Co. and Drexel & Co.
(jointly); The First Boston Corp. If by negotiated sale,
Morgan, Stanley & Co., Drexel & Co. and Glore, Forgan
& Co. may head syndicate. Bids—Expected to be re¬

At 1

year.

y|ar.

Sept.

$20,000,000 of securities (to consist of around
$12,000,000 bonds; from $2,000,000 to $3,000,000 of pre¬
ferred stock; and the remainder in common stock, the
latter to

later this

Underwriter—May be Union Securities Corp., New York.

announced

was

stock

common

$14,00(^000. Proceeds—For construction

this

St., S. E.,

sell about

by competitive bidding. Probable bidders: Halsey, Stuart
& Co. Inc.; Kuhn, Loeb & Co. and Lehman Brothers

Office—1705—38th

Westpan Hydrocarbon Co. below.

Southwestern

proposed issuance and sale of $30,000,000 first and
refunding mortgage bonds to be dated Oct. 1, 1953 and
mature Oct. 1, 1983. Proceeds—To repay bank loans and
for new construction. Underwriters—May be determined

Sept.

December.

current,, market price, the sale would amount to about *

Southwestern Development Co.
See

the

Public Service Electric & Gas Co.

Offering—Expected in

shares at $2 per share.

Washington, D. C.

10 company filed an application with the New
Jersey Board of Public Utility Commissioners covering

was

November

Sept.

ceived

Corp., New York.

Sept. 3 it

(10/27)

Gas Co.

Finance Co.

Seaboard

Electric Co.

Portland General

additional

ing—Probably

Inc., New York

Aug. 11 it was announced company plans future public
financing to secure cargo transport aircraft.- -

(Texas)

Inc.

stock).

common

Garrett

Virginia Electric & Power Co.

Sept.^3 it was announced company plans to sell 558,946

mission for

Aug. 4 it was reported company is considering
sale of $300,000 of 6% debentures due 1963
into

Riddle Airlines,

Co.

Petroleum Service,

ible

of New York. Of the common
83% is now owned by Northern

both

Corp.,

Securities

Thursday, October 1, 1953

companies^lt:

STOCK

market

break

4eat speculative
only^fpr investment

bad burs^ a

tipri of the cost of extensions, ad- bubble, not

anions and improvements to the trusts but for the Securities busision of the necessary registration company's properties in 1953 and ness in general. <Xie of the first
to cover a projected issue of 216,- 1954steps taken by^the new Demo000 shares of its $25 oar value
Tbe bonds1 will be redeemable, cratic Administration in 1933 was

problems there came a great deal
of
unfavorable
publicity,
but
there was also developed the Fed¬
eral Investment Company Act of
1940.
When this law was finally

adopted,
work

it represented years of
the Securities and Ex¬
Commission and the in¬

change

industry itself.
a constructive
factor of great importance in the
subsquent development of the in¬
vestment company
It also represented

dustry.

Volume 178

Number 5260

The Commercial and Financial Chronicle

...

(1267)

Continued

from

page

determine

whether

securities sold to

Cunent Thinking at the SEC
that

Commission-

the

much

little

determines/ As

tical

can

inspecting
matter

prac¬

fact, the extent of the bro¬

ity

Federal

labors

public

the SEC.

same

banks.

der present
The

That isn't

Un¬

so.

anxious

so.

that

the investing public and the Con¬
The

Commission

and

Others

normal
our

own

delegated

the

Na¬

engaged in

cooperative study to determine
the

State

and

with

over-lapping

the

Federal broker-

both

covers

SEC

Tne

inspection

financial

condition

and

trading and selling practices.
State inspections vary widely from

State to State, and in some States
are
non-existent
or
nearly so.
Since* neither

the

SEC

the

nor

State Commissions have available

funds

make

inspections

regular,

each

there should be

periodic

registrant,
coordination

some

designed to avoid harassing mul¬
tiplicity of inspections of some
and long-time omission of
inspec¬
tion of others.
In

official

inspec¬

tions by the State authorities and

by the SEC, there

are

Association

the

National

has

study

inspections
of

of
to

not

to
our

the

Budget

any

activities

.are

the

subject

the

pro¬

Utility

Holding Company Act to conduct

size, type

and location of

public utility

panies

can

which

efficiently

economical

tricity.
in

the

most

While the jurisprudence
Chapter X was being devel¬
oped, the Commission and its staff,
as a body of presumed
experts, had
a greater
duty than at present to

scramble

which

follows

shorten

the

deprive

ever,

some

the

carry

the

would

not, how¬
investors of any

protection presently afforded.

interest

has

the overall

Commission

may

cir¬

soon

comment a proposal to
eliminate entirely with respect to

companies
of

the

except
This

soliciting

Form

should

issuers

10-K

not

but

all

report

statements.

only be
it

pounds

many

proxies,

annual

financial
cuts

and

relief

down

pieces

the

because the items

ers

which

con¬

stitute the text of the 10-K report
call for information which is al¬

available

ready

8-K

current

reports

or proxy statements. It is
also proposed to reduce the list of

transactions

respect

which

Form 8-K current report will be

mission

already

Act,

the

done

any

planning

has

proposal

know, the Com¬

circulated a
eliminate the 9-K

quarterly report of gross sales
The

revenues.

have

report

felt

misleading effect because

the current

trend

company's

should

contrary to the
earnings. These steps

its

enable

the

staff

clear

present Commission that

terial and thereafter to keep cur¬
rent.

exchanges, by such ex¬
changes. A public agency cannot,

funds to make studies to which

private agencies

members of

port the

would the

nor

private agency

sup¬

of their inspectors

use

informers to the public authorities
with respect to matters not in¬

volving defalcations
>Considered

in-

insolvency.

the

dealers in securities

are

aggregate,
subject to

less

government, not more, it
ask the Congress for
be

attention.

pay

since

1935.

studies increased

the

Now let

Act

passed

was

discuss briefly some

multiple inspections but from the
standpoint
of
the
public,^ the

simplify

whole

and forms. Please let it be under¬

scheme

somewhat

hap¬
hazard. This subject is receiving
serious consideration. I hope that
our

Commission and the other in¬

specting

authorities

forward

with

" can

come

helpful

some

and

stood that I

zation and programs, let me men¬
tion the matter of statistics.
The

Commission
statistical
in

some

publishes

bulletin

monthly

which

covers,

cases

monthly and other
quarterly, the following sub¬
jects:
'
/•''•

cases

New

Securities

Offerings

for

Cash
Sales

Securities

Indexes

Exchanges'

Common

Stock

Prices

Short

Interest in NYSE

Transactions

Stocks

Round-Lots

the New York Exchanges for
Members and Non-Members

Transactions

;in

Effective

Securities

Underwriters

Registered

Issues

Managers

Groups

Underwriting

Company

Transac¬

tions and Assets

Special Offerings

Exchanges

Saving by Individuals
Expenditures

also

tions and

ing by

publishes

Official

Security Transac¬
Holdings covering trad¬

persons

subject to Section

of the Securities Exchange Act,
17(a)
of
the
Holding
Company Act and Section 30(f)

Section

the
In

Investment Company

addition, there is

financial

when.
to

Securities

the

under
new

registration

proce¬

Act

and shorter form for

registration of investment com¬
pany
securities is about to be
The
Commission
has
study the use of other sim¬
plified forms for registration of
securities in certain special situa¬
adopted.

under

tions;
for
example;
extended
availability of Form S-8, the short
form now available for only cer¬
tain types of offerings to employ¬
ees; the adoption of an abbrevi¬
ated form of registration state¬
ment

for

institutional grade

debt

securities of issuers already filing

reports with the Commission; the
all

registration
requirement for

filing contracts. As
the

adoption

corollary to
more
simple

form of

registration statement, the
Commission is studying reduction
of

its examining procedures

respect to registration

with

for institutional

statements

ities and
the

secur¬

consequent shortening

normal

period.
effect

grade debt

This

20-day
waiting
should
have
the

making public offerings

competitive with
private
In addition, work is
done on the subject of a

placements.

being

consolidation of forms.

1933. A

•

New Plant and

Equipment
It

dure

Secondary Distributions
Working Capital of Corporations

Summary

changes.,

report

Act.

quarterly

the

United

controversial

item,

however, has to do with security
holders'
mind

proposals.

that

Keeping
solicitation

proxy

management

represents

ex¬

penditure of corporate funds from

The Division of Corporate Reg¬
ulation—formerly the Division of
Public

Utilities

—

under

its

new

Director, Robert A. McDowell, is
making a study, the result of
which we hope will be to elimi¬
nate some duplication of filing as
between
the

the

Public

pany

Securities

Act

and

Utility Holding Com¬
Act. A study is under way

substan¬

intervention

curtailment of
The

Commission's

that

budget

fact that

the Courts

able to take

are

anticipated

limitations
care

litigants

of themselves

will cut down somewhat the

num¬

ber of interventions.

tions

this

sarily

My observa¬
subject are neces¬

general

and

than

bankruptcy is
constitutionally
Federal

fair

to choke off the submission of

curity

all,

holders'

the

proposals.

submission

se¬

After

such

tions

point

have

should

subject

makers

that

also

some

defeat of

overwhelming

the

addition,

posals

matters

the

that management need
print in its proxy material
and

address

felt

that the only way that the
philosophy of the Commission can
be

change

the

not

sup¬

planted
fraud

ing

which

are

action

rule

out

screen

Commission

Acta

administered
were

period of 20 years.

rule,

regulation,

enacted

security

screen

with

holders

being

ther

plausible

both.

cutting
we

the public

among

staff

and

work

some

with

So long as our Acts are based

market

tal

markets, I

alertness
the

for

its

statutory

protection

in¬

NOTICES

DIVIDEND

DAYSTROM
Incorporated* h lhahcihf

most

capi¬

cutting will be

our

The Directors of Daystrom,

that

high-level staff

September 22,1953,

Incorporated
declared a regular

quarterly dividend of 25 cents per share,

Moreover, it must be borne in
mind

vT\ICE

inclined to think

payable November 16,1953, to holders of
record October 27, 1953.

mem¬

bers and the Commissioners them¬

★

Operating Units

★

selves
in

must

the

that

rule

such

participate

AMERICAN

actively

TYPE

DAYSTROM

changing

process

participation

tvorked in to

and

must

DAYSTROM

FOUNDERS

ELECTRIC

FURNITURE

CORP.

DIVISION

INSTRUMENT

DIVISION

fairly tight sched-

DIVIDEND

NOTICES

COMBUSTION

OTIS

ENGINEERING,

ELEVATOR

INC.
Dividend No.

COMPANY

199

quarterly
dividend
of
seventy-five cents
(75c) per share on all the outstanding stock
of
the
Company has
been
declared
payable
October
the

29,

1953 to
business

stockholders of record
October 15, 1953.
OTTO

Common Dividend No. 185

A dividend of $.50 per
the

STRAUSS

and

given

use

declared, payable

H. R. Fardwell, Treasurer
New York,

Quarterly
Dividend Notice

Vanadium Corporation

The Board of Directors has de¬
clared

per

share of

common

stock
share¬

Sec.-Treas,

Lexington Avenue, New York 17

420

Dividend Notice
At

meeting of the Board of Directors

today,

L. L. HAWK

dividend

declared

record

the

1953.

Checks

capital

stock

3:30

o'clock

will

the Corpora¬

stockholders
November

be mailed.

September 17,1953

Dated

held

of sixty cents per share was

tion, payable November 17, 1953, to
of

en¬

grind¬

America

quarterly dividend of

privilege

axes.

September 23, 1953.

-Bryan, Ohio

stockholders.

their

the close of business

Checks will be mailed.

The AR0 EQUIPMENT CORP.

closer

seldom

propose

been

October 2, 1953.

The Commission does not propose
choke
corporate
democracy.

own

value Common Stock

of record

use

par

Vice President and Treasurer

1, 1953.

abuse

capital

not simple. The aim of

are

vigor and

with sickle and pruning shears.

30^

professionals

by those who

corporation

of the

duties

the close

courage

modern

mechanics

the Commission is to perform with

scythe but, keeping in mind

stone for their

and

frequently by

The

the

and

axe

holders of record

does

the

of business October

Neither

course,

prophesy, however, that such leg¬

that in

may

been

run

general

That,

preventing

standards

islation is not likely to be enacted.

through the brush

our way

can

behind

reason

payable October 15

the

has its staunch defenders ei¬

requiring inclusion of
security
holders'
proposals
in
management's proxy material has
few

that

enforcing

question for the Congress. I would

Almost every
or
policy

The rule

disclosure.

availed

namely,

fraud

form

and

proposals

somewhat

phy which underlies the present
Act,

which

administrative directives to
mesh.

involves,

over

has

not proper subjects for

This

reversal of the philoso¬

October 24, 1953, to stockholders

of the votes cast.

consideration

literature.

course,

has

higher percentage will
proposed. The staff will con¬
to

what amounts to a
implemented per¬
filing with some Fed¬

statute

should

somewhat
be

"customers."

the

permits non-inclusion of proposals
which within one year received

tinue

Commission's

the
problems of
on

propo¬

present

less than 3%

staff

the

Commission

the

fairly close check

handling- of specific

quench the ardor of the publicityseeker). Another intended sugges¬
tion

communicated

to keep a

(this

proposal

can

effectively delegated—eventually.
However, for the time being it is

vestors without adding unneces¬
eight years, 1933 to
1941. Its rules, regulations, forms sarily to the inherent complexity
and policies have grown up over
of capital formation.

period

are

The Commission intends to sug¬

gest

It may be

function

direc¬

I think it only fair to
the pace may be

some pro¬

which

obviously not proper subjects for
action by security holders.

name

latter

majority furn¬

submission. In

nent

this

that

The

Commission

proposals, and
a proposal by

ishes justification to deny the use
of corporate funds for repetitive

cover

by the staff.

"the

that

ments.

said

indicate

which

traveling.

pro¬

to the proxy rules.
recognized, of course, that
personal publicity motivates the

pounded

field which is disclosure, there will be forms,
allocated to the rules, details, problems and argu¬

Government.

What

tion

dictated

are

by budgetary considerations
by philosophy.
After all,

that

deem

the

and

Commission

not

pass

haps by a
the eral agency of unexamined offer¬

on this subject will be on a
for case basis, as it has been in

case

which
management benefits
by
prospective election to office, the
dos

day to dispose
quasi-judicial matters and to
upon policy questions pro¬

dis¬

the complex character of the

Investment

rules,

happen

statements of the

Registrations

shortly to circu¬
changes in the
largely
clarifying

comment

thereon, are at worst a compara¬
tively inexpensive burden con¬
sidering the size of the corpora¬

the New York Exchanges
^

ma¬

posals and the tabulation of votes

curtailment

Odd-Lots

speaking in terms

present intention and that what
I say is neither a representation
no
a ' warranty
as to
what will
First

the subject of organi¬

unexamined

intelligent recommendations.
While

pending proposals ' to
our
rules,
regulations

currently

It is proposed

late for
proxy

backlog

any

of gas and electrictiy has

use

vastly

part by the fact that

without such

bound

This view is, of course,
in

actuated

the

part

not

would

one

suffer

cretionary
Commission.

prophesy

should

not

tially from

slow.

curity

functions

would

gross sales may be

as a

bene¬

the Courts and the liti¬

years,

gants

the

its

trend

dedicated

the

several hours each

conclusion, let me make a
competence. Now that the juris¬
passing reference to the sugges¬
prudence under Chapter X has tion made from time
to time that
been developed over a period of
the Securities Act of 1933 be

predecessor proposed a pro¬
gram to initiate staff work under
my.

Administration

Courts

the past, but it may be

exam¬

protection from security hold¬

elec¬

economic

the

upon

ule of day to day work. The Com¬
mission must necessarily sit for

fit of their experience and
special

policy

and

never

•

amount of paper which the Com¬
mission staff must

you

the

own

motion.

press

culate for

required. As

administering

The

the Commission's

under

cases

this Section, it is the view of the

abandon

Chapter X

intervention at the request of the
Court and for discretionary inter¬

nerve

Securities Dealers and, in the case
of
the members of national se¬

course,

Commission

Bankruptcy Act. The stat¬
itself provides for mandatory

contemplated by Section 30. While

the

under

of the
ute

the

opening of bids and in

gas

with

Sections

Commission

the

vention

and

Except for studies made

connection

other

public

use

com¬

operate

further wider

proceedings

at¬

would

handle,

Public

studies to determine the

our

directed

ine and file. The proposal removes

pri¬

grams, may I allude briefly to the
Commission's
authority
under

intervention

can
un¬

to which

being

wracking and expensive la^t min¬

underwriters.

been

duplicative

Section

field

orders

This

some

marily for private benefit.
While

eliminate

tention

without

post-effective

Commission.

would

determining
of the Com¬

statistical

unnecessary,

addition

use

Commission

Bureau

view
or

mission's

dealer inspection programs can be
eliminated.

the

Goodwin

thorough

witha

for

the

re-offer

Commissioner

make

for

the

compiled in the
keeping track of
day-to-day operations.

whether

the extent to which

Some

are

course

tional Association of State Securi¬

statute.

made

are

ties Administrators

are

statistical programs and to consult

understand this fact.

gress

required

ment.

a method
whereby the

out:
can

Another

ute

None of these statistical reports

them

budgets, it can't be

Commission

and

other departments of the Govern¬

examined pretty much the

are

Commission

the

under

impression that brokers and deal¬
ers

Trade

the

Unfortunately

funds.

general

manufacturing cqrporations
cooperatively
by the

published

Worked

derwriters

waiting

States

ker-dealer inspection program de¬

pends primarily on the availabil¬

case

underwriters

competitive bidding,

September

22,

m.,

BRAND, Secretary.

1953.

The Commercial and Financial Chronicle :".

(1268)

Thursday;. October 1; 1953

V* *

BUSINESS BUZZ

Business
•

•

from the Nation'*

WASHINGTON, D. C.
aside for

Put

—

or fears, as
be, that the Administration will give serious
■consideration
to
pouring out
hundreds of millions of Federal

least,
the

hopes

your

may

case

■cash
to
spur
the supposedly
"lagging housing construction in¬

hit the head¬
lines ' the other day when he
warned
the
bankers to
give
.sober consideration to the ques¬
tion of whether private finance
Cole really

doing its

was

job, now
free

proper

that there is more or less a

Finance

Home

and

the

Cole,

Mr.

as
.

Housing and
Administrator

the Administration

keep

it,
of

sees

level

proper

going.
level of1 housing
is around 1 million

housing mortgage money
The

proper

-construction

■

construction

housing

This

unofficial com-

level is still an
*

mitment, which is not writ on
Federal statutes like parity infor basic farm crops

come

under

price support program,

the farm

in fact
rigid Administration

nevertheless, this goal is
almost

an
'

commitment.

And
'

not

were

AdCon¬

ministration commitment,

probably would make it
Its own, for the handling and
broadening of the more or less
original
mild
Administration
approach on housing legislation
gress

of Congress
Congress re¬

last session

the

construction

total

up,

makes it clear that

prospect

have

which

drop

sharp

far

will catch the fever
the housing in¬

Garage

Has Needs

clear
1954.
the home building indus¬
it

make

—paper—10c.

session

shows

vance

commitment

chase)

months later.

(to

Treasury

mortgage money will frighten a

the

in the neighbofhood of $5 billion
but won't,
because of the debt limit, forc¬

building

out

lot of builders into staying

the

problems

building houses.

bloom,

the

middle

class

borne

terms

optimistic

are

the

construction outlook

total

year.
This year, according to
official forecasts, total construc¬

grandilo¬

tion will reach a new

quent high of $34.6 billion. Most
officials

said

are

expect

total in 1954—barring any

basic

onfy about $1.5 billion less

than this

last

the

'months,

the

each

four

reported

showed

latest

of 970,000 units, or

annual rate

pretty

housing

declining

been

has

starts

rate

the

to the holy political

near

goal. Officials have not seen fit
ment

the

■outlook

rooming

construction

strong,

and

with

industrial building

;

goal

housing units becomes

less sacred.

long

the

Federal

criminal

severely,

is
a

Emanuel M.

the

Na¬

Home

antitrust

appeared,
the
Justice Department junked the
criminal
a

suit

but

went

with

civil suit.

the

out and perhaps willing to make

kind of

British,

ment is

settlement with

oil

Iran's

again

barrels

something
of

Abadan

Iran

some

would

the

trusts.

400,000

large

have

become

entirely
the

number

the

FHA

way,

builders
doing it

used

FHA

Under

way.

papa

once

FHA

the set-up, the builder
of both financing and

sure

usually also of

He-

Contribution

—

Arnaud :

Human

&r Brothers,

Marts

New

York

City—Cloth—$3.'

.*>

Report of the Tin Research Institute:

1952—The:-Tin

Research

crude

foreign

a year

British,

Since
was

can

produce

600,000

day.

The

following the
with

refine between

500,000

oil

off,

barrels

output

of Iran

other

however,

agreements

oil

companies with

interests

are

Justice

the

cartel
The

suit

has

obviously

Department

hanging

over

frowned

which
foreign

cartels, is said to be urging the

ditching of the civil cartel suit.
The Justice Department, on the
hand, is worried

ment

the

demagogues of the
the

over

producers

among

which

Business

Research

Administra;

tion, Atlanta Division, University
of

Georgia, Atlanta 3, Ga.—cloth

—$7.50.
Standards We

Mazur
East
N.

—

Raise, The—Pau

Harper &

33rd

Street,

Y.—cloth—$2.50.
Stock

Brothers, 41

New .York

Exchange

Official

Book 1953: Volume

Year

II, incorporat

ing Stock Exchange Official Intel
ligence and Stock Exchange Year
Book—Thomas

flect the "behind the scene" inter¬

pretation from the nation's Capital
not coincide with

the "Chronicle's" own

Division

—

School

much

the suit.

and may or may

Store since 1867—Henry Givem

abandon¬

Democrats could make

politically

over

Ohio—Paper.

Rich's of Atlanta: The Story of

them.

State Department,

not

Columbus 1,

Baker

(This column is intended to re¬

by just the kind of

collective

foreign

prob¬

output.

the

producers,

which

settlement

can

and

shut

tough time

to sacrifice themselves for Iran,

the

per

refinery,

this crude

not going to sign any agreement

with

Institute, 492 West Sixth Avenue

such agreement

have

American oil

production

come

world market. Iran
up

Depart¬

State

the

worrying about the time

when

Without

gov¬

ernment of Iran is straightened

the

ease

selling her oil.

However, now that

some

and

areas,

farct that the,

to
curtail
Kuwait, Saudiperhaps
other
Iran back into

•

agreement

production

reaching

views.)

Skinner

Gresham House, Old Broad Streei

London, E. C. 2, England

Broadway,

Price, 2
&

New

York

volumes complete

Canada)

$33.

11;
Y

(U. £
.

sale, for with

the

easy money FHA has been
throwing to "low cost" housing

it
a

TRADING MARKETS

much trouble to hook

wasn't

buyer with the down payment
National

money.

Builders used

FHA

way

to
are

doing it the

change

over

Seneca

reluctant

change

are

another

if they

only

government

for

For the

are

producing

Carl Marks & Co. Inc.

Storage.

FOREIGN

SECURITIES

50 BROAD STREET

the

won't have to get out of

builders
no

maybe"

will.

some

SPECIALISTS

warehouses

NEW YORK 4, N. Y.

HANOVER 2-0050

C.:

TELETYPE NY 1-971

prospect of building gov¬

ernment

•

There

store

"B"

Coplay Cement Pfd.

LERNER & CO.
Investment Securities

TELi

but

Co.

Machine

Victoria Gypsum

time being the tobacco

rut,

Falls

Riverside Cement

tobacco

crop even

yet
as

lective

launch

one

duction for

their

late Truman Administration was

Harper

firms, will be required by col¬

returning to 'horse and
financing?" He means
with term mortgages and second

materials

the

vote-catching stratagems of the

that

buggy'

growers

controls,

the

is recalled

lenders

after the removal of credit and

t million

cost

something

Association

farmers

total

the

year

1.1 million units.

With

oil

the

foreign producers, including the
foreign oil activities of U. S.

other

easy

Freedom

ably can't be put into full pro¬

construction

total

the official forecast of around

;

favored

mort¬

President

tion:. Its

and

f! C'

Philanthropy's-Role in Civiliza¬

British

Iran

calling for

New York

Wall Street,

return of Persian
the world market, then

between

Companies

edition-r^Farr ' &

5, N, Y.—cloth—$2.00.

settlement is to be reached

Builders, to view with alarm
prospect,
"Are
mortgage

to expect that the housing seg¬

picture will fall short this

pending De¬
partment of Justice civil suit
against the "foreign oil cartels."

govern¬

approves

year.

While

upper

former

caused

the

change in the business scenery
—of

into

restricting

has

Admin¬

Eisenhower

over

•>.

the market.

"low

closing down of Iran.

Administration

situation

for

the

facile.:u I'i
A of Sugar.

Manual
•

Co.;: 120

from

acute internal pains

are

istration

might

Spiegel,

By and large Administration

within

Giving Pain

Arabia,

through

having

tional

officials

There

suit,

1952r1953—^3Qth

against the so-called cartels.
Then,
when
the
Eisenhower

and

upon

and

credit

gage

finally

This
,

cartel

pooled together and have sup-

suit

housing, for years

pitched

the

break.

On Construction

Oil Antitrust Suit

J.-

plied the oil that was subtracted
world production by the

salable demand.

coming

middle

down

the

ment both through more

Optimistic

Are

excess

hit

over

market

regulations

the

be¬

insured mortgage. Under

they have to consider the un¬
certainties of selling and credit

with

would

by the

Institute, In¬

'Princeton,;

corporated,

Vice-Presidents!"

and

tail-between-the-legs

housing"

along

issue

real

lenders

industry

free

our

ing

the

one

debt

use

Symposium conducted

Tax^ Institute—Tax

cloth.

needs

money

breaching

Cf the business next year, when
"S..

he's

undetermined

new

limit, for the quarter beginning
this month. The Treasury could

the

hitherto easy

production-supported housing in

the

some

amount of its

Fike

the absence of the

—it's

pur¬

;;

Furthermore,

of the

try—if not quite as much so—
Cole is worrying for fear

here he is—27th floor
wonder I didn't recognize his name—

"Pipsnortel?—Hmm-mm!—Oh,

would lead to
two, three, or four

disbursement

Actually

Fi¬

Street

Wall

Week—Donald I,

Limits of Taxable Capacity, The
—

program

handily

Rogers—in the October 16th issue

could be
pumped out quickly, and that
is by direct purchases. An ad¬

$10

which mortgage money

short

of "Collier's" (on sale Oct. 2) 15c.

disbursement of
cash. There is only one way by

must borrow

nancier

mortgages

Mortgage Association
as

3273

Mich.

11,

How

by the Federal Na¬

purchased

Street,; Detroit
.

Detroit

Company,

a spe¬

Congress. Every

worth

Garage—Strand

Products

limit, which it must stay under

that he is worrying about

Mr.

Door. Division,

Steel

Better

Griffin

dollar's

Ideas:; How

and

Plans
a

problem. It is pushing the debt

cial

—

request.

Garage

Then, too, the Treasury has a

pain of

paper

—

to Build

tween

they

Education, Inc., Irvington-

prices

than last, incidentally.

until January on

for Eco¬

charge for single copies; quantity

the
"drying up of mortgage
money," a greater volume of
mortgage
funds
overall
this
year

1984—Arthur

for

on-Hudson, N. Y.

become delirious about

cally sacrosanct.
carefully,

nomic

dustry daily and twice on Sun¬

it to operate on a smaller
than average cash balance.

read

Education

Bestor, Jr.—Foundation

causes

days to

University

27, N. Y.—paper.

definite

Columbia

—

Press, 2960 Broadway, New York

will

gards a nice round figure of not
less than 1 million units of con¬
struction as something
politi¬
If A1 Cole's remarks are

lished

pretty hard to get some impor¬
tant people unduly excited at
this moment about housing. The

tional

units per year.

...

Columbia University Press FallWinter 1953-54—books to be pub¬

job,

proper

Bookshelf,

are

Treasury

finance's

Private

X 1/ IX

Administration

and

serve

market.

money
•

y /|||

trying to hold business expan¬
sion within some bounds, and

before they

dustry.

JTjL I l/VI/

Capital

couple of months, at

Man's

Behind-the-Srene Interpretation*

10 Post Offica

Square, Boston 9, Mas*,

Telephone

T7~~ V~'~
t

y^-r

a—

Teletype

HUbbard 2-1990

BS 69

Full text of Commercial and Financial Chronicle : October 1, 1953, Vol. 178, No. 5260

FRASER