Full text of Commercial and Financial Chronicle : October 23, 1947, Vol. 166, No. 4640

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.OCT 25 19<

ADM.
LIBRARY

fcUS.

ESTABLISHED 1S39

Reg. U. S. Pat. Office

Volume

166

Number 4640

New

Anti-Discrimination
Bill

Britain's

Objectionable

York, N. Y., Thursday, October 23, 1947

Recovery Program

By DONALD R. RICHBERG*

British Ambassador to the United States

Denying that Britain is not doing enough to bring about recovery,
Lord Inverchapel points out efforts and
accomplishments in meet¬
ing present crisis. Cites increased agricultural production, larger
coal production in 1947 despite
handicaps, and expanding textile,
steel and electricity output. Scorns accusation Great Britain is on

that Senate Bill violates

asserts

essential

freedoms, such

right

as

to

choose one's associates, right

to

freely exercise a religion, and
discretionary actions

brink of communism.

individual

in business and social relations.
It

to

be

commonly as¬
sumed by. opponents as'well as by
proponents of Senate Bill 984 that
no

seems

fair-minded person will oppose
the

this

events

So,

I

to

of

For
two

venture

bill

by

face
ac¬

or

with

based
siderations of race,
national
origin or

on

con¬

of

ancestry,

personal

confidence,

liking

individual

or

(Continued

Inverrbapel

yet

and
judg-

39)

on page

commentary

a

its

its

on

eye
own

clou

pre

s

sovereignty. For a while it looked
though a measure of success
had been achieved, although the
Continent was grievously divided
politically, and Germany, which
has

it,

been the industrial

on

S. 984

Mr.

Richberg is a partner of the law
of Davies, Richberg, Beebe,
Busick
&
Richardson, Washing¬
ton, D. C.

firm

on

of

But

this

proved to
was

even

a

shallow

address

at

the

Trade

If

the

34th

Con¬

large
page 33)

on

by

Lord

Luncheon
National

ex-

Inver¬
Session

were

one

with

Steel

is short,

the

000,000,003
m

p

and

rovement
plant ex¬

enough to accept at face value all
in the press and all that is heard on the radio,

now

decided,
the
steel shortaga,
should

be

country must overcome two
a
starving Europe years hence
(and perhaps, Asia)' during the next year at all events.
If (provided
there will be
yudgnjent were based wholly u^on what some high political j
coal V
pundits say, the people of the United States, moreover, are fi-ei
freight car or

make extensive sacrifices in order to feed

tfell

of the fact and

aware

quite ready to accept the sacri¬
agreed goals.
Many who aspire
to interpret and to lead
public opinion would give the im¬
pression that the state of mind in the United States is not
fices involved to reach the

greatly different from that existing when far greater sacri¬
were
required for the winning of the war.

fices

Yet the

in the street, if he is at all observant
if he searches his own mind
candidly, knows

even

public in this country is essentially false in many im¬
portant respects.
The reluctance of political leaders to
reinstate rationing and price
control, not to say their
obvious determination to avoid any such
thing, is evi¬
dence of a convincing nature.
The dubious success—if
success

Foreign

it

can

be termed

—

(Continued

of the so-called

on

page

?•

•

pouring fuel
costs

and

the fire of rising

on

mounting

prices.

And

will the steel price go down then?

Only

few months ago, the same

a

people in the steel industry were
100%

that

sure

the

present

ca¬

pacity would be large enough to
(Continued on page 30)

voluntary

36)

State and

Municipal
R. H. Johnson & Co.
Established

Bonds

1927

INVESTMENT SECURITIES

Hirsch & Co.
Members New York Stock Exchange
and other

64 Wall

Bond Department

Street, New York 5

Exchanges

25 Broad St., New York 4, N.Y.

BOSTON

HAnover

Troy

y

2-0600

Chicago

Teletype NY 1-210

&

Cleveland

Geneva

London

(Representative)

THE NATIONAL CITY BANK HAST SMITH & CO.

PHILADELPHIA

Albany

Baltimore

Buffalo
Dallas

Pittsburgh

OF NEW YORK

Harrisburg

Scranton

SERVING SOUTHERN CALIFORNIA

Bond Dept. Teletype: NY 1-708

$2.40 Conv. Preferred

Solar Aircraft
90c

Investment Securities
626

S.

SPRING

IOS

ANGELES

Underwriters and

•

ST.

Corporate Securities

•




IIAnover 2-0980

Teletype NY

NATIONAL BANK

1-395

Montreal

Toronto

THE

OF

Bond

Brokerage

CITY OF

NEW YORK

Service

Established

REDLANDS

Members New

CLEVELAND
New York

Cincinnati

,

Chicago

Columbus

120

Denver

Toledo

Buffalo

Electric Company

Winding Company

When Distributed

for Banks,. Brokers
and Dealers

Analysis

upon

request

60c Conv. Preferred & Common

Reynolds & Co.

1899I"

Portland General

Company

OTIS & CO.

MEMBER LOS ANGELES STOCK EXCHANGE

TELETYPE: LA 68

ST., N. Y.

•Prospectus on request

14

PASADENA

Security Dealers Assn.

New York

Company

$1.25 Conv. Preferred

*Universal

.

(Incorporated)
CLAREMONT

WILLIAM

Conv. Preferred

Twin Coach

Distributors of Municipal
and

TRinity 5761

52

York

Raytheon Manufacturing Co.

SINCE 1927

WagensellerSDurstJnc.

New

Bell

Wilkes-Barre

Williamsport Springfield Woonsocket

THE CHASE

Members

Syracuse

York Stock Exchange

Broadway, New York 5, N. Y.
Telephone:

REctor

Bell Teletype:

2-8600

NY 1-635

Hardy & Co.
Members New York Stock Exchange

Members New

York Curb Exchange

30 Broad St.
Tel. DIgby

4-7800

New York 4
Tele. NY 1-733

•'

bottleneck). What is
is
that, in
the
meantime, this huge amount of
dollars spent will draw its equiv¬
alent of manpower and materials,
out of
current production,
thus

1947.

★

■

Palyi

mentioned

man

full well that this picture of the
present mind of the

C
*
Dr. Mtlehior

manpower

not

Lithographing Go.
—

generates forces

$1,of
technological

We Seelt

naive

Convention, St. Louis, Mo.,

Oct. 20,

It

resources.

example,

as an

that appears
no doubt could remain in his mind that this

success

a

nation's

pansion -

as¬

thing. It
the

on

particular, to

(Continued

chapel

of

measure

be

brought about,

tinent in

of

beginning to

momentum.

own

the

i

or

*An

Havana

its

on

strain

Why the Reluctance?

her former economic role.

sume

submitted by Mr. Richberg to the
Senate Committee on Labor and

Public Welfare, Oct. 10, 1947.

center

prevented not only by cir¬
cumstances, but by allied policy
was

also, from
*From

Each

as

religion, color,

freedom to choose one's associates
because

Lord

is

choice

a

probably
mistakenly,

if

that

Richberg

Inflation feeds

increase the

and the indus-

As

on¬

one,

co-

business,
R.

(1)
which

relief

try is very
positive that

a

of

world.

£vy.orkcrs in
Donald

down because of rising U. S. prices, and will be
merely a
rather than reconstruction program.

such

to

changed

associ¬

ates

the

the blame for rising prices
scheme of international finance,

to put

Dr. Palyi contends root of problem lies in
inflationary monetary
policies. Holds Paris Report on Marshall Plan is bound to break

our

fit

slaught

tion any free¬
dom to choose

one's

our

EDITORIAL

re-

countries in
form

gov¬

ernmental

to

build

pre¬

vent

but

we

been

trying

is

to

anyone

Europe

have

prohibit

and

the past

years

in

out

objective

the

to

each other with

or

of the world,

that the domi¬
nant

upon

anything

on

bewildering
speed and variety that it is often hard to know exactly whither we
are going, but about one
thing we may be sure that we are right when
we tell
ourselves, as we often do, that we stand at the cross roads
of the history<$>

bill.

point

in

Copy

By MELCIIIOR PALYI, Ph.D.

Asserting Washington is anxious

Expresses optimism regarding nation's future.

crowd

objectives

of

World

a

Inflationary Spirals and the
Paris Repoit

By LORD INVERCHAPEL*

Attorney and former NRA chief

Price 30 Cents

ira haupt &co.
York Stock Exchange
'Principal Exchanges

Members New
and other

111
REctor

Broadway,
2-3100

Boston

N.

Y. 6

Teletype NY 1-2708

Telephone:

Enterprise 1820

2

Available

request

on

Alabama &

C. YEAGER

Anderson, Inc.

comparison with the inflation which has occurred in our
advance in common stocks is certainly of modest proportions.

Corporation

panying table,

our

Bought—Sold—Quoted

since 1939, the

economy

>$-

ment

tions

in

astronomically high

and represents a greater monetary

obliga-y

took

place

did

not

business

recession.

bring

continued

The

on

*

a

basic
work

j expansion by far than this coun-

dustries

try has ever witnessed, it was aci tually $10 billions higher at the

capacity, except for labor troubles
and
shortages, and employ men

viduals (read¬

3/6s, 1956

ily convertible
into
five

over

-

modities
labor

Vapor Car Heating

pite
i

Vanderhoef & Robinson

System Teletype

of

consider¬
increase

H.

C.

dividends, the price of. our
leading industrial stocks is up
18%.
Hence it is pertinent
ask

whether
of

reasons

there

are

basic

transitory

forces.

There

is

the lat¬

"total

York Stock Exchange

{>

.

Curb Exchange

'

•

'&•/#

of

1946

mar¬

the

and

relatively stagnant mar¬
equities. Additional rea¬

ensuing
for

ket

fall

prices

investor

for

sons

caution

were

resulted

considerable

in

liquidation both from abroad and
home.

is

It

noteworthy that the mod-

deflation

monetary

erate

striking paradox about
position of common
stocks
is
that
many
excellen
equities are selling at reasonable
prices in relation to their net
worth figured at pre-war prices
present

and

in

unusual

some

more

than' the

quick

at

cases

nc

World War II is
ahead of

National Dyeing & Printing
General

Portland

Cement Wts.

Kendall

per share. In many
representing the best in¬
vestment values—the corporation;
are showing good earnings which
are
likely to increase and payin;
dividends which produce a returi
on
the money invested
of fron

Co.

cases—

3M>

MitcMUCoiipiuj

Members Baltimore Stock Exchange
120

61/2%.

to

Broadway, N. Y. 5
WOrth

Bell

2-4230

Teletype NY 1-1227

II

At this

point, it is useful to con¬
sider what actually has occurred
in the relationship between money

Central States Elec.(Va.)
Common

Stock

and things.

(Continued

winch

Detroit Int'l Bridge

27)

page

on

Fred F. French Investing
Preferred

Stock

Frank C. Masterson & Co.

grimly
on

the

t i

have

as a prac-

United

Aetna Standard Eng.
Punta Alegre Sugar

stands

world

Warner & Swasey

be¬

greatest expansion period
banking in this country has ever
known has come to an end.
We

domi¬

The

N

e

are

w

Hood Chemical

philos¬
ophy, or what¬

Kirby Lumber

ever

to

U. S. Glass Co.

§

you

litical

Raymond

Rodgers

Time, Inc.

has

died.

BTeeue<miCompanij|

are

claim

Dealers Assn.
37 Wall St., N. Y. 5
Hanover 2-4850
i
Bell Teletypes—NY 1-1126 & 1127
Members N. Y. Security

well

that

on

the

withered
even

those

Republicans

their way

practical
question
facing
which, how long, and,

Federal

Reserve

Federal

Committee
for

will

enable

strong
the

1923

Curb Exchange

ST.

NEW YORK

5

HAnover 2-9470

Curb and Unlisted

Federal

In

are

to taking over

humanity
solution of

address by Dr. Rodgers at

Dinner, Baystate Corpo¬
ration, Boston, Mass., Oct. 22,1947.

tied

is

have

with

our

these problems.

In addition to

I

up

the basic changes

mentioned,

just

to

of

of

bankers

MICHAEL HEANEY,
WALTER

KANE,

Mgr.

which

reassert

control

a

over

at

the

Joseph McManus & Co.
Members

New

Chicago

Banks.

the welter of movement

change, conversion and

Mgr.

Asst.

striving

reserves

Reserve

anc

reconver¬

York

Stock

Curb

39 Broadway
Digby 4-3122

Exchange

Exchange

New York 6
Teletype NY 1-1610

sion, claims and counterclaims, it
is difficult enough to tell where
we

"at"

are

guess

where

without
we

trying tc
going. Pres¬

are

ent

conditions

remind

Southern

country

meaning de

tous consequences are

who

them

old

importantly, how much?

Securities

the

Market

method,

or

measure

creation

and

Open

earnestly

are

formula,

a

Board

Reserve

definition

Annual

American States Utilities

Englanc

the
further
problem
o!
changes in credit policies by the
financial "powers that be."
Thr

under way.
The
way
we,
in America, will
meet the challenge of these chang¬
es
is of vital importance to the
entire world.
It is not too much
to
say
that the very future of

and

longest period of sustained,

"An

Trading Markets in

York

Teletype NY 1-1140

have

Truly, political, social, economic,
and financial changes of momen¬

completely!
The

expansion of but few.

and

most

longer than anything

heretofore,
There

most

of

period of con¬
balance
sheet

bankers are

it,

scene

a

The

want

call

entering

items

which dominated the national
po¬

Int'l Detrola

now

traction

Deal

Moxie Common

been

The

nation.

Newmarket Mfg.

either

passed or is being passed, and de¬
clining prices may lie ahead.

America

tween her and

Federal Liq. Corp.

has

times

modern

States

of

high level production, we
known lies behind us.

ever

peak of the highest prices
known
in the
United States in

the

Boston & Maine R.R.

New

lies

say,

irretrievably shattered.

The

1 matter,

c a

World War III, the pessimists

us.

Declining business activity—a lecession—looms ahead.

every

only

Manufacturing

extreme

ropes;

rtunity;

p p o

and,

behind

age-old pattern of international power lies

talks

at

war

two years

WALL

hangs

Russia

o

now

Established
Members
64

us.

The

Electric System
Film "A"
Hooker Electrochemical
Title Guaranty & Trust
Northern New England
United Piece Dye Wks.
Boston Terminal 3V6-47
United Artists Theatre
Dumont Laboratories
Eng.

Gen'l Aniline &

Fabrics

Scale, Com. & Pfd.

May, McEwen, Kaiser

nel

Professor of Bahking, New York University

Taylor Wharton Iron & Steel
U. S. Finishing com. & pfd.
Electric Bd. & Share Stubs

Lea

Howe

assets

of

amount

Asserting political, social, ecohoi?ilc and financial changes of moipentous consequence are under way,
Dr. Rodgers points out as portents of recession, heavy expansion of bank loans and inflated real estate
markets. Foresees need of strengthening bank capital resources. Discounts likelihood of gold revalua¬
tion and concludes "it seems reasonable to anticipate a change in economic trends in near future."

OLctual TWatket s Qu

Bates

Elkhorn Coal, Com. & Pfd.

Now the

the

in the worsening foreign
and political situations

present

branch offices

our

supply. Commodity
steadily.

rose

U

:■)

New

country

any

Direct wires to

available

By RAYMOND RODGERS*

BROADWAY, NEW YORK 5
Tel. REctor 2-7815

120

on

the

Looking Forward

Members

York

represents

New Orleans, UK-Birmingham, Ala.

Aspinook Corp.

frfcPONNELL&fO.
New

exerted

the

in

ket

at

Although the recent figure for
deposits and currency" of

Request

New

combination

The

which occurred in the stock

which

ter conclusion.

Prospectus on

actual

Stock. Exchange-

actually increased to the limit oi

economic

a

much evidence to support

Bought——Sold—Quoted

bil¬

$50
an

tary deflation may be found the
explanation of the drastic break

and

Common

and

events

two

ever

persistent
nature
which would explain this paradox
or whether the slowness of
equi¬
ties to respond is due to non-basic

American Water Works

above

time in history. In this mone¬

any

Yeager

only
to

shown.

these

force

in

NY 1-1548

of

reduced

probably the greatest deflationary

a

able

time when the Govern¬

was

surplus

in

very

York 5

Telephone COrtlandt 7-4070
Bell

and

deficit

lions

Des- \

n c r ea se

a

mental

and

sharp

a

profits

York Curb Exchange

date at

about

doubled.

Common

31 Nassau Street, New

of
the
Treasury shrunk bank deposits by
this sum during 1946 and 1947 to

fold, the
price of com-;

Class "A"

Members New

war. The policy
debt reduction carried out by

cash) in¬

creased

Savoy Plaza

|' close of the

to

York

St., New York 4, N. Y.
HAnover 2-0700 :
RV14557 ^

a

the

i

New

25 Broad

in¬

hands of indi¬

Savoy Plaza

Steiner, Rouse & Co!
Memben

165.1 billion is

Govern¬

war.

Teletype NY 1-583

Louisiana Securities

As shown in the accom¬
monetary supply, consisting of bank deposits and cash, is two and one-

half times pre¬

York 5

120 Broadway, New

and

In

New York Hanseatic

BArclay 7-5660

Thursday, October 23, 1947-

Mr. Yeager calls attention to lag in prices of common stocks compared with increase in corporate
profits and other developments affecting security price trends. Contends common stocks appear to
be cheap, and there is not likely to be lower prices, because current trend is inflationary. Says infla¬
tion affects various groups of stocks differently.

Quarterly

Comparison

i

FINANCIAL CHRONICLE

By HAROLD
Yeager

of New York
62nd Consecutive

&

Inflation and Common Stocks

Leading Banks and
Trust Companies

\

COMMERCIAL

THE

(1630)

said:

"Dey

Be

that

thing
ent

of

we

the

is

two

of

tht

preacher's

status

quo.

Latin

mess we

as

me

He

words

is in."

it may, there

is

one

business

flying high.

"air" is

Descriptive Circular

do know about the pres¬
situation:

We

have

We

risen

getting mighty thin!

on

Request

arc

into

the economic stratosphere and the

say

Liquidometer
Corp.

They

bankers love to "view with
(Continued on page 38)

Troster, Currie & Summers
Members
New

York

Security

Dealers

Ass'n

Preferred & Common

Buda
We Maintain Active Markets in U. S. FUNDS for

Cleveland-Cliffs Iron
Preferred & Common

Abitibi Pow. &

Detroit International Bridge

Minn. & Ont.

Oiiio Water Service

Paper

United

Water Service

Service

Kingdom 4%

Noranda Mines

*90

*Air

DERBY
GAS & ELECTRIC

Brown Co.

Canadian Securities Department

Scranton-Spring Brook
*West Virginia Water

Paper

South African Mining Shares

POTOMAC

Emery Air Freight Corp.

ELECTRIC POWER
BOUGHT

—

SOLD

QUOTED

Common

^Georgia Hardwood Lumber Co.
Common

British Securities Department

*Prospectus

*Prospectus available to
dealers

and

banks

only

Goodbody & Co.

G. A.Saxton& Co., Inc.
70 PINE ST., N.

Y. 5

WHitehall 4-4970

Teletype NY 1-609




Products, Inc. Com. & "A"

Detroit Harvester Co. Com.

I

i

Members N. Y. Stock

115 BROADWAY
Telephone BArclay 7-0100

Exchange and Other Principal Exchanges
NEW YORK 6, N. Y.

Teletype NY 1-672

on

request

J-G-White & Company
INCORPORATED

37 WALL STREET

,

NEW YORK 5

ESTABLISHED 1890

Tel. HAnover 2-9300

Tele. NY 1-1815

Reynolds & Co.
Members New York Stock Exchange

120

Broadway, New York 5, N. Y.
Telephone: REctor 2-8600
Bell Teletype:

NY

1-635

Volume 166

Number 4640

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1631)

3

I N D EX
Articles and

News

By

Inflation and Common

Looking

Sakolski, in stressing importance of price policies and price
manifestations, points out prices are made in various ways and
through different mechanisms, dependent on the nature of the com¬
modity, the relative number or size of producers or consumers, the

3

extent of

2

Who Makes Prices?—A. M. Sakolski

—James R. Bancroft

4

-

Dow Theory

4

What Profit From Dow Theory?—A. Wilfred
May
Economic Reconstruction and the Marshall Plan

—Thomas

H.

5

McKittrick

7

Rehabilitation—Ernest H. Weinwurm

9

Transportation and World Trade—Gustav Metzman

10

Definition of American Economy—Paul G. Hoffman
Steel Industry and World Economic Conditions

12

—Ernest

T.

Price Than Production

equal

ulators'

tions

cannot

14

profiteers, few
statesmen, in-

prices,

dustriali

are

Problem

Boom—George L. Meyer.

17

_

Providing for Families—Roger W. Babson

same

and

changed

s

The

Current Economic Scene—William A. Irwin

19

Tax

21

quately

Enterprise—Earl O. Shreve

on

Problem of Inventory
Pricing—George S. Cochrane
2,2
Federal Taxation and Debt
Management—Beardsley Ruml__ 23

NYSE Group Requests Vote
Issue
World

Bank Reports Operating

Deficit
Says Production Is Key to European Recovery
James W. Follin Sees Building Hampered
by High Costs
Philip H. Willkie Graduates from Columbia Law School
Mills, Spence & Co. Optimistic

9

15

Schram Announces Proposed Increase in NYSE Commission
Rates
Walter S. Bucklin Contends Inflation

17

Problem Is More

Serious

20

Expect Anti-Trust Action Against Underwriting Firms
Sen. A. W. Hawkes Proposes New Tariff Procedure

20

ing

price

othdr

cannot

price

pricing

phenomena

in

services.

The

bodies

administrative

24

very

have

Society for Savings Elects Mitchell and Pritchard

liberation and planning, but

way,

matter of individual

31

34

the

in

factors

social

our

Buenos Aires Bonds Called for Redemption
34
Ward Renominated as Chairman of Eastern Penn. IBA
Group 39
Illinois Securities Dealers to Hold Annual Dinner on Oct. 31
39

Nor

of

Business

EclUoiiuli.

Man's

Canadian

Cover

this

is

;

Observations—A. Wilfred May.

Bookshelf

! Our

—

'

Securities

Reporter

Reporter's

Events

in

the

Investment

Field

Railror 1

Investment

Real

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are of
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and custom have developed
pecul¬
the formulation of economic and

in

market

news,

in

York

phenomenon, the
fects of

goods

fluctuations

remittances

quotations

Manager

Thursday, October 23, 1947

(

made

but

are

extra.)

President

Business

4
.

be

and

extra.)

postage

Finishing Com. & Pfd.

therefore,

Monthly,

eign subscriptions and advertisements must
HERBERT D. SEIBERT, Editor &

wages

manifestations.

"See article'on page 9.

Other

COMMERCIAL

view

"market

competition

f

of

importance

making,

The

o

phases of price policies and price

Funds

Notes

most fundamental eco¬
problems of business and

the

monopoly,

44

...

In

and
living
costs, of equitable wealth distri¬
bution and many others of simi¬

.14

_

.

or monopoly
not
imply a
agnostic policy

or

realm of human action.

questions

Securities.

j Securities Salesmen's

de¬

government relate to price regula¬
tion and price adjustments.
The

4(i

_

...

a

does

faire

nomic

47

_

Securities.

Fstate

fact,

38

.

Report

Security Oficrings
Utility Securities

Public

'

Dealer-Broker

.

Prospective

!
:

Coming

in the

r>

—

Governments..

on

conception

regulation

price

laissez
Page

i Our

Stocks-.

whole economy of

organization.

control.

Regular Features
It

rather

featist attitude toward the matter

_

Insurance

a

group de¬

or

the effects of numerous and varied

Britain Sells More Gold to U. S. and Obtains Loan from

Sre

is, in

proof that pricing is not

a

as

been

throughout history

Nominating Committees Formed
24
N. Y. Institute of Finance Announces Correspondence Course 29

and

U. S.

the market quotations.

the for

fact that
price fixing and price controls by

NASD District No. 13

We

New

combined

alL concerned

failures

As

have

In

Heavy Demand Causes Platinum Price Rise

Bank

the

as

current

the distribution of economic goods
and

Page

funda¬

the

In

explain
fluctuations or

andu demand

Carl C. Farrington Proposes Floor Under Food
Consumption 22
San Francisco Exchange Sponsors Oil Field
Tour_^
22
Junior Achievement Awards Made by Emil Schram
24

Fund

this

of

Forging

Haile Mines

in¬

Trade)

broad and intricate mechanism of

Vice-Presidents

sellers

well

and, in the ab¬
of designated market places

which

not simple processes.

are

ply

21

:

and

Jersey Worsted Mills

Moore Drop

fluctuations.

price making and price fix¬

adequately

22

Monetary

(such

of

the

in

subject is intricate and the
basic rule of equilibrium of sup¬

21

Herbert Nelson Scores Sen. Taft's Socialistic
Tangent on
Public Housing

in
A. M. Sakolski

The

20

J. A. Krug Says U. S. Economy Can Support
Foreign ReliefCurb Clearing Corporation to Facilitate Transfers

at

time.

any

factors

or

But

19

Stock Exchange Firms Ass'n to Hold Annual
Meeting on
November 17

buyers and

Because

New

ex¬

Exchange and the Chicago

sence

commodities and services.

of

18

Southeastern Group of IB A Announce Meeting

or

different

plicable to all prices of all kinds be entirely ignorant of the forces

18

W. L. Hemingway Cites Importance of
Foreign Trade

the

bilit.y

12

Position

Board

or

9

Canada's Exchange

on

sold

press, trade papers, verbal
reports, and the like. The farmer's
A wife usually knows each day the
good deal has been said regard¬ price of butter in her neighbor¬
ing the overworked principle of hood though there is no "butter
"supply and demand," and the exchange,"
and,
likewise,
the
whole subject has been treated as banker or
importer learns without
if it were a simple matter to be
difficulty
current
sterling
ex¬
solved by some general rule ap¬
change rates, even though he may

8

at

Aeronca Aircraft Com. & Pfd.

"economic

changes
Stock

principles
o f
price
making
underly¬
ing price Sta-

8

Allan M. Pope

in

mind the basic

Permissive Incorporation

on

cats

STREET, NEW YORK
Telephone: WHitehail 4-6551

axiom,"
we
have the phenomenon of "market
price," both
on
organized
ex¬

kept
fully and ade-

The

be

materially

if the

mental

have

19

at

uncontrolled

formed.

economists

or

18

are

t 3,
leaders

labor

International Bank and Increased World Output
—Robert L. Garner

office

stray

welcome

are

99 WALL

at the same time, the
commodity or service of
quality under like condi¬

prices

your

market,

13

Current Inflation and Monetary
—M. S. Szymczak
a

that

sources

and

dogs

our

made by spec¬

Weir

Our

More of

You
and

competition, and other relevant factors.

Despite the persistent and voluminous discussion of prices dur¬
ing the last three years, and the wild official statements from high
political
<$

7

What Is the Business Outlook?—Prentiss M. Brown

"WELCOME STRANGER"

terference with developed and established
price making mechanisms.

6

Import Trade Promotion—Perry J. Stevenson
International Monetary Fund Should Aid in European

AND COMPANY

Says price sta¬
bility and price uniformity is prime objective of both producers and
consumers, both under competition and monopoly
conditions, and
that this stability in the case of standardized
products is essential
to general economic and industrial
progress. Denounces official in¬

Dollar Inflation and 1947 Stock Market Outlook

on

SAKOLSKI

Dr.

Cover

Stocks—Harold C. Yeager

Forward—Raymond Rodgers

Conflicting Views

A. M.

2

Anti-Discrimination Bill Objectionable
—Donald R. Richberg

llCHlEIMEItl

"

Pajre

Inflationary Spirals and the Paris Report—Melchior Palyi Cover
Britain's Recovery Program—Lord Inverchapel
Cover

quarter

available

C. E.

on

analysis
reqaeit

Unterberg & Co.

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4

THE COMMERCIAL & FINANCIAL CHRONICLE

(1632)

Thursday, October 23, 1947

Letter to the Editor:

Dollar Inflation and 1947 Stock Market Outlook
By JAMES R. BANCROFT*

President, American Institute of Finance, Boston

Correspondent takes issue with A. Wilfred May's contention that
Theory is "a logical absurdity," because it assumes each pre¬
ceding series of events influences subsequent series. Says prob¬
ability calculous not applicable to stock market forecasts. M. S.
Dow

Bancroft sees its cumulative effect slackening and
production meetng concentrated consumer demands. Sees no bull market ahead despite current high
corporate earning power. Urges caution and avoidance of trying, on present "surface factors," to get

Tracing dollar inflation during recent period, Mr.

rich

We

in

are

running

a

for

now

period of eight years. In "cost of living" it has reached marked inten¬
to me impossible that a period of major inflation such as this can be

sity. It just seems

corrected

sion

by<e>

reces¬

mere

by in¬
dividual reador

j u s t m e 111 s,
Only
major
deflation will
The

it.

u o

broad

next

change
existing

from

the current one being the
that we have
experienced since World War I.
ity

haps

or

national

pansion
and

to
peacetime
products
enlarge and modernize

years. Using the 1939 dollar
parity, wholesale prices in this
country
in
1775 stood
at the
equivalent of $1.36; by 1779 prices
had risen so that the purchasing

be

alent to
it

per¬

Napoleonic Wars it again declined
47 cents but by 1830 it was

should

to

back to

—or

.for

$1.32, reaching
chasing power
of

period, it

flation.
with

Over

the

past

seven

years,

which

of

am

are

familiar

course

tremendous

used

All

cul-

am

will

I

amount

of

so

say

today is that I
"proper BosI just can't go

sufficiently

a

minated i«- the

tonian"

the

;

ahead and overlook the facts that

summer of 1920—
last postwar period—the rise

140%,

was

while

in

the

I

seven

just given

time

within

address

by

Mr.

of

Bancroft

that, by
16

years

immediate

timing.
us

From that
examine briefly,

These

started to

which

forces,

the war,

have been operating now
for two years and have brought
about a boom greater than this
has ever before experi¬
enced in peacetime, aided in this

country

regard,

far

as

1947 is concerned,

as

foreign

unusually heavy

de¬

mands.

period,

two-year

a

of their force

siderable

con¬

has been

the cumulative effect
lessening rather than increas¬
ing. The 1946 year was a con¬

is

goods boom, the 1947 year
a durable
goods boom.

sumers

favor

there

of

ticular event, the mere
of that run alters the

has

boom. I think it is

is

occurrence

otherwise
con¬

think

it

is

fair

a

the? excess,

the

off

1946.

in

flected

in

That

what

fact

happened in

tain channels like the

fur

lion

culus

of
we

coin

a

Probabilities.

that

assume

To
one

illus¬

toss of

dice is

completely in¬
dependent of
preceding tosses.
This supposition is untenable in
or

a

time series where

influence

"event"

an

ex¬

the "events"
example, the
price of a commodity this month
cannot be considered independent
of its price last month.
This is
one of the reasons why it is so dif¬
ficult to analyze economic
data
in time by the methods of mathe¬

re¬

cer¬

indus¬

matical

upon

For

statistics.

this

with

compared

billion

in
use

After

radios
about

the
as

pocketboqks

our

1946

we

be

the

averages

in

that

for

move

direction

one

a

another"

or

May

bases

the

statistical

same

those observed in the

synthetic series; that is to say, if
trend has

a

in

been established

once

the rail stock

series, the prob¬

ability is greater than one-half
that it will continue. Such success
the Dow Theory has had in
forecasting is due, in the writer's
opinion, to this significant fact.
as

Those

who

doubt

try

may

the

simple experiment of forecasting
the accumulated series
by means
of
the
technique of the Dow
Theory. It is evident a priori thai
there could be

prediction."

no

(Ibid.

in such

success

p.

541).

NIKITA D. ROODKOWSKY

contention that
White, Weld
logical absurd¬ 40 Wall

and

Company

definitely proved by Al¬ New
York, New York
Cowles and Herbert Jones.
Oct. 14, 1947.

In

a

Street

was

fred

his

article

Stock

on

Market

(Cowles Commission

Papers, New Series, No. 6, p. 213),
Mr. Cowles says that "the esti¬
mated probability was .625 that,
if

market

the

had

risen

in

for

another

further

month."

says

The

Mr.

that

"the

Editor, "The

Commercial

and

Financial Chronicle":
I

any

given month, it would rise in the
succeeding month, or, if it had
fallen, that it would continue to

feel

mend

that

the

in

writing to com¬
by A. Wilfred

articles

May in the "Financial Chronicle"
"Chartism," I am not only
gratifying myself but the financial
community—even though it does

on

not know it.

of obtaining such a
Foretelling
the
future
by
penn.y-tossing series is
mechanical devices must be
infinitesimal." (Ibid. p. 213)
pure

probability
result in

a

connection

In

18,000,000 this year, so that

have turned
supply each
family in the country with one.
(Continued on page 24)

as

ity,

Cowles1

in two years we will
out nearly enough to

character

Theory is

decline

out

his

of

not

are

Dow

we

turn

aver¬

not subject to the laws
chance, on which Mr.

are

$14

15,000,000

will

kind

a

random

than

average—1935-1939.

producing
in

ages

of

years

less

prewar

the market

The fact that

Forecasting

more

£ite out of

also

That is to say, there is
of inertia which tends to

author

trate,

important is the fact
buying power is now
being
bedeviled by the recent
sharp
advance
in
commodity
prices. Grocery bills for this coun¬
try this year will take a $35 bil¬

that

will

move

direction.

'

first part of this year.

But

probability

forgets that time (p.
538).
By
comparing stock
series, of which stock prices are prices with a
statistical
series
a
particular case, do not consist constructed
by
random
chance
of independent events, which is Professor
Davis concludes "that
a
required condition for the ap¬
he sequences and reversals which
plication of theorems of the Cal¬ are noted in the rail stock series

try last winter and in retail trade
the

next

time in

The

given time

a

the

greater than one-half that the

make

easily

was }

direction,

event."

statement

most

has been for

one

cerning the next repetition of that

with

the

fore¬

nonsense.

to

going subject, Professor Harold T.
Davis of Northwestern University,
one
of the leading mathematical
statisticians of

America, states in

Bought—Sold—Quoted at Net Prices

undeniably

It may be an
easy way

business

get

— either
commis¬
sions for buying or selling securi¬

ties

fees for investment advice.

or

Psychologically it

must be

for

as

the

reliance

the

war

in

par¬

any

mathematically correct odds

spent buying power, blew its head

as

in

psychologi¬ market

when

been

that

in

run

that

which follow it.

exhausted,

has

a

erts

Cumulative Effect Lessening
After

variation of the

fiction

perhaps

a partial solution
of
question, just what it is that
has generated the current post¬
as

before the Executives

Club, Boston Chamber of Commerce, Bosi ton, Mass., Oct. 16, 1947.

to

there will be consider¬
able readjustment from
present
inflated
prices, does not do us
much good from the standpoint
standpoint let

*An

say

10

from now,

is, therefore, obviously a
distinct
difference,
from
this
standpoint, in periods of prosper-

dur¬

war.

like to

you.

However, simply to
some

There

i

have

ended

August,
1929 and
March, 1937, wholesale commodity
prices actually declined moder¬
ately.

years

that

so

goods

heavy

operate immediately at the end of

course

persuasively to
argue that this time we are on a
new
high plateau of prices on
which we will continue to operate.

increased just about 100%, in the

period

I

the

that

wholesale commodity prices have
seven-year

of

am

manufactured money, the changed
labor situation and all the things

in the various

periods of prosperity we have ex¬
perienced during the past 30 years.

,

I

and

numerous

not manufactured

were

I

familiar
with all the various arguments
against any such development fol¬
lowing the present period of in¬

Possibly you are saying by this
time—oh, this is one of those fel¬
lows
that
calls
all
periods of
prosperity major inflation — or
! perhaps you do not recognize the
difference

that

ing the

for

demand

of

semi-durable

46 cents,

that,

Now,

made.

marked

lation

cal

been

ex¬

existing plants; and the accumu¬

greater than that of 1939.

be

not

down to

was

wartime

convert

of

part

inflationary

by 10 to 16 years
following each of the major wars
in that 175-year period, prices had
declined to a level giving a pur¬
chasing
power
to
the
dollar

be

should

War

by 1933 was $1.29. It is now the
equivalent of 48 cents.

mean

and

at the end of the

or

World

Note

to

the

on

a
coin.
The
author of the Dow Theory appears to be
that "Dow thinking is a con¬ that, when a movement of the

verse

and

definite

very

desire

natural

by

1920,

By

however,

cannot

the highest pur¬
record in 1897

on

$1.65.

first

that the
minimized
that reasonable preparations

it

$1.18, reaching a peak of

$1.32 in 1860. By 1865 it was down
to 43 cents but by 1879 it was

its be¬

very

in any degree
eventuality should

of the dollar was equiv¬
only 42 cents, but by 1789
was
back
to
$1.14.
In
the

power

that the
matter of timing is difficult does
not

the last

the

lowed;

Dow

absurdity.

on

tossing

as

says

financing that was fol¬

175

ample in shoe production in New
England, there has already been
a considerable readjustment over
the past nine months.
fact,

from war
the type of gov¬

as

ularly difficult to time the broad
change that is inevitably ahead.
In individual situations, for ex¬

The

at the end

resulting

war,

to

gradual and
of
the
complex inter¬
situation, it is partic¬

ginnings will be
because

Because

consumers

based

business

in this instance the $64,000
question is—When will a Major
Occur?

the

"Observations" by A. Wilfred May, which appeared in the
9, 1947, issue of "The Commercial and Financial Chronicle," it is

logical

in

this country for

in

tions

say

Deflation

the hands of

Editor, The Commercial and Financial Chronicle:
In

Oct.

Theory is a'^>
——
This view is his Analysis of Economic Time
comparing series of stock' Series (The Frincipia Press, Inc.,
prices with games of chance, such 1941) that "the second postulate

the tremendously

ernment

course

I

—

The

stated, that the

mind, I think it
will be worth while to stop
a
moment and trace dollar fluctua¬

$64 ques¬

tion—

things

accumulated purchasing power

restrictions and

in

that

With

tion.
Of

three

of

major defla¬

the

inflationary

Dollar Fluctuations

con¬

inevitably

—

most

will

ditions

James R. Bancroft

Benjamin, partner in New York Stock Exchange firm, calls fore¬
telling securities market trend by mechanical devices pure nonsense.

This inflation has been gaining strength and

period of major inflation.
a

a

quickly.

chartist,
on

it

research and

deadly

weakens

thinking.

It is dangerous for those who trust
their money to such devices and

devisers.

As the investment busi¬

depends entirely on the latter
for its living, these
tricky and un¬
sound practices can only work un¬
ness

EASTERN CORPORATION

told

harm to the industry, as dis¬
illusionment inevitably occurs.

Cleveland Cliffs

I wish Mr.

these

Common

Central National
*PoriSmouth Steel

ESTABLISHED 1927

22 East 40th Street,

Derby Gas & Electric
Stock &

Corporation
Teletype: NY 1-2948

Standard Railway Equipment
Graham-Paige Motors Corporation
4%

M. S. BENJAMIN

Benjamin, Hill & Co.
1 Wall St., New York
City

Park, Inci.

Tennessee Products &
Analyses on
120

Ward
Established

&

Co.

request

Tele.

REctor

NY

2-8700

1-1286-7-3

INCORPORATED

1926

Direct

New

Wires




to

York

Security Dealers Association

PHILADELPHIA & LOS ANGELES

41 Broad Street

,

Dealers Association
New York 4, N. Y.

1

!

1947.

Horney, Jr., With

Blair & Co., Inc.
SAN

Odus C.

FRANCISCO, CALIF.—
Horney, Jr., has become

associated with Blair & Co., Inc.,
of New York, Russ Building. Mr.

Horney

Seligman, Luhetkin &> Co.
Members New York Security

Members

Chemical

Broadway, New York 5

Phone:

Gdus

Osgood Company "B"

"SPECIAL REPORT AVAILABLE

16,

Convertible Debentures due 1956

Fashion

put them

book, for he not only knows
he is talking about but ex¬
presses himself clearly and well.
what

Oct.

Tennessee Gas & Transmission

May would continue

articles and then

a

New York 16, N. Y.

Telephone: LExington 2-7300

Rights

in

&

was

formerly with Stone

Youngberg.

;

:

King Merritt Co. Adds
(Special to Thk Financial Chronicle)

LOS

,

'

ANGELES, CALIF.—Rich¬
ard J. Toomey has joined the staff
of King Merritt & Company. Ine.,
Chamber of Commerce Building.

^Volume 166

THE

Number 4640

What Profit From Dow

COMMERCIAL

Theory?

Joins

f

(Special

Steel

The

Carloadings

bull

a

or

rise in the Dow-Jones industrial average from

a

May 17 to 186 yesterday. This charac¬
difficulty of recognizing the market's
"trend" is rendered crucial by the Dow followers'
163

on

teristic

themselves basing

of their whole system on the

They themselves

thereof.

discovery

insist that

logic of their theory is valid
because of the probability of momentum contin¬
the" fundamental

The

little

is
to
as

how long it takes for a
be defined, and if the common run of traders
well as the Dow theorists have recognized it
not

important

market swing has to a great extent
run its course—all they have done is to make of
themselves
accurate
market
historians,
ab¬

only after
A.

Wilfred

May

a

Industry

retail

trade

consumer

Dow

long-term

actual

from

authority

leading

a

by Dow rules; the size of. each bull market as measured by the
percentage rise from its starting price; and of the greatest signif¬
icance, in the extreme right-hand column the proportion of each bull
market which the Dow theorists missed, computed by assuming
that

long position would not be

a

closed out until the advent of a

succeeding bear market was recognized.
Succeeding

Percentage of

Bull Market
i

Price Range

Dates.

8-'96— 4-99

30-

6-'00—

54-

-

f!c

76

Bear Market

Complete Bull

"Confiimed"

COMPLETE BULL MARKET

"Confirmed '

Market Missed

Pi ice

Da te

Rise

Price

Date

by Dow

6-'97

157%

45

12-'99

64

59%

68

26

lO-'OO

59

6-'03

60

93

il-'03— l-'06

42--103

144

7-'04

51

4-'06

92

30

ll-'07—ll-"09

53--100

89

4-'08

70

5-'10

84

June

lO-'lO

81

84

86

8-'17

86

63

99

,

-

73-

7-'10— 9-12

-

27

94

12-'14—11-16

53--110

107

4-'15

65

12-'17—11-19

65--119

81

5-'18

82

2-'20

2-'22

83

6-'23

the

week

June

of

12-'23

8-'21—10-'22

63--103

86--381

338

7-'32— 3-'37

41--194

371

5-33

84

9-'37

164

98--158

60

6-'38

127

3-'39

131*

121--155

28

7-'39

142*

l-'40

145

92--206

122

6-'44

145

9-'46

178

1-395

Toronto

Montreal

ON

since

touched 97.3%.

October and is also the highest for any week

topped only a score of times during the peak
of the

Members New

high point since June
as crude oil output which set a peak.
In the transportation
notion's goods, a tally of revenue freight loadings for the

Soft coal production also attained
as

well

of

the

weeks

Oct.

ended

of

4 and

a

new

11, reveal that more cars were loaded in
than in any other week in a little more

17 years.

two weeks

those

Construction expenditures during the month of Sep¬
broke through previous high levels to reach a new

also

peak of

post-war

month of August,
*
;

-

Coupons Missing
Gude, Win mill & Co.

production weeks

period.

war

WITH

reported, virtually assures a new peace¬

of around 7,500,000 tons for the month of
in peacetime, being

time production record

BONDS

week

$1,500,000 000, or a gain of $31,000,000 over
according to the Bureau of Labor Statistics.

the week with
wholesale commodity prices broking into new high ground, and
retail prices of bread, the poor man's staff of life, destined to
rise, due to an advance in flour prices. In the footwear field one
of the world's largest manufacturers has announced the current
week, wholesale price increases ranging from an average of 35.
cents a pair on children's shoes to 95 cents a pair on men's foot¬
wear, effective October 20.
The increases, were attributed to the
higher costs of raw materials from which leather is made.
Ad¬
vances
in men's suits varying from 5 to 7% by manufacturers
will, it is reported, take place in the spring.

the upward spiral of prices is being
forecast by some with the removal of Federal controls on instalment
buying in the form of Regulation W, which comes to an end on
November 1, next.
The present demand for goods is being maintained by the high
level of income
payments to individuals, which approximate an
annual rate of more than $190,000,000,000 and by the expansion in

ACTIVE MARKETS

Di-Noc Co.

Soya Corp.
Great Amer. Indus.

siegel & co.
HI)

Teletype

reality, it is noted that a propor¬
has been occurring throughout most

STERLING BALANCES

in

sales

cash

approval of local controls.

PESOS

ARGENTINE

a

decline

1-1912

NY

Arabian, Dutch, French, Siamese, etc.
with

credit.

DIgby 4-2370

Broadway, N. Y. 6

encouragement to

this credit expansion

Teletype NY 1-955

DIgby 4-7060

Inflationary tendencies again cropped up during

Further

York Stock Exchange

St., New York 5, N. Y.

1 Wall

the

of the

post-war period and with the removal of Federal restrictions
sales will result. However, the lifting of these controls

BRAZILIAN
BOUGHT

CRUZEIROS
SOLD

AND

additional

91

4-'42— 2-"46

IIAnover 2-0980

N. Y. 5

Teletype NY

71

kind of

Markets quoted for any

93

4-'39— 9-'39

Bell

BIDS MADE

tional

48

3-'38—11 -"38

1944, when it

19,

The current rate, it is

With

82

7-'23— 9-"29

WILLIAM ST.,

New York

The set¬

of 1946.

steel

consumer

68

90*

61

52

Express strike in New York City con¬

9, last, when the rate stood at 96.9%. For the current
capacity rate is scheduled at 97.1%, or a new high

the

71

1-'13

9-'02

HART SMITH & GO.

records were established last week with
steel output in the vanguard. For the week beginning Oct. 13, 1947.
steel operations touched 96.8% of capacity, the highest level since

tember

results are demonstrated by testi¬
who for many years has con¬
ducted a Dow theory service appearing in a leading business and
financial paper. This takes the form of a theoretical demonstration
of what would have happened through a mechanical following of
the basic rules during the past 50 years.
Following are the dates and the respective dimensions of major
bull and bear markets since 1896; the dates and prices at which
each of those bull and bear markets was "confirmed" or recognized
The

mony

was

production

each

Actual Box-Score

ended

improvement in deliveries to many other areas.

an

than
The

level of the like week

Railway

of the

Several

idly demonstrates the fundamental

repercussions of the broadest scope.

the week just

Bonds

Brown Company 5s, 1959
Internat'l Hydro-Elec. 6s, 1944
,

Wholesale volume rose moderately during the week and re¬

tlement

demonstration of the actual
historical record is particularly worthwhile because it viv¬

but their behavior entails

in

Dominion of Canada

consumption.

lood

of the Dow operation, a

fallacies of the system. And in
addition to showing the direct results on the individual operator, we
shall in a subsequent article indicate its effect on the community at
large. For not only does the Dow following decisively affect the
structure of the market in which its own participants are engaged,

Angeles Stock Exchange.

despite the urgings of government spokesmen to curtail

be substantial

overall evidence.

relevant

buying

moderately above the levels of both the preceding week and the
corresponding week a year ago. The Columbus Day holiday brought
an
influx of shoppers into 'many stores with the response to most
lines of merchandise very favorable.
The buying of food proved to

tributed to

case

Los

Morgan & Co., 634

employment

supply of some raw materials and skilled labor which resulted in
lower production.
The state of order backlogs continued to hold
at substantial levels as was true in months past.

conclusions here is unique in
appraising results. Nothing can be gained from the competitive re¬
counting of dramatic stories of personal gains or losses through the
pursuit of this or that system. Generally scoring of such results e.r
post facto by a non-operator is just as unreliable—and for much the
same reasons—as are the reports of his millions of winnings by the
mental bettor in a gambling house.
And even if actual personal
dollar-and-cents
results should be
verifiable, they might prove
nothing more than a possible minority exception in the face of the
In the

the

Failures

being the rule both for the week and one year ago. The

at valid

to arrive

Business

staff of

Spring Street, members of

picture too, remained stabilized with the nation's total working force
holding at a very high level and with labor disputes kept down to
a minimum. However, some lines continued to suffer from the limited

mained well above the

ability

—

added

from

stractly defining the bull or bear market after the glorious event.
Because genuine Dow technique is comparatively so clear and
definable,

been

total industrial output for the past week shows
that of previous weeks, moderate increases

of

story

variation

In

it
trend

the real world of the market place, if

Glines has

J

uation.
In

C.

South

Auto Production

and

Chronicle)

CALIF.

to the

Commodity Price Index

bear market?"—the $64 question.

seemingly em¬
barrassing question, which has continued to the moment of this
writing (Wednesday morning, Oct. 22), goes right to the heart of
the
system's shortcomings, on practical along
with
the
previously-cited theoretical grounds.
Inability to define the trend occurs in the face
of

Robert

Food Price Index

The Dow followers' indecision in answering this

£.-.mncial

ANGELES,

Retail Trade

State of Trade

(Third of a series of articles on forecasting)
this

LOS

5

Morgan Staff

to The

Production

Electric Output

By A. WILFRED MAY

"Is

(1633)

CHRONICLE

FINANCIAL

&

10-'29

93*

305

will

18

preceding

Their

bear

major difficulty can be clearly

appreciated from the elapsed

recognition thereof, and from the extraordinary high
in the right hand column, up to 93% on two occasions,

percentages
showing the
proportions of the market cycles which escaped the Dow theorists
through non-recognition of the nature of the market.

may

be

too

rigid,

they

that as the rules for "confirmations"

need

not

be

awaited

(although

somewhat

by steps

by credit
permit bor¬

being taken

now

follow sound credit policies rather than

foreign exchange, free, blocked
or

get too deeply in debt.

OPERATIONS

SCHEDULED AT 97.1%—
JUNE

steelmakers

are

now

national metalworking
strongest scrap markets
on record are rapidly eliminating any safety margin to profits which
rhay have been obtained through the steel price increase of a few

in their

WALL

Cabl»»R!

NEW YORK 5, N. Y.

.

New

Solofret,

York

history, according to "The Iron Age,"

months ago.
If

prices,

raw

materials for

no

says

steelmaking and fceight rates continue

to

steel company can continue to sell steel at current
the magazine. Reports are current that the price of tincontinued

the

on

page

37)

Growth

4

tor

Common Stocks

Income and

Appreciation-

American Furniture

Co.

Crampton Manufacturing Co.
Miller
Tenn.

Manufacturing

Prods. &

2 Good

Specialists in

Co.

Chem. Corp.

Speculations—

Iliggins, Inc., Com.

Universal Match

Maxson

REAL ESTATE

STREET

N. Y.

Telephone HAnover 2-8681-2

Ohio Match

99

CO., Inc.

79 Wall St., New York 5,

weekly. Rising freight costs and one of the

(Continued on page 43)

LAMBORN & CO.,Inc.

internal.

F. BLEIBTREU &

19, 1944

have been shattered this week and
entering one of the most serious squeeze plays

Stabilized steelmaking costs

advance,

Perversion

Some Dow defenders claim

to

HIGHEST RATE SINCE

the beginning of a major market and the

Dow

to

STEEL

confirmations at actually higher, instead of lower levels than
signals.

time and distance between

tempered

rowers

♦Showing "bull"
the

be

managers

Food

System, Pfd.

American Maize Products Co.

.

1

SECURITIES

Liquidating Situation—
Central

Bought—Sold—Quoted

★

Public Utility

5i/2s, 1952

SUGAR
Raw—Refined—Liquid
•

Exports—Imports—Futures

Reports

C. H. TIPTON
SECURITIES CORP.

Established

Members N. Y. Security Dealers Ass'n
"

DIgby 4-2727




111

MEMBERS

Broadway, New York 6, N. Y.
Telephone

WOith

2-0510

on

Request

FREDERIC H. HATCH A CO., INC.

63

Wall Street, New

N.

Y.

York 5, N. Y.

ARTHUR i. korn & co.

1888

SECURITY DEALERS

ASSOCIATION

Bell Teletype NY 1-897

50 Broad St., New
Tel. HA 2-7939

York 4, N. Y.

Teletype: UY 1-2639

<J

Marshall Plan

Economic Reconstruction and

Washington
Ahead of the News

National Bank of New York

though Europe is producing, output is not

Mr. McKittrick points out

From

McKITTRICK*

By THOMAS H.

Vice-President, Chase

Thursday, October 23, 1947,

& FINANCIAL CHRONICLE

COMMERCIAL

THE

(1634)

enough to provide reasonable living

Marshall Plan are needed. Analyzes present situation and
concludes assistance should be directed to supplying food, raw materials, capital goods and a certain
quantity of dollar exchange. Places prime objectives of Marshall Plan as: (1) more/.productionj
(2) stable price level; (3) properly adjusted exchange rates; and (4) properly adjusted wage rates.
Sees no need for direct U. S. intervention in Europe's economy.
standards and extraordinary measures as

1

At this session of

those

commerce,

There are

i

.

respective of their purposes, and
right to import and export as
we see fit without first obtaining

which seek to

the

t ransfer

for

funds

must be

regulation if it is to attain its full
development and my purpose to¬
day is to try to outline to you the
way in which the Marshall Plan
so-called can serve to stabilize

'on
and

loans

dividends

o n

stocks, for the
o

travellers

and

c

f

countries it

conditions which have led to con¬

different sorts,

trols.

Tor

family re¬
mittances and

•other

T. H. McKittrick

gifts to
only

exchange

Today when the

few.

That

this

may

be

accom¬

altogether and in short
order
is probably too much to
hope, but it seems to me reason¬

plished

mention
a

designed to bene¬

is

fit, helping thus to eliminate the

dozen

a

the

finance -in

and

economics

f

expenses

Foreign trade
released from all sorts of

official permission.

capital pur¬
poses/for
payment of
interest

Trade Convention we are to take up the finan¬
how goods exported from one country and imported
of course many other categories of international pay¬

the National Foreign

cial aspect of international
into another are paid for.
ments,

for others
the import and export

of the national currency

goods are regulated officially ments has assumed such impor¬
most countries it is gratifying to tance of late that you are all prob¬

in

had

which

need

of

types

and provided for—

been foreseen

They were to

Relief Needs:

be

Reconstruction and
Development: Under the Bretton
Woods Agreement there was to be
set up the World Bank for these
purposes, and the United States
Congress had increased the lend¬
ing authority of the Export-Im¬
port Bank to care for the inter¬
vening period before the World
Long Term

operations.

Bank could begin

Anglo-American
had granted a
$3%
billion
to
the
Kingdom and Canada had
of

part

credit

the

we

of

United

dise and commodities are
ted

more

the

for

lations

relief, about dollar shortages, the
right and wise, British crisis, the Marshall Plan,
of whole popu¬ and so on. I offer you my apolo¬

freely than any others.

That is obviously

welfare

in

depends

de¬

varying

foreign trade, but we
must strive for-the return of free
grees

on

gies and my sympathies that you
to hear

are

eral

■dealings in foreign exchange, ir*An address by
at

the

Mr. McKittrick
National
Foreign

34th

Trade Convention, St.
Oct. 20, 1947.

Louis, Mo.,

the

more on

subject from

me

same

gen¬

here today.

say

my

thoughts as to what I should
this afternoon, I turn to what

fellow

William

St. Louisian,

in all probability

would

A year ago

Bill Martin did.

said exactly what
UNRRA

well

as

I would have

the two Bret-

as

ton Woods institutions looked for¬

world

united not only

by economic ties

but by a single

to

policy

a

These

reconstruction.

of

promising

were

aiM there

steps

IIIIIIIIIIIfflllllHIIIIIIIIIIIIIIIIIIIIIIII

hope

to

Trading Markett

B

ward

reconstructed

a

active,

Co.

Jt

in most parts of the world.
that

seems

now

difficulties,

the

particularly

production,

ing

coal

Traded in Round Lots

Walter J. Connolly & Co.,
24

Tel.

Federal

Hubbard

production

Preferred

Street, Boston
Tele.

3790

Inc.
128

of

production

Tele. LY 83

to

realize

Data

on

Neto

Also

New

iielcl, Richards & Co.
Union Cent. Bldg.

CINCINNATI
Tele. CI 150

1420

as

well

on

We also
Germany's

34)

street

olive:

509

II. Willett

Murphy Chair Company
Reliance

Varnish

Co.

take

suDpose

is

my

explain
that

opinion that this doesn't

country.

The

.

likely explanation of

more

of

lack
there

our

no

the

is that
voters in

Japan

about

it

are

and

Europe

about

country

in this

agitation

tremendous

the

of

serenity

relative

the

Japanese

They don't consti¬
racial blocs in
industrial cities or our farm
country.

formidable

politicians must

Jap in far¬
away
Tokio doesn't stir up the
feeling of kinship as does the
plight of a Czechoslovakian
in
The plight of a

cater.

far-away Prague.
We

in

European

politics and apparently we
be

because

many

so

always
of

our

people
It

for
there

really

was

unnecessary

Congressmen to go over
conditions. You have

ascertain

to

only to analyze their constituen¬
cies
to
know what they would
find.
A
man
like
John Taber,
of

the1 House

Appro¬

lying around,
apparently to brush

shiftless

too

the insects. You feel you
taking your life in your hands
up the main street, not
necessarily from an attack by a
criminal but from disease. It is

away
are

walk

to

could be such distinct civilizations

didn't

war

like

An

exception

Congressmen

who

are

influenced

their constituencies is Dewey
who has a rural Missouri

St. Louis l.Mo*

of

Exchange

district.

Dewey

conditions
Members St. Louis Stock

Los

Angeles
Pittsburgh, Pa.
Hagerstown, Md.
N. Y. Telephone—WHitehall 3-7253

Exchange

SECURITIES
For
or

of

Pittsburgh Rys. Co.

those with large German -

Germany,

NORTHWEST MINING
Immediate Execution

Our bleeding hearts

Europe

But

constituencies.

before the war. He at¬

tended Heidelberg as a

youngster.

Exchange

10:45

from

Std.

Pac.

Time:

fresh

now,

to
their

go over

from

well

and

furnished

palatial liner
and are appalled at the difference
in
living
standards.
They
go
around
searching
for
their
dish

favorite
the

people

it.

that

conclude

starving when they
A returning news¬

telling

was

paperman

his

a

and

are

find

can't

off

fresh

homes,

a

group

couldn't

get

favorite

fruit.

He

was

quite

fruit.

that

newspapers

with

filled

hearts,

too,

Eastern

sur¬

old-timer pointed
that England never

an

him

Our

single piece of his

a

stories,

the

of

Europe

by

have been
bleeding

peasants
feeding

to their stock be¬
were not used to eat¬
particular
stuff. The
point of these gentlemen has al¬
most
invariably been, not that
we

goods

that

ing

shouldn't send

food

that

but

should

more

perhaps

accompany

how

people

to

and more

literature

it to tell these

prepare

certain

dishes with it. It is hard to under¬
stand

starving

people

being

choosy.

COMMON STOCK
Bought

to 11:30
Sp-82 at

.

.

.

Sold

.

.

.

Quoted

Aj Prospectus Furnished On

other hours.

Request!

Nazareth Cement

Warner Company

STANDARD SECURITIES

CORPORATION

*4-

BANKERS BOND

H. M. Byllesby & Company

Incorporated

m

PHILADELPHIA OFFICE

1st Floor, Kentucky
LOUISVILLE 2,

Long Distance 238-9

Home Life Bldg.
KENTUCKY
Bell Tele. LS 186




RIttenhouse 6-3717

Teletype
PH

of

Brokers

Stock Exchange Bldg. Phila. 2
Telephone

Members Standard

73

-

Peyton

Stock Exchange

Spokane

Dealers

-

Underwriters

Building, Spokane
Branches at

Kellogg, Idaho and Yakima, Wn.

Members:

225

EAST

MASON

PHONES—Daly 5392

of
our

they

cause

Hamilton Manufacturing Co.

of Orders

of

colleagues the other day that

England was so run down that he

Quotes call TWX Sp-43 on Floor

A.M.,

Sterling Motor Truck

is weeping about
just as

Germany

Dewey had spent a lot of time in

Botany Mills

Empire Southern Gas

as

American

Private Wire System betioeen

Empire Steel Co.

much

in

al¬

rone.

canned

returning

the

to

But

has

It

this way and it has
always been that way about Eu-

had

the

it.

do

been

ways

to

and

other.

alongside each

right
the

had

Italian-Americans,

there

that

inconceivable

almost

out

Americans,

accom¬

with Mexican peons

prised when

Polish-Americans

modernity

this

and

panies you right up to the imagin¬
ary line. You step across it and
there are the filthy adobe shacks

well-built

enmeshed

are

well-built stores. You

bus for the Tia Juana race

a

track

there is no doubt
about his doing a good job. But
I

abject

see

example, you see " a
city, well-built

for

houses and

the

Short

American Box Board

Consider

just in time to confound

voters.

by

and

LOUISVILLE

American Turf Ass'n

year

to

don't have to go to
Just cross the
border. At
San Diego;

modern American

predominating in his district.
SECURITIES

SPOKANE, WASH.

Air Filter

Calif.,

casional statement that

Chairman

Philadelphia, New York and Los Angeles

American

fact,

in

hear,

we

want
Europe.

Mexican

is an oc¬
MacArthur
is doing a good job and that he
may show up in this country next

all

succeeded

you

war-torn

communism. About

be saved from

few

a

their heads

finally

cops

you

poverty,

starving, that she must

are

than

more

separating them.
If

still consider a European
country their homeland.

STIX & Co.
INVESTMENT

Philadelphia

Member

in

as

Street, Phila'delphia 2

New York

the

the

when

France, Poland or what
Yet we've heard none
stuff from her that her

you.

people

were

strands of hair left in

as

many,

disastrous

page

there

will

Corporation

Stock Exchanges

York Curb

Walnut

Carlisle Bargeron

as

Ger¬

as

have

couple of women, flower vendors,"
fighting in the street. I doubt

up

just

much

few years before the war
by the sight of a

a

ruined

was

the

during
war

'

stituency. Thus he can give a fear¬
less and unbiased report. This is
not true of the man with German-

Request

York.

Los Angeles

land,

was

so

ST. LOUIS

BUCKLEY BROTHERS
Members

ainly

battered

-

My whole visit to Warsaw, Po¬

priations Committee, has little or
no
foreign
strain
in
his con¬

Gruen Watch

Richardson

Bldg.

which

ld 11

Portsmouth Steel

Harshaw Chemical

Tele. CV 174

how

would be the effect of

(Continued

Beryllium Corporation

CLEVELAND

the

PHILADELPHIA

Drackett

t

e r

our

fiiiiiiiiiiiiiiiisniiiiiiiiiiiiiiiiiiiiiiiii

Union Com.

on

depends.

transportation
failed

Lynchburg, Va.

CLEVELAND

C

Japan

it

the fields.

in

feed

Japanese.

—

Scott, Horner &
Mason, Inc.

10
BS

★

both

political and economic, of restor¬

Dan River Mills
—

under¬

we

much other

Prior

the

belt to whom our

estimated

Bassett Furniture Ind.

move¬

to

European

countries and the people have

Europe.

ment

when '• I

time

sinking feeling when

a

countries. The
always appeared run down to me,
even in that great citadel of cul¬
ture, France, where women fre¬
quently take the place, of oxen

visiting

%

Thereisno

tute

omy

American Furniture

Boston & Maine RR.

feed

Europe.

the

known

didn't have

and
poultryl;ess
Thursdays to

in

bad

not

never

ob¬

to

meatless

that conditions
I have

not saying

am

are

Tuesdays

this

reason

every

healthy, stable and balanced econ¬

&

asked
serve

f^iat

was

I

are

being

now

steady progress would be made to-

LYNCHBURG

BOSTON

sum

suffice.

ward

Types of Europe's Needs
When I first sat down to clarify
my

this

seem

The American

people

of

British Balance of Payments: As

Agreement,

amazing to a lot of bewildered Americans that fo£
two years there has been a tremendous agitation about the plight
of Europe, and what we must do to save her, and little or nothing
about the plight of Japan or anything that we must do to help her;
We have already poured billions into Europe and we are told this
is just the beginning. I have heard of no loans or grants to Japan.

such

UNRRA.

bandied by

merchan¬ ably tired of hearing and reading contributed $1V4 billion, making
permit¬ about the need for international together $5 billion and it was fplt

that payments for

find

three

a

The theme of international pay¬

well

last

at

year's Convention in New York.
Many of you who were there will
remember
that
he referred
to

in this direction.

as

said

Martin,

McChesney

substantial gains

look for

able to

of

as

By CARLISLE BARGERON
It must

Chicago Stock Exchange

ST.

Chicago: State 0933

MILWAUKEE (2)
Teletype MI 488

International

Import Trade Promotion
By PERRY J.

FINANCIAL CHRONICLE

&

COMMERCIAL

THE

Number 4640

Volume 166

(1635)

7

Monetary Fund Should Aid In

STEVENSON
Director

Assistant to Associate
Office of International Trade,

Department of Commerce

By ERNEST II. WEINWURM
*

£

v

Commenting

neglect to foster imports, Mr. Stevenson notes

on

international trade position that has led to setting up
an Import Advisory Committee in the Commerce Department.
Sees
enlarge imports needed to preserve national resources and to main¬
tain supply of dollars to foreign importers.
Says import promotion
is handicapped by insufficient customs personnel, but points to
present customs revenues as highest on record.
change in

•

our

Styles in trade promotion change just the same as the length of
For more than three decades American business
empha¬

<$

■

,

motion

fire

exports,
much

fact

porters could purchase the manu¬
factured products of the Amer¬
ican seller.'4 In other
cases, ex¬

so

in

so

that

for¬

c

of

h/angeable
of

gradual

evo¬

tak¬

history

set

has

Perry J. Stevenson

Advisory

Import

an

up

our

international trade

tivities of both business and gov¬
is

ernment

to a
realistic attempt to aid in the de¬
velopment of a greater volume of
being

devoted

import trade.

bership

representative

a

Laying Waste Basic Resources
For

has

the American
laying waste its

years

many

basic

been

stimulated

The

resources.

demand and

vastly increased

con¬

sumption of our raw materials
during the war period have made
fact that the

conscious of the

us

supplies

of

materials

have

raw

necessary

many

been

heavily

de¬

some
cases
below a
margin of safety. One

in

pleted,

reasonable

important avenue of conservation
is through importing those criti¬
cal supplies which are essential
to the maintenance of the

current

high

Closely

production

akin and to

levels.

certain extent

a

over¬

are the requirements of
"strategics"
necessary
in

lapping,
those

where
balance

hampered

tends to

Perhaps

the

factor

current

than other is acceler¬

more

ating this evolution in trade pol¬
icy

is

sion

of

dollars

the

in

posses¬

This

countries.

foreign

of

shortage

growing

the

American

problem stems from the fact that
the post-war demand for Amer¬
ican goods and services has been
maintained
at
record
peacetime
levels

without

increase in

a

commensurate

purchases abroad.

our

The net result of this exceptional
flow

of

has

exports

the

been

drawing down of dollar balances,
in

some

level.

to

cases

As

important

trend

a

develop

branches

their

of

public
impa tience

caps,

scant

for the future.

r

This

cross

the

it

approach,
nized

had

that

dle

and

influence

SQund
affairs.

do

which

importers.

In addition,

tising

which

volume of

in

cept

Office
areas,

and

New York

sporadically

have to create

(Continued

on

ex-

in
a

other

machinery

of

Earnings

conference

per

the

what
doing

perfect in every
represent a suitable
of future progressive evo¬

The

but

Fund

management

.to take the public into its confi
dence.
And yet its resources are
not derived from private sources

government funds.
Surely, the taxpayers of the world,
and
particularly
those
in the

knowl-

on

more

cant" contribution to the problem

It is limited to
operations
with a
"punitive"
scale
of
interest
charges.
Moreover, use of the

Of dollar shortage.
short

introductory General Comments
reprinted in the Sept. 18 issue of

term

Fund

is restricted

(Continued

as

on

We've Got

with

Room

a

View!

a

Anation-wide viewall For every country. deal with,
day we Our hand
for, brokers !
the

represent

and

•

is

on

the

over

pulse of

a

multitude of markets. Increasingly,

dealer friends find this

work

to our

But

our

mutual

finger-tip knowledge

can

advantage.

viewpoint does not stop

on

the local level.

Sitting in the center of this network of buy-and-sell
transactions,
trends

.

.

we

have

a

picture-window view of general

over-all conditions.

.

You

and
import

new

business

as

a

We take

can

have the benefit of this

anytime. Just phone, write

or

on-the-spot service

wire.

pleasure in announcing the installation of
direct

private wire to the offices of

BAUMGARTNER

Stock

Mercantile Trust

Share

$2.50

&

CO*

Building

R. W. Pressprich & Co.

BALTIMORE, MD.

Dividend

€8 William Street

may

continuing at
December
dividend

earnings
be

201

liberalized.

Price—$18

per

share

dealers

available
on

request.

COMSTOCK & CO.
231 So. La Salle St.

4

Dearborn

Teletype CG 955




Devonshire

Teletype NY 1-993

Street, BOSTON 10

Exchange
\

for
Members: New York Stock

15

CHICAGO

J**

Members New York Stock

Kalb, Voorhis & Co.
analysis

interested

Telephone HAnover 2-1700

.30

NEW YORK 5
rates,

to

page

3.00

current

Detailed

position is
strongly in
explaining that the
cannot make any "signifi¬
even

the part

Paid per Share

Approx.

Fund

Commercial and Financial Chronicle.

our

appar¬

ently felt that there was no reason

but

official

same

statement

a

Bank had to consider

lyionths Earnings

1947 Semi-annual

record

The

expressed

international

operations but com¬

sequence,

Share

payment

had

a perma¬

1 The
are

lution.

40)

page

the'Paris

at

basis

by the

Regional

Fund manage¬
play the role of a
very much interested spectator of
present world events but does not
feel that it has an active part in
these events or even a responsi¬
bility to influence or guide them.

un¬

management in monetary
The U. S. Department of
now been compelled to

respect

adver-

Judging

inquiries received,

our

we

requires

wares.

our

better

which may not be

demand, for assistance to our ex¬
porters, we have to build a new

clientele,

nent

told,

are

part of

as

the

it^iembers .of

has

ternational

that
We have added
there¬
fore, to taking care of the heavy
"line."

promote

among

public reactions; the management
had to go out and submit its pol¬
icies to expert review. The result
was a set of rules and principles

business.

any

new

they

Fund,

pletely failed to do.
This
may
be just one more
proof of the usefulness of public
discussion and criticism. The In¬

radically different from

not

to

since it began

Incidentally, the problem of the
of International Trade is

a

failed in

the Fund should have been

Office
of

has obviously

derstanding

practical day by day assist¬
needed
by both new and

established

It

give lead¬
ership in the field of international
monetary policies and to use its

English, those most suitable

ance

The

in which these problems

Obviously,

few

been intended

The
discussion
is
with the observation

ment intends to

to satisfy the curiosity

Fund

its principal purpose to

error

to the

the

of

sizable loans to Great Britain and

exports were, with re¬

of

work

France.

to

verse

Woods

BROAD

•

New York Curb Exchange (Associate)

government,
public

STREET,

NEW

YORK

5,

N. Y.

wires to correspondent firms in Chicago

OFFICES:

ALBANY

•

BUFFALO

•

•

ROCHESTER

Cleveland
•

•

Hartford

PHILADELPHIA

municipal,

utility,

and

Direct private
BRANCH

1501

Exchange

a

international

solved."

monetary relations rather than as
up to
an emergency device to meet the
disappoint¬
special needs of the postwar years.
ment for those who expected so
Its objectives can be fully realized
much from its activities despite
only when productive efficiency
the fact that it recently has made

recog¬

techniques

structure by

Bretton

playing second fid¬

way

are

has been quite a

now

State

finally

was

the

the

They are merely
generalities and a
summary of facts that had been
made public before.1
a

point

problems [the world is now con¬
with] but the role which
the Fund will be able to play in
the
future
must
inevitably be
determined in large measure by

"outsiders."

only.

The

developed for the pro¬

been

motion

trial

usual

of

architects

the

with the Bank

focusing attention on their impor¬
tance
in
the national economy.
After

corner¬

considered

stone of the postwar

even

and

for the

the

was

of

given

rather surprising;

is

Fund

The establishment

special' import studies

Ernest H. Weinwurro

Fund.

etary

though it had a
short existence, also gave impetus
t,o

any reason

up

their

the

achieve

fronted

length. But the
the Fund did not see

managers of

Inter¬

national Mon¬

Import Advisory Division in
the Office of International Trade
1945,

activities

the

of

of an

in

payments.

at

the

in

to

can

that "the Fund cannot solve these

Bank

matters

restored

members

summed

ma¬

The report of the
discusses all

International

given to

been

Long-Bell

Common

With

it¬

these

velopment of import trade promo¬
tion programs.

and

use

recently published second
report of the Fund might
have afforded the management an
opportunity to give an account of
its stewardship and its intentions

been

of Commerce
Department in the de¬

the

and

Lumber Company

per

do to make the best

has

The

restraint.
Yet

had

annual

self with little

the Secretary

a

The

1947 First 6

handi¬

expressed

usual

of its available personal
terial resources.

innumerable

manufacturers

exporters to

1946

by

as

dangerous

a

natural

a

there has been
of

of

legal

appointment of this group in 1946
was the first time the Department
of Commerce has had a group of

periods of national emergency.
which

States—who

right to be told what the Fund in¬

this character especially appointed

nation

<$>-

oper-

bonds.was

activities of
the country. While advisory com¬
mittees are not a new device, the

to aid

beginning, has been under
difficulties delayed

very

organizational

United

section of the import

a

When internal

to raise the largest share—have a

Committee, including in its mem¬

substantial part of the
promotion ac¬

in

different quarters.

many

its

Office of International Trade

the

first

the

emphasis,

In line with this new

ing place and
for

Committee

S. Import Advisory

U.

bridg¬

public attitude toward the twin Bretton

from the

ations and flo¬

lars.

a

lution

time

at least minimize
the growing wide¬

remarkable difference in

attention has

factors,
is

or

of

effect

spread shortage of American dol¬

a

of

result

exports

the

As the

number

they

a

The International Bank,

tation

could maintain their present level

inter-

words.

to find

in barter a method whereby

were

almost

have endeavored

porters

eign trade and
exports

which

with

from

lending

:

providing dollars
their overseas im¬

direct means of

of

active part in

a more

gap

There has been

the ladies' dresses.
sized the pro-

.

during the interim period until the Marshall Plan becomes operative. Says it should permit
the needy countries of Western Europe to purchase dollars up to 50% of their quotas at
special interest
rates and repayment provisions within the limits of the Charter.
Holds such an active policy of the
Fund would have far-reaching and beneficial effects for future
stability.
ing the

Woods institutions.

has

t

Writer maintains Fund should revise its present passive policies and take

railroad,

industrial

investment

bonds

stocks

amounts

28)

8

COMMERCIAL

THE

(1636)

NYSE

Vole

& FINANCIAL CHRONICLE

Group Requests
Dealer-Broker Investment

Permissive

on

Recommendations and Literature

Incorporation Issue
A

West Penn Electric

It is understood that the

petition, containing 300 sig¬
was filed with the Board

natures,
American

recently

which

Electric,

&

Works

Water

sold

its

properties by offering the stock of American Water
Works, Inc., now plans to distribute its electric interests and dissolve.
The company owns substantial amounts of the preferred stocks and
Class A and B shares, as well as all the common stock, of the inter¬
mediate holding company, West Penn Electric. All these holdings
with the exception of the com-^
mon
stock
have
now
been fund its preferred and class A
water

works

^

is proposed

It

cellation.

of

shares

additional

stock

common

so

number will equal the
Works

Water

will

This

American

the

is

It

Secretary of State in
by
approximately

What

worth?

present
market
might lie
and 30. With
a
$1

the

25

solution however is not yet defi¬

dividend

the

nitely known, since there may be
a considerable
delay before it is

oected
with

determined whether the company

somewhere

must

Hence

the redemption pre¬
mium on the preferred stock (for
which funds have been set up in
escrow).
However,
it
appears
likely that Water Works might

tric

distribute

ane

the year-end

Electric

pend

would

who

on

West

cellation
ferred
and

of

the*

of

the

the

A

B

and

shares, the earnings
currently estimated around $3

common

meeting

of

final

have

the

probably

—

points.

the

water

properties did

receive

will

changes,

the price

on

the

New

some

tangled

lationships.
Penn

Electric

will

York

—

Com¬

Study

—

Co., Inc., 730 Fifth
Avenue, New York, N. Y.—paper
—250 (free to public libraries and
non-profit institutions).
A list of active "Cats and
Dogs"

selling for $1
with

lower, together

or

list of 50 Low-Priced Divi¬

a

dend

Payers

showing dividends
declared in 1947, available
from
Herzog & Co., Inc., 170
Broadway, Nek York 7, N. Y.
paid

or

curity Dealings—Income tax guide
designed for investors exclusively,
by J. K. Lasser—sponsored by

World Bank Reports

Distributors

Operating Deficit
For

Sept.
for

the

three

the

30,

months

ended

International

Reconstruction

ment

reports

and

Bank

Develop¬

an

quarter

$2,538,741,

against

$3,416,426.

The

of

income

loans,

from

was

was

expenses

principal

amounting

of
on

$1,372,928.

The next largest item was $654,940
income
from
securities, mostly
U.

S.

63 Wall Street, New York
City—
copies of the booklet will not be

sold, but
plication
Inc.

to

available

upon

Distributors

ap¬

Group.

Director

Louis C. Lerner, of Lerner &
Co., Boston, Mass., has been ap-

Corp.—Memorandum

30 Pine

&

Merle-Smith,

Street, New York 5, N. Y.

New York Banks and Trust Cos.

—62nd consecutive

quarterly com¬
parison of leading banks and trust
companies
of
New
York—New
New York 5, N. Y.
York

New

Circular
for

120 Broad¬

City

Bank

Stocks—

earnings comparison
quarter of 1947 on 19

the

cur¬

Guide"—G. A. Saxton & Co., Inc.,
70 Pine Street, New York 5, N. Y.

Colorado

Milling

Data

—

1420

Elevator

&

Buckley Brothers*
Street, Philadelphia

—

Walnut

2, Pa.
available

Also

Portsmouth

on

is

information

Steel

and

Beryl¬

lium Corporation.

Graham-Paige

Motors

Corp.—

Analysis—Seligman, Lubetkin &
Co., 41 Broad Street, New York 4,
New York.

Also

available

Osgood

analyses of

are

Company "B," Tennessee

Products & Chemical and Fashion
Park.

Lake

Superior

District

Power

Co.—Analysis in the current issue
of "Business and Financial Digest"
&

Co.,

East

225

Mason

Street, Milwaukee 2, Wis.
Liquidometer Corp.—Analysis—
Troster, Currie & Summers, 74
Trinity Place, New York 6, N. Y.
Bell Lumber

Long

Company-

Detailed

analysis available for in¬
Co.,
23D South La Salle Street, Chi¬
cago 4, 111.
terested dealers—Comstock &

on

third

York

New

in

rent issue of "Public Utility Stock

—Loewi

ICC Rate Decision of Oct. 6,1947

—Circular—Dick

way,
a

are

York Hanseatic Corp.,

Government bonds.

Lerner

Group, Incorporated,

source

interest

to

%

following literature',

Co.

How to Be Taxwise in Your Se¬

City Bank Stocks—
Laird, Bissell & Meeds, 120 Broad¬
way, New York 5, N. Y.

Week

—

Southwestern
ferred

that

exchanges,

Developments

Current

of

the

developments in

the industry—Vilas & Hickey, 49
Wall Street, New York 5, N. Y.

Cotton

an¬

Industrial

Pre¬

Stocks—Comparison in

Nu-Enamel
dum

brey

&

Corp.

—

Memoran¬

dealers—Carter

for

Co.,

South

135

Cor-

H.

La

Salle

Street, Chicago 3, 111.

Lipmann

uptown office at 781 Fifth Avenue.
Why Long Term Municipals Are
Louis

C.

PALM
Ahbe

is

are

business

re¬

Worth

to

The

Financial

Chronicle)

BEACH, FLA.—John L.
engaging
from

in

a

offices

securities
at

241-A

pointed

a

Gypsum

name

re-'

Avenue,
of

John

under
L.

the

Ahbe

&

firm
Com-

pany.

Victoria

Co.

director

of

With Field & Co.
Financial

Chronicle)

PORTLAND,
ORE. —Field &
Co., Inc., Cascade Building, has
added Jennings O. Stendal, Jr. to
the firm's

staff.

Study—Channer Securities Co., 39
South
La
Salle
Street, Chicago
3, 111.
Amerex

Holding

Corp.—Circu¬

lar—Laird, Bissell & Meeds, 120
Broadway, New York 5, N. Y.
American

Cyanamid

Co.

—

In¬

vestment

his

appraisal—Kalb, VoorCo., 15 Broad Street, New
N. Y.

&

York 5,

Also available is

Trading Markets in Common Stocks

study
Corp.

Federal Water and Gas

'

Soutli

Chicago 4, 111.

Palace Corp.—Circular—Smith,
Hague & Co., Penobscot Building,

26, Mich.

Portland General Electric Co.—

Analysis—Ira

Haupt

&

Co.,

Ill

Broadway, New York 6, N. Y.
is

available

Also

memoran¬

a

dum on Otis Elevator Co.

a

summary

Commonwealth

on

and
Gas

Portsmouth Steel Corp.—Data—

Buckley Brothers, 1240 Walnut
Street, Philadelphia 2, Pa.
available

Also

tion

is

late

Beryllium

on

informa¬

and?

Corp.

Gruen Watch.

Steel

Portsmouth

—

Special

re¬

port—Ward & Co., 120 Broadway,
New York 5, N. Y.
National

Public

Bank

&

Trust

Co.—Third

quarter analysis—C. E.
Unterberg & Co., 61 Broadway,
New York 6, N. Y.

Southwestern Public Service

Public Service Co. of Indiana

Salle Street,

Attractive for Bank Investment—

Lerner

John L. Ahbe & Company
(Special

La

Detroit

Topics"—Rauscher, Pierce &
Co., Inc., Mercantile Bank Build¬
ing, Dallas 1, Tex.

has

firm's

Oil Exploration Co.—Memoran¬

dum—Comstock & Co.. 231

re¬

issue of "Current Quotations

and

Emil

become associated with the

West

doubtless

Stocks

&

effect.

(Special to The

inter-corporate
Eventually,

Axe

cent

commodity

nounce

and

holding companies. Also, there

Equipment

Common

W.

and

West

operating

E.

Exchange and other leading stock

Penn Power and West Penn Rail¬

both

the

from

H. Hentz & Co., members of the
New York Stock and Curb Ex¬

earnings is complicated by
the fact that the principal subsid¬

are

attention

it

SEC, whose approval will also be
required before it can be put into

flow of

—

meantime

Automobile
pany

Railroad

(judging from the 1946
West
Penn
is
"taking
down" only about two-thirds of
its
equity earnings, or in the
neighborhood of $2 a share. The

ways

the

trading.

report)

Edison,

In

weeks.

With H. Hentz & Co.

present

Potomac

on

are
per

be paid
in dividends initially?
Judging
from
the
history
of
United Light & Railways, Electric
Bond and Share, etc., a rate of at
least $1
might be expected. At

—

If acted

23,

firms mentioned ivill be pleased

interested parties the

of

share. How much out of this could

iaries

Oct.

on

since the subscription rights were
valued at only about 1/64 in the

stocks

number

Elec¬

&

value

small

not have much effect

pre¬

increased

Works

of 28%-13%. The segrega¬

range

can¬

portions
Class

and

for

for

ex-

range

is

tion

Electric

simliar

lie in the range 20-30,

might
two

or

might be

a

currently selling around
17V2
compared with this year's
range of 18%-12 and last year's

adjusting the earnings of

Penn

a

operating deficit
Light & Railways— of $877,685. After
deducting $422,in
the
20-25
range. 442 for a
special reserve fund, the
"breakup" value of income
for
the

whatever

tric

largely de¬
the escrow

gets

in

American Water Works & Elec¬

fund.)
After

stock

Water

would

"stubs"

by

or

dividend

the

American

early next year,
with a final liquidating dividend
at some future date. (The size of
this

rejected

it is expected that it will take the
matter
up
again at its regular

answer

sell

to

United

olus

stock

the

make

Under

conditions

pay

levels.

present

this

would

between

Penn

board

able
share

much as $2 a
that
system earnings

around

continue

December. The exact time of dis¬

West

eventually

that

to pay out as

Dela¬
mid-

ware

possible

assuming

dissolve with

to

The

similar proposal last January, but

two

West Penn Electric might be

of dissolution
was approved by the SEC and the
Federal court last March, and un¬
der this plan the company must
plan

file its intention

change be amended so as to per¬
mit permissive
incorporation of

favorably, it will- be submitted to
a vote of the
membership within

stockholders.
American's

Stock Exchange on Oct. 21, asking
that the constitution of the Ex¬

members.

send

to

York

New

also
prove
necessary
to
simplify some of the inter-com¬
pany
holdings and possibly to
eliminate West Penn Railways.
may

share-for-

to

ef¬

be

could

basis the earn¬

4V2%

a

increase

number of

a

permit

on

the

of

ings for the common stock might
by about 30c a share. It

Penn
total

the

outstanding.

shares

distribution

share

issue

to

West

that

fected

this

if

and

stocks

"donated" to West Penn, for can¬

Governors

of

Thursday, October 23, 1947

Tennessee Gas Transmission

75 Years

Texas Public Service
*Prospectus

Also

of

Request

on

Established

1879

Furniture

Co.—Spe¬

available

special

are

re¬

ports on Crampton Manufacturing
Co.,
Miller Manufacturing Co.,

ADVERTISING

Paine, Webber, Jackson & Curtis

American

cial report—Arthur I. Korn & Co.,
50 Broad Street, New York 4, N. Y.

Tennessee

Products

Higgins,

Corp.,

&

Inc.,

Chemical

Common

Rexall Drug Co.—Memorandum
—A.

&

Kidder

M.

Co.,

1

Wall

Street, New York 5, N. Y.
Utica
Inc.

—

&

Cotton Mills,

Mohawk

Circular

—

Mohawk

Investing

Co., Inc., 238
Street, Utica 2, N. Y.

Valley
Genesee

Stock, Maxson Food System, Pre¬

SERVICE

ferred

Stock,

and

Central Public

Utility 51/2s of 1952.

COMING
American

Hardware

Co.—Cir¬

EVENTS

cular—A. M. Kidder & Co., 1 Wall

1947

American Gas & Power
3-5s, 1953

Inc.. 63 Wall

Portland General Electric Com.
When Distributed

I

Street, New York 5,

Albert

Frank

American Water Works & Elec¬

ger,

Loeb & Co., 15 Broad Street,

New York

5, N. Y.

lucerporated

Gilbert J. Postley
29

&

Co.

BROADWAY, NEW YORK 6, N. Y.

PHILADELPHIA

CHICAGO

BOSTON

SAN FBANCISCO

outlook—G.
Wall

H.

Street, New York 5, N.Y.

,

■

:-U

(Chicago, 111.)
Security Dealers Asso¬

Gardens

of

the

Morrison

Hotel.
Nov.

30-Dec.

5, 1947

(Hollywood,

Fla.)
Investment Bankers Association

Convention at the Holly¬

wood Beach Hotel.

November, 1948

(Dallas, Tex.)

National Security Traders Asso¬

Direct Wire to Chicago




Field

1947

Illinois

Annual

study and
Walker & Co., 1

Best Foods—Detailed
N1W YORK

Oct. 31,

race

tric Co.—-Memorandum-r-Newbur-

Guenther Law

Investment

ciation Annual Dinner at the Ter¬

N. Y.

1950

In

Hardware

Corp. —
Memorandum—Bond & Goodwin,
American

Portland Electric Power
(is,

Street, New York 5, N. Y.

Central Vermont Public Service

ciation Convention.

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4640

Volume 166

Production Is

What Is the Business Outlook?

Key to European Recovery: Col. Pope
Corporation

President of First Boston

By FRENTISS M. BROWN*

says

Former U. S. Senator from Michigan

Utility executive and former OPA Administrator, after reviewing

Allan M.

Pope, President of the First Boston Corporation, told the
Alumni

likely to be
maintained for many years to come. Holds velocity of business, in
immediate and long range picture, is promising, and though there
are many businesses where prices could be increased, others are

of

New

York

keeping prices down.

Business

not too high and are

are

public
also

demand

the picture, the purchasing power?
I was amazed when I picked up

say

the

tonight

hands

subject,
and
then bring to
bear a couple
view

Prentiss M. Brown

that

in

time

of goods at the res¬

is

the

the

amount,
which
took

First

Everyone

of

that

fort in

the

was

dustry
World

in

Administration

did in 1943 and

of

the

that

1934,

I know

task

of

supplying

in

the

First

with

compared

the

Scarcities

the

at

Just

go

mind

the

things

t

billions

this

half

would

be

Charlie
it that

that

tuxedoes

wear

because

I

wide expanse
of white running up and down in
front—and you all know the same
pretty

a

condition

plies,

exists in

electrical

sup¬

materials,

building

steel

and lumber, and numberless other

articles.
A

the
little dinner here

Congressman

other night

at

that in the

steel

only

of what it
base

10

a

told

us

business

of

years

we

had

in

the

left

ore

writing

letter

a

line

say

up,
but
that much.
cost-of-liv¬

gone
up

average

to

men

who
state¬

was

in

come

tional

along

it

was

income

103

was

the

that

largest
had

we

billions.

are

That

will be, in my judgment,
iron business.

and

of

not

center

for
the

of

The

ores

high a grade as
the present 52% ore that comes
from
the
Mesba,
Marquette,
Menominee and Gogebic Ranges/,
are

but

of

ore

as

a

grade is ther6
quantities.
j

lower

in

of

power

the

In

of National Income

other

income

words,

has

the

national

multiplied

three

the

we

demand.

head

of

one

I

have
was

of

tre¬

a

told

the

by

great

building material corporations in
the United States that they antici¬

business for many
years to come, based not upon the
general situation—of course, it is
based mainly on that — but bepate

large

a

times

itself

from

al¬

1939

to

a

stenographic

tran¬

address by Mr. Brown
Sixth
Annual
Con¬
ference of the Institute of Internal
script of
before

an

the

Auditors,

of

adequate

Detroit, Mich., Oct. 13,

1947.




the

funds,

In

an

existing difficul

the

Congress of the United States
against bitter opposition. I know
to the econ¬
States, and I
that our debt, instead of
around $250 billion today,
was

necessary

of the

its

United

effect

ernment,

upon

the

would

the

commodities

that went

into the purchases of the Govern¬
ment of the
say

United States, not to
anything at all about its ef¬

as

I

Price

and

bers

industry and

num¬

industries have made

of

di¬

rect investments but in such cases,

generally speaking, they are rela¬
tively small in number of dollars
therefore the ques¬

and

tion of whether
return

or

not

an

adequate

the investment is forth¬

on

coming in dollars is not a matter
of as great importance and there¬
fore

is

which

risk

a

several

in¬

dustries have been willing to take;
"To make

dent in rehabilitat¬

a

complications that naturally arise,

ing western European industries
and to bring about a production of

the

sufficient

aside

essence

the

all

of such

other

undertak¬

an

tries

available

to

"know-how"

can

to

depleted

present

indus¬

these

Ameri¬

entrance of

the

and

as

"With

such

conditions

particularly
it

rope,

in

becomes

American

to

compete in the
thereby
sizable amount of dol¬

lars

is

a

in which

matter

a

they

is

"It is too

early to figure

on

what

the Marshall Plan may be able to

because

fort

essential

is

western Eu¬
obvious
that

early

to

Bank

not find

early

for

a

cooperative ef¬
it may
be too

what

could

will

industry

as

size

essential.

do and

generally exists.
are,

produce

supplement

management

size

international markets and

know
do,

the

but it is

manufacturers
give

to

this

World
not too

in

this

question

such undertakings feasible because

country

of the risk for

thought, to know how they could

other.

The

one

reason

or

an¬

then

that

problem
American

attract

to know

industry

what aid they might need

in the solution."

And

into such direct investments.

about solving the problem and

go

arises is what can be found which

the Structural Engineers Association of California on Oct. 17,
Follin, who is Assistant Administrator of the Federal Works Agency, pointed out

,address

nation's

re-<§>should be

According

purchase the products of
construction, particularly the re¬
lationship of family income to
construction costs and the ability

Mr.

t0

Follin,
con¬

tivity

ac¬

aver¬

aged
about
10V2% of na¬
tional

income

during the 20year

period

from

1920

1939. It is

little

to

now

running

but

more

than half that
James

rate

Follin

W.

even

terms

rent dollars.

American Appraisal Company in¬

good indicator of abil¬

quirements.

of

in

ity

a

because

dex

to

to

this

index

attempts

changes in costs per
construction rather than

measure

unit

of

materials alone
find

that

purchase houses. If we examine
the
data
relating to non-farm

we

disposable income and the num¬
ber of non-farm families, we ob¬

representing the
disposable income per
family. We find that
family income, in terms of cur¬

statistical

or. wages

costs

the

same

tain

a.

figure

is

dollars

rent

from

1915

examine
for

this

rose

to

If

I

purpose

have far outrun

we

the family

using the

income in 1915."

Construction volume

in 1939.

contrast,
production
of
goods this year is

industrial

of

indicates
1939

The Federal Re¬

Board index of the physical

volume

to

an

production

July of this year.

manufactured

Keep
Production

at all."

rose

explaining

stated:
risen

goods rose 60%,
of construction

the volume

barely
In

I fought the Price
I

also

10

in

the

m

increase of 60% from

these figures in mind.

this,

Mr. Follin
prices have
the prices
of

"Construction
faster

than

manufactured goods. The relation
of
income to construction
costs

Commission houses desirous
num

to

Amott, Baker & Go.

say

Office

of

Administration, although it
(Continued on page 27)

to

INCORPORATED
or

of furnishing Plati¬

their customers will

find

us

prepared

deliver Platinum to them from our spot
sell

tlicm

Investment Securities
Trading

Department

and

stocks, title company and

NEW YORK 7/N. Y

our*?

;

Philadelphia

&

Bacin:
MEMBERS

LEADING

NEW YORK STOCK

STOCK

AND

36 WALL STREET,
TELEPHONE:

BRANCH
FOREIGN

Boston

deferred

stocks

delivery.

Metal Department

bank participation certificates.

150 BROADWAY-

for

contracts

Wholesaler and Retailer of

OFFICES IN

Co.

EXCHANGE AND OTHER

COMMODITY

EXCHANGES

NEW YORK 5, N. Y.
DIGBY 4-3600

37 CITIES—WIRE CONNECTIONS

REPRESENTATION:

longcosts

increases in fam¬

ily income. It takes more out of
the family income to pay for a
house today than it took out of

costs—and

am

amply clear that as a
trend,
construction

term

130%

about

mid-1947.

construction

over

This index excludes
but even if we make
allowances, I think it

plumbing,

average
non-farm

320%

risen

have

today is about the same as it was

"By

alone—•

construction

time period.

to

cur¬

specializes in real estate bonds
say,

battle.

that I
spent 20 years in Washington, 10
in the
Congress of the United
States

hemi¬

that, because of high building costs, the nation's construction industry is not fulfilling the

Our

fect upon the American people.

Control

this

pur¬

probably
be
around $400 billion if we had not
controlled the price of steel and
all of

in

SeesjJuilding Hampered by High Costs
bl'fore

James W.

while

through
and
carried
through the Price Control Act in

know

of

attention from

branches.

of

will

Decrying the

of

fought

So
•From

self-denial,

clared.

I

omy

European industry

"Waving

out.

higher

a

the managerial know-how

serve

have

outlined,

and

Prices—and nobody is more
concerned with prices than I am,

that it

ment

countries

manufactured

chases by the United States Gov¬

mendous

work,

availability

Ameri¬

But for all these scarcities that
I

hard

In

being
just in

in tremendous

of

the

is

1942.

tremendous

of

production can be ac¬
complished only by a combination

well above 1939.

Growth

of

"Some

indication of the

some

purchasing
can
people.

most

that

worked

of

pre¬

year, mostly actual fig¬
partly estimate, almost two

figures

re¬

steel

when

the

of

was

hundred billions of dollars, a total
of 197 billions of dollars. Those

of ore, and the Great Lakes

the

Plan

achievement

na¬

1947, this
ures,

There

decades

"The

function

that

annual earnings of the people.
1944 it was
182 billions, and

serves

many

Marshall

level

major

a

seventy-nine
billions in 1929, and it dropped to
thirty-nine billons, or almost a
third, in 1933. In 1939 it was
seventy-two billions, and in 1941

ment.

area

become

that the national in¬

vious to 1930. It

there

are

particularly abroad. This can be
aided by the World Bank and may

"new

1929

tion

dollars

in the 1930 to 1939

figures

find

we

recog¬

to provide more goods of all kinds
to
be
consumed
at
home
and

period.

were

denying

of

struction

great Mesba Range in Minnesota.
It is not so. and I took the liberty
of

have

Extending

generally

of

earn¬

sphere have received considerable

invested

the

of

ing presupposes a certain amount
of capital in the form of American

were

want

that I have at home there

one

prices
general

they

immediately

may

they haven't gone
The

of

de¬
dollars

a

Today bank
hundred
and

one

times what

You

"One

dollars

their

eliminating
inter¬
around fifty-five

dollars.

are

and

1933

you

ordered
one a year ago, and it is not here
yet, and if I had had to come in
the

1932,

and

tries abroad.

Pope

condition—but, in reality

a

result of

restrictions

condition. The prob¬
lem is to increase production and
a

forty billions of dollars, about two
a

prob¬

that

dollars," Col.
"The shortage

clared.
is not

present

nized solutions for the rehabilita¬

"The

not

'

getting

1939, calling that 100, is now 160%

arranged

evening,

of

of

time

the

own

that

happy
so

Bonds

your

in

did not have to

we

Pope

ing items from the period 1935 to

get—automobiles, most
get; clothing — and I

Ghesquiere

"E"

during

deposits

deposits

to

very

of

time.

present

over

was

M.

of

make it possible and attrac¬

tive for American industry to help
revive the war-destroyed indus¬

on

private enterprise," Col. Pope de¬

were,

that

Following the First World War
was
no
such
scarcity of

form

be cashed by the pub¬

deposits,

and

War.

there

can

cashed, and I
were not much
Federal debt of

our

troubles

bank

Present

difficult

saw

power.

Bank

then.

and

sat

I

immediately, and that, as you
know, is a
great
potential

buying

all-out ef¬

such

war

as

the

all

we

World

goods

have

I

but
in
round
a little less than
fifty billions of dol¬

or

lic

the

War

Second

one-fifth

I

two.

for

to

factor in

such devotion of in¬

no

materials

a

lars

draws

the

following.

years

there

the

$250,000,000,002;
figures, there is

which may

no

as

of

a

Price

1917

the

in

where

Board

being

were

experience in the

my

made

we

from
place

War.

between

from

Office

World

naturally

comparison
know

both

and

scarcity

after

different,

very

character

public.

Bank

supposed that they

it,

the scarcity
ent

the

of

Bonds

the
,

tremendous amounts of "E" Bonds

authorities.
I

at

"E"

of

the

on

of

Board

Reserve

amount

that

you upon

Bulletin

September

Federal

with

reason

of

Allan

ation
may

is the
lem before direct investment by industry in
these war af¬ this country either through the
fected nations purchase of a part of an existing
of
Europe is industry abroad or the establish¬

Now, what is the other side of

to you

As

-

will

that

Ex¬

Oct. 21.

Public Purchasing Power

Out¬

in what I

to

the war years
replacement.

during

trying

am

York

change

flimsy

the

look?"
I

That is,

factor.

construction that has taken place

my

Is

Business

another

of

cause

background in
{government,
"'What

New
Curb

the tremendous amount of

and

from

Ad¬

meeting at the

<8>-

utility

business

of

in

or on

ings?

believes that the World Bank may
well be helpful in obtaining relax¬

School

return

a

their investment

tal

ministration

the

obtaining the use of Amer¬
private enterprise and capi¬
in
those nations, Col. Pope

Graduate

principal theme of what I was going to talk to you on is
of interest to all business people, and it is from the standpoint of a
in

ican

problem.

is found to entice

means

of

sured

ties in

University

The

man

the

solve

not

industry then to what
must such industry be as¬

extent

Asso-<$—

elation

contends that prices

gift of dollars will

or

remedy for dollar shortage.

as

The successful rehabilitation of industry in the war-torn nations^
of Western Europe cannot be achieved by the mere
lending or even when the
granting of dollars by the United States or by the World Bank, Col. American

growth in national income, increase in purchasing power and tre¬
mendous unsatisfied demand for goods and services following end
of war,

lending

mere

Sees only hard work and production

Chairman of the Board, Detroit Edison Co.

LONDON,

ENGLAND

TO 53 CITIES

MEXICO CITY

..10

THE

(1638)

&

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, October 23, 1947

Transportation and World Trade
By G. METZMAN*

President, New- York Central System

'

Leading rail executive stresses factor of efficient and adequate transportation in world trade promotion.
on railroads in meeting
heavy exports, particularly in coal and grain. Decries lack
of coordination of nations' transportation facilities and warns nationalization of our railroads will
mean
complete socialization of U. S. industry. Scores inequality of treatment of rails, and says our transpor¬
Points out burden

reorganization picture was further complicated last
week by the release of a letter sent to the Supreme Court by the
Interstate Commerce Commission in the Hock Island proceedings.
The general

week earlier it had been reported that the Commission
of the lawyers in the case to offer its
views to the court. Now the Commission on its own initiative, and
without an invitation to express^its opinion as it had in the Miss¬ chase of bonds in the open market

Only about

a

tation cannot survive "half slave and half free."

had refused the request of one

Pacific

ouri

proceedings before
Appeals, has

the Circuit Court of

entered

the

with

case

contro¬

a

versial letter to the Chief Justice.

Actually, the

y

did little

letter
event

Supreme
the plan

remanded to it the

Commis¬

inform

more

than

Court

that in the

was

the

sion would comply with

the law. It
the

stated that the object of

was

letter

granted, and

facts

issue

to

and

Under Sec-

priate report thereon.
¥
tion

appro¬

an

Act it

of the Bankruptcy

77

than that
remanded. The
letter did take cognizance of the
fact that there have been material
could

hardly

less

do

the plan was

Once

changes in the situation as it af¬
fects the railroad since the plan
initially submitted, but went

was

"The Commission, of
course, does not attempt to ap¬
praise the effect of these changes
so far as they may effect the pro¬
visions of the plan
."
to

on

say:

.

.

The immediate market reaction

;

to

Commission's

the

of

release

letter was sharply higher prices
junior securities. This was

for the

the supposition that re¬
vision of the plan was made cer¬
tain by the Commission's action.

t>ased

on

It is true that the

of

consideration

chances of re¬

'have been improved.

similar

entirely
Pacific

to

and

case

not be taken for

Court

Supreme

entire

the

case

But it is not
the Missouri

it certainly

cab

granted that the

grant

will

cer¬

tiorari and eventually remand

the

plan to the Commission. Nor can
it be taken for granted that ma¬
terially
in

liberal treatment is
for the junior securities

more

store

if the

even

case

the

Within

value of new securities. Al¬
most half of this, however, was to
par

common

stock and

meeting

among

will

Commission

the

allow

than

capitalization

larger

place, there is fairly gen¬
agreement among rail ana¬

the first

eral

plan

the

that

lysts

drastic

was

unduly

conditions

under

even

as

existed when it was drawn
up.
Secondly, it is felt that rec¬
ognition should be given to the
particularly comprehensive reha¬
bilitation program that has been
undertaken by the trustees. Dur¬
they

last 10 years more than
$115,000,000 has been spent on
gross additions and betterments.
In comparison to the money spent
on
the
properties, and the re¬
maining working capital of some
ing

the

$83,000,000, the new capitalization
in the present plan is held to little
more than $150,000,000.
It is con¬
sidered immost quarters that the
Commission
will
recognize the
increased operating

efficiency

ex¬

pected to stem from rehabilitation
properties when, and if, it
reorganization plan. If

to

eco¬

stabil¬

ity.
Continu¬
ing prosperity

s

home

at

assured

if

or.l.v
is

there

firm

is

a

founda¬

Gustav Metzman

A

abroad.

na¬

cannot

long continue primarily to export,
nor can it long continue primarily

World

trade

street.

As

Britain's

must

Sir

be

two-way

a

Stafford

Cripps,

Minister

new

of

Eco¬

nomic Affairs, has said: "We must

Effect

of

America

Heavy

today

about three times

importing.
abroad

as

exporting

much

the

Until

America

it is

as

countries

revive their

can

duction,

Exports

is

own

have

still

may

pro¬

increased Amer¬
exporjis is well illustrated in

tne

far

the year

as

bapk ai

Going

situation.

coal

1910,

we

ttlat

find

the largest quantity of coal mined
the United Kingdom was 287 -

118

tons.

Comstock

&

now

Co.,

231

South

La

another

less

tons,

during

Great
about

1947

produce

only

in

in

largest

order

of coal

tonnage

ex¬

ported in any one year from the
United States was in 1920, when

slightly under 20,000,000 long tons
were shipped.
Virtually the same
amount was exported during only
the first half of 1947. At this rate;

ably, will be available for reallo¬
cation if the plan is remanded.

it

since the date of the
plan the claims against

is

attaining

well

troubled

a

world.

probable that the United
mav ship abroad this year
million tons, or
twice as much coal as was

has

tion

last
had

trucks and

25

Another

possibility

net current assets of nearly

might

be

tremendous

utilized

for

pur¬

Salle
"old

Street,
timer"

Mr.
on

McGhie

La

Salle

having conducted his
business

ment

in

own

the

Bonds

is

an

Street,

invest¬

shipments probably will be
further increased. Many of you,
these

of

well acquainted
large quantities involved,
figures bear repeating.

but

Carl E.

Apponyi With
Edgerlon, Wykoff 3 Go.
LOS

Special Securities

Chronicle)

E.

ANGELES, CALIF.—Carl

Apponyi has become associated

with

Egerton, Wykoff & Co., 613.

South

Spring Street, members of

the Los Angeles Stock
Mr. Apponyi was
GUARANTEED RAILROAD STOCKS-BONDS

25 Broad Street

New York 4, N. Y.

Telephone BOwlirn? Green 9-G400

previously with

Bogardus, Frost & Banning and in
the past was Manager

tistical

Department

Teletype NY 1-1063




Exchange.

Huntley & Co,

of the
for

'Sta¬

Banks,

are

course,

with the

past.

(Special to The Financial

Presi¬

dent's food conservation program,

the

During

Guaranteed Stocks

the

of

implementing

the

Jr.

McGhie,

$83,-

000,000 which is well in excess of
working capital needs. In the past
it has been suggested that excess
cash

George

1947,

first

the

the

United

months

six

of

States exported

5,300,000 long tons of grain.
This is almost three and one-half
over

times
tons

of

as

much

shipped in

as

the

the

1,700,000

same

period

1939.

necessary

shipments,
to help get the stricken

countries

of

These

their

life-giving

the private

their
inland
waterways
have been consider¬
ably
improved;
pipelines
have
been extended long distances; and
the

expanded

tremendously;

airplane

is

now

carrier

of

well

passengers

as

express

as

and mail. Thus,

situation

competitive
various

tation is

and

freight

common

a

among

agencies of transpor¬

vastly different from that

immediately
World War/

following

first

the

passed the
Interstate Commerce Act primar¬
In

Congress

1387,

there

and

common;

that

corrected

was

situation.

The

job

well done. Now, however, the

was

problem has taken another turn.
Legislative protection is needed
not

only by the public but by the

carriers.

should be

America

the

world

back

on

the great
teamwork
trade—teamwork by the

feet,

This

problem of postwar trans¬

portation

is

the

now

subject of
resolution

investigation

under

introduced

July 12, 1945 in the

on

a

House of Representatives by Rep¬
resentative
Clarence
F.
Lea
of

California, Chairman of the House
Committee

Foreign
before
that:

the

In

House, Mr.

provide

remedies

to

meet

focus

to

legisla¬

the

transportation

our

stated

Lea

to

failure

and

remarks

"Failure

tive

of

Interstate

on

Commerce.

needs

system

or

thought

the

their

upon

of

responsibility,

own

apart from legislation, in meeting
their postwar problems, can pro¬

in

and bus opera¬

Com¬

Interstate

water

In

the
and in

1940,

carriers,

emphasize

included.

all

Thus,

commercial forms of transport are

with

body

single

a

regulatory

exception

the

the

of

airlines.

Act; and for the establishment
maintenance
of
reasonable

without unjust discrim¬
ination; without undue prefer¬
ences or advantages; and without
unfair or destructive competitive

charges

other

the

Aeronautics

Act

hand,
of

the

1938

Civil
de¬

was

signed primarily to encourage and
develop an air transportation sys¬
tem

properly adapted to the pres¬

ent

and

eign
our

an

address by Mr. Metz-

the5*" National

Trade Convention, St.

1947.

Foreign

Louis, Mo.,

others;

In

the

yet

light of

legislation
control

we

and

to

entirely

an

adjust

administrative
set of

new

conditions."

Thus,

members

some

gress are

well

transportation

problem.

is
complicated
Congress
reaching
the

to

the

problem

the

with
of

a

far-

addition

In

trucks,

among

the

national

busses,

Congress

the

must

relationship

of these mature agen¬

all

in

the

carriers, the pipelines,

airlines,

consider

now

cies

Indeed,

confronted

importance.

water

and

Con¬

individual problems of the

railroads,
the

of

of this broad

aware

establishment

system

of

a

coordinated

of

Dangers

future

and

of

Railroads,

Nationalization

of

course,
are
only
of this transportation prob¬
lem, but they lie as close to my

part

heart

they do to the heart of

as

industrial America.

ceptions,

the

With few

railroads

United

States

Pacific

in

and

the

Canada

are

the

needs of

domestic

Postal

Service,

defense.

our

for¬

commerce,

and

This

of

Act

of
our

lays

development

of,

or

coordination

with, other modes. The Interstate
Commerce Commission is charged

only

in

the
are

government-owned
with taxpayers'
In

the

Canadian

Practically all others

world.

Great

ment

ex¬

of

privately owned railroads

practices.
On

the

system.

profound changes in the economy

recognized the need for fair

impartial regulation of all
modes of transportation subject to
and

with

useful part of our trans¬

a

portation

Act of 1940

and

the

own

transportation.

The Transportation
also

Lea

its

must

the

under

Mr.

has

problems; each is highly

competitive
each is

"Each

country,

truck

were

said:

the

Commission.

domestic

further

economic

to

problem, this need for transporta¬
it placed
under

speaking of the various
transoortation,

seeing that it has an

tion cordination. In 1935,

merce

in

of

its relations

transportation
system
than in
seeing that preferential
treatment
is given to any
par¬
ticular transportation agency.
On
three
separate
occasions
Congress
has
recognized
this

tions

And

the nation's period

years

industry and

efficient

the nation's

long by

this

great emphasis upon air trans¬
portation as a single mode of
transport without regard to the

■":i

on

equal basis. *

of

in world

Oct. 20,

at

more

national

maii

eco¬

the
insuring fair and im¬
possible,

leaders in the transportation field

need for transportation

*From

system
nation

and

Transportation

spectacular growth;
have

service

time

same

efficient

Problem of Postwar

busses and

automobiles

now

grain
ship¬
ments abroad are further swelling
the flow of our exports. And witn

im¬

for

equal period of

exported for any

time in our history.

proved treatment lies in the use
of treasury cash for settlement of
some claims.
The road now has

transportation
provide
the

most

transporta¬

years

wise

Our

the

Growth
the

In

about

bonds.

will

nomical

ah

1942, the freight forwarders like¬

old

a

which

partial regulation of all modes

and

States

the

objectives. Thus, they make
difficult, if not impossible, to

it

achieve

Transportation's Spectacular

between 35 and 40

representing
accruals on

those

tion

However,

roundly $50,000,000
continuing interest

similar

munity

with

original

the trust estate have increased by

national

our

policy. They have
objectives but no com¬
of interest for attaining

integrated system capable
of furnishing efficient service to
meet the needs of a growing na¬

interested

previous years.

to meet these
deficiencies, America is increas¬
ing her coal exports.
Since 1914
the

portion in preferred stock. Only
about $8,000,000 was in new fixed
interest
bearing
securities
and
another
$8,700,000
in
income
bonds.
These securities, presum¬

particular form of transport,

one

conflict in

a

forms

will

than

in¬

and

little
equality of treatment. But the Act

aboui 276,000,000

that

Thus,

de¬

of reconversion to peace."

1913.

195,000,000 tons of coal, and there¬
will be able to export much

—
George W.
associated with

-

These Congressional enactments

public transportation had
been
largely a monopoly; rebates were

year

fore

ILL.

the

Of

the

exported over 79,000,000 tons,
or
more
than
six
million tons
above 1913.
In contrast, it is esti¬

Willi Corcsfock & Go.

required to consider
velopment of only one.

they exported 73,400,Ten
years
later they

mined only

mated

is

ily in the interest of the traveling
and
shipping public. Until then

in

Britain

CHICAGO,

national

our

responsibilities.
This
problem, therefore, must be ap¬
proached from the standpoint not
only of what is good merely for

relation between.decreased British

and

...

transportation

upon

ternational

the

ican

•

_

while the Civil Aeronautics Board

provide

the

production

i

transportation problem and its ef¬

large exports. The

to continue her

2.1

_

fect

usefulness

export or die."

George McGhie, Jr., Is
McGhie, Jr. is

failed to consider the relationship
of railroads to the nation's broad

import,
without
eventually
bringing
disaster
upon
itself.

but

of all creditors.

ment

cially interested in rail transpor¬
tation, I would be derelict if I

to

430,473 tons in

should allow very appre¬
improvement in the treat¬

.

a

this amount

it

o

but also what is good for

tion

revises the
so,

imnnrt

ing prosperity

of the

ciable

—

shippers and receivers of freight,. with the responsibility of developt<T»£»rv-n*7rvrL'
] 1
Artn-r.r.1
teamwork among all agencies of :
ing a national system comprising
transportation. While I am espe¬ several forms of transportation,

tion for build¬

a

In

essential

nomic

that

called for in the present plan.

nations

world

■x-

reconsideration of the case

in any

rec¬

ognized that
cooperation

reduction in the aggre¬

a

This

is

a

commerce.

trade i

barriers.

gate of claims remaining.
The
greatest
potentiality for
better treatment of existing secu¬
rities lies in the possibility that

the

of

capitalization
provided
in the
present plan there is not too much
room for liberalized treatment of
creditors. The banks and the RFC
have been paid off and they were
to receive a total of $42,622,000

he in

result in

domestic

tional

payment of
back interest, which would

is reopened.

framework

our

for

however,

some

the
plan be remanded to the
^Commission the Commission was
prepared to give full hearings on

it is to

as

!•

would be legal while the
company is still in arrears on in¬
terest payments to creditors. Pre¬
sumably any attempt to take such
action
would
involve
lengthy
court action. The money could be
used,

maintaining

sound transportation system is as essential to our foreign
Recently, the International Trade Organization,
sponsored by the United States, met in Geneva, Switzerland, in an effort to adjust internatrade

purpose

to advise the court that

was

should certiorari be

the

(at well below their claim) or
through a call for tenders. There
is
considerable
question
as
to
whether the use of funds for that,

The need for

is

and

Britain,

now

operated

money.

the govern¬
in a vast

engaged

social

experiment. The govern¬
already taken over the
industry, aviation, communi¬

ment

coal

has

cations
program

Jan.

1

and

is

planning to
the

banking.
to

next

Now

the

expanded.

On

government

nationalize

railroads

agencies

be
the

and

all

not
o

is

only
t h

e r

of
transportation, but
(Continued on page 30)

«

Volume

166

Number 4640

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1639)

11

Since 1939...
-FOREST

PRODUCTS

COST

RAILROADS

171.3%

-IRON

AND

-FUEL

(COAL AND OIL) COSTS RAILROADS

-WAGES

&

STEEL

WAGE
(Only recently

RAILROAD

FREIGHT

RAT E S

PRODUCTS

TAXES
an

COST

COST

RAILROADS

Arbitration Board raised annual

M UST

RAILROADS

wage costs

K EE P

$50,000,000

on

MORE

47%

MORE

81.9%

MORE

75.5%

MORE

the

Pennsylvania Railroad alonej

•»

PA C E

111

it*
If*

IT'S UNFAIR TO THE PUBLIC
to

deny railroads reasonable increases in freight rates

be

improved.

I

While

so

that service

can

industry is obtaining higher prices to meet its increased costs,

it should not overlook its

own

need for

f

adequate and efficient railroa-'

service-that the country may continue to grow and
prosper.

Industry is

prosperous when the railroads

are

prosperous.

Ir

Railroad operating costs have increased

more

than 65% since 1939.

Freight

rates have advanced but 28%. An unsound situation which
cannot continue.




J

PUBLISHED IN THE INTEREST OF

218,000 STOCKHOLDERS

Pennsylvania Railroad
W

12

&

COMMERCIAL

THE

(1640)

FINANCIAL

CHRONICLE

Thursday, October 23, 1947

rewards and penalties most
effectively lies ;in the field of
private enterprise. Private con¬
use

Definition of American Economy
Chairman, Committee for Economic

fering incentives and in impos¬
ing penalties. The private concern
can offer far greater incentive to

Development

As criteria for defining American economy

Mr. Hoffman lays down: (1) free play to legitimate incen¬
tives to create wealth; (2) the maintenance of competition; (3) team work in production and distribu¬
tion; and (4) sound government- actions in relation to business and fiscal policy. Proposes a pro¬
gram to reduce business fluctuations and outlines as objectives of government policy:
(1) recasting
of tax system; (2) wider coverage of unemployment compensation;
(3) better timing of public
works; and (4) wise management of credit and public debt.

nomic

judged.
The American economic system
is a form of capitalism.
Therefore,in its
should

system

system has been unchanging in its

it is
the
opposite
•of all systems

emphasis
dividual,
more

and

ution

of

the
own

of

It

pro¬

England,
France,
Ger-

Paul

Hoffman

G.

any

its unholy
profits largely through enslaving
and exploiting uie proletariat.
which

capitalism

is

1777,

I

sug¬

important,

Capitalism,
creator

a

its

as

use

contributions.

So

have

If

held

New

criteria

which

have

I

are

created

short

country
time

York

'such

a

so

have

much

can.

continue to have the predominant
role.

well

world's

take

have

our

of the

Capitalism and Economic

in the record of

capitalism

we

should

are

still

many

are

low

portunities

date, but

to

remember

too

incomes

to

there

that

people whose
whose

and

op¬

limited. Therefore^
we have made up to

are

progress

should

merely

serve

challenge to
improve the

effectiveness

it

that

as

generation to

our

will

of

yield

a
so

our

in

'30s.

Why
with

cycle?

much

from
ket

potentialities
realized, upon

is

made

so

the

no

people

many

in

other

beginning

the

of

their

of

had

Americans.

to

worked

play

hard

and

thought

because there have
wards for

We

been

is

na¬

have

hard

rich

re¬

doing and reasonable

so

Of

course,

the

opportunity

to

r

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

/

f

enough

to
if

nesses

will

not

be

large

adequate

individuals

de¬

and
it

use

busi¬

for

not

The

ability

create

of

to

alone

buy

involved

in

and

money

we

to

increase

in

ing. When

to

just

barely
living,

choice

when

On

must

postpone
in

the

of

if

the

purchases

often

have

we

to

and

of

can—and

even

have

buy

we

number

is

true

of

the

do—

money

true

of

also

postpone

business.

Busi¬

many

Businessmen

of

will

investments in such capital
goods only if there is promise of
reasonable

profit;
are

often put off even
reserves

when

and

dreary, they
though am¬

are

on

hand.

larger than most of
1946

not

(INCORPORATED)

spent

less

for

than

$60

billion

purchases

class and

year

INCORPORATED

DICK & MERLE-SMITH

BURR &, COMPANY, INC.

GRAHAM, PARSONS & CO.

INCORPORATED

COFFIN & BURR

HIRSCH &CO.

CENTRAL REPUBLIC COMPANY

INCORPORATED

THE MILWAUKEE COMPANY

(INCORPORATED)

Mr.
an

Willkie

PUTNAM & CO.

COOLEY

& COMPANY

these

Reduce

various

erate

GREEN, ELLIS & ANDERSON

factors

market

its

sire

to

to

establish

himself

REPORT

OP

Con¬

as

CONDITION

soon

OP

Underwriters Trust

Company
of

50

Broadway,

the

close

made

to

pursuant
Law

4.

New

provisions

State

of

with

a

6,
call

Banks

of

of the

New

York,

October

on

accordance

Superintendent

the

the

of

York

.

business

in

the

by

New

of

published

Banking

York.

Assets
Cash,

balances

banking
cluding
and

cash
of

ess

United

with

items

in proc¬

$7,472,986.38

Government

direct

guaranteed

Obligations

__u_-

of

Banking

Other

9;565,358:98

:

States

and discounts

ing $422.67

and

premises
and

5.443,931.36

(includ¬

overdrafts)

furniture

none;

and

subdivisions

political

tures

in¬

balances,

collection,
States

obligations,

Loans

other

institutions,
reserve

15,G43,566.21

owned,
and

fix¬

vaults

i.oq

assets

139,228.40

TOTAL ASSETS

$38,265,072.33

LIABILITIES
Demand

deposits of individ¬

uals,

partnerships,

which

demand

recognize,

purchasing
also

take

importance

dividuals

in¬

Time

$20,611,853.58

deposits of individuals,

partnerships, and

corpora¬

tions

5.884,174.83

Deposits

of
United
Government

Deposits

of

litical

States

States

344,537.42

and

po¬

subdivisions

Deposits

of

6,199,484.30

banking institu¬
471,350.39

Other deposits

officers'

(certified and

checks,

etc.)

1.991,547 00

TOTAL

DEPOSITS $35,502,947.52
Other

liabilities

TOTAL

130,374.62

LIABILITIES

CAPITAL

$35,633,322.14

ACCOUNTS

Capitalt

$1,000,000.00

Surplus fund

750,000.00

Undivided

881,750.13

profits
CAPITAL

The

of

power,

into

of

confidence

full

tThis

$2,631,750.13

in

~

ACCOUNTS-

institution's

we

stock

capital

with

total

~~

$38,265,072.33
consists

of

value

of

par

$1,000,000.00.

pro¬

course,

but

it

account

giving

AC¬

LIABILITIES AND

CAPITAL

common

that

MEMORANDA
Assets

pledged

assigned

or

secure

for

other purposes

I,

liabilities

WILLIAM

above-named

that
best

the
of

con¬

of
their
incomes,
(Continued on page 47)

and

and

$4,246,659.71

PIKE,

Secretary
institution,
hereby

above
my

D.

statement

knowledge and

in¬

the

tinuity

and

corporations

COUNTS

October 22. 1947




declined
for

run

possible in the practice of law.

TOTAL

fluctuations.

must

quate

the

first-

Justice

in Indiana because of his de¬

gress

Business

necessity of maintaining ade¬

must

Chief

recently

opportunity

against the background of

fluence

the

of
and

his

tailspin.

Fluctuations

gram

degree
Science
of

was

to

GREGORY & SON

voted

likely to

of the Campbell Moot Court.

must develop a program to mod¬

PHELPS, FENN &. CO.

the

Business
President

as

also

most

which

spending had been withheld the
country would have gone into a

It is

& CO.

the

as

Columbia, Mr. Willkie

of

could have been postponed. If this

CO.

WERTHEIM

At

Walter Hope

was

toward

Master

realize.

us

estimated, for example, that

Must

HUTZLER

He

tions

The amount of money available
for spending beyond basic needs is

OTIS &

the

won

prize.

individual

is

purchases.

is

and

worked

buy

we

hand, the
beyond
for basic needs,
we

1941

-Columbia.

University he was busi¬
manager of the Daily Prince-

TOTAL

BLAIR & CO., INC.

from

by his class

earn

have

use

chances of profit

HAYDEN, STONE & CO.

LL.B.

ness

will have

we

can

HALSEY, STUART & CO. INC.

& CO.

History from Harvard in

bank.

What

its

to

other

we

what

we

most

what

chance

the

If

Willkie

Princeton

.

the

money
we

liv¬

buy it. Our money
food, clothing and

we

more

a

every

of

able

to

as

for

go

disastrous

HALLGARTEN

in

and

give thought to it,

is obvious.

reason
are

H.

and

Paradoxi¬

standard

Philip

from

the

spend becomes

our

you

minmium

a

were

BROS. &

lor's

Princeton in 1940; Master of Arts

directly into

significant factor with

more

in

SALOMON

Bache¬

1947,

It

SONS

aca¬

demic degrees

credit

spend

run

factors.

customers

far

&

three

—

of

ple cash

E. H. ROLLINS

holds

at

are

EEAR, STEARNS & CO.

Mr.

Willkie

cally, this question of willingness

ness

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

Bank,

willingness of customers

businessmen

invest. Here

a

The

(Indi¬

National

complex, but they are nothing
compared with those which deter¬

buyer

and accrued interest

ville

ana)

as

make

Pf 'ice IOI.25%

Rush-

The

demand.

problems

availability

which

Dated October 1, 1947

board

the

are

choose

Forty Year 3»/i% Debentures due October 1, 1987

the

of

con¬

investment

or

but

—

larger

Company

very

demand

that

would

assure

mand

what

Telephone and Telegraph

is

It

as

un¬

of

served

the

The Pacific

is

Market

income

or

more

$100,000,000

mar¬

answer

simple.

amount

Oct.

credit

shelter.

f

■

Law

s

succeed. At

will
an

Colum¬

bia '

able to buy. The "willingness" and
the "ability" are
equally essen¬
tial.
No
amount
of
money
or

or

The

the

who

debate

the

penalties for inaction.

make

from

uals, businesses, governments and
foreign purchasers are willing and

and

team

in

graduated

tonian

and upon

how well they work to¬
gether. We have worked together

director

was

individ¬

mine the

because

the

In¬

results

demand

indeed.

total

to

boom-bust

is simple.

economy

But

not

complex

us

opportunities to

our

market

is

little

This announcement is not

in

had

we

the

the

of

economy

instability in effective

why

is

have

answer

demand.

to

bust
our

ability to buy is indispensable and
strongly influences the willing¬

the

are

use

The

stability

ness

to which

great

makes

contend

does

citizens

the

What

re¬

its

how

ating

depressions, culmin¬

unstable?

the dynamism of an econ¬
depends substantially on the

extent
of

have had 26

more

sources,
omy

bank

country,

A., member

sumption

Assuming adequate natural

youngest

Instability
major characteristic of
our
economy has been its insta¬
bility.
In the past century we

ever-

increasing opportunities for
and more of our people.

old

Willkie,
probably the

and

10.

A second

stable

right

every

deep pride

American

now

make
envy

world.

we

Yes,

sufficiently

to

living the

the

of

wealth—

of the
was

distributed

standard of

the

50%

veteran

School

rec-! quite well here in these United' psychological

wealth

time, and in

since

rich

the

of

wealth

our

tural

so

i*An address by Mr. Hoffman at

15%

almost

and

States

ever

approxi¬

tangible wealth. In 1940, with 6%
of
the
world's
population,
we

worthy. No economic system has

labor

the

27-vear

of the late Wendell L.

among 97 stu-

inventiveness and resourcefulness,

sound, then we
with confidence that the

say

held

Philip H. Willkie,
son

Navy

dents

effort. That's why if. we
going to keep our economy
dynamic, private enterprise must

in the United
with

employ¬

Columbia Law Gradaafe

are

mately 5% of the world's popula¬
tion

ord of American capitalism is note?-

the 16th Annual New York "'Her¬

Forum,

the

suggested

and

City, Oct. 21, 1947.

develop socially, intellectu¬
and spiritually as well as

tell

will

we

of America

States

and how does

opportunity of people

materially?

their

have made

dis¬

a

of their capacities and to grow

ally

Morris, Eli

McCormiek

and

In 1900,

story.

system

as

individuals to make maximum

and

Cyrus

Wealth

of

wealth

tributor of wealth,

has gone the thinking
Washington, Jefferson, Hamil¬
ton, Franklin, Lincoln, Woodrow
Wilson, and hosts of Senators and
Congressmen. Business statesmen

Thomas Edison,

Creator

of

it affect the

structure

as

economic

an

system should be judged by what
it does for people and to people.

of

and inventors such

that

statistics

few

rest

Specifically, how does it rate

as

Into

baseball.

as

Tribune"

in

of its merit.

measure

are

exacts

American

ald

life

vibrant living

a

gest that because it is people who

capitalism of those countries was
marked by state-protected cartels
and monopolies. Our system dif¬
fers even more sharply from that
theoretical
capitalism
of
Herr

Whitney,

with

vibrant

1877, and it is

ism differs, not only from col¬
lectivism,
but
also
from
the
traditional capitalism of Europe
does not of itself, of course, give

and
The

American

but,

fixed,

or

A

its

people are people,
incentives
call
for
the

Philip H. Willkie Is

greater

use of their capacities and to grow
intellectually and spiritually.

The fact that American capital¬

prewar

Marx,

Never

organism today in 1947.

sharply from
the capitalism

Italy.

static

been

was

in

It

also differs

many

wealth.

created

rather, fluid and forward moving.

the

duction.

it

has

citi¬

than

of

on

the

zens

freedom for the in¬
competition, on a
more equitable distrib¬

on

rather

which

Our

businessmen.

and

workers

fundamental

tools

leaders such as John Mitchell and
Samuel Gompers. So have untold
and unsung millions or ordinary

and

Because

be

concept

state

management

ees.

greater

define the Amer ican economy, I should like, first, to tell you
not, and, second, to suggest certain criteria by which, in my opinion, any eco¬

what it is

in

its

Before attempting to

-

have greater latitude in of¬

cerns

By PAUL G. HOFFMAN *

is

true

of

the

certify
to

the

belief.

WILLIAM D.

PIKE

Correct—Attest:
C.

W.

KORELL

SUMNER PORD
JOSEPH B.

V.

I

^Directors

TAMNEY|

v

Volume

166

Number 4640

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE
is

Steel

Industry and World Economic Conditions

entirely

Chairman of National Steel Corporation

Lays steel shortage to inor¬
production is now at peacetime record.
Holds government chiefly responsible for
high prices because of inflationary spending and wage policy.
Opposes reconstruction aid abroad, and sees lack of public confidence in French, British and other
socialistic governments.
Urges putting our own house in order.
It is

;

insufficient

to

materials.

raw

automo¬

countries did

bile

industry

Russia,

than

our

own

—as

is

evi¬

denced by the

•location, down
the

river

at

Ecorse, of

one

of

most

our

for

The

standards

countries

of

ism

been

ence.

der
T.

you

and

un¬

will show later in

my

a

National

is here with

us

the

privilege

of

group of engineers.
my

working
life,
which covers quite a
period, I
have been
dealing with engineers.
On or off the
job, I have always
them

with—and
in

to

easy

I

whether

it

get

along

not

am

yet
because

is

spite of the fact that

quite
of

or

the

en¬

gineering fraternity contains

the

world's

greatest

collection

practice, hard-headed

of

men.

Whichever

it may be, I say to
in all sincerity that the great¬
est need of the world
today is the
practical thinking and the prac¬
you

tical

action

of

practical

men

its problems great and small.

on

For

too many years

in too many coun¬
tries, the direction of affairs has
been

in

the

type

of
thinkers.

of

in

hands

men

of

the

the

other

impractical

unfortunate results

handiwork

dismal

a

—

The

their

In

its and attitudes of individual in¬

have

speaking to
Throughout

I

as

detail.

Steel

of

pleasure to be here

a

I

more

country, too, the theories and

our

and

support

repeated

are

pattern

around

the

a

dependence,
initiative

is also

good,

no

are

countries

Great

of

tonight.

sure

doing them

are

ideas

those

considerable ap¬
plication over the past 15 years.
But here, thank heaven, the hab¬

Corporation, who

found

ascendant in

now

influ¬

of your fellow
friend and associate

Lakes and also

because

powerful

a

socialistic

But

notably

methods of socialism have gained

George Fink, President

It

has

West,

France, individual¬

o n,

very

peoples

direction

Weir

.

Detroiter.

the

able

their

the

Lakes

Ernest

of

have always been low and are still
low.
Since the Middle Ages, in

and

Steel

steel—the

world' demand—is

responsibility,

were

so

by

and
strongly fixed
that our free,

produces

the

world's

38%
much
in

steel,

before

foreign
the

United

in

States

United

has

been

a

shining example of what can be
accomplished by free men work¬
ing in a free economy. The world
needs

the

inspiration of that ex¬
ample today more than ever be¬

ure

to

there

and

And

fore.

in

giving

that

exam¬

ple, I believe our country can
give something of far greater per¬
manent value than any immediate
relief. It is our responsibility as
individuals^ to
and life

all

do

American

that

see

even

are

we

not

1

how anybody can spend
few days in Europe and
back

come

with

a

and

new

deeper appreciation of the funda¬
mental

American

values, and of
the
immensely superior way of
living which those values have
made possible for the people of
our
country.
The people of the
United States—not just some of
them, but all of them—are the
fortunate

few

population

the

among

of

world's

2,000,000,000

over

souls.
I have done very earnest

ing

while

abroad

Out

return.

definite

and

won't

duced

to

be

me

this:

of

it has

come

to

with

most

to

you,

a

but

new

me

has

force.

formula

a

The

new

my

some

The

is not

one

struck

favorable

it

it

Re¬

would

be

condition

of

country is in direct proportion
to the kind and degree of free¬
dom possessed by its people, or—
a

to put

it another way—in inverse
proportion to the control exer¬
cised by the state.

Country after country has
cumbed

the

to

condition

illusion

would

suc¬

that

improve

its

under

state control of its economy. Some

can

Address by Mr. Weir at

a

joint

meeting of the Engineering Soci¬
ety of Detroit and the Detroit
Section. American Society of Me¬
chanical

Oct.
•

••
.

22,
•'
\

for

products

In

j
|

build

steel

effect,

as

a

living

Secretary

freedom

and

aspects of

tp

an

•'




time industry after
that consumes steel is
producing at a rate that equals or
surpasses that of the best previous

the

of
to

and

addition, there

tried

Interior,

that

me

using steel
it

he

later

also

have

ar¬

both

of

tion

late

in

that

1941,

until

one

the

embargo
18,000,000 tons
shipped abroad—

were

,

If the indus¬

try had not been deprived of this

and

to

also

assure

Another

no

provide
future
•

circumstances

to

the
pro¬

for

reason

you

conclusion:

can

such

our

of

the

a

solicitation

584,117 Shares

Company

(Incorporated in Ohio)

Common Stock
(Par Value $10 Per Share)

As you

is

Rights, evidenced by Subscription Warrants,

Industry

Under

issued

Fire

know, the steel industry
It is being

under

three

by the Company,

to

holders of

its

o'clock P.M., November 5, 1947,

to

subscribe for these shares have been

Common Stocf{, which rights will expire at

fully

as more

set

forth

in

the Prospectus.

heavy fire.

criticized because it is not able to

supply
asked

every ton of steel
for.
Mr. Reuther,

that is
of the

Subscription Price

to Warrant Holders

automobile workers union, charges

companies have banded
together to prevent an increase in

production.

Senator

recently said that the managers of
steel industry decided to in¬
crease

prices

rather

production.

than

to

Many

ex¬

voices

have been raised from many quar¬

About the only things their

ters.

owners

is

mon

a

prise and
the

to

seem

steel

possess

in

The several underwriters,

including the undersigned, may offer shares of Common Stock acquired
through the exercise of Subscription Warrants, or otherwise, and shares of Unsubscribed Stock, at

a

price which

may vary

than the last sale price

of Common Stock

in

sold

Copies of the Prospectus

may

be obtained from the undersigned only

in states in which the

and

m

F. S.

industry today that is abreast
spotlight shines

undersigned

which the

short

supply compared with the current
demand. What isn't? I know of
no

the New York Stock Exchange in the last preceding

was

on

said

com¬

securities

is

on

24'hour period in which Common Stock

a profound ignorance of
industry.

steel

each 24'hour period commencing 3:00 P.M., Eastern Standard Time, on
shall be not less than the Subscription Price set forth above, or more

October 22, 1947- Such price

distrust in private enter¬

Admittedly,

share

per

O'Mahoney

the

pand

$23.75

arc

Exchange.

qualified

Prospectus

may

to act as a

dealer

m

legally be distributed.

The First Boston

Moseley & Co.

Corporation

with demand. The

with

particular

brilliance

on

the

industry, of course, because

steel

is

so

basic.

tries, in one way
pend on steel.
Now

what

are

The

Blyth 8C Co., Inc.

or

the

present

another, de¬
facts

about

situation

The demand

is
for

Harriman Ripley 8i Co.

Lee Higginson Corporation

Incorporated

All other indus¬

Smith, Barney & Co.
October 23, 1947.

now

but

great activ¬

ingots—by far, the- largest out¬
peacetime year.- Tt is
(Continued on page 42)

put in any

relations of the United States with

Steel

to

That conclusion is exactly right.
the steel industry will
more than 84,000,000 tons

the

countries abroad.

are

come

produce

XEW ISSUE

industries, of
domestic situation, and of the

are

Putting
realizing

This year,

as an
offer to sell, or
made only by the Prospectus.-

The Standard Oil

and

can be supported only by a
large flow of steel into in¬
dustry.

be construed
is

steel.

very

I

scrap, there would now be a suf¬
ficient supply to sustain maximum

inventory

size

in

more

ity

over

most of it to Japan.

use

because

war

things together;
60,000,000 persons

employed,

1935

scrap

using

these

to act.

From

biggest year. In
industrial firms

which did not

now

the

increased

thus

unable to get the Administra¬

was

of

export

before

are

they
were
not in existence then, and
there are many other firms which

and petroleum, but likewise

the

buy, these shares. The offering

to

mobile industry's

stopped. We got
Ickes, former

scrap

there duction..

offer

it

against

two

our

disadvan¬

present

thought, I would like

steel?

L

the

Admin¬

gued

to discuss with you some practical

highly unusual.

-

these

industry

scrap

Harold

admitted

This advertisement is not, and is under

of

Federal

resource

have

operations
of

the

vital

a

to

nowhere.

demand that had accumulated
war—and

of

hard

greatest demand
in their experience

levels.

of

scrap

warned

age

ton

—a

previous

face

record of
the steel industry?
I believe it is
one that
requires no apology. At

istration about this serious drain¬

the

the

low

of

the

tages, what has been the

industry through

period

shortage

Record
In

Against the background of this
fundamental

1947.
-

self

free

Engineers, Detroit, Mich.,
■*

com¬

exported is a ton subtracted from
the domestic market.

to

steel
*

now

ex¬

that steel

think¬

since

and

conclusions.

important

not

their inventories

the

government

conducted

individual

that

see

a

1946,

the

number of times before.

a

This

the

throughout

tide

not

refutation of the reactionary idea

return, although I had been

do not

In

to the obvious fact that
every

up

winter

do

Production at Peacetime Peak

Scrap

as

long custom
During the war many industries,
competitive
economy
has
not
like your
own,
changed almost
been
damaged beyond repair —
completely away from their nor- I
provided enough of our people
mal types of production.
Inven-!
gest to work quickly enough on
tories of the kinds of steel used
j
the repair job.
in prewar production were wiped i
This fortunate circumstance, in
out.
Since the war, as a result, I
my opinion, affords the rallying
steel
consuming industries have
point for our country and the been
trying to do two things at
world.
Through all its history,
the

a

to

the

I

ever.

normally
huge supply at this sea¬

son

2,800,000

meet

cies,

large part by in¬
poli¬
believe that there
government

would be any particular
of steel today.

that present scrap
hand is sufficient for only five
weeks' operation, when

advisability of ex¬
porting this steel. I merely point

once;

credibly stupid

on

there is

through strikes that
in

caused

were

It is estimated

can

with

do

than

worse

deliver

to

Shortage
peacetime years. It is estimated,
shortage is entirely for instance, that the automobile
attributable to the heavy exports industry
will
turn
out
about
of scrap that continued
through 5,000,000 cars and trucks in 1947.
the 193'0's up to the
very eve of This
output was exceeded sub¬
war. At that time, others and my¬ stantially only in 1929—the auto¬

States.

I

ages and lost

tonnage
for
capacity. One reason

now

able

to fill
they
was

competitive economy are not
pattern includes.
equal to the needs of modern so¬
Our own United States.
ciety.- As practical men, I knew
Last month, I returned from a
you will help find the practical
trip to Europe. It was not a long ways to discharge that respon¬
trip—just six weeks from depart¬ sibility.
world,

as

steel

1937.

is

been

collection.

of

on

its

serious

situation

had

industry the steel that has been
lost through raw material short¬

the

produced

we

steel

nine tons

to

shortage of raw
iron and
steel scrap.
Scrap was short all
the way through the war and the

of

compared

ported
tons

tons

beyond

If

of

ton

with
Naturally,

try

their needs

of

the

not

one

has been lest for every
produced.

possible

is

compared
war.

countries

6,800,000

ment

the

half

than

more

Through strikes,

materials—particularly

the

stroyed in the war; much of the
surviving capacity is not being
operated at anything approaching
full efficiency. The United States
now

pipelines
happened al¬

entirely
has

which it has

Balkans, and most greatest in history, and the main
countries of Central Europe, for as weight of that demand is centered
long as we know, have lived in on the United States' industry.
subjugation to rulers of some sort. Much foreign capacity was de¬

England

Corporat i
which, as
know, is

go«

reasons

maximum

the

important di¬
visions, Great
;

have far to

not

the

as

This has

control—it

in3>

interested

since the war.' These
have cost the country another
18,000,000 tons of steel—the equal of
2 V2
months
of
full
production.

dis¬

export, for domestic consump¬
tion, and for inventory building,
the steel industry has produced
a tremendous
tonnage although—

pleasure to be here for two reasons.
First, you gentlemen represent the great
industry.
No industries are more closely tied together than the automobile
industries.
And in the steel industry, no
company is more deeply and directly
the

soon

will

for

a

-

as

filled.

and

shortage—beyond the indus¬

slowdowns

ready with certain steel products.
Against this floodtide of demand

Points out

automobile
and steel

steel

13

try's control—are the strikes and

inventory purposes—is

abnormal

appear
are

for steel and

evident that part of the de¬

mand—for

Prominent steel producer denies aim of industry is to restrict capacity.
dinate demand and

double demand

a

it is

By ERNEST T. WEIR*

(1641)

Union Securities Corporation

M

14

Thursday, October

CHRONICLE

& FINANCIAL

COMMERCIAL

THE

(1642)

Problem

Our Current Inflation and Monetary

Canadian Securities

By M. S. SZYMCZAK*

Asserting

By WILLIAM J. McKAY

"

Abbott"

Re¬

tical

type

this prac-<
thinking north of

of

the border it is to
no

be

debt management

a

tariffs

certain Canadian goods.

on

The

further blind-alley measures
at best

only

as

serve

is also

crisis

dollar

S.

U.

remedied only

provoking Canadian consideration
of means to derive a larger vol¬
ume
of exchange from existing
exports.
An inordinate amount

of

of

dubious

The present

palliatives.
economic

world

a

necessary,

crisis

be

can

by the application
planning, with, if
departure from

long-term

that

re¬

there

Dominion

will

come

capita basis,

per

the

world

since the

is

it

direct

a

of

tries

her

in

Canada's

present

given

Britain,

greater

the

and

assisted
been

have

plight

countries

even

been

would

a

p

problem there
is

to

the

o

ahd

reciuires

gypsum

little

imagination to
Canada has hith¬

that
realized onlv

the

the

potential

fraction

a

value

her

of

proved

freer

of

that

world

U.

re-

trade,

amplify

corresponding

a
in free

movement

workable pl&n which will enable*
Canada's surpluses of food and

*

funds.

Canadian stocks continue

behind

the

but

ment to the Dominion's U. S. dol¬

strength

In

the

on

of the

to

the

galvanizing

Canadian

implementation

shall-" Abbott"

Plan,

of

a

Mar¬

Canada

has

improv¬

ing her exchange position.
The
tariff discussions at Geneva re¬
in

a

view

the

of

lag

showed

section

paper

in

to

pattern,

future

virtual

possibilities of this industry

The

golds, in spite of the recent

situation

other important means of

sulted

York

new

addition

effect

the

New

U.

S.-United

statement
Mines

regarding imminent relief,

showed little investor
no

of

Minister

the

of

doubt

as a

enthusiasm,

result of past disap¬

pointments in this direction.

and

ing

that

the

British

notably Canada

dominions

are

now

tak¬

Ralph Wetzel Joins

steps to break the
deadlock bj' making certain qoncessions on Imperial Preference.
urgent

9
(Special

Jn this event, the Dominion would

be

in

a

strong

bargaining

posi-

CHICAGO,
Wetzel
with
231

has

ILL.

—

Ralph

Kebbon, McCormick & Co.,
South

Salle Street,

La

bers of the New York and

Stock

CANADIAN BONDS

Exchanges.

He

mem¬

Chicago

was

for¬

Glore, Forgan & Co.
Paine,
Webber, Jackson &

merly with
and

Curtis.

With

MUNICIPAL
CORPORATION

Herrick, Wacldell Co.

(Special

to

The

Financial

tion

our

own

of

interest

and welfare,

our

we

Waddeli

while
in

are

must assume the

productive

own

capacity

is

already running at full speed and

reservoir of
unused productive resources is in
Europe. The answer to this part
of
our
problem is clearcut.
I
know you will concur in my be¬

the largest immediate

constructive ways of help¬

devastated European
tries to help themselves.

&

Co.,

Inc.,

Merchants

CANADIAN STOCKS

TAYLOR, DEALE
&

COMPANY

NEW YORK 5,

N. Y.

York 5

single approach. But with a
combination of effective
policies we have reason to hope
that we still can establish a last¬




manufac¬

as

goods,

by more than 100% and clothing
housefurnishings are up 85

and

CANADIAN

SECURITIES
Municipal

Provincial

Corporate

to

With rents up only 10%,
in cost of living shown

100%.

the

the

and

war

early

post-war

signs of downward read¬

justment, but domestic and for¬
eign developments since that time
have
resulted in another sharp

upswing.

world.

is

speculation will only
dent

become evi¬

the cumulative force
special transitory factors
been spent.
after

of these
lias

higher

The

rise

prices

in an

the more widespread
severe the subsequent read¬

inflation,
and

justments

are

In¬

likely to be.

lining

a

little tardy in

forces against in¬
Weary of the disciplines

up

flation.

our

we

war,

rest

our

on

been

worked

the

on

re¬

cipients of fixed incomes by the
_
arbitrary transfer of part of their
purchasing power to classes benefiting immediately from rising
prices. This process must be slop¬
ped if we are to avoid the cata¬
clysmic consequences of a run¬
away inflation.
v,x

disparities

cause

under

come greater and greater as inj Ration proceeds. Thus inflation

'begets inilation and1 in the process
11
"""""
produces
economic
dislocations

trict

address

Fall

of

by Mr.

Meeting

Columbia

of

Szymczak
the Dis¬

us

rent

Bankers

20.

1947.

Washington,

D.

C.,

Asso¬

Oct.

the

of

some

that attend cur¬

tensions

inflationary developments.

Prices
x-nore

consider

are

1 Cotton

more

and

buyers'
turn are

de¬

becoming

dependent

which
textile

in

on

manufacturers,

depaper

deal¬
few
times the

mills, lumber producers, automobile
and wheat farmers, to cite a

ers

ciation,

production

higher

The

costs

generated by inflation are be¬
coming
imbedded in the price
structure. This development fore¬
shadows an eventual price level
substantially
higher
than that
prevailing before the war.

Since

ultimately to end
deflation, it is
that the price level

inflations tend

and

collapse

established
inflation

of

sharply

when the liquidation
is complete will be

peaks reached in

below

upward

present

the

spiral

of

prices.

Inflation Circle

Breaking the

factor in the
inflation is the in¬

Clearly, a primary

post-war price
of $160

crease

examples,

are

t-ofin-nc

making
of

several

n rp.wa v

and

billion

in

money

other liquid assets

money

unemployment.

spread

mands,
*An

before

ships.

which oc¬
curred during the period of the
and distortions that bear the seed
war.
This huge accumulation of
of
ultimate collapse and
wide¬

critical

inflationary
check, if not under

prices
and be-

among

inflation

with

develop

Let

forces

part temporary character of sup¬
ply, has already brought striking
readjustments in price relation¬

probable

sharply inflated price levels
are
unstable elements in the na¬
tion's economic position and the
Our

have been prone to
oars and
drift with higher prices rise, the more un¬
stable they become.
This is be¬
the current.
Inequities have al¬

of

evitable

in

Inflation Problems

been

have

We

This spring prices

living 22%.

showed

Extent of Price Inflation

NY-1-1045

well

is now 110% above
the pre-war level and the retail
prices of many goods have risen
by almost the same proportion.
Retail food prices have advanced

tured

ol

During wartime, price and other

Government
RECTOR 2-7231

as

the upward surge of prices
being pressed by speculative
forces, ' but
the extent of this

too,

primary

including

prices,

proper

controls kept our own

STREET

sale

commodities

consumption,
credit ex¬

expansion in
by

penditures for military purposes
and
foreign
aid. Undoubtedly,

level of all whole¬

The average

investment and

rapid

private organizations
to
business and consumers, and
unusually large government ex¬

coun¬

WHitehall 3-1374

INCORPORATED

TWO WALL

infla¬

peak of the post-war
tionary period in 1920.

any

ready

Building.

64 Wall Street, New

they were between 1914 and

than

the

private demands

deferred

tended

period. When price controls were
dropped last year, prices rose con¬
This hydra-headed problem of siderably further. Since June 1946
inflation cannot be mastered for the
average
level of wholesale
all time by any single device or
prices has risen 40% and the cost

tiaxxoxci

A. E. AMES & CO.

a

for

and

production

in

disruptions

days.
In general, ad¬
vances in prices of primary com¬
modities have been much greater
since the outbreak of war in 1939

responsibilities of this leadership.
The greatest single antidote for
inflation is increased production.
Our

only examples of im¬

recognize that

upward price spiral
reflects in part essentially tran¬
sitory developments.
These in¬
clude the persistence of wartime
present

the

pre-war

and in
stability

own

important to

It is

trade,

volition, wc
into a posi¬

leadership,

world

of

the

Chronicle)

INDIANAPOLIS, IND. — Wil¬
liam A. Cresson. Irving M. Heath
and
Fount A. Morgan have be¬
come
affiliated
with
Herrick,
Bank

Without

have been catapulted

living.

of

prices were

portant primary commodities that
have risen from 200 to 400% since

ing prosperity at home and con¬
tribute to enduring peace in the

GOVERNMENT
PROVINCIAL

the world

ing

L.

associated

become

of

areas

are

current

reduce

a

These

their purchases

tail

prices were $22 per thousand
now they are $80.

ber
and

chaos.

to find
Chronicle)

to The Financial

it

being forced to cur¬
of goods, to
saving, and to
cifaw
heavily
on
accumulated
savings. In short, they are fighting
a
losing battle against the cost
are

groups,

pound and now they
15 cents. Southern pine lum¬

cents

are

inflationary
would be equally

Lead

dollars

readjustments will affect
not only prices,
but production,
the rise
incomes, and employment as.well.
lief that we are qualified to take by the consumers' price index is
The uneven character of demand,
the measure of this problem and, about 65%.
together with the special and in
in cooperation with other nations,
Prices were already high during

Kingdom impasse, but it is under¬
stood

en¬

5

own

our

put our own house in order

'Irtfge

i

material to flow into the requisite
channels
without further detri¬
lar position.

"

*

European

of

cents

45

at

now

cents.

32

now

foolhardy to assume that vye can
:

statesmanship cjjn conce,ive a^

suf¬

is

inextricably

are

but

curve,

|first time in the absence of

S.-Canadian

defeated

it

Here

purchasing power of
a serious handicap.
While organized labor has been
able to obtain wage increases to
cover
a
part of the increase in
living costs, the majority of con¬
sumers have been in a less favor¬
able
position.
Consumers with
relatively fixed
incomes, espe¬
cially those in the low income
of

loss

the

Corn before

war.

selling

was

ited

it is $2.45. Hog
$6.75 per hundred¬
weight, now they are $29.50. Cot¬
ton was 9 cents a pound and is

aiding in their reconstruction will

internals in

tone and the

particular

with

war

bushel,
prices were

tangled with our own problem. It
would be foolhardy to deny that

particular made advances for the

provided

per

difficulties

democracy

the

habilitation

the

country.

nomic

in

ing before the

ficient to say that the present eco¬

do¬

towards

what appears to be
upward spiral of
Let us compare some of our
current prices with those prevail¬

phases

reference to Germany, a
enemy

generate

irresistible

inflation problem.
ago, in a
paper, I

problem

this

of

our

weeks

Some

of

important

and

remarks to you are ad¬
primarily to the domestic

financing foreign aid
particularly diffi¬
Foreign countries with lim¬
dollar resources are finding
recovery

cult.

The combination
factors has entangled the

economy
an

are

problem of

profits.1

of these

resources

dressed

mestic wealth.

rem¬

record

have been ravished by war.

During the week the bond mar¬
ket maintained its recently im¬

relief

Szymczak

S.

ML

increases

Price

increased

costs and have helped to

populations and

My

goods.

advances have exceeded

countries

f

whose

huge

Canada,
moreover,
is
uniquely situated to make further
contributions

neces¬

sity of help¬
ing to restore
the produc¬
tive
capacity

which are
exported in their crude state,

erto

edy.

international

the

impor¬

new

justified many price increases. In
many
instances, however, price

these

domestic

When consideration is also

perceive

have

difficult to

more

on

and

1 i cate

c o m

our

reviewed the international

it

still

of

new indus¬
colossal
forestry

take

The rising cost of
living has necessitated widespread
wage and salary adjustments that
have raised production costs and
of many

o

phases of

now

France and other European coun¬
the drain on this country's

tries

would

vast

Cana¬

T

mone y.

than

in incomes.
making the

expansion

the

Essentially temporary shortages
supply have contributed greatly
to successive spurts in the prices

asbestos

In the absence of the Dominion's

resources

A

to

open

modity prices to new high levels.

additional

use

—

pendent on other inflated prices.
Inequities
and
discontent are
multiplying. Consumption in some
direcitons is being curtailed be¬
cause the rise in prices is greater

in

quantities of
building materials in the shape of

predicament.

to

the fin¬
times the

variety of

a

resources

tance.

credits

Canada

value.

thus

is

wood

tion that Canada is placed in her

-

the

1946

carried many com¬

inflation

that

public would
customarily

industry and with the enor¬
mously expanding utilization of

•extraordinary efforts in this direc¬

large-scale

which

trols in the early summer of

for

dian

more

commerce,

result

furnish

realized

field

new

the endeavor to

in

war

international

restore

and

contributed

has

that

doubt

eventually

present

country in

no

little

ished products at many

cap in hand begging for externa),
assistance.
On the contrary, on
a

is

complete restraint. It was not un¬
til after the lapse of these con¬

t the

c

services

being exported in crude and

the

t ri

and at the

yCv

-r

i

to

availability of
goods
and

forms.
Already re¬
strictions are being contemplated
on
the exnort of wood-pulp and

position of the war-

the

products is

forestry

?

time

same

unprocessed

ravaged countries of Europe,
Canadian situation does not

quire

Canadian

now

strictly orthodox procedure.
Unlike the

costly war in history, we are
It was nec¬

after fighting and winning the most

With little pause

facing a crucial battle against inflation. This is not altogether surprising.
tion vis-a-vis this country with
essary for us to create a huge amount of money in order to finance the war
:
hoped that regard to the reduction of U. S.
r e s

would

Lays responsibility for restraining inflation on banks, and also stresses national
policy which would reduce bank holdings of negotiable government securities.

now

further time will be wasted on

any
that

bond prices.

ment

the value of a North
pooling scheme for European relief with a Marshallplan replacing the wartime Hyde Park Agreement.

With the dawning of

holds chief problem in

facing crucial battle against inflation, Mr. Szymczak

we are now

preventing further expansion in money supply is restraining hank credit expansion. Says Federal
serve is not in position to offset credit expansion because of its
responsibility for maintaining govern¬

Recent reports from Ottawa now stress

appear.

Federal Reserve System

Member, Board of Governors,

Through the murk of rumors concerning currency devaluation, a
U. S. loan, and import restrictions, the first glfhnmer of a more con¬
structive solution of Canada's U. S. dollar problem is beginning to
American

23, 1947;

upars.

direct

and liquid assets was the
result of government bor¬

It was es¬
the war.

rowing to finance war.
sential to winning
At

the war's

end these

mone¬

assets represented an enor¬
mous backlog of deferred demand

tary

goods of all types, but par¬
ticularly durable goods.
As a

for

demand at current
far in excess of any

consequence,

prices

was

(f^nntinnoH

nn

nafip

29)

Yolume 166

THE

Number 4640

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1643)

15

Decries Danger of Canadian Exchange GolEapse Moseley Underwriting
Mills, Spence & Co., Ltd. of Toronto, analyze present Canadian
S0HI0 Common Offer'g
dollar exchange situation and
point out available remedies.
Says
in,.past similar fears for stability of Canadian currency proved
groundless.
In

extended

an

Investor,"

the

analysis

investment

Toronto, Can., explains the
Jfor

sons

States

the

in

spread
Canadian

and

entitled

firm

of

gether with the
with

the

prices

The

to

full

internal

Dominion,

for

the

past

acquainted
actual

the

to

is known.

weeks

clearer

The

bond

example, is

ion

of

an

Canada

selected,

internal Domin¬

before

investor

picture

him,

will

it

from

which

In
Price in
N. Y.

normal

but her balance

one

Dec. 12, 1946

104%

98%

credit

May
Aug.

8, 1947

104%

95

other countries.

8, 1947
2, 1947

104%

94%

104%

88 y2

Oct.

The basic

between
has been

feeling of uncertainty

a

conclusion

the

funds

And with the

ex¬

in¬

recent

given

Can¬

to

ada's "dollar
problem," the spread
between Canadian and New York
bond prices has been widened
a

It

would

based

On

that

seem

investment

has

in

now

a

meet her

U.

S.

has

been

At this

from

amine the facts of the

formed

cost

of

in a dangerous position.
point it is essential to ex¬

70

Countries

Non-Monetary
Tourist

and

Interest

+ 193

+ 576

+ 145

+

Dividends

53

Total Currer.i Account

+ 125

With the

United

Trade

Non-Monetaxy
Tourist "and

—

Gold

+

Other

—

Items

—

—

the

items

above

making

59

the

chronic

with

the

for

excluded

that

unfavorable bal¬

United

war

for

statistics

the

trade

have

States.

have

interest

balance
from

the

obvious
a

—430

capital

+ 184

+

96

+

83

84

+

70

+

—193

23

of

an

little

from

larger

and

higher

overall

trade

matter

a

34

—

New

well

as

York

become

firm.

Rich

Hill, Jr. (J. S. Strauss & Co.), and Conrad O. Shafft (Shafft, Snook
new

officers will be installed at

a

dinner

party to be held

(American Trust Co.), Secretary and Treasurer; James M. Stewart
(Wilson, Johnson & Higgins), Frank Bowyer (Schwabacher & Co.),
J. B. McMahon (Merrill Lynch, Pierce, Fenner &
Beane), and Louis
J. Spuller (Elworthy & Co.), directors.
Members of the

Nominating Committee were: Richard AbrahamCo.), H. Hodge Davidson (Merrill Lynch, Pierce,
Fenner & Beane), and Jack Quinn (Stone & Youngsberg).

son

(Weeden

&

and

company

Philadelphia,

Harrisburg,

in New

York

Kalb, Veorbis Wire to Baumgartner & Go.

associated

The

Pa.,

City.

as

Kalb, Voornis & Co., 15 Broad
Street, New York City, members
of the New York Stock Exchange,
announce

the installation

of

a

rect

private wire to the offices of

Baumgartner

di-

Trust

&

Co.,

Mercantile

Building, Baltimore, Md.

$3,450,000
;

Chicago & Eastern Illinois Railroad Company
Equipment Trust, Series E
23/i%

77

—

—116

Equipment Trust Certificates

—603

1940

to

$

Earnings

U.

of

S.

900

100

$1,200

pected

a

to

this,

Canada

cates

is

to

S.

payment

U.

of

K.

by new standard-gauge railroad equipment estimated
$4,563,000.

adverse

trade balance

350
150

shipments to the U.S.
with

Europe

amounted

to

estimated

the

during the
1947

$572,800,000 and it is
total

for

the

year

The

will

amount

to

$900,000,000.

full

amount

of

American

which the

for

is expected

the

whole

100

Latin America

of these Certificates are subject to authorization by the Interstate Commerce Commission.
Offering Circular may be obtained in any State in which this announcement is circulated from
only such of the undersigned and other dealers as may lawfully offer these securities in such State.

50

$

This leaves

$1,200,000,000 and is
following

deficit
from

of

U.

probable

an

650

HALSEY, STUART &, CO. INC.
A. G. BECKER &, CO.

S.

dollar

safely covered

$1,244,900,000

be

for

met

is

the

balance

gold and U. S. dollars held by
Foreign
Exchange
Control
Board at Jan. 1, 1947.
These

are

the

facts.

What

are

noted from them?

estimated




up

of

deficits:

ALFRED O'GARA &, CO.

THE FIRST CLEVELAND CORPORATION

MASON, MORAN &, CO.

F. S. YANTIS & CO.
incorporated

the

of

made

MULLANEY, ROSS & COMPANY

This

1947

by the amount of

being

the

is

FREEMAN &, COMPANY

MARTIN, BURNS &, CORBETT, INC.

apparent

reserves.

requirement

OTIS &, CO.
(incorporated)

FIRST OF MICHIGAN CORPORATION

overall

$550,000,000 to

to have to
1947

3.00%, according to maturity

The

of

dollars

Foreign Exchange Con¬

trol Board

to

of

adverse trade balance

of

yield 1.30%

and

favorable

months

to

Issuance and sale

$

$30,000,000 in 1945.

seven

to cost

ex¬

as

Tourist traffic

Trade

1962, inclusive

receive:

dollars from

50%

to

be secured

less than

Priced
U.

each May 1 and November 1, 1948

Certificates are to be issued under an Agreement to be dated as of November 1,
1947, which will provide for the issuance of $3,450,000 principal amount of Certifi¬

not

meet

on

These

items

To

$115,000

unconditionally guaranteed as to payment of principal amount and dividends by endorsement
by the Chicago & Eastern Illinois Railroad Company

200

Shipping freight and other

United States moved
balance

To be

invest¬

ments in Canada

Gold

and the bal¬

mature

(in millions of dollars)

steadily

in

unfavorable

Canada's

the

Louis

(Dean Witter & Co.), Houston.

& Cahn).

City,

82

—

Trade

favorable

rose

with the United States

supply

McMahon

Earl Thomas

that Frederick B. Stirxx-

has

the

Colket & Co.,

incorporated

first

J. B.

Board of Directors:

The

66

—

reason

relationship

$292,000,000 in 1940 to
of

Collins L. Macrae, Jr.

the

—204

15

—

31

—

29

disruption, such

$1,723,000,000 in 1945

one

to

to meet

business

Street,

Jr.

Reading

1946 i

period of in¬

$149,000,000

ance with the

from

1939

been

peace-time figures. As

of

working

company

+ 458

—128

—

13

Sta¬

years

during such

ternational
to

+ 126

—180

14

balance of international
payments,

tistics

expen¬

77

+ 145

indi¬

Can¬

up

ada's traditional overall favorable
and

applied

of capital

To

The, figures shown

ance

be

other

(Philadelphia Plan)

Total

cate

com¬

with

may

the

—137

72

—

—166

Freight and Shipping.

+

53

1937

14

+ 119

Travel

of

States

1935

Merchandise

stock

—238

17

—

+ 180

Publicity: Louis Rich' (Schwabacher & Co.).

initially

funds of the

84

—

58

—

sale

added

maintains offices in

96

+

—249

25

—

33

—

+

68

+

—226

14

—

Items

+ 184

79

+

—206

Freight and Shipping
Other

+ 265

+ 119

Gold

Travel

and

1946

+ 206

outstanding

points

(a) Canada is basically
(Continued

on

page

to

a

be

credi-

25)

;

Walter J. Vicino (Blyth & Co., Inc.),

price which

a

the

of Penington,

Pine

with
1939

(Merrill Lynch, Pierce, Fenner
i

Secretary and Treasurer:

The New York Stock Exchange
firm

case.

1937

McMahon

offering

Pennington, Colket

is

1935

Debit(—)

J. B.

5,

F. B. Stimson Now With

to

spn,

or

Vice-President:

inventory.

announces

)

of

common

resulting

of

(in millions of dollars)

Net Credit(

officers:

the early part of November.
The retiring officers of the Association
are:
Elmer L. Wier (Brush, Slocumb & Co.), President; John Buick

Canada's Current Account Balance of International Payments

With All

new

and Beane).

on

be

States and therefore the Canadian
dollar

to

the

volume

obligations in the United

much

following slate of

Collins L. Macrae, Jr. (Wulff, Hansen & Co.).

Any balance thereof will

operation

trading

dollars

President:

increased cash requirements of its

position where she

insufficient

Committee of the San Francisco Bond Traders

underwriters

together

funds,

added

be

enable

of

cannot

The

dollars, Can¬

too

activity
opinions

from

continent

converted into U. S.
ada is

by
further drop in New York
prices.

since most

received

this

outside

that

The Nominating

Association has named the

24-hour period.

be

the payment

fur¬

generalization is continued
along this line we might arrive at
the

publicity

If

and,-

ditures.

true

ther

Canadian-United States dollar
creased

ideas.

erroneous

among a section of U. S. investors
with respect to the
stability of

change.

is

itself without fur¬
investigation it is liable to

ther

result in

the

will

the" general

to

statement

each

Nov.

on

period

from

stock

available

but if taken by

for the spread
two sets of prices

reason

these

this debit is met by the
balances she receives from

general

for

business

p.m.

every

vary

pany'

able and

This

the

Proceeds

to

favorable

SAN FRANCISCO BOND TRADERS ASSOCIATION

one

held.

of

offer shares of

may

overall

new

a

of

Rights to subscribe

stockholders

may

with the United States is unfavor¬

103

close

1947.

During
to

to

is

94%

104V2

stock

of

expire at 3

international balance of payments

104%

rate

stock

from time to time at

times Canada's

July 5, |1946
July 12, 1946

the

at

1947.

a

opinion of the value

own

of

stock

is

the

at

will

the

have

issue

new

common

being offered at
share to holders of rec¬

per

Oct. 21,

Most generalizations on the sub¬
ject state the case in this manner:

bond—3%, Feb. 1,

1962/59.
Price in

as

stock

ord

of Canadian securities.

as

Canada

placed

form his

the following table il¬

as

far

as

a

of

new

shares

$23.75

the

of

the

of

new

dollar

attitude

banking group
Moseley & Co.

S.

stock

five

It is felt that with these

American

the discount has increased

sharply

the

and

its

with

Canadian Government

year

share

of this

to

deal

F.

shares

common

the

with

purpose

is

have

briefly state
of
Canada's exchange
the methods open to

facts

facts

an

The

by

(par $10) of The Standard Oil Co.
(Ohio) now being offered by the
company to present holders of its

sub¬

investors

investment

underwritten

584,117

of

Limited

themselves

memorandum

have been selling at a discount in
New York.
During the past few

lustrates.

few

facts.

problem

and Corpo¬

bonds

& Co,

too

and

Canada

Provincial, Municipal
ration

ject

position,

text of the statement follows:

Canadian

Mills, Spence

American

the

broad generalizations on the

for

methods open

problem.

and

has

rea-<S>

United

Canadian securities, and
gives the
basic facts relating to Canada's
present
exchange
position,
to¬
deal

"Canada

An

headed

I'

4*

To bo dated November 1,

1917. Principal and semi-annual dividends (May 1 and November 1) payable in Chicago.
Definitive Certificates with dividend warrants attached in the denomination of SI,000, registcrable as to
par value.
Not redeemable prior to maturity. These Certificates are offered when, as and if received by us. It is expected that

Certificates in temporary or definitive form will be ready for delivery at the office of Halsey, Stuart & Co. Inc., 12.5
South LaSalle Street, Chicago, Illinois on or about November 19, 1947. The information contained herein has been
carefully compiled from sources considered reliable and, while not guaranteed
t
believe it to be correct as of this date.
October 1 7, 1947.

as

to

completeness

or

accuracy,

we

ri)iWMWW^WWHff«Wih«mvm<w- *fOfrn<e <n

16

THE

(1644)

COMMERCIAL

&

FINANCIAL

CHRONICLE

dollars

come

to

that,

have

comes

SHARES

for the "Dow" in '48

223
The Editor

of the

"Chronicle"

Group Securities, inc.

as

to:

now.

(2) The

approximate

of
the Dow-Jones Industrial Average
the next

over

a prospectus on

request

By

from your investment dealer or

months.

averaging

will stand around 204 but will hit

Street, New York 5, N. Y.

223 in the meantime.

1

I

The

following table lists
to
the
questionnaire
order of optimism:

an¬

in

swers

Level

of

D.J.I.A.

October

of

Range
Next

1948

12

D.J.I. A.
Months

270

270-175

240

270-170

225

250-175

220

230-150

200

250-170

Prospectus

200

200-160

your

180

190-160

177

190-160

165

190-155

160

190-150

upon request from
investment dealer, or from

NATIONAL

RESEARCH

SECURITIES

&

CORPORATION

IRQ BROADWAY, NEW YORK 5, N. Y.

It is easy

continue to
be favored, in particular shares
in agricultural, electrical, indus¬
trial machinery, railroad equip¬
ment and steel companies."

you

that the New York City

predominantly bul¬
lish but the Boston sponsors (only
two

replied)

affair

over

for

look

see-saw

a

the next year with

representing

a

175

point

middle

for

admit

that

questionnaire
prove very

•ecord,

answers

such

the

as

little but just to

your

sus

and

the
•

Hugh w. long & co.

V"
r

£

"

48 WAU

/HOV

:

■

pick 223

1948

to

a

above
go on

correspondent is will¬

ing to play along with the
Prospectus from your Investment Dealer or

I Cent
October "New

Long's

W.

York Letter" points out that des¬
pite the sharp rise in the cost of
food, in relation to 1947 incomes

food

looms

family

little

budget

before the

larger

today

consen¬

his high

as

market.

On

thought, we'll shade it

for

second

up

to 225.

the
it did

-CHlfAOO

than

ever

270

Fund,

sponsored by
refunded
its previously outstanding $5,000,000 of 2i/2% notes with an equiv¬
Abbett,

recently

has

now

notes. Affili¬

$8,000,000

of

During the three months ended

September 30, Incorporated Inves¬

Meat

is

a

good example. There is a general
belief that the meat supply is low,
yet meat consumption this year
is running at a rate of about 155

three

added

tors

common

new

its

portfolio, namely,
Continental Oil Co., General Rail¬
way Signal Co., and
Pepsi Cola
stocks

to

Company.

Davis Hunter Scott Co.

a

Office in Birmingham
DETROIT, MICH.—On Nov. 17,
Hunter Scott & Co., will
open
an
office in Birminghan,
Davis

Mich,

in

such

afford

Series

the

based

market

present

on

invest¬
during the

alone

income

ment

past 12 months.
of

30,

The

$25,816,000 at the year end.

portfolio is
U.

lows:

Other

Building,

now

diversified

fol¬

as

as

in

the

Detroit,

will

branch.

a

(Special

to

CORAL
nard

F.

Weller

The

O'Connor

have

at

Chp.onicle)

Financial

GABLES,

FLA.—Ber¬

and

formed

Arthur

Company with offices

248 Andalusia

Avenue, to

con¬

business.

Both

securities

duct

a

were

previously with A. M. Kid¬

der & Co.

Preferrcds

8.7%;

of each

dollar of

tWinM*1'1™.

The

income for

food. Last year the figure was 290
and

it is doubtful if it is higher
today by m(5re than 10. This may
seem
incredibly
small;
one
is
tempted to say, 'My food costs are
up

more

discussed

Nesbett

COMHlU

Fund

than that!' But thus far

have

dollar
food

of
costs.

The

food

not

INCORPORATED

costs

and

income,

fact

that

is

H

per

total
the

Prospectus

on

request

number of income dollars per per¬
son

has

increased

in

average

1946 and to

from

1935-39, to

a

$535

$1,230 for

$1,370 rate current¬
ly. In other words, there are more
than
lars
each

twice
per

of

many

John G.Nesbktt&Co.

income dol¬

290 out of
larger number of in-

person,

the

Managers and Underwriters

a

as

tilt

INCORPORATED

and

r

»«T«
NUrV„

q

IT \

t S

Investment Managers
25 Broad Street

Telephone
2-289.3

New York 4, N.Y.

Fund B
Prospectus

Woe
upon request

Bond Fund

OF INVESTMENT COMPANIES

Custodian

...

-

?./ «

OF

Lord, Abbett

Funds
Certificates ot Participation

,

BOSTON

Co.

INCORPORATED
New York

—

Chicago

—

Los Angeles

]VMassachusetts Investors Trust

in

INVESTMENT FUNDS
investing tlieir capital

Massachusetts

SHARES OF CAPITAL STOCK OF

IN

Investors Second Fund

BONDS
(Scries B1-B2-I53-B4)

\

PREFERRED STOCKS

<u$o6ton

(Series K1-K2)

unci

COMMON STOCKS
(Series S1-52-S5-S4)
A prospectus
investment

Prospectus from
your

relating

funds

to

may

the shares of

any

of these

separate

be obtained from the undersigned.

local investment tlealer or

He K eystone

of Boston
50

Congress Street

Boston 9,

VANCE, SANDERS

Company

.Massachusetts




Prospectus
your

may

111

be obtained from

local investment dealer,

PARKER

CORPORATION

ONE COURT STREET. BOSTON 8. MASS.'
•If

A.

COMPANY

STREET

BOSTON
NEW

THE

DEVONSHIRE

or

61

YORK

Broadway

CHICAGO
120

D.

O'Connor

Governments—11%;

S.

Bonds

HAnover

ID-ABBOT GROUP

firm's

the

Formed in Coral Gables

Weller and

Eaton &
Howard Balanced Fund reported
net assets of $29,505,000 up from
September

office

O'Connor, Weller & Co.

returns

distributions paid from net

be

The

be continued

vestment Fund and National's In¬
come

will

which
office.

main

Penobscot

Union Bond

Keystone

bor¬

rowings outstanding, all at 2%.

has

more or better

before.

ated

The

income

American eats

un¬

1.2%.

Affiliated

Lord,

"In the years before the war,
1935-39, the average person spent

NEW YORK 5, NiY.
'

increased

age

invested

war.

^coejjotjmtf: r"

ST(6n."

^NOIrti :V-fUf \

prices.

in

than

we

the stock market.
We

industries

heavy

Cost of Food up

see

due

stimulated consumption; the aver¬

As

that what makes
a
horse race also applies to the
stock market. While we promised
secrecy as to
the names of the
sponsors who submitted the above
market estimates (and some of the
answers were blind ones), we will
tell

in

not

pounds per person compared with
prewar average
of about 130
pounds. Obviously, even had there
been no increase in food prices,
the average food bill would be up.
pattern consists of four stages: (1) Higher prices have hurt a minor¬
hesitation; (2) a consumer goods ity of the consuming public whose
replacement boom; (3) readjust¬ incomes have lagged, but for the
ment;
(4)
an
extended capital big majority, the ability to buy
increased
notwithstanding
goods boom. This time, while the has
steps
have
been
followed, the current prices."
third stage has been
extremely
Notes
moderate
in
degree
but
long
If you want 6% on your money,
drawn out in time.
"Because the capital go'ods ex¬ Hugh W. Long's Diversified In¬
the

223-163

to

still

are

we

pansion phase is still ahead of us,

sponsors were

Investors Inc.

"Economically,

third
stage of the normal
'four-step' post-war pattern; ac¬
cording to the October report of
the Investment Research Depart¬
ment of Distributors Group.
This

Hugh

204

higher

greatly

25.2%; Commons 53.9%; and

alent amount of 2%

the

the

Aver
age

Fundamental

Group Favors
Heavy Industries

range

the opinions or
guesses received to date, we find
that in October 1948, the "Dow"

Distributors Group, Incorporated
63 Wall

12

Distributors

as

that

costs is

to

food

Dow-Jone-^

(1) The level of the

Industrial Average one year from

is

in¬

almost

observed

entirely

recently sent a questionnaire to
twenty-odd leading mutual fund sponsors requesting their opinions

OF

It

average,

bills.

in food

increase

1935-39.

on

be

may

of

number

increased

food

as

"It

in

dollars

apparent
much

smaller

the

of

income

By HENRY HUNT

spent last year

was

buy food, as against 270 out of

each

INDUSTRIAL

Thursday, October 23, 1947

South LaSalle Street

LOS

ANGELES

2io West Seventh

Street

CO.

Number 4640

Volume 166

THE

COMMERCIAL

&

Schram Announces Plan of Increased N.Y.S.E.

FINANCIAL

More of

CHRONICLE

membership

By GEORGE L. MEYER, JR.*

Vice-President, Stewart-Warner Corporation

proposal to readjust commission rates

a

Warning we are in more of a price boom than a production boom, Mr. Meyer advises caution in forward
buying. Says continuing rise in food prices and in wages is an unhealthy condition, but sees no likeli¬
hood of drastic drop in prices because of aid to
Europe and government stockpiling of critical materials.
Looks to exceedingly heavy
crops in 1948 at lower prices as a corrective.

as
to increase gross revenue approximately
20%. James F.
Burns, Jr., President of Association of Stock Exchange Firms, says

so

increased commissions

essential if Stock

are

On Oct. 18, Emil

change,

released

which

serve

the

Schram, President of the New York Stock Ex¬
proposed new schedules of commission rates

the

<S>-

were

in commission

by

approved

of

Board

imately

Governors
and which
to

be

to

When

Mr. Schram:
is

of

year

ful

only

about

o

a

the

Emil

Schram

thorough study that the Board of

of

involved

the

the

mission schedule in such

produce

increase

way as

in

gross

approximately

shall

not

than

20%.

an

of

revenue

a

minimum

$6

The

charge
per
share

50c

event, shall be not less

single transaction.

per

commission

on

odd

an

lot

ditions

Our

You

that

thinking

our

for

George L. Meyer, Jr.

should

caution.

We

felt

that

reluctant

were

asked

what

is

is

true

that

business

has

its

receded

general

incoming orders,

from

up

mov¬

low at the end of

a

the

war
to a new high early in
1947, dropped quite rapidly from
spring peak. However, with¬

this

in

the

have

fantastic

pay

pro¬

March

ing

were

to

it

Industrial

pipelines
filling
up.
Real estate sales then, that is
at the end of 1946, were slowing
up.
In spite of the much adver¬
tised
housing
shortage, people
industries

many

year

us.

in

the

in

the

as

were

peak, reaching a
low in July, it picked
up consid¬
erably during August, and pre¬
liminary figures for September
indicate still further improvement.
This applies to both durable and
non-durable goods generally.

the immediate
be

forecasts,

have

men

from

the

keynote of

sales

activity

then

last

been

several

weeks

they

moving upward at an
pace.
Order backlogs

Our rates have not been changed
since
1942.
Since that time the

transaction

cost

would be reduced by 10%, except
where the 6% or $6 minimum or

—fur prices were down 35 to 50%.
We
were
worried
about
what

ing upward.

the

labor would do.

It

still diffi¬

the many changes which have al¬

cult

many

materials.

ready occurred

of

doing

creased

business

greatly.

has

the

That

in¬
pro¬

posed increase is justified cannot
be questioned."

According to Mr.

Schram,

"member

Exchange

doing business in all
the United States have

parts

of

urged,
that

firms

matter

the

of

of

necessity,
readjustment be made

as

a

this

in order that increased costs may

be

made

to

up

the

extent.

some

A

great many of our member firms
have made thoughtful suggestions

same

50c

No

our

work
staff

own

have

ernors

and

best

Board

of

The

com¬

represents

the

judgment of our industry.
increase is a mod¬

The

proposed

erate

It

is, in my considered
judgment, essential to the ren¬
dering of efficient service to the
investing public."
one.

Accompanying
announcement,

Schram's

Mr.

was

Association

the

Stock

of

offsetting,

Mr.

least partially,
operating costs,''
Burns stated, are absolutely
at

rising

essential

if

the

industry

is

to

Stock
serve

Exchange
the public

properly.
Association

"The

of

Stock

Ex¬

change Firms arrived at this con¬
early
this
year
after
exhaustive studies of the operat¬
clusion

1946.

These
to

Exchange
that

studies

Clearance
There is

recommendations

selling
per

—

Stocks

of

contained

com¬

in

the

obtain

$20

stocks

on

share.

per

On

share the rates would be fixed at

6V2C instead of 6c; and

selling at
above, the

$100

Stocks

—

Give

—

Board

Governors

give

rates

up

stocks

no

$50

Constitution,

amendment provides for

conversion from
to

a

stocks

a

These

dustry.

a

rate per share

money involved basis
selling at 50c per share
It provides for
an

total

over-all




plan then

point out

in the

both classes.

pers

to

move

general

One

of

the

plants

read,

estimate

or

call

it

was

made

if

guess,

that,

on

on

a

you

you.

fall

trends

issue

1947

address

the

District
National

termine

by

Three

Mr.

Meyer

organization

price

Exports,

NAPA

the

Conference

A statement

of

Association

of

cently

Pur¬

very

by

the

was

ciable
your

our

effect he

hard
to

On

that

increase

are

This announcement is not

fixed

at

stocks

$100

3c

instead

selling

of

2%c;

between

$50

an

The

offer to sell

hand

one

just

in

have

we

are

and

fixed
It

selling

above,

$100

per

rates

who

are

Some

say

On the
of the
company in go¬

shortages.

hand, the Chairman

board of

our own

ing through Germany just a few
months ago, saw people picking
up the individual grains of wheat
had

the

left

been

harvesting

in

You know the

subject,

as

expressed in President

Truman's radio address of

Oct.

5.

On

iron

(Continued

and
on

is

estimated
and

in

that

give

will

the

page

offer to buy these securities.

Gas Company

new

rates

up

produce

member

South Jersey

an

First Mortgage

of

Bonds, 4Ys% Series due 1977

in¬

commission

Dated October

Due October 1, 1977

1, 1947

of approximately 6%.

commission

proposed

Price

in¬

described above appear to

justified by the

very

102.17% and accrued interest:

substan¬

tial increase in the costs of doing

business which has occurred since

The

Prospectus

may

be obtained in

any

State in which this announcement is circulated from only such

of the undersigned and other dealers

BOYLAN,

as may

lawfully offer these securities in such State.

Chairman of the Board
EMIL

SCHRAM,

President

Earl E.

HALSEY, STUART &, CO. INC.
OTIS &. CO.

Taylor Now With

STROUD &. COMPANY

(INCORPORATED)

,

GRAHAM, PARSONS & CO.

INCORPORATED

PAUL &. CO., INC.

s

OMAHA, NEB.—Earl E. Taylor
has become associated with Crut¬
tenden
&
Co., 204 South 17th
Street.
with

Mr. Taylor was

Harris.

H. O. Peet &

Upham &
Co.

formerly

Co., and

JULIUS A. RIPPEL, INC.

HALLOWELL, SULZBERGER &, CO.
E. W. &. R. C. MILLER & CO.

WALTER STOKES & CO.
October

tl.

1947

Sunday,

steel

share
be

field

Administration's viewpoint on this

$4,000,000

3c.

the

equipment

on

would

at Sfzc instead of

crease

be

at

the

views

the

returning.
no

as

Europe.

Congressmen

now

other

shortage

and

fixed at 3J/4C instead of 3c; and on
stocks

an

the

truth

the

determine

offering is made only by the Prospectus.

share the rates would be

per

solicitation of

or a

on

similar

a

food

many

there

perhaps his buyers had been

was

or

to

the

.of

fearful

to

the

further appre¬

no

passed through it.

nies

chasing Agents, Milwaukee, Wis.,
Oct. 15, 1947.

you

figures

drop in August. Whatever
views on the international

which

large merchandising compa¬

concern

plan, there
is
no
question
but
what
the
amount of money voted to support
—or
we
might say, "Revive"—
European economy will, to a great
degree, influence our export pic¬
ture. Their requirements for food,
farm products and fertilizers, as
you
who read the press know,
run into tremendous figures.
It is

par¬

one

some

picture, whatever they

pa¬

made very re¬

of

as

the

July, but with

Bulletin.

head

felt

the month of June continued into

by McGill in the Sept. 24
of

at

who have fol¬
at all know,
have been moving downward. The
decline, starting particularly with
lowed

regularly

trend,

output

about it.

The NAPA Bulletin,

the

their

would not be done

course

reliable vendor; nevertheless,

a

after

at

some

this very capable head of a large

these changes before
excellent summary of

in

sell

to

This of

conservative basis.

by

deliveries

He felt that

higher prices to other customers.

ticularly, is covered very well by
monthly
commodity
price

Our

level.

a

buyers, in driving too sharp
a bargain,
might have jeopardized
their positions. Perhaps the source
with whom they had contracted,
because of rising costs might de¬

into

Question of Inventories
*An

too low

the

want to

business for

keep
An

changes

under

direction reached its peak in

May—another in September.

will

undoubtedly

you

you.

Business activity in
a
peak during

reached

March.
my

to

especially, coupled with trade

But business continued

up.

known

are

from industry to in
What you men buy and

vary

undoubtedly

use

less-

on

facts

They

future

dropping their inventories to

(Special to The Financial Chronicle)

above.

estimated

to

major in¬
Surpluses with lower
some commodities, even

on

conservative inventories.

selling under $20 per share.
selling between $20 and
share, the rates would be

Cruttenden & Company

Non-Member Rates—Stocks

prices

con¬

per

ap¬

dealing with commissions.

were

keep our plants operating; on the
other, our need for balanced and

On stocks

amendment to Section 2

of Article XV of the

we

about getting materials to

for

committing

proposed change in
of commission in

proved today, for submission to
the membership for balloting, the
enclosed

need

no

though few, and unfilled demand
with
higher
prices
on
others

hand

one

themselves

in

Up Rate
There is

of the Exchange:

of

is

dustries.

On

—

conservative,

Marshall

steel.

the

at 7c instead of 6c.

Member Rates

instances again mov¬

some

There

stocks

on

share
and
would be fixed
per

rates

was

in

are

Publicity
was
beginning to be
given about the black markets in

1942.

To the Members

and

houses.
Department
again advertising sales

ventories.

Commissions

ROBERT P.

on

to

accelerated

ened,.activity; began to watch our
commitments; began to reduce in¬

—

at 6c instead of 5V2C; on stocks
selling between $50 and $100 per

creases

ernors:

basis

20 Broad

1109,

commissions

under

be

following notice sent to Exchange
members by the Board of Gov¬

The

the

at

selling between $20 and $50
share the rates would be fixed

revenue

The proposed schedule

The

the

stocks

The

is

in

commis¬

proposed change in

no

clearance

commission

Proposed Rates

rates

than

available

are

Member Rates

clearance

revised upwards."

mission

the

for
were

We began to

made

commission structure

the

other

(Room

Stock

were

the New York

with

in

proposed

prices
stores

cerned

Exchange.
Street.)

ing costs and revenues of member
firms covering the period
1942available

applies.

transaction

Ex¬

commission rates, for the purpose

sharply

but

Examples of the computation of

change Firms, endorsing the need
for higher commissions. "Increased
of

lots,

statement

a

by James F. Burns, Jr., President
of

is

share

commissions

Gov¬

revised

schedule

round

sions.

and

into the matter

gone

exhaustively.
mission

the subject,

on

computed

stocks selling at less than

on

per

us;
the Association of Stock
Exchange Firms has done a great

of

be

share rate

per

minimum

to

deal

for

as

change

rates

50c

would

year, we were

of his

While

man¬

agement

future

and

ahead of

ing 1947.

as

commission

exceed

any

gressed.

would be dur¬

$15, the

shall be

involved; when the
$100 or more,

sum

but, in

to

casting of what

in

amount involved is

submitting to
the membership of the Exchange
a
proposal to readjust our com¬
now

carefully made

felt

transaction is less than

Governors

is

and

with the fore¬

100

minimum commission shall be 6%

and

sales

faced

were very
As the year

—

too

con

amount

we

business structure.

Additional commitments for pur¬
chased items, tied in with actual

we were

money

than

matter of fact,

a

immediately

ac¬

transaction

more

as

on our

pretty well*

satisfied; but

mutually agreed; when it is $15
or
more, but less than $100, the

care¬

n

single

a

minimum commission

a

considera-

t i

graduated

1946, early in December,

accomplished during that

I

rates

new

$100
6%
$ 100.00 to 999.99
1%+$ 5
$1,000.00 to 3,999.99___
1/2%+$10
$4,000.00 and above-__l/10%-j-$26

statement of

"It

in

In the latter part of

much concerned about the coal strike and its effect
end approached and we took stock of what we had

First

final adoption.

after

be

aggregating not
shares, would be

a

for

According

would

involved

Exchange
members

The

cording to the amount of

are

sub¬

mitted to

of approx¬

revenue

20%.

which

vote of the

a

Exchange is to

public properly.

.

17

Price than Production Boom

a

Commissions
Will submit to

(1645)

alone,

31)

18

COMMERCIAL

THE

(1646)

FINANCIAL

&

International Bank and Increased World

CHRONICLE.

Inflation Problem More Serious

Output

Walter S. Bucklin, President of National Shawmut Bank of

By ROBERT L. GARNER*

and Development

Vice-President, Int'l Bank for Reconstruction

"The problem of inflation is

becoming much more serious," says
Bucklin, President of the National Shawmut Bank.
In an.
analysis of the
<$>disposition of
have been greater than in each
personal
in¬
previous year. Since 1944, how¬
comes based
ever, the amount saved has per¬
on averages of
sistently fallen off. Even though
incomes for the first six months
quarterly
Walter S.

something of the operations and policies of my institution, The Inter¬
Development, and discuss its relationship to the

figures,

national Bank for Reconstruction and

for

of

the

resources

of

Other parts
the world.

of

some

an

ating

oper¬

otherwise diverted.

or

institu¬

tion and I be¬

non-productive purposes

for

One of the interesting

lieve that it is

of

proving to be

the Bank be

example of
practical
in¬

of

ternational

opments

elements
provisions that
supplied with a flow

an

it is

co-

Robert L. Garner

consid¬

erable

delay-

performing the work for
created, the making

now

which it

was

of loans

for

Our

productive
Annual

Second

purposes.

Governors

last

was held in London
and was attended by

Meeting
month

are

pertinent information regarding

the

get
these
principles
of
supervision
and consultation accepted in our
earlier
negotiations.
However,
that

it

not

was

to

easy

holders' meeting was

bers have both

com¬

some

or

member

handled

ex¬

peditiously, carried out its sched¬
uled program of formal action,
and provided an
opportunity for
useful

discussion

informal

and

exchange of views.
Our directors, now 13 in num¬
ber, have been giving conscien¬
tious and intelligent attention to
the work of the Bank, acting on
matters of policy,, loans and

These

directors.

men

interests

viewnoints

and

of

diverse

different nationalities and

have

backing to the
management and there has never
splendid

given
been

board

on

ouestion

any

there

the

in

which

on

This is not to infer

it has acted.
that

division

formal

a

no

are

differences

of

have
frank
and
discussions and
thorough consideration of vari-

opinion.

We

sometimes spirited

.ous

it

points of view, but uo to now
always been possible to
at
decisions which have

has

arrive

received

the

full

of

support

the

board.

Our staff
370
ent

consists of about

now

and

men

of 20 differ¬

women

nationalities.

They include a
diversity of training

remarkable

and

a

can

that

and

voice

Bank

the

properly

exercise

without

functions

these
ment

financial interest

a

therefore

infringe¬

the national sovereignty.

on

Discussions

We

of

are

discussion

in

stages

member

other

with

and

and

the

General

Manager.

assistance

to

economic

problems

the

reconstruction

to

France.

$197,000,000

Netherlands,
mark

and

bourg,

$40,000,000

$12,000,000

total

a

of

to
to

to

the
Den¬

Luxem¬

$497,000,000.

These loans are for the purpose of

supplying equipment and mate¬
rials to increase production.
They

providing urgently needed
supplies and should be of substan¬

are

tial aid to the borrowers in build¬

ing

up

their output of goods.

and
and

pervision

the disbursement of
payments
only
carefully checked docu¬
Furthermore, our repre¬

funds,

in

making

♦against
ments

sentatives in the borrowing coun¬
tries are closely checking to in¬

that

sure

the

goods

purchased

the

address

34th

by

National

Convention,
20, 1947.

as

the

or

of the

revision

a

tax

development

the

structure

of

power

a

will

we

selection

of




j

government.

Based

this

on

of

figures

each

in

available

for

and

world

development

conscious

are

ficient

to

its

do

this connection,

tion,

even

W.

the

of

the

of

funds

tion is

be

can

a

promoting

economic

sound

sunuly
with

practical
to

resnect

On

tial

measures

and

and that it

can

the

that

and ad vim
both policies and
a'd

L.

is

essen¬

recognize the Bank's

we

limitations.

job.

Bank

hac

make

to

these:

are

The

The

loans.

subscribed

facts

canital

of all the 43 member nations does

add up to something in

excess

of

the

equivalent $8 billion.
How¬
ever. only 20% of this is naid in
or

will

ever

this

paid in for the
making loans and of

of

nurpose

naid-in

capital

$725,000,000
dollars.
cause,

be

is

I

as

United

in

This

for

am

the

only

nation

volved.
there

are

States

significant be¬
sure you realize,

dollars
in

Furthermore,
capital

the
we

with

whose

is almost

en¬

to buy goods
United States.
can

lend

our

the consent of
currency

Today,

is

in¬

unfortunately,

sition to give such consent.

out

of

francs

With

equivalent of
made

avail¬

of its subscribed capital

bv Belgium to cover the purchase
of

more

only

tance

develop

eign

the

of

resources

the

dislocation

been

the

ani

1944.

of

pro¬

W.

in

efforts

its

Instead, there is

for

have

quarters

amount

Bank,
many

of

hopes

too

was

would

most

made

the

from

trade show

railway equipment by Luxem-

tory.
the

total,

by

to

expect

ness

the

in

the

of

destructive

war

in

Tom

eight

years

for Europe

farm

to reach
on

a

obstacles

his¬

to

reach

maintenance

a
.

has

multi¬

been

the

more

still

goal
to

part

be

must

countries

to

factories,
permit

to

for

pay

the

export.

we

"These

facts

about world

axiomatic

are

found

with

trade

but

you,

are

not well understood

So
not

by the public.
this convention will

see,

you

attendance,

be

beneficial to you in
but also will be most

helpful

making

only

in

clear

the

to

people

generally, subjects about
which they are very much per¬
plexed."

With

Mitchell, Hutchins

(Special

to

The

CHICAGO,
man

has

become

Mitchell,
South
of

Financial

Salle

Hoff¬

connected

Hutchins

La

Chronicle)

ILL.—James
&

with

Co.,

Street,

231

members

the

New
York
and
Chicago
Exchanges. He was previ¬
ously with Doyle, O'Connor & Co.

the

organization for

the world than

thing.

reasonable
m

markets

a

in

stand

will
we

not

any

be

know that

preserve

peace

other

With

the

of its realization, the efforts

it will do
in

And

and despite the many
that

its farms and

from

put

the

as

nation and

with the greatest out¬

Stock

trade

this

diminished because

seven

36).

world

long time,

McKittrick

page

necessary

prosperity.

slogan of

after World War I

(Continued

one

companies

are

the

But

also the

small frac¬

foreign

to

thought.

great creditor

of their busi¬
many others

to

orders

essential

lateral

it

We should not lose sight of
which

and

agriculture,

way

fact,

a

"Non-discriminatory,

from

recovery

abroad

foreign

are

possible to foresee and

quiek

be

to their successful operation.

thai

that

pro¬

your

many

the greater part

do

fact,

has mentioned, that it took
or

it to

tion of the

pro¬

too high; that it

were

much

be

provide for
the

loans

arises

follow

you
any¬

prosperity here, for¬
must be maintained.
While the figures of our foreign

criticism in
the
limited

of

that and

of

will

whole

our

of

world's

in

lasting
eign trade

finally, much of the cur¬
disappointment at the pace of

some

its habits

goods

that

Of course,

trade.
error

are

volume because in the last
analysis they can only be paid for
in goods and services.

has

lacy

for

And,

including

k s,

r

ceedings here must conclude that

recovery.

rebuild

of

the

import more if
to continue in

must

we

exports

other-

Hemingway

who

one

ductivity, trade and stability.

recovery,

prosper¬

In his re¬

unimportant part of

know

is being made

to

area

L.

volume

lent division, with the Soviet bloc

its

in

acceptance

in opposition and hostile to almost

effort which

as

r

quarters, namely, that for¬
eign trade is a small and therefore

deep and viru¬

a

trade

many

and

could

world

that

is another fal¬

an

the

*

ize

means

very

profound

of the Board of the Mercantilein a welcoming address

stated: "There

life
millions of people

more

necessity for

upon

"Too much emphasis can not be

Mr.
Hemingway

Recovery woujd have been d;fif,Uvhen the fighting

rent

FIGURES)

placed upon the necessity of more
imports because it is not easy for
an
exporting country living be¬
hind high tariff walls to change

our

ficult enou'gh

outside

OF

INCOMES

(AVERAGES OF .QUARTERLY

for¬

ity.

was

widespread.

every

DISPOSITION

impor¬

maintaining

in a

of

on

of

facto

a

acute than could have

trade

Louis

the

ed

repair

to

and

war

the physical de¬
greater than was real¬

but

duction.

united

•4/*

good

St.

was

struction

ceased,

'4 J

PERSONAL

.

our

Oct. 20, stress¬

ail

few countries other than

the United States which are in nn-

000,000

of

created at Bretton Woods in

about

is

the present demand

nrimarily

onlv

'42

41

•s/x MONTHS DATA

Foreign Trade

any

provide

been foreseen when the Bank

has

gil|p§*
•

Convention at

obvious

Furthermore,
we
must
recognize that the present situa¬

ized,

mm

•

the

National

•34th

In

was an

could

untapped

Not

*£££ jfcgs
mmHtglgj MSTSv ******

cot*
consumer

of Foreign Trade

Chairman

before

There has been much

that the

mm

emphasis cannot be placed

Hemingway,

suf¬

necessary

damages

of hundreds

other hand, it

■££
ims

Commerce Bank & Trust Co. of St. Louis, Mo.,

ques¬

resources

proper

if

institution

tions. I

bv saving

30-

imports.

world.

hope that the Bank
constructive influence in

tm

banker, in addressing Foreign Trade Conven¬

too much

says

more

misconception to believe that
one

the

summarize

-

1941,
after taxes,

Prominent St. Louis

re¬

Limited Resources
We

Without taking time to go fur¬
ther into this aspect of our opera¬

our

40

since

year

people's incomes,

adequate protection.

cians. engineers or other experts.

can

-

on

The Importance

obligation, it is now possible for,
file investor in America to make

with

BANK

of Boston

50

at

by

the

that it is

private

THE NATI0NA1 SHAWMUT

already

series

new

that

is

looking
the protection pro¬
the obligation of his

primarily

techni¬

able

Oct.

have

"A

develop¬

be prepared to
advise the member government on

project,

Foreign

Mo.,

j

time

present

investor

construction

the detailed
out of such plans, such

working

Mr. Garner at

St. Louis,

the

at

the Bank will have

$2

Trade

prices

With-

broad

the exception of the

*An

that

his funds

As to

Department of

$

in

this decline

of

some

tion in many minds as to whether

plans.

LIONS

saving and increase in spending
is, of course, due to the fact that

is

In general, it will be our
policy to assist in the diagnoses of
problems and the development of

tirely

We have provided for close su¬

American

ment.

which

Since May of this year the Bank
has made four loans—$250,000,000

fact

in help¬

study

ing to develop realistic programs
of

the
the

of our
of their

many

in

From the Statistical

BIL¬

Bucklin

S.

Walter

inferring that the i personal income has just been re¬
obligations of the other members I leased by the U. S. Department of
effective, we recognize I Commerce. These figures show

own

$8 billion of funds at hand out of

Bank

in

out in any way

It is

be of prac¬

we can

misconception

Loans Made by

credit of the United States.

vided

techniques.

Vice-President

obli¬

bank's

S. Government

-

an

risen and
more goods are now available, the
j decline in people's willingness to
member nation.
Thus, up to this i save
money is also adding sub¬
amount, the bonds of the Bank 1 stantially
to
the
inflationary
are covered
by the full faith and j
problem we are facing.

eco¬

members

McCloy, formerly Assistant Secre¬

the Presi¬
I became

the

meet

up to a total of $2%
billion, irrespective of whether
the guarantee is met by any other

their

belief that

tical

various

regarding

financial

tary of War. assumed
dency in March and

to

,

UP

UP

e^np,tures

"While

'

SAVINGS DOWN

prices.

committed

financial plants.

countries

our

Economic Plans

on

now

experience who are working
together with businesslike eff;ciency.
As you know, John J.
and

scription. We have tried to make
it abundantly clear, but it bears
repetition, that in the event it is

INCOMES

EXPENDITURES

will not be

other nomic

major problems quite in accord¬
ance with the general role of cor¬
porate

they have

of course, all of our
including our loans and
the unqualified right to call upon
all of the member governments
for the unpaid 80% capital sub¬

gations, the U.

t h

1944."

they saved in

PERSONAL

increasing de¬
mands. People are spending more
money than they ever have be¬
fore. Although people's incomes,
even after
taxes, are bigger than
they ever have been in the past,
people are increasing their spend¬
ing more rapidly than their in¬
comes
are
going up. As a result,
they are saving less and there is
a
strong
upward
pressure
on

them,

needed

amount

lines by

many

assets,

say

are

more

July.

above

16%

running

are

saving only one-third of the

are

the

matched

The bonds of the Bank have be¬

the borrowing coun¬
tries and for continuing consul¬
tation between the governments
and
the Bank on financial and
economic matters.
I am frank to
in

parable official of each of our 45
nations.
This
stock¬

Minister

in

bonds

hind

been accepted on the
sound ground that the Bank is a
cooperative international institu¬
tion in which the borrowing mem¬

Finance

of

most

in

1947

the rate of income in 1944, people

continue to be

isting
circumstances,
predomi¬
nantly to investors in the United
States.
As you may recall, we
sold our first issue of $250,000,000

the economic situation and devel¬

ration.

ope

After

loans

our

of

improving
greatly, but
these
gains

In order for the Bank to obtain
taking care to avoid some of
the unhappy experiences of cer¬ additional dollars for the
purposes
tain foreign lending in the past of lending we must sell bonds to
whereby proceeds of loans were private investors and, under ex¬

used

of

market

our

the

are

The Bank is

now

he

"Sup¬

goods

funds are actually used bourg, all of the loans that we
productive purposes have made up to date have been
agreed upon.
In this manner, we in United States dollars.

with

of

velopment

a

plies

the related

subject of de¬

:

said,

also touch

problem of rebuilding production, trade and financial stability in Europe. I shall
on

Boston,

points to factor of rising personal incomes and reduced savings.

Though asserting International Bank can be of constructive influence in promoting sound economic and
financial measures, Mr. Garner stresses serious limitations on bank's activities due to its limited re¬
sources and borrowing powers.
Says present situation is more acute than foreseen, and European diffi¬
culties cannot be solved by loans from America.
Sees Paris Plan as forward step toward recovery
but warns international trade barriers and fear of war must be removed before recovery can come.
I shall tell you

Thursday., October 23, 1947

one

And along with this and
it is the necessity for

of

the people of this country to real-

Freehling, Meyerhoff

(Special

to

The

Financial

Chronicle)

CHICAGO, ILL.—Paul W. Linstrorn

is

Meyerhoff

now

&

with

Co.,

Freehling,

120

South

La

Salle Street, members of the New
York

and

1 changes.

Chicago

Stock

Ex-

Volume 166

THE

Number 4640

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1647)

19

The Current Economic Scene

Providing for Families
By ROGER W. BABSON

By WILLIAM A. IRWIN *

Mr. Babson stresses importance of Estate Planning as factor in

Economist, American Bankers Association

reducing "booms and busts."

Points out value of planning to
Advises setting up irrevocable

Dr.

Irwin, asserting this country is in throes of inflationary boom,
points out customary yardsticks of
Denies monopoly or speculation has been cause
of high prices, and
lays
inflationary tendency to terrific pressure of short supply of goods.
Says labor is in monopoly position
and "full employment" is
inflationary. Expects serious readjustments, whether depression comes or not

physicians, lawyers and farmers.
for

trusts
To

family protection.

those

to say that

who

only

troubled

are

our

n

t i

a

o

and

bust s."
other

In

words,

providing for
the future, the
"booms"

will

less

dan¬

and

gerous;

"depres¬

sions"

less

will

be
I

severe.

feel very cer¬
tain about this.
We give too

Roger Babson

much

business

and

children.

A

the

too

time

future

time

little

to

to

our

busy executive gives

no

to

which

thinking

is

to

be

a

of

very

essential part

to his later-life de¬
Also think of the far¬

velopment.
mer or

businessman who has been
pouring all his profits back into

the

farm

•out

or

business.
He
sells
finds
himself
with
a

and

grand

bank

come

until

work.

He

some

future

Then

but

sit down

is

the

to

and

thinking.

depends

there

in¬

no

his money

puts

serious

veiy

•entire

balance,
he

has to

want

I

do

His

far

are

clients'

the

tailed
their

legal
time

work

is

the

inflationary
ary

mostly spent.

widow

to

boom;

this

Central

West

is

this

management

The

recommend

lege

I

as

•opened
U.

local

af¬

such

will
col¬

a

friends

my

the

her

banker

attend

or

and

at

of

is to read such

answer

her

as

"Center

have

of

will

farmers

when

of

now

draw
poor

|

upon

prices and

low

to

crops

need

doesn't

rain,"

vocable

to

your

c

Then there

Whose

bankers.

family's

They are should be

vis-j

six months!

every

from

in

success

largely
terest

due
in

has

one-sided

he

to

good advantage.

in Estate

course

what he needs.

take

themselves

time

A

Planning is

These

doctors

always "checking up"
seldom

arrange

others

to

are

but

check

physically

up

finan¬

or

If

you

'"trust,"
fidence
who

held

•enough

in

that

the

Club,

consult

beneficiaries
with

best

the

'usually

training

so

intelligently watch

can

Trust

their

lowing
will

Mead,

Mead,

ners or

well

paid

;;much

estates

for

time

/giving

study

and

xmer

classes

dentists
to

Lawyers should
clients

to

men

invest-

The
been

keep up to
be fair to

their

and

are

work

so

& j

give

date.

the

training

fi-

con¬

pressed

with

which

be $2.00 i

reservations

with

Miller

Co.

&

limited

to

made

for

at

the

officers

Group

annual

of

be

to

bear."

being

But that is

done.

Even

simply

where

ef¬

of

cause

of

our

current in¬

partially respon¬
extraordinary be¬
grain markets.

certain

To the extent that this is
true, we
one of the clues to our
situ¬
ation pricewise, and it is the un¬

fortunate fact that this lies
largely
at the base of our
high cost of

living.

Furthermore, since this ispartially accounts for the
recurring demands of labor for in¬
it

so,

creased

wages,
while these in¬
in turn, push up costs and

creases,

lead to further increases in prices.

Therefore,

if

face

such

value

have

about

forced
for

to

we

accept,

can

evidence

speculation,

lay

we

are

of the blame

some

current

at

as

we

inflation

the

on

shoulders of the speculators. What
effect the

latest

increase in

gin requirements will have
situation

is

still

mar¬

this=

on

moot

a

question,
though its first and immediate re¬
sults

to

seem

show

limited

some

promise.
Renewed

Demand

for

Price

Controls
In

light

of

all

the

facts

about

inflation, it would be strange in¬
deed

if

there

had

not

been

so pie

flation.

James

H.

appointed

tion

the

to

for

election

committee

officers,

are:

in

C.

Ewing, Allen C. Ewing Co., Wil¬
mington, N. C. (for three years);
P.

D.

C.

&

(for

unexpired

Dunn,

term

May);

and

Baker,

Watts

(for

one

The

Auehincloss,
Washington,

Redpath,
two years
of

to
W.

fill

the

Peyton

John

Redwood, Jr.,
Co., Baltimore,
year) ex-officio.
&

nominating committee

gone

that price
very effectively
influ¬
not actually fixed, by

has

been

if

deliberate

and

govern¬

•estates

inson &

James

F.

actually do
times

and

try

the

come

of

shortages

to

operate

doing

legitimate

a

in
America is
well aware of the primary cause
of this condition.
It was brought

banker

Every

especially,

on

so,

"shoe¬

a

they

trader

bring

into

seems

indicate

to

condition

does

dis¬

that 1

exist

the controls

velopment

of

were

black

other features that

ly undesirable;

effective;

markets

were

they had the

ef¬

fect of shifting needed goods from
one

to

consumer

could

they developed

at

another

who

afford black market
prices;
a

(Continued

bureaucracy that
on

page

40)

no circumstances to he construed as an
offering of these securities for sale, or
offer to buy, or as a solicitation of an offer to buy, any of such securities. 'These securities
are
initially being offered by the Com Tuny to its Stockholders and
offering is being made only by means of the Prospectus.

NKW

and

thorough¬

This is under

as ait

ISSl'F.

October

17, 1947

100,000 Shares

Providence

Washington Insurance
Company

by the expansion of credit
to finance World War II.

about

No

blame

that

expansion.

assessed

be

need

It

was

for

Capital Stock

necessary.

Without it, the war
been

have

could not have
fought and won. But there
been secondary causes, and

[fto par

been issued

sibility for these causes that is a
current topic in many circles. Let
us

take

look

a

proper

careful

them

at

and

estimate

and

an

try to

on

honest

place

a

Copies of the Prospectus may be obtained from any of the several underwriters of the.
unsubscribed shares only in States in which such underwriters are qualified 10 a, !
as dealers in securities and in which such
Prospectus may legally be distributed.

them.

to blame in the

"rigging" of prices.

past for the

Examples of

The First Boston
Barrett &

*An

address

ings

by Dr. Irwin be¬

Convention

Banks

of

Association

the

of

Sav¬

the

State of New York, Lake Placid,
Company, 9 Lewis Street. N. Y., Oct. 10, 1947.

G. H. Walker & Co.

Corporation

Company

Herbert H. Brooks & Co.

McDowell, Dimond & Company

Mackubin, Legg & Company

Joseph Cummings

Granbery, Marache & Lord

Davis & Davis

Brown, Lisle ft Marchall
MacColl, Fraser & Co.

Merrill Lynch, Pierce, Fenner & Beane

Paine, Webber, Jackson & Curtis

M.

fore Ahe

value)

Rights, evidenced bv Subscription Warrants, to subscribe for these shares l.avo
by the Company to its Stockholders, which rights will expire at 12 noon,
Eastern Standard Time, October 28, 1947, as more fully set forth in the Propscctun.

it is the assessment of the respon¬

Chronicle)

McAvoy, Jr. have
joined the staff of Henry C. Rob¬

real

The general tenor of the

repute.

such

that

Many
of
them
into the market,

In

string."

busy in the

markets

arises.

unusual caution.

and for

been

and

only when "outsiders"

commodity

con¬

HARTFORD, CONN. — Charles
Kaman, Charles Kirchner, Jr.

at

some

cases,

appalling. In the face of
possibilities, there is need for
sober'thought, for calm judgment,

sisted of James P. Nolan, Folger,
Monopoly and Speculation
Nolan, Incorporated, Washington,
"The Goat"
D.
C.,
Chairman;
Edward
C.
It is the customary practice in
Anderson, Scott & Stringfellow,
this country to seek a "goat" when
Richmond, Va.; and John Red¬
things go awry. The time-honored
wood, Jr., Baker, Watts & Co.,
goat is monopoly.
To some ex¬
Baltimore.
tent, monopolies undoubtedly have

(Special to The Financial

In

on that point, there can be no
dif¬
ference of opinion. But they were
cumbersome and
annoying, and
they brought with them the de¬

It is

evidence

its economic effects could be

lies

war

again the record is quite unassail¬

in

only because

the

able.

price remain comparatively steady
is the use of money, and this is
case

during

the root of this demand.

Once

ours.

—pure gamblers— get

trouble

the

controls

useful purpose

a

like

to j
needed

addi¬

Allen

have

least,

serve

economy

such

l

executive

at

an

utterly

Secretary - Treasurer: W. Pey¬
May, Investment Corporation
Norfolk, Norfolk, Va.

Also

estate, both urban
Profits, in some lines

business

of

soon,

Lemon, Johnston, Lemon & Co.,
Washington, D. C., and Joseph W.
Sener, Mackubin, Legg & Com¬
pany, Baltimore.

the

real

of

rural.

and

tion fails to
in

just ourselves to its consequences;
and if another war should come

List,

Robert Garrett & Sons, Baltimore.

Vice-Chairman:

applies

if there should be
a series of crop failures, is discon¬
certing. If a serious slump in eco¬
nomic activity should develop, it
would tax all our ingenuity to ad¬

voted

D.

This

obsolete.

The prospect,

the

H.




not

is

the

that

problems

ment controls.

meeting:

George

The

conscious

following nominations have

to hesitate to suggest
$0 clients that they revise their
wills, form trusts and plan their
these

banker.

enced,

At¬

They

Yet

to demand "all that the traf¬

will

banker, or an investment secondary

■

part¬

Three With H. C. Robinson

intelligently.

j

Carroll

W.

they must
do, that they seldom take time
to present new throughts to their
•clients.
Busy lawyers are
not
/good salesmen of their own wares.
seem

cer¬

as

through every recorded ceiling.
The only thing that has had its

group.

be

Southeastern

sum-

post-graduate study.

Lawyers
detailed

of

How

attend

mancial side of their

tinuous

busy

cus¬

very

Lawyers want their doc¬

tors

trusting

get

work.

such

Drexel

officers of firms and heads

Richard

made

and

such

are

the

to

iments?

often

are

of

Jr.,

ton

Lawyers

a

value

of departments of member houses.

Parker

Lawyers
todians

made

will

tendance

of

discussing.
Books and
classes exist to help
^people get such training.

be

become

dinner meet¬

a

and

person

be

Trustees

glad to discuss
they feel you un¬

to

the

should

who

derstand what you are

Advice

address

per

very

are

asuch matters if

true,

equally to the prices of commodi¬
ties, to the wages of labor, to the

The

the dinner and
regular
meeting, Mr. Hopkinson

business

Trustees

service.

j

Baltimore.

Hopkins,

a

get

is

so

fic

operate, whether justifiably dismiss manipulation of
savings banker, a com¬ prices by them as an important

mercial

i

Co., President of the I. B. A. Fol¬

men

also

you

investment

you

them.
often

con¬

handling things, but it is

advice

that

of

have all the

world

he

Group

Oct. 24 at 6:30 p.m. at the

on

Chairman:

beneficiary

a

may

the

in

are

my

get

are

you

This

ex¬

isting for them could be combined

and

for

demand for the reimposition of
Another
of
this poses,
the
time-honored price
control.
That
demand
is
especially for the officer who is goats is "speculation," especially with us now. It comes not only
BALTIMORE, MD. — The An¬
in
commodities.
It from consumers and from labor
nual meeting of the Southeastern- responsible for the investment of speculation
funds, are manifold.. All the cus¬ cannot be> successfully asserted, leaders, but also from some lines
Group bf the Investment Bankers
Association
of
America
will
be tomary yardsticks of value have however, that legitimate specula¬ of business. Experience with such

on

cially.

and the effective demand

cars

Irwin

A.

William

for

sible

currently

must

Cost of the dinner will

what

conserve

be

present

may

a

little

a

and

is
in¬

into

runs

take

must

accumulated

affairs

:short

But

He

world.

profession

his

in order to

(pause,

ihis

financial
his

to

it.

problem.
:he

the

re¬

needs

man

of China and of Greece, fective monopoly conditions do
and is probably true also of Italy exist the
same
thing is demon¬
and
of
several other countries. strably
true.
Apparently
the
Such a universal phenomenon has monopolists at this time are show¬
never
existed before within the ing discretion in their
pricing pol¬
memory of any living banker, and icies either through fear of con¬
perhaps has not previously oc~ trols, through dread of possible
curred. It is within the conditions economic
consequences,
or
for
of such a world that the bankei
some
other
reason,
so
we

Regarding this consult
"dentist" as the rauio
lawyer and

your

sensible

tainly,

irre¬

an

No

monopoly—could ask much higher
prices for cars than it is doing,
and
get them.
The shortage of

out-

e

m

o

refute the

or

the

told, for example, that the
industry — which has
"administered"
prices, if not a

construction.

talks about—but your

Edward
man,

far

are

to

be

can

one

in

automobile

them, namely,
chaos and financial re¬

ing this year in order to entertain

Ups"

is the medical

prime interests

moved

His

"Check

cusation.

economic

the

use

start

for

Trust

protection.
—not

then

and

one-third

other

Group is holding
Need

there

But

present situa¬
tion, the undeniable facts seem to
give the lie to much of the ac¬

only

world¬

a

too well known to call for

are

record.

segment

only

again—as they will.
My advice is that after getting
out of debt you spend one-third
of your profits on improvements,
one-third put in government bonds
or
cash
lor
"the
day
when it

Maryland

Doctors

is

boom

come

the

S."

domestic

one

Gf BBS to Meet

foooks

have

that

wide inflation

get basic knowledge of the
in

attempt to question

well

is

"get-rich-quick"
which
is
so
They are trying to get j
serious
in
away from the farmers their hardj some
counearned money, much of which the
j tries
that

Southeastern

tials

havior

promoters.

responsibilities left on her shoui-ders for which she is not
prepared.
How best in a short time can she

fairs?

citation, and only one who is
either ignorant of the facts or an
incurable monopolist would even

aware

with

essen¬

who
the

facts

with

infested

this

one

any

just visited the wheat
country where farmers are reap¬
ing much wealth. They are get¬
ting more money then they ever
dreamed of, but have no knowl¬
edge of what to do with it. As a
result,

^

and

knows

Farmers

have

I

few times in the

any

de¬

which

upon

a

economic history of
Jhe United States when
banker was faced with conditions such as paralleled those of
today. It is quite Gen¬
erally admitted, even by government officials, that this
country is in the throes of an

important for

more

families than

Warning

ited

it.

on

There have been but

-

things

ditional family

the

outlook,

ad¬

every

be

financial

n^>

its

reduce

for

the

about

families adopt careful Estate Planning will

as more

"booms

almost

value have become obsolete.

Richardson & Clark

Maynard H. Murch & Co.
W. B. Freeman & Co.

Thomas A.

Kennelly

Shelby Cullom Davis & Co.

Miller & George
Dean Witter ft Co.
Putnam & Co.

Robert Garrett & Sons
Revnolds & Co.

20

& FINANCIAL CHRONICLE

THE COMMERCIAL

(1643)

Steiling

International Currency

as

By PAUL EINZIG

maintain sterling as an

Dr. Einzig, commencing on British desire to

sterling became an international
It is true to say that
international
commercial position
in spite of
being handicapped by sterling's

role

as

always been a liability.
Says foreign balances have placed Britain
banking situation as indicated in 1931 withdrawals, and
denies Britain attained international commercial position because

on

of role of sterling as

international

role

ling

:

balances carries no ad¬
vantage beyond satisfying the am¬
bition of banks wanting to show
an increase of their deposits. For¬
foreign

ster-

of

in-

as an

ternational

*

This

currency.

is

the

with

ance

easily the least
dependable type of balances. They
eign balances are

accord¬

in

views
after

margin of export surplus and with
a
relatively small gold reserve—

and

as

Socialists
is of vital im¬

Dr. Paul

Einzig

play such a part

sterling should

axio¬
matic.
It is a
universally held
view that Britain stands to benefit
substantially from the use of ster¬
regarded

has come to be

as

ling as an international currency.
And yet, if we examine this mat¬

ter closely
jiby

find that this is
so, and that the in¬

we

no means

ternational role of sterling and of
the London banking center has
always been a
liability rather
than

point

the

from

asset

an

of

view of the national wealth.

S'/A country with

perennial ex¬

a

port surplusp-such as Britain had
the war—naturally has 'to

■I until

!;iend

abroad in some form, and to

fthat extent it hapto play the part
of

[function

is

This

banker.

international

an

profit¬

but

anything

able, owing to the large propor¬
tion of defaults on foreign loans
There is reason to
believe that capital losses on forcredits.

and

i

f eign loans and investments made
by Britain during the last hundred
in excess of her earnings of interest and dividends on

years were

I

these loans and investments.
-

'

jWhen

about the inter-

we; talk
national -role of

sterling

and

of

vthe London-banking center, how-

to re-lend it
abroad in a not sufficiently liquid
form.
As a result, the situation
arose in 1931 that foreign depos¬
itors reclaimed their money and
Britain

The

mind.

rto re-lend

banker's

task

is

borrowed from

money

London's

pothers.

real

international

lunction consists therefore of reI lending abroad the foreign mon¬

deposited in sterling.

eys

sterling's

to

tional

role

Owing
interna¬

large amounts are

currency,

kept

an

as

permanently

London

in

as

the polsetting aside the gold equiv¬

Treasury adopted in 1932
of

cy

alent

the foreign balances

of

ac¬

cumulating in London. By 1939 a
gold reserve of some £600,000 000
was
kept for that purpose. This
meant that the British taxpayer

The

incurred

thus

loss

paid out of the Bank of Eng¬
hidden

land's

And since

reserve.

often

is

its

argued that London

prominence

inter¬

of commission

gations repeated to boredom that

its granted
annum,

per

V2%
possible

to Germany was

it

and

was

to discount the acceptances at
so

ers
as

%,

that the credit cost the borrow¬
1%.

This

about the

was

the deposit rate paid

same

foreign

on

deposits by London banks which,
in

a

prepared
'The

to

forego

commiss'on

implied

of

their
¥2%

profit

per

an¬

the accepting
banks assumed that Germany and
num

that

other borrowers would not default
for at least 200

matter
of fact, the amount lost on Ger¬
many's

wiped

years!

default
out any

As

have been earned

any

case,

a

in the 'thirties
profit that may
on

international

-banking activities since
ginning of this century.
In

sterling's role

the

the

attraction




be¬

center

ther from the truth.

to

international

an

be fur¬

Nothing could

currency.

In the annual

reports of the British Department
of

Overseas

the

wars,

Trade

if

firms

the currencies of

tries instead of

ing

in

the

Counsel¬

Embassies and Le¬

British

only

between

Commercial

lors of British

quoted

importing

insisting

sterling,

they

on

in

coun¬

quot¬

would

do

much more business. Indeed much

international commercial business
was

lost

and

Rotterdam, because the Ger¬

man

by London to Hamburg

and

country has a large and
persistent export surplus and a
large gold reserve then its cur¬
rency must assume the role of an
international currency. While this
a

be gratifying from the point
prestige, it is a mistake

may

of view of

to imagine

the

derive any ma¬

to

benefit

terial
if

that the country con¬

stands

cerned

it.

from

However,

wealthy and
strong—Lke the United States are

present—it

at

is

country

can

afford to stand

What is absurd is that

the burden.

as Britain, which
it, should try, for
misguided considerations of pres¬

country, such

a

afford

cannot

tige, to play a part that is beyond
its present means. It is a mistake
on the part of Mr. Dalton and his
advisers to allow their policy to
be

guided by their desire to main¬

tain and increase sterling's role as
an

international

Dutch

merchants

were

commercial

their

its

customers.

The

Committee

Nominating

of

the Association of Stock Exchange
the follow¬

has announced

Firms

ing nominees for offices to be voted
on
at the Annual
Meeting and
Election

of

Association

the

of

Renominated

to

serve

three

years:

James E. Hogle, J. A. Hogle

& Co.,

Salt Lake City; William E.

closs, Parker & Redpath, Wash¬
ington, D. C.; Charles N. Schenck,
Jr., Mitchell, Hutchins & Co., New
York City.
The
the

Dinner

Annual

Association

center

to

its

five

ties

continents,
and

which

to

to

shipping

long

on

Monday evening, Nov. 17, at the
Hotel Commodore. Henry J. Tay¬
lor,

will
be
the
speaker.
His
subject
"Looking

and

economist

journalist,

author,

Ahead

at

principal
will

be
and

Home

Abroad."

Meeting of the As¬
sociation of Stock Exchange Firms
will

be

held

in

the

afternoon

before

United

exports

Room of the New York Stock Ex¬

change, at which time eleven
ernors

1948

gov¬

will be elected and also the

Nominating

on

Committee

of

Members will also

proposed amendments to

Association

necessary.

Constitution

and

Following the Annual

Meeting

of

Board of

Governo^'will m^qf 'fpr

the

Unless

should not aim

the

sales.

increase

imports mere¬
ly for the sake

of

Sen. A. W. Hawkes

He

I think tariffs

the fair¬

are

equalizing conditions

which

do

we

compete—(low

not

want

standards

to

which

affect cost).

one,

there

tariff,

a

is

definite

should

we

except where for

not

reve¬

purposes.

A

should

Tariff Commission

new

be

sioners

created.

should

The

be

Commis¬

the

of

men

highest ability and integrity. They
should have adequate salary and
a long tenure.
"This

Commission

given

authority

through
the

should

be

to

hearings

facts

determine

and

otherwise,

to

necessary

a

calcula¬

tion

of a proper tariff
rate to
implement the policy laid down
by the Congress.

"(4)

Such

Tariff

Commission

should have the further authority
to
make
or
change rates, such

President, if not disapproved by
Congress within a specified time.
"(5) The Congress should enact
statute

ple
be

establishing the princi¬
basis on which rates shall

or

made

or

changed within

pre¬

scribed limits.

provided to meet changing con¬
but with some
practical

ditions

limit

on

the frequency of change.

"(6) A program of tariff changes

negotiation, through the De¬
partment of State, could perhaps
be continued provided there was
reasonable equality of concessions
and that the rate to be used in
by

shall

trade

such

citizens

own

election

members

of

officers

and for other business.

the

ijieyv

for.T1948

to

make

people

excessive

ex¬

be

set

by

the

taxes.

as

"Current

propaganda
of
the
Advertising Council uses the slo¬
'Part of

dollar

every

get

you

from

foreign trade.'
The
at present part of
every dollar you get goes to pay
for foreign trade.
"The emphasis on exports puts
us
on
the wrong foot.
We have
the ability to produce and export,

comes

but

that

is

truth

do

we

the

have

not

corre¬

sponding capacity to import an
equal value.
Reduction or even
elimination of United States tariffs

altogether will not increase our
need for foreign commodities.
"When
a
government,
under

special interests
unduly lowers
competitive products,

from

pressure

within the country

tariffs
it

on

strikes

a

blow

devastating

basis

vital

the

its

of

own

at

pros¬

perity and by its own act creates
unemployment.

the conditions for

merchants

and

bankers

"Some

vociferous in their denuncia¬

are

of tariffs or other

tion

regulatory

vocate huge

legitimate

as barriers to
time they ad¬

devices

At the

trade.

to finance

Such

"Provision for flexibility should
be

not
deception

the

these

the

ing increased employment where¬
as, actually, as taxpayers we must
pay for the excess exports.
For
when government loans the money
abroad, it must collect it from its

changes to be proclaimed by the

a

that

balance,
gifts,

are

lies

propaganda

gan:

Unless

for

Therein

wants.

or

imports and

ports are profitable trade provid¬

expressed his
views on tariff
policy in the fol¬
lowing statement:

"(1)

of

of

believe

expanding,

value

eventually
exports

excess

to

with

re¬

only through its im¬

ports of what it needs

States

est means of

Hawkes

r;"The inescapable fact is that the
nation gains

exports.

foreign

on

marked:

policy,
based
the prin¬
ciple that the

same

foreign loans in order

continued vast exports.

trade, they

makes for

say,

peace.

"As

we

whom

most,

read

sweet things

the

said about us by those
we
have loaned
the

currently
to

wonder if the peace

we may

tag put on these things has any
validity or whether perhaps it is
just the carrot before the donkey.
There is truth in the old adage
that
to

the

way

to lose

a

friend is

him money."

loan

Expect Anti-Trust Action Against Underwriters
of Justice and Attorneys of Wall
civil suit will be filed under AntiAction has been pending for three years.

Conference between Department

Street houses leads to expectation
Trust Act.

Oct. 15 of attorneys of several large
of the Anti-Trust Divi¬
sion of the Department of Justicesfashion the securities marketing
has led to the expectation that a
civil suit will be filed either late industry. According to one news¬
A meeting

in Washington

on

securities underwriting concerns and officials

this

year

or

early 1948 against
banking houses

several investment
on

the ground of illegal

to

fix

prices

and

collusion

avoid

compe¬

paper account, it is stated
Justice
Department has

that the
already

requested a number of under¬
writing houses to sign a consent
and

decree

security issues.

avoid

thus

court

action,

The

matter

on

Nov. 17 in the Board of Governors

Senator

economy,

tariff

tition in the underwriting of new

The Annual

transact such other business as is

insurance facili¬

existed

held

the

the center of an empire cover¬

ing

Meeting of
be

as a

graphical position, to its position
as

will

Explaining his views

upon

of

before de¬

as

trade promotion and the domestic

mittee,
pro¬
posed
a
re¬
vised

Commission,

scribed."

Fi¬

Com¬

nance

City; Harold C. Patterson, Auchin-

geo¬

prominence

Senate

nue

17

Tariff

the

"(2)

Annual Meeting Nov.

<$-

mem¬

"(3)

vote

of

a

of

have

currencies

owes

N.J.),

need

prepared to quote in terms of the

London

Hawkes (Rep.-

currency.

Stock Ex. Firms Ass'n

the dinner meeting of the American Tariff League
City on Oct. 17, Sen. Albert W.

Addressing

at the Waldorf-Astoria Hotel in N. Y.

ber

five members.

facilities

of

as

an

as

commercial

national

competitive efport to increase

the amount of their deposits, were

de¬

on

arisen

has

reserve

owes

acceptance cred¬

lost

was

Huger, Courts
& Co., Atlanta;
George R. Kantzler, E. F. Hutton
largely out of the commission paid
& Co., New York City.
by
the
Treasury to the Bank
Nominating Committee for 1948:
of England on government trans¬
T.
Burton,
Burton,
actions
it
is
true
to
say
that Benjamin
the
British
taxpayer
indirectly Cluett & Dana, New York City;
Dean Dillman, E. F. Hutton & Co.,
financed
German
rearmament
through
London's
international San Francisco; Harold T. Johnson,
Jas. H. Oliphant & Co., New York
banking activity.
hidden

the

Is, does this ac¬
tivity pay? Individual banks en¬
gaged in keeping foreign deposits
and granting foreign credits natu¬
rally earn a prof A on these opera¬
tions, though owing to keen com¬
petition between the wars the
margin of profit declined to van¬
ishing point. The standard rate
on

means

Stock Exchange Firms to be held
to provide interest on a cor¬
on Monday, Nov. 17.
responding amount of government
For Board of Governors (nomi¬
loans that had
to be issued
in
order t<yfinanbe the acquisition of nated to serve three years): James
the gold equivalent of foreign bal¬ Bv Burns, Jr., Harris, Upham &
Co., New York City; Ralph W.
ances.
Davis, Paul H. Davis & Co., Chi¬
Nor is this all. Before the war,
cago; J. Lewis Gabel, Bogardus,
1
certain London banking house
Frost
&
Banning, Los Angeles;
granted Hitler's Germany accept¬ Russell E.
Gardner, Jr., Reinholdt
ance
credits
which
indirectly
& Gardner, St. Louis; Maynard C.
helped Germany to finance her
Ivison, Abbott, Proctor & Paine,
rearmament imports.
When the New York
City; F. W. Pershing,
war broke out the Bank of Eng¬
Pershing & Co., New York City;
land had to take up the bills, in
Frank C. Trubee, Jr., Trubee, Col¬
order to obviate the failure of the
lins
&
Co., Buffalo; Hans A.
banking
house,
failure
which Widenmann,
Carl
M.
Loeb,
would have- been
damaging to
Rhoades & Co., New York City.
London's
position as a banking

It

question

business attracted

had

working balances.
The

to

for meet¬
To avoid the recur¬
the situation, the British

of

rence

was

of

position

a

find the gold necessary

vesting abroad

proceeds

in

ing the drain.

I ever, it is not the function of in¬

export surpluses that we have in

or

not

was

center.

the

temptation to

a

balances,

eign

that

Britain

always

is

spend abroad the foreign exchange
obtained through an influx of for¬

for

portance

Britain did between the wars—

there

it

That

alike.

country working with a narrow

a

t ive s,

Liberals

short-term
worse, for

loans.

and

speakers, Conserva

only be employed,

can

therefore,
in
very
What is much

by

day

writers

and

sale,

day

whole¬

liable to be withdrawn

are

ex¬

pressed

Chancellor of
and

maintain

<♦>-

strengthen the
-

If

LONDON, ENGLAND—In a recent public speech
Exchenuer
Dal ton
reaffirmed his desire to

the

commercial

than others.

sterling

helped, but they were granted far
too cheap, so that what was gained

currency.

productiveness. Says nation is already large importer, and opposes
increased imports of goods which we can produce as well as better

Admittedly,

credit facilities granted in

by such
faults.

Sen. Hawkes proposed six-point tariff policy to protect American

international currency,

an

and not because of it.

"in delica'e

Proposes New Tariff Set-Up

currency,

London developed its

contends it will be of no advantage, since
international role of sterling and London as banking center has

international currency,

Thursday, October 23, 1947

consideration

has

for

been

under

about

three

during which the Depart¬
ment of Justice has questioned,
among other things, the legality
of the provision in underwriting
agreements of the price main¬
tenance clause during the life of
underwriting
syndicates.
Other
practices connected with securi¬
ties underwriting have also been
under
fire, all presumably an
outgrowth of the Securities and
Exchange Commission's policy of
extending the field of competi¬
tive bidding in securities under¬
writing and otherwise seeking to

years,

control

in

absolute

bureaucratic

a

and that these concerns
have been advised by their attor¬

but the "Chron¬

neys

not to do

icle"

yet has had no confirma¬
of this.
That some sort of

tion

so

as

anti-trust action may be expected,

however, is indicated by the Jus¬
tice

Department

matter

in

to

a

referring

Federal

York

New

Grand

the

Jury

City.

Join Leonard ^evtig Staff
to The Financial • Chronicle)

(Special

FT.

WAYNE

IND.

—

F.

Ray

Fecker and Alton P. Hower have
become
J.

connected

Fertig

Street,
Stock

& Co..

members
Exchange.

with

Leonard

Berry at
of

the

Court

Chicago

Volume

U. 8.

166

COMMERCIAL

THE

Number 4640

Economy Oan Support Foreign Relief: Krug

The Tax

Interior

Secretary, in report to President, anaylzes our national
resources, but warns, with or without a foreign aid program, nation
faces pressing urgency for expanding conservation
practices.

standards

of

living,

in

general

is

into

resources

our

methods of

by-products,

able

to

vide

the

re-

source

Selected for study in

re¬

quirements

which

of

program

the Report

And, because <$>
business

resent the bulk of current exports

considerable

a

ness.

those commodities which rep¬

are

of

most

are

likely to

be

aid.
A.foreign

-

Included

under which all areas of the world

fully

be

may

productive

and

wisely exchanging their products
with each

The

other.

re¬

Report

declares

the

that

economy is operating at the high¬
est levels
in history
and short¬
ages

resulting from high

tion

will

be

consump¬

intensified,

particu¬

larly
in
such
commodities
as
wheat, steel, coal, nitrogen fer¬
tilizers and certain items of indus¬

trial

equipment.

These shortages
problem of supply and

present the

economic

consequent

repercus¬

sions

to

year.

Most of the supply problems
short-run nature that will

be faced

during the next

of

are

tend

diminish

to

five

under

years

increases

pacities

throughout

in

study,

the

because

domestic

some

ca¬

being undertaken and

are

because

foreign aid
needs
for
critical commodities can be

many

expected

to

taper off sharply

production abroad gets under
The

supply
be

can

impacts,

minimized

effective

as

way.

moreover,

by establishing

procedures

for

careful

and

not

are

relatively

before the
items are in

war.

as

the

United

scarce

States

the result of the

as

Though
supply

chiefly

and the

war

to maintain

and

provide

will be those related to shortages
that are world wide in character
result

and

chiefly

destruction
duction

from

wartime

or

rehabilitation
The
with

without

foreign

high
ers

economies

basis.

to

this

program,

pressing

urgency

for

of

the

of

its

its

a

expanding

practices such

as

preserving the fertility

soil

efforts

and

productivity

for

extending

discover

to

new

the

and

forests

velop

for

faces

c e

are

eager

their

increase

to

strong

output

coal and

for

farm

and

Similarly,

before

come

sources

to

for

machinery

fiscal

the

for

foreign

these

goods.

demands

for

steel compete with those

effect

equipment.

The

of

de¬

and

supply

for

a

non-member will

delivered

to the clearing cor¬
each morning by mem¬

ber

firms.

and

made

will then

firms

They will be sorted
up
into bundles and
be sent to

through

clearing

non-member

messengers

corporation.

the

of

Later

in

the day messengers will return to
the non-member houses for
pay¬
ment bv checks made out to mem¬

reconciliation

a

demands, many of which

tively unessential,
tral

are

rela¬

the

poses

emphasize

to

clearing

The

checks

sorted

for

corporation
received

are

direct.
then

bulk

delivery to the
various banks where they will be
certified.

After

checks go

Curb and
ber firm

back
are

of

vital

some

tax

problem and

miliar with the

our

It

close finish

a

convinced

the

would have

But it is

the

branch

lost

in

the

real

check

trend

politics.

in

the

(Continued

is

upon

the

develop
place
that government actually intends
to cut spending.

of

fog

nressure.

conviction

prevailed had not the

become

quite possible to manage
w!th
the objective of

inflationary

main issue of urgently needed tax

relief

debt

Another

am

branch

legislative

from

reducing effectively its inflation¬
ary

and I

derived

Nobody, of course, expects
debt to be repaid quickly.

that

twice ham¬

was

by the Executive
government.

was

lion.

fa¬

are

years

ing.

in which

manner

legislative action
of

you

war

borrow¬
Chief source of the current
bloated money supply is the na¬
tional debt total of some $260 bil¬

competitive

Congress this year made a laud¬
effort to come to grips with

the

the

to

market

page

on

26)

of the tax structure.

maze

Our present

tax structure

—

a

hodge-podge

circumstance

that

have

blown

In the

verities.

present Federal tax setup

there has

crept—wittingly

or

un¬

wittingly—much of the fuzzy the¬
orizing that finds expression in

noble-sounding

phrases.

Tax Revision Would Increase

Revenues
If

taxation,
could

the

the

chief

present

end

tax

of

system

increase

Treasury cash re¬
being overhauled. And

ceipts by
the

at

is

revenue

time, such

same

haul would

an

over¬

stimulate incentive of

the individual to work, to create,

cen¬

We

"soak

all

are

the

familiar

foreign aid

so

program

far

is

as

con¬

cerned.

(Special to The

once

picked

certification,
more

up

messengers.




by

to

the

mem¬

Financial

instituting

confiscatory tax

has

ham

CRYSTALS THAT GROW FROM A SEED

Tartrate) Crystal.

.

.

.The huge crystal is an EOT (Ethylene Diamine

It is started from seed

D.

become

affiliated

Newman

Building.

He

&

with

Co., Ingra-

was

previously

with Clark Davis Co.

continuously in

sorting out each telephone conversation from the others, they enable

that

the

tax

burden

be

can

to the few

many

a

solution.

In three months it

plates, cut from the large crystals,
to go over one

coaxial circuit at

are

one

Moffett With Conrad, Bruce
(Special to The Financial Chronicle)

PORTLAND, ORE.
Moffett

has

Conrad,

become

Bruce

Southwest Alder

formerly
for

Inc.

—

John

prows to

the size shown. Thousands of small

used in filters in Long Distance circuits.

F.

associated

&

Co.,

813

Street.

He

brackets. A variation of the phrase
is the one about "adjusting taxes
the

to

capacity to

By

circumstances,
question
soaked?
It

is

is—who
The

actually

to

really

gets

drowning,
the

the

is

the

Long Distance tele¬

point

of

spirit

through

go

wearing strain of creating and

I

wonder

would-be

nomic
to

if

some

architects

destiny have

note

the

of

of

those

our

ever

eco¬

stopped

infant mortality

of business ventures.

even

better. Tlicy devoted

of study to the physics and

chemistry of

can

be built next year be¬

of Bell Laboratories research

Thus, soaked

to

thing

demand,

soaked

venture

incentive

more

years

cause

the

to

Many

phone coaxial circuits, in urgent

apparent that what really

saturation,

and

gets

is clear.

answer

suffers—what

Crystals for Conversations

pay." In the
the
reasonable

and

development

on

synthetic

of

quartz arc ordinarily

used in the electric

wave

filters of

rate

these circuits.
A

now

synthetic crystals.

have

long time

Bell Telephone

Laboratories foresaw
natural quartz;

these

a

shortage in

hoped to find

some¬

representative

Here

.

*An address by Mr. Shreve be¬
the Detroit Board of Com-

Hugh W. Long and Company,
HHerC&v

Detroit,' Mich.,

Oct.

BELL

growing

again Bell Telephone Lab¬
idea

of

making things

better at lower cost
von

now

helps to give

the best and most economical

telephone service in the world.

Many busi-

fore

can re¬

crystals in the factory.

oratories'
ago,

that

one

place quartz in telephone filters.
Western Electric is

crystals.
Plates

They

was

Portland

...

two conversations

time.

expanding business.

with

(a piece of the mother crystal) and revolved

rates
higher income brackets. The
implication of this catch-phrase

in the

hardest is enterprise.

Chronicle)

MIAMI, FLA.—Eugene V. Wal¬
Frank

the

slogan. It is an
emotion-charged verbal recipe for

by an adroit juggling of the rates
applied
in
the
several
income

With Frank D. Newman Co.

ter

with

rich"

is

problem of supply,

the

ber houses, the sellers, and not to
the

session

I should like to take this oppor¬

tunity

these and other competing

among

that the New York Curb Exchange Securities Clear¬
ing Corporation is ready to put into operation a centralized system
for facilitating securities transactions between member
firms and
non-member organizations and banks. The
system was devised sev¬
eral months ago to alleviate the difficulties and red
tape that beset
members in making these transfers on an individual basis.
Under the plan, securities to be*»>

poration

next

harsh

able

strung

policy—taxes here at home
spending here and abroad.

and

in¬

Clearing Corp, to Facilitate Transfers

transferred to

the

to

r n

Congress will be the government's

difficulty of satisfying

mechanical

need

competition

It is reported

be

of

con-

businessman.

shifted from the

Curb

is

money

the

in

in

emergency spending and

to ^ave.

its conservation
those

aid

foreign

country

struggle to survive.

collects

supreme

a

At current

prices, United States' farm¬

demands

that

selves

govern-

economic

storing

self-supporting

the

clear

the

enter

violently—and at times erratically
—during the last two decades.
Taxes, in fact, have become a
but their basic
and
interrelated
jerry-build
structure,
some
of
character complicates it.
Maxii whose
constituent
parts
derive
mum effort to relieve current food
rom social
reform, some from war
deficiencies abroad interferes to expediency,
and
some
from
some
extent, with the aim of re¬ woolly-minded thinking about

export

a

they

until

small number of key com¬
modities simplifies the problem,

tilizers

makes

survey
or

starters

arable.

facts about taxes and the risks of

enterprise

ment

Earl O. Shreve

and spending are insep¬
Together, they generate
inflationary or deflationary forces.
We must recognize the fact that
the general inflationary situation

high mor¬
hopeful
don't discover the tough
many

The

creases

abroad.

Taxes

for that

reason

Spending Are

Inseparable

business field and then find them¬

and spends its

of

facilities.

for

means

One

tality rate is that

and

today — has been
devastation of pro¬ fashioned by the changeful winds

production

the

a

Taxes

still

and where the

available supplies of nitrogen fer¬

here

reach

Fewer

traordinarily high level of domes¬ truths about taxes and their re¬
tic demand, the only serious prob¬ lationship to the American enter¬
lems of supply to be anticipated prise
system, also to indicate how
in
connection
with
foreign aid these truths ramify through the

channeling of supplies
will serve

Few survive to

maturity.
ripe old age.

advance¬

as
ex¬

started.

profitable

ment, just how

The most

and

that they

for

important domestic issue that will

a

screening of requirements and for
so

re¬

economic

our

commodities

the current high levels of produc¬

many

nesses are

most

large claimant for

ports are not

in

ment

largely
sponsible

that in most instances, ex¬

reveal

large

instru-

the

a

s

are

Studies of specific

tion

i

enterprise

foreign aid program.
agricultural prod¬
ucts; coal; iron and steel; nitrogen
aid
program,
fertilizers; metals (exclusive of
the Secretary
iron and steel);
machinery and
points
out,
equipment (including vehicles and
J. A. Krug
will serve not
agricultural machinery; petroleum
only
a
hu¬
and petroleum
products; chemi¬
manitarian interest in preventing
cals and related products; rubber
hardship and starvation for mil¬ and rubber
manufactures; textiles;
lions of people, but can also pro¬
leather and leather manufactures;
vide
the
basis for
getting the fish; fats and oils; forest products
world
economy off dead center and other building materials.
and
creating the circumstances
quired for

foreign

is not to lead to disaster,

our prosperous economy

According to an old and cynical saying, what is everybody's business is nobody's busi¬
But that saying cannot apply today to the Federal Government's fiscal policies.
Be¬
cause the effects of those policies reach down into the smallest details of our economic life.

waste materials.

pro¬

vital if

are

points out needed changes in taxes, particularly abandonment of steeply graded income tax rates. Says
taking too much out of taxpayers* dollar discourages investment and managerial incentive.

and better

using low-grade ores,
and what are now

physically

Enterprise

on

prominent industrial spokesman urges both reduced government spending and tax structure revision
that will not handicap enterprise.
Advocates close scrutiny of defense and foreign aid spending, apd

stepping up

new

21

President, Chamber of Commerce of the United States

Asserting wise decisions in fiscal policy

The Report

many basic materials.
stresses the need for

our

economy

(1649)

By EARL O. SHREVE*

In his report, "National Resources and
Foreign Aid," Secretary
Krug declares that from the standpoint of preserving the national
security and
our

CHRONICLE

FINANCIAL

&

TELEPHONE

SYSTEM

21,

1947.iv

V

:"'VV

22

(1650)

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, October 23, 1947

Scores Sen. Tafi's Socialistic

Problem of Inventory Pricing
Member, Deloitte, Plender, Griffiths and Co.

Herbert U.

j Accountant calls attention to dangers of improper

prices of inventories and warns utmost care and
j skill be used, since wrong answer in inventory pricing will have serious adverse effect on a business.
Calls for clarification of "the lower of cost or market" rule.
The most

Businessmen

Inventory.
seems to be
beyond dispute that many influences, some of them worldwide, not
<S>—

Proposes Floor Under Food Consumption

affecting
the
price

spending, gov¬
buy¬

want and need to eat and

ill-con¬
taxa¬

In

tion, so-called

and Forestry,
for

agement are a

are

the

as

rect

the

C.

di¬

ministrator

causes,

in¬

and

supply

of

shortage

completely

skill

and

will

care

therefore have to be exercised in

der

farm

setting

food

con¬

and
of

scheme

order that the value of all classes

price supports

of

in

be satisfactorily

may

for

the

United

Carl

C.

the farmers in

faced

which

ation

the early

thirties.
"We recommend," Mr. Farring¬
ton stated, "that the Congress set
upon.
Unquestionably
prices of
all as a national goal the maintenance
things at the present are high of a floor under food consump¬
in

measured

other

terms

dollars

of

or

tion in the United States based on

what the people want

and need to
with prewar
eat and the ability of our agricul¬
ture to produce. Programs should
not such measure is reliable may
be open to question but it is the then
be set up which would—
is
standard of measure which we insofar as
practical—prevent
Iiave to use.
consumption from falling below

compared
periods. Whether or
and

currency

There has

as

been any doubt

never

for

basis

tory

satisfactory

valuation

cost

is

"the
but

market"

or

inven¬
of

lower

time

some

level."

that

In the mind of the accountant that
the

stated:

prices,

to

What cost?

And

in

questioning

became clear that these
ters

neither

which

What

it

mat¬

were

business

nor

supports

in

itself

at

level

moderate

a

would

We

surance.

also

as¬

need

a

of government loans and
granary.
We

program

ever-normal

accountants had satisfactorily de¬

would

fined.

production goals, aided by adjust¬

need

strong program of

a

able price supports, so that agri¬
the ques¬
tions surrounding inventory pric¬ cultural production can be ad¬
ing will have a serious effect on justed to changing demands as
the economy of the business con¬ rapidily as possible. And though
cerned and enough wrong answers we would expect them to be gen¬
will have a serious effect on the erally inoperative, we would need
authority to use acreage allot¬
economy of the whole country,
ments
and
marketing quotas to
indeed, of the world.
meet
emergencies for individual
The
experience
of
previous
A

wrong

to

answer

particularly

years,

prices

1921
commodities the

to

when

climbed rapidly to unprece¬
dented levels and then crashed,
over

needs to

be

eration.

ure

given serious consid¬

Appropriate

be taken

to

the fall which

must
meas¬

or

later

place

and

sooner

"We

would need authority for
expanded program of market¬

an

ing agreements and orders to
vide

orderly

inevitably

been

take

a

rapid than has

more

the rise in

As

prices.

chart to your

subject,

Committee

thinking

issued

Accounting Proce¬

on

Accountants

re¬

is most

cotton, wheat, tobacco, lard,
rice, and certain fruits and vege¬
tables

as

July of this

year,

timely.

:!:A talk by Mr. Cochrane before

York

Certified Publ

York City,

c

State

from

our

program.
I
should pause a minute to give you
of the reasoning we went

We

farmers

our

be

know that
turn

(Special to The Financial Chronicle)

JACKSONVILLE,
Greene

has

FLA.

become

resort
over

bution
no

—

outpouring

to

trols

G.

prewar

through in deciding that this was
the best way of supporting farm

that

With Southeastern Securs.

that

out

of

to

we

policy which will
which

such

growing
fiber, and

a

could curb

government

a

From that begin¬

ning it is hoped that
be

laid

in the

be

which

basis

a

will

can

insure

con¬

tinued full production in the rest
of the economy. Without that be¬

ginning—without

full

production
agricultural raw

of food and other

materials—continuous full indus¬
trial' production would be impos¬
sible.
"Now let's turn to program
tails.

de¬

con¬

distri¬

and

magnitude that

our economy

would

them.

Programs to Stabilize

medicine,

in

and

Consumption
"As
that

I

proceed

we

able

number

of

would not expect
on

any

commodities

good

times

to

use

commodity,

one

at

any

such

notice

consider¬
programs.
We
a

all
time. In
on

or

one

only

these,

as

a

minimum amount of action would
be

needed.

develops

gency

flexibility
with

a

aids.

wide

the

only

can

of

range

need

books

emer¬

an

will need the

we

that

We

on

when

But

to

program

these

get

while

now,

come




if

soc;alism.

not

The

move.

our

They

so

misstep is to

in

of

en¬

a

collectivist

no

single tool

winning support for

objectives

record

Senator

as

Taft's

aid

to the enemies of private en¬
terprise, of freedom of individual

initiative

if

"Even

the

bureaucratic

production
cost

would

it

is

it

work,

human

in

more

than

road

worth,

self-

but

it

Russia.

The

Financial

Chronicle)

Drew

has

ILL.

become

affiliated

Hulburd,

Warren

&

208

La

Street,

South

bers

of

cago

Salle

Stock

the

New

with

Chandler,

York

Exchanges
leading exchanges.

always

When

ages.

competitive

ages

encour¬

production

in

a

free economy, the result is sur¬
plus—freedom's word for 'enough.'

has

This

dition
work
"It

been

the

it's

and

American

time

to

tra¬

it

to

power

of

put

within

now

Federal

the

Government

five-year plan

a

Congress
the

will

stim¬

to

of

private

can

humble

agree

internal

permit anyone
housing, for sale
deduct

his

taxable

income

try

can

homes

for

or

a

to

law

invests

investment
for

now

revenue

who

rent,

period

in
to
his

from

Financial

home

before

been

Nelson

lim¬

the
same

This

Chronicle)

with A. G. Becker & Co., 120

South

La

formerly

Salle

with

Street.

Dealers

He

was

Discount

Co. and Argus Research Corpora¬

pany

In

the past he was with the

of Chicago.

5,000,000

and

for

new

and

sale

ownership

able

to

explained.

end

CHICAGO, ILL.—John Saris is
now

rent

5,000,300 families who have

John Saris Has Joined
The

produce

for

and

and

extensive tour of the

in

that

luncheon

held

the

on

Mr.

area.

Mosher

Mr.

Club

Sam

Signal Oil

Company, who took the

fields

the

Long

Reid

hosts

were

at

at

a

Officer's

Beach

From Long

Naval

Beach, the party in¬

spected installations
Oil

of the Basin

Company in their new Ingledevelopment before board¬

wood

This

is

the

such

second

by

sponsored

the

dustrial

San

tour

Francisco

Among these
M.
can

J.

&

Western in¬

on

development.
the trip were:

on

Duncan,

Calvin

E.

Dun¬

Co.; Geno Galigani, Davies

for

attain

it, Mr.

This

means

time, uproot the seeds of
that have

action

been

planted.

by Congress would

simply permit taxpayers who in¬
vest, during a limited period of
time,

part

of

their

Co.; Geo.

E.

Wm.
R.
Staats
Co.;
McCampbell, Mason
Brothers; Harry Meyerson, Kaiser
&
Co.;
Mathew
Morton,
Davis
H.

Skaggs

&

Co.;

Schwabacher

Raggio,

Reed

Sinton,

J.

Co.;

&

&

incomes

in

Rasmussen,

&

&

Reed,

Robert

Co.;

Co.;

Sutro

W.

P.

Co.;

Barth

Sutro

Symons,

Carl

&

E.

Harold

Stanley

Co.;

E.

Thomas

Tasso, Walston, Hoffman & Good¬
win; John C. Traylor, Douglass,
Van

der

Earl

Co.;

Naillen

&

Richards,

Phillip
&

Oakland

J.

Co.;

Co.

Dean

Witter

Post-Enquirer;

A rthur,

S.

Eugene

Gray,

H.

&

Fitzgerald, Dean
C. N. Alexander,
F.

Lindsay

Call-Bulletin;
Walker's

Man¬

ual, Inc.; John M. Julius, The Wall
Street Journal; John S.

Francisco

News;

Schneider,

S.

F.

Piper, San

Alfred

Examiner;

J.

Alex

Streloff, San Francisco News.
R.

E.

Kaehler,

Francisco

Stock

Schick,

President,

San

Exchange; J. C.
Relations,
San

never

hous'ng shortage and, at

socialism

to

oil

Witter
If

amend

the

(Special

Company

group on an

Getz,

again.
is

ilies would be home-owning fam¬
ilies within five years.
It would

A. G. Becker & Co. Staff

Gas

short¬

stabilizes

government

Chi¬

other

Oil

B. Mosher, President of

Forrester,

that two-thirds of American fam¬

and

Hancock

and

to

Oil Fields.

Long Beach, the party was
by Will J. Reid, President of

Andrew

mem¬

and

At
met

Sugar

enroute

Keyston, Keyston &

provide

W.

Floyd

—

properties

the Los Angeles Basin

under

"Bureaucratic production

socialism

ited to three years, private indus¬

to

Company

Union

inability to work & Mejia; Arthur Gambarasi, Shaw,
steadily lowering living stand¬ Hooker & Co.; Richard P. Gross,
in England, as it has done in Stone
&
Youngberg; George N.

is

to

(Special

the

over

Oil

Avenue

ards

tity of agricultural products which
How through the normal market

With Hulburd, Warren Co.

and

Maria

Santa

Ventura

Its

suggesting, I assure you that our
first emphasis in stabilizing con¬
sumption and farm income will be
placed on maximizing the quan¬

both

Fields

the

over

and

ests well informed

powers.

the wildest dreams of planners in
the collectivist economies."

prices reasonable for
producers and consumers."

flew

Valley

of
reoresentative Stock Exchange in keeping with
through delegated its policy to keep financial inter¬

home production that

at

Press

anH

government

number of programs which we are

channels

repre¬

By turning his back on his ing the plane at Los Angeles Air¬
he has given comfort and port for the return trip.

name.

to

35

Base.

have had

potent

their

result

net

along.

"Advocates
economy

ulate

City National Bank & Trust Com-:

even

socializing part of
is

courage it

the

high unit prices defeats

During hard times,

that

convince

never

of Senator Taft's

free of the pressures which emer¬

ends.

own

Sen¬

will

overnight

gencies will bring.

Securities Corp., 304 West Adams

our

negative
toler¬

and

know that socialism always takes
over
little by little, never in an

are

In spite of the

and

will

Taft

aids

we

States,"

compromise with it.

no

them

the

"Businessmen

stifling

economy

them all

Street.

Southeastern

the

won't work.

will

you

proposing

are

said.

of socialism

ator

become

can

hate

respect

tion.

with

Nelson

would

"We know, further, that putting
chief
emphasis on
maintaining

connected

in

welfare

ways

encourage

is known to

right direction.

agricul¬

plenty would

production

segment of

like

of

by nature

and

prosperity.

national

our

"Since this overall program in¬
a
shift
in
our
emphasis

of abundance of food
Accountants, New that the only way

Oct. 20, 1947.

tural

to

CHICAGO,

Society

w.u-vui

Thomas

produced beyond

volves

income.

New

we

some

in

want

need
a
foreign trade
program
which would give us a market for

on

In¬

the

by

dure of the American Institute of

the

and

We would

domestic needs.

Bulletin No. 29,

Pricing,

ventory

•

marketing

duce price fluctuations.

pro¬

such

will

will be much

this

action

anticipate and

commodities.

world

set

support

would also need
governmental price

give farmers needed price

an

national

We

r.

we

direct

more

phrase meant.

M

would

demand
farm

permanent

Farrington
"Though this floor under

Continuing,

many
began
to
question
whether we really knew what this

ago

market?

housing,

general

plane,

—

by

change executives, San Francisco's
leading banks, and the Bay Area

Herbert U. Nelson

socialism
in

DC-4

CALIF.

Airport

San Francisco Stock Exchange, Ex¬

man

who stands for

ate

income.

will have gone a long way toward

Farrington

of States,
in
compiled order to avoid the desperate situ¬

■during the next few months and
which you, as auditors, will be
required to examine and report

degree that

originally sought—good

whole economy to do that we

our

accounts

will be

which

the

maximum

in

we

"Finally,
we
know
that
the
farmers'
tendency
to
produce
abundantly in good times and bad
is basically right.
If we can get

un¬

sumption
a

which

pro¬

floor

on boosting consump¬
the other, we will thereby

achieve

Adminis¬

up a

at

costs

no

Oakland

sentatives of member firms of the

predict

that

FRANCISCO,

chartered

Cincinnati.

Mr.

ing

Exchange

Leaving

Boards

of President of the United

posed

placed our price structure in
extremely precarious position.

business

in

SAN

Real

tion

on

he said.

Sponsors Gi! Field Tour

Associa¬
of

hand, and

and

agement, and operating prediction,

arrived

the

tion

Market¬

liave

inventory

cutting

on

one

San Fran.

a

Republican nominee for the office

tration,

utmost

concentrate

at

to

"I

we

than
in the past century.
"five-year plan" that

have
is

will work,

through volume production and
increasing efficiency on the one

outside the scope of business man¬

The

21

Estate

advance

cn

tion

were able to keep prices up by
cutting production, farmers would
not get parity of income.
But if

of

d

e

Ohio

we

Ad¬

t

will

as-

,

Produc¬

S. Cochrane

George

creasing direct costs.
These
influences,

an

d

Farrington,

Assistant

s

<$>

proa n

Estate

d

speech

the House Committee on Agriculture
the Agricultural Department's long-range program

on

they
This

o a-r

standards

the next five years

in

more

Association

Oct.

consumption, based on what people
ability of agriculture to produce.

control. Carl

a s

more

food

duction

these

important

housing

luncheon

statement prepared for

a

currency man¬

which

<S>-

President

s e r

maintenance of floor under food

of

conspicuously failing in England, Herbert U.

Vice-

B

keting Administration of Agricultural Department, tells House Com¬
mittee on Agriculture Congress should set as a national goal the

structure.

few

now

exec¬

utive

of Real

Car! C. Farrington, Assistant Administrator of Production and Mar¬

Government

sidered

Nelson,

al

are

ing,

deeply regret Sen. Taft's excursion into the kind

of socialism that is

of the Nation¬

commodities
them selves

ernment

Housing

Nelson, Executive Vice-President of National Association

Boards, attacks Republican leader's stand on public
Suggests plan to stimulate private housing investment.

housing.

important single item in the accounts of this country's business at the present

inherent in the

^

of Real Estate

time is the
It

Public

on

By GEORGE S. COCHRANE*

Tangent

Public

Francisco
Stock
Exchange;
H.
Taylor Peery, Vice Pres., Bank of
America, NT&SA; Neil Brogger,
Bank of America, NT&SA; James
A.
Horsburgh,
Wells
Fargo
&
Union

Vice

Trust; Laurence H. Tharp,
Anglo California Na¬

Pres.,

tional

Bank

of

San

Francisco;
Ass't Vice
Pres., Bank of California; Arthur
Merkt,
Crocker
First
National
Arthur

Bank

W.

of

Schiefer,

San

Francisco;

F.

S.

housing to keep that part of their Litchfield, American Trust Co.
income free of taxation, he added.
We

do

th's "now

for

that

part of

the taxpayer's income that is used
to

pay

chase
the

interest involved in
of

same

the
used

pur¬

Two With

Slayton & Co.

(Special to The Financial

Chronicle)

ST.
housing.
If we extend
LOUIS," MO. — Rex M. S.
exemption to the part of Beach and Eldon R. Schade are

housing
to pay

investment that is
other cost items, our

now

with Slayton & Co.,

Olive Street.

Inc., 408

Volume 166

Number 4640

THE

'COMMERCIAL
savings

Federal Taxation and

in

By BEARDSLEY RUML*

alternative

of its manage¬

a

ment and

chasing

sec¬

an

of

means

ond, the prob-

the

of bonds to the

tool

fiscal

of

ment

the

lion

Some

level

the

that

the

time

same

banks

But, in spite
made

we

the

over

these

long-term
$250 bil¬

a

to

contribute

such

of

we

Plan

approach

urgent

the

with

in

be¬

debt

importance

faced

are

under

the

pos¬

proposals for
rehabilitation and re¬

European

the

construction.

either

of

two classes will

these

of

necessarily be

Expenditures for relief must be

re¬

dissociated

to the other.

one

the

The structural problems of debt
to

what

be,

the

what

debt

the

maturities

should

be

of

and

they

agement
arise

as

first

tool of fiscal

a

from

the

sheer

to

be

the

facilities

character that

a

But there will

be other produc¬

not

of

relief,

but

which

com¬

clearly

are

will

suitable for loans from

be

the

un¬

national Bank.

Such

productive

loans

abroad

for world reconstruction should be

management would

is

campaigns

no

to

the national

say,

sense

a

aggregate.

Through

A

the
and

taxation.

classification
of

classification

to

debt

the

or

from

another

has

power

of

the

is

management

public.

therefore

of

Debt

to

maturity and get

amount

said

trust

Reserve

funds

the

reconstruction

of

we

bonds

and

to

that

from

the

of

sale

the

surplus

and

the

of

com¬

improve the rela¬
tionship between capital
funds
and the greatly increased volume
pany

of

so

Association

York

City,

1947.




Bankers
of

New

Oct.

20,

on

to

as

premiums

on

written.

consolidated

a

year-end to net

For

the

basis

and
as

directed

are

of

world

of

73.1%

such

in

1946.

The

capital funds

1947,

to

ratio

proceeds

written

be

to

j
i

means

the

deficit

tax

dis¬

as

emer¬

by sales

burden

is

important
will

be

for

used

are

which

of

public

a

It is expected that
the

of

invested

net

by

substantially
will

proceeds

the

be

in

company

se¬

curities.

na¬

we

headed

groun

Stuart &

Oct.

rate

are

ratios

and lower expense

of

the expanded volume

on

16

Co.

of

does

surplus

it

Inc.

by
the

won

award

trust

certificates,

maturing $115,1, 1948, to

delnhia

Plan,

reoffered,

not

only

will

be

less than if otherwise would be.
financing of productive loans
by bonds means that tax rates
be
even
lower
by
that
amount; and since the bonds are

The

cer¬

immediately

were

subject

to

Interstate

Commerce Commission authoriza¬

tion, at prices to yield from 1.30%
to

the

of

issue

will

be

provide for not exceeding

80%

of

the

less

than

lowing

cost, estimated at not

car;

hopper
25

Diesel

A.

G.

Co.;

Inc.

six

and

with
in

1,500

cars;

h.

p.

First

Inc.;

Alfred

offering

Co.

&

Inc.;

Co.;

Mullaney,

O'Gara

Cleveland

Co., Inc.

June 30,

30,

1946

1947

62.9

64.2

Expense ratio—
Combined ratio.

40.6

39.1

the mar¬

Since the 1942 lows of

insurance
stocks, as
measured by Standard & Poor's
weekly index, have moved from
86.8 to 115.8 on Oct. 15, 1947, a
fire

ket,

of 33.4%;

the same pe¬

over

Industrials
183.28,

Jones

riod

the

have

moved from 92.92 to

Dow

appreciation of 97.2%.
Rela¬
to the Dow Jones, the fire
index lagged 5.5% behind
the industrials from the low point
of 1942 to the end of that year,

an

tive

appreciation from 86.8

an

Through the year 1943

105.4.

to

index

the

behind

but lagged 4.1%
Jones; through

rose,

the

Dow

again

index

the

1945

103.3

103.5

and

rose,

but also lagged behind Dow
6.9%, respectively.

Jones 8.6% and

Through 1946 and thus far in 1947
fire stocks are still lagging, but

signs of steadying, for the
lag is at a somewhat

show

relative
will

It

the

while

1947

in

loss
2.1%,

the

that

noted

be

increased

ratio

by

by 3.7%, with the result

that the

months.

sustained

the

to

increase

premium volume, funds avail¬
able for investment have climbed

heights,
which
fact,
a substantial num¬
of increases in dividends paid

record

to

combined with
ber

by industrial corpora¬
tions," leads to the inevitable con¬
clusion that average net invest¬
this

year

of

income

the fire compa¬

peak this year.

compilation for 70 com¬

their aggregate net

investment in¬

1847 to
compared
for the first half
gain of 7.8%. Dividends
same two
periods were

come

for the first half of

have

been

$17,869,000,

of

List

American

North River Insurance

Co.,

ance

Co., Phoenix Insurance Co., Prov¬
idence Washington

Insurance Co.,

St. Paul Fire & Marine Insurance

Co., Security Insurance Company
of

New

Springfield

Haven,

Marine

Insurance
Fire

States

Fire
and

Co.,

Insurance Co.

Halpern With Orvis Bros.

invest¬

income alone were, respec¬

NEWARK, N. J—Orvis Brothers
&

tively, 1.46 and 1.45.
Dividends

Co.,

and
an

Dividend coverages by net
ment

Fire

Home Insurance
Co., Insurance Company of North
America, National Fire Insurance
Co., New Hampshire Fire Insur¬

United

$12,328,000, re¬
increase of 8.8%.

Insurance Co.,

Insurance Co., Hanover

Insurance

of 1946, a

$11,331,000
spectively,

Boston

Fire Insurance Co., Hartford

&

the

Aetna

used:

Insurance Co.,.
Fidelity-Phenix
Fire
Insurance
Co.,
Fire Association of Philadelphia,
Franklin Fire Insurance Co., Great
Co.,

Continental

with $16 578,000

over

stocks

21

'Insurance Co., Agricultural Insurr
ance

Due
in

rate, viz.: 8.0% for the 21

slower

ratio dropped

expense

combined ratio was a shade lower.

appear

safe and are

likely to be steady, in accord with
the conservative policy of repre¬
fire

insurance

compa¬

This feature, combined with

equity growth char¬
explain in part the
high favor in which fire insur¬
long-term

Co., members of the New York

Stock

is

Curb

and

now

Exchanges,

that Edwin

nounced

associated

M.

with

an¬

Halpern
them

as

representative in their

registered

Newark office at 760 Broad

Street,

acteristics,

stocks are held by conserva¬

investors.
Stocks
of a group of 21 leading old-line
fire insurance companies (listed
below) are currently selling at an
average dividend yield of 4.0%.
Highest yielding stock
in the
group is Agricultural with 5.2%,
tive

Barclay Syndicate in NYC
Syndicate

Barclay

long-term

in

securities

a

is

business

engaging
from

of¬

fices at 1776 Broadway, New York

City.

Partners

Shepard

are

Barclay

John A. Dietz,
and

O.

Emily

Barclay.

&

Corp.;

of INDIA, LIMITED

CORP.

Bankers

Head

Otis &

Circular on

Request

Branches

of

Ross

&

The

the Government

in

Blshopsgate,
London, E. C.

Office:

In

Colony

Laird, Bissell & Meeds
Members .New
120

York Stock Exchange

BROADWAY,

Telephone:

Mason,

Co., and F. S. Yantis &

to

Kenya Colony and Uganda

are

First

Co.;

NATIONAL BANK

AMEREX HOLDING

Bell

Moran &

com¬

Loss ratio

Stuart

Michigan Corp.; Martin, Burns &

Co.;

ord is 67 years.

all-steel,

Halsey,

the

Becker &

Freeman

Corbett,

The average age of the 21
companies is 105 years, and the
average unbroken dividend rec¬

years.

1944

locomotives.

Associated
Co.

coach

200 all-steel box

cars,

road

mail-

seven

50-ton,

500

cars;

flat

car;

din¬

one

1810

and parlor-observa¬

cars; one rear
car;

car;

combination

one

baggage-lunch

tion

fol¬

combination

one

mail-baggage-coach

ing

the

standard-gauge rail¬

new

equipment:

road

of

the following

shows

June

ance

$4,563,000,

in

despite

nies.

to

since; the latter was founded
and has paid dividends
a
break for the past 73

year

It is pertinent to refer to Best's
compilation of the semi-annual
ratios of 70 stock fire companies

sentative

3.00%, according to maturity.

former company was founded in
1863 and has paid dividends each

business, which will have a mod¬
ifying effect on the combined loss
and expense ratio.

panies (referred to above), shows

$3,450,000

with

Fire

stock

Best's

Halsey,

Hartford

rise

factors in the situa¬
increases in a num¬

Offsetting

nies will register a

Chicago &
Eastern
Illinois
RR.
equipment
trust, series E, 2%% equipment

are

The

can

expansion

Caribbean-Gulf hurricane.
tion

ment

Chicago & Eastern III.
Equip. Trusts Offered

con¬

productive

financing;

that the

indicated 30%

an

premium volume, thus
the average fire loss ratio may
not be greatly affected.
But the
over-all incurred loss ratio may
average higher than in 1946, due
to the Texas City disaster and the

received

by the
company from the present financ¬
ing would have been 69.0%.

&

financing
to

percent increase
is somewhat less

this year in

of

of June 30,

as

premiums

net

to

pro¬

non-recurrent

those

than

losses

yielding stock Is
2.3%.
The

lowest

the

and

without

the

at

premiums written

during the year ranged from a
high of 146.0% in 1939 to a low

sounder

international

one

bonds

fire

ber of States,

Proceeds

capital

the

However,
in

G. H.

stock will be used to increase the

used

can

loans by the sale of U. S. savings

f

Investment

meet

discussing.

The

private

by Mr. Ruml before

be

relief

tax

such

mean

An address

The

ture

With small and moderate incomes,

New

been

headed

Marshall.

be

it

covered

are

of

savings

bonds

York,

relief,

structive

other

knew

timed

to

budgetary expenditures of

individuals, particularly those

Brokers

has

group

a

The First Boston Corp.,

Proceeds

think

our

now

war

war

be

found if the proceeds-oL4he sales

Federal agencies.

During the

also

shall

taxation.
far too high

Banks,

and

costs

productive

amount

I

all

by

hands of the commercial banks.
Fourth, there is the debt held

and

1947,

by

Walker & Co. and Brown, Lisle &

occur.

we

if

measure

Junior

28,

tificates, issued under the Phila-

of bonds to the nublic rather than

companies and other institutional

the

The offering to

as

it,

direct

of

can

principle,

gency

investors.

of

held

000 semi-annually May
Nov. 1, 1962, inclusive.

it

impose

ductivity, productive loans
tinguished from grants for

hands of savings banks, insurance

-i

public

that

the

Second, there is the debt in the

the1 sale

shares

on

that

afford

the

commitments that

differences.

Federal

cannot

might,

ground

and

Third, there is the debt in

in

not

scheduled in

In

significant

some

does

they actually

First, there is the debt in the
hands of private individuals.
We
could perhaps divide this classi¬
of

by

expenditures in this market when

I have said there are at least
four distinguishable kinds of
pub¬
lic debt.
Let me name them.

terms

savings

The sale of savings bonds

the

and

of

withdrawn

reconstruction

plants.

cor-

a

be

taxation

who

taxation

remaining in

rolary of tax policy in the main¬
tenance of high employment at
stable price levels.

by the
Federal

Oct.

A

It has the great advan¬

over

these

care

that would other¬

to

therefore

con¬

with

sales

of

power

have

tage

one

the amount and kind

purchasing

in

new

stockholders, which will expire at

consumption.

the public picks up pur¬

from

wise

The sale of

associated

program

bonds to

chasing

transference

public.

and restraint in

homogenous

surpluses

of

the

to

through the terms of refunding
issues,
the
retirement
of
sums

fication

the

on

the

of

three

1947.

Oct. 16,

on

share,

financed, not by taxes but by the
sale of U. S. Government savings

debt is in

hands

for

all

debt; that

the

stock

Inter¬

government savings bonds
should
be
nationwide
intensive

of

share

be; during the 12 months ended June
Inter-' 30, 1947, was 55.0% and, after
giving effect to the minimum net

these

on

per

a

can

the

by

tive expenditures that

policy
size

added

repayments.

productive

financed

properly

be

not

of

con¬

bonds

sequences

$28
one

at

and only
for those

parisons:

The national debt consists of at
least four distinguishable kinds of

each

of
of

17

in-<$>

situated.

ital funds of the company and its
subsidiary, Anchor Insurance Co.,

expendi¬

Kinds of Public Debt

application

orice
basis

com¬

outstanding

Oct.

still

are

companies,
profitable

many

moderately
better

productive

national Bank.

negligible.

global

made

each

the

of

was

for

which

currently

burden

of

will be of

plex composition. If the debt were
small, the possibilities and neces¬
debt

holders

to

presently

shares

Co.

past 10 years the ratio of the cap¬

working capital

should

Insurance

losses

fire

creasing though at a fractionally
lower rate, and it must be as¬
sumed that net underwriting oper¬
ations in 1947 will be unprofitable

for

Relief

are

and

the

Some

man¬

the debt and second from its

sities of

provide

sumed

how debt management should be
related harmoniously with other
aspects of fiscal policy.
The possibilities of debt

for

inventory.

we

who
should
have the
decide these points, and

power to

and

of

since the

should be balanced, how the own¬
ership of the debt should be dis¬

tributed,

advances

tures should be financed by taxes,
food and supplies which

the

how

and

from

reconstruction

facilities

include questions as
interest rate should

management

initially

now

new

Marshall

weakening of dangerous in¬
flationary pressures. Answers to

lated

Washington

pany's

by

this

as

sible requirements that may arise

toward

the

problems

value capital stock of Provi¬

par

dence

the lowest of the year, and totalled

$47,990,000, according to the National Board of Fire Underwriters.
For the nine months the aggregate was $517,982,000, compared with

$418,579,000 for the corresponding period in 1946, and $333,988,000 in
1945. The per cent increase of 1947 over 1946 is 23.7%, compared
with a 25.3% increase of 1946 over 1945.

Offering of 100,000 shares of $10

noon,

management of

comes

Beardsley Ruml

employment
at

that

Effect of Marshall

productive

and

our

Ins, Stock Offered

underwritten

help

high

of

fact

sales

that

This Week—Insurance Stocks
Fire losses in September were

Thus,

as

debt.

maintain
a

know

commercial

problem of managing

instru¬
to

We

conception

pol¬

affording

new

refunding to accord with

J

distinctions in wartime, we do not
seem
to have carried a parallel

manage¬

icy,
a

of

of

a

people.

had different effects.

possi-

bilities

as

if

domestic economic welfare.

withdrawing
pur¬
from the hands of

power

lems

raised

taxation

to

By E. A. VAN DEUSEN

levels of world
the plans do not

new

4
was

Bank and Insurance Stocks

If the

reconstruction

distribution.

its

roughly into
first, those problems related to the structure of

ownership and

ment

world

financing relief expenditures under Marshall Plan by

two general
classes,
the debt, of its

debt

check¬

pressures.

succeed, the loans will be offset
by payments to the United States

or

The problems of debt management can be divided

the

for

23

operate

of taxes in

debt and be subject to redemption

taxes, and reconstruction expenditures by sale of savings bonds.

by

plans

production;

Pointing out close relationship of taxation to debt management in
fiscal policy aiming at a high level of productive employment,
Mr. Ruml contends much depends for its success on classes of
and character of

they will

(1651)

CHRONICLE

succeed, the bonds will be treated
as any other part of the national

a

Advocates

bonds
manner

arising from

Chairman of the Board, R. H. Macy & Co., Inc.

debt outstanding

FINANCIAL

ing inflationary

Debt Management

government

the

&

(L.

A.

NEW YORK 5, N.

Y.

Teletype—NY

1-1248-49

Gibbs, Manager Trading Dept.)

India, Burma, Ceylon, Kenya
and Aden and Zanzibar

Subscribed Capital

Paid-Up
Reserve

BArclay 7-3500

26,

The

Bank

Capital
conducts

£4.000,000
£2.000,000
£2,300,000

Fund
every

banking and exchange

description,
business

Trusteeships and Executorships
also undertaken

of

24

THE

(1652)

COMMERCIAL

Junior Achievement Awards Made by Schraiw
change

for

the

best

annual

by

report

in

company

a

the

Junior

Achievement

plan, a youth movement through which teen-agers
engage in their own business enterprises, were presented on Oct. 17
by Emil Schram, President of the Exchange, to Catherine Voorneveld
and Peter Czap, who, as officers of the Junior Achievement Company,
of West Laboratories, Newark, N. J., wrote the winning report; and to

Eugene Jannece and Sisto Cichette of Novelty Printers, Chicago, 111.,
winners of second prize.
The young participants in Junior Achievement raise capital for
the companies by selling stock, usually at 50 cents a share, and then
gain experience in manufacturing, labor relations, marketing, bill

FINANCIAL

CHRONICLE

ment.

turned

out

over

fully

say

300,000

a

month, or double the
Enough shoes were
produced in 1946 to equip every

ment

that I should

1941

at

the

rate

of

rate.

man,

and

woman

child

in

the

country with 3 pair and leave
100,000,000 pair for export. Since
the end of the

an

outpouring
200,000,000 men's
600,000,000 pairs of
women's nylon stockings has cer¬
tainly erased shortages.
From 1929 to 1944 personal in-j
of

well

shirts

war

over

and

in

this

country was
reduced from roughly $41 billion
to $35 billion. It has since crossed
the

$45 billion mark. The greatest

individual

increase

consumer

credit

has

been

which

in
has

doubled, from $5.7 billion to over
$11 billion. Non-farm home mort¬
gages have increased about 40%.
In

other

words,
gentlemen,
quite apparently this accumulated
and

overflowing

at

purchasing

in the hands of

power

the

end

of

the

consumers

has

war

been

markedly cut into.
Savings
only one-sixth those of 1944.
has

been

are

It

aided

by a market ex¬
pansion in borrowings. Probably
it would be better to say the rise
in prices has
necessitated those

borrowings.

been

debt

has

incurred

when

living costs were moving to record
high levels.

Catherine

Czap,

N. J., first prize winners), Emil

Voorneveld

(Newark,

Schram, President, New York Stock

Exchange, Eugene Jannece and Sisto Cichette

(Chicago, 111., second

prize winners).

collecting, and in meeting payrolls; in short,
a

hand

from which it realized

cream,

last fiscal year.
The four contest
luncheon

the

in

sells
a

a

full-fledged operation.
after-shave lotion

an

net profit of $90.63

and

in the

who

honored

were

on

Oct.

17

at

a

are
remaining in New York over the
Their reports won the competition on the
basis of clarity and effectiveness of presentation and on the form of

weekend

its

as

the financial

former

Exchange

guests.

The contest judges were

statements.

Pierre R. Bretey,
Society of Security Analysts; John L.

President, New York

Carey,
Haskell,
stated

Secretary, American Institute
of Accountants, and John
Vice-President, New York Stock Exchange.
The judges
man.v of the 60 entries in the contest deserved highest

The

aim

of

the

Achievement

Junior

program

described

was

to

of

in the event of a
recession—and business

business

the

position

not

of

is

too good.
definite indications,

are

according

people

many

going to be

any

due

was

to

Oct.

has

the past two years
an end.
In a broad

,is coming to
the

demand
for
capital
should
remain
large, as
compared with the average pre¬
sense

goods

war

but

year,

in my opinion the
intensely of demand

concentrated
in

seen

the

subside
We

in

a

variety

of

! While industrial demand

&

factors.

No.

for plat¬

As

result,

a

13

Committee of the National

Association

of

Securities Dealers,

Inc.

announces

the appointment of

the

inum has been steady throughout
the year, the jewelry trade has
been in the throes of a mild re¬
cession

Co.,

following

Nominating

Com¬

two

past

will

years

George

N.

Lindsey. Chairman,
allowed their stocks of platinum
Swiss
American
Corporation;
to run off end bought on a handJohn
C.
Maxwell,
Tucker,
to-mouth bas:s.
Dur'ng the past Anthony & Co.; Frank Dunne,
weeks,
the
imoroved
sentiment Dunne &
Co.; Michael J. Heaney,
concerning general business coup¬ Jos. McManus & Co.; Frank C.
led with a strong stock market
Trubee, Trubee, Collins & Co.,

has

stlrmjla+ed

elry.

de^-^n-i

Jewelers,

for

seeking to

jew¬
cover

mands for

not

yet

accumulated

the

as

de¬

durable goods.

bered

that this demand
demand

and

deferred demand.
it

is

This is

only

being

their requirements,
have found
the market bare of offerngs.

Furthermore, substantial
tities

of

the

metal

have

quan¬

been

taken off the market bv the pub¬

lic.

Seeking

selves

tion
the

in

against
the

dollar,

to

nroiect

purchas'ng

accumulating

one

of

The nominations
for two vacancies

are

on

to be made

the Board of

I Governors,
B.

to replace Irving D.
Smith, Barney & Co., and
Winthrop Pizzini, B. W. Pizzini

&

Co., and four members of the

Fish,

them¬

District

Committee

deorecia-

further

investors

|

Richard

F.

power

have

of

been

the

commodities whose orice has

few
not

yet fully reelected the strong in¬
flationary trends so clearly ap¬
parent in our economy.




to

replace

Abbe, Van Tuyl &
Abbe; Philip L. Carret, Carret,
Gammons & Co.: Roy W.
Doolittle,
Doolittle, Schoellkopf & Co., Buf'falo, and John F. Wark, Merrill
i Lynch, Pierce Fenner &
Beane,
all

of

whose

Jan. 15, 1948.

terms

will

expire

It

that, while
still

there

and

from

around

which

ran

said.

be

can

We have

experienced

year

this

extraordi¬

an

narily large balance of exports
imports. As you well know,

over

this has not been due

much to

as

buying by Europe as to the same
type
of
post-war
inflationary
purchasing throughout the world
as

have

experienced in this
country—and we could well have
a

we

marked diminution in that buy¬

which carried such

into

appliances
Today the
things
is

manufactured.
of

two

these

peaks.

Effective
consumer

demand

goods

dependent

prices
this, it
has

either

of

durable

is not

in¬

incomes

or

charged.
Remembering
is my opinion that 1947
the

seen

trated

for

then,

peak

demand

from

now

more

lective.

and

will

on

of

demand

Marshall

any
tures.

Moreover,
what

it

Plan

does

indications

that

we

two

one

going

are

expendi¬
from

seem

in

to

aid

our

have

be
to

more

Europe

the

in

been

that

program

will

be

principal

that

our

ton

past

overall

based

food

the

on

and

cot¬

there¬

and

be given away, but that
materials and the com¬

can

raw

our

the

reproductive

are

fore

price factor has al¬
ready become a visible deterrent
in the housing field.
Following the recession in re¬
tail

demand

months

of

in

this

weeks

there

year,

impetus.

that

is based

the

has

first

six

recent

over

developed re¬
In my opinion

seasonal

on

factors,

plus the recent soldiers bonus dis¬

tribution,
will

we may

well be in what

be the culminating
phase of the present inflationary
cycle. It should terminate over
the
and

to

prove

12

next

months

production

into

recession

a

of

price
dis¬

turbing proportion.
Perhaps this is a good place to
recall

to

years

ago

46,

your

minds—that,

two

in the winter of 1945-

all emphasis Was

deflation

8,000,000

and

resources.

these, in the

on

feah Of

interest of national

far

as

recessions

bot¬

as

are

con¬

cerned, has caused

many to feel
decline from around 213

that the
the

spring

of

1946

in

160

to

fall, represented all the re¬
adjustment necessary
from
the
preceding four-year bull move¬
ment.

Unfortunately,
picture

of
as

of

than

stocks

average

tion

than

Dow-Jones

indus¬

and public specula¬
more acute in the

much

was

stocks

the four-

the general
considerably

rose

the

not

the stock

In

market,

more

trial

whole.

a

bull

this

is

averages

good picture of

very

year

however,

the

outside

in

of

those

mediate

result

the

im¬

in

the

stocks

which

and

the most

public speculation

which

in

much

was

suffered

rampant

average

The

that,

was

collapse,
risen

that

covered.

much

more

more*

security, there must be some quid
quo, including
stock piling

losing from 40% to 75% of their
price
level
as
compared
with
about 25%

pro

materials.

raw

Such

a

would

program

be

not

nearly

as
inflationary as
feel—simply looking at
billion lending program.

many

now

$20

a

should

whole
from

remembered

be

world

the

namely

disease

inflation

an

excessive

that

is

today

same

the

we

are,

featured

demand

it

suffering
as

by

which

has

time,

similar

be

that

the

fulfillment

of

some

so-

difficult to

see

is

that it will prevent

much

as

no

than

more

The gen¬

that

37

not

groups,

regained

25%

as

of

their

losses.
is

of the strange anoma¬
1947, then, that there has

one

lies of
been

much

so

talk

about

re¬

mistake that has been made

those

who

have

conservative attitude

unpleasant outcome of current
inflationary
excesses.
What
is

the

of the bull market and the

newal

by

it

find

we

two-thirds, have

even

great

period,

the

even

body of stocks has done much
poorly. For example, break¬
ing stocks clown into 56 individual

ion

deflationary

year

more

called Marshall Plan would cush¬
a

this

eral

It

of the nature of the

program

recov¬

year.

half of their 1946 loss.

factors.

it might well

have

yet, recovered

as

or

other

in¬

should

Dow-Jones industrials have at

groups

While, therefore,

Dow-Jones

substantial

some

this

low

with it, quite naturally,
productivity and shortages of
labor, strikes, black markets and
unbalanced production, hoarding

the

That

brought
eries

brought

and

in

dustrials.

Actually

top of all this, however,

followed
over

a

the past

year.

a

able
of

more

it

to me,

seems

of

for

is

reconstruction,

ment

and

necessary

a

period

readjust¬

a

over-valued

prob¬

currencies

and
a
readjustment
everywhere.

in

prices

Well,

you may ask, what
business man do?
There

a

things that
do

to

we

aid

can
are

do

and

only

the

can

not

general situation but ourselves
well.

Inventories

as

low

in

a

should

possible,
sion—except when

be

as

kept

plant expan¬
it can result

as

increase in output—
should be postponed.
Most im¬
portant, consumer credit should
be

quick

extended

basis

when

moved.
creases

on

a

conservative

should

of

seem

to

so

and

our

people

despise.

influence

to

tained

the

months

of

this

year—

outstanding feature

that, in spite of the

boom—aided

rapidly

it

as

sus-

was

increasing

by

export

boom in the first half of the year
—since February, and in face of
all

the

curity
made

satisfactory earnings,
prices

no

as

whole

a

se¬

have

progress.

Many claim that, based on
rent

earnings,
the

stocks

cur¬

cheap,
industrials,
are

Dow-Jones

example, earning at the rate
of $19 for 1947 and selling for less
than 10 times such earning power,
are

activities.

low.

Such
a

a

bullish

argument, from

long range standpoint, it seems

to me,

banks, the prin¬
cipal source of credit to business
enterprise, should pursue conser¬
vative lending policies and exert
their

early

but the really
of 1947 is

that

Commercial

all

the

for

Save the damn dollars that

here

1946, the only natural and
logical thing was to anticipate
intermediary recoveries. We ex¬
perienced such a recovery up into

in¬

effort made to lower prices.
Saving—not spending—should be

keystone

fall of

re¬

every

the

a year ago, after such
collapse in prices as was ex¬
perienced from the spring to the

are

resisted

be

As I said

wage

restrictions

Unwarranted

minimize

unemployed ithe use of credit for speculative
—and you will remember the re¬ purposes.
—

cur¬

of

should

The

from

that

and

level,

the

of

oody
think

would

many

se¬

carried

187

to

This rising

toms

glean

can

years.

I

and

more

which

163

the

the year ahead. That in
might be sufficient to off¬

gradually be¬

critical

that

184,

around 174.

ing in
set

concen¬

that

to

rently underway which began in
mid-September
at
a
level
of

much

Demand

160

from May of this year

July,

around

itself

an

Sees Peak of Concentrated

aver¬

an

the Dow-Jones industrials

age as

in

automo¬

no

that which ran from
1946, to February, 1947,

think

de¬

a

exists,

were

electrical

no

a

price—not
is well to

upon

demand

de¬

a

remain

can

necessity.

on

ferred

was

In other words

dependent

newed

| Buffalo 2, New York.

recovery,

the whole thing is as yet so neb¬
This
much, however,
I

ulous.

On

obviously

all

come

mittee:

jewelers

The

years.

October,

1948.

have

1947

21,

four

difficulty in discussing it is that

had

around pre-war

announced

next

market, using aver¬
we have in the past
experienced three waves of

prices,

age
year

for

production

platinum,

In the stock

our

ago

of

the

over

Stock Market Trend

is

drain

or

Kernan, White, Weld
Chairman of the District

argument

hardly be any de¬
flation in this country if we are
going to loan Europe $20 billion
can

Hence

biles

Francis

con¬

so-called

non-reproductive

which

over

years

nominating Committee

that there

the

The

national

expenditures
seen

activities of 60,GOO persons,

in the price

is

Plan.

ment

A broad

The increase of $3

arguments for

boom

Marshall

again, the current distorted, top
heavy and vulnerable price struc¬
ture will inevitably result in farreaching readjustments.

1946

remember then

Platinum Price Rise

newspapers.
One of the

tinued

the

of

pages

are

companies in operation has grown from less than 200 to nearly 900.
Junior Achievement currently operates in 11 states and involves the

Heavy Demand Causes

front

modities fabricated from them

ferred

including stockholders and adult advisers.
expansion provram is under way which envisages a total of
30,000 companies by 1950.

the

statistics,
that the rise in plant and
equip¬

various

to

to

experience, enabling them to see for themselves what it takes
to meet a payroll and earn a business profit.
Since the movement
was
first established on a national basis in 1942, the number of

reached

market

matter

particularly apparent in the hous¬
ing field. But it should be remem¬

give young people between 15 and 21 years of age first-hand busi¬

are

approaching, if not definitely in,
that period now.
It has already

Plan

the

Colgate, Chairman of the Board,
Colgate-Palmolive-Peet Co., who is Chairman of the National Ex¬
ecutive Committee of Junior Achievement. The primary purpose is
ness

riv¬

we

we

fulfilled

the luncheon gathering by S. Bayard

think

than

moment

recessions have always in the past
followed booms in this
country—

that

praise for their excellence.

became

I

words, we should stop,

look, and listen—and go slow. In
my opinion such an attitude and
procedure will not only be valu¬
able to the economy as a whole
but will in the long run save us
individual losses
because, once

shall

been

winners

fear inflation

attention

inflation.

on

state¬

naturally follows—forgetting

There

West Laboratories manufactures and

the

In other

Govern¬

a

timing—that,
right—Peter

by

the

for

to

taken

that I made the

realistic under the so-called Mar¬

It

left

eted

steps

At that time I can't truth¬

when

At least this big rise

in

From

sultant

(Continued from page 4)
Washing machines are being

debtedness

Presentation to Junior Achievement annual report awards winners.

Thursday, October 23, 1947

Dollar Inflation and 1947 Stock Market Outlook

Awards in the contest sponsored by the New York Stock Ex¬

,,

&

overlooks two things—first
of
the period in
the
earnings
are
being
made. I pointed out initially the
difference between this period of
prosperity, from a business stand¬
point. and those which culminated
the

character

which

in

1929

and

1937

and

its

simi-

-mi

Volume

166

Number 4640

THE

larity with that which culminated

boom

price

a

than

in

a

inflationary

non-price

infla¬

tionary boom.
For

1929

15

earnings.
In
to

1937

and

between

16

sold

times

for

their

it did in 1929 and 1937.

Minister of Finance recently elab¬
Now, to close this harangue up orated at considerable length upon
—except from a purely temporary the fact that dollar devaluation
intermediary standpoint, based on would be ineffective in
solving
another inflationary fillip—from a the
existing difficulties. It would
sound
long
range
fundamental do little to curtail the flow of im¬
standpoint, it seems to me that ports from the United States for

.

the

second

place, if

another

get

they

and

bull

we

are

market

fol¬

lowing

current

will

the first time in the his¬

be

high

earnings

it

tory of the stock market, accord¬
ing to my records, that a bull
market
has
followed, and not
preceded
or
accompanied
high
earnings.

the

environment literally
cries out for caution!

now

saying is that all that is

consumers, the unstable economic
situation in Europe and—some¬

in order to make satis¬

necessary

factory profits—and by satisfac¬
tory I mean 50-100%—is to rec¬
ognize current earning powef.
What

real money I
the stock market I

in

thing which I have

around

other

like

made

stocks

U.

S.

by

buying

Steel

when

showing

was

lieving

that

would

when

stock

a

the

to

com¬

preferred
rise

a

rates

in

and fin¬

going

pretty

slowly,

years

rather than trying, on the obvious
surface
factors,
to
get
rich

earn¬

satisfactory

out

of

the

Canadians

to

our

Canadian

in¬

States used up $131,000,000 of our

on

supply of American dollars, as
compared to the similar figure for
1941 of only $18,000,000.

increased by such a
move,
we
could expect few effective results

were

If

the

devalued,

possible that it might be used as a
palliative until cures which strike
at the base of the problem can be¬

(b)

From

earlier

in

the

this

figures

shown

memorandum,

we

can see that
by far the most im¬
portant factor contributing to the
tapping of Canada's U. S. dollar
reserves is the
rapidly expanding

the United States for the first six
months

of

Products

From

96

present time, little is being
official circles regarding
such an alternative, but it is quite
said

able
in

we

to

are

supposed

to

156.7

80

64

discussed.
Some

make
stock

the

satisfactory profits
market

I

A. W

84.1

48

37

78.9

59.9

76

70

Chemicals and Allied Products...

58.1

51.6

89

70

Wood, Wax Products

45.3

41.9

93

90

Animal Products

47.2

31.3

66

55

Miscellaneous

78.2

68.2

86

by

saying
that with
Steel
earnings $13 a
share or better in a boom, because
the stock
is selling
for only 6
times such earning
power, it has
got to go
A

70

this

it

To

to

those

chance of

no

put

there

B.

either

consumers

getting what they want or what
they have been promised."
This

is

what I

until

then

I

Even

call

buy.

While I

not

that

meat

or

if

will

we

only

wastefulness,

really benefit are
Europeans, but ourselves.
who

such—will

by

nothing

care

in

this

are

time

of

themselves well

serve

exercising

frugality

and

ab¬

stention.

to accept the
viewpoint that it has become that

Anybody
then,

is

that

from

doesn't

do

personal

a

time

nent

out

it,

dollars

of

with

luxury
or

chased

It

which

There

small

items

frain from

in

and

its

standpoint, simply

in

the

stock

Decries

market.

I

still

cents

and

personal

a

health

damn fool.

a

Danger of Canadian Exchange Collapse
(Continued from page 15)

tor

nation

favorable

balance

of

overall

an

of

ance

with the

payments

been

which

postwar

U.

S.

reduce her unfavorable balance of

payments with the United States:

(1) Checking the unfavorable

Ihe

tions.

to

(c)

The

American
countries

credit

present
dollars

with

shortage

whom

balance

of
other

among

has

we

have

resulted

in

but

expanded
finds

world

much

a

formerly,
U.

and

S.

itself

a

to offer

in

a

dollars

becomes

ply

pean

countries.

Canada

as

dollars
result

a

trading.
(d) Canada has
of

U.

her

S.

dollars

steps

draining
we

to

tion

must

the

ail¬

common

Were this condi¬
one,

Canada could

tion of European industry and the
present-day efforts for the re-

further

reserves.

a

practically all Euro¬

normal

a

the

hope for little change in her re¬
ceipts
of
U.
S.
dollars
from
Europe. But with the rehabilita¬

meet

she

but

of her

stated,

current

hand

lessen

away

have

of gold

to

of

to

ample supply

an

on

deficit

current

take

accruing

of

Having little
return, the shortage of

among

S.

goods

than

Canada.

ment

U.

of

dependent

degree

the

upon

result

a

remainder of

greater

considerable lessening of the sup¬

of

as

therefore the

As

establishment

Canada's supply

trade,

and U. S. dollars stood at

a

we

of

are

little.

very

is

present
to

trend

be

cannot

continue.

Canada

allowed

must

unbalanced trade with the United

find

States.

Such

ways

of lowering her deficit bal¬

ceiving

ance

of

and,

States.

hope

trade

At the

that

with
same

the

United

time she

present-day

plans

are

consideration

with the

interna¬

Trade Conference

tional trade conferences, the Mar¬
shall Plan and the Monetary Fund

now

the

cabinet

re¬

on

and

trade

Oct.

10, im¬

we

can

expect
Canada's

effect?

cause

realize

of

that

the

disrupted.
Over the longer term, we can hope
to
develop domestic output of

the

present

(a)

are

some

which

of

the

may

possible

be put into
could

in Canada's dependence on

crease

the United States for imports over
the prewar period and it would
seem

likely that with restoration

the world's industrial economy

hope to increase

can

chases

from countries

our

pur¬

other

than

America.
In considering these figures
imports from the United States
must realize that

most

a

by dollar values is the
siderable rise in
occurred

since

in

as

shown
con¬

very

prices which has

the

United

days.

prewar

now

important

for their increase

reason

on
we

States

Canada

must

more

for her American

This

pay

rise

States

by June, 1947 to 157% of
the prewar
(1935-39) figure as
compared to 135% in Canada. The
effect

from

prices
their

present

in

to

effective

itself

normal

more

a

should

factor
an

dollar

imports is obvious. When

demand returns to

level,

the

on

down

come

heights.

should

This

contribute

lowering

of

our




1

groups

a

S. trade and

re¬

change

a

increase in

There

major disadvantages to
The Canadian prices

these

States.

The problem is certainly a com¬
plex one, but Canada has skillful
and experienced officials capable
of

charting

commodities

rise

would

United

to

in¬

States

pear

such products would be dis¬

on

rupted, and exports to the United
Kingdom would be severely af¬
fected.

that

addition

deficit

States,

we

to

easing

with

the

hope

can

to

our

improve

supply of American dollars by
selling more gold to the United
States.
At the present price of
gold

much

gold

production

of

Canada's

potential

is

being stifled
because the selling price of the
product is rigid and the cost of
production has greatly increased.
Some

help

has

been

granted

in

the form of tax relief to gold min¬

ing

companies

been

a

plans

very
are

this

but

not

measure

effective

now

has

and

studied

of

effect

and

war

postwar condi¬

this

industry can be seen
following figures which
show the complete reversal of the
production trend of Canadian gold
production.
During
the period
1931

tion

to

1940, annual gold produc¬

in

Canada

increased

whereas the 1940 output was

greater than that of

1946.

turn to the 1940 level of

duction could result in
in

our

A

gold

an

97%,
88%
re¬

pro¬

increase

supply of American dollars

derived

from

United States trade deficit.

$104,000,000

We have pointed out three ways
in which Canada can reduce her

this

from

source

meanwhile

Canada

the

has developed

regarding the

will

evolve

and

resulting decline in the price

of internal Canadian bonds in New
York

in

has presented the American,
with

apparent

bargains

good securities.
This is not the first time such

situation has occurred. There

a

were

similar fears in New York regard¬
ing the Canadian dollar in June,

1940,

when

Dominion

of

Canada

medium termed internals

dropped

to

62

with

the

developments

unfavorable

of

months later the

at

79 V2

to

months,
with

for

being

the further encouragement of gold
roduction in Canada. The adverse

the

It would ap¬

in the United States

United

our

in

effective

most

uncertainty which

investor

In

the

be taken.

to

course

a

the

time.

same

drop

bonds sold,

again

December,

war

Five

in

1940,

two

to

66

further uncertainty and in.

October, 1941, they sold at
Today they are selling at 88.
We believe

therefore

82.

solution must, and

a

will

be
fqund,
and
through exchange
control, import adjustments and
greater gold production or a loan
of American dollars, or a com¬

whether

it

be

bination of

these, the present dis¬
equilibrium will b§ corrected and
Canadian

bonds

favorably

to

American

will

the

respond

action

taken.

investors who took ad¬

vantage in the past of uncertain¬
ties

in

their

Canada's

country

position

regarding

should

again,

recognize the bargains in today's
market.

000,000.

deficit

with

For immediate

the
re¬

sults she can revert to greater im¬

in

1946,

to

$186,-

(d) When the shortage of Amer¬
dollars became acute during
the early stages of the war, Can¬

Joins Herrick, Waddell

ican

ada

conserved

(Special

hope for an expanded domestic
production of some essential com¬

supplies by a
rigid system of exchange control.
Since
1944, many war-time re¬
strictions have been dropped. The
re-imposition of some of these

modities

to The

NORTH

her

Financial

BEND,

Chronicle)

NEB.—Clinton

regulations would further relieve

port and exchange restrictions and
for longer term results she can

fective
ment

now

now

States.
measure

of

supplied
An

by

additional

the
ef¬

is the encourage¬

imports

countries

being

from soft cur¬
to replace goods

purchased

from

the

the

situation.

have

We

pointed

out, however, that Canada cannot
expect to cut off many of her

commodity
rupting

without

dis¬

economy,

but

imports

domestic

J.

Bauer

has

the staff of

joined

lerrick, Waddell & Co., New York
investment

firm.

With Carl M.

Rhcades &

Loeb,

Company

(Special to The Financial

MIAMI

BEACH,

Chronicle)

FLA.—Harry

re¬

possibility

with

in¬

States.

re¬

such

the

mediately effective and undoubt¬

The United States and Can¬

cur¬

(4) Loan raised in the United

S.

action.

on

instigated by

war.

of this

'such

from

;u^e>

rumors

of

three

tions

prices

but it is felt that such have been

current

the

is

products

removal

supply of U. S. dollars.

is

in

productivity

from

the U.

are

shown by the cost of living index
which had
risen
in the
United

imports.

be devalued.

resulting

U.

our

Of

At the pres¬

our

figures above indicate the in¬

age

abnormal condition of world trade
is
the
disruption of
European

There have been

in

Africa

lines.

export to
our

and

South

these

strictions could result in

(c)

rency

The Canadian dollar

of

some

stricted

trade

United

What

of

The percent¬

United States.

lem.

measures

severely

merchandising

basic changes in
policy of meeting the dollar prob¬

In examining the need for re¬
establishing a balance in world
must

of these items.

be

Ottawa

some

changes.

we

will

Finance

portant decisions will be taken by

will lay a foundation for multila¬
teral trade and convertible ex¬

underlying

omy

at

Minister Abbott from the Geneva

can

en¬

exports;
imports from soft

of

United

the

time

in

along

solution

econ¬

trade:

and

domestic

the

internal

import

rency

levels, domestic industry depend¬

of

return

essen¬

Minister

during his

ing

value of

on Jan. 1, 1947 and trade.
interesting to note that this
However, we cannot expect to¬
figure compares with only $400,- day's world trade disequilibrium
000,000 at the beginning of the to right itself quickly and, in the
war and only
$175,000,000 in 1942. interim, Canada must take effec¬
It is obvious however, that the tive
steps to improve her own

it

The major

composed of such

resulting

$1,244,900,000

re¬

buying from the United
their
total
would

Canadian

or

return to
world

could

we

Trade

activities

tinue

of

a

basis

normal

more

multilateral

expect

can

merchandise
of

to the United States.

ent

evitably

we

war

of

restriction

course,
a
very
important
step
would be to increase our exports

been

of

of

it and

productivity.

coal, petroleum, machinery
products and the im¬
porting of these articles must con¬

only

unscathed by the

many

of

mission

present
have

cotton

not

greatly magnified by
world economic condi¬

currencies,
helped by:

countries; development of
production.
(2) Increased gold production.
Stiffening of exchange
(3)
control
regulations, especially
with respect to travelling in the

as

are

escape

difficult

a

probably

much

MacKinnon's

and

the most important coun¬
tries whose industrial capacity has

trade.

United

edly

tials

ada

Canada's chronic debit bal¬

(b)
has

enjoying

of

be pur¬

the

prove

are

some

simple to make satisfactory prof¬

compo¬

weeding

but

amount to

items

are

groups

to

may

than

will

task.

the

these

at

non-essential prod¬

or

ones

States,

Ottawa

view

a

other

States.

at

examining

details

articles

that

doubt

no

officials

carefully

ucts

this

to

high prices

be crazy,

may

and

irony of the present

those

any

yet ready

am

throw

about Europe's plight—if there

speculating
market made simple!
earnings boom—and

in the stock

Wait

a

we

who will

the

not

are

be

can

multilateral

e

Steps Canada might take to

creased

There
this

it

spoil.

is

stop

a

we

food

the

me

steel

is

I

i d

Dollar

^

The Marshall Plan

pean

to

nation—that

much

allow

mor¬

and

that

me

situation

can

speak

conservation.

food

Canada's

(2) The Monetary Fund
(3) The restoration of Euro¬

64

78

w

-

couragement

most

to

the moment is crystal clear. The
steel mills are
producing all the

they possibly

to

is

wasteful
away

column

asked

as

"The steel situation at

says:

1,256.7 980.7

hardly think it is necessary.
It is just as clear to you

up.

financial

ning

been

about

you

rl d

o

balance

have

for

Cures

which will be

35

173.6

•

concise

more

a

picture of the possible means of
improving Canada's current dol¬
lar problem, we shall tabulate the
measures which have already been

80

140.4

Food Conservation

be

'
v

ings.
Now.

effective.
order to get

In

(1)

191.8

Products.

in

come

85

220.3

a

trade with convertible

U. S.

U. S. in 1938

346.9

be

States.

At the

% From

From

Fibres, Textiles
Agricultural Vegetable

Products

would

United

the

in

Problem

Non-metallic Mineral Products.-.

Metal

be

1947:

362.4

taken

measure

tive.

%

Non-Ferrous

possible

raised

All
and

a

could

loan

Imports U. S.
Iron

(e) Finally,
that

along this line.
With the high
price levels existing in the United
States,
Canadian
exporters
al¬
ready have sufficient sales incen¬

later,

economy.

dollar

1946-

and

the deficit in merchandise trade. The
bulk of such imports is
comprised figures given below show Can¬
of petroleum, coal, cotton
goods,
ada's imports in total and from
and
machinery and other items
basic

in

pressure

upward

price structure. As far
exports to United States being

as

for

help,

Canadian travellers to the United

quickly.

few

a

bonds and

accompanying

suggest

point

cost

Canada's

persistent

ally the history, which I have tried
to cover, of previous postwar in¬
flationary booms, all seem to me

deficit, be¬

a

within

show

all

will

we

worthwhile

their

have

you

recent

short-term money

pessimistic—in

were

words

pany

it

industry

me

in

as

rather than decreasing the inflow
of these items it would only raise
crease

25

(1653)

discussed

not

perhaps

the

—

weakness

by having faith in the future of
American

which

but

noticed

have made
have

current

The recent rapid rise in com¬
modity prices with its squeeze on

In other words, what the bulls
are

CHRONICLE

at
this
time, based on current ing some help. However, govern¬
earnings. If the bulls are right, ment spokesmen have been insis¬
little patience is going to be re¬ tent that dollar devaluation is not
quired
because, of course, the the correct remedy and it is now
stock is shortly going to sell at
generally accepted that such a
15 times that
earning power—as measure will not be effected. The

example, in 1919-1920, in¬

dustrial stocks sold for
only about
8 to 9 times their
earnings while
in

FINANCIAL

it is one of the most dif¬ interest such
as
the gold mining
ficult things in the world, largely industry which was
caught in a
because it requires courage and
squeeze when the Canadian dol¬
foresight and patience. Neither lar returned to parity in
July,
courage
nor
foresight is neces¬ 1946, and which has since been
sary to say that Steel is cheap decrying such action and
request¬

Stocks tend to sell much lower
in relation to the earnings en¬

in

&

think

in 1920.

gendered

COMMERCIAL

vested

ypited ,States.
can: to

meas-

exchange

control

degree be im¬

Canadian

tourist

This latter

some

United

States

restricts

which
traffic

could

Levin has been added to the staff

the

j of Carl M. Loeb, Rhoades & Co.,

to

prove

a

1011 Lincoln Road.

26

THE

(1654)

COMMERCIAL

FINANCIAL

&

CHRONICLE

were

(Continued from page 21)

Expert and thorough overhaul¬
ing of the Federal tax structure
provide adequate revenue

would

for proper servicing and progres¬
sive reduction of the public debt

know, want to follow the wishes
of their constituents. But there is
a

constant pressure upon

spending groups

by

members

which as a

vociferous than the

rule are more

compelling reasons—humani¬
tarian, economic, political—why
cannot fail in

considerations

sympathetic
plight of

our

of

now.

American
dened

industry is overbur¬
overwhelming
de¬

with

mands for goods.

industry that

shoulder much

must

due to

ture—weaknesses directly

taxation.

excessive

remains

fact

unfortunate

The

that, once supply of goods catches
up with demand, these structural
economic weaknesses will become

It is United States'

the

And the Ameri¬

nations.

overseas

In spite of its
productive capacity,

as

tremendous

are

we

pertinent to the nation's

so

welfare

The Tax on Enterprise

Thursday, October 23, 1947

of

the

than

more

task

There

apparent.

is

defi¬

accumulated

an

of replacing or repairing the world
ciency of capital for industrial
minded. And, unfortu¬ can people realize the need to
maintain the strong character of wastage
brought about by the expansion. Incentive for invest¬
nately, many of these spending
and at the same time readjust the
most destructive of all wars.
our national
defense structure.
ment of risk capital in new enter¬
groups are business groups, local
tax burden so as to stimulate the
The sums involved in both na¬
Already,
our
industries
are
business
interests
who
in one
prises is held in check. And, as
business
investment
processes.
tional defense and foreign aid are fheeting their responsibilities in we all
breath demand government econ¬
know, it is such new enter¬
You would then witness the spec¬
this respect as evidenced by the
so large as to warrant the closest
prises that create jobs.
omy and in the next call insis¬
tacle
of
an
inflationary
spiral
tently for the establishment or the scrutiny. So, we must recognize record-breaking and still growing
Similarly, the steeply graduated!
halting in midair.
continuance of some pet project. the bounden duty of members of outflow of industrial goods to Eu¬ surtaxes
on
individual
incomes
Wise decisions in the area of
Businessmen
have
a
definite Congress, business groups and in¬ ropean and other overseas mar¬ destroy the incentive of persons
government domestic fiscal policy responsibility to their own busi¬ dividual citizens to join in this kets.
in the managerial group to exer¬
are vital if our prosperous
econ¬
examination. We seek no shrink¬
Moreover,
the
population
of cise their natural initiative and
nesses, to their communities, to
omy is not to head toward disaster. business as a whole to let Con¬ ing from our commitments.
But this country has grown by many ingenuity.
When such
a
mans
And
kindred
fiscal problems
we
do seek assurance that there millions in the last 15 years of
gress know that they will support
knows
that for each additional
loom as formidably in the inter¬ reductions in
appropriations and will be no wastage and that costs under-investment in business en¬ dollar earned the government may
national sphere where, from con¬
will not get hot under the collar be held within limits that impose terprise.
These were the years take one-half to two-thirds, he is
siderations of national security as when some
money-costing plea of no excessive burden upon our during
which
we
experienced likely to pause.
And the vital
well as
humanity, our concen¬ their own is rejected.
economy.
continuous
tinkering
with
the spark of our free enterprise mech¬
trated attention is needed.
This nation recognizes its ob¬ Federal tax structure and the al¬
anism is not kindled.
In that regard we are confronted
Forthcoming Shaping of Fiscal
ligation to the war veterans. At most constant raising
of
rates
Policies
with this fact: World rehabilita¬
the same time, we must face the which
Per
Capita Tax Burden
already inhibited the flow
tion
procedure must be
main¬
I cannot repeat too emphatically fact that such costs are running of venture capital into new enter¬
The
per
capital burden from

tained

on

sound basis if we our¬

a

to avoid the desperate

selves are

economy

the fact that sentiment of business

well be decisive in the shap¬
plight in which so many peoples ing of fiscal policies next session.
of
this
planet find
themselves And keep in mind that crucial is¬
today.
sues will be raised next year.
may

Federal Fiscal Problems

fiscal

Federal

problems

fiscal year

natu¬

rally fall into three general cate¬
gories, each of which is interwoven
with

other

the

two.

First is the question of expendi¬
tures.

1

ahead

difficulties

The

the

for

which begins next July

be realized from a glance

may

make-up for the
current fiscal year ending next
June 30. Latest official estimates,
the

at

budget

contained

in

the

President's

Second

the

are

necessary

rev¬

in August, in¬
dicate expenditures of $37 billion

times

the

normal

This estimate

recently

made

as

others

for

there is need

long-term

as

In this

two years ago.

as

well

in

as

review

a

commit¬

statutory

ments.

A

tax

which

structure

develop
work

Structure

Tax

a

and

This
such

Under the provisions
the appropriating and
revenue-raising
committees
o f
Congress were required to meet

jointly to fix
limits

and desirable

proper

appropriations

upon

and

expenditures.
It is

fore

there

requiring
authority

been

the

never

be¬

committees

ities.

would yield

rev¬

were

several

the

to

a

reasons

lower
are

level?

obvious.

Thev center chiefly in three items:

smoothly

as

might

as

have
Due

general Congressional commit¬

tee

reorganization,

unavoidable.
factor

of

Also

shift

in

delays
there

were

was

party

the

control.

Then, with respect to the budget
situation, there were numerous
uncertainties.

However, in spite of failure to
attain complete objectives, notable
progress

achieved

was

toward

adequate consideration of appro¬
priations. Debates in both Houses

illuminating and the inter¬
by the people gen¬
erally was heartening.
Actually, very substantial sav¬
ings from original budget esti¬
mates were, achieved.
The fact
were

est manifested

that

unexpected

funds,

International affairs and fi¬

rates

especially

demands

in

The total of these three
itures

expend¬

current

fiscal

is estimated at $22.2 billion,
exactly 60% of the $37 billion

total.

This $22.2 billion figure includes
$10.4 billion for national defense,
$7.5 billion for veterans, and $4.3
billion
If

for

be

estimated
of

total

interest

on

matters.

the

public

item of $5.1 billion which

an

cannot

a

international

add

we

debt,

cut,

and tax refunds,
at $2.1 billion, we reach
$29.4 billion, or nearly

80% of the budget total.

businessmen,

local

the aggregate of
government in the

was

of

costs

middle

'30's.

national

views
and

were

Senate

impressed upon House
members

contributed

important degree to reduc¬
tions in appropriations.
an

With

respect

to

defense, veterans and in¬

expenditure ceilings, the ex¬
perience of the last session offers
excellent

which

sion.

to'

build

foundation
in

on

the debt and tax refunds

$6 billion

than required
in 1941. And
the $7.6 billion for miscellaneous
these

the

upon

1948

ses¬

more

purposes

activities of government is about

$2 billion above 1941 costs.
Where

Spending

Reductions

Can Be Made

appropriation

and

an

is

It would appear, then,
substantial
from

the

though

reductions
the

while

There will be better oppor¬

that

must

any

come

$22.2 billion, al¬
savings should be

possible from the $7.6 billion sum
tunity for early but well-consid¬ for miscellaneous activities.
ered action by the Joint Commit¬
We must face realistically the
tee
on
the
Legislative Budget. facts of the chaotic international
Members and the public generally
situation. They constitute a major
will be more fully informed.
obstacle to reduction in expendi¬
Members

of

Congress,




as

you

tures

touches

directly

in

the

1948

session.

There

element

of

capital in¬

vestment.

see

business

to

ex¬

Incentive
risk

and

the

readiness

to

savings in enterprise dimin¬
when

ish

the

steps

government

its take to 50 cents or 85 cents
out of every additional dollar of
up

individual
be

but it

goose

is

very

to her prolific
What

This

income.

killing the

eggs

not

may

endeavor.

are

common sense

granite foundation for
economic well-being

con¬

sistent

enterprise

sound

a

and

The

system.

is certainly not made easy
emotional
slogans
and
the

way

by

"soaking" technique applied
few taxpayers.

to

a

wise

current

steeply graded in¬

and

raising

for unsound

dollar

represent

a penny-

pound-foolish policy of

They

revenue.

are

more

device for leveling and reducing
wealth
than
for
increasing the

So,

the

and

through

In

yield.

the

income

brackets,
are clearly confiscatory.
violate the principle that
upper

the rates

They
a

man

must be

at least

permitted to retain

fair part of his earnings

a

if he is to risk money
venture.

Instead,
a

the

structure

tax

government

heads-I-win

in business
be¬

proposition

tails-you-lose.

for

a

tax

structure.

posed readjustment of the income
schedule

by

progressive rates
maximum

As it

the
At

lowering the
as to provide

so

total

rate

of

50%.

is, at $18,000 taxable income

individual

rate

passes

50%.

$50,000, 71%. At $200,000, 86%.

One
upper

does not have to be in the

income brackets to realize

that with such rates there is little

incentive

on

vidual to

assume

the part of the indi¬
risks of venture

investment and business develop¬

toil

accu¬

sweat.

and

overhaul

complete

This

dertaken with

of

the

be

must

un¬

specific objective

a

—to encourage and

stimulate the

spirit of work and saving.

might

aggravated.

be

Any surplus should be de¬
voted to retirement of the public

to

of

some

theorists.

From

debt.

have

feeling, how¬
for most
of the opposition to tax reduction
is an implicit desire to maintain
I

strong

a

that the real

ever,

obvious

Washington

our

work

to

saving

and

is derived what the nation

is

there

think

reason

evidence

ample

support that view.

And, to some of the tax reduc¬
oppositionists, I say that if

tion

high taxes
a

check

ent

supposed to act as

are

inflation, such an
outstandingly appar¬

upon

effect is not

the moment.

at

nitely

greater

In fact, I am
be

infi¬

of

would

there

convinced

inflation

pro¬

assurance

debt

taxes

if

the

In

matter

over

concern

mani¬
those who professed

festation from

a

new

merit in the accumulation

to find
of

reduced.

were

of

refunding, it is

public

debt

over

16-year

a

period.

Among those favoring
during the last
there was unanimity of

tax

duction

that

preference.
benefit

individual

re¬

session,
opinion

individuals

relief for

have

will

The sequence should be
even

More

should
persons

reduction

from

income

of

than

taxes

through any other change in rev¬
enue

laws.

ur¬

And such tax readjustment most

invest¬

certainly will provide stimulus to

productive enterprise—
more
building — more
goods —
lower-priced products—more util¬

business as the period rears when
activity may be lessened.

gently
ment

needs

—

increased

so

in

ities—more

services—in

fact

the

old familiar endless chain of busi¬
ness

The national Chamber has pro¬

savings

I say, the time has come

as

a

revenue

tendencies

Inflationary

(2)

duction volume sufficient to check

The highest price the nation can
pay

high level of ex¬

penditures.

I

we

rule of hard-headed

—the

three counts:

on

(1) Continuing

that lays the revenues at a level sufficient to
discouraging support liberal spending programs.

going to do about
I would urge a return to the

it?

based

been

(3)

mulated

tax rates

come

a

Also, the $22.2 billion total for

for

tax

to

following World War I.
Opposition to tax reduction has

peacetime

the

tax

figure

our

chambers of commerce, trade as¬
sociations and other groups whose

income

conducive

not

in

prise—the principle of work and

This

terest

structure—the

individual income taxes.

on

comes

tended in

Individual

tax

difficult

not

exaction

fiscal policy at
the top is an inflation that liter¬
ally destroys the buying power of

of

all

the

This is the sector which Congress
studied at its last session. Individ¬

And so, we find that all other
expenditures, representing 20% of
the total, amount to $7.6 billion.

for

connection

in the

items

year
or

of

The

foreign commitments, ternational affairs, is some $15 bil¬
large part to offset these lion above the costs for these pur¬
savings, does not detract from the poses in the last prewar fiscal
value of what was accomplished. year, 1941. The $7.2 billion for in¬

with

in

sector

is

It

such

pre-World War II figure, and
in the decade

ten times as great as

save—the

fits, and
(3)

points I make here.
Consider, if you will, just one

he problem of incentive for enter¬

Veterans'services and bene¬

(2)

tion of

ual

National defense,

(1)

why

reasons

mechanism did not oper¬

new

been desirable at the outset.
to

requirements Finance. This study merits atten¬
the
British tion for its authoritative exposi¬

nance.

There

ate

reduced

think

to coordinate their activ¬

revenues

this

been

with

over spending and those
responsibility
for
raising

with

to

Greek-Turkish
aid
and
domestic emergencies.
Just why have expenditures not

procedure

a

new

related

as

credit,

I

noteworthy that

had

excepted

invest.

would

maximum incentive to
save,

Investment

oil

pansion.

involving chiefly the levy¬ in
the
current
year.
Original enue to balance the budget and
ing of taxes.
budget
estimates
submitted
to make substantial repayments on
Third is the managemet of the Congress in January had called for the debt. And it would be a sore¬
public debt.
| appropriations which, added to ly needed antidote for the infla¬
During the last session of Con¬
tionary sentiment that is so pre¬
| funds previously made available,
valent.
gress, public attention was focused | would
have permitted expendi¬
on the dimensions of
the Federal tures
The
technical detail of sound
totaling $37.5 billion.
budget to an extent greater than
The President credited Congress tax revision has been set forth in
ever before.
This was largely due with action which would have cut extensive detail by the National
to the Legislative Reorganization total
expenditures by $1.5 billion. Chamber's Committee on Federal
of that law,

the

Effects

Any government that takes too
much out of every dollar earned
by the taxpayers is going to find
those
taxpayers less willing to

is

Changing

Federal taxes is about seven times

Tax

that

enues,

Act of 1946.

prises.

postwar

was

field of expenditure
of

higher

estimated

authorities

be

level.

three

as

most

would

re¬

view of the budget

much

as

than

development.
restrictive

The

prise is

a

levy

on

on

enter¬

all who live and

readily see, the tax on enterprise
is paid in the costly toll of infla¬
tion.

Congress must write and pass
comprehensive
tax
legislation
which will

provide encouragement
enterprise.
I am convinced

the results will be
enues

tion

tax

be

when

increased

for the Treasury—more

rev¬

and

Existing

reduction

again

given first considera¬
Congress reviews its

examination
tax

gain by enterprise. That literally
means everybody.
As we can so

for

Income
should

of

laws.

revenue

discrimination

citizens in states without

against
commu¬

nity property laws should be re¬
moved.

Consideration
to

application

should

be

methods

given
the

of

averaging principle to the income
of

individuals.
Earned income again

should be

given preferential treatment.
Other Forms of Tax

Relief

Other forms of relief from bur¬

lower-priced goods for consumers
ment.
densome taxation also are needed.
Certainly such rates are —more
jobs in industry—sounder
not
revenue
producers.
Rather,
Overwhelming evidence of the in¬
and
more
enduring
prosperity.
they discourage individual effort
jurious effects of many Federal
And all this without sacrificing
to increase income from which the
taxes can be found in three vol¬
one iota of our obligations or com¬
tax yield might be materially in¬
umes of hearings before the House
mitments abroad.
creased.
Ways and Means Committee on
I am convinced that the tax re¬
a
I
believe
general
revision of
revenue
that even Treasury
duction legislation passed by con¬
laws.
These
circles are
hearings
filled
a
beginning to realize
majorities
in
the
last crowded period of two months
that lifting the deadening hand of vincing

confiscatory

rates

is

essential

if

the enterprise system is to expand,
so as to accelerate the process of

productivity.
There
memory

session had

today
that

never

was

when

a

the

sound basis—despite

fail

tends

Many people

to

recognize

current

business

time in my

elemental

a

the Executive veto.

to

camouflage

the

fact

activity

Corporate
remain

level.

inherent gifts

truths about the enterprise system weaknesses in the economic struc¬

the

toward

close of the

last

ses¬

sion.

at

And
are

adverse

so

income
taxes
excessively

an

taxes

heavy

economic

on

as

estates

still
high
and

to produce

effects.

Rea-

Volume

THE

Number 4640

166

COMMERCIAL

&

FINANCIAL

CHRONICLE

•

sonable

excise

of

rates

articles of

wide

taxes

on

but not first

use

necessity are essential to supple¬
ment taxes upon income.
Howaver, excises so extravagant or so
inequitably applied as unduly to
iriipede production or consump¬
be avoided.

tion should
Wartime

increases

in

excises

should be repealed, together with
the taxes on transportation and
levies of a nuisance type which
produce relatively little revenue.
The

of

extent

Siinges, of

tax

course,

reduction

the amount

on

of curtailment of government ex¬

penditures.

The

latest

estimate of substantial
the

current

ample

fiscal

proof

official

provides
reduction in

taxes proposed in the last session
could have

been effected

without

incurring an immediate deficit.
The surplus would have been suf¬
ficient

also

for

reduction

the

the

of

public debt in the current
In

year.

to

business from

tions in taxes

proves true
again, full weight
should be given to the extent to
which
rent

existent taxes

to

are

deter¬

a

business.

Only

if

the private enterprise
functions without undue

system

Interference will it be possible to
sustain

high level of expendi¬

a

tures and retire debt.

public

need

debt,

is for

a

the immediate
Congressional man¬

date for its reduction in

ly

order¬

an

Reduction of the debt

manner.

is important, just as reduction in
taxation is
important.
The two

should go

hand in hand.

Reduc¬

tion

in expenditures is
prerequi¬
site to their accomplishment.
The debt—close to $260 billion

—hangs

grim shadow over
economy. Trends in prosperity
depression will be influenced
by the abnormal monetary supply
a

as

will

that

find

stripped

they have out¬
price structure.

the

I

don't

know

this

what

price

situation is going to develop into.
Mr.
Wilson of
General Electric
made

a

sensible statement to

very

effect

the

perity

that

time

be

a

he

thought pros¬
here for some length
yet, that there might

was

of

as

slight recession, but that we
reached

generally higher
price level, which will be main¬
tained

for

a

many

Business

I

want

to

by

of

the

you

to

seems

element

every

Good

with

leave

that

me

reasoning,

these facts that I have
to

brought out
tremendous demand

you—the

that the American people

goods

the

and

chasing

America

are

con¬

tinuance of

high velocity of busi¬
am
not
saying whether
highly desirable or not.

I

is

It is the Immortal Bard who

"Sweet

the

are

adversity",
the only way that
great reduction in

and, of course,

will have

you

a

the price structure is
but

that

would

collapse.

Do

want

we

ent

to

said,

of

uses

be

by adversity,
that

want

we

economic

our

continue

do

or

in the pres¬

high rate of business, high
of food, high wages, and so

cost
on?

our

I

brought. They
will be influenced also
by taxes
collected to pay interest
charges
and retirement of the

■There
vices

is

by

no

which interest

government
to

principal.
question that de¬

securities

rates

on

held

were

exceedingly low levels contrib¬

uted

to

wartime

inflation.

The

low level of interest rates has dis¬

couraged

capital

enterprises

investment

involving risk.

in

Con¬

sequently, the effect upon persons
and institutions
dependent upon
a

•

return

from

savings

has

been

adverse.
is

Management of the public debt
largely within the discretion

of the Treasury. But
prescribing
general policies is up to Congress.
The program for debt reduction
becomes part of the larger
plan
for dealing with all branches of
fiscal

-The
is

no

confronting Congress

for

complicate

The

assistance

relief

pean

simple.

means

demands

and

the

in

new

Euro¬

reconstruction

situation

tremen-(

dously. And continued uncertainty
to the peace contributes

to the

general fiscal difficulty.

Nevertheless,
ward

we

lessen

the

tax

burden

and

gradually lower the debt.
"Let

our

to

cue

help

work

with

a

and

slogan—

a

Let

save.

sensible

to

it

adjustment

of the Federal tax system.
The
more

than
are

American

ever

not

eager to
are

before

only

eager

a

strength

in

ready

to

our

—

respond

into

today

history,

they

sure.

are

They

with

the

saving that will in¬

new

and

the

for

irresistible

national

omy.




econ¬

I

the

immediate

velocity

discus¬

a

leave

it

which

is

will
to

as

the

the

United

of

States;

business,

and

rather

picture, it seems to
promising,
and
I
surely
range

with

what

Motors

Mr.

and

Sloan

what

General Electric
of

"Time

look

and

apartments, that

fore

the

of

rate

for

Whether

that

Wilson

is

generally

the
to

good

of

probably

price
come.

or

and

basis,

go

on

and

a

stop

upping of wages and

another

question; but I

feel satisfied that the present rate

is going to continue for some time
to

come.

I

believe

that

there

where

are

many

prices could be

greatly decreased, but

of the

one

things that greatly encourages me
the

is

could
have

fact

that

businesses

which

greatly increase their prices
not

done

business

Take

so.

that

centers

the great

here

Detroit, and which is policed,
might

Mr.

by

say,

your

in

no

ing the past eight
natural

is

car

tends

to

come

down.

omists

of

Board
ary

litical)

trebled

that

there

our

has

money

been

an

uprush in prices? The price, i. e.,
purchasing power of money, has
declined

in

which it

can

terms

of things
exchanged.

be

Now,

common

shares in

stocks

are

means

equity in natural resources,
plant, equipment, processes, re¬
search and development activities,
an

The

etc.

all

cost

of these

at least 50%

shouldn't

of

reproduction

assets

has

gone

the

acute

Motors,

their

and

of

great many

a

I

credit
a

other

American

great

service

prices

at

a

fair,

to

lower level

than that good old Law of

Demand

would

Supply

permit them

charge if they followed it. They
not.

They

are

selling

products far below what the
ket governed

ply
them

and
to

do.

their
mar¬

by the Law of Sup¬

Demand

would

is
point

economy

danger
must

get

can

be

permit

a

(po¬

generated

to cope with them. It is not
likely
that the political courage neces¬

will be shown in an election
One method of lessening in¬

sary

flationary
cluded

as

instrument of

an

policy

because of the necessity for keep¬

ing the huge amounts of Govern¬
ment

bonds

held

by banks

from

of

Current

developments are al¬
wholly of an inflationary
nature. The redemption of Veter¬
most

ans

Terminal

will add

Leave

over

the money

Certificates

billion

a

dollars to

supply and elimination

of restrictions

up-

on

instalment buy¬

ing will expand small loans fur¬

which

ther.
Although the latter were
outstanding in July at over $11
billion, a normal ratio between
consumer
credit
and
disposable
income would bring about an in¬
crease
of $4 or $5 billions more.
Commercial loans recently have
shown weekly increases of over
$100 million, indicating a further

common

stocks,

of property,

this

type

be worth more? The

clearly is that they should.
Businesses are operated to make
answer

given profit margin
working on higher dollar sales
should produce more
dollars of
profit. In the long run, profits
should
increase
proportionately credit expansion at the annual
with costs and prices. The table rate of over
$5 billion. At high
shows th&t thus far this has been
prices, the needs of business for
truq. It should hold true in the dairying inventory and working
future, so long as the demand capital increased, thus raising the
holds up. Many businesses—auto¬ volume
of
business
loans
and
mobiles and
agricultural imple¬ new capital flotations. Increasing
ment manufacturers—are actually loans
automatically increases the
curtailing
their
profit
margin, volume of money, thus feeding
selling their product below what further the inflationary mechan¬
consumers are willing
to pay.
ism now in effect.
and

money

a

The odds do,

Ill

therefore, strongly

favor continuation of the inflation
In the

light of the foregoing, it

quite plain that in relation
prices of other types of prop¬

of rising
rates.

spiral

seems

to

wage

Many
cerns

down

the

price of stocks to go up.
probabilities of occur¬
rence of the former?
Considering
solely our domestic demand, there
is
some
$100 billion of excess
money pressing
on
a
supply of
goods which is limited by our
present productive capacity and
labor
supply.
An
output
75%
or

What

are

higher than pre-war is sufficient
take

to

When

of

care

even

a

present

not

that

course,
not
all
common
stocks will do well in an inflation.

indus¬

companies
inflation de¬

change as the
are risks involved.
however, is there a risk in
carrying money and fixed income

velops. There
So,

investments in
It

funds

a

safe

seems

conclude

in

selected

invested

stocks

inflation.

severe

to

that
com¬

today's prices will
providing real pur¬
chasing power in the years to
come
than will
cash and high-

mon

do

at

in

better

grade bonds.

Hafsey, Stuart Offers
South

Jersey Gas Bonds

Halsey,

Stuart

industries
will

ficulties.

and

encounter

Care

must

many

con¬

serious

dif¬

taken

be

& Co.

Inc. and

associates offered

publicly Oct. 17

$4,000,000

Jersey

South

Gas

Co.

first mortgage bonds, 4Vs% series
due Oct. 1, 1977, at 102.17% and

The

interest.

accrued

the

awarded

bonds

group was

Oct.

15

on

a

bid of 100.1799.
Net

the

proceeds

bonds will

toward

company

the

from
be

accrued

Peoples

City
now

interest,

Gas

Gas

Co.

bonds

of

and

of

which

Co.,

constitute

sale

of

the payment of
price, exclusive

redemption

of

the

applied by the

of

Atlantic

companies

South

Jersey Gas

Co.
The new bonds have redemption

prices

ranging

from 105.17% to
special redemption prices

par and

scaled from 102.17% to par.
The company's outstanding cap¬
italization following the sale will
consist

the

of

$4,000,000

in

bonds and 550,319 shares of
stock

mon

($5

new
com¬

value

par

per

share).
The

is

company

public

utility

principally

in

distribution

operating
engaged
manufacture,

an

company

the

sale

and

all

of

gas

in

Atlantic

of

County, including Atlantic City;
major portions of Gloucester and
Salem

Counties;

tions of

and

small

por¬

Cumberland and Camden

Counties; all in New Jersey.

in

selection of securities for retention

and/or

purchase that the subject
company
has
control
over
its
price. Where action of public reg¬
ulatory body is necessary, as in
the case of railroads and utilities,
inflationary protection is not good.

Although inflation drastically cur¬
tails

there

small portion of the

public recognizes

and

Of

larger

demand.

various

individual

substantially

modities and labor to

come

commodity

V

erty and services, common stocks
appear to
be cheap. If this be
true, then in the long run we
would expect the price of com¬

of

fortunes
and

will

forces, i. e., a higher
rate, is practically ex¬

above pre-war. Why

represent ownership of

purchasing
sector of

are areas

of the
population,

power

the

of business involv¬

ing necessities for the accustomed

goods are

going to get much cheaper and

living standard of the American
people
and these services will

Divided

Korea

—

Its

Economic

Resources, Potentials and Needs—•
Selected Economic Statistics 1939—1947

Robert

1947

1939

(Latest

Available)

$64.1 billion

$165.1 billion

$ 9.8 billion

Increase

$ 65.6 billion

1947

T.

Oliver

ference

Per Cent

on

International Economic

Union,

Deposits and
Currency
Government Obligations
(Held by Individual
Investors)
of

Citizens Con¬

Lexington
Avenue,
17, N. Y.—Paper.

370

New York

1939

Banking

Export-Import
Instruments

+157

—

The

and

Operations Util¬
ized by American Exporters and
Importers and Their Banks in Fi¬
nancing Foreign Trade—WilFarn
S.

Commodities

(Index No. U. S. Dept.
of Labor)

—

over

Total

Prices

with

Reserve

inflation¬

before the

worse

courage

econ¬

tries

depreciating.

simply

business, which

a

for

the

conditions

great deal

interest

and

the

that

year.

same

Federal
that

condition of

reaching
and

Therefore, should it be sur¬
prising that with our aggregate
real
wealth
in
physical
terms
the

the

believe

re¬

a

prospects of the ag¬
implement
manufac¬
exceptionally good.

us,

are

The

been

you can

the American people in maintain¬

do

market

market—but

prices for their products.

true

businesses.

to

ore,

duced capacity to produce dras¬
tically, thus aggravating the short¬
age.) When the supply of a com¬
modity is increased sharply with
no
change in demand, its price

free

ahead of
ricultural

come.

reported in
liable financial journal that

etc—have been
seriously depleted. (In most for¬
eign countries war destruction re¬

a

has

should do well. Selected

chemicals, because of the growth
factor, are in a favorable position.
With
world
shortages of food

IV

It

coal, oil, forests,

in

exceedingly

time to

Year Ended

General

creased

and

iron

some

the
last
to
be
given
up.
Automobiles, soft drinks, oil and
gasoline, building materials, all
belong in this
list.
Companies
controlling and producing natural

turers

Of course,

years.

resources—

is

wages

unlikely for

depreciation and obso¬
lescence which has occurred dur¬

President,

question—and

it in the used

ing

greater

any

for
goods of all
considerable decline in

and

as

competitors, could get greatly in¬

It

been

any

Cunningham, General Motors.

There is
see

not

demand

kinds,
prices

have

the

than

the

bad, or
it might be well

lower

is

in

in

recession

a

this constant

prices

is

agree

time

or

some

not

or

have

me,

decline

business

structure

to

long

said in the issue

real

no

whether

in

General

of

Mr.

resources

wide

had be¬

we

Additions

war.

Magazine", in that they

for

business

perhaps

minded

respond, I feel

work and the
fuse

people,

realistically

into

economists

better

that

Congress then give

the nation its cue—not
its

but

but

I

must drive to¬

level of expenditures that

a

will

the

enter

that,

on

the

to

not

businesses

taxation.

task

by

as

sion

policy—including expendi¬

tures and

will

Thus, in the face of an actual
shortage of man-power and world

same
amount of transporta¬
tion, industrial plant, utility ca¬
pacity, agricultural lands, houses

pur¬

—

the Number One factor in the

that

be

the

have for

tremendous
of

power

utilize savings and credit to aug¬
purchasing power to
buy the things" they need or desire,
an even greater
upward pressure
on prices
may be exerted.
ment current

about

to come.

years

Outlook

thought that it

or

which the debt has

(Continued from page 2)
During the war and post-war
years to date we have added rela¬
tively little to our real physical
capital. That is, we have about

our

ness.

With respect to management of

the

1933,

savings of the public, and the
bank deposits of the public, you

reduc¬

ficient to offset expected revenue
losses.
But whether or not this

in

was

the

invariably suf¬

was

what it

times

had

following World
War b experience showed that the
years

stimulus

(Continued from page 9)
only took nine months to spend
those
10
years of
effort. I am
still tired. So when I say that I
do know the price conditions, and
that I think prices are altogether
too high; yet, when you take the
national income, which is almost
three

27

...........

Inflation and Common Stocks

For Business?

surplus in

year

that

What Is the Outlook

(1655)

V

v

Shaterian—The

Ronald

P^ess

15 East 26th Street,
New York 10, N. Y.—Cloth—$5.
Company,

154

75

+105

Non

Agricultural Male
Employment
Aver. Weekly Earn. Mfg.
Production (F.R.B. Index)
National Income

Corporate Profits
Taxes)
Dow-Jones

Indus.

30.7 million

$23.86

Aver.

million

$ 48.46

39

How to Be Taxwise in Your Se¬

+104

curity Dealings—Income tax guide

+172
+300

Copies of the
sold, but are
available upon application to Dis¬
tributors Group, Incorporated, 63

+

designed for investors exclusively

120

$72.5 billion

(Alter

42.8

$ 4.4 billion
148

*$197 billion
$ 17.4 billion
175

+

J.

which

official Government sources.

tion.

Lasser

K.

booklet

Wall

(*) Estimated
The above figures are from

18

—

will

not

—

be

Street, New York
is

5, N. Y.,
sponsoring the publica¬

28

THE

a656)

COMMERCIAL

&

FINANCIAL

CHRONICLE

which

International Monetary Fund Should Aid in
(Continued from page 7)
(25% of the quota annually) and
However, some ray of
hope is given for the future when
the
Fund
may
"gradually" in¬
purposes.

crease

"special

resources

to meet

temporary

situa¬

"of its

use

and

There

will

little

be

that

doubt

"special situation" is on
right now when the world
how
to
bridge the period until the
Marshall Plan can become opera¬
a

be

postponed

avoided

or

fully protected from all possible
dangers and put into wraps until
"favorable"

more

a

has
be

tions."2
such

hardly

whether it is to be merely a fairweather institution (to be care¬

been

created,

in the foreseeable

created

ture)

atmosphere
if it can ever

or

vital

a

evening out the

hand

international

is faced with the problem of

fu¬

instrument

in

and downs of

ups

ments.

tive

next

question is
job
assigned to it to cooperate in
solving that momentous problem.
A great many proposals have
The

year.

whether the Fund may have a

advanced

been

close

to

the

gap

writer

financial

has

move¬

Whatever

the outcome, it will
precedent for future policies
and thus greatly influence future
set

a

economic

and

monetary develop¬
Evidently, the problem is

ments.

much broader than

decision

a

in

the

immediate

An

sug¬

Important
Fund

future.

Precedent
Policies

ly

holders of dollar bills to sell them

tries.

to

with manufactures but these

their

domestic

governments

which, in this fashion, would

come

into possession of dollar balances
estimated at 2 to 3 billion dollars.

material importing coun¬
They used to pay for them

be produced in the required
quantities as a result of war de¬

course,

they

to

the gap.

and

make up

would be enough
The only hitch
in the proposal is that the foreign

owners

of dollar notes have

tention
for

to

their

would

sell

domestic

make

bills

new

this

in¬

exchange

currency

effort

every

in

in

them

no

to

country

but
get

sooner

later.

or

Another plan would use part of
the
frozen
balance
remaining

from

the

British

loan

for

emer¬

Thus

In

few

a

shoe

foreign exchange
for the difference.

will

There will

the

on

be

again

foodstuffs and

to

the

other

an

foot.

of

excess

materials and

raw

danger that their prices may drop
as
they did during the thirties.

disputed away that the Fund has
in its possession more than three
billion dollars at this time, which,

perhaps, might be made available
in part to relieve the difficulties
of
Europe
during
the
interim
period. This question, undoubted¬
ly, should be worth investigating.
It

be

may

divided

into

two

principal parts. fFirst, should the
Fund make

contribution from

a

a

viewpoint of policy and, second,
could ii make such contributions
under the
The

Articles

original

of

idea

moters of the Fund
an

instrument

in

cases

of

to

Agreement.
of

the

to create

was

lend

pro¬

assistance

temporary

interna¬

tional monetary disequilibrium in
to avoid those troubles and

■order

emergencies

which

characterized

monetary
developments
the inter-war period.
The Fund
as

during

expected to

was

forum for sober and

a

serve

unemo¬

tional discussions that would result
in such

time.

the

decides

that

now

responsibility in assisting

a

reestablishment
in

of

orderly

international

mon¬

etary affairs and is not restricted
to the role of observer, if it adopts
flexible policy designed to ad¬

just the Charter to the continu¬
ously changing requirements bf
actual

ing

purely legalistic view, then
will be set for its
policies in case of future emer¬
a

the

precedent

gencies
world
In

in

certain

be
to

preventive
restrict

before
open

in

and

it

the

expected to
first

extinguish

would

break

place,
a

into

fire
the

order

to

the

Fund

has

have

look

to

tries

with

frained from offering any kind of
advice or guidance in connection
with

the

present monetary crisis.
If it ever did in camera nothing
has

transpired; this would be
surprising in the atmosphere
of Washington in view of the pe¬
culiar significance of such a move.
Therefore, there is a sound pre¬
sumption that the Fund has failed
ever

most

to

make

important recom¬
collecting statis¬
tics and watching developments.
No doubt, the Fund stands at
any

mendation.

the

It is

crossroads.

2 ''Fund

Year,"
Banker"

and

A

Bank:

decision
The

First

can

Full

by
Herbert
M.
Bratter,
"The
(London), September 1947.




its

the

policies

Fund

may

to

groups of coun¬
similar
conditions

rather

than to individual nations.
The various economic systems are
too much interrelated to permit

separate consideration of individ¬
ual

needs

only; but this has been
policy of the Fund up to
now. Dealings on a multinational
basis (such as now contemplated
by the Marshall Plan) may have a

the very

cumulative effect and thus achieve

better

results

than

contribution

suitable

connection

in

period preced¬

answers

and solutions.

It

an

unfortu¬

First, a number of
probably will not need
dation from
be

of its

resources.

fact

up

should

that

able

How¬
be

not

there has been

a

to

the

countries
accommo¬

Fund but should

provide

the

required
dollars from other sources, such as
the

Scandinavian
the

gium,

Benelux

ceived

loans

tional

from

Bank.

tries have

proposal keeps fully within
takes

of

the

Charter.

advantage of provi¬

which

the

enable

Fund

to

case

number of general rules
of special need.
For this

reason,

the

Second,

Austria, which is not yet
There

a

under these amended rules should

of

course as

extending

years

long

as

as

grant
over

a

matter

a

there is

and

the

Netherlands

Great Britain should be able to

pull

sales.

There is

why

the

other and

Fund
more

second

no

good reason
should use any

rigid yardstick.

question

as

the

to

legal possibilities for a more
tive policy of the Fund can
answered

These

in

the

*

ac¬

be

affirmative.

transactions

can

be

kept

fully within the provisions of the
present
Articles
of
Agreement.
There is no justification for at¬

tempting

changes

when

Fund

the

ing less than

a

at

this

time

has been operat¬
year

and has

ac¬

for

the

should

same

Netherlands

cently also received
the

International

has

large

loan from

a

Bank

holdings

and

to all of its members

participating
in the Conference for European
Reconstruction dollars up to 50%
of their quota as determined in
the Charter in exchange for their
currencies.

domestic

in

50%

These
to

addition

would

be

sold by

the Fund prior to the date
adoption of the pro¬
This would be permissible

of

posal.

under Art.

5, Sec. 4 of the Charter.

Members

wishing to avail them¬
selves
of
the
special
facility
should so inform the Fund. They
would be entitled to buy the re¬
spective amounts of dollars in six
equal instalments beginning Jan.
1, 1948.
Repayment

have

would

to

be

monthly instalments over
period of two or three years
beginning one month after dis¬

the

have

Marshall

faulting
would

started

Plan.

if

the

Fund

will

its

Italy,

excluded

be

dollars for France

and

to

winter

required to carry
countries
through the

was

recently

reported

at

about 700 million dollars. On that
basis the additional amount to be

raised would be about 350 million
dollars.

This

would be on top of
already provided for

the amounts

in recent weeks.
In

addition,

fortunate

future

the "regular" interest

of

particularly
last

the

the

such

war

Switzerland

of

Millions

As of

6-30-47

U.

the

Austria

50% Avail.
Under

Proposal
_

225

__

Denmark

68

~

112.5
34

Eire

—

France

_

—

—

—

525
40

Greece

..

20.0
.5

180

_

262.5

1

_

90.0

Iceland

Italy
Luxembourg
Netherlands

10

16

would

amount

the

Sweden

as

and

Articles

the

der

25.0

_

contributions

some

own

either in kind

reasonable.
All

to

service

Not

a

In

order

for

actually
should

the

The

latter

true

for

of

of

or

International

would

be

it

Bank.

especially

Switzerland

dollars than

which
can

has

the adminis¬

dollar

represent
entrusted

be

loans)

the

to

Bank

Settlements

with

tact

land, Yugoslavia) did not partici¬
pate in the Paris Conference and

upon

is

might be
their 50%

the

than

The

Articles

and

15 years,

with

centrally located
Europe and easily

are

accessible from all capitals of the
Continent.
Cooperation with the
United

Nations

nomic

European

Commsision

in

Agreement set
forth a very ingenious and com¬
plex system of service charges. Its
purpose
was
to keep the Fund
liquid by inducing members to
speed up repayments under the
pressure of increasingly high in¬
terest
rates.
However,
these
would

not

be

prescribes

There will be many

objections,

legal, material and others. Indeed,
there will always be

objections to

active policies by the advo¬

more

it

cautious procedures,

more

be hard

would

First, there is

a

that

in

there

an

to

should

able but

explain

be

organization

an

Therefore,

review

a

of

situation

unwilling to lend its

sistance.
for

emergency

of the

cies should be

sideration

as¬

suggestions
Fund's poli¬

given careful

whatever

may

ap¬

kinds

two

Eco¬

Geneva

could be easily maintained.

But

of

con¬

central

its
European
problems and its

more

headquarters

at

Fund.3

the

European

familiar

conditions

totaling 155 million dollars.

Special Low Interest Rates

for

agent

as

in the heart of

use.

Three other European members
the Fund (Czechoslovakia, Po¬

service charge of
amounts

1,358.5
of

the

cooperation.

Tdx>'

among

Second,

Fund.

participating

European

keep

International

for

staff

of

charges.

Member

Eleven

to

con¬

be

the

final decision.

3 For

the

a

detailed

more

discussion

problems of cooperation

Fund
Bank

and

for

the

B. I. S.

International

Marshall

the

Financial

see

Plan,"

between

"Future

of

Settlements

Commercial

Chronicle Sept.

4,

of

the
the

and

and

1947.

uniform

_

__

tCountries

according

is not sub¬

ject to modification (Art. 5, Sec.
8(f)) have to be paid in gold.
Since the whole charge would be
small, this provision would not
have any major significance.

banks for

It

Total
*

charges

provision which

a

issues

more

un¬

Agreement,

However, this charge would be
spread over the whole period of
or three years
and the total
charges would probably not ex¬
ceed 1 % p. a. on the outstanding
amount.
Such a charge can cer¬
tainly not he called prohibitive
but should be considered quite

possi¬
bly by subscribing to future bond

inn conference
^

■,

I

vjartvi.i i

the 16 .countries

the

%%

a

of the
on

(Art. 5, Sec. 8

all

(a)).

service charge is due

average

daily

country's domestic
by the Fund in
,

p. a.

purchased levied

transactions

of

of

The Bank has been in closest

make

*

Switzerland

which

reduced

or

to

their

be modified within the limits per¬
mitted by the Charter.

_

Sweden

purchased

cannot be waived

agement of the dollar sales (which

in

neutrals

plicable under the special repay¬
ment schedules provided for by
the proposal and, therefore, should

137.5

50

Norway
Portugal

Director

certainly be decisive.

more

and

considerations

5.0

275

_

_

A favorable vote of
Executive

S.

Basle

Proposal

*

Belgium

three-fourths

a

majority of the total voting power

Dollars)

Fund Quota

tCountry—

domestic

perhaps
even
Portugal and Erie, should be able

share

Available Under the 50%

(In

member's

a

currency

cates of
Amounts

it

charges

is, therefore, suggested to fix a
special uniform service charge of
fa % p. a. on the average monthly

nations,

the

of

some

among

the proposal. The Fund could de¬
termine the special conditions un¬

from

excessive

avoid

To

lengthening of

period.

trative expense of the proposal as
low as possible, the actual man¬

thus would not be eligible under

fact, the Articles

no

do

it

as

de¬

21.5

There is

se¬

instalments

Members

their

on

under

650.0

appropriate policies.

the holding

two

Thus

duty,

amounts

official

43

Agreement are flexible enough
the management all the
neoessarv leeway.
All that is re¬
quired is courage to pursue the

still

dollar

of

curities.

two

United Kingdom -_1300

to permit

re¬

the

Turkey

matter of

siderable with the

minimum

proposal provides that the
should stand ready to sell

The resulting regular
charges would be con¬

quota.

interest

dollar

which

The

quired little experience in apply¬
ing the
Charter
provisions
to
a

the

true

be

ment.

actual conditions.
As

holdings). Thus an increase by
50%, as suggested in the proposal
would bring the holdings to some¬
where between 125% and 150% of

gold

additional

some

The

implement the amounts
they would receive from the Fund.

x

reduced

be

member's gold

a

This charge of V2 % p. a. on the
unpaid balances would be in ad¬
dition to that of %% on the total

additional

<

be paid in gold

could

but

basis of

of the Fund.

than 10%.

more

from regular activi¬
they will be
subject to special terms as to serv¬
ice charges and terms of repay¬

terms of repayment will

be met.

the

with the consent of

30%

be separated

of

that the

dollars

60%, France and Italy would get

ties of the Fund, for

doubt

no

or

Fund's present dollar resources.
Britain's share would be almost

These
countries
(Great Britain,
France, Italy, Netherlands) could
draw a total of 1,140 million dol¬
lars, or about one-third of the

permitted to draw

loans"

the quota had to
on

held by the Fund under
the 50% proposal, regardless of
the member's quota
position or
the
the
length of
the holding
period as long as the instalments
are
paid in accordance with the
proposal. This adjustment of serv¬
ice charges is permissible under
Art. 5, Sec. 8(e) of the Charter

only four major
nations that would depend on dol¬
lars
provided
from
the
Fund.

certainly should, the
problem boils down to providing

Fund

rate of

a

When the Fund started operat¬

balance

remain

der which those nations

number

a mem¬

ber of the Fund.

have to pay
rates.

"term

Interna¬

some coun¬

special arrange¬
ments with the United States, such
as Greece and
Turkey as well as

transactions entered into

amend

The

starts with

It

ing, it held between 75% and near
100% of the quota in each mem¬
ber's domestic currency (25% of

made

dealings with the Fund and would

now

(Bel¬

Luxembourg).
Denmark
Luxembourg
recently
re¬

and

notable

banks

some

countries

term

shift in interpreting the
"liquidity" in recent years.

(Den¬

group

mark, Iceland, Norway) and
of

perhaps

policy decision.

The

bursements

the

of

million dollars from the loan and

the result of

as

ments that may result in

tying

40%

some

silent

a

or

or

held

through with her share to¬
gether with the remaining 400

Fund, as provided for in
the Charter, should avoid commit¬

freezing

dollars,

dollars

50%,
1,358

to

amount

by the Fund.
However, this is not to be ex¬
pected for several reasons.

made in

The

ever,

the

would

give the world the benefit of their
combined experience but are kept

in

than three

period of more

a

months.

ing amount and the length of the
holding period (Art. 5, Sec. 8(c)).

total

some

really too bad that the distin¬
guished experts on the staff of the
Fund are not being permitted to

piecemeal

a

procedure.

The
re¬

make

effective,

more

and do any major harm.

However,

the

of

economy.

Commercial

were

sectors

from

ing the Marshall Plan. This is not
intended to be any patent "solu¬
tion.
It is merely one possible
way for dealing with an exceed¬
ingly important situation. More
discussion may bring out more

situations rather than tak¬

complish
these
aims,
it
was
equipped with a large capital to
support its recommendations with

Obviously, the activi¬

discussion

the

with the transition

sions
Fund

overlooked

ties of the Fund

shift

it

in

measures are taken

timely measures as might
prevent difficulties from expand¬
ing into real emergencies. To ac¬

hard cash.

To

But

the

international

Practical Proposal

A

appropriate

a

The fact remains and cannot be

the

framework

conditions

the Gap?

for

the

If

the man who
else laid the

anyone

Economic conditions in producing
countries may deteriorate unless

it has

Can the Fund Help to Bridge

than

monetary organization is not able
any more to interpret its true aims
and
principles. But
almost
40
years
of
public activity
leave
hardly any doubt that John Maynard Keynes would have been a
protagonist of an active policy of
the Fund and would have opposed
any attempts to make it a mere
spectator in an emergency.

nate

for

*fa % p. a. and increases gradually
in accordance with the outstand¬

is

however,

years,

be

would

nothing to the dollar
pool available to Western Europe
during the forthcoming winter.

dislocation.

need

gency help to France and Italy.
This may well stir up a good deal
of
resentment
in
Britain
but
add

can¬

not

This, of

close

Unfortunately,
more

best

raw

struction

refuge behind the
imaginary obstacle

an

active policy.

ted how the Fund could make its

The present crisis affects main¬

currency

paper

as

more

generalities
to
actual
facts,
a
practical proposal will be submit¬

for

exchange
American
during the next
few months and to force foreign
to

gested

take

to

re¬

Paris

members of the Fund. If all of
them should draw the full
million

foundations

garding the policies of the Fund

during the interim period. A wellknown

monetary

a

the

Marshall Plan

the

Charter
to

in

the

on

are

European Rehabilitation
need

participated

Conference

1947

Thursday, October 23,

on

balances

of

currency

held

excess

a

of its quota

Herbert Adair in Phila.
PHILADELPHIA, PA.—Herbert
J. Adair is
ties

engaging

business

from

in

a

securi¬

offices at Al¬

legheny Avenue and Howard, care
of the Artloom

Corporation.

Volume

THE

Number 4640

166

COMMERCIAL

&

FINANCIAL

CHRONICLE

current

Qui Current Inflation and Monetary
(Continued from page 14)
supplies of goods that were avail¬
able or could be quickly made
available. The result, when war¬
time controls were removed, was
a
sharp rise in prices and the
spiral of inflation that is still

going

The

on.

this spiral

sooner

is broken, the better off our peo¬
ple and our economy will be.

held

by Reserve Banks reduced
the volume of both bank deposits

and

bank

funds
cial

shifted from

securities

ernment

Banks

serve

The

difficulty confronting
any
such attack, however, is that the
existing
supply of money and
liquid assets is based on public
debt issued to
We

finance

debt of $260

surplus

government

a

billion, it is clear that

in

will

greatly reduce the total.

not

year

For

any

one

the current fiscal year, the Presi¬

has

dent

recently estimated that
have a budget surplus of

we

may

$5

billion

for

that will

debt

further
that

retirement.

rise

in

have

we

be

available
With

national

been

the

income

experiencing

the available surplus may exceed
the President's estimate. But the
new

in

budget assumed

taxes.

reduction
in¬

no

still free

were

positions by
government securi¬

reserve

selling other
ties in the open market at rates
kept stable by Federal Reserve
System policy, and this the banks

securities.

ment

Association

of
Supervisors
of
Banks, has underscored the
importance of our changed bank¬
ing problem and the urgency of
finding an effective way of meet¬
ing it.
State

In the absence of

credit

and

monetary

expansion

under restraint.

lion

a

This increase in the

year.

supply

is

directly infla¬
tionary and is seriously accelerat¬
ing the upward spiral in prices.
money-

The

renewed

expansion

in

the

supply is based in part on
increased holdings of gold, large¬
ly received by this country in
payment for exports needed by
other

nations.

So

far

this

country's gold stock has in¬
creased by $1.8 billion and im¬
of

gold are
stock.
This

this

provided

the

still

adding to
gold has

new

with

banks

the

re¬

not as yet exerted an
retarding influence on
expansion.
As
you
are
aware, the sheer size of the $260
billion public debt, the problems
of refinancing large monthly ma¬

turities, and the role of interest

under the
proposed
for European relief and

Reduction

through

be

slow process

a

Not every year will

conditions

et

public debt
from budget

retirement

surpluses will
at best.

in

be

been allowed to rise more

of

some

pres

by selling some

its holdings of government

curities.
gone

The

as

this year. But it is urgent that we

debt

use

retirement

possible and that

whenever

continue to
do so while we are confronted by
acute inflationary dangers. In the
present situation, this means, of
we

that moderation should be

course,

going

momentum being

expansion

can

check for

some

Therefore,
ral

ther Bank Credit Expansion

our

answer

was

a

to

the inflation prob¬

to increase

production to

level consistent with

the exist¬

ing volume of money. Since busi¬
ness

already operating

was

inflationary spi¬
not only a

now

monetary expansion. Since

also

problem

a

of

re¬

cannot

we

rapidly reduce the
supply that is
largely on public debt,

excessive
based

money

so

we

restrain

can

do is to endeavor

further

based

monetary ex¬
private debt

on

near

full capacity,

however, expansion
output appeared to be a timeconsuming process.
Some price

of

rise,

therefore, was a method of
facilitating and shortening the
adjustment period and could be
viewed without alarm.

We attained this leveling off in

unfortunately a funda¬
change in the financial

mental

situation

which

restraint.

This

handicaps

such

fundamental

change is the ability of the bank¬
ing system to contijryue credit ex¬
pansion that the Federal Reserve

System is not in
set

because

of

^psition to off¬

a

its

responsibility

for

maintaining orderly and stable
prices of government securities.
The

Board

of

Governors

given

considerable

study

to

by

this

the

thought

problem

fundamental

has

and

presented

change

in

surplus from the Federal budget
to

retire

The

government

retirement

know,

was

commercial
Federal
ment of

mercial

directly,

posits

program,

directed

at government

securities.
as

particularly

obligations held by

banks

Reserve

and

Banks.

by

reduced

because

were

the

Retire¬

obligations held by
banks

you

com¬

deposits

Treasury

de¬

exchanged for matur¬

credit

controls

submit

Under

to

present

re¬

indi¬

upon

1946,

are

Congress
to

for

empower

1945

and

the Federal

Reserve to increase member bank
reserve

requirements
exception of raising

self-

quirements
banks
the

in

Board

from

20

central
of

tory

maximum

ments to member

reserve

al¬

require¬

banks), to intro¬

any

Government

increase

the

bonds to

restraining fur¬

sale

of

long-term

investors and to

the

use

proceeds to retire part of the debt
held
by
the banks.
Important

banking
strongly
and

other

and

urged

have

groups

such

a

program

recently the Treasury
an
important step to

has
im¬

taken

plement

the suggested

A

non

policy.

marketable

investment

Further experience along

sales

of

sible will

alertness

high

as

need

to

level

a
as

be

pos¬
es¬

an

designed to help check
the inflationary spiral.
The vast
majority
of
American
families
strongly believe that regular sav¬
ing is important, and more than
program

dividual

credit

advances

much to restrain the rate

bank

rent

credit

expansion.
to

It
the

reduce

can

monetary
also do much

undesirable

and

end

cur¬

and

finances.

consumer

stance

to

than in

the

It lends sub¬

belief

that

a

con¬

comes

is

followed, as it
inevitably will be, by deflation.
To be sure, the business of banks
is

an

to make loans and

which

investments

accommodate

industry,

agriculture, and
they discontinue this ac¬
tivity they cease to be true bank¬
ing institutions. I am not urging
and

commerce,

when

banks

be

large,

transfer

with

desirable

that will be most anti-

It

is

ment

uation

is

rant

much

as

serious

out

lem.
one

to

contribution

tionary

as

This

be

can

accom¬

taxes

up and governmental
penditures down as far as is

sible

under existing

ex¬

pos¬

conditions.

Monetary policies should be di¬
rected to keeping in check fur¬
ther bank credit and deposit ex¬
pansion.

Not much

be

can

done

through Federal Reserve policies,
however, in the existing situation.

Therefore, individual banks have
to

assume

a greater
responsibility
expansion, to recognize
more fully
the composite effects
of their actions, and to take ac¬
count more directly
of the ab¬
normally high risks that are in¬

for credit

volved

in

credit

current

exten¬

sions.

Public debt management policy
be as anti-inflationary as

should

circumstances

Emphasis

permit.

retirement of bank-held

Gov¬

every feasible measure for trans¬
ferring Government securities out

of

the

banks

the

into

hands

of

non-bank investors should be ap¬

plied.
The

ent

and

businesses.

successful,
system

may

if

it is not

private

And

our

banking

once

the

be

more

scapegoat in the eyes of the pub¬
lic.
First, it may be held respon¬
sible for having caused inflation.
And second, it
having caused

be accused of

may

the

deflation

applied

in

all

without

quarters

delay.

Robert F. Master and
Others of Staff Join
F. S.

Moseley & Go.

(Special to The Financial

Chronicle)

CHICAGO, ILL. —
McMaster, James R.

Robert

F.

McMaster,
Laurence B. McFarlane, Edward
J. Billings, Lindsay W. Leach, and

will

receive

or

careful

N. Y. Enst. of Ftase

Domestic Inflation

on

Oorrespofifese® §©irse

And Monetary Policies

Economic stability at high levels
of employment and output is seri¬

threatened

by the current
spiral.
One of the

inflationary

supply

se¬

are

is

of

causes

is

this

the excessive

money

created

by war finance.
the money supply

in

of forces that

pressure

largely domestic, but to some

extent

international,

being resumed.
demand

can

inflationary

goods

in

for available

is

the

supplies of

services

and

origin

Meanwhile,

is

driving

The

New

York

Institute

City, has announced
ence

courses

Stock

the

on

Exchange

Office
ment

of Fi¬

20 Broad Street, New York

nance,

and

Procedure"

and

correspond¬

"Work of the

Brokerage

and

"Invest¬

Security Analysis."

E. S. Dudley Co., Inc., in

Manchester, New Hamp.
MANCHESTER,

H. —E.

N.

S.

Dudley Co., Inc.. has been formed
with
act

offices

at

875

Elm

Street to

Debt retire¬

spiral is

it is im¬

underwriters, distributors
in
railroad, public
utility, municipal and industrial

the

of these avenues.

in

situation should be

suggestion

every

Conclusions

meeting this key prob¬

operations

inflationary sit¬
enough to war¬

study and consideration.

perative that the world supply of

bonds, bank and insurance stocks.

Debt management policy is

ment

1his purpose.

plished, however, only by holding

ment.

that

condition

it

manage¬

The

alternative

Expansion
rising 'under the

whatever

budgetary surplus is essential for

of policy

sures

in

economy

large

a

construc¬

of such

use

feasible.

main

the

of

policy as
actual working
William F. Wilson have become
appropriate to cur¬
associated with F. S. Moseley &
rent conditions,
is, of course, a
Co., 135 South La Salle Street. All
highly technical matter. The sub¬
were
formerly
associated
with
ject is under continuing study by
Robert
F.
McMaster
&
Co., in
the
Board, the System's Open
which the Mess1"5. McMaster were
Market Committee, and the Treas¬
partners; Mr. McFarlane serving
ury, and the effective liaison that
as manager of the trading depart¬
exists between the authorities as¬
is

related to the present in¬

to

debt
serve

can

clear too that the

precautions to make

damage

that

clear

policy

tively to check the present price
spiral by helping to restrict fur¬
ther monetary expansion.
It is

flationary economic picture.

rious

debt

inflationary.

ously

as

Maintenance

less prudent realistic measures are

help to

bank-held obligations in

way

respect
sound—not
only
in
individual
cases,
but

sound

money

supply.

banks to

will

to retire

these and in1 their self-interest to

are

At least, it is urgent to restrain
Jurther expansion in the

in accordance

they

the

deny themselves their
sphere of activity. They
can
reasonably be asked, how¬
ever, to recognize a common re¬
sponsibility
in
times
such
as

loans and investments that

but

securities from

management
policy. Again, consideration must
be given to the use of these funds

to

double

spiral.

ary

collapse and
which, if history is any
guide to future events, will at
some
stage inevitably come un¬

The amounts

years.

non-bank investors

proper

take

war

in any one year will probably not

effects

banks when inflation

upon

do

can

of

without

task of breaking the pres¬
inflationary spiral through
fiscal,
debt
management,
and
half of all families think that sav¬ monetary policies may not prove
insuperable.
If successful, how¬
ing is even more important now
ever, the attack will require the
than it was during the war.
This
full cooperation with Government
is one of the significant
findings
of all banks, financial
of the Board's recent
institutions,
surveys of

the part

on

of bankers regarding the compos¬
ite inflationary effects of their in¬

developed

Fiscal, debt management, and
monetary policies must also be
brought to bear on the inflation¬

on

sential aspect of an effective debt

inflationary tide. This
is particularly true for bapks spe¬
cializing in real estate and con¬
sumer credit,
but it is also true
for banks engaging in extensive
business and agricultural lending.
A greater

be

ernment securities is essential and

savings bonds
also

should

delay.

I

course, to the new Series
-

it

29

re¬

securi¬

important phase of debt
management policy would be to

crest of the

make

statu¬

However,

of

Another

and fewer losses to write
off than institutions that ride the

for

cities,

positions by

reserve

ther credit expansion.

to regret

to

has

now

ties held by banks is helpful and

stubbornly maintain a high
degree of liquidity will have less

for

present

of

tirement

and

re¬

Governors

ready applied the

Reserve

(The
holds $22

are

reserve

26%

anti-inflaof issues

commercial banks.

banks.

many

done, every avenue of public fi¬
nancial policy must be examined

reserve

more

retirement

tinuing flow of funds will be
incurring large
available to the Treasury
from
risks irt private credit expansion
.sales of savings bonds in excess
and
they should be constantly
of redemptions, even
though per¬
aware of these risks.
Banks that
sonal savings are lower in volume
conserve
their
credit
resources
banks

the

(with

restrictive

billion of Government
securities.)
This process necessitates the ad¬

condi¬

If the present spiral of
prices is to be broken before

to

requirement against demand de-!




to

expan¬

heavy

cussed in the Board's Annual Re¬

ports

are

ties.

obligations

held by
Federal

Debt Management Policy

which

duce by statute a
secondary reserve

of

credit

dis¬

methods,

than

retire¬
the Re¬

by

more

therefore,

tinary

reestablished.

ing bank-held government securi¬
Retirement

further

banks

tions,

sound

These

some

the
limited

in dealing
type of infla¬

present

restraint.

the government securities market

Treasury

with

vidual

every

might be protected and traditional

combined

its

on

the

Nevertheless,
sponsibility devolves

the banking picture and has sug¬
gested several methods by which

expansion
by
using
large accumulated balances of the

monetary

by

its authority

the

restrain

to

creation.

There is

post-war expansion in the money
supplv had been effectively
brought under control and that
lem

is

withou';

time.

newed

pansion

Six months ago it appeared that

by

sion.

the

but

adjustments in

structure.

and

Fed¬

before,

held

is

Maintenance of

Reserve

responsibilities,

of

with

gathered, credit

little

and,

of

Federal

handicapped

hand,

scope

se¬

assets

to

tax

is

present

matter of the wartime accumula¬
tion of money and other liquid

the least

our

with

continue

our

problem

the rule to govern any immediate

The Problem of Restraining Fur¬

and,

on

Banks

serve

on

Banks

the

the

these lines is desirable.

Responsibility Falling

System

the

on

refunding.

The

one

action

soon

1st

Although

they increased during the
The increase

still

said

issues

bonds.

announce

November

During the first nine months of
the year, bank loans increased by
almost $5 billion, or by almost as

is

have

of

will

Deposit expansion has
because of heavy private

on

I

refer, of

to

brought

As

sharply.
Secretary of the Treasury Snyder

has

budg¬

favorable

so

why

reasons

short- term interest rates have not

whole of last year.

actually be less than
possible.

main

are

reserves

on

cal year may

seems

the

budget

sure

much as

currently

Federal

Reserve

Thus, the amount avail¬
able lor debt retirement this fis¬
recovery.

the

among

property owners, consumers, and
State
and
local
governments

obligations

in

cost

tional deposit expansion notwith¬
standing the fact that the Federal

to support addi

necessary

necessary

may

has

effective

tionary banking situation, on the
other hand, the System will do
all it can, directly and indirectly,

serves

be

as

securities.

government

But the rise in bill and certificate

year,

the

ports

of

gov¬

by

the

and

in the direction of

credit

Unfortunately, the control of
post-war monetary expansion can
no longer
be affirmed. The total
money
supply is currently in¬
creasing at approximately $9 bil¬

banks

been some increase

in short-term

should
of

held

Reserve Banks.

justment

rates

bank

surplus

retirement

authority to
deal with the changed banking
situation through one or more of
these methods, there has recently

enough

further

Chairman Eccles, in a
before the National

recent speech

rates

keep

the

securities

commercial
eral

did in limited degree. But in gen¬
eral
the
pressure
exerted
was

to

budget

on

ernment

posits, or, lastly, to authorize the
System to limit commercial bank
holdings of long-term government

demands for credit from business,

to fulfill the nation's international

program

that

true

expendi¬

such

tures,

banks

restore

is

It

government

in

crease

no

It also assumed

corre¬

a

money

only reduce the volume
having a budg¬

can

of Federal debt by
et
surplus.
With

a

war.

Re¬

by

cancelled

balances.

reserve

to

and employment.

held

sponding volume of member bank
commercial

Today, the country's aggregate
stock of money and other liquid
assets
exceed
$225
billion, an
amount about equal to the total
national product. Prior to the war,
aggregate liquid assets approxi¬
mated only $65 billion, or nearly
one-third less than total product.
Since redundancy of money and
liquid assets is a primary factor
in the present inflationary spiral,
attack on this strategic factor is
an
essential
requirement
for
breaking the circle of rising prices.

Reserve

Banks and the retirement of gov¬

the

of production

case,

commer¬

Federal

to

Also, the

nearer at hand will be
goal of sustained high levels

this

In

reserves.

were

banks

focus

(1657)

as

possible.

prices higher.

present

anti-infla¬

This

goods
as

means,

If the inflationary

to be broken,

and

rapidly

services
as

expanded

Earl

Today the

be

possible.

and

and

as

dealers

S.

Dudley,

Treasurer

Jr.

of

is President

the

new

firm.

!

^b^rse,
program

thatany

made

retirement

possible

by

the

greatest

1

used

available

resources

is

supply
in

of

un-

Europe and

He

was

previously

with

Merrill

Lynch, Pierce, Fenner & Beane.

30

(1658)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, October 23, 1947

mand had been whittled down by

Inflationary Spirals and the
(Continued from first page)

with

the

demand, without
any expansion.
Inflation means rising wages, in
turn stimulating the use of laborsaving devices. Strong demand is
developing for cost-saving tools
and
gadgets, for better control
devices, longer lasting and faster
working instruments, and more
economical production processes.
cope

the

need

for

Growing demand for aluminum
replace steel, for mineral oil
and natural gas to substitute for

to

belongs in the same
chapter. The backlog of machine
tool and steel pipe orders, to men¬
coal,

etc.,

tion

lines

two

again after

only, is increasing
four-year slide.

a

This

artificially enhanced rate
technological progress means

of

faster

obsolescence

chinery,

the demand for

tive

result

is

fresh

into

the

vast

a

old

ma¬

increase

of

amount

investment

being
equipment, rais¬

new

demand

for

labor

and

materials—and their prices. (Cap¬
ital outlay in the petroleum in¬

dustry, in the next two
supposed
its

to

equal

years,

one-fourth

is
of

present total investment.)

The

inflationary boom spreads

from

goods

consumer

and

resources

ducers.

The

to

machine

higher'

natural

tool

food

pro¬

prices

the
more
climb,
machinery
is
bought by the farmer, who spent
la^t
year
$800 million on that
score,
an
all-time record. That
means

food

more

"in

the

long
devices, longer lasting and faster
run."

wide

Russia is
virtually the only country which
this
year
reports
much
better
shortages.

crop

harvests than it did last year.
the
notorious
unreliability

But
of
Soviet statistics, especially when
political
issues
are
at
stake,
should be a warning. Besides, last
year's crop failure in Russia was
so
catastrophic that even a sub¬
stantially improved crop in this
season
still may be well below
average.
fact

is

that

without

very

Europe would be in the throes of
unprecedented

an

famine.

(Widespread famine in the Orient,
especially in civil war-torn India,
involving millions of lives, is a
foregone conclusion anyway.) It
should

be

needless

to

point

out

that the food exports of the cur¬
rent crop year tend to raise the

price of the American food basket,
it

were

for

not

the

fact

that

the

Secreary of Commerce, Mr. Harriman, tried to cast doubt on any
causal

connection

Apparently,

his

between

them.

economics

labor and steel and fuel, and more
inflation of wages and prices.

This inflationary

(2)

spiral is
blessing to business.

unmixed

Typical

is

the

recent

experience

of most department stores. Last
spring, under the influence of the

nation-wide

hysteria

al¬

over

about

a

that putting $20

year ago

Of

at

the

home,
ported at
material

tion

to

not

purposes

the

either

the

export,

be

The

their

tory crisis", the stores liquidated

unless

their

worth

dollar's

inventories,

duced

prices.

repurchase

often

at

re¬

Now, they have to

the

at

wares

higher

costs.

Such is the

curse

of inflation: it

produces record operating profits,
but burdens business with the risk

offset

therefore
which

that
we

which go

in urgent

are

every

item

exported,
import of a

by the

to

is

Virtually

of

worth

cost"

no

themselves

creation,

dollar's

for

could

then

"at

resources

domestic demand.

threatening "inven¬

and

produc¬

trouble

things
the

or

trans¬

needed

we

—

ance"

a

of

goods,

the

adds

strain

under

the

body economic labors.
The inflationary fever is the re¬
action
of

of

that

excessive

body to the strain
demand, full em¬

ployment, labor shortage, and

of
inventory losses. As a rule,
selling prices cannot be raised as

fast

tration

ma¬

terial bottlenecks.

costs

as

sult that

go

up,

with

even

with the

an

turnover, stocks have to be
chased

at

prices

above

experience of all

that

at

their end,
finds

working
it

risk

by

To

at

com¬

inflations:

itself

capital.

protect

may

a

before,

or even

business

repur¬

those

which they were sold. It is
mon

re¬

accelerated

without
extent

some

itself against

this

hedging

in commodity
technique is not
applicable beyond a limited num¬

futures.

ber

But this

of

commodities, and only so
it is not becoming a gen¬
erally accepted practice.

long

as

Insufficient
tion

is

sion

accumula¬

reserve

another

danger growing
cost-price spiral. Provi¬

out of the

for

obsolescence

ciation

should

hanced

under

be

and

depre¬
greatly
en¬

conditions

of

full

capacity production, and especially
in view of rising prices. But it is
a
common
experience of infla¬
tions

that

expect
ess,

or

a

enterprise

selling prices
go

up.

against

will

as

fast

plant
are

and

have

to

for

go

many

costs

reserves

be¬
day it
into the capital

funds.

simultaneous

its

equipment
Some

When

flation is over, or even
from

not

bound to lag

requirements.

market

as

Consequently, its

deterioration

hind

does

continuation of the proc¬
is not able to raise its

demand

the

in¬

before, the
for

funds

quarters reaches

ur¬

have
the

that

argue

risen

out

food

of

proportion

exports.

significance of
Only 2 or 2 xk % of

our

current

meat

output
goes
abroad, while meat prices are up
by 85 to 100%. True enough, but
argument

sential
and

overlooks

grain.

It

is




is

en-

(5) At
sion

es¬

giving away
a
large share of the grain crop
and thereby rasing grain
prices
that we keep the
price of meat
rising.

Washington
the

blame

anything

is

for

or

anxious

to

put

rising

prices on
but our "in¬

anyone

ternational finance." For political
reasons
it
cannot
blame
labor
either. Business in general and

monopolies

in

particular

the

are

natural

scapegoats for all leftwingers. But wholesalers and re¬
tailers can point at their

costs,

fabricators
the steel

prices.

at

steel

prices,

and

industry in turn at farm
Farm

rightly that
before, and

interests

answer

started to rise

wages

went

further

than,

food prices did.

The

that
the

truth

monetary
root

of

the

matter

policies

the

very

or

groups,

they

be.

More

greedy
and

"need"

by

the

(plus

minal

leave bonds
decline

in

and

the

the

spec¬

of

we

are

heading—and the volume of

pur¬

omies

western

into

un¬

16

nations

billion

the

In¬

"capital¬
forego the im¬

To

political
and
economic
advantages Russia
acquired
by
having put Central Europe's re¬
mense

under

sources

her

control?

Transportation and
World Trade
(Continued from page 10)
■
also electric light and power, iron
and

steel

chemicals,

industries,
gas,
oil,
building construction,

and

industries.

allied

Generosity for "capitalistic" re¬
covery
(to strengthen American
influence!)
is
not
one
of
the
Soviet weaknesses.

upon

In

other

and

food

words,

western

the

materials

Europe used to

Under

permitted
business

system anyone is
set himself up in

to

regardless

of

effect

the

his competitors, and he can

establish

his

rates

own

without

regard to those of his competitors.
This

poses

the question

how

much

regulation, when con¬

ernmentally

Americas, which means that our
$22j/2 billion subsidy will have

tice to all parties concerned,

to be

sound

controlled—gold re¬
serves, dollar balances, and other
dollar
assets
of
Europe
still
amount to at least $15
billions.
Also, it still could liquidate sub¬
stantial holdings in African and
American

imports

from

they

set

pay for
regions. And

why not mobilize their "invisible"
hoards,
such
as
the
estimated

by

honest

each

week to support
refuse to put in an

5-day week for their

own

benefit?

Marshall

original

Plan,

the

General

we

idea

of

the

announced

as

by
that

shall

June

on

5,

was

help Europe if Europe
itself. Now, the report of

helps

European Economic Commis¬

sion

the

tells

all

us

about

share

our

from

job

only

and

if

rise

July

by

the

else the

or

its

promises

down.

to

break

down

dollar

will

American

do

prices

their

level

But

they have risen
already, and the

5%

Marshall Plan is short
dollars

or

half bil¬

a

What

so.

if

our

prices keep mounting, as they are
most
likely to do? The Report

wishfully and arbitrarily

assumes

that

they

from

will

1949

will

the

up,

for

ask

actually

decline

Obviously,

on.

prices will go

basis of equal jus¬

for the
national

as

our

Europeans

dollars.

more

in

The

the public

interest.

The British Government

going

from

other.

port

Under

the

Privately
be

petition
be

miles

drive

to

of

distance

nomic

pool.

participating countries", customs
unions, and the curing of their
trading deficits. They are vague,
however,

objectives

realized
taken.
to

how and when these

on

desirable

In

be

steps "will

what

or

will

'be

concreto,

they

promise

raise their output in a

of basic items, such as

million
their

tons

the

to

number

adding 145
level

1947

of

coal

production—by 1951,
when the Marshall Plan expires.
This is the same kind of promise
as
in last year's Anglo-American
loan agreement, which was sold
the

to

American

public by dan¬
convertibility and

gling

pound

trade

barrier

its

With

eyes.

that

this

not

four

this

time

mature

before

reductions

the

difference:

promise

within

a

does

but

year,

hence, after the Mar¬

years

exhausted. If

are

dollars.

But

and

can

by
back,

saying

imposed

too

much

too

which

they

should have accepted?

There
be

is

little

in

interpreted

the Plan that

"strings at¬

as

tached."

But its

positive

implication

Allies

will

one

concrete and

is

that

the

make

Germany work,
hoping that she will make up for
their

own

deficiencies.

to

1951,

Report,

obviously

do

not

believe in its promises. The prom¬
ises of reaching new production

goals,

financial

stability, sound
equilibrium, etc., by 1951, hinge
on
a
great "if": If Russia will
permit

normal

modities
Plan

countries

satellites.

sential

and

About

of

com¬

Marshall

Soviet

the

25%

from

come

countries.

leaves
trade

cover

the

of

the

es¬

imports of the westerners

to

billion
in

exchange

between

no

is

will

the

The

doubt

resumed,
not

Europe's

be

central-

Paris

that

Re¬

unless

the

$22 V2

sufficient

four-year

to

deficit

trade with the Americas. Pre¬

sumably,

another

hand-out

will

be

6-odd

billion

needed

(which
$29

is the difference between* the
billion originally proposed by

Paris

billion

Conference
to

which

and

the

a

new

action
assures

1o
an

Europe's

relief need by
does it open up vistas of
channels for private
movements over the At¬

nor

capital

ernment

until

but

other

considered

nomic

ization, they
basis of

gov¬

doing

are

private

not

be

ble this winter.

Na¬

provided by private enter¬
We
must
be
constantly

prise.
alert

the

to

America's

occupa¬

eco¬

tionalization, in fact, has nothing
transportation that can¬

expenditures to keep Ger¬
alive are expected to dou¬

Our

of

national¬
considered on the

to offer in

relief

plans.

are

basis

under

political expediency.

other

In

infiltration

would

tend

weaken

transportation
interest

the

welfare and

of

system.
national

our

defense,

forces

of

to

less than

no

Japan, Korea and

in the discharge of our interna¬
prospective re¬ tional responsibilties, the develop¬
Latin Americans ment of a sound
transportation
serious financial system demands that proper rec¬

other

are

in

eco¬

of

Under

the

on

necessity;

tional

cipients.

they

as

Britain.

which

are

our

circles

The

industries,

Moreover, it competes with

China

in

ownership would expand

Great

in

railroads

ou r

stone

they engulfed practically all

lantic.

many

Is

Most
a

very

jam, too, and expect help from us ognition be
given to all agencies
part of the price to be paid lor so as to
permit them to be selftheir co-operation
(of question¬
supporting and competitive with

as

be

fresh

in the so-called Hem¬

Security.
in the U.

Even
S.

Canada

market

for

capital.

A11

foregoing
be

considerations

overshadowed

by
the
problem: the sharp conflict
between the urgent, foreign need
may

basic

and

the

burning domestic infla¬
tion.
Something must be done to
cope with the latter, but the one
effective
rent

method—stopping

credit

expansion

—

is

cur¬

sug¬

gested only by powerless banking
authorities.
Before Congress will

each

other

in such

equal terms.

on

Only

America be as¬
sured of a fully coordinated sys¬
tem capable of rendering the most
a

way can

efficient

service

possible

the

at

lowest cost to meet the peacetime
needs and
wartime
demands of
the nation.

survive

Transportation cannot

"half

slave

and

half

free."

This equality of treatment is
mere

no

ideology of American enter¬

prise.

Rather

fundamental

it

is

one

institutions

of
of

the
our

democracy. It is the foundation
to rationing measures, to
of our economic structure. Amer¬
nothing of re-imposing price
ica's whole concept of individual
controls, foreign spending will be
initiative and liberty is inscribed
trimmed, presumably, and vital
for posterity in the words of the
exports (wheat and coal) reduced,
United
States
Supreme
Court
risking hunger
and trouble in
consent

say

(7)
The high officials them¬
selves, who wrote the Paris Eco¬
nomic

their

normalized

not

them

gave

conditions

never

can

we

and

severe

they

the British do now,

as

that

little

Will

1951?

(with

relief
It neither

precede it).
end

may

goals

nations

a

"intermediary"

better?

come

16

repudiate

other relief program

ispheric

What if they will not reach those

the

only
more

reconstruction idea,
the MarshallPlan has become an¬

able value)

do

out

59

enterprise, business problems are

Originally

16 Eu¬

governments

broken

promises.

its

ropean

then,

must

the British Government missed all

goals, why should the

be

pour

or

portation America wants? That is
exactly what can happen here.
Let
me
remind you
that na¬

the

can

40

of restrictive trans¬

a

to

not

trucks "a

establishment.

his

of

refusing

will

his

than

more

from

the kind

that

shipper

a

not

com¬

operated

state

And

allowed

in

operate

with

trucks.

will

trucks

to

be

by

Trans¬

British

owned

permitted

tionalization

vicious circle

is

the

free to select the kind of transpor¬
tation
best
suited to
his
needs.

would

the

to

Bill, the shipper will not be

more

dollars
they get and the
they preempt our markets,
more our prices will rise. This

now

extreme

one

more

between

a

enterprise, individual initiative
competition are all preserved

their

cooperation

re¬

of

Under

economy.

but

comparatively
little
about
own.
They
use
general
phraseology about creating "in¬
ternal financial stability", "max¬

is

maintenance

system of regulation, freedom

cur

of

the

on

quired

makes

American

on

billion

beyond

1.

about

ducted

to just

as

and

It is bound

not

lion

The

(6)

Plan

requests
hinge
prices. The $22 V2

last

days

peoples who

billions,

more

break

(8)

5V2

gold

of

drawn

anyway. The Paris Report
it prefectly clear that its

do

billion

be

Therefore,

supplemented from the out¬

Marshall

held (ille¬
gally!)
by
the
French
public
alone? And why should we work
$31/4

forthcoming.

must

will

assets to

those

be

not

the

British

present

conference

from

the

sphere?

econ¬

get from the central countries will

this

rate

adjust their

ternational Bank). On the other
hand,
Congress cannot
fail
to
recognize that the visible—gov-

port

—the uninhibited cashing of ter¬

scene

auspices. Few

reality of Europe's
$19.3 billion
four years as proposed

$3.13

at

as

enters

another

in the next

eastern

is pouring into circulation

money

political

unhappy

for

is

more

Plan

will doubt the

not

are

problem,

individuals
may

Marshall

American

used

of

Marshall Plait

of

rate, the Paris ver¬

any

the

of

der

by

liquid savings show where

capital-depletion

the

relationship between meat

interest rates, if at all.

of

to

quantitative

tacular

ger

prices

food

the

Version

shall Plan funds

(4) Spokesmen of the Adminis¬

gency proportions, and can then
be satisfied only at
skyrocketing

The dan¬

Paris

imum

labor

their

world

ourselves.

into

for

dis¬

surpluses

and

cost—if

no

used

support

had

we

produced

would

other

outer-world's

if

course,

at

power

our State Department).
should Moscow permit

why

the satellites to

istic"

on

a par with the
philosophy of his
colleague in the State Department,
Mr.
Clayton,
who
announced

legedly serious "consumer resist¬
and

is accelerating its
ominous upward trend.

the

is

posal "doesn't cost anything."

$210 million expansion pro¬
gram, causing more demand for

chasing

Latin

The

substantial American food exports,

billion

a

no

(3) The pace of price inflation
being stepped up by world¬

is

But

the

a

in
the
meantime, it
boom to the farm equip¬
industry that has embarked

ment

of

flationary squeeze."

But

brings
on

waves

depression
propaganda
and
of
governmental witch-hunting tend
to mislead business management
and to retard the adjustment of
its financial policies to the "in¬

in

The cumula¬

new.

capital

forced

ing

of

further

and

when recurrent

hanced

request of

the

the

$221/2

earlier

de¬

Europe, still leading space for tax
reduction

out

-

of

the

estimated

$6.2 billions grolss surplus in the

"Equal
must

Our
world

budget.

Justice

Under

Law."

We

protect it.
effectiveness

stability

world trade

can

and
be

in
a

restoring,

prosperous

greater than
guess
that
our effectiveness in
preserving the
Congress will
integrity and the efficiency of our
swallow the Marshall Pill, if only
entire transportation
on a
somewhat reduced scale. It
system, with
each agency considered in relation
has
no
choice; our prestige is
It

after

is

a

long

committed.

reasonable

debates

"something" will to its
domestic infla¬ These

be done about the

tion,

too.

no

So'w, the

politicians

needs
are

In their

our

and

its

common

usefulness.
problems.

solution, I know that

We

asking can count on the intelligent lead¬
the resourcefulness, the
to eat less and clamping down ership,
the
"speculators."
Which is statesmanship, and the energy of

look for the easiest escape;
us
on

just

about What.. their planless the National Foreign Trade Coun¬
colleagues do, imposing cil. Together we face the future
austerity" on their nation, with high faith —faith that our
canalizing,/.: its
resentment united efforts will lead, both at

British
more

and

of

home

planning against the "spivs" and

peace

about

the

"drones."

complete

failure

and abroad, to an era of
and economic stability un¬
paralleled in all history.

THE

Number 4640

Volume 166

COMMERCIAL

&

FINANCIAL

CHRONICLE

his advice.

More of

a

Price than Production Boom
in

(Continued from page 17)
Europe wants almost 50% more
during the coming year than they
able to get this year.
On
machinery—here again us¬
large quantities of iron and

were

farm

ing

steel—we

told that the Europ¬

are

demand is several times what
required during 1947.
All

ean
was

have

you

formation

these

is study

do

to

which

is

in¬

available

other items.

and

the

The

on

daily

is constantly presenting the
conflicting views of our experts.
Certainly' what we do on exports

press

and

the

out of

ply

of

amount

goods

taken

available domestic sup¬

our

help but continue to
supporting factor in demand

cannot

be

a

and, consequently;in prices. Watch
fhe international picture—watch
Congress. Undoubtedly there will
be

much

heated

Europe's
action
may
to

come

Maybe suitable
furnishing of funds
too late to accomplish

those
If

do.

Will

on

needs.

and

what

discussion

funds

too

expected

are

late,

economy

our

certainly be affected adverse¬
On the. other hand, if such

ly.

funds

voted in

time, and you
can
make up your mind that aid
to Europe will be voted, food and
other goods taken from our sup¬
ply can reduce any surpluses we
might have. Prices on such items
will

are

weaken.

not

months to

There
which

other

should

conditions

be

overlooked.

not

in

conditions

and

1948

the resulting crops,

whether good
or bad,
will have tremendous in¬
fluence on food prices and, con¬
sequently, wages. The healthiest
thing that could occur for all of
us would be an exceedingly heavy
crop
and lower prices.
On the
other hand, with bad crops and
the continuing demand, both here
and abroad, high prices would re¬
sult with consequently increased
demand for higher wages.
1948 is
election

an

in

are

not

election

an

will

of

occur

Both parties

keeping the

pros¬

country high and
they can to keep

the

what

do

usually

year.

interested in

perity

A recession in

year.

does

business

things humming.
Another

creased

for

still

Commission

has

full

their

fig¬

if granted, added to what has
already been granted, would mean
an increase of approximately 50%

Whether
you
agree
with the
government's stockpiling of criti¬

cal materials

freight rate since

important

not, the fact that

or

they are beginning to do
ticularly in metals, is not
ish

factor,

few

least

at

for

par¬

so,
a

bear¬

the

the

prices.

pressure on

As

write this

I

Labor

Supply

supply is still generally
it is still difficult to get

the kind of labor
too

are

creating

on

a

All

well

as

Jobs

senteeism.
to get.

wants. There

opportunities,
desire to change em¬

a

ployment

one

job

many

creating ab¬

as

are

still too easy

People don't have to stay
it.
these
things are factors

job long enough to learn
of

in keeping production down.

Un¬
til people are willing to stay on
the
job and learn that job as
they should, thereby increasing
production, our costs of produc¬
tion
will
be
higher than they
should

of

I

be.

know

in

which

of

our own

wage

number

a

including

industries,

the divisions of

some

of

increases grantea

as

consumer.

That is fine

as

long

the volume of business is good.

Every

who knows anything
business well ap¬

man

of

cause

the

be

of

ment

The

week.

No.

seemed

there

worry

1
to

continued upward move¬
commodity prices occur-

in recent weeks. This is es¬
pecially emphasized in the whole¬

prices of all foods which have
since price con¬

sale

risen almost 60%
trols

the

double

about

This

discontinued.

were

wholesale

price

is

in the

increase

of. all

average

products other than farm and food
products. We must not overlook
this
important factor.
A dollar
can only go so
far. If foods take
an increasingly large amount of it,
there is a correspondingly lesser
left for other items.

amount

While

weekly earnings of

non-

agricultural wage earners were up

67%

approximately

at

war's

the

peak and have increased since to
almost 94% at the end of the third
quarter of this year from the mid¬
dle

of

1939, real wages reached a

about running a

high of approximately 31% at the

preciates that with reduced vol¬
ume
profits are wiped out very
quickly.
Undoubtedly many of

war's end and have since declined

you

middle

increases

labor

absorbed

with

granted last spring and who made
sincere effort to keep their owr

a

prices from advancing who now.
because of their own rising
and

in

costs

instances lower vol¬

some

find it impossible to go along
without some price increases.
ume,

Building Activities

Building

activities,

after

con¬

siderable reaction early this year

high costs and with a con¬
sequent drop in the awarding of
contracts, started out very slowly
but
began to move upward in
due to

fashion

slow

gressed.
changed

as

the

year

pro¬

That picture has been
materially since June,

1947, at which time the value of
construction
again reached
the
highest level attained during 1946.
Construction has increased each
since

month
new

It is

approximately 20% as'com¬
pared to what they were in the
to

suppliers

finding

are

men

who

This

1939.

of

increase

an

of

in

compares

the

over-all

approximately
58% during the same period. The
continuing increase in the cost of
food, especially, and the conse¬
quent demand for increased wages
again exerts "an upward pressure
on
prices. Without question, con¬
tinued
rising prices and rising
wages without increased produc¬
tion are not good in the long run
—nevertheless, they are here now.
cost

living

Labor's

of

event

will

even

recession

a

show

any

The old saying,

strong
in

that

the

wages

appreciable

drop.

"the higher things

the harder they fall," may still
true—but we are still living

go,
be

in

remains

doubtful

is

it

and

of

position

the

that

present.
must not

We

we

boom

in

are

than

a

A

A

that

new

construction,

single

and multiple

1948 will reach a
in 1947.

type, during

higher total than

The major portion of

the

a

production boom.

of more than 46,000,-

pent-up demand is still there, and
if

wages

and prices

can




be kept

the Federal Reserve
Board
by the Survey Research
Center of the University of Michi¬
for

indicated that there was a
slackening of demand as compared
with a year ago, even though in¬
comes
are
higher.
This . trend
gan

come—

be evidenced
questions which
put to management in the

recent

discussion

table

round

on

problems of management and pur¬
chasing, held at the American
Washing Machine and Ironer Man¬
ufacturers' Association meeting at
Mackinac.
of

one

Soc. for Savings Names

of the

some

were

can

31

will only mention
questions here, but

I

these

it illustrates the

tion which

was

Mitchell, Pritchard
CLEVELAND,
regular monthly

OHIO —At

the

meeting Oct. 10
the Trustees of Society for Sav¬
ings elected Byron R. Mitchell and
D. James Pritchard

office

the

to

point! The ques¬
submitted by one

of the member

purchasing agents
ican families in the lower income was: "Why doesn't management
conferences
between
groups who have many unfilled encourage
demands for goods, and who will sales, purchasing and production?"
buy whenever prices appear to be The answer necessarily was that
management
within the range of their pocket- progressive
should
books.
The American consumer head up the purchasing depart¬
ment with a capable man and staff
market is much larger than pre¬
based

war

population increase

on

and then

alone and without considering the

I

higher standard of living of many
our people.
The census bureau
reports that the nation's popula¬

ment

of

since

increased

has

1940

During the past several years,
I have not personally had

while

to

repeat here a state¬

which appeared

in the San

Francisco "News" and

reprinted

in

the

which

NAPA

was

Bulletin

of Sept. 10—you may have seen it,
but I think it is worth repeating:

D.

James

"In

of

Vice

about

executive

the

than the

probably

corporation,

every
one

knows

outlook

more

business

for

purchase orders, I know
from our own purchasing depart¬

which
to

could

with

You

we

yourself

had

to

find

time

or

another—

have

at

which

and

us

handle.

not

doubt

no

sources

business

endeavored

customers

our

place

hand, I have

additional

of

known

difficulties have

the other

On

been.

one

new

sometimes they were

old;

out

better than
times they turned

poorly.

many

all

major

know

of

Supply

One of the things I feel

movement
the

this

when

downward

business

in

occurs

evaluation

careful

and

is

com¬

of the services between
old and new sources of sup¬

parison
your

While every period of active
prosperity ends with some
ply.

recession

letdown—a

or

not

could

control

give

you

that the

source

new

did

not

take your

business because it was
temporarily more attractive and
taking it at the expense of an old
customer who really should have
capacity. A good deal of
has happened.
Finally, use

had his
that

in

determining

plan of action.

Don't be ar¬
out your old

judgment

good
your

throw

and

bitrary
source

who

served

you

serve

us

a

as

years

is ready to

something about in¬
is a present as
This is

say

ventories.
well

period of

well and
again.

you

Let

over a

That

future problem.

phase
where
purchasing
agents will eventually be judged.

one

Management has for months been

"Watch your invento¬

preaching,

ries. This volume of business can't

last."

On

the

other

hand,

particularly those who use
certain types of steel such as sheet
and strip, know that commitments
to
meet
the
estimated
require¬
of

department
must be made and orders placed
far ahead.
There is nothing else

smart

your

sales

Pre-Cut

of
Ward and Company

You

inventory

must

agents

purchasing

keep in mind that the decline in

prices

can

quickly.
the prices of metals
very

come

Just compare
in the

spring of 1920 and one year
later.
Even
prices of building
materials at that time in spite of

for housing were cut very

I cannot

the

need

ventories.

You always

of hell when your

of

items

some

get plenty

that

ties

down

moves

with

and you

are

caught

large inventory. My sug¬
gestion is that you know your
a

commitments, watch them care¬
fully and gear them to your sales
department's open order balance.
Study that constantly.
There
in

short

supply.
those

for

sure

still

are

will

have

plenty of items
Constant pres¬

a

the

above

items

available supply
and

certainly has had
effect

bullish

on

management is

its sales,
purchasing de¬
partments to keep in closest touch
with one another, not at irregular
intervals but continuously. Smart
management

recognizes this, and
organization is so set up that
the purchasing agent or director
of purchases and his organization
sits in on sales planning meetings.
His knowledge as to possible de¬
its

In 1929 he entered

investment

coming

of the

Department

field,

banking

the Cleveland office of

to

C. F. Childs and

Company in Oc¬
tober, 1935. He has taken an active

interest

in

Investment Bank¬

the

Association,

ers

the

Parent-Teachers
is

of ' the

Bond

His

principal responsibility
Society will be in the in¬

the

at

Lakewood

Association, and

Treasurer

Past

vestment

and

loan

term

depart¬

ment.

Mr.

Pritchard.

old, attended

who

the

is

39

years

Cleveland

and

East Cleveland public schools. He
studied

Wooster

at

College,

and

holds certificates from the Ameri¬

Institute

can

Graduate
the

of

Banking and

School

American

tion.

he

of

Associa¬

associated

Steel,

thje

Banking

Bankers

Formerly

Truscon

of

with

joined

the

School Savings Department of the

Society
has

in

November, 1929. He
participated on committees of

the

American

tion, the

Bankers

National

Associa¬

Association

of

Mutual Savings Banks, and is a
is—buy what director of the
Financial Adver¬
you need, for delivery when you
tisers Association and Past Presi¬
need it.
Don't overbuy and don't
dent of Cleveland Chapter AIB.
hoard.
If you find your invento¬
A member of the Cleveland Ad¬
ries moving up because your fac¬
vertising Club and the Cleveland
tory is not producing to schedule,
Chamber of
Commerce, he has
regardless of the reason—if your
been active in civic events.
finished
goods inventory is in¬
creasing because of slow-down in
sales—speak up and recommend Madden Associated With
to your management a reduction
Ketcham & Nongard
of operating schedules and a cur¬
tailment or at least a postpone¬
CHICAGO, ILL. — J. Arthur
ment

of

deliveries
This

is

on

commit¬

responsibility

Madden, former Cleveland invest¬

Gable With Dean Witter
(Special

LOS

Chronicle)

to The Financial

vin L. Gable has become affiliated

with J.

A.

was

Adams

nounced.

Madden

South

previously

in

it

is

an¬

1934 to

1942, Mr.
charge of the

office

of Stifel, NicoPrior to his pres¬
ent association, he was a member

laus & Co., Inc.
of the

Chicago office of Eastman,

Dillon & Co.

Bacon & Vincent in Buffalo
BUFFALO,

to

The

Financial

ANGELES,

N.

Y.—The

& Vincent Co., Inc.,

With Corbrey & Co.
(Special

Nongard, 105

Street,

was

associated

now

and

Hogle & Co. for many

years.

LOS

is

From

Cleveland

ANGELES, CALIF.—Nor-

He

banker,
Ketcham

West

that is yours.

ment

with

a

Chronicle)

C A L I F.—

a

securities

Bacon

is engaging in

business from

offices

at 1 Eliicott Street.

Booth Waterbury has become con¬
nected with Carter H.

liveries; of materials must be list¬

Waterbury

Marache, Sims & Speer.

was

Stephen Dremuk Opens

Corbrey &

Co., 650 South Spring Street.

ened to.

Heed must be given to

Housing

Pittsburgh.

the

the investment
manager

My advice

prices.

Spring Street.

requires

in

your

up

But you will be criti¬
plenty as business volume

entering

Montgomery

factory is short

production.
cized

to

Club.

emphasize too strongly
for watching your in¬

with Dean Witter & Co., 632

and

Com¬

has been active in the Bond
Club and various civic organiza¬
tions since coming to Cleveland
in October, 1935.
Born in Pitts¬
burgh 47 years ago, he received
his education at
Carnegie Tech
and the University of Pittsburgh.
Upon leaving school, he gained
experience in the steel business
and the electrical appliance field.

pany,

and com¬
mitments with falling prices.
about

that

which

resident
and

was

to do.
that

Childs

F.

business, he

men,

ments

C.

Prior

ments.
you

to
B.

change from shortages to plenty,
and from soaring prices to wor¬

nearly in two.

everything you wanted during the
past few years, think twice.
Be
sure

with

men,

you

am

sort^o^emand
a
de¬

pression—nevertheless, those try¬
ing periods are themselves fol¬
lowed by periods of better busi¬
ness, increasing demand and dif¬
ficulty in getting deliveries. An
upward
movement
in business
may
begin
after
this letdown
sooner than might be anticipated.
Before you discard an old source
who because of conditions beyond
his

and
higher
let-down.
I

personally acquainted,
went through this same condition
or cycle during World War I and
the postwar period of years 1920
and 1921. We can recall the quick

will be

advisable

Sources

of

many

rying

Old and New

have had shortages,

war we

higher
production
prices—and then a
whom I

each

after

that

know

Mitchell

and Assistant Vice Presi¬

of

dent

local

Mitchell,

manager

We

Byron. R.

President.

France,
Mr.

Danger of Let-Down

place

ments what their

Pritchard

President, according
announcement
by Mervin

purchasing agent."

try to search for supplies and

to

a

them.

use

want

no

I feel

of

spending units in the United
States conducted early in the third
quarter

they

better
coming

of the two-thirds of Amer¬

more

price

more

000

primarily residences, both of the

a

the market to include

will widen

for you

Slackening of Demand

survey

continue

and

price breaks—when

production

postwar high in September.

awarded,

balanced

overlook the fact

then, and reached a

expected, based on contracts

shock

operations in
economy.
The

ex¬

ing

company,

last spring were pretty generally
absorbed and not passed along to
the

1947,

convention of the

this

held

ing

the

prosperous

American Bankers Association be¬

Labor

tight;

Oct. 3,

uncertainty

pressed at the

it

the

on

the

of

read

I

is another

Here

ended.

factor which increases
and creates another upward

costs

next

months.

average

war

coming breaks and
possible for business to

absorb

general

a

ure,

the

the

services.

An additional increase to this

in

make

should

the

request under consideration.

27%

cushion

that

but

While

rates.

10%
temporary in¬
Interstate Commerce

a

the

crease,

factors

are

and

in¬

not

increase and have just been

granted

up momentum
extremely
serious,

for

demand

asked

by

9,160,000. Nine million additional
people require a lot of goods and

must

we

the

freight

railroads

27%

there

That this is not always

true, however,

build

tion

thing
is

overlook

could

become

come.

are

Weather

excellent

continue

should

line

for

(1659)

previously

Mr.

with

Stephen Dremuk is engaging in
a

securities business from offices

at 46 Avenue

B, New York City.

32

THE

(1660)

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, October 23, 1947

the President of the

Makes Prices?

Who

loss

(Continued from page 3)
ployed

quite well known, but
lines prevailing price
systems find little notice outside
in

are

many

the

of

industries

specific

bution,

con¬

the

in

cerned

or

modities in

production, distri¬
purchase of the com¬
question.
II

Commonly used commodities of
uniform and standard quality, the
units of which are perfectly in¬

arising from a general price

reduction

the finished product

of

that follows lower raw materials.

his

of

material

raw

(wheat)

by

buying a "future" on the organ¬
ized
exchange.
Such
transac¬

"hedges"

cotton, he does not

market

eliminate

•exchange,

transaction.

the

conditions

current

of

There is

supply.

de¬

no es¬

sential difference between the two

types of markets. On organized
the "bids" (demand)
end the "offers" (supply) are reg¬

■exchanges
istered

openly, whereas, in the ab¬

of

sence

specific market place,

a

"offers"

the "bids" and

made

are

privately and the registering is
done individually.
The cumula¬
tive effects of the interplay of the
same forces are likely to produce
similar

a
on

psychological reaction
individuals, so that buyers and

one

is involved.

raw

When the cotton

his

speculation

pur¬

the

from

He

merely shifts it
to another party, just as fire risks
are

shifted

the

insurance

to

without

nies

total

sum

compa¬

fire

of

losses.

In

insurance
companies,
almost all or¬
ganized
exchanges
a
class
of
traders
who
for
purposes
of
profit assume the risks of price
fluctuations.
Regardless of the
place

of

there is present on

fact that

looked upon
"speculators"

they

are

as

"gamblers" and
or
"manipulators," they perform an
essential

function in the market¬

ing of standardized commodities,
particularly on organized ex¬
changes.

proper price level under the then
prevailing conditions. They there-

Recognizing the economic ne¬
cessity of future trading on com¬

toy create
The

"market."

a

adaptability of certain

com¬

change

requires both
standard quality and uniformity
of the units. To a far greater ex¬
tent, however, it is dependent on
the

marketing

quantity and the availability

to control and

regulate but not to
eliminate this practice.
Congress
in 1914 passed the Cotton Futures
Act, which aims to abolish abuses
that long had been prevalent in
connection with exchange opera¬
tions.

sality

Grain

its

of

demand.

words, there must be

large

number

of

sellers in active
market
can

If

or

the

other

relatively

buyers

and

competition at the

place.

diminish

increase

In

a

the

the

producers

consumers can

supply

available

at

any one time on the market, or if
either opposing group is able to

withhold

nitely,

change
for

offerings or bids indefi¬
"open" organized ex¬

the

cotton,

that

reason

commodities,

function.

to

ceases

this

such

which

It

is

agricultural
grain and
produced in

as

are

large quantities and by innumer¬
able individuals and

which,

more¬

are prime economic neces¬
sities, have their prices registered
on
public, organized exchanges.

over,

On
and

the

other

hand,

standardized

such

ties.
economic

advantages of the organized ex¬
changes in furnishing continuous
for important articles

quotations
•of

certain

commerce,

drawbacks

arise

from

practical
the

con¬

stantly changing prices character¬
istic cf organized exchange trad¬
ing.
Frequent
fluctuations
in
raw

material

prices

lead

to

reasonable

limits

and profits.

It is largely owing to
that certain practices

on

their

costs

underlying
much

so

secret

of
to

arrangements

among little buyers or sellers, as
to the "follow the leader" policy

necessarily adopted by competing
producers
same

or

the

of

consumers

commodity.

"follow-

The

the-leader" policy
is peculiarly
adapted to industries having rela¬
tively few important producers or
a
limited number of purchasers
and

If

consumers.

ducer—for
States

Steel

Standard

a

example,

large pro¬
the United

Corporation,
the
Company of New

Oil

Prices of grain and cot¬
undoubtedly continue to

output.
ton

of fur¬

assurance

no

will

fluctuate

continuously,

as long as
controlling factor in
the quantity produced and as long
as
no
group of
individuals can
combine to effectively withhold or
increase the marketable supply.

is

nature

a

The

market

graded

prices of standard
which

have

no
organized exchanges or other
localized market places, are theo¬

retically

fixed

economists

through what
higgling of
Such prices, though

term

the market."
fied

less uniform

or

market,

continuous
The

be

rapid

quotations,
abrupt.
such

speci¬

however,
than

are

If

to

changes.

frequent

more

of

a

subject

changes,

less

trends

in

not

are

and

price

though
change

"the

ex¬

likely to
price

the

commodities

are

plotted on a graph, they usually
exhibit flat tops, that is, plateaus,
contrast

formations

with

the

sawtooth

characteristic of price

movements

of

cotton, grain, cof¬
fee and securities.
One explana¬
of

this

contrast

stability

is

that

the

in

the

exhibited

"flat
a

tops" is frequently merely
record
of nominal quotations

and not the actual

prices at which

company by
at tidewater

to

keep

severe

price-cutting

points.

His attempt
production of

down

competitors

by

in

bounties

scale

the

offering

accordance

diminished

of

them
with

output

a

like¬

wise failed to relieve the unfavor¬
able price situation in the anthra¬
cite
industry.

Accordingly,

of producing

plan

cient quantities to

coal

in

his

suffi¬

the inter¬
est
charges
on
an
extremely
heavy investment of the Reading
Company
in
undeveloped
coal
properties had to be abandoned.
A

receivership

corporation
sult.

of the Reading
the inevitable re¬

was

Since

pay

this

time, anthracite

prices have not undergone abrupt
or
erratic changes and, notwith¬
standing the widespread and fre¬
quent accusations of price agree¬
ments among the
producers, the
"follow-the-leader" system of

price-making

has
continuously
prevailed in this industry.
Other

as

instances

might be cited
illustration of the

affording

"follow-the-leader"

method

of

reason

transactions

quite

to shift the effects of price in¬
stability.
"Future
trading,"
"hedging," "short selling," "puts
and
calls,". and
other
similar
transactions, whatever
may
be

are

common

effected.

It

minous

largely

coal

sold

iron

ore




not

These

ing to

business

in

accordance

activity
with

and

not

changes

lists,

merely as a basis
for
making
quotations.
Price
changes are effected through "dis¬
count"
under
or
"premiums"
above

the

"list

price."

Since

competition among the producers
of standard wares is severe, the
"discount" and

selves

"premiums" them¬

become

uniform.

Price-

cutting in this and other industries

accordingly has taken the form of
special delivery privileges, pack¬

ing

allowances,

sorptions

freight

other

and

ab¬

rate

similar

terfuges to avoid the
of actual

sub¬

appearance

reductions from

quoted

prices.
V
It is quite manifest that it is in
interest of producers, as well

the

consumers, in many industries
to promote price stability.
Some
of the methods which have been

as

used to effect this

object, such as
price
associations,"
"Gary dinners,"
market-zoning,
pooling of orders, and so forth,
have been declared illegal and in
the

"open

be

staples fluctuates accord¬

Whatever may

the

legal aspects of the prob¬
lem, however, it is evident to all
who have studied the perplexities
of
fair
price
adjustments
that
price
stability in the case of

trade, other producers in the

difficulties,

risk

trial

storage.

single

same

line, in order to protect their
business, must under normal con¬
ditions

meet

Small

this

producers,

hand,

cut

may

tain

times, may
tations, without

on

competition.
the other

prices or, at
make higher

cer¬

A

and

expense

producer

of

may

endeavor

to

through

price reduction, but he

a

increase

his

sales

will reap no permanent advantage,
since other producers immediately
meet the

effecting corre¬
sponding price changes by large
competitors.
This is particularly

price-cut and the general
consumption of the product is not
increased. Hence, it is customary
for producers of cement, copper

true

and similar

when

both

consumers

"piker"

producers

are

an

and

commodities, in which

the

moderate price changes do not af¬

output in¬

fect demand materially, to quote a
uniform net price to dealers in

that

aware

has

concern

quo¬

sufficient
to
materially fill the
consumptive requirements. Hence,
this sort of price-cutting can be

ignored

the

same

market.

The economic

situation with reference to cement

prices
T.

S.

the

pointed

was

Adams

trial

of

by Dr.
in his testimony at

the

out

members

of

Cement Manufacturers' Protective

receive

higher

Association, accused of maintain¬
ing prices by agreement in 1925.

prices.

This

Dr.

in

producer

the

the

the

industry

name

the

the

producers

"black

market."

inability of large

fill

to

both

World

recognized under

now

of

of

after

Second

and

Wars and is

and

ask

can

than the quoted
situation developed

steel

First

Because

who

current

orders,

so-called

from

far

consumers

the

above

quoted prices of their large com¬
petitors.
When conditions are re¬

versed, the small concerns will ac¬
cept contracts at prices consid¬
erably below the quotations of the

"leading

interest."

take

no

effective

meet

these

capacity
means

their

since

cuts,

of

no

The

latter
to

measures

the

small

price-cut.ters

the

substantial reduction to

Adams

to the

showed,

by reference

price histories of

a

number

of commodities,

that price stabil¬
ity may be the result of balancing
competitive forces which neither
the producers nor consumers re¬
frain from disturbing.
stress

of

If, through

competition

or

other

temporary price adjust¬
ments are required, the nominal
or quoted
price at times remains
causes,

unchanged,
granted

be

concessions

but

through

may

variety of
ways leading essentially to price
change. Freight rates have in the
past afforded an illustration of
these

business

a

practices.

The

making of railroad rates is an ex¬
tremely delicate and complicated
task.

When rates have been

once

determined, both railroad officials

business.

and

IV

shippers

are

is

ticity

the

of

steadiness

consumption.

well-known

fact

that

or

inelas¬

It
the

is

a

other

con¬

some
commodities
expansive demand can
be enlarged through price reduc¬
tions, while the consumption or
the use of commodities having an

sumption

having

in the

cial

of

an

inelastic demand cannot be mate¬

past to secret rebates,

and

unfair practices

in railroad

charges.

The history of the steel
industry is also replete with pe¬

riods

price

is

petroleum.

Anthracite

coal

probably the best illustration.

to

of

competition

is

economic

general

and

progress

and

it

un¬

essential

indus¬
be

cannot

permanently obtained by artificial
governmental or private controls,
but results from the balancing of
economic
forces
through
de¬

veloped

and

practices,
with

when

recognized
trade
not inconsistent

public welfare.

One of the gravest dangers of
government interference with de¬
veloped
pricing systems is the
disruption it causes to industrial

marketing.

A case of this kind is
attempts being made by the

the

Federal

Trade

Commission

to

abolish the "basing point" system
of

price

and

quotations

the

in

cement industries.

steel

This bas¬

point

ing

method has been in
for a number of years and

vogue

has

in

resulted

tition

wider

compe¬

steel manufacturers
throughout the whole nation, re¬
among

gardless of the location of their
plants.
The absorption of freight

charges by cement manufacturers
competing for distant mar¬
kets. a practice that has grown up

when
in

the industry, is also

tack

under at¬

by the Federal Trade Com¬

mission

as

collusion

a

fix

to

prices by producers.

But, wisely
and
well, neither the Courts or
Congress seem to favor this atti¬
tude

of

regulatory bureaucratic
For to do
so,
may mean the abandonment;
of many existing producing plants,
a lessening of competition in cer¬
tain regions, and a general dis¬
ruption, bordering on chaos, in
established marketing methods.
a

administrative agency.

Francis V. Nixon, Others
Join Gross, Rogers Staff
(Special to The Financial Chronicle)

spe¬

discriminations

favors,

free

generally opposed

to
making changes even when
price stabil¬
warranted by altered conditions of
ity of certain commodities sold15
trade or traffic—hence, the resort
under severe competitive condi¬

A prime source of

tions

der

the

deviation

quotations.

from

standard

Manufacturers

receive

"premiums" in times of
acute shortage of products, or ac¬
cept discounts under their market

other producers would
adopt the same measures and no
advantage would be gained by
vertised

under contract ar¬
The difficulties and expense of
usually altered
those initiating them.
The prime
storage, together with its limited
by current quotations.
Notwith¬
purpose
of
the
formation
of
use (it is used almost
exclusively
their moral or economic effect, standing this practice, however, it
for domestic heating) lead to a "open price associations" a few
is undoubtedly true that the ab¬
decades ago has been to eliminate
are
fundamentally devices for
close adjustment of output to an
sence
of an organized exchange
the disturbances to price stability
stabilizing
prices.
The
cotton
inelastic demand.
Price changes,
for the sale of these commodities
manufacturer hedges his purchases
therefore, have had little effect on resulting from these underhand
of raw cotton so that during the causes more
abrupt though less the amount consumed. ; About a methods of price-making.
interval required to produce and
frequent price fluctuations than half century ago in the
The general desire for standard
antbr^ctye
sell his goods, he will not incur a would be the case were the sales
industry,
Mr.
Samuel
Gowen, price quotations has led to some
rangements

serve

standardized commodities sold

and

are

price-list.

however,

restraint of trade.

certain

in many industries

and

uniform

coal,

Unlike anthracite
however, the demand for

is

•or

hardware trades,
for
manufacturers
use
a

and

price-making.

rially affected by price changes.
quotations during
dull periods.
Among the latter class of com¬
have
Considerable secrecy prevails re¬
developed
in
connection
modities are important articles of
to
market materials and
goods
with organized exchange dealings
garding such practices, since if
commerce, such as coal, salt, ce¬
which aim to eliminate altogether under sales contracts applying to
ment and, to some extent, copper they were widely known or ad¬
future
deliveries.
Thus,
bitu¬
this

glass

example,

in
The demand at any par¬
ticular moment, therefore, cannot
be materially stimulated through
price reductions, because of the

"independents" are
able to demand "premium" prices

commodities,

excessive anthracite output of his

interesting and peculiar methods
of price-making.
In the pottery,

supply.

the

Ill

utterly

the National Lead Com¬
pany—announces a price change,
its output being sufficient to sub¬
stantially meet the demands of the
or

small

price

calculate within

not

due
or

gauntlet

The

share of the market value of their

supplies

can

the

run

such accusations.

is

trade

Coal, iron ore, copper,
timber
and
cement

all

cause

agree¬

of

stabilizing prices or of even
obtaining for producers a larger

furnishes

it

in

to deliver their goods

restraint.

petroleum,
have

price

forms

ther

tion

they

enacted

was

other

by the trade.
"Piker"
profiteering is likewise an occa¬
sional phenomenon, since in pe¬
riods of larger demand, it is the

contracts either to purchase their
unless

Act

provides for the supervision
by the Secretary of Agriculture of
the trading in grain futures on the
Chicago Board of Trade and other
grain exchanges
in the United
States.
Though such legislation
may
correct some of the evils
fostered on organized exchanges,

un¬

certainty of manufacturing costs.
Accordingly, producers of the fin¬
ished goods hesitate to enter into
or

Futures

the

which

more

the

later,

years

as

anthracite coal, iron ore, copper,
petroleum, and cement, the effec¬
tive supply of which may be con¬
trolled by few producers, have not
developed organized market
places, though they are widely
bought and sold in large quanti¬

Notwithstanding

few

A

useful

commodities

monopoly,
and

Jersey

modity exchanges, within recent
years legislation has been enacted

of its production and the univer¬

against
ments

materially reducing formal

sellers "sense" what should be the

modities to open or organized ex¬

experienced in wheat, cotton, cof¬
fee or cattle.

The price
changes in widely
tions, it should be noted, are for used and standardized commodi¬
the purpose of avoiding specula¬ ties
which are not dealt in on any
tion, though it is inevitable that specified exchange have been a
speculation on the part of some fruitful source of complaints

manufacturer

mand and

on a public exchange.
petroleum is probably the
illustration.
The
relative

Crude

miller, in taking a con¬ best
tract to supply flour at a fixed price changes
in this important
price for future delivery, insures commodity constitute more abrupt
himself against changes in price fluctuations
than
are
generally

chases of

•of

openly

and

Philadelphia
Railroad Company,
to dispose of the

Reading

failed

transactions effected continuously

The flour

terchangeable, have their market
prices in any locality determined
either through transactions in a

place, such as an organized
or through the general
knowledge of sellers and buyers

and

LOS

ANGELES,
CALIF. —
V.
N'ixon, Thomas A>
Nixon, Howard D. Hotchkiss, Hen¬
Francis

ry

Marin and Joseph Sattler have-

become

Rogers

associated

with

Gross,,

&

Co., 458 South Spring
Street, members of the Los An¬
geles Stock Exchange.
The Messrs.

kiss

were

Nixon

and

Hotch¬

formerly of Francis V„

Nixon & Co.

Mr. Marin

was

with

John M. Barbour & Co.; Mr. Sat¬
tler was with Robert L. Winters
& Co.

Fagan & Co. to Admit
Louis

F.

Kaplan will be ad¬
partnership in Fagan &r.
Co., 41 Broad Street, New York
City, members of the New York
Stock Exchange, on Nov. 1. Irving
mitted to

Herzfeld and Bessie Sherman will
retire
firm

from

on

partnership

Oct. 31.

in

the

Volume

166

Number

4640

THE

Britain's
(Continued from first page)

tent,

by

piece-meal

form of

in

aid

loans, relief schemes and

subsidies from the Western Hemi¬

sphere

palliatives, not
Nevertheless it might have

cures.

—

pros¬

pered had it not been for the
disastrous winter of this year, and
the formidable rise in prices in
this,

hemisphere, which knocked
the patient out again and made it
quickly apparent that something
than

more

tonics

needed

was

to

meet the

challenge of poverty, in¬
paralysis and their unescapable political consequences
in Europe.
dustrial

Let

look

us

situation

then

it

as

is

again

at the

this

on

20th

of

October, 1947. What was only dis¬
turbing muttering early in the
became

year

thunder

mid¬

by

Strife, famine and pestil¬

summer.

beat upon the doors of Italy
and France with loud clamour and
ence

threaten

now

ancient

to

destroy
cultures

liberties,

traditions

of

the
and

those

great

to whose genius
you

deep

so

On

and

owe

we

the

other

hand,

under the
stimulus of the idea put forth by

the most of them, have

hard things to say about the Eu¬

effort to

ropean
war.

Many
which, I am

recover

from the

these

accounts,

of
sure,

I

feel to

be

mistaken

a

themselves

fairly

and

in

have

been

able

common

develop

together their portion of the Con¬
tinent
each
I

and

in

to

so

help

other.

used

to

major

outlook

wish

to

perfection
Britain.
and

those

premises

man's
not

call

and

my

They
I

it

is

fully realized

this country what

step

forward

that

In the United

people

me,

immense

an

action."

States, it
apt

are

seems

to

point

to

to

do?" But, it is one

we

thing to
up from a clean beginning
with a growing
population in ex¬
panding territory. It is another to
attempt to bring into harmony old
build

established

nations

of

diversified

natures,

traditions and histories.
Their inherited habits, tastes and

prejudices

all

create

barriers between
For

myself,

much

the

Paris
of

ropean
some
cause

new

the

draw

fact

that

us

to

In all

made

sence

Here

there

and

as

whole.

a

like

I

that.

economic

which

the

coalition

raises

hope in

of

to

are

going to hear

the

16

you

have

issues.
heard

the

in

the

For

this

I

Europe,

about

and

it

as

view

of

of

the

in¬

and

simple

countries

have

talk

you

of

little

a

the

top of all this

Europe,
the

on

come

me

It

the

narrow

is

for

prepared

the

to

issue

to de¬

you

do

to

of

recovery

I feel that

my

bring

Western

we

my

in Britain

trying to contribute. There is
need for

me

to recall that the

chiefest condition of the idea put
forward by Mr. Marshall was that

Europe, and

measure

occupation
farmer.

best

slave

a

at

He

of

part

in

Germany
just
grown
up,
were
living in the
Maquis and facing torture and
death if they were caught.
Be¬

whilst

lieve

his

I

me

who

sons,

do not

come

to

you

to

not forget, when
judging
Europe, the ghastly background to
the present picture.

Britain

How do
the

Working
in Britain

we

picture?

There

back

on

wide¬

a

we

we

not

are

sitting

are

hands

our

into

come

is

spread impression that

doing enough, that

with

I

back

the

should

like

to

take

you

little and to remind
you of

a

country has done since

m,v

to

war

indeed

help recovery.

Whilst

received

we

and

large credits
Canadians, we

the

out to Europe

war-shattered

the

ured

returned

from

a

brief visit home, it has been
my
lot
to
read
many
articles

by

writers

visited

and

speakers

Britain

who

and

have

Europe this
year. Many of them, I might al¬




back

years.
cause

know

we

ducing

rely

on

two

which

We did
under

so

the

for

to

50% of

over

put it

in

uct of

whereas

way,

increased

farms by

our

compared

with
in

food.

our

another

Britain have

the

as

than

own

world.

less.

output by

15%, and

much

whole,

a

our

machinery

less

industry
as

.uses

in the

any

We have to thank
you for

help in that regard for you
sent
us
much
agricultural ma¬
chinery, and you helped us gen¬
erously with seeds under Leaseyour

Lend.

But

today our production
agricultural
tractors
has

of

reached 290% of the 1939
figure.
To give you an idea of what we

doing in other directions, our
production is up by half,
potatoes
2V4
times, milk 20%,
vegetables

30%

and

beet

sugar

28%, compared with 1938.
To

meet

the

present

crisis

we

b,y 1951 to grow 60% of
food at home. We
hope, there¬

our

by,

to

save

in

year

to

upon

you,

million

exchange.

inflict

sorry

$400

over

foreign

so

but

I

I

figures

many

anxious

am

a

am

to

bring home the great effort which
has been, and is being made in
our countryside.
Coal Production
Let

me

now

move

need

ent

in

to

on

Today fuel is the second

coai.

most urg¬

Western

Europe. We
being severely criticized, I am
with some justice, for not
making a big enough contribution
are

afraid
from

mines.

our

study
find

the

But

Paris

that

as

the coal mining

Europe

if

will

you
you

report

result

a

of

will

the

war,

has

shown

the

most

fall,
and
that
every
country that mines coal is experi¬
encing great difficulty in.raising
output.
Before the

the yearly out¬
mines of Western

war

put of the coal

100

over

econ¬

manufacturing

order

that

industry

our

coun¬

benefited from that policy.
It en¬
us to build
up that interna¬

tional trade towards
we

all cast

because

ture,
as
our

an

we

we

entered the

importer

food.

which, today,

nostalgic glances.
neglected

of

our
war

be

free

as

ever

you

can

like

tions

that

over,

were

installa¬

many

wrecked,

and

some¬

thing like two-thirds of the work¬
ers'

homes

were

damaged

240,000

tons.

But

still

are

this

a

short

people

alike

their

at

were

mil¬

from that quar¬

year

ing

the

home

miners,

ground,

pithead
work.

and

Thus,

rooted
look

to

their

to

leave

to

the

idle
other

for

should be
been with

no one

sur¬

prised that it has
the
utmost
difficulty that we have
persuaded even some of the min¬
ers

whom

Since

lost to the forces to

we

return to the

the

pits.

Now what about the British coal

In

1938

produced

we

227 million tons of coal, of which
we used 181 million at home.
The
was

the

exported

or

Coal

Board

over in January of this year,
comparatively successful drive

took
a

has

made

been

to

recruit

new

for the

industry, and in fact
they have succeeded in raising
the manpower by some 25,000, but
many
of these have still to be
drained.

when

there

produced only 189
but during
the

year

we

lion

was

months

our

of

paralyzing
our

this

year,

incentive

no

to

duction
For

that

by some 22 million tons.

myself

I

better

as

feel pretty sure
machinery is in¬

atmosphere of
improvement
and
progress
is
spread throughout the coal dis¬
tricts, the miners themselves will
begin to slough the sense of de¬
stalled, and

an

failure

and

feat

as

which

to

they

grievously

accus¬

will

say

Not

winter,

this

Of

mettle.

their

I

show
con¬

am

fident.
Other

Industries

of

mines has been at the

197 million tons.

It is that

gap of 30 million about which

erybody has

so

According to

ev¬

much to say.

the

Paris

report,

As European coal production
this is a better record than
that of any other country, but I

But

agricul¬
in

1939

two-thirds

of

Those first two years of

goes,

bound

am

to

that

say

it

is

a

of grave disappointment to
in Britain at the present time,

source
us

as

Mr.

But

our

Bevin
coal

subject to
during the
affected
It

is

in

has

often

so

said.

industry, though not
physical
war,

destruction

was

Brink

on

sometimes

when France fell

MO!??(•■■

forgotten
an

that

export mar-

by

the

of Communism

bold

a

experiment, controversy

people in this world like the Brit¬
ish, with the possible exception
of

yourselves, for predicting dis¬
crying from the house¬

aster and

about

their

the

into

mess

government

which

has

landed

them. Yet, there are those in the
United States who suggest that
we
are
on
the
brink
of
com¬
munism

because

His

Majesty's

Government has nationalized the
mines

and

two

industries.

It

three

or

is

other

really such utter

that I do not feel called

to go deeply into it, except
that I should like to remind
you
upon

that

communists

our

(now

num¬

supply of foreign exchange. All of
chafe

us

control.
it is in
to

under

That

worked

that

people

who

the

have

Our aims

have

ship

our

half

over

yards

the
in

construction

1,877,000

today,

utmost,

are

tonnage

the

world

tons of

3,317,000

reconverted

or

tons
were
repaired.

According to the latest figures
of the Board of Trade, we are

trucks,
26% more
steel, 45%
more
gas
and 67%
more
electricity than we did in
1938. In almost all directions, with
the exception of coal and cotton,

turning

75%

out

more

rayon

far ahead.

are

more

yarn,

The

cotton

in¬

dustry is being drastically reor¬
ganized under private enterprise,
and the latest reports are encour¬

aging.

peace,

can

pointing to

a

under

great deal of solid
very

difficult

and

have

col¬

he

as

Since

the

laborated

war

we

wholeheartedly

with

yours.
our

less:

which

and

his

in

secure

confident that there

am

in

man

he likes, talk

like:* and feel

lies

the

us

the

will

the

and

with

our

Commonwealth

Empire to surmount not only

our

present

but

even

perplexing

and to

us,

still

greater

have

known

again

troubles,

troubles

worse

they beset

greatness
and,
to

on

than

in the

as

play

should

move

our

to
we

past,

part

setting the Western World

on

in
the

path of progress, material, moral
and

spiritual.

N. Y. Stock

Exchange
Weekly Firm Changes
The New York Stock

Exchange

has announced the following

firm

changes:
Allan

from

Reinhardt

will

retire

partnership in W. E. Burnet

& Co.

on

Nov. 1.

Abraham

Ungerleider,

limited

partner in E. J. Roth & Co. died
Oct.

tryapg conditions.

as

utmost,
to
help

in

world

a

and go

come

E.

I could go on indefinitely quot¬
ing facts and figures, some more
favorable
than
others,
but
all

to

fortunate peoples to fill their poor
bellies and to get on to their feet.
Like you, we want to see a world

once

work

same

our

together

under

we

the

are

done

of

that

the

submit

them.

brothers

fact

them

than

to

strength

building

55%

view

favor

more

impressed by the rapid re¬
our merchant marine, by

be

to

as

heavily over¬
who have to ad¬

controls

our

any

and

nature

our

the

people

minister

restriction
in

But, it is ridiculous?

yours.

assume

with

is

as

grievously

other ways^

printed

the details of other indus¬
Britain. But I think that
to our shores are bound

being

out¬

be

turns upon what should or should
not
be
done, and there is no

at

Time will not allow me to touch

taneously

the

and

Very naturally in times like
these, when we are in the midst

tomed, and will begin to feel that

first

despite

government

and

it,

mil¬

tons,

six

in public what you

the

then owing to bering some 40,000 in 49 million)
were
not
considered
important
the war, when it ended by boom¬
ing and there was no means of enough to be invited to the new
Comintern meeting in Poland, and.
modernizing it, our mines have
that two of the
not enjoyed
leading members
the thorough-going
of our government have the dis¬
reorganization they need in order
tinction of being named as the
to
bring them up-to-date.
But
now
the industry enjoys priority implacable enemies of that creed.
It is now a truism to
for supplies of equipment.
It is
say that
intended
that
output
shall
be in the crisis through which we
are
raised next year to 214 million
passing we have no choice but
tons, and to 249 million in 1951, rigidly to
economize
upon
our
i.e., to outstrip our prewar pro¬ imports and to save our dwindling

modernize

Last

bunkering of ships.

to

as

Britain

newspapers.

nonsense

Owing to the depressed state of
the coal industry before the war,

shipping
in July this year compared with
780,000 tons in 1938, whilst simul¬

devoted

are

In

opponents. If you
person of importance, what

tops

National

vival of

industry?

democracy,
We

were.

political

a

you

wits

end to discover ways of persuad¬

or

means

100

a

God.

we

say

about

your
are

to

dangerous

might

from the

During that

still

are

growing industry, and will

fought

put.

away

1939.

We

thanks

We

mercilessly bombed and

better compete in the world mar¬ 92% of our
prewar manpower is
ket. Whilst this had the bad cf->
producing 87 % of our prewar out¬
feet of draining our agricultural

population

and good citizens of the world.

they are part of an expanding and

was

rate of

in

good Britains, good Europeans,
good friends of the United States

Ruhr

put of

19th century, we built
prosperity by importing
food and
raw
materials

abroad

Agreement which
turned
out to be too much for us. I claim
with all emphasis that we
have
done more than our full share aw

have become so

up

from

unemployment be¬

severe

1921 and

have

we

Loan

Germany was about 440,000 tons a
day. When we remember that the

omy of the
our

of

tween

20

again,

time the government and private

industry through¬

dramatic

psychologi¬

The coal miners

look back with bitterness
upon

men

intend

to

trade

This problem has a

are

cereal

men

and we have had to
the older men, who bore

cal side to it too.

years

no

younger

the brunt of the war, to carry on
the industry.

as

war,

worker, today, has in¬

creased his

as

prod¬

one-third,

before

Europe,

Our farm

Or,
in

we

the

the farms produce 37%

of
the

deliberately, be¬
free

the

and

utmost to restore a sys¬
tem of multilateral
trading in the
world. So far did we
go, that we
undertook to do things under the

still

neglected ag¬

Britain

because

Ministers have

our

our

liberties. I

British Agriculture

in

and

again

visitors

abled

have

re¬

end,

an

as

said
tried

gone,

rest

As you

to

came

demand

particular,

tries in

Paris report has stressed the
urg¬
ency. First let me deal with food.

riculture

of thousands of our
younger min¬
to leave the industry in order
to join the forces. When the war

had

tons

at

tens

some

ers

food, which was the
figure before the war, we are pro¬

lion

of

allowed

we

in promoting the economic
projects of the United Nations. In

upon

fore to deal with that feature and
that feature alone.
I

our

farming in¬
into
neglect,

ter.

glance

working. It
capital mis¬

33

you

to

do not wish to press that
point.

needs

a

worse

slip

I

now

take when

making

with the result that
today instead

ended has altered
to let our

never

dustry

we

me

into

us

of 33% of our

solve

that

major

adopt short-time

led

collieries

the export
returned
with
greater
force, we had only 700,000 miners
in the industry instead of
766,000.
Indeed, the shortage was made

war

wealth, is equivalent to some $14
or $15 billion
paid out by you. But

tryside to the towns nobody would
deny that the nation, as a whole,

Since

at home.

our

tion has not done badly in
raising
the daily output from
30,000 tons

country as part
of
Europe, should help them¬
selves. My purpose today is there¬
my

growing food

to

tons, which
cut off at

was

destroyed, the present administra¬

This sum, meas¬
basis
of
national

the

on

in¬

serving,

This forced

the

$3 billion.

some

started,

16 million

some

were

blow.

(1661)

East

and

of

areas

was

Nothing that has happened since
the

our

mouths wide open
waiting for you
to fill them. This is not so.
And

here

of

ness

out

Hard

we
a

vestments, and the activities of
German submarines forced
us to
begin all over again with the busi¬

have

whine, gentlemen. I only ask that
these things should be borne now
and then in mind, and that
you

cheap

job is to do

best to explain how

the

spent

as

the

or

look

we

of years of

worker

them

as

have also to

we

have

may

Then

war.

the effects

the

Situation

I think you should do.

no

those

on

paid

I

Europe. It would be improper for
me to
attempt to tell you what

are

about

higher and higher out¬
put from machinery, factories and
mines
obsolescent
by the very

Let
British

further.

are

then

you

cide, through debate in gatherings
such
as
these,
and
ultimately
through the Congress, upon what
you

and

have

reason

American

Please let
still

a

hardships, the fatigue, mental and
physical, the rations, the destroyed
houses, the scattering of families,

from

Europe.
The

any

strains

which

living. When
Britain,
consider

or

like to try to confine
my¬
self mainly to the British side of
the problem, both as it affects the

situation

of

speeches

many

should

affects

flesh

like

rather for

the discussions

remember

what

wide

very

that

sure

them.

es¬

that the Paris

seen

am

about

the

very

in

see

signed it.

We all have

report

not

Surely

indeed

—

do

of the idea—lies

states

of

emotions

dustrial
output, hours of work,
strikes, and so on in Britain and
Europe, I think that we are bound

Eu¬

people tend to grumble be¬
it is presented for Western

strength

people in

own

appeal

do

greater understanding of ordinary
behaviour.

the

offers

ket of

overseas

like

should

I

approach

recovery.

Europe
things

the

from

report

a

formidable

them.

therefore,

comfort

basis

I

human

dint

is.

their massive Union and ask
"why
cannot the Europeans get
together
as

govern

anything

are

and

race.

which

claim

for

blood

other

"inarticulate

pleas for
if

wonder

in

doing

squarely

Europe. I think
to forget what Mr. Justice Holmes

all

Europe

is

eight years
they are apt

been

reach agreement on a
effort to restore and to

say

it

into the shoes of those who have
lived through the past

folk

Western

I

difficult for people who dwell in
Western Hemisphere to put

happened.
to

and even

the

under

of

com¬

unfair picture of ourselves.
this because I
think
that

stresses

nations

FINANCIAL CHRONICLE

war, until Lease-Lend
bit heavily into our

plete good faith, have given what

Mr. Marshall in June of this
year,
a
very
remarkable
thing
has
Sixteen

made with

are

the best of intentions and in

nations

debt.

a

&

Recovery Program

most say

the

COMMERCIAL

8.

Ann

Reed

&

Putnam

Reed,

Co., died

on

partner

Oct. 10.

in

31

THE

(1662)

■

*

V.

By JOHN

DUTTON

experienced salesman should be able toclassify
There is no point in wasting time

in the first interview.

(Continued from page 6)
inability to resume her place in
the European economy, due in
part to the division of that coun¬
try by the iron curtain and in part
to the non-restoration of German

caUing on

We still have with us

production.

the capacity for investment the inclination calling for immediate attention
the problems of relief, of longto do so, or are already tied up with someone else.
A salesm
term
reconstruction, and of the
time is his most precious asset. It is an expensive luxury to w
British balance of payments.
it calling upon prospects that might be sold someday after you w
Time is not available to discuss
yourself out doing it. The only glory in this business should go to
the SEC and the politicians.
That is what they must have to keep in detail how and why these situ¬
ations have
arisen but let me
their jobs.
If you are a salesman, take the cash and be satisfied
with as much of it as you can get. If you do that, you will be O. K. make it clear that the last thing
No
Here are a few suggestions that you may find helpful in quickly I want to do is to criticize.
men
better
qualified for their
analyzing a new prospect:
tasks than those now in charge of
(1) Financial Capacity—If possible find out before you attempt
the
institutions
in
Washington
to do business with a new client whether or not there is sufficient
could be found the world over.
wherewithall to make it worthwhile. If not, listen to his conversa¬
That emergency relief is still re¬
tion during the first interview. Sometimes club affiliations, friends
and business associations will give you the clue.
Best indication quired in Europe must be laid
of all is to allow the conversation to be diverted into a discussion largely to the weather, an excep¬
of his views on business, the market and his specific holdings.
If tionally severe winter and this
people who do not have

find out what a man owns you can tell immediately whether
is large, enough to make cultivation worthwhile.

you
or

Thursday, October 23, 1947

Economic Reconstruction and-Marshall Plan

'

Securities Salesman's Corner
An

& FINANCIAL CHRONICLE

COMMERCIAL

not the account

If othei factois
should be en¬

Incidentally not all small accounts are unprofitable.
enumerated
below are favorable, small accounts

couraged.

past

much

summer

hot

too

and

A great friend of mine at the
Bank of England told me recently
it cheered him up to read the fi¬
nancial history which that institu¬
tion compiles from year to year
dry.

Personality Traits Peculiar to Investment—Some people have
and to find that after the first
a
one-track mind on several subjects.
If a man thinks he knows
world war economic recovery in
all there is to know about investments and that no salesman can tell
was
not attained
until
him anything, don't waste time trying to show him that he is wrong. Europe
This can be discovered by prospect's attitude and conversation.
He 1926, eight years after the armis¬
tice in 1918.
often will admit how smart he is and how wrong are most salesmen.
This does not mean, however,
Then there is the typical wiseacre who knows all about the securities
that there has not been achieved
business. Maybe he was in it once or has a friend in the business.
in Europe — Germany perhaps
He thinks you make too much money when you sell him a stock
should be excepted — substantial
or bond.
He will accept your information but he will buy from
someone else
(after he chisels around the market to see where he progress in the restoration of eco¬
nomic activity.
The recovery of
can save an eighth).
He usually pays for his folly in the long run,
has been astonishing.
because no one cares enough about his business to keep him posted transport
after he has made the investment.
But you leave him to his own Bridges and buildings have been
replaced and, though temporary
devices—there is little profit for anyone in his business.
(2)

structures

still

are

much

in

evi¬

in

two

any

like

tries

Look at

cases.

Belgium

and

coun¬

Holland,

side by side on the southern shore
of the North Sea. If any pair of

countries

first

at

glance

would

likely
to
resemble
each
other, here certainly are two. But
seem

let

now

facts.

the

recall

me

Belgium
destruction

minimum.

you these
liberated in

of 1944 and

summer

that

to

was

was

Holland

so rapidly
kept at a

occupied

was

until 1945 and that last winter of

occupation
of

the

entire

and

coal

brought

destruction

severe

the

war.

together

with

Holland has

has
a

heavy
industry.
coal, only re¬

little

cently

developed, and no home
production of iron and steel.
The
economies of both countries have
the
benefit
of
important

had

colonial areas in the
tropics, the
Belgian Congo and the Dutch East
Indies, but the Congo is so placed

geographically

that

it

escaped

enemy attack

and its production,
stimulated
by
wartime

greatly

demands, has continued

uninter¬

ruptedly. On the other hand, the
Netherlands Indies fell under the
control of Japan, destruction has
been widespread and the result¬

ing political difficulties remain to
be
fully solved.
Further facts
might be stated, but these will
suffice to show why Holland's po¬
sition is more difficult than that
of

Belgium and why the needs of
these two countries differ greatly.
Certain
faced

other

mand

countries

are

with

great problems pecu¬
liar to themselves and not shared

pressure

the

of

the

—

public

de¬

with

more

to spend each week for
goods of all sorts, demand far in
money

of the

excess

be to

Luxembourg,

well-developed

inflationary

plies.

consequence,

ma¬

to make arms and
military sup¬
plies, not articles for personal use.
These two
factors—oversupply
of
money
and
undersupply of
goods—gave
rise
to
increasing

most

Belgium

raw

terials and essential
supplies sent
them where they would be used

privation

and

largely in

authorities in control of

The

strictly limited

natural

effect

sup¬

would

push prices sky high and to

check this

tendency, rationing and
are introduced.
1

price controls

But, when money can no longer
be used to buy freely what people
want,

it

becomes

less

useful

to

have and public distrust develops

the

to

as

continuing

Such

money.

gives rise to

lack

value

of

confidence

of

artificial demand

an

for useful and durable articles and

to hoarding by producers and con¬
sumers alike.
Barter tends to re¬

place the normal

process

chase

and

Because

great

shortage

sale.
of

there.

seen

Ger¬
most easily

are

manufacturer

A

Frankfort told

the

of

in

goods

these effects

many

of pur¬

in

last June that

me

he estimated less than

of his

10%

bought for money at
the final stage of distribution.
At
product

was

time in Germany, during the

one

coffee became far

war,

fective

than currency

ef¬

more

as

means

a

of

obtaining merchandise and w,e
all read of how cigarettes
became a medium of exchange in

have

that

country

over

by the army of occupation.

after

it

was

taken

Firm—There are quite a
Elsewhere, things have moved in
dence, such effective use has been
few
with their (established)
Such are Great Britain the same direction
made of the reduced number of by others.
without as yet
investment connections that you couldn't pry them loose with the
and
the western zones of Ger¬
locomotives
and
cars
available
going so far except in Hungary,
best of offers. Why waste time?
The only propitious opportunity
many, to name the most obvious but the
that in many countries more pas¬
point has been reached
for acquiring new accounts that have transacted most of their busi¬
cases.
It is impossible to deal
Customer Tied Up With Another
investors who are so well satisfied

(3)

with

ness

then

firm is after

one

a

market debacle such as last fall.

the most unstable

only

Even

type of account will change, due to

dissatisfaction.

Clash of Personalities—For some unknown reason there are
cases wherein
two people cannot find a common basis for liking
each other enough to warrant a business relationship. The psychol¬
(4)

ogists have given

us many reasons

for this barrier that subconciously
As for the deep inner

sengers and

ried

in

freight

are

being

car¬

in

1938.

The

than

1947

European putput of textiles is ex¬
pected to reach 1,400,000 tons this
year, not far behind the estimated

production

prewar

tons.

1,600,000

Comparing the output of
in physical volume for the

food
12

of

months

for this condition of mind we can leave that to the researchers

reasons

in

psychiatry.

himself for

All

salesman needs to do is to trust to his sixth

a

feel that the other fellow is building a wall around

If you

sense.

people when they meet.

some

reason

some

entirely beyond

your

control, shove off to

greener pastures.

securities

Selling
established

to

personal business.

a

make

profit

a

buy what

register

what

on

you

be

There

half way, keep an open

loud

sell them, and who have the means

you

selling in sufficient quantity to make the cash

are

you

ring

often.

and

These

experienced salesman tries to sell.
off your

must

what you have to say, who are fair enough to want you

to

as

Confidence

lasting business relationship can ensue.

a

people in this world who will meet

are

mind
to

before

is

are

the

only

The others should

prospects
be

an

scratched

year

ending June 30 this
with the 1934-38 average we

find

arises between

that

sented

countries

repre¬

same

time

has

borrowed

the

same

amount

from

the

International

Monetary Fund to meet the shortage of dollars needed to make pur¬
chases in the United States. The gold sale was accomplished by debit¬
ing the gold held to Britain's account in the Federal Reserve Bank
r f New York and
crediting Britain ^
—
—with the
equivalent amount of Buenos
dollars.

The

reported

that

it

Aires Bonds

British

more

was

Treasury
shipping

bullion to the United States

to

replenish its reserves.
The "Queen Mary," which sailed
on
Oct. 19, was rumored to have

already
production
Western

reach

Germany, is expected to

almost

million

80%

tons).

estimate

of

1938

(439

The corresponding

for

crude

is

steel

just

two-thirds, 30.3 million tons.

$40,000,000 in gold aboard destined
for

New

Britain

York.

has

gold from

l'eved

been

South

that

reserves

Although

its

Great

gold

and

a

situation

low

comparable

not

enough to be

prosperous.

Un¬

All

outstanding 4%-4% % exreadjustment sinking fund
dollar bonds of 1935, due Nov. 1,
1975, of the Province of Buenos
Aires,
Argentine Republic,
not
heretofore

called

for

Europe with its pop¬
nearly twice as great as
own
is prosperous the world

redemption,

our
as

a

whole

cannot

measures

this

and

at

known
is

time

of the

continental

Bank

Street.

City of New York, 11 Broad
or

of

at

The

New

National

York,

55

City

Wall

the

program

being devised and will

ex¬

Street,

needed

are

the Marshall Plan

as

is

will

be prosperous.

Exceptional

made at The Chase National Bank

KINGSTON, N. Y.—Richard A.

the

imposed during the
war.
Europe is producing but not
enough to provide a living for its
people at reasonable standards,

re¬

With Chilson, Newbery

with

levels

debated

dollar

steadily being
duced and
do not greately
ceed $2 billion at present.

The alterna¬

tive is for Europe to fall back into

be redeemed at par on Nov.
1, 1947, through operation of the
sinking fund.
Payment will be

receiving new
Africa, it is be-

are

sistance is essential.

as

a

means

now

soon

be

to meet this

crucial necessity.

The scale

of the

continental

tried

certain

strike

scale

before.

today will

and

be

lines

to
of

Marshall Plan

planning

has

My

never

main

up

statement of their

a

would

a

giving effect

as

lay before you

sound in

un¬

the

to
of

measure

which

of

Montgomery,

York has recently




ess,

goods

to

laborious proc¬

a

are

There

either

are

be

to

to

met

infla¬

military
the

or

so-

called expenses of occupation im¬
posed

by

volve

immense

the

Both

enemy.

programs

in¬
of

without

money

effective

and

govern¬

on

diffi¬

The administrative organi¬

zation

in

men and
much ex¬
tended and expanded.
Aside from
armies, navies and air forces them¬

point of both

must be very

measures

less

production
is
maximum, employ¬

inflation

culty.

selves,

war

place.

itself leads to further

ment

workers

modern

the

in

trade can¬

The combined effect of the war

great expansion in the volume of

credit.

channels of

does not take

and

merchan¬

of

commodities

and

circulating

and

which everybody

wants the flow

organized
not

I

unquestionably,
as
the
means of satisfying his

accepts
own

cigaj-

and

mentioned—but

as

dise

short¬

many

found—coffee

rettes,

government borrowing leading to
currency

that

however,

cuts

mu¬

be

thousands of office

many

needed for the count¬

are

detailed

tasks which

wages rise to greater
heights than ever before, but the
goods made available to the pub¬

lic

case?

ment

usually decreased.

are

start

its

to
and

with

flation.

the

money

Let

me

side of in¬

The vast funds raised by

the

government

ing

are

through borrow¬

performed

the

This must

leads to

and

staff
of

by

have to

organizing
and
supervising departments of
government.
Who can begin to
remember
all
the
alphabetical
organizations required in our own

in

enue

others.

all

be

paid for

similar growth of

a

and ministries

treasuries
New

finance.

paid out in large part to
manufacturers,
railways and

sources

cf

rev¬

tered.

which
the

The largest single

this

next

money

stage is

is

item to

applied at
and sal¬

of

turn

materials,

raw

must

pay

out

the

tional

first

instance

by

the

na¬

make their way
rapidly into the pockets of the
public and increase greatly the

capacity of people to buy things;
is, purchasing power.
now

to the goods and

materials of

of

is

than

war

war

as

called

of all

should

low

be

reduced

al¬

vanishing point. Even
stocks of all

industries,

materials

was

supplies

materials, semi-manu¬
factured goods, the end products
of industry for all purposes other

duce

and

armed

raw

almost every

effort

that

inevitable

sorts,

It

national

man¬

other essential work, it

or

in

industry could pro¬
something fheeded for the

and

into the

is drafted

war

forces

most to the

aspect of the question:
found early in the war that

war

not employed in occupa¬
tions essential to the prosecution
power

services
was

adminis¬

sible

greater

treasury

Turning

and

Inflation creates immense diffi¬

but they in

part of what they receive as sal¬
aries and wages.
Balances held
in

enacted

devised,

the

Some part of it goes on to
other manufacturers and produc¬
ers

have to be found, new taxes

culties, but there are others whicfa
arise directly from the war effort
itself.
When industry is called
upon
to produce wherever pos¬

wages

aries.

With S. P. Klapper Co.
New
upon by the government to do so.
(Special to The Financial Chronicle)
mental facts that must be borne It might be anything from battle¬
joined the Sales
in mind.1 No two countries are ships to bandage^
Department of Chilson, Newbery
BOSTON, MASS.—Norman H.
The output of
& Company, Inc., 48 Main Street,
Kristel has been added to the staff economically alike and, therefore, goods for the consumer, what in¬
to
represent their interests in of S. Peter Klapper & Co., 31 ) the task of bringing about eco- dividuals wanted for their own
Milk Street.
•nomic recovery is never the same use, was cut to av.minimum.
Orange and Rockland Counties.
The
Osterhout

have

prefer barter to sale.

Barter is such

effort

inevitably leads

tion.

been

purpose

attack-

remain

that
on

approaching
the problems of Europe, but first
let me point out certain funda¬
me

War

forced

is the present situa¬

in¬

tual aid.

In

ulation

ternal

draw

expenses

less western

Called for Redemption

to

figures.
is

the

accepted

greatest possible

output of fertilizers
above prewar.
Coal
this year, including

the

Governments to meet at Paris and

after

The

of

most

vitation of the French and British

filled

Recovery has gone a good
part of the way but for continued
rapid progress further outside as¬

Treasury
has sold another $120,000,000 of gold in the United States and at the

countries which

Con¬

Paris

recent

Present Situation

announced in London that the British

hostilities

production of cereals

the

tion?

was

of

which

What then

On Oct. 20 it

close

reached 86%
of prewar output,
potatoes 88%, meat 65%, oils and
fats including butter 71%. These
are
production not consumption

list AFTER ONE CALL.

Britain Sells More Gold and Gets Fund Loan

rather try to sketch in barest
outline the problems which faced
in widely varying degrees at the

who

those

dispose of

me

needs

the

at

ference

the

in

where

with them separately in the halfhour or so at my disposal.
Let

and

as

supplies

the

were

held

requirements

of

continuous production would per¬
mit.
Although the United States
felt
less

the

effects of

than

most

war decidedly
belligerents, and

vastly less than some, we all know
that
many
articles of clothing
could be obtained only with much

Volume 166

Number 4640

THE

COMMERCIAL

difficulty until quite recently and probably
so-called

consumers'

become
impossible.
High tax revenue depends upon a
and so large volume of industrial, agri¬
supply. cultural and other production,

durables—

automobiles, refrigeration
forth—are

still

in

short

Household repairs

still

are

diffi¬

cult to get done and
priorities
main in force for certain

building

materials.
for

Months

deliveries

agricultural

tjhe

.

needed

are

lines

some

far

are

with

in

countries

serious

more

hampering

us,

of

like

And

belligerent

shortages
than

in

machinery.

other

growth

re¬

production

at

the

every

turn.

with

its

industrial and other plant.
It
left badly suited to the needs
of peacetime
economy if not ac¬
tually useless for such ends and

to

plants to

war

situa¬

materials

of

purposes, inadequate

maintenance

from

This

so.

from the conversion

because

could

and

men

not

be

spared

direct

production, destruc¬
tion through
shelling and bomb¬
ing,

the

final

wearing out of
machinery through prolonged in¬
tense use (with the best of
main¬
tenance

machines

do

not

indefinitely), confiscation
moval

from

such

last

and

re¬

occupied countries of

things

as

railway

rolling

must

as

In

CHRONICLE

and

eat

certain

so

coun¬

Denmark, the needs

mankind

be

can

domestic

largely

met

But

continue

its

the absence

only

which
and

revenue,

and

It

is

be
a

will

man

from

point

where

millions
ated

under

normal

circle
If

between

the

this

the

Ger¬

1914

and

cents

to

bil¬

of

case

Austria

out
of

of

Under

Committee

Nations,

provided to

the

by
the

are

item

second

was

the

League

describe

cre¬

after the first World War.
the Austrian plan worked

Financial

To

Plan
a

12

in the Paris report as 41.3
million tons.

a

ones.

the

and

stated

used the expression

Dawes

foods

of

was

Things have
that length in only a few
cases, however, and foreign inter¬
vention at an earlier stage proved
in

requirements

man

feeding

mark

gone to

successful

total

by both

stuffs
during
the
Many months ending June 30, next,

introduced in exchange for
lion of the old

needed

as

change

new

of

I

centers

to

power

of

the occupying
good
its
own

make

losses through

bombing and

over¬

use.

its

and

effects

little

so

All

this

taken

but

together

when

in

is

country bar? been occupied
tide of

battle

territory,

had

not

bad

addition

passed

a

the

or

its

over

only causing de¬
disorganization on

of

their

to

its

of

for

blast

the

that

see

bridges,
be

in

with

economic
easv

understood

problem
reorganization.
It

connection

enough

because

importance and because this sub¬

ject is

to

furnaces

is

produce steel

instance,
to

two.

attacks

or

from

the

had disrupted
transport and

munication,
chaos

com¬

bordering

on

produced

was

This

state

a

air

there

must

convert

ore

into

is

It

to

easv

so

modern

duction

tinue under its

in

countries

many

and

many diverse industries had been
raised to the extent I explained

few

a

minutes

achievement

is

ago

it

and

splendid

a

deserves

our

admiration.
Under

circumstances

we

cannot be surprised that
govern¬
ments, finding themselves restored
to power and
responsibility, ad¬

task

themselves

first

the

to

of

restoring production and
providing once more the people's
of

means

already

livelihood.

said,

in

this

As

have

I

direction

a

machinery

to

convert

raw materials into countless man¬

ufactured

articles,

variety

a

supplementary materials
modities

needed

are

of

and com¬

in

order

to

public

pensable.

the

of

essential

processes

sary to the ordered
ern

neces¬
a

mod¬

state have not yet been

dealt

with.

Food,

fuel

and

terials

clothing,

minimum of

a

naturally took

shelter,
raw

ma¬

precedence

the

over

reorganization
of
the
system in a large majority

fiscal
of

life of

not

cases,

stated

but

the

reasons

because those in

faced

were

ties and

only for the
by

political

to retain

relief

of

office

difficul¬

popular support

physical

hardship

had to be out first.
In

certain

has received

finance

prompt and effective

needed

people

and

this

for

finance

is

indis¬

which

well

and

on—fuel

so

and light, as
derived, lubri¬

power

heat,

as

are

of items which constitute the bulk
of what is needed, in addition to

plant, in order to increase pro¬
duction.
The estimated value of
;his

category of

period

imports for

1948-1951

the

is

given in the
report of the recent Paris Con¬
ference as $17.5 billion.
This is

failed
end

in

to

major

many

the

cases

inflation

the loss of life and
ishment of society

struction

problem

of

to

bring

and

next

an

to

reached

stantial

the

a

fair

That means,

everything

except

materials

product

genuine savings and

market

out

of

from

not

?>n

money

inflationary

expan¬

sion of bank credit.

aver¬

even

of

that

in

I

have perhaps

giving

vou

labor

idea

tbp state of affairs to which the
Plan
if it takes

Marshall
t'cal

prac-

form

dressed

will

have

The snecific

to

be

ad¬

purposes

to

which the assistance granted is to
go

can

let

me

be

now

considered.

But

stop for just a moment, to
that in using the term "Mar¬

sav

shall

Plan"

the

I

have in
of

nurpose

Conditions

mind

onlv

reconstruction

require

mav

utilized.

40%

comes

The

the

of

re¬

finished

remain for the home

can

after

abroad
The

suc¬

some

emer¬

position

of

a

measure

come

demands

that
From

that

which
all

the

I

sides

budget

balanced, but. this has




chief

supplies

in

distribute

for

the

amounts

due

materials

have

to the third

item:

raw

sales

come

I spoke earlier of

how

the
capital
equipment
of
Europe has suffered through de¬
struction, through being inade¬
quately
maintained
and
being
worn
out, and through physical
removal.

In

the

first

this must be made

instance,

good,

but the

Paris
report
goes
further
and
gives estimates for the moderniza¬

tion of European

tricity

be

and

industry.

petroleum

Elec¬

nroducts

express'on.

does

not

am

"emergency
a

nart

thirds

us

then

to

constitute

nf the Marshall Plan.

Let

tion
be

the

at

tance

in

th's

at

set

ends

money

out

Food:

to
or

time.

which
in

assis¬

goods

The list

and

could

as:

and

raw

mate-

in

much

kilowatts
that

and

2V2

strike

of

or

larger
To

war.

bv

two-

oil

refineries

prewar

times

These

capacity.

big

money.

The

Western

for

food

Europe

is

is

now

obvious
cut

off

in

the

large
sources

< can

past
regularly provided
quantities.
Until
new
can

turn

be developed Europe

only to

America.

The

ereat

important

but
in

current

government

Thus,

the

Dras¬

is

more

of

eco¬

than

to

possible, tho

viouslv

described,

the

and

expenditure.

vicious

circle,

structure

be

can

expansion

nre-

broken

the

of

checked.

The

credit
under¬

taking of the French Government
to

balance its budget,

the

Paris

renort.

id

given in

as

immense

an

There

are.

The

flation

havoc

have

"dollar

of

the

for

econ-

in¬

and

Avar

to

led

shortage."

so-called

meaning

the

evhaustion of working balances in
hard

currencies,

dollars.

particularly TT.

These

reconstituted

balances

must

funds

and

for

prices is less
than full production.
Reasonably

Having once reached a reason¬
ably steady level of prices, it be¬
comes possible to relate it to the
price levels of other countries

addition,

currencAr

with.

the

reserves

Until

values

be

of

dealt

reasonable

de¬

of

of

As

at

the

volume
the

of

the

field

of

patterns

international

in

mone¬

working popu¬
enough to allow
the employer the profit to serve
his incentive to

as

without

interfering with the

mestic

policies

concerned?

make

this

point clear.
know

to

that

the

no

will

settle

This

continue

international

went

it

and

war

Gold

gold

to

used

during

on

goes

todav.

on

reserves have by
disappeared outside the

currency

means

United

.States,
but
in
they
mav
need

places

strengthened.

This

for which

purpose

certain

tion

made

one

realizes

capita

per

fore the

as

Europe.

American

war

Be¬

consump¬

than

other industry,
but would bring per capita con¬
sumption in Europe up to only
more

one-sixth
the

of

United

further

any

what

it

States.

comment

this

is

today

Probably
is

needed

in

the

by

State at Harvard

another

is

outside

monev

the domestic
economy of a badlv
weakened country may be needed.
I have tried to trace in outline
first

the

in

economic

the

countries

stricken

and

perative

needs
of

I

effects
most

to

be

the

im¬

in

the

met

reconstruction.

sketched

the

war

severely

describe

to

of

Sec¬

means

of

ative,

I

Eurooe.

the

consist

drafting

purchase

of

initi¬

come

from

of

of

I

want

in

closing

call

to

to

vour attention the major gen¬
eral objectives to which the minds

and

efforts

such

of
as

efforts

rected

and

those

these must

how

engaged

the

in

be di¬

steps

sug¬

lead
to
their
First,
production:
country must seek to

will

no

gested

on

attainment.

point which .leaves us with
only the final and most difficult

make

in

men,

topic of Money.

plant and natural resources.

The

Obviously
use

a

of

all

it

has

pro¬

do so."

to

us

Those

disoos'.tion

a

this country to co¬
preparation of a
and—usincr Secretary Mar¬

plan
be

the

in

words—"so

for

practical

forward

plan

as

to

so

it

may

so"

do

worked

in

to

out.
to

responm

have

out

now

Avhich

plan

a

far

us

suggestion,

to

seems

all the points which T have

cover

taken

I

up.

approach to
which

imagine

cannot

an

critical situation or

a

such

to

response

an

le«s

disclosed

a

approach

of

spirit

intervention.

deliberate

is just one more point

There

I

wish to make mid with that I shall

parts of Europe

close.

In certain

food is

woefully deficient and fuel

for

of

And

lacking.

such

areas

thev

whereby

conditions

almost

there

is

unfortunate people
no means whatever

the

to

open

comfort

of

purposes

entirely

of

improve

mo

]i*e

and

them

alleviate

iheir sufferings. Under such condi¬

tions.

far below that of in¬
normal,

leading

dividuals

their

that

inevitable

is

it

haooy

Discouragement ami i^ne-

lessness render the™

cure

Now,

in

aid

European

the part of

on

such

age,

country

friendly

a

indicate only

words

people

the

The

nerish."

will

Plan

inrapab1- of
1 ~oe

"Without

effort

Marshall

shipping, insurance, stor¬
rent, salaries and so forth.

point.

"The

program

merchandise and commodities and
the payment of incidental costs
as

that

on

of

Those

and of later support of such
so far
as
it ma-" be

gram

tered

the

Secretary

The role of thi<?

practical for

a

Marshall

must

think,

outnut falls

for

first

said.

Secretary

meeting these needs and finally
sought to explain how money en¬

than

to

thepleclara-

June 5.

on

words bear directly
The

be

1 to

The

the

as

countries,

likely,

require

suggestion of what the world has

Sixteen

be

it not

is contrary

the policy of our government?
I
do not think so and I hope I can

sustained

when

today the United States is
using four times as much fuel and

Would

intervention which

this

is

do¬
countries

the

of

postwar

balances.

produce.

The question is bound to arise:
How can all this be accomplished

other

force

that

the

the

It

large
in

a

power

low

support

to

spiral
equitable

an

to maintain

of

but

much

as

prices,

tary relationships will result from
the play of economic forces "nder
conditions.

the

let us
Having

rates.

purchasing

hands

lation

shall's

what

is

inflationary

steadied

and

to

clearlv

relative

that

objective,

wage

checked

operate

see

the

currencies,

fourth

a

look

economic stability can he
attained it will remain impossible
gree

exchange rates which
represent

exchange rates which do not un¬
duly
favor
or
obstruct
either
exports or imports.

a

auestion

must

some

fix

to

and

accurately

should
be

that

purpose must be provided.

In

a

stable prices are perhaps the core
of all that we seek to accompFsh.

Plan was contained in

however, n^eds

money outside the domestic
nmv.

I
stable
important

imply that

of

come

step in the right direction.
♦

a

currency.

high enough

program

as

the

by

for

the nri-

of Central Bank credit to meet

use

level

to

The

said

necessity

of

mean

be

inflation

of

nothing

a

value

price level.

can

level of wages can be worked out

eliminated.

promntlv

as

stopped

delay and

reconstruction

check,

oossible

of economy may also

needed,

nomic

it

or

cause

measures

be

make

reduced

direct

marv

tic

an

stable

lives

ing

need

under

stable

a

thing
stressing
the
do not

steadily and
prices can be

The second major objec¬

is

same

the program and the ends
for which money needs to be used

me

under¬

is

unless

mounting

takings, but that impression loses

Dower

simvlies

needed

This

the Central Bank to

on

will have been

ondly,

the

relief"

As I

be

volume than before the

them

use

money in cir¬
proceeds
of such

should

greatly

25,000,000

be worked out.

can

requiring

further.

The

without

course

tion

re¬

trade

of

tive

being received by the gov¬

this end the proposal is to expand
electrical generating capacity by

reconstruc¬

them

however,

we

Capital goods.

to

are

culation.

will

precede

country

are

conditions of inflation there is
abundance of liquid

gency relief measures to tide ovej
ncriod
before
all
the
plans
must

a

who

which

a

presents

to do so.
of needed goods,

commodities

or

ceived

recon¬

opportunity

When any form

if

been paid.

country has from eastern Germany and the
Danube basin, two regions which
resembling in sub

described?
be

finished

the purpose of

serve

illustration.

should

the

necessary

come

whose

have

should

60%

through the de¬ Hals, ineb'dinq in el: capital rioodr tion was 2V2 times that of Eurnne.
inflation and, finally, a certain
quantity of The plan would expand oil refin¬

is

state

a

will

age and

maining

'

government

the

figure of 60% is

is

the impover¬

are to
my mind the
most serious
consequences of war.

what

than

more

of

property,

and its effects

Now

value

very

raw

commodities should be directed in
order to bring about reconstruc¬

a

speaking

to

come

the

of

although
that
is
highly desirable, but if borrowing

stitutes

The end of hostilities

roughly,

not,

ported to replace the supplies and

revenue,

look

todav

do

necessarily be covered in full by

attention and where this occurred
there has been avoided what con¬

elsewhere.

labor

tax

mean

the

The

itself

program

try, agriculture

from

from abroad, only 60% of the fin¬
ished merchandise need be ex¬

By that I do not

struction

for drafts

government expense must

that all

using

public

cases

is

which

confidence

W'th

vast that many

there

in

money

have

ceeded

so

own

sources,

stable

of

restoration and reorgani¬

con¬

this be stopped?

can

ernment

the

had been attained, but the

of

to

a

the
Central
Bank and this, of course,
strength¬
ens the forces of
inflation.
How

carry out the processes of indus¬

foreign

commendable

zation has been

nation

the

of

at reg¬

from

facilitated by the fact that

and

product.
This
varies
of course
from one industry to another, but

success

task

for

life

indirect advances

to

production
not
take
place and goods
produced will not pass into chan¬

of

being

plant

production

But

will

number

is

of

improve

proposed.

a

money

intervals

was

provision

and

rapidly
halted.

available in the form of di¬

or

the

extend

nels

In

this

tion,

re¬

tools

power, to sus¬
tain itself without assistance from

highly

measure

that

see

economic

industrial

orderlv

such

dressed

complicated

made

to set the process in motion and
to sustain it for a time.
In addi¬

insufficient

to

to see that to transport
But here an
important point
goods by rail, locomotives and arises.
The cost of all factors
freight cars are needed. But it is necessary to production
except

point from which
recovery had to begin. That pro¬

countries

suggested the delivery of
supplies and raw materials needed

current

or

is easy

not

the

quirements?

35

steps

its

with

meet

those

pig iron, other furnaces to the figure for total imports which
struction and
change nig iron into steel, rolling
substantially exceeds what the
all sides, but
dividing the country mills, fabricating shops and so on United States is asked to furnish.
in

to

materials, including fuel." In
addition to labor applied through
raw

stock, automobile trucks, shipping cit during the period needed to here are
the raw materials them¬
on both
the high seas and inland introduce fiscal
reforms and bring selves to be turned into
finished
waterways and so forth, to say the budget into balance.
products.
The expression I used,
I have taken so much of
nothing of entire factories which
your "supplies and raw materials, in¬
were
packed and shipped to in¬ time in talking
about inflation cluding fuel," covers a multitude

dustrial

faced

revenues

assistance, they should be sold

"supplies and

money
was cants,
abrasives, fertilizers, dyes,
budget defi¬ finishes and dozens more.
Then

cover the

cover

is the money to come from
will
enable
a
national

treasury

ular

occur.

small

and

true

think

us

men¬

the period necessary to re¬
organize government finance.

beast, although feed for livestock
might perhaps equally well be
considered a raw material.
The

how the
24

is

same

Let

I

expenses of government dur¬

impedes

broken.

about

the

from

wartime

ing

rect

complete currency

fell

mark

1924

the

and

vicious

recall

Much

Switzerland.

sorts

remember

tioned the need of funds to

food

more

a

various

of

will

you

referring to
postwar
inflation,

and

inflation

further

discourages active and

you

cake

of

adequate

collapse will in time
of

oil

abroad.

more

not

full production concentrated
high-protein foods in the form of

(1663)

when

the
highly developed Where
dairying industry require which

activity and* the ex¬
be
paid.
This, in

mean

business.

nec¬

must

the

that

in

of

must

penses

revenue

government

but

sources,

Perhaps

ag¬

Still,

for

collect the

can

must

nearly

of

they

essary.

done

or

con¬

shortage.

beings

Danish

is

arose

and

and trade must be restored before

which

tion

the

animals.

Hard-pressed
treasury
officials complain that production cattle

on

tirely,

must

from

was

certain categories of
capital goods
were
in
many cases lacking en¬

gravated

their tries, such

finding

users

FINANCIAL

drought of last Summer has
human

sumers.

can

Problem of Plant Reconversion
A further
problem arose from
the effect of all-out war
efforts

products

freely

way

&

directed

Is

to

the

ills, but it has a

of economic

equally important purpose,
confidence to
millions of suffering human
second

to restore hope and

beings

so

that

they

feel the comfort of

enjoy
peace

the
and

stored to
we

be

a

would
able

to

may

again

well-being and

blessed sensations of
happiness.
Once re¬
state approaching what
call normal,

they Ax/iU

their

contribu¬

make

tion, as producers and consumers,
to the welfare of us all.

36

(1664)

THE

COMMERCIAL

(Continued from first page)

abstinence programs suggested by the powers that be
is another.
The general lack of enthusiasm anywhere
one

can

sense

even

if

cannot prove

one

to

figures and charts—is possibly the most convincing of

two

obvious explanations

midst

or

at

come

in other lands.

One

to mind.

once

the

before asked to do

where.

freely

Heretofore

gifts requested

or

This is

too, at

a

that

in

power)

degree perhaps

a

else

there

involved.
is

that

States to remain
in

It may
causes
the

so

wide margin to

a

certain

is

indifferent to the situation

countries

these countries

are

did prior to the

involved.

At

plainly producing

restoration

least

more

some

of

its

industrial

and

agricultural productivity.
In addition to what the
previous
speaker has said regarding the
needs of

Europe for food, for

terials to
the

run

a

few

ma¬

its industries and for

restoration

of

financial

bility, I would like

to

sta¬

emphasize

additional factors affecting

recovery.

of

Manpower is a
Europe.
There is

than they

V,.

bottleneck
a

It may

of

much less than it is

now

But whether

non¬

Again,

common sense

has

Europe today, is due less to the
policies and programs within

allegedly dreadful need and
For

our

part,

war

the

that

ment

we can not

to

for

capital
modernize and

rebuild,

productive facilities

expand

con¬

stitute the field in which the Bank
is most concerned.

category
funds

we

of

cannot

Even for this

requirements
be

sufficient

our

to

do

on the
Marshall Plan is
that $3.1 billion of industrial cap¬
ital goods are required over the

long

next four years.

justify an opinion on the reliabil¬
ity of this estimate, but we are
obviously giving close attention
to it.

Nature of Paris Report
I think

to condemn the American who can see no reason
why
he should do without it in order to
enable any country
to nationalize its
industry, or to enjoy the lu'xury of a
life-and-deatli internal political
struggle whether about
communism
see

are

or

some

other sort of "ism."

We

Europe

are

normal

economic

the

By virtue

countries

tremendous

a

is

of

being done
this

Bank,

amount

on

every

of
as¬

problem and we in
in
close
coooeration

with
many
other agencies, are
attempting to develop answers to

of

the many questions..

under the handicap of trying to recover their
status

At

with

the

present

.

time

.

„

it

is

im¬

Germany virtually in irons. practical to judge the validity of
converting Ger¬ the estimates which have been
submitted. vSubject to much more
many into an agricultural nation, and about
denying ;her
detailed ahd continuing studies,, I
the right to any sort of
industry which could be converted
t those
to the conduct of modern
^miliar
warfare, has apparently been per- wiwJ
i
are
in
agree!
OTfOOOA *1
Some of the

more

extreme nonsense about

'

.

M




•

...

'

•

-

-w? •

■

-

-

■<*#

.i

•

—'

"

"Tl)C

-

are

discouraged.

poor,

Will

America's

weary and

they

respond

aid

by
working
harder, by continuing sacrifice,, by
willingness to pull together? Will
;heir leadership have the
vision
and
courage
to take the hard
measures

to

necessary
to move

production,
nancial

increase

towards

'

fi*

and

political stability, to
discard some of their
traditional
methods and to lay aside some
national susceptibilities?
I

fully

in the emphasis
the urgency of
restoring

concur

on

financial

stability,

restoring

on

confidence of the peoples in their
own

Without

currency.
is

this,

no

recovery
is
possible.
of the most difficult

one

problems
of
reconstruction.
It
must be worked out in connection
with

provision

minimum

for

necessities

reasonable

a

supply

of
of

food

life

tain countries it will

Europe

requires

stantial assistance

and

and

for

In

cer*

probably

re*

if she

sub¬

is to

in¬

firm measures
nancial reform.

production and regain sta¬
bility; that it is essential that the
assistance rendered be not too lit¬

internal

of

up

fi*

crease

tle, but that also it not be
to relieve

as

much

so

Europe of making its

Reduction in Trade Barriers
To

people

many

probable

that

it

also

seems

western

Europe

cannot attain

a

ard

irrespective

of

life,

reasonable stand*

maximum effort. Aside from
the amounts involved, I think it is
fair to say that

amount of

shall's invitation to the European
countries to study and state their

riers to the flow of trade between
the constituent countries and

own

needs

the

and

Paris

consequent

are

somthing unique in
No country ever indi¬
willingness to consider

history.
a

much

so

without

It is

for

the

tangible

genera

quid

pro

example of positive

an

leadership based, I believe,

on

the

realization of America's vital selfinterest in world

On

the

other

hand,

should

less

there

greater integration of their
mies.

think

I

recognize

the

the

of

outside ass'stance, un*
is a reduction of bar*

Broken

,

econo*

into the tradi-* >
tional small
trading areas, it is not
possible to take full advantage o£
modern technology and without,
better technology, without full use
the

of

best

up

know-how

in

every

line,

Europe may not be able to
reach an acceptable level of pro*

to produce goods at

nor

will

costs which

be competitive in
This is

recognized in the Paris report; to
translate the thought into accom*
plishment will be a real test of

accomplishments of the Paris Con¬

statesmanship.

ference in agreeing
upon a frank
analysis of Europe's economic ills

role

and

of

which

facing

to

up

Europe must

the

take

steps

to

cor¬

rect them.

Skeptics may say that
are merely pious
expressions
of good intent, without evidence
of determination to
put them into
these

effect.

Realists certainly will de
the undertakings be

mand

that

put

in

that

specific action by the Euro¬
countries

pean

collectively
must

concrete

more

form

and

individually

to

and

them

out

carry

the granting of

accompany

aid.

But with all these qualifica¬
tions it seems to
me
that real

progress has been made on both
sides of the Atlantic towards fac¬

ing

to the gravity and realities

up

depend

pect

most

an eco¬

prediction.

-

difficult interval be*

a

sustained

Perhaps,
the

in

success

shall
rope,

or

Plan,
the

ity

and

the

last

analysis,

failure of the Mar¬

the

recovery

chances

from another

iteturning
of

iterate

now

to

Bank,

the
that

I

specific

the
wish

the Bank

to

a
stop-gap for emergency aid.
We cannot provide food and other

as

sustenance

items.

It

quite
large
scale loans for productive facili*
ties must be integrated with what
may be provided under the Mar*
shall Plan.
Even so, the Bank
clear

to

cannot

that

us

supply

seems

further

the

funds for all
this category,^

that is required in
We

only be a trail blazer,
to
meet
the
most
attempting
urgent and critical needs, in the
hope that in increasing degree
private caoital and industry will
step into the picture,
I was in¬
can

and

war

of

Eu¬

vited

to

of New York business

meet

escape

investment

the

secur¬

where.

well-being

of America
intangible factors. Will

last

week

with

a

men

to discuss how private industry
might work with the Bank in the
development of direct industrial

an

of

re*

cannot act

group

of the situation.

work

Germany in Irons
of the situation.

must all realize that

world

quire stabilization credits to back

where

do not

Europe and China today.

powers,

and

increasing productivity.

Covering the
period of four years, it is neces¬
sarily general and lacking in preciseness.
The form, the timing,
the conditions, the means of im¬
plementation, all must be worked
out.
In
Washington and else¬

doubt that such things as these
responsible for much that is currently complained

But there is another
aspect
the policies of the victor

we

the Paris report is merely
nomic

how any one can

of in

We have not yet
far enough in our studies 'to

gone

hearts

our

After

battering in two

tween, they
i;o

Europe the

difficult.

Americans

requirements

goods

than to the postwar
countries in such

find it in

more

the markets of the world.

The

the part of the victor

on

even

effective.
of

self; the problem cannot be solved
by loans from America.

aroused suspicion in the average mind
that, a good
deal of such suffering and
hardship as does exist in

powers.

well, the

people

ductivity

Report

convinced that

the

terrible
wars

always be pop*

lem must be made by
Europe it¬

these.

we are

cannot

must be

tude with that which existed after
World War I.

or wrong about this, we feel confident that there more than fill the most pressing
needs.
The estimate in the Paris
great many people in the United States who have
just
as

eadership

test is

by irritation at

directed at them by
ignorant or hostile.

are

recovery.
It is
noteworthy to contrast this atti¬

part across national borders. Moves
toward the solution of this prob-,

ago

of

other

right

such doubts

,

and

pursuits, and by a
greater mobility of manpower, in

some

declared to be.

governmental

productive

instances, doubtless,
better off.
We are quite certain that if
supplies already
within Europe and
being produced there were distributed
as
evenly as many of the reformers in this country would
have ours distributed, need for outside aid
would be very

are a

When they
—

Output

quo.

in

:

been in their lives—in

words

those who

other

shortage of. report

labor to perform the
urgent tasks.
This shortage could be met in

be conceded, indeed it must be conceded,
that there are
spots here and there, doubtless substantial
areas, where the population would be
subjected to severe
hardships this winter without help from outside their own
districts. It is, however, beyond question that there are
many other areas where the people are as well off as
they

are

ungen¬

Secretary Mar¬

't

Europe's Bottleneck

true, of course,

ever

larsh

course

~

placed

skeptical, not

are

part cated
that destruction during the war
by more efficient utilization of
doing
\vas very great.
Stocks in many instances are doubtless labor,
by reduction of the number good
very low.
Crops have not been good this year in many of people unnecessarily employed

have

us.

(Continued from page 18)

it exists

as

war.

sections.

Ameri¬

does to

an

people today

World

be instructive to inquire what
ordinary man in the United

too

is

We know it

International Bank and Increased

ex¬

that there

greatly at variance with production statis¬
compiled and regularly published by the United
Nations and, for that matter, by the governments of a

It

to turn

to many

seem

can-

not afford to be
swayed from their

determined

This

as

the

But the notion that

They want answers to many questions.
get them, and if they are satisfied with them
story will or would be different.

foremost, we suspect that the rank and
simply do not believe reports which come out of
Europe about conditions there.
We confess to a feel¬
ing of the sort ourselves. These accounts often seem

of

commun¬

erous.

file

number

not.

these notions must

on

The American

can

First and

tics

the

appreciable part of the
today—as told by many of our
political leaders—is the supposed need of a bribe to
keep
Europeans "democratic."

Europe and Asia today.

much

are

are

indefinitely bribing them

on

as just a trifle
naive.
The suspicion is abroad that
"dire need" in
Europe

similar sort which

a

might be listed seem to us to fail by
plain the current situation. We are
more

of

Adequate Explanation

But all these facts and others of

much

Some of them

cans

before.
Not

remainder

matter which Britain,

a

flirting with "ideologies"

are

us.

some

keep right

their backs

experienced

never

Europe

distasteful to

are

wexan

find it at prices which do not rob them of most of their
pur¬

chasing

the

part

For

istic in nature and

time when the great rank and file have the

buy what they want (that is, if they

and

a

suspect

we

many countries in

could be made without extensive sacrifice on the
part of the giver.
This demand for extraordinary gener¬
osity comes, too, at the end of a substantial period during
which most individuals had
perforce to defer many kinds
of expenditures for their own comfort and convenience.
It
comes,

degree this situation is

ular, but it

—

wherewithal to

some

that the ordinary American,
endowed as he is with common
sense, is deeply dubious
about this competition in
bribery we apparently are en¬
gaged in with Russia.
There is no reason to doubt that

humanity else¬
and usually granted

—

they

In

between Russia

Finally,

much for

so

conflict

France and the United States could
readily rectify if they

on an astronomical scale that is being sought.
It
requires in real fact a practice of "giving until it hurts."
It may be
questioned whether the people of this country
ever

Thursday, October 23, 1947

would.

charity

were

CHRONICLE-

world, but it is also in large part

Why this reluctance to proceed as requested, or possi¬
bly better put, this relative indifference? The American
people are notoriously generous in their gifts to the needy,
own

their histories.

of

it with

all.

whether within their

FINANCIAL

mitted to die down, but no one can doubt that
most, if not criticism from many quarters and
an
all, the countries of Western Europe — and
probably also is attack on their motives. This
hard
those of Eastern
for
Americans because
Europe—are suffering today in large part
they wish to be liked, they want
by reason of the fact that they are under the
necessity of to be good fellows, they welcome
restoring themselves in an economic ecology quite foreign a pat on the back. But

As We See It

—which

&

in

As

a

else¬

and

of

oui4

pre¬

there be the bold and constructive

agreed to work
together in developing methods
whereby private investment might

leadership both here and abroad

participate

to

on

meet

and

solve

dented problem?

an

unprece¬

the basic issues
will they have the maturity and
to

in

construction

we

specific

some

.■

unite

behind

their

Europe's

re¬

projects.

Will the people

of America grasp

firmness

liminary talks

Europe
result

Problems

■

■.

and

<-

Bank's

Activities

We in the Bank realize that

we

emotional, must not permit the urgency of
but in a European problems to interfere
determination to adopt and follow with our activities regarding, the
through a consistent, realistic pol¬ sound
development of
the
re¬
icy? This will probably not bring sources of our member nations
leaders,
splurge

them

not
in
an
of generosity

gratitude

and

thanks,

but

whose

economies

are

less

fully

*

Volume 166

Number 4640

THE

developed.
Of such areas, per¬
haps Latin America is especially
important to many members of
this

audience.
the

of

aware

All

of

great

us

in

degree

are

essential to the needs of American

industry in

peace

(Continued from page 5)

CHRONICLE

Industry

plate, which must be named before Jan. 1, 1948, may go up $15 to
$25 a ton. Subsequent market factors, between now and the latter
part of December, will determine the new price for tinplate — but
a

stiff advance is inevitable.

they proved

as

FINANCIAL

of

resources

increasing

The State of Trade and

are

materials—copper, tin, iron ore,
timber, oil—to mention a few—
Which

COMMERCIAL &

Scrap prices this week touched $41.83

per

ton which

gross

vital during
the war.
On the
other hand, there is a huge poten¬
tial market for imported goods in

WHOLESALE FOOD PRICE INDEX
SHOWS MILD UPTREND
IN

To

greater extent than

even

an

indication

With development in the still

nomically

underdeveloped

This

midweek

that

the

peak had

a

great number of steel

COMMODITY PRICE INDEX ADVANCED
STEADILY IN CURRENT WEEK

The Dun & Bradstreet
daily wholesale commodity price index
steadily in the past week mainly due to-continued
strength in foods and grains. The index figure rose
from 281.85
on October
7, to 285.54 on October 14. This represented an in¬
crease
of 17.1% over the 243.90 for
the corresponding date a

advanced

been reached. In the

year

the sound progress of underdevel¬

oped

will decline for months to

only be

can

small fraction of what will be

quired.

a

Experience

and

capital

of

their

know-how

and

and

the

Some

the

economically

nations.
Perhaps the
striking example of this is

United

self.

It

Latin

States of

developed

marily

obvious

appears

America

America

other

and

it¬

that

under¬

must
rely
private foreign

areas

upon

of

flat-rolled

pri¬
cap¬

companies

published price by large com¬
panies of $45 a ton. Strangely enough some major steel producers on
firm contracts are now
selling ingots in the immediate vicinity of
their plants at about $5 a ton below the
price of scrap. In the case
of billets, blooms and
slabs, the trade paper adds, these same com¬

only about $3 to $4

of

number

a

record

divert

iron

pig

ton

a

situation

for tightness

this

more

metal

with

from

this

week

is

reaching

steel companies

openhearth

in

an

to

The
of

this

American

week

Iron

and

Steel

Institute

on

the

to

create

the

necessary confidence.
They must
offer a fair deal to foreign, capital
and management at the same time

that they insist that the latter re¬
frain from the exploitation which
in the past has not been unknown.

Perhaps

international or¬
ganization the Bank may be of
help to these countries in taking
the

as

Monday

American

of

America
white.

all

nor

companies

have

hut

others

many

and

Some

suffered

have

losses,

profited

high profits

Unquestionaly

and

ican

re¬

enterprise.

there

has

to¬

foreign capital and enter¬
the Latin Amer¬

some of

countries.

tude and

increasing desire

an

Loadings for the latest week totaled 956,862 cars. This was an
of 14,329 cars, or 1.5% above the
preceding week. This
represented an increase of 57,419
cars, or 6.4% above the corre¬
sponding week in 1946 and an increase of 202,303
cars, or 26.8%0

a

most desirous of

and

assisting in this

Certainly there
audience who

fair

and

process.

of

car

manufacturers

rate

of

output of

of

change-overs
In

the

Nash,

may

be

affairs.

are

exaggeration

no

of

to

to

say

new

will require

only

that the problems and perils ahead

tion has

ever

faced.

However,

it

tradition

to

bold

and

stakes

than

are

the

is

in

meet

practical

American

dangers

high—perhaps
of

automotive

the part of a greater

week,
units

indications

with

num¬

point to

prospects

that

no

less

private

is

reported

it

models

is

that

new

occur

in

trade

before

circles

that

the

year's end
brief halt in the assembly line to achieve it.

Stuart L.

Brown

sociated with

has

CALIF.
become

—

as¬

Holton, Hull & Co.,

Despite the fact that failures

prior to 1944.

it

were

more

than three times

as

three times the number that failed in

was

ago.

of

Columbus Day holiday brought a
large number of shoppers

a

year

of trade.
increased

survey

plans

reports Dun & Bradstreet, Inc., in its
use
of charge accounts and deferred
slightly and consumer quality-price con¬

ago,

The

regained evident.

0

,,

•

•

1

*

:

<•'

The food-saving program had little effect on
grocery volume
last week, since consumers continued to
purchase substantial quan¬
tities

of

most foods.
Housewives requested large quantities of
goods and fresh vegetables and fruits continued to sell
well. Less expensive cuts of fresh meats were
popular with can¬
ned meats, fish and poultry in large demand.
The volume of
frozen foods and dairy products remained
considerable.

canned

Clothing attracted a great deal of interest the past week. Rain¬
and heavy footwear received favorable
attention, and sports¬
sold well.
Women's crepe dresses were
very popular.
The
demand for coats and suits was
steady. Many stores reported a rush
in the buying of nylon
hosiery, and lingerie volume proves to be
large.

considerably lower than

any

Men's worsted suits

demand with

day

an

and covert cloth topcoats were in
good
increase in interest in wool shirt and sweaters.

Retail volume for the country in the
period ended on Wednes¬
of last week was estimated to be from 7 to
11% above a

ago.
Regional estimates exceeded those of a year ago by
the following percentages: New
England, Middle West and South,
16 to 10, East 8 to 12, Northwest 10 to
14, Southwest 7 to 11 and
Pacific Coast 4 to 8.
year

Merchants in many parts of the country noted an improvement
deliveries the past week with normal deliveries resumed at the
settlement of the New York
Railway Express strike. Wholesale vol¬
ume rose
moderately in the week and remained well above the level
of the corresponding week of 1946.
The buying of fall and winter
merchandise continued to be substantial with the
showings of spring lines enthusiastic.

Department store sales

on

a

monthly total

on

record

response

country-wide basis,

to

early

taken

from

the Federal Reserve Board's index for the week ended
Oct. 11,

1947,

increased by 8% from the like period of last
with an increase of 18%
(revised figure) in

by

Augus^ total b|v287. Al^btigli
September.year

change.

was

crop

of

For the four weeks ended Oct.
11,
for the year to date increased

they were far below the 277 reported for
the comparable week of
prewar 1939. The total of 75 compared
with a weekly average for the
year of 65 failures.
Concerns failing with losses to creditors in
Septembernum¬
bered 292, only five above the
ago,

;

in

Commercial and industrial failures
during the week ended Oct.
75, Dun & Bradstreet reports. This compares with 62 in
the preceding week and 23 in the
corresponding week a

this




decrease

responding week

week's

210 West Seventh Street, members
of the Los Angeles Stock Ex¬

forecast

year

the

and

year ago.

ANGELES,

cotton

a

clips. Appraisals of domestic wools for purchase by the
5,072,356 pounds in the week of October 3,
making a
67,207,595 for the season to date.

current

model

numerous as last year,

(Special to The Financial Chronicle)

1

246,600 in the like week

totaled

The

a
,

high rate

volume

was

as

compared with

estimated at 40%

as

This compared

year..

the

preceding

week.

1947, sales increased by 14% and
8%.

Retail trade here in New York last week

totaled

Brown With Holton Hull

ago.

into many stores and consumers
generally responded very favorably
fall and winter merchandise.
Retail volume in the week was
moderately above the levels of both the preceding week and the cor¬

after Jan. 1, next.

understood

will

other

no

FAILURES TURN UPWARD IN LATEST WEEK
16

democratic way of life.

LOS

a

the

output comprised 84,589 vehicles made in this
country and 3,797 in Canada. The U. S. total included 59,409 cars
and 25,180 trucks, while the Dominion
figure showed 2,180 cars
and 1,617 trucks.

The

enterprise and the maintenance of
Our

Last

with

action.

continuance

on

current

98,978 units in the previous week and 89,540 units in the
compar¬
able period of last year, states
Ward's. In the corresponding 1941
week the figure was 85,600 units.

It is easy to

the

the

week

yield to fear and discouragement.

week

wear

Production in the United States and Canada
during the past
totaled 88,386 units, compared with a
revised figure of

than modern civiliza¬

,arq greater

a

Nash

a

coats

in prospect until

case

It

it

over

to

possible

exception

in this

ignore the crit¬

world

CGC

total of

YEAR AGO

a total of around
70,000 cars and 25,000 trucks.
The decline in volume last week was due in
large measure to
the shutdown of almost all of the
Chrysler assembly lines. The
Hudson plant, which was closed since
September 19 for a model
change-over, will resume output this week and with the

encouraging

are none

can

of

state

A

LATEST WEEK

switch-over

ical

THAN

volume will approach

We in the Bank

are

HIGHER

With the resumption of activities
ber

on

October

a

payment

.

AUTOMOTIVE PRODUCTION SHOWS DROP OF
10,592 UNITS
IN

tight

rising slightly

1947-1948

last year.

higher

countries

9%

1,841,000
a pound

Demand for fine staple domestic wools continued
to
exceed
supplies and trading volume in the Boston market was restricted
by lack of offerings. A little more activity was
reported in foreign
wools as a result of arrivals of
Montevideo and Argentine lots from

distributed by the electric light
power industry for the v/eek ended Oct.
18, 1947 was 4,946,090,kwh., according to the Edison Electric Institute. This
compares
with 4,958,062,000 kwh in the
preceding week, and was 9% in excess
of the
4,539,712,000 kwh. produced in the corresponding week of

business and capital

equitable basis.

OUTPUT

of Agriculture esti¬
2,458,574,000 bushels, an
September 1 forecast. The

at

the

11,508,000 bales repre¬
341,000 bales, or 3%, from the September 1
estimate. Weather conditions in the cotton
belt were generally favor¬
able with picking and
ginning reported making rapid progress.

000

their part to encourage American

their

The

sented

and

on

to come into

prices

sciousness
ELECTRIC

corn

over

WHOLESALE TRADE MAINTAINED AT LEVELS
MODERATELY ABOVE PREVIOUS WEEK

increase

1945.

of

October 7.

RETAIL AND

freight in the week ended
Oct. 11, 1947, than in any other week in a little
more than 17
years,
Association of American Railroads announced.

week in

production

54,761,000 bushels

on

Department

revenue

the

same

the

Trading in spot cotton markets continued active. Prices
regis¬
moderate net gains for the
week, largely influenced by
lower-than-expected government crop estimate of 11,508,000
bales. Early strength reflected active mill
and commission house
buying; but subsequent profit-taking and hedge
selling tended
to check the rising trend.
Sales in the ten spot markets aggregated 398,600 bales for the week as compared with
324,700 in

there

However,

signs of reversal of this atti¬

are

loaded with

were

of

tered

The amount of electrical
energy

been

hostility

even

cars

areas

the accepted

are

ward for successful

prise in

RAILROAD FREIGHT LOADINGS HOLD TO HIGHER
TREND
FOR WEEK AND YEAR

above the

Well,. In the undeveloped

wards

ago.

More

elsewhere abroad has been neither

Suspicion

96.8%

one week ago, 94.1%
Current operations represent
an increase of 0.3
point or 0.3% from the preceding week.
The
week's operating rate is equivalent to
1,699,200 tons of
steel ingots and
castings compared to 1,693,900 tons one week ago,
1,646,700 tons one month ago and 1,591,400 tons one year

steps.

The
experience
business in Latin

black

19, 1944. This compares with
month ago and 90.3% one year
ago.

an

necessary

all

June

of

one

year's

of

report

the previous week, and

for the week

order

this

1

the

operating rate of steel companies having 94% of
steel-making capacity of the industry will be 97.1% of capacity
beginning Oct. 20, 1947, the highest rate since the week

countries must put their financial

houses

in

with

supply pig

announced

•

export and domestic demand, and
continued strength in
hog markets. Cattle prices were steady but
lambs turned downward at the close. Flour
bookings were sharply
curtailed, due to advancing prices. The cocoa market continued

all-time

the

largely

good

being forced to

order

„

total wheat crop was estimated at
1.408,602,000 bushels, or
bushels less than a month
ago.
Lard prices gained 1 cent
last week as the result of

by their plants, are receiving
than they are paying for scrap.

some

their

October

increase

If this were not done a
shortage of
ingot molds would further restrict current steel output which is
now at a postwar
high.

countries, credit
has been impaired through failure
to meet obligations, steps must be
These

a

mated

iron to ingot mold makers.

of

American

taken to restore this credit.

gin requirements which went into effect

on contracts with customers close

The

how will not be available unless
favorable conditions exist. Where,
case

which is in many cases more

on

than $90 a gross ton compared with

However, the capital and know-

the

turning down additional tonnages of
the filled-up condition of slabbing
Iron Age" notes has tightened up the
of

mills. This situation, "The
supply of free slabs, the spot price

development.

in

are progressing
being held back because of

are

are

ingots for conversion because

panies

as

they

The

steel

ital and business to assist in their

Latin

even

r

while cash wheat went above
$3 per bushel at leading markets,
the highest since 1920.
Speculative trading in wheat, corn and
oats showed considerable decrease as
a result of the
higher mar¬

Conversion deals too

come.

hectic pace that

a

•

reflected subestantial government
buying of cash grains and con¬
tinued unfavorable weather in
principal winter wheat areas. The
December wheat contract reached a new
seasonal high last week

consumers

their volume.

the

from

at such

developed
most

quotas

re¬

own

with

manpower

mature

more

a

re¬

that

has been the result of

areas

"combination

sources

shows

quarter

ago.

A general rise in both
futures and cash grain markets

having had their fourth
products almost entirely wiped out
demand for steel is
reaching almost hysterical proportions this week,
the above trade authority points out. Greater
activity is present in
the gray market with little chance that
premium price levels there

outside of Europe

with

$6.83 a week earlier, and wich $6.15 on the
a year ago.
Due to the sharp rise that occurred
in this week last
year, the year-to-year percentage increase has been
sharply narrowed to 11.4%, from 26.5% shown last week.

of Chicago the increase amounted to
$3 a ton and $2 a ton
for Pittsburgh and
Philadelphia. The tonnage of scrap moving
from the east to the midwest was on the increase.

With

compared

corresponding date

case

eco¬

lands

at

WEEK

index, compiled by Dun &
Bradstreet,
Inc., turned slightly upward this week to stand at
$6.85 on Oct 14

melting steel were registered at Chicago, Philadelphia,
Pittsburgh, Cleveland, Youngstown, Boston and St. Louis with no

in Europe, the amount of its own
funds which the Bank
may have
available for loans in connection

LATEST

The wholesale food
price

heavy

area.

37

DAILY WHOLESALE

not only surpassed the hectic period of
June, 1917 but topped the
previous all-time record made in the early part of August this
year, by 16 cents a ton. Substantial increases in the price of No. 1

this

(1665)

one

year

was

ago.

maintained at

Department store

above the like week

of 1946.

According to the Federal Reserve Board's index department store
sales in New York City for the weekly period to Oct.
11, 1947, in¬
creased 24% above the same period last year.
comparisons for this week allowance should be

In

using year-ago

made for the fact
that in the cities of New York and Newark work
stoppages in the
trucking industry prevailed. This compared with an increase of

32%

(revised figure) in the preceding week. For the four weeks
Oct. 11, 1947, sales increased 28% and for the
year to date
by 9%.

ended
rose

38

(1666)

THE

Our

Reporter

COMMERCIAL

Governments

on

continue

government securities markets
the down trend again taking some

to

with
year.

.

have

.

about

%

of

showing
token

issues to new lows for the

The longer-term bonds, both the eligibles and restricteds,
a
rather sizable reaction from recent tops being down

had

point.
interest,

a

At present levels, investors appear to be
although they are not making more than
prices recede.
.
.
Some hold that 102 and

...

more

commitments

as

.

105V2 should be good resistance points for

ibles,

inflationary

although

prices.

.

..

the longest taps and elig¬
could bring about lower

selling

fear

the

to

SHORT-TERM RATES

.

to be

.

.

mixed, with some mildly surprised, while others seemed to have

expected it. . . . This continues the policy of tightening short-term
rates, Without too much effect yet upon longer-term obligations
other forces, not the least
prices upon all fixed-income-

which now seem to be influenced more by

which

of

the

are

effects

bearing; obligations.

.

.

of

higher

to

lend-lease,
shipments,

relief, or military
preclusive buying,
old-fashioned
Yankee

Obviously,

the

volume of

the

cannot

years

maintained

in¬

.

.

big decline if the Marshall

high

of the first six months of
this year cannot be maintained.
As bankers well know, the so-

ment,-securities, no clear-cut upward trend is anticipated until
corporate bonds have made a base.
.
This will undoubtedly
take Some time because ,of the adjustments that must still be

called dollar

made i

but

.

.

in non-Treasury obligations.

.

Investors are taking

.

.

a

longer look at corporate bonds now, with some purchases being

madejat the

of government securities.

expense

.

at

MORE LIQUIDATION

Institutional investors,

particularly, are becoming more conscious
yields that are appearing in the corporate list and
with more advantageous ones expected, there will be further liquida¬
tion of Treasury securities in order to acquire corporate bonds.
.

.

.

This will help the

earnings of the purchasing institutions, which are
always desirous of improving income provided it can be done with
reasonable safety.
Prospective buyers of corporate bonds are
getting the best opportunity in years, to take on the pick of the
list, at their own prices.
.

low

.

...

of

trade

nothing
deficits.

levels and

with American

Sp far most of the selling that has been done in governments

closing the door to imports.
Why we, as a nation, prefer to
give our goods away rather than

fathom!
Just

prices of the Treasuries sold.

.

expect:

on

indicate what

Merchandise

foreign
we

may

exports

cf

$7.5 billion in the first six months
1947

were

nearly 70%

greater

PROFITABLE TRADING
Investors and traders alike

the skeptical side of the

on

are

mar¬

will most

ket and

of

1946.

A

drop of at least

20 to 30% from the abnormal level
of these first six months would

.

.

likely stay there until they have had greater ex¬
perience with the new trading range that is now in the making.
Government security prices are going to continue to move within
fairly definite limits, probably somewhat under those that the market
has more or less taken for granted in the past.
It is, however,
this process of adjustment that makes for confusion, except for those
that are agile enough r.o move from one side of the market to the
other, and there are plenty that are doing it successfully.
.

.

.

seem
a
reasonable conclusion in
view of the "dollar shortages" and

the

recently

restrictions

Zealand,

import
Australia,
New

in

Mexico,

England,

and

nearly all of South America.

.

.

.

.

.

.

side of the market.

.

.

.

SURPLUS FUNDS DECLINE

Studies that have recently been made indicate that the free funds
of institutions available for

investment have gone

stantially in the past few months.
believed
as

to

be

much under

those

.

.

that

down rather sub¬

The estimated figures

.

had

been

minimum amounts in the financial district.

.

are

generally accepted

.

.

Some of the smaller non-banking institutions are just about
out of idle funds and will have to sell part of their investments if

they

are

This

to take advantage of expected higher yields.

helps to explain to

of governments
tion of the

some

.

.

.

extent at least the softness in prices

from time to time

well

as

corporate bond market.

.

.

the demoralized condi¬

as

Inventories

Now
have

are

advising

corre¬

needed

changes in their portfolios.

be disposed of are

being let out

income

are

obligations

tion is

.

.

Issues that should

.

price strength, while the higher

on

being acquired

weakness.

on

.

.

.

This opera¬

being carried out cautiously and does not necessarily have to

inventories.

on

highest

We

inventories

of

an

immediate completion.

.

.

Buying levels

.

.

.

.

also

are

.

.

the rate of $170 billion, of which
$11 billion is being saved, leaving
$159
billion
for
the
spending
Yet

people are borrowing

.

fact these bonds are'in

they

were

first offered.

a

.

.

and

be no

they certainly

more

favorable.

what's

the

are

...

matter

question
as

good




as

now,

to the safety of these securities

AAA corporates and the yield is

when they

appear

higher, levels,

to be

dra dtic

a

>

to?

em-

de-

cline in the sales of manufa ctured

goods.

As both prices and volume
drop, somebody will oe left
holding the well-known ba y I
will

Increase in Bank Loafts

individuals

to

by commer¬

cial banks, up 81%.
Like

so

of

Bankers

complain

yet the

gone;

commercial

that

there

total

banks

iof

loans

of

the

the

jUnjited

1947, reachjed'tho
record-breaking figure of -nearly
$34 billion—a figure some f$5 bil¬
States in June,

lion
of

greater

World

than

War

1920.

I

the

load

reached

peak

in

mid-

food and

on

the

income

receivers
less the

shelter

for the

belong

same.

new

remain

so

even

could

eventually
or

on

some

sooner, Through mar¬
The days when

ket "action.

you

buy

government

with your eyes

they would

securities

shut/knowing that
have passed—

go up,

the free rides
It is
the

oyer!

are

reasonable*, to ekpect that
changing credit policies,
position of some iswill change. But it is
impos¬

relative

sues.

sible

to conceive rthat the
public
debt managers or the
Open Mar¬
ket Committee of the
Federal Re¬
serve

the

System would,> permit

most

even

adversely affected issue

drop under par. We still have
managed money and a managed
public debt. A debt Total of some
$260 billion is sufficient
incentive
for the managers to
keep prices at,
or

above, par. Beyond question,
they have the inclination to pre¬
vent

unwanted

prices

of

est rates

loans.

to

the

problem,

much lower

are

There

is

no

inter¬
these

on

fiercely competitive basis

a

that

This is

I

told

the Federal Deposit
Corporation Supervis¬
ing Examiners in Washingtpn last
spring that the rates rerhinded

Insurance

of the fellow

me

ing

the

to

who

was!

with

races

start¬

his'wile.

After

considering
his
financial
situation, he said: "Honey, J sure
hope I break, even today; I need
money so bad-!

If I

take

were

—-

banker, I would not
anything for
granted
on

loans. Each loan should be studied
in the light of
possible adverse

developments ;;in exports, inven¬
tories, and consumer spending. In
particular, I would study those
good, low-yield loans which are

is

too small for the borrower,

get

may

too

wet

it

is

for

ers?

Although the
have

over

moment

authorities
such

use.

pow-

nearly
has

commercial banks

$70 billion

riskless

the most

of

assets

the

world

known —United

ever

States

government

securities

t h e,y

—

should

nonetheless
carefully
weigh the adequacy of their cap¬
ital

with

resources

their risk assets,

relation

There

der

greater

peared

on

times

are

service

if

time

it

soon

the

tions

is

are

and

how

—

I

cannot

indica¬

many

business

a

source

community.

materialize

there

that

ment

a

banker

approaches

will

but

say;

to

of mind to the
a

ap¬

the balance sheet. There
when
an
abnormally

comfort

Such

ren¬

they

strong capital position is
peace

to

times

are

when hidden reserves. would

readjust¬

overdue.

Deposits

Deposits
which

have

the

are

commercial

no

,

Thing

one

bankers

about.

worry

deposits

In

need

general,

filtering down

are

into

smaller hands; and, also, demand

deposits

tending to flow

are

into time deposits.

over

As I stated at

meeting four

your

and

years ago,

repeated three years ago, and two
years ago here in Boston at meet¬

ings

of

the

Conference

Bank

of

Management

the

Council,

I do
consequential

New

not

England

anticipate any

shrinkage of' de¬
posits—especially of New England
deposits. As a matter of fact, the
odds

are

New

England

pneumonia. There is an
optimum amount which is best for

jlo

i

he

economic

the

say

beyond

one

monetary

hesitate to

contract

and

equally

doubt

the

would

of

a

in

question that they have the
pow¬
ers to prevent such
declines. Does

for,

marg: n

declines

governments.I

that

you

that
add

their

better

own

than

even

that

will

hold

deposits

or

possibly

even

go

ahead.
There
many

is

another

bankers

ing words.

thing

concern

would like to utter

a

on

few

giving
which I

reassur¬

I refer to the persist¬

ent rumors from abroad and from

Real Estate Loans

If I

a

were a

banker, I would turn
cold anxUsuspicious eye on each
estate

l&'dp', especially those

acquired

sinc#The

War

Commercial

II.

real

on

estate

are

end

of

World

bank

some

loans

six times

larger

than

estate

loans,

cess

1920.

aft'k

Such

currently

in

real
ex¬

of

$8 billion, which is more
greater than the previ¬
high reached before the war

certain
sources
in
the
United
States, to the effect that the mon¬
etary authorities will increase the

price of gold and thus further de¬
value the dollar.
Speculators in
gold shares have undoubtedly in¬
itiated, or at least nurtured, many
of these

my

,

Such

rumors.

Such

a

move

would

cally unsound.

ous

fires

in

1941.

praisals

I

would recheck my ap¬

realistic, rather than
a
veteran's
housing emergency
basis, remembering always that an
old

on a

house

much of

is

an

old

house.

Too

present day house value

a

move, to

mind, is out of the question.

than 50%

important that it war¬ has come from the housing short¬
rants further explanation.
Thus, age. Such scarcity values cannot
per
permanent.
In
any
event,
capita income, which was be
$575 .per year in, 1940, increased scarcity
is the poorest possible
to $1,200 in 1946; ybut in addition basis
for
value,
especially
in
to this per person increase, there America, whose production genius
This is

issues

anyone

I

*

To

.

real

other

many

spending units to which these
or

will
disappear
through write-downs,

a

aren't any commercial loans to be
had any more, that those days are

and

loans

which

to

1946, as follows: Commer¬
industrial, up 48%; real
estate,
up
54%; and
consumer
cial

more

...

If they were so good at much

with them

bargain counter?

as

cause

$11,060

.

The free riders have been

eliminated and marketability is improving.

There should

up
I'll tell you: a sizable
drop fin

ployment will

.

much better position now than

.

add

June,

costs

In
wlmn

this

Consumer credit
billion in July. the time to determine that amount
Bank loans, which filter on down —before, and not after, the change
to consumers, have expanded since in economic trends.
things!

to

securities,

them

both borrower and lender. Now is

.

.

all

storm
comes.
thing for bankers to away when.,, the
is the fantastically While that il^funtrue, it is true
that if theJpnbrella is too large
high level of consumer spending..
The national income is running at for the borrower, they both may
the rate of $200 billion a year. be blown away in the storm; by
Disposable personal income is at the same token, if the umbrella

.

.

does

about

buy

Government

constitute the
greater pai-t of your
assets, need give you no" concern.
The premium you
paid on most of

the

at

things in
being forecast with indications that the longest eligible issue should economics, full-employment, or as
I call the present unsatisfactory
be in for scale purchases by these banks from 105 Vz down.
situation, over-employment, is a
two-edged sword. Every, increase
WORLD BANK BONDS
in the number of employees di¬
World Bank bonds have been on the toboggan, largely because of
rectly increases the total payroll,
the lack of buyers.
There has been some selling but not enough of course, but it also, permits a
to cause the sharp drop that has taken place.
Both the 2V4S and much more than proportionate in¬
crease
in "free" spending as the
the 3s seem to be at levels that should be attracting buyers.
be rushed to

or

Another

rose

spondent institutions to take advantage of government price swings
to make

the

time

worry

to

that large New York City banks

bort

one

highest prices--of .considered to be beyond question.
all time—truly a dangerous situa^- .These are the loans to watch in
tion.
Inventory write-ups have times,of transition such as we are
been siphoned off in many cases now entering.
The heavy losses,
by taxes and dividends.
Is it not in times of change, come from the
time to ask borrowers what they loans we think are good, not from
plan to charge their inventory those we know are poor.
losses against when prices fall?
It has
been; unjustly charged
And fall they will; they always that bankers
Mipply an umbrella
have in the past!
when the sun shines and take it
all

stream.

.

SWITCHING
It is reported

word

a

of the entire world.

with the

What

inaugurated

...

Widely swinging markets such as we have been having are
quite profitable for a good many government dealers, not only
from the standpoint of larger volume but also in the form of tradin? profits.
Money is being made on the long and short

automo¬

or

another.

such

statistic

one

trade will

of

It has not yet been sizable enough to have any

.

refrigerators
biles, and luxuries of
as

especially true of the term loans,
nearly all of which were made on

year

.

largely spent for Amuse¬
mechanical conveniences,

shall I say, contingencies.

payment is too much for
limited
comprehension
to

ate maturities.

.

directly increased
member
bf the

my

than the $4.7 billion of the entire

on

require

breadwinner's

accept

in orcfer to take on corporates has been in the short or intermedi¬

great bearing

such

tariffs

the favorable

.

reflections

are

And such trade deficits cannot be
avoided with foreign production

.

.

shortages

are not
another

be

can

matter how desper¬
needed.
Exports

is not adopted; and, even if
should
be
adopted, the

it

.

income,
when

are

level

tinues to influence the trend of

of

export
and postwar,

Plan

rallying tendencies that appear "from'time to time in govern¬

character.

abnormal
war,

be

no

they
a

bonds con¬
Treasury obligations.
Despite

private

a

ordinarily
of the

ments,

country

country was too
aims, no country

our

50%

the earth.
no

or

plain,
trading of

face

The downward movement in prices of corporate

if

or

or

ately
BEARISH INFLUENCE

as

which

around

Food and rent

spending unit
secures
employ¬
ment, so that the increased income

too far away to benefit from

was

definitely,

.

of

corners

costs,

is the envy, if not the
admiration,

spending

each

shipping
loose, ana
loose,

were not

too poor, no

opposed

refund the
1 maturity, will-boost rates for one-year money to just slightly
1%.
The reaction to the Treasury announcement appeared

The 11-months' certificates, with a 1% annual rate to
over

four

It seemed almost

.

in

of the unit.

come

been busy night and day
was

working

unit,, thus contributing to the in¬

As we are in Boston, a great
foreign trade centqr, let us first
bring foreign trade to the mourn¬
ing bench.
Since 1941, we have

everything which
some things which

Thursday, October 23, 1947

more people working and,
important of all, moye peo¬

ple

Foreign Trade

was

Nov.

CHRONICLE

about this evening?

worry

the* defensive

on

FINANCIAL

(Continued from page 2)
| were
alarm."
Well, what can we find | most

By JOHN T. CHIPPENDALE, JR.
The

&

and

of

It

economi¬

It would fan the

inflation

make

farce.

be

the

in

this

Marshall

would

be

country
Plan

a

another >blow

at

Europe at the very time when
are
trying to resuscitate the
European economies. And, most

we

importantly,
sible

without

it

is

tive action by the
In

legally

impos¬
legisla¬
Congress.
■>

affirmative

closing, let

me

say

that

we

enjoying an unearned, warf
prosperity of fantastic pro¬
portions. These are indeed "easy'*
are

born

Volume
times;

Number

166

the government is
"making money," as a $4.7 billion
surplus of revenue over expend¬
even

is

itures

indicated

now

for

the

current fiscal year.

sonable

It seems rea¬
anticipate a change in

to

trends in

economic

the

fu¬

near

ture.

And, while we do face a
change, there will be no repetition

of

What

1920.

cession, not
f

is

re¬

a

depression.

a

of

times

In

face

we

if bankers

are

the

whatever

meet

bring;

they

and,

will

with

future

must

may

have

an

capital strength

asset liquidity and

permit them to cope

stress,

banking
must
almost
be
"all
things to all men." It follows that

to fulfill their his¬

not

developments no matter how

adverse

they might be.

for

limit
so

as

color, national origin or ancestry.
This, however, does not prevent
any labor union from continuing
internal control and maintain¬

practiced

are

irra¬

rhent,

whether

tional

(in the opinion of others),
of the most essential free¬

analyzing the bill in de¬

one

doms

of

been

free citizen which

for

a

decades

Constitution

the

States.

The

has

guaranteed
of

by

United

the

objective of S. 984 in

not

Freedom

cise of

the

of

free

a

and

contract

exer¬

liveli¬
genuine liberty

right to

hood, essential to

asso¬

free

a

earn

a

essential

the

to

pursuit of happiness.

There

is

nothing inherently wrong in
having a preference to work with

particular race, reli¬
gion, color, national origin or an¬
cestry. If racial and national congenialty
is
not
sinful,
then
uncongeniality cannot be a sin.
of

persons

a

brotherhood

Human
beautiful

ideal,

geniality

of

Irish

to

not

is

natural

a

how

the

to

French

to

vice,

a

if

but

Chinese

French

and

geniality

toward

ities and

races

is

Of

Irish

feeling
it

and
is

uncon¬

other national¬
wrongful that
it should be for¬

by law!
racial

prejudice

and
ugly thing,
unjustifiable
hatreds,
fostering
and leading to wasteful conflicts.
All unreasoning prejudice and in¬
course

intolerance may be an

tolerance

may

evil.

bad

be assumed to

If

the government is to under¬
to prohibit and prevent all

unjust discriminations in employ¬
ment, why stop with "race, reli¬
gion, color, national origin or an¬
cestry"?
The
Charter
of
the
United

Nations, which is dragged
into
the
Policy statement, also
deprecates distinctions as to "sex"
and "language."
There are, fur¬
thermore,
notorious discrimina¬
tions in employment because of
"age," and

be

young." Many persons are re¬
employment because they

"tall"

are

"thin"

"halitosis"

or

of

and

"intolerance"

is

righteous dislike or hatred? Is it
wrong or right for a deeply reli¬
gious person to prefer not to as¬
sociate with those who would like

to destroy his religion and all its
Is it wrong or right for

devotees?
a

free

individualist

enforced
natic

association

to

object

with

a

communist, who seeks to

to
fa¬
en¬

birth"

to

If S. 984

were

the law, the man¬

agement of a religious publication

(for profit) would be forbidden to
discriminate

against atheists or
hostile religionists who might be
".qualified." but certainly would
not

be

The

cooperative,

manufacturer

articles

books,

or

maintaining

employees.
of
religious

desirous

of

harmonious organ¬
and
satisfied
customers,
would
be
compelled to employ
"qualified" but cynical and dis¬
agreeable associates to make and
sell his products,

j The

Congress is forbidden
any

law

free exercise" of

to

"prohibiting the
religion. But this

law prohibits

a man from freely
exercising his religion in carry¬
ing on a business in association

with others who

are

of like faith.

The maker of food
or

products, drugs
sewing machines may desire to

have

the

religion

ethical standards of

effective throughout

his

his

business
organization; but this
proposed law would deny him this

privilege

this constitutionally
guaranteed liberty. The constitu¬
tional invalidity of such a law
only emphasizes the point that the
objective of the law, as a denial
—

always being

otherwise

or

without

If the employer (of more
is to be regarded
mere instrument of state pol¬

than 50 persons)
as

a

wno

ploy

be required

can

whom

anyone

bureaucrat finds to
a

to

who

run

the

unions.

But, even if there were no dis¬
criminations within the organiza¬

tion, it is not made an unlawful
employment practice for an em¬
ployer to deny employment to a
non-unionist.

So here

we see

pro¬

posed a law to prohibit supposedly
wrongful discriminations in em¬

ployment which fails
the most

to

prohibit

obviously wrongful dis¬

crimination that is practiced today

against

ing to

government
be "qualified"
a

This

government

a

would

great

agency?
deal of

free citizen who is seek¬

a

a

shall

stock

against

employee, or an appli¬
work, because he is a

an

for

cant

discriminate

member of

a

labor union.

But it is

not the law

today that he shall not
discriminate against him because
he is not a member of a labor
union.
to

That might be

begin the writing

discrimination

good place

a

of

an

anti¬

any

law—if

such

be written.

When, however, the manifold
defects, illegalities and improprie¬

Whyte

posed to go
At

then

Theory.
*

Hs

Since the previous column
was
written the market has

advanced

individual

liberty.

to

the

elevator

and

men

stand dealers

passing

side" information..

It would be pleasant to ride

bull

investment

counsellors

their

around. Actually I think the
trend, to which attention was

called three weeks ago

ages

a

may come

CHICAGO,

ILL.—The

Illinois

Chairmanship

Then

the
employer
nothing to do except to try to run

Pennsylvania Group of the Invest-

his

America for

with

"civil

employees furnished

service"

by the gov¬

Others

the

placed

year
on

the

regular

ernment and made secure in their

slate of officers to be voted

jobs and in advancement,

the annual

vided

in

pro¬

Section

The

function

as

5(a)(1)
of S.
fact is that the

plain

of

22,

on

at

H.
Gates
Lloyd,
of
AkJCo., Vice-Chairman; and

the

employer in pri¬
vate
enterprise, and the system
of private enterprise itself, would

disappear

soon

laws

logically

Terrace

Friday,
Gardens

Morrison Hotel.

The

supposedly
buy (if
hasn't already done it)
how long to hold on. A
months ago if I felt that

one

and

few

the advance had further to
go
I wouldn't have hesitated to

stock is almost

time.

change

dollars

equities

really

J.

of

the

of

Aires

Buenos

Walter

office

Thompson Co., is in

States to consult with

the whole

thing becomes too
And when that hap¬
I merely agree that

easy.

:1s

The steels, motors and util¬
ities

are

in

a

sjs

*

and
now

practiced

CLAYTON,
Co.

in

employment is
not prohibited by S. 984. The em¬
ployer would still be permitted to
deny employment and the oppor¬
tunity to
not

livelihood to

earn a

the

on

ground

belong to

tion known

as

that

demands

a

labor union.

on

labor union which
as

"closed shop," is the most inde¬
fensible violation of constitutional
a

tolerated

in

the

been widely

Utiited

States.

There may be a very good reason
for

disqualifying

a

person

from

a

particular employment because of
race,

gin

religion, color, national ori¬

or

President

man a

ancestry.

But,

to

J.

and

securities

a

at 22

are

T.

article
&

South

A.

time

do

expressed

not

coincide

Whyte
in

necessarily at
with

this
any

those

of the
Chronicle. They are presented as
those of the author only.]

Kahle,
Pettus, Jr.,

Vice-President.
T.

Johnson

Pacific Coast

Ward

Established

Albert

deny

a

R.

Thayer,

of

In

Secretary-Treasurer.
addition, the following were

nominated
the

for

three

Executive

year

right to work unless he sub-

Securities

H. Hentz & Co.

Dam, of Eastman, Dil¬
Co.; John S. Malick, of
Fidelity-Philadelphia Trust Com¬
pany; and Alfred Rauch, of Kid¬
der, Peabody & Co.
by

a

committee

Arthur

New
New

Stock

Chicago

Exchange

Curb

York

York

Coast Exchanges

Exchange

Exchange,

Board

of

New Orleans Cotton

Inc.

Schwabacher & Co.

Trade
Members

Exchange

And other Exchanges

of:

&

Pacific

Exchange

Cotton

Commodity

made

consisting

York

New

York Stock

Exchange

New York Curb Exchange (Associate)
San Francisco Stock Exchange

S.

Whelen

were

on

Members

New

&

These, nominations

Orders Executed

terms

Committee:

Loring

lon

1856

Thayer,

Baker & Co.,

on

ever

Officers

Kahle

views

This

job monopoly, such

liberty that has

in

business from offices

private organiza¬

a

a

engaging

[The

Chronicle)

MO.—A.

Thursday.

did

a

discrimination, which is forced
employers by

is

Central.

any

he

Financial

care

#

—Walter

A. Kahle & Co. Formed
The

position.

to go.

More next

(Special to

move

Further than that I don't

de¬

noting, however, that
clearly
undemocratic
unjustifiable
discrimination

spe¬

coun¬

try.

most

buying
takes hold,

❖

Manuel Mortola, Associate Man¬

ex¬

by

then almost
any stock chosen
will go up. If this is true then

Agency Visiting in US
ager

useless pas¬

a

If this wild fear to

they'll go up but I won't
cify individual issues.

Mortola of Thompson

Thompson Co. offices in this

It is worth

go

question

veloped.
the

will

uppermost is what to

pens

American clients of the Argentine
office
and
to
visit
J.
Walter

as

were

the

the United

the high sound¬
ing objectives of anti-discrimina¬

tion

the

of

meeting called for Oct.

were:

Drexel

31, at

on

of

1947-1948.

belief is

recommend a group of stocfcs.
Today, with inflation biting
out the back at the
market, choosing a

Oct.

business

My

market

stocks

tween government and

Association

the

higher and

Johnson

Bankers

markets.

confirm¬

axiom of

are
going hazard a guess that when this
they will make figure is penetrated it will
more
money.
It makes for hardly cause a ripple.
❖
❖
:i:
pleasanter relations all

that

--

ment

thus

be¬

Ward Re-Nominated by
Illinois Securities
Eastern Pa. IBA Group
Dealers Annual Dinner
PHILADELPHIA, PA.
T.

Eastern

a

through this disputed 190
sides being an easy thing to figure but not without some
do.
Everybody likes to hear backing away first. I'll also

thing

the

level

Dow theory

that

way.

of

190
a

along with all these volunteer

Securities Dealers Association will

employers.
would have

and turns must have been

ing

hold its annual dinner

litigations be¬

they're up
capable of catching the twists

the

❖

Ward, partner of Merrill
Lynch, Pierce, Fenner & Beane,

a

in

and

up

The big hope now is that
"in¬ the averages will go through

has been again nominated for the

save

went

again, and now
again. The trader

news¬

on

wise

wasted

then

down

approximately 187 making
them and
plug along hoping
everybody, from customer to
that I'm
right a little more
broker, quite happy.
This
often than I'm
wrong.
happiness is expressed in
❖
s!<
i'fi
optimistic forecasts with even

time and energy which will other¬

be

little,

genius. Me, I'm not a genius.
points
I just call them the
way I see

about three

ple

in

little, then turned down

up a

Dow

good deal of this strength is
of the cream puff variety.
One real squish and the whole

believe

hoping and telling
not so
long ago.
Unfortunately things didn't
turn out that
way. They went
a

ten

who

other

Trades await conformation of

(aver¬
then about 174) will con¬
tinue up.
At the same time,
however, it seems to me that\

and
no
attempt should be
made tOr^mpose such controls over
the minds and activities of a
peo¬

was

each

hopes build up
optimism.

like rockets.

up

least that is what
every¬

body

market

living.
not

sooner.
During an infla¬
tionary period stocks are sup¬

=By WALTER WHYTE=

Inflationary

It is the law today that an em¬

ployer

on

Says—

v

earn

Burgess, of Biddle,
Co., Chairman; Philip
L. Lee, of Wurts, Dulles & Co.;
mits to the taxation and
discipline
of freedom of
association, freedom
J. Reece Lewis, of Elkiiis, Morris
of contract and freedom of reli¬ of a private, unregulated organ¬
&
Co.; Edward)1 C.h- Sayers,?1 of
gion, is not a righteous, but a ization, is a wrong for which there
Smith, Barney & Co., ahd\Bertram
thoroughly unrighteous objective, should be a complete
M. Wilde, of
remedy, and
Janney & Co.




Walter

who

em¬

particular job, why should
all
employments
be
made

man

make

of

the employer as desirable em¬

a

ization

cials

law should

"body odor."
thousands

ployees.

984!

him?

slave

or

personal fault, they do not appeal

through

"prejudice"

"fat"

"partially
they have

upon

are

not

Ideally evil or is, on the contrary,

or

those

denied
employment for such discrimina¬ ties of S. 984 are made clear on
tory reasons. A government bu¬ detailed examination it may be¬
reau
would certify most of them come evident that no such anti¬
as
"qualified"; but, "by accident discrimination law should be writ¬
persons

is

called

or

or

because

Thousands

determine

to

"sickly"
or

wisdom

which

"short"

or

or

disabled,"

for

that

because

fused

cial be endowed with the celestial
necessary

old"

"too

thinking cannot be
legislated out of the human mind.
And how can a government offi¬

whether

frequently

"too

hired

icy,

But

persons are

not

to

so

action based upon
bidden

con¬

and

absurd

a

Chinese

that the outgrowing

argue

be

may

create.

take

one's

choose

to

is essential to

ciates

legislation and catch a glimpse of
the society which the progress of
such law-making will eventually

is

essential libferty
admirable but detestable.
this

denying

us glance ahead toward
ultimate objectives of such

against

prise is that it hasn't latched

Markets

*

not favored by the labor offi¬

are

tail, let
the

a

the present discriminations which

(Continued from first page)
Before

effect

39

can't argue that inflation
hasn't gotten hold. The sur¬

Tomorrow's

organization to
its membership
to discriminate against a
because of race, religion,

in

(1667)
I

classify

great variety of
regulations which would continue

Anti-Discrimination Bill Scored
&

CHRONICLE

labor

a

or

person

ing

or

FINANCIAL

further

any

ful

an

rational

&

support, in the
toric responsibility of leadership, Federal law.
guidance, rescue, and service as
Proponents of S. 984 will of
a tower of strength in emergency,
course
refer to Sec.
(5) (b) as
they must be well-informed on providing an answer to this criti¬
probable economic developments; cism; but there is no answer there.
they must have definite plans to Sec. (5) (b) does make it unlaw¬

which

economic

COMMERCIAL

THE

J640

Chicago Board of Trade

N. Y. Cotton
,

NEW

Exchange Bldg.

YORK 4,

N. Y.

14 Wall Street

New York 5, N. Y.

COrtlandt 7-4150

Teletype NY 1-928

Private Wires to

CHICAGO

DETROIT

PITTSBURGH

San

Francisco

Principal Offices

—

Santa

Barbara

'

GENEVA, SWITZERLAND

Monterey

—

Oakland
Fresno

—

Sacramento

40

FINANCIAL

&

COMMERCIAL

THE

(1668)

increase for aluminum was

There
rise

(Continued from page 6)

end product just the
same as any other producer.
In the "manufacturing depart¬
ment"
a
number
of
important
edge of

our

steps have been taken. The For¬
eign Service of the United States
has been given by the Department
of State
at
the request of the
Office
of
International
Trade

date

(under

March

of

1947)

3,

fundamental directives under

which it is instructed as a perma¬

policy "to report on the po¬
tentialities of
their districts as

nent

suppliers

sustained basis of

a

on

for export
and especially

materials and products
to the United States
to

as
U. S.

to

assistance

of

be

would

information

such

report

The Foreign Service

importers."

also informed that "as a gen¬

was

While

decisions.

court

pending

effort is being made by the
develop im¬

every

Bureau of Custome to

was

also in 1946

the

in

value

dutiable

at

further

a

rates, a
trend which

the

of

has prevailed since the end of
war.

the

These

cally

of

imports

valorem

ad

continuation

of

all

products are practi¬
manufactured articles
and to a very large extent they
time to time, as at San Francisco
represent importations from Eu¬
currently, a congestion which the
Some of these goods which
Bureau of Customs is unable to rope.
provements in procedures, the fact
does remain
that there is from

expeditiously as they
would like. An Interdepartmental
handle

as

subject

are

high

to

ad

valorem

rates, such as laces and embroid¬

eries, glassware, chinaware, jew¬
elry, gloves and feather manu¬
cians
and
factures, are still below the pre¬
working on these basic problems
war level of imports.
Ad valorem
and
the
National
Council
of
duties now constitute 24% of the
American
Importers „ has
also
total collected, as compared with
made
certain
suggestions
after
26% in 1938 and only 9% in 1943
careful study and analysis.
and 1944.
Specific duties, which
It is also clear that many of the
were 84%
of the total collections
present difficulties arise out of in
1944, compared with 64% in
the importation of new products,
1938, accounted for 70% of last
such as plastics, new foreign ship¬
pers who are not fully aware of
American import regulations, new
Committee,

of techni¬
has been

composed
specialists,

year's

Thursday, October 23, 194?
collections.

Articles

dutiable at combined rates, partly

1,600%

for lead almost 4,600%.

and

Import Trade Promotion

CHRONICLE

"No." They are willing to admit
the pertinence of the past analo-r^

specific

gies

total

and

still

are

partly

existed

prior

valorem,

ad

the

below

levels

World

to

which

War

10%, for example, in 1938 as

II,

com¬

pared with 3% in 1944 and 6% in
the last two years.

Unfortunately, the inauguration
of this

trade promotion pro¬

new

has coincided with the se¬
of the produc¬
tion machinery in many countries,
especially in Europe and the Far
East.
Not until after foreign pro¬
gram

breakdowns

vere

duction

wards

has

been

to

full

policies

new

Even

will

evaluate

and

range

revitalized

levels

prewar

possible

be

long

of

these

effects

imports.

our

on

to¬

it

the

under

existing handicaps,
purchases abroad have

American

relatively high levels, but
only time will show to what ex¬
tent

imports

be stimulated.

can

obtained

review

first

The

Importers.

extensive

results

the

of

through the publication

of these trade leads is now under

preparation

Section

Economic

-and

Commercial

the

by

of

the

first

countries

10

duties

collected

the basis

on

on

their

into the United States in the fiscal

1947:

year

Duties Collected by

in London. It

is

Countries

result of this Australia

that

a

as

review the Office of

will

Trade

international
the

know

shortly

causes underlying the disappoint¬
ing lack of results so far secured
from import trade opportunities
submitted by Foreign Service of¬

ficers in London: Whether this is
due

trade

to

such

obstacles,

as

high prices, or whether these new
prospects have not been suffi¬
ciently publicized, or perhaps is

American

of Estimated

Valuation

American Embassy

hoped

of

imports

of Origin

$65,889,320

Cuba

52,452,862

Canada

general result can be that the pro¬
duction of goods on which prices
are controlled simply can be stop¬
ped
while
substitute or other
goods can be produced' in the
plant. That is part of the record
of price control history. It would

then, that the mere absence
suffi¬

seem,

of such controls is hardly a

42,426,041

United

29,563,795

Argentina

28,359,744

Mexico

17,544,276
Africa

16,500,760

Turkey

15,013,520

France

14,360,701

The

number

the

of

explanation

present

price boom, and that the restora¬
39,488,716 tion of such controls might easily

Kingdom

Switzerland

Union of South

cient

one

position

held

revive other evils that are

bad

as

What use is it to
say,
for example, that the con¬
trolled price
of a man's white
broadcloth shirt is $3.50 when the
high prices.

as

only shirt that is made available
is one made of inferior material,

by Australia is directly attributed short-tailed, with a wilting col¬
to
its large participation in the lar, and can be had only by paying
of commercial sales appeal.
raw wool trade, the total of $121,$5 for it?
Lack of Sufficient Customs Staff 105,594 representing larger duty
due

even

intrinsic

their

to

lack

At two meetings of the Import collections on raw wool imports
Advisory Committee, the sugges¬ from all sources than for any pre¬
tion
has
been
made
that
the ceding year in customs history,

fundamental barrier of the devel¬

except

opment of a larger import trade
was the lack of sufficient staff in

was

194-3,

in

when

the

total

the Bureau of Customs to process

approximately 25% larger.
Imports under the tariff sched¬
ules of spirits, wines and bever¬

the current volume of import en¬

ages

under

and

the

agriculture
also recorded

appraisements.
It has products schedule
been suggested by one member of diminished collections, as did the
the
Committee
that,
until the wood and wood manufacturers
staff is adequate to the present group, but in this latter case the
volume of our imports, it is futile reductions were attributed to the
to attempt to increase the trade. free admission after Oct. 25, 1946,
Currently, it is admitted by the of many important types of lum¬
tries

and

Bureau of Customs that the situa¬

ber

tion

tial Proclamation 2708.

for

difficult

more

at

is

relatively

San

importers

Francisco

under the terms of Presiden¬

All

the

of

remaining types

of

than at any other American port;

import commodities recorded

they
iiave recently had to close the
Appraiser's Store in that port and
order that no additional imports
be removed from docks and piers.
To deal with the present backlog,
five specialists have been detailed
from other ports and Washington

large

as

temporary

a

measure,

to San Francisco and funds for 11
additional
made

with

employees

available
a

view

to

to

being
Appraiser

are

the

alleviating

the

present congestion.
On Jan. 1, 1947, there was at all
ports

a

voices

total backlog of 79,000 in¬
which

had

not

been

ap¬

praised for dutiable value, but the
Bureau of Customs believes that
this

volume

has

been

cut

down

considerably and probably now is
closer

to

50,000,

including

some

i6,000 appraisements withheld




nue

increases in customs
in the past fiscal year.

example, the

revenue

table damasks

was

greater

reve¬

For

from cotton

Effect of Heavy Exports
As

boom, there are

almost 14 times

1946, while for
cotton tapestries it was more than
14.
Felt hats, wrapping paper,
wool
yarn,
buttons,
glassware,
cordage, rayon table damasks, cot¬
ton

floor

coverings, musical in¬
human
and
animal
rayon filaments
and other

struments,
hair,

fibers,
other

tions
were

1947

potatoes

and

were

important import classifica¬
on

which increased amounts

collected.
on

mitted

The

revenue

articles which
free

for

were

stockpiling

during
the
startling heights.
poses

tinsel

war

For

in
ad¬

pur¬

reached

example,

and

that

come

realistic

explanation.
One of these is the export of goods
closer

to

a

needed

here

mand.

Up

the

ninety

past

otherwise in such quantities as to

shorten the
domestic
In the very nature of
things, this could have no other
logical effect than to raise prices
here, especially when it is cou¬
pled with a national income that
puts effective buying power at an
all-time high. Heavy effective de¬
mand plus
short supply means
only rising prices, and that is pre¬
cisely where we are today. Let

seriously

supply.

look at this

us

The

sumption

is

demand

goods

The
for
as

true

consumer

is

for

con¬

unparalleled.

of

durable

the

demand

goods such

automobiles, stoves, furniture,

and

host of

a

demand

been
age

The

other articles.

housing

has

never

equalled. Indeed, the short¬

of it amounts to almost

tional

calamity,

affects
and

for

the

enlightening to see from whence
comes the purchasing power that
is

the

at

(1) Current earnings which are

which are being
placed every payday in the hands
of
some
60,000,000 people gain¬
high

very

and

fully employed. That is something
of

record!

a

It

that

come

current in¬

means

without

almost

is

For

this
16,000,000

are

workers

of

farm

commodities.

factors,

new

increased

nest-eggs to meet the
of

cost

Savings

living.

who

sells its sav¬
the bankers
them, are all aware

as

redeem

this

fact.

communist
It is

not

the

and

which

ings bonds,
of

deposits,

savings

well

as

Labor

all

there

be-no

can

serious

break

"bust" without

in

a

fact.

(3) A reduction in current sav¬

ings. The record again shows that
this is so, and the point need not
be

labored

pleases. The fact remains

that neither of them is very com¬

forting. For, if the analogy of the
past is repeated and a bust comes,
there

be

will

serious

readjust¬

ments to be made during a period
of bad times which even bankers
cannot

bust

no

other

are

still

If,

escape.

hand,

to

be

other

there

readjustments

made

will

the

then

on

comes,

serious

be

bankers

which

unable

even

to

avoid.

One of the worst of these will be

the

wiping out of much of that
potential purchasing power which
of

many

have built

us

aration

for

in

up

retirement.

prep¬

Besides,

it cannot be overlooked that there

will

be

some

millions

middle-aged and
millions

more

who

of

011

people,

as

over,

well

fixed

of

be subjected to a good
hardship simply because
they do not have the time or the

to

power

make

the

needed

ad¬

justments.

Hence,
we
shall
be
partly damned if we have a bust
partly damned it

There

is

don't.

we

shadow, however,
that overhangs our whole current:
It

scene.

It

one

is the shadow

Russia.

of

might

easily be said that at;
moment, while America and!

her friends

are hoping to avoid a>
crash, Russia and her friends are-

praying

that

it

here.

come

may

These doctrinaires who accept the.
Marxian
philosophy are firmly
convinced

that

carries

system

its

our

within

own

ultimate

destruction.

i booms

collapse

They insist that;

busts

and

capitalistic
itself the

inherent

are

in*

capitalism.

Right

they

now,

finding

unholy

barrassment

in

be

to

seem

glee

em¬

inflation.

by

our

To>

them, it represents the oncoming
of

the death throes of the

and

the

vent

of

Can

Communism.

world-wide
we

cheat

them

prey? Will we? Only

prophet

system

opportunity for the ad¬

could

tion under

an

their

of

infallible-

that ques¬

answer

present circumstances..

Our economic future

to be

seems

here.

is the tremendous
both business and
government, all of which helps to
swell the
stream of purchasing
(4) There
spending by

throughout the country.

to terrific pres¬
sure on the price level when goods
are
in short supply, and in the
final
analysis they account in
They all add

up

the lap

of the gods.

Buy U.S Savings Bonds
REGULARLY

if
s-

large

as

incomes,

will

deal

in

power

a

prices.

Well, each of us is at liberty to
accept whichever side of the argu¬

agitators know it too.

healthy, but it is

two

rigid. Both of them enter
costs; since this is so, a
bad price break cannot come; and
into

and

leaders

These

so

bankers, commercial bankers who
take

a

less

or

and

their

have

the argument goes,
mean
that
higher
wages
and
higher farm prices are now more

seeds of

from

who

power,
and
legislative
support, with respect to the prices

invasion of savings
past earnings. It is now a
matter of public knowledge, and
of private concern, that many of
our
people are drawing down
The

(2)

example,

some

ganized

precedent.

from

time

this

important

new economic and
political power
with respect to wages. In
addition,
this time the farmers have or¬

this

measure

for

our

9 S*

.

:

inflationary

boom.

a

especially

na¬

as

it

of "Boom

Question
Does all

headed

this

for

There

mean

inevitable

an

are

or

that

and

of

we

economic

our

on

past

wars

Any

price

chart

after

the

ipomihg frqm business for

for
vegetable oils were 1,700% above improvement; of,, p I a n t
those collected in 1946, while the modernization, for plant expan¬
,

mk

this is exactly what has

happened.

their.; families. The domestic

the

the

point to the fact that after all

that after the War of

of

lY:»

history,

show

veterans

are

"bust"?

those who say "Yes."

They base their reasoning
record

Bust"

war

demand

It

demand.

this

of

root

from four sources:

comes

but they

—

that

now.

domestic

same

there

organized

point

contains

factors.

new

time

and

is both interesting and

Now, it

meet current de¬

to

until

days, we have been sending goods
out of this country for relief and

in

than

attention

for

call

supply?

government

the price
other factors that
of

explanation

situation

ment he

The Current Economic Scene

American

the

a

insist

been at

requirements of
the U. S. important interests are
entitled to receive the same at¬ importers, some of whom are not
tention from Foreign Service of¬ well
grounded in import tech¬
ficers as would be given to U. S. niques, and new employees of the
(Continued from page 19)
exporting interests." Through this customs service. In this latter con¬ was exceedingly difficult to de¬ sion, and for a thousand-and-one
step, import promotion was placed nection, many who are aware of mobilize. This has proved true in other
seems
at
the
purposes
the
valuable
contribution made
on the same basis as assistance in
other
countries
where
similar moment to know no bounds. In¬
export trade promotion, includ¬ by the Customs School of Instruc¬ controls have been applied. Even deed, business is clamoring for
ing visitors, inquiries, and trade tion will regret to learn that this
Russia, which has controls par ex¬ supplies for such purposes and
Division of Training, which was
reports.
cellence, is said also to have its simply cannot get them. It has
Subsequently, the Foreign Serv¬ first established on July 5, 1935, black markets in spite of the fact the funds. In most cases, it has
ice was supplied with a special has been discontinued by admin¬
that the penalty applied there for the will. But the things it wants
form for reporting import trade istrative action and the employ¬
such
operations is much
more are not to be had. On top of all
■opportunities. Owing to the spe¬ ees transferred to other duties.
this, there are tremendous de¬
drastic than elsewhere.
cialized character of our import
mands due to spending by gov¬
The fact seems to be that there
Increased Customs Collections
trade, considerably more detail
ernment on goods for export, for
is little use in setting a price on
Importers will not be surprised
has to be developed in order that
the armed services, for govern¬
a commodity or a service when it
the
prospective American
im¬ that our customs collections dur¬
ment supplies of one kind and
will
become the chief sport of
ing the fiscal year ended June 30,
porter can deal effectively with
another.
Demand!
Demand!
De¬
sellers and of buyers to get around
1947, amounted to $497,533,914, an
proposals of the overseas seller.
mand for goods everywhere, and
the
control by any conceivable
This new form was developed in increase of 12.9% over 1946 and
the purchasing power available to
device. Quantity can be reduced;
cooperation with the Department larger than for any year since the
make the demand effective! What
of State and with the assistance passage of the Tariff Act on June quality can be sacrificed; "tie-in"
else
could
any
one
expect but
1930.
The following table sales can be resorted to unless
of the Import Advisory Commit¬ 17,
higher prices in face of the short
absolutely
prohibited;
and the
tee and the National Council of will be of interest as it shows the
eral rule that the

to

up

—

nevertheless

World

Civil

War

I,

War,

we

and

will
1812,

after

had calamitous

"busts." So much for the record.
But

there

are

others

who

say

Ask where you

WORK*

Ask where you

!

BANK]

Volume

Number 4640

166

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1669)

'41

Indications of Current Business Activity
The following statistical tabulations cover production and other figures for the latest week or month available (dates
shown in first column are either for the week or month ended on that date, or, in cases of
quotations, are as of that date):

r

Latest)

AMERICAN IRON AND
Indicated

STEEL INSTITUTE:

steel operations

Week

(percent of capacity)

Oct. 26

97.1

Previous
Week

Month

96.8

94.1

90.3

AMERICAN
Steel

Steel ingots and castings produced

(net tons)

PETROLEUM

output—daily

average

Crude

to

runs

stills—daily

1,693,900

1,646,700

1,591,400

Gas

oil

and

(bbls. of 42 gallons each)
(bbls.)

Oct. 11

oil

and

Residual

5,207,550

5,217,300

5,309,000

5,318,000

4,801,000

16,458,000

16,505,000

Oct. 11

2,253,000
6,539,000
8,777,000

2,071,000

2,156,000
6,053,000

1,958,000

8,517,000

8,855,000

8,220,000

82,202,600

81,607,000

82,509,000

22,778,000

21,832,000

87,724,000
21,528,000

Oct. 11

23,057,000
61,098,000

60,223,000

57,619,000

64,872,000

Oct. 11

57,279,000

57,504,000

56,168,000

60,458,000

distillate

fuel

CASH

14,921,000

(bbls.)
fuel

oil

oil

fuel oil

(bbls.)

(bbls.)

at

at

6,241,000

for castings produced
September

6,775,158

*6,982,086

6,555,566

products, including alloy
(net tons).—Month of July..

5,278,213

4,974,566

4,994,377

STEEL

AND

and

steel

INSTITUTE:

of

tons)—Month

of steel

stainless

4,737,400

5,296,000

16,519,000

output (bbls.)
Oct. 11
Residual fuel oil output (bbls.)
Oct. 11
Stocks at refineries, at bulk terminals, in transit and in pipe lines—
Finished and unfinished gasoline (bbls.) at
Oct. 11
Kerosine (bbls.) at
Oct. 11
Gas

5,245,300

Oct. 11

Oct. 11

distillate

ingots

met

and

average

Ago

IRON

Shipments

(bbls.)

Gasoline output
Kerosine output

;

1,699,200

INSTITUTE:

Crude oil

Oct. 26

Year

Month

Latest

Ago

Equivalent to—

AMERICAN

Previous

Month

Year

Ago

DIVIDENDS

BY

U.

REPORTED

PUBLICLY

—

CORPORATIONS—U.

S.

COMMERCE—Month

OF

of

DEPT.

S.

5,942,000
CLASS

I

RRS.

Month

of

(ASSOC.

RRS.)-

AMER.

OF

August:

Number

of
miles represented
operating levenues
Total operating expenses
Operating ratio—per cent

Revenue

OF

$745,257,959

565,605,880

freight loaded

RAILROADS:

(number of cars)

Revenue freight ree'd from connections

Oct. 11

(number

956,862

942,533

922,360

743,248

735,966

682,209

708,467

ENGINEERING

CONSTRUCTION,

ENGINEERING

charges

EXPORTS

COAL

Month

CIVIL

after

(est.)

NEWS

U. S.

RECORD:

of

(BUREAU

OF

Total U.

S.

construction

Public
State

COAL

OUTPUT

(U.

S.

BUREAU

OF

$108,205,000

To

North

and

57,208,000

44,819,000

45,897,000

80,2 1 5,000

To

South

America

34,130,000

48,164,000

44,730,000

27,990,000

To

Europe

Oct. 16

municipal.

$90,627,000

29,869,000

43,958,000

33,550,000

26,160,000

To

Asia

..Oct. 16

and

$92,983,000

Oct. 16

Federal

$91,338,000

Oct. 16

construction

4,261,000

4,206,000

11,180,000

1,830,000

To

Africa

COKE

MINES):
.Oct. 11

STORE

SALES

INDEX—FEDERAL

12,190,000

12,600,000

1.289,000

1,169,000

1,192,000

135,200

>132,900

135,200

125,400

*327

291

281

RESERVE

AVERAGE=1«0

ELECTRIC

303

4,958,062

4,977,141

4,539,712

75

62

73

S.

Electrolytic

3.19141c

3.19141c

$36.96

$36.93

$36.93

$28.13

$39.50

$38.08

$37.75

$19.17

21.225c

21.425c

21.425c

21.425c

16.925c

15

80.000c

80.000c

80.000c

52.000c

Woolens

.Oct. 15

15.000c

15.000c

15.000c

8.250c

14.800c

14.800c

8.100c

10.500c

10.500c

10.500c

9.250c

Oct. 15

Piece

14.150c

Govt.

.Oct. 21

.Oct. 21

121.92

121.95

122.27

113.89

114.08

115.82

118.80

120.63

121.43

117.00

117.00

119.00

113.89

114.27

115.63

106.92

108.34

108.88

109.24

111.07

115.24

115.63

117.20

117.60

117.60

119.20

U.

S.

Govt.

DAILY

120.02

Oct. 2l

1.52

1.51

1.49

2.95

2.86

2.71

2.62

2 80

2.30

2.70

2.96

2.94

2.87

2.84

3.37

3.34

3.26

3.23

3.21

3.11

116.1

136.7

125.6

2.87

2.79

2.73

2.69

INDEX

.Oct. 21
Oct.

453.2

447.6

427.4

BY

119.0

110,0

139.7

139.5

121.6

146.8

137.8
1:5.5

149.3

149.1

Radios

125.0

125.0

Luggage

128.3

127.C

124.3

135.8

1.35.1

119.5

129.6

128.9

118.4

1130.5

t132.7

130.4

Floor

coverings

household

appliances

117.*

347.2

Index

INDEX

115.9

119.2

INTERSTATE

ITY

124.1

127.8

147.0

China

COMMODITY

120.5

158.2

127.9

Electrical

MOODY'S

127.5

wear—

Shoes

2.65

119.0

128.0

overalls

129.3

119.7

126.7

159.7

including
children's

&

144.1

129.4

126.6

caps

Underwear

2.76

2.77

145.3
129.4

neckwear

&

&

Furniture

3.04

2.89

120.4-

137.6

Socks

3.15

.Oct. 21
.Oct. 21

158.8

131.2

Shoes

2.69

Oct. 21

124.7

148.1

131.0

Infants'

2.60

.Oct. 21

145.0
131.8

131.1

Underwear

2.82

2.71

133.2

145.2
132.2

dresses

brassieres

132.0

Shirts

1.63

2.96

Aaa

118.1

apparel—

Clothing
Oct. 21

house

&
&

Hosiery

AVERAGES:

Bonds

Average corporate

106.6

Shoes

Hats

MOODY'S BOND YIELD

131.9

105.4

Underwear

117.80

Oct. 21

171.0

138.9

149.5

Men's

112.37

.Oct. 21

116.4

172.3

Aprons

110.34

.Oct. 21

134.3

139.1

comfortables

&

Furs

116.22

106.39

131.9

156.0

apparel—

Corsets

119.20

Oct. 21

goods

Hosiery

121.04

.Oct. 21

A

Baa

131.7

133.9

156.3

Sheets

116.61

118.80

.Oct. 21

131.5

122.8

Domestics—

Women's

Bonds

114.7

143.4

134.1

wash

Blankets

S.

126.5

126.5

goods—

Cotton

AVERAGES:

Aaa

131.2

143.8

Silk

21.225c

123.2

131.4

furnishings

21.200c

15

132.8

134.8

126.7

wear

127.3

135.7

135.4

children's

&

136.1

135.9

apparel
Women's apparel

14.300c

U.

1—

goods

Infants'

York)

DAILY

98,619

PRICE

RETAIL

Men's

Heme

PRICES

'•'77,212

dons

122.9

Piece

copper-

BOND

113,158

index

Oct.

MOODY'S

96,304

lbs.)

stocks at end of period

OCT.

OF

Composite

QUOTATIONS):

Oct. 15

(New

2,000

PUBLICATIONS

.Oct.

Lead

6 7,803

95,562

136.4

of

(tons

2.73011c

Oct. 14

J.

3.19141c

Oct. 14

M.

69.743

88,052

lbs.)

2.000

lbs.)

2,000

AS

&

■>33,307

92,088

Sept.:

INDEX JAN. 2, 1931=100 (COPYRIGHTED)

PRICES:
Oct. 14

(E.

806,529

customers—

A.

FAIRCHILD

PRICES

539,900

772,920

A.—

in

of

of

5,494,600

983,112

83,784

month

U. S.
2,000 lbs.)

tons)

-421,064

80,113

(tons

(net

6,034,500

5,372,665

569,446
month

■>5,793,729

5,633,853

23

U.

In

of

METAL

6,203,299

(net tens)

of

to

Aug.:

tons)

(net

Refined copper

COMPOSITE

2

INSTITUTE—For

Refined

4,946,090

286

stocks at end of

Deliveries

434,018
223,269

344,571

464,776

tons)

(net

(tons

657,280-

3,940

MINES)—Month of

production

Copper

INSTITUTE:

Oct. 16

AGE

365,452

tons)—

OF

coke

coke

Oven

COPPER

Oct. 11

Oct. 18

IRON

714,249

»3,415

ions)

(net

tons)

(net

tons)

(net

coke

Beehive

Crude

EDISON

53,400,000

anthracite (net

America

tons)

(net

(BUREAU

Oven

Central

(net

Production

12,518,000

1,330,000

Oct. 11

SYSTEM—1935-39

12,750,000

.Oct. 11

DEPARTMENT

37,000,000

July:

exports of Pennsylvania

Oct. 16

construction

858,212.561
81,855,564

MINES)—

tons)
Private

73.26

60,958,451

528,831

income

78.73

$74,948,797

52,300,000

railway operating income before charges

$84,227,673
80,824,802

899,443

Oct. 11

of cars)

$710,291,517
555,902,703

75.89

Net
Net

AMERICAN

227,345

227,361
$705,361,414
555,361,881

227,345

Total

Taxes

ASSOCIATION

$16,900,000

$18,700,060

September

GROUP—1935-39=100:

of

COMMISSION—

COMMERCE

Railway

Employment

middle

at

of

September:

Foods

233.1

232.1

234.0

234.8

222.0

Average—100

245.6

269.2

266.3

261.9

230.9

299.9

297.6

303.0

294.9

284.9
256.9

224.0

CIRCULATION—TREASURY

218.0

262.1

IN

MONEY

329.0

307.8
262.5

Fuels

1935-39

192.6

225.6

„

of

DEPT.—As

NEW

August

STOCK

YORK

31

^

$28,434,214,326 $28,148,076,876 $28,447,643,163

— —

EXCHANGE—

190.3

190.6

154.2

'169.3

168.6

144.7

215.4

215.7

216.3

206.0

159.2

159.1

159.1

125.0

232.6

*232.7

226.6

178.5

152.4

151.5

149.6

128.2

Credit extended

77,703,728

76,590,962

81,805,759

135.5

135.4

134.0

121.9

Cash on hand and in banks in U. S.

395,582,858

398,884,779

496,513,658

136.9

Metals

'>190.3

170.9

135.7

135.7

125.1

Total of customers' free credit bal.

629,680,553

655,900,273

729,313,360

of

As

Sept. 30:

Member

firms

carrying

margin

accounts—

Total

net

customers'

of

debit

$569,697,227

balances
to customers

127.1

127.1

127.1

116.5

Market

value

of

listed

214.3

*213.6

212.6

178.4

Market

value

of

listed

67,521,963,215

68,184,122,479

66,863,605,035

140,498,941.444

141,235,834,445

139,784,237,29a

77.5%
$138,969,392
234,602,893

78.3%

shares
bonds

Stock

price index, 12-31-24=100.Member borrowings on U. S. Govt, issues

NATIONAL PAPERBOARD ASSOCIATION:
Orders

received

Production

(tons)

Oct. 11

(tons)

WHOLESALE

REPORTER

S.

DEPT.

180,203

176,834

186,174

102

100

471,355

145.6

Oct!

169,988

472,229

on

other collateral

142.6

TRANSACTIONS

MARKET

DIRECT AND

605,059

146.3

TREASURY

99

492,845

80.2%

$156,883,10a

$150,779,406

251,041,662

184,631,821

IN

SECURITIES

GUARANTEED

133.4

OF

U.

A.—Month

S.

U.

158.0

157.1

157.4

126.0

190.1

187.5

187.3

160.2

.Oct. 11

180.0

178.3

180.9

137.7

.Oct. 11

189.2

186.7

185.2

141.3

.Oct. 11

141.2

141.0

140.4

126.1

.Oct. 11

115.4

115.3

114.4

95.0

.Oct. 11

150.7

150.7

150.4

183.3

182.3

179.4

S.

STATUTORY

GOVT.

125.1

123.9

120.4

132.7

131.9

132.1

115.3

.Oct. 11

116.1

115.9

117.9

102.2

face

DEBT

Sept. 30:

that

be

may

outstanding at any one

tune

amount

OUTota?agro£!s" public

98.8

.Oct. ll

Total

134.1

.Oct. 11

$74,053,450

$275,000,000,000 $275,000 000,000 $*.75,000 000,000259,144,588,455

260,097,121,993

265,368, 855,31*

75,959,624

debt

79.064,542

,.99, 639,725

114.2

.Oct. 11

$308,111,500

purchaser

LIMITATION—As of

.Oct. 11

September:

saips

Net

LABOR—1926=100:

of

$123,096,300

Net.

.Oct. 11

Guaranteed

by

obligations

net

owned

„

Treasury

the
Total

gross

Ipublic

debt

and

guaranteed obligations
$259,220,548,079
outstanding
public

$260,176,19b,53o $265,160

495,039

Deduct—other
debt

debt

Special

borrowings

158,176

103

■

PRICE

AVERAGE=100

PRICES—U.

233,861

185,582

.Oct. 17

at

OIL, PAINT AND DRUG
INDEX—1926-36

II."

11

Oct. 11

I

activity

orders

165,049

Oct. 11

(tons)

Percentage of
Unfilled

Member

$632,282,599

$550,116,782

obligations

not

subject

to

869,662,221

limitation

8 <o,^89,809

e49 000,000-

groups—

Balance

Raw. materials

Semi-manufactured

Oct. 11

articles

Manufactured

products...
All commodities other
than farm products
All commodities other
than farm products and foods
•Revised

figure.




175.0

172.9

171.9

152.1

151.3

150.4

117.1

11

151.7

151.4

152.5

118.6

11

151.0

150.4

150.9

139.0

138.6

138.1

of

obli-

118.4

Oct. 11

amount

146.3

11

face

112.6

ZZZ~~Oct!
ZZZZZZoct.
_Z_Zoct.

authoritySS —h———————

$258,350,885,858 $259,300,906,726 $264,819,000,600
$16,649,114,142

"■Revised

figure,

tPreliminary

figure.

$15,G99,093,274

$10,182,000,000

42

(1670)

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, October 23, 1947

better automobile and other

prod¬
than he did
years ago when the buying power
ing facilities. On the basis of our supply and demand keeps stub¬ of the dollar was much greater.
Government makes prices high¬
experiments and studies, we con¬ bornly at work. It invariably up¬
sider it conservative to estimate sets the nicest schemes of govern¬ er in other ways. Most important
is the extravagant price tag gov¬
an
ultimate
increase
of
20%. ment "planners." It was inevitable
Other steel
companies are also that prices would be higher after ernment places on its own serv¬
ices.
Cost of government is part
pioneering in the use of oxygen. the war.
Among other things,
I believe it will prove to be one part of the money paid for war of the cost of everything.
The
of the greatest advances in the production was held over to swell real price of any article is the
technology of steel making—and the number of dollars bidding for selling price minus taxes, just as
actual
one
that will probably lead
wages
are
the
amount
to scarce peacetime goods.
In the
And taxes
beneficial changes in the design of normal working of a free econ¬ earned minus taxes.
not only operate directly to make
furnaces,
methods
of
material omy,
goods
and
services
will
handling, and other aspects of eventually come into balance with prices higher and wages lower;
steel production.
the supply
of money and true they have a further inflationary
standards of value will be estab¬ effect because of the inefficiency
I have given you this picture
and waste in government spend¬
lished.
of the steel industry to establish
This happened after the
a
clear-cut comparison between first world war when prices and ing. Let us take the steel industry
as an,example
of the tax effect
stabilized
on
a
the facts of steel and the criti¬ income
higher
cisms of steel. It would be most level than before. Had not gov¬ on prices. The present federal tax

Steel Industry and World Economic Conditions
(Continued from page 13)
said that the automobile and other
industries

could

their

increase

production if they could get more

steel, which is true. But it is also
true that the steel industry is in
the

With

boat.

same

materials,

it

raw

more

its

increase

could

The industry has the
capacity to make 91,000,000 tons
of ingots.
In other words, about

production.

7,000,000 tons of its capacity will

this

unused

go

mainly be¬

year

materials—partic¬

cause more raw

scrap
and
metallurgical
coal—are unavailable.

ularly

The critics clamor for additional
steel

capacity. They suggest that
new plants be built.
They appar¬
ently do not realize that if you
could double capacity overnight,

still could not get more steel

you

without raw materials to feed the

extra

capacity and trained man¬
power to operate it.
The direct
expansion of capacity is a lengthy
process that must go all the way
back

to

the opening

least three

at

overall

of new iron
It would take

and coal mines.

ore

to make the

years

increase

10%

from

of

to

20% that is demanded, and in the

present steel users would
be deprived of four tons of steel
for each ten tons of added capacity.
process,

for

now

bit of

a

paradox!

a

the

At

very time that the steel
industry is accused of not expand¬

ing,

it

has

expanding.

been

In

fact, since the

war it has been
the greatest program
of expansion and improvement in
its history. The various steel com¬
panies have been
going along

carrying

on

quitely adding to capacity in
that

would

current

interfere

ways

least

with

production.

They have
probably been too quiet about it.
But here is the picture. On pro¬
grams started at the end of the
and still in effect,

war

the indus¬

try will spend an aggregate of
$1,000,000,000 and several hun¬
millions

dred

tion

is

dollars

of

in

addi¬

projected. You can
appreciate the extent of this pro¬
from the fact that $1,000,000,000 is more than one-third of
now

gram

the total present net property in¬
vestment in the steel industry.
In

this

in

and

year

1948,

expansion program will
least 3,000,000 tons of

the

bring at
ingot-

new

making capacity into production.
It also will provide additional and

improved
such

facilities

products

for

finishing
sheets, strip, and

as

others of importance to the auto¬

mobile

industry.
National Steel Corp. is a major
contributor to this total industry
program.
The amount of money
spent
plus

on

current

our

amounts

program

still

we

expect

to

spend, total approximately $100,000,000. All of this work will be
completed within two years. Our
ingot capacity will be increased
800,000,, tons,

by

20%.

over

by

or

Within

the

slightly
next

two

months, Great Lakes Steel Corp.
w;ll place in production new facil ties which will
tons

this

of

provide 300,000

capacity.
remaining 500,000 tons will
new

largely from

the

that

provided

to

will

be

and

be

of

use

The
come

oxygen

by plants

plant

Weirton

to

will

plant with

a

be

installed

at

be
a
single-unit
capacity of 400 tons

steel

industry.

Provision will

be made for the addition of other

gen

Our initial interest in oxy¬

will be in its

furnaces

but

use

we

in the blast

will

also

be

equipped to apply it in Bessemer
open
hearth
operations —

and

where

have

we

mentally

for

vantage
naces

of

up

it

used

almost

with great success.

speeds

public

such

mind

in

the

impression
industry is not pro¬
ducing efficiently at the very time
that it is turning out its greatest
peacetime tonnage of steel—that
it is not expanding and is even
"plotting" to reduce capacity at
the very time that it is
carrying
out the greatest expansion pro¬
gram in its history—that it is tim¬
idly bracing itself against an an¬
ticipated depression at the very
time

that

it

is

developing with
vigor and ingenuity and at great
expense
an
important new ad¬
in

the technology of steel
Unfortunately again, it

making.
is

the basis of such statements

on

experi¬

two

years

The chief ad¬

oxygen

is

that

it

the rate at which fur¬

process

materials and thus

increases the production of exist¬




rate

this

detailed study, I am quite con¬
vinced that if the federal tax rate

intervened,
the
same
thing would have happened after
Prices

war.

income

and

would have been
hiffh

higher but not
at present.

as

Government is the

so

principal in¬

stigator of high prices for three
First, it has deliberately
forced
on
the
country policies
which raised prices.
Second, it
reasons.

maintains the cost of government
on

of

excessively high basis, and

an

the

of

cost

government is a

ernment

spending

Third, gov¬
is inflationary

because of waste and
A

sizable

prices

can

blunders

most

ever

found

the

war,

inexcusable

made by a Federal

vate economy

after

inefficiency.

part of today's high
be traced directly to

the

of

one

part

other cost.

every

Administration.

Immediately
so-called pro¬

the
in

minds

Washington and
the detriment of both industry in the high councils of the na¬
tional unions decided that a great
and the public.
Awhile back I said that
the depression was only a matter of
months away. The antidote they
steel
and
automobile
industries
concocted for this imagined de¬
are
closely tied together — so
closely, that the progress of one pression was a national pattern of
large wage increases.
You re¬
means the progress of the other.
You men of the automobile in¬ member the hysterical campaign
by government—to

in

of

steel-consuming indus¬
eager to help solve their

tries and

problems.

You know that

as

you

Administration

which

dustry know that the steel indus¬
unions
try, has always been alert to the^
needs

tern"

joined

put

to

over—the

this

and

"pat¬

strikes, the sta¬

tistics, later admitted to be phony,
the absurd contention—made with

developed

straight face—that wages

trucks

production. You remem¬
ber that the Administration, it¬
self, finally set the amount of the

new types of cars and
requiring different kinds
of
steels,
our
industry
never
spared time, effort or expense to
get you those steels. Your design
of the monitor top and one-piece

fenders created

a

steel

met

industry

mills

that

could

sheets than had
before.

And

need which

building
produce wider

ever

this

the

by

been

rolled

is

only one of
many" examples in your industry
and

others.

You

know

also

how

strenuously individual steel com¬
panies have competed with each

a

The

fact

increase

the

that

steel

in¬

is one of the most com¬
petitive in the country. Each com¬
pany is extremely jealous of its
position and works night and day
to
maintain
that position.
The
history of the industry shows that
it has always been keenly inter¬
ested in increasing the number of
applications and the total use of
dustry

steel.

Steel

been

ways

prospects

producers have al¬
optimistic about the
of the steel industry,

other
in

ter

industries, and the country
general, and this needs no bet¬
proof than the fact that the

steel

industry has always built ca¬
pacity in advance of demand.
Furor About High Prices

of the
one

another

your

dustries
and

is

made

industry. But in this
industry and other in¬

as

well

commerce

refer

criticism

steel

to

prices.

the

as

have
furor

agriculture
a

share.

about

Characteristically,

I

high
gov¬

ernment

attempts to put the blame
prices on corporations.
government, itself, that
is chiefly responsible for prices
being as high as they are today.

for

high

Yet

it

is

not

and

bludgeoned indus¬
it. This whole
series of stumbling steps are a
perfect example of so-called man¬
agement by government—and a
warning for those who care to
heed
it.
The immediate
effect,
was a large increase in the num¬
ber of dollars bidding for scarce
goods and, of course, an increase
in the cost of producing goods.
try into accepting

Industries

absorbed

the

in¬

is

38%.

While

have

I

made

no

cut in

were

the
or

half,

we

could reduce

price of steel by $2.50

cost

per

ton

In

addition, since the
everything the steel in¬

more.

of

dustry buys could be reduced,

we

dividends.

If

in

1947

only 38% higher than
prewar, and this is much less than
the increase in average wages, in
are

the price

of most other products,
general price index. Gov¬
ernment and unions point to cur¬

or

in the

rent steel

profits as evidence that
too high. They ignore
the fact that profits are higher
only because production and sales
are higher.
This is shown beyond
question by comparing the ratio
of profits to sales in 1947 with
the same ratio applying to years
immediately preceding the war.
Average profits in the years 193%
prices

are

government methods of procuring
food makes the situation worse.
It

recently reported

was

times

three

have

been

other

and

that at
agencies
against each

government

bidding
all

private buyers for
What happened was best
described by a private buyer who

wheat.

said, "No
United

bid against the
Treasury."

one

can

States

"Stop,

Look

and Listen"
Foreign Aid

As to

foreign aid, it is

sidered

opinion that

welfare demands
of

on

my con¬

national

our

national policy

a

"Stop, Look and Listen." There
situation in any country of

is

no

Europe

that

not

was

months

anticipated

Aside from
direct relief to help fight hunger
many

and cold

ago.

during the coming winter

—which

I wholeheartedly favor
giving—there is nothing our coun¬

try

do or should do for Euro»countries on any so-called

can

pean

basis.

"emergency"

the

Yet

Ad¬

ministration has been carrying on

highly

so

payments

could net

emotional

in lower

prices.
The
budget of $37,000,000,000
proposed by the Administration
the

current

fiscal

year,

was

unjustifiable burden
to place on the
people of this
country.
It is more than four
times as much as the top budget
an

entirely

the free-spending

in

1930's. This
huge taxation is due to only one
thing—the
stubborn
determina¬
tion of the Administration to con¬

into

tinue

fi¬
nancial burden which the public
peacetime

and

a

accepted only to win the war.
It
is a case of burglarizing the peo¬

ple so that Big
keep on living

To my

earn¬

ings, and this would be reflected

for

a

communistic."

dividend

could be lower

Government can
in the style to

good
and

col¬

don't

bfe
bad, but they go on living,
they preserve their national
may

vive.

If we did nothing at all

of aid,

way

that

assured

As to

are

two

com¬

of

types

One type is the country
communist
because. it

is

lives

Russian

to

munism—there
countries.
which

be

may

you

Europe would sur¬
communism—and, of

refer

I

course,

Red

just

condition

un¬

or

the

under

Army,

shadow

the

the

or

the

of

country

now

communist, or likely to go
munist, because its people

com¬

have

always been oppressed and make
no

of

distinction

between

form

one

With

oppression and another.

accustomed.

such

countries

from

become

Nations

Their

identity.
in

1

mind, this is entirely

realistic.

lapse.

People should realize that govern¬
ment has no money of its own.

which it has

amount

make

of

of

aid

differ¬

any

other type

The

ence.

no

would

us

country

Consequently, every cent it spends will not go communist—with or
—whether by taxing or borrow¬ without aid from us—because of
ing—is the people's money, and the character of their peoples. The
the

government spends, the
people can spend and save

more

less the

Englishman or French¬
for instance, has known per¬
long. He is in¬
dividualistic.
He would
quickly
average
man,

for themselves.

sonal freedom too

High government taxing and
spending is a major political In¬
Adminis¬

revolt

strument of the present
tration

as

of the

administrations

other New

Deal

it.

By

before

spending it maintains government
payrolls — and
votes — at
their

for

cost

upward pressure on prices, and

an

campaign to
might be able to reduce steel an¬ make
the American people think
other $2.50 per ton. After all, it
that if our country does not im¬
is finally the consumer who pays
mediately commit itself to an out¬
all taxes.
Taxes on personal in¬
pouring of billions of dollars an¬
come are also a factor in keeping
nually over* a period of years,
prices higher because they create
Europe will "collapse," or "go
pressure
for payment of larger

awhile, but nat^" bloated wartime levels and re¬
urally could not keep on doing so. tains the adherence of the nation¬
al union high commands and the
Government became bitterly crit¬
ical when prices were raised. Yet left wing groups which are
its
the plain
fact is the price in¬ political allies. I am not here to
make a political
creases
have not been sufficient
speech. But I
to cover increased costs. The cost say to you frankly that, in my
of making steel in 1947 is 70%
opinion, the present Administra¬
greater than prewar. Steel prices tion will not and can not change
creased

is

are

cost of

other to be the first to meet your

requirements.

money

ernment

that public support is built up for
the further invasion of the pri¬

following

day—the first of this size in

units.

if

that the steel

Still

The

per

unfair

and

built at Weirton next year

at Great Lakes the

year.

the

the

vance

Capacity Expanding
And

unfortunate

unjustified statements created

for less

ucts

because

submit

he

would

never

the

rigid control and
regimentation of Russian commu¬
nism. The question of aid to Eu¬
rope is one that must not be con¬
sidered in the atmosphere of hys¬
teria

to

and

scare

psychology which

the Administration tries to create.
It

demands

praisal

and

vestigation
gardless

of

cool,
action

that

is

how

required for it.
Just last week, I

practical

ap¬

on

in¬

thorough

re¬

based

much
was

time

-

is

d'scuss'ng

this
same
subject in my office
personnel is too with a member of Congress.
I
deeply steeped in the philosophy made the point that our country
of spending and government con¬ should
act on
foreign aid only
trol of the economy. A change lor when it was sure it had the facts.
the better can be brought about He
replied that, unfortunately, we
only by placing control of the were not always able to get the
government in the hands of men facts. I disagreed with this state¬
with a different philosophy. Ours
ment emphatically. As Engineers,
being a two-part.y system, this you men know that you can al¬
means
election of a Republican
ways get facts if you go about the
Administration in 1948.
This is
job in the right way and spend
the only practical alternative to
enough time on it. That is what
government of the present type, I told him. I said further that if
and, as practical men, I commend
Congress voted money for foreign

its

ways.,

Its

it to you.

The

aid

Administration

will

without

un¬

would

doubtedly try to win support for

knowing the facts, it

would

fail

in its duty

because it
undoubtedly
waste
the
spending on people's money.
profits were 6.66%
two major grounds: The need for
I went to Europe determined to
other words, present profits are
widespread government activity make as careful study of condi¬
lower in proportion to sales.
If to combat high prices and infla¬ tions as I could. In addition to
my
steel operations were to decline
tion, and the need for huge sums own observation and many casual
to 80% of capacity, there would
of money to be devoted to the aid contacts with rank and Lie people,
be no profit under present costs.
of Europe.
I had the advantage of extensive
I
1940 and 1941

In

the

am

first

sure

were

six

this

6.73% of sales.

months

of

1947,
of sales. In

situation

in

its

continued

high

the

that in interviews with a number of out¬
the effect standing men in industry and fi¬
nance.
scarce
and money was abundant
They had broad and inti¬
And it is a matter of interest that of government activity is to raise
and prices were not high, I would
prices, not lower them. One more mate knowledge of both the con¬
the progress of industry has been
like someone to point it out to
example.
Withdrawal
of
food ditions in their respective coun¬
me.
Despite all efforts to theorize such that even at today's so-called from United States stocks for tries and in Europe generally. I
it out of existence, the old law of inflated prices the buyer gets a shipment abroad naturally exerts was surprised to learn that these
If there

any

has

country

ever

been

when

a

time

goods

in

were

steel industry is duplicated in the
automobile industry and others.

We

the

have

already

domestic

seen

economy,

did

men

helpful

think

not

it

would

be

the United States to
funds into their countries.

pour

On

THE

Number 4640

Volume 166

for

harmful

be

would

merely

when

the

ples

set

because

those

it

the

back

day

governments and

of

fcome

countries

peo¬

would

to

grips with their own
problems and begin to solve them
labor.

and

resources

own

They pointed out that most
nearly $4,000,000,000 loaned

of the
to

their

of

out

Britain has already been spent

—and

free

interchange
o f
economic
activity across their borders, and
given their combined na¬

have

contrary, they thought it tional

the

would

areas

a

name—Bene¬

new

lux—a combination of letters from
the

of three countries.

names

Be¬

yond

this, they have done one
other thing—they have given pri¬
vate enterprise the "green light"
to

work

those

countries

back

to

prosperity.
These countries ask
very little aid from us. They are
now not only
producing for their
needs but are

own

ing

largely wasted.

COMMERCIAL

actually build¬

surplus to export in return
needed imports.
If countries

a

for

Among the businessmen of both with such small
populations, areas
England and France, I found no and
resources can do this, what
confidence, in the governments of
is it that prevents
England, France
those countries—and this feeling
and others from doing likewise?
was shared by most rank and file
People may talk all they please
people with whom I talked. In about the destruction
•

both governments, of course, so¬
ideas prevail.
Instead of

doing

the

practical, things

that

oration of plant and equipment in
these

countries

as

result of the

a

of the depleted condition of

war,-

would get industries back to work

their national
treasuries, and of
producing the things that people other broad aspects of their na¬
need so badly, office holders are
tional economies. But one glaring
devoting time, energy, and what fact remains unexplained.
They do
little ability they have, to sociali¬ not make the most of
what they

zation

try.

of-industry and the

coun¬

To win support for this pro¬
people are encouraged to

have.

They

production

could

increase

their

all

along the line by
expedient of putting

gram,

the simple
live without in more hours of work. A work¬
working and that government will week of 40 hours or less is now
take care of their every need from the rule.
If, as they say,' their sit¬
cradle
to
grave.
Unfortunately uation is so desperately serious,
many of the people, particularly why don't they go to the six-day
members of labor unions, accept week?
I am positive
that, under
believe that they can

these promises at face value.
To

the

visitor

has

who

similar

heard

£o much about the harrowing con¬
ditions in those countries, it is
amazing to find people working
ho

than 40 hours

more

the

outside,

making

week at

a

that

in

and

time,

real effort to produce.
The condition of the British coal
no

industry

is

characteristic

whole situation.
duction

the

Prewar coal pro¬

people would do this without

second

a

thought.
short, gentlemen,

In

believe
ask

thus

that

the

I

miners, production is 180,000,-

000 tons.

The mines

national¬

are

ized and government mismanage¬
ment is solely responsible for the
deficiency. That missing 60,000,000
of

tons

would

coal

industry

enable

every

Britain to increase
In addition, it would

in

production.
allow a surplus for export which
would aid

conditions

tinent

and

goods

it

the Con¬

on

bring back to Britain

sorely

The

needs.

sad

not

self-help, nothing much would
gained if they continued' to

be

live under the

mismanagement of

dedicated

to

social¬

be

remembered

always
merely certificates
exchange for American goods

that dollars
of

and

are

American

labor.

In

the

Oct.

13, 1947 issue of "Newsweek," it is
reported that the Population Ref¬
erence Bureau, a research
organ¬
ization
of

estimates

that the people
States—7% of the
population — now does

the

United

world's

40%

of the

world's work

in

pro¬

thing about this is that it is en¬
viding food, clothing and shelter.
tirely unnecessary.
Coal output I do not
consider it just to ask
and production of British industry
Americans to labor
as

whole could be increased im¬

a

extra hours to
make up for labor that
Europeans

mediately simply by going to the

are

six-day week.

form

France affords another example.

The

official

rate

125

to

dollar

the

value—as

for the franc
but

indicated

by

the

is

true

employees and

dustrial

official

w

orkers

necessities
rate.

are

the

at

right

They get

worthwhile

of

effort to

an

to

earn

event of misuse.

whelming majority believe in

chance of

Shylock" in the end.

regimentation

In

deliberation.

not

accept

any

to

its

assertions

as

but

get the actual facts.
How necessary this is was shown

by the experience of
of mine.

By

called

to

extreme

should

country's

which France complains so much.

the official rate

can

any aid to Europe be¬
immediate relief we should

we

cre¬

socialism

giving

yond

needs

about

and

provide abundance for their peo¬

ples.

First,

adjusting

He

was

associate

an

do

I fail

so,

to

under¬

stand.
Socialism

These

amples.

Discourages Production
are

,

isolated

ex¬

Others could be cited in¬

definitely.
same

two

story.

They would tell the
By word and action,

socialistic governments discourage
work and production—and it is in
work

and

countries

production
of

Europe

that

must

foreign

should be approached in the real¬
that
the
problems
of

Europe will be with

Nothing that
bring recovery

will

Europe today

tomorrow.

or

abilities and

resources.

be

only

extended

which

show

the

of

one

the

find

His group asked for

a

group

detailed

a

ex¬

planation of the need for this ton¬
nage.
None could be offered. A
representative
to

many

of

his

sent

was

investigate.

drawn

So

to

As

Ger¬
result

a

investigation, the

for 130,000 tons of steel

demand

was

with¬

completely.

should get the facts. And
should not accept as reliable

we

we

the statements made

by

our

diplo¬

mats, whose motives may be polit¬
ical and whose

..

j

aided.

We

>

with the larger aim
a
world
condition

prosperity and

first rank from

course

ture

entirely different from that
countries of Europe,

mutual customs

trade agreement allowing the




coun¬

do

this

of achieving
of

freedom,

peace.

Put Our Own House in Order
If

we

are

to

act

this

on

ciple abroad, certainly
neglect it at home.

prin¬

cannot

we

We must put

economic house in order.

our own

We

handicapped in that task
today because our government is
are

whose think¬

men

ing is tainted by

some

of the

same

social and political ideas that in¬
fect Europe.
The central idea is

31, 1932

(cited in "Fallacies of the Dow Theory and Confirmations," by Nor¬
Wright). This took the form of an analysis made at the request

man

of

Dow advocate from all 255

a

in 1902,

depend

on

get the
on

and

practical mat¬

facts

government

musL.be

ton, editor of the "Wall Street Journal"
First each

editorial

practical

resented in modified form
by the
and the New

socialism of Britain
Dealism

of

America

grew

the

United

States.

and

great

strong
under the opposite principle.
We
cannot offer the world

alterna¬

an

tive to communism

by embracing
its principles—even in part.
We

he

became

result

of

results

"doubtful"

Hamilton's

must

vigorously and wholeheart¬

edly

affirm

and

practice

true

principles.
As a nation, we have our great
opportunity to do this in the next
are now

do in

we

being drawn. What

that election will be

other

example

an

fields.

After

know, the true needs of
we

of

should
these

determine

needs

the

a

to

can

people decide

elect

to

carry

will, of
the

the

States.

they
policies

men

those

and

condition

borders

of

life

of

the

United

But the election will also

tell the world whether the United

States still

great

has

confidence

dom

principles of

on

which it

intends to stand
All

them.

petitive

the

much

was

Hamilton would

"bullish,"

were

sold

and leading Dow exponent.
intelligent readers as being

assumed

short

when

during the 26

sold

them

"bearish."

have

when

His forecasts

years

The

net

were

the railroad averages

on

yielded an annual return of 5.7% annually, no greater than would
have been gained from dividend income alone.
Likewise, his trans¬
actions in industrials would have shown a return of 12%
per annum

against 15V2% which would have been gained through simply hold¬
ing the stocks outright throughout the period.
And it must be remembered that, in addition to loss of income
while trying to capture the capital swings, there likewise must be cut
in on "the kitty," the broker and the tax man.
Brokerage com¬
missions

must

be

taken

into

account

not

only

as

a

constant

ele¬

ment

effectively altering the 50-50 chance as above-cited; but therh
are
two important factors making its impact greater on the Dow
trader than on the long-term investor. In the first place, the "tech¬
nical" Dow operator will be more active—accentuating the incidence
of commissions over that on the

term

investor;

looked

on

in

and

the

income-desiring or otherwise longplace, the commission must be

second

cut

figured as a percentage not on the amount of
principal involved, but on the "margin" of the capital expected to
be made or lost. Thus, under the proposed new commission
rates,
as

a

with

taxes an in-and-out transaction of 100 shares of stock at 50
would cost about $70 or only 1.4% on the invested capital of
$5,000.
But if the chartist is looking to profit from a 10 point

swing, then

this "take" by the commission "kitty" amounts to 7%.

market's fluctuations.
back

privileges in

issue of

economy

versus

indi¬

the free

com¬

is

basic

However, it

all

to

may

be

obscured, it will be the basic issue
in

the next

presidential election.

The strong assertion

in that elec¬

tion of America's determination to

free—socially,

politically
a

world.

—

As

for

the

and

powerful
our

good

own

of

where

the

men

the

and

as

patriotic citizens, I
of

you

to

country could freedom.

enlist in

urge

the

each

one

battle

of

our

on

Government

said

"heads

you lose,
tails I win."
If the
deducted, if he lost, he lost 100%—
like the inexorable house cut on the winning bank plays in chemin
de fer, which connotes odds on all plays. This is somewhat modified
by carry-back, but is the same if conceived over a 5-year or fullcareer play.
In other words the individual can figure that over the
five-year period or a lifetime, the chances are either for or against

speculator had

a

profit, 25%

was

his making capital gain or loss on
In any
and

event,

on

a

"net" basis.

Dow theory operations the burden of taxation

commissions is particularly severe in view of the smallness of
"profit field" available because of the amount of the market's

the

Some
In

for

eludes

the

operator before

a

trend is recognized

"play" is made.
Conclusions

About

Forecasting and Investing

the

preceding weeks we have pointed out various reasons
sharply growing boom in "technical" market forecasting;

the

have demonstrated the basic fallacies jointly occurring in the
various mechanistic systems for judging the future of
security mar¬
kets.
In this instalment we have left the theoretical level, and
and

appraised
system.

the

ascertainable

Next week

Meanwhile

we

word

operating results of the most popular
shall cite the broad social effects therefrom.
of

clarification on our general position on
impact on investing is concerned, now
seems
called for.
Although amusing, enjoyable, and not difficult,
a mere binge of
debunking forecasters of the New Era and thereafter,
including Presidents of our country down to the white-haired econ¬
omists, would be purposeless and irrelevant. If we were confining
ourselves merely to prophecy-debunking, our readers
might well
ask: "If he thinks there is no way of
anticipating the future, what
is he trying to prove?
Merely that there is no key to investing? Why
should we read him; for even if he is correct, we may as well
hurry

forecasting,

to

a

insofar

as

its

spend

our remaining capital instead of throwing it down the
drainpipe?"

mar¬

So I want to orient my position by

affirming that there is a real
investing problem. But it seems to me that in lieu
of starting out with one's own
pet theory to be proved eclectically
as
by a lawyer's brief, it has been more logical first to inspect

answer

the

to

alternative investing policies and attitudes toward the market, the
various popular fallacies and pitfalls, and then to form one's own con¬
clusions

as

technique.
market

the

to

most

logical and individually suitable investing
methods for forecasting the stock

Disillusionment with

as a

whole is affirmatively constructive,

dovetailing with

my

unswervingly-held principle that the

investing problem should be
business-like approach to individual issues on their
respective particular merits. As applied to the stock market as a
unit, or to groups of issues segregated to fit ratio theories, forecasting

handled with

is misused

a

to individual

issues, an end in itself; whereas in the busi¬
approach which we advocate, the forecasting
incident, usually more than counter-balanced
liberal protecting margin of safety.

ness-like

practical

Because of the 5-year carry-forward and carry¬

tax statute, the exact incidence of capital
speculative operations is not simple to calculate.
Before the carry-back and as our tax used to be, as recognized
by
the British who have had no capital gains tax, we had a situation

gains taxation

ket

stc.te

vidual freedom and

other issues.

the

free¬

founded and

was
on

the world

over

the controlling

in

human

we

country

how

foreign

profoundly affect

course,

manner

within

the

on,

out

country

industry, agricul¬

by five

the same
he could have expected to get from flipping a coin; 45

as

of

countries, including Russia. The
national policies that the Ameri¬

influence for the good of

the

and

forecasts

successful and 45 unsuccessful.

American

of

men

rated

was

bullish, bearish or doubtful. It
bought
when
his
editorials

strong,

vidual
obey.
Communism
and
fascism represent this idea in its
extreme form, but it is also rep¬

should

we

editorials written since Dow's death

embodying Dow theory interpretations by William P. Hamil¬

The "House Kitty" deduction for capital gains taxation, and
exactly how it changes the odds against the speculator, is not so
and the individual weak; that
rcasy to calculate, eithef absolutely of comparatively. But its existence
gov¬
must be recognized
ernment must order and the indi¬
when appraising the results in beating the

that

economically—can be

and

the free

and

judgments

a

and

sense

should

To

of the other

coun¬

competitive economy in the
tries

ters.

They have made

should

instrument to bring about systems
of personal freedom

make

smallest

European countries, Belgium, Hol¬
land,
and
Luxembourg.
These
three countries have followed a
^

in

Our

the willingness to use it toward
practical ends. And above all, we
should frankly use our aid as an

—that

the

It

to those

be

of

we

total aid should be held well with¬
in the practical limits of our own

training and ex¬
perience does not enable them to

three

for years

us

and for decades.

their salvation. There is proof for
that statement in another example
of

aid

ization

to

Washington to devise
the true value of the franc, France means
of
immediately
getting
would help itself greatly.
Why 130,000 tons of steel for Germany.
it doesn't

of

as

price of French exports
shortage

question

and

re¬

as

markets, and thus

more

out to have been

which in the

importance, both to ourselves

double the

dollar

we are

like in the

tries

"recognition" of

economics before the annual joint meeting of the American Statistical
Association and Econometric Society in Cincinnati on Dec.

istration. If

do

sonal

business¬

cold-blooded

get better results and win greater
respect than the emotional and
haphazard conduct of the Admin¬

can

rank

a

beginning, there is less
our being called "Uncle

sounds

practical, I suggest that it will

The

competing trend-charting systems; then we have left
perversion of the Dow theory.
How "Dow-ish" dis¬
cretionary intuition can go wrong is shown by Hamilton's own per¬

only

vital

with

the

per¬

little longer the fiction that

a

move

ates

If this suggested

the plethora of

tain

sult, low productivity is the rule.
The official rate also operates to
to foreign

the

in¬

much

As

in

a bear market in 1926, which perversal turned
only a minor secondary reaction in the bull market
following three years doubled itself in the most violent
rise in speculative history.
Another objective demonstration of the difficulty of
discovering
momentum was presented by a distinguished university professor of

procedure
and

aid

fluctuation which

market

make

it.

suspend

and the

little in return
that it just doesn't

seem

to

SEC analysis of Sept. 3, 1946, trading
clearly shows the great
uniformity of Dow behavior). If this be true, that is if it is per¬
missible to jump the gun, either with pure psychic
intuition, or by
trying to outguess other Dow followers with an admixture from

which

so

for their money

per¬

just or fair to
Americans—who in the over¬

ask

right

(Continued from page 5)

the

many

paid at

black

to

43

Theory?

in

to have representatives check the
manner of its
use, and that we had
the

What Pioiit From Dow

then

were

presidential election—the lines for

but they have to buy

rate

unable

or

because of bad government.

I do not consider it

(1671)

sonal freedom and
private enter¬
prise—to give work and goods so
that European politicians can sus¬

the black

market—is 250 to the dollar. Gov¬
ernment

unwilling

we

that it would be used under
spe¬
cified terms, that we had the

in the hands of

We speak and think of aid to
Europe in terms of dollars, but it

should

could

we

which

should suddenly acquire the
spirit
of

established,

decide how much aid

aid are doing enough to
themselves.
And
if
they

help

governments

was

do

countries

a genuine ef¬
With the net need

so.

position to grant. Any aid should
be granted only under
agreement

our

240,000,000 tons annu¬
istic experiment.
Today, with the same mines

ally.
and

of

can

circumstances, the Ameri¬

CHRONICLE

fill itself if it made
fort to do

and deteri¬

cialistic

& FINANCIAL

as

individual

is merely a necessary

by

a

Hence forecasting skepticism is not only completely
with, but indispensable to, a sound investment attitude.

consistent

44

Securities

Fund,

Inc.,

Oct.

New York

in

Now

Registration

in

22

of

ratio

the

share

new

one

each four

for

2,000,000 common shares (par $1.25). Under¬
writer—Lord, Abbett & Co., Inc. Purpose—Proceeds for
investment. Price—To be offered at market.

Rights will expire Nov. 6.
Unsubscribed
shares will be sold publicly.
Price—$17 per share to
warrant holders.
Proceeds—To increase capital funds.

(10/24-27)
Sept. 26 filed 200,000 shares ($1 par) common.
Under¬
writers—Reynolds & Co., and Laurence M. Marks & Co.,

•

Oct. 9 filed

Air

Products,

Inc., Alientown, Pa.

Price based on market.

both of New York.

bank loan and for working

To repay

Proceeds—

capital.

Co., Paxfon, 131.

Allied Gas

notification) 4,020 shares ($10 par)
common.
To be offered for subscription at $10 a share
to common stockholders.
Unsubscribed shares will be
purchased by Merritt H. Taylor, President.
For con¬
Oct.

9

of

(letter

struction and expansion purposes.

(11/10)

American Cladmetals Co.

....

The company was
organized in 1945 for the manufacture of cladmetals.
American Fire and Casualty Co., Orlando, Fla.
commercial

Oct.

30

common.

Business

operations.

—

(letter of notification) 12,500 shares ($10 par)
Price—$24 a share.
Stock will be-offered for

subscription to stockholders on basis of one new share
for each
two
shares
held.
Underwriter—Southeast¬

For investment

Jacksonville, Fla.

Securities Corp.,

ern

in securities.
•

Telephone and Telegraph Co.

American

$360,000,000 10-year 2%% convertible de¬
bentures.
No underwriting. Offering—Debentures will
be offered to stockholders of
record Oct. 31 on the

Oct.

filed

16

basis

of

each six shares held.

$100 of debentures for

Pro¬

Rights will expire Dec. 15. Price—At face amount.
finance construction program of the

ceeds—To

Associated Telephone Co., Ltd.

•

com¬

and its subsidiaries.

pany

filed

Oct.

16

due

1977

$6,000,000

first

150 000

shares

am1

(11/3)

mortgage
of

bonds series D

cumulative

preferred

Underwriters—Names to be supplied
through competitive bidding.
Probable Bidders—Paine
Webber, Jackson & Curtis and Mitchum, Tully & Co.
(jointly): White, Weld & Co., Kidder, Peabody & Co.
and Lazard Freres & Co. (jointly); Halsey, Stuart & Co.
Inc. ^bonds only); Stone & Webster Securities Corp.
Proceeds
To reimburse treasury for capital expendi¬
tures. Bidb—Expected bids will be received Nov. 3. *
stock

(par $20).

—

-

Belden Manufacturing Co., Chicago

/■

Price—$10

a

share.
Offered for subscription
Sept. 29 on basis of one new
Rights expire Oct. 28.

W stockholders of record
share

for

each

10 shares held.

No underwriting.
•

Belvedere

For general corporate purposes.

Hosiery Co., Charlotte, N* C.

Service,

Inc.,

cent cumulative, convertible preferred and 50.000
shares (10c par) common. Price—$5 per unit, consisting

27%

one

Underwriter—White and Co.. St.

share of each.

Louis, Mo.

For expansion of operating facilities and for

working capital.
•

California Water

Service

New York

U. S. A.,

John, Virgin Islands,

St.

Island of

Carolina

Power

offered

be

by

Proceeds—For construction program.

amendment.
•

Price

underwriters.

through

publicly

Cooperative Wholesale, Superior, Wis.
preferred stock.
No underwrit¬
ing.
Offering—A portion of the stock will be offered
for conversion of outstanding notes, on a dollar for dollar
basis, and the balance will be offered to members and
patrons eligible to become members.
Price—From $25
to $25.75 from January to December, depending on the
quarter in which the stock is sold.
Proceeds—For con¬
struction of warehouse, expansion of inventories, and
property additions.
Business—Cooperative for buying,
processing, packaging, selling and distribution of com¬
modities to its members, which are retail outlets.
Chief
commodities are feeds, coffee and bakery goods.
Central

Oct. 13 filed $750,000 of

be

used

to

retire

share.

Proceeds—For corporate purposes.

Camden

ing—Shares

will

be

&

Sherrerd,

offered

to

Philadelphia.
stockholders

shares

be

filed

business.
•

Boman-Frasier Helicopters,

Inc., N. Y.

(10/27);

Oct. 16 (letter of notification) 6,750 shares ($1 par) com¬
and

mon

—5,C00

1,750 common stock purchase warrants.
shares at $1.50 each and one cent

common

The

rant.

issuance

of

balance

shares

common

are

exercise of the warrants.

upon

John Nickerson

&

Price
a war¬

reserved foi'

Underwriter-

Co., Inc., New York.

For operating

El

Oct.

Dorado

14

Mines, Ltd., Winnemucca,

notification)

Price—75

common.

For

Gold

(letter of

cents

share.

a

purchase of properties,
working capital.

for

Electric

Steam

200,000

shares

Nev.
par)

No

underwriting,
equipment and

additional

Sterlizing

($1

Co.,

Inc.,

N.

Y.

Sept. 22 (letter of notification) 65,000 shares of common

Price—65 cents per share.
Under¬
writer—Reich & Co., New York.
Purchase of inventory,
(par

100).

etc.

Empire Projector Corp., New York (10/27-31)]
Aug. 21 (letter of notification) 80,000 shares ($1 par)
common on behalf of the company, and 15,000 shares ($1
par) common on behalf of officers and stockholders. The

share. The 15,000 shares
& Co., New York, the
principal underwriter, at 60 cents a share. The under¬
writing discount for 80,000 shares will be 50 cents a
share. The company will use its proceeds to increase
working capital.

80,000 shares will be sold at $3
will

be

sold

a

Sherman

D.

L.

to

,

Ero

Seattle, Wash.

Inc.,

notes, due
to be

($1 par)

1957, and 3,800 shares

Un¬
Seattle, Wash.
For re¬
duction of current liabilities and purchase of additional
helicopters.

Proceeds—To

amendment.

preferred.

17

retire

shares

Price—$10
working capital.
common.

share.

a

25,000 shares ($10 par)
No underwriting.
For
v

Central

Power

Co.. Golden,

Colo.:

(letter of notification) 9,872 shares ($10 par)
Price—$30 a share.
Company will sell the
stock through investment bankers or security dealers
and pay a commission of $1.25 a share.
Proceeds will
be used to repay a $100,000 loan and to reimburse its
treasury cash.
common.

Consolidated Edison Co. of N. Y.,
17

filed

Inc.

(11/18)

$30,000,000 25-year 1st & refunding mtge.

Opening of bids tentatively

scheduled for Nov. 18.
•

<•

Oct.

filed

16

$1,000,000

non-cumulative

4%

common

par); $4,000,000 of 3%% certificates of in¬
debtedness
cumulative; and $1,000,000 of 1 Vz % loan
certificates cumulative. No underwriting. Offering—To

stock

the
off
loans in the amount of $1,295,000 to Bankers Commer¬
cial Corp., New York, and for additional working capital.
Federal

Services

Finance

Corp., Washington

lative preferred stock.
Price—.$104.50 a share. Under¬
writer—Mackall and Coe, Washington, D. C.'1 For oper¬

ating capital.
Rami

Florida

Products, Inc.

(11/7-14)

(letter of notification) 100,000 shares ($1 par)
class A common.
Price—$3 a share. Underwriter—Bat-,
kin, Jacobs & Co., New York. To purchase new machines

Aug. 1

and equipment, to pay off some
to add to working capital.

current liabilities and

Forest Lawn Co.,

Glendale, Calif.
notification) $295,000 3% debenture,
series B, due 1967.
To be sold to Forest Lawn Memo¬
rial-Park Association, Inc., at par, plus accrued interest.
For capital improvements or investments.
Oct.

7

(letter

of

(10/^7-31);

Assoc., Kansas City,

Consumers Cooperative
Missouri

with $755,000 of other bonds, will be used to repay
of $34,000 of a property mortgage, to pay

Sept. 24 (letter of notification) 2,870 shares of 6% cumu¬

Sept. 8

Oct.

26, filed 150,0U0 shares ($1 par) common class A.
Underwriter—E. F. Gillespie & Co., Inc., New York,
Price~$7.25 a share.
The registration states princi¬
pal stockholder has granted the underwriters an option
to purchase 45,000 shares of class B ($1 par) common
at $7.25 a share, exercisable for a period of three years.
Proceeds—Proceeds of approximately $870,000, together
balance

Washington, D. C.

(letter of notification)

Colorado

unexchanged

Offering indefinitely postponed.

Coffee-Cola Co.,

Oct.

Electric Products Co.

Federal
Feb.

Illuminating Co.
Sept. 26 filed 254,989 shares (no par) preferred, series of
1947.
Underwriter
Dillon, Read & Co., New York.
Offering—To be offered share for share plus a cash ad¬
justment for outstanding $4:50 preferred. Unexchanged
shares of new preferred will be sold publicly.
Price by
Electric

(Ohio)

Cleveland

($25

the public. Common may be bought only by patrons and
members. Price—At face amount. Proceeds—For acqui¬

Frailey Industries, Inc., New York
Sept. 26 (letter of notification) 34,500 shares of class A
stock
(par $1).
Price—$5 per share. Underwriter—
Edward R. Parker Co., Inc., New York.
Expand sales
of

products, etc.

•

Fraser

Oct.

21

Products

Co., Detroit, Mich.

filed

100,000 shares ($1 par) common.
Under¬
writers
Campbell, McCarty & Co., and Keane & Co.,
both Detroit.
Price—$7 a share.
Proceeds—The shares
—

Fire Insurance Association

Sept. 19 filed 100,000 shares ($5 par) capital stock.
derwriter—Butcher

to

receive proceeds.

Helicopters,

(letter of notification) $140,000 of 5%

sition of additional office and plant

(N. J.)

($1 par) capital stock,
by amendment.
Price
by amendment.
Proceeds—To develop mining proper¬
ties in Flint Lake locality of Ontario.
Business—Mining
1,000,000

derwriter—H. P. Pratt and Co.,

Central

Oct. 9

poses.

Callaway Mills, LaGrange, Ga.
Aug. 28 filed 123,306 shares (no par) common. Under¬
writing—No underwriting. Offering — Shares will be
offered only to those stockholders who exchanged their
holdings of common for preferred in 1945. Price—$35 a

filed

common.
Notes
sold at face amount and the common at $1 a share.

•

debentures due 1958, at 102.

Proceeds—Will

Co.

22

Underwriter—Name

Manufacturing Co., Chicago
Sept. 30 filed 150,000 shares ($1 par) common. Under-*^
writer—Straus & Blosser, Chicago.
Price—$7 a share,
The underwriting commission will be $1 a share. Pro¬
ceeds—Shares are being sold by stockholders who will

Dean

&

Dogpaw Gold Mines Ltd., Toronto

stock

bonds, Series D. Underwriting to be determined by
competitive bidding.
Probable Bidders—Morgan Stan¬
ley & Co., The First Boston Corp., Halsey, Stuart & Co.
Inc.
Proceeds—To redeem $30,000,000 of 3%% 20-year

Witter

•

Oct.

Light Co., Raleigh, N. C.

&

shares (no par) common. Underwriting
—To be announced by amendment.
Offering—Stock¬
holders of record Oct. 29 will be given the right to sub¬
scribe on or before Nov. 20 on the basis of one new
share for each 10 now held.
Unsubscribed shares will

$1,500,000 first mortgage 3%% bonds, series
C, to be sold through competitive bidding.
Probable
Bidders—Halsey, Stuart & Co. Inc.; Dean Witter & Co.
and Blyth & Co., Inc.
(jointly).
Company also filed
15,652 common shares (par $25) to be underwritten by
$900,000 bank loans, to reimburse the treasury for ex¬
penditures on construction and for ether corporate pur¬

Proceeds—To redeem outstanding de¬
bentures, repay bank loans and to increase general funds,
Offering indefinitely postponed.

expenses.

working capital, etc.

Oct. 8 filed 90,935

•

Co.

Oct. 21 filed

—By amendment.

©

Robertson, Me.

March 24 (letter of notification) 50,000 shares ($1 par)

of

on

other property,

•

(letter of notification)

Brayton Flying

(10/28)
Oct. 21 (letter of notification) $250,000 5-year 5% regis¬
tered debentures and
266,100 shares of capital stock
(par 100).
Underwriting—None.
Securities will be of¬
fered publicly as follows:
190 units consisting of one
$1,000 debenture and 400 shares of stock at $1,040 per
unit and 60 units will be exchanged for tangibles.
Of
the remaining 166,100 shares of stock 100,000 are subject
to option to John B. Griffith to purchase same on or
before Dec. 31, 1947 at 10 cents per share; remaining
66,100 shares subject to option to promoters at 10 cents
per share on or before Dec. 31, 1947.
Purchase of land

of old

10,000 shares of common.
Price—$5 a share.
No underwriting.
To purchase ma¬
chinery and for working capital.
Oct. 15

Caneel Bay Corp.,

—

jSept. 22 (letter of notification) 29,164 shares ($10 par)
common.

shares held.

located

1,000,000 shares ($1 par) common.
Under¬
writer—Mercei: Hicks & Co., New York.
Price—$1.50 a
share.
Proceeds—To buy machinery and equipment for
10 filed

Oct.

Thursday, October 23, 1947

CHRONICLE

FINANCIAL

INDICATES ADDITIONS SINCE PREVIOUS ISSUE

•

A * Affiliated

&

COMMERCIAL

THE

(1672)

of

Un¬
Offer¬

facilities. Business-

Production, processing and wholesaling of various prod¬
ucts for ultimate benefit of farmers.
•

Crader

record

Oil Co.,

are

being sold by 14 stockholders who will receive pro¬
Business
Manufacture of textile products for

ceeds.

Inc., Fort Worth, Texas

—

:'

automotive and other industries.

(letter of notification) 20,000 shares of common.
Price—$1 a share.
The stock will be sold through the

Oct. 16

president

of

the

company.

To

purchase

oil

and

gas

BOOY

leases.

Corporate and Public Financing

m

•

Oct.

Davis
15

Mfg.,

Inc.,

Wichita,

(letter of notification)

lllliliillltl

Kansas

\vWb

9,000 shares of common.

•

FIRST BOSTON

common.

New York

Chicago and other cities




13

(Mich.)

Pittsburgh

I

de<l

VS6S

York

Imperial Co.

(letter of notification) 12,000 shares ($10 par)
Price—$10 a share. No underwriting. To liqui¬

date indebtedness.

CORPORATION
Boston

Oct.

Detroit

sr*

CO

%

Price—$11 a share.
Being sold on behalf of Charles J.
Davis, President of the company.
Underwriter—Dempsey-Tegeler & Co., St. Louis, Mo.

The

A

•

flliii

*

brokers

,nd

Bos,°

C\G°

<

Dodge Manufacturing Corp., Chicago
filed $1,500,000 15-year sinking fund deben¬
tures.
Underwriter—Central Republic Co.; A.. C. Allyn

UNGSftWRltiaS

Bos-ro1'

Ti

Sept.- 30

& Co., and H. M.

Byllesby & Co., all of Chicago.

.

Price

'

'

'

'

mi

hJ

COMMERCIAL

THE

Number 4640

Volume 166

&

FINANCIAL

CHRONICLE

•

Heyden Chemical Corp. (11/10)
$6,000,000 15-year debentures. Underwriter
Co., Inc. Price by amendment.
Pro¬
ceeds—To pay off a bank loan and for expansion and
additional working capital.

■Oct. 22 filed

—A. G. Becker &

NEW ISSUE CALENDAR
October

24,

1947

Air Products, Inc

Hickok

rorv,TVmn
Common

Rochester Glass Corp.October 25,

Capital Stock

Finance Corp., Chicago
222,485 shares (no par) common (stated
value $10 a share).
No underwriting. Offering—Stock¬
holders of record Oct. 29 will be given the right to sub¬

Common and Pref.

Laboratories

Debs, and Common

Kendall

Howe

Plan

3 filed

at

$17

Fund, Inc.,

Rochester, N. Y.

500,000 shares ($1 par)

ment.
•

Common

October 30,

par

1947
Preferred

Preferred

finance

Capital Stock

the

American Cladmetals Co

Debentures

1947
Pref. and Common

November 18,

sold

be

at

face

No underwrit¬

improvements

to

its

electric

Oct.

Bonds

•

General

American

Transportation Corp.

(11/6)

Chicago

in

Indianapolis Power & Light Co.
9 filed 50,000 shares ($100 par) cumulative

pre¬

bly Lehman Brothers). Common by competitive bidding.
W. C. Langley & Co., Shields & Co.,
White, Weld & Co. (jointly); Otis & Co.; Blyth & Co.,

Probable bidders:

17 filed

150,000 shares of Series A preferred. Un¬
derwriter—Kuhn, Loeb & Co., New York. Price—$105
a
share.
Proceeds—To pay off indebtedness and for
working capital. Business—Operation of railroad freight

Inc.; Lehman Brothers. Offering—The preferred will be
publicly while the common will be offered to

offered

common

cars.

of

J:, Gold Ridge, Inc., New York

one

Nov.

share

new

19.

Price

capital stock;

(10/25)

capital.
Great

15 (letter of notification)
110,000 shares (10 par)
capital stock.
The shares will be issued in return for

certain mine properties.

Graham-Paige Motors Corp., New York

Oct.

17 filed

&

($1

Co., New York.

par) common.
Under¬
Price by amendment.

Life

Ins.

Co., Denver

Sept. 2 (letter of notification) 45,250 shares ($1 par)
capital stock.
Price—$2 a share.
To be sold through
officers of the company.
Of the total 13,250 shares will
be sold for cash and

32,000 will be issued in exchange

for 32,000 shares of capital stock of Western
in order to acquire all of the latter's assets.

Agency Co.

to

j

the sale of the bonds.
•

Jarnel

Lumber

Oct. 16 (letter of

Price—60 cents

Co.,

Point Pleasant, W. Va.

notification) 124,000 shares of

a

share.

common.

Underwriter—E. W.

Hoy, New
To build plant and for working capital.

York.

Great Western Biscuit Co., Los Angeles
filed 249,972 shares ($1 par) capital stock.
Underwriter
Fewel & Co., Los Angeles. Offering —
Shares will be offered to stockholders at $2 a share in

Power

Lehman Brothers,
Wertheim & Co. The SEC

Proceeds—To repay bank loans and for working capital.
of farm implements.

Eastern Mutual

share. To be offered to stock¬

r

on bid of $4.05 per
Goldman, Sachs & Co. and
on Sept. 25 rejected the bid
for the stock. The SEC in its decision declared the price
offered for the stock "would not effectuate a reorganization plan which would be fair and equitable to the per¬
sons effected
thereby." The SEC's action also held up

share

Business—Manufacturers
Great

•

Winona, Minn.
(letter of notification) 60,000 shares
Price—$5 a share. Underwriter—H.

Oct.

($1

par)

P. Carver

To retire debt and for working capital.

Lakeland

Shoes,

real

16

(letter of notification) 7,500 shares ($10 par)
Price—$10 a share.
No underwriting.
For
estate, personal property and working capital.

Legend Gold Mines, Ltd., Toronto, Canada
June 27 filed 300,000 shares ($1 par) common
treasury
stock.
Underwriting — To be supplied by amendment.
Price—50 cents a share. Proceeds—To
develop mining
properties. Business—Mining.

Liberty Loan Corp., Chicago (11/17)
Sept. 25 filed 100,000 shares ($10 par) 75-cent cumula¬
tive convertible
preferred, and 100,000 shares of Class A
common, reserved for conversion of the preferred. * Un¬

derwriter—Sills, Minton & Co. Price—$15
ceeds—To reimburse
cent

share. Pro¬

a

treasury for cost of redeeming 50-

preferred.
Lock Nut Corp.

Oct. 6 (letter of

of America

(10/30)

notification) 24,000 shares of 5%

lative convertible preferred stock

writer—Ray T. Haas, Chicago.

(par $12.50).

Price—$12.50

cumu¬

Under¬

per

share.

General corporate purposes.
•

Lunkenheimer Co.,

Cincinnati

Oct. 13 (letter of

notification) 3,700 shares (no par) com¬
mon on behalf of Helen
P. Lunken, Cincinnati.
To be
sold at market.
Underwriter—Field Richards & Co.,
Cincinnati, and Neergaard, Miller & Co., New York.
Lyon Metal Products,

Inc., Aurora,

III.

Oct. 10 filed 20,000 shares ($50 par) 5% cumulative
pre¬
ferred.
Underwriter—Kebbon, McCormick &

Co., Chi¬
Offering—15,764 shares will be offered to holders

$100

6% cumulative preferred

par

basis of two shares of

on an exchange
preferred for each share of

new

old

preferred.
The balance of the shares will be of¬
fered publicly.
Price by amendment.
Proceeds — To
retire unexchanged old preferred and for

working capital.

•

Macy

(R. H.)

& Co.,

Inc., New York

Oct. 22 filed $20,000,000 25-year 2%%

sinking fund de¬
Nov.
1,
1972.
Underwriters—Lehman
Goldman, Sachs & Co., New York.
Price
by amendment. Proceeds—To pay off $7,400,000 of notes
and for expansion and improvement
program estimated
to cost $25,000,000 during next five
years.
bentures,

due

Brothers and

Manhattan Coil Corp., Atlanta, Ga.
May 20 filed $500,000 5% serial debentures, due 19491957; 12,000 shares ($25 par) 5*6% cumulative converti¬
ble preferred and 85,000 shares ($1 par) common.
Un¬
derwriter—Kirchofer & Arnold, Inc., Raleigh, N. C. Price
—The debentures at 102.507, while the preferred shares
will be offered at par and the common shares at $4
each.

Proceeds—To retire bank indebtedness and to
finance purchase of machinery and other plant equip¬
ment.
»<

Massachusetts

Bonding and

Insurance Co.,

Boston (11/7)
Sept. 19 filed 100,000 shares ($5 par) capital stock. Un¬
derwriter—Geyer & Co., New York.
Offering—Offered
for1 subscription to stockholders -of record Oct.. 7 at $26
per share

held.

the basis of

on

one

share for each four

new

Rights expire New.' 6 and unsubscribed shares will
publicly. Proceeds—For expansion of business.;

be sold

Merritt

Chemical

Co.,

Inc., .Greensboro,

N. C.

Oct. 1 (letter of notification) 60,830 shares ($1 par) com¬
mon of which 19,537 shares will be offered to stockhold¬
ers at $2.50 a share and 41,293 shares will be offered

publicly at $3 a share.
Underwriter—Main Line Investr
Co., Merion Station, Pa. For expansion of business.

ment

Minnesota

Min.

&

(1G/29)

Manufacturing Co.

Oct. 6 filed $10,000,000 20-year sinking fund debentures
and

100,000
shares
(no
par)
cumulative
preferred.
Underwriter—Goldman, Sachs & Co., New York. Price-f-

By amendment.
poses

Proceeds—For general corporate pur¬
new facilities.
Business

including construction of

—Manufacturers of scotch tape and

other adhesives.

:

Munising Wood Products Co., Inc., Chicago
Sept. 29 filed 50,000 shares ($10 par) 5% cumulative con¬
vertible preferred and 100,000 shares ($1 par) common.
Underwriters
both

of

$6.12x/2

Straus & Blosser and Brailsford &

—

Chicago.
a common

Price
share.

$10

—

a

Proceeds

preferred
—

Col,
share and

The securities arfe

.

Aug.. 11

—

the ratio of one new share for each two

now

held. Un¬

subscribed shares will be offered publicity at $2 a share.
The (underwriters will receive a commission of 25 cents
a

sfyare. Proceeds—For business expansion and to reduce

short term indebtedness.

I Greenback

Jersey

Industries,

Inc.
Sejpt. 17 (letter of notification) 25,000 shares ($10 par)
preferred and 50,000 shares (100 par) common.
Price—
$10 per unit, consisting of one share of preferred and
two shares Of common.
Underwriter—L. L. Bailey &
Co., Knoxville, Tenn.
To pay for equipment and build¬
ings.

Johnson
Oct.

holders

on

owned.

Price—$5

the

basis
a

of

one

share.

program.




share for each

iy±

shares

Proceeds—For rehabilitation

Gas

&

10

Automatics,

Inc.,

Boston

(letter of notification) 95,000 shares of

being sold by 12 stockholders who will receive proceeds.
Nashville

(Tenn.)

Vultee

Corp., which, in turn, is parent of the
registrant, has agreed to purchase shares not subscribe!

common.

for otherwise.

Consolidated's

sold at market.

shares

be

Consolidated

Kendall Co., Walpole, Mass.

Price by amendment.

Proceeds—The shares

being sold by H. P. Kendall, President of the

com¬

pany.
•

Oct.

Keystone Custodian
22

filed

five

Funds,

registration

of Nashville

stockholders

common

common

and

Inc., Boston

statements

for

the

fol¬

lowing securities:

series K-l, 500,000 shares of $1 par;
series B-4, 100,000 shares of
$1 par; series B-3, 100,000
shares of $1 par;1 series
S-l, 25,000 shares of $1 par;
and series S-4,
500,000 shares of $1
par.

on

the basis of twjo

in return for

one

share df

The exchange c
whereby Consolidated wi

$18 cash.

is part of a program
transfer the assets of its Nashville division to the

Underwrit¬

Goldman, Sachs & Co.,

New York.

Offering—The shares will be offered tp
common

common

(16/29-30)

Oct. 9 filed 50,000 shares (no par) common.
ers—The First Boston
Corp., and

Underwrit¬
Consolidated

Aircraft

Underwriter—George F. Breen,
York.
For additional working capital.
Issue will
placed privately.

be

Corp.

Oct. 7 filed 820,834 shares ($1 par) common.
er—Avco Manufacturing Corp., parent of

New

are

Hawaiian-Philippine Co., Manila, P. I.
'Sept. 24 filed 500,000 shares 7% cumulative preferred,
par <10 Philippines pesos per share (currency basis one
neco equivalent to 50 cents).
Underwriting—No under¬
writing. Offering—For subscription by common stock¬

(Pa.)

Heating Co.
Sept. 10 (letter of notification) $25,000 first mortgage
sinking fund debentures. Price, par.
Underwriter—
Bioren & Co., Philadelphia.
To retire present loan of
$20,500 and to add to working capital.

To

(Tenn.)

Shore

Underwriter—

■

Inc., Rib Lake, Wis.

common.

Stock awarded Sept. 24

rate.

coupon

233,320 shares

writer—Allen

for

Co., Dubuque, Iowa
May 13 filed $19,400,000 of first mortgage bonds, due
1977, and 2,132,223 shares ($3.50 par) capital stock.
Proceeds—For debt retirement, finance new construction
and for working capital.
Bonds awarded Sept. 24 to
Halsey, Stuart & Co. Inc. on bid of 101.90 for a 3%%

Bend, Ltd., Reno, Nev.

iOct.

•

common.

by

Price—$1

Interstate

Goldfield

the basis

holders.
Unsubscribed shares to be offered publicly
through Bennett & Co., Hollywood. To purchase equip¬
ment, liquidate indebtedness, and for working capital.
An amended application may be filed in near future.

20

(letter of notification) 45,000 shares of capital
stock (par $1).
Price—$1 per share.
Underwriter—
Stein Bros. & Boyce, Baltimore.
Proceeds for working
•

on

Inglewood Gasoline Co., Beverly Hills
July 7 (letter of notification) 100,414.8 shares ($1 par)

—

Oct.

stockholders of record about Nov. 5

each four held.
Rights expire
amendment.
Proceeds—For new
construction purposes.
Business—Public utility.

Gerity-Michigan Corp., Adrian, Mich.
Sept. 29 filed 40,049 shares ($1 par) common.
Under¬
writer—Name to be filed by amendment.
Price by
amendment.
Proceeds
The shares are being sold for
the account of James Gerity, Jr., company president.
•

July 22

of its

ferred and 214,451 shares (no par) common. Underwriters
—To be supplied "by amendment. **For preferred* (possi¬

"

-

Koch Chemical Co.,

cago.

Business—Public utility.

sellers will receive

1947

Consolidated Edison Co. of N. Y

and

exchange for their holdings
of four furniture companies to be merged with the
regis¬
trant. The merging companies are Toccoa Manufacturing
Co. and Stickley Brothers, Inc., both Illinois corpo¬
rations, and the Luce Corp. and Stickley Bros. Institu¬
tional Furniture Co., both Michigan corporations.

Common

Heyden Chemical Co

additions

Illinois-Rockford Corp.,

1947

November 17,

will

share.

a

July 24 filed 120,000 shares ($1 par) common. Under¬
writers—Brailsford & Co., and Straus & Blosser, Chicago.
Price—$9.25 a share.
Proceeds—The shares are being
sold by four stockholders and represent part of the stock

Common

Liberty Loan Corp

at

Wegener & Daly, Inc., Boise, Idaho. Price by amend¬
Proceeds—To repay short-term bank loans and

system.

1947

10,

debentures

common

ment.
to

Florida Rami Products Inc

November

and

1947

Massachusetts Bonding & Ins. Co

Mo.

100,000 shares ($20 par) common.
Underwriters—Blyth
& Co., Inc., and Lazard Freres & Co., both of New York,

Common

Common

7,

Joseph,

Power Co., Boise, Idaho (10/29)
7 filed 35,000 shares ($100 par) 4% preferred and

Oct.

Bonds and Pref.

(Ohio)__

November

St.

Idaho

Transportation Co

Standard Oil Co.

Inc.,

$10
To build bakery building.

ing.

Public Serv. Coc of Indiana Inc., Noon (CST)-Bonds
Wisconsin Public Service Corp
Bonds

November 6,

Products,

The

common.

1947

Associated Telephone Co. Ltd
Publix Shirt Corp

Food

amount and the

Lock Nut Corp. of America

November 3,

Hy-Klas

Oct. 17 (letter of notification) $200,000 of 6% certificates
of debentures, 10-year maturity, and 7,500 shares of $10

Debs, and Preferred
Common

Silver Creek Precision Corp

Oct.

business."

Pref. and Common

Minnesota Min. & Mfg. Co

■

shares

new

capital stock.
Un¬
derwriter—George D. B. Bonbright and Co., Rochester.
Price based on market prices.
Proceeds — For invest¬

1947

Co.

Gen. American

the

share for each 10 held.

new

Oct.

Robertshaw-Fulton Controls Co.__Pref. & Common

Idaho Power Co

to

per share in ratio of
Rights expire Nov. 17.
Proceeds—Added to working capital.
one

28, 1947
Caneel Bay Corp
Debs, and Capital Stock
Jacksonville Terminal Co., Noon (EST)____-Bonds
Providence Washington Ins. Co
Capital Stock

29,

filed

9

scribe

October

October

Offering

45

The Keystone Co. of Boston.
Price—Based on market
price. Proceeds—-For investment. Business—Investment

Corp., Boston.

Household

Oct.

North American Research

Pottstown Small Loan Co

Rochester,

by 36 stockholders who will receive proceeds.
postponed indefinitely.

Common
Common
Class A Stock

Empire Projector Corp
Frailey Industries Inc

Inc.,

Sept. 19 filed 200,000 shares ($1 par) common.
Under¬
writer—E. H. Rollins & Sons, Inc., New York.
Price—
By amendment.
Proceeds—The shares are being sold

October 27,

1947
Doman-Frasier Helicopters Inc

Co.,

New York

1947

Gold Ridge Inc

Manufacturing

(1673)

trant.
•

Proceeds—For working

North

American

North

regis¬

capital.

Research

Laboratories,

Inc.,

(10/27)
Oct. 20 (letter of notification) 2,800 shares of common
stock (par $1) and 700 shares of 6% cumulative
(non¬
voting) preferred.
Price—$100 per unit consisting of
one preferred and two common shares.
Balance of com¬
mon to be exchanged for present common.
Underwrit¬
ing—None.
For construction of equipment, purchase
cjf
materials, etc.
Plainfield, N. J.

..

(Continued

on

page

46)

46

(1674)

THE

•

(Continued from page 45)
•

Oliver

Orange Concentrates
21

filed

CHRONICLE

Southern New

Associates,

Inc.,

of

one

share for each five shares held.

new

share.

per

Price—$100

Proceeds—To repay advances from American

share.

Proceeds—National
Business

will

Research

receive

Southwestern

pro¬

Portland

common: Schneider, Bernet & Hickman. Purpose—
working capital. Offering—To be offered
subscription to stockholders, the preferred at par
and the common at $15 per share.

To

to

(Ore.)

General

increase

Spartan Tool & Service Co., Houston, Texas
Sept. 26 filed $1,200,000 of 4% subordinated debentures,
1955, and 120,000 shares ($1 par) common. Above

Electric Co.

of first mortgage bonds, due 1977.
Underwriting—To be determined by competitive bid¬
ding. Probable bidders: Blyth & Co., Inc.; Halsey, Stuart
& Co. Inc., The First Boston Corp. Proceeds—For
prop¬

due

erly additions.

of the company and $92 principal amount of
7V2-year notes due 1955 and one share of common
(par $1) of Well Service Securities Co. at $1,193 per
unit.
Underwriting—In addition, Well Service Securi¬
ties Co., an affiliate, will sell 110,000 shares of common
of Spartan to Spartan's officers and
employees at par.

$50

(Pa.)

Small Loan Co., Inc.

(10/27)

(letter of notification) 500 shares ($50 par)
$150,000 of 5% debenture bonds, due 1967.

common

com¬

stock will be

offered

The

directly to the public at

share while the debentures will be offered at face

a

amount

through the underwriting firm of Suplee, YeatCo., Inc., Philadelphia.
For reduction of bank
loans and for working capital.
Providence

(R. I.)

Washington Ins. Co. (10/28)
Sept. 25 filed 100,000 shares ($10 par) capital stock.
Underwriter—First Boston Corp., New York. Offering—
Offered for subscription to stockholders of record Oct. 16
the basis of

share for each three shares held

one new

at $28 per

share. Rights expire (noon) Oct. 28.
—To increase its capital and surplus.
Publix
Oct.

3

Shirt

Corp.,

New York

Proceeds

(11/3-7)

filed

—

stockholders who will receive proceeds.

Public
i

due

Service Co.

filed

subordinated

debentures

and

100

shares

of

of

Proceeds—To provide working capital.

Oct. 2 filed

Oil Co.

of

Ohio

(11/6)

584,320 shares

($10 par) common.
Under¬
Moseley & Co.
Offering—Shares initial¬
ly are offered for subscription to common stockholders
of record Oct. 21.
Rights will expire 3 p.m. Nov. 5.
writer—F.

S.

Unsubscribed
underwriters

shares
at

will

$23%

be

offered

share.

per

publicly

through

Proceeds—For work¬

ing capital to meet expanding operations.
Swansea

Inc., Helena, Mont.
Oct. 14 (letter of notification) 500,000 shares of common
and $50,000
in debenture warrants to accompany the
stock.

Price

directors

10

—

cents

licensed

or

share.

a

To

salesmen.

To

be

sold

through
purchase mining

(11/3)
$15,000,000 first mortgage bonds, series G,

Title

Insurance

Block,

Plants

of

Montana,

Union

Missoula, Mont.

Oct. 6 (letter of notification) 2,400 shares each of
common and no par
preferred.

par

United Fish & Cold Storage Co.,
Oct. 13 (letter of notification)
150,000

Juneau, Alaska

preferred

With

•

shares

Mills

of

Florida, Inc., Boston
(letter of notification) 15,000 shares ($1 par)
Price—$3 a share. No underwriting. For ad¬
ditional working capital.

Oct.

15

common.

Robertshaw-Fulton Controls Co.

of

conversion

for

common

of

the

pre¬

Underwriter—All but 50,000 shares of the com¬
will be underwritten by Reynolds & Co., New York.

ferred.
mon

The 50.000 shares will be -offered to

employees and offi¬
Offering—Company is offering the
preferred and 50,000 shares of the common and Reynolds
Metals Co., Richmond, Va., parent of the registrant, is
offering the remaining 500,000 shares of common. Price
by amendment. Proceeds—To nay obligations.
of the company.

cers

•

Rochester

Glass Corp. (10/24)
Oct. 17 (letter of notification) 1,000 shares ($100 par)
common.
Price
$100 a share.
Underwriter — Kay,
Richards & Co., Pittsburgh, Pa.
To pay off debt and
purchase equipment.
(Pa.)
—

Rockland

through officers of the

Oct.

16

Rockland, Mass.

(letter

of notification)
Price—$150 a share.
retire preferred stock.
common.

of

preferred

For operation of busi¬

company.

common

stock.

of

shares of

Price—$1

preferred
common

share.

a

the

stock

shares

purchaser

($1

par)

every 100
receives
25

a bonus.
To be sold through offi¬
Acquisition of a ship and installa¬
equipment for the processing of

as

of the company.
tion of cold storage
cers

fish in Alaska.

owns

77.8% of the

stock.

Probable Bidders—For bonds:

com¬

Blyth &

Co., Inc. and Kidder, Peabody & Co. (jointly);
Stuart & Co. Inc.; Harriman Ripley & Co.
Firemen's
25

Insurance

stockholders

Co.

will

of

vote

Newark,

N.

Halsey,
;

J.

authorizing 100,006
shares cumulative preferred stock (par $50). of which
from 60.000 to 75.000 shares will be
placed privately
through Blyth & Co., Inc.
Company proposes to issue
120,462 additional
to

on

shares, increasing outstanding
A registration covering the 120,462

common

2,000;000 shares.

shares will be filed with the SEC and the
offered

•

for

Dec. 22

snares

will be

stockholders, with Blyth &

underwriter.

Machinery Corp.
stockholders will vote

common

increase

par)

subscription to

as

Food

in

the

authorized

aoproving an
preferred ($106

on

cumulative

stock to 100,000 shares from 70 000 shares and.the
($10 par) common to 3,000,000 shares from

authorized

the

Subject to approval of the increase in capital,

directors

tion

to

have

for

each

that

common

share

they do

authorized

stockholders

common

shares of

and

of

basis of

on

Dec.

distribu¬

a

22

of

additional

one

666,share

then

outstanding.
The directors state
currently intend to issue or sell any

not

Household

Oct.

declared

record

further shares of either preferred
distribution.
•

...

•

Company, which

pany's common, has advised the subsidiary that it would
waive its preemptive right to subscribe to the additional

common

To be sold

ness.

•

U. S. Thermo Control

Oct.

Co., Minneap.
(letter of notification) 120,000 shares

14

common.

F.

Price—$2.50

Breen, New York.

•

W. A. &

Oct.

8

•

(letter

Well Service
17

shares
notes

$1

a

filed

or

after this

common

Finance Corp.

16

reported company plans sale of about $5,000,006
preferred stock, when common stock offering is corn*pleted, with Lee Higginson Corp. as underwriter.
•

International

Oct. 22 reported

Harvester

Co.

contemplating new financing
to augment its
working capital position.
No indication,
as yet of the form which the
financing will take.
Probr
Tlpden"ritcrs
Glore, Forgan & Co. and Harris,
Hall & Co. (Inc.)

be

share.

with

a

share.

of

4%

500 shares ($100 par)
No underwriting.
To

from

at

of

the

are

company

par)

notes

Jacksonville Terminal Co.

Company will receive bids

par)
To erect

Houston, Texas

Tool

&

and 1,200
Price—The

common

Service

.will

company

use

up

(10/28)
to

noon

(EST)

Oct.

28

for the purchase of $4,000,000 first
mortgage bonds, se+
ries A.
Bids will be received by John B.

at

to be sold in combination

Spartan

Proceeds—The

the

Co.,

7V2-year notes

No underwriting.
face amount and the

common.

The securities

see).

No underwriting.

Securities

sold

securities

(which

($1

Underwriter—George

For additional working capital.

$110,400

($1 par)
will

share.

Motors, Inc., Baltimore, Md.
of notification) 29,850 shares ($10

Price—$10
garage building.

Oct.

a

A.

common.

ceeds

Trust Co.,

a

The company will issue one share
bonus with each share of preferred sold.

•

•

holders of the company's outstanding 6% preferred'and
common
stock.
Central Maine's parent, New England
Public Service

—

25 filed 120,000 shs. of 4%% ($25 par) cumulative
preferred and 550,000 shares ($1 par) common; also
shares

as

(10/28)

Sept

300.000

Price—$125

share.

Co.

$3,000,000 ($10 par) common stock at competitive bid¬
ding.
The common stock would be offered initially to

810
no

Power

complete the financing of its 1947 construc¬
tion, company asked the SEC for permission to sell $4,000,000 first and general mortgage bonds, Series P, and

1,500,000.

Co.

Maine

to

Co., Inc.

Mines,

Probable bidders: Blyth & Co., Inc.;
The First Boston Corp.; Glore, Forgan & Co.; Halsey,
Stua t & Co. Inc.; Kuhn, Loeb & Co., and Harriman
Ripley & Co. (jointly). Proceeds—About $4,000,000 wipd
be used to reimburse the treasury for expenditures al¬
ready made and the remainder will go for additional
construction requirements.
Bids—Anticipated bids will
be received at Room 2000, 11 South La Salle Street., Chi¬
cago, at noon (CST) Nov. 3.
Ramie

21

Nov.

Standard

Indiana, Inc.

petitive bidding.

Central

Oct.

•

property and for working capital.

Underwriters—Names to be supplied by com¬

1977.

of

4%

•

140,000 shares ($1 par) common.
Under¬
writer—Reynolds & Co., New York.
Price by amend¬
ment.
Proceeds
The shares* are being sold, by three

Oct.

$1,000

&

man

on

securities to be offered only in combination with certain
securities of Well Service Securities Co., in units of
common

and

•

for

Oct. 13 filed $6,000,000

Fottstown

(tentatively)
Chicago, up

Neb.;

—

Research

Investment Co.

Oct. 8 filed 15,000 shares of 5% cumulative
sinking fund
preferred (par $20) and 21,499 common shares (no par).
Underwriters—Preferred: The First Trust Co. of Lincoln,

Orange was organized last June by
acquire and offer to national re¬
search
stockholders an
indirect
participation in the
Vacuum Foods Corp., whose notes and common stock are
held by National Research.

Oct. 9

fot purchase of the
bonds will be received
at Room
1100, 231 South La Salle Street,
to Nov. 3.

108,000 shares

ceeds.

mon

Wisconsin

construction program.

war

Thursday, October 23, 1947
Public Service Corp. (11/3)
Sept. 30 filed $4,000,000 30-year first mortgage bonds.
Underwriting—To be determined by competitive bidding.
Probable bidders:
Halsey, Stuart & Co. Inc.; Shields &
Co.; Glore, Forgan & Co., and Harriman
Ripley & Co.
(jointly); W. C. Langley & Co.; The First Boston Corp.
Proceeds—To repay short-term bank loans.
Bids—Bids

Telephone & Telegraph Co. and finance extensive post¬

Boston

($1 par) common.
No un¬
derwriting.
Offering—The shares are owned by Nation¬
al Research Corp., parent of the registrant, and will be
offered for purchase by its stockholders.
Price—$7.75 a

National

FINANCIAL

England Telephone Co.
100,000 shares of capital stock (par $100).
Underwriting—None.
Offering—To be offered for sub¬
scription to stockholders of record Oct. 30, in ratio

14 (letter of notification) 30,000 shares of common.
Price—$10 a share. No underwriting. To build and
equip factory to produce deep well turbine pumps and
pumping equipment for general trade.
•

&

Oct. 20 filed

Pump Co.». Pomona, Calif.

Oet.

Oct.

COMMERCIAL

Co.
pro¬

for

purchase of 110,000 shares of
Spartan common and for other expenses. The common
is being sold by C. P. Parsons, President of the Com¬
pany.
Business—The company is not ,yet engaged in
business and although its charter authorizes it to sell

Hyde, ViceYork City*.
Probable bidders: The First Boston
Corp.; Blyth & Co.*,
Inc.; Smith, Barney & Co.; Shields & Co., and C. J. Devine & Co., Inc. (jointly).

President,

•

Room

Northeast

Nov.

5

916,

71

Airlines,

stockholders

Broadway,

New

Inc.

will

vote on authorizing an issue
(no par) preferred stock.
If approved,
of the new issue may be applied in part

of 65,000 shares
the

proceeds

to

the payment of about $900,000
Atlas Corp.
Atlas also owns

of notes held by the
100,000 shares of stock in

Northeast Airlines.

Probable

underwriter, Lee Higgin¬

son

Corp.

•

Wisconsin Central Airlines

Sept. 4

securities and real and personal property, it
actually
been organized to acquire the common stock of

Oct. 20 company expects to file with SEC in near future
an
issue of 175,000 shares of common stock
(par $1)».

ferred.

Tool & Service

Loewi

Seattle

(Wash.)

Gas Co.

(letter of notification) $300,000 ($50 par) pre¬
Price—$50 a share.
Underwriter—Shea & Co.,
Boston; and Smith, Landeryou & Co., Omaha, Neb. For
payment of loan and current obligations.
•

Silver

Oct.

13

par)

stock.

Price—20 cents

a

Idaho

1,500,000 shares of (10c
share. Underwriters—F.

E. Scott. Pennaluna &

Co., J. E. Scott and Morris George,
all of Wallace, Idaho, and John Erickson and Harold
Gribble, both of Mullan, Idaho. For mine development.
•

Silver Creek

Oct.

16

common

Precision Corp. (10/29-31)

(letter of notification)
and

a common

South

149,850 shares (400 par)
29,985 stock purchase warrants.
Price—$2

share and

First Colony
•

(N. Y.)

one

cent

a

Corp., New York.

Bend

(Ind.)

warrant.

of

Underwriter-

For working capital.

Bait Co.

Oct. 13

(letter of notification) $88,784 of ($20 par) com¬
Price—$34.56 a share. No underwriting. For addi¬
tional working capital.

mon.

employees

Spartan, the registration said.

•

Buckle Mining Co., Wallace,

(letter of notification)

has
Spartan

Co. for resale to officers and

•

West Disinfecting

Oct.

17

ferred

Co., Long Island City, N. Y.
filed 12,500 shares (no par) $5 cumulative pre¬
and 75,000 shares
(50c par) common.
Under¬

writer—Coffin
Proceeds—Of

&

Burr,

the

Boston.

total,

shares of preferred and
balance of securities

the

Price

company

by

is

25,000 shares of

amendment.

selling
common.

2,500
The

sey. Stuart & Co. Inc.; Glore, Forgan & Co. and Harriman
Ripley & Co. (jointly); W. C. Langley & Co., White,
Kidder, Peabody & Co. (jointly); Blyth
& Co., Inc.; The First Boston
Corp.; Shields & Co.

Weld & Co. and

being sold by 14 stockholders.
The company will use its proceeds to
repay bank loans
and
for
working capital.
Business—Manufacture
of
are

UNITED STATES

sanitation products.
•

Wickes

Corp., Saginaw, Mich.
Oct. 20 filed 770,000 shares ($5
par) common. No under¬
writing. Offering—To be exchanged for stock of U. S.
Graphite Corp., Wickes Brothers and Wickes Boiler Co.
in connection with a plan to
merge the three companies
into the registrant.
Business—Graphite and boiler busi¬

GOVERNMENT,

STATE, MUNICIPAL AND

Investment Co., Milwaukee

Sept. 29 filed 370,000 shares
& Co., Milwaukee.

July 29 (letter of notification) 8,000 units consisting of
share ($10 par) 6% cumulative preferred and one

Loewi

will be offered to stockholders and unsubscribed shares
will be offered publicly through underwriter.
Price-

working capital.

Based

on

market

prices.

Underwriter—

Offering—Shares

Proceeds—For

Co.

INC.

one

of common.

.

CORPORATE SECURITIES

Blair

Wisconsin

share ($1 par) common.
Price—$12.50 per unit. Under¬
writer—Southeastern Securities Corp., Jacksonville. For




Power & Light Co.

Oct. 15 reported company
contemplates sale of $3,000,000
bonds for expansion purposes.
Probable Bidders—Hal¬

Development Corp., Jacksonville,

Fla.

Co., Milwaukee will be principal underwriter.

Wisconsin

ness.

Southeastern

&

NEW

YORK

initially

investment.

fe

ATLANTA

•

BOSTON

PHILADELPHIA

•

BUFFALO

PITTSBURGH

•

ST.

CHICAGO
LOUIS

I

Volume

THE

Number 4640

166

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1675)

47

liberal yield

Definition of American
s

Economy

announcement

.(Continued from page 12)

•

in

confidence

businessmen,

the

prospects for continued profitable

on the foregoing is¬
since several of the recently
loans stiffened visibly on

sue,

floated

that

bentures would be

ing and to stop the flow of capital for
new enterprises.

into

reoffering

3.07%.

operations.

the

i

yield

The issue sold

a

about

year

ago

we are

Now

the

question. which should be expanded when
will yield the level of business activity is
dynamic stability? Perhaps you low.
agree that the complexities of the
Fourth: We must so manage our
problem are such that (1) it will hugh public debt that it potential
take the collective wisdom of all
contribution toward greater sta¬
Of
us
government, business, bility can be realized. There are
labor, agriculture and the educa¬ also potentialities in the way of
tors—to
help us work our way
governmental activities which
toward
our
goal, and (2) that might
assist in
stabilizing the
there is no money magic, no one
availability of credit. Credit has
comes

What kind of

a

$64

program

us

months but it

no

one

the

for

cure

boom-bust cycle. Nevertheless, if
we fail to check a climactic boom,
if

or

have

we

disastrous depres¬

a

sion, it will not be because of
act

God

of

of

acts

will

It

nature.

or

convulsion

a

be

because

an

of

the

of

and women—Ameri¬

men

and

often

been

times

were

too

easy to get when
good, too hard to get
when times were tough.

Fifth:
stant

There

is

vigilance

on

for

need

con¬

the part of

gov¬

to see that competition
lively—that monopolistic
practices are outlawed.

ernment

is

kept

American
It would be presumptuous of me
leaders—you, and others like you.
Looking backward, we can see to offer proposals as to the meas¬
that
all
past depressions
were ures which can be applied to pro¬
dynamic
caused by things men did (things mote
stability in the
agriculture, labor and
which they could have refrained fields of
from doing) and by things they education. In each area there are
failed to do
(which they could potentialities for significant con¬
Xiave done). This being so, if men tributions.
act sensibly in the future than
The goal for which all of us
they have in the past, fluctuations chould strive seems clear to me.
in
the
business
cycle
can
be We should attempt within the next
can

men

moderated.

women,

is

There

for either violent booms

By

adopting

held

drop

valleys

peaks and
foe

perhaps 15%. We

or

that;

and

1929

volume

ness

20%,
live with

can

that which took place be¬

as

tween

of

cannot live with a crash

we

such

I believe,

can,

fluctuations

to

busts.

or

appropriate
between the

the

measures,

excuse

no

1932, when busi¬

dropped

than

more

50%.

To

Program

achieve

ing the

range

50% to 15%,

There

the

standard

the

must have action

we

For

things to help make
more
dynamic and
First:

example,

and should do these

can

Promote

of

last
rea¬

of

more

of

tempo

goal

a

are

us,

lives

our

Why shouldn't

faster.

progress

in the

Why isn't such

sonable?

and

the

made

been

living

is

double

we

for

the

in the next 25 years?

average man

Why shouldn't we come close to
achieving
the
great
American
dream
of
creating
conditions
of

For

Show

you

a

business

a

stable.

contribution

true

whose

toward

Regularize employment
to the greatest extent possible.
Exercise

scientific

con¬

trol of sales expenditures.

In the
past,
American
concerns
have
kept their sales and advertising
budgets high when business was

flourishing and easy to get.«When
business was slow and sales* tough
to get, sales and advertising
neither

minimum.

a

good

business

were

This
nor

is

good

If

we are to have a stabil¬
ized market demand,
selling pres¬

sures

should be

maintained—per¬

haps increased, at the first sign of
,

a

;

decline

in

Telegraph

Co.'s

financing operation. With
"double A" rating, as against
"triple
A"
accorded
Pacific

a

Telephone,

the

sold

company

$40,000,000 of debentures, due in
35

years for a price of 100.8091
with the bankers reoffering the

issue at 101%, to yield
True the issue

was

2.925%.

price received from
0.4

bankers

Stock

Cleveland

Deal

Electric

Off

Illuminating

the

decided

to

postpone

operation.

headed by

eastern firm, but

an

including

number

a

of

Cleve¬

land houses, brought bitter pro¬
test by a large local firm.
De¬

tails, however, had the approval
of

the

Ohio

Utilities

First:
cast
tem

of

the following:

We need
our

could

tax

a

comnlete

system.

contribute

dynamic stability if the
it

exerted

areas

sion.

syndicate

projected

which

manages

financing

new

Harvester

Co.

of

will

that

time ago,

some

it

contem¬

was

position

and

week, William R. Odell, Jr.,
Treasurer, disclosed that con¬

Outcome of this week's

bidding

of Pacific Tele¬

versations

going

have

must

lingering
money
market

any

*

removed

doubts
has

that

the

moved

defi¬

nitely out of the "golden age"
far

borrowers

corporate

as

so
are

with

bankers

now

certain

appears

borrowers

of

dication

of

the

form

new

expected

that

that

matter will be

the

phase

of

the

determined in the

future.

near

Competition Is Keen
issues of smaller dimensions

new

these days.

This probably reflects

the fact that

a

rated

obligations

"triple A" and the best

bid received for its
a

new

3V8%

issue

was

interest rate,

the

tended

to

pressures

stabilize

spending and to encourage invest¬
ing in risk enterprises. As pres¬
ently constituted, it works in the
exactly opposite direction. It tends
to promote

fluctuations in spend-




the

writing houses

rate

and

The

net

company

offered

interest

cost

figured

to

an

as

102.6199

an

cost

of

The
was

out

2%s for

to

the

about

a

price of

indicated

interest

the

large

At

any

issues,

rate,

listed

a

grouping

established

in

of

for

Ala¬

being

even

a

bit

more

100.391

an

for

practice

of

of

$4,500,000

mortgage

rate.

HELP

the

tinue, of borrowing from its
rent

need

as

therefor

bonds

a

WANTED

TRADER-SALESMAN
Long

pa¬

arises

for

general corporate purposes includ¬
ing extensions, additions and im¬
provements

to its telephone plant
and advances to its
subsidiary.

firm

established

wants

with

man

commission
Box

K

over-the-counter

experienced

clientele.

trader-sales¬

Salary and liberal

basis,

complete

Financial

1020,

Park Place, N. Y.

facilities.

Chronicle,

25

8.

Pacific Telephone, which spent
$104,000,000 for new construction
in 1946, has spent in the first half
1947 a total of $71,000,000 and

expects

that

such

will continue at

As

of

June

expenditures
high level dur¬

a

ing the next few

Trader-Salesman

30,

Small

well

house

known

desires

with

over-the-counter

salesman

clientele.

and

trader

Liberal

commission,
furnished, partner cooperation.
Replies
confidential.
Box
B
1024,

leads

years.

1947,

the

com¬

and its subsidiary, Bell Tele¬

telephones

in

service

and

Commercial
25

Park

&

Financial

Place,

Chronicle,

New York

N. Y.

8,

change
the

The company

areas.

States

of

California,

serves

its

the

subsidiary

TRADER
Long experience

por¬

subsidiary

About 34%

of

ex¬

Oregon,

Washington and the northern

Nevada.

SITUATIONS WANTED

were

furnishing local service in 620

position.
fc

and

25%

Financial

New York

located in San Francisco

and

vicinity,

and

by

work

in

desires

Commercial

1023,

Chronicle, 25 Park Place,
N. Y.

8,

Security Analyst
25

debentures will be

new

order

securities
M

about

vicinity.

The

3ox

located jji Los

are,

and

are

doing

over-the-counter

of the

company

Angeles

re¬

years'

N. Y.

the

at

company

experience

Eastern U.

Address

Box

Financial
New

with

City firms—desires

tion.

DIVIDEND NOTICES

K

S.

York

N.

8,

connec¬

references.

Commercial

1016,

Chronicle,

leading

new

Best

25

Park

&

Place,

Y.

AMERICAN

MANUFACTURING COMPANY
Noble and West Streets
Brooklyn 22, New York

The

Board

cf

Directors

Manufacturing Company
dividend

dividend

Stock,

of

Record

19,

of

the

has

per

at

1947.

the

close

of

business

books

Transfer

will

re¬

open.

ROBERT

B.

BROWN,

EXECUTIVE

American

declared the regu¬
share and
an
extra
per
share
on
the
Common
December
31,
1947
to
Stock¬
25c

payable

holders
main

of

50c

of

December

Treasurer.

Presently
treasurer

tered

employed
of

as

investment

individual.

secretary and
firm.
Regis¬

Twenty-five

years

sound practical
experience in manu¬
facturing, mining, finance and. secur¬
ities,
in
ell
phases
of
accounting,
taxes, S. E. C. and State regulations
and management in executive

capacity.

Well

qualified to assume heavy re¬
sponsibilities.
Excellent record.
Box

INTERNATIONAL HARVESTER

P

Commercial

1021.

&

Financial

Chronicle, 25 Park Place, New York

COMPANY

8.

Quarterly dividend No. 117 of one dollar and
seventy-five
cents
($1.75)
per
share
on
the
preferred stock payable December 1, 1947, has
been

declared

close

of

stockholders

to

business

November

SANFORD

B.

of

5,

record

at

the

1947.

WHITE,

Secretary

Municipal Bond Man
AVAILABLE
Over

INTERNATIONAL HARVESTER

20

Directors

of

declared

International

Harvester

management,

quarterly

dividend on the
Company of one dollar
($1.00)
per
share, payable January
15,
1948,
to
stockholders
of
record
on
December
15,
1947.
The
Directors
also
declared
a
special
dividend
of
one
dollar
($1.00) per share on
the common stock of the Company payable at
the same time as the quarterly dividend, that
is, January 15. 1948, to stockholders of record
on
December
15, 1947.
of

stock

a

the

SANFORD

B.

experience in

Familiar

ness.
The

Company

years

all phases of municipal busi¬

COMPANY

WHITE,

with

office

supervision

of

books, trading and retail sell¬

ing.
Would consider
ing office for out of
firm.
cial
25

Secretary

Box

M 1014,

open¬

town

Commer¬

Financial

&

Chronicle,
Place, New York 8,

Park

N. Y.

O'okiep Copper Company iiiimmiimmgiiiiNimmimimmiiii;
Limited

agency
a

3 *4%

The Board of Directors today declared a divi
dend of four shillings per share on the Or

dinary Shares of the Company payable, subject
to the approval of the South African
exchange
control, on December 10, 1947, to the holders
of record of Ordinary Shares of the
Company
at the close of business November
21, 1947.

of

Co.'s offer¬

first

new

elicited

no

less

price of 100.81 for

3%

many

ZZ experience
~

and

public

desires

Excellent

Shares issued under the

ZZ

operations,

of the Deposit Agreement dated June 24,
1946, The net distribution after deduction of

3

said

dividend

on

holders of American

the

years

the

of

supervisory

—

in large stock brokerage «Z>

™

authorized

accounting

position

of

concerns,

ZZ

responsibility.

™

knowledge
civil,

of

mining

financial

and

me-

j2
ZZ

terms

tax

South

African

non-resident

will amount to 74 cents per

"New

E.

DODGE, Secretary.

York, N. Y., October 14, 1947.

chanical
nancially

shareholders

share.

By order of the Board of Directors
H.

a

S With

ZS

Directors

the

bids, with the highest

§ Senior Stock Brokerage |
|
Accountant
|

distribution of
same
date to the

The
the

Metropolitan Edison

seemingly fixing

market

on

coupon.

ing

(par $100), and
820,000 shares of preferred stock,
; (par $100).

6% cumulative

conformity with

Dividend No. 4

bidding

top bid, reportedly

basis,

stock

position

a

total of six tenders with the

than eleven

2.77%.

geared for

extent

$250,000,000 in
2,787,577 shares Of

debt;

common,

company, which it expects to con¬

capital is necessary.

out
pay

3.11% whereas, just a year ago,
it sold $75,000,000 of similar de¬
bentures

the

to

an

operation sin¬
whereas in the case

gle-handed,
of

in

are

Bell

re¬

toward

obtained

good many under¬

to take on such

Telephone's

funded

net proceeds are suf¬
therefor.
These advances

are

common

Competition is really keen for

will

money

find the bankers decidedly more
realistic in their approach when

are

to

Tele-;

104.25%

pany will comprise

in¬

no

which

financing will take although it is

that

called upon to bid competitively
for such issues.
Pacific

Co., parent,

are

concerned.
It

advances

from

Following the sale, the out¬
standing capitalization of the com¬

on.

Thus far there has been

phone & Telegraph Cq.'s 40-year
debentures

reim¬

ranging

such

its

augment

this

$100 million

outstanding

deemable

steps to
working capital

100.14.

The sys¬

graph
that

ficient

Commis¬

coupon

are

important

then

telephones

group

acjtion

government do?

its

Its

prices

par.

repay

from American Telephone &

serves

large

a

in! which government should take

can

more

treasury having been so
bursed, the company will

handled

plating

for

its telephone plant.

to

tion of Idaho while its

highest for any company in
bama Power Co.'s issue of
$10,System since 1939. The
competing group named the same 000,000 of bonds this week brought

Now what

Among the

ments

Banking arrangements for the
undertaking, which were to be
by

<8>

phone Co. of Nevada had 3,190,462

which had virtually com¬
pleted plans for offering of $25,000,000 of new preferred stock to
replace
its
outstanding
senior
has

or

regulatory authorities
California, Oregon and Wash¬
ington, for expenditures made for
extensions, additions and improve¬
of

was

Co.,

equity,

in accordance with

ders of the

pany

indicated

100.3999 for

business.

treasury,

points higher.

Rig

at

reimburse its

of

of five years

shorter maturity, but the
coupon
rate was Vs of 1%
less and the

The company,

a

Fourth:

y sense.

England

predominantly mid-western in
its make-up it became known this
week.

peo¬

Operate profitably. Only
ia
profitable business, can offer
security to its employees.

to

&

New

only

recent

business.

a

Third*

pared

the

International

America.

Fifth:

out

Telephone

the

growing, and I will show
business that is making a

^dynamic

single

near-

needs

one

be

who make

me

are

situation

interest.
The group won the award of the
debentures
on a bid of 100.3999.
The company will use net
proceeds from the sale to

competitive sale

lar

Encourage the growth
and development of employees.- It

ple

comparison of the

a

term

The

services.

..people

be¬

noted

accrued

or

Second:

is

has

was

Halsey, Stuart & Co. Inc. headed an
underwriting group that
offered publicly Oct. 22
$100,000,000 of Pacific Telephone & Tele¬
graph Co. 40-year 3V8% debentures, due Oct. 1,
1987, at 101.25% and

every

race

products

new

This

recent

in a tendency of several recent
issues to "back up" as institutional
investors stood aside.

our economy
more

in

American,
Postponement was
decided
creed, the
upon, the company explained, "be¬
opportunity
to
realize
to
the
cause of current unsettled condi¬
fullest on his capacities and
to
tions of the market for
high-grade
grow and develop to the limit of
his potentialities, materially, in¬ utility preferred stocks."
tellectually and spiritually?
Big Industrial Issue
assure

regardless

this goal of reduc¬
in fluctuations from

fronts.

many

business

and

has

fifty.

match

to

years

which

which will

A

on

25

been

situation

marked.

come

—

formula,

has

weeks that the

$100,000,000 Pacific Tel. & Tel. Bonds

priced at 101 Vi

to

Second: We should expand the was
priced at
103 V\
to
yield
seeking measures coverage of unemployment com¬ 2.74%.
to minimize the instability of our pensation
insurance — as far as
Preliminary inquiry indicated
economic system and thus correct practical to all workers.
Unem¬
a
smart demand for the new
its
weaknesses, we must
con¬ ployment compensation insurance
Pacifies with everything point¬
stantly
keep
in mind that its gives to people the confidence in
ing to a quick sale and the likeli¬
strength lies in its natural lusty continuity of basic income which
hood that the debentures would
vitality. That we must not lose. is so essential to the achievement
command a premium over the
Otherwise, we may end up with a of greater stability in our econ¬
offering price.
stabilized poverty so characteris¬ omy.
The undertone of the
tic of the tired, regimented, oldmoney
Third: We need better timing of
market has been firming for some
world economies.
the construction of public works,

While

Halsey, Stuart & Co. and Associates Offer

de¬

new

ZZ

travel.

ZZ

&

~

engineering.

Mature,

responsible.
Box

H

Financial

Place,. New

1015,

Willing

N.

to

~

Commercial ZZ

Chronicle,

York 8,

fi- ZZ

25

Y.

..

Park ZZ
ZZ

flllUIIHIllllilHIlllllillllllllllllllUmir.

48

COMMERCIAL

THE

(1676)

&

FINANCIAL

CHRONICLE

Thursday, October 23, 1947
President

Truman

sideration

BUSINESS BUZZ

to

fraining to call
of

Congress.

is

on...

that

will

Behind-the-Scene

A

Interpretation#

"\fg^kmaa

w\Jb

xJL I

from the Nation'# Capital

x

FILING DEPT.

the

on

M " IMl

re¬

What is behind it
ready,

foreign

a

of

special session

a

face

to

idea

government simply

be

not

looks,

con¬

gave

the

aid

It

December.
information.

it

as,

by

program

lacks

It

now

down

Congress

is

important

not

to

ready

make firm judgments. However,

though unprepared

even

President

ash can the

personally has dumped into the

Truman

long-range

this idea on grounds
legally are entirely correct.
grounds
are
highly

which

these

theoretical.
*

This

*

*

was

plan

the

proposal

of

the

staffs

that

members

the

Congressional

sit in

hearings

"within the family" of the Ex¬

branch.

ecutive

held
what
recommends to
They

are

to determine how much of

President

the

Congress each year shall be ap¬

Federal
and for each function.

agency

each

for

propriated

private hearings would
he of great value to the Appro¬
priations Committees in forming
an
accurate judgment as to the
need for numerous money allow¬
These

give
better judgment as to

Congress a

would

also

They

ances.

the relative efficiency
«very

of each and

agency.

In

together next month. So that can't
be avoided. But facing the entire

Two

ambitious

an

build himself

bureaucratic

a

resented

a

Republican leaders to the White

of
least

It was seen as a way

House.

overcoming

one

the

of

government economy.
ft

ft

ft

This

nothing

is

hurdle

more

Appropriations Committee simply
do not get the facts upon which
to make sound decisions as to the

for hundreds upon

justifications

hundreds of unspectacular appro¬

priations. These facts are the pos¬
session of
government officials.
When they go before the supply
committees, these officials are not
concerned with getting less money
than they request.
The prestige
of these agency heads, the jobs of
their thousands of employees, de¬

what

pend upon
they get.

appropriations

heavily

are

ft

ft

*

they

parade
several
a
day
the Congressional ap¬

through

propriations hearings. The offi¬
cials
sell
their stuff.
Unless

occasionally hap¬
pens, leaks out a bit of infor¬
mation, the Congressman has no
way of telling where the sales
talk fails to jibe with the facts.
somebody*

as

Furthermore,

though

even

the

appropriations hearings last for

months,

members

the
*

Congress

of

the time

to digest

itself

has

of

most

the

solid

factual

background, economy has
tough going. That the Republicans
found this year. They had to stab
in
the
dark.
Conversely, they
often went along with some items
of expense. This was sheer help¬
lessness— helplessness to get at
the meat of each and every one
of thousands of small items of ex¬

Hence the Republicans last
groped, like blind men.

hit

and

housing,
of

sands

that

—

would

Republicans
Truman

man

idea

to

at.

year.

the

as

be

to

So the approach of having

staff

members of the committees sit in

This

appropriation
presented

was

to

the

highest Executive authorities.
This was a way to achieve sub¬
stantial economy. It was a way to

horrible shortcoming of
Congress. Staff members would
have
the
judgment
based
on
months of private hearings. They

remedy

of the "inside"

some

of administration

anybody

conspire
of

down

cooperate

can

objectives. They
the size of

to

cut
All

bread.

manufacturers
close

The

else

the

whiskey

conspire

can

restrict

and

the

to

pro¬

Truuman

jected the idea. He
Webb,

Director

told James
the Budget,

of

the rap for rejecting

took

who

re¬

the plan, that the GOP proposal

with

the

independ¬

of the Executive branch of

government.

legal

He

But

grounds.

firm

on

was

Appropria¬

tions Committee staff members
not

are
men.

Republican

They

Congress¬

technical

are

em¬

ployees who don't often change
with

changes

in

party

control

of Congress.
ft

ft

*

Interior

Secretary Krug gave
tip-off here last week that

the

Administration

the

industrial

duck

will

try

controls

to

under

assistant.'

an

interested

in

this

might

sort

happen

to

case

the

was

Truman-Clark

prices down. It

one

ahead

$

Now
a

if

ft

you

ft

believe wheat is

good buy and

decide to

you

can

see

con¬

a

when

even

one

son

has

another

to

his

credit

mar¬

time

else

der the

sion.

The

over

the

use

playing the
tune
of
scaring
was

time

The

liquidation of
ft

Secretary
cold

water

sion.

He

many

CIO

capacity

observed that

line

it takes

support for

plus

1-year

tions

in

was

designed to build

up

lighter feeding of livestock. Just
a

little while after Mr.

announced

General

that

was

ture
was

Secretary
no

the

said

This, he said, is not the time to

industrial

a

Agricul¬
there

that

of any

viola¬

to

Commodity Exchange Author¬
ity daily supervises the operations
of the organized futures ex¬
changes in farm products. If it
had found a trace of manipulation
causing high prices, it would have

ft

ft

ft

to

Rails
Domestic &

that

ever,

be

will

take

"much of

New Issues

M.S.Wien&Co.
ESTABLISHED
Members
40




"diffi¬
whoie

N.

Y.

1919

Security Dealers As3'n

Exchange PI., N. Y. 5

HA. 2-8780

Teletype N. Y. 1-1807

off

States

oil

in

East

be

using

Coast

refin¬

eries. Also, fuel oil supplies prob¬

ably will be OK this winter only
if "everything goes all right." If
not, the situation will get tough
in the Middle

Ralston Steel Car

(supplying)

our

probably' will

Arabian

Trading Markets:

the European

West, with the East

Oregon Portland Cement
Riverside Cement 4 & B

Spokane Portland Cement
LERNER & CO.

"not far behind."
ft

Investment

ft

*

10 Post Office

There is

more

behind

eye

than meets the

the

stories

Securities

Square, Boston 9, Mass.
Telctjpe Bs 69

Telephone Hubbard 1990

that

Teletype—NY 1-971

Empire Steel Corp.

Susquehanna Mills

this

conspiracy will not
Tom Clark, the

f-ARL MARES t, C.O. Pic.

prosecuted.

General,

instead

will

It's

here

'

getting to
that

Tom

be

said

Clark

around

is proving

Hill, Thompson & Co., Inc.

FOREIGN SECURITIES

50 Broad Street
the

Foreign

Securities

All Issues

assist

conspiracy

*

Congressional

authoriza¬

•

"Krugisms": When the
trans-Arabian
pipeline is built,
maybe two years from now, this

FOREIGN SECURITIES

bless it.

Add

contract

How¬

year

culties the fact

recommend,

appropriations,,

Other

shoulders." And—then the United

-U

great deal of

the foreign aid program.

will

of the country.

ity

Truman

tions of law.
;!•

full

Reorganization

pound of steel to produce 1

load

evidence

the

Attorney

the

going to check into

grain speculation,

by

tentative deci¬

limited amounts.

Old

expand the steel-making capac¬

campaign

the

the

of

expan¬

pound of steel-making capacity.

that

of

drop any

threw

also

the

"waste
primarily

candidly

this

1-year

weak

said

less"

confirm

ft

Krug
on

steel

enforced

to

approval
of

committee

instead:

accounts.

and

"coop¬

to

decision

step is big. It is
the approval of the White House,

when

Firm Trading Markets

Government-industry

ft

remain

not

0.7

allocation of materials.

eration" means

is
na¬

other

should

market

for frankness. The other day he

resources

controls

fall's

4-year plan for Eu¬
rehabilitation. One step is

formal

weak

a

thinking far
prices,
turning down, might collapse un¬
the

to

ride up with it, that is a differ¬

there

be

to

prove

accord with the

high objectives of
government quarter.

one-third

the

elevator operator or any one

who

CEA

of

that grain
CEA was

gins. It got them. During the first
several days this shook out a lot
of trading. It may even have dis¬
couraged the bus boy and the

slide.

spiracies

people

high price.

a

a

foreign aid. In connection with his
national

of

lot

a

worth

in

does not exist. Secretary Ander¬

President

is

sister

product. It is only
coincidence, of course, that con¬

spiracy
But

vince

duction of their

ent matter. You

waste.

man to
butcher,

the candlestick maker,

and

a

would know

handy

the baker,

loaves

hearings.

mighty

a

Truman.

can

*

Bureau

is hinting again that he needs

President

for certain broad

to defend its jobs.

Budget

long

a

committee

"I guess Smythe

the

get

whipped them,

of

like.

appro¬

this

*

the

Harriman committee

the

what

is

like

tried

*

it

it

sooner

which

next
ft

steps

tentative

ropean

whole vast bureaucracy stood as
a

the

sub¬

the

unspectacular

priations

Attorney

*

earlier

start

to

❖

veterans'

—

subsidies,

farm

to

prelude

Two

Big things

since 1933.

headlines

the

pense.

*

the

tug-of-war

the Repub¬

trying to get—overwhich has been going

apace

have

-

and

knows

tional election.

are

staffing
on

*

the thing

This is

licans

*

moved quickly. It found no manip¬
report, he ob¬
the vast volume of information,
The rising price is due
served casually that he thought ulation.
even
one
sided
information,
government-industry cooperation to all those factors, including
spread out before them.
would do the job without con¬
buying for foreign aid, which con¬
❖
*
ft
trols—other than the existing ex¬
So when an Administration is
port controls. In other words, the
so
doggedly determined as the Administration plans to avoid ask¬
present one to spend every nickel, ing for legislation reviving war¬
HAnover 2-0050
cannot take

arguments

special session idea

prevail. Thus, the Admin¬

will

staffed.

ence

these officials are
out to sell their services. And

other

the

istration

over¬

that

❖

political

interfered

Naturally

still

❖

eral

agencies

out

about

faces Congress the

on

glamorous than the dull but for¬
midable fact that members of the

All

against the

em¬

understood but most formidable
hurdles to

ft

away

majority

The proposal rep¬
mature approach of

is known

with
it, too. That is partly why in the
great majority of cases, all Fed¬
He usually gets

pire.

tions Committee chairman. This
error..

neck

is another thing.

program,

He tries to

But the countless items of thou¬

an

information

in govern¬

man

ment do to get ahead?

its

stuck

Congress on the foreign aid pro¬
gram when so little fundamental

just passable, can get almost the
same pay in government. That is
the Civil Service system. So what
does

House

and asked these committees to get

competent, one

one

about this
plan indicated that it was the
suggestion of one Appropria¬
Is

White

❖

*

men,

benefits,

Reports published

ft

supervises.

sidized
v

ft

government, officials are paid
by
classifications.
Classifica¬
tions of pay vary according to
"importance." But "importance"
is
usually
measured by
the
number of employees an official

These

held by the bureau

are

of stop-gap aid.

the Administration is
obliged to go before the foreign
affairs committees of Congress in
November to make a preliminary
presentation on foreign aid. The

own

sessions.

chamber

star

Ad¬

Of course,

facet

bigness.

for

makes

which

ft

Bureau's

Budget

the

on

Appropria-

Committees should

lions

of

•

the

on

the

impressed with

—

Civil Service system has a

He rejected

.

the urgency
ft

<$>■

*

*

*

-----

was

Federal expenditures.

essary

Yet

program,

ministration

far-reaching, and at the same time most practical plan ever yet
-advanced to make it possible to save hundreds of millions in unnec¬

most

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