Full text of Commercial and Financial Chronicle : October 22, 1953, Vol. 178, No. 5266

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

MICHIGAN

OCT 23 1953
ESTABLISHED 1S39

***,££"torn
library

~Tke Commercial

Financial

an

d

Chronicle

Reg. U. S. Pat. Offioe

Volume

178

Number 5266

New York 7, N. Y.,

Price 40

Thursday, October 22, 1953

Cents

a

Copy

EDITORIAL

Outlook for Interest Rates

As
This
when

We See It
to

seems

be

to

us

of

one

those

By MARCUS NADLER*
Professor of Finance, New York University

seasons
as forces back of interest rates:
(1) busi¬
(2) position and needs of the Treasury;
(3) the National debt management policy; and (4) Re¬

gain immensely from quiet re¬
flection upon first principles. We are
entering a
period of intense, even bitter argument about

ness

Board

serve

foreign trade policy. The so-called farm
problem has come to the fore with all of its pro¬

policies.

political troublesomeness. Organized la¬
enjoying a degree of freedom from the
general rule against monopoly which no one else
save the farmer even
aspires to, professes to feel
aggrieved with its lot, and insists that the national
government do something about it. Some of the

will be offset by a larger demand for
capital by public
bodies. Concludes "we have seen peak of interest rates."
The subject assigned to me is "The Outlook for Interest

Rates."
do

world

problems which turn in large measure upon
things economic are much to the fore, and our
part in their solution is a subject of much debate

I

Many in this audience

have to

listen

tain to be

of

movement

termines

these

are

the

There
tween

of fundamentals and confusion

upon

We

blunder free

should

us

profit by

little reflection

rates will be

upon

one

So much for the

the

28

The

has

be

is

and

to

bond

;

a

relationship

rates

But

and

that

make

Association

School

New

a

of

salesman

a

by

Business

Dr.

Securities
New

lead

it,

who

you.
on

Nadler

in

subject and

Nevertheless

York

in

New

can

of

it.

impact

of

these

on

the

of everyone

The

of

framework

etary

financial

and

remarks

my

issues

inherited

by the new Administration, and the
problems which they present to you
as

well

these

Joseph M. Dodge

government

tion.

The transfer called for

was

are,

define

you

your

transferred to

executive

and

Because, whatever)

us.

and no matter
them, they are as
much yours as they are ours.
In
January the management
of
how

32

to

as

problems

a

Administra¬

new

reorganization of admin¬

a

personnel,

establishment

of

series

Continued

sponsored by
cooperation with the
of

say

needs

interest in

your

the

to

the

to

will be related to the principal budg¬

and

It goes

the

have

of

and

is what I hope to do.

goes

page

I

adequate

Industry,"

Administration

City, Oct. 7,

What

by time

economy and the
is of so much im¬
portance that it is, I believe, well
worthwhile to help establish some
general understanding of them. That

certain

at

success

discussion

my

limited

is

York

Uni¬

*A

1953.

paper

Detroit,

by

Detroit,

Mr. Dodge delivered before
Mich., Oct. 12, 1953.

the

on

page

Economic

26

Club

A glance at the Index

—

on page 3
vividly shows the wealth of informa¬
securities industry, investors and
businessmen which
Thursday "Chronicle" every week throughout the
year

tion of vital importance to

available

of

York

lecture

the

nor

lives

be¬

would

that

sure,

selective.

be

all-inclusive

afield.

merely be

a

am

problems

problems

also

far

I

the

istrative

report of
Economics of

Investment

versity,

ON THE INSIDE

Chemical

high-grade

importance of the topic to

♦Stenographic
entitled

Graduate

is

the

Continued

ing for a simple exposition of these matters, one
hardly do better than consult the great
page

neither

study care¬
fully for years and endeavor to master it.
Otherwise,
will be "hacks" at your profession and, in all
prob¬
ability, will not last long in the profession, and will end
up selling insurance.

could

on

therefore

will

you

the real nature of wealth and upon the ultimate
source of all economic
well-being. And in search¬

Continued

high-

rates

realize,

around passing rumors and
hoping
that he will get better
orders, interest
of the subjects that
you will

Marcus Nadler

and foolish notion."
a

interest

will

budgetary and fiscal

However, L can
this right now, that if you
going to be in the security busi¬

not

questions involved. A brief period of
dedication to calm thought about fundamentals
might, in the words of the Scottish poet, "frae
a

You

de¬

you

ness

misunderstanding
of thought about

real

monie

of

prices.

too

me

are

of

of

If you know what

of

interest

equity

evident

mass

rates

of national security programs.

prices will be.

tell

enough that there is superimposed

costs

a

also will know what the

you

movement

play

business.

your

interest

movement

movement

be, then

cer¬

disappearance of this kind of counsel. But it is

the

of

the

grade bond prices.

long, and sometimes sad,

conception, and much ad captan-

a

Interest rates

important role in

very

dum argument. Perhaps it would be
asking better
bread than can be made of wheat to expect the

all these difficulties

may be wondering, "Why
long-winded professor talk on

a

The

corrupted by thinly veiled selfishness,

narrowness

to

interest rates when I sell stocks?"

here at home.

as

4

short-term demand for money in next 12 months will be

now

experience that discussions such

After stressing the universal impact of the Federal
Budget, Director Dodge outlines the rapid and complex
growth of the Federal spending, making the budget "fan¬
tastically large and complicated." Likens situation to that
of family that has long lived beyond its income, without
plans for changing its habits. Expresses doubt Federal
Budget can be balanced before fiscal 1956, as substantial
savings are only possible in defense outlays, and the final
status in dollars of the budget will depend on needs and

Discusses these forces and holds

reduced, while bank funds will be larger. Points out,
however, smaller demand for capital from private sectors

verbial

One has learned from

Director of the Bureau of the Budget

activity;

proper

bor,

By JOSEPH M. DODGE*

Dr. Nadler lists

should

we

Our Tough Budgetary
And Fiscal Problems

in

the

the

State and

Bank
&

Trust Company

WESTERN

NATIONAL BANK
of INDIA, LIMITED
Bankers

Founded 1824

Head

Complete corporate and
personal trust facilities
Correspondents in all
parts of the world

the

to

Government

Kenya Colony and
Office:

Bonds

in

Uganda

Private Wires

Bishopsgate,
London, E. C. 2

Branches

in

26,

India,

Municipal

Pakistan,

Coast

to

Coast

land

Paid-up

_£4,562,500
£2,281,250
£3,675,000

CapitalFund

Reserve

The Bank conducts every

banking

Bond Department

Protectorate.

Authorised Capital

and

THE NATIONAL CITY BANK

exchange

A. HOGLE & CO.
^

OF NEW YORK

description of

50 BROADWAY

also undertaken

•

NEW YORK CITY

Salt Lake City

Bond

Dept. Teletype: NY 1-708

Los Angeles

Net

99

WALL

NEW YORK

To

Active

Markets

Dealers,

Banks

5, N. Y.

Inquiries

Spokane

OF THE CITY

OF NEW YORK

Cities

Brokers

CANADIAN

CANADIAN
SECURITIES

invited

BANK

NATIONAL

Maintained

and

STREET

securities

CHASE

Denver
J

and to other Western

Listed and Unlisted

THE

ESTABLISHED 1915
Members of All Principal Exchanges

business.

Trusteeships and Executorships'

LAMBORN & CO., Inc.

^

Ceylon,

Burma, Aden, Kenya, Tanganyika,
Uganda, Zanzibar, and Somali-

BONDS & STOCKS

Public Service Co.
of New

Hampshire

COMMON

Commission Orders Executed On All

t. l watson & co.

sugar

Canadian Exchanges at Regular Rates

MEMBERS

Raw

—

Refined

—

Hew

Liquid

York

Stock

American Stock

Exports—Imports—Future/

Exchange
Exchange

50

WIRES TO

MONTREAL AND TORONTO

Broadway, New York 4, N. Y.

Teletype NY 1-1843
DIgby 4-2727

Goodbody
MEMBERS
115

BRIDGEPORT

PERTH AMBOY

NEW

BROADWAY

NEW YORK

Analysis

upon

request

DEPARTMENT

Teletype N Y 1-2270-X
DIRECT

Telephone WHitehall 4-6500




CANADIAN

&

YORK STOCK

PoMcaoTi Securities
<0rporatio74

Co.

EXCHANGE

1 NORTH LA SALLE ST.

CHICAGO

40 Exchange Place,

New York 3, N.Y,

IRA HAUPT & CO.
Members
and

111

Broadway, N. Y. 6

WOrth 4-6000

Teletype NY 1-702-3

WHitehall 4-8181

Boston

York Stock Exchange
Principal Exchanges

New

other

Teletype NY 1-2708

Telephone:

Enterprise

1820

of

2

The Commercial and Financial Chronicle

(1522)

WE

The

and

POSITION
TRADE

Security I Like Best

IN

A continuous forum in which, each
Arizona Public Service
Black Hills Power &

in the investment and

they to be regarded*

are

Citizens Utilities

Units, Notes & Common

New York

Members

Otter Tail Power

Southern Colorado Power
Southern Utah Power

Upper Peninsular Power
Western Light

& Telephone

New

I.

G.

Farbanindustrie

Corporation
Established,

1920

pendent

Anilin

in¬

country
well

of

as

in

as

and

of

fered

new

Tel.

REctor

E. Oppenheimer

Max

of¬

large

has long
of the greiat

one

of the world's prog¬

is due to these scientific "Giants."

status

G. Farben
in

assumed

1925.

the

became

of the world's

one

largest

important chemical

Bassett Furniture Industries

car¬

corporations

bine

spent

sales

for

The firm's

Farben

research,

substantially

American

stockholders

concerns,

did

not

badly.
Liberal
dividends
paid in the prewar years.
Now,

indicate

that

stock

Farben

has

Like

other

every

Farben

was

German

operations extended

major chemical field.
a leading producer of

securities, including the
issues resulting
from Far¬
liquidation, may be acquired

new

ben's

by

American

investors

with

Life Insurance Co. of Va.

Sperrmark

chemicals,

which at present are quoted at a
discount
of
approximately 25%

tars, dyes, pharmaceuticals,
nitrogen compounds, inorganic

Lynchburg, Va.
LD 39

TWX LY 77

Marks)

plasties,
syn¬
(buna), synthetic from the Deutsche Mark. To some
fuels, artifical silk and fibers, in¬ extent, this resembles a situation
secticides and light metals such as that occurred
a
few
years
ago
magnesium, powdered iron and when
English
securities
were
thetic

STRADERJAYLOR & CO., Inc!

films,

(Blocked

rubber

nickel.

bought at

the

In

1930's

company

the

valued at

were

of

assets

the

esti¬

an

30%

discount of from 20%-

a

with

discount

switch
has

sterling.

narrowed

This
to

ap¬

INACTIVE

STOCKS

\

portion of Farben's far-flung
holdings were lost. Therefore, it is

holders of Farben

Ambrook Industries
American Wringer

impossible

opinion

evaluate

Front Range Mines
National Licorice
Pocahontas Fuel

Ponds Extract Units
Roch. & Pitts. Coal Com.-Pfd.

Stonega Coke & Coal
Upjohn Co.

today

the

panies of
trie

vestor with

the

Federal Coal 5/69

(W/S)

Intl. Accountants Soc. 5/68
E. Pritchard

4%/61

the

I.

Gv

com¬

Farbenindus-

(Farbenfabriken

Farbwerke

Hoescht

and

Export

sales
G0%
of

ac¬

those

of

American

cerns

of

securities

chemical

of

con¬

120




To Yield
James H.

few

next

years.

This

is

company

principally,

turer,
twist

used

farm* implements,

goods,

consumer

This

and

are

frequent
The com¬
in the upper brack-r¬
means

is

now

ets in the industry in point of vol¬

of

sales

valued

at

only

of

is

sales.

Furthermore, in contrast to

many

American

ben is

virtually debt-free.

-

this

such

major U. S. chemical
panies as Allied Chemical,
and

American

Cyanamid.

of

company

achieved

in

losses

incurred
War.
was

chemical

spite
in

More

the

of

This
into

second

amazing,

the

financed not in the

capital market, but entirely out of
earnings.
I.

G.

ceive

a

holder of RM1,000

Farbenindustrie
as a

result of the

annual

companies,

Far¬

Lunn Laminates Inc.

Chicago and Los Angeles and this

Permachem Corporation

geographic distribution is effec¬
tive in
maintaining closer con¬
tacts

with

tating prompt delivery of orders.
Modernized equipment has been
installed

in

reduced

tion

has

in

1946

shares

re¬

liquidation?

A

dividend
the

4V2%

at

based

are

on

Stock
on

rate.

the

the

official

Exchange

Prices
Frank¬

quotations,

prevailing Sperrmark

Markets

in

the

new

secu¬

rities may be expected in the near
future on a when-delivered basis.

This exchange of the I. G. Far¬
ben

shares,

which

are

traded

in

the Over-the-Counter Market, for
new securities
will represent one
of

the

greatest

corporate

break-

Telephone

in

company

for

pe¬

part

for

our

on

Opportunities
or

write

current

»

Japanese securities

was

from

YAMAICHI

SECURITIES CO., LTD.
Established

1897
-

j

occurred

necessary

'

publications

for

in

Home

the

Office

Brokers

Tokyo

—

Branches

48

Investment

&

Bankers

discontinue dividend

to

and

payments

3-0066

Japan

Call

agreement

company

This

making it

WHitehall

Investment

in¬

15-year

restriction
loan

preventing
the
paying dividends
amount.

these
fields

contacts.

Company

in

on

new

New York 6, N. Y.

Broadway

$1,250,000 was
the Mutual Life

with

in

by

years

loan of

a

invited

are

companies

s. d. fuller & co.
39

terest with an annual amortiza¬
riod.

inquiries

growth

and

up

recent

dealer

A

organiza¬

built

been

strengthened

a

marketA

sales

coordinated

in

costs

Your

has

and

years

competitive

highly
well

recent

operating

Regal Plastic Co.

facili¬

and

customers

the

this

accounts

dividend

in

111

Broadway, N.Y.6 C0rtlandt7-5680

accumula¬

tions.
The reduction in working
capital resulted because the man¬

agement made the decision to in¬

Street firms have

in I. G. Farben certificates.

giants fort
great and

retained

What does

of

Dow already established active markets

remarkable return of Farben
the

Several Wall

com¬

60%

Underwriters For

with

compared

as

the bottom of the list 13 years ago.
Plants are located in New York,

1949

approximately 110% to 290%
yearly sales volume, Farben

3-2340

ex¬

continuing orders.

pany

ume

Telephone
WHitehall

dur¬

valued by the stock market at

are

Gordon Graves & Co.
30 Broad Street, New York 4

drills,

of

manufacturers

able and

and

These

utilities.

by

—

for

used

are

air-craft,

household

★

high speed

of

which

drills

manufac¬

a

when working
capital became lower than a spec¬

German

1965

1,

2.35%

Young

ified

comparable

November

re¬

a

cession during

While leading chemi¬
companies of the United States

This volume places Far¬

Year

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

minor

Due

than

cal

sales level comparable to
Eastman Kodak and well above

40%

on a

recovery

Our 26th

not more

companies.

or

for

World

George A. Rogers & Co., Inc.

experiencing

Insurance

counted

was

Rochester Ice 5/56

2% Bonds

or

either

major

below

Worth, Texas

at

three

the

1,-

Offer:

pres¬

negotiated

an

present

Taxes

Independent School District

included

carried

Badische-Anilin and Soda-Fabrik)
had total sales of approximately

ben

Doeskin Products 4/54

its

in¬

amount.

BONDS

Fort

busi-

my

alert

offices

activity

level

In

liquidation, in

all

Income

and

own

upon

of

ness

shares.

presents

We

common

supposi¬

(.$409*000,000).

$550,000,000.

Virginia Coal & Iron

based

tion provision over a

were

conservative

a

combine

Bayer,

as¬

Farben

from

exempt

Federal

branch

our

Inc.

far

1948

720,000 marks
1952

total

The

to

$100,000

outstanding oppor¬
tunity to buy shares of these lead¬
ing chemical companies at prices

the books at

In

effectively

combine's

sets, which in
on

to

wires

com¬

6,000,000,000 marks ($1,- proximately 4%, -thereby adding
to investors' gains.
Since
1941
this
company
has
A similar nar¬
500,000,000).
However,
due
to
World War H and the Russian rowing of the Sperrmark discount shown a profit each year except in
would prove just as profitable to 1950 and 1952.
grab of East Germany, a substan¬
tial

-

Mobile, Ala.
Direct

selection

additional

mated

NY 1-1557

Ma-

&

chines,

ent

Exchange

Exchange

St., New York 4, N. Y.

HAnover 2-0700

Avildsen

tion

Stock

Stock

NewOrleans, La.- Birmingham, Ala.

Interest

a

York

American

25 Broad

consisting of the
and

New

Members

business¬
is

Quoted

of

approximately 300,000 stockhold¬ pendable.
ers.

Members

great

trucks, tractors, tanks,
fare
jet
engines,
electronics, guided
were
missiles, electric equipment, ma¬

Latest

company^

good

a

this time

preferred

chinery,

about

word

one

reports

at

prior

Tools

com¬

annual

of

coal

Dan River Mills

cer¬

—

the

of

5%-6%

than

more

company.

into

risk

Sold

Steiner, Rouse & Co.

is

Machines, Inc.

bination package

the

spite of the fact that the sub¬

sidiary

&

continuing

acetylene.
In

Tools

choice of

man's

is

internationally
tels. The stock market then placed known European companies, such
a
total
value
of
3,000,000,000 as Royal Dutch, about 15% of the
marks (over $700,000,000) on the shares are held abroad.
new

My

the

including ownership of the

into what

merged

were

and most

Commonwealth Natural Gas

time

eight leading chemical concerns of
Germany with total capitalization
reserves,

Camp Manufacturing

"Giant"

its

that

At

of 646,000,000 marks, not

American Furniture

A

since the turn of the century

ress

Ayildsen

This

Hoescht:

money-makers.

measure

I.

Trading Interest In

It

the

split-up of 1911, and
resulting profit making pos¬

the

rub¬

monia, plastics, and intermediate
products for synthetic fibres and

Bought

Standard Oil

near

considered

Exchange

2-7815

synthetic

fibres.

detergents.

The chemical industry

BROADWAY, NEW YORK 5

antibiotics,

Heavy chemicals, fer¬
liquidation
present an extraordinary oppor¬ tilizers, plastics, dyestuff, insecti¬
tunity
to
profitably
invest
in cides, detergents, rayon, syntheticpharmaceuticals,
antibi¬
sound chemical concerns of grow¬ fibres,
otics, vaccination cera, oxygen and
ing world importance.

Exchange

Stock
Stock

dye-

photo¬

Far-

to

been

York

Machines, Inc.—

ups of modern times.
tainly comparable to

stocks

chemicals,

Louisiana Securities

Young &
Co., Inc., N. Y. C. (Page 2)

Badische-Anilin: Dyestuffs, am¬

international

American

Heavy

ber and

ben stockholders in the

Since 1917

Members

E.

James H. Young, J. H.

5%

follows:

as

pharmaceuticals,

cides,

the

securities

com¬

graphic products, plastics? insecti¬

have

the

1925.
than

production of these three
Bayer:

situa¬
I

company formed in
each employed more

stuffs,

conclusion

f-fcpONNELL&rO.

Max

—

Lud-

of

workers, and had sales in
of $150,000,000. The
scope

panies is

analysis

the

that

120

the
1952

excess

interest in this

reached

Rights & Scrip

Avildsen Tools &

210' shares of FarbHoescht,
of Frankfurt

e

25,000

tense investor

tion.

Specialists in

nor

DM

k

of

After

York 5

Soda-Fabrik

&

In

study

Teletype NY 1-583

be,

to

Farbenindustrie

Oppenheimer, Partner, Oppen¬
heimer & Co., N. Y. C. (Page 2)

wigshaven; DM 285 shares of Farbenfabriken
Bayer,
of
Leverkusen;

Stock

Common

has

careful

120 Broadway, New

intended

G.

I.

.

cor¬

porations

Europe.

BArclay 7-5660

Alabama &

Selections

sibilities are most attractive.
split-up of I. G. FarbeninMain; and DM 25 shares of Casdustrie, the leading and largest sella Farberke
Mainkur, of FrankJAMES H. YOUNG
chemical combine operating out¬
furt/Main-Fechenheim.
side of the United States,
into
President, J. H. Younx & Co., Inc.,
Bayer,
Badische-Anilin
and
four
inde¬
New York City
Hoescht represented the backbone

Stock

Exchange

particular security.

a

not

are

The

Associate Member
American

New

for favoring

w e r

promoted

New York Hanseatic

City

Exchange
Stock Exchange

and American

Their

When the old shares are surren¬
dered, th,2 stockholder will ac¬
quire DM 250 shares of Badische-

Stock

York

of experts

group

offer to sell the securities discussed.)

Partner, Oppenheimer & Co.,

England Gas & Electric

Public Service of New Mexico

as an

E. OPPENHEIMER

MAX

Lake Superior District Power
New

reasons

(The articles contained in this fornm

Gulf Interstate Gas

different

a

Week's

Participants and

advisory field from all sections of the country

participate and give their

Light

Central Maine Power

week,

This

.

Forum

Thursday, October 22, 1953

...

stall

more efficient
machinery and
equipment in order to reduce pro¬

duction
of

the

costs and they used part
working capital for fixed

capital,

thus reducing the work¬
ing capital below the limits set by

Over-the-Counter

Quotation Services
for 40 Years

the insurance company: When the

insurance

brought
company

to

$608,000

refinanced

dividend
and

loan

company

down

restriction

it has

it

with

was

the

National Quotation Bureau

the

Incorporated
Established 1913

eliminated

subsequently paid the

46 Front Street
CHICAGO

Continued

on

page

20

New
SAN

York4,N.Y.
FRANCISCO

Number 5266

.Volume 178

The Commercial and Financial Chronicle

...

(1523)

INDEX

The Look Ahead!

LlCHTEnSTEin

By CHARLES M. WHITE*

Our Tough

nothing in near future to scare us, head of
largest steel producer admits, however, business
will fluctuate, but no deep depression, such as in
early '30s,
is likely. Praises Administration leaders for their
understanding
sees

—Hon.

of economic and

military problems, and lauds the curbs put
trends.
Expresses satisfaction with return to

the

nor

claim

not

of

son

to

be

read the future.

a

prophet,

prophet.

a

I cannot

But

as

Ameri¬

an

businessman I know that

can

cer¬

mills

our

That

is

100%

operation.

It

and

tain events af¬

a

A Method of

of

overtime pay on a

American

of

business, and
that certain
trends
ble
and

go

often

business.

customer

I

find

also know that

like

the

order

smart

it

businessman is

always pre¬
pared for the

may

it

we

is

going to
happen to

m.

c.

and

difficult

Finally, it

reluctant

to

John

D.

possible.

as

that

stock market. '

acres

was

The

fluctuate," he replied.
right.
It did.
It still
is true of business.

same

will fluctuate.

means

And

must

we

of them—so that

expensive and

rising

shows

that while

had recessions,

and

have

we

depres¬

even

operation

is

Labor

don't have to

prices

for

Business could retreat from where

profitable

It has been and still be good busi¬
Business reached

{high just

record index

a

few months ago of 243

a

—that is 243% of the 1935-39 base

period.

Even

in

the

summer

months of 1953

more

than 63,000,-

€00 Americans

were

employed—a
that all

record

these

high.

That

and

men

means

women

were

earn¬

ing high wages and spending them.
The

steel

industry
produced
76,600,000 tons of ingots in the
first eight months of 1953, also a
record.

Now

slightly and it
I

for

the

future

near

been

100%

of

people

in

where

off

eased

off more.
anything in

may ease

cannot

one

have

has

it

see

to

scare

We

us.

operating so long at
capacity
that
certain

get

Wall

Street

alarmed

and

when

else¬

opera¬

tions
drop to 90% of capacity.
"They might well drop to 85%, or
310%, or less.
Just remember this: that at 90%
of

today's
capacity more
steel
be produced than at 100%

would

operation in 1951, and 1951

was a

good

States

for

year

and

for

the

the

steel

United

industry—and

350% of the industry's current

pacity is well
ity in

over

ca¬

the total capac¬

Great

address
Lakes

Conference

Society of Security
Cleveland, O., Oct. 13, 1953.

of

The

in

it is

nual Convention at

National Banks'

Ray

our

is

another.

One

mill

location

mere

With

a

Steel

which has

pend

M.

what

on

As We

answers

Then

again

(Editorial)-

is

NSTA

plants

like

better.

100%

other

They

Our

18% of

our

double

profit.

a

on

steel,
of

decline,

us

perhaps

our

been




Corner

The

.

and

.

on

much

to

Industry

Piasecki
*

Worcester

Helicopters

44

Article not available this week.

28

Helicopter Corp,

Yuba Consolidated
Twice

Weekly

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

COMMERCIAL and

CHRONICLE

Reentered

WILLIAM

B.

DANA

COMPANY, Publishers

Place, New York 7, N. Y.

HERBERT D.

SEIBERT, President

Possessions,

and

Chicago

city news,

Offices:

3,

111.

135

etc.).
La

STate

Gold

matter

Fields, Inc.

Febru-*

United

of

States,

and

Salle

St.,

2-0613);

U.

8.

Members

of

$48.00 per year; in
Canada,
$51.00
per
year.

Countries, $55.00

and

Quotation

$33.00 per year.
Note—On

Record

of

—

Monthly,

the fluctuations in

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

made in

New York

funds.

INCORPORATED

WHitehall 3-3960

(Foreign postage extra.)

account

ill

39 BROADWAY NEW

per year.

Other Publications
Bank

WM V. FRANKEt 1 CO.

Union,

the

South

(Telephone

in

Territories

Pan-American

Other

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

Eng¬

Subscription Rates

Every

state

second-class

as

Subscriptions

Thursday, October 22, 1953
.

c.,

ary
25, 1942, at the post office at New
York, N. Y., under the Act of March 8, 1879.

to 9576

SEIBERT, Editor & Publisher

WILLIAM DANA

e.

Copyright 1953 by William B. Dana
\
Company

Reg. U. S. Patent Office

ST., NEW YORK 4, N. Y.

Glens Falls

Hiller

5

Dominion

TELETYPE N. Y. 1-5

Getchell Mine, Inc.

2

_

these

page

1-1826

Collins Radio Co.

8

____

Washington and You

as

NY

38

You—By Wallace Streete

The State of Trade and
as

&

Capitol Records, Inc.

31

Security I Like Best

feed

can

Exchange PL, N. Y. 3.

1-1825

21

As other de¬
we

40

NY

43

Salesman's

The Market

often

QTflPKQ

•

Teletype

*

Securities

Members New York Stock Exchange

Schenectady

HA 2-0270

5

Securities Now in Registration

Spencer Trask & Co♦

•

May__r

Report

REctor 2-9570

Nashville

Singer, Bean
& MACKIE, Inc.;

33

40

FINANCIAL

•

35

25

25 Park

•

Wilfred

Corp.

♦

12

Reporter's

Securities

no

lllLrLllHLU 0 I UlllVO

Chicago

7

30

Notes

these

have specialized in

•

Bargeron,_^

Public Utility Securities

getting

have

capacity,

Continued

Ultra Sonic

24

Prospective Security Offerings--

steel and netting us a

been short of steel.

Republic Natural Gas

8

emergency

customers,

They

Recommendations

Our Reporter on Governments

has

make

treated

have

4

We

Steel

that

have

Lunn Laminates
i

Funds

Observations—A.

Oil

*

News About Banks and Bankers

of products for the

we

Keta Gas and

44

Securities

Indications of Current Business Activity
Mutual

simple.

Republic

With

Great American Industries
23

plants and

being produced

are

Helicopter

Cover
^

From Washington Ahead of the
News—Carlisle

like Republic

D D C C C D D C fl

Manchester, N. H.

21

Einzig—"Sterling Area Fearful of U. S. Trade Recession"

Railroad

operation

•

Bates Mfg. Co.

1953, reports

______

Dealer-Broker Investment

important.

many

plants

great variety
consumer.

Analysts,

Boston

Teletype
NY 1-3370

21

First Half of

Coming Events in Investment Field

more

For many years we

•

in

Man's Bookshelf

Canadian

Published

Albany

Stable

Gidney

See It

Business

complex operation and few

a

fabricating

TELEPHONE HAnover 2-4300

Telephone
18

The matter

is

corporation

is

Street, New York 5

DIgby 4-1680

by

Hollywood, Fla

Profits

Bank and Insurance Stocks.

The

25 BROAD

☆

15 Broad

10

kind

by what mill and where.

of the

40%

Offset

Manager

Trading Dept.

Empire State Oil

hundreds of products and operates
over a
wide area much will de¬

have

Investments

Unlisted

5

Doman

profitable

more

One

efficient than another.

and

Company

I

JOHN F. REILLY,

Regular Features

impossible to

advance.

operation

than

of

☆

1

pace.

it that

calculate
of

BURNHAM AND COMPANY

the

ter into

Sold

Investment Bankers Association of America to Hold 42nd An¬

probably like to
break-even
point for
Republic Steel. So would I. I am
always being asked that question,
Honestly, I don't know, nor does
anyone else.
So many factors en¬

by Mr. White before the

Regional

Cleveland

Insurance

on

Taxes

would

know

more

*An

and

—

25

*

4

operate at the
most
And we can give
good service to our customers.:

mands

1946.

machines

*

can

You

ness.

Our

Inventions—Roger W. Babson___

Editor)

Higher Yield

premium
and other

scrap

Bought
22

Henry Steinmetz Takes Issue With Criteria for Rating Invest¬
ment Funds (Letter to
Editor)

operation.

pay

20

New Jersey Highway Authority to Sell
$135,000,000 Bonds.

overtime, and

to

steel

materials.
mills

work

have

don't

we

Liberty Products

Convertibility Will Not Work!

Collin

(Letter to

90%,

or

Shoup

Members New York Stock Exchange

responsive,
and
consequently more productive. We

business has made steady
progress for a century and a half.

sions,

88%,

American Marietta

David Unterberg Says SEC Shows
Signs of Jaundice

All this is

efficient

Giddings & Lewis

Walter Williams

*

more

is

*.

14

18

uneconomical.

On the other hand

but it has

It cannot go on

Occasionally it must re¬
treat
if only
to consolidate its
gains. The history of the United

Foremost Dairies

13

15

New Discoveries and

Efficiency Greater When Oper¬
ating at 90% Capacity

It

steadily.

States

Basis for Bank Loans

a

will be

we

4-6551

12

_

as a

parts—

spare

WHitehall

16

—Fernand

that

maintain

ready for quick action.

We have had good

business for years now,

fluctuated.

Miles

—Hon.

does.
1

S.

Limited Currency

a

quickly

•

Wall street, new york

Money—One of the Government's Biggest Problems

furnace for repairs, and when
forced to do so we repair it as

the

99

Telephone:

Sound Money—Not Money Managers!—Merrill
E.

plant

a

subsequently.

11

The Odd-Lot System on the New York Stock
Exchange
—Col. Howard C. Smith

In

that

means

close

you

Obsolete Securities Dept.
9

Monetary Policy, Business, and the Banks—Murray G. Lee___ 16

not

to

large investment in

He

supply

may

seeing

6

Bonds

on

—Haughton Bell

we

elsewhere.

go

may

to

They

elder, was once
asked what would happen to the
will

Yield

Seidman

—Raymond A. Rich

to

are

or

Wtine

business?

American

operations

demand.

to service it.

What

"It

—E.

avert that we go a long
oblige them. In fact, we
lose money on an order just

way

Rockefeller,

Get the Maximum "After-Tax"

Marketing Soundness

large scale. Re¬

capacity

Europe

♦

Loss Reserves for Investments of Life Insurance
Companies

Under

dogs here
of

6

pay.

again affect

worst.

Cobleigh

Government Electric Power Invades Free
Enterprise
—Walter H. Sammis

and

on

and

alleyways

"AWAY WE 60"

has been paying out from $800,000
to $1,200,000 a month in overtime

on

the cats

the

Background and Future Forecast of Canadian Oil Stocks

cently, for instance, Republic Steel

lia¬

are

to

left

visit

4

__

The Recession in General Business: How Far? How
Long?
What Will the Administration Do About It?-^-A. W.
Zelomek

operation.

to extract another ton
another ingot.
It means

ore,

to

3

Approach to Security Values—Paul A. Murphy__

William

—L.

straining

fect the future
of

We've

Cover

Rates of Progress in Natural Gas—Ira U.

extravagant
that we are

means

Budgetary and Fiscal Problems

Joseph M. Dodge_____

Be

on

operation

is emergency

wasteful

___Cover

__i_

Fear of United States Deep Depression Unwarranted
—Hon. Winthrop W. Aldrich___

How to

Moreover,

Rates—Marcus Nadler

The Look Ahead!—Charles M. White..

buyers' market.
I do

Page

AND COMPANY

Outlook for Interest

nation's third

Socialistic

Articles end News

.

President, Republic Steel Corporation

Asserting he

3

Direct

PLEDGER

YORK 6

Teletype NY 1-2390
Wire

to

& COMPANY INC*

LOS

ANGELES

,

4

The Commercial and Financial Chronicle... Thursday, October 22, 1953

(1524)

'

'

.

LETTER

tatives from both

Feai of United States

of

weight with Congress.
The crux of the problem before
the
Commission
was
noted
by
to

U. S. Ambassador to Great Britain

Former prominent New York banker seeks to

likely

soon

in U. S.

and quotes President Eisenhower

benefit

mutual

economic

favoring

as

a

ceived
tention

in

received

only

It

has

in

ica

There
be

eral

that

are

of

Only

the

ICC.

must

last

week

since

Ever

he

formation

President

national

trade.

world

increasing con¬
stantly since the war. They are
now greater than they have ever

time

ripe for

been before.

a

been

And from this

coun¬

try [England]-alone they have al¬
most doubled since 1949.
see

foundation for

any

that

America

has

be¬

need

Eisenhower

has

ex¬

his

pressed

strong belief in the
higher levels of inter¬

for

that

felt

He

the

which would
benefits
to
the

United

States and

tries. *He
make

sure

desired
that

to

other

coun¬

particularly

any

program

to

rec¬

ommended wouH he accentable to

America's tariff rates have fallen

Congress and result in legislative

since

steadily

the

be

To

war.

protection

asserting that

are

the

reductions have gone far enough.

the

On

have

other hand,

so

many

before

never

leaders and organi¬

zations of American

business, la¬
bor, and agriculture publicly ad¬
vocated programs for the promo¬
tion of greater international trade,
including more liberal American
import policies.
When

I

was

Chairman

of

International
merce
*A

action.

those who believe in tariff

sure,

to

1945

Chamber

of

t.hp

over

as

the

of

Com¬

first

by Ambassador Aldrich

before

Commerce

in

Council

preside

paper

livered

here

the

in

the

American

de¬

Chamber

of

London, England Sept. 29,

1953.

_

^

standstill

a

Con¬

customs

customs

chance of passing the Senate when

again in January.

the

establishment of

the

proposed

a new

commission

to

convinced that,

am

adopted

this

proposal

and

commission of 17 members

a

appointed.

was

It is headed by Clar¬

Randall

of

Chicago, Presi¬
dent of the Inland Steel Company
and a highly thoughtful and artic¬
ulate
spokesman for American
ence

business.

It

includes

other

six

time, even without
any further changes in legislation
or
tariff rates, there is room for
still greater exports to the United
The

States.

beyond

success

in

the U.

few

years

doubt.

a

and

of now, the
of the great¬

one

freest

this

proves

As

United States is
est

of many Brit¬
S. market in

in

markets

the

world.
the

in

ently,

last

few

attention

Europe
change

weeks, appar¬
has
shifted
in

from
the
prospects
of
in
America's
economic

The

for this

reasons

to vary.

seem

perity is tied
Korean

has

and,

solely with the
now
that the

there must be

come,

Another

collapse.
American
reached
must

up

War

idea

such

obey

of

Sen¬

Represen-

of
economic
gravity and begin
tumbling down, and there is a
feeling of real concern that cer¬

tain

economic

ball

I

and

The

idea

indices

have

as¬

the

the

make

are

like

to

level

in

Korea

That

is

idea

individuals
budget of

operating

Its

employees

were

regional offices

assumption

the

that

aggression

us,

as

handled

SEC

supervised

and

responsible

was.

Transcontinental

some

of

the

based

our

un¬
on

whole

in

It is true that

Korea

alerted

Gulf

world.

the

caused

whole

us

defense

all

to

activities.

free
inBut

And the Korean truce will

not

greatly affect our defense ex¬
penditures. We will unfortunately

Sulphur Corporation

Mexican Gulf

as

the threat still remains very much
with us, in several parts of the

IIP M

have

Sulphur Co.

to

keep

defense at
time to
As
goes

a

spending for
high level for some

up

the

must

our

concept

that, what

down, I do
complex and
growing economies of the world
are subject to the
same laws
of
physics which apply to paper kites

CO.

come

and rubber balls.

Member: National Association of Securities Dealers, Inc.

WHitehall




4-5540

Teletype NY 1-2233

New York

1

herd

ride

to

with

and

its staff had time

SEC and

The

What

all

on

this

of

expedition.
SEC

the

does

look

like

its major¬

ity?
From

that

quick look, I would

a

the

shows

with

signs of

the

Why

One

2

CLEVELAND, Ohio

—

William

A. Williams has become associated
Parsons

Building.
merly

a

&

Co., Inc., N. B. C.
Williams was for¬

Mr.

partner of Pratt and Wil¬

liams.

With Hutchinson & Co.

jaundice mixing

a

Chronicle)

(Special

to

The

Financial

Chronicle)

rose.

great

such a promising
to be faltering after

answer

Emasculation!

—

PUEBLO, Colo.—John F. Nance
has

been

added

Hutchinson

the

to

staff

of

&

Co., Inc., Thatcher
Building, members of the Midwest
Stock Exchange.

—

1940: 1670

(low

and approval?

success

Compare
000

v

say

teenster

should

future appear

such

cheeked

rosy

Employees, $5,400,-

tax

cost

and

living

of

Employees,

COMING

(high tax high cost of
living period) Budget.

EVENTS

1954 less than 850

$5,000,000
The

case

mained the

ally

and work load has
same

increased.

registrations
a

Staff

a

re¬

More

and

short that it must go on

so

waiting

list

receive

to
one

who has

seen

both sides of the picture, i. e. as an

attorney

with

SEC and later

strangulation,

spe¬
say

planned

or

public, the

a

fraud

Ibid., Oct. 5, 1953,

450.

Southeastern Group Annual Con¬
ference

securities dealers

The

public has been led to be¬
lieve in the SEC—What good is a

policeman who rides in a wheel¬
chair?
securities

at

the

Greenbrier

Hotel.

(New York City)

Nov. 10, 1953

Security Traders Association of
New York Beefsteak Dinner at the

Nov. 18, 1953

dealers,

due

(New York City)

Association

and the Staff.

Firms

Stock Exchange
Meeting and elec¬

of

Annual

tion.

Nov. 29-Dec. 4, 1953

(Hollywood, Fla.)

to

faced with de¬

Investment Bankers Association:

in processing registrations.
Corporations seeking to publicly
offer stock must wait a danger¬

of America Annual Convention at

ously long time for action on reg¬

June

Staff shortages, are

lays

istration

to
p.

Sulphur

on

statements.

The

Staff

review

the -Acts

and

the

is

In the past cen¬

747.

(White

Antlers.

hamstrung SEC is

the

1953

the

otherwise, must stop.
A

23-25,

Springs, W. Va.)
Investment Bankers Association

as

enforcement

Oct.

steno¬

graphic work.

Speaking

Field

Investment

more

being handled by

are

In

if it hasn't actu¬

May 25,

p.

Parsons & Co., Inc.

with

that it has gained

now

work

frustrated by its inability to per¬
a half, the levels of eco¬
form its duties as it would and
activity have been moving
should like to do.
Continued on page 42
With an
increased
staff, the
Commission will be in a position
State Department Bulletin of

1953,

B.

with

Co.

(Special to The Financial

tury and

City 5

Robert

associated

the Securities

nomic

30 Pine St.

Miller &

organizations.

The

not believe that the

L. D. SHERMAN

become

Chronicle)

formerly associated with Don

was

Exchange Act of 1934, in addition
to participating in hundreds of re¬

come.

for

has

—

William Williams With

ties Act of 1933, and

this

Oil Corp.

Mill

Financial

Mich.

Utility Holding Company Act, the
Investment
Company
Act,
the
Trust Indenture Act, the Securi¬

threat

and

The

W.

^ea<=e

our

to

for the enforcement of the Public

#.#:#>&::

Ami'lnc.

of

thousands

as an attorney
cializing in securities law, I

well

(Special

DETROIT,

world, to the dangers of the Soviet

feili

Campbell, McCarly Co.

principal office in Wash¬

V

<

Robert Mill Joins

registrations of securities, inves¬ Campbell, McCarty & Co., Inc.,
tigated hundreds of broker-dealer Buhl Building, members of the
proceedings,
and
in
addition, Detroit Stock Exchange. Mr. Mill

make.

quite

is

requirements alone.

Uptick Label]

Unterberg

1670

some
an

scattered among 9

defense effort is geared to Korean

Stocks with the

David

employed

The

(4).

it

1940

had

City

Oct. 7, 1953.

sociation.

crystal

to

there

should
that

a

American economy was dependent
on
the
continuance
of
actual

fighting

;

But

I

founded.
y/>; #&:#>>:%

York

the

In

UNTERBERG

Unterberg & Unterberg, Attorneys
at
Law, 52 Broadway, New

by

brokerage

the

or

Respectfully,
DAVID

in

of

one

lic, the brokers and the SEC.
Support them or dissolve them.1

(with

cheek

as

KILL IT.

—

adopting

by

in¬

and
harsh

alternative will the present

endorse-

some)

—

administration be true to the pub¬

of

tongue

—-or

period) Budget.

am

predictions.
comments

ft###}

that

unexplained law

owned

House

is

a

activity has
high point that it

a

some

unable

the

Only

the public and

economic

ten leading members of +he

and

sound

other

had

support

the

in America's economic conditions.

representatives of the public, but, changed course.
most important of all it includes
I have never
ate

tic

appropriations

of Staff

it may

the enthusias¬

the present

at

truce

gress

it

Either

solution?

the

crease

its

In

is

adequate

ington, D. C.

I

And

situations,

outmoded

bring the SEC back to life with

ful¬

be

teens,

What

every

riginators

levels.

ommendations

Con¬

o

and the

One notion is that American pros¬

action.

giving

its

of

also, America
is continuing to import at record

study all aspects of American
foreign economic policy and to
come forth with appropriate rec¬
for

to grow,

$5,400,000.

meantime

policies to the prospect of change

he

Accordingly,

ideals

and

Imports at Record Levels
In

liberalize

promise that
the hopes and

ment

simplifying the valuation system,
was
approved by the House of
Representatives and stands a good
it meets

ster started

would

until

ticalities of present day

policies, and
The SEC was formed in 1932 bring the
SEC into focus with
modern financing, its needs and
and was a lusty youngster. As the
years went by, the lusty young¬ operations.

filled.

step was taken
of

Chronicle:

of

simplification
bill, containing even more im¬
portant provisions including one

past

developed

at

Editor, Commercial and Financial

to

that

mean

the last session
gress,
which passed
a
simplification bill.

the

mutual

time last

during

reappraisal of America's economic
position in the world. He wanted
policy

Commission,

something
early months

useful

Another

as

have

is

One

firms

bring

econ¬

groups.

the

action

then.

ish

a

protectionist.

increasingly

come

in

major national

was

un¬

particular

But that does not

by

office

into

came

is now backsliding and
importing less. As you know, the
facts are quite the contrary. Amer¬
ican imports from the rest of the

view

announcement

the

of

made

principle

expound the needs of world trade
to the American people.

that

be

America

the

last

prominent businessmen of a com¬
distinguished citizens to

more

Nor do I

the

In

all

cer¬

mittee of
Winthrop W. Aldrich

ought to be

have

has

one

years

was

America

importing

This

selves in support of this

so

abroad,
saying

and

Charter."

ican business have declared them¬

the

home

at

advancement
envisaged by the

after another of
the major organizations of Amer¬

people,

many

both

an

will

report
1954.

security

few

assump¬

tion

of

of

"the essential prerequisite of

Council

gen¬

week,2

objective

tainly been the view of the U. S.

seems

reason

address

I said then that

trade."

and

of

which met for the first

expansion

"the

was

Atlantic

mis¬

a

principal

ICC

and

conceptions.
to

the

opening

my

those

with

It is hoped that the

Council,

the type of economic

led

some

that
the

was

11.

w e

has

in

noted

the

of

expanding volume of world trade

Amer¬

a s

This

I

world

this

[Europe]

but

to

months.

recent

at¬

increasing attention not

on

side

of

amount

meeting

"place

the interests of the nation

whole

staff-or "kill it."

new
the

This is essentially the basic

individuals

decline, the U. S. Government "will not sit idly by."

unusual

an

shows real signs

postwar

at

problem of democracy—to recon¬
cile

America's foreign trade has re¬

not

of the American

segments
omy.

For¬

Says it is clear that if the American
of serious

which

and

does

t

Unterberg, formerly SEC Enforcement Attorney, con¬
Exchange Commission is faltering because
of "emasculation," due to staff shortages. Advocates bringing
the SEC back to life with adequate approriations and increased

which

America's

equal burdens" on any particular

eign Economic Policy and to the increase in U. S. imports.
economy

status

time

same

policy covering U. S. and foreign
on

line /with

in

creditor

international

an

Calls attention to President's Commission

countries.

is

J

.

David

lishment of the Commission.1 It is

European Continent that a depression is
Points to America's expanding economy,

•

tends Securities and

Congress asking for the estab¬

the development of a policy

dispel widespread

•

.

THE EDITOR:

TO

Says SEC Shows Signs of Jaundice

President Eisenhower in his letter

By HON. WINTHROP W. ALDRICH*

on

its

sion

Deep Depression Unwarranted
fear in Britain and

parties. Because
composition, the Commis¬
is
bound
to
carry
great

various

Hollywood Beach Hotel.
9-12, 1954 (Canada)

Investment Dealers' Association
of

Canada

Annual

Convention at

Jasper Park Lodge.
Sept 22-26, 1954 (Atlantic City)
National Security Traders
ciation Annual

rules; and in the light of the prac¬ Hotel Clar»dge.

Asso¬

Convention at the

Number 5266... The Commercial and Financial Chronicle

Volume 178

(1525)

5

New
Steel

The

Jersey Highway
Aulhority to Sell

Production

Electric Output

Carloadings
Retail

State of Trade

Price

Industry

Business

Sale of

slight

contraction

registered

was

in

the period

ended

on

Wednesday of last week in aggregate industrial production for the
nation as a whole, and it continued to be down mildly from the
near-record level reached last March.
However, it was slightly
higher than the comparable level of a year ago.

Reporting
mer's
that

close

it

business activity across the nation at the sum¬
United States Department of Commerce stated

be held about Nov. 18,

the

continued

at

But

quarter pace.

business]

new

"declined

substantially,"

of defense

to

latest

recorded

survey

the

Offering consti¬

Authority.

of

remainder

tutes

of

issue

of Garden State

struction
Plans

chiefly

as

the

the

A

way

the

discloses

numbered

bids

than $2,000,000,000.

reported,

reserves

have risen

bonds,
more

But the average number of workers covered

Thus, the gain in reserves of state jobless
systems has been "roughly paralleled by increases in the
potential liabilities" in the event of unemployment, the Bureau

noted.
Premium

steel

prices

are

falling like tenpins, but "regular"

mill

prices remain firm, states "The Iron Age," national metalAlthough overall consumer demand
is expected to remain high for at least several months, steel pro¬

working weekly this week.

,

ducers have pretty well

products.

After

caught up with demand for most of their
than three years of guns-plus-butter short¬

more

buyers have become extremely cost conscious. Once
are rating price more important than delivery, con¬
tinues this trade magazine.
The result is that high cost producers can no longer sell at
premium prices. Faced with the alternative of shading prices
toward competitive levels or reducing operations they are acting
as expected
and are reducing prices, it states.
At least 10 steel producers have recently lowered premium
steel

age,

again they

prices, most of the cuts coming in the past two weeks. The pro¬
are
pretty well spread geographically; three being in
Michigan, three in Illinois, three in the Pittsburgh area, and one
in the East, this trade weekly further reports.
Premium prices have not in every case been slashed all the
ducers

to competitive levels.

way

find

ducers

But they will be if the high cost pro¬

themselves still

unable to sell

enough

to

The

steel

several weeks and now that the hysteria over

has died

tion

The forthcoming

returning competi¬

down, these conclusions may be drawn, states this

or

sale will

18.

cover

the remainder of the $285,000,000

presently

bonds

of

authorized

carrying the state's unconditional
guarantee

to both principal and

as

interest.

This

will

ond

sale

of bonds this year

big

and

sec¬

165-mile-superhighway
to

Paterson

to

a

banking group.
The
heavily oversubscribed

was

the

and

closed

syndicate
the

books

will

Parkway
iw

that

indicates

date

1954

will

be

Memorial

Day,

1954.

The
ease

Parkway is counted

and

congestion, in Essex, Bergen
erse

and

to

on

the state's most serious traffic

counties.

Union

modern

also

trav¬

resort

area

economic benefits

new

disclosure

I

1954.

ing off and are believed past their peak.
(3) Consumer inventory correction, largely responsible for
softer market tone in recent weeks, is about two-thirds accom¬
plished, should be completed before year's end.

will

travel

holding companies whether listed or unlisted, and regulated in¬
vestment companies.
The basis on which the regulation rests is full disclosure—of
facts relevant to the election of directors and approval of manage¬

activities;

at

100%

or

more.

This is because the slight decline in the ingot

largely reflects disappearance of high cost conversion pro¬
duction and return of marginal facilities to standby basis.
rate

flash in
the pan, scrap prices rose again this week.
Although "The Iron
Age" steel scrap composite price rose only 50 cents a ton to $32.83
per gross ton, prices were firmer in most areas.
The decision to
open-end export quotas for the balance of this year was helping
shore up the market, this trade authority points out.
In the automotive industry last week, states "Ward's Auto¬
motive Reports," production of independent car makers is limpif

As

to

that

prove

last

week's advances

were

Continued

page

29

the

-

of

Appointment
Sawers

as

of

President

S.

Andrew

Assistant

an

Manufacturers

ing

(as

a

1938

has

and

worked

in

various

departments and offices until 1951
he

when

sistant
1942

in

Treasurer.

until

the

appointed

was

the

of f'rustratedly "blowing one's top").
1938, three years after the initiation of the proxy legisla¬

way

In

tion, the Commission effected a general revision of the rules,
giving, among other things, the right to vote a "yes" or "no" on
each matter to be considered. Further revisions were enacted in
1940 and

1942, the latter including the important requirements that

of the annual report precede or accompany the proxy
statement, and that the management include in its material a
statement up to 100 words in support of any security holder's pro¬
posal which it opposes. Further amendments were made in 1947
a

copy

1948.

and

That

As¬

an

Sawers

is

posals, and the ensuing activities
recent exposition of "Current

a

to

Demmler

assigned

to

Canadian National

Railway

Executed

in

Canadian

Stocks

and

Bonds

Master

he

Financial

was

thus: "The rule

material has been availed of frequently by a few profes¬
and seldom by
the general run of stockholders.
The
Commission
does
not propose to choke
corporate democracy.
Neither does it propose to encourage abuse of their privilege by
those who use it as a grindstone for their own axes."

proxy

sionals

Shooting at the Publicity Hounds with Anonymity

inclination to tighten up on the

Such

other proposals

and

several ways.
rule

motivated

by

submission of reforms

is embodied in the specific new proposals in

They state: "In order to discourage the use of this

inclusion

[compelling

★

a

In "Securities

proposals]

of

by

persons

Legislation" by Louis Loss,

p.

521

(Little Brown).

pleased to

Mr. Karl

Chronicle)

H.

are

announce

that

J. Panke

C.
has been elected

a

Vice President

In

of

with Wilson, Mc-

our

Corporation

Co.

Rodman & Linn Adds

Burns Bros. & Denton, inc.
Tel.:

37 Wall Street, New York 5

DIgby 4-3870

TWX: NY 1-1467

J

Wires

to:

Toronto




•

Montreal

•

Ottawa

•

Winnipeg

(Special to The

Financial

Chronicle)

CHICAGO, 111.—Bruce P. Tweed
has
man

with

&

Linn, 209 South La

Salle

Blair, Rollins C> Co.
INCORPORATED

Rod¬

become

who are

desire for publicity rather than the interests of
Continued on page 42

We

has become connected with

&

the stockholder-champions

the

B. C. Morton & Co. of Boston.

the past

»

Orders

Gibson

at

the

of

111. —Harry

CHICAGO,

hit

of Major.

Division

The

(deemed antics in some quar¬
of the current proposals.
Thinking at the SEC," Chair¬

requiring inclusion of security holders' proposals in management's

Joins B. C. Morton Staff
(Special

Minority-Suggestion-Box

procedure in handling stockholders' pro¬

ters) thereunder, that constitute the nub

Banking Department.

Specializing in Securities of

Controversal

this matter of

January,

Army Air Corps where he

Metropolitan

is

It

1946 he served

March,

attained the rank
Mr.

From

made an instrument

the proxy has been

matter, physical attendance at the meeting
responsibility or power, excepting perhaps in

practical

affords little greater

Trust

to the bank in

came

areas

Vice-

Company has been announced by
Horace C. Flanigan, President.
Mr. Sawers

both

in

Thus

In

Appointed
By Mfrs. Trust Go.

no

on

in

embodied

A. S. Sawers

(5) Steel producers operating at about 95% of rated capacity

transactions with the corporation, directors' oc¬

serving as the closest substitute for actual attendance at the meet¬

to

comfortable

and

be

as

stockholder.

man

Freight absorption
and premium
price adjustments
brought about by more competitive conditions represent no funda¬
mental weakness in steel prices.
probably making more money than they did while operating

features

Parkway construction.

(4)

are

safe

promote

(2) Order cancellations, though still sizable, have been taper¬

of directors' and management's acts—past, pres¬

ent, and future. Thereafter, under the Securities Exchange Act of
1934 and the Public Utility Holding Company Act of 1935, the
Commission acquired very broad discretionary power to admin¬
ister for the public's interest in this field; at least in the cases of
securities registered on exchanges, all registered public utility

rapidly developing sections
of southern New Jersey. The most
engineering

Check

before "corporate democratization" as insti¬

days

blanket approval

to the

(1) The steel market is fundamentally sound. Outlook is for
better than average business at least through the first half of

shore

state's

the

bring

trade authority:

will

It

old

the SEC, proxy solicitation consisted of a small card,
of information and merely to be signed in

by

without

open

by

open

entire

the

to traffic
major sections

be

that

and

day

same

tuted

were

that the
offering was made to the public.
The progress of construction to
on

the

In

Professor Louis Loss.*

Old Days of the Blank

cupation and experience, stockholdings, compensation in various
forms, including bonus and profit-sharing plans, etc.
Outside the
disclosure area, the shareholder is guaranteed the opportunity to
vote for or against each proposal that may be made by a fellow-

In

nationwide

issue

and degree

ment

bonds

state-guaranteed

the kind

attitude toward

May.

Cape

July, the Authority sold $150,000,000

present-day cor¬
distinctly segregates
Irrespective of in¬

our

Paramus

will extend from

which

the

mark

construction of the

to finance the

projected

keep their

satisfactory level. Chances are competition will
hands, "The Iron Age" declares.
market actually appears stronger than it has for

operations at a

continue to force their

be

on

about Nov.

increased by 4,500,000.
pay

to

opened

England

L.

B.

Good

The

the

for

by

corporate system," is the apt conclusion of

invite

will

3-3,100,000.

Since June 30, 1950, it was

May

,

The Authority

highs in August. At the month-end, reserves earmarked for the
states came to $8,800,000,000 and workers covered by state sys¬
tems

Hired

W

h.

f

o

the Authority.

the workers both hit new

pay

and

device

"Unregulated, it is an open invitation to selfperpetuation and irresponsibility of manage¬
ment.
Properly circumscribed, it may well
turn
out to be the salvation of the modern

Chair-

n

a

a

regulation of proxy solicitation, its
functioning as a powerful force for good or
evil in the capitalistic system is indisputable.

L.

Treasurer

unemployment insurance sys¬

is

of

by

-

Vice
m

available to

money

2 0

e r

meeting

set-up, which so
from control.

dividual

England,

sub-contractors.

and

tems

porate

of the proxy

indispensable to the existence of the

ownership

an¬

Bayard

instrument

company

of

Park¬

were

foundations

they merit the

entire corporate system,

The

nounced Octob

report from the Bureau of Employment Security

by their nature touching at the
our

rendered

Garden

State

week

that workers covered by state-run

as

of

com¬

construction

major

rules changes, as de¬

proxy

closest attention.

Jersey Highway Authori¬

available, reports on claims for
unemployment insurance benefits show a continued rise as layoffs
occurred in some consumer durable plants, shoe factories and
defense

con¬

Pkwy.

ty state-guaranteed bonds to

plete

current proposals for

for the sale of $135,000,-

000 New

result

a

authorized

$285,000,000 for

received by manufacturers
added,

The SEC's

finitively promulgated by the Commission and discussed by Chair¬
man Demmler, are most vitally important to the financial world,
the business community, and the lay shareholder.
In indicating
the general direction of Federal securities reg¬
ulation under the new Administration as well

Vice-Chairman and Treasurer of

production cutbacks.

the

In

the

Corporate Democracy Under the New Administration

according to Bayard L. England,

on

high levels, but there were indications that
some segments were slipping a bit.
Consumer demand was susstained by record personal income receipts, which ran at a yearly
rate of $287,000,000,000 in July and August—1% above the seccond

State-guaranteed obliga¬

tions

Failures

J
A

By A. WILFRED MAY

Index

Production

Auto

Observations...

$135,000,000 Bonds

Commodity Price Index
Food

and

Trade

affiliated

Street, members of the New York
and Midwest Stock

Exchanges.

44

WALL

STREET

•

NEW YORK 5, N. Y.

€

The Commercial and Financial Chronicle

(1526)

Piogress in Natural Gas

Author of

cheerful tune.

Hence

today's theme

natural

—

.

,

The last time this column zeroed
in

the

on

doings of the gas gentry
1952), it was to take a

(August,

dim view of certain rate decisions

improvement, he has some solace
the $2 current dividend and a
yield of around 5.70% at today's

Power

Com-

in

mission;
the

Northern

Natural
and

Gas,

Colorado

Interstate
In par-

cases.

ticular,
took
tion

to

°*

we

excep-

cost

a

money

line

valua-

tions

which

wound
U. Cobleigh

Ira

..

terminating
as

appropriate

an

tiiis6 woolly wUless^ost
that'it

was

of-money

provided

no

solid base for rates whatever.

it

was,

a

0/2% over-all

,.

capitalization,

theory

de-

up

was

All

inverted financial

an

thermometer applied to pipe line

capitalization, which would have
had

every

into

trotting

company

of depression, the very time

when nobody could afford higher
rates; and when financing for ex-

pansi'on

would be costliest.

0f

Todav
in

however

a'

have

we

last

was

brought

were

and

hnth

t

and

fnr

growth_

ous

Chicago Corporation

;

con-

the

On

there's

production side,

favorable

been

about

comment

taken

mated

a

look

new

Meanwhile,

the

0f the trade reflect
the

0f

in

dramatic

recent

statistics

continuance

a

expansion

so

because of

the

in

its esti-

of

extent

reserves

three

kinds

of

petroleum: (a) Natural Gas where
estimates

some

have

trillion

1%

as

cubic

high

as

run

feet;

(b)

characteristic of this

Crude

the past 20 years.

rels; and (c) Distillate—32 million

was

fabulous

a

in

1952.

nudge

the

industry for
Gas production

8.6

It

9

billion

will

billion

About supply,

year.

hand

a

feef

0f

about

paltry

200

probably
on

cubic

reserves—

supply

years

this

have

we

trillion

recoverable

25

cubic

mark

today's

at

a method of judging trend of security values,
Murphy lists three factors to be considered: (1) outlook
for interest rates; (2) outlook for equity earnings; and (3)
valuation of equity earnings relative to interest rates. Gives
illustrations of the process of applying these factors.

Mr.

rnrrpnt

Chicago Corporation, importantly

on

In explaining

of in-

regulatory climate, gas
securities, across the board, have
weeks.

By PAUL A. MURPHY*
Oglebay-Norton & Company, Cleveland, Ohio

has

common

be

service

sensible

a

Gas

trlKtc

combustion rate; but we're findjng more every day.

million bar-

Oil, above 11

barrels.' Bear

mind

in

these

are

but estimates, and are unsupported

by

statements
the subject; but if they have
.company

any

validity
reserves

a

any

all,

considerably

than the $19V4

more

share current quotation

Because the forecasting of se¬
curity prices is such a hazardous
pastime and since my errors seem
to

outnumber my

(NYSE)

of the 3,324,196 common shares.

r.

.

...

v

_

.

could

buy

their

basic

com-

in

Counties, Texas;
Cheyenne County, Neb.

in

definitely

seems

an

up-

price has advanced and manY de- grading enterprise and its market
™"tra9ts are at. 12c Py action in the soggy sessions of the

U's®" mixed

but

blessing* East Tennessee Natural Gas Co.

a

Wimberly

Hme
in

Mr

S

T

Louisiana,

well

versed

and

_

lhe

the

tar

is

the

ages

it

areas.

supply

people

willing

regulatory

the

encour-

gas

more

seems

its

m

of

com-

to

to

and
pro-

decisions,

For example, in its important de-

cisions, the reconstituted Commission

granted

6%

a

rate

Mississippi

River

tion;

return basis

6%

a

Fuel

Transmission

Gas Transmission

United

Fuel

and
and

Gas

base

such

Tennessee,

as

Gas. all admittedly of investment
grade, and talk for a moment

Commission

sibility

to

is:

to

Corpora
to

a poser, a"d ma>'' }n foma eases- sharets

computer—if you put
right material, you will

the

get the proper
To

illustrate

Texas

ratp

a

Co

The

kev

"Our

encourage

of

respon-

necessary

expansion of facilities for the

pur-

the

out
I

right

hope that

will

rather,

The

American

Stock

Exchange

New

Cotton

Exchange

York

Commodity
Chicago
New

Exchange,
Board

Orleans
And

of

Cotton

other

Inc.
Trade

Exchange

Exchanges

here

basic
also

—are

NEW YORK 4, N. Y.
CHICAGO

DETROIT

GENEVA,

PITTSBURGH

SWITZERLAND




of

ai:e01/tradad'

the

ovel\

(2)

Average

be

9%

of

in the future

6.7%

(this

minimum

on

the

1938

re¬

recession

low).
the

Should
trials

Dow

Jones

9%

average

Indus¬

the

on

esti¬

mated year-end book value of 225
the

resulting earnings would be
Once more be sure to sub¬

$20.

stitute

figure if it dif¬

your

own

final

The

factor—Valuation

of

perhaps
'pb'

bv

has,

now

D>,

,

the

have

we

e

\

,

in

ave

paintrd enough.-backdrop to justlfy rundbn^ in a few sPeciflc
sa™ples of ^current investment
values m Petroleum vapor, or its
transportAmerican Natural

line

main

of

from

ville to Kingsport, Tenn.,
Largest

due

is

customer

in

pro¬

ductivity 1V2% annually

(a

com¬

bined

.

.

,,

,

you may bave in either the com-

Cn

American Natuial Gas Co.
mon, or the 5% Convertible DeEverybody seems to have a very bentures due 5-1/68, convertible
£in.d w"d to say about American into common at $10. These bonds
Natural Gas Go- Here's a splendid sell at par and give you a double
examP^
an integrated^ com- burner in the market range of
®
Wltl.lts Mlchigan- East Tennessee Natural Gas!
Wisconsin

Line

Company

which

runs

111.,

it

Texas

distributes

RaSidS
in

Michigan, and

...

to

in

gas

Milwaukee,

say

problem of American
in

Gas

recent

has

years

...

.

Prices

base

you've
rama

^ac^

this

of rates of

,

.,_

,

All

Sas.

here's

and

enjoyed

,

swift

,

they

hoping
pano-

in nat-

progress

kinds

interest,

as

^

of

rates

dividend,

in

whole-

sale and consumer!

To

barked

that

on

pansion

vast

a

of

ANG

a

line

1949

prior

of

around 200

FRB

economy

(3)

things, (1) the build--

new

from
area,

1.000-mile

ANG

home
is

completion

(2)

much

the

to

greater

area,

and

gas to

150,-

this

William

to

big

have,

H.

Lowitz

.

on

program,

on
,

,

.

will, acquire membership
New

York

will

become

Lowitz &

Stock
a

Oct.

29

.

in

Exchange
partner

the
and

in

E.

Co., 29 Broadway, New

v

„

members of the.Exchange. On the

heating clients.

thought
of

30-inch

Louisiana

storage
facilities to pipe in
new

ex-

for

Korea
190

but

FRB

1953.

or

growing
the next decade or

Where you disagree, please
substitute your own figures. And

more.

the

now

evaluation

factor—interest

of

the

first

Rates.

purchasing

assumed

Wage

annual; loss due

demands

in

basic

a

logical

seems

Since I have

power.

1%

at

long

as

vast

of 4%
strong

as

such

some

long-term

also.

My

assumption

rate

would,

decline
10-20

in

of

points.

of

4%

a

course,

long

basic

mean

governments

However,

the

portant point is to put down

a

of

im¬
your

conclusion.

own

For

the

Earnings

second

—

maligned

I

factor^—Equity

will

the

use

Dow

Jones

attempt to

and

du

seem

apply

Pont

approach.

much

Industrials

modified

a

This

involves

computing the amount of capital
and

work

at

that might

the

rate

of

return

be anticipated.

For the amount of capital I will

the

use

Jones

book

Industrials,

replacement
pect
At

the

end

of

the

backed
and

costs

retained

of

of

value

1953

up

the

future

Dow-

by

pros¬

earnings.

book

value

should approach 225 or nearly 2V2
times prewar and nearly double
the

figure for the close of World
Replacement cost, an im¬

same

date J. Ken-

neth Lyden will withdraw from
partnership in the firm.

factor

in

would

expanding

an

exceed

300

al¬

dis¬

a

however,

also

can

ings

worth

are

that

whereas

grow

that

assume

equity

60%

earn¬

interest

of

income.
On this basis

interest rate of

an

25 times income, would in¬

or

dicate

60%

earnings

of

this

the

as

valuation.

15

or

times

stock

proper

Aoplying

this

latter

multiple of 15 to earnings of $20
would indicate

fair valuation of

a

300 for the Dow Jones Industrials.
You have
built-in
ness

probably noticed two

cushions.
less

were

terest

First,

if

active and

busi¬

the in¬

rate

33

dropped to say 3% or
income, equity earnings

times

at

60%

would

become

worth

20

Thus

from

earnings could drop
to
$15. and
still
be

$20

worth 300.

Secondly, retained earnings
keep adding to book value so that
a

rate

constant

of

would

return

increasing earnings of 3-5%

mean

per year.

Funding of

public debt would

reauire

of

excess

rate

national unions exist.
our

forgotten,

times.

I feel long-term money of the
highest credit is worth at least 3%
in

be

conservative average

To me,

active

an

over

economy,

E. Lowitz Admits

em¬

the level

use

to

around

means

portant

providing,

underground
000

has

$200 million

program,

among other

ing

end

in¬

War II.

been to get enough gas to
supply
the burgeoning needs of its terri¬

tory.

wage

(due to

point I

business

this

or

outrunning productivity).

a

after

1%

earnings sell at

interest is fixed. I will

of

growth

increasing

annually

As
of

not

4%

(3)

.

TV,

on

Mral

Wisconsin.

„

Well this is it for today,

an

annual

average

3%).

the

Atomic Commission at Oak Ridge,
*
Get the prospectus (dated 410/53) °" thls interesting company and on the basis of the
facts there (the only official ones)
determine any personal interest
^

stock

count to interest income. It should

earnings

increase

is

outfit

starts

simple:

shortly.

this

gas

CF):

lateral

110

and

—

trouble

Average population growth
of 1V2% annually.

Christmas for the stockholders.

when

trillion

3

and

the

(1)

rate

units.

fabulous

a

(perhaps

Detroit

Exchange Bldg.

would

simple

are

assumptions

where

is

Knox-

gas

N. Y. Cotton

book value

assume

rate

average

—

miles

an(j

Natural
Exchange

errors

approach

evaluation

factors

three

past) distributed share interests in
its production
properties, it's been

producing

particular, has

reserve

Members
Stock

minimum

al¬

was

fers.

to

jn

The main
York

the

on

to

gon,

New

the

on

the factors.

productivity,

the

800-mile pipe line from

H. Hentz & Co.

of

However.

inevitable

my

lines, serving' utilities and industries in Middie and Eastern Tennessee, and
completion of an additional 100

Joliet,

1856

operation

answer.

reflect

not

lines

in

Pipe
(wholly-owned)

Established

the

EPT-is

ex

I will

roughly 10%.

was

on

rate

the 1937-39 return

and

placement—or

answer.

this method I will attempt to feed
in the proper material and grind

East Tennessee operates 444 main

stock

Panhandle Eastern Pine Line Co.,

Tennessee

sentence in this latter decision
the

leaders,

be worked out only by handing counter, at 8% and presently are
' to pipe bne stockholders, shares without benefit of dividend status.

financial incentives for
expansion,
and a fair shake for the investor.

to

the

Texas Eastern, Trans-continental,
El Paso and Northern Natural

£ear? ago; °r '°? (,he ba?if o£ what about an up and coming smaller

of

now

alert

regulation that

and

for

'
as

more

extension

more

vide

reserves

pipelines

Commission,

needsoi a

Gas

switch from standard reference to

<;nmp

particularly

eas

to
.'

.

Diehv

and

in

delivery

posea,

to

place'on

gave

Among the pipe lines I'd like to

they re worth today with gas re- unit—East Tennessee Natural Gas
Conservation'Commissioner serves worth 15C per MCF? That's Co., whose 1.072 257 common
to

tell this approach

can

a

current

14%, the 1949 rate
15%

mon

cio and Coleman

at the wells and

gas,

now

son

I

as

My

Exploration by Chicago Corp.
About prices, the days of cheap has been both aggressive and
?r a*most give-away gas are gone successful, with new production
forever. Why ten years ago, pipe from wells in Calhoun, San Patri-

tbe integrated
companies.
Kuvkendall i«?
Phairman
of
They sell to themselves from their
the Federal Pow^r Commission
own wells' but because they're
rpnlacinf?
Mr
Pnchanan
' ho' interstate, they come under the
reaucratvisihivin^n. W to tho Commission. Now will their valdominant incentive motif in our uIation "here be on what those gas
kind of economy
Also Mr Iiarri
Production facilities cost them
FPC

the

a

ior the eurrent 80c dividend,

.

Give-Awaj Prices Ended

*or

r

that

about

Earnings
is probably the most
? ,na ur l «as ,sold ls. burned in from $7 million net sales m 1947 enough:
difficult. Because of earnings and
' >*"*8; and pipe line to somewhere around $18 million
(1) Outlook for interest rates.
dividend irregularity and result¬
d's£nbpt Sn has extended to over or this year. Projected net lor
(2) Outlook for equity earnings.
ing price instability as well as
90% _of the map; of the U. S. A. this year is around $1.6> per share,
(3) Valuation of equity earn¬
greater risk of ultimate loss, com¬
Gas is gigantic.
alfording comfortable coverage ings relative to interest rates.

natSX%mhed°OTeryintoathef0FldI ducers'
T

It is

nearly

resembles

this capi¬

on

subject to wide divergence.
interesting to note, however,

most

creases

Power CoMr

The rate of return
tal is

primarily on a method
of approach to security values. As

more

cr-d

your

attention

but,

In use' 11 million homes now
Growth in earning power here
J)fea' ™'h, fs' even though 55% has not flagged, moving nicely

correct projec¬

tions, I should like to focus

on

they suggest that
alone
might be worth

at

fo-a nick61 per MCF, Slowly this Chicago

year

different bunch

Washington who

bought by a "number

by the invigorating

up

such

modify, natural

The New Commission

Natural

been

structive

lines

That

that

insure

Buoyed
ajr

the Commission for rate relief in
years

to

Approach
To Secuiity Values

quotation of 35Amer¬

ican
,

supplied at reasonable rates."

feet

theory of pipe

NYSE

of rendering adequate service is no less than our responsi-

bility

of

levels

to above $4.

in

gas.

.

A Method of

around
While
investor awaits this hoped for

pose

the Federal

oi

present

per year

the

"Winning in Wall Street'

With many enterprises displaying a somewhat slackened pace,
it's refreshing to gaze on the gas industry which is still piping
a

from

Thursday, October 22, 1953

earnings,

capable pf carrying per share net
$3.40

By IRA U. COBLEIGII

for

horizon

exalted

an

Kates of

...

Even

assuming the Dow Jones

Industrials

be

worth

300

with

a

3-5% annual gain, it does not fol¬
low that these stocks are immune
to

further

a

decline

investors

—

psychology is much too fickle for
such

However, it does

assurances.

reasonable

seem

time

to

that

assume

is

running against the pes¬
simists. Depending on the factors
you have applied you may or may
not

this

reach

event

I

hope

inforces your

any

procedure

re¬

thinking.

Since there is
of the

In

conclusion.

this

much criticism

so

Dow Jones Industrials and

this

because

considered
would

anproach

rather

like

to

be

may

theoretical

try the method

I
on

three components of the Industrial

Average.

(1)

du

growth
(2)

Pont

glamorous

a

—

stock.

American

Can

depres¬

a

—

sion resistant issue.

(3) U. S. Steel—a cyclical issue.
Du Pont

somewhat
Jones

book

value has grown

faster

than

Industrials—as

the

Dow

would

you

though I have made no effort to
compute a figure. As you know,

expect (about 3 times relative to

it is most unusual to have the Dow

for the average).

Jones Industrials sell
value.
to

I'm

afraid

accept the

unless

book

they have

below book

you

will

have

value figures

been

computed

incorrectly.

this year the

More

book

Great

talk

Pont's

by Mr. Murphy before the
Regional
Conference
of
Society of Security Analysts,
O., Oct. 13, 1953.

Lakes

Cleveland

Cleveland,

the

2V2

du Pont book value
share.

ner

spectacular than

value

growth

increase
From

a

times

At the close of

should be close to $30

turn.
*A

compared with

prewar

in

has

relative

been -du

th° rate

of

re¬

level of 18% in 1937

rate of return

r~°e

to

2«%

the 1949 recession and should

proximate 27% this

year ex

in

an-

EPT.

Volume 178

Number 5266

The Commercial and Financial Chronicle

...

7

(1527)
5,

Considering du Pont's record and
return

reasonable.

seems

From

experience is any criterion
more
companies
and
analysts
might profitably focus attention
the

of

rate

return

on

On

rate

Ahead

capital

$30 book value and 25%
of return, du Pont
earnings
a

should

$7.50

average

replacement

assuming

value

share

and

yield

$40

a

pects,

and

in

basis

the

worth

On this

would

be

the

Dow

Jones

should

approximate $25

vested

from

Can's

capital
the

return

tended
to

prewar

tions

of

greater

sults.
the

From

in¬

hamper

of

re¬

the

1938

low

ings

yield

or

earnings

rather

and

indifferent

about

25%

of

the

At

the

was

end

1953 book value should exceed

a

will be

Washington bureaucracy.

that

Washington bureaucracy. In the past 20
individualism

Democracy.
the

upon

It

which

American GI's,

they have

seems

Federal

made them

Government

the

U.

S.

Steel's rate

of

return

varied from minus 3%

estimated 15%

I have assumed

But

the

the

the

French

of 10%

an

next

year.

the

likely the Senate, in the Congressional elec¬
There is no minimizing in Washington political

seriousness

of

the

overturn

in

the

recent

in

the

business

Administration's

problems

ington who

and

were

industrial

fraternity didn't

spending

into

us

encountering from all sides, from
the

ruin.

really

The

Administration

best elements,

our

mean

U.

S.

10%

hard

times.

aid"

nomic

abroad.

Wisconsin

All in all,

From

is

it is making

spending:

for

be

these

same

quarters

is

coming

up

those

and

This announcement is neither

an

The

around

humble

my

him,

a

serious dissatisfaction with the

dissatisfaction, if not remedied,

all

shades

bounty.

have

come

will

opinion,

thought in this country is in
to

an

to

the

my' mind

depend
up

be

a

Conservative

awful fix.

They have finally caught

offer to sell

nor a solicitation of an offer to buy
offer is made only by the Prospectus.

upon

political

school

any

or

$15

to

Federal

Government

with the "decadent" French.

of these Shares.

has
to

800,000 Shares

man¬

Public Service Electric and Gas

half

this

(without nominal

figure

cost

10%

would

on

yield

book.

rate of return

that cheap as

steel

The

the

9%, fairly en¬
couraging
relative
to
prewar.
However, there can be no doubt
be

based

on

they will be

no

stocks appear

substantially

exceeds prewar standards. It is
belief that

for

a

more

With
rate of

a

favorable

background

adequate return.

$70 book value and 10%

return, U. S. Steel earnings

should average $7 per share. Here

retained

again
add

to

Copies of the Prospectus may be obtained from only such of the undersigned as may legally
offer these Shares in compliance with the securities laws of the respective States.

mv

active economy will

an

a

Price $25:Vi a Share

replacement cost,
bargain unless the

future rate of return

provide

value)

1949

was

to

or par

Actually only $5
less than 2% on re¬

or

placement
assumed

Common Stock

Present

sufficiently

ingot.

per

ingot

per

make

be

future

earnings

prospects.

ing average earnings

are

MORGAN STANLEY & CO.

DREXEL &

CO.

GLORE, FORGAN & CO.

should
Assum¬
worth

a

BLYTH & CO., INC.

THE FIRST BOSTON CORPORATION

GOLDMAN, SACHS & CO.

multiple of 10. U. S. Steel would
seem

to be

fairly valued at 70.

Granting that these projections
are

subject

to

there

error,

wide .margin of
would
seem
to
be

considerable cushion against error
in present stock
ures

even

prices if

your

approximate

my

as¬

In contrast long-term
prices would appear to be

MERRILL LYNCH,

WEEKS

KIDDER, PEABODY & CO.

PIERCE, FENNER & BEANE

SMITH, BARNEY & CO.

STONE & WEBSTER SECURITIES CORPORA TION

UNION SECURITIES CORPORA TION

vulnerable.
Whether

RIPLEY &
CO.
HORNBLOWER &

Incorporated

fig¬

sumptions.
bond

HARRIMAN

a

WHITE, WELD & CO.
or

not

your

conclu¬

sions agree with my observations,
I hope you will find this approach
useful.




October

21, 1953.

of

Too many Americans

$70

facilities

new

ingot.

should

facilities
modern

on

per

the

which, with the disposition of the President

closest

In

calamity.

of

for

And this

,

is

$30

sub¬

going to result in the Democrats capturing both the House and

the Senate next year

This, notwithstanding that payrolls and employment

ingot

return

would

is

sidies, for the military, particularly, the Air Force, and for "eco¬

hand, in and out of Washington, this writer hears
complaints that Eisenhower and the Republicans are making for

selling at about
against a replace¬
cost of some $300 per ingot.

ment

A

Steel

per

it

to speak,

so

ner:

$25

con¬

and those in Wash¬

for continued high government

pressure

not

are

It is finding that American "free enterprisers"

when they voted against the "socialist state"

every

average return

in this round about

"frog"

in World Wars I and II, returned home to

Republican

fined to this group.

tremendous mil¬

EPT for 1953.

ex

they
rock

Bargerou

man

of

in 1938

a
•

to be quite as

come

as

years

rugged

share.

per

a

free country and that

prewar and

increase

plant revaluation.

an

a

Curiously, book value has

only doubled since the

is

However, he has said that such

incumbent Republicans.

On

Steel is the most difficult
because of the wide fluctuation in

He

laugh smugly about.
Carlisle

Congressional election, in which a Democrat, for the first time in
history won over a Republican, notwithstanding that Republicans
in the past have been of the "Progressive stripe."

U. S.

record.

lost

of American

living: the soaring price of beef, of eggs, butter and the
necessities of life; a man dedicated to ending inflation.

circles

for American Can.

so

single farm price support law.

one

butter, potatoes, wheat and what not under

eggs,

attitude toward

he

cessation of

happens that the present Secretary of Agricul¬

so

changed

up

come

foodstuffs, the increasing cost of

and not beholdened to the

man

whom

the

fallen; yet

argument that after all, what is wrong with inflation.

tions

the

earn¬

Dow Jones Industrials multiple of
15 would indicate a fair value of
50

to

Farm prices have

to lose the House and

through
retained
likely.
Using the

seems

dedicated

to the present Administration

has taken steps toward accomplishing
these things, the political party of which he is the leader, in the
opinion of the majority of Washington political observers, is going

return—

Again further

growth

profits

10%

would

—

result.)

same

and

man

Now, because this

replacement cost of

a

a

a

It is getting to be quite apparent that he and the Republican

v

the gospel

whether

In

Administration have greatly misinterpreted the American farmers*

in

a

was

have been laid

men

he hopes to work out something
by which the farmer

of

cost

earlier.

share

not

buying

free

itary and foreign aid spending that was piling up the National
debt.
They elected a man dedicated to checking the increasing

a

per

N'ow, it

has

existing price support laws.

with

now to»ascertain
relic of the past.
I ;

elected

an

(Assuming

French

cancelled.

was

situation, in his opinion, cannot prevail in

tfie American people elected a President dedicated to
the proposition of removing the citizens from the public teat, of
eliminating the farmers' dependence upon the Federal Govern¬
ment, the State capitals' dependence upon Washington; they

book value of $25 and
14% rate of return, American Can
earnings
should
average
$3.50.

$35

and

country
a

other

With

ture

still

In 1952

average future rate
should reflect the factors

14%

living.

bright morning
wreathed

trucks

into power was the high price of

dependent

isn't

war

mentioned

and

The) gentleman had better look about his

14%

and

a

face

>

He has maintained

British

own

but recovered to 15% in 1949.
S'x
EPT the 1953 rate is estimated at

13%

his

few thousand

things which helped the present Administration to

have

aggressiveness

1939 return of

a

Indian

which he sung and abided by-

More

dropped during the

rate

of the

Enterprise, free and unfettered,

recently there have been indica¬
and fewer controls to

up on
.

a

military order for planes

a

greatest alarm, politically,

healthy scorn for
their increasing
dependence upon handouts from the State,
either their own or any other State.
Private

downward
1949.

November

smiles.

per

on

came

with

the

share.

American

American

of

last

Indus¬

trials only slightly.
At the close
of this year book value of the for¬
mer

segments

large

and Truman and

American Can's book value has
exceeded

the

He was a hardy specimen, this American
Conservative, who just as a generation before
him went through Prohibition and Bath Tub
gin without completely
succumbing to
its
stomach ulcers, survived the era of Roosevelt

150.

stock

like

Conservative,

industry, that he exists
only in the Eisenhower Administration.

excellent pros¬

times appears warranted.

American

might conclude from what is happen¬
ing these days, by way of becoming extinct. At least, it would
seem from the clamor that is arising in the Agricultural Belt and

earnings valuation of 20

an

The

the American buffalo is, one

per

Since du Pont has such

five record

a

The

,

return
of
19%
similar result, with
growth as earnings are

retained.

But

is the excitement in the Farm Belt.
one

a

further

ofNews
the

By CARLISLE BARGERON

1939

would

of

-

or artillery
nutshell, the complaint
is that not enough government
money is being poured out, rather
than too much, yet one of the major issues
against the former Ad¬
ministration was that it was spending us into
bankruptcy.

military

or

Washington

employed.)
■

all-time high.

an

off here and there because

(If du

Pon't

on

at

are

promising products, 25% of

many

8

The Commercial and Financial Chronicle... Thursday, October 22, 1953

(1528)

At least

be

THE MARKET... AND YOU
By WALLACE

In

somewhat

a

sedate way,

quiet

and

stocks continued

of

run

American

seems

to

Dealer-Broker Investment

Telephone

higher and this week reached
a
recovery high. The weight
of all the postwar financing

items

The

trimmed.

around,

which continued to work

STREETE

ard

issue, immune

one

to all that is

being

was

convertible

via

Recommendations & Literature
It

debentures

the steel¬ approaching its 1946 high of
finding it hard 200, and it is another of the
to move their production. The index
issues still well below
company promptly denied its 1929
peak which was more
has been proved conclusively, any general price-cutting but than 300.
so the
argument continues un¬ the steel shares' buoyancy
abated over whether this is a was a bit tainted by then.
"War" Stocks Keep Going
rally in a bear market or the
course,

was

makers

were

signs

early

of

Still
*

*

the

*

so

far

is running has retraced two-thirds of the
the decline from the August highs
to the September low, there
good third quarter earnings
is still plenty of skepticism
statements
are
starting to
Actually,

time

bears 'since

the

on

Favored Stocks of the Pension

plane

&

dollar to the

a

regular

quar¬

terly for the first time since

promptly
which
at

with

the

13,000

shares;

new

Company,
Dillon

stock

has

sold

since 1930.

ed rather

cations

be

derived

was

shares

to

quarter million this tabulation

a

back

bring the short in¬
the

above

two-

million share mark at 2,188,There

was

a

time when

vorable
many

side

are

on

yield
Vork

ble,

Sears,

California
Co.

and

Standards
and

Union
❖

While

Carbide.

*

the

of

Jersey, Texas

And the list of issues "short¬

after

ed"

Boston

tistical

such

dated

more

to

attention

the

official

was

being paid

statements

on

the prospects for the future.
Flat denials of
any signs that

*

fair

work
at

moment

measure

taken

price

of*

a

bit

but

what

place is the
all stocks

of

Stock

is

that

the

a

has

average
on

the

Exchange

tically

to

as

low

as

In

1949.

this
to

a

latest

top

Jgg

♦

♦

Co., 31 Nassau

York

4,- N;

&

Stern, 30 Broad

Y.

Street, Chicago 4,
International

on

Noyes & Co., 208 South
Also available is a memo¬

111.

Cellucotton

Products

Co.

Cinerama, Inc.—Bulletin—E. M. North Co., Inc., 42 Broadway,
New York 4, N. Y.
Steel

Greenriver

Corp.—Memorandum—Clark, Landstreet &
Fourth Avenue, North, Nashville 3, Tenn.
Corporation—Report—Batkin & Co., 30
Street, New York 4, N. Y.

Kirkpatrick,
Guardian
Broad

315

Chemical

International
&

Harvester Company—Analysis
Co., 30 Pine Street, New York 5, N. Y.

Kennametal

Inc.

Memorandum

—

Stanley Heller

Moore, Leonard & Lynch,
1003 Union Trust Building, Pittsburgh 19, Pa.
Metal & Thermit Corporation—Analysis—New York Hanseatic
Corporation, 120 Broadway, New York 5, N. Y.
National Homes Corporation—Analysis—Aetna Securities Cor¬
poration, 111 Broadway, New York 6, N. Y.
National Steel
120

—

—

Corp.—Memorandum—Emanuel, Deetjen & Co.,

Broadway,
American

North

New

York

5, N.

Y.

Cement Corporation—Report—Daniel

F. Rice

&

Company, 141 West Jackson Boulevard, Chicago 4, 111.
Otis Elevator—Brief analysis in current issue of "Gleanings"
—Francis I. du Pont & Co., 1 Wall Street, New York 5, N. Y.
In the same issue are an analysis of White Motor Co. and a
list of specialized Portfolios.
Also available is a list of se¬
lected
the

in

swing it

of 27

New

randum

Plomb

climbed

5, N. Y.

Maine—Memorandum—Herzfeld

&

Salle

La

went

6%

(No. 1451—Smith, Barney & Co.,

Street, New York

Carrier Corp.—Memorandum—David A.

loftly 47, only to drop dras¬

*

Another bit of official sta¬

shown

ability to respond to
specific good news, even

issue

York.

New York 5, N. Y.

Street,

1946 bull
expanded significantly to through in the
a month earlier.
swing when it climbed to a
*

has

Wall

Street,

922 from 896

*

market

the

as

New

13-year period —
Front Street, New

a

Audio Devices, Inc.—Analysis—Peter Morgan &

pre¬

was

such

4.

*

i

Steel, Procter & Gam¬

,

market performance over
Quotation Bureau, Inc., 46

Railroad Earnings—Bulletin

able to put a couple
Unlike some of its other the old axiom that the shorts of
days back to back with the
colleagues in the averages, GE were always wrong was an highs leading the lows by
still has a score of points to operating guide, but lately the
good margins. It hasn't been
go to equal the 1929 price shorts have achieved a more since
early in August that
ever since described as "fabu¬
loftly stature, at least as far such a feat has been possible.
lous" although roughly half as the attention paid to their
the Dow industrials already maneuvers is concerned.
have exceeded the equivalent
New-Low and New-High
of the 1929 peak. In the select
Repeaters
As a measure of the pes¬
group that has already bet¬
Rather prominent repeaters
simism around, the October
tered the famous highs are
among the new lows were
such as Bethlehem Steel, figures show more dour feel¬
U. S. Hoffman Machinery and
ings than at any time in a year
Chrysler, D u P o n t, Kodak,
and a half, the last higher Grayson-Robinson Stores. For
General Motors, Johns-ManU. S. Hoffman it is, at least
aggregate being the 2,478,000
ville, National Distillers, Na¬
shares
short
in
Feb.
1952. temporarily, the end of a saga
tional

and

National

dominating, this week's trad¬
ing

Co., 15 Broad Street, New York 4, N. Y.
Stocks—Analysis—White & Company, Mississippi

the fa¬

sessions with lows

Scott Paper
Corp.—Eastman,

Gamble,

&

Carbon

Jones Averages and the 35 over-the-counter industrial stocks
used in the National Quotation Bureau Averages, both as to

from

because

&

Japan—Circular—Yamaichi Secu¬
Y.
Japanese Electric Power Companies—Brief analysis in current
issue of "Weekly Stock Bulletin"—The Nikko Securities Co.,
Ltd., 4, 1-chome, Marunouchi, Chiyoda-ku, Tokyo, Japan.
New York City Bank Stocks—Comparative figures at Sept. 30,
1953—The First Boston Corporation,
100 Broadway, New
York 5, N. Y.
New York City Bank Stocks—Comparison and analysis of 17
New York Bank Stocks as of Sept. 30, 1953—Laird, Bissell
& Meeds, 120 Broadway, New York 5, N. Y.
Over-the-Counter Index—Folder showing an up-to-date com¬
parison between the listed industrial stocks used in the Dow-

sharply. The impli¬

to

Carbide

Valley Building, St. Louis 1, Mo.

jumped ground, the daily lists of new
DuPont, Re¬ highs and new lows contract¬
over¬

Company, Procter

Union

rities Co.. Ltd., Ill Broadway, New York 7, N.

middle

in

&

and

Investment Opportunities in

makers.

14

all rise

398.

back

now

&

Insurance

Douglas and Boeing vied for
leadership in this group and,
despite evidence of consider¬

sues

Pfizer

Chas.

interest

and American Can. The

terest

the

which

high
highest level
a

the

was

General Electric

as

where

responded public Steel, Radio, Chrysler

stock

The

1950.

stalwarts

General Electric Company, General Foods Corpora¬

Co.,

Mining & Manufacturing Company, National Lead Company,

able
profit-taking now and
around which was reflected
the year-end
then, were able to keep their/
in the issues where short sell¬
dividend meetings with the
independent rally going.
consequent
year-end
extra ing predominated. The mid❖
#
*
month report showed sizable
payments are close at hand.
With a majority of the is¬
One of the first to act was increases in the shorts in such
General Electric which added

Corning Glass

on

tion, Minneapolis-Honeywell Regulator Company, Minnesota

and

out

pour

Funds—Data

Works, Corn Products Refining Co., E. I. du Pont de Nemours

high¬
ground with some regular¬
ity were the so-called "war"

stocks—the

likely to ben¬

efit—Troster, Singer & Co., 74 Trinity Place, N. Y. 6, N. Y.

er

Skeptical Shorts-

Although the rally
out

pleased

the following literature:

E. P. T. Elimination—Over-the-counter securities

Also able to work into

bull

new

a

swing.

send interested parties

to

that

to

give

forge ahead this week to
a measure of comfort to
the bullish contingent. Ffom
a
technical standpoint little

understood that the firms mentioned will be

is

of has
kept the issue from even

inference,

equities

now

selling

at discounts from

past three years.
Tool Co.—Memorandum—H.

Hentz

&

their tops of

Co.,

60

Beaver

Street, New York 4, N. Y.
Public

Service

Co.

of

New

Hampshire—Analysis—Ira Haupt
Co., Ill Broadway, New York 6, N. Y.
Company—Analysis—Lerner & Co., 10 Post
Office Square, Boston 9, Mass.
Southern Railway Company—Analysis—McGinnis &
Company,
61
Broadway, New York 6, N. Y.
Taylor, Pearson and Carson
(Canada) Limited — Review —

and

&

is back down to 17. The

now

Grayson

story

is

different

since

it

Riverside Cement

somewhat
never

was

which, at
business will fall off late this $38.20 at the end of Septem¬ able to show any extreme im¬
after
slumping
year or early next year were ber, was the lowest in almost provement
three years. This is just that
able to impart an even
from the 1946 peak of 37. Its
greater
lift
to
the
issues involved, much more grist for those
recent new low of 10 is only
with Republic Steel as good who find stock averages in¬
about a' point above low for
efficient as an overall barom¬
an
example as any. Official
the last half dozen years.
forecasts that earnings next eter,
particularly since the
*
❖
*
year should be the same as averages presented a far more
this year lifted this issue sev¬ optimistic picture at the same
A
rather
quiet repeater
time.
eral points in a few
trading
among the new
highs has
sessions before the scare

James Richardson & Sons, 173 Portage Avenue,
East, Win¬
nipeg, Canada, and Royal Bank Building, Toronto, Canada.
Technicolor, Inc.—Memorandum—Hirsch & Co., 25 Broad St.,

New York
Texas

4, N. Y.

Utilities

Co.
Memorandum
Josephthal & Co., 120
Broadway, New York 5, N. Y.
Ventures Ltd.—Data-^Joseph Faroll & Co., 29 Broadway, New
York 6, N. Y.
Virginia Iron, Coal & Coke
Analytical brochure — Reich &
—

—

—

Co., 39 Broadway, New York 5, N. Y.

over

price-cutting in the industry
chilled the group somewhat.

been Sutherland
The

Still

Laggard Rails

Rails are still the laggards
tempering what optimism is
The scare centered on Na¬ around.
They stubbornly re¬
tional
Steel's
subsidiary, sist rallies and are quick to
Great Lakes Steel Corp., find excuses
for a selloff. In
largely because of some re¬ this they only outpace the oils
if

ductions

in

announced

trade.
into

a

This

if

if

special materials by a narrow margin since
quietly to
the petroleum issues have been
news

rumor

burgeoned

that the stand¬




rather

persistently on the dis¬
appointing side, too.

suddenly
an

a

all-time

list.

a

Companies

Likely To Benefit From •-*

neglected end of the

EPT Elimination

.

•

i

[The
article
time

List of Over-The-Counter

high and furnish

feature for what has been

rather

Available—

Paper which

to life to reach

came

views
do

not

coincide

Chronicle.

expressed

in

this

necessarily

at

of

the

Troster, Singer & Co.

any

with

They

are

those

presented as

those of the author only.]

HA 22400

Members: N. Y. Security Dealers Association
74

Trinity Place, New York 6, N. Y.

NY 1-

376

for them.

Bow to Get the Maximum

"Aftei-Tax" Yield

So

By L. WILLIAM SEIDMAN, C.P.A.
Seidman & Seidman, Public Accountants

yield

advantage in buying taxable bonds at

an

there is

an

a

Bonds selling

premium

however,
them

The
elements

those

separate

involved

rules

mature at the

same

Officers

yield can

6%

a

an

important exception

If the bonds

discount.

were

lend

Suppose Com¬

a

premium work

out

and is selling

Knight, James H. Musson and
W. Young, Vice-Presi¬
dents; and Mildred Vrba, Secre¬
tary. All have been associated for
some years with Remer, Mitchell
& Reitzel, Inc.
William
J.
K earns,
Philip
Kaufman
will

that

now

est

selling

bought the yield is the

the 4%

coupon

to year.

is taxed

same

as

other

In

return to

issra
L.

5%, but only

interest from

William

year

relation to

as a capital gain when
maturity, and the bondholder cashes

♦This
case

words, by buying the bond

a

to Hear

take is the

converse

That is to

an

ten

years,

3.0%

the premium.

In

less, in

a

King Merritt Co.
to The

Financial

Colo.

DENVER,
has

Roberts

bond sell¬

staff

market

of

Chronicle)

to

All other things

Building.

J. K. Mullen Adds

(2)
par or

There is

an

an

Co.,

Bank

offer to sell

nor a

The offer is made only

solicitation of

an

Robert

—

with J.

is

Investment

advantage in buying tax-exempt bonds at

Chronicle)

Financial

Colo.

Dunnebecke

at premium instead of at a discount.

This announcement is neither

to The

DENVER,

premium;

U.

K.

S.

offer to buy these securities.

by the Prospectus.

New Issue

the

$50,000,000

tax value.

discount and premium.
Suppose the buyer

Province of Ontario

A more accurate bit of arithmetic is desirable.

is in the 50% tax bracket.

(That bracket is reached by a married
He buys $10,000 face amount of
bonds that have a remaining life of ten years. Suppose also that a
5% bond sells at par, so that bonds will coupon rate less than
that sell at a discount, and above that at a premium. Here are the
figures for the net return, after taxes, at the different coupon
with

$28,000 of income.)

(CANADA)

Twenty-five Year 3%% Debentures

rates:
4%

Price of bond

to

yield 5%

net

for ten-year

(i%

5%

interest
$9,333 $10,000 $10,667

$8,667

return to maturity

♦Aggregate

after taxes

return

2,487

period

2,494

2,500

2,666

2.9%

2.7%

2.5%

2.5%

Price 98.78% and accrued interest

Annual rate of return after taxes in
relation to

♦This
years

at

discount,
amount

at

purchase price of bond

the

combination

deducting

50%

of

taxes

what

remains of

the

total

interest

for

the

ten

after deducting, in the case of bonds
In the case of bonds bought at a
to the net return. The 74% is the
capital gain tax due when the bond is paid off

and also,

premium, 50% of the premium.
74% of the discount has been added
a

of

the

discount, less

2G%

par.

Copies ot the Prospectus are obtainable from only such of the undersigned and such
dealers as may lawfully offer these securities in the respective States.

market yield can be stepped up to
after-tax yield of from 2.5% to 2.9% in the case illustrated
other words, the same

In

an

is

after

bought

Due November 1, 1978

Dated November 1, 1953

-Coupon Rate3%

merely by buying the discount bond instead

of the

par or

other

premium

bond.

the illustration, it has been assumed that the bonds were

In
held to
if the

maturity and collected at par. The same principles apply
are sold before maturity or if the bonds are called

bonds

maturity or if the call or maturity price is other than par.
A special rule exists in respect to the discount on bonds like
the Series E government bonds. The discount on those bonds is,
before

by express provision of law, treated as interest income, not capital
gain, when the bonds are collected at maturity or earlier redemp¬
tion.
The government seems to be heading in the direction of
applying the Series E rule to all bonds issued without interest,
and sold at a discount to make up for the absence of interest.

.

Harriman Ripley &

pared

Smith, Barney & Co.
A. E. Ames & Co.

The First Boston

McLeod, Young, Weir, Incorporated

October 21,

1953.

Corporation

The Dominion Securities Corporation

Incorporated

with issue price of a noninterest bearing bond is capital




Wood, Gundy & Co., Inc.

Incorporated

However, in one case where other than Series E bonds were in¬
volved, the court held that the increment on redemption com¬

gain to the bondholder and not interest income.
There is also a special rule on Series G and K bonds. When an
owner cashes them in before maturity, he gets less than he paid

Co.

J.

Mullen

National

Building.

he reports the

ten-point premium. This will be a capital loss with
deductibility and hence limited tax benefit. Reporting
this way is generally a disadvantage because it means high inter¬
est income during the life of the bond, taxable at full rates, with
a deduction in the final year that may be of doubtful or restrained

man

the

King Merritt & Co., Inc.,

limited

We have been using round amounts for

S.

Terry

—

added

been

U. S. National Bank

advantage in buying taxable bonds at a dis¬

count instead of at par or at

6% coupon as interest each year and then at maturity he takes a
loss of

the

summarize, the tax picture is as follows:

of what happens

say,

for

words, a tax-exempt bond selling at a discount can

(1) There is

each year offset¬
ting a pro rata part of the premium against the 6% interest cou¬
pon. This brings to 5% the net interest to be reported.
The cost
of the
bond is marked down accordingly.
If the bond buyer
decides to do it that way, he must, for the rest of time, follow
the same pattern for all bonds bought at a premium.
can

Corporation. His subject will
Outlook for Utility

"Current

(Special

the remaining life of the bond, and

The other route he

be

being equal—

One way is to treat it as if he bought a 5%
This is worked out by spreading the ten-point pre¬

with bonds bought at a discount.

the amount of

the

Principal

Club.

yield.

in one of two ways.
par.

3.0%

2.8%

2.5%

interest

Mon¬

at

Stocks."

ing at par or a premium though both bonds carry the same

To

over

3,231

(Special

premium,

total

on

p.m.

speaker will be Albert F. Tegen,

Joins

the

5

at

President of General Public Utili¬

the
the case of

a

of

2,

Yacht

Boston

tjK

materially cut into the after-tax yield compared with

What happens if the bond with the 6% coupon, selling at
110, is bought? The buyer can handle it in his income tax return
bond at

3,000

be held

Club will

Nov.

ties

2,569

Nov. 2

on

meeting of the Boston Invest¬

ner

discount, 74% of the discount has been added to the net return.

combination

bought at

In other

of 92%.

mium

bonds

$9,231 $10,000 $10,769

2,138

purchase price of bond

the

bonds bought at a

discount there is
a double benefit.
First, the year-to-year tax payment is made on
only 4% instead of a 5% coupon, the other 1% being deferred
until maturity. Second, when the time does roll around to pay the
tax on the other 1%, the rate is the capital gain rate which is a
top of 26% and not the regular income tax rate, which has a top
at

of

is

4%

taxes

Annual rate of return after taxes in

the

BOSTON, Mass.—The next din¬

day,

-Coupon Rate2%
3%

$8,462

return after
ten-year period__

for

Seidman

tax

3% interest

net

with

Boston Investment Club

ment

maturity

♦Aggregate

The other 1% of the yield comes

the bond is paid off at par at
in on the ten-point discount.

to yield

Price of bond

in the 50%

person

a

follows:

as

1%

at par, is bought the 5% interest will be re¬
ceived each year and taxed as regular income.
If the bond with the 4% coupon, selling at 90,

is

The figures for

yield sells at par.

Zarbock

Adolph

associated

firm.

new

actual arithmetic may point the situation up more
Here is the same type of example as before, except
we have a ten-year tax-exempt bond where a 3% inter¬

bracket work out

and

be

also

Again,
forcefully.

at 110.

Which gives the best tax break?
If the bond with the 5% coupon,

are

President;

,

mandatory.

They all

Norton,

Raymond

just like
bonds selling at par. That is because a pro rata part o£i the pre¬
mium must be written off each year and the cost of the bond
marked down accordingly.
There is no option about this; it is

time and they are all sell¬

coupon

firm

new

L.

tax, whereas with the par bond

part of the 3% yield must be paid out for taxes.

Tax-exempt bonds selling at

ing to yield 5% interest to maturity. One has
5% coupon and is, therefore, selling at par.
One has a 4% coupon and is selling at 90. The
a

the

Presiden^ and Treasurer; James

a

third has

of

Vojta, Executive Vice-

on tax-exempt bonds selling
initially sold at a discount when
by the city, state, etc., that discount, spread over the
life of the bond, is considered as additional interest. Only the dis¬
count in excess of that amount is capital gain when the bond is
sold or cashed in at maturity.

laws,
and treat

three bonds outstanding.

pany A has

involves no tax

first issued

tax

simple and

are

par

Charles J.

at

differently.

The

themselves best to illustration.

tax-exempt bond at

H.

There is

premium.

involved.

3%

a

of purchase to the

Laurence

no

yield, depending on whether the
bonds are selling at par, at a discount, or at a premium. That is
because market yield combines the interest coupon with the dis¬
or

securities.

example,

the 3% return must be given up in

have radically different after-tax

count

Chicago

time through maturity. How¬
ever, a 2% bond selling at a discount in order to yield 3%, means
2% tax-free interest and 1% capital gain. In other words, part of

,t

discount, while
par or at

in the market for the same interest

La Salle Securities

_

Formed in

the time

from

advantage in buying tax-exempt bonds at
a

~

we

V

For

bonds selling at a discount or at a

is

far,

"^better.

on

premium. Shows tax laws
treat these elements differently, and cites illustrations of application of the laws. Concludes, other things being equal, there

interest deduction, not

an

as

have been dealing only with taxable bonds. The
picture is almost the opposite with tax-exertipt bonds. Whereas
with taxable bonds, the bonds selling at a discount have extra
CHICAGO, 111.—La Salle Secu¬
attraction, in the case of tax-exempt bonds it is a good thing, from
rities Co. has been formed with
a tax standpoint, to stay away from
bonds selling at a discount. \ officers at 208 South La Salle
That is because in tax-exempt bonds the more that is treated as •]
Street to conduct an investment
tax-exempt interest and the less that is taxed as capital gain, thp-^
business, specializing in unlisted

Bonds

A Certified Public Accountant discusses the after-tax

The difference is treated

capital loss.

a

on

9

(1529)

Financial Chronicle

Number 5266... The Commercial and

Volume 178

10

The Commercial and Financial Chronicle

(1530)

ket, only

TO THE EDITOR:

LETTER

Rating
Investment Funds Questionable

paying
if not

Fahrner

Homer

by

the

runlifl.
I arch
1 arch

Mav
May

Buy?"

appearing

section

of

managements

rating

the

anced

mutual
_

these criteria,

to

open

funds. Several of

sbarp

question

mdiK.ei,

their vary-

of

mention

no

shadings

of

|n the

that these

emphasis
on

preservation,

bldj

and

kinds

of

targets they

re

witb

each

funds

to

measure

asset-value

is

(allowing for capital-gams
distributions) against the performthe

of

ance

stock

Dow-Jones

average

of

tban

ance

„

of

gains

es-

Jones

cyc|e

outperformed

it

shows that the

has at least done

ment

buy-and-hold

a

have

policy

'irrnmnlidhpH

vector"
r»n

panies

a

the

•

iu

skip

.

the

statistical

-

of

sins

done

last

year

(

such

at

Ume

a

bv

toe

by

.

tne

ing

previously
issue

these

the

Chronicle

of

use

gains

most

of

prices).

If

cost

average

larger

mean

acquired

scaled

at

for

Proceeds
debentures

that

of

a

management

the

shareholders

fact

gains

some

will

Province

sion

of

Ontario

of

and

distribution of
issue of

ent

any

.

__

other
stock
average,
either
in
Highbrow Hassle
long-term gains or in near-term
True, mutual fund managers are
yield. His objectives, like those of sharply divided on the propriety
the fund, are more conservative, of this. An opposing school (mostly representing stock funds) con■

.

No

Miracle

Next

the

Managements

author

tells

fund, stock or
realize and dis-

any

what

balanced, should

a

well-

tribute

should

stocks at the

common

that

us

proportion of its portfolio
managed
balanced
fund
have had in

tends

mum,

onto

its

so

gains

far

some

their

at

maxi-

possible. To

as

hold

of them at diminishing

"less

1949,

"at

than

least

25%."

In

60%."

mid-

In

early

1953, "less than 30%."
1
fund

that

has

d°n'*
even

°f

any

close to

come

meeting these specifications

None

wilir)^lar/ad™rilm^PC„ei
Wellington Fund, certainly one of
the

unsound

practice.

But

practice

a

number

know

better-managed companies in

it is,
leading

of

among

a

balanced

which

the funds to pay for a

capital construction

the

en

me

Hn

58%

in

the

situation

as

it

exists

should

bLa2y0ne Studymg

their portfolio work,
About

four-to-one

that

in

in mid-1949,

ratio

vestment'
vestment

squares

and 63%

early

at

nearly

kind

of

critical
as

common

market

important

as

stocks

points
the

is

per-

centages. For example, both Wei-

lington and Commonwealth
shifting

facts

of

life

the

among

runs trolling the bulk of assets of all

,

The

the

six

1942, 71%; 1946, 65%; 1949,
59%; early 1953, 63%.

held

with

l^mimn^nan^her^will"' fundf.the7e'vfs-%th„e cauntry's
Company, another wellbiggest balanced funds, con-

regard^d outfit, the record
thus:

from, cyclical




balanced

larger

funds,

only three paid
capital-gains distributions
„

^

than income dividends in 1946, the
last
year
of the wartime bull
market. And
come

the

highest gain/inratio among these was only

1.65/1 (for Wellington). In 1952,
to the last year of the Korean mar-

were

issues

con-

first

we

'it'
are

for
sup-

others:

and

?an

+i-io

about

If

have

icc,

is

as

„,c

Q

cer

hanapd^ogMheHn

e^rise

to

by
The

ifndefwntinS
underwriting

of

ot

will

competitors,

as

that

of

fact

one

the

of

two

or

nudnmpr

customer.

"Furthermore

system has

the syndicate

effect whatever

no

under which

gress>and the various rulings of
•in admimsterin2 these
AcH' ?r.e in eVIry waylawlul
A

^bi?st atPthe
^aM^
^uat tne basic

__

4 007 nnn

underwriters

and

prices

of

securities

rating

of

on

the
Net

total
direct

population
debt

Aug.

31
$635 458 123
$635,458,123.

on

of

1953

sue

or

part

of

the

in
this

pre-

opinion,
one isthese de-

by bringing out

many,

fendants

none

nor

of

of them
acting together, have ever, so far
as appears in this record, been so
foolhardy as to attempt to control

of

The

are-

Dominion
and

Smith

First Boston

e. Ames &

Co.

th

nf

Canada,
Province

amounted

*

Other'members
grouo

of

of

the

Barnev

to

10

offering
&

Co

Corporation:

•

A.

Incorporated- The

Securities

Corporation;

McLeod, Young, Weir, Incor-

porated.

the

,
hand

one

i nivCston

^"fusticl
of Justice

whole

with

.

.

.

mind that

in

scheme

thp

or

any

in any

group

manner

affect gen-

was

«rpaW

rogneress

f

,

Anti-

Department

statutory

m]f

the

and
the

of

the othe
the other.

on
on

"It must be borne

this

care

thor_

ny hlv
of anti trust nrob,^g y
mnfant
and
j*™>'f."I
P
^rvdnic+pr thn ?ntricatc
awarp

..

nf

iu:.

,

.

^

„uGfOC

ur+innlntod

....n

and

phases of this well articulated and
^

th^ecuTities^business",Tntf'in

:t

?

Af

fruits

intended

result

a

ppthpr

The

the

on

0f

wont

integrating
the

nattern

bringing
tbpn

out

:v

of this

task

their

statutory

the

issues

securitv

invest-

bv

use

with

generallv

bankers

assurance

of

modes

current
new

to-

beneficial

ahout

common

pnrnniPtP

worked

and

into

is

point

real

formulation

significant
lprHciatinn

ex-

and

accomplish

who

those

no

that'thev

nrobable

inadvertentlv

all

manv

invest

Act-

Sherman

thp

hardlv

wnnid

tbat

the

of

tn

p™tinn

that

vio-

no

latio" of the Sherma? Act-was

even

remotely involved.

"According to plaintiff's claim,
the

purchase

of

security

a

issue

Product

or

a

with

manufacturer's

the

well-worn

^theline" BuUs"ttf'iTreat
the

investor

either

or

be makes

a

Soutb

is

or

common

stock- The document in the form
Qf
01

^
a

Dona

stock
siock

^
or

certificate,
ceruiicaie,

of a relationship which is created,
and the relationship survives loss

destruction of the document....
"It

matters

members

of

not

the

whether the
be called

team

S.

street,'

209

members

UMmann & Benjamin
(Special to The Financial

CHICAGO,
is

„

now

min<

with

Board

members of
Exchange.
Exchange

which is 'sold' and delivered to
tke investor, is merely evidence

or

Inc

Harris

of the Midwest Stock Exchange. '

continuing invest-

preferred

Philip

become connected with
Salle

La

—

lends

ment in the issuer's capital, if the
issue

111.

Fairman &

Sills

Chronicle)

The Financial

CHICAGO,

of a purchase and resale of AdamVhas

commodities

ity

Joins Sills. Fairman
(Special to

to the issuer' if the issue
consists of bonds or debentures,

iV

the legal questions now un-

der discussion form an area of
head-on collision between the SEC

quality

and

explained

Act.

The plain truth of the matter is

They

whether

1Qm

r*

Sherman

the

ligations

price, as
liminary

square

rpmwpntinlj

Tll„a

constltute P«r se

of

violations

Act"

thne declaring

clauses 01 trie syn

dicate system

rre^'Elimated ^ula^iln 'of^the m"on?y
prmrin„.

sterman
same

and penetrating

which control the public offering

the Canadian provinces, covering

412>000

been

e™ment ndve been laboring is
laboring is
tkat
insist. that the P™V1~
sl0ns 0A the various Acts of Con-

^olonsed

p®u"g accrae™ story

ap.proximate!y

embarrassments

counsel for the gov¬

nn<.,p,.inn

market

provided

is the second largest

.

on

dealers intend it to have any. On
the
contrary, it is the general

10 AUU/0' piUb dLC-lueu

ontar"i0

.

have

ernment

of Ontario and will be redeemable from an issuer and 4+c, distribuits
th®. °ptl°n of ihtft^r°VMnCe V tion to the public via underwritapy„ 1
0l) and aft?r N?v'
ers
and dealers is just
the old

'-'J

.

the

of

"One

banking

general market prices, nor do the

1954, exclusive of any St. Lawrence River Power Project costs.
Principal and interest on the
debentures will be payable in currency of the United States and
will be free of all present and
future taxes, including income
taxes and succession duties, imposed by the Province of Ontario
or such taxes imposed by the

Government,

the

representatives

firms in the team may try to sell
the bonds or stocks to the same

part of its
and

program

the date of the advance. The Com-

Canadian

despite

occasionally

agents

or

use

issuers,

offense to the

no

participants

that

tx/i+h

enterprise

for

investment

Sherman Act.

issuer makes it clear than they dc wnrkpH
not and cannot enter the syndicate ™
^d

the

of

to repay any temporary loans in-

funds' which argue just as devoutly for their viewpoint, and

commolTTnd 1942, 45% in'Ve" bull market, 4? inc0I^f» in a late
1942d'45|d
1946, (ca,Pttal-Sai"s it
hardly
commons

but

the

by

use

industry, gives

?afnW fh?gnnc« Vw*that

a^?

.

1946,

speak

^«^^°of^n»rtUreS market!*16 ^

™a^Lt„Ur"inLP„0j"tu„I"

.

no

quite differ-

a

But

tn

talking

are

1942, for instance, it "might have more
particularly
to
distribute are not residents of Canada,
been expected to have more than them in a way that gives them the
The debentures will constitute
75%
in common stocks." In continuity and color of income, is direct obligations of the Province
.

in

we

the

securities

another

the

or

is

.

as un-

unless

of the

some

comparable

industrials

o.

engaged in the underwriting

the Dow-Jones

that

.

are

competitors

participating

think,

I

clauses

what

the

capital

new

public offering of new securities
viewed in the large, and on the
basis of methods now in common

posed to be competing
Perhaps a
few moriths before the issue under

Commis-

Power

Ontario

these

of

business of

which

or

nothing

follow

(on lower-cost certificates) to dis- mission estimates the cost of its
investor who buys into a balanced tribute
to shareholders in less construction program will total
fund—assuming he knows what palmy times—when they're more approximately
$191,000,000
for
he's doing—isn't trying to "beat" likely to need the money.
1953 and about $146,500,000 for
is,

tne

dealers

or

competitors

were

advanced

be

Hydro-Electric

is to hold back

course,

noiu

determine

t^usrealized down tire year's total curredthat may be outstanding on
holding gains. The idea, of poses for capital or other pur0f

group of industrial common stocks,

The

will

basis

bidding, that the Congress and the

Prov-

sale

the

from

the

upon

raising

and distributing a particular issue,
ince of Ontario, Canada, 25-year then by very definition they can3%% debentures aue Nov. 1, 1978. not be competitors. The necessary
at 98.78% and accrued interest.
relation that each bears to the
is offering $50,000,000

inc>

is

.....

which

com-

UA syndica^e ™anaSed jointly by
Harrtiman
t
*T
porated and Wood, Gundy & Co.,

year

more

raflierrJmkies1TmwiFth
rails,
utilities)
with

of

fusion

field of special study and

would

the

«It

_0

competitors. When

sense

Offered to Investors

questionable virtue, (as a practical tax matter, it must
in my
opinion, is the idea of com- distribute to shareholders all such
paring the performance of a con- realized gains), it may identify
servative
balanced
fund
Chnnds.
fund
(bonds, certificates of above-average cost,
even

a

be

can

endoHhe^ vefr
0
year

May 8, 1952) by Harry Corner, of than
the
fund's
Paine, Webber, Jackson & Curtis, thinks good for the
Of

is

nothincr

of gains

_

"Those who participate

.

derwriters

Province of Ontario

it recog-

ner.

con-

the general

.

STEINMETZ
writer

to

me

discussion

method it uses in establishing the
cost of the stodks [t has sold (hav~

the Dow-Jones industrial average;
a
definitive job on the subject
was

does

d

in-

•

yours,

$50,600,000 Debs, of

"ontroned^for^accoun^

/

1

111

it

as

would

for

if ft thinks

even

Moreover, the amount

manage-

well

truly

investment

mutual

nizes the top

Dow-

as

binus

of Burton, Cluett & Dana. He has

stability, is much less apt to cash

in solely the distribution of a new
of security issue in an orderly man-

these syndicate agreements now
under attack to be illegal per se
under the Sherman Act.

share

new

representative of the
Stock Exchange firm

York

all

—

emphasis^on""^cons'ervatTsm r'and

industrial

n„win

trolling precedent here

with its greater interest.

the article, "if [the

has

"Despite

&—luvlv

The

Note:

made

because

viouslv,"

fund]

XOUXj

exceeded

registered
New

voioT^o!m
to 1949,
says

has

1946-49, and

HENRY D.

fund

ir.

exercise of a,ny manner of controJ
general market prices, but

up-

whether by syndicates of underwriters proceeding in negotiated
transactions or by public sealed

again-

time and

Very

though

fund,

dictum, the Judge

durin§ the trial proceedings.
Concerning price-fixing in syndicate agreements, Judge Medina
states:

at

nurnnse

six.m0nth period in

a

have

the

—

-niKi?*111®' ,pefging; or stablll^~

facts, peculiar to the

saies

stock

'joint

over

mutual-fund snare reaemp-

tions

—

a

baianced

'quasi-partners,'

rities
n nhner

linuidate

markets

bear

lcl.c

wmcn

oyer a couple of in itg capital gains all in a
mLP?ri0iQSsq «r^'' bundle at the top of a market
1946 to 1953.
Ob-

1942

...

a

true,

generally

a

'partners,'

which had already been dismissed

this

1937-38,

been

mar-

ratio

that

baIanced fund,

a

in

soar

expected

reservations

about

ordinarily truer

perform-

IhW, fir

h

reg.u'ar ofdiyidends
ratio
four to

the

some

above

told

we re

be

Me-

m§ the pnce'of cinything, nor the

co,.Iir,j+ioc

1929-32,

uia-

stage of

capital

R.

opimon covers a11 phases ot secu"

11

Editorial

pecially

Wrong Yardstick

bull

a

well

may

aucu

final

Harold

^
securities offered to the publichad to sell a single portfolio a phrase of the anti_trust suil

"only slight"

the

market,

aouDt

tions

»

one

shooting at.

Second,

ciiiu

be

Judge

•

.

.

the demands of

withdrawing shareholders

£™nS dTspr0ved

There

the

to ®XCeed
pernaps in

,

sizes

in

dividends

witLTSdUer!nJ th^artou"
consiaering me various
.

dividends.

octys,

lower prices

meet

to

nip times. The notion that redemp-

invest-

early .phases of

«BUt

keb

income, capital
and capital gains.

place

fupds

ue

to

relation

tributions shouid

investment aims, the different

,

also to keep

capital-gains dis-

0n

in

ment-income

.

ing

eye

tributions

Federal

security to finance its

The author urges us

off, the author advises us

makes

T
l

ever

The Capital-Gains Poser

it seems to me, are

serious

First

bal-

of

sup¬

author

the

says

to

bonds and preferreds.

six standards of judgment for

up

\

Tn»nvnanickvbear market"'
held the practice of syndicates
dnnhtTf aL lead^^ fund has fixing the price of new issues
i aouoi u. any leaaing iunu nets
any

equity-type

m

ac

own

nf

conin

but

commons,

of the "Chronicle"? The article sets

obiter dictum opinion,

an

ports present practice in underwriting securities, and says any
ban on it should be by legislative and not by court action.

Funds

the

on

much

at

woli

qc

sider not only the percentages in

issue

8th

analv^s

nmhing

mnrp

^er^0?iom^n^^rsg would

second

the

in

October

the

stocks

in

their common-stock ratios. Fur- its

eyebrow or two
eyeorow or two
Fund to

an
an

Investment

"Which

over

change

much

u/ithnut

Run

"V t

dina on °ct- 15 released his adventurers' or what not; the signear the close of his article,
"the 115,000-word opinion giving rea- nificant tact vis-a-vis the Shersmart management will take some sons for dismissing the
Federal man Act is that they are acting
very substantial profits in the last Governments anti-trust suit betogether in a single, integrated,
chase of each bull market
to be gun more than three years a§9 unitary,
cooperative
enterprise,
in
a
position
to
replace' these aSainst the nation's leading in- the purpose of whidh is not 'rais-

stable kind all through

more

1QS9

actually extinct.

"Obviously"

"Chronicle" of October 8.
Editor: Commercial and Financial

year

any

No

of the

Second Section

the

in

Judge Harold R. Medina, in

in
capital
is a rare bird—

four-to-one

gains in

Henry D. Steinmetz, of Burton, Cluett & Dana, Members of the
New York Stock Exchange, reviews standards for rating set
down

Price-Fixing by Syndicate Upheld

gains than in¬

more

(1.59/1). The balanced fund

come

Finds Criteria foi

of the group (Boston

one

paid

Fund)

Thursday, October 22, 1953

,..

Chronicle)

111.—John
Uhlmann

of

the

W.
&

Trade

Bell

Benja-

Building,

Midwest

Stock

With Bache & Co.
(Special

to

The Financial

Chronicle)

BOSTON, Mass.—Ralph J. Fish-

has become affiliated with
Bache & Co., 21 Congress Street.
man

.Volume 178

Number 5266

The Commercial and Financial Chronicle

...

The Recession in Geneial Business
Long? What Will the
Administration Do About It?

.

By A. W. ZELOMEK*

Zelomek

while

maintains

business

will

further,

worsen

it will start to

improve during latter part of 1954. Predicts
activity will be restimulated not only be reversal of deteriorat¬

ing economic factors, but also by government aid in form of
basic credit easing, drawing
struction

projects,

on

reduction

acceleration of defense orders.

huge reservoir of public

of corporation

rates,

only slightly lower than 1953, but higher than 1952
I

wholeheartedly

believe

con¬

and
Expects 1954 business to be
tax

corollary,

a

downward

movements

will

stay within limits.

a

stimulus to plant expansion and

modernization.

*

employment

As a matter of fact, the steel
Also in connection with taxes,
lower, as industry happens to be a very the individual consumer will get
layoffs take place.
Where good example of why I believe a saving next year that will help
actual layoffs are not seen, there the decline will not
carry too far, to offset lowered income levels.
will be elimination of overtime, and
why recovery will take place.
As of Jan. 1, individual income
extra shifts, etc., in many cases. That industry has seen tremen¬ taxes will be cut
10%; over the
dous expansion in the past years.
Directly, this is going to affect
year as a whole, that will add $2
As demand declines somewhat, the billion to
income payments, and in the last
$3 billion to consumers'
older and less economic units will
analysis, consumer spending.
disposable income.
be the first to be retired; overtime
Once
this
chain
reaction has
What these various factors add
gone to its limit, consumer confi¬ payments will be cut, and so on. up to is the fact that there is con¬
Thus, when this process is com¬
dence is going to be somewhat
siderable strength in the economy,
shaken; the result is likely to be pleted, the break-even point of the enough to absorb some business
more
reluctance to spend than is industry will be lower than has

warranted.
There

1951.

or

As

the

v

more

Economist, International Statistical Bureau, Inc.

Mr.

tion, with durable goods again
showing the larger movement.

11

levels will be somewhat

How Far? How
r

(1531)

will
up

been the

.

.

for

some

decline and then to turn those de¬

time.

Another factor that will prevent

are

agree

case

.

many
people who
with what I have said

movement

levels

is

to

the

to now; but on the question of

constantly
question

clines around.

lower

of

Some

prices.
.

Conclusions

I'd like to wrap up my conclu¬

Thus, when I speak of declines of
sions as far as I've gone as fol¬
further
the
declines
10% or so, this does not apply to
lows:
and how long it will take the
wholesale price level. And that
heading into a major depression.
Recent Cutbacks
before business gets better, there
During 1953, economic activity
is important to the outlook.
The question then is: where are
In the past few months, an in¬ are sharp disagreements.
was
on
the way up
during the
we
Prices, which advanced sharply
now,
and
first
Various economic indicators are after the
creasing
number
of
industries
half, and began to move
where will we
beginning of the Korean
have found it necessary to cutback going to show important degrees
down in the second
half.
Total
War, have lost a good part of that
go? There are
output, either through actual lay¬ of difference during the coming advance; in some cases, there has activity for the year will prove
many
terms
to have been above that of 1952.
offs, elimination of overtime, etc. months; but in general, I think actually been too much correction,
in
circulation
During 1954, economic activity
Among these have been automo¬ business planning on the basis of and higher prices are called for.
today which
biles, appliances and TV, farm declines of 10% to 15% as the out¬ And as I pointed out earlier, wage will, be on the way down during
attempt to anside limit is justified.
the first half of the year, and will
cost
machinery, metal mining, etc. And
rigidity will maintain the
s w e r
this
these cutbacks are not limited to
Let's take industrial production price level until means are found show upward movements during
question.
the second half of the year. For
non-durable goods, although pro¬ as a case in point.
to lower wage costs.
For my own
the year as a whole, activity will
duction declines in that area will
Because of this situation, and
amusemen t,
Production Index Will Hit 220
be less sharp.
because over-building of inven¬ be somewhat under that of 1953,
I've
compiled
In a few months, industrial pro¬ tories has not taken place on the but at very good levels.
Do
the
a
list of some
farmers have
all the
Up to this point in our discus¬
duction as measured by the Fed¬ highly
excessive basis seen in
of
machinery
required?
Are
con¬
them, and
eral Reserve Board will sink as earlier periods, we are not going sion, I've very carefully limited
sumers saturated
I'm
sure
with appliances
you
low
as
220
(1935-39 = 100); the to see a wave of sharp inventory my remarks to what you might
and TV sets? Obviously, the an¬
-could
add
call internal factors in the busi¬
A. W. Zelomek
year's high was 243 on that index. liquidation,
either in terms of
swer
to
is no. But they cannot ab¬
that list:
ness picture.
Or, to put it another
That's a decline of 23 points; prices or physical volume.
D epression;
sorb
our
productive capacity at
way, I've tried to steer clear of
percentagewise, it's only 10% from
recession; maladjustment; decline; current price levels.
the relationship between govern¬
Easing of Money
the peak, and well above pre-Koleveling out; readjustment; busi¬
ment policies and business activ¬
The price level in general will
In the various money markets,
rea
levels.
And I'd like to em¬
ness correction; deflation;
setback; show little movement, since it is
the very tight situation that has ity.
phasize that one point; it's a de¬
interrupted boom; bust; cyclical based on a relatively rigid wage
I've done this, since it's impor¬
been seen for a good part of this
cline from the peak.
■downswing; downcurve; sinking structure. In some industries, ul¬
tant to see the basic strength of the
We have become so accustomed year is definitely easing; a slight
spell; liquidation, and so on.
timate prices are partially deter¬
economy in its normal workings;
to seeing new records being cre¬ shrinkage in interest rates is the
and that picture is
Rather than use any of these mined
a
generally
by
payroll
padding, ated that we tend to lose a little key indicator of this.
or
similar terms, I'd like to state featherbedding prices, etc.
Also in relation to the money healthy one.
of our business perspective; and a
For a whole variety of reasons,
the
case
simply and then give
The rigidity of the price struc¬ decline such as I've outlined is question, the fact that the Excess
any I given Administration has an
some supporting arguments:
ture is seen in the fact that price- considerably less disturbing than Profits Tax will go out of exist¬
ence as of Jap. 1,
is a very posi¬ important stake in the economic
cutting, which is the usual first- if it were to take place from only
health of the country. It is no ex¬
tive factor in the business outlook.
Business Will Improve
step in adjusting production and a moderate level of activities.
aggeration to say that it never
in Late 1954
Not
only *will its elimination has been more
Now, it's true that some indus¬
sales, has. not been seen to any
important than
Business is not as good as it has major extent (look at automobiles tries will experience a level of help the corporate earnings posi¬ now.
operations that is more than 10% tion, but it will mean less of a
been; it's going to get somewhat for, example). Rather, it is pro¬
With
the
tremendous
respon¬
or sq from the peak;
that's going drain on corporate financial re¬
worse; and most important of all, duction" cutbacks that are being
sibility for the free world that
This means that they will
to be true of the steel industry, for serves.
it's going to get better again. Fur¬ seen.
rests
be

that

true

it

not

are

we

to

now

material; it

can

become any steel

product.

how
can

much

go,

.

upon

example. But other industries will have less of a need for outside
thermore, improvement will prob¬
Although I have pointed out decline
less, so that on balance, borrowing, and it will also act as
ably start during the latter part that the production area is key to

of

1954.

the

Before

picture,

there

look at what other factors of great importance;
happen during in fact, if they were absent, the
the coming months, it's necessary production factor would be much
we

to

examine

to

the

ness

has

brought

us

to be taken

impossible to cite

and

one

fac¬

based

(1)

been

which

trend

a

is

the

tremendously

high for

coupled with

increasing¬

will

defense

of the past few fiscal

year

be

higher

than last.

sumer

level

could

War

Korean

be¬

(5)

weakening

Some

of

There

other

are

be

cited,

capacity and in

were

great

enough

ment

well
was

as

the

that

1951

Homebuilding
•of actual

was

the
seen,

of

shortages,

of defense goods. Thus, it

in

peak

in

in terms

most

are
es¬

As defense needs were met,

and

business

of

most

business

in

decline

activity to take

outstanding
declines

from

place

last

tively limited

will

be

seen

AUCHINCLOSS, PARKER &, REDPATH

COOLEY & COMPANY

WM. E. POLLOCK &,

HIRSCH &CO.

SON

CO., INC.

INCORPORATED

MULLANEY, WELLS &, COMPANY

HELLER, BRUCE & CO.

COURTS & CO.

March

is

CHAS. W. SCRANTON & CO.

PRESCOTT, SHEPARD &. CO., INC.

rela¬

a

STIFEL, NICOLAUS & COMPANY

one.

THOMAS &. COMPANY

'

INCORPORATED

of




GREGORY &,

the

production

the

the

decline

•

will

RAFFENSPERGER, HUGHES & CO.

FIRST OF

IOWA CORPORATION

INCORPORATED

PATTERSON, COPELAND & KENDALL, INC.

PETERS, WRITER & CHRISTENSEN, INC,

WALTER STOKES &,

CO.

decline.

Zelomek before the
During this
Milwaukee
Association
of
Purchasing
will see more
Agents, Milwaukee, Wise., Oct. 13, 1953.
Mr.

PAINE, WEBBER, JACKSON &. CURTIS

DICK &, MERLE-SMITH

INCORPORATED

the ending of the Korean
continue until a point about 10%
War, much of the increase in pro¬
below the
March peak will
be
ductive capacity could be turned
to civilian use. A steel ingot is reached, with durable goods out¬
neither defense nor consumer raw put continuing to carry the brunt
by

HALSEY, STUART &, CO. INC.

STROUD &. COMPANY

evidence

high point
production
which

industrial

The

talk

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

move¬

in the production area. Even now,
the

with

*A

The

con¬

a

Production Declines

The

took

physical units.

1, 1983

place well into 1954.

allocations, etc., the country's in¬
dustrial plant was able to produce
high levels of consumers' goods as

Due October

1, 1953

which

factors

but these
important,

production were aimed for. And
Consequently, I look for
in the main, they were achieved.
tinuation of the downward
production

Bonds, 3//s% Series due 1983

Price 102V8% and accrued interest

con¬

During the Korean War period, pecially in that they affect the
and actually still continuing, ear¬ largest number of industries.
lier production levels were dis¬
Jhe full effect of these factors
carded, and great new highs in has not yet been felt.

that in spite of material

Dated October

confidence.

among

gan.

The advances in

Company

tion.

War, this country had
expansion of plant
and equipment, and had just about
adjusted itself to that new high
the

First Mortgage

(3)

great

when

Kansas Gas and Electric

in

the Korean
a

0,000,000

this

The beginning of a decline
spending on new plant and
In the period from the end of equipment.
(4) A very tight money situa¬
World War II to the beginning of
an

ly rigid price structure.

seen

SI

has

through most of the

steady

say:

production level
years,

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

an

The

Declines in farm income,
mainly on a lower level of
prices,

"that's it." But it is years.
possible to pick out the key fac¬
(2) Lowered levels of defense
tor among the
many.
That key orders, even though total spending
factor

This announcement is not

October 16,1953.

same
period, you
inventory liquida¬

I

,

of

page

important.

farm

come

granted.

tor

less

point where lowered busi¬

It is

on

a

what

levels have

shoulders

are

be expected to

can

tor

take

current

the

Continued

thij

20

12

The Commercial and Financial Chronicle...

(1532)

long-term trend of petroleum

Background and Fnlnre Forecast
Of Canadian Oil Stocks

U.

and

S.

Canada

increased

substantially

Ont.

foreign

on

Canadian

forecast

next 12 months

over

progress

think

I

from

Oil

of action of the Toronto Stock

these meetings

at

lable future

the various

of

course

stock averages to

in

the prob-

a set of
economic
ar¬

provide

to

guments

expected

are

1952—still

those

exceed

to

duction.

of

that

had

I

plied psychol¬
ogy instead of
economics

I

might stand

a

chance

better

of
Miles

S.

being

rect

on

cor¬
my

the

were

of additional pro¬

sources

bbls.

ent world

oil.

of

production.

evidence

ing

that

the

With

Accordingly, a brief
background of the
oil scene is perhaps in

Canadian

order.

United States and other

tries may at last be

considerable

coun¬

turning down,

exists

fear

Canadian

I know that all of ,you

here are

the

tremen¬

quite

familiar
strides

dous

with

Canada

which

has

taken in the oil business since the

discovery of Leduc in February,
Let

1947.

look

us

that

at

record

in comparison with that of
neighbor, the United States.

our

the

over

Canada during the
period 1947-52 a total of
wells
(including develop¬

6,430

ment and

These

dry holes) were drilled.

wells

turned

billion bbls.
the

or

—

mately
3.2

1

wells

up

of crude oil

equivalent
million

of

bbls.

some

2

reserves

approxi¬
for each

completed.

during the
same
period a total of 245,543
wells (including development and
dry holes) were drilled.
These
wells

discovered

billion

bbls.

the

or

mately

1

12.8 wells

of

an

estimated

crude

equivalent
million

oil

of

bbls.

19

approxi¬
for

bbls.

Western

Canadian oil reserves.
By com¬
parison in the United States it re¬
quired in the neighborhood of 47,feet

of

drilling

to

establish

each 1 million bbls. of reserves.

Accordingly,

b

comparison
with the United States, over the
above-mentioned period the rec¬
ord

would

Western
times

as

seem

Canada

y

to

is

attractive

indicate

that

about

four

an

produc¬

approximately

area

in

which to search for oil.

is

probable

k:et.

average 225,000
to nearly 46%

an

average

dicate

further rise

a

to

approxi¬

mately

109

address

by

Mr.

Miles at the
"Forecasts Dinner" of the Security Ana¬
lysts Association of Toronto, Toronto,
Ont., September 23, 1953.




Lester G. Mouscher

and

move

Now With H. Henfz

independently in future than

more

in the past and

financed

better

managed

that the stocks of

companies

will

receive

to

Mouscher
with

than those

H.

Chronicle)

The Financial

CHICAGO,

better

and

public attention

more

(Special

111.

has

—

Lester Gassociated

become

Hentz

of the smaller operators.

300,000 bbls. daily) equal
of anticipated Cana¬

million

bbls.

(or

an

of

number

year

&

Co.,

120 South

& Co. of St. Louis.

or more.

Notes

NSTA

Decision

is

still

pending

to

as

whether

Westcoast

Transmission

will

permitted

to

be

transport
the Peace River

natural gas from
Area

to

the

Similarly
ficial

Pacific

there

has

been

of¬

no

the

on

central Alberta.
not

am

"call

the

going

shots"

to attempt to
these two an¬

on

nouncements.

Suffice

decision

early

an

it

to

in

say

either

although of considerable sig¬

nificance
have

in

due

affect

no

would

course

the earnings of

on

Security Traders Association of New York (STANY) Bowling
League standing

dis¬

position of the exportable surplus
of
natural gas in
southern and
I

SECURITY TRADERS ASSOCIATION OF NEW YORK

Northwest.

announcement

as

of Oct. 15, 1953, is as follows:
Points

Team:

Bean

(Capt.), Bass, Valentine, McGovern, Bradley
(Capt.), Nieman, Gannon, Tisch, Greenberg
Serlen (Capt.), Rogers, Gold, Krumholz, Gersten___„
Klein (Capt.), Fredericks, Murphy, Weseman, Huff.
Hunter (Capt.), Brown, Reid, Farrell, Barker
Krisam (Capt.), Pollack, Cohen, Smith, Strauss
Meyer (Capt.), M. Meyer, Frankel, Wechsler, King
Donadio (Capt.), Craig, Gronick, Bies, Demaye_______
Kaiser (Capt.), Hunt, Werkmeister, Swenson, Ghegan
Manson (Capt.), Jacobs, Topol, Weissman, H. Frankel
Burian (Capt.), Gavin, Clemence, Montanye, Whiting
Growney (Capt.), Boggs, Siegel, Voccolli, Leinhardt
200

been completed two or three years

Walt

Point

Club

Cy Bies

Canadian Gas Picture

Western

estimated

10.5

Canada

trillion

18
17

17
15%

15
14
II
9

6
5%

3%

5 Point Club

257
208
__207

Bradley

Hoy Meyer

Long-Term Factors in the

Today

18%

Leone

hence.

C. Kaiser
H. Meyer
W. Krisam

i
<

BOSTON SECURITIES TRADERS ASSOCIATION

has

cubic

an

feet

of natural gas reserves—a consid¬
erable

portion of which is avail¬

to some 60%

able

dian consumption.

surplus

Although Canada is by

no means

tion, it would

that the ex¬
isting wide gap between produc¬
tion
and
consumption in this
country is an important protection
regard

level

of

appear

to

continued

a

production

in

high

Western

Canada.

However, any decline in
prices would, of course, be
soon reflected in well-head prices
in this country.

world

for

export. This exportable
is
likely
to
snowball
rapidly as time goes on.

insulated from world oil competi¬

With the tremendous growth in
natural
U.

S.

consumption

gas

the past 20

over

pattern and with
fied
in

demand

the

the
as

a

large unsatis¬

a

still

United

in

years

remaining both

States and Canada,

there is plenty of evidence to in¬
dicate that this commodity will
assume

high degree of impor¬

a

tance in future years to petroleum

companies

operating

in

Western

Lewis

D.

Edward

Henry E. Tabb, Jr.

McDowell

Hines

Canada.

Long-Term Factors in the World
Oil Picture

at

Western

beginning of 1953, world

crude oil

reserves

estimated

were

approximately 120 billion bbls.

Of these the U. S. held something
like 29 billion bbls.
(or 24%),
Canada

nearly 2 billion bbls. (or
1.5%)
and
the entire Western
Hemisphere including these two
countries only 43 billion bbls. (or
36%).
Approximately 65 billion
bbls.

(or

over

54%)

located

were

in the Middle East.

However,
continent

the

North

American

is

presently consuming
more oil than it produces. For ex¬
ample, even if all U. S. oil fields
were permitted to
produce at their
efficient

rate

of

And

of

tion

Oil

now

Stock

Averages

for the forecast of

the

Stock

Toronto

ac¬

Ex¬

change Index of 15 Western Oils
the next

over

months.

12

I

think that my previous com¬
ments indicate that I believe in
the

long-term

growth potentiali¬

ties of Western Canadian oil

On the other hand I

gas.

moderately

enthusiastic

and

only

am

the

over

short-term outlook.

Today the Western Oil averages
at
approximately
86.33.
They have suffered a long and
tortuous
18

decline

months

157.56

some

believe

ditions.

*

:

during the

from

their

they

18

months

of
ago.
I

the bottom

are near

Moreover,
Canadian"

only

ments

some

at

S. and
equivalent
12 years' require¬

present

reserves

current

U.

are

rates

of

shake-out

to

take

the

aver¬

clear, therefore, that if the

J.

Wmn,

James F. McCormick

D'Arcy

William J. Burke, Jr.,

President and Chairman of the nomin¬

ating committee of the Boston Securities Traders Association, an¬
nounces the following nominations for the year 1954:
President—Lewis D. McDowell of Charles A. Day & Co., Inc.
Vice-President—Henry E. Tabb, Jr. of Townsend, Dabney &

Tyson.

,

Treasurer—Edward Hines of
ages down to about 73 in the near

Stocks

rarely

rebound

from their lows after

such

as

the

Canadian

quickly

steep fall

a

oil

stocks

con¬

sumption in each country.
It is

this

John

past

high

future.

.

M§ms M-

stand

pro¬

we would be able to con¬
tribute only about 70% of our re¬
quirements under the same con¬

to
♦An

likely to

Canadian Gas Picture

bbls. daily) equal

Canada

nearly 5% over 1952 and more
than 18% over 1951. 1953 figures

are

mar-

Short-Term Factors in the

of Canadian con¬
Forecasts for 1954 in¬

sumption.

complete loss of Iranian oil, world

This

believe
oil

^

j

.

tQday they would supply
Oil Picture
only about 6% more than current but that perhaps a last shake-out
During 1952, despite almost the consumption in that country. In will be necessary. I would expect

12.3 million bbls. daily.
represented an increase of

companies

time as the pipeline or lines have

or

daily.' This

duction

or

I

individual

a

roughly 37% of Canadian

maximum

bbls.,

of

so

become

can

potential producers of natural gas
for
export purposes until such

Short-Term Factors in the World

oil production exceeded 4.5 billion

stocks

also like to

that

view

that

repre¬

At the

of

oil

consumption. Estimates for 1953
place these figures at approxi¬
mately 82 million bbls. (or an

completed.

million

1

bbls.

bbls.

each

during the
1947-52
period it required the drilling of
something like 12,880 feet to add

790

million

61

to

reserves

Similarly

each

Canadian

1952,

amounted

with

In the United States

—

In
tion

Canada

that

the

in

conclusion

her most

as

Oil Picture

average

Western

In

six year

the

exporter of oil with the United

States

case

sented

Since Leduc

Factors

Short-Term

167,000

Canada's Record

closing I would

express

during the next

by that date and increasingly
thereafter
net

com¬

with some in¬
activity in

self-sufficient

1960.

natural

market

dications that industrial

than

more

oil by

in

every

be

world

before too long and

is

This

will

Iran

into

back

the

be

The

In 1950 (the last full year of its
participation
in
the
petroleum
world) Iran produced some 243

will be the ultimate

the

formerly with S. R. Liv¬

ingstone, Crouse & Co.
In

department for Friedman, Brokavr

prices.
of

ex¬

Sachs & Co., Ford Building.

was

formerly manager of the trading

determining factor in setting secu¬
review

mensurate with the amount of

He

amalgamations

Iraq

possibilities of a world over-sup¬
However,
notwithstanding
the ply of oil during the next few
fact that public psychology may years.
Such an event would un¬
have
a
considerable
bearing on doubtedly result in some cut-back
the movement of stock prices—in¬ in oil production—including the
cluding the Canadian western oils U. S.—and some softening in the
—I think you will all agree that price of crude.
in the long run the economics of

rity

Canada continue to grow com¬

Clayton R.

Call has joined the staff of Gold¬

ing

and

conclusions.

the situation

next

—

will

Arabia

roughly equivalent to 5% of pres¬

ap¬

time

Chronicle)

The Financial

Saudi

10

years

(Special to

DETROIT, Mich.

La Salle Street. Mr. Mouscher was

million

studying

this

at

they will be around the 100

the

in West¬

reserves

that

not exceed

I would

the

increase

this

to

spent the past

£.

Assuming that
ern

duction.

conclusions.

increasing

assume

and

will

expect this to result in an increas¬

r's

Tonight I feel

potential—

time goes on.

as

Oil averages

Middle East countries of Keewait,

primary

e

to

and

of the opinion that dur¬

ploration and development carried
out, it is expected that Canada

contributed

explain the
forecast

likely

importance

excluding Iranian pro¬
Although
many
areas

pic¬

Canadian

U. S.

are

in

am

Clayton R. Gall With
Goldman, Sachs & Co.

and

Canadian

as

mark.

gas

results

reserves—present

to forecast

see

drilling vs.
drilling that Canadian crude

of

years

company's stocks are likely to move more inde¬
pendently of each other in future than in past.

is usual

readily

the

the

well

man,

recent

and

as

world

ing the next 12 months the West¬

year

tion of North America in that

ture

I

gas,

110

Picture

will

you

Canadian oil

short-

the

to

as

outlook for both

term

ern

previous comments on
the world oil situation, the posi¬

oil and gas

It

sources.

my

Exchange Index of 15 Canadian oils, and concludes individual

attempting

or the
heavily

Long-Term Factors in the

of Canada's
oil and gas industry, and lists short-term and long-term factors
in portraying its future.
Looks for Canada to become a net
exporter of oil, with U. S. as her most probable market. Gives
outline picture of the

conclusions

ous

must

reserves

two countries will become

dependent

Director, Burns Bros. & Denton, Ltd., Toronto,

Mr. Miles gives an

anticipated,

as

North American oil
be

By E. S. MILES*

con¬

sumption continues upward in the

Thursday, October 22, 1953

have been experiencing.

In view

of this and in view of my

previ¬

Chace, Whiteside, West & Wins-

low, Inc.
Recording Secretary—John J. D'Arcy of F. L. Putnam & Co.,
Inc.

Corresponding Secretary—James F. McCormick of A. C. Allyn
t**

& Co., Inc.

Nominated

to

the

Board

of

Governors

for

two

year's

are:

Joseph F. Robbins of F. S. Moseley & Co., John L. Shea, Jr. of
Shea & Co.,

Inc., John A. McCue of May & Gannon, Inc.

Volume 178

Number 5266... The Commercial and Financial Chronicle

-

-'i it,

I

:>

i

•

to

Soundness

all

er's

Basis lor Bank Loans

a

door.)

saving

consumer

officer

of

great social, as well

reject
a

p

do

exercise

not

tion

in

accept

of
or

ever

all

to

types
the

meet

expanding

Census

to

accomplish this sav¬
ings, would not buy any passenger
automobiles. What would happen?
In simple arithmetic, the 3% sav¬

ings

add

billion,
than

consumer

of

need

Bureau

states

this

The

population.

na¬

a

consumers, to

Urges

of

Assume

to

up

which

equal

to

that

the

not

tolerate

than

more

$7y4

is slightly more
the total sales of

the

1952!

We could

resultant

unem¬

ployment.
In

short,

consumer

we

—

by

must persuade the

selling and

the

of

many

of

facets

to¬

day's industry.
You

judge

accurately the
financial
Raymond

stability

of

company.

the

mer¬

proper
on

All these additional people consumer goods if we are to hold
require more food, clothes, high levels of economic health—
shelter, appliances and other types (for the individual).
of consumer goods. We
will, in
While
production
techniques
fact, have to increase consumption
have improved to enable a com¬
of consumer goods at least onepany to produce a quality product
third in the next 10 years. Lack
at a selling price for the mass
of
understanding of this great
market, so has the concept of
market
ahead
by business may
marketing grown and its impor¬
well lead to short-sighted plan¬
tance
in
the
business
picture.
ning and thinking.
Basically, marketing consists of
Also, the man on the street will all those things a manufacturer
have an increasingly higher stand¬ does to move his
products from
ard of living—a standard that in his warehouse into
the hands of

under¬

standing

spend

Will

through lack

Rich

A.

a

part must be sold to him. In

our

the

consumer.

It includes the dis¬

terms

jective of selling the customer.

of

arts

and

sciences

broader interests. What

important is marketing in
integration
of the and

How

and

they want

are seeking is a higher civili¬
business enter¬ zation in terms of creative living.
And an alive, alert, strong indus¬
prise? I sincerely believe that in
the era ahead of us, it will be the try, in cooperation with progres¬
most important management func¬ sive and well informed banking

overall

the

various facets of

tion.

a

Because of the chal¬ interests,
goal.

Why?

help them meet this

can

lenge that lies ahead in the tre¬

f

•

,

•

*

^

population expansion of
the U. S., the necessity to provide Marketing—A Challenge to Better
Business
essentially full employment—and
to
This, broadly, is the scope of the
provide a fuller life and a
higher standard of living for the job facing business today; how
to meet this newer challenge of
American people.
I have tremendous faith in the the growing market—a challenge

mendous

We

America.

of

future

a

are

demanding

dynamic economy. We have lived ship

in

industrial

the

broadest

statesman¬
terms

of

altruism and profit.

through
depressions, wars and
peaks of good times. We , have
If
a
consumer
has
spendable
even
weathered the dire predic¬ funds available over and beyond
tions

economists

those

of

around

come

every

so

particularly

would

do

for

look

we

that

to

assure

has a
present and future selling

sound

company

a

philosophy?

place any

business.

goods

the several

of

off, in my imaginary role
officer, I would want to
something about the phil¬
osophy of Company "X."
What
are the objectives of management?
(It might be surprising to find
how many top management groups
loan

cannot define ultimate

objectives.)

What is their present and future
marketing strategy?
Here is a
vital question.
If the strategy is
standard
operating procedure,
then it must be underpinned by
thorough classical methods. If the

top freezer manu¬

It

facturers in the country.

business,
credence in the
in

words of these prophets of doom.

to

keep the

because it
the

You can

analyze this same char¬
a successful distribu¬

acteristic in
tor

or

operation. I think
top distributors
tremendous
success
has

dealer

several

of

whose

of

our

unique mer¬

been due eniirely to a

chandising approach developed by
Philco over the years.
It is the

particular strategy
dising that counts.
Many successful

of

merchan¬

dealers in the

marketing strategy is individual,
unusual and

in

effective, then will it
the future against
more
scientific marketing meth¬
ods?
Will
it
perpetuate
itself
through others, or is it tied up in
stand

in

up

two men?

one

or

ing

trained

in

osophy which
sible
"X"?
and

for the

Are others

the

was

unique

be¬

phil¬

greatly respon¬

success

of Company

Is there genuine leadership,
does Company "X" have the

policies

and

people

to

produce

continuing leadership?
Market

Let

Strategy

this case,

egy
ful.

is an accepted strat¬
that has always been success¬

ocre

Contrast this with the medi¬
or

extremely poor job being

done by many

today

try
have

no

dealers in the coun¬
simply because they

overall plan

or

strategy

operation.

of

Private

enterprise

consists

"know-how"—or information.

runs.

one
company ahead of another.
Marketing particularly is "knowhow" coupled with an individual
philosophy, augmented by faith

explain what I mean and team work.
by strategy.
A few years ago,
Specific marketing information,
"Blank" Electric Co.—which had
especially in consumer goods, is
always been considered a splendid invaluable. Such items as partic¬
manufacturer of apparatus—was ular methods in new product de¬
considered to be a very slow out¬
velopment, product research, pro¬
me

fit

indeed in selling appliances.
Apparently they had little idea of

the

profit breakdowns
individual prod¬
ucts, and certain aspects of sales¬
men's compensation are the crys¬

duction

costs,

and mark-ups on

merchandising and promotion
in the appliance busi¬
Their strategy evidently was tal ball to the future of company
business.
apply
apparatus
or
heavy "X" if you interpret them prop¬
Marketing is the very to
heart of any business. In today's equipment thinking to the sales erly.
competitive market, the man with of consumer goods. As a result,
Strategy consists of how the
the better mouse trap cannot sit few people in the appliance in¬
company merchandises, promotes,
in his plant or store and expect dustry
ever
thought
seriously advertises; how it develops new
the market to come to him.
No about "Blank" Company being a
products; how it prices to mer¬
as
a
matter how fine the product, un¬ threat
competitive factor. chandise a line. How are excess
less it is distributed, advertised Then, a few years ago, a new man
inventories
handled
when they
President
of
"Blank" occur?
and promoted by an intelligent, became
Does the company follow
alert and aggressive organization, Company and
there were some the field of competition or strike
it will not be a successful product. changes made
in the top level out on its own?
If so, have its
Flow of the product through dis¬ management.
Several years after tactics been successful?
tributors, dealers, sales, market that, a completely new strategy
For example, take seasonal fluc¬
research,
product
development, showed up in "Blank" Company. tuations in the sale of a
particular
Their philosophy
regarding the
pricing, advertising and sales pro¬
product line.
Has the company
consumer goods business changed
motion—all aimed at moving
a
done
anything about trying to
product into the consumer's hands completely to a hard-hitting mer¬ flatten out that seasonal peak?
—is marketing as we Vr»ow and
chandising, promoting, advertis¬
Continued on page 34
understand it today.
That is an ing and selling strategy. In the
loan officer, I want to em¬
phasize this important phase of
nary

required

ness.

This issue

having been sold,

this advertisement appears as a matter

of record only.

He should bb sold

food

Of course, we are

the

we've

met

years.

it

Ours

is indeed

a

vibrant,

because

Just

a

wife is young and

robust, growing economy with all

strong is no reason to deprive her

the

of

an

if

the

it

on

The next 50
years will show far greater strides
in every avenue of living than
our

53,852 Shares

of

challenge

promise ahead.

antecedents had ever dreamed

air conditioner in her home
husband
an

can

afford

installment basis.

to

DOMAN HELICOPTERS, Inc.

buy

(After

Common Stock

is in a delightful
I sincerely believe that mood after she has sweltered out
with intelligent business planning a hot, humid day — particularly
and a full understanding by busi¬ when she knows friend husband
nessmen of the economic factors has been working in an air con¬
all,

no

woman

possible.

America will rise to a ditioned office.)
new level of prosperous
living—
Perhaps some of us think we
not for just a few, but for the
should advocate a far greater rate
people as a whole.
of saving.
I question the sound¬
We know that the population ness of that approach because it
trend is upward; we know that well can cut consumer
spending
technological advances will create below a balanced level and di¬

($1.00 Par Value)

Price

$3.00 Per Shore

involved,

production

greater
needs

of the

Industry

to

meet

the rectly decrease all business activ¬

great mass markets.

have
to
create
lower-cost produc-

will

greater,, and
.!-•

•An

address

Robert

Morris

ence,

by

Mr.

Rich before the
Fall Confer¬

Associates

Atlantic City, N. J., Oct. 13, 1953.




That can mean lower sales,
lower production, lower employ¬
ment, and a lower national gross
product. I am by no means advo¬
cating a wild, free spending era

ity.

by the consumer and easy credit

of
It's

what management knows that puts

oldncefrigerator just

time,

and

certainly paid off.

country today use a strategy of
selling that utilizes certain fun¬
damentals of good selling practice
that have always worked.
Here,

and
money
going to meet saved by a new, larger, and more
today just as automatic
refrigerator
with
a
for the past
150 separate freezer compartment.
on

was a

smart merchandising strategy

First
a

in point is "XYZ"

Corporation. A few years ago,
appliance industry had
really heard about "XYZ" Corp.
They adopted
a
philosophy of
food plan merchandising in sell¬
ing freezers and, literally over¬
night, achieved a position as one

it has

know

case

who a prudent scheme of living—in¬
often cluding reasonable savings — he

preaching the doctrine of a "ma¬ should be persuaded to buy addi¬
ture economy." They have been tional or better
products that will
proved wrong so many times that help him and his family live a
it is unbelievable to me that any¬ better life. He should not be urged
one,

consumer

few in the

ourselves

as

the

in

Another

an

sound understanding of

past several years, this company
has become a competitor to watch

a

You

time, he has been sold the auto¬ tributor, the dealer, the sales, the
appreciation and a
mobile, the telephone, the electric advertising and promotional work
American refrigerator, the home
freezer, the that goes into selling at the con¬
business, its past, its present, and radio and television. And this sumer level. For all
phases, it
its future.
average man will want a fuller must sell a satisfactory volume of
What
is
life—not just more leisure time. goods at a
marketing?
In
the
satisfactory profit for
simplest terms, I'd say that it is People fundamentally don't want all business groups involved.
"selling a satisfactory volume of just "leisure time." What they
Marketing—The Heart of a
goods at a satisfactory profit." want is a better, more creative
Business
It includes many related activi¬ way of life in terms of travel,
In my role today as an imagi¬
ties, all directed at the final ob¬ elimination of drudgery, more in
have

also

company's fitness for

a

What

in point.

case

tional increase in savings of only
3% and also assume that these

years.

sheet alone, or

me

can

you

in deter¬

production, to economic and in¬
dividual
health,
then precisely
what
does
this
selling formula
called
"marketing"
consist
of?

chandising—to

hearsay, on
the ledger

that
role

marketing is going to be the

If

illustrate sensitivity of con¬

share of his disposable income

•of

mining

economic

population will increase about two

industry

so

its

key to the insurance of high levei

essential

million per year over the next 20

the basis of

down

evaluate

loan.

credit

a

a

it

better

spending

plication

from
on

You

has

break

ical

sound marketing structure will
business's future success.

business, goods

as

responsibility in the
office.

bank

a

that

say

consumer

passenger cars in

The loan

his

a

over-simplified definition.'Let

goods sales in relation to
employment, here is a hypothet¬

marketing phase of

a

dealer's

a

sumer

well

as

wild and free spending under
easy credit terms.
loan officers give special attention to the
as

enterprise, and predicts
be deciding factor in

do

health.

dealer and distributor credit, is essential to nation's
Decries excessive

I

absolutely

Stressing importance of efficient marketing as basis for eco¬
nomic growth and stability, electronics executive finds
today's
chief challenge to business to be a
growing market. Holds
high level of consumer spending, along with adequate con¬

a

But

a

To

economic health.

on

relative level of consumer,
dealer and distributor credit is

Vice-President, Philco Corporation

an

knock

(And, in tyirn, on the bank¬

with

By RAYMOND A. RICH*

sumer,

who

door.

high level of

As

13

(1533)

■('{' 'i'f'i,*1

h:

Sreene^iCompartu
ESTABLISHED 1929

Members New

York Security

Members National Association
37 Wall St.,

New York

■

*

Dealers Association
of Securities Dealers

Tel. HAnotrer 2-4850

l-JOT

e

y

The Commercial and Financial Chronicle

detail.

crete

Government Electric Power
Invades Free

in

Enterprise

Electric Institute

President, Ohio Edison Company

and

ment

private enterprise and individual freedom. Cites

privately owned utilities in carrying the
of change in government's socialistic
trends, and calls for enlightenment of public regarding inequi¬
burden.

The

free

days.
three

enterprise system

According to
years after the

historians,
landing

the

of

Pilgrims,
the

,;of

men

Most

got

in this country in colonial

show

with

States

7%

of

all

of

54%

the world,

phones in

all

85%

of the

the

radios,

of

48%

automobiles,

tele¬

the

capacity.

colony became
d i ssatisf ied

supply nearly half of the world's
manufactured goods.

of

their

lot

working,

steel

We

50%

with

fish¬

and

ing

then

and

storing
fruits

of

the

their

labor

in

a

common ware¬

house

to

be

rationed
to
Walter H.

out
sup¬

Sammia

all

as

got

wth

those

of

who

Strong

and

tired

men

plies:

skillful

work.

Women, encouraged by their hus¬
bands, began to voice objections
to cooking, weaving and
working
in

the

fields

for

other

families. So it

own

than

their

that Gov¬

was

thrift

was

business

flower

kilowatt-hours.
This
was twice
the per capita produc¬
tion in Great Britain, 2lk times
that

in

West

Germany,

times that in France and
that

in

Russia.

capita

per

in

the

continues

to

the

at the Falls more than 30

power

is

It

million

9

kilowatts

more

authorized

been

by

devote

way

now
in service, building
men in the Ameri¬
of business that they did templated would come to

not

give

up.

or

these

of

The profit motive, of

con¬

over

million kilowatts—as much

69
the

as

prod¬

When

began

his

their

improving

neighbor, though he builds his

house in the woods, the world will
make

the

Federal

building

government

multi

purpose

-

beaten

a

navigation, irrigation

as

path to his door." control. That the real

tions

Canyon

Snake

River

func¬

control—is

river

of

Hell's

with

case

incidental

negligible

project

in

the

the

on

Idaho, where the

Business
the

profit motive has

al¬

been approved by the great

ways

or

flood

purpose was

file

on

the

Federal

an

application

with

Commission

Power

to

build three power dams to cost a
total

of

than

more

million.

$130

The Interior Department

original¬

ly registered strenuous objections
with the Commission to the power

application for a li¬
of a development

company's
in

cense

of

its

favor

estimated

own

to

cost

$400

plainly million. The Department of Agri¬
stated in 1942 in litigation involv¬ culture also registered its objec¬
ing Mayor Creech of Sumter, S. C., tion. Recently the two Federal de¬

Government Electric Power

Since

constitutional functions such

some

to

States

year's

only

was
a
major factor in present total generating capacity Idaho Power Company and gov¬
of America's investor-owned elec¬ ernment
power advocates are in¬
keeping them and their associates
tric companies.
volved. Idaho Power Company has
constantly
at
work overcoming

Electricity
Last

bill by a vote
was reported

out

course,

five

over

hearings, passed

power

of 262 to 120. No bill

velopment—and in this

The total of all these projects—

essential

the

to

Committee

after

re¬

can

faith

have

Congress, al¬ the private

agencies.

tribute

a

to

age

three

United

grow.

the

additional power on

by the Senate Public Works
Above and beyond this, nearly 40
Committee,
as
hearings by the
of million kilowatts more have been committee were not completed.
himself listed by Federal government
Another example of power de¬

able to

at

public service.

obstacles,

2,984

crops

less

of

"Saturday though all of the necessary appro¬
dint of hard priations have not yet been made.

by

thereafter

and

to

Post,"

and

founding

progress

was

jointly

York State have offered to

develop

as a bellwether
dams in the Tennessee Valley, on
also presents an im¬ acceptance. They believed in the
old adage of Ralph Waldo Emer¬ the
Columbia
River
and
else¬
pressive
picture.
In
1952
the
son:
"If a man can write a better where, it
was
claimed that the
United States generated 42%
of
of
electricity would
the world's electric energy sup¬ book, preach a better sermon, or production
make a better mouse-trap, than be a by-product or incidental to
ply and our electricity per capita
of

times

dividing
did

\

Electric

situation

the

today

from

printing

early

.

the

to

ucts, and seeking widening public

Electric Power

farming, hunt¬

ing

42

population, the United

has

of

than

less

whose

is

work

recently available figures

that

the earth's

this

tobacco,

led

Evening
tire

started

of,

persist.
91/2 million

automobile,

and

what

solution to problem.

as

derstanding
should

Henry Ford Congress, although all of the nec¬
James
B. essary appropriations have not yet

telephone,

ventures

Sees signs

ties that exist

the

Franklin,

discrimination against
tax

the

Duke

business

power

Electric Light

years ago. Three bills have been
Robert Dollar been made. Above and beyond introduced in Congress—one for
and shipping, George Eastman and this,-nearly 40 million kilowatts development by the five compan¬
the Kodak, William Douglas and more have been listed by Federal ies, another by the Federal gov¬
ernment and a third by the State
shoes, Julius Rosenwald and the government agencies,
mail
order
business.
Benjamin to existing Federal plants, close of New York. Last July the House,

power

projects, and asserts government in the

is threat to all

invested

money

kilowatts of Niagara River at no cost to the
Company enabled him to continue
his work and, despite skepticism additional generating capacity are taxpayers, but in reality to pay
and ridicule, he justified the in¬ now in various stages of construc¬ about $23,000,000 a year in taxes.
vestors' trust in him and brought tion for new Federal plants and One of these companies has had
to existing
the age of electricity to the world. additions
Federal power
plants at Niagara since
Much the
same
story could
be plants, close to 9 million more 1895, and originally advanced the
told for Alexander Graham Bell kilowatts have been authorized by idea of further
development of
and

industry traces development of
investor-sponsored electric utilities, and decries invasion of
government into the business.
Gives recent data on govern¬
Spokesman for electric

The

Edison

first

Some

By WALTER H. SAMMIS*

President, Edison

the

Thursday, October 22, 1953

...

produce electricity

behalf

on

the

and

of

was

and

others,
Public

tions,

withdrew

partments

Caroline

himself

South

the

and

their

objec¬

Federal

Power

figure of 2,984 kilowat-hours com¬ majority of the American people Service Authority. The Authority, Commission will decide whether
with 1,247 in prewar 1939, as a proper incentive to our way created by act of the state legisla¬ or not the application of Idaho
Power Company should be grant¬
an increase of 140%.
of doing
business, it is nothing ture and aided by a loan and
ed. Hearings have already taken
The benefits that have accrued short of alarming to observe the grant from the Federal govern¬

pared

had built the $57,000,000 place and are scheduled to be re¬
Bradford decided to give to the American people under the extent to which the Federal gov¬ ment,
ernment has gone into proprietary Santee-Cooper
power
project in sumed on October 5.
family a plot of ground, per¬ system of free enterprise are fur¬
Soutn Carolind. When completed,
business in competition with
Another argument advanced by
its
mitting
each
family to keep ther shown by these additional
citizens. Last June the Govern¬ it was like the lady who was all Federal
power
advocates
from
everything it raised, but insist¬ statistics in the electric light and
ment Operations Subcommittee on dressed up, but had no place to time to time is that the investoring that each family must depend power'field. When Thomas Edison
go. The Authority had no market owned companies cannot take care
Relations
of
on its own work to
provide it with placed the first, electric lighting Intergovernmental

ernor

each

food
the

and

clothing.

governor

was

The

wrote, in

plan,

so

his diary,

great success, the colonists
industrious
and
con¬

a

became

tented, some families had
pluses to sell and famines
appeared. Having found
tem

worked

other

from

and

dis¬

this sys¬

only here but in

locations,

-down
tion

not

sur¬

it

handed

was

generation to genera¬
become synonymous

has

in

company

operation

York City in

for about 24 cents
for residential

the nation

was

down

1939 it
of

to

last

25

price for

average

down to 10.5 cents.

5.6

cents.

1932, it

In

prewar

House

the

of

Representatives

government

ated

be¬

study of the extent ko which
owned

enterprises

private

or

oper¬

competing

business.

with

Representatives

from

such

coffee

roasting, retail trade, wood

boxes,

ice

varied

industries

cream,

as

men

are

created

it had

year
to

2.77

dropped

cents

rope,

kilowatt

a

and

sale

of

scrap

iron

and

steel

free, overhead-free business of the

principally

equal and endowed
by
their Creator with certain inalien¬
able rights —
among them life,

technological

liberty and the pursuit of happi¬

numerous

ness—is set forth

ther

the

Declara¬

It

power.

sought

private

some

to

power

con¬
com¬

panies in the area—to force them
to sell out to the

Creech

sought

large

quirements
contention

Supreme

advances
The

art.

recent

from

major
in

the

reductions

times

resulted

factors,

including

refinements

in

in

from

fur¬

equipment

the

that

in

re¬

This
the

On

true.

Court

granted

American

economic

history.

the
Investment-Owned

in

the

electricity.

not

Authority. Mayor contrary, the story of the indus¬
injunction to try's expansion is unrivaled in

Supreme Court of South

Carolina

growth

for
is

an

prevent the sale. The South Caro¬
lina

the

of

Power

The Authority petitioned for a
printing and binding, tug boat and
still barge operations, and the baling rehearing in which they stated

testified they had to buck the tax-

more

the

demn

paint, injunction.

resulted

electric

for

4 cents and at the end

was

further

or

the

gan a

hour. The early declines in prices

with America's
progress.
The principle that all

in

By 1907,

In another 25 years, or by
was

New

kilowatt hour

a

use.

later, this

years

in

1882, electricity sold

considering

the

case

The

record

Electric

Adequate
of

the

investor-

owned

electric

of

cquntry since the close of

this

companies

power

while the last war in providing new
government, while at the same the Act creating the State Power generating equipment and other
time
in
effect they
were
com¬ Authority
referred to improving electric facilities to meet the ever
pelled to pay heavy taxes to keep rivers for navigation and com¬ expanding
requirements
of
the
their "competitors" going. A tab¬
for
merce, this was only a constitu¬ nation
light and power, is
ulation presented showed over 100 tional
probably unequalled by any other
safeguard, that
the
real
should

known

have

that,

such

different governmental
ac¬
of our economy. Total
purpose was to put the State in segment
investment in their electric facil¬
the power business.
ally increasing use of electricity tivities.
■order to establish a
ities has increased from a little
A compilation by the Tax
government by the consumer, thereby increas¬
Let me quote to you a
Policy
para¬
that would
maintain, respect and ing production, raising the stand¬ Committee of the Edison Electric, graph from the petition for re¬ over $12 billion in 1945 to about
preserve the rights and freedom ard of living and improving the Institute lists 190 electric
$25 billion today. According to
compan¬ hearing filed by the
Authority:
of the individual.
comforts and enjoyments of life ies that have been
the "Survey of Current Business,"
liquidated or
"In the great national
projects U. S.
for all.
are
Our forefathers in
Dept. of Commerce, expend¬
being .dismembered as a re¬ like
drafting the
the

tion

of

Independence, and the
Revolutionary War was fought in

Constitution

delegated

al

Government, and carefully

served

to

the

ple

all

for

liberty

states and the peo¬

powers

ernment

not

comes

but

themselves.

re¬

so

not

from

The

delegated,
from

gov¬

the

free

people
enterprise

system has thus been used to
serve
the- individual
liberty

pre¬

not

as

some

to

seem

think

the

property of business. Free enter¬
prise is an instrument of the peo¬

ple,

a

means

of

getting

things

and

household

1.0%

of

his

in

the

continu¬

paid

user-

disposable

only

personal

sult

Bonneville

of

government

these 43

have

been

activities.
taken

over

Of
in

Boulder

Dam, and

improvement

Dam,

the

the

TVA, tne

itures

for

ment

for

new

all

plant

and

equip¬

industries

in

the

of

navigation, re¬
country
since
the
war
have
by the Tennessee
electricity in 1952, as
claiming waste lands, and the cre¬
amounted
to
only slightly over
compared with 1.2% in 1939. The Valley Authority and various ation of a
'yardstick' for electric
$150 billion, which indicates that
manufacturer spent only 6/10ths state and municipal bodies.
An¬
rates are illustrations of
legisla- the electric
of one per cent of the cost of his other 55 companies have lost part
companies' expansion
income

their

for

entirety

t i

finished
1952

product for electricity in

with

compared

as

1.4%

in

1939.

and

rights of all the people and it is

methods

The

only

cer¬
powers to the Feder¬

tain specified

and

This

is

all

record

the

since

more

of

during this

days

era.

in
oc¬

To the best

knowledge the consumer
of electricity has fared better than
my

their

property

to

these

same

government agencies. A total of 72
electric companies have been tak¬
en over

prewar

remarkable

view of the inflation that has
curred

of

projects

in whole

or

promoted

in part by REA

and

financed

by the Federal government. Fed¬
eral

money

has been allotted

another 20 such transactions.

for

declarations

v e

while

tacks,

everybody
knows it
of

the

been

ize,

the

at

understood

as

a

fact

named

of

scores

others

to

speak,

to

hostile at¬
same

and

now

was

the

For

and

have

to

l/12th

public

account

million

or

for

of

social¬
of

the

utilities
$4

Most

from

of

the

poses a

total.
as

billion

a

425

16% of the total of $27

billion 821 million for all

of

since

business

for

1953,

group

that the object

that

accounts

time

projects,

undertaken,
so

intended

the probable

overcome

this

new

investing

industry.

capital

comes

public.

question: Who

are

This

the in¬

vestors in power companies? There
Twenty years ago the power producing and
distributing elec¬
other commodity generating capacity of the Federal tric energy through public grants are about 3,000,000 stockholders
and
or
a
service during this period of agencies was 7/10ths of one per and
large number of bond¬
public ownership."
dividual and personal
well-being.
cent of the
holders.
industry's total. Today
Through life insurance
"Under this philosophy Americans high prices.
One of the most recent
attempts
it is 12%. Federal
policies, mutual savings bank de¬
generating ca¬ of
Like many other industries, the
have become the best
government power advocates to
fed, best
pacity has increased more than 40
posits, pension funds, investment
have government enter the
clothed, best housed »people on early progress of the electric bus¬
power
times in this 20-year period. This
funds,
charitable,
religious and
■earth.
These latter facts should iness was marked by the struggles
business has been at Niagara Falls
fraternal organizations, about 90,generating capacity financed by
of
be obvious to all—I'm sure
devoted
men
to
convince
a
which is not to be confused with
they
billions of the taxpayers' dollars
000,000 people in America are in¬
have been deeply impressed
doubting public of the advantages
the
St.
Lawrence
upon
Seaway
and
amounts
direct
j;o
investors in
to be gained from the
approximately
10.6
all who have seen
power
com¬
widespread
military service
power project some 250 miles dis¬
million kilowatts. Although
panies. It's safe to say then that
use of the
by it¬ tant. At
overseas.
commodity or service.
Niagara Falls the issue
self, this figure is alarming, the
probably everyone in this room
Edison,
himself,
visualized
the
is power, and power alone. Ad¬
*An
address
real danger lies in what could be
by Mr. Sammis at the elements of
has at least an indirect stake in
an
electric light and
35th Annual Convention of the
mittedly there is no flood control,
National
our business.
Exchange Club, Colorado Springs, Colo., power system, but had not suffi¬ built on this foundation, if indif¬ no
navigation, no irrigation. Five
September 26, 1953.
cient funds to develop it in con¬ ference
to, neglect or lack of un¬ private power companies in New
Continued, on page 24

done

by the people for their

benefit—the

system

for




their

own

in¬

the

user

of

any

Number -5266

Volume 178

..

The Commercial and Financial Chronicle

.

(1535)

holdings at the start of the pe¬ existed

Loss Reserves (or Investments

Of Life Insurance Companies
By IIAUGHTON BELL*
Vice-President and General Counsel,
The Mutual Life insurance Company of New York

between

the

ultimate

re¬

duction

in

reported

after foreclosure and the ures."
appraised value at time of default,
Professor

riod;
(b) For real estate and mortgages combined, the maximum
net capital loss was reached at
the end of 1944 and, at this

15

surplus

fig¬

found

that

covery

interest

adjustment or other im¬
pairment of the security. Another

this

Lintner

situation

led

to

the

adoption
policies, which he
'■
type of question may be how to considered
undesirable,
relating
point, represented 6.3% of the handle defaults on farm mortgages to such matters as the disposition
portfolio at the start of the pe¬ in years of crop failure where both and retention of properties, the
riod.
lending policy of the life insur¬ timing of foreclosures and the tak¬
ance
company
and appraisal of ing of purchase money mortgages,
The
loss figures for the two
the property may be based on the all designed to limit and
delay the
types of assets were thus not ma¬
normal income-producing capac¬ acceptance of losses.
terially different, though changes
ity of the property with due al¬
of

investment

,

In

pleading for

setting

asset

up

discretion by life insurance

more

particularly

reserves,

managers

reserves

in

relating

to

in conditions could affect this

mortgages and stocks, Mr. Bell calls for altering methods of
valuation of stocks to erase severe fluctuation as encouraging a

value

in

such

than

more

are

valued at

against
In formulating invest¬

contingency should be permitted.

reserves

ment

policy, he contends insurance management knows that
•stock price fluctuations can decrease a surplus substantially; "•
though at present, loss is limited by current low ratio of stock
investments
There

has

difference

been

in

mortgage

the

loans

valuation

secured

by

of

real

estate and the valuation of securi¬

Mortgage

ties.

loans

were

valued, im¬
mediately followingthe
Armstrong In¬
vestigation, at
cost so long as
they were not
actually
in
default.

Dur¬

ing
the
De¬
pression, when
defaults

oc¬

curred

ad-

.1

uo

made

were

Haughton Ball

or

ine ins

i

interest

mortgages because they
contract

able

to

even

where there

meet

in
on

were un¬

rates,

and

neither ad¬

was

justment in interest rates nor de¬
fault but where current appraisals
the value

showed that

curity
the

the

of

se¬

below (or at least in
of purchase money morL

was

case

not much above) the
outstanding principal of the mort¬

gages,
gage,

writedowns

value,

or

appraised

to

percentage

some

resenting the

difference between

the

appraised value of the security
and
the
outstanding
principal,

were

required

permitted

or

by

regulatory
authorities,
but
no
over all policy was formulated as
in the

of securities valuation.

case

Mortgage

loans, that is to say,

loans to individuals

or

to corpora¬

which,

rower

may

be,

sified

investor

ment, expect to receive fixed in¬
terest

payments

the

of

face

and

repayment

at

amount

definite

a

maturity.

Furthermore,
on
the
all past experience, there
some obligations
of each

basis of
will

be

type in which this expectation is
realized—i. e.; there

not

loss

some

the

in

will

be

experienced.
of

case

:herefore, just
corporate

as

mortgage loans,
in the case of

obligations,

provision

should be made

a

number

Formerly,

There are,

of

of differences.
loans

mortgage

were

usually made for periods of 3 to 5
years (though often renewed for
periods up to 5 years without re¬
appraisal), but now this difference
is disappearing. Most are made for
periods of not less than 10 years
and many for periods of 15 and
20
years
and even longer, al¬
though, as in the case of corporate
obligations, the principle of
amortization or serial maturity is
prevalent. There is some dif¬
ference in the basis for lending,
now

depending

op

the type of

mort¬

and the type of cor¬
porate obligation.
In corporate
obligations and in mortgage loans
gage

on

loan

commercial

a n

d

one

of

comment

hand, and
type,

time

gage

for

altnougn

loans,

security.

The dif¬

nificant

as

the

fact

that

in

tne

from

timate

i

the

and

reserve

accumulation

be

may

paper




however,

a

method

Continued

rate

generally

a

vestment

than

therefore

turity

to

securities

likely

more

be

and

held

mm

are

m \A

than

until

established///^,

ma¬

default, there is greater
value them on a long-

or

to

reason

are

less liquid form of in¬

even

securities

of

different.

Indeed, since mortgage loans

term investment basis.

in

Mortgage loans have fluctuated
value
perhaps more than is

pril thirtieth"

generally realized. Over the past
years
a
number of studies

MM

few

have appeared

which have traced

the loss records of mortgage

loans
of various types made by institu¬
tions such

life insurance

as

com¬

panies, savings banks and the like.
These

include "Urban
Mortgage
Lending By Life Insurance Com^
panies" by Professor R. J. Saul-

National
Bureau
of
Research, 1952; "Mutual

poration,
Economic

Savings Banks in the Savings and
Mortgage Markets" by Professor
John Lintner of Harvard

sity,

1948;

Boston

Policies
Loan

of

the

Univer¬

and

"History
Home

Owners

THE PORT OF NEW YORK AUTHORITY

Proposals
New York
DUE

Harris

of

Columbia

versity, National Bureau
nomic

Research

1951;

Analysis, 1906-1934" by Ed¬
gar
A.
Lodge
of Home
Title
Guaranty Company, New York,
1935;
and
"Urban
Real
Estate
Markets; Characteristics and Fi¬
nancing" by Professor Ernest M.
of

Columbia

or

111

none

of

$20,000,000

of The Port of

Authority CONSOLIDATED BONDS, SECOND SERIES,

1984,

FIRST

will

INSTALLMENT,
on

by the

be. received

Tuesday, October 27, 1953, at its office,

Eighth Avenue, New York.

Each offer must be

accompanied by

a

certified check

or

cashier's

Mort¬

gage

Fisher

all

Uni¬

of Eco¬

"A

for

Authority at 11:00 A.M.

Corporation" by Professor C.

Lowell

check in the amount of

$400,000. The

acceptance or rejection of bids at or

Authority will

announce

the

before 6:00 P.M. on that day.

Copies of the prescribed bidding form, of the Official Statement

University,

National Bureau of Economic Re¬

of the

Authority and of the resolutions pursuant to which these bonds

search, 1951.
are

Extent

of

Capital

to be

issued,

may

a

Authority, 111 Eighth Avenue, New York 11, N. Y.

THE PORT OF NEW YORK
HOWARD

reserves—expressed as
percentage of assets held in each

form

on

Dec. 31, 1931

and

at

the

represented

end

7.6%

of

of

1940

the

October 16, 1953

AUTHORITY

S. CULLMAN,

CHAIRMAN

showed that:

For securities, the cumu¬
lative net capital loss reached its
maximum

be obtained at the Office of the Treasurer of the

Losses

including

both

presented by
Mr. Bell before the legal section of the
,48th Annual Meeting cf the American
Life Convention, Chicago, Oct. 6, 1953.
a

entitled

the

experi¬

(a)

•Extracts

of

.

—

the

student

may

A study made by the Research
properties whether the borrower
is a corporation or an individual, Division of Mutual of New York
earning power is always impor¬ of the experience of net capital
tant and this involves the question losses for 14 life insurance com¬
of management. In mortgage loans panies,
including losses realized
on
dwellings, however, the pre¬ on sales, writedowns, and changes
dominant question is one of sale- in assets not admitted
but not

ability of

one

on

be different and, there¬
fore, both the amount of the ul¬
ence

industrial

ferences, however, are not as sig¬

of

loans of a
subject on the influence during "Equity Investing by Mutual Sav¬
the other.
the past depression of the absence ings Banks," by August Ihlefeld,
There are also wide differences in
of
adequate mortgage loan re¬ President of the Savings Banks
the losses which have been ex¬
serves.
This comment by Prof. Trust
Company, of New York.
perienced on dwelling loans from John Lintner
which university
of
the
Harvard The extent to
those which have
been experi¬
Business SchooMVas directed spe¬ endowment funds, investment
enced on large commercial prop¬
cifically
to
the
experience
of trusts and pension funds have in¬
erties and, here again, these dif¬
Massachusetts savings banks.
In vested in stocks are other indica¬
ferences should be taken into ac¬
his
book, which has just been tions Of the trend in this directioncount in the amount of reserves
referred to, he wrote at page 292: Trust funds in New York have
accumulated.
Perhaps these dif¬
been permitted by law since 1950
"The banks had gone into the
ferences may be recognized by
to invest up to 35% of their assets
some
composite figure; the dis¬ depression with no valuation re¬ in stocks, preferred or
common,
serves out of which to absorb the
cussion of this subject in relation
and about a year ago the Teachers
net losses that subsequently de¬
to
securities reserves is equally
Insurance and Annuity Associa¬
veloped on mortgage assets, and
applicable here.
tion launched its variable annuity
as
a
consequence
these
losses
The
essential
principles gov¬ could be
plan which contemplates invest¬
charged off only against
ments of up to 50% of annuity re¬
erning the use of the mortgage current
earnings and the surplus
loan reserve should be largely the
serves in common stocks.
account.
But the amount of book
same as those governing securities
Before life insurance companies
surplus was a published figure,
reserve,
though
there
will
be and in a
period of widespread dis¬ can invest in stocks, preferred or
some differences due to the differ¬
tress and distrust of banks and common, to any substantial extent,
on

over a long period
taking care of these ent nature of the assets. For ex¬
osses
through the establishment ample, the question may welTarise bankers there was an almost uniof asset reserves. If this principle as to the
relationship which has versal reluctance to show any re¬
is sound as applied to bonds, it is
equally sound as applied to mort¬

of

on

obligations clas¬

securities.

as

course,

made

are

ilar to corporate

the

c

by the terms of the instru¬

may,

kinds

conventional

bor¬
the nier of Columbia University, Na-,
strength of
mortgages on real tional Bureau of Economic Re¬
estate having an appraised value search
1950; "Commercial Bank
affording the statutory margin of Activities
in
Urban
Mortgage
security above the amount of the Financing" by Carl F. Behrens,
loan, are in essential respects sim¬ Federal Deposit Insurance Cor¬
tions,

whoever

assets.

types of obligations the

of it,

the setting up of reserves rep¬

or

total

to

pronounced

a

Reserves for Stocks
That

are

the

the

'

have fluctuated

par,

generally realized and

lowance for bad crop years. Ques¬
such as these would seem,

tions

there is now a great deal
wide differences in however,
much
less
important of interest in institutional and
mortgage loans and than, those relating to loss ex¬
fiduciary
investment
in
stocks,
the losses which may be expected, perience and loss
common
as
well as preferred, is
expectancy.
for example, on FHA and VA in¬
It 'is
interesting to note the illustrated by the publication this
sured ; and
guaranteed loans, on
last
June
of
a
book

..There

greater amount of investment by life companies in equities.

Says mortgage loans, which

re¬

lationship for the future.

which
on

pro-

page

22

16,

the

During

rose

in

was

mainiy

bank

turbulent period for
banks because of declining bond prices, abnormal credit de¬
mands, and a continued pressure on their reserves, Dr. Lee
surveys current situation relating to Federal Reserve policy,
Treasury fiscal operations, debt management and the general
business situation.
Says interest rates are still low in com¬
parison with other prosperous periods, and warns bankers may
be facing a set of new problems arising from possible down¬
a

story

is

who,

summarize

of

when

the

noted

a

asked

European

since

ments

told

offset

to

develop¬

Renaissance,

re¬

have

vestments

Loans

are

plied that this

holdings

curities $7

would

be

difficult

task,

since

the
of

events

last 400

have

a

a

or

windows again became

billion, while holdings

the

The

tended

feed

to

necessitated

a
murray

ui'.

un¬

u.

JLee

rapid

still

Federal

The

the

The rate

on

selling

Treasury bills moved up from 2%

some

in

$24

peak of 2.42% in
Bond yields reached peaks

January to

a

not

the

since

seen

off

of

in

its

the

billion at

—of

the end

would

have

tial.

points from their

16

high in January, 1950.
has

It

for

been

weather?

have had

Bankers

banks.

to

declining
prices, extraordinary credit

bond

period

a

pf

demands, and continued pressure
their

on

For

20 years we

have had
cheap money. Since 1951 we have
been approaching something like
a

over

free

has

for

market

revolution

in

the

required

have

could

prevented

fective action
mitment

This

credit.

market
to adjust

money

bankers

new
use

became

more

of

were.

Federal

required

expansion.
to

sales

the

to

use

extent

credit

down

their

threatened to

in

Now, having weathered the ad¬
justment from artificially-main¬
tained cheap money to a higher
interest

of

level

bankers
new set

rates,

facing a whole
of
problems growing out of a
possible^ downturn in business ac¬
tivity.
be

may

slip below par, and

institutions to

ings at

unload

and

par

their

hold¬

the funds to

use

the

presentation

tions.

The first

require

the

is

ment,

policy.
fiscal

deal

The

four

sec¬

topic, which will
detailed

most

Federal

recent

treat¬

Reserve

second is TreasuryThe third will

operations.
with

ment

Federal

policies;

the

into

debt

the

manage¬

fourth, with
situation.

business

general

Throughout,
emphasis
will
be
on the impact on the banks
of developments in these areas.

placed

Federal
Of

for

the

Reserve Policy

various

inflation

World

War

factors

since

II,

the

two

effective

lost

control

generation of
bank

suoniv

funds, and

reserve

and1

reserves

in

were,

the

over

the

money

This

situation

Certain
grown

One

is

Federal has

the

order

to

at

consider

attractive.

drawal
term

support

governments

from
and

short-

long

pnd

the

of

market.

time, the Federal
nort

at

periods

gave

of

last

December

Treasury
its

on

a

supre-

starting

but

the

been left to stand

For

some

Treasury

fimding operations,

own

has
feet

competition with private bor¬

from

The third
—the

vast

credit

since

factor in

the picture

expansion

of

1945—was

private

amenable

accord

gave

the Federal

*A paper delivered by Dr. Lee at the
Law Section of the New York
State Bar Association, Buffalo, N. Y.,
Sept. 25, 1953.




borrowers

As

I

have

and credit supply without

actions

on

the

We

bond market.

government

can

get

a pretty
policy has

affecting them. Reserves,
the key to the credit

situation:
cess

their

when

banks

have

to

loans

or

reserves

open-market

via
pur¬

reserves,

on

once

again dependent

on

the Fed¬

eral for additional reserves needed

demands.

accommodate' credit

The

policy

has

ag¬

restrictive.

contraction.

continued,

The

in

rise

although

Odd-lot Order Procedure

we might trace an orders
buyers from its inception, through to its
completion. Let us say that one
stock gathered
in front of the of you gentlemen goes to your
rostrum and effected their trades. broker in Chicago.
You go into
When they were done with that the office and get the man with

stock

at

time.

a

call

to

All

I think

one

the

and sellers who had orders in that

longer under it.

Here,

the New

on

securities

credit

tended

order

in

to

to

demands

become

selective

in

accommo¬

and

more

have

cautious

screening

loan

Nor

has

up

pushed

the

Federal

sought to
What has
up
rates has been the
of
extraordinary
de-.
interest rates.

for

credit

—

demands for

business loans,

for consumer cred¬
it, for mortgage money, and for
long-term funds needed for ex¬

pansion

of

productive

u

.

Continued

on

wire to

direct

a

booth

its

on

Stock

shares.

That

became

little

a

bit

on his desk in front of him; one is
buy and one is sell.
They are
developed which, first of all,
printed on the bottom "DeCoppet

cumbersome in itself, so a system
was

change, so the odd-lots were, by
large, handled in the offices

and

various

the

of

much

commission

the

as

present

firms,
over-

the-counter market is handled.
A

few

fellows, by and
by, thought that they could more
properly handle these odd-lots by
going directly down to the floor
of the Stock Exchange, so a few
of
them
did
just exactly that.
They went down on the floor, and
at

Even

odd-lot

not

was

round-lot sale.

negotiation

It

down,

was

the

into

tied

matter of

a

the

drops

it

Exchange takes this
it up, puts it in a
carrier, shoves it down the proper
tube, and it goes under the floor*
and

wraps

comes

at

up

Post

4,

where

General Motors is traded.
At this
of

point, another employee
Exchange takes the

Stock

the

of

out

the

carrier, puts it

automatic

an

time

clock

which stamps the time of arrival
at the post,
and that is an ex¬

important

will

see

later

operation,

The clerk of the Stock

takes this

on

hook which is

a

as

on.

then

somewhat natural step,

the

on

An employee

Stock

tremely

Round-Lot Sale
a

off,

tears

order,

Tying the Odd-lot Order to

was

his telephone, and

up

nearest tube station.

you

It

picks

to deal only in
that point, an under

each trade.

on

He

he gets this order to buy 50 shares
at
the market, which he writes

order

set themselves up

odd-lots.

& Doremus."

of

smart

order

Exchange

and

puts it

the post at

on

think, from then on to the de¬ the open end of the horseshoe. Our
velopment of the present system, odd-lot brokers are stationed there
and they stay there all day.
You
namely, that the odd-lot

I

order/Js

tied

directly to the round-lot sale.
much

So

the

for

history

the

of

thing.

can

the

number of

steps that
place already from
Chicago down to the odd-lot brok¬
see

have

taken

er on the floor of the
Exchange.
me
bring out one point, if
We, the odd-lot dealer, have had
don't already know it. In the
first place, we odd-lotters are not absolutely no responsibility until
that very moment when the order
brokers, in the sense that the word

Let

you

is

generally used. If you go to
commission firms and give

your
an

order to buy 100 shares of Steel,

that order will eventually get into

the hands of

facilities,
page

36

broker

a

market,

shares.

and

He

is

the floor

on

buy

acting

reaches the

hands

of

our

broker-

It may have been delayed in the
wire room in Chicago, it may have

been, delayed

-Now,

the clerk

as

on

in

New

many

are important to us, because
times the customer is sitting

in the board
is entitled to

the

we,

in

odd-lotters,

are

the floor

been

100 things

your

purely

broker.

your

principals

applications.
push

has

the flobr of the Stock Exchange.
Exchange, they
That order is called down over the
adopted the present auction mar¬
direct wire
to
the floor of the
ket, with which I am sure you
Stock
Exchange.
A
telephone
are
all familiar.
Now, there was clerk stands
there, and let's assume
no
unit of trading, such as we
that that firm is doing its odd-lot
have today. The buyer and seller
business with DeCoppet & Dore¬
met and traded in any number of
mus.
The clerk has two pads right
York

banks were
forced to reduce their holdings of the

.

chases.

the

York, and
might have
goofing off someplace, and
of the Exchange. He will go to the might have
stayed there for two
loans
post where Steel is traded, quote or three minutes.
All
of
these

been

not

The Fed¬
eral has not sought to force credit
gressively

is

additional

pressure

deposits—

gradually forcing the banks
position where they were

pressure

supplies

rising

a

mands

discounts

and

into

the extent that demand for funds

forthcoming; when they do not
h»v* excps«! reserves, they cannot

credit

of

exert

thus

ex¬

they can expand
and investments,
to

reserves,

excess

dropping or reserve deficien¬
from
developing.
In
sum,

pansion

a

expand credit, unless the Federal
Banking

credit

credit demands—reflecting in ex¬

and

rise in bank deposits and other
liquid assets that took place dur¬
ing the war.

that

the policy has been to allow

to

rowers.

The

proceeded

Jurte; but it did not

their

prevent

?r^-. cies

t1ne

termination of sunoort ef the

.ual

in

with¬

factors

vast

all

in

reserves

Treas¬

for

of course, are

the

was

pro¬

reserves

the

provided

prices.

other

rates

not

needed

accommodate

demands

increases that pushed up costs and

The

has

it

they

reserves

date

One

that

to

and

•Exchange

$1.7 billion of new reserve founds
during the two-year period down

its

rounds of wage

has

The

credit.

supply them with enough

Reserve

at

shown, it provided the banks with

end

authorities.

Federal

the

tightened credit only

sense

tional

been by looking at the published
figures on bank reserves and the

repeated

that

"tightening"

Federal

which

That
is, the
opening of the

system.

Chairman

very

misapprehensions have
around these develop¬

up

been

largely beyond the control of the
Reserve

might

measures

ments which need to be dispelled.
I shall mention four.

Federal
the

and

the
that

in prospect.

be

good idea of what its

was

authorities

restrictive

by

upon

to the end of

money

been

frowned

bv the accord of 1951 between the

ury,

"call"

a

adopted 100 shares as a trading
of unit on the New York Stock Ex¬

terminated

was

.

early days the Exchange We buy and sell for our own ac¬
operated under what is known as count.

the

to

expansion

open-

effect,

excessive regard for the effect of

have

indication

in

purchase higher-yield¬
ing investments. The Federal thus

making
of

it

from

raised

was

further

was

as

vided the banks with all the addi¬

and

freer hand to regulate the nation's

I

policy

earlier

loans

ended.
covers a good
territory, and I shall have
to cover this ground in a rather
summary fashion.
I shall divide

that

again

instrument

increase their mortgage and other

topic today

My

deal of

reduce

days of
In January, 1953 the

2%—an

to

more

this made it possible for financial

thinking and their policies
the
light of fundamentallychanged conditions.

the

rate

monetary

Moreover, the Federal

stand

ready to buy longgovernments whenever they

term

1%

credit

throttle

to

reserves

to

rate

Reserve

in

discount

banks

to

discount

System.

securities.

unable

into

come

excess

them

important

an

been

* the

market

the

Federal

had

commitment,

this

was

open-market

had

the

support

invest¬

their indebtedness to the Federal.

poten¬

really ef-

and

loans

they tend to

because bf its fc6m-

of

their

possession of

Third,

government

result

a

the

to

of

prices

situation

ments, and when they

raised

takifig

from

it

had

now

price.

In the

Further'

of

requirements

been

First,

Federal

and

effect

expansion

credit

creasing

war

This

Unfortunately, the "^Federal was

As

reserves.

the

reserves

reserve

sharply than they

turbulent period

a

bank

limiting) credit
Legal

the

had

last November to below 90 in June
of

of

government securities.

pulling; down

loss

market

open

holdings—about

vast

early
1930's. The
bank-eligible
2.%s of 1972-67 declined from 97
—a

could

have checked credit expansion by

rise in interest rates.

the

the odd-lot

Stresses im¬

the trading floor to fix

on

firmly under
whom you deal, and you put in
expansion
of particular stock, they moved down
to
the next,
and so on down an order to buy 50 shares of Gen¬
credit was only possible
if the
eral Motors at the market.
That
Federal chose to feed additional through the list.
order goes to the order room of
It was a cumbersome system at
reserves
into the banks by dis¬
the
Chicago firm.
It then goes
counting for them or increasing best. I talked two weeks ago with
on
the wire to New York, into
its holdings of governments. Sec¬ a member of the stock exchange
that firm's office if they have one;
ond, when banks are continuous¬ in Sydney, Australia, where they
if not, to a firm in New York
ly in debt to the Federal they still use the call system, and he
through which they clear.
tend
to
become
more
reluctant said it is getting almost inoper¬
The order room in New York
lenders.
They tend to avoid in¬ able. They cannot proceed much

borrow¬

Reserve

By De¬

reserves

threefold.

was

that

control.

on

further

excess

significance of this devel¬

opment

itself, as
the
increased
business
activity
and higher prices engendered by
rising
spending encouraged
or

This

mid-year

active. By
borrowings

the largest since 1920.

ing.

at

1952

meant

witnessed

June.

of

cember, 1952 they hit $2 billion—

contributed,

period has

usually

middle

discount

The

exceeded

sion

than

sharp and

Federal.

Exchange floor and with member firms.

portance of "timing" transactions

reserves

excess

the

from

se¬

deposits and currency
outside banks). The credit expan¬

have

usual!

non-government

with

and demand

so

been more ab¬
normal

and

tion of an odd-lot order and reveal! method of stock keeping
by odd-lot dealers and their avoidance of abusing their position
by trading arbitrarily or possibly upsetting the market Ex¬
plains working of odd-lot order room and its communication

develop¬

fell. This,
in turn, made the banks increas¬
ingly
dependent
on
borrowing
ments,

principals, receiving a differential
a commission.
Describes execu¬

as

above floor prices instead of

currency

these

along
with
other factors,
to an increase of
nearly $42 billion in the privatelyheld money supply (adjusted time

past

year

billion

from

of

result

credit

abnormal.

six months

in¬

drain

net

brokers but act

not

are

gold movements.
a

development of odd-lot trading on the
Exchange, and points out odd-lot specialists

New York Stock

of

funds

reserve

Stock Exchange

Colonel Smith reviews

gold inflow
the period as

governments have dropped $32
billion.
The expansion of bank

years

The

of

1945

a

amount—just enough, to off¬
the

As

billion.

$14

Partner, DeCoppet & Doremus
Members of the New York

result of a rise

a

additional

that

of

the

been

risen

$39.5

up

by

with

and

loans

as

of $700
million for
a whole.
Third, the Federal increased its
holdings of governments by $1.7
billion, thus providing the banks

Since the end of
bank

By COLONEL HOWARD C. SMITH*

of about

$2.6 billion in currency in cir¬
culation winch was only partially

set

commercial

tne

Second, tnere was a

billion,

and

historian

to

of

turn in business.
control.

due

loans.

in turn
rise in

wnicn

deposits,

drain on reserve balances

$1.6

the

on

New York Stock Exchange

billion—aue to tne

aoout $1

rise

Department of Monetary Policy, American Bankers Association

System

First, required reserves

reserves.

By DR. MURRAY G. LEE*

to

The Odd-Lot

tnree

tnings nappened to memoer banx

And the Banks
Asserting past six months have been

period

two-year
to mid-1953

from mid-1951

Monetary Policy, Business,

The

October 22) 1953

The Commercial and Financial Chronicle... Thursday,

(1536)

order

has

thinks he

room, and

execution when the

not

even

reached

our

transaction. hands.

every

When the order is in the hand?
'An

Third

address

by

Annual

"Forum

Joint

the

Committee

the

resenting
ness

Col. Smith
on

American

soonsored

by

the

on

beforfe the

Finance"

Education

Securities

rep¬

Busi¬

Association

of

Stock Exchange Firms, Investment Bank¬
ers

Association

sociation

of

of

America, National As¬

Securites

Dealers,

American
Stock
School
of

Stock Exchange and the New York

Exchange,
Business

at
the Graduate
Administration
of

University,
1953.

New

York

City,

New

York

Aug.

of

our

of

31,

broker, he picks it off the
him, and he sees

hook in back of

it

is

marked

order

to

buy 50

shares of General Motors.

As you

an

probably know, that order is
titled
time

to
a

an

execution

the

round lot of Motors is

whether it be 100

or

Continued

en¬

next

sold,

5,000 shares.
on

page

37

Volume 178

Number 5266... The Commercial and Financial Chronicle

(1537)

IT

YOU UN SEE TOMORROW FROM THE TOP OF THIS TOWER
New Electronic Wonders Are

Being Developed at

Federal Telecommunication Laboratories, A Division of IT&T

This unique
the

electronic research tower at Nutley, N. J.

designed to explore

was

mysterious realm of microwaves—those extremely short radio
future

waves

with such great

promise. Built into this 300-foot functional structure of steel and aluminum is

a

complex system of equipment and antennas... to advance experiments in the transmission of
sight and sound by microwaves... to attain
reception of "line of sight" signals.
At the top

of this tower

are

new

highs in sensitivity in the
:

•

five stories of specially equipped laboratories. Here teams

of IT&T scientists think and work in terms of tomorrow.

Already they have made

important contributions in several fields of telecommunication... in Pulse Time Modulation
for

mobile radio

transmitting multiple

...

in television

navigation. And they

are

...

in

messages
new

pointing the

simultaneously

on

the

same

frequency... in

types of radar and improved devices for safe air

way

to the possibility of a world-wide network of

telephone, telegraph and television communication by microwave relay.

ENGINEERS,

PHYSI¬

CISTS: Desirable open¬

ings with excellent op¬

portunities
able.

are

avail¬

Write Personnel

Manager, Federal Tele¬
communication

Labor¬

atories, Nutley 10, N.J.

IT&T DEVELOPMENT

IT&T COMMUNICATIONS
IT&T companies operate the largest

American-owned system of international

communications,
many

countries,

telephone networks in

approximately

47,000

nautical miles of submarine cable,

more

than 7.000 statute miles of landlines,
some

200

and

radiotelephone and radio¬

telegraph circuits.




INTERNATIONAL TELEPHONE AND TELEGRAPH

AND

MANUFACTURING

IT&T maintains central

laboratory

com¬

panies in the United States, England, and
France, in addition to the many specialized
'laboratories

maintained

by IT&T's 32

manufacturing companies in 19 countries.
These IT&T facilities have proved their
value to the free world in peace and war.-

CORPORATION, 67 Broad Street, New York 4, N. Y.

18

The Commercial and Financial Chronicle....

(1538)

Thursday, October 22, 1953

reported daily in your newspapers,
and that is that John Doe Public's

Sound Money—Not

Money Managers!
By MERRILL E. SIIOUP*

redeemable paper money manage¬
ment.

Shoup takes issue with former Federal Reserve Chairman,
regarding efficiency of managed currency
and his statement that currency convertibility is no assurance

hered to

stability. Points to use
balances as proof "paper
managers" do not trust each other or subscribe to a
"super-money manager."

other

in settling international

subscribe to

or

that

the

arguments for
return

a

sound
be

to

to

money

again

peated.

Views

to

nation

record
been

to

the welfare of
world that

gold

Like

we

standard

our

years

has

and

spokesmen

the defensive,
European politicians
are on

recent

rainmakers,

own

now

are

managers

money

paper

it

do

because

of continued paper money

America's

and

men—

mere

20

last

failure,

a

management

the

to

return

the

of

sponsors

entire

the

manage-

money

paper

are, after all,
supermen—and

not

is

our

and

from

tar

worship by their fellow
man.
Theoretically paper money
promptly.
Economic
management,
like
socialism
or
truths do not change through the communism, is Utopia. There may
and

Shoup

E.

Merrill

ages, despite efforts of politicians
to remake them, !My thinking on

be one man in these United States
with capabilities to manage our
best be conveyed money, our pocketbooks, and our

.sound money can
to those

uting

present today by distrib—
of

copy

a

"Sound

gave

entitled
Depression,"

talk

a

Money

which

I

or

to members of the

Los Angeles Rotary

Club June 5,

subsequently
"Commercial and

which
in the

1953,

was

printed

lives. If such man does live, he
has to date failed to offer his
services to our political administrations in Washington.
a

of Mr. Eccies' talk,
which represents the summary of
all

summary

who sponsor paper money

men

Financial Chronicle" and has been

management

placed in the Congressional Rec-

[s

ord.

To

save

your

time

to

and

talk to the allotted period, I am passing out copies of

keep

my

this

which

talk

hope you will

I

find

interesting.
Today I thought it constructive

iZZXJ™1
ridiculous

and

which
turn

premises

the

based.

I

of

Savings & Loan Asso-

advocates of sound

confronted

are

attempt

to

all

cover

confine

but

points.

with.

myself
Eccies

Mr.

I

money

will

his

of

the

to

not

talk,
main

and

says,

I

■Quote:

over a

standard

no

money
Doe

under

managers

its

to

the debtor because

increased

?"d
ing

standard

to

purchasing

over

the

that, therefore, why
change
from
managed
paper
money which they
tell us John

Qut of one side of the

gojd

mouth

manager's

money
all the

paper

Lets

examine

or

saver

l>ecause of its

decreasing purchasThese excesses can be
only by intelligent management and use of our money

to talk Americans into

to be

u'

-

their gold in

giv-

exchange for

the" other side of
manager's mouth
thought that foreigners

From

paper.

j.be paper money
the

comes

their

settle

must

trade

balances
-One of the largest

is not

in goid—their paper money

was'Sealed

There is something
evjj
about any 'double currency
standard,
when
that
standard
acceptable.

available

makes

that

same

bard

dollar

redeemable

to

dictators')

states and
real

n0

has

hope of

There

under

bers

in

ment

blank

a

on

John

check

Doe

can

confidence.

cannot

duced by

John
any

According

standard

paper

money,

and

Blair,

Rollins

&

Co.

John

has

purpose

of helping to

World

avoided

committed

War

II,

we

an¬

that

been
c

t

dent

d"

e

of

firm.

Doe
time

been

Mr.

i

n v

has

in

Public

past

25

and

had

a s s o

Karl J. Panke

with

the

years

been

cia ted

Lehman

Brothers
we

spent

save

the past six years.

for

"Prior "to

that

time he was with C. F. Childs &
q0

for 12

years,

the

would

increase
of

decline

be

if

most

six

the

such

not

all

or

as

of

seven

prior to the upturn. Such a

years

gain would normally have already
reflected

been

costs,

but

life

in

large

a

insurance

part

•

this

of

set

by rising taxes. Consequently,

only

a

portion of the' greater in¬

vestment

spend, to
nations
and to

income -is

available

the

part

of

fiscal policy on

a

the

government

and

bolster
foreign
fight Russia and China $55 billion

RranrK in Flnrirla

Several

Cycles

Looking back
years,

man & Co-»

over

Seen

the Institute has found that

-

continued spending policies origi-

statement, of course, means that
Eccies strongly favors management of money by men. Mr.
Eccies emphasizes his belief by

nated

Mr.

further stating:

ard,

convertibility of our money
gold, would give no assurance

or

into
of

"The gold stand-

either

nomic

sound

stability.

money

To

or

quote

eco-

Allen

by

men

tried

and

found

wanting. But Mr. Publte could do
nothing about it. He could not
demand gold for his paper money,
Since 1940, John Doe Public might
have at times been worried by the
increase in paper currency in cir-

culation, which increased from $8
billion to $29 billion today.
He

Sproul, President of the Federal might have been worried about
Reserve Bank of New \ork, 'If the increase in
bank deposits from
you are not willing to trust men $63
billion to $167 billion, but

This

resentatives.
wiI1

Dermit

^ i

.

each

n

1n

arrangement
renresentative

kiZ

to **ve in Coral Gables with his

family and conduct his business
in

Florida for

nf

bmp

paPh

a

specified length

fairly sharp fluctuations, winding
up

at about 6.5% in the mid-1870s.

The
eral

ensuing 25 years saw a gen¬
decline, with the rate shortly

after the turn of the century

y

century, there was another up¬
swing, with the rate of the mid-

Wire to New York

1920s

DALLAS, Tex.—John W. Tur-

being

much

not

was

5.18%.

will

rio^get protection from a mechan-

ofTZct wLt£h

3.28%

of money,

history has proved that

you

rj

.

thing is
1953.




certain,3

proven

by' past

Goldman, Sachs & Co. in New

history, recent history, and events York.

the

rate

was

1923, there was
1947

the

Wash., September 23,

ciable.

Last

year,

example,

for

the earning rate of 3.28% became
an
effective rate of 3.07% after
taxes. About half of the improve¬
in

ment

rent

yield rate since the cur¬
began has been off¬

upturn

set by

Federal income taxes alone,
taking into consideration state

not

and local, taxes.

The current

rise is

reflection

a

of both

higher interest rates gen¬
erally and also portfolio changes.
As a matter of fact, the greater
part of the improvement thus far
is

probably traceable to portfolio
changes, as it takes a long time

for the improved interest rates to
be translated into over-ail earn¬

ing rates.

Frank Denison Joins

Walter &

low
rate

a

is

now

associated

Walter & Company,
Bank Building.
He

was

commercial

a

for many years,
was

with

First National
banker

during which he

with the First National Bank

of

Denver for

of

the

18 years, President
Stockyards Bank, a Vice-

President of the

Denver

National

Bank, and President of the Colo¬
rado

Bankers

Mr.

Denison

Associatibn.
then

the

entered

investment

banking

field,

from

to

represented

1929

1940

cago,

Philadelphia,

and

York, Chi¬

and

Moving to California he

Denver.
was asso¬

of

2.83%.

has

been

reported

After

decline to the

last

SinceJ then,

rising,
year

with
and

a

rise expected again
For
1940s

Company

different ciated with Mitchum, Tully & Co.,
The investment bankers in Los
in 1923,
Angeles.

peak of this period

management

income taxes have become appre¬

that of 75 years before.

from

when

the

same

rate, but in re¬
the inroads of Federal

Calvin Bullock in New

ner' President of the investment
again he could do nothing about banking firm of Eppler, Guerin
Maybe John Doe Public is the & Turner, Fidelity Union Life

with

being

about 4.5%.

During the first quarter of this

vpar

cent years

circles

the past 100

and suffered

basis of economic stabilityThis

the

effective

DENVER, Colo.—Frank J. Deni¬
son,
widely known in, financial

investment securities
the
life
insurance
investment
firm at 231 S. La Salle Street, has
an additional 150,000
announced the opening of an of- earning rate has moved through
a
monetary and credit policy on casualties. John Doe Public may fice ir> the Miracle Building, 220 several cycles of increase and de¬
crease. In the early 1850s, the rate
the part of the Federal Reserve well have
questioned our govern- Miracle Mile, Coral Gables, Fla.
was in the neighborhood of 5.0%.
System timed to meet the condi- merit's
spending, coziness with
The new Coral Gables office
For the next 25 years, the trend
tions
necessary
for maintaining Russia,
sell
out
of
Nationalist will be staffed, at different times,
was generally upward, with some
production and employment on a China, the Korean
affair, and the by the company's registered repsupply through

practically

was

the

as

to

•

CHICAGO, 111.—E'ldredge, Tall-

earned

apply to policyholders' net cost of

spent or

to

investment income.

on

yield improvement has been off¬

insurance."

'

France,

any

sees

year

eliminate

to

banking busifor

com¬

more

the antici¬
pated further increase in yield,"
the Institute says, "it would be
the sixth successive year of rise in
investment
yield
and the- sixyear

the

est ment

n e s s

insurance

rising for
years
than at

been

this

"If

a

the

Panke

unwisely

have

ourselves

e

life

by

time since the turn of
century, but the benefit to
policyholders from this improve¬
ment has been sharply reduced by
the heavy inroads of taxes.

Vice-P resi¬

England, Russia and China. Since

ing power.

1

e

investment

on

the

Karl J. Panke

demand

During World War II

ot

previous

—

has

has

consecutive

Incorpo-

City,

redeemable

Doe

nation's

panies

llltuluu.

nounced

gold for his money
savings at any time when he feels

can

Institute

the

to

-

earned

terest

the

and at his will end government financial rampages.
Under a gold
coin

higher taxes

years

*

Blair, Rollins & Co,
w

policyholdersr benefit from
has been sharply re¬

rising interest rates of last five

Karl Panke V. P. of

arrange-

at

stop

Insur. Funds Offset by Taxes

on

Institute of Life Insurance notes

Life Insurance the net rate of in¬

^iaijL

mem¬

yield of approximately 3.40%.

a

Higher Yield

The

world, lies in a prompt return to
the gold standard,

Public's bank

currency,

paper

public

approximately 350

by

be

a

account, have accomplished .the
following results: Under irredeemable

headed

and

99.50%,

safe future, not only in
United States, but the entire

the

Maxwell
observes.

Smith, Barney & Co. purchased the bonds
from the Authority and re-offered them to the public at a price of

chaotic

in which John Doe

no

enjoyed with the spendour Washington
Adminis-

trations

Turnpike Authority 3% % bonds due July 1, 1988.
Jr., (left) member of the Turnpike Authority,

irredeemable

who have
ers

purchase by the firm and associates of $150,000,000 New Jer¬

communities

nations.

trade

paper currency

Public

from

Lester,

is peaceful trade

between individuals

record
Tfoast

the

conditions (wars, currency deteri-

orati0n,

on

L.

Paul

accepted

An investment banking group comprising

alternative

ord

when

sey

and

COuntry.
Tbe

1953

14,

New Jersey Turnpike Author¬
C. Cheever Hardwick, (right) partner in the
investment banking firm of Smith, Barney & Co., a check binding

to the citizens of this

money

Oct.

(above, center);. Chairman of the

citi-

American

public offerings of turnpike bonds

Wednesday,

on

ity

Zens',gold to foreigners and denies

managers,

—

creditor

security,

few facts.

a

money

paper

the

the

comes

Doe PuTb"c has e"joye? f°r ?0 rated. 44 Wall Street. New York

that his government is
of handling its finances.

power

loss

® a'jq"lrlnS- Dur" ?350 casualties suffered one milbillion and all for the end
dollar becomes lion

inflation

unsound

money

that

say

suffer

will

Public

gold

a

gold standard,
is perfect. In

"During deflation the dollar is
unsound

in

and

years

The

ciations, at Ogden, Utah, June 9,
1953. Mr. Eccies'speech illustrates
perfectly the type of thinking
which

j0hn

re-

a

talk given by Marriner S. Eccies
before the Pacific Northwest Con-

Terence

e{fect)

years.

gold standard are
going to refer to a

am

that

upon

arguments opposing
to

Paper

in the world today setbetween themselves

balances

of

Because paper money man-

agers

re¬

It

vital

sponsor

ment.

repeated

and

su¬

super,

a

glittering promises
benefits, high standMr. Eccies has appointed himself ard
of living, and dribble as sales
as
one of the leading spokesmen
talk to American citizens. And it'
for that group who still continues
has been a good sales talk; it had '
Mr. Eccies'

vital

.

need

*

who would
money issue for

world.

entire

the

managers

a

f

manager

control the paper

ical control. Ignorant, weak, or
to the gold standard have been irresponsible
men
will pervert
presented in a large number of that which is always perverse'."
excellent
articles
and
speeches,
there is

peace,

gold standard.

a

money

per

to return

reasons

enjoyed

progress

Speaking of paper money man¬
agers, it is interesting to note that
they apparently do not trust each

of either sound money or economic

Although basic

Public

Mr.

and individdignity from 1814 to 1914,
when the then world leader ad¬

Marriner S. Eccies,

money

Jersey Turnpike Authority Bond Sale

his losses under ir¬

to

compared

New

thegold standard
negligible — nothing

ual

Mr.

gold

been

prosperity,

President, The Golden Cycle Corporation

of

under

losses
have

this year.
the most years prior to the
the

net

rate

of

interest

Since

returning

to

Denver

in

1949 he has been associated with

the

investment

banking firms of

Peters, Writer & Christensen and
later

Co.

with

Bosworth, Sullivan &

Tour

guardians of quality in radio,

television and recorded music
When you see these trade marks
radios, "Victrola"
instruments

television sets,

on

phonographs, and other electronic

you are

assured the highest quality—

born of research, fine

engineering and craftsmanship.

The
lions

sun never sets on

RCA

as

in all

phases of television.

Victor has

made radio

millions of Americans. "Victrola"
tended

these trade marks

"living presence" that artists
in

your

on

a

seem to

.

•

•

'

These

phonographs have

ex•

great music from the concert halls to homes

ing. You
marks

appeared

same
s

on

recordings made by the worlds
a

century.

high standards of quality make NBC

leader in radio and television broadcast¬

can

depend

on

RCA and RCA Victor trade

guardians of quality—sure guides to finer
performance, dependability, better value and service.
as




Radio Corporation
.

rich in

be performing

Tmkg.

-

so

Nipper and the familiar phrase "His Master's

Voice" have

the nation

household word to

records

home.

Little

the pioneer, continues to lead in every major

...

see

greatest artists—for more than half

friendly confidence.
RCA,

You also

these trade marks, and mil¬

of people around the world turn to them with

advance

everywhere.... from Broadway to Every Street, U.S.A,

World leader in

of

America

radio—first in television

:

f

20

The Commercial and Financial Chronicle

(1540)

Continued

from

stability at high levels of opera¬
tion is backed by the means to do

2

page

Money—One of the Government's
The Security I Like Best
Biggest Problems
dividends
(calendar
the 5% prior preferred

following

By WALTER WILLIAMS*

year)

Under Secretary of Commerce

on

stock:

Pointing out getting

problems,

I

we

of the government's biggest

one

Department executive gives data «n
Says figures give "insight into the difficult

in." Points

are

budget is

1952__

cutting substantially the national

*

Reveals

outlays

government

they are not already fixed, and, excluding defense
expenditures, this area constitutes less than 10% of the
total expenditure.

I

would

like

to

mendous need in

the

stress

responsibility

and

the

to

our

face

govern¬

ment,
of

which,

course,

prob¬

means

lems
face

i

w n

c n

us.

is

Money

the

of

one

cided

government's

Let

me
Williams

Walter

for
I'd like you to see some
of the most challenging aspects of
Here is

problem.
little background

terial

a

as

.stands

national

there

ma¬

obligated
(2)

debt

now

of

the

For

first

time

since

hostilities

first

began

authorizations
estimated
with

Now

mincfTet

in

to

time

less

background

functions of

ment,

the Defense

Depart¬

the

Mutual Security Pro¬
and
the Atomic
Energy

gram,

-expenditures
includes

fixed -by

interest

on

law.
the

This

public

-debt, the Veterans Administration,
-agricultural price supports, and
grants to states for unemployment
compensation.
7.2% of the budget goes meeting
the expenses of government, in¬

cluding the Post Office deficit and
the
Department of Justice, in¬
cluding the FBI.
contemplated

summary,

ex¬

penditures will be $72.1 billion.
Jleceipts will be $68.3 billion. And
deficit

.

.

in

met

one

(6)

Personnel:

been effected

Savings have
through the strictly

economic

of

ian
'

and

(7)

will

850

support

aircraft

type

dropped from

These include

direct

schedules.

trainer^, transports,

of

the

taxes

on

stk.

by

problems

of

of

cut, naturally
enough, only in areas where they

these

problems

knowledge,
to

persistency,

be

can

courage,

alertness

already fixed, namely in
expenditure for national

in

IN

MEMORIAM

are

in—you and I and

ment. What

our

we

George Elder Watson
George
member

to meet this

problem? Rigid

Elder
of

the

Watson,
New

former

York

"From

■Nevir

an

address

before

York

City,

the

by

Under

Oct.

12,

1953.




42,462

of

com¬

for

these

stocks

his

retirement

away

last

in

week

1942,
his

at

Summit, N. J. after

a

Watson

was

a

Stock

passed

home

in

brief illness.

He is survived
former

Rosalie

by his wife, the
Starr;

in

his

son,

partner

a

Gude, Winmill & Co., and two

daughters.

.

firms

of

those

who

those

variations

importance;
are
right

only

and
make

can

the

decisions.

necessary

of

top

on

^

s

the

a

profit in capital gains
few

next

common

,

and

Avild¬

years.

be

the

outlook

considered

still

must

against

the

back¬

ground of the over-all movement

during the period.
Therefore, let me sum up the
main points of the business out¬

in

the

the next important eco-

over

nomic

swing:

•

(1) Declines that
in

being
increasing number of

an

are

indicators

nomic

have

seen
eco¬

not

yet
bottom, even though
moving slowly. In gen¬
eral, lower levels of business ac¬
reached

they

the

are

tivity will

carry

well into 1954.

(2) Sometime during the latter
half of

1954, it is likely that the

bottom

of

the

declines will

have

been seen, and upward trends

start

preferred

to

dominate.

For

the

Over-the-Counter

a

will
year

are

whole, however, economic in¬
will
average
less than

dicators

during 1953.

series

a

and

help

of

the

actions

readiness

halt

to

which

of

and

on

would!

such

reverse

What Will the

Administration Do About It?
country, economic health must be

the

John Delmer Joins

would

maintained

not

prosperity,

but

defense

this

only for internal
to maintain the

enlarge lending ability of
banks,
and
thereby
pump

credit into the economy, to exits pand business operations,
allies at a peak.
(2) Easing down payment reWe hear much of the economic quirements, and
extending amorof

country

and

difficulties of our allies, especially in Western Europe, difficulties
pour

tization
periods
on
Federallybacked mortgages. The power to
have made it necessary to do so already is in the President's,
billions abroad for military hands. In addition, more funds for

and

economic

Blyth in Chicago
CHICAGO, 111.—John F. Detmer
has

become

associa ted
with

Blyth

&

C o.,

I

in

n c..

the

municipal
department of
the

Chicago

the ; Federal
National T Mortgage
office, 135
Association, which acts as a sec- •
South La Salle
allies are- operating under fairly ondary mortgage market-, or
help- Street.
good economic conditions. But we ing to set up a private secondary
aid.

We

tend

overlook the fact that most of

have

face

to

the

to

up

result in those

to

our

mortgage marketr would help con.in the highly important"

probable

countries should

ditions

a

'i Before join¬
ing

Blyth

&

Co., Inc. Mr.
depression take place in this coun^ residential building field.';
Detmer
was
try.
"
'
"
I/': .
(3) Drawing upon the huge res-J
w i t
h, H. M.
Therefore, a very important as- ervoir of public construction projB y11e sby &
pect of the business outlook is the ects, many of them connected with
Co. (Inc.). For
fact that the Administration must the nation's
defense needs.-,

to

see

it

that

major business de-/And

occur.

has

made

clear that that is

policy

of'the United

ernment.

the Adit

a

(4)

rates

Permitting
to

sink

to

several

corporate
tax
lower level in

a

order to stimulate capital investcardinal ment, ;;and
distribution of divivery,

States

dends.

Gov-

.

/

-

.

-

.

.

or-

Even at this point in the down-

ward business trend that is taking

been

agreed

carried

out

by

Federal
a

and

upon

being

are

the Treasury

Reserve

and

Board

.

sufficient', volume

to

beginnings
money

earlier,

is

a

easing of the
situation, referred to
direct

that policy.
If this type

outgrowth

of

-

of

-

action

all

were

of

government

to

business

in

the

portar.t

factor;

•

is

even

if

case.

The

is

a

very

many

(1)
of

income

area

broad one, and contains,;

were

slow in moving upwards, the
sumer

would be

con-

likely to spend

a

larger proportion of his income,
'Should the Administration
it necessary
or

similar

represent
of

confi-

curve

find

favor

community,

since

bank

reserve

low-

Co.,

Inc.

of

as

Nov.

1

to form Stevens, Cor¬

nelius

Co.,

be

and

Inc.

Offices

will

located at Ellicott Square. Of¬

ficers

of

the

Frederick

C.

firm

new

will

be

Stevens,

President;
Cornelius, Yice-President

Edward

and

Treasurer, and
Stevens, Secretary.

J. A.
<Special

the

LOS

they

in the main, attempts
economy through

orivate channels.

E.

W.

Dann

O.

to

Chronicle)

ANGELES, Calif.—Richard

Gude

staff

Hogle Adds

Ths Financial

of

has
J.

A.

been

added

Hogle

&

to

the

Co.,

507

West Sixth Street.
,

,

TT

Direct action to quote Housin® Director Albert M. Cole, is B,
Ray Robbins Co. Opens
another possibility. This would
Beatrice
Ray Robbins is en¬
mean such actions as direct lend.

the

Administration

to

Qualified home buyers, etc.

Thus, the desire of the Adminrequirements istration to contribute to economic
as

&

will merge

find

with

m&
measures

Co. to be Formed

approaches, they would

A further and basic easing
Such

Stevens, Cornelius

to employ the above

roads

credit.

ering

the

to stimulate the

1"t^rventum

not the

increased

dence leads to increased purchase
ing, whether for cash or credit,

business

This

Co.

&

nelius

of public confidence,
This latter could be a very im-

only secondary consideration.

government intervention in the
business picture for the purpose
of improving economic conditions

prior to that time he was the prin¬
cipal in his own firm of Detmar

ration

generally

Intervention

Detmer

BUFFALO, N. Y. — Stevens,
Dann & Co., Inc. and Edward Cor¬

coming months would be accorded

Broad Area of Government

F.

fashions: the actual economic stimulation involved, and the resto-

of

of

John

years

.

(5) The placing of. defense

•
^

)

But regardless of the individual

declines.

City

Golf Club.

indi¬

come,

business

(3) An important bulwark
against extended declines is the

How Far? How Long?

member of the

of New York and the Garden

tions

pre¬

market.

brokerage firm of that could be undertaken by the
the
Armstrong & Co. until Administration,
relationship

econ-

Secretary
Packaging Institute,

share

market

possible opportunity for

a

traded

6%

to

and commodities will show varia¬

as

Street

George E. Watson, Jr.,
Williams

present

the

The Recession in General Business

tight

Exchange, and head of the former

govern¬

steps have been taken

at

5%

on

months

industries,

the Administration to embark

oau-

in¬

over
sen

share of

one

one

prices

substantial

($1.35)

the

vidual

look

dividend

In addition the present

1.

118,573

134,588

share.

a

cents

Continued from page 11

The

Mr.

figures give you an
into the difficult spot

at

442,430
on

Accum. back divs.

Union Club and the Racquet Club

These

and

296,326

Accum. back divs.

preferred

a

sent

shs.

cents

prior preferred stock
return of about 7% on the

2VZ

low

($1 par)

surplus__

it

when required.

5%

preferred

mon

309,796

credit to underwrite the important
fourth quarter business activities,

head.

or in the less than 10%
expenditure for government over¬

157,265 of

Earned surplus

the

subversion, and faith.

.security

sight

stk

outstdg.—118,573
Paid

government.-

and I and all of us—with

Wall

be

5%
..

16

25

package cost of

$978,355

($1 par) out¬

com.

the

on

about

to

current

ders well in advance, through letters of intent, etc.
<
;
solved by charting new courses place, the Administration has al->
Actions such as these would
and by stepping out
boldly—you ready acted. Credit policies have have an impact in two different

Many

in¬
on

fEqual

gives

shs._

and
does

stress

but

appears;

of the economy

Surplus

standing—309,796 shs.

very

These facts will, I hope, give
you
somewhat better understanding

Watson,

can

Com.

tors.

?

&

outstdg.—31,453

helicopters, and liaison aircraft— clines do not
including special planes for visi¬ ministration

Expenses

the 70%

military.

be

excise taxes, or by customs levies.

not

personnel, civil¬

Support Aircraft^ In the 30

about

f69,104

"Calendar year 1953 including declared
dividend payable of 6% cents on Nov. 1.

pfd. stk. ($5 par)

pr.

guarantee

dividuals,
by
direct
taxes
corporations,
by
borrowing,

are

use

months beginning July 1 this year,

conceivably be

can

Stocks

ment

situation,
9,600

stock

com.

pre¬

of June

as

outstdg.—195,671 shs._
6%
pfd. stk. ($5 par)

that

Unnecessary

-

are

pi two ways—either

by

need.

Installations:

marginal bases and installations
being closed.

or

increasing revenues or decreasing
expenditures. Revenues can be in¬
creased

warehouses, etc.,
only on the basis

$3.8 billion.

.

This deficit

barracks,

demonstrated

(5)

Commission;

22.8% of the budget will go for

Limited Construction: New

bases,

in.

penditures will go to national se¬
curity. This includes the military

the

replacements

many

expected, and substan¬

as

to be undertaken
of

receipts.

point out that in the
of all ex¬

me

(4)

new

are

fiscal 1954 budget, 70%

In

so

needed

since

Korea,

spend

that

5%

funds.

tial funds saved.

the

For

(5)

Capital

Jet Engines: The life of jet

nearly

tures.

•

estimated

than

has proved to be much
longer than expected. Result: Not

1948, new authorizations to spend
less than estimated expendi¬

than

lower

engines

are

125,480

paid)

for

The

new

(3)

(not

the

running

go

that every important move¬
will be evaluated, and the

mean

*46,676

"

Bal.

at

that

that

mean

every

action

strain

willingness

through accidents have

much

profit.

Losses of planes in

Losses:

over

(4)

advance.

which
back

Avildsen

on

Machines, Inc.,

provided
for
in
previous
budgets. Result: Substantial carry¬

appropri¬
ations in the January budget have
been reduced by $13 billion.
Requests for

(3)

in

and

years

deficits.

of

far

so

Korea and

been

consecutive

13

were

Getting Delivery: Now that

is in quantity
production, delivery is speeded up
and money does not have to be

billion.

$273

at

to

facts

prior pfd. (68%0)

(1)

Beginning with fiscal 1934,

(2)

able

was

secure

152,000

Divs. paid on 5% pfd._
Divs. due on 6% pfd.

30, 1953:

the aircraft industry

starter:

a

The

(1)

Tools &

these:

now.

the money

Pertinent

the Depart¬

reasons

Defense
a

accelerate
payments on the
to

277,480

_

ferred stocks.

CI. A

position and
still spend less money, I shall list

problem

you

of

maintain

help

money

the program.

meet

Among the
ment

this

outline

to

in interest charges

dividend

Net

fiscal year
substantial re¬

should

211,824

taxes.

Provision for Fed. tax.

of

for
a

duction

you

the amount of

total

ma¬

489,304

oper

before

not

into

In

deductions

Profit

loans current
a

over

$7,684,103

from

ending
Other
has

year

company

current

non

so that
1954 there will be

being practiced in
government.
The

think

upon

needed

prob¬
lems, just as
it is yours and

biggest

mine.

I

loans

$905,611,

will be in¬
terested in these steps taken to
make this saving. First of all, the
Department determined
through
careful
examination
and
study
just what is necessary for our na¬
tional
security. yThe Department
then planned ways to eliminate
every
wasteful expenditure and
duplication. From there they de¬
budget.

this

Profit

fiscal

account of

on

and

Department has effected
billion cut in the air force

$5

a

problems

which

the

paid

Defense

d erstand

u n

still

are

running

public

a

know

to

omies

democracy for

a

informed public. It is

an

tre¬

the
1953

30,

does

will

June 30, 1953

payable

form

groundwork laid for action if and

Net sales

June

pro¬

for

Earnings for Fiscal Year Ending

1.

During

be cut only in

can

where

areas

share

dividend

This

chinery and equipment.

share

a

cents

declared

Includes

Nov.

a

6y4 cents

specific

Administration
over

common

a

52%

cents a share

*25

1953.

tough job, despite present steps taken in that

a

direction.

out

-i,

12 Vz

1951

Commerce

national finances.

spot

is

money

the

involved.

share after making
depreciation of
of the original cost of

$2.30

vision

whatever

so,

of

value

Book

..Thursday, October 22, 1953

.

gaging

in

a

securities

from offices at 501

New
name

Fifth

business
Avenue,

York

City,

of B.

Ray Robbins Co.

under

the

firm

Volume 178

Number 5266

.The Commercial and Financial Chronicle

..

(1541)

and

rooms

Investment Bankers Association of America

compartments will

tion

Return Train

To Hold

Forty-Second Annual Convention

be made at

the

from Nov. 29 to Dec. 4.

the

Convention of

two

rooms

least

one

the

at

Hollywood

such

of

Hollywood

Hotel,

Beach

Hoi ly wo od,

this

at

room

be

not

may

Florida,

attendance

beginning on
Sunday,

that"

hotel, as
possible if the

of recent years.

should

approach

29,

wood

and

on

the

Beach

of

Hotel

convention

the

will

will lurnish

December 4.

indicating their hotel

a

will

bers.

conven¬

each

for

Monday

through
i

w

Boles,
Ohio

Hollywood1 Beach
be

Seacrest

session

and

Monday,

on

presented

Town

presented

at

the principal speakers at the sub¬

those

sequent sessions will include:

turned over

Ernest R. Breech, Executive Vice-

Motor

Com¬

Ralph H. Demmler, Chairman, Se■/

tags

gage

curities and Exchange Commission.

Dr. Raymond J. Saulnier, Director
of Financial Research, National
Bureau of Economic Research.

the
House

be-,

front/desks

of

keys wlil be

slips

filled

with bag¬
with their
numbers.

room

should

tags

tached to each

be

at¬

piece of hand bag¬

arrival in Holly¬
baggage will be
transported immediately from the

gage.

all

wood

upon

such

by truck and distributed
promptly
to
the .proper
hotel

rooms.
;

the Board of

committees

will

Association

during

hold

of

the

meetings

convention

the

Convention Transportation

Governors; and most

national

of the

will

and

New

York

of

route

tions

Special

the

will

train

be

Train:

in

both

The

direc¬

Pennsylvania

between New York and

RR.

Washing¬

present their annual reports at the

ton, R. F. & P. RR. between Wash¬

convention

ington

sessions.

An

open

Richmond,

and

and

Sea¬

meeting of the Municipal Securi¬

board RR. between Richmond and

ties

Hollywood.

Committee

will

held

be

on

Sunday afternoon, Nov. 29.
With

the

exception

that

of

meeting, and possibly one or two
other committee meetings, it is not
planned to schedule any business
sessions

in

will

left

be

the

afternoons.

free

•Excellent facilities for golf,

swimming, and fishing
able.
r

north

is

of

coast

avail¬

are

situated

Florida,

Miami.

of

the

on

miles

17

furnishes

It

an

unusually satisfactory site for an
I.B.A. convention,
and has long
been

of the Association's most

one

popular meeting places.
A

,

registration

charged

for

.alternate

fhe

wife

family

convention.

be

delegate

his

his

of

will

fee

each

and

member

This

and
other

or

attending
will

fee

be

$40 per person. Checks covering
registration fees should be made

payable

the

to

Association

and

forwarded to the Chicago office of
the

Association

with

the

appro¬

priate white form.
-for the convention

rooms

be

must

made

through the Chicago office of the
Confirmation of

Association.

crvations

the

York 5, N.

Street,

New

Y., is Chairman.

Pittsburgh Special Car: This

car

will be operated via the Pennsyl¬

vania

from

RR.

tached
train.

the

will

res-

made

be

as

the

to

Pittsburgh

trip

going

York

New

Pullman

to

reservations

Louis

should

A

special

Chicago to Hollywood,

with special cars from Detroit and
St.

Louis

to

attached

be

Cin¬

at

there

sufficient

are

The

route

of

New

York

Central

the

Chicago

to

Railway

System

will

In

addition

the

to

Hollywood

Seacrest

Apartments,
Surf

Hotel,

Manor,

the Town

and

the

House

will also be available for

conven¬

tion

On

housing

basis of past

to

necessary

number

hotels.
than
at

the

place

persons

view

a

substantial

at these other

of

this,

no

more

rooms
will be assigned
Hollywood Beach Hotel to

two

the

any

of
In

purposes.

experience, it will be

one

should

member

be

tion

does

that

each

requesting

noted
not

organization.
that

necessarily

member
same

this

It

limita¬

imply

organization

will be assured of




the other

on

a

regular

Lines

or

National

Airlines;

Governments

on

Sytsem

Cincinnati,
from

from

Southern

Cincinnati

Jacksonville, and Florida East

Railway from Jacksonville
to Hollywood.
The route of the
special cars from Detroit and St.
Louis
be

to

Cincinnati

New

will

likewise

Central

York

for

the

which

see

below)

should

be

made

through Richard B. Walbert,
Blyth & Co., Inc., 135 S. La Salle

Comptroller

tional

government market

banks in the United

According to reports

3% obligation would not be unexpected
be many that would be very well
issue. On the other hand, there are those

an

looking for

are

a

27/s%

a

security with

an

maturity

extension of the
A 2%% issue is

over the recently offered obligation.
being talked about which would be a slightly lower coupon
rate than the last financing by the Treasury.
A package offering
may be made, although this idea does not seem to have as much
support as in the past.

also

to

$ 2 9 3
t

s

r

in

i

s

x

The

annual

an

rate,

amount¬

ed to 8.21% of

capi¬

average

profits

in the
period

same

of

/jr

Net

funds.

tal

5

19

2

Ray M. Gidney

amounted to

$279 million, or 8.22% of average
capital funds.
•

Net

to $624

of $93 million over the

crease

of

half

from operations
million, an in¬

earnings

amounted

curities

last

year.

sold

came

while recoveries

Maturity Extension Prevalent

loans and se^

on

curities, including adjustments, in
valuation

time to

is

mainly responsible for the pushing out
of maturities. This is being done also in spite of the opinions that
long-term financing by the Treasury in the future is quite likely
come

million

principally in the short-term obli¬
gations are now putting some of these funds into the 2%% issues
that are still at a fairly sizable discount. It seems as though the
belief is becoming more widespread that the most distant 2V2S will
continue to go up in price with the easier money policy.
To be
sure, there will be corrections from time to time but set-backs,
market followers, should be oppor¬

to

acquire needed issues and advantage should be taken
developments in the market.

these

of

money

,

spite of the profit taking which has

going

been

on

in

taxes

amounted

to

earnings were $1.5 billion,
of $181 million over
six months ended June 30,

the

1952.

Principal items of operating
1953
$854 million from interest
and discount on loans, an increase
of $119 million over 1952, and $341
earnings in the first half of
were

million

from

States

Government

1

interest

increase of $41

an
1

:

.

on

United

obligations,

million.

*

*.i

'

Two With Walston & Co.
(Special

SAN

to

The

Chronicle)

Financial

Calif.

FRANCISCO,

Warren S.

—

Carter, Jr. and John F.

Mulligan have become associated
Walston

&

Street,

gomery

The intermediate term obligations are still among the favored
in

while

increase

with

Intermediates Still Favorites

issues

1

Gross
an

Institutions that have been

tunities

■

$272 million.

place. However, it is not expected that the long-term
financing which will be undertaken by the Treasury will have too
much of an effect upon the outstanding issues because it should
fit into the pattern that has been established by the market itself.

according to the many

:

Losses, charge-offs, and current
additions to reserves totaled $96

take

to

$29

totaled

reserves,

:

Activity and volume in the government market has stepped up
considerably, especially in the longer end of the list. It is reported
that a large number of institutions are lengthening maturities,
with not a few of these moving into the more distant Treasury
obligations. The belief that money rates will continue to be easy
some

first

Profits on se¬
to $8 million

million.

for

States

total,
figured

supposed to

are

pleased with such
that

Cur¬

sions amount¬

when

is

now.

there

the

Posses¬

and

at

since

of

Gidney, reports that
profits before dividends of na¬

net

profit

.

Co.,

265

members
San

Mont¬
the

of

Francisco

New

York

Stock

Exchanges. Mr. Carter was

and

securities.

formerly Burlinghame manager for

for the discount

Stephenson, Ley decker & Co. Mr.

There still seems to be a good demand around
obligations in this group, with some of the buying
coming from those that were mainly in the shortest term issues.
Corporations in some instances have also been going in the middle
maturities, with part of these funds coming from the sale of the
these

shorts and the balance
latter type

of purchase

representing
appears

a

which

banks

that

reported
fall

more

certain
in

into the market for

the

U. S. TREASURY;

out-of-town

commercial

the

est in the
as

well

as

STATE

a

It is reported that these institutions have shown an inter¬
2%s due 1958, the IV2S due 10/1/58, the 2V4S due 1959/62

gations.

with First, California

late.

savings banks classification and
fair amount of excess reserves have
the intermediate and longer term obli¬

have, according to advices,
come

of

was

departure from the pattern

Outstate Banks Active
is

It

Mulligan

Company,

commitments. The

new money

to be

that most of these corporations have been following of

the 2!/2S of 1963/68 and 1964/69.

There

are

also reports

and

MUNICIPAL

that these banks have been modest buyers of the 314s due 1978/83,

System.

reservations

The

rency, Ray M.

year.

backing and filling pending the
announcement by the Treasury as how the new
money will be
-raised. A strong tone is evident; nonetheless, in spite of the mild
uncertainty that always accompanies financing by the government.
There have been plenfy of rumors as to how the Treasury will
obtain the new funds, with an intermediate or a longer term obli¬
gation apparently in the spotlight at this time. It seems as though
a short-term obligation is not
being given too much consideration

be

Coast

for

Beach Hotel, the Hollywood Beach

go

convention

the

scheduled flight on either Eastern
Air

reservations.

train

them, there

this connection.

the

may

cinnati, will be operated provided

as possible, but due to
go¬
required for processing ing trip (with the exception of the
Detroit and St. Louis special cars,
may be some delay in

time

than

above

By JOHN T. CHIPPENDALE, JR.

made

be

Special Cars:

train from

with

way

group and

cars

Reporter

for

Chicago Special Train—DetroitSt.

one

later

or

months of the

special

through
A.
Lowrie
Appiegate,
Hulme, Appiegate & Humphrey,
Inc., 586 Union Trust Bldg., Pitts¬
burgh 19, Pa.

Pullman

•promptly

William

52

Co.,

to

All reservations for hotel

-

Our

Washington, where it will be ate

Hollywood

•east

tennis,

'

■

•

They

liam E. McGuirk, Jr., Kuhn, Loeb

recreation.

for

Pullman reservations

for the going trip should be maide
torough the New York Transpor¬
tation Committee, of which Wil¬
&

scheduled

f i

station

In addition to the convention
sessions, there will be meetings of

earlier

capital funds in period

on

was
at annual
rate
of 8.21%
compared with 8.22% in 1952.

ed

presented.

are

out

hotel

Then,

should

representatives will

these

of

Slips' for
Surf Hotel,-

passengers

and

names

One

pany.

;

as

special

First Half Year
Gain

million

the floor'.

to

Room

also furnish

tary of the Treasury.
Ford

hotels.

for

Profits Stable in

National

Hotel-

the " Hollywood

-

the

The hotel's

Hon. George M. Humphrey, Secre¬

President,

for

Manor,

the

and

to

regular trains.

floor of that*, *A»/.teThe

proper

Slips,

■

made

and

num¬

room

Hollywood Beach Hotel.

-

,

Com¬

opening

been

on

return

flights

operation of such a
Accordingly, arrangements

r

National Banks

New York 5, N. Y. Provision can
be made so that those desiring to

the

train,

Lines

with slips

Beach Apartments should be pre¬
at the front; :desk of tee

Columbus, will address the

pany,

special

in recent years

Air

on,

sented

T.. Boles

Ewing

The

of

Holly->

travel

passengers

oh the

hotel.

T.

g

the

clerk

Fri¬

n

warrant

These

should

day. President
E

that

ficient demand

slips will take the
place of hotel registration.1 Slips-

sessipn
morning

from

No

sec¬

arranged

special trains and

Friday,

be

reservations.

has

have

Representatives

November

tion

train

Special

been

through Harold H. Sherburne, Ba¬
con, Whipple & Co., 1 Wall Street,

been scheduled for the
Associa-' Beach Hotel, or that each member.
return trip.
This Is due to the
be held at organization will be assured of at fact that there has
not been suf¬

will

America

tion
the

There

Hotel

Bankers

Investment

ending

Beach

have

Airlines. Reservations for the spe¬
cial section flights should be made

throughout the convention to han¬
dle

1953 Annual

Eastern

Hollywood. Represen¬

Hollywood

flights

between New York and Miami via

tatives of the railroads will be at

Meeting to Be Held at Hollywood, Fla.,1:
The

Arrangements: Re¬

Pullman reservations, shohld

turn

Air Transportation:

be,

available./

21

mainly

on

term issue,

these

SECURITIES

dips, however.

State funds have again

been in the market, with the longest

the 3V4% obligation, getting most of the buying from
although it is indicated that some of the longer-

sources,

term 2V2S were likewise taken on at the same time.
were

that

in the market for the longer governments
there

were

more

interested

in

the

Private funds

but it is reported

longer 2V2S

than in

the

314% issue.

Street, Chicago 3, 111.
Detroit

Special

Car:

tions for the going
made

don,

through Ralph Fordon, ForAldinger

&

Co.,

Penobscot

Bldg., Detroit 26, Mich.
rooms

and

Tax

Reserva¬

trip should be

compartments

Drawing
will be

available.

prominent as

ever, with indications that the savings banks have assumed a very
prominent role in these operations of late. This does not mean,
however, that the commercial banks are not doing an important

amount of this work because

in these
The

St. Louis Special Cars: Reserva¬

Selling Operations Persist

Switches and exchanges for tax purposes are as

as

a

whole they are still the leaders

exchanges when volume and activity

are

considered.

partially exempt obligations have been appearing in the

market in somewhat increased amounts but these issues are being

tions for the going trip should be

absorbed without difficulty, with investors taking on

made

ties, according to reports. The funds which have been obtained
from the liquidation of the tax-sheltered governments have been

through Harry Theis, Albert

Theis &

Sons,J Inc., 314 N. Fourth

Street, St. Louis 2, Mo.

Drawing

these securi¬

put into the state and municipal obligations, with the state issues

getting more of the attention at this time.

AtTBKET G. LANSTON
& Co.
INCORPORATED

15 BROAD

ST., NEW YORK 5

WHitehall 3-1200
231 So. La Salle St.

45 Milk

St.

CHICAGO 4

BOSTON 9

ST 2-9490

IIA 6-6463

72

The-Commercial and Financial Chronicle

(1542)=

Limited Currency Convertibility
Will Not Woik!

have

to

...

"*

,

any

<

Economy

capital

Moreover,

essential in

are

Efforts

Belgium

to

movements

with

Temporary unbalance is bound to
why

"hybrid system," retaining all present red tape in exchange
same time blocking capital transfers

that

may

well

of

cur¬

balance

adverse

an

nevertheless

country

a

without being any
Many countries
have spent more than they nave
that are essential to a free economy.
produced, invested more than they
have saved. This they have been
International trade is still con¬
(a) There is no valid justifica¬
able to do with impunity by at¬
stantly hampered
by exchange tion for such restriction.
foreign capital in the
control.
In
a
certain
measure
(b) Capital movements are es¬ tracting
sential to a balanced free econ¬ form of long-term investments.
businessmen have
rent payments

the

transactions, while at the

accus-

this

to

loineu

j

H a v.i n g

I
;

try

adjust

:

;
;

7;<

e

-

existing- world is still suffering, and to the
danger of capital flight.

Never-

of the

i

tions

It

regula-

the

f^reign

and international pay¬
ments.
It is, moreover, a fact that
during the past few years most
European countries have achieved
very appreciable progress in the
monetary sphere. The restoration
exchange

a

or

stable balance no longer ap¬

to be either an impossibility
ideal.

distant

a

So much

so

the German Government

was

which first took this

govern-

that in many places

possibilities of a return to
currency
convertibility are the
subject of lively discussions. Nev¬
ertheless, most responsible writers
and authorities on money matters

World

first

the

authorized

rations,

financing of

short-term

foreign,

by

and

credit

mainly

renewed

not

were

granted

American

currency

disaster.

nvented

She accordingly

exchange control.

Other

governments followed this

exam¬

and

led

the second World Wai¬
the generalization of this

to

Traditionally,

the

outflow

capital in the form of hot

the possibility of
exchanging one's own currency
for any other currency without
prior authorization or legal re¬

has been accused

\

freedom

of

of

money

of the abolition

the

sphere of for¬

transactions.

But

democracy the public author¬

a

ities have

.

in

exchange

eign
in

the

not

their

at

means

the

disposal to staunch completely the
outflow
of
capital.
Transfers

liberalization of current payments

"through the official channels" do

only. Payment of goods and serv¬
ices would be generally author¬

not constitute the

V

What is considered to be feas¬
in

ible

the

without

ized

future

near

undue

is

interference

half

■

curing
beyond

.

only way of se¬
passage
of
capital

the
the

frontiers.

Private

-

transactions
and
exchange authorities. How¬ compensation
capital transfer would re- agreements between residents and
main strictly controlled.
foreigners, under - invoicing and
invoicing,;: illicit
Businessmen all over the world over
consign¬
ever,

would be greatly

rejoicing if this
progress
were
achieved in the
near
future, and if it could be
maintained. I fear, however, that
their -joy would not

j

one.

-

-

the

In

-

-

first

be a lasting
*

*

•

hybrid

would bring, no relief of
the prevailing red tape.
For it
entails essentially the maintenance
system

■

of the whole of the administrative

machinery now in force:
order to
*

alleged

For, in

prevent capital transfers,
be prejudicial to the

to

.balance of

payments, it is neces¬

sary

every

transaction, whatever
it may be, involving a payment
abroad.
The
exchange
control

*

*

f

to subject to prior authoriza-

tion

,

would,
however,
refrain
from
using its powers to influence the
spontaneous
ternational

hand, the
1

trade.

On

the

in¬

of

other

system of limited con-

vertibility

will

unworkable
•

development

.•

after

certainly
a
.

prove

time.

certain
.

.

.

'

t

Should Oppose System of Limited

Convertibility

Everyone who wishes a return
full convertibility should fight
: the
introduction of a system of
f convertibility
restricted to cur¬
rent payments, and this for three
•

the

national

abroad—these

are

some

currency

examples

of exports of capital which

ities.

Bankers,
that

wanted

all

to,

Nobody

such,

taken

in

sure

outflow

an

really

sending
country.
to what

own

tell for

can

extent

wha

succeeded

his

Eurone,

over

anybody

outside

money

fact

easily

the control of the author¬

escape

know

-■

this

place

of

has

place. .Certainly

But,- before - the
was,
in general,

filled

passed.

repatri¬

the

.

had

emergency

nently

abroad

mostly

because

regulations have been broken, and
fines

those who
on

or

can

imposed

caught

are

on

way

back

the

doubt,

no

be

therefore,

the

on

way

There

that

change control has not prevented
an

important, outflow

assets.
is

the loss of

market...

a

those

But

avoid

order to

lucncrauie

capital.

:

concluded

loans

of

exportation

or

iurm

maintain

They

be¬

the least recorq-

are

existing

and

they usually
benefit the least solvent countries.

lack of

balance

drain
creditor

They amount, in fact, to
the

on

a

budgets of the
On the one hand it is

countries.

that

feared

be

to

will

the

taxpayers

quickly revolt against the re¬
burdens.

sultant

the

On

other

hand these operations have a

effect on
they

inflationary

tinctly

dis¬
the

creditor countries, unless

financed

is,

icy

no

If

this

sense

adequate

insecurity
control.

of

eon

address

of Beljrian

the U.

by Mr: Collin at Lunch¬
Chamber of Commerce in

S., Inc., N. Y. City. Oct. 14, 1953.




of the so-called hot
The Central Banks are
sufficiently armed to check such

is really

Continued,

there

so,

pointing

reserves

If it is

liquid

to

in¬

and to political

justify-

exchange

genuinely the fear

flights of capital which is

venting
more

a

pre¬

return io freedom it is

than possible that exchange

which

to

is

can never

situations.1 One

cannot

its contribution

to

hope that

the restoration

equilibrium will be a
permanent one. It is abundantly

clear that

is

public opinion in Amer¬

in all the creditor countries

as

and

more

this

opposed to

more

of financial

form

such
and

is

certainly

any

assistance,

due

not

to

any
change, in the remarkable
generosity of which the American

people

proof

ample

gave

the

in

past.
-

this

the

is

recognition

of

simple fact, that those hand¬
more harm than good.

outs do

of

However, the absolute necessitv
a
constant and regular flow of

capital from the rich countries to
those whose development
ficient

or

become

is insuf¬
has been retarded, will
and

more

evident.

more

Salvation, then, does not consist in
tho

restriction

capital.

of

jrom

Convertibility—A Hybrid

panies

aresubject

which

;

to

a

great

danger

of
a

breaking
return to

any

form of convertibility would
indefinitely

postponed.

Ex¬

again be
firmly established, so much the
more,
that some seem to admit
that these regulations constitute
control

would

improvement

the previous

on

order, with its cyclical crises and
its inevitable lack of equilibrium.
.

But full

convertibility will not
an

abundant

the

countries

necessarily result in
flow

of

which
not be

capital

need it.

to

Such

a

flow

can¬

commanded; it must be de¬

served.^

Money

itself.

It

least

good

—

at

be

forced

to

will

money—cannot
vest

take

time

reestablish confidence,
which

many

wantonly
last

be

brought

again

by building up con¬
patience and par-

that

severance

over

private capital will

gradually to move
the frontiers. At that

moment

convertibility, full con¬
vertibility, shall no longer present
a problem.

in¬
to

the credit

governments

dissipated ..during

years.j

have

the

But this is an indis¬

not very much

which

serves

in the

for

stocks

treated

be

must

as

policy liabilities rather
Investment officers

assets).

committees must think twice

and

they will invest much in a

before

form

of

never

be large, but

June 1953 resolutions of the NAIC

of

the

in

reserve

of

it

said

be

S.

rest

to

on

practical

influence

limit

man¬

on

the amount of stock

on

There are, of course,
other factors, such as tax advan¬
financing.

the
advantages
of debt
obligations in the cost of money,
less now than formerly, and the
dilution of ownership, which an

tages,

a

British Companies

vs.

very

agement discretion.
It may well also have been an

solid foundation).

U.

a

of

or

cannot

placed

1%

of Dec. 31, 1953

charged against this, so that as yet
very

better system

a

has

valuation

definite

(but permitting losses,
unrealized,
to
be

stocks

realized

clear instance iri

a

which the lack of

in

of

1953
as

thejsingle

aside

setting

the asset value

in

easily reduce surplus to such an

a

extent. This is

the

can

which, because

type of investment alone, can so

part of surplus, except to the ex¬
tent that this was changed by the

permitting

which

investment

fluctuations

the

of

—

prices of stocks aggregat¬

it is to

as

than

be established

may

—

market

of market prices

(a)

(b) of the limitation
on
surplus, and-(c) of depart¬
mental requirements that any re¬

issuer takes into account in select¬
Preferred stocks have been per¬

for

investments

missible

all

tically

ing

prac¬

became

latest1 Joint

Sept.
the

Investment

ALC

the

of

and

market wants has

191,

common,

able.

be compared

life

1953,

was

with investments by
companies,

insurance
free

are

reserves

set

to

such

up

they deem necessary.

as

in the 27th

the 22 shown

Most of

Plan

Reserve

method of

One

-

31,

Aug.

of

as

only 2.8% of total assets. This may

which

;

Stock

A

of the assets of the in¬

with 88%

dustry

on

influence
the supply
of stocks,
especially preferred stocks, avail¬

shown that
of stocks, preferred and
held by 49 companies

total

influence

an

of

financing industry
does. The investment policies of
institutional investors may well

is

it

1953,

30,

form

the

Bulletin

LIAA, No.

periods
what the

of higher interest rates,,

in the

1950s. However,

true,

time, and particularly in

permissible - within nar¬
limits mainly during the

1940s and

medium of financing. It is
however, that at any

a

also

companies

insurance

since the 1920s and common stocks

reserve

accumulating

»

for stocks would be to set

aside the earnings

in excess of
company's con^
tracts or the earnings in excea
of the earnings on other invest^
ments. This could well provide
rate

required

on a

Annual Life Assurance Number of

annual addition to the reserve

"The

from 2%

Review," Nov. 21,1952 (Page
1127) held more than 10% of their

assets in preference and
shares

held

in

1950;and

20%

over

above

ordinary

1951,

and

many

held

some

30%.

would, of

be impos¬
weigh all

course,

of

ascertain

to

the

those

•

down, and if it failed,

•

with

ing only 5% of total assets would
take over lf>% off surplus- (keyed

sible

limited convertibility will always

change

only

permitted will have to be devised.
existing rules, those com¬

Under

.

System

in

is

It

fidence

15

page

of

movement

•

Therefore, the hybrid system of
be

no

neces¬

drop

It

*

Limited

the

on

sity of punishing offenders.

vides much greater stability in the
valuation of stocks than is now

British

But

the

if

at least

undue stress is laid

Of Life Insurance Companies

rower

of financial

ica

repatriate,

readily

are

last long.
only a makeshift solution
is justified in extraordinary

pedient which
It

ing financial equilibrium has been
restored, by sound monetary pol¬
icy, a great deal of the money
that
has
escaped
control
will

Loss Reseives for Investments

and

which

reasons

led

have

responsible for the invest¬

ment

policies of life insurance
companies in this country to in¬
such

vest

and

reasons

small

a

stocks. There

are

amount

in

doubtless several

they

have

doubtless

weighed differently with different
managements. It is unquestionably

thinking of management. I know
that this is

have

so

in

cases

of which I

knowledge and I
imagine that the influence of the
valuation method pervades the in¬
personal

On

seem

that

wise,

reflection,

it could

because

not be other¬

every

officer and committee

investment
formulating

investment policy knows

fluctuations

are

to

would

it

the

which

mar¬

stocks

subject and must calculate the

extent

such

which

to

fluctations

may

decrease a surplus very sel¬

dom

more

Often-

than 10% of assets and

substantially

would be the
pany K

is

limitation

case

subject
laws

less.

whether

This

a com¬

to the surplus
or*, not. A 10%

of the cost of the

to 3%

stock portfolio. Even so,
take

it would

long time to build

fairly

a

a substantial reserve and the
companies would probably pro¬
ceed -shy
starting
out
slowly,

up

gradually widening the portfolio
the

as

accumulated. The

reserve

important thing, it would seem,,
is to get started. From this stand¬

point, it is fortunate we are en¬
gaged in a long-term business, be¬
cause a mere change in regulation
will

tion

long precede the accumula¬
of conservative reserves,—

unless they happen to be
in

part

built

in

increases

by

up

market

values.

true, however, that the method of
valuing stocks has influenced the

ket

in

to

of

movements,

disorderly

by savings. Such a pol¬
therefore, only an ex¬

reasons.

•An

ing capital,
money.

dustry.
ex¬

even

quirements
of Dec. 31,

an

heavy

They should not

eign assets.

the eco¬
nomic and social consequences of

r

Nowadays, flight capital has a
tendency to stay perma¬

out

procedure, too,

form of

a

in

definite

is

This

be

after

ated

rapidly

century.

by the granting of offi¬

credits.

after

important.
hot money

very
war,

19th

the

,

in current transactions

gaps

erate, in

the events of Korea, the flight of

capital has been

of

statutory limitation on surplus are
now
held in a- vise by the re¬

-

ments

unused

Instead

exportation of capital
that the state is compelled to tol¬

is

of the

■

of

Nowadays, the normal and inevit¬
are

North
all-out

on

blocking former investments, they
should gradually liberate all for¬

Canada, South Africa and
Switzerland, during the sec¬

ond

cial

a

confidence

have

resources.

the

with

case

even

able

which

those

all

of

available

have

an

the

deserve

to

U. S. A.,

which

system.

limited convertibility. Such a sys¬

striction.

re¬

rapidly dwindled and Ger¬
was threatened with
a fi¬

nancial

ple,

even

When in 1931 these credits

serves

dare not advocate a return to un¬

tem presupposes

repa¬

investments with the

new

aid

banks.

had

they

reconstruction

of

After

course.

War

certain

many

the

the

was

tween states

trol.

liberalization

-y

pears

In

fact,
t h e 1 e s s the the flight of capital has been the
cause of, or at least the excuse for
vast • majority,
aspire after a the introduction of exchange con¬
rules.-

*

of

attempt to justify
convertibility by point¬

ing to the inadequacy of gold or
in a num¬
ber of countries, to the political
insecurity from which the modern

well

as

experts

limited

hard currency reserves

possible to

t-h

y

Collin

a

to

.

as

Fernand

The

no

to
change- it,

p they

con¬

vertibility is bound to break down.

p o w e r

effort

especially

which

tq make up
should make

leeway

,

(c) The system of limited

rrial "situation,

:

countries

of

.dread Jso
On the contrary, if a last¬

much.

payments.
governments,

The

attribute

to

they

for it.

worse

Such

omy.

abnor-

.very

disparities

try to prevent the exodus of float¬

has

Experience
have

reason

needed.

are

shown

main

the

and hard currency re¬

gold

serves

of international capital transactions
necessarily would lead to control and regulation of all other
financial transactions, as at present. Calls limited convertibility

is

That

occur.

capital and dividends, is foredoomed to failure.

grown

authorities

the

America,

of

balance

a

payments are liable to
only passing success.

current

meet

Contends any prevention

a

the

to the freedom of interna¬

those

free economy.

a

secure

like

pensable step towards any lasting

-v return

-

tional

Belgian banker maintains any attempt to reestablish
convertibility on a limited basis, which would prohibit

free transfer of

•

Free

Prominent
currency

-'

Capital Movements Essential to a

By FERNAND COLLIN*
Chairman, Kredietbank, Brussels,

ceased

has

control

object.

..Thursday, October 22, 1953

.

Various
valuation

proposals

to

situation

the

meet

have

been

made. In 1945, the Investment Re¬

search Committee of the Life In¬

Association

surance

made

to

of

America

proposal regarding

a

ferred

This

stocks.

pre¬

limited

was

preferred stocks which yielded

not more than
above

of

the yield

high

grade

a

prescribed ratio

on

selected list

a

preferreds.

As

to

preferreds which met this test, it
was proposed that one-fifth of the
difference

the

between

of the

stock

previous

year

value

for the year

cial

the
at

market

the

and

its

case

of

value

for which the finan¬

statement

was

made

be added to or subtracted

the

end

might

should

from,

as

be, the previous

Nuniber'5266 TV. The Commercial and Financial Chronicle

,Volumel78

year's market value. This came to
be" called
the? "average market
value method." rThis proposal did
involve

not

the

for

other

the

use

selected

reserves

the
suggest a
on

it did not
stabilizing the

hand,

method

of

list/ but,

for

value

of

preferreds which did not meet
the yield test or of commons. It
could certainly be made applica¬
wider range of preferreds

ble to

a

than

that

in

contemplated

the

proposal then

made if a reserve
also provided. It might also

was

be adapted to commons.

Stocks, of course, differ fun¬
damentally from bonds and other
debt
obligations in that stocks

generally have

maturity date

no

their

and

value, even on a longterm
basis,
is ! therefore
more
closely related to market, at least
to market trends. This last is par¬

ticularly

of

true

related to trends

long-term

stocks

common

is generally directly

value

*whose

which

within

having adjust¬

which fi¬
stand,
made each year in the direction
of market changes would seem to
have a good deal to be said for
it, particularly if some reserve
was provided to make up for any
long-term lag between the finan¬
nancial

cial

well

as

absorb

could

value

statement

value,

range

a

statements

actual

and

market

to

course,

losses which

might

suffered.

be

'

previous

of

Committee's

Joint

Report

April

10,. 1951 recommended
that preferred stocks not in- de¬
fault
of

and

Vi%

yield

yielding not

in

on

selected

a

in

excess

of the average

excess

list

of,

pre¬

ferred stocks adopted by

stocks,

is expected to

play some part
the method of stabilization ul¬

serve

in

timately adopted. Their action was

only

up

the

same

basis

as

bonds

ferreds which
be treated
class.

cost

the second

all

speaking,

preferreds
at

not in default

bonds of

Broadly

these

ried

as

were

to be

were

of

car¬

amortized

at cost

or

the

of

other pre¬

a
50-year period to a price
producing a 5% current yield. On
going into default, writedowns to
market were to be charged against

over

and Insurance Stocks

can

By H. E.

This Week
The

ample

time and the sooner
is commenced, selves.

over

In

will they serve the ends

sooner

sideration

there

which they are designed to accom¬

Details

plish.

their

even

as

size

in

these

any

sense

problems
contest

a

though the general pattern in which both have a
should not be difficult to formu¬ terest, matters which
should

late in view of the great progress

be

worked

can

out

be

In

and

the

covering

much

very

ant influence

on

I

As

have

strides

of

action

the

said,, great
first, in the"

already
NAIC

in

rules

much further

the

in

re¬
finement of those rules in June of
This

1953.

thought on the part of

committees

industry
much

preceded by much

was

and

work

over

very

a

The

longer period of time.

made has been very real
and
has
been, of course, made
through the cooperative efforts of

progress

reserve

which remain—as all

cerned

believe,

being

recognize—are

along the general

lines proposed

by the Investment
Committee
in 1945
if

the Commissioner desired.
•-

The

Committee

Joint

recommendation

A

~

►

for"

stocks.

common

less

COMPARATIVE

..

.."James

long

York

has

office, 25

direct
1

a r

an

have, of

-

no

stocks

upward

over

as

time;

of

a

There

been very violent
fluctuations in value, and for this
reason
this
suggestion ' contem¬
reserve

will be substantial.
A

established

•

slightly

sibly 50% of whatever their mar¬
ket value happens to be at any
instead of- being
carried at cost, they be carried at
market valug, all fluctuations be¬
ing charged against the reserve.
but

Whenever

that

such

a

$10

to

(10-7-53)-.—

Market
Net

%

Times

Price

Operating

Net

Net

Admitted

Total

2.94%

34.1
11.4

$3.56

$3.22

Income-

Income

Share

per

Liabilities

Assets

L

$ijso

$3.52

9.1

•

$io

54V*

-

'

3.00%

-.$3.88
41.2

•

Investment

Investment

Earnings

Total

40

$1.20

4.51%'

Share-—

per

of

200,000':

-

—___ ___ ___

Income
as

35»/2
$1.60

......

I__

Rate

—

Rate

Worth

iPolicyholders'

Net

Worth

to

Net

Worth

to

Net

Worth

per

1

Estimated

for

$5.12T

31.3
'

10.6

$11.33

$94,109,000 $65,193,000 $52,414,006
67,544,000
47,696,000
42,338,000

as

Net

nounced

%

of

%

Premiums
Fire

of

Value

076,000'

%

Automobile

36.7

75.8

72.7

67.2

$48.30

$43.74

$50.38

$66.33

$60.68

$70.03

73.5

91.4

108.2

53.5

:

Share

per

39.3

65.9

77.8

t

1%)

Net Worth (Policyhldrs.* Surp.)
Estimated Liquidatig Value

41

Workmen's

%

Damage

20
5
7

11

Property

24

6

&

40

5

Bodily Injury

%

23

m

6

21

Fidelity —
Surety

"

Other

%

23.a

j,066,000 $24,054,000 $15,,002,000

Lines

Compensation

'

by

i

%)

Written

%

an¬

i

Written
:

Liquidating

Price

Surplus)

Liabilities

Premiums

Share

as

has

been

Net

Market Price

banking
it

Total

Market

invest¬

m,

Price

Dividend

Investment

Dividend

na¬

coast-to-

ment
r

New

Street,

Market

Annual

Corpm

*•

:

—_n.L.
Lines

•___

13,:

v,

Combined

managing
partner.
Mr. Quigg

Average Combined

Loss & Expense

Ratio

1943-1952

97.4

Loss & Expense

Ratio

1943-1952

97.4

2(b
3D
9

96.5

size

the

to

and

use

of

the

re¬

son,

Ratio

with

and

a

of

Cash

not

are

serve,

%

Loss

&

of

Loss

U.

U.
and

%

All

of

Cash

Bonds

Bonds due
Stocks

All

Percentage
Total

Government

Stocks

and

Admitted

Policyholders
Estimated

50.1

53.0

75.8

8.4

5.5

99.4

65.6

19.6

97.0

62.9

0.3
8.T
111.1

70.5

107.2

60.3

38.2

Income

68.0

59.0

31.7

;
.

-

Liquidating

figures

90.»

1947-1952:

Surplus

Value

97.t»

Liabilities

Total

"

52.3

74.8

16.9

Written

_!

otherwise

rounded

47.1
51.9

:

'

—22.2
—

.

15.S

60.5

40.5

—15.T

77.9

Value

Share

per

NOTE—Unless

dollar

of

187%

65.1

...

Assets

Investment
Premiums

%

164%

46.8

years

years

Portfolio-

as

Increase

5

108. S

100.&

-

74.7

5

Portfolio

than

92.1%
*

54.7

Portfolio

of

than

less

98.1%"

.160%

(a)

Portfolio.

of
of

Earned

%

as

in

of

"

98.3%

1952

Premiums

Bonds

less

%

Bonu's

Net

Market

in

%

Ratio

due

%

as

as
as

Net
•

to

Governments

All

Preferred

Common

Expense

Reserves

S.

S.

Cash

full

and

4L

.

102.4

Average Combined

debate.

40.0

—31.«

noted

out

in

figures relate to year ended Dec. 31, 1952.
thousands,
(a) Excluding fire subsidiaries.

All large

In spite of the operating difficulties under inflationary condi¬
tions such

Association and

ed.

In this field, they are

far be¬

hind other and sometimes compet¬

ing institutions.
far

seems

as

after the

excep¬

overvalued

considerably

are now
as

ture

has

Teserve

As

•

the

risk

of

If there

to

the

investment

reserves

for all

three

is

moderate downturn in business

a

is

used

also

was

Club

been

and

Club

Bond

a

of

the

Municipal

Chicago.

He

the similar

period of

Webber,

Jackson

&

Curtis

General

Reinsurance

American

Based

has

106.0%

Re-Insurance

Reinsurance

Company

94.3

105.1

Corp.

91.2

95.1

the results achieved

the

have

,




far and the trends now

operation there is considerable reason to be optimistic about
operating outlook for these companies.
The First Boston study reviews these factors and other considerations which should be considered in formulating an invest¬

ment

Spring Street.

balance

sheet

that

is-

(Special

SAN

Clarence
come

&

decision

on

companies in the

•

reinsurance industry

at the

present time.

to

The

Financial

1

FRANCISCO,
J.

Calif.

Richardson -has

(Special

to

The

Financial

Chronicle)

—

be¬

connected with Schwabacher

Co.,.

600

Market

•

COMPARISON & ANALYSIS

17 N. Y.

City

Bank Stocks
Third Quarter 1953
Bulletin

on

Request

Chronicle)

DENVER,
bott

has

L>

Tal-

associated

with

Colo.—John

become

at Carroll, Kirchner & Jaquith, Inc.,
Montgomery,
members
of
the
Patterson
Building. Mr. Talbott
New York
Stock Exchange. He
was
previously with Walston & ,was formerly with Gray B. Gray

fluctuations would, as before, now reposed in relation to the
to be charged against*- sur¬ liabilities side. Certainly there is
room on the asset side for as great
plus.
v
"*'• * ' Although no -method has yet legitimate differences of informed .Co.
up,

so

the

affiliated

become

upon

94.4%

Corp

in

*

ANGELES, Calif. —Ralph

Dalton

1952

1953

since

Chronicle)

to Tht Financial

Ratios

First Six Months

With Dean Witter Co.
(Special

,

.

Loss and Expense

Employers

G.

ago.

year

general partner of Paine,

1950, directing municipal bond ac¬
tivities from Chicago.

LOS

a

has

it

substantially
more
flexible
through reposing the same discre¬
tion,. and responsibility, in man¬
agement in relation to the asset
of

econo¬

,

He

active member of the Chicago

.

side

many

now

would seem
Joins du Pont Staff
that there is one basic question
Joins Turner Staff
common
to all, though so far ap¬
(Special to The Financial Chronicle)
(Special to The Financial Chronicle)
pearing to manifest itself oniy in
PASADENA, Calif. — James R.
SAN JOSE, Calif. — Gerald L.
the securities reserve, since it is
Pitcher, 3rd has joined the staff
Robertson has joined the staff of
the only one which has begun to of Francis I. du Pont &
Co., 723
Lola
Turner - &
Co.,
Bank
of
take real form.
This question is East Green Street.
America Building.
whether the pattern being estab¬
lished is not too rigid, whether
With Schwabacher Co.
the pattern should not be made
With Carroll, Kirchner
types,

as

expect, there will be less of a
meed to build up loss reserves as has been the case in recent years.
This in turn would be reflected in improved undewriting resultsTo some extent this factor, together with a better rate stmeture, have been reflected in the loss and expense ratios for the
first six months of the current year as compared with those for

with Dean Witter & Co. 632 South

•

prevailed for the past five years, the companies
gains in admitted assets and investment income.

.

an

long-term invest¬
one
is sufficiently

eliminated

loss.

have

mists and business forecasters

Governor of

the I. B. A. 1940-43.

Bond

mortgage loans go, it

clear that

was

as

have made marked

,

different suggestion
is that a reserve be provided for
common stocks amounting to pos¬

time,

400,000

$10

Reinsur.

Group

550,000

ii

outstanding-.:

Employer**

Group

Share

per

munic¬

coast

f i

the

to

Broad

bond de-

the

Net

Net

partment

important.

-

course,

plates that the

Value

COMPANIES

Amer.

Re-Insur.

en-

g e d

tional

ipal

moved

shares

Yield

F.

Curtis,

con¬

stabilizing tionally long period of prosperity
v
the country has been in, and is

common

been

period

of

Approximate

.

very

REINSURANCE

General

Par

Quigg, Chicago part¬
Paine, Webber, Jackson &

of

ner

after ments—unless
provision of whatever reserve is optimistic to accept the thesis that
deemed to be adequate. This sug- depressions
are
a
thing of the
gestion also recognizes that' the past or that the amortization fea¬
whole has

THREE

Lloyd W. Ma¬

and

suggestion ■?has still in, they

formal

market value of

STATISTICS

One danger

So

made

been made, however, that common

a

CONSOLIDATED

is, it seems to me, that if these
questions, especially those relating

research

stocks also be carried at cost,

-

a number
It reviews the salient features of the reinsurance

a detailed analysis of three of the lead¬
ing American reinsurance organizations. The companies reviewed
include: General
Reinsurance, American Re-Insurance and Em¬
ployers Reinsurance.
:
"
'

.

Research

community, the report is interesting in

industry and also presents

Current

t

In addition to

publicity in the financial

-

-

method

subject matter given little

a

of other respects.

Number

them need much further

Some of

investment study entitled "Reinsurance."

an

Reinsur.

gjv-of Paine, Webber

primary

connection The

at¬

Quigg in NY Office

number

their

not attractive investment oppor¬
In fact there are certain

are

:

December

principle of a
adopted and
laid down and,

I

are,

small

a
as

reinsurance.

of

tacked. "

reserve was

initial

the

main

business.

our

the

when

securities

have

made,

were

today and ress made to date, and it is in that
an import¬ spirit that the problems which re¬

alive

can

there

mean

field

and investment

doing nothing else, it will duce the best results for the insur¬
succeed in stimulating some fur-,' ing
public — our
policyholders.
ther discussion of a subject which That spirit accounts for the prog¬
which I think

only

are

reinsurance

to

varying economic conditions.
First Boston Corporation, New York,
leading investment banking houses, has recently pub¬

this

lished

ceeds in

is

this

of the

one

complete sympathy and un¬
between them, and
Conclusion
the ends should always be to
try
hope, that if this paper suc¬ to set up a system which will pro¬

decided correctly, has
been';
appreciation of active in midJam„ F. Qui
what is involved, the new system
western mu¬
may not work during its first real
nicipal bond
circles for many
the reserve. This suggestion test as it is
expected to work and years. He joined the bond depart¬
doubtless recognized that, despite as it is
capable of working, and ment of the Mississippi Valley
the absence of a maturity,:pre¬ this
may discredit a system which "Trust
Company of St.; Louis on
ferred stocks may be ^expected 'to is basically sound and beneficial.
his graduation from Northwestern
have market values which, on a
Even more needs to be done, of in 1922 and remained with them
long range basis, are fairly close
until he joined Paine, Webber in
course, on the reserve for stocks.
to par, subject to changes in in¬
Here the progress must be viewed 1943.
At the time he left Mis¬
terest rates and, of course, (to a
as
very slow, and the companies
sissippi Valley Trust he was Man¬
certain
volume
of
losses.
The
remain
completely shackled
so ager of the bond department and
letter of theChairman of-' the
far
as
entering this field more Vice-President of the Mississippi
Committee accompanying the Re¬
than a very little way—and en¬
Valley Company
port stated, that while the Com¬ tering it on a conservative basis,
Mr. Quigg is a former Secre¬
mittee i preferred this method: of which is the
'only one on which tary, Vice-Chairman and Chair¬
valuation, it would see no objec¬ it should be entered—is concerned.
man
of
the
Mississippi Valley
tion to the use; as an alternative,
They will remain so until a better Group of the Investment Bankers
of the so-called ■"average market
system of valuing stocks is adopt¬
-.value"

in

derstanding

I

devoted

characteristics of reinsurance companies which tend to contribute
to their strength under

in¬

with

activities, there

companies

This does not
tunities

most

already made.

reinsurance

domestic

be¬

common

industry is

activity.

is

to their use and tween management and regula¬
can
be filled in tory authorities. They are matters

later,

the broad insurance

of

provide. An additional con¬
although many of the large insurance groups

that

is

in

engage
of

of

none

Insurance Stocks

—

reinsurance segment

understood by the public at large and is one which
has received only limited attention from investors.
Part of the reason for this arises from the
specialized function
of the service reinsurance
companies

to exert them¬

room

JOHNSON

not generally

accumulation

the
the

have

the Com¬
mittee on Valuation of Securities,
NAIC, and preferred
stocks of the regulatory authorities and the
equivalent quality which had no industry.
public quotations, be treated on
The questions on the securities
first class and that all

anyone

avowedly tentative and applied is a wide area in between, an area
only to 1953, but it is most en¬ which should provide latitude in
couraging to find that this prob¬ which initiative, enterprise and
lem is now receiving active con¬ ingenuity, the keys to progress in
sideration.
Reserves can be built so many lines of endeavor, will

second,

The

of

year

else

possibly be;
and flexibility is generally better
than rigidity — flexibility within
the limits of safety, on the one
side, and equity to participating
policyholders, on the other. There

preferred and common, that a re¬

1951

-of

as,

the

of

than

of the asset value at the end

age

reflected in market

are

values. The idea of

ments,

the
probably
approval
of
the opinion,
considerably
NAIC, they indicated, by provid¬ greater. Management is closer to
the individual company situation,
ing for commencing to accumu¬
late a reserve based on a percent¬ its possibilities and its problems,

2»

received

the

over

(1543)

Street

<

>

>

& Co.

Laird, Bissell & Meeds
Members New York Stock

Exchange

Stock

Exchange

Members
120

American

BROADWAY, NEW YORK 5,
Telephone:
Bell

(L.

-

BArclay 7-3500

Teletype—NY 1-1248-49

A. Gibbs,

Manager Trading Dept.)

Specialists in

Bank Stocks

f

N. Y.

The Commercial and Financial Chronicle

24

its weakness in Britain is one of the most grat¬

in Western Europe

U. S. Trade Recession
By PAUL EINZIG

'

■ i

;

Dr. Einzig

■■

the

Communist bastion.

be put

on

shelf, and exchange and

become

more severe.

of the

be discussed at the Commonwealth Finance
in January will be the measures that the
Sterling Area should take in case of a trade recession in the United
main topics that will
Ministers' Conference

States. Following on a wave

of optimism about
British opinion

American

business

now

be less confident about the
Washington Administration to
setback in trade. It is pointed out

appears

ability

of

prevent a
in

the

prospects,

to

the

British

Press

that

new

orders

for cap¬

and durable consumer goods have
now largely overtaken the backlog of
demand
that developed in 1951. This is interpreted as
ital

goods

foreshadowing business recession in the United
States,

though opinions differ about its prob¬

able extent.
It

is realized in

London that even a com¬

paratively moderate business recession in the
United States, such as the one experienced in
1949, is liable to upset the precarious equilib¬
/Dr. Paul Einzig
rium of the Sterling Area's balance of pay¬
ments. It is recalled that although in 1949 the
decline of the national income of the United States was merely
5%Sduring the period of recession, it resulted in reduction of Ster¬

ling Area exports to the United States by some 20%. A comparable
reduction in the dollar earnings of the Sterling Area would reverse
the flow of gold and

would soon reduce the Sterling Area gold re¬
level.
For this reason, while everybody in Britain and in the Sterling
to danger

serve

Area is hoping and

praying that, if the trade recession in the United
duration, it

States is inevitable it should be very mild and of short
is necessary

This

worst.

for the Sterling Area Governments to prepare for the
what they are expected to do when they meet in

is

Sydney in January. While they will consider the possibility of pro¬

ceeding with the convertibility plan in due course in the absence
an American business recession, they are also likely to consider
which should be taken in common agreement in face of

of

measures

the consequences of such a business recession.
In the first instance it is safe to assume that, at the first indica¬
tion of

recession in the United States, the Sterling Area

countries
further progress towards liberalization of trade and
exchanges. The convertibility plan would be put into cold storage
until the adverse spell has passed.
At the same time steps would be taken to cut down dollar im¬
ports to an extent corresponding to the decline of dollar exports.
Import restrictions, unpopular as they are, would be resorted to
once more. This time it would be easier to apply them than it was
in 1949 when owing to the world-wide shortage of many kinds of
goods there were no alternative supplies in them to those of the
United States. This is true also today in respect of a number of
goods, but the proportion of goods with alternative supplies has
increased considerably during the last four years. Generally speak¬
ing stocks are also higher, so that the dependence of the Sterling
a

on

the Dollar Area has declined. Even

so

it would be idle to

minimize the inconvenience caused by the need for
lar imports.

curtailing dol¬

Commonwealth Finance Ministers' Conference is likely to
elaborate measures aiming at an increase of trade within the Com¬
The

monwealth. This would be done if possible within the framework of
GATT but, should the balance of payment situation become

grave,

it

is

conceivable

that

Britain

and

other

Sterling Area countries
might even feel reluctantly compelled to break away from GATT
if that organization should attempt to prevent measures which in
the circumstances

are

considered to be of vital importance.

The possibility of another dollar crisis

through a business re¬
likely to induce the Commonwealth
Finance Ministers to elaborate a long-term program of intensified

cession in the United States is

investment

within

the

Commonwealth.

The

object of such

a

pro¬

gram would be to reduce
Area

on

earning

further the dependence of the Sterling
the Dollar Area, by increasing the production of dollar-

dollar-saving goods. In view of the uncertainty of the
American market for Sterling Area exports the accent is
likely to
be on the latter type of production. Britain experienced three dol¬
or

lar crises since the end of the War and the advent of

a

fourth this

year or next year

would greatly strengthen the influence of those
who believe that the solution lies not in efforts to increase our sales
to the United States but in effort to reduce our
purchases of Amer¬
ican goods. This would be widely deplored but a dollar crisis in
the not too distant future would convert
many people
such a policy.

in favor of

sidered

favoring

at
an

of

a dollar crisis are also
likely to be con¬
Sydney Conference. Today the majority of those
increase of East and West trade are inspired by polit¬

case

the

ical motives. An American business recession and its effects on
Britain's balance of payments would greatly increase the number
of those favoring East-West trade even if
they are

politically out of
sympathy with the Communist countries. Many people would reach
the conclusion that

an increase of
tr^e with the East was in the
necessity not only fromT^on economic point of view
but also from a political point of view.
Inpr any unemployment or
decline in the standard of living
resulting Irom a scarcity of dollars
would greatly strengthen the Communist
sympathies of the British
working classes.
"

circumstances

a

Thus, from the point of view of the security of the democratic
West the choice would be between
supplying the Communist coun¬
tries with goods they need and
allowing Britain's resisting capacity
to Communism to weaken. In view of the
strength of Communism




caused

throughout
principle that

the

assume a

share

certain

Congress to

the

local

of

cost

operations
applied

be

should
generally

ularly

to

government

Federal

a

proprietary operation.

Government Electric Power

discrimination

Another

ticed

prac¬

by the Federal government

in the power business is the

pref¬
de¬
creed
shall
be
given to public
Further striking proof of the in¬ capital it employs is not charged bodies
and
cooperatives in the
dustry's ability to meet the- na¬ against the government proprie¬ sale of electricity from Federal
tion's requirements is evidenced tary operation. In those instances government
projects.
This dis¬
by the contract signed last year where interest is charged, it is at crimination against the customers
by the Ohio Valley Electric Corp¬ a rate obtained from the issuance of the private companies is unfair
oration to supply 1,800,000 kilo¬ of government bonds, which rate and
un-American.
It
should
be

Invades Free

of

watts

electricity

the

to

new

atomic plant of the

Atomic Energy
being built in - Pike

Commission

is

what

below

far

the

in

pay

Enterprise

must

industry

eliminated

Congress

that

so

2,500,000

because of the nature of the.credit-

behind

the

has

of

customers

market/ private enterprise, cooperatives

money

same

which

erence

or

will

operations

government

credit' treated alike.
horsepower. This agreement calls being better than the Federal ^gov¬ Y As long ago
That's

Ohio.

County,

be

obligation—no

♦

/

.

1945 the electric

as

Further//there
utility companies of this country
history. often other items of; expense' gfo-- publicly stated their position with
sorbed by the government and: notOhio Valley Electric was formed
respect to river development in
by 15 private electric companies, charged to government proprie¬ advertisements appearing in na¬
for

the

block

largest

contracted

power, ernment's.

of

industrial

in

Ohio tary operations. This is unfair for tional
magazines. The
declared
it results in customers of private
policy:
?
business subsidizing customers of
"If power is produced at gov¬
V •
government for power. Two huge government business.
ernment-built dams, it should be
If
the
steam
government with
the
power
stations—one
in
sold
to
existing power systems,
Ohio
and
one
in
Indiana—and monies of its citizens is going to
without special privilege or dis¬
compete with them in business, it
connecting transmission lines are
already
and

in

business

doing

neighboring

meet

to

states,

..

this unprecedented demand of the

.

under construction to

now

this

Financing

energy.

supply should operate government pro¬
in
the prietary business on an equal ba¬

crimination.

expensive

This

will

the

save

duplication

of

trans¬

mission facilities, help to co-ordi¬
million has been sis with private proprietary busi¬ nate the entire
power supply of
arranged through private capital ness, charging to its business the each
region, and assure its widest
and
included
the
largest direct true costs of doing business and
possible use at the lowest practi¬
placement of a single issue of se¬ not base government proprietary cal rates.
curities in the history of the in¬ business prices on subsidized costs
"Any savings made possible by
vestment banking business: $360 at the expense of the customers of
this plan should be passed along
million through the sale of 3%% private business and the general
to the users of electricity, under
bonds to 29 insurance companies, taxpayer.
Further, [the
Federal regulation by State Commissions
seven pension funds and two sav¬
government going into proprie¬
or other
properly constituted reg¬
ings banks, $60 million through the tary business is one of the reasons
ulatory bodies. This will assure all
sale of unsecured notes to twelve our national debt is at the present
the benefits of river development
banks and two pension funds, and level of approximately $273 bil¬
and
hydro-power
without
the
$20 million to be supplied by the lion.
added
of

amount

sale of

$440

utility

companies.
in

Government

In the

might ask:
ernment

Why should

into the

go

it

Is

ness?

Business?

light of the foregoing

in

of

gov¬

busi¬

power

function

a

be

ment—to

the

one

govern¬

into

with

of finance

men

ing

of Taxes

Burden

The

Some

Why

of government go¬

expense

stock to the spon¬

common

soring

its

cannot

its
destructive

and

load of taxation. This load

can

be

equitably distributed if gov¬

more

ernment

Signs of

survive

long

heavy

system

proprietary busi¬

competition with its citi¬

enterprises

and

competing

citizens."

own

warn¬

are

ing that the American investment
present

business

There

are

a

Change

few

a

signs

last that indicate
the

better

long

take place. The
Interior recently

may

Department

at

change for

some

of

taxed
issued a statement of power policy
businesses
which recognizes that private cap¬
zens? Government in the power with which they compete. And
ital should have an opportunity
business is a threat to all private further, the sale of such facilities
to participate in the development
business and without private en¬ could
help reduce the national
in

ness

with

equally

are

private

of

terprise there cannot long remain
real

individual

freedom.

the

utility business

of

government

portant
and

can

can

citizen

into the
into

go

well.

as

mistake—if

no

go

this matter
in

extremely im¬
other industry

as

every

each

to

make

it

to

see

For

government

show how the trend has been de¬

There

is

limit

no

to

government competition with bus¬

iness, if the public does not check
the practice.

took

govern¬

complete

monies

tax

not end up

we

nationalization

with

business

where

place,

Federal

our

from? Would

of

working

everyone

for the state?

its

In

operations

field, the Federal
most

cases,

tioned,
local

Since

taxes.

any,

power

governments,

properly im¬ they should pay their fair share
safeguards upon of the cost of such benefits. Con¬

may

reasonable

business in the public interest but

gress

should

Jpcal

should

not

business.

operate

not

play in the

game

It

for

should

which it makes the rules. In other

power

cies

be

the

referee

same

Our
tax

and

Federal

monies

to

taxes

for

business of Federal

on

taxes

government

the

are

operate and

every

There

needs

its fair share

pay

this

this
on

same

levied

basis

such

of

business,

it

trict

the

extent

should

taxes

pay

and

on

an

to

equal

local
of

national

on

are

several precedents for

assume

part of the costs

government.

In

the

Dis¬

Columbia, the seat of the

capital, the Federal gov¬

large scale and

a

from assuming full

away

may

respon¬

sibility for the

power

supply

river

basins,

a

extensive

sibility

which,

when

of

respon¬

backed

by

huge appropriations from the Fed¬
would

treasury,

lead

the

to

The

will

inevitably

nationalization

of

throughout the nation.

power

effect

the

of

largely

depend

tations

by
and

policy

new

interpre¬

on

Federal

bureau

agency

department,

officials and
these interpretations, in turn, are
bound

influence

to

ment

in

ment

power

the

public

where

areas

is being

senti¬

govern¬

would be

or

supplied.
The

policy of the Interior
can remove only part
discriminations against the

new

Department
the

customers

recognition. of the obligation

Where ment to

purpose.

business

expand its holdings, but does back

private of

against

and

government remains in the power

agen¬

that

the part of the Federal govern¬

government goes into proprietary
same

and

business.

industry should
of

quarterback at

time.

state

governments to levy taxes
against the power facilities and

words, government should not try
to

authorize

with

agencies

with the Federal government. Un¬
der this stated policy the Federal

men¬

state or

benefits

enjoy

local

in

Federal

these

operations
by

the

previously

as

little, if

pays

power

in

government

along

resources

government

eral

provided

Government
pose

this

If

would

with

mentioned

services

or

have

not

displace all proprietary bus¬

iness?

business,

I

why

obtain

can

commodities

ment

shoe

activities

veloping.

their

government

cheaper,

come

the

might ask, if the customers

the

business,

business, automobile bus¬
iness, or any other business, in¬
cluding farming. And it is now.
100

of

water

local

One

power

grocery

The

debt.

in

We

encroachment

the power field

Finally, the possibilities of expanding trade with the Commu¬
nist countries in

government

Federal

and

throughout the nation and partic¬

would stop any

Area

nation

reasonably

14

page

slight depression in U. S. would

ENG—There is reason to believe that one

LONDON.

from

'

slump in U. S. buying of Sterling Area goods, and thus
widen the dollar gap. Says, if such eventuality materializes,
trade restrictions will

the

have greatly expanded

government

cause

sterling convertibility would

of

of

Continued
\

•

_

points out even a

ings

ifying features of the international situation. It would be well worth
while to put up with the disadvantages of supplying goods to Com¬
munist countries for the sake of maintaining Britain as an anti-

Sterling Area Fearful of

f.

Thursday, October 22, 1953

...

(1544)

ies.

of

the

power

compan¬

Clearly, there cannot be im¬

portant encouragement to private

capital

until

the

unfair

other discriminations

and

tax

are

removed

by Congress.
Another

indication

that

government may reduce

its

the
com¬

basis with investor-owned propri¬

business
operations
is
ernment,
according to
Moody's petitive
etary business; otherwise, the cus¬ Manual, pays over 10% of the seen in the decision to sell the
tomers of private business will not costs of the district's operations. Inland
Waterways
Corporation.
enjoy the same advantages as The Federal government also con¬ This government enterprise oper¬
customers of government in busi¬
ness.

But

quite

the

opposite

is

true. Government in business pays
no Federal taxes and makes
little,
if
or

any,

local

stances

payments in lieu

taxes,
the

and

interest

in

of

state

some

against

tributes
costs

in

or

pays

some

of the Atomic
are

local government

areas

where

plants

Energy Commission

located and in other instances

pays

substantial

in¬

and

the

In recent years

other

sums

for schools

government

purposes.

the property hold¬

ated

barge lines

and

tributaries

rivers

July

in

on

the Mississippi

and

on

southeastern

24,

1953

holdings

were

these

several

states.

On

government

sold to the newly-

organized Federal Waterway Cor¬

poration,

u

a

private business, for $9

Number 5266.

Volume 178

The Commercial and Financial Chronicle

..

(1545)

million.

1939

From

to

the

1952,

government corporation piled up
losses totaling nearly $10 million,
losing
and

in 12 of the 14

money

paid

Public

years,

ment.

By ROGER W. BABSON

Mr. Babson lists eleven fields of

By OWEN ELY

further

A

[New Discoveries and Inventions

Utility Securities

taxes to the govern¬

no

indication

is that

on

tions,

July 30, 1953 Congress passed the
so-called

Shafer

three-man

Act

creating

Commission

to

nego¬

synthetic rubber plants and

to submit to

31, 1955
their

Congress by January

full report

on

negotiated

a

contracts

along

recommendations.

all sales

with

With

right reserved to Congress to have
days in which to disapprove

thetic rubber

oped

by

World

million.

industry

the

War

The

devel¬

was

government
II

at

Some facilities

during
of

cost

a

syn¬

and

electric companies,

Let

me

name

some

two gas companies

now

(1)

Two subsidiaries, New Hampshire
Kittery Electric Light Company, will even¬

has

a

34.5%

Indestructible

July 1953 legislation

al¬

was

so
enacted setting up a new bi¬
partisan commission of 12 men to

make recommendations
the

reorganization

tive

branch

ernment

of

the

of

the

looking to
execu¬

Federal

by (1) abolishing

gov¬

unnec¬

government functions, (2)
reorganizing regulatory agencies,
and
(3) recommending ways to

essary

Electric

revenues

in

gas

the

certain

They

textile

wide

a

factories

variety
the

in

other

of

New

products.

Bedford

area

While

some

been

eliminate
from

inefficiencies
arising
interdepartmental relations.

the companies moved southward, most of these buildings have
been re-occupied by a number of diversified small industrial units.

Important

recommendations

Cape

Such
clude

doing

ment

corporations

competing
business

that
states
In

and

to

with

abolishing
best

be

in¬

govern¬

fcund

unfairly

or

could

could

with

away

be

private

functions

exercised

by

The System

in

government

business

and

the

preservation of our system of free
enterprise must in the final anal¬
ysis be

adjudicated in the court
public opinion. It is for that

of

that

reason

I

chose

discuss

to

section of America's

a

cross-

citizenship

as

is

represented here today.
The
solution will be made easier and
will

is

come

fully

and

advised

of the problems
inequities that exist and

the

how

when the public

sooner

the

public will be benefited
by the fair and proper solution or

elimination

Finally,

of these

let

problems.

take

us

heart

to

these words of Thomas Jefferson:
"The
best
government
is
that
which

least"; and who
his first inaugural address:
governs

said in

"A wise and

frugal government,

which shall restrain

juring

one

from in¬

men

another,

which

shall-

leave them otherwise free to
reg¬
ulate their own pursuits of indus¬

try

and

improvement,

shall

and

not take from the mouth of labor

the
the

bread

it

has

of good

sum

bridge,

earned—this

is

government."

Large Now With

C. J. Devine & Co., 48 Wall St.,
New York City, has announced

that John W. Large

pal

as

has four steam generating stations, two in Cam¬
one in Portsmouth (New Hamp¬
Of

the

effective capability of 247,000 kw. in the steam generating
plants, about 40% was installed since 1947 and 60% prior to 1946.

total

The

of new high pressure equipment installed in the last ten
has increased the overall efficiency.

use

years

NEGEA

obtains practically all its gas requirements from
pipe lines, Algonquin and Northeastern. After
about two years' delay due to litigation, Algonquin recently re¬
natural

ceived

now

gas

its certificate of

convenience

and

necessity from the FPC
and began operations.
In addition to the two pipelines, NEGEA
also has efficient standby oil-gas manufacturing facilities.
At
present these will be operated only on a peak shaving basis, but
will provide a 100% standby set-up which is unusual. System sales
of gas are expected to about double in five years, due in part to
anticipated increase in house-heating sales. Instead of endeavor¬
ing to obtain additional natural gas, NEGEA will use its manufac¬
turing plants (already designed to supply about 1,000 BTU gas) to
take care of the additional load. It may be necessary to add some
propane equipment during the fourth and fifth years.
Since customer appliances were
some

time

converted to high BTU gas
the current transition .to natural gas (for cities

ago,

served by Algonquin Gas) is not expected to raise any problems.
conversion costs have been amortized on a 10-year basis.

Former

of

the

oil-gas manufacturing

(in four cities) have
since 1947.
They are adapted to use of cheap Bunker oil, and it is estimated
that New Bedford plant can produce gas at a holder cost of 53c
per mcf. (based on present price of oil) about the same as natural
gas. However, if natural gas had not been contracted for it would
or

have been necessary to build additional plants
$1 million capital costs over the 5-year period.

the

companies

gas

and incur about

a

member

department.

has joined the

average

an

of

of

its

to 6% on the rate base as allowed by the Massachusetts
Commission, some increase in earnings is exacted before dny
question of reducing rates might be encountered. Eventually in¬
come

ment of the Chase National Bank.

CHICAGO, 111.—The Executive
of the

also be received

Midwest

Stock

Exchange has elected to member¬

on

; PHILADELPHIA, Pa.
Toebe

Baker

&

Co.,

as

—

joined

Inc.,

as

G. E.

Amott,

Assistant

Manager of their Philadelphia of¬

fice, 1420 Walnut Street.




has

been

now

$4.7 million, but dividends are

can

of

than

be put

different

small frac¬

a

tested.

These

alloys offer great opportuni¬
ties for development.
new

(3)

Commercial

Isotopes,

of which the Atomic

mission

has

lic.

They
hospitals.

when

The

time
is
coming
Isotopes will be used

these

for all kinds of industrial

find

flaws in machinery,

work, to
in steel

rails, textiles, etc. They may de¬
velop into a great industry.
(4)

The t"Do-It-Y our self'

dustries, which have
future.

With

hours,

the

everyone

In¬

promising
shortening of
is given more
a

opportunity to work at home. If I
wanted to open any kind of
store,
would
have
a
store
which

I

would

handle

materials

to

Mechanical

Brain—an

invention with great possibilities.
The

time

new

mechanisms will do much of

is

thinking and analyzing, and

may

become almost

I

common as

adding machine.

(6)

Watch Supersonics.

mean

sound

rapid

very

vibrations

which

are

NEGEA
on

recently offered about 200,000 shares of common stock

l-for-10 subscription basis at $13.75 per share.

a

shares to be outstanding in 1953 including this offering,

average

President Campbed expects the company will earn

calendar

based

Based on the

on

For

year.

1954 he has forecast

the actual shares to

be

the

about $1.40 in
same

amount

outstanding at the end of that

By this

mechanical
than

faster

Supersonics may
completely eliminate present
washing
machines
and
other
waves.

They have the

some

(7)
years

ken

enter¬

common

stock record has been
on

as

follows in recent years,

ago

Machines.
had

we

Some

vending

but

corners,

bad

a

the

rut

of the machines
stolen.

troduction

vending

-fli

12 Months Ended June

30,

Earnings

1953

Paid

—Price Range—

High

$1.00

$1.40

Low

Calendar Year—

X

1951

1948
1947

The stock is

1.00

15%

14

1.00

15%

13%

0.95

15%

12%

0.85

14%

9%

i.3i

0.80

12

9%

1.13

0.40

12%

9%

1.52

1950

1949

1.27
1.22

-

-

—.

1.56

'

currently selling around 15 to yield about 6.67%,

study

and

Now,

and

more

time

leisure.

They

are

in
printing industry is

changes

the

rapidly

of revolu¬

verge

whereby

it can
along with a fraction of its
present
number
of
employees.'
Shoe factories, cotton mills, and
others will enter the push-button
stage where practically the entire
operation
will
be
done
auto¬
matically.
This
will
solve
the
get

union labor

problem.
Conclusion

•

Economics is my specialty. All
talk about making prosper¬

this

ity

by legislation is
although Congress

permanent

sheer nonsense,

temporarily extend

can

In

same.

the long run, prosperity is depend¬
ent upon us

developing spiritually

and

having better knowledge and
self-control, with a determination
Too few of

to render service.

our

these all-important
qualities. Sometimes I think that
young ministers and school teach¬
ers
have the greatest opportuni¬
have

people

for improving

ties

conditions.

Folger, Nolan and
W. B. Hibbs Merge
(Special to The Financial Chronicle)

C. — The
Nolan & Co.,
founded in 1931, and W. B. Hibbs
& Co., founded in 1899, becomes
effective Oct. 31, 1953. The com¬
WASHINGTON,

merger

first

the

on

D.

Folger,

of

be conducted

business will

bined

floors

three

the^«

of

Hibbs

Building at 723 Fifteenth
Street, N. W., as Folger, NolanW.
^

Hibbs

B.

Officers

the

ma¬

&

Clifford

New

Inc.

Co.

the

of

firm

York

Stock

James

will

be

member of

Folger,

on

industry

because
were

with

Paul

Exchange,

Nolan,

Parker

member

Rodler,

the

of

Exchange, James

C. Elgin, James A. Bruen, VicePresidents; and John J. Dunn,

Vice-President and Assistant Sec¬

so

bro¬

retary.

money

the

in¬

Jack G. Jackson With

Shearson, Hammill Co.
(Special to The Financial Chronicle)

It is again com¬

BEVERLY

Power.

when
run

The

electric

time

power,

home appliances,

be broadcast like radio. Some
claim

P.

New York Stock

own.

Electric

coming

even

prices

increase

on

self-service,
the
machine is protected

ing into its
is

of

workers

tionary

that

we

will

buy

our

HILLS,

with

Shearson,

Hammill

&

Co.,

9608 Santa Monica Boulevard. Mr.
Jackson

was

formerly

of Jackson-Anderson,

President

Inc.

/

•

electricity in batteries, which will
brought to us once a month like
bottled gas. This may give us elec¬
tricity for the household cheaper
than we could get it from the big
central power stations.

Calif.—Jack

G. Jackson has become associated

be

-

"

allow

of

within the store.

may
Dividends
i

decrease

should
for

Treasurer; Robert W. Fleming,

Vending

sufficient to

shares outstanding:

average

(11) Automatic Factories should

permit

day enter the supersonic age.

and

age;

and the products and

were

September issue of

executive Vice-President and

electronic

into

got

many

on

will

ing' the

(8)
The

in the

pears

President;

now

of

"Fortune Magazine."

electrical age;

are

complete report

very

John

we

acre

the future of Solar Radiation ap¬

of cleaning metal and even
cutting metal. We first had the

power

year.

earnings being based

A

power.

coming when these

our

as

an

help

people get along without carpen¬
ters, painters, electricians, etc.

(5) The

amount of sunlight on

land is equal to a thousand horse¬

Energy Com¬

to the pub¬
being used by

now

particularly inter¬
getting power, heat, light,
refrigeration from Solar

Radiation. Statistics show that the

released

are

New

ested in
and

some

street

1952

Peter

tion

less

are

millions

Metals

Square,

am

already

chines in railroad stations and

Kurzka,

With Amott, Baker

There

in

alloys, of which only

the Algonquin Pipe Line stock in

ship: Alan T. Calhoun, Calhoun &
Co., Spartanburg, S. C.; E. Alan
Chicago, 111.; and Elbridge S. Warner, Hayden, Miller
& Co., Cleveland, Ohio.

Alloys.

I

soft

New

elements, but these

(10)

to

probably several years away because of sinking fund requirements,

the

Midwest Exch. Members

100

together

devised to carry
Grand Central

York City.

The

pro¬

per¬

the

Times

destined

etc.

munici¬

Large has
past 18 years been a mem¬
ber of the municipal bond depart¬

Committee

may

which NEGEA has invested about

Mr.

for the

and

of

use

to

number.

(2) The
and

from

and

goods.

Roger W. Babson

household utensils.

already earning

are

bridges

even

sets

reconstructed from water-gas sets

houses

mobiles,

the
; All

either been built

about 5%

G. J. Devine & Co.

firm

include

in New Bedford and

one

While

John

served

shire); it is also interconnected with Boston Edison Co.

two

these problems with such

territories

Cod, Martha's Vineyard, and Plymouth and surrounding
territory in Massachusetts, and Portsmouth and surrounding terri¬
tory in New Hampshire, and this provides a well-balanced load
factor to stabilize year-round operations.
Among the customers
served are several of the important educational institutions in
New England.

muncipalities.

conclusion, these problems of

vacation

and

be

for

down to auto¬

duction

being

now

erything,

and

large

abandoned

as

recreational

e v

from

small plants manu¬

have

will

used

1953 were
37% residential, 22% commercial, 28% industrial and 13% miscel¬
laneous.
Industry in the territories served is highly diversified.
The more important industries are textiles and textile machinery,
machine tools, steel and steel wire, rope and cordage, soap, candy,
rubber, carpets, paper and paper products, gypsum products, and
facturing

new

mpounds.

c o

service.

numerous

on

chemical

12 months ended June 30,

cranberries, and in addition include

based

are

Massachusetts and

palities get both electric and

In

-

or

rust, crack or
split. These

electric service to 136,000 customers in

government hands.

is

people

will

bend

not

interest in Algonquin Gas Transmission Co.

ing about $525 million, remain in

after the war, but 28 plants, cost¬

Plastics

which

23,000 in Maine and New Hampshire, in some
78 communities and surrounding
territories; gas is furnished to
170,000 customers in 39 Massachusetts communities; 10 munici¬

were

are

Station

tually be disposed of, and negotiations for such sale are currently
progress.
In addition to these fully controlled subsidiaries,
The System furnishes

dis¬

new

progressing:

in

NEGEA

Says talk of making prosperity
by legislation "is sheer nonsense/'

manent

combination company.

one

Electric Company and

discoveries and inven-

new

are:

coveries and inventions which

and 2% steam heating.

NEGEA controls five

$700
sold

gas

among

and automatic factories.

proportion of the utility business in that area. Annual revenues
approximate $37 million compared with $105 million for New
England Electric System; revenues are approximately 61% elec¬

the

60

these recommendations.

New England Gas & Electric Association
New England Gas & Electric Association is the smaller of the
two New England holding companies which control a substantial

tric, 37%

which

Indestructible plastics; commercial
isotopes; the mechanical brain; vending machines; broadcast¬
ing of electric power; improved conveyer belts; solar radiation,

a

tiate sales of the Federal govern¬
ment's

.25

With Bateman,

Eichler

(Special to The Financial Chronicle)

LOS ANGELES,
H.

Bateman

has

Calif.—William

joined the staff

The Conveyer Belt, coming of Bateman, Eichler & Co., 453
more for'both people and
South Spring Street, members of
goods. This will develop into a the Los Angeles Stock Exchange.
new industry, especially after the
He was previously with E. F. Hutsynthetic rubber plants are re¬
turned to private industry. A belt tori & Company.
(9)

into

use

it

£6

The Commercial and Financial Chronicle

(1546)

Thursday, October 22, 1953

...

beyond its means; had five "years lie which always has to be condiadversity (related to World tioned to any material change

first page

Our

control

policy

effective

and

operations, and reorientation
the
existing
structure to a

of

.•fundamental
ment

over

in

change

manage¬

philosophy.

#

Budget—Fantastically Large

The

Complicated

And

of the

fantastically

compli¬

and

large

cated business. As we do that, you

idea of some of the
that
went
with
the
transfer of management. And you
can
estimate
the
possibility of
will

gain

government income or borrowing.
The
contracts
and commitments

an

producing
(1) In 20

changes

the

all

in

see

you
few months.

a

the Federal gov¬
in termfe of 16

years

ernment has grown

times

expenditures, more
twice
the
percent of na¬
income taken by taxes, and
greater

than
tional
about

times

seven

a

greater total

of civilian and military personnel.
At the
and
*

time, both direction

same

velocity

acquired from
centraliza¬

were

policy of increasing

a

in

tion

the

and

ment

control

and

by

govern¬

of

encouragement

im¬
plemented by the legislative and
dependence

government,

on

The

in

are

a

dollar

-

built-up

1955.

the

govern¬

on

?of them made mandatory by exist¬

legislation,

ing

which

on

there

have been imposed staggering ex¬

penditures

for

national

our

were

tax

ment
on

se¬

loss

govern¬

in

and most
the remainder in the 1955 fiscal
fiscal

1954

the

of

was

loss

was

have

time.

•

/

that

spends

balance

busi¬
of

mal
be

meet one

there

but

expenditures,
reduction .of

much

as

not

in

estimate

an

be

expenditures upward, it is a
of almost
twice that

difference

the

in

amount

Last

direction.

wrong

actual revenues
$3.5 billion less than the es¬

were

the

year

total

of

estimate

The

timate.

locality.

ex¬

^ancec^

ancj

budget should be

taxes should

^Qwn—but—proposals for

the

in

is

it

be

could

retrenchment

charges

top

had

executives

with

to

the

of

ing costs.
ernment

Legislation which estab¬
calling for gov¬
support to activities car¬

ried

outside

lishes

have

sources

will

an

or

relatively
in these

government
which are

costs

by ad¬
reduction

uncontrollable

expenditures will require

legislation

the

in

changes
other

not

easily obtained. Either can be an

expanding program with automat¬

ically

increasing

constantly

and

costs.

times over, but the budget always

maintaining

the

annual

in

ministrative action. Any

unlimited number

Obtaining,

on

results

projects they are convinced
pay
for themselves several

increases.

programs

be

brings
economy" or

something much worse,
Every agency and many

the gov¬

on

adds to the annual operat¬

always

"false

work-load

or

ernment

govern-

included in the budget." Denial

few new of
very

themselves

service

come

"should

Legislation which places a

(4)

should

cxnenditures

pourse

reduced('the

be

has

Law

and

piled

been

law

upon

require
ing service and expenditure. There
program

program,

on

of

w

average

60 departments nation and its people are the envy
with innumerable of the rest of the world, but needs
subdivisions, a n d or desires still are unlimited and

had

government
and

agencies,

divisions

and

2,550,000

civilian

can

With this

$3

as

•

,

-

•

$6
billion is
month's nor¬

about

;of
to

disasters

and operations of seg- and expanding government supgovernment the equiva- port of projects and the power are
constant
additions
without
of, or even larger than,some of centers related to them is a major offsetting " substitutions
or
sub¬
the largest of our corporations in activity
both inside and outside tractions.
' ~
; •
;
'
I
terms of dollars spent and num- Washington.
I am reminded of a quotation
ber of employees. In January the
; The wealth and resources of our
from a British author, that,-"What

.five-day work week, $6 billion a
month. A Treasury general fund
needed

domestic

variation

5%

and

the

of

year

considered a large
one
but in government expendi¬
tures it is $3.5 billion. If revenue
estimates should vary downward

problems

ments

million every day of a

about $300

than

of a

at

These

familiarize

-

an

A

its

or

terms

lent

(6) Your government is a
ness

budget

public interest," and

there

first

At

the addition

level.

focus at the

to

cofne

can

difficult

administrators

revenue losses as
the
tax
reductions

of

result

a

would

they

with

more

only

highest

the

the

and

years

begin

business.

planned level of expenditures un¬
der the authorizations of previous

consideration

the

crop

foreign crises to meet.

may

apparent

more

unforeseen

and

Congress ment spending always "nave
and will merit," are "essential,'' "in the

the

met.

even

Tax.

Unfortunately,

with continued

from

there were the
organization problems of a new
management, and obtaining new
management
in
government is

months'
Profits

series

inherent

own

to meet them. And

To

In the 1954 fiscal year the
partly offset by the six
extension of the Excess

year.

are

^

year

in

Federal

this

the

good

a

There are other
open-end items as well

similar

offsetting
tax revenues. Everyone is for govexpected to ernment economy—in the abstract,

change in status. However, action
has been taken and is being taken

be

scheduled to fall

this

its

has

and the citizens

One-quarter

basis.

of

than

is

and

few

a

cooperation

by about $8 billion

revenue

full year

a

the

lower

would

Nowhere

what

is

did to the budget.

as

Every issue is subjected to the
impact of the extremely varied
views and objectives arising from
special areas of interest to responsibility and all the public and
Congressional pressures which can
be made to serve them,

of obstacles and roadblocks to any

being authorized, automaticreductions were in the law

which

we

Special Areas of Interest

four

over

law

a

billion $888

$1

were

That

months. The But economy always should begin penditures turned out to be ac¬
summary only highlights the na- somewhere else and not affect the
curate, but the expected deficit
ture
of some
of
the problems, projects of a special interest or
jumped from $5.9 to $9.4 billion.
in

salvage

Each

much

expenditures

While

greater than government revenues

we

ment for domestic purposes, many

This is what

committed to reach their
peak in the fiscal years 1954 and
(5)

times
its yearly income; owed more than
a year's income on COD's that will
have to be paid for on delivery;
normally had /ibout one month's
living expenses in the bank; had
relatively
little
margin
before
reaching a fixed limit on its borrowing; was aware of an impending
10% reduction in its income; and
had no immediate plans for changdebt

a

ing its habits.

largely

.

that

facts suggest
costly trap of

demands

appro¬

penditures were programmed and

same

accomplishing these ends.
(2)

in

useful

devices

administrative

of these

result

a

readjusted. To make mat¬
worse, these authorized
ex¬

ters

•problems

would, like to

as

priations became, in effect, COD
obligations
against the govern¬
ment
and cannot be
quickly.- or
easily

let us take a look at
pertinent facts of this

first,

So,
some

future

claim against current and

made

of

acquired

And Fiscal Problems
an

million.

II); had only three times in from a pattern of action to which
20 years provided itself with more it is accustomed,
income
than
it
has
spent; had

Tough Budgetary
a

expenditures

of real
War

Continued from
V

employees.

every

the need to make

was

existing and proposed

ject has

some

pro-

is

n£ed

we

a

Parliament of

ual

careful

and '

.

men

the grad-r

and women.dedicated to

unmaking

o

f

laws.'", And particularly, so,/when

degree of merit. The X

see

attempts-to measure the acT

changes
among difficult question is what projects, complishments of the Congress in
billion in the first half of some those
exercising
policy - making services or activities should be terms of the number of laws en¬
in taxes or in increased govern¬
months.; ,;
i
'•
and delegated authority. There was carried on by the Federal govern- acted/
ment debt.
^
;< */.•:/. f/: - -•!.-/.
'J,-l
(7) While the government has a little freedom to move on a selec- ment and on " what basis. And
The Federal; budget is an ap¬
(3) Past fiscal policy is clearly
tive
quality basis, even at the when you get to that point, you palling /document,, published" in
reflected
in
the
deficit record. •fairly uniform level of expendi¬
curity. The

of payment is

source

a

the

supporting

.

-

..

•

Beginning with the fiscal year
1934/ there were 13 consecutive
years of budgetary deficits, and in
the 20 years through 1953, 17 years
•of deficits.
In

the

there

1954

there

was

for

and

before

years

actual

were

billion

.$13.4

fiscal

two

deficits

fiscal

of

1954

proposed budget with

a

indicated deficit of $9.9 billion.

an

"This totals

than

more

of expenditures

in

$23 billion
of

excess

rev¬

for these three .years.
Unofficial projections of the ex¬

enues

penditure authorizations and
in

grams

Ihe

effect

January

and

pro¬

in

proposed

budget,

of

the

from the

and

ex¬

estimated

revenues

isting

#

laws under relatively
assumptions for the fu¬

tax

•favorable

ture, indicated that after the fiscal
year

1954 there would be continu¬

ing deficits for
billion.

If

a

total of about $33

this

program had been
allojved to stand unchanged, there

codld have been

a

total of at least

fl&Q billion of deficits beginning in
the fiscal

1952.

year

It should

not

be difficult to

see

the trend

of the

affairs

the prospective increase

or

nation's financial

The

deficit

low

by

interest

tration

of

was

rates

and

a

obligations.

know,

these

sup¬

maintained
concen¬

government

.short-term
well

policy

artificially

law

of the government's total in¬

40%

of

calendar

the

last

half

The

up-and-down

enue

tial

year.

A

in

deficit

cash

first

the

to

debt

As

policies

in

you

led

to

new

cash sur¬
plus in the last half.
The result
is a financing problem within the
fiscal
the

and.

year

a

the

the

at

and

Few

For this reason,

had
to

borrow

to

the government

$6 billion

into

in July

before

the

of

end

Yet,

calendar

some

year.

The

(8)
about

debt

government

Sept. 30, it

was

about $273

nearly

the

by

60%

the

of

debt

huge

this

fact

within

due

mand,

one

the

and

is

that

publicly held
obligations

refinance

about

marketable

securities

year

or

and

during

$75

de¬

on

Treasury

has

billion

to
of

non-marketable

the

1954

a

seems

unreasonable

successful

go

*■

have

belief

group

could

that

a

of new ad-

take

over

this

is

a

dollar

amounts
are

estimate

which

officials

of

the

believe

required to support the activi-

task.

way

to

reduce your con¬
complexities of

the

business is
books—I
will read them.

your

you

to look
doubt if

own

through
-

tremendous and difficult

about

cern

(1) The President recommends
budget to the Congress which

a

technical

.

budget you should understand:

a

metropolitan

One

^er,e a,re sev^ral factors about

re-

been

,

a

tion is

Factors About the Budget

few months.

a

to

enticing to read as a dictionary

these

To understand the budget at

it has to be
am

not

all,

greatly simplified, so I

going to feature the incom¬

prehensible billions of

dollars or

ties of the government. The de- the thousands of details. You will
nism and staff of government and tails and total can be, and usually more easily grasp the nature of
completely change its form, its are, changed
by the Congress, the problems related to reducing
policies, and direction almost im- which carefully reviews these es- the budget if it is analyzed in
mediately.
Little
type of action re¬
thought
was timates and decides the maximum terms of the
given to the long-established pat- amounts allowed in each case,
quired.
tern
of organization
You will find expenditures fall
and move(2) The amounts to be spent are
ment, the limitations and restric- authorised
by
appropriations into three principal categories. Of
tions
established
by ■> the
laws which establish the level of spend- the total estimated expenditures
which govern a large part of every ing, but do not automatically pro- (and using rounded figures), 70%
operation, and the complexities in vide the funds. If the spending is for the three major programs
the
relationships of everything authorizations are not covered by of national security, the military
done by government and in gov- tax
revenues, they have
to be functions of the Department of

billion, with a statutory debt limit
$275 billion.
Financing

to

a

* assure you it is by no means
only one*

de-

legislation,
expect

to

telephone di¬
Preparation
begins
in
May or June each year to cover
the year of business which begins
the people.
'Pjls
sug£^st to you one July of the following year. As
substantial area of difficulty con- you can imagine, to assemble,
?
with the Federal buget, analyze, and prepare the informa¬

comparable to their

effect

there

public

done

the
their organizations.

business
and

meet

and

unending

would

men

complicated

tremendous,

of

complicated

and

ministrators

$22.5

on

a

to

relatively srnMl

was

billion in 1933. In
January it was about $267 billion
and

rectory.

organization within

additional amount

some

the

a

own

replenish its cash and will have

to borrow

suading the government to finance it from taxes levied on all

time-consuming

related

budgets,

year.

and

other

mands

fiscal

of the

end

or

Administration,

immediate

which is unrelated to
situation either at the begin¬
or

as

budgets prepared by the pre-

vious

year,

ning

particular

examination and review of

be

benefit

group or area as a result of per-

special out-of-

Congress

struggle with

half

season

of the fiscal

encounter the habits encouraged two v o 1 u m e s 1 of nearly 1,700
the pressures closely printed pages. Because of
that have been built up behind its length and complex legal and
the discovery of how much can accounting language it is about
over the years and

was

in session,
the heads of the departments had

action of rev¬
receipts leads to a substan¬

debt is concentrated in

in the total Federal debt.

ported

the terms of the corporate highest staff levels. In reductions
are such that only about
in force, existing restrictions frequently led to the loss of the
come is received in the first half
best, rather than the least desirof the fiscal year, which is the able members of the staff.
ture,

tax

fiscal

mecha-

covered by government borrowing.

ernment.

Defense, the Mutual Security Pro¬

'

year.

tradi-

(3) The budget is subject to all

and difficult consultation, negotiation, and compromise. This process
will include the Congress if
Income
legislation, reorganization, or apReducing the astronomical dol-r propriations are involved. It will

nues - but
not comparable costs,
Even favorable conditions can in-

In

accord

with American

gram,
and
the
Atomic Energy
progressive depreciation in the
The margin between the total tion in government, great responsi- the risks of advance estimates of Commission.'"
purchasing power of the dollar.
debt and the statutory debt limit bility is coupled with little direct any kind magnifield by the range
,
All other costs are 30%—20% is
(4) In addition to actual defi¬ is a slim one for a business spend¬ power of
decision
and
action, of government activities and every for major programs that are rel¬
cits, during the last four completed ing $6 billion a month and leaves Even after a determination, or form of domestic or international atively uncontrollable under ex¬
fiscal years (1950-1953) expendi¬ little
flexibility for handling so even an agreeemnt, on something change or crisis,
isting legislation, and 10% covers
tures were authorized
exceeding large a debt, such large refund- that is right or necessary, every
Adverse
economic
conditions all the other activities of the gov¬
the actual revenues of the same
ings, and possible unforeseen de¬ step thereafter is one of extended automatically will reduce reve- ernment.
'
a

years

by

over

$90 billion..

mands.
.■

A large part of the
authorizations to spend
'enues

•of

our

Hie

was

for the crash

over

of

rev-

build-up

defense establishment after

beginning of the Korean

But the effect of this
-t

excess

war.

♦

-

i

,

Jt

.

Living Beyond the Treasury's

lar amounts

I

have

mentioned

to

fiscal

understandable terms, the govern¬
ment's situation, when the new

year
(last July), there were an
•estimated
$81
billion >• of
unfi-

Administration took office, can be
likened to the status of a family

nanced

that

the

beginning of

the

was

that, at

1954

appropriations existing




as

crease costs.

Here is

one

Relation
V

example

of National

Security

^

Costs to the Budget

.

had

consistently

lived

include

other

ments of the

interested

depart-

government.

It may

include foreign governments., It is

of a substanial factor of uncertainty.
i On assumptions given in 1951,
the original fiscal year- 1953

In this breakdown you
a

comes

of

will find

definition of the problem. It be¬
easy

national

to see the relationship
security costs to the.

budget estimated the expenditures total budget. Now a brief explana-;
of the Commodity Credit Corpo- tion of each category, but in a dif¬
.
ration at $253 million. When the ferent order of presentation.
Little can be done by adminiswell include negotiation with the pub-jr.ear, closed, June 30, 1953, actual
sure

to include

the

existing government staff. And, finally, it will

*

Volume 178

Number 5266... The Commercial and. Financial Chronicle

^

-

-

(1547)

.i

(

1

'

trative action in the

of

area

man-

der

existing legislation. Each

datory programs and those requir-

contribute

ing

under

not supply the final

only

to
others
legislation. Here

changes
.

in

payments

the

laws

themselves

will produce material savings.
These

-

-

include

programs

large costs
lie

debt;

interest

as

such

the pub-

on

compensation,
benefit programs;

and

grants to the states for public

as-

sistance;
;

unemployment

tion,

the

to

compensation

service
for

giants

states

Federal

highways; agricultural
ports;
total

aid,for

price

similar iitems,
nearly $15 billion.

and
of

and

administra-

sup-

for

a

amount but

some

is

fact

the

that

any

can-

\

way

you

whether

by

principal
sources of
its growth, the final
status in dollars primarily will
depend on the needs and the costs
of

the

by

or

national security programs,

our

This

will reinforce
about the

what

the

ex-

penditures developed according to
plans which reach their

United States, in view of prevailing world conditions and the type
of weapons available to possible
aggressors in an atomic age, is the
most serious policy problem of the
government, of the Congress and
of the people. A reappraisal of

inflation, was quickly
The dead hand of goverenment

cost

of

defense

an

structure

which we can afford to carry over
a 'on8 Pu">
that should prove
necessary, is having the most intense examination by the Admin-

istration and our military leaders,
So long as these legal obliga- peak in fiscal 1954 and 1955,- and On the answer and its public actions exist, there is a correspond- the automatic loss of revenue un- ceptance will depend the future
ing need to administer them. The der existing laws in those same of the budget and of taxation.
cost

of

doing

will

with

Their

There

is

toward

j Fiscal
toward
dollar

action

the

and

earn

the

will be

there

government,

a

two, 1955 is the

the

of

tory

workload

functions

services

and

Included

ment.

manda-; ing

on

and all

programs

the other

revenues

or

expen-

of govern--:ditures.-. r

the/costs

are

other unfavorable circum-

no

stances affect

of

The

is

1955

year

still

operating all the regulatory agen- ahead of us. It
begins in July, 1954.
cies; government construction; the jf the revenue conditions remain
Treasury
administration of the favorable, the tax reductions now
public

debt

collection

and

of

taxes; the Department of Justice,

in the law will
loss of

cause

revenue

an

estimated

in that year

equal
amount of

including the FBI; the Post Office to or exceeding the
deficit; and many other essential savings we expect to make in this
and
longstanding
services
that year's expenditures. This means
be

cannot

eliminated

dras-

or

tically reduced if their function is
to

be

with

continued

is

few

performed

degree of effectiveness,

any

This^cost
A

and

about

that the budget balancing problem
in the 1955 fiscal year is at least
the

$7.5 billion.

in

same

magnitude

faced this year.

we

both the mandatory and workload

effort

to

one

tary

front

'

and

time, weaken

a

on

the

mili-

at

not,

or,

stability

the

and

eco-

vitality.

We

are

in payments for

pensions,
90%

of

cost

the Department

for Federal
like

these,

reduction

tial

a

in

the

controllable

will represent

relatively small percent
total expenditures.
a

The

rity

three

represent

expenditures,

billion.
the

of

The

70%
total

and

The question is what kind of
defense

ably

structure

effective

be

can

a

reason-

under

present

circumstances, is economically
bearable, and can be maintained,
relatively long

over a

Period of time. We
a

to de-

propose

of life,

way

as

well

as

to

Protect

its

of
$50

of

Defense

are

billion, Mutual Security $6
billion, and the Atomic Energy
Commission $2.3 billion. While
$41.7

these

the

are

major

programs,

elsewhere in the budget

national

ian

security, such

are

the Civil-

as

Administration

Defense

the

there

other expenditures related to

some

and

stockpiling of strategic mate-

one

*

large cost of

?r

.

£edu^ed expenditures

is

not

only

security,

absolute

military

modest dollar cost.

a

Tw0

gQ

tbings

need

lQng

it .g

ag

necessary

J5S?Jl* ?h

f

human welfare that
woven in'to
H

?
ar^a+

/

are so inter-

gb°ver^®nt^

^ J?e substantially de

t

Penden*

them.

and

destroy

without

the

engaging

it

States

in

actual

in

or

be

can

as

well

better carried out by other

or

means,

savings can be and
being made in operating econ-

are

ment

and

mands

tary

supplies.
than

more

budgets

Strength

de-

dollars in mili-

and

fat

neither efficiency

nor

encourages

While these

come

the

is

expenditures

this,

were

in-

problems

of

con-

amount

from

existing

which

of

reductions

will

reconsideration

a

plans

underlie

and

the

of

programs

expenditures

in the budget. This is being done
for the first time. All the possibilities are being intensively sur-

You

depend

can

on

Secretaries

Wilson and Kyes, the Joint Chiefs

as

rapidly
possible, and they deserve your

unlimited support.
Whatever the problems that

resources.

The

billion.
two

of these

figures is obvious. They make
be

to

are

of

corifle

there

if total expenditures
substantially reduced

that

clear,
most
to

relationship

the

reduction

from

Deficits of

the

the

was

a

area

greatest

will

in

which

increase,

magnitude of $10 bila

smaller amount

rep-

resenting all the other activities of
the

government

or

tory programs and

from mandapayments un-




modify

or

But

to

eliminate

unravel

Nowhere
or

more

is

this

more

difficult than

and

of

some

more costly programs is not
pie task.

have

lion cannot be met by completely

eliminating

government.

the

sim-

apparent

in

To

the

se-

curity categories of expenditures
which represent so much of the

portion to its size, the most critical
kind of policy problems relating to

national

security, and

this

support

peat

everything
and

a

tre-

how

it

con-

statement

that
was

President

commission, with broad

to

examine

the

organization

u

m

gen

Dodge

Clark'
'& Co'

New

York

Geddes

§|^KIE

M

and

9^m
Jig

John

Sullivan

J

sen-

ior partner of
Bosworth,
Sullivan

Co.,

of its ap-

&

Denver,

have

been

nominated

as

^Vice-Presidents, and
James J. Lee,

'

W.

all

E.

Hutton

& Co., New York, as Treasurer, it
examining and revising their or- was announced by the Board of
ganizations, plans, and operations. Governors of the Association. .
re-

All 10 organization plans advanced
by the Administration
have been approved by the Congress and are in effect. As time
goes on they will be increasingly
productive.
In a relatively few months' time
notable results have been produced. Reductions in personnel
are being made and will continue.
There has been a $13 billion reduction in the request for new
appropriations—a saving of about
$300 in current and future government expenditures for every
household. There is an estimated
$6.5 billion reduction in expeditures for this fiscal year in a
we

told

were

than

estimated

could

Elections will take place at the
annual meeting of members in
New York on Nov. 18.
The Association also announces
that. the following have been
nominated for election lor varying terms to the Board of 35 partners of member firms:
Henry M. Cook, Newhard, Cook
& Co., St. Louis.
Roger Cortesi, Auchincloss, Parker & Redpath, New York City,
Van R. Halsey, Carlisle & Jac-

quelm, New York City.
;
John H. Kitchen, George D. B.
Bonbnght & Co., Rochester, N. Y.
Rob^t J. Lewis, Estabrook &
Co> New York City.
Charles

not

budget

revenues.

cent years, is the first step toward
whittling down the backlog of
and

worked

so

long,

effectively to

lowering

McKenna

Lynch,

hard, and

so

bring

Ka"sas CJ^y'

Jr.,

so

about these

convinced, interpretation of
general public demand for the
change of direction.
What has been done is just the
beginning, and will continue. We
are proceeding on the principle
that when costs are not an issue,
expenses
multiply. And when

^

James H. Scott, Scott & Stnng-

„

EXaS^Thomnson

made

are

an

issue, savings

or

I

re-

recognized and established

at

all

been

coming to

our

You

thousands

of

about

Lam-

"

^ waSir ?r

Seweii
Waft<,

'watts

s

ro'

p,

Jr

Baker

'

'

Baltimore

Wat/0svf ^'VounHester
t

pn

0«?

.

Rvons

'

Aneeles

*'

w

r

?•

*

.

Jphe Nominating Committee
™hic^h Pres*rn^ted this slate was
headed by Ranald H. Macdonaid,
Dominick & Domimck.

I be otner

^mbers were George E. Barnes,
;7ayne

2'j

or«

^Haffn^^Wilrn %
g

„

MnntPLm
s
y>

'

Thp fonow;n(?

cons+Hu+e

tbe

cirott

nominated

arp

Nominating

v

mittee for ^54.

.

ro':

to

Com-

s

'

^
r^a
e^Q^?r„r/r
Pr^ J S

N

w»ltPr

HZ?V
chen &

^

Tvi«rm
Npw

Ahhntt

York

Tr

w

fo
T

13acne &

'

,

York Citv

'NgW

'

Watline

Ler-

Stringer

Co

'

Detroit

j^ewbPid Taylor

boid>s Son & c0

fitv

Stokes

v

W

H

New-

Philadel-ohia.

the levels of government, we find

has

fundamental

Jr

c_^ ^ac J

am

costs

e.

Shreve, Hayden, Stone
Soft

^

o

cur-

results. The support, the cooperation, and the action reflected, I

done.

observations

assistance the
able

and

many

t

sincere

government

doing is

employees,

staff

and

necessary

in

the

in

Kohlmeyer Admits

the

Kohlmever

*

armed

and are eager

&

Co

members

of

"'

Wew Work btock exc a g
on

,

Oct. 29 will admit Charles B.

and willing to assist in its ac- Vbse to partnership. Mr. Vose will
complishment.
make
his
headquarters
in the
But—to quote the President of
vnrk
nffirp
at
fift

change in tone in
government
arising
from
new
standards of personal integrity,

the

security, and ability.

cannot do this job—any more

a

of

™

,

chane^ Firms"

services, who believe what we are

is

2

of

few

important

Annotation

hie

powers,

civilian

general

of

Former President Hoover heads
a

already know about many of the
actions taken. I shall close with a
some

'

Frnst

Horace W Firost res,dent partBoston
has been^omina t'oS

definite

shall not attempt to recite

total budget. This has every kind Changes.
of management problem in pro-There

our

government,

your

done

a

Horai,p w

*

will multiply. Costs have been
creasing nearly $34 billion over
and aggressive action is being made an issue for the first time
the $16 billion level of the fiscal
taken to meet them. The course in many years, and will remain
year 1950, the total expenditures veyed
and continuously acted has been turned and progress is an issue.
of the budget increased only $32 upon in every department of the
being made in new directions.
As this policy becomes fully
front

A«■

intergov-

and available

a

economy.

what needs to be done, as

fact

the

the process

pends on establishing a management and an organization which
attacks waste, inefficiency, and
duplication, and spearheads the 0f personnel, and better balanced
elimination of activities that are procurement of military equipunessential

Cl-I- t

rights

special commission will

.

Wl3IG TOF OffIC6TS

and

toward a balanced budget.
every possible step will be taken
For what has been done i want
to produce greater strength from you to give full measure of credit
the resources available, by revis- to our leaders in the Congress and
ing an(j improving plans, better the
Chairmen and Committee
management, more efficient use members and
their staffs who
But

dollar

significant

States'

ernmental functions

fiscal

a

e

Our military power definitely is rent and future expenditures—
being and wdl be impr0Ved and and is the essential turning point

of Staff, and their associates to do

The

a

Pwj.l.„.,a r-

action

and

respect

new

for

commitments

war

strengthened.

Moving to control, to stop, and
to change a situation like this de-

United

savings which produce the largest

tilities in Korea.

and

sider

plang

a

of thoge who hope tQ undermine This is a complete reversal of re-

i!LP

expenditures

of the increase in the total

is

to

one

CXCIIallgG rlffllS U6t
'

types of movement.

matter what you may choose to ditures. For the first time since
call it Second> a continuation of hostilities began in Korea new
irresponsible and unsound fiscal authorizations to spend are less

principal

budget since the outbreak of hos-

for

consideration

budget

but

source

realization

j^s two-way aspects and there can
a

the

belong."

First,

est dollar amount of

the

time

same

that the stabilization problem has
be

except

group
you

be cut. This also is a $2.5 billion Moore, Leonard & Lynch, Pittsto devote reduction from 1953 expenditures. bu.rgh:

certain.

are

omies but management economies
alone will not be sufficient. The

represents

the

turbm;S^ed:s

Substantial

the
largest proportion and the greatcategory

At

pobcjes wdl play jnto tbe bands

the eco^my of

which

to

1 ajJ ft?
^ou d ba]Lance the bu<dget. There
Thlrp™ t{fP
/nt"
f
possible dis-

rials.

This

economic

provide

safety of life and property, at only

illustrate the fact that the
"

personal

and

anf-

military functions of

Department

6

an effective national security pro-

major national secu-

programs

total

cases

fairly substan-

costs of the agency

7

fi

govern-

every

sound

a

incentives

complete

a

directed

of

citizens,

as

of de-

*be fundamental strength and plification. At his direction
soundness of the United States.
departments and agencies are

farther'fend

'

of Agriculture

highway aid. In
even

•

t

t

d

Nearly

the

of

Treasury
Department is interest paid on the
public debt. About 60% of the cost
of

tb

g0

you

simple

compensation,

benefits.

and

the

a

pro-

military defense. We know that
The Administration is unified
*be fate of much of the rest of behind the President in a policy
the world depends on maintaining of economy, efficiency, and sim-

lives and property. To
ment
economy
the more diffi- Preserve the first, and our naover-all percentage reduction cancult
becomes' The first cuts al- tional solvency, while providing
not be applied across the budget.
w
are the easjest
As tbe fiscai the second will require the underAbout 70% of the cost of the De1954 expenditure reductions be- standing and cooperation of everypartment
of Health,
Education, eome known and
begin to take ef- one. Particularly as we seem to be
and Welfare is in grants to states
fect the compiaints and criticismsJ dealing with a belief that the govfor public assistance. Nearly 80%
increase
The
pressures
already ernment should finance any kind
of Veterans Administration costs
are
buijding up against further of a project, can guarantee everycosts, and also show why

been

renewed

save

there " is

same

destroy its

from

know a sound domestic economy the government in terms
is the foundation of an effective propriate functions.

if necessary,
vigorous

same

butX

it

meet

the

as

'

There will be the

examples will illustrate

have both

we

safety of the nation

nomic

fiscal

that

you

military and an economic threat
of to meet. We have to ensure the

y/• ,r;cause there the greatest part
The 10% of the total carries the the revenue loss is
taken, assum-

cost

remind

except to

us,

critical be-

more

large cost.
-

to all of

are

has

assurance

and

There

they

reversal

a

the encouragement

for both

as

less

spend

cannot help the common cause by
rnerely favoring economy for

centralization and local responsibility.

It is not my function to discuss

years.

the

to

upon government. You,

x

gressively increasing the concentration of power in Washington

military policy questions, serious

vary

combination

promptly lifted.

was

makes

so

of

government

your

must yourselves practice self-remade, straint in the demands you make

program/ If ' the fiscal years 1954 and 1955 crit'there is a great deal of superyi- deal from
an
expenditure and
sion and detail to be handled by revenue standpoint. And of the

the,, nature

other job—utterly alone. You
and your fellow citizens who want
any

con-

trols> before this time considered

and

earlier

.

government

necessary to obscure the symptoms

structure

appropriate

of

other

an

The

earlier

level

The decision about price, wage,

rent, and

adequate defense posture for the

said

i

•;

,

Plans and Policies underlying

outstanding backlog of

income,

-

budget

commitments against current and
future

international commitments.

the

of

summary

mendous backlog of domestic and

to the

answer

budget,

components

for

grants

employment

•

The

analyze

veterans'

pension,
.

can

budget balancing problem.

existing

.

27

'

.

United

States,

"Government
than Beaver Street.

The Commercial and Financial Chronicler ;"i
«8

Thursday;3 October 22, 1953-

(1548)

enshrined

thinker who should be

Millions of

initiative

the patron saint of

as

the

system of free enterprise and individual
Adam Smith. At the very beginning of his

—

on

These

the farms while the rest of the

goods demanded by the people! Is this good "judg¬
application of human energy?

efficient

production

we as a

people have encouraged

proportion must in every nation be regu¬
different circumstances; first, by the skill,
dexterity, and the judgment with which its labor is gen¬
erally applied [we are certain that the master would have
added the word "diligence" had the conditions in the world
at his time suggested the need of it]; and, secondly, by the
proportion between the number of those who are employed
in useful labor, and that of those who are not so employed.
Whatever be soil, climate, or extent of territory of any

they

mo¬

this

supply, too,

Continued from page

New Deal and Fair Deal adminis¬

trations, will require adjustments
in

the former of those two cir¬
cumstances than upon the latter. Among the savage na¬
tions of hunters and fishers, every individual who is able
to work, is more or less employed in useful labor, and
endeavors to provide, as well as he can, the necessaries
and conveniences of life, for himself, or such of his family
or tribe as are either too old, or too young, or too infirm
to
so

to

depend

more upon

a-hunting and fishing. Such nations, however, are
miserably poor that, from mere want, they are fre¬

go

quently reduced, or, at least, think themselves reduced, to
the necessity sometimes of directly destroying, and some¬
times of abandoning their infants, their old people, and
those afflicted with lingering diseases, to perish with
hunger, or to be devoured by wild beasts. Among civilized
and thriving nations, on the contrary, though a great
number of people do not labor at all, many of whom con¬
sume the produce of ten times, frequently of a hundred
times, rnore labor than the greater part of those who work;
yet the produce of the whole labor of the society is so great
that all
even

are

of the

industrious,

often

abundantly supplied, and a workman,
lowest and poorest order, if he is frugal and
enjoy

may

a

greater share of the necessaries

and conveniences of life than it is
to

possible for

any savage

them

3

Full
And yet

This obviously would af¬

plants.
fect

profits.

our

Sure There Will Be No Deep

in

Depression

on

that busi¬

said

already

have

I

"full

are

I

will fluctuate but

ness

will

be

sure

am

deep recessions,

no

of the

We have learned
decades. We
have not made the economic mis¬
1929-34 pattern.

lot in the past two

takes

all,

made in the 1920s. Above

we

living in

are

we

different

a

kind of world—one that must have

ever-increasing tonnages.

in

steel

of

First

all,

has taken

lives are cen¬

our

many

much of

over

us

return to further observations of

one

and

it

tons

more

and

roads

which

over

Millions of

the

must

also

so

travels.
needed

are

to

supply it with gas and oil, steel
for the oil wells, steel for the pipe

us,

"the abundance

or

any

na¬

scantiness of its annual

supply must depend, during the continuance of that state,
upon the proportion between the number of those who are
annually employed in useful labor, and that of those who
not

employed. The number of useful and productive
laborers
is everywhere in proportion to the quantity of
capital stock which is employed in setting them to work,
and to the particular way in which it is so employed."

are

so

...

Now with these basic

principles in mind let us turn
to some of our current problems and controversies. First
of all, we may congratulate ourselves upon the fact, for
fact it is, that in part at least the so-called dollar problem,
and the persistence of the troubles
underlying it, are to
be traced to

our
mastery of the art of applying the energies
beings to the tasks of producing the good things

of life. So great is our success in this endeavor that we as
a nation are the chief if not the
only source of many of the

things other peoples need
to

date

we

have

with the basic

of wealth laid down in the sentences




and not yet true war. There
be no
change for us until

peace
can

there

is

a

there is

no

change in Russia, and
sign of that yet. This

all adds up to a base
economic aid

quoted above? Mil¬

military and

budget ranging from

Steel

so. We gave
recently by the
campaign to get our workers to
buy Savings Bonds. Nearly 97%

Russia

war

to increase its ingot output
might increase its war poten¬

years
so

it

government-owned
its
output is only about a

While its

refrigerators, air conditioners, vac¬
uum
cleaners, telephones, wash¬

sneak
ons,

ing machines and the variety of

knows it. We should continue

other electric appliances are made

lowering their standard

Republic Steel
can
be
counted on to contribute its share.
All we ask is to be allowed to

of living, and this means that there

operate efficiently and profitably.

steel.

of

Americans

tention of

will

be

have

in¬

no

for

large replacement

a

third of that of the Unite.,d

short

Thus,

mar¬

Hitherto

of

by the require¬
formation of new

the
as

population

our

in¬

As

look abroad,

we

picture changes.
a

however, the

We

living in

are

world of tremendous uncertain¬

ties.

We

have

mistice in
of

sure

just signed

Korea,-but
even

bled

France

nists

in

are

country.

help

in

We

peace

down

ar¬

are

we

an

not

trying

Indo-China.

to

Commu¬

There

are

troubles
in
the
Philippines, in
Burma, in Indonesia, in Kashmir,
in

Egypt, in Italy. We have just
signed a treaty for bases in Spain.
won

victories in

Iran and Western Germany. There
is

an

stirring

uneasy

among

the

Too many

hungry, and thus

are

prey

cide,
the

the

of

that

fact

she

most

hydrogen bomb is the
disturbing news of our time.

While she has
at

seems

the

a

new

regime that
taken

moment

up

on

us,

if at

hope of
of

make

any

time she has

us

all

successful

pause

use

and

From all this,

United

think.

by Russia

disastrous for us—it

the

any

The potentialities
hydrogen
bomb
should

success.

the

one

States

can

can

keep

economy.

commit

sui¬

national

them with
want. Until

oblige

they

cannot

afford to

have

a

We

of

our

country's management and in the

security which

investing in
That is
also

country's
of which

record

a

people get by

our

our

bonds.

danger.

He has

given

us

his

are

we

proud.

Let

me

right here that you
by giv¬

say

weaken your economy

can

ing

the

away

bond

such

of

proceeds

purchases.
the United States get

for

return

million

the

and

sacrificed

the

Ameri¬

$350

bil¬

lion

spent, or given away, in re¬
cent foreign ventures?
I

asking

am

that

the

shall leave

I

question.
to

answer

so-

our

Liberals.

called

Reduced

Will

Tax

Business

Be

Incentive

Finally, the coming reduction in
on corporate income will
have an important influence on

the tax

business; but even more important
is the change in the tax philoso¬
phy.
The Excess Profit Tax is due to
end

Jan.

on

1, 1954, and few will

It has been

miss it.

bad tax.

a

has encouraged waste

has

It

the

favored

It

in business.
long-estab¬

profitable business as
against the younger and growing
lished,

It

business.

unfair

been

has

to

We did not have
chance to build a strong profit

Republic Steel.
a

before

base

profit

excess

taxes

We will gain more

imposed.

were

by its death than almost any other
steel company.

Whether

regular corporate

the

will

tax

income

reduced

be

on

1, 1954, from the present
52% to 47%, as scheduled, remains
in doubt. The Eisenhower Admin¬

April

istration has had great success

made

have

leaders

ministration

in

Ad¬

slashing governmental costs.

President Eisenhower is alert to

this

soundness

of about $7 bil¬

savings already

word that his Administration will

lion, and that is not small change,

not

but

permit

have

the

will

the

close

kind

millions

United

of

States

to

of depression

that
throw

factories,

our

workers

our

out

of

and weaken our national
and our national defense.

jobs,

economy

He
at

has many economic weapons
hand, and he will use them.

the

balance

the full

need

do

to

not been abl& to
budget.
They may

they have

amount of this tax

so.

If

the

changed,

that

understand
be

cannot

continued

is

tax

Friendly

to

Business

cut.

is

it
We

because

we

the

have

first

a

time

in

20

years

government in Wash¬

President

used

For

we

realize that the trend towards so¬

ington that is not hostile to busi¬
ness.

it

under¬

will

wealth.

redistribute

to

un¬

American business will

stand that taxes are not being

Government

A

Eisenhower, Sec¬

cialism, toward the welfare state,
has been stalled, if not reversed,
and that taxes are being imposed
to pay

governmental costs, and for
And this is all

retary of the Treasury Humphrey,

that purpose only.

Secretary of Defense Wilson and
Secretary
of Commerce Weeks

to the

understand
from

alone.
can

that

wealth

comes

production and from that
They know that production

only

come

from

three

erating factors: national
working

coop¬

and

it
of

not tax

self

a

vacuum

good.
feel, as I

am

sure you

do, that

spend my own income bet¬
than the Government can do

can

ter

resources,

and the
capital makes available
them. They know that you can¬
men

I

I

for
a

me.

lot

Moreover, it is a

more

hell

fun.

Some Recession in Evidence

women,

At

tools that

be

its

to

depression.

to

thing is clear:
must

been

have

American

shall

we

we

Its

be fatal.

of

leaders

depression

a

depression

then

For

has the

now

to

want

we

lies of the Communists..

confirmation

Russia

on

from

been

the

They know that this would reduce
our war potential.
They have told
us so again and again.
It is part
of their plan of conquest.
When

people
to the

But dominating and confound¬
ing the world crisis is Russia. The

know

the

weaken

has

States

We

counting

peoples of Asia, of Africa and of
South America.

United

within.

that trou¬

the

weap¬

greatest danger in

our

Communist

All of this will

products.

strengthened

ments

atomic

lead.

the

be

States.

devastating

a

lick Russia, and she
that

can

we

of
with

attack

the

in

believe

cans

this world
potential, and
also, is based on steel
has been pressing for 30
Our

Russia's

that

What did

Republic

drama.

of

signed to buy Savings Bonds.

in

Companies

Steel

of

Role

and

can

We at Republic

happy to do

are

evidence

$45 to $50 billion.

national

solidating its hold in that police
state, she is ever ready to pounce

principle of the creation and distribution

is not true

tack—a condition that

Secondly, the American stand¬
ard of living is built on steel. Ra¬
dios, TV sets, dish washers, driers,

with the domestic problem of con¬

devastating wars abroad and the like) succeeded in
doing so.
v
But how, we wonder, would it be
possible to square
our
agricultural policies of the past two or three decades

threat of at¬

mills have made great progress,

doing so is another question but
(with the help at times, of course, of

shall be able to continue

living and

on

tial.

garages.

want. How much longer we

or

go

under the

and

Our friends have

A New Look at Problems

of human

must

We

working

lines, steel for the filling stations

of the

skill, dexterity,

become nor¬

should cooperate.

major role to play in

steel, millions of tons of it,

and

bridges

Tremendous Uncertainties

judgment with which labor is applied in

tion," he tells

mal.

conditions

uneconomic

the

So

of the cold war have

have

greatest thinkers of all ages.
"Whatever be the actual state of the

go

Steel, and the other
American steel companies, have a

creases.

But let

war—and

of

instruments

spending billions for years.

trans¬

our

cannot

portation and changed our homes
and
our
habits.
It, itself, must

families

deavor and the seal of its success!

gladly in the interest of the
good to himself and to

This is the kind of Administra¬

It

automobile.

the

around

tered

It

strong.

foreseen

who blithely suppose that
employment" is at once the goal of economic en¬
there

economy, but I
that the average

tion with which business

relax
for a day. To keep strong this na¬
tion must spend billions of dollars
defenses

steel, together with the
possibility of new and, today/un¬

Employment

also

ultimate

The Look Ahead!

ket

acquire."

American

the

business.

a

seems

am

American, certainly the average
American businessman, will make

certainly not a depression

bf

Presi¬

in

traveling the right road,

are

feel certain

there

scantiness

confidence

certain that they will
Inevitably the readjustments
that they must make, the changes
made necessary by 20 years of

pear!

those two circumstances.
or

have

I

and

protected goods which could be more cheaply purchased
abroad? How distressingly our folly is thus made to ap¬

particular nation, the abundance or scantiness of its annual
supply must, in that particular situation, depend upon
abundance

the

balance

and

win.

lated by two

"The

]

moti¬

Eisenhower, Secretary Hum¬
phrey and their associates. I know"

occasion.

"But this

to

taxes,

cut

lar., I

the production of tariff-

labor devoted to

the

of

What

efforts

,

that

facts

dent

nopolistic labor unions to impose upon us? What of the
manpower wasted in needless government operations?

...

production.

maintain
the purchasing power of your dol¬
budget,

What of the restrictions and other interferences with

published in the year of our Revolution he
gets to the heart of economics in these words:
"According
as this produce [of the economic ac¬
tivities of the people], or what is purchased with it [from
other countries], bears a greater or smaller proportion to
the number of those who are to consume it, the nation will
be better or worse supplied with all the necessaries and

,

the

are

their

vate

ment" in the

magnum opus

conveniences for which it has

detained

men

,

^

must have more

community searches in vain for the manpower to produce

American

the

know

eggs, potatoes, and many other things which no one wants
and which ultimately are destroyed as useless or worse!

See
We It

As

as
deflation.
They
that to get more jobs you

weakening

lions, perhaps billions, of, man-hours of work producing
Omtinued from first page

and

spend

your¬

into

of

present there are evidences
recession from the high

some

business

prosperity.
They also
know that despite all sorts of eco¬

ness

nomic trickery inflation can be as

same

has

duction

plateau on which busii*
been living.
SteeP profis

below

capacity.

is true in some other

The

indus-

Volume 178

Number 5266

The Commercial and Financial Chronicle

...

(1549)

tries.
a

We

are

buyer's

,

probably entering

market.

But

is

something to worry the American
businessman?

I

think

Cer¬

not.

Continued

from

5

page

those

The State of Trade and

Industry

tainly it does not worry the offi¬
cials

who

direct

Steel.

ing at

a

We welcome the free market and

to roll

out

Republic

In

plenty of competition.
The

free

condition

market

for

would

We

American

not

have

It is the kind of
It means

it

do

normal

business.

otherwise.

challenge

must

we

the

is

we

like.

best.

our

steady improvement in
production, in selling, in products.
means

We
and

accepted

Federal

controls

price-fixing under

ditions, but

war

did not like them.

we

We do not want them in times of

We want to

peace.

run

our

own

company.

the

Under

the United

tem
In

free

a

enterprise

States has

sys¬

grown

century and a half from 13
struggling colonies on the

poor,

edge

the

of

Continental

Wilder¬

of the 101,317 turned out.

about 19%

last week was

below the high week

this year of

April 25, when 151,126 cars were produced but the
independent makers in that period turned out 12.5% of the tdtal,
this

trade

authority notes.

This week total output will fall slightly as such big producers

According to Government reports construction was begun in
on 92,000 dwelling units. This was a decline of 2,000

September
from

ductive and most powerful of na¬
tions.
Under it men have been

August, and 8,800 less than in September, 1952. A decrease
of 4,000 in private housing starts, to 89,000, was responsible for
the overall drop from August to September. Public housing starts

Jfree

totaled

into

ness

the

richest,

most

pro¬

.

and

more

happy.

goods for more
any;, other
system

than

people

known

•ever

It has provided

of the world's

rglance

at

to

the

Just

man.

Europe

take

of

Britain and Italy, with their vari¬
ations of the welfare state, are in

difficulties,

and

cannot

In

3,000

the

in

first

Steel

survive

over

again.

their inventories about
over-all

business

the free market and compe¬
tition. We believe that
production
wealth.

means

We

not for

are

We

an

form.
cold.

don't want Federal controls.
don't want bureaucrats to do

We

thinking and planning for

«ur

We

the

want

American

us.

system,

the old-fashioned kind, and noth¬

ing else.

Given that

know

we

-will prosper, for we know

we

ifbe living and working in a pros¬

America.

perous
moves

Republic

Steel

into the future full of

con¬

v

The New York

Shas announced

previous

Stock

Exchange
the following firm

William

Fisher, Jr. retired from
partnership in William Fisher &
<Co., Oct. 20.
Newell

E.

Thomas

will

is

as

Now

practical in light of the high
they must

quit living off in¬
into the market for sufficient steel to supply
needs. This means that a good many steel

Gordon R.

Kay will retire from
.A. M. Kidder & Co., Oct. 31.
Richard
A.
Balsam,
general

the decline in demand for steel has

reasons

not

The

slight

stemmed

to

that

decline

hit

steel

demand

this

last

summer

great degree from the fact that the growing steel
capacity and supply caught up with demand about the time the
Korean

ended.

Ending of the war dispelled fears of short¬
and brought stretchouts of defense programs, it points out.

ages

war

demand for

While

some

forms

of

finished

steel

is

less

than

for

others, the over-all demand was sufficient to keep steel ingot
production at a steady pace of 95% of capacity during the week
ended

Oct.

duction of

17, declares

This rate is equivalent to
2,140,000 net tons of ingots and steel for castings.

American

"Steel."

Iron

and

Steel

Institute

pro¬

the

operating rate of steel companies having 93% of the steel-making
entire industry will be at an average of 94.8%

capacity for the
of

capacity

2,137,000

for

tons

(revised),

of

week

ingots

beginning Oct.
steel

and

2,172,000 tons

or

the rate

ago

the

a

week

for
ago.

19,

1953,

castings

equivalent
against

as

For the like week

95.1% and production 2,144,000 tons.

was

A

to

96.3%

ating rale

106.9% of capacity.

was

current Year

based

are

upon

the

Earnest

of Jan.

as

1,

1953, the

rate this year being higher than last year.

from

their

Car

limited

Stiassni,

Oct. 9.

retired

partnership

in

Loadings Continue to Decline in Latest Week

Loadings totaled 804,070

cars,

a

decrease

7.4% below the corresponding 1951

national

average

placed at $1.60

PLAINS,

nold

F.

been

formed

Bunker
to

of

38,727

cars,

business

Y.—Rey¬

from

offices

at

11

power

was

Co., Inc. has
in a secu¬

estimated at 8,264,800,000 kwh.,

industry for the week ended Saturday, Oct. 17, 1953,
according to the Edison Elec¬

tric Institute.
The

current

kwh.,

represents a decrease of 42,509,000 kwh.
preceding week, but an increase of 583,468,000
7.6%, over the comparable 1952 week and 1,115,342,000

or

the like week in

over

U. S. Auto

S. D. Slater Co. Formed
Sidney

D.

have

Slater

and

formed

the

Eve

M.

partner¬

offices at 550

Jtfew

York

securities

City,

Company
Avenue,
engage in a

Fifth

to

the

high

to

The

The

Bookout
&

Bookout

is

Fla.

E.

representing McCor¬
of
Chicago.
Mr.

Co.

has

been

with

the

WASHINGTON,

D.

C—Merle

Thorpe, Jr. and Newton I. Steers,
formed

the

Atomic

De¬

velopment Securities Co. with of¬
fices at 1033 30th Street, N. W.




25, when

151,126

19%

corn,

^

precipitation in general was said to be extremely light. Sales
grain and soybean futures on the Chicago Board of Trade

last week declined to

a daily average of about
40,300,000 bushels,
44,900,000 the preceding week, and compared with 35,600,-

from

000 in the

largely

week

same

a

year ago.

influenced by

sharply

in heavy trading;,

of pending changes in

rumors

Brazil's

ex¬

port policy.
Domestic
raw
sugar
was
steady in fairly active trading".
Lard prices moved irregularly higher, aided by dwindling stocks
and sharp advances in soybean oil.
Live hog values continued to>
as heavier receipts encountered
buyer resistance.
Spot cotton prices were irregular and the market developed,

weaken

somewhat weaker tone following the substantial increase re¬
ported in the latest official production estimate. The Department:
of Agriculture estimated the 1953 crop as of Oct.
1, at 15,596,000
bales, or 437,000 bales higher than the September forecast, and

a

comparing: with
The

indicated

highest

the

1952 actual

yield

record.

on

per

acre

production

was

placed

of

at

15,136,000 bales.
pounds, the

315.4

Harvesting continued to make good

the movement of cotton

buying

into

trade

channels

progress,

increased.

Mill

confined largely to small lots for nearby needs.
Inquiries from foreign sources were more numerous. Entries of
was

into the CCC loan continued in good volume and totaled
172,000 bales during the week ended Oct. 2, bringing entries fai:
the season through that date to 563,000 bales.
cotton

Volume

Trade

Lifted

by Special Promotions

i

And Favorable Weather
Shoppers increased

their

spending slightly in most parts Oil
on Wednesday of last week as*
weather stirred the interest
in many
apparel items.
Special promotions on Columbus Day generally attracted spirited!,
the

in

nation

Most

the

period ended

merchants

continued

with

cars

were

last week totaled 23,211 com¬
23,926 the previous week. A year ago truck output
made

5,539

cars

last

week,

compared

1,913

mated

industrial

sales

figures of

jn

L'
was

esti¬

Regional estimates varied from the com¬
by the following precentages: New England
and East 0 to +4; Midwest and Northeast -fl to +5; South and
Pacific Coast +2 to +6 and Southwest +3 to +7.
Aggressive promotions wree instrumental in stirring the?
a

ago.

year

demand

level

for apparel the

past week. Shoppers continued to spend
apparel than they did a year earlier. Gaining steadily
popularity were women's coats,, men's suits and children's*
for

more

clothing.
quently

Casual clothing and campus styles
purchased than at this time last
retailers

Many

failures

declined

to

many
volume

riod ended

expected

to

exceed

the

were

also

more

fre¬

year.

sales

figures

of

the*

Wednesday last week and continued to be slightly
a year ago.
Most retailers anticipated a newholiday shopping season. Deliveries were less prompt than

larger than that of
in recent weeks.

Department store sales in a country-wide basis, as takea
from the Federal Reserve Board's index, for the week ended Oct.

10,

1953,

In the

decreased 5%

the

level of the

preceding week..

decrease of 3% was reported
from that of the similar week of 1952. For the four weeks ended
Oct.

Oct.

3%

a

10, 1953, no change was reported. For the period Jan. 1 to
10, 1953, department store sales registered an increase oi*
above 1952.
trade

in

New

York

last week

leading stores

several

by

recording gains of
in

from

previous week, Oct. 3, 1953,

Retail

169

buyers prepared for the holiday season, the total
of wholesale orders expanded slightly in the pe¬

on

promotions

Business Failures Continue Downward Trend
and

the

by Dun & Bradstreet, Inc., to be from 1 to 5% higher than;

of

1952

the week before and 2,256 in the year earlier period.

Commercial

surpass

The total dollar volume of retail trade in the week

record

122,198 cars last week,
week. A year ago the

States truck production

companies

to

with the most marked rises in apparel.

year ago,

dollar

below

29,555 units.

firm

Development Sees.

April

about

was

with 6,4-34 in the previous week and 4,960 in the like 1952 week.
Truck production amounted to 1,524 units last week, against

jn Chicago for a number of years.

Atomic

of

turned out
the previous

with

Canadian

Leslie

year

116,476 in
weekly production was 101,317.

was

Chronicle)

—

this

industry, however,

United

Financial

MEYER,

1953-crop

same as for the 1952 cropt
the serious drought conditions pre¬

of all

As

produced, "Ward's Automotive Reports" stated.

pared

(Special

*

1952 gift shopping season.

Output Continues to Rise in Latest Week

week

compared

business.

With McCormick in Fla.

1951.

Automobile output for the latest week

ship of S. D. Slater &
-with

remained!

over many sections of the southwestern
Winter wheat
belt. Heavy rains reported last week were confined to small areas

in

figure

that of the

below

kwh.

Saxonwood Park Drive.

prices edge#

vailing
and

that

week.

The amount of electric energy distributed by the electric light

N.

&

corn

offerings

price support level for

Steadiness in wheat reflected

or

Electric Output Extfends Decline of Previous Week

Bernard,

engage

crop,

country

as

bushel, the

per

parable

and

WHITE

lows

response.

from

Reynold Bunker Opens

recent

seasonal

Loadings of revenue freight for the week ended Oct. 10, 1953,
decreased 8,484 cars, or 1.0% below the
preceding week, accord¬
ing to the Association of American Railroads.

Winkler & Co., Sept. 5.

have

Despite the prospect of another huge
upward

small in volume.

year ago

below the corresponding 1952 week, and a decrease of 64,613

Jr.

Grain markets were unsettled last week.
Following early
weakness, most grains recovered to show small net gains for theperiod.
....~ ..v

month

a

or

mick

year ago.

The percentage figures for the
capacity

Ago

daily wholesale commodity price index, compiled by
Dun & Bradstreet, Inc., moved in a narrow
range around the
lowest level of the year the past week.
The index dropped ta
270.04 on Oct. 8, a new low since
early July, 1950. It closed at 270.71
on Oct. 13, comparing with 270.85 a week
previous, and 287.01 a

and

that

announced

cars,

FT.

To Level of Week
The

a

4.6%

limited partner,

Unchanged

Commodity Price Index Holds Close

The coffee futures market declined

partner in J. C. Newsome & Co.,
a

the

at the wholesale level.

steel than they have been

more

doecame

Slater

Wholesale

•

further are continued heavy expenditures for national
defense, a continued good level of consumer expenditures and a
continued growth in the country's population, states this trade
journal.

Gam-

rities

trend of food prices

The

with¬

partnership in
mack & Co., Oct. 31.

from

draw

in

,

the weekly production was placed at 2,221,000 tons and the opera-

•changes:

19

comparable 1952 figure of $6.38.
The index represents the sum total of the price
per pound of;
31 foods in general use and its chief function is to show the
general

month.

any

The

Exchange
Weekly Firm Changes

far

high
probably will be ordering

gone

fidence.

3Vew York Stock

come

Among the

we

shall

as

recently, it notes.

come

economy of scarcity in any
"We don't want war, hot or

the

1,000

1953,

conditions.

present

users

at Republic Steel wel¬

against

ago

concerns

Irregular movements in food prices last week left the Dun
& Bradstreet wholesale food price index
unchanged at its pre¬
vious level—$6.57. While this was the lowest since June
30, when
the index stood at
$6.54, it represented a rise of 3.0% over the

was

ventories and

we

of

"looking up" in the steel industry, says "Steel,"
the weekly magazine of metalworking, the current week.
The inventory reduction that started among steel consumers
during the summer appears to be about over. They have lowered

their

Yes,

months

is

without American handouts. Pres¬

it all

as

week

23

From Previous Week

Operations Scheduled to Be Lower This Week

Business

ent-day Europe

proves

against

September,

nine

building was undertaken on
863,000 housing units, slightly below the level of a year earlier.

today.

Germany, Belgium and
Switzerland, the nations with free
enterprise, are prospering. France,

more,

a

previous week.

a

Western

with

Ford and

Mercury, along with possibly a few others, cut their
schedules a bit. The independents won't offset this loss and may
add to it, continues "Ward's."
In the year to date, 5,126,157 cars have been
assembled, com¬
pared with 3,300,336 in the like year-ago period. There have
been 999,146 trucks made in the same period this year, against
923,677 in the corresponding 1952 period, "Ward's" reports.
as

the other hand, raised small casualties,

under $5,000, to 31 from 26
comparable week of 1952. A total of
liabilities of $100,000 or

independents
accounted for only
122,198 cars built, according to this

of

total

In the preceding week they represented about 4.7% of
cars made and in the like year-ago week they stood

Car output

con¬

failed

on

liabilities
the

Wholesale Food Price Index

the

week

the

of

for about 12%

in

17

continue

116,476

It

and

with

high rate.

a

past

3.8%

agency.

the

at

the

about

pa£e while the Big Three auto models

slower

An increase,

year ago.

that

,

more

responded to important

and

favorable

weather by

than 5% above the similar period in 1952..

According to the Federal Reserve Board's index department
City for the weekly period ended Oct. 10,

the

week ended Oct.

store sales in New York

the

1953, declined 2% from the like period of last year. In the pre¬
ceding week Oct. 3, 1953, a decrease of -3% (revised) was reported
from that of the similar week of 1952, while for the four weeksf

15, from 186 in the preceding week, Dun & Bradstreet, Inc., reports. Despite this decrease, casualties were consid¬
erably above the comparable 1952 total of 139 and slightly above
157

of 277

in

1951.

remained

in the similar week of

Casualties
from

Failures

160

last

39%

below the prewar level

ended

1939.

involving liabilities of $5,000
week

but

continued

above

or

the

more

122

of

fell

to

138

this

size

a

period
that

of

Oct.

Jan.
the

10,
1

to

1952

1953,
Oct.

>1

increase of 2% was reported. For the
10, 1953, no change was registered from

an

period.

»

30

i

The Commercial and Financial Chronicle

(1550)

Declining Market

assets

Net

of

Mutual Funds

Commonwealth

totaled $62,123,057 at the close 'of business on
Sept. 30, 1953. This compares with
net assets of $61,470,000 on June
30, 1953, and net assets totaling
$60,248,000 on Dec. 31, 1952. There
are
approximately 40,000 share¬
holders on the company's books at

Decline Could Accelerate

Investment Company

V

While

By ROBERT R. RICH

Market;
Lower Cash-ins

on

of

through 1954, the
"Perspective," Calvin Bul¬
economic analysis, concedes

no

that

downturn

a

can

develop

tendencies

which

ac¬

AMUTUAimVESTMENTFUNO

Net

A.ssets________

NATIONAL SECURITIES &

Broadway

•

New York 5, N. Y.

of

$511,637,000

63,942,000

181,943,000

of

146,767,000

again

it

is

difficult

Purchases

July

U.

1,

to

September

Purchases, $201,637,000
Holdings

U,

Cash,

of

—

_

indicate

■''The

have

to

liquidations, new members, etc.
Except
for different dates are comparable.

figures

3rd Quarter

ment

"The

shrs.—not

of

$2.5

billion
in

Wellington Gains

Prospectus from
your
or

ing

PHILADELPHIA

Wellington

3, PA.

recorded

Fund

an

increase of

$9,571,000 in net assets
in the three months ended Sept. 30,
1953,

bring

to
to

date

total

the

that

on

$262,055,331; according to

the

PUTNAM

fund

Principal

that

investments

made in selected

month had been

chemical electronic and oil stocks

FUND

following

their

attractive.

considered
The

e/ tJOodfon

and

moderately
in

July

these

two

stocks

common

During

August.

re¬

months, the sales by the fund of
commons were
principally in the

Putnam Fund Distributors. Inc.
50 State

had

Fund

its

duced

levels

decline to

Street, Boston

moderate

signs

are

decline

in

of

business

cancellations.

On

the

action

vidual stocks. The
stocks

more

and

indi¬

of

are

at

the

other

hand,

peak levels, and liquid sav¬

peated next

business
activity
negative influences.

some

general

taken

to

power

credit

ease

in¬

that

so

find
raise needed capital.

it

should

dustry

easier

to

shares then

on
on

to

STREET

'Calvin Bullock

tions

ilSlISfi j
—

me a

no

obligation please send

prospectus on Canadian

Nome.

Fund,

were

reduced

stable income stocks

in

common

stocks

at

the

close of the quarterly period; 25%
in
investment
bonds
and
pre-

ferreds; 2% in appreciation bonds
and' preferreds; and 12% in gov¬
and




common

stock additions to

indicated

Fund

a

preference

lor

utilities, banks and insurance
stocks. The three largest industry
holdings

Sept. 30 were utilities,

on

chemicals

and

these three
third of

oils,

groups making up over a
•

the

total

invest¬

stock

common

ment.

Commenting
adjustment

the current re¬
George

on

business,

in

prices

of

This could

re¬

New

of

implications."

in

lower

ticularly

employment, par¬
the durable fields,

in

adverse

effects

personal

on

incomes and spending. What busi¬
nessmen do about inventories will
be

a

and

Denver,

Central
10,000

omy.

of

of

change of the

econ¬

A policy of rapid liquidation

inventory

could

result

in

a

ac¬

Bank

&

Trust

International

mained 100%

England

Ohio

Oil

Electric

System,

and

invested in

were

:

4,000 Cities

pers Co.,

Service

Co.,

8,000 Kop^

Inc., 25,000 New York Central R$.

Co., and 10,000 Rhinelander Paper Co.

STREET

poration

on

total net assets of
to

$13.62

per

$3,430,243
to

on

Investing

Sept.

30,

1953,

June 30, 1953, equal

$13.58 per share.

Fundamental Investors, Inc.

selected

during

the

•

Diversified Common Stock Fund

third

Diversified Growth Stock Fund

quarter

cash.

in

conditions
this

way:

were

sum¬

"Business

or

that

have

National

Investors

Diversified Investment Fund

unusually

good growth prospects.
On Sept. 30 the asset value of
shares

was

8?

Manhattan Bond Fund, Inc.

$10.99 compared with $12.23 at the
beginning of the

Sept.

30

or

PROSPECTUSES

year.

Net assets totaled

about the

same

as

a

At

quarter

11,768 shareholders

owned

the

end

of

YOUR

ON

LOCAL

THESE

MUTUAL

INVESTMENT

FUNDS

DEALER,

OR

on

earlier.

third

AVAILABLE

FROM

$28,707,007

the

2,611,649 shares compared
has continued at near the high with
10,492 shareholders owning
level reached last
spring, follow¬ 2,401,459 shares on Sept. 30, 1952.

Cleveland

Chicago
Los Angeles

Hugh W. Long and Company

San Francisco

Incorporated

Westminster

at

Parker, Elizabeth

had

share, compared with

terly report.

stocks

Cor¬

$3,497,326, equal

common

\

10,000

Co.

Common stocks eliminated from the Fund

Corpor¬

stocks according to the 66th quar¬

Co.

Utilities

15,000 Maryland Casualty Co., 15,000

Corp.,

prime factor in the direction WALL
rate

stock additions to the Fund

common

15,000

were:

New

sult

tivity.

outstanding.

dustry, with'business activity as
whole
remaining relatively

a

ation for all practical purposes re¬

year

Business
marized

City

New

the

business

Dec. 31, 1952, substantial drop in economic
the 11,794,699

NATIONAL INVESTORS

activity

also increased."

T*le Fund had 61% of its net

assets

ernments

Address.

$62,885,669.
were made

investments

and

WAIL

GENTLEMEN: At

in

impel business to

continued to emphasize
dynamic growth stocks in¬ holdings in companies that might
creased. Issues of well-established be expected to show resistance to
companies with strong trade posi¬ a downtrend in general business
more

of

steady. Secretary Humphrey re¬
cently called attention
to this
be rolling type of correction which
obviously has important invest¬

may

softening

reduce inventories.

with

The total net assets of the Fund

decline

In the report Francis F. Ran¬
anticipating these develop¬
by following an increasing¬ dolph, Chairman of the Board and
ly conservative policy. In general, President, points out that common

volatile stocks have been

of

auring the pe¬
riod, the common stock portion
of
the
F u n d as
of
Sept.
30,
amounting to 63% of the total
compared with 64% on June 30.

ment

"A

should keep
activity
or
sales of most consumer goods at a
would seem
satisfactory level. Steps have been
buying

ments

and the

total

a

Fund

for
the
third
increase in net

and indeed taxes

and

ings of the public are very large.
This

year

been

ONE

to

an

stable in¬

growth
stocks have done relatively well,
while
many
volatile stocks are
down. For about a year," he con¬
tinued,
"your
management
has
come

Putman

reports

postwar year except
change in direction is

a

national income

employment and

shareholders, "has continued to be with $246,183,017
very selective
with considerable or $20.87 a share
in

I

■

;

.

ac¬

aircraft, container, electrical and of $262,055,331 on Sept. 30, were
railroad equipment fields, while
equal to $19.56 a share on the
the principal purchases were in
13,395,464
shares
outstanding,
the bank, oil and utility groups.
compared
with
$252,483,390
on
"The
stock
market,''
W.
L. June 30, last, or $19.58 a share on
Morgan,
President,
noted
to 12.897.153 shares outstanding: and

variance

-.A

.

than for any

had

depressed market in Septem¬

ber.

'

•

George

assets

less

larger

back to adjust supply with de¬ number
of
starts
next
year.
moderately in¬ mand. Defense spending is some¬ Stimulants to plant investment in
what lower due to revisions and 1953 are
creased its common stocks during
not expected to be re¬
The

adjustment

the

bounds."

Relatively few changes

forces

the latest report.

£7/ie

*

'

•

quarter of 1953

abrupt

still

keep

;
Rise to $62.8 Million

on non¬

billion

$3.0
While

man¬

Putman, chairman of the trustees,
1.953, the
stated: "In many ways this ad¬
significant, with all it implies for justment is entirely different from
tivity. The building of industrial inventory requirements, employ¬ anything in our history. Instead
plants and homes has slackened. ment and income, and prices
of the old fashioned ail up and all
The
production
of automobiles,
"The increasing slowness with down style of correction, we have
household
appliances and some which new housing is
moving into been having highly selective re¬
other durable goods has been cut
buyers' hands indicates a smaller adjustments in industry after in¬
there

cently

3.5% in Net Assets

investment dealer

two-year upward trend. Re¬

a

to

1953.

.

The

ac¬

activity. Government spending at

1952

241,069,000

266,280,000

86,213,000

than

1928

FOUNDED

...

or

economic

intelligent

moderate

Boston

ahead for next year

see

we

un¬

George Putnam's Assets

?

in¬

all levels in 1954 is expected to be
53,299,000

dollars)-

■

likely to reduce economic

appear

Stk. Exch. Vol. (No.

N. Y.

major
we

While,

'

spending

consumer

that

can

Within

occur.

which

1st 9 Months

1953

1953

1953

can

1st 9 Months

2nd Quarter

in

1953.

to

picture, it seems reasonable

expect

in its

and

1952

agement by business and govern¬

income

spent

6%

or

favorable potentialities in the cur¬

variations.

wide

5

perhaps, emphasized the

rent

determine

consumers'

variations

Bonds

from quarter to quarter due
to a minor degree, however,

number of funds may vary slightly

precise

mergers,

the

of

Thus

.

seem to
drop in the

change slightly greater thart the

a

under¬

reduce

.

a

rise from

third factor is the increased

essentials.

June 30, 1953
$220,942,000

$248,853,000

will

period of fall¬

a

Gross National Product for 1954—

busi¬

and

to

after taxes which is

Short-Term

and

Sept. 30, 1953

to

"A

proportion

Sales, $127,698,000

Governments

S.

cyclical

Securities

Securities)
30, 1953

Government

S.

1953

Portfolio

of

Sales

and

(Excluding

this

centuate

$421,734,000

$329,694,000

$95,697,000

$101,532,000

better

a

whether
sales

Net

that

economics

does

"These economic factors

.

cyclical movements in mind. Here

$568,501,000

50,540,000

have

It

bal¬

efficacy.

is

premiums.

ing prices.

creasingly make plans with future

1952

$159,639,000

Repurchases

economic

factor

nessmen

$152,072,000

shares

second

standing

1st 9 Months

1953

1953

1953

Sales

Sept. 30, '52

1st 9 Months

2nd Quarter

3rd Quarter

Established 1930
120

"A

$3,857,375,000 $3,801,924,000 $3,931,407,000 $3,956,070,000

RESEARCH CORPORATION

an

somewhat questionable

1953

Dec. 31, '52

June 30, '53

Sept. 30, '53

Prospectus from your dealer or

have

we

ance wheel of great potency, if of

STATISTICS—SEPTEMBER 30,
108 OPEN-END FUNDS*

OPEN-END

Total

Thus

burdened

seem

remain stable in

STOCK SERIES

one.

debt

have

likely that consumer
spending would increase or even

NATIONAL

to

insurance

not

The
portfolio is investment portfolios by 108 mu¬ to $511,637,000 for the first nine
analysis notes three de¬
of 329 individual securi¬ tual funds, substantially exceeded months of 1953, while net sales, velopments of recent times which
ties with 61.7% in common stocks, their sales of such securities dur¬ after redemptions, were $329,694,- have an important bearing on the
Gross and net sales for the future
course
21.2% in preferred stocks. 10.3% ing the quarter ended Sept. 30, 000.
of the
economy.
in corporate bonds and 6.8%
is 1953, a period of generally declin¬ same period last year were $568,- "The first is the Federal Govern¬
held in cash and U. S. Govern¬ ing markets, John Sheffey, Execu¬ 501,000 and $421,734,000, respec¬ ment's acceptance of a consider¬
tive Secretary of the National As¬ tively.
ment bonds.
able degree of
responsibility for
sociation
of
Investment
Com¬
Redemptions tended to dry up maintaining a
high level of em¬
panies announced yesterday. Se¬ as the market declined this year. ployment.
Acknowledged by both
curities bought
(excluding U. S. Third quarter redemptions were major parties and given
legisla¬
Government
securities)
totaled $50,540,000 (less than 1.3% of total tive sanction in the
Employment
$201,637,000, whereas total sales net assets), compared with $63,- Act of
1946, action under this
were
942,000 during the second quarter
$127,698,000.
policy may he tending' towards
Total net assets of the 108 mu¬ and $67,461,000 for the first quar¬
prevention of a serious recession
tual funds were $3,857,375,000 on ter of 1953. Third quarter sales of
by halting a preceding boom be¬
Sept. 30, 1953, compared with $3,- new shares to investors exceeded
931,407,000 on Dec. 31, 1952 and redemptions by more than three fore it attained excessive heights.

Sept. 30, 1952.

which

heavily

payment, mort¬
amortization,
interest
and

life

Commonwealth's

on

those

rather

installment

gage

may

made up

$3,596,070,000

debt,

appear

with

amounted upset previous calculations.

shares

new

"While it is true that a large
proportion of spending units have

activity

celerating
Sales

orderly

an

lower level of busi¬

a

October
lock

Net Sales Rise

foreseeing

transition to
ness

Assets Decline With

Purchases of securities for their

this time.

Thursday, October 22, 1953

Bullock Analysis Warns

Commonwealth Sales Gain
In

...

3,

New Jersey

Volume 178

Number 5266

The Commercial and Financial Chronicle

...

(1551)
PERSONAL
The

PROGRESS

appointment

Betz, Jr.,

of

Mr.

Frank

T.

wholesale manager in

as

Betz

will

Fund in the New

represent
the College with a Bachelor of Science
York, New Jer¬ Degree in Business Administra¬

sey

and New England areas, where

tion.

he

the North Atlantic states for Dela¬
ware Fund
was announced Tues¬

has

served

been

actively engaged in

the mutual fund field.

day.

Mr. Betz is

a

with

War

World

During

the

he

II

Marine

1st

Securities Salesman's Corner

Air

Wing of the United States Marine

Corps in the Pacific.

graduate of Rider

By JOHN DUTTON

Fund

Studies Probable Effect of Profits Tax Removal
The

Believing that there will be

:

no

profits
taxes
applicable
to
corporate
earnings
after
Dec. 31 of this year, with the result that
many
corporations may substantially benefit, National
Securities

study

&

Research

three

on

of

has

its

prepared

mutual

interim reports for the balance of 1953 (modified
where necessary by prevailing and prospective

excess

funds

general

economic business conditions); (4) on
consideration of each company's tax position of
prior years including carry-back and carry¬

special

a

National

—

or

forward allowances, and

Stock Series, National Income
Series, and Na¬
tional Speculative Series
to determine the ef-

(5) on such information
available regarding renegotiation of de¬

?

as

t

on

earnings

each of the portfolio holdings

on

when EPT expire.
In these special staff

;earnings and

of

•published to date in

were

(1)
company reports
(2) on comparison of

1952;

(3)

tion of emergency

extraordinary

the

on

portfolio holdings

subject to the final decisions
such items

on

as

the

facilities, inventory write-offs,
incident to defense busi¬

expenses

the

and

ness,

projection of these

on

made

charges to be accrued for accelerated amortiza¬

profits taxes accrued in such 1953 interim
-reports with those for company fiscal or calendar

ended in

estimates

of corporate managements

based:

(excess

^years

'

below are, of course,

interim

1953;

contracts.

The

reports, the estimates of

profits taxes

excess

the examination

•on

was

fense

—

-fect

treatment

accorded

capital

gains

and losses.

NATIONAL

STOCK

SERIES

Preliminary
Estimates

Preliminary

Preliminary

Estimates

Estimates

1953

1953 Excess

1953 Excess

Earnings
per Share

Earnings
"i.
Bakeries

American

BraKe

American

Chain

American

Radiator

American

Steel

American

Tel.

Armco

&

$0.05

4.20

0.80

American

Cable

Co.,

S.

S.

1.00

American

Inc

4.25

Corp

1.80

Foundries
&

Steel

per Share

$2.75

Co.

&

Tel.

Corp.

America

Bethlehem
&

Steel

Chain

American

&

American

Inv.

American

2.35

Armco

Boeing Airplane

Inc.

Co.

_

_

of

America N.

0.20
0.10

1.35

4.00

..

Companv
Borg-Warner
Corporation
&

Brass

Stratton

Bucyrus-Erie
Buffalo

Co.

__

Corp.

2.40

Chicago Pneumatic Tool
Chrysler Corporation

6.50

Comb.

0.25

Consolidated

2.00

Container

_

_

Company
Company

Forge

__

5.25

_

3.25
_

T.

&

S.

A._

2.35

2.35

Dana
Eaton

General

Goodyear Tire &

8.50

12.50

7.50

3.09

0.94

Kelsey-Hayes

1.00

Kennecott

_

Combustion

Consolidated
of

Dana

&

Vultee

Eaton

Aircraft

__

Auto-Lite

7.00

Corp

3,50

•

-

.

Ingersoll-Rand

Co.
..

General

Trailer

Company-

Electric

General

Libbey-Owens-Ford
Lockheed

1.50

Melville

to

Gillette

Companv

.

Grumman

Tap

&

Ingersoll-Rand
Inland

Steel

Interlake

Joy

Important Things

Company

Company
Corp.

_

9.00

2.50

1.90

York

Phelps
*

Air

Brake

Dodge

Rockwell

Standard

9.50

..

1.25

0.33

5.25

&

agement

Cooper

0.25

Sunshine

United

Shoe

United

Mead

_

States

West

Penn

1.00

Mesta

Shoe

0.15

3.25

National
National
Nat l

Acme

0.52

Rust

Phelps

2.20

Co.,

stantial

peals

Richfield
Rockwell

0.10

__

_

Co

3.30

United

1.70

American

1.10

Armco

0.50
l.OO-

0.05

1.07

1.60

5.50

Armstrong

3.90

Rubber

States

Steel

2.35

6.25

....

Corp.

States

Bliss

&

Auto

Wheeling
White

Electric

Steel

Motor

_

..

Auto

Con.

Vultee

0.40

Co.

(Mo. 1

Corp._
__

_

Dana

General

Time

Gt.

Northern

Hubbell

PREFERRED

Pub.

Co.

General
Kaiser

Steel

Steel

1%

S3-S4 cum.

$2

cv.

2.50

1.10
1.00

0.25

Kelsey

Con.

Hayes

National

Mall.

Profits Tax

Neptune

per Share

Phelps
$9.00

7.00

0.15

Reo

3.00

Republic

35.00

3.30
0.25

cum.

prior

37.50

2.55

44.00

19.50

8%

Co.

pfd.

cum.




.

"B"

more

on

any

in

and

when

siz¬

some

there is

portion

disclosure of that

save

the

of

which

estate

was

0.15

without
which

would

1.40

estate

were

0.40

wife

revocable

a

living trust,

interruptions and

and

be

she

on

taxes

importance

to

Steel

if

the

outright

to

the

had

to

their property
possible to their children and

pass on as much of
as

grandchildren without having it
unnecessarily shrunken by taxa¬
tion.
Touch the Vital Interest

The

.,

more

you

think

I

ness

is

why

people
a man

by

0.50

0.30

able to have

4.00

with the client if

3.50

0.50

5.00

1.70

3.25
3.00

1.90

3.50

0.05

2.60

0.50

the establishment of a revo¬
living trust and it is advis¬

so

that

all

as

well

as

things.

some

loves his wife and his

extent

him

that

that

he

if

you

make

can

for them that there is

no question
going ahead. Sometimes

about his
a

has

man

wife that is not capa¬

a

position—show him
arrange
his affairs

family

achieve,
have
him

as

any

and

to

I

work

statistics and

There

attorney counsult

an

one

is drawn up,
of the estate

3.40

2.00

Vanadium-Alloys Steel Co

2.66

1.24

White

4.75

0.25

rest
funds

in

trust

only giving you the
why people buy. The

sons

0.75

the
the

am

chanics

3.20

his

are

as

much

possibly

you'll

hard

balance

not
sell

to

sheets.

variations

many

of

lies. There

tive

are

in

favor,

relied

cases

have

may

where

a

rela¬

that

spouse

is

who could not be
to handle principal

or

upon

properly.

a

A

living

trust

leaving

the income to the proper heir and
the corpus to a

charity, or others,
impossible for capital to
dissipated by the demands of

makes it
be

unreliable

husband

or

other¬

wise.

about

out

if there is

a

much

as

as

you

can

customers—then

your

see

that

help
them to obtain all the advantages
of
a
sound
investment
during
their lifetimes and the protection
of their families after they are
way

you can

appeal for business and if
develop
it

will

come
as

you can

competance in this field

a

bring

and

you

very

substantial

in¬

great satisfaction

well.

Russell C. James With

First of

are

Michigan

(Special to The Financial Chronicle)

COLUMBUS,

Ohio.—Russell

C.

James has become associated with
the First of

Mr. James

Michigan Corporation.
formerly manager

was

of the Columbus office of Baxter,
Williams

&

Co.

Prior

thereto

he

with Westheimer & Company

and Merrill, Turben & Co.

I

2.75

7.10

can

can

think
very

this

give

to

other angle.

5.00

2.00

and
may

he

of mind and

peace

protection

how

was

5.00

.

reason

In

protected tax-wise and from every

9.25

Corporation,
Stewart-Warner Corporation

can

be

arranged

by

rea¬
me¬
you,

Fabian Adds
(Special

to

The

to

Financial

Staff
Chronicle)

BEVERLY
client's
HILLS,
Calif.
—
officer of Harold B. Johnson has been added
your bank. Some local banks are
to the staff of Fabian & Company,
charging
$2.50
a
thousand
for
setting
up
these
simple living 9500 Santa Monica Boulevard.
your

Steel

that

agree

things safer and less bothersome

1.00

Incorporated

Company

be saved

cable

Inc

"B"

busi¬

your

main

one

do

the

show

can

study
will

you

usually

go

inheritance taxes would

0.50

Casting Co.—

Corporation

inves¬

tors, especially where they wish to

through
the long involved court procedure

6.10

Inc

of

be

can

many

delays

incurred

left

2.50

Company—

Company
Fibres,

will

gone. This makes a very powerful

It would

3.25

Steel

Motor

involved

will be

cases

8.00

Corp

that

sources

before it finally passed to her. No

Corporation
Robertshaw-Fulton Cont. Co
Sharon

around 7 V2 %

sum

4.00

Company.

13.00

5.73

Motors

through

0.30

0.15

Company

10.00

non-cum.

Co.

Dodge

&

pr

Pittsburgh Steel Co. 5V2%
Rubber

Poor

estate

3.25

Company
American Aviation,

North

other

inheritance

on

vital

Find

1.30

Meter

per Share

find

can

ex¬

left under

5.00

&

the

her

save

and the income would continue

1.55

Wheel

1953 Excess

also

of putting that portion of

1.50

0.40

Electric

would

0.10

2.95

Copper

un¬

4.50

Co

to

the

ques¬

be

so.

3.50

Prop

can

consequence

Practically
leading Mutual Funds to¬
day will be able to give you in¬
formation and tell you where you
all

an

would

real estate.

Inc

Automotive

3.75

S.

0.40

of

use

her

probate and
the legal fees involved. Such fees

1.10

1.25

practices

from

1.00

3.50

.

3.50

Acme

Moody's Investors Serv. $3 part.

U.

0.65

3.00

Corporation

National

.___

able

3.40

!___

Co.,

Copper

National

cum.

average

2.40

Corporation

Iron

Kennecott
Master

SERIES

$31.00

cum

1.35

Inc

Joy Manufacturing

"A"__

$1.46

0.60

0.46

STOCKS

Castings Corp. $6
Corp,

her

^

Estimates

cum

2.35

3.25

Ore

(Harvey),

Interchemical

1953

Curtiss-Wright

in¬

experi¬

or

her

through the

money

5.25

Corp
Iron

Earnings

Curtis

the

in

those who might

even

able to do

.

training

separate

tionable

6.50

Co

Adv.

Preliminary

■

Co.

receive

are

4.50

Outdoor

Estimates

Issues—

Share

It

Corporation

Inspiration

8.00

_

per

4.75

Corp
Corporation

Curtiss-Wright

2.50

4.75

_

to

penses

Company

Preliminary

Locomotive

funds

relieve her of making
which she was not

and

wish

0.14

"A"

Aircraft

4.00

4.50

_

Co.

Stamping

6.75

...

ence,

Profits Tax

1.80

Bucyrus-Erie Company

City

6.50

..

NATIONAL INCOME

Amer.

capital

my

only

by

STOCKS

Mfg. Co._

Brass

7.00

Co.

Corp.

Co.

I

qualified

$3.00

Laughlin, Inc

4.25

_

Corp.

Supplv

Westinghouse

Rubber

Bridgeport

Interlake
Western

ap¬

for

$10.00

._

substantial

larger investors.

many

not

1953 Excess

STOCKS

Corp

of

estate taxes

living trust to protect their fami¬

her

but

to

and

6.50

S.

be

consideration.
of the irrevo¬

use

save

trust she could always say,

a

4.00

S.

Corp

Decker

&

0.20

0.90

Steel

&

major

a

how people can use the revocable

It would

Estimates

"A"

not

were

tied

decisions

Preliminary

per Share

COMMON
Radiator

General
-

United

0.50

3.75

_

_

Corp.

United

3.20

2.50

_

..

Co

Aircraft

5.00

3.00
7.10

Paper

her from the

save

Having

like

trust

SPECULATIVE SERIES

Curtiss-Wright Corp. $2

0.50

6.75

Incorporated

&

in

"I'd

4.00

9.25

_

Corp.-

Shovel

sub¬

of

0.12

PREFERRED

3.50

_

'

_

Co._

Company

Bag

1.00

0.50

4.00

_

_

_

_

Corporation

Technicolor.

upon

the

nature of her investment.

her.

up

2.50

0.25

3.50

....

Sunbeam

and

on

1953

5.00
_

Spring & Axle

Steel

worry

depend

needy
relatives
and
friends who might wish to impose

3.00

Issues—

6.50

Corp.

Simmons

Union

1.25 ,'

Black

Oil

of

0.20

Preliminary

6.10

_

Co.

could

income

It would

2.50

NATIONAL

5.00

____

Inc

Casting Co.__

Republic Steel Corp.

Thew

'

3.50

_

Froof

she

her

4.00

7.00

0.50
;

4.25

...

_

Corp...

Dodge

Sharon

3.25

__

Automotive Fibres,
Steel

dividends,

5.90

Earnings

_

Co.

relieve

continuous

1.60

12.00

0.50

4.30

Corp._

Elevator

Parker

Co.

t

Malleable & Steel

National
Otis

Glass

Co.

would

because

0.50

8.00

_

Corp.

Machine

of

advice.

It

0.05

Co

Electric

savings that could be created
by using irrevocable living trusts

ble
of
managing securities
impossible for he knows it—other times he
meaning friends to give her have children who are in

well

1.70

Corp

Steel

.

Melville

collection

0 25

5.00

"B"

Corporation

Motor Wheel

of

6.50

!

Machinery Corp
Gypsum Co

States

United

man¬

different

4.00

4.00

Aircraft

children and the

It would make it

0.33

3.50

Oil, Ky.___;
Biscuits, Inc

just referred

case

no

reporting them, etc. etc.

3.00

Co

of

10

come."
Corp.

Corp._

Libbey-Owens-Ford

least

at

3.00

Estimates

-Kennecott

of

stocks—with all attendant

common

0.50

2.90

-

Axle

0.40

3.75

_

_

2.50

6.50

_

_

Co

Corp

Spring

1.20

3.00

2.95

..

Laughlin Steel
Manufacturing Co.
Wheel

__

_

Harvester

Hayes

0.65

3.40

_

risks and responsibilities

details

5.00

._

were

tax

family to

It would relieve his wife of the

0.50

2.50

Cast.—

simple

to there

cases

Living Trust Would Do These

0.50

6.10

Steel

Savings Are Also Possible
the

there

2.20

Co.—

In

and

pointed out

was

6.00
___

Gas

&

United

&

Kelsey

Co._

Corp

Engineering Corp.

Iron

International
Jones

Die

Aircraft

2.25
2.20

4.00

_

New

3.40

3.50

..

__

_

Goodyear Tire & Rubber
Greenfield

0.25

6.00

Co.

lived

that—

2.75

0.15

it

he

1.50

2.50

because

him

2.25

while

3.25

Co.—.,.

Co

Malleable

to

revocable

a

8.00

Corp

Cylinder

reg¬

shown

was

3.25

Corp

Acme

National

stocks

dividends

it

made

income

bad

National

2.75
0.60

5.50

Corp.

Railway Signal

He

1.10

9.50

"B"

Glass

Aircraft

Shoe

a

1.75

the

2.50

Tax

help you to understand this very
inquired important subject. Saving money

common

pay

When

be used

can

.

he

1.00

9.00

.___

Corp

0.25

4.00

Co

Motors

General

Wheel

Copper

0.15

7.25

_

protect.

certain

would

to

that

>1.10

5.50

Co.

wife

a

thereafter to his wife, he invested
without hesitation. The sale was

4.50

Co._

.____

4.50

_

to

made

was

2.75

6.00

Co.

2.00

__

Nat l

Fruehauf

Rubber

4.25

_

..

Manufacturing

Electric

__

Inc.

Corp.

Corporation

Co.

Corp.

Baking Co.

Wheat

_

Machine

Iron

Engineering,

Continental
Cream

lling

sale of substan¬

a

had

living trust agreement, giving him

2.75

Cincinnati

Time

day

who

5.00

5.50

Co

Corp.—
Corp

5.00

set

can

4,60

Motors

10.00

they

2.00

4.50

Manufacturing

1.00

how

consequence

man

A

0.65

them

The other

tial

0.50

4.00

M

show

their estate up in a
way that will
give some measure of protection
to their loved ones.

3.50

Corporation

Campbell, Wyant & Can. Fdry. Co
Chicago Pneumatic Tool Co.
Chrysler Corporation
Fuel

to

women—is

7.00

America

purpose.

cable trust to

sometimes

8.50

Corp

of

this

man—and

10.00

Co

for

Howerever, the

hold the shares under

0.10
3.00

the least amount that

appeals you can place before any

8.50

Vultee

Corp.

these

it was possible to use a
good Mutual Fund and for a small
fee have a bank in his own city

0.14

11.50

Corp.

that

him that

0.30

1.80

Corp

provision

the

as

repository for the assets of the
trust, with a minimum of $20,000

much

very

funds will not be
dissipated. One
of the most
powerful emotional

1.00

„

2.50

Engineering Inc

General

Colorado

making

ularly.

4.25
.

Corp

—

2.60

5.75

____

Steel

Borg-Warner

3 40

5.50

_

out

0.05

3.00

6.50

'

_

S.

Steel Corp..

2.35

Borden

Bridgeport

S.

are

erty is left to their families with¬

that

0.07
Bank

people

trusts using Muiual Funds

unaware of what can
happen if
securities, cash, and liquid prop¬

0.80

6.50

&

8.50

_

Co

Illinois——

of

14,00

A

Manufacturing Co.~_

Laughlin.

Co.

4.50

S.

Most

4.20

Co

10.00

&

it.

about

0.50

few things that

a

really wish to do when
invest money, and not the least
of these is to attempt to protect
our families as much as we can
do

2.75

11.50

T.

6.00

*

Cable

Radiator

Share

STOCKS

Co

Shoe

1.80

2.75

Corp.

Decker

&

Briggs

Brake

per

only

any of us

wished

Co

0.40

6.50

__

N.

Chemical

Bakeries

Bethlehem

of

Black

0.14

Agric.

5.20

Dry Goods Corp
Atchison, Topeka & Santa Fe Ry. Co.

Bliss

COMMON

Amer.

11.25

Co.

Associated

Bank

Profits Tax

per Share

Co

Shoe

Issues—

Living Trust Can Create Large Sales for You

are

we

Profits Tax

1953

Issues—

There

Estimates

Preliminary

American

31

lawyer)

lawyer

and

the

(or

the

trust

32

The Commercial and Financial Chronicle

(1552)

Continued

towards the end of this month or

from first

page

the
A

without saying that in
utes

I

can't

that I know

about
I

give

that I don't know

or

you

panies have been established; and
partly
because
so
many
new

at

of

profits will tend to decrease.
Unemployment—which is at pres¬
non-existent—will tend to in¬
crease
moderately, and in labor,
too; the seller's market will be

of

ent

ernment

whole

The

Rates

not forVnulated

are

Money rates are the
result of (a) business activity; (b)
the
position and needs of- the
a

vacuum.

Treasury;

the

(c)

debt

manage¬

ment

policy
of
the
Treasury
which, as the last few months has
indicated, is a very important fac¬
tor

in

the

market;

money

and

into

converted

buyer's market.

a

During this cleansing process-

readjust¬
it a reces¬
whatever you

it

call

people

some

a

ment, other people call

finally, the policies of the Reserve sion, you call it
authorities, which, in turn, are or want—the demand for credit will
should be guided by business ac¬ decrease. A lower volume of busi¬

ness activity will lead to a smaller
movement
of
com¬
prices, the movement of demand for commercial loans. In¬
•employment, and the position and ventories, in all probability, will
needs of the Treasury.
be
reduced.
Consumer
credit,
Therefore, if you want to find which is at a very high level, in
all probability will be curtailed.
•out what money rates will do in
All this, plus the elimination of
the future; if you want to know
whether bonds are a good buy or the Excess Profits Tax, will lead

tivity,

the

modity

not; if you want to find out what

to

reduction in bank credit.

a

how

handle

to

the

tools,
security

just half-baked

are

you

this

part,

the debt

increase

cannot

it

cause

corporation paper on the
banks, and, by the
analyze these four forces: Busi¬ same token, the Federal Govern¬
ness
activity,
position
of
the ment, in order not to be forced
Treasury, debt management pol¬ to call on the Congress to raise
icy, and policies of the Treasury. the debt limit, will tighten up on
All four are not clear-cut. No¬ the progress payments to manu¬
body can tell today what business facturers of war equipment, and
activity will be next year. Nobody these, in turn, will be forced to
Have I made it clear?

Now,

modity

therefore

we

have

to

commercial

from the banks.

tell what other people will do;
what the debt management policy

borrow

of

Treasury will be, or what
The credit policies of'the authori¬

mand

ties will be.

But, if

account

factors,

(3) The demand for long-term
capital from the private sector of
the economy, with the exception

can

the

all

take into

we

as

see

we

them, and naturally the

average

individual is limited in his vision,
and analyze them

them

carefully, weigh
measure them, we will

and

reach certain definite conclusions.

JShould something unforeseen
hap¬
pen,

as,

for example, the Korean

War, which

more

But, taking it all in all, the de¬
for money, for short-term
ought to decrease.

money,

of

being,

will

we

ihose forces that

the

analyze only

we

foresee.

can

will

year

smaller.

be

probability, the number of
homes erected and privately fi¬
nanced, will be smaller. Already,
have

that

seen

"starts"

home

decreasing, and in all proba¬

are

started

finished

and

previous three

is

past.

of

The

the

index

of

industrial

-.activity stood, in March and April,
at

243.

It

August.

went

It

is

down

to

238

in

probably at 235 in

business,
is

and
will be at
the
end of the year a little lower
than
at present. The boom is over.
Whether

body

serious

a

readjustment,

no¬

tell.

adjustment
business.
will

will have

a

In my opinion, we
headed for a serious re¬

can

not

are

we

or

or

serious decline of

a

In my

is

opinion, what

we

wholesome readjust¬
ment, which is the process through
which our economy cleanses itself
of

see

the

a

incompetence,

rfficiencies
that

and

grow

the

in

up

the

of

I
at

of

headed

for

a

cleansing

process.

make

it

still

clearer,

some

«of

you who live in this country
know that usually during Febru¬
ary and March, there are strong

winds.

That

nature

cleans

branches,
3forth.

clean

has
out

the

the

way

whereby

trees

of

dead

dead

This

which

is

leaves, and so
cleansing process
already started will

the

deadwood

in

busi¬

deadwood

also

ness,

and

•among

security analysts who don't

the

"know their business.
The
•one

pattern of business will be
competition, perhaps

of keen

keener

than

ever

before

in

the

Jhistory of the country, partly be•cause the productive
capacity of
the country' is so much
greater




for

by

pro¬

de¬

a

conditions

as

as

are

Something unforeseen

happen.

If, for example, the
government should suddenly de¬
cide that we have to spend $10

may

billion
then

for

more

change

national

defense,

opinion; changed

your

conditions

will

changed results.

bring

But

as

about

conditions

budget.

On

Gov-

the legis-

basis,

cash

a

will

year

therefore, the budget ought to be
either

balanced

show

or

of about $500 million.

estimate—if
that

the

much

half

first

of

of

year,

tions

will

tax

15,

surplus

have
In the

not

the

year,

Treasury

45%

45%

and

the

half

first

and

half.

If conditions remain

a

today, the Treasury,
not

be

they

as

such,

as

important

an

the market

in

the

of

deficit in the second

year,

rower

on

resulting in a Treasury
for

should

large.

corpora-

their 1953

of

15

reve-

are

for example,

pay
March

on

June

will

money.

the

the

nues

Next

This budget

remains—indicates

it

Treasury

borrow

to

deficit

a

bor-

the

in

next

months.

12

conditions

change

you

change, then

ingly.

Now

The management of
public debt in the early part

management.
the

of this year

the

nor

every

did not show the skill

technique

that

the

had

we

well

were

Administration

handled.

But

believe

was

he is

stops

through.

and

train

the

So

will

he

same

for

was

they
I

to

come

the

Treasury

second

point—

the needs of the Treasury.

The mis-

in

money

for

made

when

and

were

today.

period

a

long-term

high,

very

mistake

high

as

The

again.

will

as

Treasury

be

repeated

Therefore, I reach the

I

agement,

mean

securities for

new

borrowing

new
,

money

,

,,

that

the

or

the

re-

,

more

securities

care-

will be

tailored to the needs and require,

n

.

1

,

analyze it only from the
point of view of conditions as they

.

.1

j

.

.1

money

market

market.

of

As

this:
the
As

change our opinion.
the situation is
debt limit imposed on

of

the

billion.

of September, the
outstanding
in
the

States amounted

billion.
can

$275

end

debt

United

is

to

$272.4

The

Treasury, therefore,
borrow only about $2.6 bil¬

lion.

limit

Then
and

it

it

reaches

cannot

go

the

is,

therefore,

quite

evident

Treasury will not borrow
billion, but maybe $1*£ bil¬
lion, a maximum of $2 billion, in
a

to

disorganize the

and

the

capital

tiny bit of

This -borrowing

will

a

lee¬

come

Reserve

mod-

(2)

becom-

the

Federal

long-term, is down, un-

as

elusion.

Fed-

authorities

the

that

learned

from

serious;

m0re

eral

have

f

therefore

^nd

basic

I

reach

conclusion

Reserve

the

authorities

Decline.. Slightly

TRI-CONTINENTAL Corporation

continued as the country's largest
diversified closed-end investment

sec-

that

—

Assets

s

••

J
the

: with-.gross

company

will,

through either open-market pur- $170,455,884 on
chases or through lowering of the ^e report for
discount rate, or a combination of This compares
both, furnish the banks with ade- °* $ 1^1^423,10;5
quate

to

reserves

all

meet

Ltd., on April 8, 1953.

After deducting liabilities
reserves,

funding operation's.

alent

.

..

,

....

„

„

then

factor

to

have

we

consider,

to

and

assets

$23 36

share of
„

„

and

equiv-

were

com_

.

.

mon stock on Sept. 30, compared
with $23.52

more

one

net

T

,

.

The Availability of Capital
And

of

assets

Sept..30 shown in
the third quarter,
with gross assets
three months ago

a^f, ul77,029,7136 after the merger
Ta{^ a
^om~'

the

bodies and the public authorities,
assist the Treasury in its re-

„

.

-

Tn-Con

Reserve

cuities.

•

^

the Treasury must cooperate,
it will lead to diffi-

and

in

long-term

we

bonds

mortgages.»
what is the status on the
P^y s^e
long purchases?

June 30,

on

1953 and

(1)

The

savings

of

the

earlier.

year

asset

The report

coverages

of

...

share

per

sup-

a

$8,643
.

.

,

405,370 shares of $6

on

Dreferred stock

According to the report

nation

a

divi-

have become institutional in char- dend of 20 cents per share on the
common
stock was declared for
acter.
(2) The volume of life insur- the tftjrd auarter making a total
ance is constantly increasing.
0f 60 cents to date this year Fran(3) We save today through pen- 01 b" cents to date 1this year, t ransion funds.
c,s r. Randolph, Chairman of the
(4) The savings of the nation Board and President, said that net
have become contractual in char- investment income normally is
acter. Once you buy a policy, you .
.
fdurth
auarter
as
are taking a contractual obliga- lar^f1.in me Iourm garter as
tion. You have undertaken a con- portfolio companies tend to pay
tractual obligation, and you have any special or extra dividends in

to. maintain it, and these funds that period and that it is anticiaccumulate in good times and pated that the final dividend for
a

tremendous that those who are* investments including the stock of union
entrusted with the Obligation Of Securities Corporation were maintaind at
approximately 80% of net investment asinvesting money have to work sets with continued emphasis on holdings
very fast in order to invest the that might be expected to show resistance
money
flowing into them from J° ®
tivity. Public utility common stocks, which
the payment of outstanding debt, represents Tri-continentai's largest single
•

a:^„

£

a

In

ply

~

a

to

ury.

Reserve

In

my

opinion,

the Reserve

authorities, too, operated under
misapprehension
end ui ividy.
of Mav

Federal

Operated
we

are

a

funds

j-

seeking

long-term

bonds

is

and

bound

1

to

i

the

on

still

until

about

outlet

the

confronted

flation.

with

lip

authorities

that
in-

and

'

.

to

investment,

s%0T'of
Sept.

end

30,

for
on

16.6%

year

earlier,

a

further

in-

on

June

oils,

30.

which

the second largest group, accounted!

13.4% of net
June 30, 1953

19£,2-.

were

T/eSmenT ST™

against

as

13.9%

remain

net

„

M

+

assets as against 14.3%
and 17.9% on Sept. 30.
,

w..

■

part

pub-

mppf

irdustry

in

t0 meet
requirements Of industry and trade, of the increase

thp

^odera^e" requirements TfVhe
Treasury.

quarter with the purchase of 7,500 shares
of Tm»isiana Land & Exploration,

8,700

General Electric,
13,100 American
10,300 Pacific Gas & Electric, 30.000

«

I can
,

Can,

oummary

the

authorities

assumption

a

mortgages,
be large,

,1

a

Until the enu ui may,
umn ine end of Mav

Reserve

1

sud-

Will be more than adeauate

roncy

the

a

humble opinion

my

0f

u

~

™

au

Pnliev

Reserve
now

by business activity and by the
position and needs of the Treas-

the

that the

way."

jng

readjustment

lower

any

well

as

guided

through

rates, to prevent

money
erate

desire,

a

no,J StaneH b,et0re> nthHe of states, municipalities and
™d demand for.funds on the
policy will oe determined

enu

$2.6

order to have

(i)

by

therefore,

come

xteserve

debt

Congress reconvenes, and
the Congress raises the debt limit.
It

not

Federal

We

beyond it

until the

the

j

we

The

on,

change take

today,

government

total

a

now

trend of interest rates, short-term
less something unforeseen occurs,
and if it occurs, it is up to you to
analyze as carefully as you can
the impact it will have on the
money market, on the capital market, and to draw the proper con-

mind, that
policy of the

own

Reserve authorities will be

con-

ments of the market, and that the
issue will be handled in such a
as

Should

from

my

inJeJ*'
1953 will be considerably larger
(5) A large portion of the savings of the nation are negative in t"311 ttlat declared lor tne tnircs
the selling of character; negative in the sense quarter.
the purpose of that the payment of debts is so
The
report reveals that common stock

ury—will be handled

manner

today.
place, then

in

elusion that the debt management
in the future—and by debt man-

Again,

can

sure,

bentures outstanding and $340.53

fully;

Needs of the

quite

bound to go up
opinion, the

my

or

doubt very much whether the

same

bond prices are
and down, in

Chi-

and

outlet

Treasury

taxes

are

York

Per $1,000 principal amount of de-

learned.

soon

New

mistakes,

make

demand

corporate

in

by 1%, thereby freeing $1,100,000,000 of reserves. And I am

cag0

an

making mistakes,
But teach yourself

the

new

the

cities and country banks by

serve

2%, and

the peak in money rates,

seen

And, while it is quite evident that

Re-

the amount of capital seeking

being

assuming that the Treasury
could compete
aggressively
with a private sector of the econ-

funds

of

as a man

long

in

when

have

lowered

requirements

reserve

shows

mistake again.

which

buyer of Treasury bills,
Federal Reserve

the

the

legitimate requirements,
And, therefore, one can reach
the final conclusion, namely, we

a

$23.94

yourself never to make
mistake again.
I don't

same

omy

and

has been

more

can

think that the Treasury will make

take

the Treasury

constant

remain large, and will be
than adequate to meet all

will

ir!V?e,gefnefal c°nclusi0P- An.d
^ ^ final factor to consider is

human

everv

he

When

was

0f June

not

lesson

a

was

learned'.

the

ties, municipalities, etc., will be
greater.
The supply of funds seeking an
outlet in long-term obligations

ana

bonds

selling at 89. Last
night they closed at over 95. The
debt management in the early part

I

the mistakes
they had
they immediately changed
their open market policy; whereas> during the first five months of
1953> the Federal Reserve was a
seller of Treasury
bills on the
0pen market, since the beginning

realized

made,

government

2V2%

the

previous 12 months, although

legitimate requirements of indus- W1*h
try and trade, of the tax-levying Pany>

bond

sharply,

very
ago

that

the

Reserve

expect, with the
prices dropped
and a few weeks

to

reason

result

the

Federal

the question of debt

comes

these facts:

on

the demand from public authori-

ond

Debt Management

in the
The

dii&

supply of funds at the

posal of the banks will be larger,
either
through
increased
open-

authorities

opinion accord-

your

funding operations Of the Treasto.,1

demand for funds.

The

1

otherwise

_

Should

today, I say to you that as of
today the outlook is for a decrease

are

are

To

outlook

of moderate

repeat, this is

We
a

the

it at present,

accompanied

present.

we

are

the
see

decline

a

portions,

in-

seller's market.

We

we

weaknesses

period

a

for

in

was

years.

that

as

year

cline in the demand for credit,
well as capital.

September,

recession

find

We

postwar boom

next

will be smaller than it

Business Activity
The peak

fiscal

This is

lives,

next

all

bility, the total number of homes

for

lative

August,

Federal

the

this

billion.

$3.8

in

States

of

for

tions

mind

But,

United

deficit

be

by

makes mistakes.

In

is based
When

budget estithe President

the

to

utilities, will also decrease.
Capital expenditures by corpora¬

we

came

immediately.

the

the

of

the

must

billion—under
not much,

$2

presented

of 1967/72

entirely unex¬
pectedly to me, then I change my
time

According
mate

limit, will tend to shift some com¬

men.

obligation

itself

exclusively witn
the legitimate credit needs of the

present, is quite strong.

are

will be counter¬
•equities, which move more or less
in unison with interest rates will acted by (1) an increase in bor¬
4lo, you ought to master the sub¬ rowing for tax purposes, stimu¬
ject of money rates. It is part of lated by the operation of the Mills
your tools, and if you don't know Plan;
(2) the Government, be¬
In

of

and medium-term securities,

term

produced.
volume of business on the
will remain large. Margins

have been

of Money

Money rates

produced and

products are being

few highlights.

a

Factors Back

in

the end of the war;

than it was at

partly because so many new com¬

interest,rates, and therefore
merely' whet your appetite

will

and

few min¬

a

you

bank's

concern

conditions—is

present

everything

tell

central

country and the position and market purcnases by the Reserve
needs of the Treasury, and that authorities or the lowering of the
particularly if we take into ac- the position and needs of the Gov- Reserve requirements, and poscount the fact that part of .these
ernment Bond market is none of sibly both.
securities may be long-term, part their business.
Tne demand for capital from
medium-term, part of them shortI believe that they, too, have the private sectors in the next
term; and the demand for short- learned a lesson. And this belief 12 months will be smaller than in
maximum

a

Outlook for Interest Rates

early part of next month.
billion and a half dollars, or

.Thursday^ October 22, 1953

..

Canada Dry Ginger Ale, 6,400 Continental

n0w
,

.

summarize

my
J

re.

marks and give you the concluslons:
Money

£f,n*,6,390 Reynolds 3,600 Corn b_
Tobacco
/,soo
Illinois
Power
and
Products
Refining.
.

rates

will

depend on
business activity, position of the

During

period. Tri-continental elim-

^ BS?g-wamePr°Sk700
Indiana,

19,700

Merck,

5,200

"'on

of
Reynolds

standard

the Federal Reserve Treasury, the Reserve authorities, "^"ons'in^ommofft^hoidings inpreaching the
The
short-term
demand
for eluded 8,000 Northern Pacific/* 8,600 Johnsgospel of an independent central money in the next 12 months will ^nviiie. i7.5oo ceianese, 6^qo seaboarct
bank,, independent of the Treas- be somewhat smaller than it was papersW Goodyear Tire &nRubbefaSand
ury.
Their argument was that a during the past 12 months. - - ~ ~2,ooo Chicago, Rock island & Paciuc. - -

Secondly,

authorities

were

Volume 178

Number 5266...The Commercial and Financial Chronicle
(1553)
stock

H r *r :•

,

vj\

-

\

"

♦

V

*

dividend of one share for
each 22 held.. Par value would re¬
main unchanged at $20 a share.

••

News Alboet Banks

Stockholders

CONSOLIDATIONS
NEW

OFFICERS,

Oct.

on

BRANCHES

NEW

Bankers

and

ETC.

REVISED

asked

are

the proposal at

to

act

29.

CAPITALIZATIONS

Oct.

on

rectors

17

that

ex¬

the

di¬

were

prompted to recom¬
plan by the growth of
the bank's deposits.
mend

The

Chase

National Bank, New
"York announces the following ap¬

pointments

its official staff:

on

At the head

promoted

-was

JPresident

.and

in

J.

personnel

Schmidt

Cashiers

ant

In

New

-John

C.

to

are

branches,
promoted

was

Vice-President

at

'Times Square Branch, Winfield F.
.Hanrahan was made Manager at
Peter Cooper, a\nd the following
.are

Assistant

new

if

George

Managers:

.Arthur E. Albracht at Rockefeller

Rockefeller

Center, and Edwin E.

elected

Overseas

•opening

Company,

New

contributed

20

the memorial

the

$500

building fund of

Press

phase

Club

of

in

the

the

drive

launched in New York's financial
•district.

The

equivalent

Oct.

an¬

years

ident

extra

Mr.

check

and

minia¬

a

Fleur

presented

were

Cowles,

Associate

JEditor of "Look," Campaign Treas¬

Wilfred

and A.

May,

the

Brooklyn

M.

Vice-Presi-

•dent of Manufacturers Trust Com-

New York,

announced

was

8by Horace C. Flanigan, President.
Mr.
,

Roos

will

succeed

the

late

"the bank at 55-60 Myrtle

C.

G.

with

which

-Bank,

the

Also

the

Vice-President
Oct.

as

1938

has

and

ant

was

present

sion

in

appointed
is

Metropolitan

various

Assist¬

an

assigned

Division
if

Arthur

Committee

of

if

A

5%

The

Quarter

same

from

$800,000
$880,000.

to

Biltmore

has

been

Hotel.

has

16

it

bty Mr. N.

Club

of

be notified of the number of

held
Oct.

its
14

new

Mr. Lawrence C.

Marshall, Pres¬
ident, presented additional awards
have

who have served the Bank for 35

He

also

members

made
of

the

awards
staff

to

who

entitled

be

by

of

reason

the

Arrangements
by the trust oom-

by Mr. Andrew Wilson, Chairman pany for the purchase or sale of
of the Board.
A precedent
for fractional interests without cost to
this

distribution

stock

when

ago

year

The

shares
be

a

By
Oct.

will

in

be

the

share for each 20

new

outstanding and will
immediately fol¬

now

if

by

7,

the

to

annual

stockholders

meeting

Jan.

on

at

20,

it is planned to transfer sufficient
funds from

reserves

and undivided

profits to increase the stated
ital funds to

cap¬

approximately $15 Vz

million.

creased

its

dividend

which

*

tired.
The

membership

consists

of

of whom

President
time

of

in

of

1911.

the

Just

he

1931,

at

company

nation-wide

severe

20

became
a

eco¬

nomic depression. His direction of

31,1953, after having

three

successive one-year
terms. The Council is
comprised of
one

representative

the

12

and

its function

the

Board

Federal

from

Reserve

each

of

districts,

is to advise with

of

Governors of the
Federal Reserve System in Wash¬

icago Title and Trust through
ington on monetary and credit
difficult years brought the
policies.
It
usually holds
four
company to I its present position of
meetings each year in Washington,
financial strength as reflected by
D. C.
/
its last published financial state¬
4
4
4
ese

ment

showing assets in

of

excess

$48 million.
The

division

of

been

also

developed

The National Bank of Commerce
of

trust

has

pany

Mr.

under

the

com¬

Seattle, Washington,

Oct. 7,

on

increased its

common capital stock
aggressively from $4,000,000 to $6,000,000
by a

Pettibone's

stock dividend.

direction.

He

elected

was

Bankers Offer Stock
of New

Vice-President

a

in 1947 and in 1951

made

was

re¬

title

new

Daniel O'Day has been elected a

if

Glen

Cove

of

the

Cove,

N.

Y„

to

$300,000

the

Merger

day

Jersey Utility

Representing the third offering
of

its

stock

common

within

18

months, public offering of 800,000
shares
&

of

Gas

made

Public

Co.

Service

(Oct.

21)

was

by

investment

89

of

Electric

stock

common

yesterday

group

a

firms

headed

with

The

Nassau

under

was

title

Union

of

its

on

Oct. 19, that of the

offering of 313,200 shares of
stock

common

stockholders

in

to

the

its

common

ratio

of

one

for

five, rights for which expired

on

Oct.

15,

subscriptions

aggre¬

gated 305,365 shares. The remain¬

ing

7,835

by

shares

have

been

pur¬

underwriting group
headed by Morgan Stanley & Co.
an

if

The

board
Title

cago

of

directors

and

Chicago, 111., at

The

Trust

of

meeting

a

Chi¬

Company,
on

Oct.

The

According to

a

stockholders,

to

increase

Charles H. Seuling—President

shares

Emil C. S. Iseli—Vice-President

December




would

until

the

bank

number

outstanding

were

no

dissenting

votes.

The Boards of Directors of the

spective

institutions

re¬

had

previ¬
ously approved the proposal and
the Bank

land

Commissioner of Mary¬

has

approved
The

agreement.
will

commence

the

by

plans
of

2,000

its

this

through payment of

a

from

the

common

scheduled

sale

of

this

stock and from

public

sale

week

of

cost

its

construction

nexi

$30,000,000

business

on

Oct. 20.

as

Mercantile-Safe Deposit

and Trust

known

Company, is State char¬

tered and will continue to

the

use

Deposit, which
originally granted in 1864.
institution

resulting

of

As

June

of

pany's

30,

084,000

to

$-31,631,000

applicable

to

ment

$29,453,000

and

division.

com¬

program

approximately $91,-

which

of

program

1953, the

construction

amounted

its

The

is

electric..depart¬
to

the

gas

estimates

company

that between $40,000,000 and
$45,000,000 has been or will be ex¬

pended during the last six months
of 1953.

The major portion of the
balance will be spent during 1954

Of these amounts

merger

institution

new

applicable to
tor

$23,300,000 art
turbine-genera¬

one

of

145,000 kilowatt capacity
installed at Kearny Gen¬
erating
Station
and
one
tur¬
bine-generator of 185,000 kilowatl

being

capacity being installed at Bur¬
lington Generating Station and
$22,130,000 to expansion of the
distribution

gas

has

of

Mercantile-S

f

a

e

Messrs.

Charles

H.

B

a

b

c o c

k,

Daniel

Baker, Jr., Summerfield
Baldwin, Jr., Fred G. Boyce, Jr.,
5.

Bonsai

san

W.

14

Goadrich Holman D. Pettibone

elected

Goodrich

W.

Paul

division since 1947.

system.

Public

Donaldson

Brooks,

of

years,

the

was

Board.

named

John

c e-P resident,
Manager of the title

D.

was

Garland, R. L. Hockley,
D.
Luke
Hopkins, .Richard
N.
Jackson, George F. Lang, A. C.

Levering, Edwin W. Levering, Jr.,
Edwin F. A. Morgan, S. Page Nel¬
son, Walter F. Perkins, A. H. S.
Milton

Donald

Roberts,

H.

Sherwood and Roy B. White.

gas, or both, is over 3,900,Through a subsidiary thi

company also operates local anc
interstate bus transportation systerns.
For the

30,

1953,

12

months

operating

ended

June

revenues

erf

the company alone wer $223,107,543 and net income was $25,438,-

595, equal after dividends on the
preferred and dividend preference
common
on

the

mon

stocks

average

to

$2.13

per

share

of

com¬

number

shares outstanding

during the

period.
Dividends

on

the

common

stock

previous item
about the are currently being paid at thr
merger appeared in the Oct. 1 is¬ rate of 40 cents a share
quarterly.
sue of-the "Chronicle" page 1258.
The

First

Bank

National

wil

lbecome

was

stated by Mr.

$100,000 to $250,000 effective Oct.
6. $100,000 of the increase was

its

common

With Inv. Service

of

Clarksville,

1, it
Percy B. Eck-

or

000.

A

These top executive changes in
the 106-year-old Chicago company
Dec.

ity

di¬

vision.

effective

state's larger cities. Population ol
the territory served with electric¬

Cooper, Jr., Alfred E.

Post.

Holman D. Pettibone, President

named

letter mailed to

the

greatly exceeded, be¬
93% at both meetings.

was

over

Directors

capital Binkley, V i

$1,000,000.

its

t he

Charles S.

proposal

years"

Oct. 19,

on

Cross,
A. E. Duncan, William L. Galvin,

Com¬

the

share.

per

additional

at

Brown, Thomas B. Butler, J. Cros-

$920,000 and may be
by "similar action in

stock reaches

Md.,

Cove

raise the bank's capital stock from

succeeding

Trust

and

Baltimore,

Deposit and Trust Company are:

Morristown, N. J. plans to President and Chief Executive Of¬
increase its capital funds by $40,- ficer of the company. Mr. Good¬
000 through payment of a year- rich has been Vice-President and
end dividend in stock rather than manager of the company's
title
cash.

Deposit

of

Company"

Trust

$25.75

Proceeds

Service,
an
operating
capital and surplus of $15,000,000, electric and gas utility, serves the
undivided
profits of more than most densely populated and heav¬
$2,000,000 and total resources of ily industrialized areas in Nev
approximately $100,000,000.
Jersey, including most of the

pany,

women

were

ing

There

The

*

Morristown

Safe

charter of the Safe

Paul
*

City

The merged Trust Company,

of

filed.

are

officers
elected for the ensuing year:

of

merger

if

Union

"Glen

Trust

*

head¬

York

proval

bank's

Bank into Glen Cove Trust Com¬
pany

with

New

at

on

announced

ap¬

Plan

a

York

proposal for the
these institutions. The

consisting of 6,000

same

New

announced

separate meetings held

shares of the par value of $50 per

On

bank's
was

vote necessary for ap¬

increase its capital stock

76

following

and

Company

Company,

received

it

in ;the

approved

4

proval on Oct. 9 from the Banking
Department of the State of New

92

re¬

quarters

^

Trust

the

of

Vice-President

2nd

was

Glen

y-.
.

later,

of

Chairman

men

in

graduate

years

two-thirds

followed

now

lege

Dec.

on

served

He joined the company as a col¬

Charles T. Fisher, Jr., President
of National Bank of Detroit, Mich.,

if

have

paid quarterly for a period of
The bank has paid a total
■M

in¬

capital stock
from $100,000 to $300,000.

chased

cash

J.,

common

if

the

i:

dividend

the Woodbridge
Woodbridge,
N.

Bank,

distributed

presented

if

stock

a

for the past 22

Club

Chi¬

mortgage
office.
bonds will be used by the com¬
*
4
*
pany to pay before maturity $30,The stockholders of Mercantile 000,000 of bank loans due June 15
effective
.1954 and to pay a portion of thf
National Trust Company of Baltimore, Md.,

stockholder.

recom¬

approved

dividend
one

set

was

similar

a

was

the

$880,000 to

years.

cand 400

real

of

West for the office

Oct. 20. Mr. O'Day previously was

Oct. 19

on

be

<*)ut

total

the

life

will

Ray, Presi¬
dent, National City Bank of Dal¬
las, Dallas, Texas, who will retire
at the
expiration of his term of

made

announcement made

an

to

in

The

in

He

DeWitt

will

according

Ihave completed 40 years of serv¬
ice and three who have rounded
45

place

financial

and

cago and the Middle

1954.

year

Mr.

City office,

com¬

pleted 30 years of service and 25

five

estate

calendar

succeed

charge

Nassau

:years.

prominent

a

during

the

dividend.

the

at

Fifty-five

who

new

stock

Directors,

of

Company,

any

share, to $450,000, consisting of
12th 9,000 shares of the same par value.

welcomed

members

Pettibone,

as

member of the Federal
Advisory
Council to represent the
Eleventh
Federal
Reserve District
a

will

of

York

Board.

32

D.

Board of the Federal Re¬
Bank of Dallas, of the
elec¬
of Mr. George G.
Matkin

Board

been

by Mr.
-J. Stewart Baker, Chairman of the

lo

Holman

the

tion

full shares and the amount of
any
fractional
interest to
which
he

stockholders

of 172 consecutive cash dividends.

Century

were

Mr.

Chairman of the Board of Chicago
Title and Trust Company, has held

the State banking authority, each business, and reinsurance business.
4
*
*
of the bank's 670 stockholders will

"the Bank of the Manhattan Com¬

members

dent in 1947.

County, development of

years.

if

pany,
New York,
Annual Dinner on

c e-

ing, and approval is obtained from

dividend

stock

from

if

V i

Brooklyn

the

""""'if

if

County

been

Jackson, Chairman.
if

Assistant

1945 and Vice-Presi¬

sponsible for the company's title
operations
outside
of
Cook

the

of

New York,

announced Oct.

was

President in

He

If the proposal is voted and
ap¬

to

Manager of the Times
."Square Office of Chemical Bank
Company,

appointed

was

division.

of

serve

jointly by Morgan Stanley
Vice-President of The Northern & Co.; Drexel & Co. and
Glore,
Trust Company of Chicago, 111. in Forgan & Co. The stock is
priced

.^appointed
Trust

title

proved at the stockholders' meet¬

Tax

the

to

if

McGinness

F.

the

Revi¬

the

Mr. Wilson pointed out that any
stock dividend will be in addition

Banking Department.
if

in

Association;

State Bar
of

the

Real Estate Board.

on

to the bank in

worked

Sawers

-Baxter

of

Committee

Chairman

their

Treasurer.

Mr.

com¬

the capital
61-year-old insti¬

of the

their

Grievance

An¬

of

Assistant

an

^departments and offices until 1951
•when he

the

last increase in

the

1954, Mr. Wilson said. If approved,
came

June

$19,560,000 at the

increased

lowing the approval of the stock¬

22.

Mr. Sawers

last

$26,457,000,

each

holders and state supervisory au¬
thorities.
The proposal
will be

announced

was

of

Brooklyn Association; member of

the

1927.

appointment

Sawers

S.

ca¬

with

-Manufacturers Trust in

drew

aminer

organization
preliminary ex¬

as a

Mr.
John
D.
Binkley, named
tution occurred in
City; member
1946, upon the
Manager of the title division of
Special Transit Committee of occasion of its merger with the
the company, has been a member
the City of New York; Director American Trust Company. At that
of the company's staff since 1925.
and
Counsel
of
the
Downtown time
capital and surplus were

ratio of

Montauk

merged

-

a;

were

accounts

Wildermuth

with

career

4

Chicago
Announcement
was
made
on.
Company began Oct. 15
by J. R. Parten, Chairman
the

Trust

22 years ago

4

of

of

Avenue,

-Ridgewood, Queens, N. Y.
Mr. Roos began his banking
1921

o

designated

end

and

The

Garden

Gehringer as Officer in
"Charge of the Ridgewood Office of stockholders.

in

December,

was

date in 1948.

mendation

/Martin

reer

the

Justice

of

and

4

President

new

White Plains, N. Y., by the bank's

Frederick

Assistant

a

dividend; and 75 cents each

Village

Trust

an

$1.25

each

cents

1952

the

Title

pared with $25,426,000 on June 30,

Bar

for

if

of

In recent

paid

deposits

of

recommended

Appointment

per

dent

The

if

$1.80

Morristown Trust Company's total

Vice-

bank.
if

has

be

muth is Presi¬

•dent of the

•pany,

cash

50

At

Wilder¬

president of the club, by Edward
7T. Hetzler, Assistant Vice-Presi-

as

stock

pro¬

would

about

June.

Dime."

and

JEtoos

in

which

"The

The

market

dividend
to

the

share

b y

New York

urer,

stock

George C.
Johnson, Pres¬
of

$1,000,-

share, the letter stated.

on

19

to

present

the

on

posed

^Company building
Mrs.

increased

price of the bank's stock, the

of

nounced

succeeding

by a stock dividend andv
making $50,000 by the sale of new stock.

in

past two decades.

Based

Brooklyn, N.Y.
was

in

000."

Savings

it

ture replica of the Bankers Trust

to

Dime

The

is

company

Police

4

Trust

Oct

on

of

action

per¬

until the capital stock of the

of

4

4

Bankers
York

member of the Board of

a

Trustees

similar

years

Association;

Worsoe at 34th Street.

Tto

mit

if

Wildermuth, promi¬
Brooklyn attorney, has been

nent

'Center, James H. Harris at 42nd
"Street, Robert S. Stapleton at 57th
."Street, Charles Streichenwein at

if

C.

Bank

loans.

City

Lawrence

Wil¬

Assist¬

In the letter to stockholders the
Board
of
Directors
stated
its

"hope that circumstances will

tary.

relations,
and

now

branch

in

York

Second

Dorothea E. Rampmaier—Secre¬

office, George Lang
to Second Vice-

Harry A. Howland

liam

Margaret M. Kidd—Treasurer

the

spokesman for made

as

directors

announcements.

his

George Munsick, President,
plained

the

on

special meeting

a

hart who acted
the board of

33

it

(Special to The Financial Chronicle)

increased
stock from

Tennessee,

capital

DENVER, Colo.—John D. Mark/
is

now

with

Investment

Servif

Corporation, 444 Sherman Street:'

t

34

The Commercial and Financial Chronicle

(1554)

level, but throughout the distribu-

Continued imm none 13
Continued pom page J J

tion

Marketing Soundness
AS

Dnrir

m

«

fAV

Dual*

1 Vl

KAnlr

I.A2IV1C
JUUCUI*

DuIIA
'

Have
successful-

been

is complex

selling

sales

programs,

and

training

How

personnel

fef^Tneome

dealer structure,
servicing,
what else he does to help
achieve
year-round
production, move merchandise off the wholeTherefore, we developed merchan- salers' and dealers' floors.

fh7rl^men

conditioners as.a
case
in point.
We pioneered in
this field and recognized a number of years ago that we had to
air

his

and

dising ideas to sell room air conditioners in the winter
in

the

as

months.

summer

well

By using

those

methods,
we
have
now
a
point where we can
produce
air
conditioners
on
a
reached

year-round basis, just as we do
refrigerators/electric ranges and

items.'

other

.

Market Research

as

.

look

good

compensation

A

and sales aids for his salesmen,
local advertising, how to handle

Take .room

are

at

are

plans

plans

kev

and

de-

vo

but very poor

in marketing strat-

For the future loan prospect,

egy.

can be in serious

sales,

in

my investigatory time in
checking his marketing organiza-

tion.

centage of the time to hold posi-

with

good manu-

facturing set-up and good engineering, of course. But, I'd spend
most of

Let's look in

detail at

some

some

of the other facets which make up

marketing.
Distribution
In the
you

have the finest manufac-

can

turing

goods business

consumer

in

plant

engineering

nancial

brains

tribution

the

country

management

without

but

vour'

for

I

fi-

dis-

product

vou

'

lost.

are

top

and

well

remember

immediately
several of my

following the

war,

friends

excess

with

manufactur-

tion and make

Much of can

profit.

a

Z

ideas

to

in

build

out with great

came

the

product

consumer

trailer

bodies

and

were

incorporating good
because

lack

of

product
ideas. But,
distribution,

new
of

this product was a

in

The

fine

a

dismal failure

67 % of all retail sales.

of

product

dealers.

better

-

advertising

Qompanv
man

should

<<x»

with wide

management

of

manager

be

I

Tn
In

want

to

Thn
the

be

sure

some

that

means

would

be

useful

to

know

if

i

1

inventory

weUy organized

but

the

hitch

comes

you find he does not have

The

when

enough

combination

of

a

How

Tooling

costs have

many

companies
into serious

what the customer will

on

or

.

number to

°V!i L °^~
both long- and short-

determining the current sales

po-

SI?°n-

key areas;
the product,

cult

in
a
highly competitive in- merchandising? Is this reflected
dustry.
in an overall philosophy which
So, as a loan officer investigat- also
manifests itself in spirit,
ing Company "X," I would want teamwork, calibre and respon-

something about the dis-

tribution

system.

territory

is

salers
are

and

they?

Sers'S
T

How

covered

by

...

?uVeS

'

1
wholesalers

in

tosine^'n^f^
Snert
ti eci

tn
10

n

whole-

sibility

xw-.i
Dp:nLrtlJf P. r.arrWr
be-." 1111 *vciniioiui ot oaruncr

buy

helping them

par;?cularly ^lth r.e~
and financial




qtat,,c

frppzer

treezer

refrigerator.
b

To
t t

lower

t

invent

new

Sftion6

design

fight

cost

and

f

out

product

be

well

the

to

know

in checking the
one

man,

Is there

or

broader

customer

Droaaer

customer

relations f and

cold indeed at

series

a

investment
the

must

it, to
merchandise

from
tj?

$1

may

million

cost
to

to
of

whether
,

With John B. Joyce

•

LLIMHUS, Ohio. ]Mris. Ruth
R- A:yers has been added Jo the
w,,'tino^n„Ranl7Rml^Lm^m',

practices,

the
.

marketing

to

as

a

j

may be worth millions of do„ars
Qf los^ sales> J think Of two large

a

good risk.
fx

v

x

«

c

c

chronicle)

+

*

lvrinr,

r

F
Chamberlain Adds
to

the

financial

chronicle)

J™
chronicle)
7-NG' Minn«.7T ■D?ns.N:
MacLeod is now affiliated with
Chamberlain & Co., Inc.,
r

East Avenue'

,

Yount has become connected with

xX7..i

Wlth F,rst Trust Company

Commercial

Rank Rnildine

mem

done the job properly, and the

bers o£ the M?dwest Stock Ex-

cial statements of these companies

T

Interstate Securities Corporation,

,

proper divisionalization other who hasn't, and the finan-

-X;

n/r

CHARLOTTE, N. C.-Harold H.

financial

t? aT

tS~w
18 J10^ with w K.
Lompany' 112 South Mlil

(Special

(Special to the financial chronicle)

the

Rnctaf

n

^

Commercial Bsnk Building, mem-

who

to

-inrT?rTTQ

marketing structure

has

one

.special

•

structure

comnanies

todav

i

With W. R. Olson Co.

judge

Wlt" Interstate bees.

million.

j

and

benchmarks

with

Midwest btock tx-

°
8 '

-

strategy of a business makes

sell"a

it

.

become 1 familiar

anywhere

$4

r>

-

promote,
and

it.

alone

gested

be

line, to balance

standardize

advertise,

John-

Co

(J*]a, to The pm,NCIlL CHI,clI)

In conclusion, I want to repeat:

marketing

and

&

with Thomson & McKinnon.

"X."

Additional

tool

Chronicle)

uPriam & to., uonn

aS fa ,l0an P^^ould look

a

only at the manufacturer's

Unham

01

^

$30.00 list increment in the price of the product,
made to

Financial

ston Building. He was previously

soecific

±or if I were investigating the
marketing structure of Company

to The

CHARLOTTE, N. C.—Larry H.
More has been added to the staff

—

aCtUaUy h6"6" thesejose industry position which
things where applicable, it
are being wdi
I would use

ItbVoins8for

in

the men

prfpaF caution
organization of a
—not

if

(Special

distri

or

tools

would

west Stock Exchange,

to

order to price I do feel that marketing activities
feature at an ac- during the next two decades will,
ceptable price. A new feature can in many cases, be the deciding
be terrific or
a
dismal failure,
factor as to whether a business
depending
on
how it may be maintains economic health
or,
priced. It might be excellent at a Jndeed, survives.; Therefore, I
$10.00 list increment, but very would use the outline I have sug-

the

.

Dain & Company, 110 South
Sixth Street, members of the Mid-

Thus, I have given you some of
opinions and ideas as to what

to"

not only hold present personnel,
but attract others?
It

what

ana

bl-

Cn

n*;

MINNEAPOLIS, Minn. — Earl
S. Sanford has joined the staff of

my

products
these

is

nyi

Harris, Upham Adds

and

greater

do this, money
pUect data on

style

still

1

(Special to the financial chronicle)
•

good will. Does it have some form

the customer will want, to engineer,

stand

•

f

and

greater

compartments

or

1

JOlnS J. 1V1. Uain

-

the

are

h^the^roduct^or^reSer

tem-

Snyder is now affiliated with
Reinholdt & Gardner, 400 Locust
Street, members of the New York
and Midwest Stock Exchanges. -

1 ™uld

.

compartments

features

Tn

m]0

retrogress

"vTsHs® toThe "stor^arfa
refrigerators,

jThese

(Special to the financial chronicle)
ST. LOUIS, Mo. — Edward C.

.

.

Furthermore, I would beware of
company
satisfied
with
the

a

changing,

are

Today, annual changes in a
refrigerator line on expendable

riUnni"?htheir Cl°SeIy knit' fami'y operation'

operating

habits

shopping

necessary.

companies that eventually get into
trouble—or never get put of it.

consumed, frozen food consumption is increasing tremendously,

of sales people, and in
compensation
plans which will

adequare'"16" gated^andlf
gatedandif

EistaZe
hie
his

the

retailers?
How good
How well financed and

Is coverage
,,

well

of

^ a^d Sds'foVconstenUy the econom^ to interPret « in
^nods tor constantly terms of pre-design specification,

all

cover

standards

as

living go up, food consumption increases, more perishable foods are

peratuie

foflfch^k^f^ff1
(y
J^nves

really

example,

npratnrp

Retail outlets must be sufficient sales

to know

For

larger

statistics, industry and
competitive standing reports? I
and, depending on
would be especially interested in
may be required in much greater
learning if the company is gennumber
Here again, is a problem erally sales minded, or does top
of quality.
Quantity is easy, but management fail to understand
to get good dealers is
very diffi- the
importance of selling and
.

in

these items.

on

and

aggressive, capable man
What are the sales targets next
and the money, is the
problem in year and five years hence?
Are
finding a good distributor.
there weekly and monthly field
young,

vvlin rusz ocnmeizie v^O.

(Special t0 THE FlNANCIAL chronicle)
ST. LOUIS, Mo. — Irving R.
have you seen get
Ohlsen has become associated
trouble because the ^management with Fusz-Schmelzle & Co., Boatthinks engineering-wise and not men's Bank Building, members of
saies-wise? How many times have the Midwest Stock Exchange. He
you seen the attitude on the part was formerly with Mark C. Steinpf management that here is a high berg & Co.

quent
pronounced trend. These economic
sound'mar- facts must be translated into
on a "fifth product development in terms of

control,

SaIes

•

have sufficient capital. Good distributors are very difficult to get.
You can usually find an excellent

capital.

housing,

„

w

YVith Fusz Schmelzle Co

merchandising and sales

minded.

the same old line year after year.

of

tion relative to current sales.

•

=

pre-

key

a

authority The top
of
the
company

sh0uld be

refrigerators in
itself is not
enough. It must have the features, styling and merchandising
characteristics to appeal to the
consumer.
Companies have lost
industry position by staying with

product line.

.

collecting, interpreting and digesting general market information and specific market informa-

forward' planning
t
a
ket information
appliance business, sense"
distributors are vital
sense*

wholesale

man,

would

Company "X" has

It

outlets, retailers, coverage,
finance, and quality of these out-

new

ferred stock; will be used by the
company to
provide additional
electric facilities and for other
corporate purposes,
Kansas Gas & Electric Co. is engaged almost exclusively in the
electric utility business. Territory
served by the company comprises
most of the southeastern portion of
Kansas and covers an area of
about 6,000 square miles. Operatmg revenues of the company
tor the 12 months ended July 31,
1953, aggregated $20,816,000 and
net income was $3,636,000.
!■

There must be a solid> hard hit_
ting advertising program to do a
pre_selling job, to put the company and product in the minds of
more consumers, to expand Company «X's" share of the market,
Als0 aggressive pre-selling will
b-eip greatly in getting more and

this breadth of experience,
be welded together in a team

7th respect to 'whole- foreca^sales Sfts^wa^

sale

sale of 50,000 shares of

and

Think of what an examination
of this information means in terms
of market coverage, transportation and sales volume to anyone
suppling the consumer market.

the market place.

adequate

will

contain 58% of the population,
Certainly, it costs a great deal quality product, well engineered,
70% of the buying power, and 0f money to change a major well manufactured, and that is

roller

skates—among other items.
roller skates

on

7, °i 10L,479%t,
be redeemable

bonds

the bonds, together with proceeds
to be received from the proposed

merit

soared to astronomical heights, cause "we know what's best for
Engineering and design costs are them"?
field. Their only trouble was that
much greater than they were in
j have WOrked with many comthey neglected to work out a pro1945. But, if you are going to have panies (particularly in the indusgram for getting the product off
the features, styling, capacity and trial field), where«top managethe shipping platform.
How can a company do an in- convenience in a refrigerator line ment felt that sales pretty much
There was one chap who had telligent job of selling and cover- to keep ahead of competition and take Care of themselves and that
been a successful aircraft frame age
without knowing basic in- to create obsolescence, then Com- advertising,
merchandising
and
component supplier.
He decided formation of this type?
pany "X" must spend the money promotional expenses are not
ing facilities

at competitive sale

issue

The

market potential. But all of these
items will be so many impressive
displays if the top management
depends on the product to sell itself. It won't!

management today does not un- to accomplish the desired result.
derstand enough about market reTo illustrate, let us take a research as a management tool.
frigerator. A good quality line of

^et me £*ve you a very simple
example. Eighty percent of the
u- S. population is in 28 states on
the Atlantic, Gulf, Pacific and
Gfeat Lakes coasts282 counties out of 3,070 in the
United States — less than 10% —

The the

ri^end

at general redemption prices
ranging from 105.13% to par, and
at special redemption prices for
the current sinking or improvement fund, ranging from 102.13%
to par, plus accrued interest in
each case.
'Net proceeds from the sale of

operation,

merchandising,

ence

that he

sure

a

yield

to

the efficiency of its plants, soundness and up-to-date methods of

manufacturing, engineering and
industrial design Perhaps individuals, each with all of these
facets of experience, cannot be
acquired, but several men or more,

be

to

interest,

accrued

Of course, as a loan officer, I am
going to be concerned with the
financial health of Company "X,"

The product development structure must be strong in methods,
in people, in imagination, and in
merchandising awareness. In my
opinion, in a consumer goods business, this group should be as
and depend upon market interpre- strong as all others. It should
tat'ion, This interpretation must have men who have had experitrend, and specific requirements.
*
Without such information, the
company is guessing and it will
n°t guess right a high enough per-

want

good product,

a

and

trouble two or the product, on advertising, and
the sales structure concept.

In analyzing Company "X," I three years hence.
would want to know if market research is understood as a man1 ro«uct development
agement tool and if it is being
You can have an excellent sales
used.
•
and distribution organization, but
Market research is absolutely without a good product, they will
vital in order to do a good prod- be
smothered
by
competition,

be based on facts with respect to

would

had

wiH

net

'

j

series, due Oct. 1, 1983, at 102%%

A company can be in great a very large degree upon mershape today, but if it a ows its chandising strategy, with particukey Peo.Ple
be lured away,
lar emphasis on the saleability of

scope,

I

for

ume

n

sen utility Bonds

\olume, for net, will depend in

,

||im"i

^ *7 gr°UP ??" awa?d ot

[?.? acute as t,lr"e Koes

hold them.

ii

Halsey, Stuart & Co. Inc. and
asociates on Oct. 16 offered $10,000,000 of Kansas Gas & Electric
Co. first mortgage bonds, 3%%

to,

uct design job and a good selling
chandisers but poor manufactur- Job.
ers
or poor at research—or make
In any business, you must una
poor
quality product.
Others derstand first the characteristics
might be excellent in the field of of y°ur market — design, manumanufacturing
and engineering, facturing, and selling all follow,
Some companies are good mer-

^

Aa a loan officer, I would put
much more weight on these produ,ct an? allied marketing functions
tha? 1 would ™ Past earnings
Performance. The competitive

they?

adequate

and to

CIi.avI Piiahm

HalSe/, 0111311 UFOUP

earn-

™ —asssr""-

The problem is to get

hold themv

sufficient proof of what might

happen t0 jeopardize future

com.

it is not ings.

and

esneciallv

would

T

methods

these

merchandising

procedures,

What methods has it used?

If the

we]1?

as

to suffer.
Furthermore, people
wiR n°t be built for future leadership.
,

IV

m

m

Am

system

pany

1

■

■

Thursday, October 22, 1953

...

change. He

was formerly with E.

L. Hardin & Company.

r.

.

rp

n

(Special to The Financial Chronicle)
__

h'as

become connected
with The First Trust Company of
Lincoln, 10th & O Streets.

Thompson

Volume 178

>

Number 5266

The Commercial and Financial Chronicle

...

(1555)

The

Indications of Current

Business

week

Activity
Latest

AMERICAN

steel

Equivalent
Steel

operations

Crude

42

PETROLEUM

oil

and

gallons

Crude

§2,137,000

*2,172,000

2,144,000

2,221,000

output

Oct. 10

output

(bbls.)

Distillate

fuel
fuel

ASSOCIATION

OF

24,045,000

24,358,000

23,032,000

2,582,000

2,553,000

2,215,000

10,142,000

10,312,000

10,244,000

8,460,000

8,249,000

8,816,000

AMERICAN

•

2,640,000

of

Oct. 10

142,517,000

*143,111,000

143,487,000

120,910,000

10

47,756,000

37,260,000

36,799,000

35,529,000

10

129,226,000

127,052,000

125,664,000

10

53,341,000

51,912,000

51,760,000

804,070

812,554

710,554

CONSTRUCTION

of

(no.

842,797

672,846

595,572

699,310

cars)—Oct. 10

662,801

U.

and

S.

OF

coke

EDISON

FAILURES

71,446,000

53,132,000

56,801,000

39,376,000

14,394,000

21,128,000

70,323,000

(COMMERCIAL

AGE

9,230,000

8,115,000

678,000

480,000

897,000

88,800

*89,300

80,200

81,900

120

112

Oct. 17

.

INDUSTRIAL)

—

DUN

Scrap steel

102

Electrolytic

8,264,800

8,307,309

8,394,707

7,681,332

J.

169

186

182

4.634c

4.634c

4.634c

4.376c

$56.59

$56.59

$56.59

$55.26

Oct. 13

$32.33

$31.33

$37.17

$42.00

QUOTATIONS):

(St. Louis)

Zinc

(East

St.

U. S.

all

MOODY'S
S.

Winter

Oct. 14

80.000c

81.500c

82.000c

121.500c

Oct. 14

13.500c

13.500c

14.000c

14.000c

Durum

—Oct. 14

13.300c

13.300c

13.800c

13.800c

Oct. 14

——,

OF

10.000c

10.000c

10.000c

13.500c

at

Oct. 20

95.11

95.08

93.61

96.50

Oct. 20

105.17

104.83

103.30

108.88

Oct. 20

110.52

109.79

107.44

112.75

All

spring

(100-lb.

105.00

111.44

102.96

108.52

98.88

97.94

103.47

103.30

102.96

101.47

106.04

105.17

104.66

102.46

108.88

106.92

105.69

112.00

2.84

2.84

2.95

2.75

Oct. 20

3.44

3.46

3.55

3.23

NATIONAL

Orders

Oct. 20

3.14

3.18

3.31

3.02

3.32

3.35

3.45

3.09

3.46

3.49

3.57

3.25

Oct. 20

3.82

3.82

3.88

3.54

-Oct. 20

3.55

3.57

3.66

3.39

Oct. 20

3.44

3.47

3.60

3.23

Oct. 20

3.32

3.34

Oct. 20

——

392.9

393.8

—

INDEX

PAPERBOARD

(tons)

1949

at

end

of

period-—

REPORTER

100

PRICE

371,431

199,338

236,587

259,457

259,699

201,235

245,680

97

98

76

96

Oct. 10

:

231,884

Oct. 10

DRUG
=

416.8

412,4

Oct. 10
j

activity
orders (tons)

AVERAGE

3.06

Oct. 10

of

AND

3.41

ASSOCIATION:

(tons)

Percentage

PAINT

'

Oct. 20

Production

Unfilled

...

-Oct. 20

Group

received

.

.

—

COMMODITY

560,609

590,808

552,959

544,741

LOT

DEALERS

EXCHANGE
sales

Oct. 16

——

SPECIALISTS

AND

SECURITIES

—

by dealers

Number

of

105.99

105.70

105.77

109.28

of

shares

Y.

N.

STOCK

3

20,711

21,815

26,563

3

594,442

623,419

735,342

696,284

Oct,

3

$25,018,112

$25,418,527

$31,196,337

$32,638,271

3

17,730

18,578

20,429

20,720

dealers (customers' sales)—

Customers'

short

sales

Customers'

other

sales

Oct

3

Oct

3

17,514

18,290

20,080

20,579

Oct,

3

503,649

534,203

618,581

581,641

Oct

3

8,575

10,686

12,205

4,798

.Oct.

3

495,074

523,517

606,376

3

$19,096,128

$20,078,962

$23,640,404

$23,886,623

3

140,320

146,830

187,200

176,730

Oct

3

140~320

146~830

187~200

176" 730

S£

Customers'

short

sales—

Customers'

other

sales

Dollar

value

Round-lot

Short

Round-lot
Number
TOTAL

sales

of

Oct,

SALES

Short

141

STOCK

MEMBERS

ROUND-LOT

NEW

3

236,430

273,210

288,950

269,520

Peanuts

beans

for

Sept. 26

ACCOUNT

OF

352,450

510,080

254,110

169,660

Sept. 26

i——

FOR

5,550,840

9,417,650

6,208,960

5,964,260

5,903,290

9,927,730

6,463,070

6,133,920

Tobacco

of specialists in stocks in which registered
purchases
;

.

1,043,980

648,690

496,770

-bept. 26

125,260

171,850

84,870

94,130

Other

sales

..Sept. 26

505,930

908.790

583,200

433,220

..Sept. 26

631,190

1,080,640

668,070

527,350

Sept. 26

210,340

228,300

initiated

purchases

the

on

Hops

floor-

Cherries (12

As of

of

Backlog of

LABOR—(1947-49

=

SERIES

—

S.

DEPT.

orders at

5,458,046

.

(AMER¬

INSTITUTE)—Month

end

5,706

of

5,557

3,762

42,198

45,735

95,377

291,260

month

SIZE

228,268

254,537

(number

IRONERS

AND

(AMERICAN

—

MANUFACTURERS'

—

HOME

ASSOCIA¬

August:

(units)

8,067

9,626

16,477

33,296

53,376

$25,925

*$25,775

$22,962

19,745

♦19,750

19,786

♦$45,525

$42,748

26,721

(units)
(units)

70,774

$45,670

of dryers

♦26,172

21,858

i

INVENTORIES

COMMERCE)

OF

SALES

&

NEW

SERIES—

(millions of dollars):

July

Durables

—

Nondurables

—

4-

MOTOR

FACTURERS' ASSN.—Month

218,630

352,320

222,050

172,590

57,290

40,950

19,780

110,490

.

278,294

230,783

251,825

225,005

335,584

271,733^

SALES

S.—AUTOMOBILE

U.

IN

of

NEW

FROM
MANU¬

August:
615,386

of

motor

MIDLAND

IN

ESTATE

SAVINGS

FEDERAL

52,056

376

349

£8,011,000

£86,099,000

£15,429,000

1,793

1,769

1,669

24,134,000
26,480,000

23,573,000

27,092,000

16,401,000

19,196,000

12,819,000

GREAT BRITAIN-

LTD.—Month

BANK,

REAL

270,982
218,577

105,622

coaches

CAPITAL ISSUES

NON-FARM

—

*599,134

24,289,000

of passenger cars
of motor trucks

101,478
451

_

♦705,132

513,457

Total number of vehicles

115,290

)

FACTORY

VEHICLE

PLANTS

of

Sept.:

FORECLOSURES-

AND

LOAN

INSUR¬

271,605

ANCE

CORPORATION—Month
CEMENT

PORTLAND

1,061,920

1,624.600

992,630

760,360

191,110

266,740

137,920

118,710

Production

1,423,184

955,463

795,535

Shipments

1,689,924

1,093,383

914,245

Stocks

Month

(BUREAU

OF

of

June—_

MINES) —

August:
i

barrels)

from

mills

(barrels)

(at end of month—barrels)

—

25,915,000

1007*

99%

$924,753,910

$925,949,189

$899,733,630

689,467,155

used

101%

701,399,387

74.56

75.75

73.73

$112,211,991

Capacity

)F

of

4

$107,538,765

$113,492,148

101,635,605

94,427,908

105,227,433

82,000,000

71,000,000

81,000,000

-.

EARNINGS—CLASS

SOCIATION

figure,

OF

AMERICAN

*110.3

110.8

110.7

95.3

96.1

97.8

104.6

Total

104.0

104.2

105.6

108.1

Total

operating

*88.9

94.7

107.3

114.6

*114.6

114.6

the

Jan.

I1,

1952

basis

I ROADS

(AS¬

RRs.)—Month

operating revenues

112.6

crude




$565,000

Inventories:

RAILROAD

against

$451,000

5,546,987

WASHERS

Factory sales

153,580

-Oct. 13

as

147,946

OF COMMERCE)—

:

CAR

-Oct. 13

1953

181,136

218

YORK—

OUTPUT—DOMESTIC

87.0

1,

790

$475,000

NEW

OF

(DEPT.

Factory sales of washers

273,700

110.1

Jan.

1,162

OUTSTANDING—FED¬

BANK

-Oct. 13

of

177

1,075

l

100):

Processed

as

214

(barrels)

(000's omitted)

30

LAUNDRY

194,900

Commodity Group—

♦Revised

230

214

185,132

1

HOUSEHOLD

859,985

U.

3,173

230
:

—

Number

—

NEW

62,560
30,947

2,770

(tons)

(tons)

of cars)

4,800

Sept. 26

—

PRICES,

63,894

28,901

2,773

(number of cars)

1,051,095
WHOLESALE

92,489

September:

Deliveries

91,000

.Sept. 26

sales

61,263

97,262

63,429

PAPER

CAR

12,100

180,855

;

sales

29

43,365

30,374

States)

(5

Oct.

141,480

,

purchases

Other

7,599
10,169

99,611

—

—

ICAN RAILWAY

121,890

.Sept. 26

Short

(bushels)

—

COTTON GINNING

37,600

Total round-lot transactions for account of members—
Total

7,525
11,381

41,752

RESERVE

236,100

sales

sales

2,254,855

7,525

(pounds)

21,700

floor-

purchases

Other

2,034,697

(tons)

30

crop

States)

Cranberries

44.150

the

347,504
28,292

(

—

States)

(3

Number

Sept. 26

off

34,301

—

Sept. 26

sales

Short

380,926

33,709

.

11,496

(tons)

(tons)

Number

-

transactions initiated

Total

373,939

(bushels)

—Sept. 26
Other

291,682

1,354,010

(pounds)

Grapes

2,610

279,725
1,411,720

2,032,557

Apples, commercial
Peaches (bushels)
Pears

5,147

16,777

3,347

252,483

:

(tons)

Broomcorn

5,040

17,291

3,347

(pounds)

173,200

Short

31,755

4,911

1,393,995

Sales

632,950

Sept. 26

sales

transactions

42,438

30,299

17,730

Total

Short

Total

42,471

30,299

;„U-*

Sugarcane for sugar and seed
Sugar beets

MEM¬

BERS, EXCEPT ODD-LOT DEALERS AND SPECIALISTS:

Other

10,935

43,462

(bushels)

Transactions

Total

104,424

12,477

(bushels)
(bushels)

(DEPT.

-

TRANSACTIONS

15,136

104,440

Sweetpotatoes

Month of

—

—

15,159

105,563

(pounds)

Potatoes

15,910

12,477

MANUFACTURERS'

TRANSACTIONS

(SHARES):

—

120,215

48,660
83,316

YORK

Sept. 26

sales

sales

THE

31,002

50,417

114,590

-

TION)—Month of

sales—

sales

Other

OF

ON

17,452

39,011

51,328

Factory sales of ironers

—

STOCK

Soybeans

STANDAR.D

AND ROUND-LOT

ACCOUNT

Round-lot

Total

349

by dealers-

shares-

EXCHANGE
FOR

288

sales

ROUND-LOT

Total

216

by dealers—

purchases

227,008

17,452

576,843

.Oct.

shares—Total

236,999

21,363

39,011

Hay, lespedeza (tons)—
Beans, dry edible (100-lb. bag)
Peas, dry field (lOO-lb. bag)

FREIGHT

Oct.

of

1,268,280

25,166

Oct

.—

value

Number

1,205,500

15,596

As of Sept.

Oct,

Dollar

217,283

1,205,106

alfalfa (tons)—.—
Hay, clover and timothy (tons)

ERAL

Oct,

Odd-lot purchases by

276,662

(bales)

COMMERCIAL

—

—

Cotton

Pecans

COMMISSION:

purchases)

orders

Number

ON

EXCHANGE

(customers'

238,646

14,314

271,476

(bushels)—-—

Sorghum grain (bushels)-

Apricots

INDEX—

STOCK TRANSACTIONS FOR ODD-LOT ACCOUNT OF ODD-

Odd-lot

290,976

13,424

Hay,

107.27

—

MOODY'S

1,052,801

284,900
^

Hay, all (tons)
Hay, wild (tons)

—Oct. 20

;

3,306,735
1,291,447

878,331

bag)

106.74

AVERAGES:

Group

1,169,307

_____

104.31

_.

Industrials

3,216,007

878,331

REPORTING

AGRICULTURE—

(bushels)

98.88

—

Railroad Group
Public Utilities

3,141,659

1,163,231

OF

220,500

2,220,692

3,196,101

CROP

—

Barley (bushels)
Rye (bushels)
Rice

5,808,300

*410,095

2,391,211

tons)

!

spring
Oats (bushels)

Flaxseed

6,340,286

416,869
(net

(bushels)-—

Oct. 20

Baa

6,028,800

6,346,622
of month

(bushels.)

104.83

corporate

A

354,900

♦6,750,381

Aug.:

(bushels)

Oct. 20

Aaa

3,761,000

*416,900

6,763,491

(bushels)

107.17

Group

Aa

"46,885,000

*2,378,000

(in thousands):

Oct. 20

Government Bonds

Average

40,275,000

MINES)—Month

MINES)—Month of

DEPT.

Oct. 20

DAILY

~22~539

237,476

S.

Oct. 20
_

YIELD

210,583

372,000

OF

(net tons)

Other

L.

Group

BOND

233,122

312,393

2,546,000

tons)

(bushels)

Wheat, all

35.075c

Group

Utilities

323,425

220,099

41,095,000

(net

and

Oct. 20

Public

42,791

anthracite

(net tons)

U.

24.200c

;

OIL,

coal

of October

29.675c

—

Industrials

32,988

(net tons)

PRODUCTION

BOARD

28.675c

Aa

U.

CROP

29.650c

—

Railroad

27,323

tons)

coke

28.175c

at

._

94,541

(tons)

America

(BUREAU

Oven coke

29.625c

corporate

Baa

78,129

MINES)—

Pennsylvania

Central

Oven coke stocks at end

Corn,

at

a

76,019

69,250
117,897

Tl"032

OF

(net tons)—„_

28.525c

Government Bonds

Aaa

83,241

57,547

(net tons)

(BUREAU

As

MOODY'S BOND PRICES DAILY AVERAGES:

Average

81,144

141,494

(net tons)

Oct. 14

Louis)

of

lignite (net tons)
anthracite (net tons)

^.Oct. 14

!

6,312,118

September:

COKE

139

copper—

Export refinery at-.
Straits tin (New York)
Lead (New York) at

9,063,287

6,582,513

220,099

of

(net

Beehive

Domestic relinery at

Lead

Asia

Production

Oct. 13

M.

&

"9,405,580

(tons of

Pennsylvania

126

Oct. 13

(per gross ton)--

(E.

8,913,000
6,498,605

_

and

Europe

of

1

PRICES

104,800

alloy

INC.—Month

all grades

(BUREAU

COAL OUTPUT

&

(per gross ton)

METAL

including

tons)

North

Bituminous

Oct. 15

Pig iron

output,

To South America

RESERVE

100

lb.)—.

(per

products,

(net tons)—Month of August

exports

(net

PRICES:

steel

S.

To

9,121,000

699,000

INC

COMPOSITE

Finished

steel

Beehive coke

AND

130,341

INSTITUTE:

castings produced
September

pounds)

To

9,275,000

—Oct. 10

INDEX—FEDERAL

(in 000 kwh.)

BRADSTREET,
IRON

127,670,000

Oct. 10

=

61,400

121,136

Month of July:
U.

ELECTRIC INSTITUTE:

Electric output

of

EXPORTS

127,124,000

Oct. 10
SALES

AVERAGE

3,222,800

55,109

for

steel

zinc smelter

2,000

206,213,000

79,260,000

—Oct. 10

(tons)
STORE

SYSTEM—1947-49

STEEL

Stocks at end of period (tons)
Unfilled orders at end of period

MINES):

coal and lignite (tons)
Pennsylvania anthracite (tons)

Beehive

and

To

Bituminous

DEPARTMENT

3,389,000

3,320,467

50,950

Shipments (tons of 2,000 pounds)

$333,337,000

101,561,000

85,840,000

Oct. 15

BUREAU

$180,821,000

84,188,000

167,046,000

Oct. 15

(U.

$170,028,000

101,896,000

Oct. 15

J

OUTPUT

$268,942,000

Oct. 15

municipal

Federal
COAL

Oct. 15
:

construction

State

3,505,917

3,315,116

September:
Slab

COAL

construction

Public

Ago

ENGINEERING

—

construction

S.

Private

AND

AMERICAN ZINC
INSTITUTE,

'

NEWS-RECORD:
Total

Shipments

120,076,000
54,423,000

Oct. 10

1

ingots

and stainless

Oct!
Oct!

cars)

IRON

(net tons)—Month of

RAILROADS:

(number

freight received from connections

ENGINEERING

Steel

8,188,000

at

Year

Month

3,487,202

(M therms)

AMERICAN

10,094,000

—

of that date:

Previous

6,854,000

Oct. 10

at

(bbls.)

freight loaded

Revenue
CIVIL

oil

7,216,000

Oct

(bbls.)

are as

ASSOCIATION—For Month of

(M therms)
Manufactured gas sales (M therms)
Mixed gas sales (M therms)
;

6,517,100

6,893,000

24,030,000

6,506,100

Oct. 10

at

oil

6,442,700

—Oct. 10

(bbls.)
(bbls.)

Stocks at refineries, bulk terminals, in transit, in pipe lines—
Finished and unfinished gasoline (bbls.) at—

Kerosene

6,313,450
116,941,000

Oct. 10

output

oil

either for the

August:
Total gas

of

(bbls.)

(bbls.)

oil

Residual fuel

AMERICAN GAS

Natural gas sales

(bbls.

average

(bbls.)

Kerosene

of quotations,

cases

Month

106;9

Oct. 25

output—daily
average

in

or,

Ago

95.1

INSTITUTE:

stills—daily

Distillate fuel

that date,

are

Latest

*96.3

Oct. 10

output

Revenue

Ago

production and other figures for the

cover

Dates shown in first column

Year

§94.8

(net tons)

condensate

Gasoline

Residual

Month

Oct. 25

each)

to

runs

capacity)

Week

on

to—

ingots and castings

AMERICAN

of

(percent

month available.

or

month ended

or

Previous

Week

IRON AND STEEL INSTITUTE:

Indicated

following statistical tabulations

latest week

35

Of

runs.

108,587,670

§Based
tons.

on

new

annual

capacity of 117,547,470 tons

of August:

'

.

expenses

,

Operating ratio
Net

railway

Net

income

operating
after

before charges
(estimated)

income

charges

i

633,359,720

'

The Commercial and Financial

Chronicle

Thursday, October 22, 1953

...

(1556)

ZiQ

The
Treasury
made
a
small out risking an upset of the capital
private and public debt (ex¬
start in February in connection market and disturbing the rather
of Federal debt) during
with the refunding of $9 billion precarious balance of the econ-*
1952 came to $26 billion. To the
of certificates. It gave the holders omy.
/
extent
that
this
borrowing in¬
Should a dov/nturn in business
the option of taking either a new
volved
the
use
of commercial
one-year certificate or a five-year develop, other obstacles will ap¬
bank credit, it contributed to the
Reduction of the floating
ten-month bond. Only $600 mil¬ pear.
net

/

Continued from page 16

clusive

Monetary Policy,

Business

And the Banks

inflation.

lion

The cash deficit of over

Treasury

l>ond

and local
The aim has been
interest rates find their own

offerings by state

in response
devmand, without
the Federal
to prevent them from rising. In
vsum, for the two-year period as
a whole, the Federal in effect sat
market

the

in

level

forces of

to the

•active intervention by

and refrained from

its hands

•on

easier. During the
tTirst four months of 1953 the pol¬
accord down to June 1 of this year.
icy became somewhat more re¬
The
depreciation,
while sub¬
stricted, as the Federal allowed
its holdings of governments to run stantial, has not been serious for
off at a time when bank reserves most banks. It has been concen¬
were
being pulled down by an trated mainly on the longer-term
•outflow of gold. Since early May issues. As of May, only 5% of the
obligations held by
xt has become easier, as the Fed¬ government
eral
pumped reserves into the the 7,000 banks was due or call¬
able within more than 10 years.
money market in order to prevent
anaking credit

•credit

tightening further.

from

misunderstanding
function of
•a
central bank in a period of
"-"boom. Many seem to think that
the Federal's policy should be to
provide unlimited credit elasticity,
by providing the banks with all
the reserves they need to meet
amounting credit demands at pre¬
vailing interest rates. Such a pol¬
icy would amount to abrogation
by the Federal of its responsibil¬
ity for regulating credit and the
money supply in the interest of
second

The

the

to

relates

proper

If the mone¬

•economic stability.

do

authorities

tary

ihey

allow

not

tighten during a boom,

•credit to

the risk of permitting

run

credit conditions to de¬

mnsound

one

borrowing. They also
result in substantial shrinkage in
the market values of bond and
mortgage holdings. A recent study
by the Research Council of the
American Bankers Association in¬
dicates
that the 7,000 banks
covered by the Treasury Survey
of Ownership suffered nearly $1.5
billion of depreciation
on their
holdings of government bonds
during the period from the 1951
people from

^governments.
io let

extent that they deter

loans, to the

and

borrowings

plus

velop and of overstimulating the
•economy
to the breaking point.
-Stresses and strains ond dispro¬

$5 bil¬

bonds

the

of

found

the

crease

debt

may

cause

of the necessity

takers.

April, the Treasury offered $1
billion of 30-year 3y4% bonds for
of the factors tending to in¬ new money. The offering hit the
in fiscal

lion

In

1953 was, of course,

money

supply

contributing to pressure on
est
rates during
the past

and
inter¬
year.

at

market

pressures

the

and

a

time

were
issue

when

demand

if

extremely heavy, ening
immediately

give

Moreover,

Treasury

to

embark

be¬

of financing
even

in a posi¬
debt-length¬

were
on

a

have to
the effect

it would

program,

consideration

to

that the slumped below par. Thereafter, of such an undertaking on the
Treasury finds it necessary to rely the Treasury limited its offerings general economy. For one thing,
on
the commercial banks to fi¬ to short-term issues.
In Septem¬ refunding of short-term
obliga¬
nance
its cash requirements, the ber,
when $8
billion of 2Yz% tions held by commercial banks
tend
to
reduce
burden devolves upon the Federal bonds matured, the holders were would
deposits,
Reserve
of providing the banks given a choice of taking either a It has also been argued that of¬
Moreover,

to the extent

to one-year 2%% certificate or a fering sizable quantities of longgovernment 3V2-year
note
carrying
27/s%.' term obligations to non-bank in¬
obligations. Such purchases by the About $3 billion of the notes were vestors would carry the disad¬
the

with

necessary

them

enable

to

reserves

buy

commercial banks tend to increase

The

taken.

success

of

the

note

deposits, thus adding to the money offering appears to be an indica¬
supply. This serves to underscore tion that investors are now will¬

vantage of providing
haven

idle

for

otherwise

convenient

a

funds

that

might

in
private enterprise, thus tend¬
and ing to extend their sights beyond
flexible monetary management is the shortest-range obligations, and ing to sustain long-term interest
at best extremely difficult so long may indicate a growing degree of rates and delay business recovery,.
in
the
as
the government is running a confidence
longer-term The weight to be given to theseconsiderations is difficult ta
credit instruments.
large cash deficit.
The Treasury may be expected assess.
In the current fiscal year the
IV
More than half of such holdings
to
proceed cautiously to avoid
Treasury hopes to hold the deficit
—51% — consisted of obligations
forcible feeding of the long-term
The General Business Situation
in the regular budget to below $4
maturing within one year; 29%
market.
Large offerings of longbillion and to reduce the cash def¬
My last topic has to do with
was due or callable within one to
term securities tend to force up
icit to around $500 million. Even
prospective changes in the level
five years; 14%, within 5 to 10
bond yields and unsettle the capi¬
of business actiyity and the prob¬
if the cash budget were balanced
tal
years.
,
market,
adversely
affecting able effects on the banks.
for the fiscal
year
as a whole,
Nevertheless the decline in
corporate
expansion
programs.
Business today appears to be;
however, the government would
market prices has given rise to
Deferral of some capital invest¬
have av large deficit in the last
in a state of uneasy balance. Oner
ment programs, due to higher in¬
developments that tend to restrict
six months of the calendar year,
set of factors suggests the persis¬
the growth of bank earnings. For
terest rates, would help to hold
due mainly to the fact that cor¬
tence of inflationary strain.
An¬
down inflationary pressures.
one
thing, many banks have be¬
The
other suggests a tapering-off of
porate income tax payments are
latest
Commerce
come
Departmentincreasingly concerned
the boom. Certainly the possibil¬
heavily concentrated in the spring.
about their capital positions. This
SEC survey of capital goods de¬
In the last six months of 1953 the
ity of a conjuncture of defla¬
has made them more cautious and
mand indicates, however, that the
cash deficit will be very substan¬
tionary developments—such as a
conservative in making loans.
major industry groups
are
al¬
tial. The Treasury sold about $6
decline in government spending,,
Credit risks have been screened
ready anticipating either a level¬
billion of tax anticipation certifi¬
lower expenditures for consumermore carefully. As a result, banks
ing off or a decline in their rates
cates in
July to cover its cash
durables, a drop in residential
of capital spending in the fourth
have
tended
to
pass
up
more
needs
construction and plant and equip¬
through
the
September
lucrative lending opportunities in
quarter of this year. Under these
ment outlays, and an end of in¬
quarter. Additional borrowing
circumstances,
heavy
long-term
favor of others that are considered
will be
necessary
this fall, and
ventory accumulation, occurring-;
financing by the Treasury would
safer.

banks

Moreover,
many
constrained to

shorten

been

fact

the

have
ma¬

banks

will

be

employment

the

that really effective

commercial

seek

ex¬

at

to be ill-advised.

seem

pected to absorb additional quan¬

Aside

from

the

effects

on

the

the

time—is

same

one

to

ber

reckoned with.

tities of government obligations.
It seems likely that if a "read¬
portions are created that invite a turities in their investment port¬
capital market, there would be
Next spring the government will
^serious reaction later on. More¬ folios.
little point in saddling the govern¬
justment" develops, it will be a*
Greater concentration
on
run
a
surplus, and some of the ment
with
a
large volume of moderate one, and that we wilfi
over, if recession were to come, short-term obligations reduces
borrowings can be paid off.
it would take us longer to dig
long-term debt incurred at to¬ be able to avoid a widespread col¬
earnings but minimizes the risk of
■ourselves out of the hole. If in¬ asset
The
seasonal
revenue
pattern day's interest rates. When private lapse of employment and demand..
depreciation in a period of
dividuals and firms have gone too
demands
creates serious complications for
subside, the Treasury There are props under the econ¬
rising rates. It is also a means of
beavily into debt, if excessive in¬ strengthening the bank's liquidity both the Treasury and the Fed¬ will have an opportunity to sell omy today that we did not have
ventories have been accumulated
eral
Reserve.
The reduction of long-terms on a more favorable in the early 1930's, and the gov¬
position. A secondary reserve that
ernment may be expected to takewith borrowed funds, if market
of legal reserve requirements in basis.
formerly seemed adequate may no
•demands for houses and consumer
Moreover, under existing condi¬ prompt action to arrest a defla¬
longer
seem
so
when a bank early July of this year was largely
durables have been temporarily
by
the necessity
of tions with the Treasury running tionary trend. Easier money will!
would have to take losses if it motivated
-*?atusated as a result of heavy
were
forced to sell governments providing the banks with funds a deficit, it is hard to see how it help, though there is danger im
buying "on time"—we may find it in order to raise cash. A bank that with which to finance the Treas¬ can make much headway with the over-rating the effectiveness of
difficult,
if not impossible, to is concerned about
liquidity may ury's needs for the last half of problem of lengthening out the monetary policy in halting a busi¬
•check the forces of deflation and
i
debt.
With short-term borrowing ness decline.
thus not be in a position to profit 1953.
to induce recovery by orthodox
If recession should come, the on the rise, the short-term debt
Certainly the commercial bank¬
from higher interest rates.
means.
Treasury may be expected to op¬ tends to rise at a pace faster than ing system is in a better positions
Fourth, the impression has pre¬
Thus
it is important for the
erate
in the red. With roughly the
ability of the Treasury to to weather a recession than it;
vailed that interest rates are high.
monetary authorities to apply the
80% of Federal revenues derived lengthen its maturities.
The best was two decades ago. Its liquidity
Actually, they are low in compari¬
brakes promptly before credit ex¬
from individual and corporate in- the Treasury will be able to do
position, in general, is far betterson
with those which have pre¬
is to prevent
c o m e
pansion goes too far. Here, as else¬
taxes,
it requires little
further deteriora¬ than in 1929. Assets, on the whole,,
vailed in past periods of prosper¬
tion of the debt structure.
are of high quality.
where, an ounce of prevention is
Government
imagination to predict what will
ity. Lending rates of banks in
literally worth a pound of cure.
obligations constituted over 41%.
happen if the national income
Should loans decline and shortprincipal cities averaged only
of total loans and investments of
should drop. Unless the govern¬ term
I do not mean to imply that
interest
rates drop, many
3.73% in the second quarter of
all commercial banks at the endh
ment increases taxes and cuts ex¬ banks will lengthen their invest¬
monetary measures can prevent a
1953, as compared
with better
penditures sharply — both ex¬ ment portfolios in the attempt to of June, as compared with 10%.
downturn. No boom has lasted in¬
than 5V2% for the 'twenties. Yields
tremely improbable — the Treas¬ improve earnings.
definitely. In a sense, every boom on
Intermediate- in June of 1929, and these aretriple A corporate bonds
free of credit risk.
A large pro¬
•contains within itself the seeds
ury will run substantial deficits, term obligations will become more
(Moody's) average 3.31% now, as
and the banks will be expected to attractive to banks.
This would
portion of loans is insured orn)f its own destruction. The point
compared with a range of 4.46%
4s that by avoiding overstimula¬
help finance them. Commercial facilitate the funding of some of guaranteed by the government,
to 4.80% in 1928-29 and 5.75 to
banks are thus inexorably bound the floating debt into longer ma¬ F. D. I. C. insurance affords pro¬
tion of the economy through ex-

v

6.38% in 1920.

credit

-eessive

least stand

a

of

expansion,

we

at

chance of sustaining

prosperity for

a

longer time and

mitigating the severity of the
if it finally comes. By per¬

blow

mitting excessive credit expansion
we

inevitably substract something

from the future

•of

eliminating

and

the

run

basis

the risk

for

vigorous upswing if
recession develops.
early

and

an

a

standing

about

the

effect

of

interest rates on bank
earnings. The impression seems to
widespread

have

for

been

banks.

that

rising

rates

an
unmixed blessing
Nothing could be fur¬

ther from the truth. While higher
xates
gross
(

provide
earnings

they

also

some
—

increase

before taxes

have

in
—

disadvantages.

Some banks lose deposits as cor¬

porations
and put

other

.place

take

out

restraint

on

Of course,

and

local

debt

has

that

powered
The

Administration
when it took
The net effect of Treasury fiscal
office, that it intended to recon¬
operations has been, on the whole,
struct the Federal debt structure.
counter-inflationary. The govern¬
The
principal
objective
is
to
ment had a cash surplus in all but
lengthen out the debt. Too much
two of the seven postwar years.
of the debt—about $83 billion—
The total net surplus for the seven
falls due within a year; too much
years was nearly $17 billion.
within two years, or three, and
In
contrast, net private debt so on. It would be desirable to
(corporate and personal) has risen refund
maturing obligations in
from $140 billion at the end of such a
way as to lengthen out the
1945 to over $302 billion at the average
maturity of the debt, in
end of 1952, and may reach $325 order to relieve the Treasury of
present

it

known,

holdings of short-term obligations.

study would be needed
liquidity requirements of
banks and other investors before
Careful

the

of

attempt is made to bring about
substantial reduction in the vol¬

an
a

ume

of "floating" debt or to

retire

debt

from

bank-held
the

short-term

proceeds of longer-term obli¬

gations sold to other types of in¬
The time to have
a

program

debt

was

embarked on

of lengthening out the
in the earlier postwar

money




billion

and

at

local

the

debt

end

of

rose

1953.

State

the

from around

^

The Federal

tection against runs.

System has been

Reserve

strength¬

Its power ta-

improved.

ened and

has been broad¬
permit loans to banks;
any
sound
asset.
Ther

grant

advances

ened

to

against

of

Board

Governors

can

lower

requirements of member
banks.
The Federal Reserve is-thus in a far better position than?
reserve

it

in the early 1930's to give-

was

assistance
serves

from

reserves

on

credit

demands;
resulting:

contraction by

A liquidity

banks.
was

to banks requiring re¬

to meet currency

drains

or

other

panic such as-*

experienced 20 years ago, in¬

volving wholesale credit and se¬

liquidation,

curity
of

vestors.

pressure of constantly recur¬ years. Having missed the boat at
ring maturities and increase its that time, the government now
Rising rates $13 billion to nearly $26 billion flexiblity to deal with any future finds itself in a situation where
little progress can be made with¬
expansion of during 1946-1952/The increase in emergency.
,'

their

it into Treasury bills and

investments.

with fiscal

lems.

made

Jiigher
he

policy and prob¬ turities.
the larger hold¬
As to how much progress can
ings of governments would help be made in "getting the govern¬
I think it is worth pointing out to offset a possible reduction of
ment debt*out of the banks," it
that
since the end of the
war
bank earnings due to lower in¬ would be difficult to
say.
ShortFederal fiscal policy has not been terest rates and declining loans.
term governments are the main¬
the most important contributing
stay of bank secondary reserves.
in
factor making for inflation. It is
Other financial institutions also
the expansion of private and state
Debt Management Policy
prefer
to
maintain
substantial
up

II

Fiscal Policy

the boom.

Third, there has been misunder¬

,

the

b^ difficult

deficits.

current

tion

then

is

forced

hardly conceivable.
Nevertheless,

even

modest

present

a

a

recession

"keep

sidered

of

would
to bankers.

proportions

challenge

bankers
heads." Ill-con¬
on customers to

Then will be the time for
to

selling

inventories, and bank failures,,

their

pressure

Number 5266 .7. The Commercial and Financial Chronicle

^Volume 178

(1557)
of

forces of deflation and undermine

banks is concerned, it is un¬
doubtedly of considerable impor¬

ance

the

tance

and

"pay up"

only exacerbate the

can

values

asset

which

on

the

soundness of bank assets and the

security

the

of

structure rests.

this,

and,

whole

Bankers recognize

given

adequate

from the Federal
every

expect that they

their

to

up

sponsibilities

as

operators

the

of

and monetary
A

with

nation's

and

credit

confront

problem

a

tial

in

likelihood of governmental action

lem

deflation and prevent a
cumulative shrinkage of values.

and

supervisory

ing

bear¬

a

capital strength today, as
compared with past periods, are
on

(1)

improved management,
(2)
deposit insurance, which will help
to
prevent
losses
attendant
to

of

trying

Continued

loans

prices and

decline

from

be

in

output

consumer

selling at $40 and above.
prospect with The round-lot sale has how taken

in

unquestionably
mal

place. Our broker has his hand
pad which is called a report pad.
temporary phe¬ You may have seen it. Have you

a

arising from the abnor¬

credit

war

demands

period.

Any

the

of

post¬

slackening off

been

on

have

seen

the

yet? You

He

one.

that the

on

floor

may

simply writes

of your broker,

name

of

business will be countered by Jones and Company. DeCoppet &
aggressive Federal Reserve action Doremus sold 50 shares of Gen¬
to make credit

easily avail¬

more

eral Motors at 60

able and less costly to borrowers.

price

Competition for loans and invest¬

at

Finally, prospective loan losses
factor to

a

While

1930's
will

there

has

to

the

costs

for

is

even

continue

Service
be

cannot

make

to

reveal

remain

to

high,
in¬

to

charges probably

increased

for

up

substantially

loss

earnings

of

loan and investment portfolios.

on

One
would

be

increase

to

way

to

earnings

lengthen

out

terms

mortgages
the

FHA

on

for

if

loans.

probably

—

recession

a

VA

sustain

to

mortgage

Government deficits
unavoidable

and

of

Some

governments.

reduction of corporate and surtax
rates
might
be expected
as
a
counter-recession
measure,
al¬
though it is not likely to be sub¬

stantial.
Some

pressed
bank

of

ex¬

adequacy
withstand a

to

stringency.
of all

accounts

been

Total

pe¬

capital

commercial banks

at the end of June

were $13.2 bil¬
lion, equal to 8% of total deposit
liabilities and 16.6% of total loans

and

S.

investments

exclusive

Government

the

of

Of

obligations.

aggregates

sition of individual
as

variations

banks,

as

well

geographical

among

areas.

In

the

capital

strength of banks, certain things
ought to be kept in mind.
that

prospective

losses

and

investments

in

One is
loans

on

few stocks in

a

business.

odd-lot

floor

minute part of the total

a

We

of

the

Stock

brokers.

We

call

brokers. Each

the

his

liquidity
"dumping"

ride along with
stead

of

ment.

so

a

a

that

it

securities

a

in

could

bank

associate

a

member of

Exchange,

They are not
firm. They work

fixed commission. It is 2 *4

a

stocks

on

strain
factor
any
as

on

which

bank

cannot

degree

its effect

in

alleviating

would

capital.
be

which

nut

a

While this

evaluated

of

precision

on

the capital




with

insofar

needs

its

the

order

have

we

that

room

in

are

it

you

commission
electric

an

on

the process

that

so

it

the

on

firm.
board

thousand stocks

stock

every

fact,
nothing at all

is

a

there
a

panding
on

in

our

connection

matter of

a

of

it,

ex¬

will

carry
That is

floor.

a

a

trans¬

one

simple thing..

very

orders, it is
to

very easy to miss that
sale that takes place, so

protect himself against that, asi
as he gets that order on this#

soon

inactive

girl

on

"Give

stock, he calls up to his*
the range table, and saySj,
the next sale

me

on X, Y,.
he can forget about
that.
He puts the order in the
back of his book, and when that

Z."

Now,

sale

takes

place, it

be three
the girl

may

in the afternoon,

o'clock

telephones down immediately, so
that the order is executed. The

words, if we are long
1,000 shares of General Motors, it

mission firms with whom

We try to cut it down

is

dealing.

public has been
selling General Motors in odd-lots
and

have

bought. We would
never go out and arbitrarily buy
1,000 of Motors because we think
we

it is good stuff. We don't need an
odd-lot firm with 400 clerks to
do

that.

office

You

set

can

yourself

by

smart

you

are

the

whole

to

up

submitted

system

was

the

to

S.E.C.,
We have

had any trouble since.

never

manning these tur¬
right there all day long.
There
are
literally
thousands
upon thousands of calls that come

pretty well.

in

board

a mini¬
succeeded

to

have

we

rets

from

the

commission

firms

of

function

Another

sit

room—as

I said

customer

may

a

this

order

moment ago the

the

in

sitting

be

and he puts in that

room,

order to buy 50 shares of Motors.
They want to know about the last He sits there and watches the tape.
He sees the sale, and he thinks he
of Steel.
if
Somebody is con¬

Besides,

system

got their approval.

and

mum,

clerks

it.

do

with all sorts of sales information.
sale

cleared in the early days of the
S.E.C., when we had an indepen¬
dent study made of the odd-lot
and

can't

I

able to say

be

to

miss any sales, but
We do miss them.

never

we

your

that

do

enough.

odd-lot

The

are

we

like

would

I

by

the

because

templating
entering
an
order, ought to be getting his report, t
perhaps; or the last sale of any tried to point out the many stepe
stock; or they will want the se¬ through which that order goes be¬
quence of sales in a stock after fore it gets to us, at any one of y
which a delay might occur. How¬
10:30.
ever,
the customer calls his ac¬
Checking

the

"Range

Tables"

That goes on all day

long in the
trading session. Adjacent to the
turrets
are
several
long tables
which we call range tables. You

$10.

order

at

price. They gain noth¬
ing if they try to chisel a quarter.
They get their fixed commission.
We divide the floor up into four
five

in

ner

firm who

the

of the

member

a

Stock Exchange. The part¬

circulate

ners

is

section
a part¬

of

track

around

and

keep

positions. They have

our

fit.

Business

Odd-Lot

How

within
must call

shares,

over

a

Is

Run

The

You

business?

you run your

buying

are

and

selling all the time. Frankly, It's
a
mystery to us, too. However,
we
do trade in every stock
on

or

in

short,
it,

over

stock what

To

keep

call

a

one

of

con¬

some

assign

we

we

every

each

to

"basis." The

basis may be zero, and that

apply in the case of an
inactive

will

a

stock.

close to

zero

humanly
other

basis of

Our

General

has the authority
"All right, let it go." Or,
say,
"Sell it out," or

"Cover it."
have

We

call

we

has

up

in the office what

control

a

about 400 stocks that
ket leaders.

It

ture of what
We

have

all

during

board

with

the

mar¬

are

is enough for any¬

going in to get

one

which

room,

electric

modest

a

That

would
extremely

means

that

in

his position as

possible.
stocks

We

that will

100, 200, 500, and

positions

are

may

have
so on.

determined

by the action of the odd-lot

mar¬

for

reason

into

it is

office.

oi<r

it

is

much

The

easier

out the 60 stocks that the

quick pic¬

a

the market is doing.

four

who

men

sit

there

the

trading session.
tape in back of them,

master

She

tape.
has

in

of

the stocks

that

books

front

she

her

pad

a

the two

on

is

watching. She
direct wire with

is connected by a
the two telephone clerks who are
on

those

books

two

the

on

floor.

As the tape is pulled by the auto¬
matic
puller past her, it goes
under an automatic electric clock
whch

stamps

minute,

the

on

that

executive

count
man

his customer's#

or

and he says, when ha

over,

tape

the Motors book
whatever the

Anaconda,

or

two

books

are.

the

tape

goes

or

She

every

sale of each stock that she

diately

is watching and records it on this

a

pertinent

about

news

dividends
or
split-ups,
which
might affect the stock. They also

sale

from

hour

each
a

of

our

complete

position.
words,

In other

hour

know every

took

are

doing,

selling

us

whether they are taking

the

sion

and tell the brokers to

stock

away

and

short
and

that

tell

has

from

we

lighten up.
taking

been

us

don't

at too fast
want

to

a

be

much, they go around

them to

which

a

cover

the

that

trading

will

ses¬

of records

series

a

show

every

Exchange
we,

it

and
took

the

odd-lot

two

in

minute

the

place. Incidentally,
houses,

are

the only sources of that informa¬
The
do

Stock

Exchange

it. Nobody

does

does it except

ourselves.

Takes

Place

of

Commission

One point with which you may
familiar
is that the odd-lot

commission what¬
soever. We have only the quarter
or eighth differential, so whether
or
not we make money depends
gets

no

of Price

As I told you,

that order is timestamped when it reaches the post.
This clerk

the

can

determine the time

the postexplained, a
all sales in
general. From these basic factors*
he is able to determine, with a
great deal of accuracy, whether
that

order

reached

then

He

adds, as I
complete record of

that

price is right
is

There

or

not.

certain

a

change,
and

element—•

in

stand

various

they take place.

as

It is the#
round-

obligation of the seller of
lot to
of

groups^

report the round-lot transac¬

tions

see

a

that it gets in th** hands#

the reporters.
From those

ticker

slips that go upstairs*
is made.
Herev
a chance for varia¬

tape

there.
The reporter may bet
extremely busy if the stock is ac¬
tive, and he may stand there and
collect dozens of these things. He*
puts them over in the tube to go
upstairs and it may be that just

After the debacle
there

going
called

on,

use

1929 when

law

suits

constantly

were

we

upon

in

countless

were

ords for

in court to try to de¬

We

that he

gets the proper

execution; that is, that his odd-lot
is

tied

into

the

round-lot sale—the broker
book

on

in
the

—

the

there,

another

wait until

the

floor

may

order to buy an odd-lot

of

con¬

gets#

swings

the

the*

on

are

that

we

moment

ticker

one

report

which

three

over

to*

compo¬

That thing is going to

they have gone through*
back tc*

No. 2 and No. 3, and come
No. 1 again.

The poor customer sitting in the*

brokerage office

may

think that it

took an unconscionable amount of

time to get up there.

Now, then, another item in our
to
assure
the odd-lot

order

round-lot
cerned

to furnish these rec¬

endeavor
customer

at that moment the

nent tickers.

termine what sales took place.

it up.

be

dealer

Determining Accuracy

again, there is

keep them for seven years.
Differential

*

the

Transaction

of

have

up

which

tion.

rate,

in

transaction that took place on the

not

they see fit.
think we are taking on
much stock, they go around

they

public

out the original order which
still be on the floor of the
Stock Exchange, although we col¬
lect them every hour and bring
them up to the office.
get

the

the

end

we

hung

If

the

by,

place.

Timing
At

take whatever action

If

minute

the

notes

of

it away from us. So, that is com¬
piled right there in a matter of
minutes,
and
again telephoned
down to the floor partners. They

too

We will

tion

we

exactly what we
the public is
or

brokers

story

as

which is in front of her, and

form

every

entered,

time."

a

may

every

and flash down to the floor imme¬
any

market

the

at

at such-and-such

you

off,

They have

Motors

50

know by
well, there is a lack of complete.,
looking at the tape the precise exactitude in
this thing. You prob¬
minute in which a sale took place
ably have discovered already that
in the trading section.
the
so-called
reporters
on
the
The girl, let's say, is watching
floor, employees of the Stock Ex¬
so

picks

broker is directed to stay just

have

standing

partner

say,

stock

know

to

piped

listing all

whether

is

tapes

to pick

little while."

then the second, then

one,

knowledge gained from
right
there,
watching
Motors day after day.

past—everybody

wants

on

the third, and go back around. We
have
those
three
broken
down

girl is watching from the deleted
tape than it is from the entire

his

as

first

Or, if he were short, he might
"I would like to postpone
covering that for the time being,"
his opinion being
based on his

that the all-important
and intriguing part of this thing,
at least, in my experience in the

our

say,

basis. I would like

my

run

he

or

say,

I suppose

trol

mar¬

position

receive

authority to sell them out if they
see

his

500

to

the

bring

of the floor partners and

he

the proper

or

to

the

no

execute

our

one

on

liability; they have no share in
the profits of the firm, and there¬
they have no reason to do
than

ket

2Vs

and

simply told that if

were

abused

either trade in the round-lot

cents

fore

other

We

ever

They have

$10,

over

under

stocks

those .stocks.

affords

reserve

useful

nrove

conditions

room

like

ket. In other

let it

Stock

our

and

substan¬

portfolios

secondary

order

see

explain

me

and

is

Being busy with his other active
isolated

with the floor. As
our

It

mayv*

hours^

report goes out.

am

solely; they are not allowed
do anything else. They are paid

long

pay¬

let

room

and then there will be

action.

It

three

or

that

"I

us

can

its customers in¬

attempting to force

The presence of

liquid

or

stocks

on

stock.

two

telephone company, and they
carry direct wires to all the com¬

to

period

tial volume of short-term govern¬

ments

of capital to deposits

Briefly,
order

quarter

a

share.

a

for

the

44

of the big board with the exception
declining business are likely to be of a few. Being principals, we are
smaller if a bank possesses suf¬ bound to have a position, either
avoid

tests

$40

over

inactive

sell

slight curve, and in the area
in front of that board are a series
of turrets. They are installed

the

on

seat.

own

partners in
for

them

is

one

York

New

owns

have

Exchange

how in the devil do

evaluating

ficient

rule-of-thumb

capital to risk assets.

the

U.

conceal
wide variations in the capital po¬

course,

cup

couple of others

a

sections,
each
of under the supervision of

the

about

capital

riod

has

concern

a

which they specialize on the floor.
That is

comes

—would result in growth of bank

holdings

are

who do odd-lots in

to

help

may

demand

comparisons
based on the

raised to

was

tremely
not

„

gets the report: "I don't think this*
we
is right."
position by trad¬
So the customer's man goes back
up and it simply retraces its steps,
ing arbitrarily, and possibly up¬
the steps the order took coming setting the market, we would be will see all that this afternoon. over the wire and asks the New
in, goes back to the telephone called up on the carpet. I point At these tables are seated girls. York office to check the price on
odd-lot order,
clerk on the floor, who telephones that out. as a sideline. We don't Roughly speaking, each girl has this
Number soit up to his New York office. The do it.
two
odd-lot
books
which
she and-so.
That request will come into our
New York office puts it on the
To get back to the basis. "Let's watches. Passing across in front
room
which
I
have
de¬
wire to Chicago. It may have all
of her is the ticker tape. Now, as order
say that Motors has a basis of 500
scribed. It will land in the hands*
been completed in a matter of two shares. If the
action of the odd- you probably know, the master
of one of these men sitting at the
or
three minutes.
lot orders makes our broker long tape is made from three compo¬
The 6rder clerk in New
There are presently two odd-lot 550
nent parts which feed into it to turret.
shares, or short 550 shares,
York will say: "Check the price oil
dealer firms. Well, as a matter of he must do one of
two things; make the master tape. They run

ma¬

turities, and many banks will be
in a position to do this. Liberali¬
zation of

it in

and there again

post,

operating fact, there

time,

likely

may

and

jolt

to

spots.
same

are

crease.

of

decades

two

bound

it

that

test

substantial

any

weak

At

real

no

assets

economy

some

expected,

remember

been

that

the

be

to

well

banking

to

not

are

be

and

be reckoned with.

charge-offs of the magniexperienced
in
the
early

ture

He drops

was.

the

whatever the

or

Stock Exchange employee picks it

ments will be intensified.

are

such

ratios

as

periods

past
of

use

of

doubt

The Odd-Lot System on the
New York Stock Exchange

Part of the rise in recent years is

nomenon,

with

validity

serious

that has

general softening of business.

any

the

on

cast

for 20 years. Until two years
ago
this August it was that. Then it

We

decline in interest stock

a

would

factors

These

16

page

That execution takes place on the
loans would decline if building next
round-lot sale at the same
drops off. The rising tide of amor¬ price as that on the round
lot,
tization payments .will
confront plus or minus the differential.
banks with a serious problem of
The
differential
now
is
onefinding .lending and investment eighth on stock selling below $40
outlets for their funds,
v
a
share, and it is one-quarter on

Moreover,

arrest

and

could

credit would carry with it a
good
slice of business loans. Real estate

rates

to

A substan¬

bank

and

A

bankers

Other factors that have

inevitably drop off as inventories
decline.

by

authorities.

be expected. Business loans would

pared

upon our ability to trade. That
of mortgages
differential, I might say, was
commodity loans, and (4) the fixed at
one-eighth on all stocks

would

would

earnings.

are

over¬

(3) government insur¬

guarantees

or

machinery.

to maintain

decline

re¬

custodians

recession

banks

public

frequently

bank runs,

looked in discussions of the prob¬

help

Reserve, there is

to

reason

face

will

financial

is

and

37

proper
on

the

get

an

I

say,

we,

by and

However, as#
large, can de¬

termine with great accuracy what
the
proper
price of an odd-loti
order is.

^

In the last

enough

analysis, if

hell,

ment anyway,

in an ex¬ Jiim and keep

raise
you
get an adjust¬
so we'll fix it up for
peace

you

in the familyv

1

38

The Commercial and Financial Chronicle

(1358)

Now in

NEW ISSUE CALENDAR
October 23

Price—At
and

Wing Oil & Gas Corp.
(Lewis

a

United

Gas

For advances to

Co., Inc.

Price—To be supplied by amendment.

ceeds—From

stock

sale,

together

with

and 7% preferred stocks
sub-holding companies, and the
approximately $5,000,000 to make additional
in

the

common

stock

of

its

subsidiaries.

Underwriters—W. C. Langley & Co. and The First Bos¬
ton

Corp.

Nov.

V.

(B.

underwritten by Union
shares

—

Common

Inc

Christie &

11

Bonds

mon

stockholders

Witter & Co.)

October 28

C.

Langley & Co. and The First Boston Corp.)

$5,625,000

Common

New Mexico-San Juan Natural Gas Co
Securities

(Hunter

Corp.)

(Bids

11

EST)

a.m.

November

4

Co.)

Sept.

28

Lead

November 9

Mines, Ltd., Toronto, Canada

filed

700,000 shares of common stock (par 20
cents—Canadian funds) to be offered for subscription
by
common

stockholders

at

each five shares held.

the

rate

of

one

share

new

for

General
(The

Precision

(Bids

be

$25,000,000

6

stock (par $2)

stockholders
for

being offered for subscription by

of

Oct.

record

each

nine

Nov. 16.

Price—$7.50

capital.

Office

shares
per

6500

—

20

at

held;

share.

Eastern

Underwriter—None.

the

rate

rights

of

to

(Geyer

(par

drilling

new

expire

Office—703 Liberty BankBldg.,
Underwriter—None.

supplied by
amendment Proceeds—For working
capital. Business—
(Manufacturer of tires and tubes.

(Bids

23

to

be

Bonds

invited)

(May

be

First

Boston

Common
about

Corp.)

November 24
Government

shares

100,000

Employees

(Tuesday)

November 25
Delaware Power

&

(Bids

Tennessee

invited)

to

(Bids

be

232,520 shares

to

be

Bonds

invited)

$10,000,000

lative

preferred

capital.

par

Office

stock

cumu¬

offered

to present stockholders.
share). Proceeds—For working
Seventh Ave., Brockway, Pa. Under¬

($50
—

per

writer—None.

Burton

Bonds

$25,000,000

17

(Thursday)

Picture

to

be

invited)

$5,400,000

Productions,

Inc.

(letter of notification)

stock (par 10

cents). Price—$1

California Central Airlines,

Inc.

Aug. 24 filed $600,000 of 7% convertible equipment trust
certificates, series A, due Sept. 1, 1S57, and 400,000
shares of common stock (par 50 cents). Price—100% of
principal atfiount for certificates and 75 cents per share
stock.

Proceeds—To

the spare parts.
Gearhart &

Boston,

acquire five Martinliners

Office—Burbank, Calif.

Otis, Inc., New York; and McCoy & Willard,

Mass.

.

Telephone & Telegraph Co.
Aug. 17 filed 33,320 shares of capital stock to be offered
for subscription by stockholders in the ratio of one new
share for each five shares held.

Price—At par

($100

per

share).

Proceeds—To reduce short-term notes.
Under¬
writer—None. Offering—Temporarily postponed/

Boston

Pittsburgh

San Francisco

Private fVires




to

all

offices

Chicago

Cleveland

West

Elm

St.,

Syca¬

Co., Rock Island, III.
(letter of notification) $300,000 of first mortgage
5V2% serial sinking fund bonds.
Price—At par (in units

Cascade Natural Gas Corp., Seattle,, Wash.
Aug. 25 (letter of notification) 35,000 shares of common
stock

(no par).

retirement

of

Price—$4.50
notes

and

per

certain

Office—407 Securities Bldg.,
—None.

share.

reduce

Underwriters

bank loans
To

and for

new

construc¬

be determined

by competitive
bidding. Probable bidders: The First Boston Corp.; Kid¬
der, Peabody & Co., Merrill Lynch, Pierce, Fenner &
and

—

White, Weld & Co.

(jointly); Kuhn, Loeb &

Co. and Smith, Barney & Co. (jointly); Blyth & Co., Inc.;
Lehman Brothers. Bids—Originally scheduled to be re¬
ceived up to 11 a.m. (EDT) on Sept. 17. but on Sept. 16

Proceeds—For

stockholders'

Seattle, Wash.

days from that date,1 bidders to be advised at least three
days in advance of new date.

Fairway Foods, Inc., St. Paul, Minn.
May 8 filed $1,600,000 first mortgage lien 4^2% bonds
to mature $40,000 annually from 1955 to 1994, inclusive.
Price—At 100% of principal amount. Proceeds—To con¬
struct

new

Fallon

warehouse.

Underwriter—None.

Gas

Corp., Denver, Colo.
June 25 (letter of notification) 3,616,000 shares of Class
A common stock.
Price—At par (five cents per share).
Proceeds—For drilling wells. Office—528 E and C
Bldg.,
Denver, Colo. Underwriter—E. I. Shellev Co., Denver,
Colo.

and

Underwriters—

Carolina

Philadelphia

Office—112

held.

construct

the company announced bids will be received within 30

Equip. Trust Ctfs.

-

300,000 shares of com¬
per share. Proceeds
—For production of movies and TV stories. Office—246
Fifth
Avenue, New York.
Underwriter — Alexander
Reid & Co., Newark, N. J.

for

New York.

shares

Dohrn Transfer

Beane

Co

mar¬

mon

Price—At

four

111. Underwriter—None.

Proceeds—To

—

invited)

December
Erie RR

Sept. 24

Brockway Glass Co., Inc.
Oct. 9 (letter of
notification) 5,500 shares of 5%

each

Proceeds—To

Duquesne Light Co.

(Tuesday)

Transmission

Gas

(Bids

per

exchange.

tion.

Cleveland, O.

$10.75

telephone

for

Aug. 10 filed loo,000 shares of preferred stock (par $50).

—Common

stock

common

at

share

($10 per share).

$1,000 and $500 each). Proceeds—For working capital.
18th St., Rock Island, 111.
UnderwriterQuail & Co., Davenport, Iowa.

(Wednesday)

Light Co.-.

be

to

December 1

(par $1). Price—At market
share). Proceeds—To selling
stockholder. Underwriter—Wm. J. Mericka &
Co., Inc..

(estimated

par

Office—208

$500,000

share for each 10 shares held

ket value of

for subscription by stockholdes at

new

of

.Debentures

Corp

(Offering to stockholders, without underwriting)

expire

Bingham-Herbrand Corp., Toledo, Ohio
Sept. 28 (letter of notification) $100,000
aggregate

one

Oct. 5

(Bids

on Oct.
7, with rights
on Oct. 23.
Price—$24 per share. Proceeds-—
For general corporate
purposes. Underwriter—None.

be offered
of

rate

more,

$10,000,000

Monongahela Power Co

Beneficial Loan Corp.

Sycamore, III.
(letter of notification) 25,695 shares of common

stock, to
Price—At

(Monday)

Iowa Southern Utilities Co

Underwriter—Rey¬
Co., New York. Offering—Postponed.

Sept. 29 filed 355,976 shares of common stock
(par $10)
being offered to common stockholders on the basis of one
new

November

Avenue, Baltimore, Md.

cent) to be offered for subscription
Price—Four cents per share. Proceeds

expenses.

Parkway, Miami, Fla. Under¬
Co., Miami, Fla.

the

Proceeds—For working

Armstrong Rubber Co.
March 31 filed $4,000,000 of 5% convertible
subordinated
debentures due May 1, 1973. Price—To be

to

Preferred

$7,500,000

EST)

noon

439

—

DeKalb & Ogle Telephone Co.,
June 24

(Bids

Office

purposes.

Reagents, Inc., Miami, Fla.
(letter of notification) $300,000 of 10-year de¬
Price—At
par
(in denominations of $1,000

writer—Atwill &

(Tuesday)

Worcester County Electric Co...

on

common

Proceeds—For

tal. Office—1851 Delaware

Preferred

Gulf States Utilities Co

Oklahoma City 2, Okla.

nolds &

November 17

common
one

share).

per

general corporate

$750,000

Co.)

&

($1

par

each). Proceeds—To retire debts and for working capi¬

(Thursday)

one

by stockholders.
—For

12

McAlister

Price—At

For

—

Sept. 28

common

Arkansas Oil Ventures, Inc., Oklahoma
City, Okla.
Sept. 30 (letter of notification) 1,237,500 shares of com¬
stock

November

non-

stock. Price—At par (,$10 per share).

Minerals Corp., Washington, D.C.
notification) 6,000 certificates of par¬
par (in units of S5Q each).
Pro¬

(letter of

bentures.

American Fidelity & Casualty Co

•

mon

Price—At

Dade

Bonds

invitedi

Nov. 3.

on

Proceeds—For

Wyatt Bldg., Washington, D. C.
Underwriter—James T.
De Witt & Co., Inc., Washington, D. C.

$5,408,350

\

Proceeds—To develop mining properties. Under¬
writer—None. Financing proposal later dropped.

Anchor Post
Products, Inc.
Sept. 30 (letter of notification) 32,953 shares of

Preferred

and Tucker, Anthony & Co.)

to

share for each

—

common

ticipation.

Long Island Lighting Co

Price—To be supplied by amend¬

new

Denver, Colo.
(letter of notification) 300,000 shares of

Oct. 7

Oct.

(Monday)

ment.

share

share.

per

one

15; lights to expire

Cuban American

Equipment Corp

First Boston Corp.

Oct.

working capital.
Office—711
St., Waukegan, 111.
Underwriter—None.

(Wednesday)

invited) $5,400,000

be

to

the basis of

on

on

drilling expenses and working capital.
Office — 922
Equitable Bldg., Denver, Colo.
Underwriter—E. I. Shel¬
ley Co., Denver, Colo.

shares

198,500

Chicago, Burlington & Quincy RR.__Equip. Tr. Ctfs.
(Bids

City;

Kansas

Proceeds—For

stock.

$40,000,000

&

St.,

Cosmo Oil Co.,

—...Bonds
.Common

Allen

and

held

$28

—

cumulative

$299,200

Strategic Materials Corp
(Hamlin. & Lunt

Oak

★ Cooperative Trading, Inc., Waukegan, 111.
13 (letter of notification)
7,500 shares of 4%

Preferred

Niagara Mohawk Power Corp...

Office—1334

Oct.

(Wednesday)
Inc

;

working capital.
Blunt Ellis & Simmons and Swift, Henke
& Co., both of
Chicago, 111.

$1,000,000

Works Co.,

shares

Underwriters

Preferred

San Jose Water Works..
(Dean

construc¬

new

Electric Co., Chicago, III.
(letter of notification) 10,041 shares of common
stock (par $12.50) being offered for
subscription to com¬

Price

$30,000,000

EST)

a.m.

and to employees
by amendment. Pro¬

7

11

Public Service Electric & Gas Co
(Bids

13

Cook

$20,000,000

Co.)

Nov.

on

be supplied

Underwriter—Wahler, White & Co.. Kansas City, Mo.

Oct.

100,000

Corp.)

★

,

Anacon

expire

Price—To

★ Century Acceptance Corp., Kansas City, Mo.
Oct. 16 (letter of notification)
10,000 shares of class A
common stock (par
$1) and 5,000 shares of class B stock
(par $1). Price—Of "class A, $2.50 per share: of class B*
$1.90 per share. Proceeds—To Robert F. Brozman, the

ceeds
•

10.

ceeds—For repayment of bank loans and
tion.
Underwriter—Union Securities

Mo.

Common

stockholders

to

(Glenn),

Pro¬

company and $5,241,900 of 6%
of the system's three

(Tuesday)

Illinois Light Co

McCarthy

(W.

received

funds

stockholders to

selling stockholder.

(10/28-29)

from private sale of $20,000,000
bonds, to be used to re¬
deem $14,700,000 of collateral trust 3s due 1957 of this

investments

$25,000,000

EST)

noon

October 27

Central

American Water

Water Works

Oct. 8 filed 225,000 shares of cumulative preferred stock

balance of

Equip. Trust Ctfs.
$4,350,000

Debentures

(Bids

subsidiary and associated companies, etc.

Underwriter—N^ae.
(par $25).

(Monday)

EST)

noon

Securities

jr American Telephone & Telegraph Co. (11/5)
Oct. 14 filed $625,000,000 of 12-year 3%% convertible
debentures, due Dec. 10, 1965, to be offered for subscrip¬
tion by stockholders of record Oct. 30 in the ratio of $100
of debentures for each seven shares of stock held; rights
to expire on Dec. 10.
Rights will be mailed about Nov. 5.
Price—$100 for each $100 principal amount. Proceeds—

offered for subscription by common
on the basis of one new share for each

Corp., New York.

Corp

(Offering

American

$300,000

Seaboard Air Line RR

to
on

...Common

,

Co.)

Smithken

October 26

None.

•

—Common
105,500 shares

100,000

par

develop

Beverly Hills, Cal.

par),
stockholders
(no

held (with an oversubscription privi¬
lege, subject to subscription rights of employees); rights

Light Co

(Bids

shares of class A common stock.
($10 per share). Proceeds—To establish
cattle industry in Israel. Underwriter—

'(
stock

of record Oct. 27

(Friday)/

(Offering to stockholders—no underwriting)

N. Y.

American-Israeli Cattle Corp.,

f

ISSUE

nine shares then

Hartford Electric

Aug. 24 filed

be

to

-

REVISED

Oct.

Underwriter—None.

Amalgamated Growth Industries, Inc.
Sept. 28 (letter of notification) 149,969 shares of common
stock (par 10 cents). Price—$2 per share. Proceeds—For
acquisition of patents, etc., and for new equipment and
working capital. Office—11 West 42nd St., New York
City. Underwriter—R. A. Keppler & Co., Inc., New York,

PREVIOUS

ITEMS

•

Central Illinois Light Co. (10/27)
7 filed 100,000 shares of common

it Alton Downtown Parking, Inc., Alton, III.
12 (letter of notification)
400 shares of common
stock.
Price—At par ($100 per share).
Proceeds—For
organizational exoenses, etc.
Offices—c/o Henry Wuellner, 301 No. Plaza St., Alton, 111., and c/o Ryrie Milnor,
West Third St., Alton, 111.

ADDITIONS

SINCE

Registration

Oct.

200

Thursday. October 22. 1953

* INDICATES

,

Securities

...

shares.

Underwriter

Both tf one 8®sf!
Thru advertising in the Chicago Tribune you can reach
effectively and at one low
cost both important investment markets in
Chicago and the midwest—professionaj

buyers and the general investing public.
Financial advertisers place

Chicago

newspaper

more

advertising in the Tribune than in

because the Tribune

gets

any

other

best results from investors in this

multibillion dollar market.

;

A Tribune representative will be glad to give you the facts that show how you can
make effective use of the selling power of the Chicago Tribune. Ask him to call.

CHICAGO TRIBUNE
The

World's Greatest Newspaper

The Tribune gives to each day's market tables and reports
the largest circulation given tbem in America.

;

Volume 178

Number 5266

The Commercial and Financial Chronicle

...

★ Fleming Co., Inc., Topeka, Kan.
14 (letter of notification)
6,666 shares of

Oct.

stock

common

(par $25).

Price—At book value of Oct. 3 (which
will be between $38 and $35 per
share).
Proceeds—For
general corporate purposes.
Office — 311 East 17th St.,

Topeka, Kan.

Underwriter—None.

Corp., St. Petersburg, Fla.
Sept. 11 filed 211,416 shares of common stock (par $7.50)
being offered for subscription by
of

rate

one

share

new

for

stockholders

common

each

10

shares

held

Underwriters

★

Flour

Kidder,

—

Pierce,

Fenner

&

Peabody & Co. and Merrill
Beane, both of New:. York.

Sept. 23 (letter of notification) amended to 42,858 shares
common stock.
Price—At par ($5 per share) being
offered for
subscription. by common stockholders of
Oct. 9

basis of

on

one

share

new

for

each

K-O-T

Harold E. Wood & Co., St. Paul,

Minn.

General Hydrocarbons
Corp.
Aug. 12 filed $1,010,800 of 20-year debentures and
66,424
shares of common stock
(par $1) to be offered in units
of $350 principal amount of
debentures and 23 shares of

Price—$359

New York

of

Price—At

stock.

common

Oil Corp., Ardmore, Okla.
(letter of notification) 299,500 shares of

Sept. 28

stock (par one cent).

mon

—To

Pricce—$1

complete wells. Office—504 Gilbert Bldg., Ardmore,

City, Okla.

»

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.

unit ($336 for the debentures and
$1 per share for the stock). Proceeds—For general cor¬
porate purposes.
Business
Oil and gas
per

development.
Under- riter—None. Office—Oklahoma
City, Okla.
★ General Precision Equipment Corp. (11/9)

Underwriter—None."

Kenwell Oils & Mines

stock (par $1).

common

Price
To be supplied by amendment. Proceeds—For
working capital and general corporate purposes. Under¬
writer—To be supplied by amendment.
—

Lone Star Sulphur

Corp., Wilmington, Del.
May 8 filed 600,000 shares of common stock (par 5 cents)
to be offered for subscription by common stockholders of
record May

8

on

a

share-for-share basis "as

tion."

Price—To be supplied by amendment.
expansion program. Underwriter—None.

For

specula¬
Proceeds—
a

—

Oct.

16

filed

108,167

preferred stock
to

common

shares

cumulative

stockholders

the

on

on

basis of

one

about Nov. 6;

or

share

new

rights to

Nov. 23.

on

convertible

(par $50) to be offered for subscription

for each six shares held

pire

of

ex¬

Price—To be supplied
by amendment.
Proceeds—To repay $3,925,000 bank loans and
to increase
general corporate funds.
Underwriters—The First Bos¬
ton

Corp. and Tucker, Anthony & Co., both of New York.

General Shoe
Oct.

2

filed

Corp., Nashville, Tenn.

19.465

shares

of

$5

cumulative

stock, series B (stated value $100
shares

of

stock

common

change for shares
the

on

shares

of

4 6/llth shares

series

of

stock

following basis:

0.54253

B

shares

of

of

share) and 139,742

to

Berland

be

offered

ex¬

Shoe Stores,

For each Berland

General

in

common

Inc.

share

Shoe

common; and for each
preferred stock one share of
General Shoe or for each 2.0227

of Berland

preferred

common

per

(par $1)

preference

of

Berland prefered

share

one

of

General

Shoe

stock.

is

Offer, which will terminate on Dec 7,
subject to acceptance of 80% of each class of
stock.

★

Grand Bahama

Co., Ltd., Nassau
$1,350,000 zu-year 6% first mortgage conver¬
debentures due March,
1973, and 1,565,000 shares
class A stock (par 10
cents). Price—Par for deben¬

t eD. 3 filed

tible
of

tures

$1

ana

share for stock. Proceeds
Business
Hotel and land

per

construction.

—

Underwriter—Gearhart
ment has been

&

—

For

development.

Otis, Inc., New York. State¬

withdrawn.

(par $5) to be
subscription by stockholders on the basis
share for each four shares held.
Price—To
be supplied by amendment.
Proceeds—For general cor¬
porate purposes.
Underwriter
None.
Offering
No
definite plan adopted.
offered

for

one

scription
the

Hartford Electric
Light Co. (10/23)
2 filed 105,500 shares of
common
stock (par $25)
to be offered for
subscription by stockholders of record
shares

the

on

held:

basis

rights

of

one

new

share

for

each

eight

will

expire on Nov. 10. Price—To
be supplied by amendment.
Proceeds—For construction
program.

Underwriter—None.

Co., Ltd.
!
Sept. 25 filed 100,000 shares of common stock to
be of¬
subscription by common stockholders of record

fered for

Oct. 5 in ratio of

one new share for each
5y2 shares held
Price—At par ($20 per share).
Proceeds—For plant ex¬
pansion. Underwriter—None.

★ Hillside Cemetery Co.

(Pa.)
(letter of notification) $100,000 of 6%
registered
debentures due Nov. 1, 1973.
Price—100%
principal amount. Proceeds—To repay
$75,000 bank
14

subordinated
of

loans and for

writer—None.

improvements. Office—Roslyn, Pa. Under¬

Oct.

15

(letter

of

notification)

450

shares

of

(approximately $47 per share).
William M. Roth, the
selling stockholder.
Underwriter—Dean Witter & Co., San
Francisco, Calif.
June 2
stock.

(letter of
Price—25

Mining Co., Wallace, Idaho
notification) 160,000 shares of common
cents

per

share.

Proceeds—For

oper¬

ating capital.
Office
509 Bank St.,
Wallace, Idaho.
Underwriter—Mine Financing, Inc., Spokane. Wash.
—

★ Insurance Securities, Inc., Oakland, Calif.
19 (letter of
notification) trust fund certificates

Oct.

as

follows: 7,346

units of $1,000 each, single
payment plan,
series U; 16,795 units of $1,200
each, accumulative plan,
series E.
Ten-year participating agreements to create
such indeterminate amount of investment
units as

may

be necessary to service the
agreements. No
is involved.

Ionics.
June

Inc., Cambridge,

30 filed

underwriting

Mass.

131,784 shares of

common stock
(par $1).
by amendment (between $8 and
Proceeds—To pay mortgage debt and for

for

each

seven

new

construction.

& Co.

Underwriters—To be

Bids—To be received

★ Massachusetts
16

filed

determined

on

Business

or

share. Proceeds—For construction.
St., Redmond, Ore.
UnderwritersCamp & Co., Portland, Ore.; Wm. P. Harper & Son & Co.,
Price—$15.75

per

Sixth

Office—313

Seattle, Wash.; and others.
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

to

encourage

stock

common

(par

in

Massachusetts.

Under¬

writer—None.
•

McCarthy

Oct.

(Glenn), Inc.

one

con¬

Overland Oil,

Inc., Denver, Colo.

June 10 filed 600,000 shares of common stock (par 100)
to be offered for subscription by stockholders (except
the original incorporators) at rate of one new share for
each two shares held.
Price—40 cents per share.
Pro¬
ceeds—For

July

9

stock

working capital.

(letter

June

29

held.

at

(10/27)

5

Co., Inc.
notification) 2,000 shares

of capital
stockholders of record

to be offered to
of

rate

one

shares

each five

share for

new

Proceeds—For working
Office—Lock Haven, Pa.
Underwriter—None.

Price—$10

capital.

Planter's

of

share.

per

Peat

(letter

6

units

Underwriter—None.

Chemical

of

(no par)

shares of

$1).

assist existing businesses and

industry

new

share of stock and

unit. Proceeds—To

and equip hotel building.
Underwriter — None.
(Subscriptions to 4,949 shares of stock and 4,949 deben¬
ard held by a group of citizens of Orange formed
under the auspices of the Orange Chamber of Com¬
merce.)

cumulative

Development Corp.,

150,000 shares of

which will be available to

one

per

struct

Aug.

about Nov. 9.

Price—$10 per share.
Proceeds—For loans and working
capital.
Business—To provide a new source of financing

of

Corp., Coral Gables, Fla.
notification) 100,000 shares
stock
(par $2.50)
and

preferred

stock

common
one

share

of

of 6%
100,000
(par 50 cents) to be offered in

each

class

of

stock.

Price—$2.50

unit. Proceeds—To liquidate liabilities and for work¬
ing capital. Office—220 Miracle Mile, Coral Gables, Fla.
Business—To process peat for fertilizer. Underwriter—

per

Frank L. Edenfield & Co.,

Miami, Fla.

Prugh Petroleum Co., Tulsa, Okla.
Aug. 28 (letter of notification) 35,000 shares of common
stock (par $5). Price—$8.50 per share. Proceeds—To pay
loans. - Office—907 Kennedy Bldg., Tulsa, Okla. Under¬

(amendment) filed 10,000,000 shares of common
(par 25 cents). Price—$2 per share. Proceeds—For
drilling of exploratory wells in Bolivia, acquisition of

writer—None.

Sept. 30 filed $30,000,000 of first and refunding mortgage

stock

Houston, Texas. Dealer Relations
Representative—George A. Searight, 115 Broadway, New
York

6, N. Y. Telephone BArclay 7-8448.

Research and development and

Public

Service

bonds due Oct.

for

and

new

Electric & Gas Co.

&

received up to 11 a.m.

parent,

for $3,010,000,

to

be

used

to

bank loans and for construction program. Bids—
headed jointly by Halsey, Stuart & Co., Inc.,

repay

A

Co.,

Securities Corp.
the securities—

Reoffering had
planned at 101.875 to yield 4.87%. July 6 com¬
sought SEC authority to borrow $20,000,000 from
banks on 3x/4% notes pending permanent
financing which
pany

is presently being

have been sold the moment the offering is approved and
the

remaining 512,922 will be sold following approval.
Price—$1 per share. Proceeds—For oil and gas leases
to

repay

notes.

Underwriter—None.

Co.

(par $10).

Price—At market (estimated at about
share). Proceeds—To A. G. Ballenger, the sell¬
ing stockholder. Office—135 So. LaSalle St., Chicago 3,

$10

per

111.

Underwriter—Hallgarten & Co., Chicago, 111.
Nevada

Natural Gas

Pipe Line Co.
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 shares of common stock are to be offered in units
one

share

of

each

class

of

stock

—For

ital.

to be offered

publicly at $7 per share. Proceeds
construction of pipe line system and working cap¬

are

Office—Las

California Co.,

Vegas,

Nev.

deter¬

Halsey,

—

To be

Oct. 27 at 80 Park Place,

on

Newark, N. J.
Production Co.

Saint Anne's Oil

April 23 filed 165,000 shares of
Price

stock (par $1).

common

Proceeds — To acquire stock of
Neb-Tex Oil Co.. to pay loans and for working capital.
Office—Northwood, Iowa. Underwriter—Sills, Fairman
—

$5

& Harris of

per

share.

Chicago, 111. Registration statement

may

be

revised.

Oct. 5

(Calif.)

(10/27)

filed 40,000 shares of cumulative

preferred stock

(par $25—convertible into common stock from Jan. 1,
1954). Price—To be supplied by amendment. Proceeds—
To

repay bank loans and for new construction.
Under¬
writer—Dean Witter & Co., San Francisco, Calif.
•

Segal Lock & Hardware Co., Inc., N. Y.

Sept. 4 filed $975,000 of five-year 6% convertible sink¬

each

250

principal

working

stockholders
shares

of

amount.

capital.

at

of

rate

common

1958, to be offered to
$100 debenture for

one

stock

Proceeds—To

held.

Price—100%

loans

repay

Underwriter—None.

and

Statement

to

of

for

be

withdrawn.

Silver Dollar

Exploration & Development Co.
1,000,000 shares of com¬
30 cents per share.
Proceeds—For
exploration. Office—West 909 Sprague Ave., Spokane,
Wash.
Underwriter
Mines Financing, Inc., Spokane,
Aug. 20
mon

(letter of notification)

stock.

Price

—

—

Wash.

at

$28 per unit;
25,000 shares of common stock are to be offered for
subscription by stockholders of record Sept. 21 at $6.25
per share; and the remaining 25,000 shares of common
stock

(EST)

ing fund debentures due Oct. 1,
common

Bids

(jointly); The First Boston Corp.

common

of

be

Co. Inc.;
Kuhn, Loeb & Co. and Lehman
(jointly); Morgan Standey & Co. and Drexel

San Jose Water Works

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). Of the class B shares, 172,894 will

and

&

Brothers

given consideration.

Mon-Dak

of

Stuart

group

Harriman Ripley & Co., Inc. and Union
entered the only bid on June 15 for
100.125 for 5s.
This bid was rejected.

Underwriters—To

mined by competitive bidding. Probable bidders:

Natural

Gas

(10/27)

1, 1983. Proceeds—To repay bank loans

construction.

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 215,000 shares of common stock (par
$14) to American

Underwrtier—The First

Inc., San Francisco, Calif.

• New Mexico-San Juan Natural Gas Co.
(10/28)
Sept. 21 (letter of notification) 748,000 shares of common
stock (par 10 cents).
Price—40 cents per share. Pro¬

Gold




Telephone Co., Redmond, Ore.

8

(letter of notification) 10,000 shares of common
stock (par $5), of which 6,000 shares are to be offered by
the company and 4,000 shares by three selling stockhold¬

at

held;

Boston, Mass.
Oct.

ceeds—To

—

shares

sub¬
14

by competitive bidding. Probable bidders:
Halsey, Stu¬
art & Co. Inc., Blyth &
Co., Inc. and The First Boston
Corp. (jointly); W. C. Langley & Co.; Smith, Barney

$9 per share).

Business

for

for
Oct.

record

★ Long Island Lighting Co. (11/9)
Oct. 19 filed $25,000,000 first
mortgage bonds, series F,
due Sept. 1, 1983.
Proceeds — To repay bank loans and

Price—To be supplied

equipment.

stockholders of
share

Northwest

Oct.

Pedlow-Nease

stock
common

Proceeds—To

Creek

new

offered

Morris Paper Mills, Chicago, Hi.
7 (letter of notification)
1,600 shares

Price—At market

Hunter

one

being

Oct.

★ Honolulu Oil Co.
stock.

common

stock (par $10),

common

are

been

Hawaiian Electric

Oct.

of

shares

rights to expire on Oct. 29. The remaining 100,000 shares
are
being offered to employees. Price—$16 per share.
Proceeds—To repay bank loans. Underwriters—Blyth &
Co., Inc., The First Boston Corp. and W. C. Langley &
Co., all of New York.

Oct.

23

by

rate

new

—

Oct.

685,648

North Idaho Mines, Inc., Kellogg, Ida.
July 31 (letter of notification) 400 shares of common
stock (no par).
Price—$125 per share. Proceeds—For
exploration. Address—Box 298, Kellogg, Idaho. Under¬
writer—Robert G. Sparling, Seattle, Wash.

leases and for general corporate
purposes. Underwriter—
B. V. Christie & Co.,

new

Gray Manufacturing Co.,
Hartford, Conn.
May 1 filed 55,313 shares of capital stock

of

which

•

tures

Long Island Lighting Co.
Sept. 24 filed 785,648 shares of
of

Niagara-Mohawk Power Corp. (10/28)
v
7 filed $40,000,000 general
mortgage bonds due
Oct. 1, 1983.
Proceeds—To repay bank loans and for
new
construction.
Underwriters—To be determined by
competitive bidding.
Probable bidders: Halsey, Stuart
& Co. Inc.; Morgan Stanley & Co.; The First Boston
Corp.; Kuhp, Loeb & Co. Bids—To be received up to
11 a.m. (EST) on Oct. 28, at Room 1840, 15 Broad St.,
New York, N. Y.

ers.

Ltd., Toronto, Canada

Aug. 20 filed 1,400,000 shares of

•

Oct.

com¬

share. Proceeds

per

Okla. Underwriter—Petroluem Finance Corp., Oklahoma

seven

held; rights to expire on Oct. 30. Proceeds—For
working capital. Underwriters—Woodard-Elwood & Co.,

stock.

Inc.,

shares

share). Proceeds—For investment in exist¬

ing industrial enterprises in Israel. Underwriter--None.

shares

Minneapolis, Minn, and

18,800

per

Kay

City Ornamental Iron Co.

of

record

Enterprises,

filed

1

($100

on

Oct. 8; rights to expire on Oct. 26.
Price—$24 per share.
Proceeds—To repay bank loans and for new construction.

Lynch,

Israel

par

Florida Power

at

subsequent commercial exploitation in the field of ion
exchange chemistry. Underwriter—Lee Higginson Corp.,
New York and Boston (Mass.). Offering—Date indefinite.

Oct.

39

(1559)

develop and maintain leases.
Office—2135
Avenue, Albuquerque, N. Mex.
Underwriter —
Hunter Securities Corp., New York.

South Atlantic Gas Co., Savannah,
Oct.
stock

7

(letter of notification)

(par $5).

plant additions.

Ga.

25,000 shares of common

Price—$12 per share.
Proceeds—For
Office—620 East Broughton St., Savan¬

nah, Ga.
Underwriters — Johnson, Lane, Space & Co.,
Inc., and French & Crawford, Inc., both of Atlanta, Ga.;
Grimm & Co., New York, and others.
Southern New England Telephone Co.

Sept. 15 filed 400,000 shares of capital stock being offered
for subscription by stockholders of record Oct. 2 in the
ratio of one new share for each 10 shares then held;
rights will expire

on

Oct.

23.

Price—At

par

($25

Continued

on

vaae

per

4Q

)

40

The Commercial and Financial Chronicle

(1560)

'

.

.

Continued,

from

page

Proceeds—To

share).

advances from American
Underwriter—None.

repay

Telephone & Telegraph Co.
Oil

Sta-Tex

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

Co.

Finance

Universal

(letter of notification) 300,000 shares of common
(par five cents). Price—$1 per share. Proceeds—
For drilling costs.
Underwriter—Arthur R. Gilman, 20
Broad

of

2

Street, New York City.

Strategic Materials Corp., Buffalo, N. Y. (10/28)

and one share of common stock.
unit. Proceeds—For working capital.
Office—1301 Elm St., Dallas, Tex. Underwriter—None.

198,500 shares of common stock (par $1)
for subscription by common stockholders
at rate of one new share for each share held. Offering

Aug. 31 filed

expected Oct. 28, with rights to expire on or about Nov.
be

Price—To

12.

exploration

supplied

amendment.

by

Proceeds—

loans and other indebtedness, for further

to repay bank

properties

of

for

and

working

additional

Underwriters — Hamlin & Lunt, Buffalo, N. Y.,
and Allen & Co., New York, W. C. Pitfield & Co., Ltd.,
capital.
■of

Canada,

Montreal,

has

agreed

purchase

to

50,000

.shares from the underwriters for distribution in Canada.

A Strutwear, Inc., Minneapolis, Minn.
Oct. 16 (letter of ratification) 1,500 shares of 5% pre¬
ferred stock (par $100) and 25,000 shares of common
stock (par $5), of which 15,000 shares are to be offered
only to purchasers of preferred stock at rate of 10 shares
-for each share of preferred bought. The remaining 10,shares

300

of

common

stock

are

to

offered

be

to

em¬

ployees. Price—To public, at par for both issues; to em¬
ployees, at average cost for common stock (now approxi¬

mately $3.71 Vz
dale

per

share). Proceeds—To purchase Clarks-

(Miss.) plant and for working capital. Office—1015
Minneapolis, Minn. Underwriter—None.

South 6th St.,

A Utah Oil Refining Co.
Oct. 15 filed 13,970 shares of capital stock (par $25) of
Standard Oil Co. (Indiana) to be offered for purchase

Utah
Refining Co. and its subsidiary (Utah Oil Building

by trustee under the Thrift Plan for Employees of
Oil

for the accounts of and at the directions of em¬

Corp.)

ployees

72.4%

owns

stock

(par one cent). Price—At market

45 cents per share).

Proceeds

—

(approximately

To selling stockholder.

Office—504 Gilbert Bldg., Ardmore,

Okla. Underwriter—
Finance Corp., Oklahoma City, Okla.

Petroleum

A Town Enterprises', Inc.
14 (letter of notification) 264,000 shares of class A
common stock
(par 50 cents) and 72,000 shares of class
B stock (par 50 cents). Price—For class A, $1 per share;
and for class B, 50 cents per share. Proceeds—For work¬
ing capital, etc. Underwriter—None.
Oct.

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¬
sidiary, to provide it with funds for construction; and to
replenish the treasury of United Gas Corp. and for other
^general corporate purposes, including advances of jjuch
-additional funds as may be required by Union Producing

Co., another subsidiary. Underwriters — To be deter¬
mined by competitive bidding.
Probable bidders: Hal-sey, Stuart & Co. Inc.; Morgan Stanley & Co., White,
Weld & Co. and Equitable Securities Corp. (jointly); The
First Boston Corp., Harriman Ripley & Co., Inc. and
Goldman, Sachs & Co. (jointly). Bids—To be received
to noon (EST) on Oct. 26, at Room 2033, Two Rector

up

St., New York 6, N. Y.
United
Oct.

Merchants

Manufacturers, Inc.
574,321 shares of common stock (par $1).

filed

7

the

Price—At

market

(either on the New York Stock
Exchange or through secondary distributions). Proceeds
—To a group of selling stockholders who will receive
the

said

and

common

"basis

of

shares

6V2

Juilliard

in

for

outstanding preferred
stock of A. D. Juilliard & Co., Inc., on the

shares of United

common

None.

exchange

or

Merchants stock for each

preferred

share.

Underwriter

—

Mining & Leasing Corp.
Aug. 26 (letter of notification) 1,700,000 shares of com¬
mon stock.
Price—At par (10 cents per share). Proceeds
—For mining operations, equipment, etc. Office—Central
City, Colo. Underwriter—R. L. Hughes & Co., Denver,

proposed divestment plan.
Blair

Holdings Corp.
it

24

June

newly acquired subsidiary. Underwriters—Blair,
& Co. Inc. and The First California Co.

it

7

representing

10,000

ordinary

be supplied by amendment.

holders,

who

company,

tions

to

Freres
•

&

purchased

Proceeds—To selling stock¬

the

ordinary shares from the
the proceeds to be used by it for capital addi¬
plants and facilities.
Underwriter
Lazard
—

& Co.

share.

For

Office

306

West

United States

—

Proceeds—
Fourth St.,

Oxnard, Calif. Underwriter—None.

stock

common

(no par) to be issued in connection with

the proposed merger

into company of Puget Sound Pow¬
er
& Light Co. on the basis of one-half share of pre¬
ferred and one-half share of common for each Puget
ceive cash at

the

rate

of $27

share. Underwriter—

per

None.

West Coast Pipe Line Co.,

Dallas, Tex.
6% debentures due Dec.
15, 1964, and 580,000 shares of common stock (par 50
cents),.,to be offered in units of one $50 debenture and
Nov. 20 filed $29,000,000 12-year

share of stock.

one

Price

—

To be supplied by amend¬

Proceeds—From sale of units and

ment.

tional shares of

common

1,125,000 addi¬

stock and private sale of $55,-

000,000 first mortgage bonds, to be used to build a 1,030
pipeline. Underwriters—White, Weld &

mile crude oil

Co. and Union Securities

Corp., both of New York.
fering—Postponed indefinitely.

Of¬

West Coast Pipe Line Co.,

Dallas, Tex.
shares of common stock (par 50
cents). Price—To be supplied by amendment. Proceeds
—Together with other funds, to be used to build pipe¬
line. Underwriters
White, Weld & Co. and Union Se¬
curities Corp., both of New York. Offering—Postponed
indefinitely.
Nov. 20 filed 1,125,000

—

• West
Virginia Pulp & Paper Co.
Sept. 28 filed 1,270,344 shares of common stock (par $5)
being offered in exchange for common stock (par $10)

of Hinde & Dauch

Paper Co. on the basis of 1% shares
Pulp stock for each Hinde & Dauch
The offer will expire on Nov. 18.
Underwriter—

West

of

share.

Virginia

None.

Wing Oil & Gas Corp., New York (10/23)
(letter of notification) 750,000 shares of common
(par 10 cents).
Price—40 cents per share.
Pro¬

Oct. 5
stock

ceeds—For drilling expenses and working capital. Office
—42 Broadway, New York, N. Y. Underwriter—Lewis

Smithken Co., New

York.

Worcester County Electric Co. (11/17)
Oct. 12 filed 75,000 shares of cumulative preferred stock

(par $100).

Proceeds—To

repay

bank loans and for

Underwriters—To be determined

construction.

bidding.

Probable

bidders:

Blyth

&

by
Co.,

new

it

21

Oct.

Inc.;

to be offered for

are

Sept. 23 filed 240,000 shares of common stock (no par)
being offered in exchange for the 15,000 outstanding com¬
shares of Aspinook Corp. on the basis of 16 shares
Finishing stock for each share of Aspinook stock. The

mon

of

offer

of at

pires

is conditioned
least
on

80%

Nov.

upon

its acceptance by the holders

of the Aspinook shares.

13.

Statement

Ar United States Millwork
Oct.

became

The

offer

effective

Oct.

ex¬

13.

each

of

the

to

be

on

offered

for

(letter of notification) 15,000 shares of class A
or class B stock
(each purchaser must buy a minimum of
100 shares of each).
Price—$20 per share.
Proceeds—
For general corporate purposes.
Office —3201 Fremont
Ave., Seattle, Wash. Underwriter—None.

subscription by common stockholders
basis, about Nov. 12; rights to ex¬

share-for-share

a

pire

about Nov.

rights to
later.

27.

Certain stockholders have

purchase

Proceeds

the

new

For

—

shares.

working

waived

Price—to

it

2

Stone

Ar Arizona Public Service Co.
Oct. 13 it was reported company is planning some addi¬
tional common stock financing before the end of this
year, but the amount, etc., has not yet been determined.
Underwriters
The First Boston Corp. and Blyth &
Co., Inc.
—

Electric Co.

22nd

St.,

Denver,




Colo.

Underwriter

ers

on

raise

1-for-10

a

#n

basis

of

sufficient

common

stock

Emmett

Securities

Previous bond issue

Atlantic

March

to

additional estimated $3,000,000. Proceeds—For

be Union

may

—

for

out¬

and sel3

Forgan &

A Chicago, Burlington & Quincy RR. (11/4)
Bids will be received by the company on Nov. 4 for the
purchase from it of $5,400,000 equipment trust certifi¬
cates to mature in 30
equal semi-annual instalments.
Probable

bidders:

Halsey, Stuart

Co.

&

Inc.;

Salomon

Bros. & Hutzler.

Columbia

Gas

System, Inc.

company plans to issue and
$40,000,000 of new debentures. Pro¬
bank loans and for construction pro¬
gram.
Underwriters—To be determined by competitive
bidding. Probable bidders: Halsey, Stuart & Co. Inc.;
Morgan Stanley & Co.

April 6 it

announced

was

sell later this year

ceeds—To

repay

Columbus & Southern Ohio Electric. Co.

Sept. 22 it

was

reported

company

plans

some

financing

later this year. Underwriter—For any preferred or com¬
mon stock may be Dillon, Read
& Co. Inc., New York.
For

bonds, underwriters may be determined by competi¬
Probable bidders for $10,000,000 of bonds:
Halsey, Stuart & Co. Inc.; White, Weld & Co.; Salomon
Bros. & Hutzler; Dillon, Read & Co.; Union Securities

tive bidding.

Corp.

and

Brothers;

Glore,

Forgan

Higginson

Lee

Rhoades & Co.

& Co.
(jointly); Lehmafr
Corp. and Carl M. Loeb,

(jointly).

A Commonwealth Edison Co.
Oct. 19 Willis Gale, Chairman, announced that if the
separation of the gas and electric properties is carried
out, a substantial block, perhaps $60,000,000, of mortgage
bonds constituting a lien on the gas properties would be
sold

to

public investors by Edison

its

financing
gram.

Gas

the next step in

as

postwar

construction

pro¬

Upon transfer of the properties, Northern Illinois

Co., the

sume

$1,100,000,000

Halsey,

gas company to be formed would as¬
obligation of the bonds. Probable bidders:

new

the sale

Stuart

&

Co.

Glore,

Inc.;

Forgan

&

Co.;

The

Corp.

<

Power &

Light Co.

announced company plans to issue and

was

1954 about

sell
$10,000,000 of first mortgage and collateral

Proceeds—For construction program.
be

determined

Un¬

competitive bidding.
Probable bidders:
Halsey, Stuart & Co. Inc.; The First
Boston Corp. and Blyth & Co., Inc.
(jointly); White,
Weld & Co. and Shields & Co. (jointly); Union Securi¬
ties Corp.; Lehman Brothers; Morgan Stanley & Co.;
Kuhn, Loeb & Co. and Salomon Bros. & Hutzler (jointly);
W.

C.

by

Langley & Co.

Delaware

Power

Oct. 5 it

was

stockholders

&

Light Co.

announced this

tional shares of

(11/25)

company

pians offering to

of record Nov. 25 of 232,520 addi¬

common

stock

on

a

one-for-seven baSis,

Rights will expire about Dec. 15. Employees will receive
rights to subscribe for up to 150 shares each. Price—To
be named by company on Nov. 23. Underwriters —If
determined

by competitive bidding, bidders may be:
Langley & Co. and Union Securities Corp. (joint¬
ly); White, Weld & Co. and Shields & Co. (jointly);

W. C.

&

Co.

619

share

Lehman

England, President, announced that the com¬
plans to issue and sell early next year about $4,000,000 of new bonds and make an offering to stockhold¬

Oct. 13 (letter of notification)
100,000 shares of preferredcommon stock (par 1
cent).
Price—50 cents per share.
Proceeds—For advertising and

Powers.

new

presently

Corp.; Lehman Brothers
Co. (jointly); Blyth & Co., Inc.,
Ripley & Co., Inc. and Smith, Barney & Co,
(jointly); Salomon Bros. & Hutzler.

pany

construction program. Underwriters—For common

Office—

one

$16)

Harriman

Oct. 5 B. L.

Ar United Western Sales Division, Inc.,
Denver, Colo.
'ili

merchandising.

of

(par

Securities

Webster

&

common

writer—Geyer & Co., New York.

basis

reported company may issue

was

Glore.

tnd

be

capital. Under¬

the

shares

60,000 shares of new preferred stock. Underwriters—To
be determined by competitive bidding. Probable bidders:*

derwriters—To

Fidelity & Casualty Co. (11/12)
Oct. 21 it was stated registration is expected on Oct. 23
of 150,000 shares of convertible preferred stock (par $5)

subscription by stockholders of rec¬

on

Central Power & Light Co.
March

trust bonds.

American

2

standing.

in

Prospective Offerings
•

27

562,500

Delaware

Atlantic City

Corp.

8

Oct.

about

ord

First Boston

17.

(11/2)

stockholders will vote Nov.

announced

was

increasing the capital stock by 140,625 shares, which

on

com¬

Brothers; Merrill Lynch, Pierce, Fenner &
Beane; Equitable Securities Corp. Bids — Tentatively
scheduled to be received by company at its office, 441
Stuart St., Boston
16, Mass., up to noon (EST) on
Nov.

& Co., Inc.

share to holders who do not elect to re¬

common

(jointly); Coffin & Burr, Inc.; A. C. Allyn & Co.„
Bear, Stearns & Co. (jointly); Harriman Ripley

A Central National Bank of Cleveland

Washington Water Power Co.
May 7 filed 1,088,940 shares of $1.28 cumulative con¬
vertible preferred stock (par $25) and 1,088,939 shares of

named

Finishing Co;

Central Maine Power Co. common stocks
Blyth & Co., Inc. and Kidder, Peabody

of

Inc. and

their

Co., New York.

plans sale during the

Probable bidders:

Oct. 5 it

shares

company

quarter of 1954 of $10,000,000 common stock after
distribution by New England Public Service Co. of its

first

per

United Rayon Manufacturing Corp. (Netherlands)
9 filed "A. K. U." American depositary receipts for

American

reported

was

Rollins

Power Co.

Maine

Central
Oct.

Price—$1

(par 25 cents).
working capital.

Oct.

shares of A. K. U. at the rate of 20 American shares for
each ordinary share of Hfl. 1,000 par value.
Price—To

plans to issue and

company

—

Colo.

200,000

announced

was

publicly $2,000,000 of convertible debentures. Pro¬
ceeds
For development of Stanwell Oil & Gas Ltd.,
sell

stock

Lehman

United

a

holdings

petitive

*

u

stock (held
stock¬
under

by Southern Union Gas Co.) may be offered to
holders of the parent company on a pro rata basis

Ar Vaca Oil Co., Inc., Oxnard, Calif.
Oct. 16 (letter of notification) 50,000 shares of common

•

&

Standard Oil
Refining cap¬

ital stock.

Sound

A Texo Oil Corp., Ardmore, Okla.
Oct. 15 (letter of notification) 622,934 shares of common

Oil and its subsidiary.
of the outstanding Utah Oil

Utah

of

}

Aug. 11 it was reported company's common

per

offered

be

to

share of preferred

one

Price—$10.15

Underwriters—Smith, Bar¬

/u

(letter of notification) 29,000 shares of 70-cent
preferred stock (no par) and 29,000 shares
common
stock (par 15 cents) to be offered in units

cumulative
of

•

1953.

& Co. may head group.

struction program for

Aztec Oil & Gas Co.

Sept. 21

Oct.

stock

tho

$75,000,000 to $150,000,000.
Pro¬
ceeds—To be used to help pay for a $100,000,000 con-r

Dallas, Tex.

Corp.,

.

debt from

authorized

ney

Underwriter—None.

Blvd., Los Angeles, Calif.

.

Stockholders voted May 5 to increase

determined.

Angeles, Calif.

Universal Finance Corp., Los

39

1953

Thursday, October 22,

...

'

'

27

Corp.

was

and

Smith,

stock

Barney

&

placed privately.

Detroit Edison Co.
March

24

it

unspecified

Refining Co.
it

Brothers; Harriman Ripley & Co. Inc.; Blyth
Co., Inc.; Kidder, Peabody & Co. and Merrill Lynch,"
Pierce, Fenner & Beane (jointly). Price—May be set by
directors, with bidders to name their underwriting com¬
pensation. Registration—Expected about Oct. 28. Bids—
Tentatively expected to be received on Nov. 25.

was

announced

company plans to issue

amount of convertible debentures

due

an

1963

debenture

(about $55,000,000 to carry an interest rate not exceeding

later this year will be around $60,000,000.
The
exact nature and timing of the financing are still to be

stockholders. Proceeds—To retire bank loans and to meet

issue

was

announced

that

proposed

4%)

which

may

first

be

offered

for

subscription

by

Number 5266

yolume 178

The Commercial and Financial Chronicle

...

(1561)

41

i"
>

construction

costs.

authorized the
Dixie Cup

2 it

Oct.

--

Meeting—Stockholders
debentures.

new

April 14

on

Underwriter—None.

Corp
stockholders will

announced

was

vote

Nov.

3

authorizing the creation of a new issue of 200,000
shares of preferred stock (par $50), of which approxi¬
mately 150,000 shares as a convertible series will be
on

offered to

for

stockholders

common

15-day

a

period.

on

one-for-five basis

a

Proceeds—For' expansion.

Under¬

writers—Glore, Forgan & Co.; Hornblower & Weeks.
Eastern

shares

of

which

issue of 200,000

an

are

preferred

stock

(par

$10),

shares of
expected to be offered publicly. Underwriters
—Blair, Rollins & Co., Inc. an.d Cohu & Co., both of New
York.

Registration—Expected in

100,000

future.

near

nancing to provide funds for its construction program.
Bidders for about $25,000,000 of bonds
may include Hal¬
sey, Stuart & Co. Inc.;
curities Corp.;; Lehman

Kuhn, Loeb & Co.; Union Se¬
Brothers; Smith, Barney & Co.;
Kidder, Peabody & Co.; Equitable Securities Corp.
Idaho

Power

mission

that

Feb. 20 it

was

collateral

000

sale of $7,000,Under¬

1973.

writers—To be determined by competitive bidding. Prob¬
able bidders:
Halsey, Stuart & Co. Inc.; Estabrook &
Co. and Stone & Webster Securities Corp. (jointly); The
First Boston Corp., White, Weld & Co. and Kidder, Pea-

foody & Co. (jointly); Glore, Forgan & Co. and Harriman
Ripley & Co. Inc. (jointly).
Erie RR.

;

Oct.

it

2

reported company plans to issue and sell
equipment trust certificates. Bids—Expected

be

to

received

Dec.

on

Probable

17.

bidders:

Halsey,

Stuart & Co. Inc.; Salomon Bros. & Hutzler;
Peabody & Co.; Blair, Rollins & Co. Inc.

Essex

Sept.
sale

County Electric Co.
it

21
of

reported

was

Kidder,

and

May be determined by competitive

bidding.
Halsey, Stuart & Co. Inc.; Lehman
Brothers, Merrill Lynch, Pierce, Fenner & Beane and
Union Securities Corp. (jointly).
—

Probable

bidders:

Florida

was

announced that the company plans to sell

approximately $10,000,000 first mortgage bonds due 1983
the latter part of this year.

Proceeds—To pay off bank
borrowings and for construction purposes. Underwriter
—-To be determined by
competitive bidding. Probable
bidders:

Halsey, Stuart & Co. Inc.; Kidder, Peabody &
Co. and Merrill Lynch,
Pierce, Fenner & Beane (jointfly); Lehman Brothers; Glore, Forgan & Co. and W. C.
Uangley & Co. (jointly); The First Boston Corp.

^

6

stockholderss

: stockholders

(par

$10)

—$43

issuance

sale

and

"

York.

rights to expire

on

Oct. 23. Price

Underwriter—Blair, Rollins & Co. Inc.,

"

•

~

Aug. 24 company received SEC authority to acquire its
distributive portion of portfolio stocks being distributed
toy New England Public Service Co. pursuant to that
company's plan of liquidation and dissolution. By reason
of its ownership of NEPSCO stocks, General Electric will
toe entitled to receive 97,030.95 shares

(3.89%)

stock

'common

shares

(3.89%)

Co.

of New

the
'

commbn

Corp.

of

Central

of the

Power

stock of

common

of

Central

General Electric
of

Maine

Co.;

of the

45,690.45

Public

Service

Hampshire; and 20,730.20 shares (2.72%) of
stock

such

Vermont

proposes

to sell

Public

or

Service

otherwise dis¬

securities

within a period of one year
acquisition (subject to its right to
apply for additional time to dispose of such securities).
pose

from the date of such

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% annually. The management

J

states

that,

issued

as

under

present

plans,

these

shares

will

be

the growth of the corporation warrants.

Government
'f

Sept.

f

23,

company

of

Leo
soon

Employees Corp.
(11/24)
Goodwin, President, announced that the
plans to register with the SEC an issue

$500,000 10-year 4% convertible junior subordinated
(convertible into common stock at the rate

debentures
of $20 per
mon

of
on

share), to be offered for subscription by

stockholders of record

debentures for each
Dec. 9.

foe mailed

15

Nov.

or

17

at

the

rate

com¬

of

$100
rights to expire
subscription warrants will

shares held;

It is expected that
on

about Nov. 24.

Price—At par.

Proceeds
Government Em¬

—For

working capital, etc. Office —
ployees Insurance Bldg., Washington 5,

D.

C.

Under-

writer—None.

:

7

the

company

to

Connecticut

issue

To

be

determined

and

Edward

P.

sell

U.

Commission

$200,000

of

L.

stockholders will
ized

by

competitive

pay

authorized

first

shares.

common

Price—Will

Proceeds—About

bank loans and for

Statement

expected

to

depend

market

on

$2,000,000 will be used to
construction. Registration—

new

be

filed

on

about

or

Nov.

2.

Underwriter—May be The First Boston Corp., New York.
Oct.

14 it

sell

was

stated

50,000

that company is

additional

shares

common

stock.

Proceeds—To finance acquisition of control of

Waterous,
Ltd., which will be known as Canadian Koehring Co.,
Ltd.
Underwriter
Probably Loewi & Co., Milwau¬
kee, Wis.
—

Maier

April 18 it

was

announced

additional shares of
rate
per

of

four

share.

new

common

offer 400,000
stock to its stockholders at

shares for each

Prcoeeds

—

To

will

company

share held.

help finance

a

Price—$5
bottling

new

Underwriter—None.

July 7

company

sought SEC

of

a

bank

loan

of

$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: Halsey,
&

Co.

Inc.;

Glore, Forgan

&

Co.

and

Lehman

Brothers

(jointly); Smith, Barney & Co. and Blyth &
Co., Inc. (jointly); Kuhn, Loeb & Co.; Kidder, Peabody
&

Co.; Harriman Ripley & Co. Inc.

Minnesota Power & Light Co.
Aug. 3 it was announced stockholders will vote Oct. 1
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 financing that may become
necessary.
Immediate offer not contemplated. Under¬
writers—May be determined by competitive bidding.

Probable bidders:

Kidder, Peabody & Co.; Blyth & Co.,

Inc.

Monongahela Power Co. (12/1)
Sept. 9 it was announced that company is planning is¬
suance and sale of
$10,000,000 first mortgage bonds due
1983.

Proceeds—For construction program. Underwriters
To be determined by competitive
bidding. Probable bid¬
ders: Halsey, Stuart & Co.
The First Boston Corp.

Inc.; W. C. Langley & Co. and
Loeb & Co.;
Kidder, Peabody & Co. and White, Weld & Co. (jointly);
Glore, Forgan & Co.; Lehman Brothers, Equitable Se¬
curities Corp.; Union Securities Corp. and Salomon Bros.
& Hutzler
(jointly); Merrill Lynch, Pierce, Fenner &
Beane; Harriman Ripley & Co., Inc. Bids—Tentatively
expected to be received

(jointly); Kuhn,

on

Dec. 1.

Registration—Expect¬

ed about Oct. 30.

Mystic Valley Gas Co.
Sept. 21 it was reported company plans issuance and sale
$6,000,000 of bonds. Underwriters—May be de¬
termined by competitive bidding. Probable bidders: Hal¬
sey, Stuart & Co. Inc.; Merrill Lynch, Pierce, Fenner &
of about

and

Union

Securities

Corp.
Brothers; Kidder, Peabody & Co.

(jointly);

Lehman

Narragansett Electric Co.

ferred

S. Nelson, President, announced that the
expects to sell a new issue of
$10,000^00 first
mortgage bonds. Proceeds—To repay bank loans and for

new

construction.

Underwriters—To be

competitive bidding.

Probable bidders:

determined

by
Halsey, Stuart

& Co.

Inc.; Salomon Bros. & Hutzler and Union Securi¬
ties Corp. (jointly); Stone & Webster Securities
Corp.;
Merrill Lynch,

Pierce, Fenner & Beane and White, Weld
(jointly); Lehman Brothers; Kuhn, Loeb & Co.
and A. C. Allyn & Co., Inc.
(jointly); Lee Higginson
Corp. and Carl M. Loeb, Rhoades & Co. (jointly). Bids
—Tentatively scheduled jto.be received on Nov. 23.
&

>

.

Co.

.Houston Lighting & Power Co.
was reported company plans

Sept. 25 it




pre¬

ferred

Roy

stock
stock

new

fi-

(par

$50).

Underwriter

—

Previous

pre¬

offer

(in 1940)
was
handled by
The
First 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.; Lehman
Brothers and Goldman, Sachs & Co.
(jointly); Kidder,
Peabody & Co. and Stone & Webster Securities
(jointly).
'

Corp.

New York State Electric & Gas
Corp.
Feb. 27 it was reported that company
may, later in 1953,
issue and sell $20,000,000 first mortgage bonds. Under¬
writers — To be determined by competitive
bidding.
Probable

some

Northern Natural Gas Co.

Sept. 23 it
sell

some

was announced company plans to issue
and
additional debentures later this
year. Proceeds

—To repay bank loans. Underwriters—To be
determined

by competitive bidding. Probable bidders: Halsey, Stuart
Co. Inc.; Blyth &
Co., Inc.

&

Northwest Natural Gas Co.
March

23 it was reported that this
company plans to
finance its proposed 1,300-miles
pipeline from Canada te
the Pacific Northwest
by the issuance and sale of

$60,000,000 of 41/2% 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

publicly in the United States and

Underwriter—Morgan Stanley & Co., New York.

Oklahoma-Mississippi River

Products Pipe

Line, Inc.
Sept. 23 it

reported this company, a newly organized
subsidiary of Sunray Oil Corp., plans to issue and sell,
privately and publicly, some securities to finance
was

both
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 Corp.,
March
with

bidders:

Boston Corp.

10

it

was

the SEC

nationally.

Albuquerque, N. M.

announced

an

issue

company plans to registei
stock, which will be offered

of

Office—5003

Central

Avenue, N. E., Albu¬

querque. N. M.

Otter Tail Power Co.
25 FPC authorized

to issue

company

a

maximum

of

$4,000,000 unsecured promissory notes to banks, the
proceeds to provide funds to
temporarily finance the
company's 1953 and 1954 construction programs prior to

arranging for long-term financing.
Underwriters—May
be Glore, Forgan & Co. and Kalman
& Co.
Jan 29 company received FPC
permission to file a third
substitute application
proposing to construct a 1,466mile transmission line
extending from the San Juan
Basin in New Mexico and Colorado
to market areas in
the Pacific Northwest.
Estimated overall capital cost
of the project is

$186,000,000, including $2,000,000 for
working capital. Financing is expected to consist of first
pipe line bonds and preferred and common

mortgage
stocks.

Underwriters—White, Weld & Co. and Kidder,
Peabody & Co., both of New York, and Dominion Secu¬
rities Corp. Ltd.,
Toronto, Canada.
Pacific Telephone &

July 2 it
sell

to

was

its

Telegraph Co.

announced

plans

company

to

issue

and

stockholders

1,004,603 additional shares of
l-for-7 basis. Price—At
par (100 per
share.
Proceeds—To repay bank loans.
Underwriter—
None.
American Telephone &
Telegraph Co., parent,
owns 91.25%
of Pacific's outstanding stock.
Offering—
Not expected until the
early part of 1954.
capital stock

on

a

Petroleum Service, Inc. (Texas)
was reported company is
considering issue and
sale of $300,000 of 6% -debentures due
1963 (convert¬

Aug. 4 it
ible

into

Garrett

&

common

stock).
Underwriters
Probably
Texas. Offering—Expected this
—

Co., Dallas,

fall.

Portland General Electric Co.
W. Delzell, Chairman,

July 22, Thomas

Polhemus,
1953

President,

construction

announced

program,

that

which

will

and

James H.

financing
range

of

bank

loans

mature in

under

a

credit

November, 1953.

arrangement

of

its

between

$8,700,000 and $9,200,000, is being accomplished
by

means

which

will

Repayment of the loans at

maturity, plus the procurement of

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
was

an

done privately through
Blyth &

financing

Co., Inc.

Public Service Co. of Colorado
Oct. 13 it was reported
company is
issue of $15,000,000 first

planning to float an
mortgage bonds, due 1984, early
Proceeds—For financing, in
part, a $17,000,000 electric
generating plant to be constructed in Denver.
Colo.
Underwriters—To be determined
by competitive
bidding.
Probable bidders:
Halsey, Stuart & Co. Inc.;
Kuhn, Loeb & Co.; The First. Boston
next year.

Underwriter—F. L. Putnam &

7,

&

Beane and Union Securities
Corp. (jointly); Lehman
Brothers; Kidder, Peabody & Cb.

Pacific Northwest
Pipeline Corp.

approval

loans.

Oct.

by competitive bidding. Probable bidders:
Halsey, Stuart & Co. Inc.; Merrill Lynch, Pierce, Fenner

Milwaukee Gas Light Co.

Oct. 8 company applied to Rhode Island P. U. Commis¬
sion
for
authority to issue 150,000 shares of

company

about

Co.

reported that company plans issuance and
$3,000,000 bonds. Underwriters—May be

June

Brewing Co., Los Angeles, Calif.

mortgage
$483,000 par value of common stock (the
latter first to stockholders).
Proceeds—To retire bank
(11/23)

of

determined

planning to issue

of

and

Gulf States Utilities Co.

sale

was

ic Koehring Co.

bonds

Co., Boston, Mass.

North Shore Gas

Sept. 21 it

Canada.

President, announced that
Nov. 12 vote on increasing author¬
by 300,000 shares, or to 1,100,000

on

(jointly);
Brothers; Harriman Ripley & Co., Inc.

Lehman

stock at $10 per share

(11/23)

shares. It "is planned to raise additional
capital required
at this time by the sale to the
public of
conditions.

-

& Co., Inc. and Smith,
Barney & Co. (jointly); Hemphill,
Noyes & Co. and Drexel & Co. (jointly);
Kidder, Pea¬
body & Co. and Salomon Bros. & Hutzler

Shutts,

stock

common

Beane

Greenwich Gas Co.

May

was

—

15,

Stuart

General Electric Co.

.

Oct.

to

additional shares of capital stock
basis of one new share for each 10

Oct. 6;

on

share.

per

■INew

the

on

shares held

authorized

of 39,000

*

Co.

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.

plant.

Franklin National Bank, Franklin Square, N. Y.

Oct.

writers

and

Power Corp.

Sept. 11 it

$184,550,000

reported company is planning to issue
$20,000,000 of first mortgage bonds. Under¬

sell

and

Power

it

100,000

issuance

$4,000,000 30-year first mortgage bonds. Under¬

writers

raise

approximately

'

plans

company

to

of three

^ Iowa Southern Utilities Co.

(12/17)

was

$5,400,000

plans

company

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.
Throughout the financing period, the company would
borrow and repay $29,000,000 of
short-term,, loans. Final
financing details would depend on market conditions.

Sept. 21

announced company plans
trust mortgage bonds due

this

finance construction

Illinois
Eastern Utilities Associates

Co.

Aug. 6, officials of Blyth & Co., Inc. and Bankers Trust
Co., New York, testified before the Federal Power Com¬
to

Industries, Inc.

Aug. 20 stockholders voted to create

*

'»

Halsey, Stuart & Co. Inc.; The First
and Glore, Forgan & Co. (jointly); Blyth

Corp.; Harris, Hali
Inc.; Harriman Ripley & Co., Inc. and Union Se¬
(jointly); Lehman Brothers; Kidder, Pea¬
body & Co.; Blyth & Co., Inc. and
Smith, Barney & Co.
(jointly).
& Co.

curities Corp.

Riddle

Aug. 11 it

Airlines, Inc., New York
was

financing to

announced

secure

cargo

company plans future public
transport aircraft.

Seaboard Air Line RR.
(10/26)
Bids will be received at the office of

Willkie, Owen.
Farr, Gallagher & Walton, 15 Broad St., New York 5
N. Y., up to noon
(EST) on Oct. 26 for the purchase from
the company of
$4,350,000 equipment trust certificates
series N, to be dated Nov.
15, 1953, and to mature serially
in 30 equal semi-annual
instalments. Probable bidders

Continued

on

page 42

*•

42

The Commercial and Financial Chronicle

(1562)

Continued

from

Lehman

41

page

Stuart & Co. Inc.; Salomon Bros. & Hutzler;
Kidder, Peabody & Co.; Blair, Rollins & Co. Inc.

Halsey,

Seaboard

11 it

Aug.

financing
the

Southwestern Public

latter

Corp., New York.

build

335-mile

a

Florida at

pipe

Commission

in

line

estimated cost of

an

for

Alabama,

Storer
Oct.

&

Birmingham,

Broadcasting Co.,

Sept.

it

28
of

&

Beane

was

announced company later this year will

issue

sell

50,000

Tennessee

preferred

cumulative

Securities

Corp.

Co.

Underwriters—To be determined by competitive
Probable bidders:
Halsey, Stuart & Co. Inc.;

Fenner

&

&

Co.

and

Beane

Lynch, Pierce,
Securities Corp. (joiqtly);

Union

reported

1973.

holdings of

bidding.

western

security holder
name

be

common

upon

This credo is

from

page

provide that

if it contains, in lieu thereof, a
the security holder will

rent

cases

so

where it reveals the proposer

as

a

recur¬

some nasty folk are saying that manage¬
publicity "on the house" in many directions,

steadily upward.
of the world
so

the

have

The population
increasing;

has been

needs

and

of

wants

this population as consumers, and
so
have production and produc¬

tivity, the ability to fulfill these
In recent

pending innovation regarding stockholder
the re-running of those that do not elicit

decades, partic¬
ularly in the United States, the
continuing rise has been spec¬

Under the present rules

tacular.

The other important

repeated in the proxy if it received 3%

a

proposal must be

There

have

been

the

last

annual

of the total number

or

Now it is

planned instead to provide that a proposal may be
period of three years if it has been submitted within
the past five years and received less than 3% in the case of a
single submission, less than 7% on a second submission, or less
omitted for

than
year

10%

a

on

a

third

or

subsequent submission during such five

Grist for the "Corporate Democrats"

democrats"

will

be

contending

that

under

the present pro-management
influences, it is most difficult to get a
sizable following with a mere 100-word
explanation of a compli¬
cated complaint
and proposal—and "anyway, why the hulla¬
baloo just to prevent a little extra space

being wasted,

fellow-shareholders?

among
proxy

material surely is

no

A

100-word

statement

or

buried

and

in

Intra-Company Arrangements

Also proposed are some changes in the
reporting of
regarding remuneration and other transactions.
A
struction would be added which would

specifically

omission of information where

as

an

the amount of options

new

permit
granted

aggregate purchase price in

involving $1,000 to
re¬

interpretation

withheld

}s given to the Commission.

Quite ironically, such increase in administrative power in this in¬
objected to by the very people (the reformers) who have
favored it so much in the enforcement of other areas
of the Secu¬
stance is

rities Acts.

Stockholder Interest the Real
Key to His Welfare
But it must be realized that effective
not

company

depend on the detailed form of the proxy
rules, nor on any
kind of legislation. The root of the
public stockholder's impotent
status in the company which he
owns,

education.

Nor

would

purpose

be to

even
see

a

an

lies in his apathy and lack

overflow

show

or

attendance

eat the

at

meet¬

company's sand¬

wiches, be effective.

What is badly needed is self-education for
equipment to arrive at intelligent
judgments, together with
real active interest
functioning in the exercise of the duties and
privileges pertaining to the company in which he is an owner.
the

Persistent

owner

abdication

process, any more than it

At

can

cannot

in real estate

least, let the mutual fund
structive participation in the affairs




suffice
or

in

the

investment

business.

Because

several

of
the

of

per

man

to

in

enlarged

common

mar¬

Europe which would give
and

room

leeway for ex¬
policies and adequate

pansionist
outlets

for

the

fruits

of

higher

productivity.
These

programs

not

are

sup¬

ported by the American taxpayer*

the evidence thus far available, I
do not think that it is certain.. On

out

the other

the belief held by Americans that
economic
expansion everywhere

hand, it cannot be ruled

omr~

of

sheer

rather

the

altruism.

natural

duction, in trade, and in living
standards, has not been halted. I

tion

recognizes
is preparing

believe

if it

occurs.

They

are

expression

of

interest.

and

and

have the wit, the will,
wherewithal to keep it

we

the

moving in the

direction.

same

calling

the

President

A

Well-Balanced

sent

Economy

question

that

remains

is:

What is the present position in the
United States? A careful analysis
should

make

American

it

clear

that

the

is fundamen¬
balanced.
Production,

ment

are

all

at

picture is by no means uni¬
form, but it hardly ever is. Steel
production has eased up some¬

duction

has

"light"

is

greater.

been

lower

peak for
matter

industries,

of

Farm income

than

its

time,

some

concern,

pro¬

earlier

which

is

but total

a

na-

and

of

mental

advisory

In

course

he

the

in the absence of any unexpected

developments, will continue
close to that level for

months

to

good

a

At

come.

very
many

the moment

has

well

declared

and

in

are

private

citizens.

economic

Those

predictions

particularly likely to go astray
they try to prefigure what

when

millions of

consumers are

going to

The
a

United

States

dynamic
The

economy.

of the line

on

has

always

exnanding
general direction

the U. S. economic

the

Congress

Employment

continuing policy

to

coordinate

and

plans, functions, and

for the purpose of creat-

think it should be

clear from

this that, if the American economy
shows real signs of serious de¬

cline, the U. S. Government will
idly by. In any action that
might be taken II am sure the

not sit

U.

S.

Government/will
with

be

the external

the domestic effects

con¬

as

of

States.

ness

President Eisenhower has

of the

aware¬

interdependence of the

economies of the free nations and
the

impact

which

economic

velopments at home have
ditions abroad.

vinced

in

chart is upward, but as in all such
charts it is not a straight line.

the

of

bilities of
not

f

American

an

on

de¬
con¬

are

beneficent

expanding

con¬

possi¬

economy,

only in the United States but
the

world

as

a

economic

informed

scene

would

observer

to

lead

see

a

Purpose

any

deep

do

so

is

of

much

why

Aid

effort

\

we

business

in

exporting
England.
It is

great

a

such

as

always important to press for
higher efficiency and productivity
in a growing economy.
It brings

bit

a

for

all

But if

the

in

best

Programs

have devoted
aid

of

things begin to look

higher

tighter,

efficiency

than

vital

more

ever

in

the face of increasing competition.
And

ultimately it is the most

cer¬

tain way to get
its

the curve back on
climb again.

upward

Britain and America
with

pnporreH

are

other

the

already
nations

North Atlantic

in the

community
in a great common effort to guard
the security of the free world and
assure
a
lasting peace. But this
effort can succeed only if it is
based on a foundation of political
and
economic
strength.
This
strength

day's

ourselves

if

only

jointly

imaginative

in

achieved

be

can

world

to¬

commit
bold
and
of expan¬

we

to

programs

sion, in production, in trade, and
in standards of

living throughout

the free world.
On the basis of the past
ence

of

certain
From

two

our
we

the

are

experi¬

countries, I

pro¬

am

bound to succeed.

time

of

industrial

the

revolution in this country and the

of

our

tingent

the

ocean, we

both

across

been

operating

sionist lines.
nomic

whole.

irf-our

prospects

immediate

country

both

That

business

development

6

pfonle

is

self-

that is being ex¬

concern

a

repeatedly emphasized his

and

own

well

drop
in economic activity in the United

The

and

the

ting and maintaining, consistently
with free competitive enterprise
and the general welfare, employ¬
ment opportunities for all."

do with their money.

had

message,

America's

future, it may
be useful
to keep
one
idea in
mind, particularly for those who

times.

responsibility^Lihe Federal

Government

as

make

that

Act of 1946 the

cerned

who

the

stability,

prosperity

about

becomes
is

overall

of

this

In the

pressed
for

international

to

benefits

stability.

of

said:

"It

are

government expenditures
being reduced, but the effects
of this are likely to be offset by
tax reductions, which will leave
more
spending
money
in
the

Advisers

interdepart¬
board on eco¬

an

growth and

I

just about at their peak and,

President

Economic

establish

to

nomic

tional income remains high.
Actual expenditures on defense

the

to

message

Council

high levels.

very

June,

Congress, de¬
scribing his plan to reorganize the
a

economy

tally well
investment, incomes, and employ¬

possibility

declared
policy
of
Eisenhower
on
this

In

matter.

this

to deal with it,
It may be worth re¬

Nothing in the present American
managers by active and con¬
of companies whose shares are

in

to

hands

democracy does

offing.

ket

therefore

are

ings, if the

the

program

And that is why we have
all
the
measures
to

an

more

indices,
various
ob¬
servers
are
considering the pos¬
sibility of a mild recession. From

resources

or

create

economic

so-called

$30,000.

or

in

changes in

the

excess

And the dividing-line figure for the disclosure of
officers'
muneration has been raised from
$25,000 to $30,000.
Considerable added discretionary power as to

recent

utilize all its

(Previously, no amount defining such arrangements
specified.)
Likewise, the compulsion to give the data relating to the
cases

depression

what, as has output in some other
heavy industries. But in numerous

$30,000.

indebtedness of insiders is raised from

of

created

we

industry and agriculture in each
country

in¬

informa-|

material had been

and what is to be included

why

assistance

that the present U. S. Administra¬

The

tion

of

publicity

filibuster."

Disclosure of Remuneration

exercised does not involve

is

the general upward climb, in pro¬

The

"corporate

to the creation of condi¬
tions which would permit
expan¬
of production and trade in
grams

sion

and

period.

The

384,860 shares

owns

of the other two
companies.

security,

subsequent special meeting; re¬
sulting sometimes in the repetition year after year of proposals
which won very modest support by fellow-stockholders.

at

Westpan and the South¬

leads

dips and temporary setbacks, but

cast

in

Sinclair

One
of
the
most
important
things to remember, however, is

some

of

votes

stock

technical

Deep Depression Unwarranted

wants.

why not the stockholders?

proposals relates to
appreciable support.

extension of

an

supported

superficial pest. And

ment too gets a lot of

Washington and
& Co., New York.

21, 1953, in which to dispose of its

That

4

Fear oi United States

address of

cause a storm of protest.
It will be con¬
identity with the standing of the maker of a com¬
plicated proposal is helpful to the appraisal of the matter by the
lay stockholder; and possibly that it will be embarrassing as well
as cumbersome to ask the
company for such identification.
More¬
over, it may be contended that identification may be helpful also

in

Proceeds—To

pipe line from the

help increase output

tended that the

to management

public.
gas

Underwriter—May be Union Securities Corp., New York.

the name and

to

sure

the

(52.85%) of the stock of each

request."

furnished

and

to

Europe.

the management's proxy material need not contain

statement that the

to

natural

a

Development Co.

portfolios, set a good example in keeping alive the fran¬
the army of shareholders for whom they have assumed
responsibility to serve in a trustee capacity.

Continued

the company and its security holders, it is proposed to
the

line bonds due

chise of

Observations...

sold

Underwriter—Eastman, Dillon

six months from June

plans to issue and sell

company

of first mortgage pipe

the

of

be

in their

Continued from page 5

address

to

July 1 SEC granted Sinclair Oil Corp.

Stone &
Webster Securities Corp. & White, Weld & Co. (jointly).
Bids—Tentatively expected to be received about Dec. 1.

Merrill

Inc.;

was

$25,000,000

Kidder, Peabody & Co. (jointyl); W. C. Langley & Co. and Paine, Webber, Jackson & Curtis (jointly);
Ripley

Oregon,

(12/1)

& Co. and

it

plans

Westpan Hydrocarbon Co.

Gas Transmission

Oct.

6

stock

Canadian Peace River field to western

(jointly); Lehman

stock

(par $100). Underwriters — May be determined
by competitive bidding. Probable bidders, White Weld

Offer¬

program.

Beane, and Kidder, Peabody & Co.

common

Brothers; Kidder, Peabody & Co.

April 29 it

&

finance construction of

by

Union

about

to

$71,000,000
20-year, first mortgage bonds; and $24,440,000 in sub¬
ordinated long-term debentures and
4,100,000 shares of

reported company plans issuance and
$4,000,000 bonds. Underwriters—May be

and

At

year.

amount

in

competitive bidding. Probable bidders:
Halsey, Stuart & Co. Inc.; Merrill Lynch, Pierce, Fenner
t

this

later

West Coast Transmission Co.
Oct. 14 it was announced mat
company now
issue $29,000,000 in l-to-5V2-year serial notes:

was

about

stock

common

price, the sale would

ties Corp.; Blyth & Co.,
Inc.; Merrill Lynch, Pierce, Fen¬
ner

Co., New York, and Oscar E. Dooly & Co., Miami, Fla.

sale

shares of

market

$14,000,000. Proceeds—For construction

reported company may do some financing,
later this month.
Registration filed

was

Webster

&

ing—Probably late in* November or early December of
this year. Underwriters—To be determined
by competi¬
tive bidding. Probable bidders: Stone & Webster Securi¬

Mich.

and

Development Co.
See Westpan Hydrocarbon Co. below.

Harriman,

current

Suburban Electric Co.

Southwestern

of

additional

l-for-13

a

registration

determined

shares

on

19, 1952, covering 215,000 shares of common stock
(par $1) was later withdrawn.
All but 15,000 shares of
these were then outstanding.
Underwriters — Reynolds

$8,141,518. Underwriter—

Southwestern Gas & Electric Co.

stockholders

to

May

Shields & Co., New York.

and

8 it

with

authority to

Georgia

first

offered

Stone

Virginia Electric & Power Co.
Sept. 3 it was announced company plans to sell 558,940

Underwriter—Dillon, Read & Co., New York.
Offering-—Expected in January or February 1954.

South Georgia Natural Gasl Co.
Sept. 28 it was reported that an application is pending
Power

be

to

Pipe Line Corp.

was

—Probably White, Weld & Co. and
Securities Corp., both of New York.

company

basis).

Sky Ride Helicopter Corp.
Sept. 3 it was 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 shares at $2 per share.
Offering—Expected in
November or December.
Office—1705—38th St., S. E.,
Washington, D. C.
j

Federal

Co.

Service

announced

was

Gas

reported company may issue some con¬
vertible preferred stock before the Fall.
Underwriters

sell about $20,000,000 of

was reported company may do some public
(probably in the form of debentures) before
this year.
Underwriter—May be The First

before the

May 4 it

plans to issue and
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
6 it

Aug.

Co.

of

end

Boston

Finance

Transcontinental

Brothers; Blyth & Co. Inc., and Stone & Webster
Corp. (jointly).

Securities

Thursday, October 22, ,1953

...

This

expansion

well.

than

the

few.

It

is

But

boon

the

vast

on

con¬

have

expan¬

policy of eco¬
has

served

us

today it is more
of

the

fortunate

hope—and need—

of the entire world.

^

Volume 178

Xumber 5266

The Commercial and Financial Chronicle

...

(1563)

Greene & Go. Sells

Pennsylvania Go.
W

PHILADELPHIA,

engine in the coal fired gas tur-*
bine.

Promotes Three

•

Pa.

Helicopter Shares
Greene

The

—

Pennsylvania Company for Bank¬
ing and Trusts has announced the

&

has

they

the

of

power.

issue

recent

offered

53,852

following executive promotions in
Helicopters, Inc.
Department: George W. common stock at $3 per share has
been oversubscribed.
Hemphill, from trust investment

Illinois Central

the Trust

dent,

to

Assistant

and

Vice-Presi¬

P.

Edward

Deiss

Henry H. Pease, Jr., from assistant
trust

investment

investment

officers

to

The

CHICAGO.
O'Connor

Wood,

(Special

trust

111.

Gundy

&

Co.,

Inc.,

Mrs.

nor
was
previously
Forgan & Co.

105

O'Con¬

with

become

H.

the

Hentz

&

The

Financial

connected

now

Hess

how

of

holdings

junior bonds and

prospects

conducted

his

and

in

in¬

own

Miami.

stock,

the

and

for

the

pre¬

long-term
The

company.

had

management

of.

asked

for

pired

October

on

ment said that

ber

of

of

have

we

times

the

Illinois
the

this

Central

vast

past

mentioned
in

strongest

10

railroads

12

num¬

one

the

of

picture has been
strides

done

the

of

Few, if

years.

have

a

column,

aspects

financial
or

15 the

manage¬

satisfactory of¬

no

turity schedule
As

of

(Special

to

The

Financial

Oakes

&

Chronicle)

Company,

there

Ingraham

Building.

been

that

rejected.

holders

It

were

is

per¬

fectly willing to sit with their
bonds and stock unless, and until,
they could be disposed of at prices
in excess of those the

any,

extensive

so

be

can

improved

with greater dieselization or,

alternatively,
fired

gas

upon

as

in the

large fleet of coal

a

turbines.

This is looked

important plus factor

an

long-term earnings picture.

Last year the
company reported

With

considered worthwhile from their

Although

Mitchell, Hutchins

remained
of

panies,

year

about

maturities

though

by

with

Illinois

solved.

last

1955

Even

protected

agreement

been
of

only

the

outstanding.
are

has

end

$12

insurance

Central

bite

com¬

has

con¬

points.

Thus,

the

despite

heavier

the

income

tax

earnings

share

common

for

period increased by $3.45, to

these

"stand-by"

a

three

substantially

$12.14.
some

Presumably there will be
tapering off in

months

but

for

the

the

closing

year

as

a

these

securities

are

tinued to buy them in
steadily in
the current year. It is also obvious

whole earnings of about
$18.00 ap¬

that

company

point of view.

to Staff

the

million

had

obvious

MIAMI, Fla.—Frank L. Dempsey
has become connected with

In¬

Company, Illinois State
Building.

Quail Adds

As

ferings had been received and all

With 0akes & Co_

vestment
Bank

their

its

analysts

of the opinion that

are

was

I. du Pont & Co.

past

Chronicle)

with

had

tenders

QUINCY. 111.—Joe C. Hootman
is

ferred

associated

of

Co.,

Mrs. Bowen

Francis

Glore,

With Hess Inv. Company
to

road's

has

question

view

L.

Joseph

the

to

A.

Fla.—Mrs.

and

vestment business in

(Special

Central

investors

the

Chronicle)

company

degree

of
the
debenture
414 71st tenders
43/4S, a job of reducing non-equipment earnings of $16.26 a share on its
formerly 1966 and the 6% preferred stock.. debt without recourse to judicial common stock, Revenues were up
with Goodbody & Co. and
prior No price was specified and the reorganization as has Illinois Cen¬ slightly
in
the
eight
months
thereto was in charge of the Coral company did not reveal how much tral. At the same
time, what was through August and the
operating
Gables office of Francis
I.
du money it was prepared to use in at one time considered a
virtually
ratio
was
Pont & Co. Mr.
pared by more than
Rayvis was with the operation. When the offer ex¬ insurmountable
near-term
ma¬

with

—

West Adams Street.

have

Street.

Chronicle)

Mrs. Virginia
joined the staff of

has

Bowen

Rayvis

Gundy Staff

Financial

BEACH,

Blanche

Financial

The

to

MIAMI

officers.

Joins Wood
(Special

to

Ray vis With Hentz

the

high

a

the performance
upon

Illinois
answer

Bo wen,

and

true that

Nevertheless,

generally

shares of Doman

officer

is

It

developed

operating efficiency with its steam

Co., New York City,

that

announces

which

43

pear

reasonable.

the
management considers
company's financial status at ground there

the

With

are

this

many

back¬

in the fi¬

(Special to The Financial Chronicle)
obviously looked upon in many least adequate. If they did not it nancial
(Special to The Financial Chronicle)
community who feel that *
quarters as possessing consider¬ is hardly likely that
Davenport, Iowa — John T.
they would the
CHICAGO, III. — Edward J. able investment merit it is notable have
dividend, which was recently
asked
for
tenders
of
the
Gerwe, Jr. is now with Quail &
Wargin
has
become
associated that both the
increased to a $5.00 annual rate,
bonds and the stock debentures
and
the
Co., Davenport
Bank
preferred
Building, with
Mitchell, Hutchins & Co., 231

members

of

the

Midwest

Stock

declined after

South

Exchange.

of

La

the

Salle

New

Street,

York

members

and

Midwest

Stock

(Special

to

The

Financial

Exchanges. Mr. Wargin for

many

Geo. Clarke Adds

years was cashier for Hicks

& Price.

Chronicle)

LAKE CHARLES, La.—Jess M.
Knowles, Jr. is now with George
W.

Clarke.

(Special

to

The

DENVER,

Joins Vance, Sanders Co.
(Special

to

The

Financial

Holden
with

has

Devonshire

(Special

Amos

&

Allen

Chronicle)

Frederick

—

to

The

the

The

firm

Stock

Co., 211
members of

and

•

H.

to

The

is

(Special

with

have

Corporation,

445

to

Howes is
&

field
New

Jersey

and

the

generally

improved

senti¬

that characterized the

as

whole.

a

the

with

Even

common

still

was

mar¬

or

firm

been

done

the

past

and

this

in

however,

so,

gradual program will presumably
be

end

development

at the

selling

has

year

this

the

is

stock

cf

one

the

of

tractive

the

among

and Extra Dividend

better

DIVIDEND

NOTICES
A regular quarterly

SOUTH AMERICAN GOLD

grade

& PLATINUM COMPANY
Broadway,

New

York

DIVIDEND

NOTICES

A

N.

6,

October

Y.

19,

quarterly dividend of ten (10^)

Salleras-

cents per share has been declared

payable

E.

g®1ell

Renyx, Field
Financial

At

Chronicle)

with

now

December

14,

1953,

The

Renyx, Field

Financial

meeting of the Board of Direc¬

of The Gamewell Company, held
today, Friday, October 16, 1953, a divi¬
dend of $.35 cents per share, was de¬
clared payable on the Common Stock
of
the Company on November
16,
1953, to stockholders of record at the

as

a

close of business

November 6, 1953.

on

Chronicle)

G.

JOHN

sales¬

&

W. C. Beck, Treasurer

November 30, 1953.

($0.20)

216th

dividend
stock

to

close

ber

of

20,

meeting held

1953, declared

on

the

on

a

Capable
ing

institutional.

experience

Thoroughly

investment

phases

offices.

or

TION,

has

of

been

business

on

payable

pany,

close

on

the

of

of

BURROUGHS

ten

January

stockholders of record

December 5,

1953 to holders of record at the

of business

on

November 6, 1953.

The stock transfer books will

Robert Fisher




October 20,1953

Treasurer

Southern

California

Edison

Company

DIVIDENDS

L. H.

Jaeger, Treasurer

CUMULATIVE PREFERRED STOCK

4.08% SERIES
DIVIDEND

NO. 15

CUMULATIVE PREFERRED STOCK

($1.75) per share on
the preferred stock payable December
1,1953, to stockholders of record at the

DIVIDEND

close of business on

4.88% SERIES

GERARD J.

EGER, Secretary

NO. 24

The Board of Directors

NATURAL

GAS

COMPANY

13,

has

authorized the payment

SOUTHERN

November 5, 1953.

of the
following quarterly dividends:
25V2

cents per

Cumulative

at

Birmingham, Alabama

($0.10)

upon

INTERNATIONAL

the

CORPORA-

8,

1954,

HARVESTER

the close of

Sheldon F. Hall,
Vice President

Detroit, Mich.
October 12, 1953

t,

and Secretary

of

35

share

Preferred

the
Stock,

on

on

the

Stock

of

Southern Natural Gas Com¬
The Directors of International Harvest¬
er

Company have declared quarterly

dividend No.

share

January
record

155 of fifty cents

(50Q

the common stock payable
15, 1954, to stockholders of

on

at

the

December 15,

close

of business

on

pany,

payable December 14,

1953

to

ord
on

at

stockholders of

the close of business

H. D. McHENRY,

J. EGER, Secretary

on

the

Stock,

The above dividends

are

pay¬

able November 30, 1953, to
stockholders of record Novem¬
ber 5, 1953.
mailed from

Checks will be

the Company's
office in Los Angeles, Novem¬
ber 30,1953.
p. c.

Vice President and Secretary.
October 16, 1953

Dated: October 17, 1953.

GERARD

rec¬

November 30, 1953.

1953.

share

4.88% Series.

share has been declared
Common

cents per

Cumulative Preferred

cents

per

COMPANY

per

©

dividend

A

to

301/2

Common Stock Dividend No. 59

re¬

main open.

November

International Harvest¬

business December 11, 1953.

open¬

icle," 25 Park Place, N. Y. 7.

cents

declared

Highest

references. Box S1021, "Com¬
mercial & Financial Chron¬

stock¬

the close of

per

Com¬

Company have declared quarterly
dividend No. 141 of one dollar and

of

November

at

quar¬

seventy-five cents

BURROUGHS

payable

ex¬

business.

managing

branch

December 10, 1953, to

holders of record

4.08% Series;

share

stock

Trader, order clerk, salesman,

the

Company have
declared this day, payable

er

twenty cents
been
declared

business

forty

the

Octo¬

a

outstanding shares
stock

common

COMPANY

payable December
stockholders of record at

of

of

the Capi¬

(INCORPORATED)

share

The Directors of

has

share

a

the

of

on

Directors of The Southern Com¬

1953.

all

of

share

THE SOUTHERN COMPANY

INTERNATIONAL

CONSECUTIVE

Special dividend of

AVAILABLE

in

Stock

dividend

per

FEE

terly dividend of 20 cents

added to the staff

CASH DIVIDEND

Quarterly

the

firm.

to

on

Extra

(40(5)

GREENBURGH, Treasurer.

pany, at a

Burroughs

or

Chronicle,"

on

2, 1953.

10, 1953,

own

an

cents

dividend of
(75d) per share

tors

Straus, Blosser

to

a

CORPORATION,

perienced

and

cents

stockholders of record at the close

HARVESTER

upon

years'

seventy-five

been

1953.

Oscar

posi¬

City

Place, N. Y. 7.

Eighteen

Consecutive Dividend

%

tal

DIVIDEND NOTICE

A1022, "Commer¬

and

205th

efficient

more

a

at¬

most

Straus, Blosser & McDowell,
Bankers Equitable Building.

215th

retail

THE TEXAS COMPANY

continued, subject to possible

some

of

desires
York

Financial

Park

ket

with

tone

over-the-eounin¬

tion

25

ment

stock advanced

common

sympathy

DETROIT, Mich.—Peter S. Vi-

Gentleman with 25 years' ex¬

&

Some

in

firmer

Chronicle)

with

NOTICES

doing relatively little in the

Lemon
Midwest

Juan

—

The

Joins

SALESMAN

securities

DIVIDEND

of road freight dieselization.

Dooly Co.

Financial

viano has been

cial

the

Company.

(Special

Box

East

WELLESLEY, Mass.—George P.

Hamilton

'.

New

been
way

of business

With

SITUATIONS WANTED

man.

disappointed speculators
withdrew last week. At the same

of last week

staff of

the

and

power,

rails.

now

Norland

B.

Grant Street.

with

the

over

not too distant future.

grades, Illinois Central has

first

was

made and

Dooly & Co., Ingraham Building.

•

in

some

offer

steam

.

Llinares

Harold

Svoboda

R.

affiliated

perience

efficient

fleet of modern

Chronicle)

—

Arthur

Management

tender

.

a

because the line has few trouble¬

61

(Special

Financial

Ferdinand

become

the

Exchange.

With Oscar

of

name
.

Colo.

Hawxhurst,

the

and

be further increased

may

Because it has

Financial

MIAMI, Fla.

to

&

&

Street,
W.

Three With Hamilton
(Special

themselves

holdings, there had been
trading commitments made

stock.

securities

a

F. W. Doyle & Co.

DENVER,

Sudler

C.

W.

to

Ayre, Jr. has joined

business from offices at 7 Central

under

added

divest

their

some

recovery,

(Special

Doyle is engaging in
Square

anxious

are

Chronicle)
20% below the year's top. Many
LAKELAND, Fla. —Thomas H. analysts feel that at these levels

The Financial

Mass.

Robert

—

been

Joins Allen Staff

Ill

Co.,

Street.

to

of

associated

Sanders

to

of

investors

time, the

Chronicle)

Co.,
First National Bank Building.

Forms F. W. Doyle Co.
LYNN,

has

staff

Timothy G.

becomb

Vance,

Colo.

Hughes

Chronicle)

-i

BOSTON, Mass.

Financial

announcement.

while

when

With Amos C. Sudler Co.

Weber Building.

the

Presumably
not

hale,

Treasurer

44

The Commercial and Financial Chronicle

(1564)

...

sixth

BUSINESS BUZZ
A

Washington

•

WASHINGTON, D. C.—Presi¬
Eisenhower is being ad¬

dent

implored, to

almost

vised,

conventional

store

re¬

of do¬

ways

ing business with local political
organizations.
This is

one

of the direct con¬

of the debacle of the
by -election in Wisconsin. Party
officials make even less effort

sequences

privately to conceal their most
pessimistic
appraisal
of
this
election.
In public, except for
the cheerful Attorney General,
they make little enough effort to
cover

up.

Between

and January the

now

President, of course, has a tough
problem making up a package
of legislative proposals that can

chance of
the present nominal

and that have

pass,

saving

even

control

of

Whatever

policies the President hits upon,
however, in the face of demon¬
strated agricultural dissatisfac¬

tion, is

thing.

one

Another thing is repairing
local political organizations.
them

leave

excusable.

It is

a

constructive

one

be taken lead¬
clear-cut force for im¬

step which

ing to

disrepair,
being told, is

is

President

the
To
the
in¬

in

can

provement of the chances of the
Republicans. To neglect it is to
the Adminis¬

court disaster for

tration.

dividual

privately

officials

Party

ex¬

barely squeak by, by

tance of this

Two

constituency.

things

definitely happened. The Demo¬
cratic local organizations got out
their vote; the local Republican
organizations did not.
Even

before

by-election,
uals

in

had

individ¬
figured they

25 House

almost

were

Wisconsin

the

knowing

the" GOP

in serious

seats that

jeopardy.

have sat down with

They

local

GOP

leaders in those districts, includ¬

ing the Wisconsin constituency.
1

Local GOP Is Demoralized

Without exception they found
the local GOP organizations in
a

bad

state

of

demoralization.

This is because in dealing with

particularly
patronage, the White House has
adopted the high and mighty at¬
titude of ignoring the party or¬
ganizations on the local plane,
or so GOP leaders report.
party matters,

more

Customarily, if

an

office is at

man

the

in

state

consults

the

GOP

Congressman, who in turn
consults as many GOP county
or
precinct workers as he can.

coming battle, or be

Bookshelf,

political

his

that

wisdom is not

penultimate.

Mr. Eisenhower

recently made
an
off-hand
press
conference
crack that he was not going to

Applied Imagination
Osborn

elections.
Many Republicans hope this was
just a thoughtless remark by a
take any part in local

a

Preferred

Presidential assist.

Railroad

Weisman
way,

enhance his personal popu¬

approach without striking for
Congressional control.
They say that one week of the
new Congress after a GOP Con¬
gressional set-back, if one oc¬
curs next November, Mr. Eisen¬
will

hower

learn

did

as

of

other)

politicians than the

advancement

eral"

so-called

of

"lib¬

policies.

for

if

care

IS

it

Considerable significance was
attached to the public indication

given by Joseph Dodge, Director
of the Budget, before the Eco¬
nomic Club of Detroit, that the
fiscal '55 budget would be at
as

much out of balance

the current year's budget.
text

of

Mr.

first

rates.

Supposedly

banks should profit

handsomely

thereby, for normally there is a
lag between the return on credit
and
the
price paid to entice

deposits,

talk

see

in

period

a

place, this was the
first public admission by any
key official of the Eisenhower
Administration, that the deficit
will continue through '55.
There may be a greater sig¬
nificance, however. Fiscal offi¬
cials
may
be swinging
away
from their previous approach of
about a month ago, when by
talking about "turning points
toward a balanced budget" smd
emphasizing the cash instead
of the actual budget, they were
seeking to convey the impres¬
sion
that the job of budgetbalancing was about done.
Mr. Dodge seems to
ward

leading

the

emphasiziing

be

cour¬

way

what

a

to¬
big

job remains to be done. Natural¬
ly,

it

the

will

be

embarrassing

Eisenhower

been

notion

your

crime

is

to

Administration

is

indirect

benefited

manufacture

plot

a

credit

of

to

enrich

banks and other lenders.
The

six-months

assessment

National

Cur¬

periods,
net

bank

com¬

earnings

$14.6 million from
the 1952 to the 1953 period, but,
because
of
increased
capital
actually

rose

funds, there
rise

in

capital

on

8.21%

rose,

no

percentage

before
in

funds

divi¬

1953

was

8.22% in 1952.

versus

Federal

or

was

earnings

income

taxes

—

much

ed out between Kenton R. Crav¬

as

than
net

three

times

as

rose.

Furthermore, Federal income
taxes

in

alone

aggregated
pared

the

$262

with

1953

million

$293.5

Administrator, and
provide for as
liquidation as possible

RFC

ens,

rapid
of

groups,

a

RFC

loans.

when

election

time

comes

around.

tronage is being disbursed
through the GOP Governor. In
several

other states

it

is

being

handled by the Republican
tional
committeeman
for
state.

Even

eases,

known

come

period

where,

in

conventional

a

na¬

the

few

that

another

in

any

case

in

000 to $10,000,000, it is hoped to
tution
over

the

million

of

Dividends declared in the 1953

period amounted to $127.8 mil¬

which

pool

to

pool insti¬

a

will

sell

and

take

these

participations

banks.

an

military and foreign aid pro¬
grams became known, or hinted,
as they were Feb. 24 in execu¬
tive

Amer¬

Session Laws, State

Special

of

Colorado—$1 per copy—Sec¬
retary of State, State CapitoB

No Major Depression in Our Life¬
time— A.

W.

Zelomek

—

Inter¬

national Statistical Bureau, Inc.,
350 Fifth Ave., New York
1,
N. Y.

(paper).

Problems of United

States Policy

—James P. Warburg—The Cur¬
rent Affairs Press, 25 Vanderbilt

Avenue,

New

York

N.

Y»

Statistics

on

17,

(paper).

prob¬
ably will require special legisla¬
tion next year to make such in¬

vestments

bank-eligible.

Details for
smaller

t

RFC's

of

Car

Facts:

Car

Building and Car Repairing,
American Railway Car
Institute, 19 East 47th Street,
1952

—

New York 17, N. Y.

total in number of 5,000 defense
and business loans—will be an¬

(paper).

Tax Planning for Foundations and)

Charitable Giving

merchandising the

loans—95%

Railroad

—

William J.

Casey, J. K. Lasser, and Walter
Lord
Business Reports, In¬
corporated, Roslyn, L. I., N. Y*
(fabrikoid), $12.50.
—

nounced later.

lion, less than half the $262 mil¬
lion

of

Federal

income

Seeks Big Pipeline

taxes,

and these exclude other Federal
taxes and state income taxes

on

banks.
The
^ems

story
to

be

of

these

that the

-

The oil

industry is

in

up

arms

figures
rising in-

the proposal of the Direc¬
tor of Defense Mobilization that
over

a

huge

oil

pipeline

which would transport

be

We Trade

built

nearly

a

RIVERSIDE

CEMENT
"B"

sessions

before

the

Analysis Available

I

Carl Marks & Co Inc.
FOREIGN

Senate

Banking Committee.

SECURITIES

50 BROAD STREET

Between the first half of 1952

and the first half of 1953, there

In

was




1953

outlook

political

Sherman

—

Association, 4 E.
41st Street, New York 17, N. Y„
(paper), 500.

inevitable when the magni¬
tude
of
the
new
President's

followed, and local party peo¬
ple have united on a good rec¬
ommendation, the White House,
of

Calhoun

was

Government Profits from Bank

person

Leonard J.

ican Enterprise

pear last March, that a balanced
budget before fiscal '56 was out

operating procedures have been

the

in

This

Incidentally, the Dodge speech

question. Such

Organization

On loans running from $500,-

com¬

profits.

1954, when the Presi¬
dent submits his new budget.

of the

In at least five states all pa-

known

Labor

Building, Denver 2, Colo.

examiners, acting as per¬
sonal
representatives
of
Mr.
Cravens, are getting in touch
with banks personally to inter¬
est them in purchasing loans
roughly in the neighborhood of
$200,000 to $500,000 each. The
RFC will if necessary enter into
an
agreement to cough back
90% of the unpaid balance tak¬
en over by a
bank, in case the
bank runs into a tight situation.

which began to ap¬

it

of unbalanced

C..(paper).

and United States Domestic Law

Seek Liquidation of RFC Loans

bankers'

Con¬

Association,
Building, Washington 5,

International

there first.

set up some kind of

alone

however, by $48.1 million,

more

D.

Press,

TV—National

and

Federal

the

income tax collector had not got

The actual earnings rate

dends.

if

Guide

the

RFC

has
analyzed
national
operations during these

bank
two

■,

Comptroller of the

rency

banks

have

might

with

'Finance

sumer

.

hacking away at the
the ending of free

was

money

trend

corroboration of the

personal satisfaction to

have

year

Radio

Tentative arrangements work¬

that

full

and

rate

terest

of

paratively.

In the first

ageously

has

as

[For

page.—Ed.]

Dodge's

—

Dealing

Bowen

interest

in

And the whole "liberal" front

least

Jetsam

sunny,

unpardonable—coming to work without your umbrella!!"

January

ringing

United

the

of

Commerce

Haw to Tell Your Story—A

don't

"I

rising interest rates.

Dodge Forecasts '55 Deficit

"recognizing" the efforts of the
local party workers.
It gives
them a feeling of belonging to
the whole organization, and is a
for door-bell

New York 4, N. Y. (paper).

Washington 6,
D.
C.
(paper), 500 (quantity discount).

bank

budgets is
ahead. However, that would be¬

sate them

Gans,
Broad¬

50

States,

Mr.

Hoover, that overall the grasp¬
ing for power is of far more
importance to Democratic (or

to

compen¬

Butler,

GOP

party
they
have a voice in distributing pa¬
tronage. This is the business of
feel

&

Amen,

Guaranteed Wage, The—Chamber

larity and get bi-partisan back¬
ing for his "middle of the road"

In this way as many local

possible

—

thinks he

he

workers

as

Securities

Company

Modification

however, of the peculiar
election problems of GOP Con¬
gressmen,
that some have a

can

Inter-

Stockholders,

in opposition to Modifi¬
cation Plan Western Maryland

So heedless has the President

that

Scribner's

City.

venors,

been,

horrible fear

Alexander

Brief for Sartorius Group of First

politics, for otherwise many
seat will be lost for lack of

a

—

Charles

—

Sons New York

President untutored in the ways
of

least not of front rank national

importance, the head patronage

Man's

impor¬

the

learn

advice

given

1% to 2% of the total vote in

the

Business

locally-recommended.

must

Adams

margin

a

the

M. " Cv

Congressional
leaders
are trying to impress the Presi¬
dent that the grave stake is con¬
trol
of
Congress.
Either Mr.

in

of

and may or may not coincide with
"Chronicle's" own views.)
,

fkII

GOP

any

pected the Republican candidate
the Wisconsin by-election to

East,

of national defense.

as a measure

~

Adams, has turned down the in¬

a

Congress.

wfA/

jlJl I

from

(This column is intended to re¬
flect the "behind the scene" inter¬

M

Capital

oil

nation's

pretation from the nation's Capital

BeVincUhe-Scene Interpretation!
from the Nation'*

the

of

the Gulf and Texas to the

•

•

Thursday, October 22, 1953

TEL:

HANOVER 2-0050

•

SPECIALISTS

NEW YORK 4, N. Y.
TELETYPE NY 1-971

LERNER & CO.
Investment Securities

10 Post Office Square, Boston 9, Mass.

Earnings

sharp

upward

adjustment

Telephone

v

-

\

Teletype

HUbbard 2-1990

BS 69