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bus. adm.

°CTSs 19

Library

Sections-Section 1

In 2

ESTABLISHED 1839

Edition

Final

Reg. U. S. Pat. Office

y

yolume 164

New York, N. Y.,

Number 4536

Inflation
"

be not only
business depression but
profound upheaval of

there

says

another
also

a

"

-

free

and

approaching peak of inflationary phase concludes there is

sure

wants

a

it

Of all

accurate

in

Jordan

Virgil

Dr.

revival of free

*

.<

Addressing the Union League
Club of Chicago on Oct. 15, Dr.

Jordan, President of the
Industrial
Conference

National

States

crucial
that confronts the United

asserted that "the
and

the world is whether

the American

used.
■ef¬

It

people are willing

(Continued on page 2120)

munication

ages,

t

tional

|
like- V

different

must be greater than normal.
Sees unsatisfactory interna¬
trade situation and unprecedented consumer spending as
of inflating

both prices and wages and causing more acute
Concludes stock market debacle is due to bewilderment!
face of complicated and confused situation.
>

means

shortages.

In 1926, under the

as

the

and

vening in New York,

warns

that the peoples' desire for

peace

as

an

in¬
Alan H.

in

Temple

prises,
>- •; -■.' ■} /" ■'' •
but they are not the same thing.
A more useful description
\of in¬
rising

threatens, in
contrast with the realistic decisions confronting
the Council of Foreign Ministers. Climactic Veto
re-examination possible/ Molotov the public's "in¬
Frank

ternational

Sinatra.'';

■

INDEX

index of

contents see page

2071

one

to

before.

than

(Continued
*An address

works

page

on

is

that

2098) \

/

sirens,

Hall

went

to

raw ma¬

Prospectus

tile

products down from 108.3 to
on

A. Wilfred May

2095)

page

*Based on talk by Dr.

performance and luncheon
official receptions with

delegates and secretariats to the scene
activities. v„,''r?

was

(Continued

out
of
of their 6^/2

Palyi be¬

fore the Association of Customers

Brokers, New York City, Oct. 3,

':v.

1946.

(?)

weeks

.-v.;

of

7

.

-.7

/

(Continued on page 2131)

(Text of President Truman'S address on yage 2073)

STATE

AND

& OHIO RR.
COMMON STOCK

request Y:

on

Palyi

1946.

GULF, MOBILE
Havana Litho. Co.*

Dr. Melchior

were

Aerovox Corp.*

•

one-

Nay, the entire price
"slipping"; from 103.5
in 1925, the BLS wholesale index
fell to about 95 in 1929, with tex¬

here in the late afternoon welcomed the array

Water¬

coffee

level

first citizen, President Truman,

sugar—our

the

of softening.

with Maestro Whalen, and

Association, Atlantic City,

N. J., Oct. 18,

City

a

of boom,

in the process

1946—In this former skating rink which; with the

by Mr. Temple be¬

Pennsylvania

the

fore

Vacuum Concrete

second

those

years

other

which

The

thirds.

During

terials

promote

they spend more freely instead of
saving the excess.
The third is
that there are not enough goods

two-

tin, zinc, cot¬
ton, hides, and

is more aid of a $2 Vi million face-lifting treatment, is
sound now serving as the universe's "Temple of Peace"
thinking about it, is one which ;—the United Nations Assembly today began anemphasise its causes. In inflation other major re-airing of ihe world's problems.
three conditions exist. One is that
Climaxing a hectic day brimful of typical Amer¬
people have a lot more money ican
fanfare—including
motor
parades
with
and

calculated

by

or

third; sugar,

MEADOW PARK, N. Y. Oct. 23,

FLUSHING

40

some

cents,

down

The prospect of indecisive .oratory

mani¬

to

price

ideal must be implemented by realistic sacrifices.

is

itself

fests

President Truman, sounding keynote at UN General Assembly's con¬

Of

that

true

flation

,,ji;

By A. WILFRED MAY

same

it

course

flation,

For detailed

of

one

thing.

ill-fated Stevenson scheme, the price of crude
high of $1.26 per pound.
When the stock
» market broke
in September,
1929, the rub¬
ber price had
already dived

rubber reached the all-time

Meeting of the World"
Moves to Western Hemisphere

thought. Many
people
think
o f
rising
prices and in¬
flation

commodity prices have not yet fallen

]

;

com¬

economy

j
I

inflation is probably

means so many

shortage

a

Dr. Palyi sees probable cause of stock market
break in declining and fluctuating profits.
Holds labor's demands
mean that volume production, which is now handicapped by short¬

"Town

almost

come

Lays

question

and inflationary boom because

in

economic vocabulary

useless for the

-

Board,

the

that it has be¬

down essentials for

Virgil

».

ferent

cally controlled

'

in

things to difpeople

through United
Nations, threat¬
ens
a
politi¬

economy.

words

the most loosely and improperly

collectivism,

America.

Asserting symptoms indicate continuation of

lihood of extensive disastrous deflation.

extension

of international

economy

no

*

with stock prices,

order.

no

longer

I

By DR. MELCHIOR PALYI*

of word "in- %

use

job of getting productive organization back to peacetime working
Says current situation is characterized by immense credit
expansion based largely on government borrowing, and hence there
will be no forced or disorderly liquidation as after last war, but
sees
danger in distorted cost-price relationships. Holds we are

Easiness is

that

loose and improper

progress

to

1

Says American

■economy,

•/

of rising prices and economic conditions
resulting therefrom during and following war, points out that we
"fumbled" opportunity Jo stabilize conditions by not buckling down
flation," reviews

may

life.

American

'-1:7V';;'

Copy

Vice-President, National City Bank of New York

Bank official, commenting on

President of the Conference Board

■

a

What Does the Stock

Approaching Peak

"-By ALLEN H. TEMPLE*

Virgil Jordan

Price 60 Cents

Thursday, October 24, 1946

Municipal

MUNICIPAL

BONDS

Analysis on request

Hirsch & Co.
Successors

to

HraSCH, LIL1ENTHAL A
Members

York

New

Chicago

Teletype NT 1-210

Cleveland

London

Geneva (Representative)

1927

INVESTMENT SECURITIES

64 Wall

25 Broad St., New York 4, N. Y.
2-0600

;Established

Stock Exchange

and other Exchanges

HAnover

R. H. Johnson & Co.

CO.

BOSTON

Troy

PHILADELPHIA
Buffalo ; Syracuse
Washington, D. C.
Scranton
Wilkes-Barre
New Haven
Woonsocket

Dallas

OF NEW YORK

Pittsburgh

Springfield

Acme Aluminum

CORPORATE

Harvester Co. Com.

^Detroit

Solar Aircraft Company

SECONDARY

BROKERS

Alloys, Inc.

Conv. Preferred

FINANCE

BOND

New York Security Dealers Assn.
WILLIAM

52
•7v

Bond Dept. Teletype: NY 1-708

90c

MARKETS

Conv. Preferred

*Twin Coach Company

;

ST., N. Y.

HAnover 2-09M

Gearhart
Bull, holden & c°
MEMBERS NEW YORK STOCK EXCHANGE

14 WALL ST., NEW YORK

5.N.Y.

INCORPORATED

Members N. Y.




Security Dealers Ass'n.

New York 5

45 Nassau Street
Tel.

TELEPHONE-RECTOR 2-6300

Company

&

REctor

Philadelphia

2-3600

Teletype N. V. 1-576

Telephone:

Enterprise

5015

-

ReynoldsStock
&Exchange
Co.

Members New York

120

Broadway, New
Bell

York 5, N. Y.

REctor 2-8600
Teletype NY 1-635

Telephone:

NATIONAL BANK

Bell Teletype NY 1-385

New York

Bond

Montreal

OF

Toronto

Service

THE

CITY OF NEW YORK

New

Brokerage

England

j

Public Service Co.
Appraisal of

Values

available upon request

for Banks, Brokers
and Dealers

ira haupt & co.

Conv. Preferred

*Prospectus on request

Department

THE CHASE

Members

Street, New York S

Albany

Baltimore

Bond

■

THE NATIONAL CITY BANK HART SMITH & CO.

Hardy & Co.
Members New

York Stock Exchange

Members New York Curb Exchange

30 Broad St.

New York 4

TeL DIgby 4-7800

Tele. NY 1-733

Members New York Stock Exchange
and
111

other

Principal Exchanges

Broadway
York 6

New

REctor

2-3100

10 Post Office Sq.
Boston 9

Hancock 3750

Tele. NY 1-2708
Direct

Private

Wire to Boston

''''

:

:4:
t\

1

V„V',U

"ii'V.'::*,

.'i-, "■

r'':

•

Expreso Aereo
Taca Airways*

yt

4

;

trol law is defective

'•

Dealers Assn.
of Securities Dealers, Inc.
■

Alarm

Fire

stuffs,

be

the forces of

ent

"Standard Screw

supply and demand

pro¬

trols. Lamb and beef and chicken

which

send them,

more

most

the

This

There

ceilings

seems

a

the

to

Request

on

that the

so

share

free

poor

will

Stock Exchange

Broadway, N. Y. 5
NY

Teletype

Bell

1-1227 .i

Direct wires to

what

But

Cadillacs.

on page

2120)

" I"

?

Rogers Peet
Preferred'

&

Common

3/6s,

; v.

j

Henry Hazlitt

over

The "con¬

national economy
off the things that

"A"

Cle.ss

'V

Vanderhoef & Robinson
Members

New

Telephone

.

Bell System

at last, not' only

Now,

York Curb Exchange

practically

York 5

■

all

COrtlandt 7-4070 "/."V

have

foodstuffs

been decontrolled.

Teletype NY 1-1548

meat but

But while price

before
the Sales Executive Club, New
York City, Oct. 22, 1946.r , / . :<4
*An

address

delivered

.

^

American Overseas

Campbell

Common Stock

v

Airlines 41/41

Members

WHitehall 3-1223

Teletype

NY

New

';

1-1843

120

>.

•

,

Curb Exchange

markets

but

o.r..

BROADWAY, NEW YORK 5
Tel.

REctor 2-7815

own

and
not

are

Ragnar D. Naess

if

/

sometimes

change

to

no

.our

will

be able

maintained

or

blocks

large

the

School

Club, New York City, Oct,
-

-f;

Dominion of Canada Internal Bonds

N. Y» -Security Dealers

Bell

Assn.

N. Y. 5

Canadian

•

■

five

say

to

Manufacturer

Exchanges

NEW YORK 6, N Y.
Teletype NY 1-672

Telephone BArclay 7-0100

divi¬
improve-substaritially in
heavy industry and remain favor¬
able in light industry, in trade
expected earnings, and

.

and

l

-service'

ift

New

25 Broad St.,

York

Stock

New York 4, N. Y.

HAnover 2-4771

Tele. NY 1-2903




Aspinook Corp.

Frank C. Masterson & Co.
Members'New York Curb Exchange64

about

occur

mid-sum¬

By

on

page

2100) 7

"NATIONAL GAS i ;

CORPORATION

-

NEW YORK 8

HAnover 2-9470

-

Haytian Corp.
-

v";

Punta

a

v:7j:

i

Alegre Sugar
vv

r-"-

•

-jy

yi

'

Quotations Upon Requett

Members

New
New

120

&

York

New

York

CO.

Stock

York Curb Exch.

Exchange

Assoc.

Member

Coffee & Sugar Exchange

WALL

ST.,

NEW

YORK

TEL. HANOVER 2-9612

>

Curb and Unlisted
Securities }

:

MICHAEL HEANEY, Mgr.

WALTER KANE, Asst.

^

Mgr.

7

Joseph McManus & Co;
York Curb Exchange

Members New

Chicago Stock Exchange

39 Broadway
Digby 4-3122

-

s

New York 6
,

Teletype NY 1-1GIO

Western Union Leased
Line Stocks
International Ocean

BOVGHT—SOLD—QUOTED

Southern & Atlantic Tele. Co.

Empire & Bay States Teleg. Co.

bought

Troster, Currie & Summers 4
Teletype 1-376-377-378

Buffalo—&eve!aaft~l>etr«it--Pittflrargli—8*. Mi

-

sold

quoted

J-G-White £s Company
INCORPORATED

York Security Dealers Association

74 Trinity Place, New York 6, N. Y.

Telegraph Co.

Pacific & Atlantic Telegraph Co.

Common

Private Wlret to

'

4:

WALL ST.

Teletype NY 1-1140

•

Finch Telecommunications

Telephone HAnover 2-2400

v

Commodore Hotel, Inc.

& ELECTRIC

Member New

'

in this favorable outlook

to

Trading Market

Exchange

4

A

of

Simons, Linbarn & Co.
Members

industries.

'

Banks, Brokers & Dealers

.

Request

:

(Va.)

Common Stocky

;

still

unhealthy.
The actual levels of
prices at wholesale and retail that
obtained in July did not disturb

Stock

on

-

Members N. Y. Stock Exchange and. Other. Principal,
:

»

favorable- early this year.

dends to

mer.

Currently selling around 2l/z
•Prospectus

years

.economic*-* situation-

Phonograph Records
Common

ten

period
ahead.

ing July that the trend of com¬
modity prices was dangerous and

115 BROADWAY

Central States E!e&

FAItR
this

along,

yy,Goodbody & Co..

For

Recordings, Inc.

j

August it appeared to
us, on the basis of the available
data covering developments dur¬

Securities Dept.

priced speculation—

Keynote

some¬

-

ings and dividends, over a

(Continued

A low

is

it

Spring and Summer that common
stock prices were relatively high
in relation to the outlook for earn¬

began

Hanover 2-4850
Teletypes—NY 1-1126 & 1127

37 Wall St.,

4

right

knew

change

&TeeTie«xAGompaTU!j
Members

We Maintain Active Markets in U. S. FUNDS for,:

sense

difficult to execute a

Investment Policy

Business

Harvard

at

of

Over-the-Counter Stocks and Bonds;

,

Immediate Reason for Change in

We

for the accumulation

placement- of

occur

policy than it is to formulate it.

We

Naess

this

more

looked

Department

be. adopted^ to- recognize

In

look.

The

Is

?

foresee

to

Our
\

bottorh in the

politicaldevelopments

times

V
V
the assumption that

on

go

ftne

,

'

,

.opinions
quickly because of economic and
political developments that may

have

of

"Special Situations"

a

important change
of policy and if, by chance, this
change of policy can be put into
effect only after a top has beexi
reached in security prices it is of
great importance that portfolios
be adjusted immediately in line
with the changes in the basic out¬

limi¬

-'

16, 1946.

J

or

that require an

also

we

4* An address delivered by Mr.
.

top

a

this condition. If sudden economic

and secu¬

rity

N. Y.

Scranton Spring
Brook Water

devel¬

should

ness

s

'

Exchange

York Stock
York

-

,

.

stock market, except

suddenly occur.

bfc pONNELL & Co.

New York 5
New

Bell

either

our

conclusion

York 4,

<$>-

analy¬

and

We

H. C. BRUMS & CO.

r

.

change in the outlook for business and

eco¬

surprised

Bought—Sold—Quoted

Telephone:

^

>

have to be constantly on the watch for

ments in busi¬

sis-

we

Common stock

20 Pine Street,

we

respect

nomic

.

Wells

Struthers

*

.

business

We

our

Bell System Teletype NY 1-1919

as a -'temporary washstocks to move selectively

common

regarding fin
ture develop¬

for

■

Broadway WHitekall 4-8120

50

New

by Tuck,-'and
that a rational investment policy
places considerable- emphasis on
the prices of securities in relation
to their basic long-term values, If
prices appear either high or low
against: values- the proper "policy

have

we

•

Expects

the security

tations
A. S.

our

markets:

our

Stock

Common

and divergently.
In

•

commodity prices, but only

out" of 12-18 months.

recognize

Byrndun Corporation

Members New York Curb Exchange -

enofmous-increase in

opments that may cause; a

foodstuffs was
discontinued and price ceilings
retained.
This was exactly the
way to
bring about a shortage.

■

expects

in business and

that

rationing

Shortly after V-J Day

•/

31 Nassau Street, New

.

/

op¬

of meats and other

Savoy Plaza

Com.-J

Members New York Stock Exchange ;;

the

seemed to make common sense.

1956-7-

v-

Edward A. Purcell & Co.

!

,

available consumers' 4
goods will result in intensified competition and lower prices.. Antici-4
pates sharp curtailment in capital expenditures. Looks for decline

actually is a

chaotic situation.

By RAGNAR D. NAESS*

~

Naess

Mr.

V(

\-

*

,

proceeded in precisely the
posite direction from the one

^

H;'*'■

Savoy Plaza

,,

trols

come

T

)

Northern Indiana P.S'i
Scranton Elec.

The Securities Markets
~

•

nearly everybody expected to be
decontrolled last. Decontrol has

& Preferred

Common

f

South Carolina Elec. Gas

very

have

Electric Ferries
V

branch offices

our

Birmingham Electric: *

'

;

Oiitlook for Business and

have

we

NY 1-1557

American Gas & Power

get hiis

can

and

-

window.

the

St., New York 4, N. Y.-

New Orleans, La.-Birmingham, Ala.

4

Many
people are
saying
that
price
control
is already out

WOrth 2-4230

,

:1

Request

on

Empire Dist. Elec.

be

now

rapid.

Mitchell & Company
120

I.-S*1

•'

marked, but
held

man

Lincolns

of

-(Continued

on

25 Broad

feeling

extremely

Members Baltimore

Analysis

HAnover 2-0700

that decontrol
I * Analysis

■

of automobiles is

the/.price

of manufactured
is chaotic.
Price

still being held

are

left

are

they are still held on

great bulk

articles.

go

now

suppose.

to be

Bros.

off food¬
wherever

whiskey (unless it is in new-bar¬
rels); while milk is free of con¬

ceilings have been taken

of

economy

people at pres¬

May, McEwen & Kaiser
Stern

(s/""i:

Members New:York Stock Exchang&.\~

.

*-

bulk

than

Preferred

•'

• •

the

longed

Scale

Howe
Common &

over

the

will

Corp.

Grinnell

.f„

Steiner,Rouse&Co!

fashion, and the Administration has announced a
business man is asking himself is how long the war¬
going to be continued. My own belief' is that price

rapid decontrol program, the question that every
time government controls over the economy are
controls

Automatic

I

7

collapsed in dramatic

Now that meat control has

HA 2-2773

MY 1-423

prolongs inflation by cutting down production." ahd reducing profit margins and

effects of partial controls in raising pricss of uncontrolled items*!r. Concludes universal price
control, to be effective, must ultimately lead-to a totalitarian economy, while partial control does not
reduce general price level.
Urges abolition of all price Controls to deal properly/ with inflation.

SECURITIES CORP.
Established 1920

BBLXi TBLETYPH

•

r

Bought—Sold—Quoted .7/'

4 points out

Members N. Y. Security

Ass'n

Manufacturing Co.;

removal.while retaining price ceiling8 as' "chaotiC.^ Holds new price con¬
because it does not give President power to decontrol at his discretion. 1 Contends

price control actually

KING & KING
gxchange PI., M.Y. 5

'./rf

opposite direction than might be expected, Mr. Haz-

Asserting decontrol has proceeded in precisely the

Higginsjiic*

40

"Newsweek""

Associate Editor,

IStt characterizes rationing

Prospectus '■

'v

Rockwell

IIAZLITT*

By HENRY

Drug Products*.

*With

v-.-.v

'

/ ■'

Standard G & E Com.'

N&t'l

Thursday, October 24,'1946

Trading Market* tns

:

l»

••

•

FINANCIAL CHRONICLE

THE COMMERCIAL &

',l."•

'

'

L-

2070

!*'

'

i,.1-;,4 <

37 WALL

STREET

ESTABLISHED 1890
Tel. HAnover

2-9300

Arnhold and S. Bleichroeder

NEW YORK 5

Tele. NY 1-1815

INC.

30 Broad St.
WHitehall

3-9200

New York
Teletype NY 1-51

2071

IN D E X
Articles

and

The Outlook for Red

V^'V'

T What Does The Stock Market Break Portend

Page

~

By DAVID SAPERSTEIN

,

AND COMPANY

Former Director, Trading &

—Melchior Palyi
„__.-_._^«.____^.w-.-V__-,>.-.„_Cover
Inflation Approaching Peak—Allen: H. Temple.,
-Cover..,Crisis Coining—Virgil Jordan
______Cover

j
:

;
'

"Town Meeting

i

of the World" Moves to Western

May

Wilfred

Hemisphere—A.

Herrings

.tyVi

News

-

Exchange Division,

Exchange Commission

KILROY

Former SEC official holds SEC's proposed changes in rules for

,

—___Cover

_

Securities &

issue

How Long Government Controls?—Henry Hazlitt
_____2070
?#' Outlook for Business and the Securities Markets 7:-.
i
;—Hagnar D. Naess
__2070

new

distribution leave unsettled several questions which he

'

alyzes.

Concludes, nevertheless,

;

;

[

an¬

whole is sound and

constructive in

2071

f The Outlook for Red Herrings—David Saperstein_>_
f How Par Can Federal Expenditures Be Trimmed?

i

M.

J The

.

Boom

I The UN's
T
i

—Ta

Ming

Kung

_-_-2074.

—

-

Stanley Rukeyser::207<U

for the U.S.?—Merryle

What's Ahead

h

-

.

—Edson

Trade—Wilbert

Foreign

f

Financing

v

Italy's Future

Import Requirements—Antonio

~

Giordano-_2077 }

E.

Teylor

j Contrasts Within Europe—Herbert M. Bratter—
Only A Republican Congress Can Check Inflation
j
—Senator Taft -i
The Federal Reserve System and Credit Control
)j \t—Ralph A. Young
—Albert E. Van Court and Augustus

*

g

for

comment,

are

;

page

2073.)

new

j

- T>

,

Telephone: WHitehall 4-6551

Specialists in

SECURITIES

give effect to

program as
sound and construc¬

a

GOLDWATER, FRANK & 0GDEN
39

Broadway, New York, N. Y.

The SEC Proposals
In

substance, :j the' proposals
dealing with the red herring pros¬
?

David

statement

be¬

pectus are
A red

date and the ef¬

date, without opening the

.

World Bank Faces Crucial Decisions
l\„:—Ernest H. Weinwurm

Teletype NY 1-1203

Member

of

'

\

York Security Dealers

New

Assn.

National Assn. of Security Dealers, Inc.

follows: J

as

herring

(Continued

on

STROMBERG

-—...---2082

Slater

ESTATE

REAL

V'

.

program,! the

'whole is

}

the filing

fective

;

HAnover 2-8970

registration

a

tween

Dept.

NEW YORK

tenta-

tive step in the right direction.

of information

2080 £

us!

to

WALL STREET,

09

r

the

dissemination
in°

the

j

o

possible

.

by

tive rules drafted to

problem

t

unsettled

(Comments received by the'
Chronicle" with reference to
SEC's
proposal
appear
on

\

encourage

e s.

left

are

parties

t

They alt

generally written!

their obsoletes

1933.

ing the broad-

Reasons for Stock Market Break

i

of

of

..2080

....

n

Securities

the

.2078
..2080

.—...

ad--

i

is

sales, offers to sell, or of¬
fers to buy during that period.
While several important questions

a

%| i —Lewis L. Lorwin ..—....
—-—____.-___._._2077
: f Current Trends in International Transactions
?
■ r
—Amos

e r

addressed

v;';iKv?4

Trade

in

minist

name

bring

door to

prob¬

ious interested

Ward^__-___u.^..—i.r_2077~

Organizations Fostering Foreign

f International

-.

proposals,
recently.^ sub¬
mitted..to. var¬

2075

Gould..—

;?/ .'•/

standards.

current

The

vj$$$£

4 4<No Grounds for Further Stock Liquidation'?^.?"

c

lems

Act

Bowen___r-.___———-—,_2073

'f Law or Anarchy—Albert E.

i

a s

the

Highest—Robert T.<Haslam.._2074-■
M Government In Business—George V. McLaughlin_____:-_2075
f Let's Wipe Out Economic Illiteracy—Ody H. Lamborn_«__2075
Why Our Living Standard Is

-

radically improved instrumentality for;

proposals for regulating the use of the red
herring ( prospectus have focused widespread attention upon one of
,th e>- agency's
4»—
—

Truman_.rr--1'22072

for Peace—President

Struggle

f Chinese Communism—A Menace to World Peace

a

Obsolete Securities

tev^The:. SEC's

._____2072
Here—What's Next?—Lewis Schellbach.;Jl_2072

Sakolski
Is

developing

wider circulation of information under proper

_„_207i

stock certificate

obsolete

an

that should be pasted up where his

,

| Regulation "Shenanigans"—Editorial

WAS HERE

—with

program as a

s

^...^_^r..__2082

!

Construction Industry

Reform of

Needed:

»

2082
..2083
...2083

I

—Beardsley Ruml
J Scouting the Economic Front—Arthur A. Hood
i
Comprehensive Social Security—A. J. Altmeyer
Pitfalls and Guideposts of Commercial Banking
.■*i\, —Edward A. Wayne

;

i'Vic-■-

|

Communications of SEC! and NASD on filfng of financial state-

!

ments

|:

Governors of Execntive Director's instant: activities questioned.

Challenge to Free Enterprise—Roger

There follows the full text of

-—2076
<

letter sent out

^

1835 K

«

|

.

N.'W.'

Street,

Market Imminent—Marcus Nadler

Sees Buyers'

Switzerland and U. S. Conclude

Transactions

Eases Securities

Canada

v

Trade Agreement

^

Bank and Insurance

Stocks^..^.-..-..-..----------------2088

I

York,

Reg. U. S. Patent Office

■J '•

;

25 Park Place, New York 8, N.

j

jT \ ?'

.;V

Y.

Pan-American

Union,

Dominion

Canada,

WILLIAM

SEIBERT,

President

v1 Bank

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

vertising

statistical issue — market quotation
uncords, corporation news, bank clearings,
plete

per

$25.00 per year.
•

Monthly

f.

We

the

rate

of

t/o Edwards & Smith

Copyright 1946 by William B. Dana
'

Reentered

25,

as

1942,

Company
••
second-class matter Febru¬
m

at

the post

office

at New

TITLE COMPANY

CERTIFICATES
Bond & Mtge. Guar. Co.

N. Y. Title & Mtge. Co.

Newburger, Loeb & Co.

exchange, remittances for

eign subscriptions and advertisements
be made in New York funds.

WHitehall 4-6330




Alegre Sugar

Lea Fabrics

*

:

U.S. Sugar

High Grade Public Utility and Industrial

Commodore Hotel

^Fidelity Electric

'

PREFERRED STOCKS

.

V
_

Spencer Trask & Co.
v

Stromberg-Carlson

j i

Members, New

f:

Tel.:

HAnover- 2-4300

-

'

••

Armstrong Rubber
Ft. Pitt. Bdge. Wks.
Punta Alegre Sugar

Exchange'

York Stock

25 Broad Street, New York 4

Albar.jr *

.

'Boston

-' >

Members

New

135 S. La
\

'

York

Co.

Class A Common Stock

Susquehanna Mills

for¬

must
;;s:;■>/.

.

Curb Exchange

Salle St., Chicago 3

Tel.: Andover 4690

*

>

,

prospectus on request

DUNNE&CO.
Members New York Security Dealers Assn.

25 Broad S.t., New York 4, N.

•

'

Y.

WHitehall 3-0272—Teletype NY 1-850

Teletype—NY 1-5
/' Glens Falls
■*i f1 Schenectady-

Worcester

'Private Wire to Boston

MacFadden

Fuller Houses,

Inc.

Publications, Inc.
AH

Sport Products

Issues

Capital Stock

'"Public National Bank
...

STRAUSS BROS.
Members

N.

Y.

Security

Broadway
NEW YORK 4.
DIgby 4-8040
Teletype NY 1-832.. 834

.

Bought—Sold—Quoted

-

>

•

:

HouRsseSBisster
Established 1914

• Harrison 2075
Teletype CO 128

York—Chicago—St. Louis
City—Los Angeles

Kansas

.

*

Board of Trade Bldg.
CHICAGO 4
*

.

Dealers Assn.

Direct Wire Service
New

« Members New York Stock Exchange
Bell Teletype NY 1-2033

Punta

account of the fluctuations In

32

Prudence. Co.

15 Broad St., N.Y. 5

Haytian Corporation

2119)

interested in offerings of

Lawyers Mortgage Co.

Lawyers Title & Guar. Co.

2-0300

1-84

,

(Foreign postage extra.)

St., Chi¬

3, 111. (Telephone: State 0613); 3
Drapers' Gardens, London, E. C., England,

ary

are

Earnings- Record — Monthly,
year.
(Foreign postage extra.)

Note—On

Teletype NY

in

in

year,

sago

-Y

on page

System

t Eastern Sugar Assoc.

etc.)

135 S. La Salle

you

WOrth

Broadway
Bell

file with the Execu¬

of the financial statement filed by
(Continued

"

Other Offices:

copy

you

of

Record—Monthly,

Quotation

and

$25.00 per

Thursday; October 24, 1946

vtate and city news,

a

that

: S.

year;

per

$29.00

Members New York Security Dealers Awn.

$33.00 per year.

Other .Publications

SEIBERT, Editor & Publisher

DANA

$26.00

htnioG

,

WILLIAM D. RIGGS, Business Manager

I

of

Countries,

Other

statement of,

to this letter of the Securities and Exchange Com-

response

Rates

in '' United States, : U,
Possessions,' Territories
and Members

REctor 2-9570 to 9576

HERBERT D.

March

Subscriptions

DANA COMPANY, Publishers

WILLIAM B.

Actof

-

Subscription

CHRONICLE

FINANCIAL

tive Office
the

under

Y.,

a

of Sept. 30, 1946.

as

The Association requests

J, 1879,

and

The COMMERCIAL

N.

Shops

Products

£

170

———-.2082

Twice Weekly

Chicago

3, 1946

Dealers, Inc.:

(registered brokers and dealers to file with it

(Continued on page. *2132)
Published

Reilly & Co., inc.

The Securities and Exchange Commission has requested

financial condition

Business Man's Bookshelf

a

Request

Laclede-Christy Clay
of Securities

National Association

;..

Regular Features
*

on

Thiokol Cor|L

,To; Members of the

2090

.*...

/'v.'

National Shirt
Oct.

2081
—^208X .
2085
2087

Inflation in 1947
Operation of Monetary Fund

,

^ TRADING MARKETS

Washington 6, D. C.

.

Association
Economists See End of Price

•

by the

/

s

*

London Sees Delay in

,

^National Association of Securities Dealers, Inc.

to J. Arthur Warner Trying

Brokers'

a

j

Dealers, to its membership:

^Investors to .Get Data on. New Issues...,————....2073
Criticlze's Personnel Increase in Government .
i —Senator Byrd
—
~-r-2075
——

i

iExecutive-Director of the National Association of Securities

Should Be Easy for

J to Pin Market Slump on Them
Ohman's Farewell Message to Chicago Stock

'•

Prospectus

New York

>♦

Underwriters Take Exception

v', '•

J. F.

,S

tion scored,

—^2078

Lawrence

•

• *

disapproved, and right to "Special Statement" under

j Rule X-17A-5 doubted. Encroachment by administrative regula¬

>

—Joseph Stagg

v

Preferred

Bought—Sold—Quoted
'

_

Underwriters Agree With SEC It

&

i.-il

£

by, dealers and brokers analyzed.: 4 Knowledge by NASD

SEC letter

V-''

Common

•

W. Babson
2084
National Transportation Policy—Donald D. Conn——..2083
Are Labor-Management Relations Based on Economic
Principles—Jerome and Sr Jay
Rival Unions Now Seeking to Organize Banks and Broker•.age Houses of Wall Street Community—Edmour Germain 2132
''Federal Usurpations in Attacking Inflation Dangerous"
A

V

CARLSON

Regulation fShenam

.'*

_,•:••

74 Trinity Place, New York 6, N. Y,

Telephone:
BOwling Green 9-7400

Teletypes:
NY 1-375 & NY 1-2751

upon

Request

-

C.E. Unterberg & Co.
Members

/

& Trust Co.

Analysis

61

N.

Y.

Security Dealers Ass'n

Broadway, New York 6, N. Y.

Telephone BOwling Green 9-3565
Teletype NY 1-1666 ■ "v

THE COMMERCIAL & FINANCIAL CHRONICLE

2072

Thursday, October 24, 1946

BUSINESS BUZZ

How Far Can:
■

Expenditures Be Trimmed ?

|
••

Air Cargo

'
•

Art Metal Const
Amer. Window Glass*
Com.

&

Pfd. .'

Automatic Instrument

A victorious war's end always brings hopes

Barcalo Mfg. Co.*

\

H'; Cinecolor
Chicago R. I. & Pac.

}

Old Pfd.

.-w

This hope again has been
clamors
for
4
silent

or

pectation
the

that

of

the

of

these

ment

.

Mohawk Rubber*

|

Moxie

N.T. New Hav. & Hart

i

(M

1946-47.

determined:

A

effort

must be made to reduce the total

v

volume

: .:::

:■

an

editorial

in

the

of

spending.

-

must be in terms, of

New

■

.

Missouri Pac.
Old pfd.

postwar

a

timates and the budget realities of
A. M. Sakolski

■

Michigan Chemical S
:■

of

expen-

Thus

Mastic Asphalt

that

can

the

that

notice

be reduced

taxation

present

scale

to

remain,—this is
(Continued on page 2099) :

more determined
effort must be made to bring ex-

significantly,

Purolator Prod.*

„

-

.

Before Tax rates

Pfd./

.

This effort
billions, not
York "Times" of Aug. 16 boldly in terms of millions, if a healthy
budgetary
situation* : is
to
be
states;
The
main, emphasis
"The major factor in the con¬ achieved;
tinuing unbalance of the Federal must: be on reduced \ spending
/
budget, however, is not the pres¬ rather than reduced taxes."
But there is much, doubt that
ent high tax rates.
Record vol¬
ume
of expendtures for peace¬ the reduced spending will be sub¬
time, plus-the unwillingness of stantial. So the bulk of the na¬
Congress to hold down new ap¬ tion's taxpayers, particularly busi¬
propriations, plus the willingness ness concerns, are doomed to dis¬
of the Administration to approve appointment.
Senator Walt e r
of such new appropriations—this George,. Chairman of the Senate
is the source of the budget deficit. Tax Committee has already given
time.

Majestic Radio & Tel.

...

budget would be easily possible of
less than $25,000,000,000. There is
a wide disparity between these es¬

iture in peace¬

Jack & Heintz

;

have i estimated

ex¬

pectations,

than

more

,

course, is re¬
duced govern¬

j Hartford-Empire Co.*
Higgins Inc.

S'

the

The basis

ets;

Gt Amer. Industries

1

in¬

in

come

estimated at

are

$40,000,000,000 during the current
fiscal- year.
Unless these ex¬
penditures can be.pared substan¬
tially, tax relief is- out of }the
question.
i
•
' "Most students of this problem

public's pock¬

^iSS-Expreso Aereo ;

|

itures

govern¬

more

Douglas Shoe*

]{

penditures under control.
Under
the revised budget; recently re¬
leased by the President, expend¬

ex¬

national

'! '

r

ment's fingers
will
leave

District Theatres!

of taxation relief.
On all sides, there are either

manifested.

tax reductions

Diebold Inc.

;

--M-V

A.'m; SAKOLSKI

public demands for reduced Federal.
expenditures and Federal taxes, land points out substantial reduc¬
tions are out of question in view of fact bulk of government outlays
are of a fixed character or are required by military ahd«. adminis¬
trative necessity. Shows economy program following First World
War was confined almost entirely to reduction in Army and Navy
costs, as other expenditures were largely stationary. Estimates
that Federal expenditures in coming years will equal, or exceed
present receipts, and doubts whether total outlays can be reduced
below $35 or $40 billions annually.

•'

■

By

Dr. Sakolski calls attention to

•

a

is

"Well,

K

-

*The FR

Corporation

^District Theatres

Tenn. Products

^Princess Vogue

Upson Corp.*
United Drill & Tool "B"

of

What's Next?

a

By LEWIS SCIIELLBACH*

Alabama

tion

LeRoi Company
Available

U

Members

Mills^

52

New

York

New York 5, N. Y.

^

Teletype NY 1-2425

Sold

Bought

"The Boom is Here;

i

Quoted

,

the

wildest

expecta-^-

income

is

the

EASTERN CORPORATION

Derby Gas & Elec.

NORTHERN INDIANA PUBLIC SERVICE

New England P. S. Com.

MARATHON CORPORATION

:

g

the

war.

Central National

I Southwest Natural Gas
:
Standard Gas Elec.

.

22 East 40th

Circular upon requeet

Corporation

ESTABLISHED 192?

at

new

skies

clearest.

seem

nessmen, and something not very

pleasant.
The second

really

*

Teletype: NY" 1-2948

canned

signal is the
supply of grains,
and

frozen

fruits

and

vegetables. With relief ship¬
tapering off as foreign har¬
vests come in, it takes no great
imagination to see what will hapben to farm commodity prices
ments

next

spring

if

another

year

of

the large domestic crops is then in¬
break
in
stock
prices,
which dicated. Y
dropped 22% in a hurry. Similar
The 1921 Deflation
declines in 1920, 1929, and 1937
anticipated business depressions. ; If any one thing can be said
The first

storm signal was

wide

a

to

variety of factors
the

stock

to have caused the depression

of

market

1921, it was the deflation of farm
break, it * wiw probably saying commodity prices, with the collat¬
eral slump in farm land
values,
something of importance to busiresulting mortgage foreclosures,
*From

an

address by Mr. Schell-

bach before Tri-State Conference
of Credit

Oct.

-

storm

terrific

of

and

and

Street, New York 16, N. Y.

Telephone: LExington 2-7300

tProspectus Upon Request
or

,,

trade is

Profits are rolling in.
The second part—what's nextpresents the problems.
A few
storms signals have gone up, and
if
experience teaches anything
it is that those signals should be
examined most carefully when the

contributed

Spec. Part.

•Bulletin

Retail

peaks.

While

Pnget S'nd P. & L. Com.

above

highest point reached during

business

Cent States Elec., Com.

Southeastern Corp.

The first part is self-evident.
Employment is

What's Next?"

tions. "National

surpassing

Security Dealers Association

Wall Street

Tel. HAnover 2-S080

American Gas & Pow.

already exceeds consumption, and that former may drop 24%
Index bogging down to 135.
Expects in¬
creasing competition with credit troubles.
with Federal Reserve

Industrial production is at record peacetime rates".
;

I Textron Wrnts. & PldL

■.

;

..

.

^Stratford Pen

FIRST COLONY CORPORATION

Aspinook Corp.*

i

.

Economist holds that tip-off on future is provided by renewed union
demands, worsening already-created dislocations. Asserts produc¬

Shops *Metal Forming Corp.

3'v*.' 'Prospering

Vacnnm Concrete

!

;

A

*Hungerford Plastics

*Loew Drug Co., Inc.

f U. S. Air Conditioning
;

Collateral, Mr. Pendleton!"

>

Economist of Standard & Poor's Corp.

Taylor-Wharton*
f

I Wouldn't Exactly Call A Sweepstakes Ticket

The Boom Is Here—

Richardson Co.

I

-

,

.

18,

Men, Atlantic City, N. J.,
1946.

bank

failures.

Both

farm

products and farm land have been
inflated by World War II to al-

(Continued

on

page

2114)

CTIVE MARKETS

Ward & Co.
EST

*Argo Oil Corporation
Stand/ Comm. Tobacco

1926

^Tennessee Products
.Nmhrt N. Y. Seturity Dealers Assn.

120 BROADWAY, N. Y. 5
REctor 28700

General Crude Oil

*Wellman

Electrol, Incorporated

Direct Wires To
& Los Angeles

ENTERPRISE PHONES
HartTd 6111
Buff. 6024
Bos. 2109




U. S. Finishing Com & Pfd.

Engineering

'Descriptive Circulars

on

^Capital Records

request

Seligman, Lubetkin & Co.
Incorporated

*Prospectus

New York 4

5s 1952
-New Common W. I.

request

Established 1908

Members,N,

HAnover 2-2100

on

J.K.Rice,Jr.&Co.

Members New York Security Dealers Association

41 Broad Street,

OFFICE BLDG.

*Hoving Corp.

Robert Reis Common

N.Y. 1-1286-1287-1288
Chicago, Phila.

Standard Thomson Prod.

Osgood Co. "B"

t.

Security

REctor 2-4500—120
..

Bell System

Dealers Assn.

Broadway

Teletype N. Y. 1T7H

SIEGEL & CO.
89 Broadway, N, Y. 6

DIgby 4-2370

Teletype NY 1-1942
.

<

VlOM.tivv ••(AJ

*.

Volume

Number 4536-

164

The UN's Struggle

.

■'

;

President Truman asserts Assembly's coming to'United States symbolizes our abandonment of isolation.
Emphasizes our bi-partisan

support of UN.

war, but warns against complacency
people to submit to collective justice.
specialized agencies to further both

parts

of

<*>-

•

to

cisco,

Charter

represent their
countries
this
of
eral

of

the

at

Assembly

the

United

the

people of

meeting of the League Assembly;

which

This time the United States is not

the

only

and.

I

represen¬

tatives

of

United

the

Many..
';;v-' V >'■^
who are here today were
present then. It was the final day
Conference

San

at

;

Nations

and

the

at

the

and

>

■,.

„

chosen

by President Truman
at opening of the General Assem¬
bly of the United Nations, Flushing Meadows, L. I., Oct. 23, 1946.

Nations

a

home for the United

in

American

this

and

welcome

the

(Continued

The

country."

people

delegates

the

the

of cooperation

on

the

Secretariat

of

2114)

:|

page

Jos. Stagg

Lawrence

1

a

conser

"far

are

more

-V -.grave

.

than

possible ill effects of inflation
'22 ' :yj
'v'
"On the ground that inflation
must be controlled," Dr. Lawrence
stated, "the Federal Government
has seized plants owned by pri¬
any

itself."

.

.

,

the

spirit
It

the

of

has used

Fifth

Amend¬

this power

to

Easy for Investors to Get Data on New Issues

current

help to return the

party to power."

\

"The. right of buyers and sellers

"inalienable"

our

"For the

on

liberties

ternate

are

spurious

same

reason,

for

easy

investors
<

that

ing

to

upon

offerings

facts i>

the

but

doubtful

are

wider

all

bear¬

the values of coming new

security
them

obtain

in any way have a

can

of

use

of

many

whether

'Mr.
for

himself

the

among

under¬

by

suggesting that the
SEC rules governing certain un¬
derwriting procedures should be
changed. The underwriting fra¬
ternity
generally
has
felt
for
time

some

that

drastic

some

re¬

visions in the laws affecting their
business

in

were

order.

5

It will be recalled that Mr. Caf¬

frey gave the underwriting indus¬
try until Nov. 14 to submit opin>

ions to him concerning his sugges¬
tion put by him in the form of

proposed rule
lished in full in

which

a

;

Editor, The
nancial

our

pub¬

was

Commercial

Comment

columns last

prospectus

into

the

of

the

actual

issue

new

best

effective

of

the

underwriting

is

;and

still

is

inviting comment it*

the

on

subject.

-printed such comment

ready

received.

ment

should

Below
as

mailed

com¬

to

a

and

see

a

deliberately

contrived

sciously

a

and

to place a

was

former

director

ceiling

to

pectuses

investors

hire

larcenous in their impact
high incomes were justified
on the ground that they were nec¬
essary to curb inflation.
This un*'
just and- uneconomic tax struc¬

make

upon

the

the

became

ture

land

in

revenue

law

page

prospectus,
could

one

or

then

readily and

(Continued

Morgenthau, when on the
stand before a Congressional com¬
mittee, admitted that the great

Broadway to

distorted

"This

the

tax

of Foster Nichols Co.

dermine

in

the

distribution

our

the

efforts

of

The

entire

&

telligence,

courage

I

request

of

Abitibi Pr. & Paper Co., Ltd.

those

Giant

-

.

Brokers

In

&

Dealers

Investment

62 William St.
•?

•

•

v" Brown

Consol. Pap.

the

Canadian Bank Stocks
Abitibi Pr. & Paper 5s, 1965

:

Branch

113

Hudson St.,

*-

1-2613

Office

Jersey Cltyj N. J.




IN

,j
4»/2s, 1967 ,
Brown Company 5s, 1959

Consol. Pap. Co.

International

'.V

6s,

;;

,

6l/2S, 1955

.-.I

.

International Power Securities
*

&

1952

7s,

■

Bell

1957

HAnover 2-0980

N. Y. 5

1-395

Teletype NY

Toronto

Montreal

New York

Louis

Y., New Haven & Hartford

Western Pacific

N.

Y., Ontario & Western

Wisconsin Central

Sulphur

Ptd.

&

Jonas & Naumburg

Southwestern

N.

Lake

Com.

Francisco

St.

Houston

Galveston

Jefferson

Lane

Mills Corp.

Cotton

Standard

Fruit &

Com.

G. A. Saxton & Co., Inc.

S/S

Pfd.'

&

T. J; FEIBLEMAN & CO.
Members New

70 Pine Street, New

investor

York 5, N. Y.

WHitehall 4-4970

2117)

.

New Orleans 12, La.
Carondelet Bid*.

41 Broad St.
Bo. 9-4482

Bell Tel.—NY-1-498

2'i

Dravo

Corp.*

*Air Products, Inc.

American Maize Prod. Co.

Common

Com. & "A";

^Raytheon Manufacturing Co.
$2.40 Conv. Preferred

Common

♦Universal Winding Co. Com.
Bought

—

Sold

—

Quoted

,

♦

Request

Orleans Stock Exchange

New York 4, N. Y.

Teletype NY 1-609

.

on

request

Prospectus

on

request

,

FREDERIC H. HATCH t CO., INC,

Reynolds & Co.
,Members

Established 1888

120

,

Broadway* New York 4, N. Y.

Tel. WHitehaU 4-6430

1944

■

Seaboard Air Line

PETER BARKEN
32

SVfcs, 1961

Hydro-Electric

International Power Securities

■

Dulilth, So. Shore & Atlantic

1

Teletype
NY

.

member
banks.
page 2090)
;

Missouri Pacific

Securities

4-2422

Aldred Investment Trust

for

on

easily turn to

on

Paper Co.

Sun Life Assurance

"Again, for the alleged puroose
controlling inflation, the Fed¬
Reserve
Board
has
been

Louis-San

♦Prospectus
*Memorandum

:

Noranda Mines

eral

quirements
of
(Continued

Company

Corp., Ltd. of Can.

Minnesota & Ontario

Preferred

New Yo» k 5, N. Y.

Telephone

WHitehaU

.

largely resoonsible
in the past.

Yellowknife

'

progress

St.

American Beverage

MAHER& HULSEBOSCH

I

^SECURITIESy

which have

Denver & Rio Grande West.

Baker Raulang

...

ments in our economy
so

IN

CANADIAN

and energy to

Rutland Railroad

Statistical data
upon

MADE

reading
investor,

^American Insulator
Preferred

.

with

Sheets Co.

AMERICAN

who have in¬

men

Old Colony Railroad

Common

Mining Issues

Mr. Nichols

connected

was

MARKETS

ultimately un¬
economy.
It gravely

progress.

of

past

Elmer A.

citizens in every community who
constitute: the
spark
plugs
of

our

secu¬
name

will

load

discourages

been

in the

engage

rities business under the firm

buying power
constituting a threat to prices was
received by taxpayers in brackets
below the $5,000 annual level.

Chi., Milw., St. Paul & Pac.

Albert Pic'$

Philippine

<

increased

of

bulk

Chi., Rock Island & Pacific

two of the

on page

Fund.

Preferreds & Commons

small, would read a syn-.
however. If the synopsis

on

of the

the

Sturc,

of

spite of the fact that

Mr.

"OLD"

or

opsis

the

of

Ernest

ols has opened offices at 30 South

52 WILLIAM ST.,

however, does

practice

a

and

As¬

of

YONKERS, N. Y.—Foster Nich¬

were

TRADING MARKETS

study the various pros:
as they
come out.
The

individual investor,

large

<

Counsel

HART SMITH & CO.

ting

stitutional

Re¬

Foster Nichols Forms Co.

earnings

on

and redistribute income. Taxes that

a

as

wider

of the synopsis method of

staffs

con¬

monstrous encroachment

Fund;

Funds

structure, the net effect of which

given vast powers whose exercise
no perceptible relation to the
Continuing, Dr. Lawrence re-: purpose for which they have been
granted.
These authorities have
marked that the government has
the right to change reserve re¬

get¬
the desired information to
the investor, though I would not
substitute
the
synopsis for the
prospectus. I know that I myself
hesitate to read a lengthy mem¬
orandum which can run up to 50
pages or so. The insurance com¬
panies, banks, and other large inf
use

were

it has al¬

Additional

be

are

of

investor

industry

whole. I would like to

not

'self

a

the

these prospectuses. Every

has

of

to

week, and to assist in the general
"Chronicle"

a

far ahead
date

possible

as

interest

the

hands
as

General

Bank,

has

the arch of human freedom."

Anything that * helps to put
prospective investor

mar¬

of

Staff; Ansel Lucford,

ket which is the very keystone in

1

No.

open

way;

ex-director of the

World

every

Chronicle, 25 Park Place,
8, N. Y.
; f; oersonal choice in the

discussion

the

Fi¬

and

merchant, every
producer,
every
worker,
every
consumer that right of unhindered
deny

New York

the

Caffrey has made friends

writers

to

the

"red-herring"
prospectus, exactly as suggested
by Mr. Caffrey, would achieve
this
end
or,
for
that
matter,
whether it would be legal.

supply and demand.
In order to
keep prices from rising, it was
necessary—so ran the argument—

of

Organiza¬

Monetary

Gardner

sistant

,

Underwriters agree with James J. Caffrey, new Chairman of the
Securities and Exchange Commission, that it should be made

and

to

Walter

develop new;* processes, to find
doubtful, however, whether the wider use
traditionally exercised in a free new
ways to make better mouse
of "red-herring" prospectuses exactly as
market to determine the fair price
suggested by James J.V
traps, are precisely the men who
of more than 3,000,000 articles,"
Caffrey, new Chairman of the Securities and Exchange Commission,
are most heavily penalized by a
he said, "was delegated to a gov*
would achieve this end or, for that
tax structure allegedlv designed
matter, whether it would be |
ernment bureau on the specious
to control inflation.
No kind o*
legal. Nevertheless, underwriters are generally pleased with factM and
dangerous ground that the
discrimination by the State could
Mr. Caffrey recognizes some drastic revisions in laws and rules i
people had given it—the bureau—
be better calculated
to shackle
affecting their business are in order*
*
f a mandate to control the law of and destroy those dynamic ele¬

-

Commission

getting under

International

search

lesser evil.

a

i.e., inflation control, the Federal
Treasury throughout the war peri¬
od agitated .for an i income
tax

vate, citizens in clear violation of

and in fact did

Many underwriters

r

promote the interests of groups
which in turn were expected to

Underwriters Agree With SEC It Should Be
v

e

auences

ment.

;

the

by

d

Government,

our

measure

making

tions
e

f

o

surpa-

power

,F

country for
We will extend

be-

cause

,

of

people

in

pretext,

are

headquarters.

the fullest

Address

ra¬

that under its

first

that the Gov¬

you

States

has

tions

its

Fran-

in
*

of

deeply proud
and grateful that the United Na¬

of you

the

assure

United

tions.

of

can

ernment

President Truman

Na¬

in order to abate

Administ

member; it is host to the

a

United Nations.

with

the

asserted

occa¬

.met

nounced

fight¬
inflation

the last

I

upon

and

empty

Cincinnati

of

de¬

ing

was

Club

York,

tion

League

tion currently

New<8>

of

Co.

significance. After the first World

the

.

George Luthringer, American al¬

the -Commercial

this meeting has a special historic

seat

.spoke

before

Preparatory

the International Trade

Stagg.Lawrence, Vice-President of the Empire Trust

policies of the

our

on

address

an

country

my

join

sion

In

Oct. 19, Joseph

of

foundation

great pleasure

I recall with

.

signed.

was

the

prices in the consideration of investments.

War the United States refused to

V;

■

Nations
On that day

United

constitutional

For

Gen¬

Nations.

the

Arrive in London

individuals have just arrived here
as
observers of - the meetings of

impact

the United Nations was laid.

meeting
the

when

Conference Observers
LONDON, ENGLAND, Oct. 22
(by special C3ble)~—1The following

grave

in its

On behalf of the Government and the people of the United States
a warm welcome to the delegates who have come here from

the-world

2073

than effects of inflation itself. Calls tax system larcenous
on high incomes and attacks one-sided labor policy.
In Virginia Beach address, he counsels attention be given to labor
factors and government controls which raise costs and depress

<
,

I extend
all

X

:v.

Joseph Stagg Lawrence, Vice-President of Empire Trust Co.,
New York, holds Federal usurpations in attacking inflation are more

economic and social reconstruction.

J;

*>

Dr.

;

Scouts fear of

and cites necessity of getting
Stresses importance of UN's

-2'

.,^Av.

Usurpations in
Attacking Inflation Dangerous"

:

President oi the United States .* \

;

2) -i/vj

"Federal

for Peace

By HON, HARRY S. TRUMAN*
,

fAvVi/'i' (•'!

THE COMMERCIAL & FINANCIAL CHRONICLE

Tele. NY 1-2500

MEMBERS
83

Wall

N.

Y.

SECURITY DEALERS ASSOCIATION

Street, New York 5, N. Y,

_

*

BeU Teletype NY 1-897

New

York

Broadway, New
Telephone:

Stock

Exchange

York S, N. Y.

REctor 2-8600

Bell Teletype

NY

1-635

:

THE COMMERCIAL & FINANCIAL CHRONICLE

2074
■

BALTIMORE

TA kung

Weight

Political

Preferred

STEIN BROS. & BOYCE
Members New York & Baltimore Stock'

Exchanges and other leading exchanges
CALVERT ST., BALTIMORE 2

S.

6

\

,

•

Bell

Teletype BA <393
New York Telephone REctor 2-3327

confusion

Great

situation

China.

in

problem fac¬
our superior
"material well-being and high living standard.
Stresses productivity
as means of
bringing greater stabilization of wages and prices and
balanced income relationships
among
all producing groups.
ing

i
j
!

Political economist, pointing to great American confusion over
current Chinese situation, states Communism is permanently uik
dermining his country's democracy and liberal economy. Asserts
there is an unbridgable gap between Kuomintang and Communists.
Warns if true situation is not faced, the present disturbance may
constitute primary cause of new World War.

;f

Noxzema Chemical

By MERRYLE STANLEY RUKEYSER*

New York

;•

Ming;
-

•

-

'

inefficient

the

man on

corrupt. This belief is accom¬
panied by a similar widespread
contention that the Chinese Com¬

the

formation of

Government

is

both

t

and

The Parker

Company,
tube

a

has

time

peace

industries

for

stantial

to

Outlook

operation.

indicates

served

in sorhe way con¬

ocratic and united

earning power.

prospective

In ad¬

contrary fac¬

tors, there is the hope for a dem¬

sub¬

China, the first

step toward which, in the mind of
At

current

Is

available

mately
and
per

basic

in

50%

at less

position,

LOUISVILLE

of indicated
than net

share.

book value

American

'

Willett

H.

upon-.request

Girdler

8%

Corporation

Murphy Chair
Winn &

Homsey Co.

up¬

the

outlook

fundamental

-

policy of th6 Chinese Com¬
from
their. temporary

real

that

(4) the be¬

peace,

distinct

as

■C

(Continued

'

2092)

page

on

\

'

r>/'

'

y

:: ■'::1

■'

"•

:

Stocks

„

*

Memos

on

Request

Members
'

F. L. PUTNAM & CO., INC.
Members
77 Franklin

Boston

Portland

Stock

Liberty

Exchange

2340

Providence

Springfield

New

York,

Philadelphia

Los Angeles. Stock
Also
New

Street, Boston 10, Mass.

Tel.

Curb

York

1420 Walnut

Exchanges

Member

;

Members St. Louis Stock

SALT LAKE CITY
:

V*

>*V- *...

'

•

' •*: '

ij

V..V. " *r

\f*

4

;;4.

for

!

Printing Co.
Produces

of

Forms

*

>

UTAH

Labor-Saving
of all

Kinds

i

MINING

STOCKS

MOINES

Phone 4-7159

BUILDING
9, IOWA

Members Salt Lake Stock Exchange

Byllesby & Company

BROKERS

OFFICE

Stock Exchange Bldg.
Telephone

Bell Tele. DM 184

*

Phila. 2

%

Stock Exchange

Building
7:; Salt Lake City, Utah

Teletype SU 67

Teletype

RIttenhouse 6-3717

'*

American

Southern
i.

■

Optical Co.

For Immediate Execution

Colorado

i

•'of

.

Common

Exchange
Pac.

from
Std.

10:45

Time:

on

to

Floor
11:30

Sp-82

at

other hours.

Stocks

standard securities

& Dolphyn
f

Members Detroit Stock Exchange
Buhl Bldg., Detroit 26
Cadillac 5752
Tele. DE 507




to

was

corporation

BOENNING & CO.
Philadelphia 3

PEnnypacker 5-8200
-

Private Phone

to

~

I

PH 30

N. Y. C.

<

Members Standard Stock Exchange
of

1606 Walnut St.,

,

.

T

;

$|j

(N.J).

Haslam ascribed this

f.
,

-

go

a

*

Brokers
.

-

Peyton

Dealers

-

Underwriters

Building, Spokane
Branches at

Kellogg, Idaho and Yakima, Wn.

„

Some of the countries I visited
were

el.

•

in

ence

■■

of

traveled

serve

Robert

T.

Haslam

or

whom

we

had' been

partly cut off, ;:to ob¬
the plants of our

how badly

the

own

:

.

.

great

^ country

living

course,

'

..

of

mass
:

standards in

Europe have been affected by the
war.
But I recalled, upon visiting
these

organi¬

wholly

our,

living for
Of

con-

from

the great differ-;

by

between

the people.

wfth
of

before

and other nations in the standard

business,

our

with worldwide in¬

of doing business, and modes
of living. But on these recent trips
I was struck more forcibly than
ever

of

employee of an Amer¬

ways

Amer-

renew

an

terests, I am accustomed to wide
diversities
in
laws,
viewpoints,;

South

I

familiar from previous trav¬

As

ican company

con-

both

f

;

and the Government permitted
abroad, I began a period of traveling

have

countries

again,

in normal times
most of them

great

that

even

the standards of

are

separated by

a

gulf from what we in the

United

States

take

almost

for

foreign affiliates had been dam-;
aged, to learn at first-hand con-; granted. As for, the Latin Amer-though they too
aitions in the different countries, ican countries,
to
see
what could be done to v/ere affected by the world con¬
v

make

petroleum fuels available to

them, and
to; study post-war trends affect¬

peoples who badly need

ing markets.

Spokane

*

COrtlandt 7-1202

>

over

coun¬

I

zation

of Qrdera

Quotes call TWX Sp-43

A.M.,

Power Co.

request

j

SECURITIES

■

Mercier, McDowell

war

to

me

tacts

NORTHWEST MINING

or

Sheller

on

the

alnd in

on

MARKETS

Bausch & Lomb

Manufacturing Corp.
Report furnished

resources.

businessmen

members

request

Now people ask, "Who was
(Continued on page 2107) ^

year.

Europe

to

on

windbags out of the Cabinet this

enterprise and not to superabunCites foreign cases where regimenta-

number of ci¬

ties

Phone B-6172

SPOKANE, WASH.
TRADING

Prospectus furnished

as

which, in the
past ten
month s, has

ica.,o--v//:'^,':'

PH 73

DETROIT

Electromaster, Inc.

but let's not overlook his good

work—he* did drive two of those

By ROBERT T: HA SLAM*

v

soon

visited

1898

W. H. CHILD, INC

Request

PHILADELPHIA

been

critical of Harry Truman in
last few weeks, and rightly

Vice-President, Standard Oil Company

sider able

H. M.
DES

As

tries.
Established

on

very

eliminate other human liberties.

fifteen

Capitalization:
90,390 shares common

Bulletin

EQUITABLE

I

taken

Sole

Municipal

understanding | or for

for

accurate statement. We have

nvested interests hamper
competitive system is inequit- able, wasteful, and "without rules." / Lauds competition as putting / :
a premium on efficiency which leads to low prices and high wages, '
and concludes to prohibit competitive business would restrict or.^f

;'Jf

MARKETS

BROKERS and DEALERS

1901/

We have been

listening for too long to intelluctual windbags without the ca¬

J tion, government controls, / cartels and

Exchange

*

System between

{Established

affluence.

our

freedom of competition and to

io

v

-

General Manifold &

We invite offerings

danger, that we are

grave

of the factors which cre¬

ated

;economic progress, and denies our

TRADING

INCORPORATED

a

unaware

Oct. 18, 1946.

U dance of natural

'

Philadelphia, New York and Los Angeles

WHEELOCK & CUMMINS

the

There is

so,

Street, Philadelphia 2

Wire

living
standards
far
international average.

American
above

the

of.

Exchange

ma¬

terial wellbeing and which lifted

Mr. Rukeyser delivered
another address along the same
lines
before
the;1 Westminster
Men's Forum at Steubenville, O.,
30, 1946,

superior

made for American

stitute, French Lick, Indiana, Sept.

(,

New York
Los Angeles
Pittsburgh, Pa.
Hagerstown, Md.
N. Y. Telephone—WHitehall 3-7253
Private

DES MOINES

Rukeyser
Equipment In¬

Farm

the

'of

aware

Foinfing to U. S. higher living* standards, Mr.
St. Louts l.Mo,

and

:

Iowa

the

STREET'

OLIVE

509

v

BUCKLEY BROTHERS

Securities

has

be

today is to
factors which

United States

the

pacity

Industrials—Utilities
Inactive

the

;::From address by Mr.

'

Insurance

in

circulated

was

L -V. v.;..

INVESTMENT SECURITIES

South Carolina Electric & Gas
and

,

been shown to be unworkable and

before

with

Why Our Standard
:: Of Living Is Highest

•

Secondary Distributions

Bank

1 i.

that

nonsense

on

STIX & Co

Gruen Watch Company

■

see

■

ST. LOUIS

England Coverage
•

wishes to

China
such.

war as

■

••

Merryle S. Rukeyser

sensible housewife

the

of

comes •

greatest problem facing us

•vThe
in

heaval, but on
the
practical
observations

Chinese Com¬

the

by

in

one

civil

Standard Stoker Company

<•

opportunity \ which

change is indeed a challenge.

temporary military truce,

a

desired

is

PHILADELPHIA

England Markets

Such

any

be?

r

change may not .be .as benefical
as we would like to see it but the

change, is not
academic

differentiate

and

2,600,000 civilians still on the
payroll to offset the con¬
of the political change
which is now under way.
' The

in

Government; (2) inability, or un¬

Bell Tele. LS 186

Long Distance 238-9

minds.

in the air

are
a

sequences

ter s'

willingness/to

from

Grocery

Floor, Kentucky Homo Life Bldg.
LOUISVILLE 2, KENTUCKY

1st

Teletype BS 424

Telephone CAnal 6-8100

New

.

way

take

Federal

that change is
vo

ferment

the

States

today,' I think
under

-

which

great deal of skill
Nov. 5th next in manipulating

on

in,.: the

.-

United

on

no

9, MASS.

ment

.

find ourselves. So I say change

will

it

fer¬

based

lief

Company

Lovett

HH BANKERS BOND £°!

STREET

HANcock 8200

Retail

Chinese
National

the;
the

and

democratic basis, and

Incorporated
BOSTON

New

between

Communists

munists asaTarty ihei^ly because

31 MILK

N. Y.

ferences

political

is

r

and non-

the impasse in

created

we

say

there

shops of the nation, and on the
observations of working men in
lieving that it is possible to estabr
lish a coalition government by the plants and by plain citizens every¬
Much of the magnificent
two parties on an enduring and where.

Turf; Ass'n

Consider

du Pont,

and

might

ideological-dif¬ thei

the

recognize

tactics; (3) the error consequent
upon the above two factors in be¬

American Air Filter r?

k\

PRICED ABOUT

to

and

working capital

available

Circular

Americans suffer from' the
consequences of certain fallacies
which they seem to hold inadver¬
tently. These misconceptions may
be described briefly as (1 ^failure

many

munists

approxi¬

at

perfectly understandable if only
.realize that, so far as the
Chinese
situation
is
concerned,

tween

one-

despite tremendous improve- ;

1940,

ment

approximately

than original offering price

third less
In

quotations, common stock
at

has

that

dition to these iwo

nor¬

of this confusion

The existence

m

the future

—

think,
in
passing,
that

I

are

*•

Way.f

1

we

Communists

hydraulics,

reconverted

successfuly

mal

of

political

is

nected with Soviet Russia.

valves

and

fittings

transmission

the

munists,

Then, there is the fear lurking in
the background that the Chinese

leading manufacturer of

couplings,
the

*.

>

economics asserts greatest

of factors which make for

The things that. I .want to discuss with you today about
United States are approached in a non-partisan

of

nents,

ability in administration and are
good Chinese patriots in general.

Appliance Company
for

contrary to their oppo¬
have shown
considerable

ernment.

the street, seems to be
a coalition gov?

on

aware

and urges busipublic ferment
and dissatisfaction by expressing economic truths simply and forci¬
bly. Sees reaction to saner Administration policies ahead.

pression that the present Chinese®

BOSTON

is keeping

us

Administrators of getting their economics "by ear,"
nessmen and others to take
advantage of existing

'

reigns in American minds with respect to the
In the first place,. there is a widespread im¬

.

commentator

Ascribes stock market break to restricted short-selling and absence
of margin trading, thereby making a thin market.
Accuses Federal

v

.

^

Thursday, October 24, 1946

What's Ahead for the U.S.?

j

Economist

s

'

' '

To World Peace

Davis Coal & Coke
Sash

V

Chinese Communism—A Menace

Bayway Terminal

National

' '

'

...

-

...

flict, they did not experience the
dislocations which occurred in the
United
men
so

: >
*

large

wealth

by Mr. Haslam be¬
fore
the r Advertising : Club
of
Washington.-*D.-C.-.'October 8,1946.
An address

where

States

were

millions

of

under arms and where
a

and

proportion
energy

of our
chan¬

were

neled into the making of weapons.
fY*nntimiPri

nn

naffp

21

Volume 164

THE COMMERCIAL &

Number 4536

FINANCIAL CHRONICLE

Government In Business

Geo.

V.

McLaughlin

Let's Wipe Out
Economic Illiteracy

strongly that dt is not enough for
the scholars to acquire knowledge.
They must teach the people. For
until

the

.

in

man

the

street

BRITISH SECURITIES

un¬

derstands, the information labor¬
iously

obtained

cannot

be,fully utilized^^

learned

the

by

i -1 need not remind

United

that the

you

Kingdom 4$, 1960-90

peace, comfort, and well-being of

the

people of the United? States

have had their origin., in a

healthy

economy:; The? genesis :of.airxevo-t

(Continued

on

page

2096)

Goodbody & Co.
Members N, Y Stock Exchange and Other

Principal Exchanges

NEW YORK 6, N. Y.

115 BROADWAY

Teletype NY 1-672

Telephone BArclay 7-0100

Bought—Sold—Quoted

Sullivan-Waldron Products
CQMMON STOCK

Leading

Company

Banks and Trust

;yy y,y

Manufacturers of the Nationally Known

i

"WHIPSTER"

(RICHMOND CEDAR WORKS)

of New York)

-

58th -CONSECUTIVE

PROSPECTUS

ON

QUARTERLY COMPARISON

REQUEST
Available

H. D. Knox & Co., Inc.
11

Broadway, N. T. 4

27 State St., Boston 9

Tel. DIgby 4-1388

Tel. Capitol 8950

Tele. NT 1-66

Tele. BS169

'

Established 192$




F. H. KOLLER &
Members N. Y.
Ill

CO., Inc.

Security Dealers Ass'n

,

request

New York Hanseatic Corporation
120

Telephone
,

on

.

BROADWAY, NEW YORK 6,. N. X.

BArclay 7-<057O

Companies

NY 1-1026

BROADWAY, NEW YORK 5, N. Y.

BArclay 7-5660

Teletype: NY 1-583

UHMfcKMWWfcMUA**"*^

jmm

"■■'

-

r

f

•

2076

,THE COMMERCIAL & FINANCIAL CHRONICLE
Eventually, those who do not ac¬
cept the exchange offer would (if
the

plan

consummated) have
by cash pay¬
at $150 and $137, respec¬

their

is

stock

ments

Thursday, October 24, 1946?

"No Grounds For Further

retired

Electric

American Power &

.«

I"#'1

Light

American Power & Light, one of the more volatile

holding

com¬

stocks, advanced from 2% last year to this year's high of 221/2,
then dropped in the recent market break to lOVs and is now around
13.
Earnings for the 12 months ended Aug. 31 were $5.25 a share
compared with $1.37 last year but, of course, this does not take into
account the large arrears on the preferred stocks.
Several lengthy
studies on the company have been®*
issued by Wall Street houses this retirement program is somewhat

with estimates of potential
future
break-up
value ranging
year

10

mate

60—the

to

being

These

average

perhaps

-

estimates

were,

esti¬

around 40.
of course,

based

largely on the application
of assumed price-earnings ratios
to the subsidiary .earnings.
Due
to the high leverage resulting from
the
large
issues
of
preferred
stocks' and their heavy arrears,
application of price-earnings ra¬
tios varying from 10 to 16 might
produce liquidating values rang¬
ing roughly from 10 to 60.
.
...

Earlier

16

in

that

sumed

the

it was as¬

year

of

ratios

from

13

to

could be applied to

AP's sub¬
sidiaries. ' But the disappointing
market reception accorded a num¬
ber of the new utility stock offer¬
ings such as Columbus & South¬
Ohio

Electric, Cincinnati Gas
& Electric, etc., combined with the
market, have made it seem nec¬
essary
to
shorten
the market
yardstick applied to the AP com¬
panies, as well as to other holding
company
subsidiaries of similar
ern

'

caliber.

1

-

the meantime, the company
Sept. 4'filed its detailed plan

In

involved.

If

and

when

the

SEC

and the-Federal court approve

the
plan, American Power will offer
for sale at competitive bidding
15% of its holdings of common
of Florida Power

stock

Light,
Gas & Electric, Minnesota
& Light, Montana Power

Kansas

Power

Texas

and

is

there

&

Utilities.

However,

After the sales

are

effected the

prices received by the company
plus 5% of such prices (as an al¬

pre¬

spread between the successful bid
price and the later public offer¬
ing price) will furnish the yard¬
stick
for
the
exchange
offer.
However, the plan remains quite
flexible
and
if
the
remaining
common
stocks
(about 85% for

ferred

stocks,
exchange
or

preferred

is

callable

accumulations

dividend

has

(it

$43.57
rate

this

should

is

115

at

paying the
so
that

year

remain

fixed

at

of

Under

the

fig¬

$150, as compared with $158.57 re¬
demption price plus arrears. Sim¬
ilarly, the $5 preferred is evalu¬
ated at $137 compared with re¬

demption price and arrears of
$146.31. In other words, the com¬
pany is willing to pay par plus
arrears plus about 42% of the re¬
demption premium in the case of
the

the "package"

$6 stock. In the case of the $5
pay only about 70£
the $10 redemption pre¬

conditions

the

two

values

to

are

are

earnings

outlook

for

American

corporations
and

for

level

of

prices.

the
stock

process

from

far

of

New

City,

York

that

has

Edson

Marshall will join the Bank as a
Vice-President on Nov. 1. Fred¬

Sheffield,

member of the

a

B.

Gould

an¬

Clark

Lawrence

built up

long

a

period of time.

Goodhue, President of

the Bank of the Manhattan Com¬

nounced

great pres¬

sures

Appoints Two

F. Abbott

result

natural

over

The

substan¬

tial

readjust¬

ment of stock

prices, the increase
in money rates and the begin¬
nings of the decline in agricul¬
tural
prices
are
parts of -; the
process.
More adjustments
lie
ahead, but the current level of
stock prices appears to discount to
-

considerable extent the uncer¬

a

The

probability is that we have

research

staff

of

Smith,; Barney
& Co., but the views and opinions
expressed by him are not neces¬
sarily those of the firm.

allocated rateably to each
exchange
unit — a
unit being
roughly equal to the claim of $6
or $5 preferred stock.
Any small
adjustment will be made in cash

the lows for this year,

and that successive

the
an

of

form

ICC

able

rate

tax

good

news

in

favorable election,

a

decision

favor¬
legislation
(all dis¬

and

labor

and

after the turn of the year

possibilities)
may
carryprices upward well into the
first quarter of 1947.
stock

We

next

almost

will

certainly have

disturbances

labor

more

early

when contracts expire,
but it by no means follows that
major labor difficulties will en¬
sue
or
that production will be
interrupted to the degree that it
was this year.
It is pertinent to
year

recall

that

ficulties
in

it

not

was

that

broke

labor

dif¬

the £ market

Stock prices held

September.

up during the second quarter labor disturbances.
Rather was it

policies

governmental

and

/

con¬

trols.

Fluctuating Profit Margins
summer

costs

the

ended

war

1945 it was

of

that the rapid
elimination

with

in

soon

the
ap¬

decline in
of

waste¬

ful wartime

practices arid- release
of
inefficient
help greatly im¬
prove t^e orofit outlook and the
(Continued on page 2117)

being

and

accrued

Underwriters Take
// Frederick

L. C. Marshall

dividend

current

law

effective

has been elected

b,y American Power in its

discretion

after

preferred stock
the

65%

of the total

(as measured by

dollar amount of claims)

has
deposited (deposits need not

Sheffield
^

would also be adjusted in cash.
The exchange offer may be made

made

until

notice

of

firm

of

Webster

Garside,

&

member of the

a

/

Board of Directors of the Bank.

Marshall, who resides in
Madison, New Jersey, is a gradu¬
ate of East Orange High School
and attended Dartmouth College.

the

ex¬

1925

From

he

1928

to

was

Midland Realization
Northern Indiana Pub. Ser. Com.

Gilbert J. Postley & Co.
NEW YORK 6. N. Y.
to

Chicago

New

the Investment
of the United States
Trust Company.
In 1943 he was
elected an
Assistant Vice-Presi¬
he

1934

joined

Department

placed in charge of its
Department.
Mr. Mar¬
shall is a Trustee, Treasurer and
Chairman of the Finance Com¬
mittee of the American University

dent

and

Banking

of

is Vice-

and

Lebanon

Beirut,

Chairman

of the New York Uni-

Cam¬

Hospital

versity-Bellevue
paign.

is

Sheffield

Mr.

the

a

of

member

Association of the Bar of the

City of New York and the Ameri¬
can Bar Association.
He is a Di^

Birmingham Electric Common

rector

Trustee

Carolina Power & Light Common

Southwestern Public Serv. Common
South Carolina Electric & Gas Common
(When Distributed)

Trying to Pin Market Slump

A.

of
of

the

O.

Schwarz,

Trudeau

a

Sanitor-

the

Board

of

School of

of

Managers

St.

..

•

dealing with the investing public.:

Asked for

comment by

—

Coles in Rochester
ROCHESTER,

Paine, Webber, Jackson & Curtis
F.ST ABLISHED

W.
ties

N.

Y.

—

York

business

from

1879

Clarissa Street.

offices

securi¬
at

446

•

> -

;

the "Chronicle," many underwriters ex¬

Security

Dealers

Associa¬
when
he

Under

the

present

Securities |

firm with a
registration
may
placed responsibility for the cur¬ broker-dealer
rent
decline
ir) -stock
market elect to act as an underwriter, re¬
prices upon the underwriting fra¬ gardless of his qualifications or >
moral responsibility to the poten¬
ternity. '
Last
week,the
"Chronicle" tial buyer of the security that he
printed a resume of Mr. Warner's may offer, insofar as that security
allegations.
It was not the first is priced to the public. Express¬
report of Mr. Warner's speech but ing it as his opinion that the mat¬
it was printed in our columns so ter of underwriting and pricing
that all would know what Mr. of a security resolves itself in
Warner's views were on the sub- many cases into a form of con¬
ject.It will be recalled that he spiracy between the underwriter"
jgave it as his opinion that the and the corporation, Mr. Warner
primary cause of the decline in pointed out that the corporation,
security values over the last few its cupidity aroused by the ex¬
months was the "plethora" of new istence of an extremely favorable;security offerings, many of which, capital market has, in many cases,
he intimated, should never have formed or expanded for the sole
been placed on the market. :
purpose of securing other people's
He made the charge, too, as ft money for the benefit of the of¬
tion

was

two

weeks

ago-

pointed out in the story last

week,
that
"underwriting
and
pricing a security resolves itself
in many cases

ment money was in

the hands of

public and that it would be
benefit of the

Acts,

ficers

said,

he

and

poration

to

any

promoters of the cor¬
the exclusion of the

public interest, except that if the
business happens to prosper, the
stockholders
cidental
"As

will

become

the in¬

beneficiaries.

we

know," he stated, "the
then finds a regis¬

corporation

tered broker-dealer who, as I said

before, may be without the requi¬
site

qualifications that should be
both in his
responsibility
to
the
investing
ties
fraternity, and to the public, and
be
of investing in new unproven,~nnd then together, these two, the cor¬
and
the
underwriter,
in some cases, disgraceful public poration
(Continued on page 2119)
offerings from the standpoint of
the

Howard

Coles is engaging in a

i

Warner,; President of J. Arthur<e>Warner & Co., Inc., New York the value received for the dollar
:
City, in a talk before the New invested."

the country and to
price structure of the securi¬
markets if these funds "could
denied the dubious privilege

economy

QUOTED

,

5

pressed resentment, to say the least, at the charges made by J. Arthur

to the considerable
SOLD

:

honest

the

Luke's Hospital.

Them

writers

Inc., New York City,
New York

into a form of con¬
Social Work and the Community spiracy between the underwriter
and corporation."
He stated fur¬
Service Society and a member of
ther that a reservoir of invest¬

ium, of the New York

on

was off the beam in his recent speech before ~
Security Dealers Association, in which he accused underof causing current decline in stock market-prices by dis-

;
//

em¬

& Co., former members of the
York Stock ~ Exchange.
In

sey

Exception to J. Arthur Warner

Charge that J. Arthur Warner, President of J. Arthur Warner & Co.**

I

Mr.

than 50% of the claim is denosited

Federal Water & Gas Com.




t

■-

parent
*Mr. Gould is a member of the

are

Consolidated Elec. & Gas Pfd.

*

),-1

witnessed

When

tainties in store.

ployed in the Foreign and Credit
the plan cannot be accepted with¬ Departments of the American Ex¬
National
Bank, ; which
out
the
consent
of the
parent change
later
merged
with" the
Irving
company, Electric Bond & Share.
Trust
Company.
From 1928 to
1934 he was manager of the Re¬
search Department of C. D. Hal-

.

of

tinct

,

The

Bank of The Manhattan

change offer is given), but if less

—

,

stock prices this

average

of the regimented economy
It is especially favorable for

longe r^

term

violence is the

the

BOUGHT

.—V'l;

-

operations to all
likely, and gives list of stocks

witnessing the liquidation

is

mium.

Win

We

stocks in order to effect

be

Direct

' V"','

bring profitable

not

and it is good news for all of America.

to assign
operating

attempting

been

•

will

Says higher prices
offering good value.

of the difficulties

some

in

toward

29 BROADWAY.

controls

smooth;| its

erick

:

is being liquidated, Mr. Gould

economy

industries.

prac¬

issue, it will

It is not quite clear whv
$6 preferred gets this "break"
except that it has a higher re¬
demption price.
The method of carrying out the

of

nation

permit.

to be
applica¬
preferred stocks,

ing

plan

become standard

The stocks mak¬

divided into two portions

up

pear

retiring senior

on

arrears

to

of

five

Montana Power.

ble

;

exchanges.

pany,

V*' \

Contends present market prices apwell adjusted to changes that have occurred, but cautions elimi¬

recent development

preferred

regular
this

it is pro¬
posed to "evaluate" the stock at

ure).

(based

a

market

avoids

Co.

v

•

.

bank liquidation of securities.

tne

method

This

the distribution

cover

Electric and finally (if necessary)

the

preferred

{

\

'.V •'

; '•

.

probably witnessed lows in

unfavorable at that

time.

the

its

•

trols brought change in long-term interest rates and was cause

/

the

to

offered

retire

securities is

theoretical

the

have

we

,'v

regimented

stock.

company

of

our

C' >•"'

-

serves

ceed

is

latter

to

next

and

of

retirement

the

public)

inherent

through voluntary
subsequently
for
cash. American Power & Light $6

the

for

new

after

It

each

•

v

(j year. Lays recent break to roll-backs of OPA which caused uncer¬
tainties and fluctuating profits. Holds tightening of monetary con-

these market

use

(together with that of the
southern holding company

prices

approval will be obtained before

lowance to

'

«/?•.*'''•! *!'

holds

reports). Com¬

press

monwealth will

offerings.. It seems un¬
likely that Commission and court

companies) ex¬
stock claims
the "evaluation" figures
named above) then the shares of
Minnesota Power & Light will be
withdrawn, next Kansas Gas &

on

according to

may

are

offer.

tially into effect by sale of Ohio
Edison (an offering of Consumers
has been twice postponed
but is now being reconsidered,

if

conditions

:

Asserting

Power

and

spring and the company re¬
the right (subject to SEC
approval) to defer making the of¬
ferings if market and business

;'V..'.v'

The

plan is similar to the pro¬
gram adopted by Commonwealth
& Southern and already put par¬

Liquidation

By EDSON GOULD*

after the

year

received under the exchange

tice

time

a

sell

received by) any stocks

are

schedule

exact

no

for these

will

Share

&

(not later than
shares

pany

Bond

/#

Stock

tively, for the $6 and $5 stocks.
'[l.

from

....

'wS'WiW \

T~

of

incumbent upon him

Volume 164

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4536

International Organizations

financing Foreign Trade
\

By WILBERT WARD*

V

Vice-President, National City Bank of New York

By LEWIS L. LORWIN*

/ cooperation if commercial relations between nations is to be
stored and fostered. Describes various international

goods

on

tions and

terms,'
have

•

and

into and out of

our own

country, exceeds $5 billion.
The
volume of trade financed by bank

times,

fully
employed the
(facili¬

credit

me

as

cial

commer¬

banks.

It

;
^

the

power

the

member

banks

of

United

Wilbert Ward

the

to finance by

ceptance

,

a v e

in

war

*An address by Mr. .Ward before

and

the

beautiful

have

wreckage
battered

streets

of

the

men,

war-drab

trying to live amidst the
ruins, seeking a corner wherever

of roofless and

there is

some

elements

ruins-that

protection from the

and

trying

to' fix

once

Paris,

silver concentrates, silk, rub¬

One

reason

destruction,,

hang¬

page 2111)

on

Lewis

L.

or

economic

Lorwin

seen

in

food

and

such

whereby

the
men

war.

piaces the

I
r

of chemicals. Textile materials

in

are

import requirements will depend
of country's economic situation.

fore the American Merchant Ma¬

delayed by lack

credible

overcrowding

(Continued

on

page

Fulfillment of Italy's

?

•

:Y

.

tons of coal,

and

.

'VV4

A

i

k

!r

V-

for analyses of

on

©f those

.'

•'

V

11

\

S4A DISTRIBUTOR,

jf\

Analyses

YOU?

TO

j\

<

^

,/

v

j-,

frequently called

you are

new

Vi.
*

issues—and the quality

analyses is therefore mighty important to you.
one

of the various branches of the in¬

dustry.. The requirements of agri¬

600,000

/.tons of iron and steel and 86,000
of non-ferrous products. The

chemical

industry

should

culture
a

have

estimated

been

total value of

to

$412 million, and

include, in addition to fertilizers,

import

(Continued

page

on

2109)

way

in which

offerings in which

reconstruction

11,700,000

products,

Americans. This

are

made with the

an

eye to

we

same

we are

of definite and

participate

as

underwriters

thoroughness and written with

clarity and investor-interest; just as are our

No. 145A

is

in

the

When

recently read

we

tion from

Galileo in

analyses in the

future, we are confident that you
practically helpful as have others.

near

will find them

as

minded of how hard
think

of

we

"words"—during
visit to California, when

recent

2104)

ripening in the famed
Valley.

That's where

CREST A

stood

in

BLANC A
are

hill,

BLANC A

and these

are

three

.

.

new

District Managers-

of grapes

Fredrick w. Johnston <
;,v

,

■■

;

Arthur m. Wolkiser
Headquarters in St. Louis

J
,

''

"■■■

"

'

'

-

•'

*

ifornia sunshine.

quantitative

about the Cal¬

It just isn't all

it's qualitative

...

Every visitor to

seems

to

things whose roots
fornia soil.
Small

are

.*'•

in the Cali¬
Z

then,

giant redwood trees

are

■"j,

& V;:-

that

Pressprich & Co.

68 William Street

Telephone HAnover 2-1700

NEW YORK 5

Teletype NY 1-993

,

•

201

the oldest

growing higher and higher
sun.

And in the .California

*

the

hillsides, carefully selected
qualities of soil and climate,
grow the vineyards, much of whose
on

go

to make the wines

today challenging the

are

Europe
sun

can

vineyards

produce.

;

has much else to do in

"ripen

grapes," but the wine

a

bunch

grapes are

Devonshire Street, BOSTON 10

season

has

passed.

96-Page Book
containing reprints of
articles on various

Exchange

earlier

subjects. Mail

coupon

to

MARK MERIT OF SCHENLEY

GOVERNMENT,

DISTRIBUTORS GROUP, INCORPORATED

PUBLIC

MUNICIPAL,

UTILITY,

AND

RAILROAD, >

INDUSTRIAL

INVESTMENT

BONDS

18A,

63 Wall Street, New York S, N. Y.




DISTILLERS

N.

STOCKS

Y.

350

CORP.

Fifth

Dept.

Avenue.

1, N. Y.

Name

StreetL

City—
h

so

their gratitude in "liquid
sunshine"—long after the fresh
express

fruit

JZone-

;

valleys and I

for

■H'./.r*'.'?

/ /;•

the

earth. They just

on

grateful for their share—and

R. W.

Members New York Stock
•

do the

so

:

wonder,

living things
on

California

it and

sense

FREE—

'
••

more

"

the world besides

Headquarters in Chicago

uv:'-V;V'

•

or

if it had nothing else in

as

There's something

of
v

we

spoken by

.

hundred

the world to do."

The

the appointment of two

its

the words

"The sun, which has all those
planets revolving around it and de¬
pending upon it, can ripen a bunch

of

announce

which

derives

best that the renowned

pleased to

of the

from

years ago.

which

are

located.

the shadow

crested

Galileo

strained to

those

ripened fruits

We

quota¬

a

"Words To

Live By," from Alfred Noyes, in
This Week Magazine, we were re¬

have occasion to use one of these

you

series.

a

By MARK MERIT

of

—reaching for the
Should

of

Sunshine

keep

other studies.

space,

SCHENLEY DISTILLERS CORP.

too.

That's

i3,000

2,900,000 tons of oil

petroleum

>'■ tons

the

for

time, in this

appear an advertisement which
hope will be of interest to our fellow

tried to remember

GoodSecurity

•

necessary

we

name,

of

requirements

to

there will

CRESTA

HOW USEFUL ARE.

•

tons of machinery- and apparatus

the

SCHENLEY DISTILLERS CORPORATION

white

practical help to our underwriter friends. Our analyses

ment may be mentioned

.*

y' *

v •' - i' .-

♦

■ ;

;

NOTE—From time

We

tons, and this in addition to 50,000

Among

Sons, Inc.

Livermore

transport

forecasted by the Italian Govern¬

>

grapes were

4

Chronicle)

Co., 647 South Spring
Street,
members
of
the
Los
Angeles
Stock
Exchange.
Mr.
Schlutsmeyer was formerly with
Wyeth & Co. and E. H. Rollins &

our

Oct. 18, 1946.

tons/ the foodstuff industry

lion.

lack

Conference, New York City, homes, the black markets which

ed also the amount of the cost of

estimated at $230 mil-

Financial

Winery and Vineyards

MILAN, ITALY—In connection^
with the Italian future import re¬ 83,000 tons of raw materials, the
industry
25,000
quirements, it is interesting to pharmaceutical
tons, the lumber industry 3,031,000
note that, according to the latest
y information secured from Italian tons, the textile industries 205,000
tons of cotton, 60,000 tons of wool
official
quarters, such require¬
and 61,000 tons of jute and other
ments for 1947 may be estimated
fibres, while the rubber industry
as far as foodstuff needs, indus¬
should
require 33,000 tons, the
trial, agricultural and transport
leather industry 72,000 tons, the
activities are concerned, at $1,258
oilseed refining industry 170,000
million, in which figure is includ¬
-

come

dis¬

ship, the factories unable to run
because they have no
coal, the in¬

foreign trade policy in lieu

on

The

Schenley's

rayon

excess.

to

have

An address by Dr. Lorwin be¬

total. Italian
Industry requires 15 million tons of coal, of which 6 million should

!

I

tion in the quality of goods where
there was once pride of craftsman¬

stores full of useful

Economist estimates 1947 needs at $1,258,000,000

j

Ernest

shortages of goods
live, the deteriora¬

By ANTONIO GIORDANO

from U. S. Enormous home output of

Maxwell, Marshall

in

as

social

goods,

were once

was

ANGELES, CALIF. —
C. Schlutsmeyer has be¬
associated
with
Maxwell,

Prague, there
and

locations due to the

busy railroad stations, the gap¬
ing holes in shattered walls which

*

Brussels

the

are

once

for the small employ-

(Continued

Italy's Future Import Requirements
come

up

whatever they can so that life
may
go on.

splendid
liv¬
ing places, the

rine

j

and

women

steel

18, 1946.

V

and

also the hu¬

seen

and

co¬

who

children

win dowless
were

were

avenues. I
man

once

tortured

ber, nuts, bristles and fur skins.

Conference, New York City, Oct.

Europe which took

Hutchinson

Torrey.

With

twisted

coa,

Merchant Marine

&

increasing the

heaps of rubble where

there

of

endless blocks

frames

American

the

Ger¬

—

S,

Marshall &

the dismal destruction

partners in

partner in W. J. Banigan &
Co. will be associated with Cohu

far

go

York Stock

a

(Special

10 -week visit to

a

seen

use

power,

toward

will

outstanding amounted to but $206

ing; imports, including coffee,
the

h

just returned from

of their ac¬ million at the end of August, and ing in mid-air
alone, without were largely employed in financ¬ which were

the

Organization
and

v.

its loans in U. S.

mostly fallow. Dollar acceptances

Presently, this power now lies

States

trade

to

John

Even where there has been lit¬
tle
physical

of

were

also

Frankfurt, Berlin, Moscow, Warsaw, Prague, Paris, Brussels

many and Po-

million at the end of 1929.

available by
our

New

Both

W. J. Banigan & Co.

London.

land

should not be

made

I

to

acceptances reached a peak of $1

forgotten that

ties

members of the

Exchange.

and shipping of the world.

billion in 1920,

fluctuated between
$400 million and $700 million un¬
til
1927,
resumed
its
upward
climb to touch the old high of $1
billion in 1928, and to pass it by
reaching an all-time high of $1,700

barriers

Trade

1, William J. Banigan
Jr., will be¬

partners in Cohu & Torrey,
Street, New York Cit.y,

LOS

the

well

International

removing

commerce

I have

as

predicts World Bank will float bulk of

proposed

toward

im¬
the

recourse

w e

ne.ver,
in flush

even

Holds

to their loanable funds,
importation or exportation of
goods between foreign countries

nor¬

Nov.

Wall

organizations

<$-

credit

re¬

that have been set up under U. S.
leadership and asserts U. S. has
much to gain from work of each. Lauds Bretton Woods institu-

y

mal

On

and John B. Fowler,
1

Administration's foreign trade expert stresses need for international

■

movement of

Be Partners in Cohii
come

Economic Adviser, Office of International Trade

jV present export-import situation creates a distortion in our trade balance and
points to need of granting foreign credits. Says exports
; when paid for by our investors and taxpayers will not benefit people
until/ as a nation, we can receive from others equivalent prod¬
ucts and services.
Scores "do-gooders" in our government who
I
propose heavy loans to foreign nations, and expresses belief that
loans will be extended only to those countries in which favorable
conditions for production exist.
The financing of our foreign traders—of our exporters and
porters—has never been a problem. In the field of financing

Banigan & Fowler to

Fostering Foreign Trade

V

Foreign trade expert points out that when conditions have been I
proper there never was a problem in foreign trade financing.
Says

*

2077

State_

Thursday, October 24, 1946

THE COMMERCIAL & FINANCIAL CHRONICLE

2078

Analytical

Osgood Company—Special report

Peltason,. Tenenbaum

—Seligman,.Lubetkin & Co., Inc.,

Chefford

report

Dealer-Broker Investment

Columbia

York—58th consecutive quar¬

terly comparison of leading New
York banks and trust companies-

edition—A. E. Ames & Co.,

Inc.,

2 Wall Street,

Co;, 120 Broadway, New
N.

Banks—Com¬

City

York

New

York

5, n,y(,

New York 5,

N. Y.

'

:

'

,

—

Railway

Circular

—

Light¬

&

•

V,

»

•

r

_•

-

....

•••' K "•

i

f

'

v

Corp.—Analysis—Wil¬
Co.," 42 Broadway,
4, N. Y.

Baren

New York

Pettibone Muliiken

Corpi-—t-Bul-

tailed'memorandum—De-

Analysis—Comstock & Co.,
South La Salle Street,. Chi¬

&

Rapids 2, Michv

Co./ 120

Street,

Chicago

Also

available

is

a

circular* on

Chicago Hardware Foundry

Co.

Young

Grand Rapids
Building, Grand

Bank

Salle

La

South

—

&

Caswell

—

3; 111.

Tornga,

National

Insulation

Universal Zonolite

Analysis

,

Larson

231

S.

liam

9,

Fred B. Prophet Company—De¬

tailed

V •«' '•

Boston

&

Adams

Decker Manufacturing Co.—De¬

>

Telecoin

Homsey

Pont,

Street,

'

letin—Doyle,
O'Connor & ' Co.,
Inc., 135 South La Salle Street,
Chicago 3, 111.

19 New Peck, 63 Wall Street, New York 5,
the third N. Y. ..;ftft2r.

for

banks

City

Co.

ing

Milk

31

Mass.

analysis of

and

quarter of 1946—Laird, Bissell &
Meeds, 120 Broadway, New York
■-

YorkV5,

Y.

6, N. Y.

parison

Provinces—Twelfth an¬

and

nual

tive: analysis—du

L. F. Rothschild &

—

Connecticut

Comparative Condensed State¬
ments of the Dominion of Can¬
ada

cupied by these industries—E. F.
Co., 61 Broadway, New

■

Parker Appliance Co.—Descrip¬

Co.,

Corp.

& Electric

Columbia Gas

—Analysis

York

Corp., 120
York 5, N. Y. \

/.Purcell & Co.,' 50 Broadway,
4, N. Y.. ftft^/vftft*;

Study of the strategic position oc¬

Electric & Gas.

Carolina

situation—Edward

New York

Industries—

Resource

Electric-

&

1420

Brothers,

Street, New York .4, N, Y.- Walnut Street, Philadelphia 2, Pa.
Also available are memoranda
v
Also available is. a late report
on
Gruen Watch Co. and South
on Wellman Engineering Co.V-. vv

;

A.

Hutton &

Hanseatic

York

New

Broadway, New

Natural

-

Companies of

Banks and Trust
New

Gas

the

of

Study

the firms mentioned will be pleased
interested parties the following literature.

C®.—Memo¬

Stoker

Standard

randum—Buckley

41 Broad

.v."ft:

2, Mo.

It is understood that
to send

—

Co., Landreth Building, St. Louis

Recommendations and Literature
-

Master

—

Corp.—De¬

Concrete

Vacuum

analysis—Ward & Co., 120
Broadway, New York 5, N.. Y,V

tailed

<

,

Utilities— cago 4, 111.
ft2j:-; ft.■; 22/ \.vPublic National Bank> & ^ Trust
Also available are analyses.of
Comprehensive comparison of 127
;
Yuba C onsoiidate d Gold - Fields
Co.~-Analysis—C. %':E. f Unterberg
common
stocks—Ames, Emerich Hydraulic
Press
Manufacturing
—Summary and^vanalysis—Shu->
& Co.; 61 Broadway, New York 6,
& Co., Inc., 105 South La Salle
Co.; Long Bell Lumber Co., and
man, Agnew & Co.,. 300 Moht- Street, Chicago 3, 111.
.
/ * \1-. Miller Manufacturing Co.
gomery Street^ San Francisco '4,
Public

Operating

?

Sugar

Cuban

,

Stocks—Study of

outlook—Lewisohn
Co., 61 Broadway, New York 6,
and

situation
&

N. Y.

Calif.

Utility

(jommon
several issues

Operating
Includes

Kit

Tax

reference to

Also available is the

holders and also enclosed is
of. suggested exchanges to

on

situations.

various interesting

and a handy
application

establish tax losses,

data

with

Letter

Investment

list

a

Fortnightly

gains and losses—Mer¬
Lynch,
Pierce,
Fenner &
Beane, 70 Pine Street, New York

rill

Paper Co.—
Circular—Ernst & Co., 120 Broad¬
Abitibi; Power

&

is

bulletin on

a

Corp.

'United Aircraft

That; The
Commercial Shearing and StampUs

Executives * Tell

.

.

Barcalo Manufacturing
Co.; John Doe Letter; American
Phenolic Corp.; General Machin¬
Co.;

ing

Mining

Corp.; Qolden Crown

ery

Co.;'Silver Creek Precision Corp.;
Plastics Materials Corp.; Higgins,
Inc.; Highlights of Wall Street.

'

Tele¬

&

5, N. Y.

dum

is

on

a

memoran¬

South Carolina Electric &

Gas Co. and

review of J. C. Pen¬

a

of

.

Corp.—Descriptive cir¬

Argo Oil

>•-

■

•

■

••

New

UNDERWRITERS

&

on

available

LOS ANGELES 14
650 S. Spring St.

135 La Salle St.

memoranda

are

Hart¬

,

Glass;

Puro-

„;2.,-1.><>

;

•

*?>

:

'•

>

-vt

lar—Hicks

available

Also
The

Chicago Corp. and The2ft :2ft

Corp.

Alarm—Anal¬

ysis—Mitchell & Co., ,120 Broad¬
way, New York 5, N. Y.

Johnson

H.

■r

Co., 208
Street, Chicago

/Brailsfbrd
Salle

La

&

ftftftft'2
available is:"a circular Ion

Also

Queen Anne Candy Co.
,

International

Resistance

Co.—

Hano, 61 Broadway, New York' 6,
N. Y.

•

:

&

Lomb

Optical Co.—

•

■

Publications

Cribben & Sexton Inc.,

Com.

Salle

La

Street, Chicago 4, 111.

cular—.C. E. de Willers &

—

;•

Cir¬

Recent

•ft..\\

.Established

100

—

Co.—An¬

The First Boston Corp.,

N. Y.1

Broadway, New York 5, N. Y.

3;

10 So. La Salle St., Chicago

'Teletype CG405

Indianapolis, bid.
Rockford, III.
Cleveland, Ohio

Public

Central
of

'52

and

and

Gas

study

Pfd.

and

form—Fred

Utility

Consolidated

5%s

Electric

Comprehensive
analysis in.brochure
—

W.

Fairman

Co.

'

England

Public

volume and nature

The

reflect many

oar

analyzing

208

new

these

SOUTH LA SALLE ST.

CHICAGO
Telephone
Direct Private
Bell

1

Randolph

Doolittle, iSchoelikopf & Co., Lib¬
erty Bank Bldg., Buffalo 2, N; ,Y.

a

fluence the

conditions
■

:

under

which

.

international

dealings
world

with

Amos E.

Ch

Taylor

are car?

forward.

ried

the

ten

alter

Railroad

Municipal
"

637




York

Incorporated

a n

ge s

in

-

policy are ofdevelopments
these may in turn

result

and

the

both

character

of

of

and

volume

business

-

Telephone
New York

State 8711

Philadelphia

tp

~

>

the

Pittsburgh

Minneapolis

wielding.; an
unprecedented balance of econom¬
ic
power
a.t;2the"1 conclusion ;; of
World War n,_ is-certain to hdve
its policies and decisions reflected
in the, composite statement of ; its
international .accounts.
EVeii
The United States,

•

,

though this country normally ex¬
ports only a relatively small part
of its total output it is the world's
greatest exporter. Despite the fact
imports are a

that United] States

fraction

small

very

volume of

of the total

goods utilized for con¬

sumption or for serving the
with other nations.
At the same processes of production this coun¬
time, developments arising from try is the second largest importer
purely domestic causes may pro¬ in the world. The nature and
duce
shifts
in
the channels of course of our trade with other na¬
methods
national
*

Teletype CG 273

nation's, international transactions

conducted

balancing the inter¬
accounts. A nation,' deof

-

135 So. La Salle Street, Chicago 3

4068

Wire to New

CG

■■

a

Byllesby and Company
.

4, ILLINOIS

System

>

ft

of

trade which will in turn alter the

H. M.

Gerety

Economics, Department of Commerce 2

the rest of the
r c u

Brochure

Bonds'.

William- J.-

of the basic elements of that nation's vitality and economic
stabil-'«
:
—:
im¬
ity. The im¬ pendent upon international trade
or
upon shipping for a substantial
pact of world
developments part of its national income or for
the
maintenance of an established
upon the na¬
of living, is likely to
tional econ¬ standard
omy
may react sensitively to developments
,♦
^ -.4
{
strongly
i n - abroad.

Service

5y2's of '52
Write for

admitted

the 2

have

small part

-

—

BONDS and STOCKS

New York t Curb Fkchange,

Department official contends that despite relatively; t
international transactions play in: our total commerce^
the nature and course of our foreign trade warrants particular
attention at present time. Points out government shipments abroad;
"/; are declining rapidly and both exports and imports will be greatly
2 influenced by economic conditions at home and abroad.^ Sees need
for larger international capita] and credit transactions to bring 2
about an equitable balance of payments and to avoid draining:
outside world of its resources Sees hope for American shipping.:
.

abroad

Utility

Broadwdy,

J Commerce

■:•'

v:\;■ "

Ohio-Apex, Inc.^—U i

Industrial

BradY & Garvin Admit

partnership in the firm.

Director, Office of Business

...

Underwriters—Dealers—Distributors
Public Utility

2

New...York"- City, members ef

national trade

Central Public

Rothschild

he organized a bond

Transactions

Straus-Duparquet, Inc.

ISINCE1908

Fred. W. Fairman Co.

partner in the* bro¬

kerage firm of L.

Current Trends in International

Appraisal of values — Ira
Haupt & Co., Ill Broadway, New
York 6, N. Y. :

&

Co.,
208 South La Salle Street, Chi¬
cago 4, 111.
'ft/

South

/:

Mich.

.

1916

Chicago Board of Trade

he became a

•

—

Buhl Building, De*

Dolphyn,

troit 26,

—Bulletin—Luckhurst & Co., Inc:;
40 Exchange Place, New York- 5,1

New

Members Principal Stock Exchangesi

Tel. Franklin 8622

Electric

Birmingham

alysis

?mi H.Davis & Co:

'VJ!1""'1" 1 1 }mt

••

•• >

Nathan

^Prospectus Available on Request.

•

report—-Mercier, McDowell

Co., 120

Broadway, New York 5, N. Y. j

Woodward Govenor Co., Com.;<

shortly after the turn of the cen¬
tury to begin iiis career with: the
firm of William-Salomon.
Later

Brady & Garyin, 115

:

Bausch

Analysis

Sheller Manufacturing Corp.

,

-

MacFadden

Circular—Adams & Co., 231 South

York;

&

Steel', Products Co.
Memorandum on*interesting situ¬

Co., Com.

Snap-On Tools Corp., Com.

—

Sills, Mintoii & Co., Inc;, 209

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

.—

J

of age.

department
Serrick

Gulf,. Mobile & Ohio Railroad—

ation

an

2 2 f

memoranda

are

Muter-Ch.

64

years

1939, died at his home
illness of several months.

Price, 231 South La

Salle Street, Chicago 4, 111.

Memorandum—N ewourgerl&

LA 255

Wells-Gardner &

•

Ala¬

lator Products; Upson Corp.;

bama-Mills.

Automatic7 Fire

*

,

4, III.

Michigan 4181

CG 99

Building,.

Stock

Greyhound Corporation—Circu¬

South

~

State 6502

>

Whart¬
Iron'& Steel; Barcalo; Haloid;
Window

1

Byllesby &

Exchange
Philadelphia 2, Pa.
Co.,

Lanova Corp.; Mo¬

Empire;

American

CHICAGO 3

M.

Indiana

hawk Rubber; and Taylor

DISTRIBUTION

New York

Avenue,

Printing

&

30

& CO., where

Broadway,

W. Li Douglas Shoe Co.;

ford

MARKET

SECONDARY

Co.—Bulletin—H.

:;

•

Co., 120
York 5, N] Y.

Also
on

Fifth

350

Products and Wellman

Aspinook Corporation—Circular
—Ward

For

■

Manifold.

Analysis—R.

Pacific Coast

—

Tennessee

running in the Chronicle-^
to Mark Merit, in care 0"
Schenley: Distillers
Corporation
write

La Salle Street."

on

available are circulars on

;

Wholesale Distributors
Middle West

Wall*Street,'Nevv York 5, N, Y.
General

York 4,

Inc., 41 Broad Street, New

Distillers Corporation
of articles they hav»

Schenley
—Brochure
been

ft

*

in the ihbusiness for
until his re¬

Mr: Marks came to New

&

Engineering.

„

V

Dealers

Securities

37

than

more

He was 69 years

N.Y.

.

tirement in

after

effort, and postwar develop¬
ment—J.: G.' -White & Co., Inc.,

•

cular—Seligman, Lubetkin,& Co.,

comparison—H a y d e n,
Street; New

position,

prewar ".

Company.

ney

A

war

„

available

Also

Also

Member, National Association

of

and- Welder

Co., 15 Broad Street, New

his &

N. Y.

CARTER H.C0RBREY&CO.

Machine

Federal

graph—Discussion of the coming
A. T. & T. financing—Kalb, VoorYork

-

banking

York %

memoranda

Distilling Corp,:

Merchants

and

<

.

Telephone

"American

are

South Carolina Electric & Gas

Co.—Study

Forecast—J. F. Reil-

Long Term

ly & Co., Inc., 40 Exchange Place,
New York 5, N. Y. Also available
are
the following: Election Day;

'

available

Also

Broad¬

32

Barken,

New York 4, N.Y.

way,

'

Insulator—Memoran¬

American

dum—Peter

:

.

Corp.—Memorandum—-

—

'

H. Marks,

Lawrence

Stone &: Co.. 25 Broad

1420 Walnut
Street,. Philadelphia 2, Pa.
on

available

cale

••

Lawrence
,

vestment
San Mauricio and United Para-

Brothers,

Buckley

;!

New York 5, N. Y. 2 2;.'r,

way,

5, N. Y,,;
Also

St. Louis-San Francisco.

on

Eastern

of capital

-

dum

|

Co.—

Anaiysis^-Steiner, Rouse
25 > Brbadl:Street^ ;NeW ;York ■ 4V
N; Y.
-.
■
'
■ " •

memoran¬

a

r

for determining

chart

available -is

Also

Manufacturing

Rockwell

Rio Grande Western

&

tax manual

a

current tax

ity

Denver

Railroad
Co—Discussion
of infor 1946— Stocks—A list of
explaining appearing attractive at current interesting possibilities-—Vilas - &
levels—H.
Hentz
&
Co.,
60
Beaver
Hickey, 49 Wall Street, New York
laws, with particular
their effect on secur¬ Street, New York 4, N. Y.
5, N. Y.
t:2ftiftftft

2- Investor's

■

An address by Mr.

fore the American

Taylor be¬

Conference, New York City,

Oct.

17,

.

v

as we are

time to

the
that
r

a

foreign

Merchant Ma¬

rine

1946.

passing from war¬
peacetime economy thus
warrant
particular attention at
this time. The interdependence of
tions

of

the

trader's interest and
shipper -1 places

(Continued on page 2105)

j;he
;

!

,

[Volume v 164

THE, COMMERCIAL &

Number 4536-■

J

FINANCIAL CHRONICLE

2079

Wfc

producer

every
once a
come

V'.-..

#y PAUL einzig /'V

-:

rv'

v:

7

■

jAsserting British export boom in face of home shortages has hamprogress, Dr. Einzig contends emphasis placed

NSTA LEGISLATION COMMITTEE
'

' SeburUy^ -Traders ^ Association.
appoint a'- specialt ,.committee ; .to
analyze- the legislation proposed ..by- the Securitiesand Exchange Commission reqiiesting additional
information on unlisted companies, according to
Thomas Graham, The-Bankers Bond'J Company,
President of the NSTA, in a letter to Robert McConnaughey, a commissioner of the SEC.-.:
*:
The committee, Mr. Graham ^declared,-.will
be instructed "to take a thorough look and to

National

"The

•

to

very

ateness for

do.

ation

most

to

be

The

sre

these special

few of

The
^

Petersburg.
The

>

.

of

accent

southern

cute

Paul

McClsaary

George

Mrs.

of

St.

Jk

good sportsmanship of Mrs. Robert Erb of Cleveland.

The unfailing poise of-Mrs. Bob

McConnaughey^f Philadelphia:

It is not

unerring &raciousness .of Mrs. G< W. Hyett of the

Road.

£•

'

'

Milwaukee

its

ignored;
means

rising. On the

and

worked

to

the government's
increase of exports

merit

who

hand,

on

situa¬

.

were

'

and

/

DETROIT AND MICHIGAN, INC.

-

Traders.

Securities

and

Detroit

of

held

be

will

•

on

Association

Michigan, .Inc.
Nov. 8 in the

Detroit.

Penobscot Club,

the

ness

dinner,

►

^ VYY'Y

'Y

:

i

F.

&

Rothschild

David

•

Don

offices of

Leven

has

Lexington Avenue
City, to engage in the

securities business under

120

th§ firm

of Leven Brothers.

nanje

Broadway, New York City, mem¬

opened

710

New York

announce

"-them

partment.y
Mr.

-r ;

y

D. A. Pincus & Co.
'-

De¬

i[ ■-

New

•

partner in W. W. Lanahari

A Co.

York

retire

Mravlag in the past was a

from

Stock

Exchange, wil

partnership in D. A

Pincus & Co.

Oct. 31;

on

know

the

that

.We have prepared a bulletin

We must make
.attractive

markets
Reserve

credit

cities.

again to the Resolution we trans¬
mitted to them in October of last

in effect.

;

"An

out¬
rec¬

the

year
E. William Ohman

:^0/rsZ-;

Copies

available

upon

serve

ernors

us

•

an

our

Ohman

said.

every

this

move

marily
but

sense,
a

as

was

was.

a

our

not

intended

their part

of

community

unwarranted

the

whole

and

would

and

thin markets. This wire
to

are

the

Governors

of

Stock Exchange at
meetings and copies

say

Mr.

pri¬

gesture of friendship
hard-headed business

on

Active

request

Optical Co.

v'-wjL<./•••

Schram

Stock

of

one

v,. ••

J

YV'

£'.-S, ...V t

t. b.


e


-

'•«"

in the in¬

New York.

"Looking

and

New

to

-V'/P-'

on

7

York

the

■

"; *

V-:

.r.

J

*/.*'•;

7

the;, future

almost too obvious to

seems

231

SOUTH

p;

2

'S

v'.i. •.} *

LA SALLE STREET

CHICAGO 4, ILLINOIS

TELETYPE CG 36!

As¬

it

PHONE STATE 0101

Aeronca Aircraft
*

Decker

\

Old

7
*

Coal

Corporation

Mastic Asphalt Co.

Miller

Manufacturing Co

Seven-Up Texas Corp.

National Tool Co.:

Hamilton Mfg. Co.
p
James Manufacturing Co.

Ben

Long-Bell Lumber Company

OF

Compo Shoe Mach. Co.

Industries, Inc.

Hydraulic Press Mfg. Co.

Weyenberg Shoe Mfg. Co.
,

Corp.

Manufacturing Co.

Howard
*

St. Louis Public Service Co.

Nekoosa Edwards Paper Co.

Trailmobile

*Detailed

Company

analysis available

on

request.

COMSTOCK & CO.
Chicago Stock Exchange

225 EAST MASON ST_
PHONES—Daly 5392, Chicago: State 0933

,

CHICAGO 4

1200

MILWAUKEE
}

...

(2)

231

So. La Salle St.

Teletype MI 488

f
Si

i,

,

I

77:

^ ' V

'»

i'"

* •

*

-i' *

*

Dearborn 1501

Teletype CG 955

s

Vi'

."i

:'4
:v->

ADAMS 6- CO.

men¬

tion that the need for

Northern Paper Mills Co..

:

■■

■*

A **""" * -'

'into

-Vf
Cons. Water Pwr. and
Paper Co.i

r J

'.v

•

v
•

J

Request
'i.

ivPj

sent to

organization
the door opened to us to offer our and
concerted action by the men
help in shaping of over-all poli¬ and women in our profession is
cies, giving voice to the producer's growing from year to year. Equal¬
viewpoint, and also have the priv¬ ly obvious is the need to have

$ 7

'

711771 ☆
;

:

*

Circular

r;

v

,'

Chicago
of their

were

the

Exchange

Exchange itself and
Security Business in general.
i"We, as a group, have thus had

of the

Members

..•1
■

i',v-

Common Stock

v

.

CG

Trading Market in

read

was

the

.yy

Teletype:

Tele. CG. 28

sociation of Customers Brokers in

Wisconsin Elec. Pr. Co.

CHICAGO 3, ILLINOIS
Telephone: Dearborn 6161

job."

Bausch €r Lomb

now

unduly
rapid price declines resulting from

organization

I venture to

Wisconsin Pr. & Lt. Co.

..

^

profession

our

life-time

we

confidence

business

capacity,"
Continuing, he

Chicago Stock Exchange

indeed friends of
in

a

avoid

advisory

Koeliring Co.

.

INCORPORATED

ranks.

our

attention

'

•

a

blood

new

Chicago 3f iii.

the Board now, permitting trading
on
a 50%
credit basis would re¬

this year

their Board of Gov¬

on

in

controls

We called

DOYLE, O'CONNOR & CO.
•

as

Tel. STAte 4950

CONTINUOUS INTEREST IN:

135 SOUTH LA SALLE STREET

con¬

135 South La Salle Street

J-

Lake Superior District Power Co.>

.

am

KITCHEN & CO.
j

protested against
regulations and suggested
prompt announcement from

these

that

our

in which

Chicago Stock Exchange
naming of your president store

on

Corporation

common

busi¬

airlines

sent a,
Reserve

thin

declaring

THE SECURITIES

Pettibone Mulliken

conduct, and I

tinuing infusion of
of high quality into

*

.

high

and

we

Federal

eral

o n,

the

Clayton Snyder, member of the

in

local

terest

that Paul yV.
associated with

is .now
in their Institutional

Mravlag

-

to

h ap t ers in
the principal

t i

a

decision

bers of the New York Stock Ex-

•change,

ethics

.

on Sept. 24
belief that existing,
resulted from Fed¬

Mr.

Leven Brothers in N. y. C

Co.,

Washington

o r

states that "While the officers of

L F. Rothschild & Co.
-

to

Board

to
Chapel

?.SV,

Mravlag Hew with
L.

terested

in

R.

of

survive

nor

maintain

our

telegram

a

from the

Harold

grow

not

organization.
i"Along this line you will be in¬

wj o r k of our
organization came to

will attend.

of

ness

ognition of the

mem¬

bers will be entertained by mov¬

•V;, H. Terry Snowday

with

our
best insurance in
this direction will be the con¬

intimately. This sort
of close contact and
vigilance
conceive to be the primary busi

recom¬

standing

ing pictures of the MichiganArmy football fgame. It is ex¬
pected that several of the officers and members of other cities

work

vinced

trends

formation of

I

Inc., is Chairman of
the committee in charge.

lins & Sons,

the

and

mended the

with

j
Snowday of E. H. Rrol-1

Following

do

we

standards

E. William Ohman, retiring president of the Stock Brokers' Asso
Chicago, in his farewell message to the membership ex
pressed grati£ i c ai; i o n at
ilege of watching developments

c
.

Association, announced that

H. Terry

47;

end

{

ganiz

of

neither

can

if

ciates of

national

4

-

Harold R. Chapel, president

this

IIIItaca M//

and

of the

The annual Fall Dinner

.

to

committees from other organi¬
zations affected. Our business

Retiring President of organization tells fellow members they should work for removal of Reserve prohibition
against margin trading.

and
prestige
gained. by the
organization

ASSOCIATION OF

SECURITIES TRADERS

busi¬

our

be required to
accomplish the desired result
may

Chicago Stock Brokers'Associates

confi dence

femmes tvho went along.

of the

One

as

mid-continent

Louis.

many more

*

Consequently

TRADING MARKETS

such treasures aboard, and those men¬
tioned: were duplicated by others. WO shall hope to bring home more
of these from Boston instead of just souvenirs.
There

like

Ohmanfs Farewell Message ta

,r]

The adlibbing ability of

i

and

all

group.

profession.

ness

are

2109)

insistent
would

we

ing such changes in

business

page

na¬

believe we ought to give a
great deal of attention to mak¬

have every reason for

(Continued

a

it originate right from

see

our

horse racing event

other

such

I

enemies.
the

sure

our .own

a

On

become

am

,

increase of absenteeism

did

for

need

F

a
snail-like pace, in spite of the
catastrophal, housing
shortage.
They are their, government's worst

harder

They

are:

"2. We need to attract
young men
and women of high
grade to

drop in the coal output.
Building workers are working at

to

an

every

an

my

national organiza¬

a

the

ready
I

classes which

appeals to the miners

limit. Wages

workmen.

respond

of Mrs. Star Koerner of Chicago. : :

Ed Kelly of New York,
f
vt The peerless charm of Mrs. Ed Beck of
X j*
; A dancing
partner like William Koeth of Cleveland.
The amiability of Mrs:. C. J, Newpart. of Chicago. •
.
J The reflected glory Mrs. Ed Welch must feel because her husband
Was responsible for our having a perfect trip all the way.

I

well's

in

tion-wide organization has al,

The good grooming of Mrs. Thomas Montgomery of Chicago..
The stunning wardrobe of Mrs. E; E. Parsons,. Jr. of Cleveland.

The vivacity of Mrs.: Jack, Morris of Atlanta. ..
I The musical talent of Mrs. Richard Walsh of St.
-

not

other

appeal for

•

The ability at bridge
'

to have

reached

trade

paradoxical

a

working

out

principal cities. I feel strongly

,

brought in the Labor Government

if workmen engaged

as

export

.;,:.

.

last year are letting, down their
government. Fuel Minister Shin-

Cheap
policy

hand, export trade is sur¬
passing even the most optimistic
anticipations. " v
•
L
in

is

-

0'.

stand

tion of Registered Representa¬
tives, with local chapters in

receptive

is slow.

other

han

The

\

This;

:

equally

markets.

tion,: The

,

>

^

and the culinary art of Mr. Dyke of the

The ability in cuisine

^

Einzig

and prices are still

the

overseas

industrial

seems

qualities and characteristics we noted in our

fellow-travelers:

to

reconversion

money

Souvenirs! Yes, we brought home all we could carry, and they
nice to have.. But we wish we had been able to bring home a

kets

progress

of

,.

much
desired.

which

"1J Building

en¬

far, from adequate industrial out¬
put from the starving home mar¬

situation

leaves

merchants

organiza-

can

vote ever-increasing attention

building workers did. It is the in¬
and

at

added

work

or

gaged in export trade who re¬
sponded. It is they who are divert¬
ing a very high proportion of the

food

•:

miners

dustrialists

listing and also to

Thomas Graham

coal

situ¬

factory,- The

study .very care¬

than

more

housing

carefully what constitutes appropri-

5CHE FEMININE VIEW POINT OF THE NSTA CONVENTION

>
.:

is critical. The

is

the

that

any

unsatis¬

fully the nfatter of the removal-of unlisted.priv¬
ileges ;on; all exchanges.'' *
- „
«
^
.

•

The

situation

coal

„

study

of

expected <$•

was

we

our

mind, and to which I hope the in¬
coming administration and suc¬
ceeding administrations will de¬

LONDON, ENG.—There can be no doubt that export trade is the
sphere in which the Labor Government has done better than it

one

that

so

it

privilege to be¬

of

speak and act
authority of full
representation. Two major pieces

'•

will:: shortly

consider
a

member

a

with

jpered reconversion

by the labor Government and by British industrialist* is resulting
tin selling goods abroad at bargain prices.
Says situation is due to
efforts-of manufacturers to please Government so as to avoid intervention.
Holds export drive is grossly "overdone" and is a shortjsighted policy.

ion

duty and

\

Contrasts Within

Ohio Brevities
-*

investment

An

group

and Northern Trust Co. of

headed by McDonald & Co. of Cleveland
Chicago, offered $1,600,000 of 1#% school
Lakewood, residential suburb of Cleve¬

reported that it was 85% sold. The
100.628.
additional construction and improve¬

The3>
to1 the board now holding $4,300,000 of its bonds compared with
yield 0.70% to 1.50% to maturity.
$1,700,000 held by the public
They mature serially at $80,000
and $600,000 by the city treasury
annually from 1948 to 1967.

transit
board operates the municipally^
owned street railway. The bonds
bear an interest rate of V/2%.

were

land, Fahey,
Clark & Co. and
Merrill-Turben & Co. and Braun,
-• >

Toledo.-

I'.

r

v

-

•:

of

last

the

Co.,

&

Bosworth

'«

.

James F. Lincoln, Presi¬
ded announced^- =/ZZ
Taylor, who served with the
Air Corps in the first World War,
was
appointed Vice-President in
charge of sales in 1928 and has
bebn a director since 1927.

A

the

split

Following; the

dividends of;
80 «ents and Class B will be en¬
titled, under certain conditions;
to non-cumulative dividends up
Zr/Zf
'/ *
*;

to 40 cents.

has been elected
Vice-President of the

company,

shares will receive

*

*

}

-

.

schedules "

in

'

airport, the traveled from central
v
n...v.^ -Europe-'^ has
the feeling of
being a charin

acter

Switzer¬

land still exist

this

ex¬

hausted

really

ever

exist? It

seems

bid of 99.279 for Cleveland. He formerly was chair¬
l3/4s. Harris, Halh& Co. bid 99.154 men of the American Transit As¬
for i3/4S find Blair & Co. 99.766937 sociation's bus advisory committee.

weeks in Ger¬

f-;'

*

unbelievable,
almost, to one
coming from

Railway Co. on a

clusive.

*

*

— -

*

•-

-

•

•

/./•;/:

stone
year

$625,000 of Fire¬
& Rubber Co.* 20-

of

total

FA

Tire

3%

lj, 1961,

debentures, due May
redeemed on

are being
first
of the
.

month. The
bonds are being selected by lot
ahd should be presented to the
Cleveland Trust Co. or J. P.

the

Co.*

&

Morgan

New York,'

'

•

*

/</:

;

-

<

-I

* *

•

two for one and par
is $1. It formerly was

split
now

no" par. *

:•!l/'

.

Wallace

De

""/•

~

y.

*

Laney was elected

Presi¬
dent and T. W. Miller, Jr., First
Vice-President; George A. Meiler,
Secretary-Treasurer, Z. T. Wile,
Assistant
Treasurer
and R.
C.
chairman of the board and

Johnson, Assistant Secretary.
'V-F.'.-br-"v';

*

V.

*

*

of increased

ing positions because
living costs.

the

800,000
city

of

of

purchase

fund

Tressel With Merrill Lynch

Office

In Cleveland

$1,-

commission,

tations
New

OHIO—John J.
Tressel, manager of the Cleveland
office of Merrill Lynch, Pierce,
Fenner
& Beane,
216 Superior
Avenue, N. E., announced Thomas
B. Ross has been assigned to the
Cleveland office as account ex¬

From

lake's

the

evening
neon

glowing

their

come!

one

Oriental

a

scandals

and Corporate

:

Philip Carey Com. & Pfd.

Securities

safety

S t

(Incorporated).
Established

/

.

..

.

1

Stock

1899

New

York

Exchanges—N.
Dixie

CLEVELAND

and
Y.

Cincinnati

Curb Assoc.

Terminal Building

CINCINNATI
Chicago
Denver
Columbus Toledo Buffalo

bonds

shore

in

looks

on

2

New York

Tel. Main 4884

Tele. CI 68 & 274

•

its

with

e,

displaying

fur coats, watches,

electric razors and shiny
" shoes,
bananas,
—
what you will! The

not

—

dollar

but

—

Ameri¬

the goods

are

ration

•

,

14,

Ohio




and

frame

They

men.

the

measures

and determine the time when

be

will

While

we

sistance

sometimes have the as¬
who

Democrats

of

is
Only

theirsupport

wavering.

;

principles,
uncertain and

Republican

a

*An address by Senator Taft at

Decatur, 111., .Oct. 16, 194-3. '

.

,

'»
•
have
.

not

do

an

oppor¬

Curley Brooks.
For the last six
he has fought steadily for
American principles.
He has not
hesitated to incur t^e enmity of
those who smear anyone opposing

years

the PAC program. I look forward
to four years more in the Senate

sitting by his side.
I strongly urge the re-election
(Continued on page 2091) ///

\

with

so

eats very

one

trast

There

food.

style/ Such
the

with

of

cities and Vienna.
That I

am

the

is

ruins

changing financial conditions. Holds system has been vital force
in financial development of a free economy, and present problem is

■

/';..vH/

in Switzerland today

by plan, but one of those
fortuities which require of today's

is not

traveller

in

Europe

either

banking and monetary conditions favorable to

to maintain

and rising level

a stable
of production and consumption without inflationary

speculative pressures and without undue monetization of public
private debt. Says traditional instrument of general Reserve
credit policy has been weakened by necessity for maintaining
orderly conditions in government securities markets and for protecting pattern of interest rates, and sees need for amplifying
or

or

much

/

credit controls.

appreciate having the opportunity to talk to you today about
System in credit control. Morris Plan

I

banking

con¬

/'

System1

Young traces role and function of tbe Federal Reserve System Z
points out constant need of adjustment to'

Dr.

are

German

Statistics, Board of

in credit control and

the role of the Federal Reserve

to be sure, but
well indeed and in

System and

Governors of the Federal Reserve

Reserve*

Federal

and

banking stem from the same so¬
cial background and are about of
the same age.
Both had their

origin in a period of thorough¬
going reappraisal—by the public
—of
the
functioning of banks;
and
both have passed
through
the

periods

same

stress

Of

financial

and change. Because of the

Another

circumstance

makes

a

review of the role and function of

the Reserve System in credit con¬
trol

especially appropriate

occasion.
the

That

on

this

circumstances

is

which we find our¬
selves in national banking devel¬
opment. We /have just passed
through a period when the na¬
tion's banking resources were pre¬
dominantly absorbed in financing
stage in

adaptations that have been made
to newer situations, both systems
total war. We are now endeavor¬
have turned out to be somewhat
different institutions in
method ing to readjust our banking opera¬
tions and activities to \tfhat

we

de¬

and in function from
conceived at their or¬ voutly hope will be an enduring
igin. But men of broad vision were period of neace.
This transition must be a grad¬
associated with their founding-

of operation
what many

men

Richardson

who by
aware
are

that

agencies of fi¬

dynamic

needs of the

Field, Richards 8c Co.
Union Com.

Bid;,

CLEVELAND
Tele. CV 174

Union Cent.

BIdg.

CINCINNATI
Tele. CI 150

ual

one, because the assets of a
banking organization geared to fi¬
nancing total war can only be
institutions, slowly converted into assets ap¬

experience and study

changing

NEW YORK 6

still

By RALPH A. YOUNG*

INCORPORATED

29 BROADWAY

?j.^

•

You

Asst. Director, Division of Research and

and

Teletype CV 594

is

Credit Control
J;

sensitive

14

Administration

by the idea that we
spend ourselves into prosper¬

The Federal Reserve

nance

Members Cleveland Stock Exchange

be¬

American

in

lieve

they

to ; Congress.

presented

WM. 1. MERICKA & CO.
CLEVELAND

Commerce BIdg.

Cleveland

mittees

form

;

coupons,

Harshaw Chemical

Union Commerce Building

1582 Union

the" com¬
"appoint; the chair¬

Congress. Z They

were

Exchange

measures

check inflation, be¬

tunity of electing a Senator this
year, but I
could not come to
Illinois
without
expressing * my
great admiration and affection for

the

Cleveland Stock

in¬

ity.

organization of

an

Company
Request

war

Only a
will have

dominated
can

the

Drackett

on

has

Congress
to adopt

to

the

cause

Robert A. Taft

the

of

Communist

in

Wellman Engineering

Circular

the

it

courage

necessary

the

government. :

has control of the

(Continued on page 2113)

Members of

the

in

been
a;;; hard . \„ •.
^ . . ,.
battle because the Administration

broad

the

down

r a s s

tastefully

are

sale!

for

W. D. Gradison & Co.
•»Members

Republican

American

razors,

prewar

OTIS & CO.

and

reg¬

home and

here, not merely on display, but

,/ Red Top Brew

investigation

fluence

American

farm,

real

the

of the

ulation

hand¬

see

looks down its nose at the

*

to-,

complete

with
many
pleasantly
messages of wel¬

rugs;

all sorts,

And

Distributors of Municipal

the

trend

of the Admin-

always cheap in
for Switzerland
perhaps alone among the nations

Land Trust Certificates

block

frame

can

program

is tr a tion

glasses, cameras, clothing of

opera

can

Underwriters and

been

to

steady

chocolates

Whitaker Paper

have

able

brightly lit street lamps, is like
walking down Fifth Avenue. On
each
side
are
rows" of
shopwindows

Sport Products

tive

While

somewhat

signs,

walk

To

Bahnhoff

past six months he took
company's intensive training
course in important phases of the
securities and commodities busi¬

Gruen Watch, Com.

Cincinnati

we

an affirma¬
within American
principles of liberty ' and equal
justice.
Only a Republican Con¬
gress can frame a definite plan
for
reducing, expenditures and
then reducing taxes.
Only a Re¬
publican Congress can undertake

Congress

of

city,.

_

colored

ecutive.

ness.

to Decatur and urge
Republican Congress this year. I cannot

elec¬

an

tion.

London,

American eyes

j

such

Paris;-and
Zurich. Only the Berlin Stock Ex¬
change board stands blank.; 4/v

illuminated

CLEVELAND,

can

stocks < and

of

York,

prices

,

are

but

one

real pleasure for me to come

digits of gold; the latest quo¬

early

the

its bonds from the

sinking

all,

bank, windows
set

For the

Cleveland Transit Board au¬
thorized

at

portanoe

pressing facilities. jeeps, mirabile dictu; nor/ any
: \
Furthermore,1 teachers are being foreign troops!"
forced
to
seek
other better pay¬
The coins are of silver! And in
Incorporated, ;

Splitting of common stock and 1 The majority of the issues; are
in the 2 and 3-mill class, with
of par value was ap¬
others ranging from 1 to 8 mills.
proved by Faultless Rubber Co.
stockholders. Present common has
been

For here in Zurich

ruins

no

a

the/.im-v'

size

enrollment/is

changing

value

.and Czecho-.

nice, newtaxing districts in Cuyahoga looking buildings! The streetcars,
County
(Cleveland)
will seek shiny in their toy-blue paint, have
voters' approval on Nov. 5 of tax glass windows instead of boards
levies and bond issues running where windows should be; and no
passengers
cling to the* outside
into the millions of dollars.f
Various members of the school steps! The motorcars purr uncon¬
by,
and
no; crowds
boards, school officials and teach¬ cernedly
gather in the streets to admire a
ers have pointed out the need for
new
Chrysler! Nor are there any
new
equipment and that heavy

•

j-

32 school

A total of 21 of the

Austria

many,

Bratter

\
Slovakia.

priced to
yield 1.10% to 2%. They mature
from Nov,.; 15, 1947. to 1956 ml%s/The issue was

for

M.

Herbert

Likens

over-empha¬

wards

■*y'C -/- ment for the Captial Transit Co.,
A
Halsey,1 Stuart-Otis Z& Co. Washington, D. C., has been ap¬
grpup was; successful bidder for pointed motor coach sales manager;
: v
'
$2,740,000 equipment trust certifi¬ of the White Motor Co.
He
will have his
offices in
cates
of the Western Maryland
■

It has been

con¬

tinent? Did it

equip¬

affirmative

artificial export business and forcing prices up.

an

the importance of electing a

a

fairy tale. Can
such
a
place
as

an

present situation to conditions after World War I.

the
the

of Zurich by bus from

\

frame

can

present price situation to President Truman's eco¬
policies. Says inflation has been encouraged by Administration's liberal spending policies and that resulting tax burden
is grossly excessive on all classes. Favors a reduction in Federal
budget to $25 billions, and attacks foreign lending program as

creating

deposited

suddenly

.

on

of

;

ZURICH, SWITZERLAND—Be¬
ing

Republican Congress

a

nomic

requiring great flexibility.

heart

Z :

,

Taft ascribes

highly uncertain*

are

Senator from Ohio

S.

within American principles of liberty and justice, Senator

program

an abundance of
food.
Air travel

*

superintendent

U.

Asserting only

Reports

clothing and

lA. F. McDougald, for several
years

:

". •

'Clarence M. Taylor, with the
Electric Co. of Cleve¬

Executive

of both Class A'
and B stocks,v boosting the au¬
thorized A shares to 400,000 and
B stock to 216,000. :>•
*.
!

•"

land for 30 years,

split

for-one

-■

<

Lincoln

j?
i Greif Bros,, Cooperage Corp.
stockholders have voted a fouri:t

tinent.

The

fund.

investment

of the group
•National"City Bank of Cleve¬

Other -members

"Chronicle"

Correspondent contrasts Swiss
"Fairyland" with the remainder
of the ruined and exhausted Con¬

reoffered at prices

were

Can Check Inflation
*

<

/

HON. ROBERT A. TAFT*

Special Correspondent of the

property.

school

of

ment

bonds

Republican Congress

a

BRATTER

By HERBERT M.

land, and soon after the offering
group won the issue on a bid of
will be used for

Only

Europe

district bonds of the City of

Proceeds

Thursday, October 24; 1946

CHRONICLE

THE COMMERCIAL & FINANCIAL

2080

to the propriate to sound banking in
economy. peacetime. Not only must this
transition be gradual, but it must
*
and orderly.
An address by Dr. Young be¬ also be. disciplined
has taught us that
fore Annual.Convention of Morris Experience
Plan
Bankers
Association, Vir¬ stable banking operations are esresponsive

ginia Beach, Va., Oct. 22,

1946.

(Continued

on

page

2100)

164- Number 4536

Volume

THE COMMERCIAL & FINANCIAL CHRONICLE

index

Economists See End of Price Inflation in 1947,
Mild business recession expected

by most to

accompany

ured

decline

in prices, with employment, not seriously affected.

„

(which registers OPA ceil¬

ing, prices) but
from

greater as

actual

meas¬

current

prices

being paid in the market.

;

General

commodity prices will reach an early peak and then turn
downward in the opinion of a majority-of the 72 non-government
economists participating in a sur~£
——
:
vey
conducted
by
Thomas
S. number qualified this statement
Holden, President of F. W. Dodge by saying the drop would be less
Corp., the findings of which were if measured from the official price
J made public Oct. 19.

rises than do those of the major¬

ity

average of expected rises to the
price peak is about 40 points.!
As a general conclusion, it may

be stated

The minority of 12 who expect
the price peak after the end of
1947 naturally expect larger price

group.; The average of in¬
to the end of 1946 expected

creases

2081

majority consider that
inflation
has
price
very nearly run its course, while
the minority expect it to continue
into 1948 or beyond.
a

commodity

The 6 economists who refrained
from

specific
answers
to
the
by the minority is 10 points, the questions asked, cited uncertain¬

ties in the .foreign situation, do¬
mestic politics, government conrols, and union labor attitudes as
reasons why no answers could be
hazarded.
The

following

participated

the survey:
Adolph

Inc.);
of

G.

Dr.

v

Abramson

Eugene

Economics,

E.

Rutgers

(Continued

(S.K.P.

Agger

tions,

on page

with" business corpora¬

financial

versities

:

institutions,
vv;

'

-

Fifty-three
to

of

expected

and

occur

recession

to

the

the

peak

general
before

start

price

the end

1947, one expected it Within
months,: while'12 expected'it

118

after the end of 1947. The

ing

six

situation

peak

remain-^

the time

to

as

the

of

when the

current

Y

m

commented on the price
without giving specific

answers

■

uni¬

research

economic

and

organizations.

v.

™

'■*

*

m&r

INCHES

MM

JfjMk

movement

All but three of the economists

VIILLIB^

who expect a price recession before the /end Of 1947 anticipated

■

^

be reached.

may

the
downswing
in
commodity
prices to be accompanied by a re¬
,

cession in business activity,

only

of the. 50

one.

business

recession

though

expects, such

to

assume .se-

'

rious
of

proportions.

-

them

Twenty-three

characterize

recession

the

coming

24

as

of

them

"moderately serious." A-ma¬
jority (28 of the • 53) dov not exrjNpct .serious
unemployment; i 9
as

.

expect unemployment of moder¬
seriousness and 12 expect se¬

ate

rious

unemployment.

About half

expect buyers' strikes, and about
two-thirds expect inventory trou¬
bles and reduced business profits.

■

A "composite

of the views

ex-

■

pressed on the timing of the price
and
business
recession
follows:

goods

consumer

would

reach

and turn-down

.a

during

spring of 1947, building matearound

the

middle

of

next

other durable goods in the

year,
'

secondhalf, of 1947.

Eighteen of

the economists expect the turn in

goods prices before the
end of 1946. With regard to dura¬
consumer

tion of the

expect

downswing, two-thirds

it " to

last: less" than

•

12

dt "t

v m

months in

consumer good
prices,
60%- expect less, than 12 months
of downswing in building mate¬

rials

prices, and 55% expect less

than 12 months of

declining prices

in durable goods other than build-

ing materials.

,

/.Pointing

:

-

-

Labor Statistics'

index

sale

all

: ■

prices

stood

of

128.4

at

economists

of

Aug.

on

24,

asked

were

whole¬

commodities

the

to

esti-

; mate the extent of such rise

that

figure
time

over

they might antici¬

as

pate by the end of 1946,
the

You make the

out that the Bureau of

the

index

and by

reaches

its

Financial Weatt

anticipated peak.
V

■? Among the 53
anticipating a
price peak before the end of 1947
the

extent

index

of

the

to

follows:

rise in the general
end

of

1946

was

anticipated a decline
from the Aug. 24 figure
(128.4),
8 anticipated zero increase over
that

figure,

28

ranging from
7

anticipated

or

.

answers

was

crease.

•'::

to

9

rise

rises

points, and
of

10

points

average of all
about 5 points

the

in: >'•

:■.
.

On

2
a

The

more.

anticipated

\"v»

'

\

'

...

•

-V'" ._:-v ;•

points the general index would
from Aug. 24 to the antici¬
pated 1947 peak, the answers were
follows:

,

all economic questions

a

meeting

increase,, 7; in¬
ranging from 2 to 9 points,
16; increases from 10 to 15 points,
13; increases of more than 15
points, 10.

The average of all the

increases

business, about

ground! for all shades of

affect the national

public opinion

are

♦..

majority opinion
moment

and the

of

the

reflected

that

BEWARE OF "THEY SAY"

welfare,

:

daily in the

the Exchange offers this
advice: At

You, as a part of the American

Thus, this financial market¬

investing public, help make

place—one of

great free

the weather in this financial

institutions—records the

market. The Exchange itself,

indicated

was

a

i

or

■>

barometer-fashion, merely i

of investors. Their ideas about

records it.

With regard to building mate¬
dicate
from

in

a

the

smaller

peak

general

percentage drop

than would

occur

commodity prices.




A

on

alleged
"inside" tips. The grapevine
will always let you down.

vague rumors or

■

-little

rials prices, 32 of 42 answers in¬

time is it safe

investment decisions

composite opinions of millions

•

no

sensible to base your

under 10 points.
■i

through

the facilities of this market,

prevails.

our

To those who exercise their
financial "vote"

market quotations.

no

creases

"•!

election, provides

the auestion of the number

rise

,

the future of

■

of

as

A free market, like a free

as

5

New York Stock Exchange

Industries,

(Department

University);' Prof

;: The group polled includes eco¬
nomic consultants and economists
connected

in

'

i

2121)

'

1

«

.

■

^

.

.

Man's

Writers discuss such attributed

■

(1) Russia and fear of

for

visors—Selected

Super¬

History

Labor,

of

The

—

A

Evolution

Its

tion

It is

17, N. Y. — Paper
quantity.

25c

—

France

.

struction

•

Bank

and

for

the

received

of

loan

vanced

of

for

stated

purpose

of the loan is to meet the cost of

purchasing

and

importing

into

France certain equipment and ma¬

than coldly

modernization.
■

It

was

announced

in last week's issue of the "Chron¬

icle"
a

(p. 1995) that

from

a

loan

$500,000,000

request for

by

France

the International Bank

;expected.

5 '/.*'■

"

,

was

on.s ;

,

.

jtionv of >• t h
jfirst „li st

/loan

kets; the Bank will have to adjust
its
policy 1 to ^ those * conditions
without fvhavirigi
p&rticiilar >
-

e

of

:

shMe:

.

applica¬

s

annual

t

Problem

<

Board of Gov¬

the '

of

ernors

/

>

is i th<r
Bank's .crediLpolicy to be decided
upon
by the management
(the
crucial; ivprpbjem

'-^The

meeting of the

ruled partly

^

•\t'bwdit'siPoiicy^i^fe}^nts-v

tions: and. the;
f kr.

Bank.

Ernest H. Weinwurm
psychology and are there¬
Why should k
hyper-sensitive to maladthis particular stage be supposed
justments which periodically A b?r,t Er Yan Court..
to have such outstanding impor¬
plague our economic system.
These maladjustments are not always clearly discerned and almost tance. It is not so much—as many
never universally agreed upon.
Hence, in a politico-economic atmos¬
phere charged with confusion and^
vacillation, orderly switching or of the 1946'securities market..to,
liquidation may induce additional date. The urge to sell, assuming,
and often blind selling.
Panic is at times stampede proportions,

by

Slater

President

and

within

rectors)

t.

montns.

For the terms

few

next

the

included
agreements will

into

as

((Continued

:

on page

2122);

i

Needed: Reform, of

irrational

fear

is

that

the

of

little

a

unknown,
what we

of

had.

"

With the postwar business boom
still in the making; the absence
of usual elements associated with
severe
price
declines — inflated
commodity prices, rampant specu¬
lation on borrowed money, swol¬
len inventories
(see below), or

dwindling consumer demand—has

nevertheless had

ratioriaLbegin-,

a

Constructionlndustry

ning and must come to a - logical
end.
But the multiplicity of rea¬
sons
generally ascribed for the
the

in

is

decline

a

measure

mindvt

upon,
(

In

'

restrictive

-

to.

on page

.

,

Asserting 'constructionindustry is costly and wasteful, subject to
feasts and famines of seasonal and cyclical demand and to illegal
Mr. RumI points out

measures,

progress

in housing is

disappointing. 7 Lays blame on Congressional delays, and calls for
a thorough investigation lor stabilizing the construction industry^ •

?:

.

therefore

order

(Continued

the in¬

,

Reasons?

•By BEARDSLEY RUML*
Chairman of the Board, R. II. Macy & Co., Inc.

of

fact

of

tempo

infringing

and fancy

vestment

itself

swift

recent

heightened the apparent mystery

clarify.

Says public works alone cannot effect stabilization, but should be
a program for government regulation of

2121)

reused in connection with

industry^ Says this would foster competition
and would be large factor in promoting prosperity
the United States and throughout world.
.1
e

whole construction
and lower costs,
in

SECURITIES

;

be made

80

Nov. 1. 1946:

on

per $1000

bond

'' 26.00 per

650

bond

23.75 per

1000

bond

$16.25

*_______

Brpad Street

BOUGHT

_ _

(Greenfield_________

Kramon Development
Lewis

SOLD

_______

Morris

Macrid

_

Maple Kissena

QUOTED

★
v

•

Pennsylvania Building ,
Textile Realty
J Governor Clinton
Roosevelt Hotel, N. Y.__X.________
____

16.95 per

1130

bond

17.50 per

1000

bond

22.50 per
20.00 per

1000

bond

1000

bond

1000

bond

1000

bond

15.00 per
25.00 per

______

Madison

★

bonds will

-"p"'

Remsen

A. M.

real estate

the

on

_

6.93

per

12.00

per

346.50
iooo

bond

:K' bond

20.00 per

1000 m bond

25.00 per

1000

bond

dustry
whole

Membart New York Stock Exchange
Membert New York Curb Exchange

40 EXCHANGE PL, N .Y.
Bell Teletype NY

Dlgby 4-4950

1-953

Genessee*Valley
Incorporates

Fagan & Co. to Admit

»

Co., 41 BrOad Street,
New York City, members of the
New York Stock Exchange, will

'

as

a
an

struction.
I want to make it clear that my

attitude
toward

\with

some

/;

thee construc¬

originally

k

inter-

an

admit Irving Herzfeld to partner¬

ship

on

Nov. 1.

California & New York

Hotel 2s

Brooklyn Fox 3s
Chariin

1958

Grant

1957

155

W. S.

A.

New

Majestic 4s 1956 W. S.




Units

Bldgr. 2%s 1957 W. S.

Hotel

Lexington Units

Hotel

St.

purveying of color¬

During the 20's, the government
taught us to believe that public
works might be used to help even

from

study

a

Beardsley

and ± conservation

works

Ruml

b 1 i c i

p.u

in

element

national

fiscal

as

one

policy,

*An

by Mr. Ruml be¬
Electrical Con¬

address

fore the National

tractors Association, Atlantic

Cit^,

out

"

'

.

business cycle.

But dur¬

illusionment
use

of

17, 1946.
...

the

;

ing the depression of the 20's, we
came
to have
a
profound dis¬
with respect to the
public works as a means
sustaining business activity.
(Continued on page 2106)
of

r

Hotel

York

Cuba

C. 2s

6s

1959

W.

S

1955

HELP WANTED

Pittsburgh Hotels Common
Roosevelt Hotel 5s

" •! POSITIONS WANTED

1964

Savoy Plaza Class "A"

George 4s 1950
East

1956 W. S.

Incorporated
Broadway

Tel. BArclay 7-4880

OTHER CLASSIFIED ADS

Savoy Plaza 3-6s 1956
42nd St. 3s

Amott,Baker & Go.
150

EXbrook 8515

in sensational¬

interested
in the

for

National

Montgomery St., San Francisco 4

Tele. 8F 01 & 62

or

ful anecdotes.

policy,

Comfton

Hotels Statler

New York

Hotels

51

J. S. Strauss & Co.

not

ism

fiscal

N. J., Oct.

W. S.

Bldg.. 1st 4s 1945

Eastern Ambassador

Real Estate Issues

am

OFFERINGS WANTED

.

Ambassador Hotel L. A. 5s '50 W. S.
Beacon

of perfectionism. "If
remarks are critical,

est in national

rv.

Trading Markets:

£¥

■

Fagan &

ROCHESTER, N. Y.—Genessee
Valley
Securities
Co.,. Powers
Building, is now doing. business
as a corporation.

or

of my

wrong impression, I should be the
first to want to change them.! I

industry

derived

from

the industry and

problems is not one* of

they -are not unfriendly.
If they
are
incorrect or if they give a

My'interest in

is

toward

its

hostility

its- parts.

tion

recently from the hous¬

more

ing crises (and^ its relation to cqn*

respect to any
of

Association invited

.

and

-

Firm

'

in¬

nor

expert

of

SHASKAN & CO.

not

con¬

struction

"11 West 42nd Street

,

on

am

Contractors

meeting, it did not do so under any misapprehen¬

authority

an

The following interest distributions
Court

★

I

sion.

We hear that:

Electrical

National

the

When

to address this

me

REAL ESTATE

•

Di¬

Executive

the

.

have

and

con-

fore

A.

eral

reconstruction

may

total subscrip¬
tion; publica-t

types and circum¬
are

assume—the question of de¬
veloping & Market tot the Bank's
obligations.To be;;true, this is.
an important matter.>But its solu^
"tion depends mainly/on the future
situation on the main capital mar-?

the

.amounting to
20%. of their.

accept

we

The

for

jt.r.i b.u.t i

mathematical phe-\

Prices

stances.

and

of

nation

a

vestors of all

terials required as part of a gen¬

plan

As

call

member

rare
often
manifold or

be

events:

statutory

-v.

declines
to

a

application requested that the lean
be made to the Credit National,
to be guaranteed by the French
The

'

nomenon, reflecting the hopes'
and fears of over 15 million in¬

an-

$500,000,000, to be ad¬
during the year 1947. The

Government.

the

but

The security
-markets, more than ever today,
t- are an intensely human, rather

Recon-

France

-The World Bank has now entered the second and probably the'
decisive chapter of its shorter history. This date is marked by three

growth and progresses matterof-cOurse,. but regard faltering
or-recession with superstitious

application from

Government

Bank bonds eligible for trust. invest¬

be expected to insist that borrowers furnish maximum

security in addition to the guarantees provided for in the Bank

„apprehehsion.

Development,
an

of

obscure.

; nounced on Oct. 21 that the Bank
; had

understood,

.

conceived

Seeking Loan

International

i 1 y

causes

•

Eugene Meyer, President of the

•

Charter.

for booms and optimism are obvious and

reasons

e a s

From Internaf'l Bank

of projects built and goods purchased

called upon to make World

characteristic of American business and investment

a common

psychology that the

;V

:

by

;/y

Lower

—

Holds segregation

tiated.

he remedied by more productivity

Inc., 247 Park Avenue, New York
rates in

\

from loan proceeds is decisive issue, and advocates they should
be used as collateral for those loans. Says state legislatures when
ments may

and bottlenecks.

Our

Time—Murray T. Quigg—Nation¬
al Industrial Conference Board,

'

•

Bank's credit policies presented

Executive Director, will have to be implemented
directions when actual loan contracts are being nego¬

in various

i

terms; (8) low rail rates in relation to operating costs; ?

profligacy which characterized war effort, and situa¬
and cooperation of labor
management. Sees better outlook due to removals of controls

can

on

J. W. Beyen, Dutch

of waste and

Brief

in

Writer contends statement

and

and
of

By ERNEST II. WEINWURM

(2) unsatisfactory labor conditions

war;

(9) foreign liquidation of securities; (10) marginless trading;
(11) undigested new capital issues. Conclude present diffi¬
culties stem from political considerations and carry-over of a spirit

reading list—In¬

Relations

Section, Cali¬
fornia
Institute
of
Technology,
Pasadena 4, Calif.—Single copies
complimentary — Quantity prices
quoted upon request.

Law

Crucial Decisions

,

tion

ment credit

dustrial

Banktraces S#

as:'

affecting productivity and profits; (3) OPA actions; (4) jconstruc-v
bottlenecks; (5) transition from sellers7 to buyers' market;
(6) increasing inventories at peak levels; (7) tightening of instal- §

Bookshelf
Relations

*

of stock market break

causes

Thursday, October 24, 194$

•>

,

1

By ALBERT E. VAN COURT and AUGUSTUS SLATER

:

Of Gross, Van Court & Co., Los Angeles

Industrial

>

V;

•

Reasons for Stock Market Breaks World

Business

.

CHRONICLE

THE COMMERCIAL & FINANCIAL

2082

'

4

.

k

9

'

SEE INSIDE BACK COVER

New York 7, N. Y.
Teletype NY 1-588

Sk®
>

Volume 164

Number 4536

THE

COMMERCIAL & FINANCIAL
CHRONICLE

i

LONDON, ENGLAND: (by Ca¬
)—-Wednesdays' London "Fi¬

ble

nancial Times" reports

in. financial London
the

failure

of

as

the

Monetary Fund

a

curiosity

to whether

International

to announce its
members' parities on Oct. 12
be¬
tokens difficulties and
consequent
>

delay |n .the Fund's expected
mencement

com¬

of

operations early
The
article
states
Manager Emile Gutt requested the
parities within 30 days of
Sept. 12.
That zero hour has
passed without
public announcement of the

next

year,-:

.

par¬

ities filed with the Fund and the

"Times", asks whether Mr. Gutt is

experiencing difficulty in obtain¬
compliance.
Calling the an¬

ing

to this question not unim¬
portant the "times" cites the de¬

swer

layed organization of * the Fund
this summer, and says
"procrast¬
ination over parities
might post¬
actual

pone

business

commencement

beyond

the

of

expected

,

early days of the hew year."
The

;

Fund's personnel,

now

in

London,: when contacted by the
"Chronicle's"
fused to

representative

re¬

speak; for/quotation

but

indicated their clear opinion
th,at
London views just cited are

the

based

inadequate understand¬

on

ing of the Fund's
Articles
of
Agreement.
Naturally the fixing
of parities in many instances
poses
great difficulty as was pointed
out

during

the

Conference.

Bretton

And

the

Woods

Fund

has

90 days from

Sept. 12 to sweat the
problem through.
The

Rubber -Trade

members
contracts

to

Association

henceforth

may

buy

sell

or

make

physical

rubber for

delivery and for ship¬
commencing Jan. X, when

ment

the

combined Rubber Committee
allocation system ends thus fur¬
ther restoring normal
marketing
methods. The contracts, however,
-

are

confinable to loose

rqbber

for

packed

or

delivery, ■ into

ware¬

house in

sterling producing areas
physical rubber 'for CIF or
FOB shipment from sterling pro¬
ducing areas to consuming coun¬
tries, excepting the United King¬
dom^ Such shipments will be sub¬
ject to normal export licensing
procedures and any non-sterling
preceeds must be accounted for
under Defense
Finance
Regula¬
or

tions 3
The

as

between

1940

and

1942.

for

authorizing 1947
contracts now is to avoid foreign
buyers sidestepping the London
reason

market.

don

Rubber

hope

traders

in

Stafford

Sir

Lon¬

Cripps'

statement next Friday on the res¬
of free market dealings

toration

will

clarify
operators.

prospects for

hedge

This advertisement appears of record only and is not, and is under no circumstances
to be construed to be an offering • of this
Capital Stock for sale or a solicitation
of an offer to buy any of such Stock. The offering is made
only, by the

Prospectus*

'

NEW ISSUE
,

}

100,000 Shares

Arthur J. Altmeyer
'

%

r

r-

,1

*

), '

"

>

s*

ti"

-

<""<1

'

•

Fowhes Brothers & Co.y Incorporated
'

V

Capital Stock
-

•

P.ar Value $1.00

;

{

address

by

Mr.

Altmeyer

before the Controllers Institute of

America,

New

York

City,- Sept.

16, 1946.




...

October 21, 1946.

may

\

.

Price $9,50 per share

Copies of, the Prospectus

Van
•;»*An

*

-

;

'

be obtained Trom the undersigned

Alstyne, Noel & Co

^ -

1

2084

;

hearings have now been com¬
pleted so that holders of rail se¬
curities will
be

Many rail analysts who have been cautious, and even

bearish,

for.as long as a year have recently been inclined to adopt a more
bullish attitude towards at least that section of the list representing
roads which over a

period of years have proven themselves funda¬

mentally sound.
There obviously can not be at any time any real
assurance that prices have seen their absolute bottoms.
It is char¬
acteristic of security markets that

they are regularly subject to extremes of pessimism as well as
no

declines

the

hand,

question but that
of
the
past
few

be

can

other

the

On

optimism.
there

have been available to return as
much

dends

the

Thus, whether

bottom

has

been

not the

or

it

seen

is

con¬

sidered in many quarters that the

arrived at least to start

time has
on

buying program.

a

of railroads with a

Stocks

profits

of

tory

■

'
his¬

back well
with en¬

going

into the last century and

viable dividend records even dur¬

depression

ing periods of severe

&

Paper

1st

5s, 1965

reduced

Most

are

so

to

months

12

favorable.

Fe,

appears

Such roads

Chesapeake

in

verse

their

of

influence

Arden Farms

of

sentatives

Marion Power Sliovel

roads anticipating

"

traffic

volume

above

previ¬

any

peacetime peaks.
Certainly
unless industry in general is going

ous

to

high¬

in 1947.

tributing
tor.

A railroad

ness

can

no

con¬

fac¬

other busi¬
not be expected to oper¬
or

any

with

faced

be

a

serious

and work

strikes

new

wave

of

pages

the outlook for production

stop¬

is highly favorable and high pro¬

heavy freight
This will be augmented

duction rates

volume.

mean

by movement of construction ma¬
terials

The

crops

and

shipment of bumper

to markets here and abroad.

high-cost replacements.

MEMBERS

Stock

Railroad Bonds and Slocks

I

Exchange

Broadway, New York 5,N. Y.
—

..

231

So.

LaSalle St.,

' vC.'\ "■
* i
Chicago 4, III.

^

r".,r ■■'■'y-iL

vr

\

It is es¬

within the next few
now being over 25
years in service.
There is great
need
for; new
passenger
and
freight cars.
Are the railroads to
continue to operate with the same
equipment until eventually it falls
apart and we have no railroads?
Or are they going to manage to
operate
with
a - profit
large
enough to attract investor interest
many

and

thus with the increased cap¬

ital

so

obtained

permit

replace¬

and improvements?

V

Need for Economy

D. L. & W.-SVJ. & E. 4-6s 2042

Canada Southern 3%

61

York

Stock

*

Broadway

ting more'effectively than the old
air-seasoning process.
Further, it
reduces the time necessary to ac¬

Exchange

New York 6
Bell Teletype—NY 1-310

Telephone—DIgby 4-4933

Electric Motors Co.

Howell

proximately
than

15

v

Situations

at

All, Times

rails help

costs.

Broad

New York 4, N.

complete arbitrage proposition on request
profits discounted

SUTRO BROS. & CO.
EST-

•

costs,

"

.

■■■'>■

1896

ever

before.

three

to

,

the

portation of the country is close
to breaking down and where the
government-owned roads are be¬
ing controlled and operated by
the labor unions.
And this brings
final statement, namely,
running
the railroads.
With an exception
of a dozen, I don't want a penny
invested
in
the
remaining 20(1
me

to my

that the labor unions are

Sleindeckor2# Years
With N. Y. Hansealie
Otto

H.

Steindecker, Assistant

Vice-President of

the

New York

Hanseatic Corporation, 120 Broad-

.A',

machines,

With

four

times

more

can

be laid manually and

costs

materially

track

than
mainte¬
reduced.

be laid in the same time

Otto

H.

Steindecker

may

and motive power

of today

be effected by the

installa¬

tie plates.

An

au¬

New York City, celebrated
twentieth anniversary with
Corporation on Oct. 21.
He
tendered a luncheon by his

way,

his
the
was

,

associates at the Bankers Club in
honor of the occasion.

1955
-

5s, 1955

Mclaughlin, reuss & co

Wall Street, New

BOwllng Green-9-8120

BOND BROKERAGE SERVICE

UNITED PUBLIC UTILITIES

Specializing in Railroad Securities

Common
*

Prospectus

on

request

ONE WALL STREET

NEW YORK S

York 5

Tele. NY 1-724

L h. rothchild &
Member of National

Philadelphia

Members New York Stock Exchange

ISLAND AIRLINES*

GETCHELL MINE

Adams & Peck

Hartford




of

Securities

TEL.

co.

Association

Dealers,

Inc.

52

wall

HAnover

street

2-9072

be seen

rail trans¬

„

can

loads

Telephone REctor 2-7340

LONG

Boston

.

protection of ties from me¬
chanical damage, caused by the
higher speeds and the heavier

NATIONAL SKYWAYS

63

where

The

'120 BROADWAY, NEW YORK 5, N. Y.

Trading Markets in—
Ref.

Mexico

maintenance-of-way

tion of larger

Ref. 4s,

in

because of higher labor

many

nance

Members New York Stock Exchange

Illinois Central

what this might mean can

departments
are
using
more
power-operated machinery than

•'.in¬

Teletype NY 1-1063

When issued

profitable business,

.

When issued securities

Y.

Telephone BOwllng Green 9-6400

a

of

of track..

Railway Company

RAILROAD STOCKS-BONDS

Street

use

St. Louis-San Francisco

Gulf, Mobile and Ohio Railroad Company
2S

The

longer-lived materials results in
greater rigidity and permanence

,

.

months to less
hardened and
to reduce high

Denver & Rio Grande Western Railroad Co.

i Partly
GUARANTEED

1

End

day.

a

maintenance
Selected

all of the railroad employees.

complish the seasoning from ap¬

welded

Harris-Seybold Co.

;

,

Stock

to

roads.

ing method for'ties and timbers,
checking and split¬

pflugfelder, bampton & rust
New

interest

the railroads,

an active managing
avail - itself
of all

to

up

government ownership is likely
to result.
A fair example of

six

to

which reduces

Members

continue to operate

it is

the railroads

four

savings in the new vapor season¬

'*

in

present management is to

the

years,

from

only real hope for con¬
tinued solvency of the railroads
is a concerted campaign to reduce
costs.
We have examples of such

>*•5 !*-!>

Analyses On Request:

interest

cial
If

The

leading Security and Commodity Exchs.

120

of rail¬

greater finan¬
their companies.

be replaced

.

other

and

officials

thousand locomotives will need to

ments

'

York

New

and

If management does not fight
for its rights to make and keep

that

timated

.

Ernst&Co.

Directors

roads should have a

.

In

profitable oper¬

ations this year and

least mod¬

at

a

'

higher rates in addition ate at a loss. Yet today, in the known and new methods of eco¬
operation.
Furthermore,
to
the
naturally
progressively greatest period of peacetime rail¬ nomic
must cooperate
toward a
way traffic, most of the railroads labor
greater control over costs.
Along with the prospect of fur¬ are operating at dangerously high fair relation between labor costs
ther rate increases and the grad¬ costs and are crying for higher and freight and passenger rates;
ual better control over expenses, freight rates which only postpone and, in addition, must find ways
of encouraging thrift and respon¬
the railroads are believed by most the day of recovery.
{
analysts to be facing a period of
The railroads, today, need many sibility for a full day's work by

given to estimates by

licity was

of

benefit

is

officials

doubt

the
di¬
and

'

Management's Responsibility

erately

that

Pennsylvania and New York Cen¬
tral. Considerable less press pub¬

vide it.

on

the

large

who controls the rates must pro¬

of

had

ofsuch

even

other¬

rectors

RogerW. Babson

plates,

finan¬

or

part

aggra¬

was

hip!

est in the rail¬

wise,

rigidity

the subject states that

cial

vated during the

:

on

installation

the

roads,

bv

traditional

lighted by the extremely bearish
estimates made individually by

Common & Preferred

This

first half of 1946
wage increases retroactive to
the beginning
of the year and
mounting other costs not compen¬
sated for by any rate increases.
Effective July 1 the roads have

own.

carriers,

expected to continue.
traditionally slow to

are

Great

was

the

1946

traffic first starts to decline.

considerable
publicity given to the dire earn¬
ings prospects depicted by repre¬
there

of

thority

though the heavier
It is not en- rails are not now to be installed,
t i r e 1 y
the will produce a savings per track
fault of man- mile of $500 to $1,500 annually.
But all these improvements cost
a g e m e n t,
although the money and where will the money
lack of inter¬ be found?
I fear that Uncle Sam.

get expenses under control when

freight rate

the

with

is

trend

Railroads

on

connection

half

first

the

t

govern m e n
owners

Earnings com¬
like 1945 months

with

with

the

are^

toward

racing

that

railroad train making ray

am on a

Well, my first thought is that

U. S.

our

railroads

become consistently more
favorable since the midyear. This

the general sharp par¬
ing of all security prices the rail¬
roads have had a particular ad¬

1927

being published I

inspection of

decided change

to be
Santa

factors

the

As this is
annual

have

Any such action would

from

is

picture

a

on

concerted campaign to

a

months.

recent

parisons
and

railroads enter

better in earnings results

for the

few,

been

Babson, in commenting

realistic and

be

market

railroad

should, on the basis of present
prospects, be well able to give
serious consideration to increased
disbursements over the intermedi¬

Aside

men

there has

Pacific

Union

and

Northern

as

Ohio,

&

Mr.

railroad situation, points out unless 1 >
reduce costs, they are rac- v
^ ing toward government ownership. Sees need for physical im- g
provement of lines, but expresses doubt that, unless rates are until -December.
increased, needed capital can be obtained. Urges rail directors and
believe that the
officials have greater financial interest in their companies.

grant a substantial part of the in¬
creases requested.
Another favorable aspect of the

important dividend rates
to be in danger at
the
present time and there is
probably no other of our major
industries where the prospect of
dividend increases over the next
six

By ROGER W. BABSON

predictions of
industry. { On the

least

at

rail

Challenge to Free Enterprise

of

the

Commission will

have a salutary psy¬
chological influence on the entire
better grade rail list.

gl

Preferred

pected

Actually

entirely.

no longer
almost daily

the

contrary, the market will probably
soon begin
to try and anticipate
the
freight
rate
action
even
though' the decision is not ex¬

appear

hearings

■

for

obviously

Chicago Railways

-

reports

any,

that

brought

Cons. "A" 5s,

be

to

is true. There

reverse

ate term.

Abitibi Power

i;

if

about

were

A

presumably

with

press

prices would appear to
possibility that divi¬

eliminated

or

On their

7.5%.

to

faced

doom

the

reflect

outstanding bargains among
the better grade dividend paying
of

5.5%

as

such

face

months have uncovered a number

stocks.

Thursday, October 24, 1946

THE COMMERCIAL & FINANCIAL CHRONICLE

;t

:

n. y. c.

5

Tele. NY 1-1293

HANOVER 2-1355

TELETYPE NY 1-2158

Philadelphia Telephone — Lombard 9008

,

v

Sees

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4536

Volume 164

National

Buyers' Market Imminent

predicts an increase in production exceeding demand if
V5 prices and wages remain high and productivity of labor increases.

Johnston, Wolkiser

Transportation Policy

Dr. Nadler

;

2085

By DONALD D. CONN*

Executive

Vice-President, Transportation Association

At Distributors

Group

of America

The

picture of the United States at the economic crossroads during
the next few months, with a prediction of an end to the present boom
within that®

period, was

will

drawn

business outlook.

by Dr.
Nad¬

Marcus

the

Central

the

and

strict

Trust

N

of

the

other

f

with

University, to
of

members
the

Factors

and

Or. Marcus Nadler

D i

Finance

is i

v

the

of

o n

and

more

less

or

wages
their

at

somewhat

present

follows:

as

production is
bound
to increase
very rapidly
and soon the present sellers' mar¬
ket will be converted into a buy¬
<

1

;

,

44 "This

applies
particularly to
soft goods (perishables, clothing,
etc.)," he said, "where production
has been at a': high
level and

where the accumulated demand is
not

particularly great.
A large
portion of the family income, par¬
ticularly those in the middle and
lower income groups, has to be
used for food.
As soon as the

supply of durable goods increases,
there will be

a

shift in purchases

from soft to hard
Dr.

said

of

recession in the not distant

a

that

the

financial outlook for the country

thesupremof

state;>

the
other, the doc¬
trine

of

choice

bert

B.

such

have

Mr. Adams

Sixth Street.

was

pre¬

viously with the First California
Co.

Mr.

More

were

&

Co.;

Dofflemyre

and

Mr.

with Nelson Douglass

Mr. Kent with

Walston,

Hoffman & Goodwin.

'

.

Conn

went

a

the

under

Also

connected

with

the

great

instrument

a

1

of

government

that

the creation of
to

||j;;

By JEROME and S. JAY LEVY
New Economic

total available goods are justly divided among workers. They there-

«

fore recommend

-

worker

can

technique of "Job Evaluation" be utilized so each
be paid in proportion to his contribution to production. |

Specific proposals

:

are

listed for accomplishing such evaluation,

of

development of a method to assure fair wages that will
eliminate the need for strikes and lockouts and which will be

new

women.

hearts

of

Yet, for

these

many years

Minnesota

services
new

tant

general

been

elected

ment.

and

V

LOS

John

with

direct charge of all sales person¬
nel
and
sales
activities in the
field.

GARY,
by Mr. Conn before
Conference on Distribu¬

tion, Boston, Mass., Oct. 14, 1946.

IND.

—

ins

T.

with

was

Maxwell, Marshall

vv ;•

past
held

several

years

Congress

hearings

numerous

on

labor-management proposals.
A
great many magazine and news¬
paper articles and radio discus¬
sions have dealt with this prob¬

Holley and Jeffers
iWith Hoffman
'

(Special

LOS

to

The

Financial

ANGELES,

Luther

R.

Jeffers

have

Holley

lem.

But

no

acceptable plan has

been evolved.
Because
wages

is

solution

-

of

economic problem, its
be

should

derived

order to promote
the

South

Holley

unions

They
that

for
soon

|

v

collective

bargaining in it¬
bring higher wages
working
conditions

"l»

with

ties business.

and Adams-Fastnow

'

i

v

1 ''" i ""

'

•' r4

*

C

+

from

and

better

&

Co.

Mr.

Maxwell,

44

political

found these weapons in the strike
and the picket line. These weap¬

obligated to assure its just and
efficient operation. Since we are
also living in a democracy, the

under

ons

power

gradually
laws

our

as

won

Common Stock

acceptance in

rights

guaranteed
political

democratic

our

Price $4.25 Per Share

system.
With the strike and the

economic measures adopted must

Inc.

of industry. Labor

principles of our capitalist
system. To hold otherwise would
be taking the position that a gov¬
ernment accepting a system is not
the

picket
'

also be in accord with our demo¬

line

cratic

to realize many of their demands
for higher wages, shorter hours,

principles.

From the beginning

of

our

indus¬

the worker has been
struggling
against
low money
wages,
unsatisfactory
working
conditions, and unjust treatment
by his employer. At first the pub¬
trial growth

lic

attitude

was

that

labor-man¬

agement relations were solely an
affair between

each concern and

its employees and did not call for




the workers have been

'-As ..'

able

'■

overtime

pay, the elimination
speedup methods, restrictions

the

use

of

shop, and
Labor,
able

to

*

i'1

1

'

'»«i-

■

'

"J

,

•

•

1

.

.

.

-

»•.»'*

;

•.

*..*•'•

.,**'

4'

'• / ;•*£;

f

-i

'

•,

4 .•••'v\.'/•/ t

John J. O'Kane, Jr. & Co.

equipment, the closed
so

forth.

however, has not been
secure

contention

ment is

>-

of
on

*

its

'

i''*'

the

that

acceptance of
the

govern¬

obligated to assure every
worker the opportunity of a job.
(Continued on page 2088) *

>

42

Broadway, New York (4), N. Y.

Dlgby 4-6320

4

Teletype NY 1-1525

V

Jeffers

Marshall

j 44

Konga International,

Additional power or weapons was
needed to offset the financial and

Street.
with

Hill, Richards & Co. and Barbour,

50,000 Shares
""r

E.

associated

Spring

Smith

their wel¬

organized into
collective bargaining.
found out, however,

—

James

previously

was

Broadway to engage in the securi¬

workers

Chronicle)

CALIF.

Walston, Hoffman & Good¬

self would not

,

the" determination

an

In

and

become

Collective Bargaining Not Enough

fare

"4:44 ".V.

■

Dwyer has opened offices at 522
J "

C.

associated

& Co., 210 West
Street, members of the
Angeles Stock Exchange. Mr.

Co. V-

&

Mr.

William

—

Fairman

win,? 550

W. T. Dwyer Opens

Herbert

was
formerly with Wal¬
ston, Hoffman & Goodwin and
prior thereto was a partner in
Thomas Kemp & Co. Mr. Hudg¬

with

they

and

Dewar

a

capacities

Dewar

Seventh
Los

has

manager,

ANGELES, CALIF.

M.

Hudgins have become

assis¬

since 1934 has been named gener¬
al sales manager.
He will be in

have taken it too much for
grant¬
ed. Too many have failed to
heed

<

Dewar & Hudgins with
Fairman&Go.

record

business.

sales

as a special advisor
German industry and Govern¬

acceptable to labor, management,^
public is one of our most' government action. It was a pe¬
vital domestic problems. During riod of extreme individualism.
the

western

;

and the

has

and

.

Clay in Berlin
on

Grady Clark who had served in

and

men

Ripley
His ter¬

department

various sales executive

enterprise is anchored deep

in the

Harriman

States and Europe.
Dr. Wolkiser
was on
the staff of Lt. General

Di¬

Vice-President of
the company. Mr. Moore will be
the administrative and executive
officer of the sales department.

farm, la¬
bor and business
leaders, indi¬
vidually and in gatherings. I can
emphasize without fear of con¬

Boston

The

a

Clyde J. Moore, former

*An address

under Government aegis.

—

more recently headed the
company's Sales Department.

a

thousands

with

Michigan.

nesota,
ac¬

portation problem in rural areas,
small towns, and cities.
I have

vate

Pointing out higher pay does not mean increased purchasing power,
economists maintain real function of wages should be assurance

nois,

with its expanding

pace

volume of

this

tradiction that this system of
pri¬

4

Library^-

keep

investment

discussed and debated the trans¬

with

been

ritory will include northern Illi¬

announced the promotion of three
members of its executive staff and

half million miles of
travel about this
country. I have

met

and
with

Syndicate

MINNEAPOLIS, MINN.

now

past decade I have

cumulated

Are Labor-Management Relations
Based on Economic Principles?

ing

rectors of Investors Syndicate, in¬
ternational investment company,

The Background

the

Army

war

associated

was

& Co. from 1933 to 1941.

system,
Robert
L.
Smith, Jr., Vicehighest living standards ever en¬
President, has been named head
joyed by the masses of any race', of the new
department designated
not only can endure but can
be as
"Conservation, Research and
adapted to the needs of an
Mr.
over¬ Education."
Smith, former
charging economy.
Securities Commissioner of Min¬

In

the

the

Kidder, Peabody & Co. after hav¬

which has given to its
people the

new

branch will be Walter Glerlich.

i

must

during

Elevates Three

individual

are

Major in

a

previously

Investors

the

liberty and freedom. The moti¬
vating force, by which these prin¬
ciples 5 are
guaranteed
to
the

demonstrate

Chamber of

Building

to
0*u

contract form—the Constitution.
The. prime I objectives of
this

tions

Merritt & Co., Inc. has opened

Commerce

u

-

LOS ANGELES, CALIF.—King

office in the

n

lengths of laying out their plan in

American people, is the
system of
private enterprise.
We who believe in our
institu¬

King Merritl Opens
Los Angeles Branch
branch

de-

American idea

Donald D.

u

with Buckley Brothers, 530 West

of

signed the

associated

become

re¬

import¬
who

men

James D. Kent and Edward

myre,

as

that the

ance

Chronicle)

CALIF.—Al-

Adams, Ralph L. Doffle-

E; More

was

as

Forces

Air

Dr. Wolkiser, with a
territory
public and private agencies; to the
use of government
capital in di¬ comprising southern Illinois, most
of Indiana and
rect competition with private cap¬
Missouri, and in¬
ital, and to the rise of predatory cluding Cincinnati, will make his
in
St.
Louis.
He
political machines.: In too many headquarters
is well known as a lecturer
places self-interest has been ason
economics
in
the
grad¬
(Continued on page 2107)
uate
division of Brooklyn Col¬
lege and as a- consulting econ¬
omist for a number of
large com¬
panies.
He is a frequent contrib¬
utor to leading financial and eco¬
nomic journals both in the United

light of

garded

Group Securities,

Johnston, who will make
headquarters
in
Chicago,

served

vidual upon- government instead
of upon himself; to the
disregard
of the line between functions of

history, the

Buckley in Los Angeles
ANGELES,

the

supremacy of
the individual.

depression."

(Special to Tar Financial

his

danger-signals that threaten
its" very existence. s':4 ;4.vX 44.4
I
refer,, particularly,
to
the
growing dependence of the indi¬

the

has
Distributors

one

Mr.

Y

/

Managers
by

of tl\e country's largest
mutual investment funds.

the

on

In the

LOS

Inc.,

doctrine

acy

activity and to prevent the reces¬

management of Paul J. Koughan.

goods."

also

Nadler

the

Four Join Staff of

that period

ers'market,

men,

remain

Business activity will be at a high
level for the next few months.

Within

one

of the shares of

contemplating forces that might order the political affairs of
the choice may be narrowed down to two: On the one
hand,

in

level," Dr. Nadler predicted, "and
productivity
of
labor
in¬
creases, then the business pattern
be

the

on -

/

announced

Group,
Incorporated,
63
Wall
Street, New York City, sponsors

In

the pattern of busi¬
of relative stability

sion from becoming a

the

will

permitting private ownership to survive.

future, then, the policy of the
monetary
authorities will
un¬
doubtedly be to stimulate business

New York City on Oct. 21.

prices

-

District

as

been

would lead to socialism.
Complains carriers are sub¬
jected to conflicting restrictive statutes and that government is
.supplying capital to compete with private transportation. Urges a
Congressional reappraisal of transportation policy with view to

Federa¬

tion of Jewish Philanthropies
"If

is

If,

purposes.

kiser

movement

.

use

hand,

ness

York

e w

•

at their disposal to re¬
of bank credit for

means

Company, and speculative
o

-

"is one of boom and bust,
then, obviously, the monetary au¬
thorities will endeavor with all

Hanover Bank

Finance

;-4

the

on

said,

of

Professor

primarily 6

,

"If the pattern for business," he

ler, consulting
economist

depend

appointment of Frederick
W. Johnston and Arthur W. Wol¬

Asserting transportation regulation is drifting toward government
ownership, Mr. Conn holds there exists program tdtdiscredit pri¬
vate enterprise by
focusing attack on carriers. Says success of this

A

I

•ViV-i'".1

Co.

&

was

Co.

2086

THE COMMERCIAL & FINANCIAL CHRONICLE

iestimated.

Support the

of

Thursday, October 24, 194<?

They point to-periods

readjustment

such

as

(experiencing as offering
(investment opportunities.,

RED CROSS!

.

'

,

t LOW PRICED1

By BRUCE WILLIAMS

Competition With

I///

/ It is

/

1

<
,

Capital "K"

a

^

,

our painful duty to report that a great deal of good, bad and

indifferent investment company literature is not being read by deal¬
ers these
days.
The reason?
Simply that the output has reachedthe point of diminishing returns.
Whereas, a few years ago a lot of
investment company literature went unopened in the waste basket
because of lack of
dealers

of GROUP SECURITIES, Inc.

and

interest, today it is finding its

salesmen

physically able
current volume

to

assimilate

output.'

^

%

v-

-

,

YOUR INVESTMENT DEALER OR

Distributors Group, Incorporated
63 Wall Street

New York 5,

•

N. Y.

fund

,

.

Story

From here on, mutual

.

•

With

Selected

who place the ac¬
cent on quality rather than quan¬
tity should get the most out of

recent

their

the

sponsors

sales

And,

as

promotional

Shares

can-

national
Securities Series,,

dollars.

^fallowing

|

sons;

Sept.

Industrial

A

>■

.<

BOND SERIES !

has

sponsor

direct

zation in the field'.

the

sales

only
organi¬

Devoted to the

Prospectus upon request from
your investment dealer or

<

NATIONAL SECURITIES £
RESEARCH CORPORATION

which

have

120 BROADWAY

55.28

are

gradually
Essentially

correct

the

of

48.42

—12.4 Z
:

5.4

+

tant companies.

.

.

/

...

We

firKb

ferreds

upon

careful

the

second

half.

A

and

to

meet

readjust

51.86
12.65

—26.9

13.45

+

still-soaring liv¬

holdings

justment.

from

Now is the time to use.*

than

justify brokerage costs in
making new purchases."—From '

to

two

major factors:

have

a

ence

on

act

expires. " It

restraining

strong
>

labor

v

demands

should

influ¬
in

the

early part of 1947. Labor produc¬
tivity will probably begin to im¬
prove.

.

"Our

if

materialize,, will be attrib¬

most

carefully

se¬

earnings Strid prospective

results

for

jahead.

..a

reasonable

Also, ;the average

stock now affords

a

that

come;

investors

ones

these

that

can

are

be

the
are

r

I

are

Vestment* oppor tunity."

common

essential

t i mat e d> distributions

es

to. holders,

Preferred stock :series,ta $0.16»
Stock series
0.07
Selected groups series-_

Investors Stock Fund—A divL*

share tap-:
proximately 18 cents out of net'

a

recent

analysis* by Manhattan Re¬

search

Associates published in J he

investment income and 20
from

jOctober issue of the New York.
fetter,
*
u"

realized

security

.

and

Manhattan Bon

Fund—An Or¬

COMMONWEALTH

ari

INVESTMENT

29 cents per. share for

COMPANY

38

Prospectus

upon request

m

with Redeemable Shares ;

Z.

!

Z'P/Z:

i GENERAL DISTRIBUTORS

,

1

NORTH AMERICAN SECURITIES CO,

Lord, Abbett & Co.
INCORPORATED
New

S. N.Y

York

—

Chicago

Los

2500 Ru«»

Building

.

.

San Francisco 4, California

/

8 cents

to

share

a

holders

of

he obtained

Prospectus
or
.

your

may

be obtained from

iocal investment dealer,

or

Keystone Company

per*

share payable Oct 25, *

article' do not necessarily.. at-anyv.
time *coincide

with

Chronicle. They

those■ of

are

presented

of the author only.\

Congress Street, Boston 9, Mass.




THE

PARKER

CORPORATION

ONE COURT STREET. BOSTON 8, MASS.

request from

Principal Underwriter.

-

INVESTORS SYNDICATE
R. E.

/

>

F
on

record

/

*

Prospectus

total of

payable pet,

1946, to holders, of record: Oct 15; /
[The views expressed in this,*

those

Angeles

per

Dividend Shares—A dividend of
;

'prospectus; on Request

cents

Oct. 5.

*

:l*

Extraordinary Distribution of

15;; 1946;

Diversified Investment Fund
.

i

ey stone

50

cents/

profits)

payable Oct. 28, 1946, to stock of
record Oct. 15.

CHICAGO

of Boston

:
-

0.02

dend* of 38; centsper;

SHARES OF CAPITAL STOCK OF

The

I

of FecOrdi Qct. 31;

reasons

From

—

|/l

Dividends*

-j

.

payable Nov.: 15, 1946,

yield which is

strong

*

r

National Trust Funds—The foLt

lowing

period

for; concludingthatthis; is; an

For

the only

measured

opinion,

.

26/1946.;/

•most attractive against high grade
bond yields of 2l/e% to 3%. These,
our

10,/
f.

Dividend Shares revised Prospectuses dated Sept.

a

period

re¬

'-

general, have declined to his¬

•current

in

indicate

studies

considerations—they

Senate,

for

; Selected
American Shares
vised Prospectuses dated Oct.
1946.
V

;

extended

•

in

the

an

torically low levels' agaihst both

profits and higher dividends.

of

anticipate

OP A

earnings results will be
reassuring. The expected change

control

to

in

This will probably lead
discard of OPA long be¬

the

sonable-

Prospectuses dated, Sept, 25, 1946;,!

rea¬

6.3

in control of the House of Repre¬
sentatives and the possible change

Third' and

!NCO«K5»AT£0

map

tax.,

a

dinary Distribution of 9 cents and

HUGHW. LONG & CO.

local investment dealer

usually^

short-term losses; to- offset taxes;
oi}-previous sho^trterm; or'long-"
term capital gains,: The tax sav¬
ings to many investors will jmorri/

poor earn¬

stock-prices.- We believe it is

,V

pour

'

'

,

of/securities;

advancing the; date of such read-f

lected companies,; Common stocks,

and labor.

Prospectus from your Investment Dealer or

Prospectus

iri-f

standpoint at the end of the year.
The current situation necessitates

y^

■earnings

The trend of developments
should
translate | this; into
high

fears.

causes

ORD ABBEII GROUP I

from

is*

stocks

.

"Owners

long list of

2.8

37.90

•

OF INVESTING COMPANIES

c ustockan

object,
present ;

at

common

ing costs.

checking;
with good

2.8

103.08

Shares, Inc.

STREET, NEW YORK

one

attractive and helps the

vestor

demonstrat¬

are

companies with fair to

A

ANGUfi

thing,

very

American Business

10*.

individual

ti.ve.'For

prices, the rate; of return available1
on
many
issues of bonds, pre-

.v.

ing the traditional American in¬
genuity by adjusting costs and
prices to show a reasonable profit.

Investors Int.

48 WAIL

the. customer's

•

—

64.36

fourth

these

business depression. To an¬
swer
this
question, with confi¬
dence we have made extensive
checks with executives of
impor¬
a

period of active business and good

quarter

the

vestment program in the light of
the current status; of accounts and

the threshold

—

of high production levels
is still before us for some time; to

these

Fundamental

A:

...

opinion, forces are al¬
ready beginning to operate which
will gradually clarify the confu¬
our

.

0.1%

—

106.04

to

averages

and

investors

many

on

practical ings'/^lier dhis

For

62.53

fore uthe

sion

-

34.78

rAarket

term outlook for business.

/

...

33.01

the decline of about 20 % in stock

"In

are

customer's" in-*

va

revised..

uted

"

\

caused

coming
into
focus.
they all have to do with the short-

New York 5, N. Y.

We

1946^ the DowStock Average

174,09

174.29

Stock Average-.-.-:—

Reassuring Earnings foreseen
fears

we

-

unusual opportu¬

an

review

on

as

Dow-Jones Defaulted Rail Bond Average
SELECTED AMERICAN SHARES, INC.-

"The

27,

174.09?

at

Dow-Jones Industrial Stock Average
Dojv-Jbnes Railroad Stock Average
Dow-Jones Utility

Priced at Market

if

to

the October issue,
of the National*
same, price substantially better earnings 'dur/ Trust Funds
Survey,
Aug, 3T, 1945/a little ling the balance of the year. Earn¬
over a year ago, on which
day the. ings of a large
fUM- ' New Prospectuses;
A"
majority of wellIndustrials closed at 174.29.
/ Keystone* Custodian ' Funds re¬
imanaged
companies
are
now
at
or
"We believe you will find it in¬
vised General
Prospectuses dated'
teresting to observe what has'hap¬ japproaching satisfactory levels.
Sept. 30, 1946.
pened to various types of invest¬ I "In summary, we believe that
Wellington Fund revised Pros¬
ments in this period;
;the-investment outlook is more fa¬ pectuses dated Oct. 15,1946.
8-31-45 9-27-4(1
% Chgs. vorable than, suggested By, current i
Manhattan Bond: Fund,

level

Dow-Jone& Combined 65 Stock Average.
Dow-Jones 40 Bond Average

Shares

.

nity

purposes, this is the

Syndicate's

monthly
house
organ,
"Broadcaster," is
unique among investment com¬
pany publications, primarily be¬
this

of

invest-^

-

ment dealer

stock

that most companies
Before," presents,
earnings for the first half of- 1946
pointed eompariexpect to report good earnings for

/ "On

cause

"When

entitled,

Jones

nation-wide

a

Selected Ameri¬

on

still be the best

Investors

prices has caused
to ask

Were Here Once

always where competition

"Broadcaster*9,.

of the

Investments Co.,. in

memo

closed

One

decline U in

severe

in most industries

Moral

a

is keen, "quality in quantity" will
answer.

"The

/ possibilities. The
present situation"
gives
the
conscientious

individual

That, undoubtedly, is the price
intensified
competition.
All
investment company literature is
better today—much of it so
good
that it only needs, to be used to
get results.

A PROSPECTUS ON REQUEST FROM

there because

InpestmentjO pportunity" r '[

in those
security groups designed /
for both income and
appreciation';,

salesmen, and consist¬ ^/'Industry continues .to operate
under many
handicaps. There are
ing largely of contributions from!
many
governmental regulations,
them, -this "magazine" is an ex¬
including
OPA
price
controls.
cellent example of first class sales
Nevertheless, good (managements
promotion. \

the

of

v>/*

way

not^

are

"Ain

/•

•

may

use

the October Investment
Report of Distributors Groups' In¬
.

li

Readjust

be~a good time to;/
current prices as a pivot point Z
for averaging the cost of
holdings-/

sound

vestment Research D epar tm

to

'/ "This

f—From

«

'*

Time

we. are

MACGREGOR, President

Minneapolis, Minnesota

.

.1

.

...

REPRESENTATIVES IN- THE PRINCIPAL CITIES OF THE UNITED
STATES

the
as

"

-

r

*

Volume

164

THE COMMERCIAL & FINANCIAL
CHRONICLE

Number 4536

to draw, definite conclusions

on the future
its effects ori the money markets.
\
...

"Our
1"
•

'

Reporter
Bj> JOnN T.

'

Thef announcement that

Governments"

on

CinPFE^DAI,E, JR.' g

redemption

while

others

that date.

Nov.

on

.

would not be aS" large" as $2,000,000,000'
no retirements at all1 on'

1

believed' that' there' might be

Again there were those who expected that the Treasury
wbdld continue'tO" redeem as large amounts as possible of the matur¬
ing certificates;
The' redemption of these certificates on Nov. I

;

.

.

.

.

.

.

will reduce' war loan accounts to the
point Where it will take
few mote of these cash repayments of

ortl'y a
maturing debt to eliminate the
reserve free accounts from the
banking system.
The sharp decline
in the equity markets and the Uncertainties' that seem to be
develop¬
ing in the economic picture, apparently are not yet significant enough
to bring about any alterations in the plans of the
monetary author¬
.

ities:

.

7

loans, and

Byrd Henderson Pres.

'

With the elimination of certain

price controls and others to be
well as the likely ending of wage con¬
trols, there is concern in financial quarters aS' to what' effect this will
have 011 economic conditions. '
This will depend to a
very
considerable extent on" the course of
taken off in the near

*

$2,000,000,000 of the Nov. 1 cer-fificates will be paid Off in cash means a continuation of the Treas¬
ury debt retirement' program.
i
There" were some who felt that the
cash

-7

WATCHING

about

.

of bank

course
.

.

future,

Byrd E. Henderson, President of

.

.

Household

Finance'

Corporation,

.

commodity prices, which have

shown" a; declining ttend.
If this trend" should continue for a time
and4 then level off and improve
somewhat, it- is believed that the
.

.

.

dangers of a4 boom and' bust cycle will5 be greatly lessened.
A
downward trend in prices and a? business recession
would no doubt
effect' some' changes in Treasury
.policy.- .•> It would probably mean
.

.

.

borrowing by the government to retire bank-held bonds, since the
inflationary psychology .would seem to be pretty well dissipated
by
such action of prices and business.

no

.

■

.•

.

-

:

The

government

securities

markets, with the Treasury not
1 likely to be seeking funds should
improve; which5 should mean'
-better prices for outstanding obligations..
1
•••!'".*
.

.

I

•good Market1

,

Switzerland and U. S.

.

The government bond'market has been displaying a good
tone,
with some issues buoyant enough to have carried them above recent

trading'areas..

Byrd

Conclude Trade Agreement

The demand for the

lbnger restricted issues as well
eligibles has come from banks,
CMGUS agrees Oil pact for imports and
exports between U. S.
insurance'companies and dealers.
Although the interest in the
Zone and Switzerland. Great
market has not been too large it has been sufficient to mOVe priced
cooperation, and implementation' of
ahead, and at the same time clean up some of the obligations that 77 increased5 trade, fa anticipated;
<
have been waiting for somewhat improved levels to be liquidated;.!.,
LONDON, EN GLAND—It has been announced; that the5 Dele¬
There also5 seems to he a irbed undertone; with sizable orders
gation on behalf of the Swiss Government and the
representatives
reported for specific issues oil the' bid side-of the market or a)
of OMGUS held a conference in Berlin to
discuss the resumption of
thirty-second or so1under those levels...
; TheTechnical position?
trade between the U. S. Zone: of Occupation and
Switzerland and
of the market stili improves^ as bonds We beliig taken
have come to an» understanding.
When the machinery: of bizonal
perina-j
nentlyout of the market/.
J
operation of the British and U. S. Zones is completed certain alter¬
Although1 certain institufiohal investors in some instances are ations in this understanding will<$mot yet > attracted tov the government bond market', in an important become necessary. The text of the
confirmation of the opening
■way, iMs believed4 by many mohey market experts that there will be understanding follows :>
of the credit.
At the same
change in this attitude in thd not* too distant future.
:
tint'ej the! Swiss ihiporter Will
X, Exports and Imports
:
be requested5 to produce a
WARNINGS
1. Procedure regarding exports to
i certificate stating .that the
The; action of the6 regulatory: authorities, particularly those in
Switzerland:
Division; of Commerce in
ihe\ Savings5 bank field,, in5 calling attention in no uncertain terms to
Berne approves of the t'ransa. OMGUS is at present the ex¬
what happened in the 1930's> according to reports, may have an im¬
clusive
aetiott.
Theexporter
of' goods
statement; of
portant bearing ort the investment policies of these institutions.
from1 the U. S. Zone of Oc*
certification«( will
be
forAt ther fecenf convention of thb New York State Savings. Banks in
Warded' by the Division * of
cupation.
Therefore
Swiss
-Quebec,' foF example,- attention} was* directed' to-past experience |of
Commerce
■ in
impoi^er^pLsuch goods miist
Berne , - to
real-estate mortgages that werd based on inflated values.
Like¬
OMGUS through channels:
contact the Trade and Coih-'
wise,. it was1 statedr that the Obrrent unfavorable, trend of railroad
merce
Branch
of OMGUS;
;As soon as OMGtJS is in
earnings' ihdicates that several1 of- these obligations may be removed
possession of the aforemen¬
throiigh official' channel's for
irom the legal5 list in the* not distant future.
tioned
two
the

as

Of Small Loan Ass'n

as

.

,

later maturities

of the

bank

•

.

.

.

E. Hendfersort'

has been elected President of the

American
Loan
of

Association"

Companies at

the

of

Small

convention

a

Association

held

at

the

Hotel

Commodore

City.

The Association is the only

in

New

York

national trade association Of small
loan companies and has over

2',000

memberships in the U. S.

.

*

,

.

—

...

.

,

,

P. W. Brooks Celebrate

,

.

'

^

■

-

,

.

.

.

Fortieth
Inc.,

115

City,

celebrated'

.

ing of the firm at
Harvard

thirty

These word's bf caution4 trom< the authorities* seem1 to* mean'
that they are' in' favor, of a; more conservative trend in the in-:
vestment of savings bank funds.
United States Government 7 ;
"
obligations, as a' reSult Of thik attitude on the part of the regibr i
latorV authorities, will most likely be ak more favored source W
7.

.

.

.

the placing of savings bank monies until ttoejte is clarification of

the

economic

situation.

♦

.

particularly the' longer

OMGUS

when'

business correspondence by
mail' of a non-trarisaction'al'
character; is permitted between

Swiss

and

larger city commercial bunks,- there has been

some

porter

open

acquisition by

on

di¬

c.5

The final conclusion5

an

irrevocable

credit in* favor

providing

The floating supply of these securities lias been cut down
sharply in recent weeks and it is reported? that the holdings of
government agencies in some of these issues that were' available
for sale have been pretty well liquidated/ , . •

,■

conclude

the

for

of

2.

"take

bank

;;

necessary

OMGUS with the Swiss Na¬

through sales to modest proportions.
There is a* good demand
^reported for the? 2%s due 1960/65 as well as the 2%s dUe 1950/59j

The; bank
will

issuing the credit

transmit

to

OMGUS

.

through

official

channels

prodedure'

dinner at the

of

the'

attended

Officers

of

some

were

Daniel

will

foreign
securities
before
H, is now a registered

World' War

representative and associated' with
Edward A. Viner and Co;, IT Wall

OMGUS

is

at

-

imports

.

present the

importer of goods

New

York

Curb

.

.

peak and will tend to level off from here. J

others who

are

of the

/v

are

.

pation.

Therefore

OMGUS

of goods which iv desires to Jersey, which is the manufactur¬
ing affiliate of the International
• from'
Switzerland,!. Telephone and
Telegraph Corp. in
(Continued' on page 2089)
^ the United States.
7:77

import

about

There

are

opinion that commercial loans will continue to

advdnhc,. with the largest demUnd from'now

on

(A Delaware' Cdirpor atiori)"

coming from the

heavy goods industries.
The
year

has been

showing
trial

demand

an

and

increase

€biriittdriv Stoick
business loans

for

substantial

very

expansion of mope

agricultural

ib

ventories.

business

/.

loans.,

since the* beginning of the

with reporting

member

(Par Value 500 Per Share)

banks

than 29% in commercial, indus¬

...

borrowings

considerable

A

part

of

this

Price $1.50" Per Share

has been* to finance larger in¬

i i.l-V (With Warrants)

?

.

While it' is likely that

there will be

some

slowing down of in¬

•

.

ventory loans in the consumers' goods industries it is believed that
"thefe

will

finance

be

increases

Inventory loans.

offset to

loans

working

indicate

what

considerable extent

a

'-"V. ■;'.!"{• V;

.•

for

capital

any

to

and
.

.

.

42

Broadway

New York

seems,

largely by the trend of commodity prices and

activity.

these

...

trends

As yet' there

will be.

.

..

.

are not sufficient data

Therefore, it is quite

likely that some time will have to elapse before it will be possible'




v.-.

Frcink C. Moore & Co.

decrease in

The demand for loans in the future, it

...

determined

the level of business
to

term

expansion of plant facilities in the heavy goods industries.

This would' probably

-Will be

in

October

22, 1946

other

work

future trend

Some in the financial district believe that these loans

and

in
the
principal
cities
throughout the United States, and
Will keep the Division of abroad, and during the war : he
Commerce in Berne informed worked for the Federal Telephone
of the6 kinds and' quantities and1 Radio Corp:,
Newark, New

into-the U. Sv. Zone of Occu¬

t

the

principal exchanges.
During his absence from Wall
Street, Mr. Dkvis did publicity

of commercial loans which have been making new highs each week.
,

•

Daniel L. Dhvis, who for many
traded in1 foreign exchange

ahd

199,000 Shares

rat their

>

Edwaid A. Vhen 6a.
7

XQAN TREND
to be'differences of opinion, over the

the

Davis Is Wife

.

seem

cere¬

of

guests at the dinner.

the demand for the partially exempt issues will continue as long as
-the tax-free yield remains favorable and there are no changes in
income taxes.
.-.

There

Brooks

corporations which have recehtly
been financed by the Brooks firm

of the intermediate-term isSues. coming in for considera¬
The opinion now held by bank investment officers is that

.

the

years
.

of process-

case

regarding

exclusive

to

tional Bank in U. S. dollars.

same'

from Switzerland:6

7

7

The'

apply in the

Procedure

OMGUS1

payment

a

ing> of raW • materials; or
semi-manufactured products
Street, New York City, members
supplied by Swiss54 firms. ;s of the New York Stock
Exchange,

the credit of the account of

Savings banks and insurance companies are he longer important
holders Of those" bonds since* their positions have been-brought dOWn
.

and

Steps* for delivery of goods
according to the" terms of the'"

German1

an* agreement is
reached, OMGUS will re¬
quest the Swiss importer id

.

.

will

Co.,

York

Approximately

members

organization
mony.

New

contract With the Swiss im¬

b. If and when

the medium-sized banks in the out-of-town areas....

.

and

of contracts will in
any case
be negotiated by OMBUS.

ma¬

maturities of the eligible taxable obligations. . ; . Although- the pre¬
mium; is Substantial and* most of the demand has come from: the

.

If

.

The partially exempt obligations,

tion.

contracts.

tions may be carried

turities MVebeenshowihg an Mproved trend4 and despite recent
price advances still give U. better tax free return than comparable

some

of

rectly.

PARTlfA^ EXEATS INF DEMAND

with

document's,

inquiry; and for' negotiation

•'firms, preliminary negotia¬ 77:77 contract.,;777W7:::77,:w77j

»

.

Club;

.

;;

Broadway,

on
Oct.; 1!8 the
anniversary of the found¬

fortieth

,

.

Anniversary

Members of P. W. Brooks &

Euler & Co.
1518 Walnut Street

Philadelphia

JoV

THE COMMERCIAL « FINANCIAL CHRONICLE

$470,564,000, whicfc gives a ratio
slightly in excess of two. This is
conservative and also indi¬
cates that the fire insurance com¬

very

Bank and Insurance Stocks
By

E.

This Week
The

assets

fire

of

19342

lustrate,,

193872

This secular trend is still under

has many years and much distance to go, and will
presumably be reflected in the long-term market action of fire insur¬

yyay, apparently
ance

stocks.

This

situation

should

appeal particularly

Visioned investor, and also to the $>■
investor who is interested in the than

medium tebm outlook, which like-

favorable.
Currently, representative
fire
insurance stocks are temporarily

^

and

1928

.

;

which

year

aggregates

clusive.

131,000 ::

108,989

v

108,989 ;

111,489

1936—

—

'—
——

—,

1939——————-1——-:

table

study.
the

total

366,295

341,943

;370,126

367,093

377,737

>327,141

333,264

# 34,659

228,579

303,886

298,341

35,093

262,772
241,576

275,337
249,054

247,785
•250,220

mium

nevertheless

33,636

397,870

% 33,667

726,069

; 438,024

31,570

823,292

410,039,

principles of

32,174

The purpose of our economic sys¬
tem; can be discovered from the

118,900
146,489

250.2%

little

a

21

25.9%

58.4%

respective

extent

an

that

stered

by

which

explains

it had

to

transfers from
the

drop

be

latter from $162,755,000 in 1931 to
$108,989,000 in 1932; Capital has
since
steadily
increased
to
its
present: figure
of
$146,489,000
(still below 1931), while surplus
has expanded to a new peak.
Un¬
earned
premiums and premium

volume

also-

since steadily

a

declined,

but

climbed/\

have
/ /

The. peak in dividend payments
was in 1931; but in 1932
they were
cut 32.5%. It is significant, how¬
ever, that not one. of the 21 fire
companies

passed

each

paid

its

dividend,

dividends
and
maintained its record for longev¬
ity of dividend payments.
In
each
year
dividends were

ex¬

earnings, which aggregated $49,-

one

amply covered by net investment
income alone, and even in 1930

610,000 in 1945 against $28,711,000

and

72.5%.

1932,

losses

when

underwriting

incurred, total net
operating profits provided a com¬

It is of interest to observe what

were

fortable

cushion.
The rapid re¬
of the insurance companies
from the depression is very strik¬
ing.
'
covery

Comparison and Analysis

functions

of

workers
•

Worker's Function Is Production
It is the function of the worker
to produce goods. To that end
devotes his productive assets,

bol¬

capital,
of the

our

mechanics, and
economic system.

and investors.

break, sur¬
plus shrunk rapidly and to such

operating

in 1926, an increase of

1

With the stock market

are

within the

>

It seems clear from

policy-holders

today
are / very
much better protected than they
were in the pre-1929
period.
In
1926 the policyholders' surplus of
the
21
companies
aggregated
$344,066,000 and net premiums

City Banks;
Circular

on

examina¬

tion of the figures presented that

19 New York
:

an

Request

.

Laird, Bissell & Meeds
■Member

New

York

Stock

written $337,586,000* resulting in
;

Exchange

a

120 BROADWAY, NEW YORK 5. N. Y.

Telephone:
Bell

BArclay 7-3500

Teletype—NY

ratio of only
.In

one.

1925

fractionally above
policyholders'

sur¬

1-1248-49

(L. A. Gibba. Manager Trading Department)

plus

against

aggregated
a net

The

first

is

vestor

to

function

of

assume

the

production.

A

the

$969,781,000

premium volume of

Insurance & Bank Stocks
ANAYLZED

Sold

Quoted

—

REVIEWED

—

]

:{

COMPARED

—

Trading daily 7

a. m.

Inquiries invited.

to 5 p. m. (P. C. T.)
Orders solicited.

r

\

of

producing goods for
assumes ;

two

.

risks,

(1)

that his product may

be destroyed
damaged by phenomena such
fire, flood, pests and drought,

or

as

and

(2) that his product may not
bring a price that will enable him
to buy other goods of equal value.
When

worker is

a

employed at
is protected

fixed
wage,
he
against these risks. If his product
is destroyed or sold at a
loss, his

employer, whether
cern

private
government, stands

or

a

con¬

the
loss. The first function of the in¬

vestor, therefore is to insure the
worker
a

against loss. He is in effect
"work" insurance company.
When

ers,

a concern
employs work¬
it expects to be able to sell

their

products

York

—

Chicago

TELETYPE

L. A. 279

San
—

Francisco
L. A.

280

Seattle

taaVi

con¬

and endeavors to produce
them at the lowest cost. The sec¬
ond
function
of
the

investor,

therefore, is to produce desired
efficiently. Thus the in¬

goods

vestor

serves

the worker in

As

as

two¬

a

worker his work is

consumer

he

is

sup¬

plied with desirable goods.
The

workers,
serve

perpetuate

It

the

is

doubtful

if

;

„

the

average

worker appreciates the unfairness
of the present method of
arriving
at wages. He takes the
position,
"I have; the right to,
strike; I am
going to use this right to better

our

with

the

::////

principles of
right

economic system? By the
strike is meant that an

ployee has the right to associate

employed to contribute to this

in

accordance

with

obligated
measures

their

effect

upon the welfare of the workers.

The

Government's

Obligations

Specifically the economic

obli¬

with

his

fellow

workers

to

stop
the production of their
product.
It has
nothing to do with the
right of the worker to leave his
job at will.
We live in a specialized
society.
Every worker produces at best a
few

products

(V.// /-v /

/;?¥!:

em¬

■'

;

qualifications,

ization

wage which

a

work value

same

maximum

goods

will

buy products of the
his own, the
of
desired

as

amount

leisure, and the greatest

or

freedom.

Freedom is essential if
the worker is to be able to leave
his position at will to find one- in
which he will be most productive
and content.
In

order

to

the

assure

maxi¬

>>>:':>;

■•V/—

depends upon /
other workers to produce most of
the goods he consumes.
Special- /

enable him to

/:;,

:•

gations of the government are to
assure every worker the
opportu¬
nity of a job based upon his

terfere

with

its job.

\

however, do not

the investors

or

to

their

existence.
The
the right to insure
their work through their own co¬

operative

organizations

their government.
not

with

or

They have the

essential.
are

satisfactory and

Government from

point

of

Unless

view

we

its

ability to fulfill
'

|sf;

and

has provided a quantity,
quality, and variety of goods that
each man
producing for himself
could not hope to have. Special¬
ization is made possible by each
man's knowledge .that others are
producing the product which he

mm-

://>:
/>;>•

needs and desires. Otherwise there
could be little specialization and

would be living in a primitive
It is inconsistent with the

we

state.

your

your

will

re¬

*

our

nomic, system is pieant the

eco¬

.way

in

which it operates. Let us see how
the mechanics of the system affect

labor's ability to increase its pur¬

chasing
scale

power

or

by raising the wage

average

wage.

Suppose that every

and Smith

worker

in

their
labor

obligations to
The

same..

default

affect

effect

Brown

on

of

does; not

their

obligations.
But
if
forgoes the right to.strike,
get justice?

how will it

We

have

already

that

seen

wages do not provide
for
increasing
the

thereby increasing the de¬

crease

mand

for

increasing

medium

a

purchasing

Under

Australia and New Zealand

goods by 10% without
the supply of goods.

a«free

economy

.

new south wales

ing profits by 10%. If
purchasing
and

the

power

we base the
of the workers

investors

and

their

on

(ESTABLISHED

turbed.

total

workers

taken

Reserve

fore.

or

crease

workers

General

Head Office:

assume

in

that

wages

remain

Vz

of

of

all

constant.

increase

the

£223,163,622

the

HEFFER,

Manager

'

*

/ /

OFFICES:

Threadneedle Street, E. C. 2
47

Berkeley Square, W.

/•'.

1

Agency arrangements with Banks

each industry receive

in

£23.710,000

30th

George Street, SYDNEY

LONDON
29

share

20%: increase
the

':'/

THOMAS BAKER

scale does not in¬
of goods.

wage

labor's

Now

will

;/

An increase in the average

wage

6,150,000

Liability of Prop.- 8,780,000

Aggregate Assets
Sept., 1945

to¬

gether will not be able to buy a
larger part of the goods produced
after the raise then they were be¬

£8,780,000

Reserve Fund

operating

The

1817)

Paid-Up Capital

profits re¬
spectively, their relative purchas¬
ing power will not have been dis¬

wages

ii

baniTof

v

industry

will increase its prices and operat¬

throughout

the

U.

S.

A.

while
workers

wages

other
As

before

total

this

of
operating
10%.
As

NATIONAL BANK

before the workers taken together

of INDIA, LIMITED

country and the
profits of industry by

will not

be

wages

able to

buy a larger
after the raise than
they were before. Thus while the
workers
receiving the increase
will be able to buy more goods,
the
others,
because
of higher
prices, will be able to buy cor¬
respondingly
less.
A
sweeping
victory by one union may mean

Bankers

share of goods

defeat for

all

other

workers.

It

follows

from

the

is, therefore, an mechanics of the economic sys¬
of■»workers to pro.-. tem'that the workers' share of

to

the

Government in

Kenya Colony and Uganda
Head

Office:

26,

Bishopsgate,

London, E. C.
Branches

in

India,

Burma,

Ceylon, Kenya
Colony and Aden and Zanzibar

Subscribed

Capital——£4,000,000

Paid-Up Capital
Reserve
The
-

.

economic

their

the country wins a 10% wage in¬

sweeping
an

the

are

Brown $1 and $50

owe

respectively,
pay

By the mechanics .of

the

workers have

organization


http://fraser.stlouisfed.org/
5BB555551^^^
Federal Reserve Bank of St. Louis

2085)

end. Thus government is
to consider all economic

sumers

charges reasonable,
place you." »

WIRES

—

profit.' It*

a

best fulfill the desires of the

services

OF CALIFORNIA

PRIVATE

at

therefore, selects to the best of its
ability those products which will

are

210 Wrest 7th St., Los Angeles

present do not
demands of their

are

ex¬

right to say to the investors, "You

BUTLER-HUFF & CO.

The real wages

at

group

to

self-employed

change

exist to

j
Special Bulletin and Booklet Service to Dealers & Brokers

any

.

-

in¬

risk

worker

insured;

—

22,603
24,365

a

his
logic of specialization to maintain
mum
output of desired goods,
labor, manual skill, power of con¬
that any group has the right to
centration, physical courage, ex¬ every investor must be offered the
products of others while re¬
the opportunity
for profit that
perience, education training, per¬
fusing to produce theirs. The
will compensate him for his
pro¬
sonality, knowledge, ability, sense
opposite view is the logical one.
of responsibility, etc. to the extent ductive risk and be given every
chance to use his ability to pro¬ Everyone is obligated not to re¬
required by his occupation.
The
sort to any activity which will
duce efficiently. It is
value of his work is,
illogical, to
therefore,
interfere with the production of
give a group the job of producing
represented by the demands his
his product. This obligation can¬
the maximum quantity of desired
occupation makes upon his pro¬
not be dependent upon the essen¬
goods and then to impose regula¬
ductive assets.
v
'
•, '
tions and restrictions that will in¬ tiality of the product. If Jones

fold role.

Bought

23,540

48,256
52,059

secure

>' ;-•>■

>■

of -goods for
one
of workers at the expense

mote their welfare. The investors

he

v

3rd Quarter 1946

page

a

under the purpose,

happened in the 1929-1932 period

pre¬

of

32,346

470,564

21.5%

vestor

The peak in surplus was reached
in 1929, and in capital in 1930-31.

com¬

face

net

to assure
profit,
/Having noted what rights labor
was
and was not able to gain
under our political system, let us
see what
rights it is entitled to

32,636

approximately $0.60 in 1945, a
decline of 37.5%.'/v;\f:
Dividends, it will be noted, are
58.4% higher, and this expansion
total

job than it is

30,712

425,744

to

of

worker
every in¬

every

326,671
337,389
372,466

rates throughout the two decades,
from an average of $0.96 in 19261

pansion

gated to assure

i> 32.016

constant lowering of fire premium

conservatively

Bill./it

340,073

totals

the

Employment

the

389,212

Unearned

in

from

the

302,167

highest in the whole 20-year
period, and this expansion has
achieved

employment

full

278,074

the

been

struck

of

298,876

34.4%

1945

recently

329,712

are

the

Congress
principle

573,740i

and net premiums

This is a

when

to have taken the position
that government is no more obli¬

22,603
.24,365

-

clear

seems

23,540
;

made

566,334
524,302
544,957

21.5% higher
written, 25.9%.
very moderate increase,

reserves

30,281

was

30,346

worth

182%.-

25,996

fact

285,995

34.4%

of

crease

This

(Continued from

268,104

,651,247

25,490

21,625

to

weapons

'■

share

of their unions
compared with
that of their employer influenced
by such factors as the essentiality
of their product.
\

35,093

24,408

/

myself." But is the right to strike

547,960

capital of the

is

/;

these

consistent

112,400

•

—5,403
'•

they

/

respective occupations on their
productive assets but the strength

Labor-Management Relations

30,306

higher than in
1926
and
that surplus is 250%
higher; total capital funds (capi¬
tal and surplus) aggregated $969,781,000 on Dec. 31, 1945 vs. $344,066,000 on Dec. 31, 1926, an in¬
panies

30,893
27,651

•

of

of

Dividends

34,659

-26,631

labor's

represent

Profits

$30,281

28,054

;

Operating

.Results

39,967
43,930

—

280,062

:>■

Total Net

Underwriting

goods

more.

group
of other workers.

be

|onS

23,317

■

258,700
263,696

Total Net

39,372
—

311,003

„

is

t

342,768

232,677

years may

as

larger

shown below;

$64,355

—

——

Are

$20,310

457,674

273,909

are

to

by
and

?

wage,

as far
purchasing power isconcerned lies solely in the ability

''

393,004

355,917

interest, and

average
obtain- more

ing, strikes, and picketing

(000's Omitted)-

Dividends

:

of

increased

the

The value of collective
bargain¬

dividend payments

during those critical

be

24, 1946

'

com¬

$28,382

Net Prem.,

»

earnings

—2,099
»:
4,588

V;-/

340,351

will be observed that

It

Prem.

,

,

'>488,371 >

118,900:)

■/ This

/' ■ #'?' f't

'/

.

with

of

$35,973

——

258,808

118,400

1926

by

old-line

that

same

1930r^^_—-42,060

278,614

1942

over

year

21

record

cannot

must produce

''j:

pared

Income

623,758

118,400

Increase

the

of

than 114.0 by the

more

The

/ i

Net Inv.

478,324

118,400

■

as

tially
index.

Total

112,400
a 18,400

■

il¬

to

serves

ill,900

i94i::::::::::z"::::::,-::

1945———::::::——:_—

shows

Unearned

158,019
;

;

companies from 1926 to 1945, in¬

301,697

108,989

——

19'35—I"ZZ—

is

table

ii5,5oo;:,

162,755/

-—

diyidends, etc

goods

raising

worth 110.8 in October
1926, by
Standard & Poor's
Index, they are
in October
1946, worth substan¬

how

1929

funds

greater,

Reserves
' Written
-(000's Omitted)$235,066
$337,586
$373,687

162,752

————

1931—:

much

years

capital

assets,

very

20

fire* insurance

Surplus X:

$109,000

19271-31111-1—I

1926,

premium volume,
are

3'

Capital

.':;;V

r

October

Meanwhile

v

:;i.Year— : /

to the long

brought out in the accompanying

can

,Z

in

companies'

be bought at
less
than
75%
of
liquidating
Values, on the average, and to
yield over 4%. Standard & Poor's
Weekly Index now stands at 114.0
which is only some 3.0% higher
depressed

have

Year-

ago.'

Wise appears

a

beautifully
well
managed insurance companies can
ride through economic storms of
great severity, and at the same
time provide protection to the

insurance

•

as

This whole record

companies have ex¬
panded with the growth of population and with the increase in the
national wealth of the United States.

whole

ample
capital to expand their underwrit¬
ing business substantially.

DEUSENi

policyholders and take care Oj!
their stockholders.
// " ,
If fire
insurance stocks were
„

panies

Insurance Stocks

—

business

and

VAN

A.

Thursday, October

'

Bank

—£2,000,000

Fund-^
conducts

banking

and

£2,200,000
every

exchange

descriptionJ of
business

Trusteeships and Executorships
also

undertaken

A

Volume 164.
of

power

Number 4536

all

gether. The

workers

function of

to assure that the

get*

share

be paid

his

ures

tion,

'

}

fair

a

work

goods,
that

wage

contribution

that

wage

the

or

quired
units

a

of

by
of

he

worker

.:

The

it

tioning
successfully f for
large organizations. *
f

in

job evaluation.

the

would

pation
the

is

•/.

of

each

ment.

■

the

'J

effort,

■"

various

factors,

result

a

factors

the

paid

wages

work in different

often

for

!

organiza¬

not

living
*

be

a

on

of

savings

that

the wage

materially

on

for

other.. reasons,

wage scale should
than the
current

the

not

be

oiner

The

...

that
do

nenceiortn

were

units

of

stated

in

.

III

aminations

?Y7
777,'

job
-:

in

the

evaluation.

r

would

in effect.

now

•

*

are

determining wages and their
determination by a government
body on the basis of opportuness
and expedience.
We have

arise
not

may,

from

-

be

may

in

to

values

give

each

These

>

naturally

aim

■,

-

most advanced

field. 7.7; 7:

•y

Review

by

M

for the occupations in which

i|!- -"'i i-. ■■

YY 7

The

concerned.

were

I-

rived at would be reviewed by a
government body of experts to
that they conformed with the

;
7//:.

see

;/77

would

become

the -legal

V.'i

by neither labor
for

nor

wages.

that

nor

management

matter

by govern¬
ment, but by a scientific method
sponsored r by * government
and
used by both labor and manage¬

//.

i-': /■: I ■'

ment.

7^>,5

■»;-

«

•

f

-

i

'

management * to

arrive

at

wages

'
■

for

various

calling

occupations

without

upon CJA's. In such

The

the
,-

L

..;*:

yyM ;<

'-

•

Many

familiar with
one

or

.

workers

have filled

job. They would

labor,

skill,"

personality^ and
present

•-

so

his

any

oc¬




the

most

use

of

force and the threat of force.

As

result in many cases there is no
relation between the value of the
a

the

when

a

worker's

re¬

the

value

his

receive.; excess

of

be

they

and

measured by. the
occupation, makes

assets,: that

and

job is fixed
by his. own

chosen

approved

experts.

in. turn; by
The feeling

increase granted to

of* workers

one group

would* be

^assumed

and

more

upon

as an

com¬

demands by all other workers:

y
,

would

not

excuse for

be
a

looked

series of

I The Tcfllowihg;; illustration

hielp

to' determine

present
better

or

-

the

working

will

balance

be

at

compensation

for

3,; The

the free

opening

J will be
7;

•

at

1.

i,

-

V

(Continued from page 2087)

that

the

workers

7

possible .Swiss

contact

Y

-J

:7 Director of

/

.j«;5.when
reached

it /

.; -r :

I

■'

dividual

-

has"'

an

*:

;

;

>

,

'

nkakes

upon

j

"i

devotes to his

hies

that* wages

Na-

t

Y
'

and Commerce, '
.

.

OMGUS,, '

Berlin, Germany,
Oct. 9, 1946.: 7
?

|7;

;

*-7

;7

:

/

--v;:

/

7;

:

—Mil

1

A

:'*v

Tlids. Malison With
Nat'l Sec. & Research

OMGUS.

*

1

will

-

ibrder

.

Swiss' francs

in

drawn

on

'vr National'
7
T :

•

in

exporter,

the Swiss National

Bank... This

payment order

will be honored by

one

the

conclude

contract with the Swiss ex-

porter and will make pay'T ment by issuing a payment

,>•;

*

receipt,

Upon

favor of the Swiss

hfqs- denied- that -job -evaluation is
thb best method we know of for

en

_

7

...

*

covering the
dollars
into
Swiss francs to. pay for the
I H. J. Simonson, Jr., President
export. If both are granted,
of National Securities &
Research
copies of both licenses will
be forwarded by the Swiss Corporation, 120 Broadway, NeW
York
City,
announces
that
exporter through channels
OMGUS

V;

his, products

determining the value, of the prcA
diictive assets which every works*

Swiss

,

-

.

assets,

these assets. No

the

tional -Bank
exchange
of

to

strength, endurance, manual skill,
ability, etc.,- and that his contribu¬
tion is measured by the demand
the' production " of

from

'yp/

'

power of all
cannot be in¬

certain'

and the Swiss exportert the
Swiss exporter will request

cense

raising the wage scale. ;,[;
''
questioned that every in¬
p

one

OMGUS

between

;;;7:7>::v;Y;v-

Bennett,

!y77YY>-> M. S. Szymczak,
77
Y '
Civ. Chief, Trade >7

•

export license from the
Swiss-authorities,, and; a li-

;
•v "

creased by

No

•

Jack

Director of Finance, V :.
OMGUS
.v:7: '

,

an

Economics,

OMGUS

;

ex-

/

Y: '

I Delegation

,

7

Trade

(Signed) William H. Draper Jr.,
77 s* >77 7:7 ^ Brigadier General S7;V

If and ; [
lM
- agreement < is

channels.

official

,

times forces other

unit

7:..7.1,1

(Signed) Paul Keller, 7;

'i

porters who will make direct
offers- to
OMGUS through

of

a

v! ■'

of Occupation
Germany and Switzerland.

of

7

will

The; Swiss i authorities

purchasing
as

account

During the meeting import and
export lists were discussed in

77

;:

V

,

.

amount

this

Y the U. S.JZone

with the

to interfere

~

workers

of

subject to approval by

why

Conclude Trade Pact

times
takes
weeks.; While ; this
bargaining is going on, the work¬
er often
stops working reducing,
thereby, the amount of goods pro¬
at

disposal 6f

Washington. This approval will

other

Switzerland and U. S.

Furthermore the bargaining be¬
tween worker and investor some¬

duced. This

fjy

account

J be requested by OMGUS.

Evaluation
of

this

OMGUs.;/;g;;/Hv /;/,; f?:-. ;■

con¬

.

This. is also true of investors.

of

the Swiss

of

OMGUS

National

the

account

Y -* Bank in U. S. dollars, within

'

job* No one d©r
I
based upon job

mittee.

sible

The

for

committee

the

is respon¬

investments of

the;
various funds managed. Mr. Mat
son,

7 an

analyst

councelor,
Guaranty
Dillon &

was

?

and

*

investment

mil

can

{

formerly with the:

Trust

Co.,

Co., and" other

Eastman]
financial

houses.77 7 Y77;;Y>v/YY7;7hY

7-

Bank "to the 'debit

7 with * the 7 Swiss;

of

Thomas E. Mattson has been made
a member of the
investment com¬

E. F.Hulton SOo.
Adds Three le Staff

,7 7the amount of the available

(Special

to

The; Potanciai.

Chbonicle)

Y
I

/7 /balance, at the day's buying t». LQS;ANGELES, CALIF.YWil:
liam TP. Herbert, Jr.,' Edmund Wirate for U. S. dollars^ on the
present method sr -1
Clark and* Thomas M. Mclnerney 11
bargaining and strikes. Yet many
Strength' of the license as have become associated with E. F;.
people have objected to this pro¬ 777;.
issued.
'
> YYY•'!' Hutton & Co., 623 South
posal.
V;'-\ '
; Y""
i >'
Spring;
3. Correspondence will ordinarily Street.
Mr. Herbert in the past
t
Objections to the Plan .7 +.
7
be ^channeled through the Of- was manager of the :
trading de-«
i These objections tan be sum¬
marized, ."This plan would enslave V? w fiee :of the Commercial Attache partment for the local office„of
evaluation

aiirived

at

are

fairer than wages

by

.

.

*

x

whether1 the.

proposed procedure

serve

according
regulations. .,>;
The

,

iyw worker; it would d6prty& himf

class: -•bf" his present status which

was

;

supplier
OMGUS Mn ;
to
OMGUS

by

;

number

a

num-

transaction

The German

paid

,

of

Chief of Swiss

declines.The

educated

are

power

mem-,

as one group

nature

will' be

just and efficient conduct of our
economic system.
<*
'•

the expense of the other workers.

the

procedure

and

receipts issued. It is only

who
depend, 7on. his
products to stop work. As a result

just,

the

including

were

productive

experts

union

are

~

those

are

posi¬

would

contribution is

government

forth -in; their

occupations '■* with

party V employs

other

a

ing by an increase in. the wage
scale,, that e^ch man's work or

by

for

knowledge",

work

„

wages

assets required by his

pare the point • values given : the

factors

specific

no

occupations

and is not in

the money value of each of these

•

given their respective*

cupations.

.*

the

published point values; for
of not being justly compensated
J which exists among Workers to¬
day would be- eliminated. Thus

values

r

for

workers

upon

each factor in every occupation
could also be used by workers to
check the accuracy of the point

than

own

demands, his

cases

government

and V

following in¬

amount,

detail and information was ex¬
job
evaluation
employed to determine
changed as to present availabil¬
wages. It would destroy the false
ity of goods as well as existing
concept fostered by Communists
/ possibilities for
processing.
Y
that there is a basic antagonism
2. It can be stated that all
major
between the working and invest¬
problems were discussed in a j
ing classes. It would promote for¬
spirit of great willingness to
eign trade, fair competition, and
understand difficulties on both
the efficiency of management. It
;
sides. The basis was laid for
is essential for sound money, full
the implementation of concrete '
employment, the maximum output
./
proposals for the development
of goods, and to deprive industrial
v of exports to and
imports from
and labor leaders of their need

no

determining the
-?ach product.

opportune

At

cannot raise their standard, of liv¬

occupation and wages arrived

at. -with

approval.

at

than his

to the fact that

/ the interested concern and its em'\i ployees would file a description of
the

how

arrived

the

factor "in

every" occupation
" covered by- job evaluation; "This
data could be used by labor and

f

know

proposed

The Department of Labor would
publish the point values given to

each

are

the

re¬

statement

should be

available
goods
investors,
more¬
over, spend a great deal of time
bers of another union are given
and
effort
preparing for * these
a raise, he too should
get a raise. bargainings which they could have
This puts it up to his union lead¬
otherwise
used
to
promote the
ers to get him an increase at least
efficient production of goods.
as high as that won for the mem¬
Of the many people who pave
bers of the other union. This is a
studied this proposal, none has
normal attitude which, has con¬
questioned the reasoning no;: de¬
tributed to the number of strikes.
nied the truth of the explanation
Under the

These wages would be determined

Y

Each

the

various

tion^^ to judge thbir ia^
therefore, feels that if the

standards laid down by Congress.
Once accepted by this board they

:'

for

Reasons

reasons

and each

There

can.

methods which it thinks

of

ation boards. No constant formula
is used. The average worker does
not

Other

tries
receipts of

he can,

as

bank

EH.

therefore,

workers

he

as

accidental

boards, and arbitration and medi¬

ar-

wages

the

contain

notify

payments

marks

of their function and

economic system.

payments for
The
Swiss
will

the

This

involved.

deter¬

deprives the

of

German

supplier, OMGUS contract
ber

the relative

consumer

be

name
of
Swiss debtor, name of German

consumers

therefore,

our

products delivered and the value

are
determined by
collective bargaining, fact finding

they

measure

for

Bank

formation:

right,
job evaluation
will lead to price fixing is not
justified under the principles of

r

increased;; wages.
for

will

by their
shall be

goods

will

payments

with

of

ceived.

the

the

There

/Many .workers, therefore,

.wages

determine

'

J

.

investor,

give

value of

"

of

function of

in

bearing in7

services.

OMGUS

Thus the fear that

the

.

rules

'

"

of

ation-: experts ;

hot

considered.

the

sumer

workers

measures

by

ing,

the

ceipt

raised

value

government Certified Job Evalu¬

occupations

■.VJ Labor and management would
call
upon' these job evaluation
experts to determine the wages

the

On

work:

Furthermore

■

while

-

worker

be

Government"

hand

investors.

method to arrive at wages, its
effect upon the attitude
be

product will

and

National

Assuming fair
competition and free consumers'
choice, the selling price of every

own

get 94%

ceipt

a

should

What

with

the

produced and what organizations

worker tries to get as large a re¬

seems to. be a gen-,
eral assumption that the standard
of living of the
working class can

y

the

low value

as

present there

knowledge in the

yYY-/<YYY

'

Workers

to

Each

to

section

;

prepare

students for the CJA examination
which would be based upon the

c2*-\ Vj..

on

goods

Bank will

account

importers

German

,

an account

not

This

economic

serve

ment and not the

share;

In determining the desirability

of

courses

-

to

Effect

:

that

manner

to

purchases

dollars,

credited

shall produce them.

receipts he receives
for
his
product
or
work, the
higher the value, the larger his

abruptly to disturb existing rela¬
tive

consumers

to
our

value of the receipt he gives the

value

and

order

system it, is the

of the goods, each
worker's share depends upon tne

productivities,:; it

desirable

is

Under;

place upon
it. Under price fixing the govern¬

still

en^

local - conditions

different

-

function

for

going
ether

however,

new

second

S.

Swiss

that the investors'

seen

consumer.

mines

pro¬

applied to the

our

for OMGUS

terest.

any

value of the various
worker, the lower its value* the
larger his share in the goods products. Government price fix¬

tire country
immediately. If these
different wage scales,

•

1

i

f7r*:;:

this

should not be

CPA's are licensed. A number of
7; universities now offer courses Jn

$■&■:

those

of

Swiss National

open

U.

country. The investors as a group
still get 6% of the goods
produced
tneir services. But each in¬
vestors share depends upon tne

great strides which

to

aspect

1. The

totalitarian regime

a

make

of

mythical country

our

the

not

distinction be¬
tween job evaluation as a means

A

on

government fixing of wages

will lead to

receipts instead
in

fixed

.

services.

expressed

f Now let

scale is raised slightly, say 5%. a basic wage based
upon its pres¬
Congress should provide for the ent wage scale, and then
gradually
establishment of job evaluation raise its basic
wage until it con¬
standards and for the licensing of forms to the
basic wage set for
job evaluation experts, Certified the country.
u
7
Job Analysts, on the basis of ex¬

t

,

being

take

to the productivity of
in these re¬
spective sections, there would be
no
reason
why the basic wage

tion of job evaluation if the wage

•

Each

stating

;: /

the average worker

however,. facilitate the introduc¬

ii

receipt

call each unit of worK

to

"dollar."

worK

portionate

lower

It

one.

the

country. If these scales

the work-

higher than the present one. And
in view of the large national debt

*

if-

a

legislature of that country

dollars.

Today there are various wage
scales tor different sections of tne

wage scale adopted
the part of cur¬

affect

scale adopted should be

and

77-

The

decided

made
in
developing
techniques, he would no longer

than

point value.

yers "will be able to buy, it is essen¬
tial
in
order
to
protect those

y.77.

re-

production.

and

insurance

opinion. More¬
over, whatever his opinion of job
evaluation, he will agree that the
wages it determines will be fairer

assure

Although the

and

subscribe

differ-

to

rent production which

■-TV 7

courage,. etc.

its"

given

changed for any desired product
of
equal worK
value
less
6%

have- been
its

the

materially*
just wages
workers, Congress should

all

will

i-w-V

experts

cnargea oy the investors for their

lower grade and wages than those
in
which
they
were'

/ concentration,

determine the national basic wage
or;

i

is

to

tion

for

*

ior

certified

are

wages

the laoor, manual

ot

aointy,:

woiKer

attempts

ent the basic wage or point value
used, by each concern varies. As

Therefore

'■"vv'^V

oasis

t|UjLied

against

evaluating most of the jobs in the
country
is
nearly
impossible.
However, if the layman knew the
present wide use of job evalua¬

same

'.

value

a

hy the
determined

value of his product in units
ot work. This receipt can be ex¬

manage¬

have

for

at

years of struggle. If
terested
in
purchasing goods
going, moreover, to have
from the U. S. Zone of Occu¬
by government, it
pation will be arranged by
win soon fix prices. Our democ¬
OGMUS in the light of over-all
racy will then have given way to
policy.
a
totalitarian system." The only
5. Rail transportation in Germany
liberty the worker Would lose
of exports to ana imports from
through job evaluation would be
Switzerland is an OMGUS rethe liberty to gain a wage higher
/
sponsibility.
than that scientifically determined
just by job evaluation.
II. Account with the Swiss
fj
The people who take the view
National Bank

accepted

the

at by

entering into
any occupation total 72 and each
point represents $.02, the occupa¬
tion pays $1.44 per hour. At pres¬

tions-

■i

would

lookout

uie

skill,

the part of management to
classify
their employees in occupations of

determine

to

of the

Unions

the

on

occu¬

an

treatment-by

is

2089

gained after

you

receipt formerly call¬
ing for MO
units of goods was
skill,"education, training, responactually valued at
$10. As betore, each
,v- '7 77y7 '•
y sibility, physical courage, ability, working. :
7 worKer could exchange his re¬
personality, etc. required for its /•; Job evaluation; has been little ceipt for
products v-ot the > same
efficient conduct. The values are publicized and the
layman may, worK or monetary value less the
given in points. If the points for therefore, believe that the task of
t>% charged by tne investors.

>fl
'

analyzed

value

physical

;

evaluation

h

evaluation

ual worker was protected

Operation of Job Evaluation

Under job

on

were
paid, that
working
conditions
were
maintained, and that the individ¬

-

wrtqre rit

government

oy

procedure
to the unions to

up

a
country in which each
brings nis product to mar¬

investors

proposed

be

aroitrary
The

T

that the wages arrived

job

many

,

ket;

good

func¬

now

comparisons.

Under

see

by an
by "job

measured

| evaluation" which«is

■

would j make
The- resulting

u

7:YY; Union Supervision

re¬

work

worker^

_

errors

produc¬
his

required

are

Picture

occupations,, Probably mil¬

explanations snouiu
bring about the correction of any

meas¬

occupation.

work

occupation

of

factors

protests and

measures

units

his

to

these

for

of

justiy divided these

For each worker to

his

given

other

is

wages

rnnong them.
must

values

to¬

goods; available, lions

to workers will be

/*'

taken

THE, COMMERCIAL? & >FINANCIAL CHRONICLE

?

,_of_the-U.-S.* LegationinBerne;

4. Visits of Swiss businessmen in-

E. H. Rollins & Sons and
of

Herbert-Reynolds Co.

was

head

7

2090

TOE COMMERCIAL & FINANCIAL CHRONICLE
ruling is merely to give offi¬
cial blessing to transact certain
security arbitrage operations di¬
rectly instead of deviously as was
previously the case.
*

^'Thursday, October 24, 1946

new

Canadian Securities

^Federal Usurpations in

By WILLIAM
It is

j

McKAY

somber caution.

This trait

can no

announcement

.

.had

little

the market and the

.on

ex¬

;(Continued from page 2073)

ternal section continued .dormant,

Canadian characteristic to view the future with somewhat

a

The

.effect

Abitibi

doubt be traced to the pronounced

5s

of

1956 eased to

They have the right to insist <ori
full cash payment for all securi¬
ties purchased .in
the open mar¬

98%

Scottish pattern in the Dominion racial fabric. .On the one hand this ,and at this level appear attractive
tendency to foreboding assures that the problems,of/the future will whether or not the discussed .re¬
be tackled with proper respect. Qn the other hand, an appraisal of funding
materializes.)
Internals
Canadian prospects from a

pessimistic.
war

fears

were con¬

stantly expressed that the Domin-

ion would be hard put -to ;meet

its

obligations to this country.

conclusion of

at :the

itself

found

As it
Canada

transpired

ultimately

hostilities with almost an .embar¬

credit balance of U. S.
dollars.. Similarly at the present
time Canadian opinion is inclined
to view with some misgiving the
rassing

$100,000 i

Power &

Paper

Principal and interest -payable
in U.

S., Canada

London

or

*

iPrice 99 and accrued

;

;

interest

to Buffalo,

Dominion Securities
CORPORATION;
•

'

•'

■»

40 Exchange Place, Hew

>V,'

»

i.'

York 5, N. Y.

Furthermore
even in a period of direst depres¬
sion, Canada has a virtual monop¬
oly in certain export fields such
as 1 asbestos,
nickel and forestry
products which would fall in the
category of essential imports for
foreign account. Moreover other
commodities

'

be cited such as

can

i

ary.

$

/

<

proceeds

which

have

been
as

/

three years.

/

Mr. Eccles, for

in

sounds

1

price

automatic
is

"It

rency or the

ernment.

to

ful

v

PROVINCIAL

solvency of the/gov¬

CORPORATION

CANADIAN STOCKS

United

before world production can meet

tionary influence, there should be
an interim period ahead of pros¬

tion

low cost

a

as

imposing variety of essential com¬
modities and her relatively stable
labor

situation,

would

share to

grim jeremiads about the possible
of OPA decontrol,
say nothing about the effect of
complacent labor policy on rising

NY-1-1045

an

be

turned

to

beyond
Canada's
produce
greater

even
•

.

During the past week the action
of the Foreign Exchange Control
in

easing

^governing
securities

dealings
came

that

dication

the

are

as

restrictions

/The fact is that inflation in the
United States, insofar as it has
taken place in the last decade, has

and rising prices.
None of
champions ,of greater bureau¬

cratic

A

been

farm

products

that

the

be

cancelled,

or

Federal

agencies now
bidding in American markets for

a

are now

been

debt

ernment

granted

Such

Canadian domes¬

.an

a

national

•

.asset

the 'Dominion

au¬

thinking in terms of

as labor .and
both instances,
the one wages and the other farm
prices, the value of the dollar has
depreciated more than it did dur¬
ing the First World War.
There
is
no
evidence suggesting any-

Willis

Btirnsfde Go.

/Willis

Burnside

E.

Street,

New

York

doing business

tion.

Officers

side,

president;

as

Co.,

30

Alton

City,

is

J.

Great
never

Tet-

was

the

firm,

meyer

formerly proprietor of
with .which Mr. Tet-

was

associated

trader.

as

ness.

and

f

as

they

been fatal.

universities.

our

are,

Our

they

have

own

coup-

try was bom in -the midst of a
grievous inflation in which the
depreciation of the .currency be¬
came
a
by-word for worthlcss-

njieyer, vice-president. Mr. Burnside

disturb¬

causing great injustice

the classrooms of

Blauner,

William

and

by economic

as between various
groups in the
community. These evils have been
amply explored and expounded in

a corpora¬

a

Nevertheless, we survived
and -great nation was

new

born .amidst economic ,pangs that

Constantinos Fateras

increasing
As

a

gov¬

practical

disturbing

were

but,

,as

events

| Constantinos A. Pateras is en¬ proved, certainly not fatal. To¬
gaging in the securities business day ft seems that the country
from

offices

at

4-6

New York ;City.

Piatt
.

through

Street,

tion

//

is

flation

Street, New York 5

All Issues

.

'

•

'

CANADIAN

1

'

■■■■'

-

Incorporated

;

Corporate
Toronto

Montreal

Street, New York 5

the

and

latter

labor

It is subject to

and has

costs

rate

a

Vancouver

London, England

high

struc¬

firmly controlled by the ICC.

This

does not

that the

mean

en¬

tire rail field should be abandoned

institutional
investor.
whose credit will

the

by

There

are roads

be good even if the country runs
into a protracted depression.
It
is necessary -to emphasize that the

investment

confine

man

can

himself

to

longer

no

an

examina¬

tion of balance sheet and
statement

figures

and

income

past

rec¬

He must give careful .coiir1
sideration to factors which for¬
ords.

merly

have

been

lesser

of

certainly, not .controlling
tance.

-"/.'otVv)

'/ •;

(Tt is
of

sion

possible

that the

inflation

bonds.

There is

discus¬

its

impact

may

under¬

and

no

and

impor¬

government

good ground

at 'the present time for such a loss
of
faith in
government obliga¬

tions.

It is

true

that the

debt is

huge and .that fiscal thinking has
been unduly influenced ib.y theo¬
ries which violate all
sound

the

-finance.

country

The

precepts of
fact .is that

investor

may

be

possesses

/enormous
.

.com¬

'

Winnipeg

to

economic power and can lake a
great deal of punishments jn box¬
mitting a grave error in trying to ing parlance, it has 'whiskers' and
anticipate the effects of inflation,' can take quite ,a beating.
The
He is apt to be. guided by the country
is entirely capable of
classicexperiences of the pasl carrying its present debt load and
which 'have been expounded in there is no immediate danger of,a
classroom and text."
substantial rise in interest rates
"In 'line with these -apparent - or a- correlative decline in
bqfid
lessons of the past," Dr. Lawrence prices."
/
/
t
/ :.
tutional

Municipal
14 Wall

of

Bankers Association

Virginia Beach on .Oct. 22, Dr.
Lawrenqe .warned that "the insti¬

Wood, Gundy & Co.

SECURITIES

Plan

at

Bought—Sold—Quoted




usurpation."

Speaking at the .Convention
Morris

3-1874

;

Provincial

to curb the very in¬
has been. the pre¬

which

text for bureaucratic

&
Company

costs

its political administra¬ on government debt
denying many of the es-. mine confidence in

time failing

Dominion of Canada

raise

to

depress prices.
The railroad in¬
dustry
unfortunately
illustrates

ture

ance

Willis E. Burn-

are

vice-president;

.&

"In his consideration of invests

ments, ,the prudent manager will
lay great stress upon labor factors
and controls, the former tending

both hazards.

companied

Now A Corporation

would alter this fact.

'

"There is no desire to minimize
inflation.
It is a grave evil ac¬

..

lesser rather than

TA YLOR, J)EALE

Government

such

In

welfare.

sential liberties guaranteed by the
Constitution and is at the same

WHitehall

more

past patterns

agriculture.

honest/purpose

would
furthermore try to re-educate the
public cn the fruits of thrift, both
personal and
governmental.
11

welcome in¬

matter, however, the effect of the

Wall

from

voter masses,

commodities with the funds
the credit of American tax¬

scarce

f -r,

its

for

depar¬
than its
conformity/* The / power of the
government has been used delibr
erajtely to promote the interests
of
groups
which contain large
ture

post¬
price'floors for

guaranteed

war

politically selective infla¬

a

tion, notable

suggests that subsi¬

power

dies be removed from agriculture
and other commodities, that

Canadian

in

a

ernmental control.

•64

use¬

ground,

:

costs

the

other security of the same type as

now

thorities
RECTOR 2-7231

the

costly.

may prove

consequences

tic security and the simultaneous
investment of the proceeds in an¬

of trade barriers progress

account.

MEW YORK 5, N. Y-

had

dollars

Permits

for the sale of

Pine

Board

States

allowed.

the
Dominion
important .de¬
gree
in any boom in foreign
trade. Likewise if the present ef¬
forts to bring about a relaxation

will

TWO WALL STREET

in

precious metal of great value, may

In view of Canada's posi¬

lip-service
stage,
comoetitive
ability
to

INCORPORATED

coal,

tangible, highly

a

substance

any

dike Bpwles/ h»d Porter encounter conditions where a se¬
who /have been sounding off with
curity .commitment in its future

would
seek
furthermore to re¬
international Well as in the securities
payable store to the individual
full re¬
ip United States currency.
sponsibility fpr his own economic
producer of an

in

activity

perous

the

A. E, AMES & CO.

;

to

.

/

"Men

.

trade.

MUNICIPAL

/

obvious

is
today hardly a good hedge against
inflation./
Similarly,
gold, / a

metals,

precious

the existing demand and in addi¬
tion threaten to exercise a defla¬

GOVERNMENT

"

.

be

of investment that

although

•

CANADIAN BONDS

must

student

threaten the integrity of the cur¬

'

rises.

safeguard

a

discrimination.

alarm
;as

level

general

adequate

in /the past, they pan the -applied
today only with the most careful

the .fi¬

such

the

as

Howevor

definite

a

the .conduct .of

minister

nance

secur¬

-

loud,

a

whenever

securities

Canadiap

imposes

to

such commitments .may ;haye beep

upon
currency issue and
credit expansion.
Furthermore, Xt

maturity pf npt less than

a

(this conviction which
justify & search for
things jn /the .ground, real -estate
and
commodities,
pecause .all
these
presumably will vary in
is

seems

gold

standard. ZIt

ity in Canada where the proceeds
are being immediately
reinvested
in Canadian dollar stocks or bonds
with

./"It

causes

limit

now/ sell //a

can
or

-very

responsible for
this country has

ing is more likely to compel sound
fiscal hehavior and
prevent infla¬
tion /.than a return to the

se-'

prohibition has been removed.
United States

the real;substance,of fhe -fund; in
.other words, its purchasing power.

m

i

.

does not suggest a re¬
turn to the gold standard.
Noth¬

of the Canadian Government. This

non-resident

■

example,

Sales of domestic Canadian

the

■

ignores carefully the

•

^ecndtiesfi^iisacliens

invest

-

"The irony of all this is .that it

.

and
uranium and
Hitherto
a
Canadian resident
payers be barred until such time
of which
has not been permitted to sell a
as supplies become adequate and
Canada is the world's lowest cost
Canadian
domestic
security
in domestic
prices reasonable.
producer. In this field also the
New York and buy in exchange
"An honest purpose to control
Dominion, under the worst condi¬
another
Canadian
domestic;' se¬ inflation would also call for
change in. the political) direction
tions would undoubtedly still con¬
an
of inflationary forces.
curity— one
payable /solely
in abandonment of the
It would
tinue to maintain a fair flow of
specious phi¬
Canadian dollars—although rein¬
be a great mistake to assume ,a
losophy that governmental defi¬
exports.
.'
!
vestment in securities payable in
Republican
victory
in
November
cits are salutary and a huge
Mt would appear, however, that
gov¬

base metals, gypsum,

other

Bell System Teletype NY 1-702-3

commodities

remain unexploited.

!

Toronto and -Montreal

these

in

resources

Piiect Private Wires

Chairman
of
the
of Governors of the Fed¬
vestment commitments in situa¬
Reserve System, is now .de¬ tions which will
appreciate suffi¬
manding a change in the .capital ciently ;to a?sure.,(l) the.satisfac¬
gains tax on the ground that the tion of dollar
commitments and
current levy -of 25% ..is .inflation¬
(2) if possible, the protection of

ac¬

curities now permitted if promost countries in
this category Canada ihas (devel¬
ceedsare simultaneously Invest-/
oped .an industrial strength which
ted in another security of same
promises ultimately to eliminate
her dependence on essential im¬
/type pr jn securities payable Jin ;
ports. At the worst, the Dominion
United States/currency.
would be obliged to adopt a policy
Accord i n g to. the Canadian
of self-sufficiency, and would be
Press,
the : Foreign
Exchange
forced
to
exploit ,domestic re¬ Board of Canada has announced
sources in place of imports. In the
new rules governing transactions
long run this could prove to be a
ip securities by both residents and
blessing in disguise.
While it is non-residents of Canada.
' /
now expedient to import such es¬
; Previously, a non-resident /was
sentials as coal, iron, and oil, the not
permitted to sell common or
tremendous undeveloped domestic
preferred stocks in Canada and

to result in

general rise in prices, in con¬
sequence, he tries to place his in¬

Board

unlike,

ever,

is/bound

bank credit
a

present

suffered .to date.

gether with all countries that rely
the
marketing
of, primary

.

eral

Canada Eases

on

vestment manager. is .apt to as¬
'that .a; very. gi;eat increase
public debt plus an accom¬
panying increase in currency and
in the

no

in,any other market.

such inflation

produce, would be faced with a
serious exchange problem. How-:

1, 1965

/

undervalued.

depression of course, Canada, to¬

5% First Mortgage Bonds

the

.current levels the paper and base
metal stocks would appear to ;be

currencies in the postwar period.
In the event .of a world-wide

Company, Ltd.

Due June

the .an¬
nouncement
of
the $10 rise
in
newsprint. Free funds after eas¬
ing to 4Vs% subsequently rallied
;to 3%%.
/,/.//■.,.;■■:■
; There still appears little likeli¬
hood of any early revival of

commented, "the institutional in¬
sume

They have the right to. regulate
installment .credit. ; Mrt Fccles,

following

tivity; in 3py .section .although at

ability of Dominion commerce -to
earn
an
adequate total of hard

Abitibi |

advance

ous

condition that confronts

a

other buyer

likewise dull and the paper
stocks, receded after their previ¬

■

During the

ket.

were

Canadian source is apt to be misleadingly
®

/

Attacking Inflation Dangerous-

.

.

..

■Volume

164

Only

Number 4536

.

THE COMMERCIAL &

Republican Congress Can Check Inflation

a

(Continued from

2080)

page

.of Rolla McMillen.

project for spending money which
nas
not been
endorsed
by the

.

He has made

outstanding record in Congress 'President. He has .recommended
in a
short time and represents 1 billions for
public works, -includwhat I know to be the
thinking mg every--creek in- theV United
and ,philosophy of the
people of: States; billions for the compulsory

Wm. G. Stratton.
The

country
of

a

.,

the more-employees. The figures show;
inflation; that in July, 1946, i-1 -months after

today- is. in
-

inflation is threatened
result of those policies.

as

workers

has

increased

approximately

more,

ment there has been

prewar.
In view of the fact that
there has been no increase- in- the

crease;

<•

in

cost

the

last

0.00,000.

further

wage

to

achieve

time to
'lb

>/*■'

''y

v«

Monetary Fund.

is due

Include

gold,

I

.

which

over

have

we

control;

no

* -1

Bank
I

di¬

"

seerh

to

bf

all

"its

lending
of $3,500,000,000 is already

power

allocated.

The Treasury estimates

e

wards.
very

Truman

lion

granted extensive price increases
in basic prices like that of
steel,
Which in turn increased the

Then

on

■-.

effect of such

politcal pur¬

hard work.
the

President justifed his veto
by claiming that the provisions of
raise

manufactured

goods.

price of
To prevent

billion.
can

entirely

•housewife.

a

difference

to

Manufactured

there

is

constant

a

This

.approximately $25
can

be done, but it

only be done by

Administration

foff the market-basket items which
-really made

In the effort to escape

burden

be reduced to

the

this he took the ceilings

and

progress

temporarily,
but leads ultimately "to disaster.
In my opinion the budget should

The

would

burden "is to dis¬

pressure towards
reduces the burden

•days.
Of course they went rapidly to adjust themselves to costs.

bill

a

initiative,

courage'

a Reoublican
which
does
not

believe

in the theory that more
spending is the solution *of every

the

goods

/The net result is
Hon

which

in

the

a

end

will

cer-

nations.

<

Such

a-budget would
-reduction in taxes *so

.

icies.

Of

once

of

the New Deal did.
before when it reduced i

course

BALTIMORE, MD.—E,: R.
& Co.j 221 East Redwood

Street, memberg of the Baltimore
that

Lorimer A. Davidson

has become

associated with them.

Mr. David¬

son

his position upon -re¬

assumes

ceiving separation from the Can¬
Army where he held toe
rank, of Major |n the Royal Can¬

adian

the

Foreign LendingProgram

•

^'The-,
$3;300,-!

-

New Deal spending; The ultimate
inflation resulting from this

British

.

loan

amounts

to

0C3;000;' the Export-Import Bank
will be worse than that in the loans
to $3,500,000,000, with more
World War when there 'was al-;
to-.come; the Bretton Woods Mone¬
most no price -control at: all.'■:?
Be-j tary Fund takes $2,750,000,000;
.sides hitting those who have been, the
International Bank can sell
thrifty, it ' hits with particular ? guaranteed securities in this coun¬
warf

force the white-collar group.
Fac-j try up to S7,500^000,000; we have
tory
workers [ have more
than .given UNRRA $2,750,000,000. Thus
Y made up the difference. '.Salaries over a period of three or four
in the lower income class move,
years
We are making available
i much more slowly, if at all.
i" ■' to foreign - nations, without; any

its been the

same

.

Inflation From Liberal Spending

'• This inflation-has been substan¬

tially encouraged by the liberal!
spending polices of the Adminis-"
tration.

It is hard .to think of
any




which

may

during

the^next four

well

be

-

billions

spent

here

J

■i

J

V A it f

■

•

|

f

SOUL

est

profits and

WILL
,,

HELP

WITH

IT.

But

chal¬

ever

pay

while

bad

are

business

business

...

.

,

men

business

.

men

greedy, they want the high¬
toe lowest wages, LEAVE IT TO US •*
WE

;,

YOU.

All this

"Business'men

business men will exploit you

.

want to starve you

.

men are

.

WE

HAVE

those

of

Street, have been taking it

A

on

MONOPOLY

whorare in

us

the chin.

Some of us have been afraid to

dp

ON HUMANISM!"

business,

We've

.

never

and in Wall

answered back./

because we couldn't trust these
to pry into our private lives, o£
so

people.
They have power
charge us with tax evasion, and.even if we are innocent, they can
plague us with endless annoyances and investigations.
Or they could
send

their.clerks

into

our

haven't answered back.
•

in

But times
their

known
ers

are

The

thought

offices

'

i

changing.

confusion.

own

as

they

is

a

Do

construct

They

disrupt

a

our

affairs.

So

we

*

.

The little

.There

could

and
,

Tower of Babel.

reach to Heaven?

men

becoming snarled

are

story from the old Testament
you remember how the build¬
man-made

would

that

tower

small men too and they failed;
It is
the way our present crop of small men are failing now.
BUT THEFOUNDING FATHER^ OF THIS NATION WERE NOT SMALL
MEN.

were

THEY BUILT SO STRONGLY THAT EVEN THE INDIFT

.

.

.

Prior

to

being

(Washington).

commissioned

in

Canadian

the

Army in 1940, he
had 18 years of experience in the
investment banking business in
New;;York; Mr.. Davidson, with
his. wife and son, resi.de in Wash¬
ington, D. C.
'•■

•

"

•

■

*>*—MBMWw-1.«

•'

-

fice WILL WE HAVE THE COURAGE AND THE CHARACTER TO
HELP

OUR YFELLOW

Service

and

Bank

has

served-

from

-

the

two

over

years. overseas

Oberman &

Company

5% Cum. Conv. Pfd. Stock
,

.Y

:

Common Stock

/ Prospectus

<!

a

as

transport

duty

was as

service Yand

on request

1 :

<

■

•

and

Herrick,Waddell & Co., Inc.
:

55 LIBERTY STREET, NEW YORK 5, N. Y.

one-half

'Supply Officer

and

cruiser.-.. His

Officer in Charge

American

of the Contract Termination Sec¬

tion of the Bureau of

S'

Supplies and

Schoff & Baxter
BURLINGTON, IOWA

—

R.

Baxter!is engaging in the securi¬
ties business under the firm
of ISchoff

&

Baxter

Fullerton

Grower# Inc.,

Com,
v

Oil Co., Com.*

mi WdgensellerS DurstJnc.
-

jfembers Los Angeles Stock Exchange

^

name

from bffices

Fruit

Arden Farms Co., Pfd. fit Com.

i ''

Accounts in Washington, D. C.

'

sufficient

been

.

;

ONE

that in¬

.

Co., First National
Building.
!. ,•

release

■

.

Mohr &

ton,

last

.

'Jn:vv-Vv

admitted to partnership in Thorn¬

of.

UNDERSTAND

dividual freedom is greater than security and that wealth

MONTGOMERY, ALA.—J.Mills
Thornton, Jr., has returned from
Naval

TO

for all is here in this land of ours, providing we WORK for it.

Thornton, Jr., Partner
In Thornton, Mohr
the

AMERICANS

That material well being is a personal thing

TRUTH?

Y

)

•

i

'
v

€26 SO. SPRING ST.

Y

:

-

v

TRINITY 5761

LOS ANGELES 14

t

'

V-!.:!/V'Y::'Y -Teletype: LA 68

years .at the in the Tama
Building.. In the past
rate of 5 billion a year. This kind
he was ; a partner in Schoff &
of buying, of course, will build
up
an
artificial •export trade -and atl:Baxter; 'li l
:)

l.M

AND

FREEDOM, AND WHO WOULD NOT FIGHT FOR THIS FREE¬
DOM, CAN HAVE ANOTHER CHANCE TO HELP BUILD A BET¬
TER AMERICA.
When "these small men are gone from public of¬

Joint Staff Mission

.

$20

ideas

FERENCE AND TIMIDITY OF THOSE OF US WHO UNDERSTAND

Artillery. For the past three
he has served as a General
Staff, Officer on the Canadian

■

return;

totalitarian

existing organizations in this business

tirade.

can't be trusted.

y

-immediate

unsound,

adian

^Mjt..; Thornton -was • serving as
-{0 Lieutenant-Commander upon his

gold '" value
of r -the: dollar.
TheYfore^
Thrift and saving has always been- threatens
$ ^ontinuatipn ^of "dnfla^
/♦contrary *; to- the .v phi losophy • of I tion in % dangerous form

of ..many

years

■

:r

onslaught

our

but it cant be reached*unless we;
great inf la-; stop passing out money to foreign >

tainly reduce the value .of the ddl- permit a
lar by 40.%,, and thereby reduce ;
that the total tax burden would
the purchasing power of all banks
be less than one-fourth of the na¬
deposits, and life insurance pol-; tional income. Y;^Y;-'//-YAYr/■• Y-vv.
*this

un¬

Jones

T-0'

problem.

went up anyway, and. so did raw
This figure of $25 billion can
materials.
Now, of course, it &s;
be-reached within the estimates
impossible to roll them back. The
of the War and Navy Department
effort to do so in the case of meat
for
a
peacetime military force,
lias simply resulted in no meat >

the

little

announced

to

ours,

which give breath and life to this business of
supplying
capital for industry, and free markets for' the ownership of that in¬
dustry.
Time after time, little men in government Rave smeared
WALL STREET.
The Wallaces, the Peppers, yes, even the verytop men in our government have "been yowling for years, and always

years,

Wilh E, R. Jones & Co.

Exchange,

PART

little

.

these

Lorimer Davidson Now

Stock

done

CATIONS

Serious collapse.

n

have

lenge such a virus and expose the fallacies upon which it was based?
Did any of our existing dealer, or broker
associations, ever stand
up for good public relations and defend the ECONOMIC JUSTIFI-,

sta¬

-

local

national income. ' The inevitable

a

survived

of

.

the flood of spending, and begin
a' stabilization which can prevent
a

We

of untold favors
but that is because our founding fathers
very resistant form of government that has prevailed

land

did any one

in operation;

face

will

VICTORY.

Our industry is the recipient

PROPERTY, YOU: TAKE THE BODY

but only if a Republican Congress
is elected can we hope to check

38; billion dollars; of Fed¬

taxes,'-we find that ; the tax
burden" is nearly one-third of toe

|

poses, the President vetoed the
Price Control Extension bill and
took all controls off prices for 30

the

and

State

of

it

for free¬

cally nothing to preserve FREEDOM.
We have allowed unsound
slogans to mesmerize the majority of our people: "Put human rights

Republican Congress

a

elected

'are

pleasant results for several

eral

July 1 at the behest

of the PAC and for

dollars

taxes 'to

price

of manufactured goods.':
,

Even if
is

excessive today ; on all
particularly on the low
groups. If we add ten bil¬

short time the fallacy grossly
policy was ad¬ classes,
mitted by the OP A itself which' income
.a

and

this free

THIS

above property rights."
Do you remember that one?
The believers
in statism and government control of our economic existence
who
said this KNEW ONLY TOO WELL'THAT ONCE YOU TAKE

weak reed to lean on when

a

these Vast forces

Furthermore, the tax burden is

the

steaks

FOR

which have been inculcated into the
thinking of our people, and the
actions of our government ever since 1932.
We have done practi¬

the flood created

between

CREDIT

established

those policies than you can
sweep back the sea with a broom!
Paul Porter says that people must
choose

THE

and

by un¬

by

too low since' deed

me

understand

deficit of $1,900,000,000 for the
war
the
President' removed all year, but again its estimate of tax
I pre¬
wage controls and proclaimed the receipts seems excessive.
doctrine that wages could be in¬ dict that properly calculated, the
creased while prices were arbi¬ deficit will be at least $5,000^000,trarily held down. He encouraged 000 by the first of next July. Of
the most general■>increase id sal-1 course Ythis creates the purchasing
aries,as well as wages, which the power out of thin air and with ;a
country has ever seen .and these limited supply of .goods, forces
.now can never be
adjusted dowri- further price increase. ;
In

in

Price controlcan

.check

;

assisting our fellow American
how, Why, and when, they should invest their savings

educate—or to lead.

Furthermore,, the estimate for ex-- bilization. Unfortunately, we have
pendxtur.es by Vhe Exportrlmport neither.
/For* price control is in¬

rectly to toe Truman economic
polices.
Immediately after the

of

bring it about.
no- more

own

NO

OF

enemy -of inflation whi le pursuing
all of the policies calculated to

don't under¬

another. Y

witnessed the confusion

in the productive forces of this nation
have won a victory
dom in what happened last week.
BUT WE DESERVE

•

to

is being transferred
an-'international organization

to

Truman Economic Policy
The whole situation

not

ernment and

for

*V-v%r,.

•

stand why ii must ; not bs counted
since it is the property of the Gov¬

come.

i *''*'V '*

does

-

then

even

citizens as to

we face the
collapse which follows any arti¬

be transferred to the International

increases, la

stabilty

This

$1,800,000,000, mostly in

and

to market." Meanwhile the law of
supply and demand reigns.
Y.. Those of us who are engaged in

when that"* happens

expenditures for the
which began July 1, almost
year after V-J Day., is $41,500,-

wise credit policies.
The President has posed as the

all

of

.

20s, except that we are
loaning the taxpayers' money. It
is unlikely that these loans will
ever be repaid.
If they are not
stopped entirely, they will "be
greatly cut down in rate, and

a

some

•

!

situation exists today

same

in' the

least

difficult

•

the substantial

of

one

old

and

in their

adding to the severity of

The

The total

;rising spiral with stakes and less
^productivity.
Even if we cain
♦check this rise, it will be
very-

"

was

an

They heard them rant, listened to them plead,
of the planners themselves, when
impotence they finally said, "We give up, but it's not
our
fault that the little
pigs, the sheep, and cows won't listen to
us, it's some other politicians who have convinced them not to come

export industries

ficial inflation of business

Yforces

,

in

year

70%

There is

governmental control of our economy.
The people now understand
that small rpen in Washington (no matter how
arrogant) can not
put meat on their tables.
They saw these little men try one plan

be

productivty of labor, this meads
that labor ,costs (and labor is at

analysis)
have
increased
moiie
than pricest and the price of man¬
ufactured goods will have to be
^adjusted still more upwards if
/they are to be made at all; This

?■,

the

as

steady/In¬

a

resulted

not

the depression.

■

,

would

causes

civlian 'employees of
the War ,and the Navy Depart¬
ment and outside of that Depart¬

cveir

these -loans

which

has occurred

war

We built up

DUTTON

adage that when a small man is given author¬
ity he sometimes becomes unbearable; but when a big man acquires
such a position, it makes him humble.
Last week we saw the be¬
ginning of the end of a nation's blind faith in what has been termed

private
an artifical
-

repaid,
all lending stopped.
Exports col¬
lapsed and wide unemployment

the

among

still

58%

.

since the

crease

of fac¬

from

- '

JOHN

Tried and Found Wanting

learned

export business.
Then in the 30$,
when it bepame
apparent that

This compares to less than a mil¬
lion when the war started, and

a

The

prewar.

average hourly wage rate

tory

have

loaned ' Jarge sums -abroad, for

sources.

Already
.according to the Bureau of Labor: to 563,000 under the last Repub¬
Statistics, the cost of living, .which • lican President. There were 118,500
in January, 1946, had increased
employees in the State of
Illinois. .Practically .all of the de¬
33%
over
prewar, >. has
.now
over

should

we

By

foolish

lesson in the 20s. At that time

we

.

more

45%

^

,/

.

peculiarly

the I; most \part

for terminal leave and billions for

r

.brought about by the ^policies of < V-J Day, there were still 2,711,165
the Truman Administration. Much employees on the Federal payroll.

reached

up prices for
goods heeded in

•

serious

:

seems

because
our

I urge

strongly that health program, billions for Social
you elect the Republican candi¬
Security, billions for UNRRA, bil¬
date for Congress at
large, Mr.; lions. for foreign loans, billions

midst

This

2091

Securities Salesman's Corner

the same time'force
many types 'of.
this country.:.

.

.an

this District.

FINANCIAL CHRONICLE

.

f-

/

Marital 9*otafiow

and Information

oa

a# California Sacaridal

;

2092

in

Chinese Communism—A Menace to World Peace
Communism
Few

would

munism

that

state

political liberty are"
compatible.
The Com¬

by nature of its
inner logic, cannot and will not
tolerate rival parties.
The eco¬
nomic

democracy
boasts

economic

of

which

involves

planning

it

totalitarian

that

entails
the suppression of economic free¬
Since

economic freedom of

choice

and political liberty
are
ireally inseparable, Communism is
.the

antithesis

of

the

democratic

Communism

system.

in

China

stands, therefore, in opposition to
the development of political dem¬
ocracy,

well

as

as

liberal

a

economy.

This is not to affirm, of .course,
that the present Chinese Govern¬
ment
is
democratically
consti¬
tuted

Chinese

Com¬

totalitarian

a

of China.

;Jjj'.':,;

and

that the present economic

or

of the Kuomintang is not
toward increasing con¬

program

leaning
trol.

But

with

the

as

we

concerned

are

possibility of China's
development
to
a
full-fledged
democracy, we should not allow
ourselves

Democracy

to

overlook

the

funda¬

as

Interlude

an

:

It is true that the Chinese Com¬
munists

fact

that

the

pamphlet

Mr.

by

chairman

a

Tse-tung,

Chinese

the

of

munist Party.
to

Mao

Com¬

But it is necessary

inquire into the real character

of this "new democracy." Accord¬
ing to Mr. Mao, political democ¬
racy in the Western sense is no

than

more

the

first

of the

stage

Communist program.

It forms the
requirement
of
the

minimum

policy of the Communist Party.

the

In the long run, however, the
goal of the Chinese Communists is

establishment

the

state.

'

$$$?

.

immediately be¬
fore the War, a liberal economic
program as an instrument of gov¬
ernment policy, was clearly dis¬
cernible.
It was interrupted
by
the War and its full resumption at
present is prevented only by the
unsettled political situation, both
,

{domestic and international.
The Kuomintang and the
Communists

:;v" J%

The principles laid down by Dr.
:Sun

Yat-sen,
from which
Kuomintang has invariably

a

problems,

the

deapproach to

<nived its fundamental

China's

-

capable of
liberal interpretation. So far as
are

this

Mr.

Mao

of

socialist

a

further

in

states

political tract that there

diate

program

-Three
Peoples'
the
Kuomintang
have in common, and that, there¬
fore, it is possible for the two
parties to join, forces.
Party

and

Principles

the

of

We

bear

must

in

Soviet

when

Russia

was

not

yet

allied to the Western Powers and

was, therefore, interested in the
continuation of Chinese resistance

Japan, which

to

doubt served

no

to weaken* the latter.

The period

of collaboration be¬
tween the two parties in China
was
clearly defined by Mr. Mao
from

the

;!:hen

impossible

the

limited.

as

than

the

result

of

it

foreign

policy,

Communists have

the

now

seen

second
their avowed policy?
to

the

fit to

stage

of

It is well to remember that for

not

.If tonly there were

diency.

interval of

an

without the constant men¬
ace of an independent army owing
allegiance to
a
political
party
which knows no
tolerance, the
-.greatest obstacle to the develop¬
of

ment

China

of

rfche

economic

toward

political
field

fullest

liberty

would

moved.

be

in
re¬

.vV

The fundamental difference be¬

tween
and

Chinese

the

the

Communists

Kuomintang

fact that the former

lies

in

the

ideologi¬
cally anti-democratic and inimical
to economic freedom
of choice,
the latter, though

whereas
means

an

within

a

by no
ordinary political party

democratic

auevertheless,

on

country, is,
the whole demo¬

cratic in outlook,
In

are

other words,

favorable

y

of

One

foreign

main

the

opinion

*; ;

reasons

has

often

why
taken

the Chinese Communists for pseu¬

do-Communists
cals

is

out

by

the

land

agrarian radi¬

reforms

carried

the Communists in
their

under

or

control.

The

Com¬

changed

the

actual

methods

adopted in carrying out their land

policy, and political expediency
has invariably beefi the factor de¬
termining the methods employed
at any time.
In the years

prior to the "Long
Kiangsi
to f.the
northwest, the Communists
adopted the policy of confiscating

March"

,

from

well

as

"large" landowners as
the physical liquidation of

the
the latter.
This policy was con¬
(Kuomintang would eventually re¬
linquish one party,rule and aban¬ tinued in the first years of their
don economic collectivism, where¬ rule
in
the
so-called
Shensi-

BEECH-NUT PACKING COMPANY
Reports for nine months ended Sept. 30:

ble

of

diverse

rate,

Net profit before federal taxes....
$3,249,641
taxes......

/''

held

by

437,524 shares

the Company,




of

whereas

program

1,150,000

there

is

the

to

large
tive

central

core

Communists, it is

more

a

majority of
are

Kuomintang

and

constitutes

army,

a

to

certain

a

extent

the

at

/

'•

tion.

this
we

$4,460,569
2,895,000

$3.58

real

economic

The formula is

one:

a

initiating
of reform and re¬

real program

inability to do

Exploit the

so.

so¬

cial discontent thus generated and

expand your own power.
This
that

does

the

not

able

concrete program

*

-

however,

mean,

Communists

would

temporary

truce.

to

a

them

the

opportunity for political infiltra¬
tion under the unstable conditions

which

,

is

munist

inherent

which

diminution
all

of

circumstances.

the

indus¬

be further

tightened without
ducing
large-scale
famine
starvation.
vfe
The

Impossibility of

now

If the above argument is cor¬
rect, the logical inference is that

there

is

breathing

1

«;

-

space

/rv.'-. * "

experience of General Hur¬

early negotiations is
re-lived by General
efforts at media¬

in his

While

mintang

Lasting

a

a

"'.;

in the
being

tion.

Coalition

election

the

of

some

diehards

Kuo¬

doubt have

no

r

of

the

fiscal

1947.

year

Merrill
of

man

Hanson Director of
Investors Stock Fnnil
*

MINNEAPOLIS, MINN. — Eu¬
B, Hanson, Vice-President

gene

and Director of Northern Finance

Corporation and Minneapolis Se¬
Corporation was elected a

Stock

member

and

committee

vestment

Fund,

Chairman

*

to this

ceeds

underlies the impasse.

Stock

The Way

to Peace

to

come

coalition government composed of
the two parties can endure.
In

an

and

terms

way

operate

to

ordinary political

as

party is to

economic <•' recovery
in
view of the fact that the Chinese- promote
China generally, and to advance
Communists now

l

and

M. Dain

Minneapolis.

resigned

y

,

a

Vice-

&

Com¬

He

suc¬

Hubert

as a

Kennedy who
director of Investors

Fund,

Inc.

tional Bank in

of in¬
ducing the Chinese Communists to
only effective

,

Barney &
bankers,

W.

in¬

formerly with
Company, in¬

was

vestment

of

the

Investors

the \

'

Mr. Hanson

Smith,

of

of

E. E. Crabb,
Board,
an¬

Inc.,

of

nounced.

day, the fundamental attitude of
the
Chinese
Communists really

The

Investors

members of the Committee.

Vice-President

unbridgable gap be¬
tween the ideologies of the Kuo¬
mintang and the Communists re¬
spectively.
This means that no

Committee for

ending Sept. 30,
Griswold, Chair¬

Massachusetts

pany

an

\/} >

Trust, and Hardwick Stires, gen¬
partner of Scudder, Stevens
& Clark, were elected as the other

to reach

up

\

t

eral

to share the blame for the failure

agreement

V

i

Dorsey Richard¬

its Administrative

President of J.

an

'.*v.

Vice-President of The Leh¬
Corporation, as Chairman of

son,
man

director

situation,

Marshall

and

the

tional

ley

pro¬

and

if

'

,

curities

The

would,
entail inestimable hu¬
suffering, as the belt cannot

a

desirable to

more

'

Dorsey Richardson
-1

•

when, in
view of the .military and interna¬
is required.

moreover,

Such

peace.

Communists

the

the

trialization of China after the So¬
viet pattern at this time
man

the

accompany

real

truce is all the

Com¬

welfare

The

of

absence

entail

economic

inevitably

.

planning,

in

creed, .would

of

Companies announces

,Tn,

is desire-

Their emphasis is on the

economic

Investment

ob¬

sub-division of the "cake" and not

Totaliarian

;

Association

National

as

construction. Discredit him for his

;

'The

pre¬

simple

a

a temporary truce
because it affords

making the cake bigger.

Of Inv. Cos. Assn.

reconstruc¬

ject

to offer.

on

Dorsey Richardson V.P.

a

fact,

no

historians left.

peace

in

be

this aim

munists have

beginning of the Third World
War—provided,
of course, that
there will be any

reason

Party,

On the other hand, by

,

ards.

.VV1, V'

as

the

obvious

very

concerned, however, the Com¬

So far

ex¬

Prevent your rival from

population.

dustrialization.

be

of

can

impossible for the
present government to embark on
a program for economic recovery
and the raising of living stand¬

cannot be ameliorated without in¬

is

might be written in history as the

munists make it

is the utter poverty
This poverty

economy

the

disturbances in China

the present

venting the establishment of real
peace and the granting of large
foreign loans to China, the Com¬

The major problem facing Chi¬

■

facing the true situation squarely,

militant group intent on seizing

dation .of

Industrialization

nese

unpleasant necessity of

the*

from

the Kuomintang
position to reduce
military
expenditure,
thereby
putting a brake on monetary in¬
flation, and to lay down the foun¬

Kuomin¬

*"v"'V

•

this

were

nomic problem of China cannot be
'■

effec¬

an

A-.•./•;

:

Chinese Communist

would

may be accused of inefficien¬
in carrying out land reform, it
least recognizes that the eco¬

r

and

is already fairly ad¬

cannot be sincere in its
profession for peace. For, if there

tang
cy

man

vanced in China.

power,

the

In the second place,

purpose.

the free

or

For

the

China,

in choosing the methods for

The strug¬

totalitarianism

between

because

cajoled and, because of
ignorance, can be easily in¬
doctrinated.
Poverty breeds dis¬

less unscrupulous

was

gle

their

opinion, we have to
bear two things in mind. In.the
first place, we must realize that
the equalization of land
ownership
is in fact one of the major tenets
of the economic policy of the Kuo¬
mintang. Insofar as the Kuomin¬
tang had failed to bring about this

fact that it

con¬

Most of the peo¬

opposition.

erced

-the

to

disposition of postwar
inseparably connected

is

\If the responsible statesmen of

The peasants who comprise the
Communist army are easily co¬

as

outside

aim in the greater part of
it was at least partly due

the

to

with the fate of man.

the Communist Party, possessing a

good impression the practical re¬
sults of their policy have made
on

of political democ¬
racy and economic liberalism in
China. The future of China, simi¬

countries able to act should shrink

content and discontent

as

in the

interested

are

more

ple in the Communist camp have
joined it because they are opposed

to

of

becdme

the

First

Minneapolis.

a

Na¬

: '

Investors Stock Fund, a mutual
investment company with
5,000

shareholders began operations in
July, 1945 and now has total as¬
sets of

$7,300,000.

Vr/vv-'v' ' ;

—

possess an inde¬

pendent

social

it is further obvi¬
they would not attempt
to bring about a' "revolution
by
consent."
v>
army,

The

only

way

First, there

must

plat¬

on

Two

involved

are

approach.

in

X,

must b^

large for¬

eign loans to the present Chinese
Government.
Secondly,
there

in which the Chi¬

political struggles

and equality.

factors

this line of

Communists may be convert¬

to

justice

essential

that

ous

be

thorough reforms within

It

forms
within
a
constitutional
framework is the removal of their

the, Chinese Government.
even

be desirable to arrange for¬

armed

eign

loans in

have

internal reform

forces.

as

To
of

a

such is

the

attempt
coalition

gov¬

a

bound to fail.

>

*$2,099,641 $1,565,569
*$4.80

well

as

Com¬

control

who

people. C; But,

the Chinese Communists

-*

"

their

million

vinced Marxists.

announced

'

.

Communists claim

than doubtful that the

inter¬

far

all

development

Europe,
;

second-largest

100

of fervent

At any

so

as
■

.

In

establishment
1945

earnings for the first nine months of 1946 include net profit
$507,508, equal to $1,16 per share,
resulting from the sale of se¬

curities

the

have, under

land policy was concerned,
they had not yet decided on the
degree of radicalness for the fu¬
ture.

be

than

their

condition.

such
Since

Besides, in trying to mediate be¬
tween the two parties, the United

of recovery and

States

from

has

pressure

after taxes.....

"Net
of

methods

Communists

the

Chinese

-

pretation is only too clear.

ernment

1946

on

/

enemy.

a

munist Party in the world and to

be dictated by neces¬
That the last phrase is capa¬

sity.

ed

Earned per share

to

of

orthodox

way as may

nese

Net

explanation
from

revolution is to proceed in such a

munists have,- from time to time,

circumstances,

Estimated federal

The

.

areas

the land of

given the most

the

"large" landowners in the initial
period of the Chinese Communist

in

Agrarian Reform

peace

guarantee

Communist Aim

According to Mr. Mao's "new
democracy," the dispossession of

of

episode in Soviet communism, is a
mere interlude dictated by expe¬

smce

to the

over

Chinese

between the Communists and

temporary manage de-conven-

with

than

more

Truce, but Not Peace,

'

Sino-Japanese

the

and

it

situa¬ solved by land reform alone,

the Kuomintang at the time when
Bsr. Sun expounded his theories.

M

1937

the

"retreat"

clear orientation of So¬

a

proceed

Is

that, in view of

international

changed

tion and
viet

outset

really sacrificing any of their
principles.
The much advocated
"new democracy," like the N. E. P.

more

down in

of

no

of

lar

con¬

but

be

re¬

temporary military truce.

should bear in mind that whereas

principles seem to indicate the Communist Party, expediency
approach
in
the is the sole criterion of political
iuconomic field, which in the ulti¬ tactics. Besides, in reverting to a
mate analysis
would indeed be policy of non-cooperation with the
{Contrary to political liberty, this Kuomintang, the Communists are
no

conflict,
this

liquidation,

would

succeed

if it did, the

even

trying to understand the part ploited to the advantage
agrarian reform plays in the Com¬ Communist
Party.
of the Communist munist

socialist

was

toned

was

are

these

&

and

cannot

manner

certain points which the interme¬

doctrines of

years

policy of outright

a

themselves, in 1944, that

mind, how¬
Kuomintang as a Party are
ever; that Mr, Mao's ''now democ¬
perfectly compatible with the re¬
racy" was published in 1940, at a
quirements of a political democ¬
time when Japan was indulging in
racy,. as
well
as
of
economic
aggressive warfare in China and
In

was

fiscation

sult

district.

,

now

of which have been outlined in

the

liberalism.

It

border

speak of a "new methods was that, otherwise, the
democracy," the essential features dispossessed landowners might go

,

mental

Kangsu-Ninghsia

outbreak

mutually
Party,

dom.

the

munists would make

Com¬

munist

©ften

favorable cir¬

same

cumstances,

Freidom

versus

contend

given the

as,

(Continued from page 2074)

this

easily and,

munists.
sure
or

to

no

bear

can
on

exerting

the

on

only bring
the

Com¬

or

indirect
munists.

another,
coercion

one

disguised and
on

Admittedly,

the

Com-

to

attached

as

the

program

reform, when car¬

will detract many a man
Communist
camp,
it

the
be

manner

that

it cannot obstruct

the execution of the program.

[

The

Wagner

DETROIT, MICH. — Ferriss,
Wagner & Miller, Buhl Building,
members of the Detroit Stock Ex¬

change,

were

completed

honored for having
years of con¬

fifteen

tinuous service
The

tory

on

the local mart.

Exchange in
message

a congratula¬
pointed out that

members of the firm have served
the Exchange in every important
off'^e and on nearly every com¬

mittee and had been
lactor in

an

important

its progress.

pushed forward without

opposition. While this program is
being carried out, the Commun¬
ist army must be isdlated in such

Kuomintang

a

as

as

way

delay and in spite of Communist

pres¬

offer it encouragement, in

form

ried out,

must

directly
She

of

means

a

may

Honor Ferriss,

above

proposal

requires

mediation daring statesmanship on the part

Richman & Co. Formed
BROOKLYN, N. Y.—Aaron W.
Richman has formed

Richman

Co.

50

with

Avenue.

offices
Mr.

at

Richman

&

Lefferts
was

pre¬

viously connected with Luckhurst
& Co., Inc.
,

yolume 164

Number 4536

THE COMMERCIAL & FINANCIAL
CHRONICLE

part of labor of need for greater

Scouting the Economic Front
(Continued from page 2083)
duplicity and plausibility of
enemy's program. Here is a
tragic paradox — Communism

the
the

which is the worst thing that can

happen
them

the

to

masses

to

seems

their brightest

hope, while
Private Enterprise which is the
best thing that can happen to the
masses seems to them a thing re¬
served exclusively for the upper
classes.
*

Let

take

us

quick

a

of the situation

inventory

find ourselves

we

in this morning and study the ter¬
rain
the

which

over

must

we

fight in

future.

near

have

to

think

I

safely

can

that

say

Americans do not like controls.

Well, whether

there

not,
or

the

on

that will exercise
the

economic
a

con¬

business

life

trol

on

profits of every

future

in the
*

man

,

,

front

degree of

and

room.

like them or

eight compulsions

are

forces

we

;

of

our

production,
pur¬
chases, investments and sales; that
buying power withheld from ex¬
penditure and investment shuts
down equivalent employment and

,

# First: The, world-wide swing to
the
of

left. An economic awakening
the masses that is sweeping
the continents of the world.

across

It is grounded in a

desire for se¬
curity—in a belief that security
lies in the state operation of bus¬
iness—in a conviction that eco¬
nomic security is more important
than individual freedom—in the
fanatical

idea

that, the state can
provide a better living standard
than private enterprise. In a de¬
mocracy
it
expresses
itself; in
votes—and

we

either vote

or

into such

a

in

America

could

legislate ourselves

state controlled ecori-

omy.

|

'

'

Its

great danger is that it is
grounded in economic ignorance,
r.
Second: The second compulsion
is economic ignorance—if we can
call

ignorance

lite

name

It is

no

ever

name

a

force, A more po¬

Economic

is

less

Illiteracy.

dangerous by what¬

we

Nor is this

illiteracy confined to
the so-called masses. From top to
in

life

industrial

American

have failed to clearly de¬

we

fine to ourselves what is free en¬

terprise—what

is

American

the

of life. Exactly how does a

way

free economy work? What causes

periodic depressions? What was
wrong with the pattern of free
enterprise / that
preceded
the
great depression? How can free
enterprise be shaped to prevent
another great depression?
Labor thinks it is

working itself
job when it lays 1,200
bricks per day instead of 600.
out

of

a

Many workers actually believe
they can have more by producing
less. Hence featherbedding, madework and stand-bys!
Both

labor
must dig out the truth and be able
to clearly answer to themselves
and
others the
great economic
question of the day—How can we
have

management

and

both freedom and a reason¬

able degree of
Less

economic security?

Propaganda and
::

More

Education

■

Specifically, why can the man
on the street expect to have more
under a free enterprise
system
than under a system of production
for use with state controlled dis¬
tribution?

ganda
one

and

need

We

more

American

in

less

propa¬

education.
a

hundred

Not
un¬

derstands that consumption is the

ward

As

a

matter

of

limiting

realistic

fact,

technology has advanced produc¬
point where the only
road
to freedom
is the selling
road. Does anyone think that the
tion to the

trend

individual

to¬

output,

be

to

seems

cruculence,
belligerency,
pug¬
nacity, and general cantankerousin human

ness

given

-

nature

which

has

what someone has called
"versus" complex. This has re¬

a

us

sulted

in

dise.

"Capital
"Management
vs.

—

Employees";—

"Government

Business," etc. These hates

>

Non-advertised
ing sluggishly.

ing fanned by self-seeking dema¬
Our

gogues.

great

have

groups

classes
found

never

and

products

mov¬

price offers are becoming
more
frequent.
,•
Real Estate prices are off from

way

to

work together
harmoniously—
fairly divide the joint produc¬
Interdependence In Economic Life
tion; to find a strategy whereby peaks in 13 cities.
:-'v Automobile retailers
Third:
Perliaps
our
report
greatest Business, Agriculture, Labor and
danger is that we will fail to rec¬ Government can lie peacefully in heavy duplication of advance or¬

the

fellow

stand

minds

we

chain

how totally interdependent
are in the light of the
present

of

ders with competitive makes.
In the home
building

bed! Resentments in the

same

sense

being abused by the other
rankle and i burn in
the

of

opposing groups like

reaction

which

builds

several

hundred thousand houses
started early in the year but
their completion has been
delayed
for seven or more months
were

up

situation, and the coal, rail¬ into explosive antagonisms.
The
road:; and shipping strikes is a customary relief valve in the sit¬ the
meat

strange

intellectual

phenomenon

—but

our traditional
rugged
dividualism is dying hard..

in¬

mixed economy,

a

the

shibboleths

"individual

economy."

freedom"-

.

"Every

self and the

most",

is

much of

cling to
slogans of

we

and

and.,"free

man

for him¬

devil take the hind¬

still

prevalent

in

thinking. Time

was,

almost up to the turn of the

cen¬

our

when

Americans

had

the

economic background for individ¬
ual independence; when the ma¬

jority of families either produced
were

or

able

to

barter

directly

for the necessities of life.

is

action,

but this

to

resort

to

1

to

•

On top of the $1,500 to $2,000
black market inflation in the sell¬

We have time, to barely men¬
tion three other factors that
may
economic

future.' Their

needs

cance

ing price of these houses, another
$500 to $1,000 each has been added

our

signifi¬

emphasis—They:

no

to the cost because of
delays.
With the limitations of FHA

'

are:
; ;

committments

Sixth:

A

Public

Debt

now

al¬

prices

most

equal to our total national
wealth—and still growing. Just
more

than

the

in

government

total

cost

of

-

•

its potentials are

extra

the

with

ceiling

GI

Houses

of

costs

must

contractors

Existing

ou'

come

pockets.

Con¬

financed

them—and

even

existing demand, thou¬
houses

will

be

slow

to

ing

economy

tween
on

on

free

of the world is be¬
individual enterprise

the one hand and Communism
the other, whereas neither ex¬

ists

as

The

a

reality in today's world.

actual

issue; is

between

a

mixed

economy,
wherein
free
shall independently and co¬

men

operatively plan, organize, direct
and control our economic
affairs,
through voluntary action, and a

Totalitarian economy whereby
by
default the Government shall take
over

the direction and

control

of

industry and enforce cooperation
by police

power.

trols

industry

of

lished fact; it is

degree.

We

Government
are

con¬

estab¬

an

question of
the gravest

now a

in

are,

danger of losing our last economic
freedom, the freedom to cooperate
voluntarily, When we confess our

inability to cooperate voluntarily
and

Now let
that

us

closer to the daily op¬
eration- of our individual; busi¬
nesses.

something

economic front
are

always

happens

we

on

the

don't like.

We

seeking

laws

which

will curb the other fellow oif
one
hand while seeking freedom from
restrictive laws for ourselves. The
grand trek is on to
to dump our
of

of

the

building industry
ceiling prices

figures

OPA.

The

the books

on

coming

reces¬

sion will be felt most-where black
market prices have reached the

highest level. The old saying the
bigger they are the harder they
fall shall hold true.

constantly

current

consumption and

personnel

are

use.

somewhat

years of a sellers'
The attitude toward sell¬

profession is deplorable.

a

tribution.-,

Eighty,

'

i

'

,

cent

those who
out of the retail field did not
to go back to retail

want

per

of

work,
50% of those who had previ¬
ously engaged in selling did not
want to go back to
selling. Peo¬
ple do not like selling, and they,
do not want to sell.
Adequate
and

compensation schedules and in¬
centives have not been set
up for

salesmen, particularly for the most
important sales job: that of retail
selling to the ultimate consumer.
V-How

will

hardwood
eight general

you

meet

these

three

specific

study
year?

men

and

challenges as
plan here for

and

NN-N./r'N"

you

next

••

:V

.

I have

purposely avoided a de¬
tailed .discussion of the
Hardwood
Lumber business.

or

N

Your President

others

far more competent
treat these in detail.
have I the presumption

will

Neither

temerity to tell

you

how to

run

business!

But

I

would

be

remiss

duty if I didn't suggest to
specific

very

and

in

my

you ten

definite

steos

that you might consider
taking in
meet

so-called

some

be

sales

totalling inadequate number
returning veterans are seeking
salesmanship and dis¬

black

present

I refer to the forces of Inflation
and
Deflation. Both
forces
are

Ten

T
..

individual

businesses

to

these problems.
Points

of

Action

in

Meeting

Tomorrow's Challenges!
l.; Build
An -Organizational

Bridge

from

the

Five-Year

Sel¬

lers' Market to

the Coming Buy¬
ers' Market—1947 is certain to be
a
transition year, a year- of or¬

ganization and preparing for the
intense competition ahead.
<

During

every

this transition period
businessman should thor¬

industry I believe oughly overhaul his entire pro¬
duction and distribution machin-.
production in¬
economy and not on a 35-hour cluding imports is at the
ery and personnel along the en¬
highest
week schedule either.
point in history. It is„ tny under¬ tire chain from product design to
Inflation means a greater money
ultimate consumption or use of
standing that some gum lumber
It might be noted
supply than goods, deflation more has been sold under ceiling prices his product.
goods than the money supply.
and that more hardwood lumber that you men in the hardwood
Inflation doesn't mean a boom— is
business have the longest produc¬
moving to the flooring mills.
it means less
tion and distribution chain in the
goods for a dollar.
So much for the immediate past
world.'
Deflation
working

doesn't

sion—it

dollar.

'

.

While

work

a

free

depres¬
goods for the

"X'

We built twice

tionary

in

mean

means more

ary year,

the
bad
habit
of
saying:
"There ought to be a law" when¬

tackle certain forces

come

.

gotten

the

"

that

will

inadequate

the field of

your

Any realist must admit today
that the black market is the mar¬

just

net

A
of

material

market prices is indicated.

and
more

important environmental forces.

last freedom.

,

from

are

for example,

The next great danger
is Washingtonites. Even the most
conservative of
us
have

building

New York to Washington.
So much for a few of the

dump our problems in the
lap of Congress, we sacrifice our
Fourth:

prices

and

ket in the home

though the struggle in the politi¬
other.
cal

42

lumber

hours travel from any
A B-29 the other day flew
12,000 miles in less time than it
took our grandfathers to
go from
over

as

your

asking prices.

understood, we do realize that
This means that new starts will
In the last century we have de¬
humanity has been ;; given the be fewer next spring—at the very
veloped a specialized production choice - of
time production will be
destroying
itself
or
reaching
of a million patents. Our inde¬
learning to cooperate.
new
heights and a recession in
Eighth. The Annihilation of Dis¬
tance—No spot- on earth is today

over,

spoiled by five

and

sell at the

businesses

with

to sales into

than I

of

is

shrinking

sales
organizations
are
depleted from raw mate¬
rials
selling clear through the
production and distributive chain

have

the

facing

Our

-

pendence has shrunk proportion¬
ately. There is much confusion
over terms. We talk
and act as

Many

together with lumber dealers whc

sands

Energy. While
not fractionally

is

margins of both gross < and
profit per dollar of sales.

•

with

Seventh: Atomic

•

sale

tractors will have serious losses-

of

pre-depression

years.

and

the

on

these

servicing this debt annually will
cost

whole series of

a

deflationary headaches.

.

change the whole pattern of

No

This will bring

further

:

beyond

Vz months completion

normal 3

time.

legislative

leads

loss of freedom.

In spite of the
totality of our
interdependence and the actuality
of

uation

honeymoon

management

came

industry

a

profit

gross

..

ognize the completeness of our in¬
terdependence in our economic
life.
How we can fail to under¬
-

dences of a breakdown in tradi¬
tional distributive channels.
The

market.

Cut

a

greatest

badly

and radiant heaters
above previous totals.

200%

are

production
the

plans, organization and personnel.

■

Convector

vs.

be¬

are

our

face

the
jockeying
for
distributive
preference, there are already evi¬

III.

-

The production of electric
irons
is 85% above
previous records.

headlines like,

Labor"

vs.

will

dogfight in the his¬
tory of American business. In the
competition for retail outlets and

caught

peaks).
•
'
Consumers shy away from new
brands and unbranded merchan¬
•

as

In your own

year.

Now

pressures

both

are

at

inflation

and deflation—the brake on either

extreme inflation

or

Historic
started

extreme de¬

from

go

their money.

but

pressures

$28

' N

at

work

continue

therefore

three

for

it

is

coming

once
some

safe

to

develop-

can

name

the exact day,

it

II. As the increased

to
;

come

era

the

One

production

of

which

we

have

seen.

of

that the
the

like

the

more

more

economic
you

have of

laws
a

is

thing

difficult it is to sell at

profit. The greater the volume
of production, the more pressure
there is on the price. The greater
the pressure on the price, the
more deadly the competition. The
a

cide to completely overhaul
marketing structure:
/
*

your

Re-appraise
the
mental
and
physical assets and capacities of
the company.

»

.

.

-

Recapitulate the company's
maximum potentialities.
Determine the market, poten¬
*.

Adjust

company

production to

market potentialities.
Determine
logical

sales

and

profit objectives.

,

of full employment hits the mar¬
ket we are in for a competitive
never

following 30-point chart
might be helpful to you if you, de¬

tialities, national, international.

Buyers' Market Is Ahead!

one

appears, certain
some time next year.

billion

in cash
in the
pockets. of the
Washington— people, the enormous unfilled de¬
problems in the lap mand for
nearly everything, de¬

deflation

A Buyers' Market Ahead
I. A

No

"

indicates

with;-/:.,

supply—the willingness or
unwillingness of people to spend
-

to

•

The

we

experience

will

and

predict

money

the

do

•ments that you will have to cope

flation is the effectiveness of the

Inflationary
today
include

where

that this trend
time

influencing

:

and current situation.

homes,

in 1921, a deflation¬
than in 1920, an infla¬

various

hardwood

here?

many

Congress for a legislative solu¬
clining
individual
production,
profession of selling would have tion. Pressure groups whether la¬
shorter work weeks, strikes and
the place it does in the opinion bor, business or
agriculture all government deficits.
of the public if this truth were seem to forget that
every time we
generally known? We have got to pass a new economic law we are
Deflationary Pressures
sell selling, sales management, and one step nearer a state
controlled
Deflationary pressures evident
salesmen as the real job makers. economy. There are
1,250,000 laws in the current picture include,
If we could develop this kind on our statute books
now.
Some growing
inventories, fuH employ¬
t)f economic literacy, we might day, if we keep on
running to ment, increased awareness on the




Radios are
moving slowly (pro¬
duction is 45%
above previous

inherent

an

to

ever

salesmanship de¬
termines who gets and keeps the
jobs. -N;-.

the

reverse

,

is

that competitive

maximum

a

standard of living

and, whether management or la¬
bor, give a full day's work for a
full day's pay.
;

into

only road to steady jobs,

to have

our

must

we

mother of employment, that sales
into ultimate consumption or use
the

we are

growth in

tury,

call it.

"

bottom

decreases the total amount of goods
and
services we can consume;

There

hit

we

we

competitive

-

.

that if

When
stride

our

•

level

intensive the competition,
the lower the gross
profit.
more

production,
declining
price
of
stocks, shrinking gross profits, in¬

hope that the ma¬ Washington for the solution of our creased commercial
loans, govern¬
citizens would un¬ problems, we shall find that the mental bungling,
buyers resistance
derstand these truths; that individ¬ sheer
weight of economic curbs to increasing prices,-^ duplicated
ually and collectively we can have has made state control a reality. orders at retail
levels, and a new
no more than we produce; that to
Fifth: Then we have the
prob¬ caution in investment and expen¬
have more we must not only pro¬ lem
of
Warfare on the Home diture on the part of consumers,
duce more but trade more and Front. Instead of
working as a investors and management.
consume
more; that' any kind of team in American enterprise—our
Some
specific evidences
that
limitation on salable output low¬ ends,
backs, tackles and guards all Deflationary Forces are in the as¬
ers the standard of
living of all; go into a separate huddle before cendancy:
that our standard of living can each
Truck tires are
play
and
each
player
selling at a dis¬
rise no higher than the balanced wants to be
count.
'
'■
' '
quarterback.
reason

jority of

*

I

2093

Establish

detailed

and

decen¬

tralized

production and distribu¬
tion quotas.
Review " philosophy,
structure,
channels, and patterns of distribu¬
tion.

Project credit terms and dis¬
tribution financing.
Establish distribution cost re¬
duction techniques and incentives.
-Revise sales stimulating tech¬

niques and incentives.
(Continued

on

page

2094) t'

■

"

.

THE COMMERCIAL & FINANCIAL CHRONICLE

2094

Thursday, October 24, 1946

mmmrnrnm

Talking with them, not to them

Front
the "distributive chain,
Produce markets,
Coordinate advertising, promo--, tion management deals with the markets.
(Continued from page 2093)

tion and

|

fabrication

and

internal
and external training tasks.
'
Set up internal executive train¬
ing (conference method).
Devise
personnel
rating
and
specify

This
must

of

techniques.

train.

trainers to

by

training

or

the

and

limiting distributive waste
breath and greater expend¬

one

itures

distribution in the next,

on

but it is

retailers

perfectly consistent A

Let's state it this way:

tribution

• •,

No dis¬

low enough if
plan¬ there is the slightest waste in the

coordinated

into

final

consumption

use,'

AaAY

'

effec¬

can assure

wholesaling
and
retailing
going direct to consum¬
ers by building adequate franchise
structures and then training all
without

•

distributors'
service
organization training.
Cooperate with formal educa¬
tors and U. S. Department of Edu¬
Improve

factors

on

the distribution

Manufacturers

in

are

a

chain.

far

more

favorable

position to develop re¬
tail training programs than their

-

economic

in

mer¬

tive

techniques.

Improve distributors' salesmen
and staff training.
yA{v{A

Coordinate

be

Manufacturers

.

cation.

in

his products into ulti¬
consumption. It means that

chandise

a a

Improve distributors' recruiting,
compensation and sales manage¬
ment

equitable

com¬

costs are

own

planning

retailers

spread the cost

for the postwar era.

because
over a

they

large

can

num¬

,

:
We should stop saying, "Distrihution costs are tob < high,'^un¬

less-

qualify the statement by
specific instances of distributive
waste.
It really doesn't matter
what percentage of .our .purchase
dollar
goes Y forA distribution '{if
there is no waste involved.
When we need more sales vol¬
ume
to -sustain employment, • we
should leave no dollar uninvested
we

in additional sales that
duce them at a

cah< pro¬

ened

through

mutual agree¬
of'an enlight- .;

public opinion.

These

{•{{{?{

•

at

;

.

{ representative ,V groups

{ Decent environment and pleas-, would be an effective educational
ant working conditions. AA{
medium to whip the problem of

of

ning and action among all sales process. No distribution costs are
factors, from factory doors to ulti¬ too high if they can produce ad¬
mate consumption,, on the com¬ ditional profitable volume with¬
■ AA;
mon
A " >1, \
'.
problem - of moving mer¬ out waste.

training.

training

voice

wholesalers

there- must

Improve company sales, staff
and field organization training.
Review distributors' executive

Deputize

a

about

that the producer

means

have

the

mate

;

,

pensation plan.

We must tap ever larger

reservoirs

who propel

operating

sales

raw

chandising polities and practices

.

and

export

paradoxical to talk

'

aptitude testing techniques.
Interpret management policies
to distribution employees. - yYY''
Revise company recruiting, com¬
pensation

materials into

markets,'

new

Fair wagesY An

••

rived

ment and the power

buying power and
A demonstrated interest in their
ready-for-use products. It is im¬ ever deeper levels of consumption;
health and happiness.
•
we
must
A .t
expend
our external and
perative that the producer should
direct those processes which are internal sales budgests and sales c Opportunity to grow and prog¬
' (AfP ? A' .! Y'A;{■ ■ 5A • A?- ress,{.'implemented with training
necessary to get his products into personnel.
facilities. {One wise management
ultimate use or consumption. a;!::
It may seem

sales activities.

Measure

of

;

or

at'.them.;.AA;: :.{•{{{A/A;A;;\

economic -illiteracy

v
r

the; grass{
roots { where it must bev
whipped.
''. :"'{' ■ f
;r..
£
;
Some might argue that this type of organization would be nothing;calls its personnel records "prog¬ but; a debating society.
-Well, if ress records.'!)
'* A '
';{•
they; will prevent a State-con- !
?i Some responsible management trolled economy I don't care what!
factor to gripe to and the assur¬ they're named.
ance: that
their {gripes will be A It still holds true that discus¬
fairly handled.':: ,,:,Y :yAA{ Ay; sion is better than silence, reason,
{{{A;
y A sense of "belonging.'-' A mem¬ is better than violence, coopera-:
ber of a winning team.
tion is better than anarchy,, and" '
{In providing these management democracy is betteir than tyranny.J {
will need to re-appraise and re¬
It is a simple formula for detervise such techniques as recruiting,
mining what is the right thing
selection, indoctrination, motiva- do cooperatively.
A.
t'on;. training,; compensation, and '. j; 9. We could not close a discus¬
the
supervision of manpower— sion of the part management must
both production and sales.
Per¬ play in meeting the problems of-:
haps I should have .said especially
sales, manpower.: Employee turn-; necessity of d^ermining industryoverwill be a y far more costly by industry of tfie part the f/ov-.
problem in the future than" in the ernment should play in the sucp
right* at

.

,

■

past;
8..

" y: :

Build*.. New

improved

and

Structures for Economic Coopera¬

tion

Outside pfGovernMeni-^his
the only, possible

is

proift.

cessful operation of each.:
y
Make ho mistake, that with
•

;

a

300 billion dollar debt to manage:

the government is a permanent'
part of our mixed economy—gov-!
ernment

regulations will be a part: {
vent ever-increasing controls of
effective antidote to
of our operation from here on out A
handicaps in a free choice the economy by" the State.
The
question then is to see that
market is more and better selling. a We; recognize• that .we must co¬
the {government's: part* of
our"
cieties, industry and competitive their consumption creating activi¬
The question is
7.
Better Human: Relations- operate to exist.
economy
is constructive and helpties if the manufacturer's fran¬
groups on distribution problems.
Arid now we come to a manage¬ whether we shall nave govern¬
chise has three elements: (a) bet¬
ment imposed {and enforced co- ful, rather than destructive > and!
Organize,
supervise,
interpret
ment activity at the very! "top tin
harmful. - "
ter profits for the distributor than
A and consolidate
distribution re¬
importance—that is, your relations operatipn, or voluntary coopera¬ A We must
he
stop damning bureau-- {
might otherwise maker- (b)
search and tests.
A /
with youf employees and your:, as¬ tion, by free-enterprisers,,
r •
cratic toterfarencer.'.wi^"? private;
consumer acceptance and demand
.It' is just .that simple in prin¬
sociates.r
.-V
^ AYAAY
Operate clearing house of new for the
enterprise until -industry by in¬
product; and (c) manufac¬
A
A".
:;{;A:{AAGood public relations rest upon ciple..
sales and distribution ideas.
turers' advertising spotlighting the
we
are, prepared
ta be
:
Our economic interdependence, dustry
good industrial relations and good
Plan, coordination
and follow distributor.
specific in verse and paragraph as.
a
'
industrial relations on good human our universal individual capacity
to
what
we
want
done
through by company's line, staff,
by govern¬
We can look for more closely
relations.
Human relations is the as produced, trader and consumer,
ment and what areas we want left
field organization
and distribupartnerships in marketing bemakes structures for intra-indusmost important problem in busi¬
tors' personnel.
to
ourselves.
•
tween each manufacturer and his
ness
today.
In, fact, Vail business try and inter-industry ^coopera¬
This is;one of the most.vitalSupervise consumer education"' distributors and between manu- problems
tion,
integration,
and
coordination
may be synthesized at
tasks before our industrial asso¬
(coordinate with advertising pub- • facturers' associations and retail
a. vital necessity.
The counter¬
the level Of human relations.
; :V
ciations, and one of the biggest
licity and public relations). :
;' associations in the same industry,
balance to Washingtonitis, to bu¬
The future of any company to¬
jobs of management;
!A
2. More Effective Market Re* f t5. Elimination of (.Distributive
reaucracy and government {inter¬
day is determinable in terms of its
:
The obligation of management,
ference with competitive
search Analyses and Salescasting Wastes—Distribution is essentially
enter¬
is to manage, it is management'
manpower.
^
/;
—It is imperative that manage- motion; the movement of raw maprise is the ability of industrial
failures which have {brought us.
Mental aititude governs > both:
ment find the answer to the para- • terials through the process of fabmanagement to organize coopera¬
to
the pass we are in;
;, '" •
tiox of plenty! .There is no down rication A warehousing,
transpor- the quality and quantity ' of the tive planning and action, and new
individual and the team. .•
{ Summarizing the stewardship'of r
<
standards and ethics, in the liajhit
cycle in human wants.
The total tation, selling and delivery, into
industrial
management in this new
Wherever
market is unlimited.
There is no ultimate consumption.
Productivity is the kev to a of public interest—thus avoiding
age includes the areas of govern-:
known height to which the Amer¬ there is motion there is oppor¬ higher living standard, and better unneeded and hampering legisla¬
mental relations, public relations*,
for
the
application
of human relations is the basis of in¬ tion.
ican
standard of
living cannot tunity
p:
g
competitive - relations, " customer,
climb! And yet we can have over- engineering techniques. The same creased production,
f\ •' '
A
{ Because'of a fear of anti-trust relations, distributor relations and
production of individual products scientific
and engineering apSuccessful management is <de{ laws industrial management has
community relations, as well as.
and partial collapse of the mar- jproach should be had to distribuveloping people and getting the shied away from cooperative ac¬ the
previously accepted responsi¬
ket.
We must find the causes and, tion problems as we have had in most out of
In the interest of pre¬
employee manpower tivities.
bilities to stockholders and em-'
the remedies for accumulating un¬ the past in the field of distribu¬ potentialities
and
capacities, in venting further unwarranted gov¬ ployees.
■
J
sold inventories, industry by in¬ tion. Time and motion studies are the interest of the
employees as ernmental controls in the econ¬
Social {responsibility must. notj
dustry.
We must •achieve a bal¬ in order all along the distributive well as that of the company.' : La-, omy, this complex must be re¬
be
left out. of management deci-"
anced production and consump¬ chain. -There should be detailed bor is no
longer a commodity subr moved:1:. There are thousands of sions in the future if we are to
tion diet.
If there is no satura¬ analysis of every "function and ject solely to the laws of
supply perfectly legal cooperative plans perpetuate the freedoms and pre¬
tion
point in the market as a process and a fight for savings and demand. People are not. ma¬ and activities that could be un¬
rogatives of management. '
A*
wherever waste can be found. A:
whole, we must determine what
the
economy
for
chinery, they are organisms, with dertaken;:, in
Nor will this detract from the %
Management should have a new minds and souls as well as bodies, mutual benefit which would stim¬
will, and what will not, sell at a
profit structure, it will add sta¬
given period and point. We must accounting approach to distribu- all capable of growth and expan¬ ulate rather than restrain trade.
bility to the profit chance and
have a better pre-knowledge of tion costs with the producer, re- sion.
The abilities and capacities Representative
groups,
covering tend to perpetuate our profit and"
product acceptance by the public; quiring
detailed knowledge of of our people are far beyond what every livelihood and walk of life,
loss system
and the concept of )
quantitatively and qualitatively. J every cost from factory door to we realize
should be organized at every level
pr they realize.
\
private property. •
Y>
We must have wiser budgeting, ultimate consumption, even though
from the grassroots to the national
•:
10. I will close on a very inti¬
Management's primary iob in
more
intelligent quota building he is not directly concerned with
Capitol,
with
the
sole
objective
of
mate and personal note.
producing' profits is to develop
That is„
and better utilization of the power the sale of his products into conpeople, machines do not make developing cooperative plans to the responsibility of each individ-.
of credit.
Our market analysts sumption.
A
/
M
profits—people
do. { Tomorrow's provide the people with what they ual to Renew the Right Spirit in
and researchers have their work 1
In
our
older industries it is
want, while retaining the people's
American Life! Y,-;Y *;
management will treat employees
- h •. ^
cut out for them.
'""
freedoms.
probable that further savings in as integral
A A{{A: A, vAAA^^^Y
parts of a family. That
3. Constructive Price and Profit production costs will be meas¬
is the highest human meaning of. iAVe might call such a develooParcel Post to China
Policies—Management has learned ured in cents; while savings in the word "company."
ment a. FOURTH HOUSE OF DE¬
a
:
during the war that lowest oper¬ distribution costs may be meas¬
Postmaster^ Albert! Goldman an- r
'{ Would you like a management MOCRACY. The guiding principle
ating costs are found at "close to ured- in dollars,- because of the
of
such
a
structure might be: nounced on Oct,: 2, that, effective^
formula for human relations that
capacity" operations. To hold its many wastes in existing distribu¬
"That which is attained by dis¬ al
once,
ordinary (unregistered
will. increase the production of
own
in competition management tive processes. Management should
cussion, and
agreement without and uninsured) parcel post pack-A
your organization a minimum of
must therefore price with capacity not overlook the fact that savings
40% at an increased labor cost of legislation tends to enforce itself, ages up to 50 pounds in weightin distribution costs passed on to
volume in mind.
viz., all established ethics,,while may be accepted when addressed
not over 20% and at a decreased
that which is obtained by legisla¬ to the cities of Canton, Peiping.Management will learn in the the consumer in the end-use prod¬
operating
cost
of
10
to
15%?
I
uct price will have the same his¬
new economy that 10% of a dime
have enough case histories of the tion must be maintained by the Shanghai, Swatow, and TeintsiaY
in net profit is probably easier to toric effect in increasing markets
freedom-destroying police power and up to 22 pounds in weight*
use of this formula to practically
as
savings in production costs
secure than 15% of a nickel; that
{AY. when addressed to other places in <
guarantee these results. \{A{!{'{A of government." -"AYr
have
brought about -in the past.:
7% net-on a 200 thousand dollar
Each
of you
here can start China to which the service ex-^
a It involves nrovidng your em¬
volume is more easilv obtained
6. Greater Pressure on the Cre¬
building these freedom-perpetuat¬ tends. It is pointed out that the
than 10% net on a 100 thousand ation of Sales—If industry is to ployees with the things they ex¬
ing structures in your home com¬ parcel post service to Manchuria,
pect
from
good
management:
dollar volume. Thus management move double prewar tonnage into
munity by calling together repre¬ and to the Provinces of ShansiY
A fair job evaluation—what is
will
turn
increased competition ultimate
consumption, manage¬
sentative leaders from every spe¬ Suiyuan, and Chahar remains sus- and shrinking gross margins into ment must certainly double its "par" on their course,
cial interest group such as labor, pended; There is no parcel post*
incresaed net profits and returns
expenditure in advertising and j
Incentives and rewards for ex¬ agriculture, education, manage¬ service to Mongolia. Postmasteron the investment.
More for less promotional activities.
Someone tra thought, ingenuity," resource¬ ment (manufacturing, wholesale, Goldman also says:
money at higher wages and fair has wisely stated that "advertising fulness and enterprise.
.A
retail),
finance;
transportation,
Except as indicated above, par¬
profits can be had through the is moving people toWards one's
Reasonable jOb security, and an communication, religion, women, cels addressed to China will be"
elimination of waste and greater products, while merchandising is
understanding of why they have youth, health, etc.
subject to the postage rates and*
Wholesalers and
Cooperate with government bu-. ber of outlets.
retailers
will
accept manufac¬
on distribution problems
Cooperate with associations, so-, turers' counsel and direction of

reaus

i

The only

the

'

,

-

"

.

.

.

<

.

.

•

...

.

.

.

,

,

,

.

,

...

••

...

1

efficiency.
;

'

-

4. Vertical

•

Coordination of Man¬

moving the products towards the
people." Both processes must have
stimulation.

'

■'

"

it.

'

"A

{

;

The

Individual

recognition and re¬
spect for their personality"— a
sense of being needed and impor¬

Wholesalers and Re¬
When confronted, with accumu¬
this new era
consumption,, pro- lated unsold inventories or the tant.
y'a.
''
duction management has a special threat of them, we must lift our { To be informed of what is go¬
obligation to the other factors in sights to wider markets, fringe ing on and consulted occasionally.
ufacturers.

tailers

of

Selling—In

imperative

agenda before such a group
the settlement of local

should be

economic problems that

would

re¬

other

conditions




x

'a i

:t
'

i

i

r.-.

„

j:

<

i'

i.'
v '

t,

■)

i

i
:

.?

1.

»

'.

t

rl

«

.

at

the*

regulations

of

the Office

of

In¬

production in the com¬ ternational Trade, Department of •.
munity or would tend to require Commerce, Washington 25. D. C..^
the passage of m<pre laws to curb are applicable to parcels for de¬
'
free, enterprise — settlements ar- livery in China.
AA
k

.

j

effect

strict

•

„

■■■

in

present time. The export control*

■) *i,
t

i':

S

1

■

T.'i

i' j >
f

i
: f

•

r* t

-

I • ■ [

»

,

i

f-r >. J

c*:!-

r

i

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...

.

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.

{,■

{;••{'•

,

1

Volume * 164~

Number 4536

THE COMMERCIAL & FINANCIAL
CHRONICLE
2095

*hTH$>:

also

What Does the Sfock Market Break Portend?
(Continued from first page)

V

-.90»'; When tile' crash

J- ing

-

Wc^ri^ in

hame.

i ties merely registered the prevail¬

bottlenecks,
ultimate

both

resort

on

depending

of

the

candle

forth¬

coming money supply. " That sup¬
ply is not described adequately by

business

the

real

well.

as

burns

at

The

both

trouble

is

bor

its

that

But

even

ing commodity price trend, as one
elimination of all governmental
would./ Expect/. ,anddiscounted reference to the face value >of
controls, including the ; unlikely
its, implications. ! It is the. same inflated currency and
deposit fig-! "de-control" of the labor market
way on every occasion: the stock
market knows little in

„

contrary

.

to. its; reputation,

but

for

time, and reacts
.with violent emphasis.
•

on

some

In all known

•

history, major de-

clines of stocks and

credit

bonds

have been preceded by one of two

"phenomena

fcoming crisis.
'cline of

both

or

heralding

One is

major de-

a

if not all "sensitive''

some

wholesale prices; The other .is a
'serious credit trouble that has oc•

not the

rising prices in the sectors which

engender

billions

have

ductidns

be

or

is

known

to

be

in

the

Free markets

can

been

redeemable

duced" without
more

we

•

a

in

the

rate

world-wide

tries

to

it

not

years hence). Our
running this year, at

for

our

transportation

tie-ups,

toration

the

of

balance

not

-

casion.

total

so

the

on

basis

of

self

oc¬

recognizedcrystal-gazing ernment have Overshadowed so
tea
leaf
reading
agencies" far this new credit
expansion, but
would be of little public interest
they both are coming to an end.
-

-

it not for the fact that

were

There

they

practically is

limit,

no

on

"reflect the mind of many an in¬ the other hand to the
commercial
vestor who seeks guidance in such credit
expansion until and unless
•primitive analogy-devices as, the the monetization of the national

'average number of months

be-i debt .will be; stopped.

tween the beginning of a
boom;
arid its peak in previous
cyclesj
in the superstition that
yester¬

or

.

;

Be that as it
may, the fact is!
that commodity prices did not fall
before or during last summer's
the

which will not be
that almost:
available
demand for labor j quantities before another two

means

must

drawn

be

from

other

three years

em-]

ployment; and the competition be-:

quent

tween

natural

employers will raise

wages

g.,

with cabinets

Monetary Situation

cannot

be

provided

unless

the

cabinet¬

/world's makers find that demand

expec¬

tations,

set-up in which, the
largest national debt is being kept
monetizable at the world's lowest
interest rate
structure; in which
credit expansion does not curtail
the credit base
and slowly
but

ture buyers go begging, or else
additional labor and lumber have

import-potential is

to,, be

creased

We

in—from

industrial

Germany,
our

where?

this country.
As a matter of
fact, commodity prices have been
rising and the credit structure is
as
liquid as it can be expected..

-The

All

symptoms indicate the contiriuation of a shortage economy,]
.or
of an inflationary
boom, two
t terms
to
designate £ the
same
phenomenon in its physical and
financial aspects,

forecasters.

arid

Do

Causes of Stock Market Reaction

Having said that
the

much

about

are.

inventories in-;
turning point of the,!
Per

inventories

is

se,

the

size

of

immaterial. : The
relevant consideration is the ratio

how is the stock and bond market
behavior of the last, few months
to

balance of many

upward
less

price

other

industrial

which

is

still

far

;

below

"what

has

that

which

in

1939.

up,

must

come

•

er

a

What
as

difference

does

it

another example, wheth¬

firm

orders 1,000 units to be
in 10 monthly instal¬

delivered

ments,

or

units at

a

deliveries

whether

time when
can

it
no

buys ■ 800
periodical

be guaranteed? Sta¬

tistically, inventories appear much
higher in the second/case; in real-!
ity, -they may average out below
jnormaL
The exa mples could be
multiplied.
V, •.
It

ment

is

the

1941

low

double.) Bewilder¬

what

should

not be
surprising if
inventories keep increasing—not¬

withstanding downward revisions
.in

this or that field—given the
trend of rising prices and mount¬




is

threatening

ment to

our

the

stock

are

.

commodity price .level?

.

.

•

is

no

means

and

the

oratory), and often also to reduce
productivity at work.
Pro¬

of

out¬

similar

non-productive

penditures may

duction and of sales. ! That should

passing.

stimulated capital valuations, es¬
pecially so when profit expecta¬

or

be

a

Kurtz, Jr., of the Sun Oil Com¬

there

pany,

so

week

Treasurer.
Dr.

and W. E. Bradley,
supervisor,
Union
Oil
Company, Los Angeles, Cal., were

counted. '
That

"profit¬
be

one

off-hand

dis¬

and

easy

interpretation. True, under OPA,
ICC, and similar controls, with re¬
troactive

wage-boosts

cost-raising
posed,

.is. not

and- other

chicaneries sun^rim

-

margins may dwindle in
industries.
They same

numerous

policies help to reduce the volume

to

on

world

the

con¬

simple

a

even in a free
economy,
break-even levels for
each plant./.The latter mean that

production

has

to

be

greater than normal to yield prof¬
it—a

factor

market.

■

to

caution

■..'!

,

the

stock

.."!

That is the curious self-contra¬

diction
tion

of

which

understood:

a

"controlled"

seems

it

to

brings

be

so

little

full

employment at rising prices, but

Co.,

a

Sti rLouis,

has

net

-

in rthis

result

is

elected

been

to

of

In¬

-experimental station in Wilming¬

be

ton, Del. Mr. Curtis is

interruptions and delays in
production, , greater
confusions,
and

Division

the engineering department at the
E. I. du Pont de Nemours & Co.,.

country.

bound

the

rector of the technical division of

enhancing the tie-

threatening

up

of

try of the Society for 1946-47. He
succeeds Thomas H. Chilton, di¬

substantial

fraction of that coveted
output at

Chairman
tion

of

the

of

the

former

a

American

Society

Sec¬

Chemical

of

bigger bottlenecks.

: y
Industry. Dr. H. F. Johnstone of
Unprece¬ .the .University of
Illinois
was
spending—$120 chosen Vice-Chairman of the In¬
billions this year, double the 1929
dustrial and Engineering Division,

Just

dented

one

more

point.

consumer

peak level volume
means
in¬
flated prices and wages, and more

and Dr. William A. Pardee of the

—

Gulf

acute

shortages; / To
meet
the
challenge, and to economize on
labor costs, business has to ex¬
pand."
of

The

current

expenditures

infla¬

about

.

by exporting

.the expense of

...

always

process

y.- ■] volume

' ;.v

-j

is

a

sumer

the

an

portation tie-ups of the rest of the

and higher

..

shifting of.which

costs,

Committee of the Division which,
with
1,300
members,
is
the

dustrial and Engineering Chemis¬

extraneous factors, then
inflation"
might

less

things:«-■ rising

chosen members of the Executive

Chairman

ment, all of these factors add
two

•

Kurtz

very

multiplied by an
artificially high ?andguaranteed
rate of capitalization. ° But obvi¬
ously, if production, volumes and
profit margins are curtailed by

to

at

named vice-

research

conspicuous example: their
lags far behind our
urgent needs, and we are
duty-bound to relieve the trans¬

less successful
attempts by un¬
•
to
interfere with manage¬
up

Laboratories
was

and
Cary R. Wagner,
consulting chemist of Bartlesville,
Okla., was re-elected Secretary-

is, the

workers

General

rhairman

coal

our

As it

Soconoy-Vacuum Oil Com¬

Paulsboro, N. J.,

good.

most

The

be

Norwood, Pa. A. N. Schanen

pany's

production

mere

to

are

of

"

ions

tions

Institute

•

crisis

emoloy-

,

in

more

American

over

ther

ex¬

mentioned

Together with the

the

Chemists, succeeds Dr. Stewart S.

and

our

longer paid-vacations, health and
welfare funds, improvements in
working conditions, social benefits
and

has

additional pressure on largest of the Society's 18
profes¬
hard-pressed resources, fur¬ sional Divisions.
!
narrowing. the bottlenecks.
Francis J. Curtis, Vice-Presi¬
Freight cars and locomotives are • dent of the Monsanto Chemical

campaign

mere

Chicago,

Chemical Society for 1946-47. Dr..
•Egloff, who is a former President

miners if such guar¬

.

Universal... Oil

been elected Chairman of the Pe¬
troleum Division of the American

of the

losing

the

Company,

coal

full

textile prices?

of

Products

after week, not
being able to com¬
pete with wages in other indus¬
tries.
As to the
miners, John L.
Lewis may be relied
upon not to

labor to utilize its

revaluation—who knows at what' program

inflation

the lack of vital parts while deal¬
ers
and
consumers
wait franti¬

make,

far below

rather than its

•

bargaining po¬
down," a meager basis for fore-! sition not only for raising wages, miss the opportunity.
In other
but
also
to reduce working hours words, our
sight under paper money condi-!
export surplus is any¬
atfons which might end in a new (the latest A!FL 30-hour week, thing but an unmixed
blessing. It
gone

concomitant
against 1.52
Presently, "inventories"; shortages raise prices and thereby
/accumulate, when radio makers the margin in dollars, if. not in
cannot get cabinets, or when half- percentage terms, in addition to
finished equipment is tied
stimulating the volume of pro¬
up by

cally.

no

a

Research

bottom

growers

The

guarantee

mills

Monetary

0.97

cotton

should

and

normal; 1.80 is the ratio, at/latest!
Security
values
reflect ? .the
of manufacturers' -inven- capitalization of profits, and prof-! longed strikes and slow-downs
are part and
itories to .shipments against 2.31' its in turn are the
parcel of the strug¬
product of
gle for higher wages. More and
before the war, and retail stocks "margin" and volume.
at

our

antee is needed.
So far
But how will that
affect

.count,

run

to

manufacturers.

decline

to

hopeful

look

adjustments—un¬

productions

be

mar¬

whole series of

a

its

sales

What this year's

debacle "discounts"

a

in-i average

accordingly. Also, infla-f
keep
raising
production

lefurbished from
top
should offer some

j nails would upset the precarious

monetary side of the picture:1 kets and unleash

not

rising

the

up-swing?

"to

!

annual rate of

interpreted ? ;; If;; it; were
proportionately.
One bottleneck
respectively."
;
true, as it is being rationalized,'
may be • overcome, but only by
that
the security marts "predict"
Inventories
]
creating, another. C
a
coming depression,- then they
Take, e.g., inventories.
Their!
rA'humber of additional or deri¬
-total, in trade and manufacturing would see a. trend that is invisible
vative factors, and no mean
as yet and
ones,
prognosticate a future;
combined, has passed the all-time!
are at play to enliven this uncon¬
.high mark of $30 billions. A great without having facts on which to
trollable scramble for resources.
deal has been made of this fact base the prediction.
They would
Most important is the tendency of
be
acting on the dictunt
by market

sales

:

the

market
producing homes at an
costs in
foreign countries while registers, bewilderment in the face
(say) 500,000 units,
of an utterly complicated and con¬
their labor
but in view, of steel,, lumber and
productivity lags be¬
fused situation, the like of which
other shortages, we can do so only hind ours. Nor is the. outer world
it never before has witnessed.
short of
' !
by cutting down commercial and
purchasing power: $17 to
irom one field to another—such a municipal construction, and while $18 billions of gold and
some $12
shortage economy, if there ever! the lag in automobile production billions in balances held abroad
American Chemical Soc.
was
;
one, is likely to continue by; keeps down Detroit's demand for plus more than. $10 billions of still' I
its own momentum. Its basic re-; steel and other materials. If rais¬ unused American credits
Appointments Announced could go
a
sources are afflicted
long way, to finance our
by the short-' ing rent ceilings or granting subinflated I t Dr. Gustav Egloff, Director of

•

-to

/v

back -to

us

coming .depression —of
symptom is visible—nor
"profitless inflation," tak¬
ing that term literally.
(If zero
profit rate were expected, indus¬
trial security quotations should

as

underlying factors at play,
the monetary side and in age-ailment and will stay so as sidies, should result in the. con¬ expoit-surplus, even if no more
} the sphere of commodities and; long as the underlying/demand-; struction
of
i,000,000 housing foreign credits should be granted
.services, promise further- rising inflation is oiled by a self-gen¬ units per year (which is the mini¬ (which is most unlikely). > ••• fmum
we heed)
prices with no sign of reprecus- erating money flow..
a scramble for J. Anyhow, the 200 million West¬
ern
sions on the financial structure.
Europeans who have to be
everything: from .electricians to

-dicate

.V;

not

even

on

dhigh

all

..

.in

both

net

in¬

which

Japan, our
reduced, while I
are

concomitant

profits

is

and

possibilities

to

as

stock market

eliminated

competitors

Italy

export

tions

mark

brings
starting point.

tobacco, mineral and
oils, etc. Furthermore,

successfully

the

'round, and in each individual
That

sucHi

;

brought

tion

dustry.

than- the demand for
furniture, in which case the furni¬

profitable

in
or

tin,

vegetable

but

stresses, plus political
uncertainties, inject a large ques¬

conse¬

sugar,

an

strains and

rubber, tungsten, etc., is

having

more

.

The

of

be

economy geared to a $200 billion
total national
output should pro¬
vide most sanguine
profit

basic bottleneck of
world economy, to say nothing of reduced
supplies in

increasing the physical
volume of output., The radio in¬
e.

(at best).

shortage

a

without

,

declines, either at home or! steadily rising prices do not dis¬
world markets.
Nor is courage effectively, the demand,
^s; hicreasing
there a credit crisis of any
production does hot
so,rt to
the offing, certainly none that eliminate the prevailing bottler
-could cause widespread
liquidation necks, but ^merely shifts ! them
stock

-on

which

dustry,

A

.

day's market behavior forecasts
what it will do tomorrow.
,

,

level,

any .additional

far

guarantees) have to
discounted.
In other
words,

,

and

how

Federal

keeps

.

"

govern¬

readjusted; (c) whether
actual deflationary
(raising taxes and/or
interest
rates,
curtailing
bank
credits, etc.) or invigorated infla^
tionary
policies
deficit
(more
spending, lower taxes, extended

point out

circulation,it¬

superficial

will

measures

supply and total demand. After as briefly that our imports are sub¬
growing:! commercial; before, bottlenecks must prevail; ject to the restraints on produc¬
analogies which they loans !are
pouring out at the week^; because with 58 million workers tion abroad, especially in articles
'incorporate in pseudo-scientific ly rate of
$100. millions or so. The
competitive
in
engaged, we are scraping the bot-j primarily
the
Charts 'and verbalizations.
The decline of
security loans and the torn of the labor barrel. We are! the American market, such as
the
"appalling ignorance of most of. redemption of bonds,
by* the gov¬ operating on the full employment! raw materials of the Far
East
these'
'do

'historical

far

need to be

•and

we

be discussed at
length on this
It may suffice to

between

between

how

vidual prices out-of-line in
rela¬
tion to the general
price level and

sphere turned to the uncontrolled, j might double this export surplus
The result of de-control is a res¬ next year,; a chapter that
cannot
prices—but

and

profit margins, break-even
levels, and volume of
shipments;
(b) where and how far are indi¬

tions, including strikes, shortages
and

controlled

cu¬

should

fect

limita¬

own

of

shifting

causes

interference from above and
union interference from
below af¬

of better' than

were

samples

recurrent and

ment

over-pro-

some
are

or

illustrate the problem
confronting
the stock market.
It is a problem
of
deciding: (a) in which indus¬

short¬

our

(threatening

foregoing

shortages and their

$10 billions,
and imports af
less than $5 bil¬
lions, leaving an inordinate ex¬
port surplus of $5.5
billions.
If

' high
prices,
since
part of the demand that could not

satisfied

present

exports

portionately
be

aggravating

at

ages

mean

These

raising prices: the
produce, the more latent
•offing.* Needless to go [ into de-^
money. tends; to turn , into - actual
tails;-, every- history of'.business
; purchasing ! pOwer.;' Thri supply-cycles bears •'out ■ the story. The'
increase is matched or offset
by
ones who ignore it are the most
ne\y demand. - But that'is "not rill.'
'successful stock market forecast¬
On top of the
rising velocity of
ers operating-in this
eountryv vvho;
curred

prevalent bottlenecks

overcome.

controlled, and possi¬
savings
piled-up dollars are, bly falling prices for substitutes.
In
other
words, 'we now have two
coming
gradually
into .- use
as
goods become available, especially kinds!, of markets (not counting
capital goods. That is one reason the black ones), some with artifi¬
why inflation cannot be "out-pro¬ cially low, and others with dispro¬
in

bonds.

a

The

mulative

...

(against $4%- and $50 billions, re¬
spectively, in 1929) still is dor¬
mant, to say nothing of the $49

.

Problem Confronting Stock
Market ' ■:

distribution of profits
losses is another
depressant
the security
markets, even if to¬

element

same

which already
are
felt
throughout the body economic.

matters, in the first would not mean
of
necessarily
a
a major part of the!
level of profits to
justify a bull tal profits shoiild approximate the
almost $29 • billion
currency
in market in securities.!:"
'
;; vf; ! $9 billions peak of 1945.
circulation, and of the $150 billion
International trade is another
The crucial issue is: whether or;
n ongovern mental deposits,

infla¬

competes
resources, the short¬

or

the relative

is that

demand

outlay

of

ages

and

What

r

advance^ place,

discovers suddenly what has been

-going

tires,

This

consumer

Business

for the

industry
losing
uncertainty about

making profits

money.

•

»

,

be

the

tion.

are

will

the

of

productivity. Therefore, prof¬

bound to fluctuate
wildly,
and the worst of it
is that it is
difficult to predict which

profit

ends.

bottlenecks and reduced la¬

on

annual

equipment, labor saving
etc., is
it

a

over

direct

or

rate

inventories,

devices,'

$30 billions, much of
indirect consequence

Research

and

Development

Co., Pittsburgh, was
Secretary-Treasurer.

re-elected
»'

•

-

The

Division

will

hold

its

•Thirteenth

Chemical Engineering
Symposium, on the subject of dis¬
tillation, at the Mellon Institute

for

Industrial

burgh

on

Research

Dec.

30

Curtis announced.

and

in

Pitts¬

31,

Mr.

THE. COMMERCIAL & FINANCIAL

2096

CHRONICLE
of that phase of our history.
and more we will have to

end

Out Economic Illiteracy

Let's Wipe
'■ (Continued from page

:

expert. He said, in effect, "I

-0.1

2075)

lutions i3 basicany lc.atea 10 eco¬

have learned from

nomics.

of

*

-

v

Although in the exact sciences
making prodig ous strides,
iri the field of economics we have
been and are in reverse gear,
y

we are

"

And

economic illiteracy

our

is

appalling!.
A recent survey disclcses that
less than 50% of the people of the
United States understand what is
>

nieant by the expression "balanc¬
ing the budget." Another poll in¬
dicates that in nearly three cases
out
of
four
the "man on the
street" who has an opinion "on the
subject believes that "capital" re¬
ceives a larger, share of the, prod¬
ucts of industry, than
after

"capitaF'gets

labor—that,

costs

other

all

are

than

more

paid,

left

is

and

labor

years

the

of

and

this

from

or

that

source.

If most

people's knowledge is ob¬
haphazardly, that is not

tained

other side
not take steps to correct this

showed. Although the tax
corporations is now about
two-thirds of earnings, only 15%

people

the

of

realize that taxes

The average guess
public is that the corpora¬
tions pay, in taxes, about one-third
of their earnings. And it is in¬
teresting to note that the same
people, on the average, believe
that
one-quarter
of "earnings
that high.

are

of the

would be
the

a

fair tax, although

present statd of their

education

they

are

greatly exercised by

in

economic

cess/at

educate the masses as

will

people

many

be

is white.
Under the circumstances, those

who know the truth cannot justly

that

say

He

has

done

nothing
to the

to

ut¬

necessity-iOf-capitaL' Hehas
convinced done nothing to show how /busi¬

black

.hat

ter

ness" has had

a

vital part in mak¬

ing us a great nation. In failing
put across his own story he

to

loses his

his

opportunity to contribute

share

the

to

of living.

■/

the

rank

and

man

has permitted

unprincipled

ama¬

As to the people's lack of curi¬ teur
in
economics to take the
osity about a subject as vital as "play" away from him. The result
economics, it is deplorable; but is that the public has been taught
t must be granted that the sub¬ untruths
or
half-truths. In the
ject is complex and requires time, meantime we are having built for
patience, and, above all, com¬ us a financial and business house
petent teaching. If they do not stranger than anything Alice ever
receive able and patient instruc¬ saw in Wonderland.

tion, the people cannot be. blamed
they regard economics as an
subject and proceed to

if

esoteric

ignore it.

!

probably not

Leadership and
the
responsibility

the situation.

statesmen

'

j

,

education are
of educators,

and business

Ob¬

men.

job for big and little
Each is responsible
Each must do his share, if not for
love of country then because of
This is

business

a

men.

seif-interest. /

enlightened

:

The small business man can

a great job by word of mouth in
pointed out "that viously, leadership of the right
a personal way. The big
business
the public is badly informed on kind has been lacking in great
man
will have -to use different
how much corporations make and measure.
tactics. But in his case, in teach¬
that this misinformation is at the
The economic illiteracy of our
ing
fundamentals
of w business
cost of many business difficulties
oeople has been fostered by the economy, he can reach the mil-/
with the public." The public be¬
demagogic politician's thirst for lions through the printed word.
1

Another poll

,

manufacturing
company's profits reach 30% of
earnings. The research organiza¬
tion comments in connection with
this
"obviously a public so
haphazardly and badly informed
is a dangerous public."
y
In view of the record, it is safe
to, say that only a small minority
of our people would be able to
.define a "free market," to de¬
scribe its values and explain its indispensability in a free society. Yet
today, fundamentally, our short¬
ages of vital supplies in many fields
may be directly ascribed to thesubstitution of a "Planned Economy"
system for the very fundamental
and sound free marketing system.
The people, because of their eco¬
the average

lieves

—

.

v

"sold" a
planned economy

illiteracy, * were

nomic

bill of

goods on

through many
bitter
experiences, r that
they
bought a lemon — that they now
and

are

have

a

finding

counterfeit economy.

Little Understanding

of Simple

Economics
The

•

lack

of

-

understanding of

simple economics by the vast ma¬

jority of our citizens is a danger¬
ous weakness which must be cor¬
rected. If it is not rectified we will

standard
superior
Standing in the family of nations.

lose
of

not

living

only our high
but

also

our

illiteracy may
be attributed, basically, to several
'

Oulr

economic

general factors:

*

'

Lack of interest, curiosity
and concern by the people them¬
selves in a problem that should be
(A)

has

been

completely
brazen and shameless in fostering
theories

~alse

economics.

of

He

norance

anything

and

sake of his brief

for the

appearance on

the political stage.

He

dangerous

is

fifth
por

a

most

columnist, ready to
his own brief and

type

of

destroy
tainted

■*lory the well-being of the many.
a
termite he is busily en¬

Like*

gaged in undermining much
Tie nation's vital foundation

of
—

the state of mind and judgment of
our

->f

people.

■

;

the

footsteps

of

the

(D)

The childlike faith of

other

and

of the labor movement.

the people of America
precious little, if anything,

sure

know
of

Ruether, of

Murray,

views

the

ness

Today
from

busi¬

would

the

sums

needed

for

the

pennywise policies of
the
majority
of
our; business
leaders is beyond comprehension.
And
since
honest confession is
good for the soul I want to say
that until the National Association
of Commodity Exchanges & Al¬
work.

The

Inc., was established

lied Trades,
in 1944, the
done

commodity trades had
a constructive job in

telling anything of the importance
or
necessity of our great com¬

is

sound econ¬
mon
mind, just as the twig is omy to be built on a fixed price
basis.
Where
do
we
expect to find
bent, the tree's inclined." *
As for businessmen, they have that seventh son of a seventh son
whom
we can put in Washington
m the vast majority been totally
who will know and understand all
Peking in leadership and imagin¬
ation
in
the
educational field. the factors entering into the pro¬
Their's has been the attitude, "let duction and distribution of all
me
alone while I attend to my products of the world and can
tell us what is the proper price
own business." They overlook the
com¬

Business

In

How

can we

for this

We
or

expect

a

and that?

should

not

the people, into

fool

Russian

large part

as a

of the economic heart. In the lat¬

ter

case

our

free

I

refer

the

to

markets

fact

that

either dead

are

badly crippled. Under a frozen
economy there is no more chance

or

for

market

free

a

than

there

where

to

exist

here

is

today in Russia,
exists, or in Hitler's
where
none
existed.

none

Germany
And, of course, in a frozen econ¬
omy the law of supply and de¬
mand

is

So

plan,

planners

unable to

of our factories shut
want of vital supplies,

for

building program for veterans

in

Public

Relations

the field of public relations

imagination, eternal vigilance,
a sharp
eye on national and
competitive factors.
Our
natural
wealth
in
fields,

the

business

man

ference

free

between

marketing

American

the

the

and

system

Russian Planned

Economy System
is that we exchange good products
and lots of them,, and the Russian,
shabby
products
in inadequate
quantities. But what a difference!
Our

political

of cir¬
(the "you will
anything to worry
about if you elect me" fellow)
can be sold "short" as our people
awaken to the truth of simple
economics—the truth that nothing
is obtained from nothing.
purveyors

and parades

cuses

have

,Now, some light, some truth, is
finding its way through our dirty

others still in the talking or economic windows. A few of the
leaders
are
awakening.
blueprint stage, our butcher shops labor
of meat, our sugar bowl William Green, President of the
a
shadow of its former self, and American Federation of Labor, re¬
white shirts
and
clothing con- cently said:
\;
spicious by their absence from
"Labor has come to the con¬
the retail shelves. Indeed we have
clusion that the time has come
an
economic jigsaw puzzle that
to drop
artificial government
even
a wizard could not put to¬
controls which have kept the
,

gether. And
•

In

effect

equipped

can

you

by

of

quick

The

Economy"

"Planned

a

successfully substituted
rock of the free

cannot be

If

economy,

Another

v

ing for and with us, in fact, that
are .Working 'fob/each'''other;

that; in
one

of

us

the final analysis,
is merely exchang¬

products of

others the

with

individual jobs. We are inter¬

dependent!
Picture, if

•

will, a popula¬

you

standard

living

of

have?

,

No group
conscious of

would

he

'

in American is more
the

interdependence

people and nations than those
finished materials. They
of the great number

ties and
are

aware

supply to which we
the products
which create our high standards
of well being.
But our great masses who en¬
joy this great variety of products
have no conception of the loca¬
of sources of

must

go

of

tions

the

to

-

demand is for reoeal of govern¬

controls. The people are
tired of bureaucracy. They are
tired of being told what wage
they can earn, what price they
must pay and what food and
necessities they can buy." +./+

ment
>

:

Now

honest

that's
kind!

leadership

That's real Americanism!

The administration in Washing¬
ton

has

last

to

been compelled at long
capitulate on meat con¬

secure

these

storehouses

of

slightest idea of the infinite
in the pro¬

by the enraged and disillusioned
public, finally awakening to the
facts that the government is not
an
all-wise father
who always
knows best and that government
control

all

over

the

world

—

of whom- learned to lean
government, had been doing

many
on

their duty over the years by edu¬

cating the public to the spuriousof New Deal economics, we

ness

would

never

have

would

They

their

also
own

140.000,000

/./a

years.

To the embarrassment of every

American citizen, .our
has presented the un¬
fortunate spectacle of utter be¬
thinking
country

they would better under¬
and indisof the

a

series of orders;

counter-orders, marches and
counter-marches,
and
confusion

compounded
should be

a

upon

confusion. This

never-forgotten lesson

public, its memory is short. It
again be sold a visionary eco¬
nomic utopia. But this must not
happen again; and will not occur
again if business men live uo to

the importance

pensability

the

benefits

better under¬
relationship to
people
in
the

people in the world with whom
they are exchanging directly cr
indirectly their product or service.
And

to

to the business leaders. As for the

United States and the two billion

stand

sunk

depths of economic chaos which
we have experienced for so many

order

in

for them to receive these

and

free markets. If business men, too

and

a great exchange op¬
perpetually in motion

successfully

self-reliance

for

wilderment with

realize that

be

cannot

substituted

duction, shipment, fabrication and
financing. If they had, they would
is

t ofthe
constructive!

That's

number of steps taken

eration

'''-..

trols/The capitulation was forced

tion in the United States of only
one lone human being. How high

of

,'•

.

"Unquestionably, the popular

We'

a

,

dent, who stated in the last few

enjoyed by each is only
possible because others are work¬

and

market place.

can

their

full

social

and

responsibilities,

both

economic.

Still Planning Utopias

But

in

the

cold, real facts

face
we

of

the

hard,

find the "plan¬

They would better understand ners". still planning their Utopias.
bunk that is wrapped up in I And they are planning dangerous
this
package they. are buving i plans from the standooint of the
called "Planned Econo
They 1 American who wishes to main¬
w( aid better understand the im¬
tain and improve his high stand-*
the

,

item is a
John ' O'Leary,

by

weeks:

v

each

restore

United Mine Workers Vice-Presi¬

of living

our

balance.

to

exoect

refreshing

statement

stantly

ing

off

economy
ever

v/e

peacetime conditions in.AmerS ica, we must first restore peace¬
time freedoms." •/"
;

solid

the

for

a Model T car¬
won't work.
not build a solid
ignoring
certain

laws.

fundamental
sands

nation's

attempting to
truck which is

ton

with

economy

will!

ever

are

we

It just

buretor.

No,

one

no

ten

a

stand

and

international

one

only exchange with
another Russian the products of
their respective labors.
The dif¬
can

devoid

the

believing that

communism

and

ourselves,

high standards of living can
be maintained without hard work,

K+

/

communism.

of

snare

under

never

many

down
our

dodo.

a

and confusion with

chaos

business

our

as

have today in the United
state of complete/eco¬

a

nomic

dead

as

we

•States

/

our

the

the arteries

well

Communism

they would better under¬

stand
Even

wealth and comfort, nor have they

..

And

hardening of the arteries. In fact,
we have
completely lost some of
as

of

Snare

suffering

+ "'Tis education forms the

have

"anything" (excepting reg¬
is merely
political
hogwash. \For competition in any
phase of life cannot he stilled.
It is an integral part of all life.
imentation)

economic

of

case

who purchase our raw commodi¬

They

system to gain

antees

small.

or

nation

our

bad

a

American

of

large

men,

drilled into
the
"eco¬
nomically illiterate" is that every
one of us is
dependent upon the
others — that the high standard

generally is
doing business at the "old stand"
forest and mines in the past has
ing their large share of respon- of 1880. And yet we have a right
been so stupendous that we have
aibility of enlightening the public. to expect leadership from him in
been able to "afford" the costly
Some months ago I was greatly the teaching of the fundamental
nf economics to the
peonlg; after luxury of economic illiteracy. But
impressed by a statement made by
!h<* recent war has hastened the
a
nationally known public opin- all. he is practicing economics




I'm

Walter

I

modity exchanges, our free mar¬
used the kets, — vital to the wellbeing of
power—the all interested in commodities. We
system of divide and rule — the were asleep at the switch and
pitting of class against class, the derelict too until death was star¬
building
up
of
hatreds,
the ing us in the face.
^reaching and teachings of false
Pleads For Free Economy
doctrines. They have no qualms
tbout assuring their constituents
Now I ask you, how can we
that 2+2—5. And they have been hold our own with foreign comriGst vocal.
- V
:'..+•: v.netition
without
free markets.

politician.

the

Dereliction on the part of
business men generally in -assum¬
(E)

Mr.

phase,

One factor that should be con¬

demagogic

the other.

people in their right to get some¬
thing for. nothing.
;

of

this

on

pending money for such construc¬
tive
and
essential
educational

never

And many of the labor leaders
this country have followed in

close

poration who is niggardly in ex¬

,,

|irst on their list of musts.
(B) Lack of good leadership.
"act that their business ig every¬
(C)
Mal-practices
and false body's business—that we are* Com¬
teachings of demagogic politicians pletely interdependent—one upon

and labor leaders.

The executive of the large cor¬

promise
anything for votes. By twisted
work, or fails to do any such
reasoning, by the nurturing of
work, is doing a disservice to his
prejudices, by fantastic promises, stockholders as well as to the
by false accusations, the political
public. Lack of action on such a
demagogue
leads
the
people
public
relations
program
will
deeper into the black night of ig¬
prove infinitely more costly than
do

will

same

,

He

oower.

solute financial security, or guar¬

I

Philip

run

do

And

views

which

produced our high standard

has

survive.

to

They would understand that any
bill of goods proposed by a politi¬
cal demagogue which will elim¬
inate
competition,
provide
ab¬

use

before

the

of

knowledge

people's

me

advancement of

American Business System

The business

Competent Teaching Needed

brains

our

practicability of "floors", "ceil¬
ings,'' subsidies and frozen prices:

should like to emphasize that all
of America knows the economic
Mr.

nomically speaking, he has found
himself, in public, or human re¬
lations, at the foot of the class.
True, he knows how to "sell" his
product and has been a great suc¬

does

falsehood, then assuredly in time

More

members

nation.

na¬

survey
bill of

as

But, as the American business
man
has
been
intelligent eco¬

black is white and the

another

taxes,

business

of

ture

confiscatory

the

of

be successful at it

to

othewise he would fail.

.

the greater fault lies
to
capital, instead of exceeding with the public. If Columbus's
the
return
to
labor,
actually proof of the theory the earth is
amounts to less than one-sixth of -ound had been kept a state secret
the return to labor.
the people of that day would have
The public has little compre¬ continued to believe it to be flat.
hension

obliged

that, Beyqpd that point,
their fault."
\
however, he has done nothing to
Thus, if those with a certain "sell the very important story
point of view take the time and about where and why and how
money to educate the people that he
fits into the pattern of the

half of

less than
half. The truth is that the return
what

mj&many

experience in the
field of public opinion surveys,
that whatever may be the opinion
of the people on any subject, be
it- right
or "wrong,
we
cannot
criticize their verdict, for their
judgment is based upon the in¬
formation they have picked up
study

daily and knows more about the
subject from a practical stand¬
point than anyone else.#And he is

-/Thursday, October 24, 1946

;

iuiMMwMAv mwatwffmmwwa

.Volume

164

Number 4536

THE COMMERCIAL & FINANCIAL CHRONICLE

■i,

ard of
to

living. They

give

are

planning

America away!

;*£• Howard R.
of the

about

'

Tolley, formerly haps

/*'

duce.

United

States.

the

We

1950

the

So

our

Must

13,500,000

Law

more

.* .• V .v'/.v-;

/

on

after

to

course,

wartime

a

the

peace.

;

And,

of

over

controls

and

distribution

price

and

government purchase and sale of
sugar crops,
would have to be
continued. The "free"
market on
would

sugar

such

*

plan

a

been

since

But

be

it

as

on

under

the

food

proposed

program

suoolies

every
of

no

use

interfere

saying

La¬
food

would

He

we

"put

said,

"it

not

the

delegates

to

tell

not

helping to bring

world

standard

is

objective."

our

of

him

His

of

economic

remarks

confuse

not

serve

further

the

up

con¬

illiteracy.
only to

other

our

eco¬

nomic illiterates but to make
certain
ouri

un¬

trouble

to

check with

drawing

out¬

parallel

a

tion

arise

out

of

; 88% oppose the closing of
modity exchanges; >
•

ployees; sometimes the employer
nas nothing to do with
it, but it
is between two different organized
groups of employees, each claim¬
ing the right to negotiate with the
employer. Sometimes workers are
compelled to go on strike when
ihey have no grievance at all and
would

are

such

organizations,

but often
into membership
against their will by violence of
threats of violence..
Often they
are

forced

coerced into

;

94%

believe

wartime;
not

fix

the

that/

-v\

•••-'•

•.

•

•

;>

■

',

• -

••

control

should

of

be

commodity
eliminated as

possible.

•'

'

Furthermore,

;

the

y5;

/

'

soon

belief

.

commodity, exchanges

-

•

' are

Commerce in
It

is; not

30

states! :

that

a

condition to make

appraisal of

stop

as

delay
educa¬

a

-:,

not here trying to fix the

am

or

or

to

who

say

is

to what extent.

that "such

a

in

the

But I do

situation

will destroy any

breeds

government

no more excuse

for per¬

up a sinister purpose,/to
take into their own hands the re¬

dressing- of their
that

there, is

own' grievances,

for

whole

and

the

system

into

disrepute

itself

government

contempt.

into

\

/•'*' :
'; The
authority of law must be

whom

preserved,
orderly
procedures
maintained, the rights of the un¬
offending
but
suffering public
made

secure

wishes

of

regardless

of

the

the

contending parti er
the pressures they may
bring

or

to bear.

Another

death.

no

;

-

.

an

organized body to obstruct public
iront

of

to throw

with

to

places

work and hold others out

its inevitable

stifling of

in¬

dividual freedom.
That warfare
involves religion. If the insuffer¬
able
and
inexcusable condition

picket lines in

entrances

of

by vio-

now

iurve'thfltln?Kdatl°-n' -threat and in~

prevailing

then

there is in any person
retript?r-fPKrl
has been
stolen
to
retrieve
it by force
of amis,
killi-hnc

free

to

way

*

will

government

give

form of totalitarian¬

some

man or

of

of the

state will

ter.

class

a

destroy

religious

liberty.

government
as
we
have
known it, what commonly now i

evhShv r+°ngSf Y?U never cure an

OVer^nf
fr?m
0ne of
Setthose
0f hands
into li
the
hands

spoken of as our democracy, is
foundationed in the great spiritual
principle of the supreme impor¬

&P°Slt? ?ide« Wrong is just

divine

7 transferring the power to
on

tance

as
sinister and just as fatal to order-

of

the

individual

derivation

of

and

the

the

human

,ly living when perpetrated by one

soul.

f;df
*° abycontroversy
trated

est political exposition in the Dec¬
laration of Independence which

commission

as if nerpe-

the/ other.
Former
not righted by the
of new ones by the

other party.-

Our method of handling

.

'

^

or

men—are

circumstance that they
God-endowed witr

basic law

our

and

*

'

conviction carried
tice

established

the

not

were

into prac^

over

do that. The

can

disciples who ,

Ancient

who

men

Church

rationalized

Jesus and his doctrines away, nor
satisfied
with ' proclaiming

were

him merely a great et';ical teacher.
When Jesus asked Peter, "whom
do

men

him

that I am," Peter gave

say

the

various

conjectures

that

had ventured concerning him.
Jesus then put it to him directly,

men

"But

whom

That

say

that I

ye

am?"

which

of the living God."
of living faith
the Christian reli¬

son

the

is

kind

carried

gion into ascendency in the West¬
world and ultimately gave to.
the world our democracy.
It is
ern

the only kind of faith that can save
world from the unchristian

the

doctrine of regimentation and au¬
dominance
over
the

thoritarian
lives of

men.

/.

,

which
even

are

no

the

Investment-

residential
tember

increased

for

in

Sep^
over
the

3%

ed in August in the 27 states east
of the Rocky Mountains, it was

reported on Oct. .15 by ' F. W.
Dodge Corporation, a fact-finding
organization' for the - construction

industry. The report went
say;

•

to

on
r

•

September residenfial contracts
$293,831,000 against $284,-

totaled

025,000 in August and called for
the construction of 40,390 dwell¬
ing units. Publicly-owned dwelL
ings account for 9% of the Sep¬
tember
and

dollar

Gains

in

of awards,
$26,702,000.

volume

amounted

to

residential

contract

uniform

not

were

Declines described

areas.

erate to

=

commitments

construction

dollar volhme of contracts award¬

awards

on

governmen

,oc.

jV'

Contracts Awarded

>

inviola¬

power

-

:

September Construction

in

all.

mod¬

as

reported

by'
the Dodge organization for.metropolitan New York, northern New "

made

coordinate

with

tne

severe

were

tracts

able.

in

For

a

fullness the two must

the products oLmcme
century and a half of the
teachings of the Christian religion
out of which they must draw their
are

a

nourishment.

or

If this

well-spring

is suffered to dry up, then indi¬
vidual freedom will wither and

SUrpnmK1/10^"
not
to the^en
lure^h°
of wm
expedi-

New England showed the

right to life itseJf.;The history of
human struggle loudly proclaims
that life without liberty is mtoler-.

ration

succumb

die.

'•

.V?•

•

,

declined

from

con-^

$211,530,000

Aug. 1946 to $169,627,000 last
month, while heavy engineering
fell from $184,354,000: to!
$156,399,000 in the eastern states,1
works

the

Dodge Corporation

The

,

demands

agencies
materials
vealed

that
all

-

For it is out of that religion that
the whole concept of the common
brotherhood of. men as the chil¬

greatest

gains.
'
,
:
' ' ',
Nonresidential construction

on
.

in

23%

of

reported.

government

the available critical

and

equipment is re-,
showingdollar value of.

tabulation

a

of

the

contracts awarded during the.

•.

sloshing around in
positions requiring big men of un-

dren

of

the

same

God

„

derives,

each equal before the law. -So

Integrity to fill them.
Why. should great cities
be
thrown-into darkness and their

timately

;

5

mere

than

it without regard to personal

because:.two

the
are

together. These conceptions in¬
corporated in the immortal Decla¬

thotiS?
intelligence to discern
right and the courage to pur¬

citizens exposed to

birth, by the creatives de¬

go

the

nrfy'- but who dare, to stand on
™ITPe tbough they stand alone,
j-hece are too many favor-currymg iit je men

that gave them being—from

thus

or-

to' have

themselves

accomplished the
regimentation of
the bodies and spirits of men. But

.

men

,to

been

may
properly- infringe.
Among these inalienable and in¬ Jersey, upstate New York, the
violable rights are the right tc southeastern states, western
life and to liberty.. The right o
Pennsylvania, West Virginia, Ohio,
man
to
liberty—to be free—is the south central states.pnd Texas.:

™e/rying
need and
of this
age is
of stature
character

sue

that

at

earth; not

ingSit?SiVe influence in establish-

consequences

fire

itself

w5 h°Pe to achieve

order,

of

cree

ble

thJi6 ^as^lgating other nations for
^role
deli^.uencies
ortotothem.
assume
of instructor
If

international

words

men

force of

thp
the

cannot maintain domestic

in

certain rights which are "unalien¬
able" and which of right and b>

these

'.ppUSnfiaK d^sPutes belongs to the
tiona? . arbarism and is a na21- disgrace.. So long :?as^ we
nr,w
-defiance, disorder,
rPd^!! "USUrpation
of the riSht to
redress
wongs, we have no right

we

This concept finds its high¬

proclaims

*

A National Disgrace

has

thorough

.

group or even
not much mat¬

Free

past suffered

are

there

most

one

or

And totalitarianism must al¬

ways

eve.n though true, that
vorkers?
have in the

wrongs

thd Christian rex.gion and

in that country where the break¬
down
hafc -been most
complete,

is not corrected

ism, whether the despotism of

processmaiming if need be in *he
anvh^ d0GS i1: belp the cause

over

^breaking down and de¬

Christ, the

the appro¬

is that the whole future of free¬
dom of religion is at stake. There
is war between the
concept of a
free people under a free
govern¬
ment and totalitarian governmem

-

greater right in

for

reason

priateness of this discussion here

per-

There is

coun¬

perished,

Peter answered without equivocal
tion or hesitancy, "Thou are the

Freedom of Religion at Stake

he
than

needs

nor

are

in¬

the two intertwined

'that democracy and the Christian
religion must survive,or perish

the marauder

Wether.

contending' parties

Neither has worked

fectly in human hands.

to be belligerent? " Why

per¬

But tbf

first nine months of this year was,
for projects listed as "publicly—

owned," the Dodge corporationreported. September awards listeri¬
publicly owned amounted to.;
30% of the total of all
as

awards.^,

.

The

total

of

all 'construction-

contracts awarded in the 37 state?

failure of the perfect working o
the principles, of free government

whole innocent populations be

probably is fairly in proportion,to

states

the

dentiaL construction

re

duced;to hunger and cold- and

<

failure. of

.

men

to -live

the

,

during the first three quarters of
this,; ' year
was
$5,995,493,000
against'$2,281.9^0 000 in the cor¬
responding period of 1945 in the-

tra°nsnnS'er
and laad
transportation, Svippinft
be
stopped
and

himself the satisfaction, of his own
wrongs of whatsoever nature with¬

;

is

in: t.iose

east

of

the

Resi-

Rockies.
'

in

>

first-

the

permitting any privation because two private par¬ Christian
religion, r The .perfect nine -months of,this *year aggre?.;
individual, to take upon ties, or
perhaps? only one of them; Working of4 the -latter Would -in-^ gsfed .$2,492,556,000. mcm-residem sets up its imperious will
regard- Wp the nerfect "workinr of the bal construction contracts totaled r

private
.

cause

that

note

a

tribunal set up to render the kind
decision the dissatisfied
party
wants. That practice
only brings

a

mi?

shammed to

or

cover

the

to

rendered

of

ani aestr°y lusonfood¬
and

necessary to give-an out -regard- to - the good Order; and
tmbhc?
to who knows more welfare of
if laws
the~whole-soeiety.~~/ *' i
,

pinion

to

this

on

before

And when

be

tant

judgment has a superficial unbelieving profes¬
by a duly consti¬ sion of the Christian fai h will not
tuted tribunal, let that
body not withstand the disintegrating forces;
be dissolved and its
judgment va¬ at play in the world today. Only
cated under pressure and another
'a
genuine, deepseated religious

I Permitting a man
J* nose son has been killed, perwlfhn1? investigation
-a brawl> to kill
so out
and
without
the

an

the merits

respective positions,

cerely entertained

im¬

!V

unreasonable

are

mitting those with an industrial
complaint, real: or fancied, sji.

-

*

workers

There is

as

portant in marketing basic com¬
modities is heartily subscribed to
by 76% of the heads of farm and
commodity trade publications, and
86% of the heads of .Chambers of

are

or society that
does not find an
effective way of dealing with it.

prices

.

I

say

the; same*percentage be¬
that, in, peacetime, Federal

afford

can

moment

J® the'seats of power. Men who

the

and

"And
lieve

and

lawlessness, eventuates in anarchy

-

part of

been

of

right

commodities in

on

heard.

f
for

blame

in
should

us

a

predicted

educa¬

an

vital

accounts, while
employers assert that the demands

i

w.

except

government

prices

general;

•• -*•

••

injustices

balancing

of their

commodity

;

suffered

pute is in

96% express opposition to floors
or
loans to. support

prices in peacetime;

are

unbiased

l

certainty

whnL1S

prefer

to go on working,
compelled to walk off the
job by the orders of the organiza¬
but

impossible of granting.
Ob¬
viously, neither party to the dis¬

com¬

with personnel so biased that their
decision may with

other part. And

any

™ants

disagree¬

and

costs;

are as

Pay,-another;, driver-

be¬

Sometimes the dispute is
between the employer and his em¬

now

commodities; • ;
;
J84% credit the
commodity ex¬
changes with reducing distribu¬

unsus¬

stuffs Unless he will take

now

"Strikes"

long

commodity exchanges play an im¬
portant role in marketing basic

of

°r

membership be¬
cause otherwise they will not be
survey, commented on this subject permitted to work at all or to earn
their daily bread.
of free markets as follows:
Employees claim that they have
96% expressed the belief that
standing economists of the coun¬
try have recently, as a result of a

as

*

that and the barbaric meth¬

we

they

know something about economics
he would have found that
the

an

farmer carrying his own
produce, the fruits of his own toil,
to market and
tip over and break

ments.

of

those who

by

■

tion to which they belong. Some¬
times they are voluntary members

standing with, the
peoples of the world at large. If
Mr.
LaGuardia had v taken the

believed

fJ^fre
l\ no more Justification
permitting an organized group

employ in our han¬
dling of industrial disputes. I have
no
nesitancy in saying that the
"strike" is a totally uncivilized
way
of
dealing
with
them.

the

living, which

Mr. LaGuardia's utterances
vict

ods

is

gamblers

and

of

tween

going

people in their countries
that, if
they did not set up a "world pool"
as the
"only export agency" they
would be "just
bolstering trade
and assuring profits to
the specu¬
lators and helping the

are

to

txie

pose

exchange

are

they

for

sumed; to present this sketchy
background for the express pur¬

with " free exchange
sales." Mr. LaGuardia

free

invited

Mr.

impartially constituted, not packed

(Continued from page 2075)■ V

.

purpose of worsnipping
assembly such as is convened nere
today. I will tell you. I have pre¬

Agri¬

world

grain

:

.

By now, some one will surely
be asking what all this has to do
witn

£ distributing

that

business."

to

and

a

of

dabbling

out

and

Organization,

Guardia

board

Food

that

often

Anarchy!

or

Disputes Barbaric

a recent speech in Copen¬
hagen,
Denmark,^ before
the
Nations'

so

false

tional program!

men,

Methods of Settling Industrial

In

United

by side with

economics

repeated

another

of people could not have lived to¬
gether.

tion, has a bigger and better
plan.
He would
out-Tolley Tolley.

culture

and

are,

business

haunting fears. Without such
accomplishment, large numbers

an

energetic

,Mr. Fiorello H.
LaGuardia, exMayor of New York, now
Director
General of the United Nations
Re¬
lief & Rehabilitation
Administra¬

^

there has gone side
its decline,
nial of

before

strained license to do evil.
It
tribunals be needed to administer
and enforce the
laws, let them be

scotch

must

they

tional nature

for

Harbor.

—

We

that public relations of

day in the progress of civilization.
Anarchy gave place to order and
it became possible for human be¬
ings to live together with a large
degree of stability and freedom

is and has

now

Pearl

hold

dead

as

nas

pecting public. We must recognize

plication of principles of justice.
This achievement marked a
great

regulations

and

things.

doctrines

the realm of impartial judicial de¬
termination by reason and the
ap¬

a

plan would require that all of the
current

of

private feuding and reprisals by
physical might and put over: into

basis

into effect such

put

tries where freedom

the

vTolley would keep the Ameri¬
citizen

to

People

business

as

evil with laws that shackle one oi
the disputants while
leaving tne
other to roam at large with unre¬

portance of business in the scheme

facilities

Educate

way,

our

power to pro¬

the

rights, privileges and obligations Toge.her they have provided an
trie> respective contenders,, let
atmospnere in wukl,
spite of
laws be passed, but let them
impenections, we nave lived arid
be fair, impartial ..and unbiased ,ilourished~a& has- no otner
natio#
laws.
You will never cure tne in recorded
history. It is import,
of

help them to understand

the place .of business and the im¬

none

Business

of educating

2097

sucn

fundamental economics.

on

' the

total

expected to be
than in 1940! .0

years

the

need

is

total

consumption of
prewar. And this
despite the fact
that our
population in 1950 is

can

world

responsibility

We must

true markets.

proposes

(and
syrups)
depressed
by 12.6%

be

under

the

people

bureaucratic controls they are not

by> the year
supply of sugar
should

is clear.-We must not
only be a
constructive force in creating jobs
and in turning out better prod¬
ucts, but. jnust take unto, .ourselves

a

places. Market places that are free
markets! If they are not free
markets but are markets that are
hobbled by complete or partial

*

Tolley

that

in

exchange
that
production , and
service with others. To accomplish
that, we need markets and market

Tolley

^Specifically,

this

power to serve,

famine

i

in

possesses

years to come.
program
is
not
a
relief. program. It is
a
plan to raise the normal
consump¬
tion of sugar in
other countries at
the
-expense,
and
through the
sacrifice, of the peoples of the
The

took

,

er na^ons f°r

wiu

LaGuardia

Mr.

Mr." LaGuardia

little too much territory when he
expanded his efforts beyond New
York City's limits.
;
/
*
All you or I, or anyone else,

program of
sugar- supply
with

our

economics,

the economists mentioned. Per¬

or

U. S. Department of
Agri¬
culture now Director of the
Divi¬
sion of Economics
and Statistics of
tne Food
and Agricultural
Organ¬
ization of the United
Nations, has
recently proposed a

sharing

1,11Vt■'4!i9!^'I,A^Vt,^i!^;^1^,^',' i1,1

g0t>d

law-abiding

pure me jaasect working at toe $2,182,054:000
former;" We

may..

not,, except

at and

_

utilities

and
-

-

public

works-

construction

-

con-

-

-

:t


V-'

.

I

are

needed to define the

oirr fperil,

discard either of them,

tracts amounted to $1,280,883,00(L

; h

r -i

I

U

-ri*

f

r

i

i

^

■

T-.nf

t s

i

i

,>lit'i

-

n 'v f

-

ill-

i

r.

i«.

V,

;,/--/\v4 '"///

-i''v;" S'

-v•' y ;i

THE COMMERCIAL & FINANCIAL CHRONICLE

2098

mand

Inflation
(Continued from first page)

trebling of the money supr
ply and the liquid assets of the
country during the war, together

All

wars

with

:

»

a

,

immense

the

deferred

and

" alf kinds*;

have1 resulted in infla¬

It is

now

clear in retrospect, as

tion, because in

war the govern¬
it seemed to many of • us at the
out money, while at' time, that what we had to fear
the same time a large part of cur¬ was never
deflation, but a more
rent production is for war instead
active inflation than we had ex¬
of civilian use, and the goods are
perienced while the inflationary,
not available for purchase by the
forces were being created.; One
people who receive the money. We danger was that people would

ment pours

treated money purchasing power,
without supplying the goods. to

and

com¬

before the industries

were

into

rush

pete,

absorb it. And although under
thej
combination of patriotic incen-.

the markets

do

an

M'rC-

•

/-/:"- f':. Wy7y/!'

Thursday,; October 24, 1946

r

weakens.

because

cline

some

"v

efficient

»

of

,

turnover

.the^

will

^

incomes of other groups will de¬

day's

jn other words, says Dr. /Hahn, -7lf
break-even points are too high..
This

public statements labor cline. Excessive costs aiid uribalianced prices have, brought on re-

to

seems

friost

important

.

one*

me

of

ther

,

,

of our
are for-^;
by, nature ;

aspects

,

[cessibns in the- past when there current/situation, /Those
jwere undeniable needs for hous¬
ing, automobiles and other goods
to be filled.
Credit

Expansion

!;

;

,

Cost-Price

and

Distortion

tunate industries. which

enjoy

a

which

highly stable demand, or
an expanding com¬
which are still in their
period. Such industries /

serve

munity,
growth

or

less vulnerable to the dangers

are

\ ; When we > look, at the current described by Dr. Hahn than are. <
the heavy machinery industries,
putes, and petty strikes over petty Situation we note,
first, that credit
which are peculiarly subject to
causes. create friction. A record;is immensely expanded today, but
cyclical fluctuation. Yet none are
breaking industrial employment •it is credit based
chiefly on gov¬
fails to produce a commensurate
wholly immune to fluctuations in /!;;//
ernment debt■ of which there -.vill
volume, or to the damage that a
output, measured by past stand¬ ibe no forced or
disorderly liquidaards.
!7/7/7,.;//A77/7 "■:''7'77
high break-even, point can wreak
In all this there is one encour¬

jtion. In.fact, I doubt that

any

of

|uS' expect any substantial govern*
aging feature. The creation, of iment:
surplus or. debt retirement,
goods
tives and lack of goods people
purchasing
power through gov¬
in-, during the war. To avert that, the
and, as long, as r the government
ernment deficit financing for all
creased their savings and bought
debt stands in the banks the de¬
need was restraint/by consumers
to supply them, for the
which had become scarce

ready

'■

■■'

7

join with employers in
emphasizing the need bf produc¬
tion to raise living standards,,, but
along with this goes emphasis, on
higher money wages, on shorter
hours, on payments for longer
vacations and other non-produc¬
tive time. Union rivalries, organ¬
izational arid jurisdictional dis¬
leaders

replacement demands for goods of

of the three basic

to

work. In

of the

isfy the enlarged demands. These
conditions push prices up.
The
price increases are the effeqt, the

inflationary influences.

labor

On the other were the stark facts

and services in the markets to sat¬

consequences,

Approaching Peak

■

■

when

The-

down.

volume * turns

sales /vs.;;;^
begins to tell then. The erosion
of the rates allowed by. the, regu-r
latory commissions to public cor¬
vast amounts of government se¬
and!the highest degree of unified Ipracticarpurposes has come to an posits, that is the money created
curities they could not supply all' and
|
cooperative effort tb. get pro¬ jend. As early as the first quarter by it, will stand also. The amount porations, will also begin; to tell,
when" itris no longer obscured and i
the
m on ey
the
government duction going. The second danger |of 1946 the government budget of .credit
empjoyed in carrying se¬
erosion of profit margins on

.

was balanced, in the second quar¬
ter there was a deficit,
in the
cost-price spiral .' The need
third quarter again a small sure
was
to keep hourly wage ratesstable or at least to hold increases •plus. A small deficit for the full
fiscal year 1947 is indicated. But
within a range that would be
on a cash basis, including the in¬
justified and supported/ by- high
take of Social Security taxes, the
man-hour
output.
We .needed]
government will take in j more
stability and patience — patient
waiting" by buyers'fbr the goods money from the people than -it
!
they wanted and patient waiting pays out.
1
This means that the piling up
by labor for the wage .increases
which improved technology and. of inflationary pressures result¬
productivity would later bring ing from the. government paying
them. We needed above all, a more ; money to people than /it
willingness to buckle down to the. takes away from them;-has ended.

heeded.. The government borrowed

from the banking system.
it increased the money
and- met its needs.

was

Thereby^

continuation and acceleration

of the

supply,

.

Inflationary Forces
From the beginning of the warto the end of 1945 the money sup¬

ply,

consisting; of bank deposits;
subject to check and of currency:

outside the banks, increased more,

curities
in

securitydoans of the leading
ber banks

mem¬

other than govern¬

on

securities are probably not
-15.% of their 1929 peak and

ment
over

probably

one-fourth

about

only

of their 1920

level. However,

the
economic panorama: unfolds, the
painful task of paying down loans

■

than three times. In addition, the.

"absorbed ,in; expanding volume. > #
is, relatively, the lowest
| *! In my remaining time I should >
times. For example,

modern

on

stocks

that have

declined on
a serious

vl|

like to offer you an opinion as to:
where we may be in the inflation- !

the-

deflation cycle, arid what are

fcriicial,points;tovlook.for., As, I,
said earlier, the piling up of

basic s
which comie
through
increasing
the money
supply actually came to. an end.
last December. At that time; fhe^

inflationary

pressures

%

,

,

governments took money away,
from people by selling them V1C7
spending. The
tory Bonds, and djiring 1946 it has
reserve
position i§ not strained
and no ^one; expects restrictive applied that money to retirementipent securities — in an amount,
qfi/spriie:j-^Of TthhS g(wieimment/^eb^|/
job of getting the productive or¬ The dimensions of tfye inflation policies comparable. to those of
held in" the !banks.' Also, during
also more than three times the.
ganization back into: peacetime- problem are reduced accordingly; .1920 ;to be. established.
1946 "the government budget has prewar figure. Total liquid assets!
working order.
!•--When
we explore cost and price
were $225
been nearly balanced. The money
billion at the end of
et showing is attributable not to
relationships,
however,
we
.come
last year, compared with $65 bil¬
Fumbled Opportunity to Stop t
supply have been increased r by
of economy that. .ought
7 the kind
to a less, favorable answer. The
lion at the end of 1939. The in¬
Inflation
private borrowing from the banks,*
people of the country held other;
liquid assets -'- time deposits,;war
savings bonds and other govern-!

market value will not be

drag

on

consumer

/

.

enforced

to. be

in the supply of money is

crease

It

the

original and primary source
the inflationary pressure. ; - ;

of

The

war

is

for the

war

more money to
ended with the

the

But

increase

in

the'

money

supply remains. The goods

which

the

bought

money

are

war wages

and

ma¬

terials costs rose, and prices of all
the industriesnot merely those

service corporations —
brought under regulation.

The great solvent of the earnings

problem! despite the

be¬

squeeze

tween rising costs and relatively
inflexible prices, was the rise in;
volume. We started

our

months

after

program

war

in

mas

Mr.

Wilson

announced

the

plants, opening new
mines and buying more materials; decision of the General Electric
abroad, but by putting people to Company to offer a wage increase
and to apply for price increases.
Work who in normal times would;
have been retired, would have He said it was apparent/that "the
stayed in the homes, or would company can no longer adhere to
new

have been in school. We built
our

up

total labor force, including the

armed

services, to 67 million,
was somewhere from 7 to
million above normal. At the

which
10

peak we had 7 or 8 million more
people at work in this country
than in 1940, despite the draft of
,

14 million into the armed; forces.

Every producer of goods and serv¬
ices, including the waterworks,
felt

the

stimulas of

the

demand

resulting from this immense en¬
largement of activity. The in¬
crease

in

costs

manageable
because of the expansion in the
gross.
At the
were

end

was

of

the

war

there

sharp divisions of opinion

to the effect

on

as

business and. the

real nature of our economic prob¬

lems.
fear

On
of

the

an

one

hand

immense

was

volume

the

of

unemployment as workers were
released from the war plants ajid
veterans from the armed forces.




but

which

to

is

a

burden

continually

Imbalance

ripw most to be feared

is that created

by the rise in the
of organized .: labor above
what its productivity would. sup¬
port. The effect is to raise indus¬
trial costs and prices above the
buying power of less favored
groups, including those living on
relatively fixed incomes. When
organized labor,
which, constistitutes,- but . one-fourth t)f .the
working population, puts a price
on
its services which places its
product beyond the reach of pur¬
chasers it is pricing itself out of

heavily oppressive. The- total
wages
the • Federal budget for the

Day the prospect was bright be-: single peacetime year 1947 is far
yond all expectations. There was above the total cost of our parreason
to think that the auto¬ ticpation * in the' first world war; it
mobile industry and durable goods is far more than we spent in the
in general would be under strong ten years from 1921 to 1930 in¬
momentum by the turn of the year clusive; and it is more than our
and moving toward full produc¬ expenditures in five years of large
tion by spring. 'Meanwhile* how¬ spending from 1935 to; 1939 in-;
''
1
ever,
the conditions which have elusive.
led both to curtailment of pro¬
The Current, Situation
V
duction and to increases of costs
This brings us to the current
were
developing. Mistaken fears
situation. If you gentlemen were
of deflation and depression led
in Wall Street and had your noses
the government to support de¬
buried in- the stock. market you
mands for large wage increases
and other measures "to maintain might say at this point that it is
time to stop talking about infla¬
purchasing power."; Government
tion. The most spectacular de¬
memoranda
arguing that - large
wage
increases could
be. paid velopment in the economic situa¬

,

building

and

V-J. of

pro¬ without advancing prices strength¬
1940 * with/ ened union demands.
large unemployed resources, and,
The moment when these forces
with a wide margin for expansion
culminated was marked for his¬
of output. We had eight million
workers unemployed and our steel ? tory, I think,. in two sentences
uttered by Mr. C. E. Wilson, Pres¬
industry, to take only one* ex-!
ident of the General Electric Com¬
ample, was operating when Belguim was overrun at only 65%' pany, a man devoted as thousands
of its capacity. First we put the and millions of others are in this
country to the philosophy of try¬
unemployed
people
and
plant.
capacity to work. Second, we in-, ing to make goods better and at
lower costs. Just before Christ¬
creased
capacity not i only by'

duction

taxation

,

-

of public
were

three

of

,

the money remains. 77,:. ^7/;..;

During the

-

now

'

at

the bottom of the sea or dissolved
into the air, but the debt remains,
and

or

say

.

Victory, Loan drive in December,4
1945.

to

that
fumbled this opportunity. For/

two

The demands

over.

the banks for

on

pay

we

is needless

.

the market..

These

are

,

in ^ihe situation. It/ is not a
sufficient answer to them to say
the

industries

can

bear

the

.

in

making them effective
have provided a

would

basis for

period;

; /

the
.

reconversion

".

\

From the war's end until

,

near

the present time the inflationary
forces have hardly been checked.

Wages have risen, costs have risen,
and prices have risen, Moreover,
people have not pulled together
well enough to get the productive
organization
working
at
full
capacity and keep it going that
way. Employers pay the highest
wages -in history but worry less
about their wage scales than they
do about the willingness oI their
,

a,

—^

it generates,
during 1946.

v

»

has

increased

not

///'/"//'•

">:

mount

through-the,.use of purr
chasing power previously created
through the inflationary be¬
havior of people. A lot of us have
/

■

w!

:

and

1.

■

'

■;

_

x'_

.

1

_i

■

x

X

_

build

been trjdng, for example, to
more houses than we had
doors and

flooring for. The

,

than is available,
in so many lines; does not bring ]
out the goods'but it does push up
costs and create black markets.
sure

•,

strained. This
cause

of

for the past few years a student
of American affairs, Dr. L. Albert

to get more

— —

|^~ ~

w — W -W

—

TT"

—

-

—

■

—

"

"

1

|

,<■

Hahn says:

-

'-Even

avoided

where
the

price

economy

rises
will

are

prove

increasingly
vulnerable.
Wages
are under the permanent upward
pressure.

due to the enormous

consists of the exchange of goods
and services. The essential condi¬

mand/cheapens and alleviates pro¬
duction/and distribution.
It is a

,v'

pent-up de¬

mv-:
-/- '•

trades the distribution pipeare
unquestionably being
filled, and the volume of goods
becoming available to consumers
is increasing.
Second, our farms
fhis year, have yielded the blessjrig of abundant cereal crons, and
these' ample feed: supplies lay the
foundation for a coming increase

„
-

,

lines

-

/
,
.

output of livestock prod- ,
authorites think that ;
farm prices in ggneral are about T
tion of keeping trade going is that very high-strung system, in which; kt their peak.
. yr.yy''f-/.L-y
prices of goods and services shall the -price-cost, relationship
re¬ ;/. A: third fact is, that in some,
be fair and practicable, so that mains tolerable only so long as lines, high costs are having their
each group of the population can everything works full blast and at usualeffect" of cutting off de- •'
sell to and buy, from all .other high speed. As soon as the -slight¬ mand. They -have- caused the pargroups. It is a characteristic of in¬ est slackening.in deriiand will set jrig down- arid; postponement of a ^
flation that prices of all products in, many, enterprises wiB/have to good deal of - industrial expendi- .
and, incomes of all groups; of the shut down; because of., the losses ture, and they, have, driven-a good
population do not move up" to¬ they suffer.' Exactly as at the onset manyv customers out., of the hous-* gether, but unevenly. Those whose of every depression, the booni will ing" market; * v
incomes lag lose purchasing power? collapse through the losses that
-My fourth point is / that the >
for the products of those ^whose * the marginal enterprises begin to deadline in- stock prices- has inj
prices are pushed up most. This, undergo; only! that, this time not duced a/ certain amount of so-,
disparity weakens deipririd-'Tf'de-' fbb "decline of prices, but .the de¬ onety. Concern is expressed as tp^
tionships. AH business and trade

i

'

many

*

:

1

It* seems to me that we must be
approaching the peak of the in¬
Hahn. Discussing the distortions flationary phase of the- cycle,. To
of prices and wages which result
support the opinion several facts
from inflationary pressures, Dr. can be adduced. One is that in

;

which

I

drop caused by

government v debt.

of

moneyjsiipply, and. the ?
basic.' inflationary jpressure which;

•

The ensuing wage in¬
inflationary spiral may creases—where they do not lead
treat before a national, failure to,
be brought to an end is through to unemployment
are bearable
establish
policies
and
achieve the distortion of cost-price>rela>
only because the huge turnover
unity

retirerheht
Hence the/

wage increases, for the idea so
widely entertained a short time
ago that wages could be raised 15
in stock prices, which obviously to 25 % without raising prices has Labor at the same time uses its
carries the tag not of inflation, been
disproved
by the event. monopoly petition s to push up ;
but of deflation. >>.7>>71
There is still another side to the money wages, heedless of the ef¬
Before dwelling concretely on matter which is of special impor¬ fect, on costs. The beneficialre-;
the current situation, let me first tance to the regulated industries. suits which ought to follow from
try to tell you in general terms If iv wage rates are lifted to the halting
the
expansion
of the
what usually brings an inflation¬ most the producer can bear when money supply are lost in an at¬
ary spiral to its end. There may he is driving every facility at its mosphere of heedlessness and of
be two general causes. One is that fullest capacity,
what will the too many people trying to get
the expansion of bank credit
situation be when this condition something
at the
expense
of
m
and
the creation of purchasing changes?1. In
this connection I somebody els
like : to
power thereby — come to an end should
quote
a
dis¬
'M:
because credit resources become tinguished f European. i economist,
Approaching Inflation Peak

tion this Fall has been the break

was a contributing,
the 1 $20-21 depression.'
Then credit was employed exces¬
sively in carrying distended in¬
ventories and in financing com¬
its policy of maintaining prewar
modity - speculation
ov e r
the
price
levels.
We / regret ; that world.
Banking resources were
through this decision we join the strained to the point where the
forces of inflation."
/./;-\/77;7 Federal Reserve System had to
Let us take note of those words; adopt restrictive polices.. ;77>//7
as a curtain dropped on a glori¬
The second principal way in
ous opportunity, as a reluctant re¬
which an

stable

but the rise from this source has

been less,than the

J

the main uncertain¬

ties

that

-

in

the

ucts. ; Most

-

'SNTZ/S

{

2099
the unbalance of
the size of.

.

.

,

inventories

and

the possibilty of ab-j
sorbing : further, rcost
increases;
through higher physical volumeis past.> Fortunate are those for'
many

outstanding .forward

commitments for merchandise. In

good many quarters re-exam.ination of buying
policy is taking
place.
' ,'i
.a

It is fortunate that

-

y

inflated

.our

has

people

started ask¬

a time
still powerful sup-

are

-porting elements beneath the bus¬
iness structure. These supporting
-elements
-mands
-

are

for

the

.

unsatisfied

goods

both

at

de-

not

yet

caught

The

up

419

-with the current rate of
scrapping.
The whole world wants American
-goods and most of our important
customers

can

for

pay

Class

Oct.

I

railroads

had

1,

How Fat Can

Federal Expenditures Be Trimmed?

(Continued from page 2072)
boiu, uUk) pcrnaps a trank state¬
ment in

view of

erating all of the civil services in
1930

the

approaching
Congressional
elections.
Rep.
Harold Knutson,
ranking Repub¬
lican member of the
House Ways
and

Means

20%

all-round tax

Committee,

urges

a

on

of

Senator; Harry

ginia,
the
spreading the

As

a

govern¬

reforms,

mates.

and

them.

weakening of demand. It

can stand
fall in black market prices and
others that have been inflated be-

on

in

on' order

which

Oct.

on

included

electric

If

-and

1

65

steam,

Diesel

484

six

locomo¬

cluded 129 steam and 406 Diesel.
New freight cars installed
in

^they

will
gain. through more
orderly operations, fewer bottle¬

service

in

the

first

nine

months

.

12,003
1

freight Cars put in service in the

-from

inflationary conditons have
stopped at precisely the right
fcoint where- excesses are cor¬

first nine months

not

many believe,

that

power of

it

tives

^situation.

service
this

in

first nine

of

which 77
Diesel.

year,

New locomotives

period last

same

locomo¬

new

the

steam, and 306

were

were

installed in the
year,

totaled 457,

Diesel.

were

let

in

economies

can

of

Expenditure

best

be

Future

a

billions.

Federal

slightly

This

under

compares

with

of about

ing

from

the

minimum

just prior
$9 billions. As

War,

estimate,

will,
add

at

government, like a busi¬
concern, has fixed expenses
and variable expenses. The
fixed

outlay

of

of

$25

Federal

a

billions

increases

wage

refrigerator

and

.continued low output-per worker.
The missing
element necessary

"for

a

lopg prosperity is the insuf¬

railroad-owned
lines. Locomo¬

by

car;

tives

and

order

by private

lines

or

installed

cars

railroads

industrial

on

or

lines, short-

car

are

i not included.

ficient emphasis on 'production
lancl |he ; in sufficient i concern for |
^the general long-run welfare, as
.opposed
to
what
people think
they can get out of the situation
lat the moment.
..power as a

flation,

people to halt

correct

minimize

It is within

our

our

our

in¬

our

excesses' arid

deflation

by

dis¬

cipline and cooperation,
No

Disasterous

Inflation

-

Sept. Freight Traffic
IJ % Under a Year Ago
The

of

volume

freight traffic

population, it

past

element

may

be the

immediate

years

:

Added to all this, is the higher

the

purchasing
lar, which was

annual

is

after

veteran

prices affect governments as well
as the public. The
depreciation of

at a
least

tory

indeed

highly conservative and, from

trend

the

cost of running
governments ancl
business. Higher wages and
higher

$10 billions to the annual budget,
estimate

of

come.

r

expenditures

war

the

expected in the

the additional fixed charges aris¬

The

may

matter

power

of the dol¬

short and transi¬

a

after

World

War

be assumed to become

a

I,

per¬

manent

a

condition, unless some un¬
realistic view, entirely over-op¬
expected boost in national pro¬
mainly the result of timistic?
And, when it; is con* ductivity comes about. "
commitments, which cannot sidered that even
during the war
be altered,
except through repudi¬
period the Federal government, }
Conclusion
ation or impairment of
contracts. aside from
projected public works,
Thus, if future peacetime budg¬
War, itself, is the pause of much has
been assuming larger func¬ ets are to be in
of this fixed future
balance, there ap¬
outlay. The tions, all entailing
increasing out¬ pears to be little hope'for sub¬
service and amortization of the
lays of a current as well as' a stantial tax reductions. The Fed¬
National Debt, pensions to veter¬
special nature, to add $5 billions eral Government alone will con¬
ans
and others,
the care of .the or even
expenses are

firm

ill

and

wounded

victims

of

the

fixed

are

all

in the nature of

charges, the burden
on

of which

future

$10 billions to the $25 bil¬
will bring the
budget near to .the point where
it is hardly covered by tax re¬
lions

together with the vast ma¬
chinery for administering these

war,

falls

railroads and

strength

to

maximum

a

to the

ness

was

and, in view of the political

and

$26

immediately ahead. And, as A1
Smith used to
say, "Let us Look
at
the Record."
How far can
Federal costs be trimmed? -

This

in the

untary

or

reduceable

at

will.

These costs will, of
course, depend
future international * relation¬

on

ships, and, judging by the present
outlook as well as
by past ex¬
perience, the outlays may be ex¬
pected to be maintained on a large

scale,—certainly,

;

much

higher

than in the prewar
period.

When

these defense outlays and the ab¬

solutely fixed costs

are taken

into

consideration—they constitute by

tinue

minimum,

to

pockets

extract

a

from

fourth

World

War

find
to

it

difficult

trim

to

:

The

a

impractical

the*

ef¬

or

Federal

ex¬

-v-.";''-

of

taxpayers

"

lies

the

•in

Now, let's look
pened
was

hope

and

substantial

any

degree
penditures.

After*

I

the. public
third of

a

earnings.
And any new
economy-minded ; Congress ' will,

fective

Bridget Reductions

to

private

ceipts, under conditions of. high
employment and prosperity.:

,

'tnresh round of

to

wars,

casted
Federal
expenditures
in
1949 at "a 'minimum of $18 billion

:

are

Organi¬

determination

outlays will continue to be large,

$15 to $40 billions.
study of the Brookings In¬
stitution publised in
1945
fore¬

us

taxpayers, extend¬
I
The figures given above in¬
per man-hour to increase produc¬ /
ing throughout ? several genera¬
clude only locomotives and comtion and reduce costs.
tions. Then, there are the ex¬
We need
inercial
service freight cars in¬
penses
jstabilty and industrial peace, Con¬
relating to national de¬
stalled arid riri order ; by Class I fense
which are not
versely, the gravest dangers that
entirely vol¬

threaten us
I strikes and

commitments

our

our

army and navy is essential. Thus,
it may be expected that defense

from

range

Thus,

examine the situa¬
tion which will confront
the Na¬
tional Government in
the years

functions

of which €2" were steam and: 395

people to improve the
We need higher output

and

-

totaled

.

in

'months

the encouraging
is within the

1945

They also put 383

,

-But if the heart of the
danger is
1ri labor costs arid prodttctivtyy as
so

of

30,590.

rected without any particular un¬
employment, losses or distress.

-aspect is

automobile box, and 11,346
box
freight
cars.
New

plain

recessions

course

it is

Estimate

an

necks and less waste.
The situa- of 1946 totaled 30,625, which irition will be easier for those who {cl uded 12,214 hopper < including
have to go ahead now and others '2,932
covered
hoppers),
4,259
may reasonably hope for better gondolas, G84 refrigerator, 119 flat,

-

Historically of

But

this: year,

tives. This compared with 535 on
the same date last year, which in¬

^people will take their turn and
rfiot • ask the economic organization for more than it can
produce,

:;

and, in view of

under the United Nations

zation

Departments, .maintain peace in all quarters of
these categories that the globe, a
large, and efficient

the

and

To the extent .that demand ex¬
ceeds possible supply an abate-

-work at lower costs by
waiting.

continue to keep large armies of
occupation in Germany and Japan,

It is estimated that

applied.

bile, 8,343 refrigerator, 200 stock quently were so bountiful in the
400
miscellaneous
freight use of the peoples' money, shot
:
cars. New freight cars on order at in their first
Presidential cam¬
"yond reason. It can stand the kind Sept.
1, last totaled 50,169 and on paign 14 years ago.
rof recession that might lead to Oct.
1,11945 amounted to 38,315.
"better quality goods and services.;
The Budget Situation
They also had "555 locomotives

helps rather than* hurts.

ha3

The

Judicial

proposed

trimming of budget esti¬
And we are
hearing more

States

abandoned.

though, of course, much below the
forthcoming elections re¬ ;i ;
';;;;;Vv::Budgets '.,';■!,!
.level of the war years. To this
Oct. 22. This included 15,450 hop¬ garding
Federal
extravagance,
A number
of
estimates
were
vast outlay we
wastefulness and
per (including 2,154 covered
may
expect in¬
inefficiency. It made
hop-j
during the war period of the creased liberalized veterans' aids
pers), 5,807 gondolas, 1,199 flat,; is a target which even the first
extent of postwar budgets.
and
New
They
Deal
expanded pension payments.
21,490 plain box, 8,530 automo¬
Democrats, who subse¬

a

vment

and

United

notwithstanding
the
terrifying
implications of the atomic bomb,
exceedingly bellicose. We must

$41'billions of Federal outlays
1946, not more than $2 billions
comprise civil service of Execu¬
tive

the

is

in

calling for admin¬

istrative

smaller.

of

definitely

present day international temper,

of

Byrd of Vir¬
official
missionary
of

policy
been

the

even

F.

gospel

'

$540,804,378, out of
$3,994,152,487, or

national budget of ex¬
penditures stands today, the per¬
centage of civil service, costs is

reduction, and

ment economy and. fiscal
has been again

but

was

grand total of

only approximately 14%."

this, he says, can be obtained
by
cutting
down
Federal
outlays.

61,-

freight cars on order
1946, the Association

new

American Railroads announced

With these elements of
strength
the
situation
can"
stand
some
:

Some

are

Freight Oars m Order
Again Up In September

home

tial building can be projected far
into the future. Automobile
prohas

"hard

.

should be to prove them wrong.

and abroad. The need for residen¬

"duction

that

amending this to read
"Qrily
hard
times
make
hard
work," and predicting depression
accordingly. The objective of all

spread,

ing questions about it, at
•-when there

:

times makes hard work.""

awareness of

position

$ and that people have

,

whom it is not past.
There is a maxim

•

:

cases

expansion of the na¬
at what hap¬
after World War I. This tional income; in greater economic
period in which the avowed productivity and in a reformed
•fiscal system, rather than in re¬
duction of immediate government
outlays.
A reformed and more

purpose
of
the
Administration
that succeeded the Wilson regime
was one of economy. In
fact, the

trimming of Federal outlays be¬ equitable tax system, if properly
elections, and gov¬ devised and executed can lower
taxes and at the same time in¬
ernment
bureau
after
bureau,
which had run wild with* public crease Federal revenues and this
•is
the one positive way
funds, through waste and expan¬
open at
sion, as at present, had' their ap¬ •the present time to relieve the
propriations cut down. Moreover, heavy burden of taxation which
following the Disarmament Con¬ is depressing the nation. Unless
gan before the

by Class I railroads in fa? the bulk of the Federal bud¬
ference in 1921; the War arid Navy 4his is done and the trend of the
the first nine months of 1946; get—it will be clearly seen that;
Departments' budgets .were cut last century is reversed, and gov¬
measured in ton-miles of revenue the margin for trimming is rela¬
to the bone. Thus, the War De¬ ernmental functions are cut down
freight, was approximately 19.4% tively- narrow and seemingly in¬
partments' outlay declined from a instead of being constantly en¬
-v
under 1945 and about 22.5% less significant.
* '
peak, of $9 billions in 1919 to larged, higher and higher scales
than in the corresponding period
Regarding this point, IP. W. Wil$451,800,000 in 1922. This com¬ of Federal taxation are to be ex¬
in
1944, according to a prelim¬ loughby, a recognized expert in
pared with a peace expenditure pected. Certainly, the rosy pre¬
inary estimate based on reports government finance, in his
book, in 1917 of $377,400,000, barely dictions made during the war that
received from the railroads by the "Financial Condition and
Opera¬ one-quarter less. The
Navy De¬ we will have a national govern¬
Association; of
American Rail¬ tions of the National Government,
partment, which spent $2 billions ment budget of between $15 and
1921-1930" remarks; (p.
roads. Freight traffic in the first
134)\ in 1919, expended less than a half $18 billions (as stated by the Com¬
nine months of 1946 totaled ap¬ V "One frequently sees the posi¬ billion in 1922. As to other ex¬ mittee on Postwar Tax Policy)
tion taken that the
great cost of penditures, the changes compared seems visionary. Even under the
proximately 431,300,000,000 tonhandled

.

-

I

neither necessity for nor

see

likelihood of extensive disastrous
deflation. One of the salient facts
in pur,

,

position is that our money j
is unlikely to contract

"supply
"much

within a forseeable time.
This is because it is based
mainly
on
government debt and to that
extent can be contracted
only by
retiring government debt,whch

few expect.
Jtends

This fact aloriri porsubstantially higher price

a

level in the postwar* period than
before the war.
The monopoly

ppsition

of

labor

direction.

same

points

in

the

We need not feel

'level,
-ahead

on

which

safely.

word which

practical
sume

purposes

we

relatively' high

but
must

costs

-price levels for about as long
;is possible to look ahead.
.v

.a

creased

funds in order to permit
to expand their
activities;
that if these services were

and,
put

upon

a

more

efficient, and

of

1.1%

ton-miles,

a-

economical basis, the. cost of
gov¬
ernment could be

with

compared

and; the

est

debt, the highest
outlay was slightly over
$1 billion in 1920, this declined to
$991 million in 1922. As

around

J

expenditures
it is practicable .to do so.;

The squeeze of costs
against prices
-Will become no

in

56%

greater

than

September,

1939-5j'J'-/■C;%; *

it

■

was

The

^

real

important

fallowing table summarizes total

revenueton-miles

statistics! for

the first nine months, of 11946 and
1945

any

(000 omitted):
.,.

"1946.

.-

let-7 inos._r 324,285.888
Mo. of Aug.-. *55,000,000.
Mo. of Sep. ;t52,000,000
Tot. 9 mos.

-

/,

'.1945

.

-

425,374,735

V*
.

Dec.-

23.8%

56,800,000

3^2

52,600,000

1.1,,

431,300,000 534,800,000; 19.4%

"Revised estimate.
'tPreliminary estimate.

I

reduction

of government

in

as

billions

or

one-third

of

-slightly
the

amount

debt.
Can

would

make

•

,

of

the

It

Defense
be

can

readily

Reduced?

seen

from the

costs

reduction

for

the

than

government

proper, or the items having to do
with .the. War. and. Navy Depart¬
ments
naval

total

with

their

military

establishments.
cost of

Thus

maintaining and

ment

after

chiefly
of

in

from

defense

the

cost

World

of

War

drastic

govern¬

I

came

curtailment

outlays. It is doubtful
and whether the same policy can be
the renewed under present interna¬
tional

blocked

ac¬

procedure
No.

95.

of

*"This

action

.

was

Gen¬

The

Treas¬
•'

taken

:

;

after

exchange

an

the

of letters between
Charge d'Affaires a.i., of the

Greek

Embassy acting on behalf
Ministry of Finance
and Secretary Snyder similar tc
those written in connection witlf
Greek

.the

defrosting of the countries
previously named in the license.
Copies of the letter are available
at

the

New

Federal Reserve

York,-:

Francisco.

Chicago

Banks of

and
-

San
;

"The Greek Government has
designated the Bank of Greece as
conditions. The isolationist its certifying agent."
.

op¬

License

of the

be

costs—meaning
operating

eral

'

Costs

whose

ury's anouncement added:

the
public

'

above comparison that along with
the Calvin Coolidge economy, the

.

^certification

represented- by

burden

v..

countries

counts may be released under the

pre¬

possible real. relief must
take place in the non-government
other

•of

figure,, and not greatly abov.e

increased

;

Greece has been added to the'list

result

the

expenditures;

that iSj a reduction such

$3-

than

more

however,

of/, these ; several
services
conducted upon an economical and
efficient basis. At the same
time,
it should be recognized that

a

still doubtful.

Secretary of • the Treasury
Snyder announced on Oct 15 that

annual

of these reductions the total gov¬
ernment ; outlay
in
1922
was

is

Greek Funds Released

the public

on

severely burdensome tax
a
balanced budget in,

structure,

the years ahead

000 or-about 12%. As to the inter¬

the volume carried in

•




in¬

for

as

since

125,-

was

for

as¬

It is sound sense to

easier,

the decrease

52,000,000,000

saving and rbtire-

postpone -capital
"where

years ago,

government

The

outlay for
such purposes increased roughly
from $1V3 billions to $1,477,100,-

war

We should not,
through current
business polices, contribute to in¬
flation.
Emphasis should be on

-

two

the

substantial.

the

*•

"economy and
rnent of debt.

.with

of

present

with the prewar year of 1917 were

not

railroads in September this year,' work

and

-

Compared

ices

greatly lessened
taxpayers' burden corre¬
spondingly
reduced.
It
is
of
September, 1945. The amount of course
highly desirable that every
traffic handled by
the. Class. I effort should be made to have the

sensible economic

will ruse,

period

same

government is due to the insati¬
able demand of the several serv¬

them

decrease

go

is

last i year.

about

new

will

Permanent

no

-commentator.

business

a

ton-miles in the

September traffic amounteds to

we
must retrace our steps
to the.prices of 1939.
Rather the
problem is to bring about a bal¬

of prices and costs on

000

535,800,000,^

000,000,000 ton-mules.

"that

ance

miles compared with

r

high employment and a high level
of production in this country.
If

Outlook for Business and the Securities Markets
much

as

the

trend

higher

page 2070)
implications of
towards
substantially

levels

over

period

a

had

become

of

aware

the

fact

that the physical volume of
consumption at retail had not in¬
since

creased

March

that

and

surely be intensified
competition, particularly in soft
goods and consumers' services, a
buyer's market in many items and
lower wholesale and retail prices

that the next major

of

out

this over-all manner we

sult /.will

of

time.
We

prewar; level.
If -we; View)
long-range / business outlook

are

we

ourselves

the

as

certainly pricing
a
part of the
market for these goods.
The re¬
when

(Continued from
us

The

probably
had
declined.
The
change from a rapidly increasing
trend to a declining or stationary
trend of physical volume of con¬
sumption suggested to us that the
basic economic position was be¬
coming less favorable. The rapid
increases in retail prices and the

in

at
the

in

a

high level of busi¬

a very

shortages of labor and ma¬
terials and many other develop¬
ments that come to mind are typi¬
cal of such a period.
ness,

and
wider

of consumers' goods, in¬
cluding consumers' durable goods.
This unusual feature arises from
he slowness of reconversion of
he consumers' durable goods in¬

range

The fourth and final considera¬

not wait
industries to reconvert
spending its money in lav¬
The public did

dustries.

lor these

tion of importance has to do

before

profit

about

our) concern

the

These

current

version

developments

reconversion

goods is near completion, consum¬
character because of more basic ers have lifted their spending to a
-light level and retail price in¬
and longer-range economic trends.
These can be discussed under four creases are taking the edge off
prospective markets.
important headings.
might

assume

5 more

a

with

margins.
I expect that
when we get all through with our

Now when recon¬
consumers'
durable

fashion.
in

ish

longer-range outlook.

profit

to

margins

a

Since the

Are

ended the Ameri¬

war

second

The

-

1

:• ja.

mi. •

:

_

Ll i

-

...

civilian

econ¬

normal in

pre¬

days even though the volume
business and the price level

war

of

will be higher than prewar.

We

are

High

basic

rt VI

—.

accumulated
savings,
high level of current in¬
prompted
this
wave
of

increase

because

of

in

moderate fur¬

a

national

income

counted

A

further increase

a

in

production: and

increased wage
industries. No doubt

at

a

will

step

in

Great

a

Deal1

stocks already
seem
to be selling at prices not
much
above
long-term
values,
while
others
are
selling much
above long-term values.
One of
the jobs that we have is to ap¬
praise an individual stock from
great

many

some

stabilize and remain

high plateau for two or three

years.
This sort of development
seldom occurs in a free economy.

us

justments
may well
ber that
the

the

total

of

put

Activity at Present Is Close to
Capacity

will not increase greatly from the

present level it is obvious that the
market will be unable to take all
the goods and services now

bought and at the
sorb

the

are

will

now

same

tremendous

consumers'

durable

being

time ab¬

amount

of

which
being manufactured and
goods

shortly become available.

The implications of this devel¬

opment in

portant.
to

shift

siderable

our

The

economy

consumer

his

are

im¬

will have
to a con¬

spending
degree from soft goods

and services to consumers' durable

goods such as washing machines,
refrigerators,
electrical
appli¬
ances,

and

furniture

automobiles.

and

furnishings

This

spending is coming at
prices at retail are

There
we

shift

in

time when
rising and

a




,

are,

can

be little

doubt that

at the present time run-

ning our economy at a level pretty close to capacity.
Taking our
history for many years in the past
we
know that year in and year
our

close

to

but

whole, but
for in¬

dividual issues.

situation.

Many companies have

enjoyed a sharp increase in sales
and their profits have sky-rocket¬
ed.
Other companies have had

There

any

are

situation

the

certain

that

it

a

stable

Since

employment.

and

that

and

to

present level

substantially higher than the

directly
ber

as

bank

90%

the basis of non-mem¬
deposits. Federal Re¬
accounts for about

currency

serve

of

currency in circula¬
outstanding Federal Re¬

all

tion, and
serve

credit comprises about one-

half of the
for the total

effective reserve base
of the country's bank

deposits and currency
banks.,
. <

outside of;

4

Changes in outstanding*FederaI
credit exert a powerful
influence on banking and mone¬

Reserve

tary conditions. Increases in such
credit under present conditions,
not absorbed

by increases in the

public's holding of currency, add
to
bank reserves and permit a

many-fold expansion in bank de¬
posits. Decreases in Federal Re¬
be pre¬
serve credit, not accompanied by
served. It also sought to devise
reduced currency in the hands of
central banking facilities that
the public, reduce bank reserves
would be responsive to the vary- and may function to impose a
ing banking conditions in different
many-fold contraction in bank de¬
parts of the country and still
posits. Furthermore, such changes
make possible a uniform and har¬
in Federal Reserve credit affect
monious banking policy for the
not only the reserves and deposits
country as a whole. It further con¬
of member banks, but also those
ceived of a central banking sys
of non-member banks, which in¬
tern that would serve as a pro¬
clude most of your own institu¬
vider
of elastic currency and

which that structure could

in
soften

that

and

We have a large

for

the System

experience had been
he distribution of authority over
acquired in connec¬ credit
policies. Through all of the
tion with problems of financing
changes, however, runs a very
war.
Today the Reserve' System
genuine consistency with the origis fortunate in having a large res¬
nal broad purposes of Congress
ervoir of experience for shaping
in creating the System. More im- |i
policies that will influence the fu¬
portant, the basic organization of
ture course of banking. Not only
the System remains unaltered, it is the System able to draw on its
continues to be a "grass roots"
experience in helping to finance
central banking mechanism. And
two World Wars, but in addition
its policies continue to be shaped
it • has available the broad and
by the interaction of regional and
varied
peacetime experience of national influences which its
the Twenties and Thirties and the
fundamental structure makes pos¬
strengthened powers which the sible.
Congress has seen fit to grant it
Today the Federal Reserve Sys¬
from time to time. This war-time
tem has some 6,900 members, in¬
period, however, like the last one,
has brought significant changes in cluding more than 5,000 national ;•
banks
and
nearly
1,900
State
the country's banking and eco¬
banks. These member banks hold •
nomic conditions. These changed
about 80% of the $160 billions of
conditions give rise to a degree
of uncertainty as to how the Sys¬ deposits of all banks in the coun¬
reserve bal*
tem can and will function in the try. Member bank
ances
with Reserve Banks total
period ahead, considering the aims
about $16 billions and these bal- :
and principles underlying its leg¬
ances serve not only as the basis
islative authority.
of member bank deposits but in-)

may occur in |
commodity prices.)
potential demand
consumers' durable goods and

decline

business

inception of

he Congress has seen fit on sevoccasions to modify various

eral

principally

elements

should

and

vital details of the original struct&
Then, at the end of ture in order to make it i
more)
the Federal Reserve
adaptable to the country's chang¬
policies adopted had far-reaching
ing financial requirements. On the
importance for the future devel¬
whole, the changes have worked!
opment of banking. At that time,
o
strengthen the structure, to
the Federal Reserve System had
clarify functions, and to delineate
only six years' experience behind
more sharply within the System

housing.
We have a large poten¬
tial demand for some types of

capacity.

much below the

a

World War I,

economy

business in the future is likely
be

as

markets

transition.

does not run construction including public
The
government
will
Whether it works.
runs year in and year out at 70%
spend large sums for our military
establishment and for other pur¬
or 80% of capacity is really im¬
material.
The point is that our poses which should exert a sup¬
economy operates at capacity for porting influence in our economy.
Therefore, we may not run into a
relatively short periods of time
The war increased our capacity serious depression but rather a
to
produce
by
a
very
large temporary wash-out or recession
amount.
No one can say how lasting from a year to eighteen
much capacity has been added but months. We may have a high level
it may fall within say, 30 to 40%. of consumers' spending with in¬
If we are now running close to creasing competition, lower prices
and relatively rigid costs, result¬
capacity the average level
of
ing in poor profits.
out

the

with

(Continued from page 2080)
to

Two and one-half decades ago,
the banking system was in similar

Business Outlook

spending

consumer

are

peacetime | their operations and coordinated '
equipped to realize its in their credit policies by the
fullest potential in terms of out¬ Board of Governors.

ups

rising tide# of consumers' durable
goods coming on the market dur¬
ing the next few months.
Since

must remem- 1
not dealing with' •

come we

we

stock market

rather

%

further read- )
stock market

While
inthe

pause.;

economy

Our economy

the sharply rising prices at whole¬
sale and retail.
The other is the

suffered as much as

they do normally in a serious bear
market.
That alone should give

is characterized by poor profits during the first two
and downs and some times or three quarters of 1946 because
and some people will use accumu¬ the
fluctuations are extremely of the effect of substantial cut¬ What Is Basic Conception of the
lated savings as a means of in¬ rapid.
At present we seem to be backs of armament orders, rising
Federal
Reserve System?
headed
toward the end of a sharp¬ wage rates' and price ceilings. The
creasing their spending.
Yet it
At the time of the founding of
doesn't seem reasonable to antici¬ ly rising trend in capital expendi¬ companies
that
enjoyed
large
the first Morris Plan back in 1910,
pate a substantial increase in the tures by industry and it seems earnings may show a substantial
the National Monetary Commis¬
rate of consumer spending through only
reasonable to ^assume that decline in earnings during the
the remainder of the boom.
I this
will be followed ■) in
due coming year in view of the out¬ sion of the Congress was engaged
look for business, while the com¬ in comprehensive studies of the
The consumer has been spendcourse by a sharp reversal. Such
banking structure to point the
ing lavishly in the face of rising a sharp reversal cannot be many panies in heavy industry that
have shown poor earnings may way to a stronger, more effective
prices
of retail for; goods land months off.
some
improvement.
This coordinated and flexible banking
services that have been available.
If increased competition should show
system. When the Congress be¬
He
has
spent for
soft
goods, result in a lower rate of profits improvement in profits of heavy
came
convinced that major de¬
movies, liquor, {ravel and other in many consumer goods indus¬ industry which is now underway
fects in the country's banking or¬
items that he could obtain.
Much
tries,
the
current
extremely may only last a few months be¬
fore a decline in business causes ganization might be substantially
of the merchandise and services
high rates of capital expenditures
remedied by the addition of cen¬
have been of an inferior quality may also be reversed.
In that a reversal. Such a situation does
not
provide a background for tral banking facilities, it under¬
at high prices.
Two current de¬ case, it is quite to be expected
took to design a system suited to
velopments will effect the con¬ that these expenditures will be much higher stock prices.
the existing dual and independent
tinuation of this spending spree.
curtailed considerably in 1947 and
Some Constructive Elements in
banking structure and under
One has already been mentioned,
1948,
rates in

Instalment loans will also increase

)

proportions.
These
poor
earnings have had a sobering ef¬
fect in the market.
Many stocks

The Federal Reserve System
Credit Control

,

ditures

attempt to

Many Stocks Have Already Dis¬

large

There will be

unemployment

viate the situation.

—

and the

ther

in

will

and take various measures to alle¬

torical basis or in relation to the of making estimates may prove
output of consumers' goods may be fallacious.
of less concern, perhaps, than the
come
Outlook for Stock Prices Only
spending. At the present time, the oresent trend of orders or con¬
Mediocre
tracts and the present trend of
consumer is spending at a rate in
This in general is the back¬
line with his current income. Any capital expenditures.
Orders or
further
substantial
increase i in contracts, and expenditures have ground that I would use in judg¬
spending can only come about been increasing lately at a rate ing the trend of the stock market.
through a further considerable in- , which cannot be sustained.
It In the last analysis the. trend of
would be comforting to believe the stock market will depend up ¬
crease in national income, through
borrowing on instalment or that the sharply rising trend of on the outlook for profits and
Since, the ending of
through the use of accumulated the last few months will continue dividends.
the war we have had a unique
and that after that capital expen¬
savings.

the

increase

an

will result in
no
greater than sential

considered

those

Capital Expenditures by Industry

Spending Spree by Consumers

like

decline in business and

competition

omy

* serious

going through a; major read¬
justment t>f our economy in terms
of productive capacity, the price
point
that
can public has beem engaged in a
should be considered is the high level and the cost of doing busi¬
spending spree unequalled in his¬
After these readjustments
level of capital expenditures by ness.
tory.
From last Fall until this
Fall the public increased its cur¬ industry for plant equipment. All we expect that competition will
rent rate of spending as much as you have to do is to take a look equalize the return on capital in¬
vested or on volume of business
normally would take place in an at the orders for machinery and
entire business cycle lasting sev- ' equipment or the contracts let for to a level not greatly different
i
' Iv.
v-I
ril ' /»AV»
industrial
and
commercial
con¬
than
that prevailing before the
eral years.
This spending spree
Many earnings estimates al¬
was
made possible only because struction. Capital expenditures by war.
are
running at about low a very high volume of busi¬
of a reduction in the rate of con- industry
sumers' savings out of current in- j three times prewar.
Prices are ness in combination with very
high profit margins.
The high
up, but even allowing for price
come to normal or less than nor¬
mal from the extremely high rate increases it is seldom that such level of business easily can lead
of the war years.
The relief that a - high level of capital expendi¬ to the assumption that profit mar¬
the war'was over, the need for tures continues for any length of gins will also be much higher
time.
The high level on a his¬ than before the war. This method
many types of goods and services,
:

ernment

a

Will Reduce Profit
Margins in Many Industries

prospect of further price increases
creased

there is little doubt that the gov¬

have

Competition

this Fall and next year

further in¬

dented to have a number of com-

have already

that we are

present experiencing many of
normal
developments
that
a
boom.
Rising

been prices,

soft? goods
than

rather

services

conclude

characterize

has

boom

present

concentrated

in

tivity will be downward.

consumers' goods.

for many

it

the

It is unprece¬

point of view.

this

panies reporting deficits or poor
earnings during a period of in¬
tense business activity of boom¬

we

change of ac¬

We must remember

Thursday, October 24, 1946 '

CHRONICLE

THE COMMERCIAL & FINANCIAL

2100

source

of emergency funds to meet

seasonal
ments

and

temporary

of member

require¬

banks. Finally

tions.

1

setting .up the Federal Re¬
serve
System to function as the
nation's central banking mechan¬
In

projected centra
banking facilities which would be ism, the Congress was not un¬
aware
of the strategic banking
adaptable to varying levels of
business
activity, to secular and monetary powers and respon¬
sibilities it was vesting
in the
growth in production and trade
and to changes in the structure of System; nor of the likelihood that
the economy. The result was the these powers and responsibilities;
Federal Reserve System, with its would assume increasing impor¬
twelve
regional Reserve Banks, tance with the passage of time.
In addition to investigating fully
Wash¬ each with original capital sub¬
scribed by members, these Re- the country's needs for central
the

Congress

Any administration in
ington is more or less committed
to

a

policy of maintaing relatively serve

Banks to be supervised in

banking

facilities,

the

National

L

■Y

•v

tVolume 164
.;; Monetary

Number 4536;

i'"'.

'

^

'Vy'"

of

Commission,;, for
Congress,

>

,

•

.

it would function
continuously in
the national public
interest with¬
out regard to immediate or

run

fected the so-called availability of
bank credit.
v, ■?/.
-".
•

longThey also influenced

profits.

discretionary

Just its

to

powers

ad-

credit

operations, within
Jimits prescribed by statute, ac¬

/

cording ;to

'With

■:=

should

view

a

commerce

to

and

Later,

language,

such

"the maintenance of
sound

as

credit

conditions"

and

"the

ac¬

commodation of

situation

' preventing

"preventing the

credit"

for

of

the

"injurious

contraction,"
excessive

speculative

use

pur¬

poses.

Originally, 'the Reserve System

provided with two major insstruments of credit policy.
The
first

was

terest

or

which

to determine

power

discount

individual

rates

on

member

in-

loans

banks

may^ obtain from Reserve Banks
toy direct advances or by discount¬
ing

paper to finance payments for
agricultural or industrial
prod¬

7

ucts. The second major
instrument
was the power to
supply banks
with reserve funds or to
withdraw
such funds by the purchase or
sale
of government obligations. It was

•

,

anticipated that Reserve credit in¬
fluenced by these methods would
the broad purposes of the
System and that such credit ex¬
meet

*

tensions,; under the discretionary
powers governing them, could be

,
,

geared to the temporary and
long¬
needs of production and
trade, without risk of inflation. It

er-term

was

of

the conception of the framers

the

System

that

the

discount

ffate

was to be the
principal
fitrument of credit control.

Under

the

circumstances

inpre¬

vailing during the first years of
the System's
existence, this con¬
ception was realized, not fully but
.; an considerable part.

While there
little need for Reserve System
credit prior to World War
I, the

,

erations

of

the

Banks and to

discount

as

general

several

assure

was

requirements of

war

rate

credit

Reserve

their admin¬

finance that

ensued

quickly after declaration of
made necessary extensive loans
to member banks. These
war

operations
resulted in part from the increase
in
Federal Reserve
currency to
meet the needs of
expanded busi-

same

objectives

policy,

"the maintenance

namely,

of sound credit

an

market

operations
were
em~
twin instruments of

as

ordinated

Was

r

the

In order to bring about
coordination of open-market op¬

central banking

Control

•

in

ease

situation.

ployed

Early Experience in Credit

v

due

conditions," the System organized
Open Market Investment Com¬
mittee early in the 20s. From this
point on, discount rate and open-

of

?

other mone¬
tary developments, to induce un¬

general

credit expansion and
sand

>:

to

open-market

istration with the

credit

with

instrument for influenc¬

an

the demand

ing

'

for

a

2101

Its

purposes

especial-] ables'during the

wide

fluctuations, by cutting
j
borrowing power of persons
seeking credit for the pur-1
pose of purchasing or carrying se- j
curities.
Y.'y 'y.;
down the

.

first,

were,

particular strain demand for

type of credit, subject to
ly

" 'V

/'.vACvV'- VMI

to

re¬

dur¬

consumer

emergency

pe¬

riod and thus to reduce inflationpressures
on
available
supplies of these goods; and sec¬
ond, to restrict the overall growth,

ary

of

credit

consumer

and

of

con¬

Subsequent to the adoption of sumer buying power during this
these changes in instruments for period and thereby to moderate
influencing bank credit and mone¬ inflationary pressures in general.
The major focus of credit policy
tary conditions, Reserve System
credit policies were generally in after the nation's entry into war
ministering credit policy during the nature of
adjustments to the necessarily became assurance that
the late 20s made it clear that
prevailing easy credit conditions an amply supply of funds would
speculative credit expansion could
that resulted from international be available at all times for fi¬
not
be held down
by discount financial influences.
During the nancing the war effort and that
rates and open-market operations
revival of the mid-Thirties, re¬ conditions in the government se¬
without putting, the entire credit
curities
serve requirements were increased
market would
continue
structure of the economy under
to prevent the
large volume of satisfactory from the standpoint
severe and excessive strain.
of
the
excess reserves from
government's requirements/
becoming the
basis for an injurious credit ex¬ Initially, this involved downward
Reconstruction of Credit Control
adjustments
in discount rates to
pansion and to place the System
?
" in the
-

commenced

commerce, indus¬
try, and agriculture," the
bearing
of System operations
"upon the

country,"

Z

the

"accommodating tended, together with
business."

strengthening, the ' System's
powers, the Congress expressed
its aims in similar broad

,v

of

government, securities market and

in
-

experience

cer¬

that

be

the

exercised

current

Ebanking and monetary conditions.
powers

After

World War I period, the Reserve
Banks
on
their
own
initiative
function through
operations.-.These
first experimental operations had
disorganizing effects upon
the

the needs of

?:J;';**The Congress indicated
tain

.

Developments During the 20s

the decision to provide the
System
"With

•■'V:'- v'/-

•

THE COMMERCIAL & FINANCIAL CHRONICLE'

the than through paper originating in1 serve Banks to /liquidate their
carefully direct customer relations. Experi¬ stock market loans,*1 This policy
studied the credit
operations of ence with this method of discount was quickly frustrated when loans
jthen existing central banks of rate
operation, moreover demon- ( to; the stock market by lenders
other
countries, and clearly set strated that changes in discount other than banks
expanded in
forth the nature of
central bank- and
money
market rates were 1929 at an extremely rapid rate.
functions in terms of their
history promptly and ■ directly reflected Discount rates were then raised
UP to that moment.
: \
| in the cost of credit to bank bor¬ sharply as a
warning to the strong
The findings of these
studies rowers.
The experience further speculative
forces
prevailing,
/
greatly influenced the
original showed that changes in the dis¬ while
open-market
operations
f. ; framework
devised for the Re- count rate also influenced the dis¬
sought to avoid an undue tighten¬
fserve System and the structural
position, of banks to lend to cus- ing in the credit situation. Viewed
y/ safeguards adopted to assure that,; tomerSj that is to
say, they af¬ as a whole, this experience in ad¬
benefit

Z

effect

policy, with a co¬
on
general bank

credit and monetary conditions.
The objective of Reserve Sys¬

tem

credit

the

balance

operations throughout
of

maintain

sound

in

of

terms

the

the

20s

credit

was

to

conditions

relation

of

total

bank

deposits and currency to the
of production and trade,
to contribute to greater
business and financial
stability.
Accordingly,
credit
operations

volume

and

so

directed to tighter and more

were

credit

costly
business

conditions

when

and

speculative activity
excessive
and,
con¬

Thirties

.

credit

new

low

market. :y Concurrently,
openmarket operations were used as a

tion

in

in

The

unprecedented

crisis

which

break

in

banking

followed

the

1929

closer

touch

with

the

banks

levels and
central

\

reduc¬

requirements

reserve

in

some

for

markets.
Later, it entailed open-market op¬
money

security prices put the means of
moderating temporary
in the position of
disturbances in the money market erations in such volume as to
last
resort, making and of
maintaining
orderly con¬ provide banks with ample funds
funds available in a limited way
ditions in the government bond for meeting unusual expansion in
through open-market operations, market. In the
the public's demands for currency
same
period, with
but largely in response to the ini¬
the rise in stock speculation, the and with adequate reserves for
tiative
of
the
money
market. Board made
upward adjustments absorbing such government securAfter
the
storm
of
crisis
and in
margin requirements. During ities as were necessary to issue
credit liquidation cleared
but were not sold to non-bank in¬
away, and after the business
Reserve Banks

lenders

of

easy credit policies again became
the order
of the day.
At this

point,

however,

unsettled

inter¬

slump be¬

ginning in 1937, downward ad¬ vestors. As a further phase of alljustments were made in both re¬ out assistance in war finance and
and

serve

margin

requirements

to

that

assure

the

cost

to

the

national conditions, together with
the
country's favorable creditor

and also* in discount rates.

oosition

System adopted stabilization of
general pattern of System credit
the prevailing pattern of interest
policy followed in the 20s, name¬
rates as a primary objective of

strengthened

devaluation,

drew

stantial amounts

by

gold

to

our

dollar

in ; sub¬
markets.

.

These

actions

confirmed

Treasury
the

debt

of

expanding war
held down,
the

its

'would

be

1

ly; of ad j u.Tting policies, with a
Largely because of the gold in-! view to
money-market policy./ ;/
moderating booms ' and
flow, bank reserves increased far
The close wartime cooperation
depressions in business activity.
.

in excess of requirements. Condi¬
tions of extreme credit ease there¬

There

was/

however,

a
funda¬
the; 20s in

.

between the Treasury and the Re¬

serve System "made it possible to
finance the most expensive war,;
policy.'
in history at low and stable rates."
Then, the main reliance for this
eral
Reserve credit
operations. purpose was on the traditional It also produced, however, an un- »
In these
circumstances, the Re¬ central banking y instruments of precedented expansion in' banlc
serve
System found itself with¬ .discount and open-market opera¬ deposits and the money supply.
out power to exert
the
period
of
war,
the
much, if any, tions. In this period, because of Over
restraining influence on banking the changed financial conditions country's money supply—demand
and monetary conditions.
prevailing, major emphasis was deposits plus currency in circula- y
Defects in the credit powers of placed on the System's additional tion—nearly tripled. In addition,
time deposits nearly doubled and
the
Federal
Reserve/. System general instrument—:the power
brought to light by the banking to change reserve requirements, the public came into possession of
a
huge additional volume of li¬
crisis and
by changed financial and its new instrument of selec¬
conditions were the subject of dis¬ tive credit control—the power to quid assets in the form Of govern¬

upon

developed

market

without

in

the

benefit

money

of

mental
the

contrast

mechanics

with

of

credit

Fed¬

appeared
versely, in the direction of easier
and cheaper credit at times of
business
recession.
They were cussion and
remedy by the Con¬ determine
margin requirements
also directed at reducing seasonal
gress during the period 1933-1935. against registered securities. While
and other temporary disturbances
The
System's
discount
powers! traditional instruments continued
in credit conditions. In the end,
were
enlarged
by
making
all!to be used, the altered financial
these methods of operation were
sound assets of banks the potential setting made their role one of sec¬
decisively upset by the feverish basis
of
advances
by
Reserve ondary rather than primary im¬
stock market speculation of the
Banks and by giving the Reserve portance in
governing general ex¬
late
20s
which,
together 1 with Banks a limited
power to
lend pansion or contraction in bank
business recession, brought to a
the
directly to established businesses credit and
money
supply.
close one oJ the longest bull mar¬
unable to obtain credit elsewhere Open-market operations, in fact,
kets in stock prices in history.
on a reasonable basis.
Second, A had become chiefly an instrument
Prior to the establishment of Federal
Open Market Committee to help maintain orderly condi¬
the Reserve System, the market was established
by law to coordi¬ tions in the government securities
for
stock
exchange loans
had nate open-market operations and market. Admittedly, however, ex¬
served
some
of
the
important to integrate them with other Sys- pansion of the public debt during
functions of
a
central
banking ter credit
policies.
Third, the the 30s had made this market
mechanism.
It provided a ready Board
was
given an additional virtually the pivot of financial or¬
market for
surplus bank loans major instrument of general cred¬ ganization.
funds and a ; ready market from it control in the form of
power
which funds could be withdrawn. to
Effect bt War on Credit Policy
change member bank reserve
introduction of the Reserve requirements
within
statutory
System did not alter in any basic limits. Fourth, the Board of Gov¬
way the role of the call loan mar¬ ernors was
given the power to
ket; in fact, under the impact of influence credit conditions
by de¬
the great bull market of the 20s
termining maximum interest rates
The

As the nation

ment securities.

tered

transition

;

from

en¬

to

war

it confronted a redundancy
in its monetary supply and liquid
peace,

resources, and the »reality of extreme /inflationary
pressures,

largely

?

from

The money

monetary

.

causes.

supply, which had av¬

eraged 50% of the economy's total

product

in

the

20?

70%

and

in

the 30s, had risen under war pres- ;;;
to

sure

nearly 80%.

that "armies

bilize

than

are

the

The adage

easier

to

demo¬

of

currency

war"

finance" threatened to be verified

again,
Conditions of banking transition
from

a

war

finance to

a

peacetime

basis has presented to the System
a
new
set of credit policy prob¬

The
eve of World War • II, lems.
System has had to
policies were largely in¬ recognize the changed role of Fed¬
fluenced by international consid¬ eral public debt in the economy's
erations.
Gold
stocks continued financial organization and the fact
On

the

credit

this .debt has
to accumulate at a rapid rate, in¬ that
become the
asset
of
commercial
lending assumed in¬ on time and savings deposits. creasing bank reserves and en¬ dominant
ness activity, rising prices and creasing importance and involved
banks
and
in
addition
an impor¬
Fifth, the authority of the System couraging bank credit expansion.
higher costs of living, a pattern an
increasing volume /of bank to
out in Europe, tant asset to other financial insti¬
apply
direct
influence
on When war broke

|

made familiar to all of

stock market

by re¬
addition to this devel¬ member banks in
periods of spec¬ open-market operations were used
cent
war- period
developments. opment, banks were.making a ulative excess was strengthened to absorb sales by timid holders of
They also resulted, and in large growing volume of loans to cus¬
by empowering the System to re¬ government securities. No further
part, from methods of war financ¬ tomers secured by stock exchange fuse
credit
accommodation
to credit policy action with regard
ing. World. War I expansion of collateral and were also
expand¬ members making undue use of to the System's general instru¬
Reserve and member bank credit
ing their holdings of corporate bank credit for speculative pur¬ ments was taken until the fall of
finally induced an increase in securities.
poses, and also the power to reg¬ 1941 when reserve requirements

•

funds.

us

rates

on discounts and advances
to
members in order to check infla¬

»

■

a

result of these

conditions,

ulate

the

proportion

of member

developments.

After

were

the

further

tutions.
nize

It has also had to recog¬

its
responsibility for
continuing close cooperation with
the Treasury in the management J.
that

of this debt is

a vital factor in the
restoration of budgetary equilib¬

rium

of

the

;

and in
stability durv
permitted by statute as a check on ing transition of financial organ¬
Finally,
it
has
been
inflationary pressures being gen¬ ization.
erated by
the national defense necessary to give account to the
financing
needs
of
commerce
and
program.
fyJ
business during conversion from
Also in the fall of 1941, the
were

increased

to

the

maximum

stability of banking became close¬ bank credit represented by loans
ly dependent on the price stability secured by stock or bond collat¬
of
Finally, margin require¬
security
market
collateral. eral.
raised
for
these' purposes.
By
Consequently, while overall cred¬ ments on registered securities for
early 1920 they were established it
conditions were not basically all lenders became subject to de¬
at the highest levels ever set in inconsistent with the
issued
an
Executive
Systems termination by the Board, Vzy'y President
the System's entire
history.
adopted standard for sound credit
The first five of these changes Order authorizing and directing
The principles of discount rate
conditions, dependence of many in basic credit powers gave the the Board of Governors to exer¬
policy developed in that formative bank assets for their soundness
System
greater
flexibility — in cise a measure of control over
period were in line with estab¬ upon stability of
security values terms of preceding experience and consumer credit for the duration
lished
banking
practices.
Dis¬ did expose the banking system to
This
contemporary conditions—and en¬ of the current emergency.
count rates were related to mar¬ the risk of bear
market conditions. hanced the System's powers to in¬ order gave rise to the System's
ket
rates
on
short-term
open- The exposure was a matter of in¬ fluence the
instrument
of
selective
supply, availability, second
market paper.
Obviously, such creasing concern to Reserve Sys¬ and cost of bank credit. The sixth, credit control, which as you all
assets yield to banks the lowest tem officials and led to the
appli¬ that relating to margin require¬ know, has functioned by limiting
prevailing return and adjustments cation for a brief period of direct ments on security loans, was an the
terms
on
which
consumer
tionary

p; war discount rates
f,

As

In

the

war

government

maintenance of

to

civilian

economy.

;

Tran¬

sition requirements of the govern¬
ment and the economy generally,

therefore, have favored.on balance
continuance of easy general

the

credit conditions in the face of an

inflationary

v postwar

business ;

rates in the government
market

a

securities
special focus of poliey.*^

in bank assets are

-

through

paper

Accordingly, the Reserve System
ordinarily made; pressure on individual member innovation in central banking in¬ credit is extended, and thus re
of this type rather banks who were borrowers of Re¬ struments. It provided the System stricting the demand for its use.
(Continued on page 2102)
*




;

boom, with maintenance of order¬
ly conditions and stable interest

/

t, "> 1,1-

THE COMMERCIAL & FINANCIAL

2102

The Federal Reserve System
Credit Control

CHRONICLE

Comprehensive Social Security

and
-

.

of destitution.

(Continued from page 2083)

one

the

now,

see

can

rate

of

change, rapid as it has been, seems
be
accelerating even more,

to

(Continued from page 2101)

rather than declining.

selective
instrument
for
once
more
responded to a nent
A World of Change
changed credit situation by ad^- maintaining sound credit condi¬
J
.
.
V-"
justing its policies to a balance of tions.
The reason I emphasize the fact
The
action
of
the
Board
of
Gov¬
contemporary forces and consid¬
that the postwar will be a world
ernors
in bringing these matters
erations.
of
change
is
because
change
to the attention of the Congress
This does not. mean
that the
means uncertainty and insecurity
represents
performance
by
the
System has been indifferent to
for the millions of human beings
Board of responsibilities placed
further expansion of bank credit
who
will
inhabit
this postwar
on it by the Corfgress to keep the
and the money supply during this
world.
This, in spite of the fact
Congress and the public informed
inflationary period. Its close co¬
that a basic human trait—perhaps
as
to basic changes in the char¬
operation with the Treasury in
we should call it instinct—is the
acter of the nation's bank credit
•debt
management
policies
has
yearning for security. This yearn¬
and monetary problem.
Because
contributed to a substantial pro¬
ing for security manifests itself
of altered banking and monetary
gram of retirement of maturing
in many ways.
Likewise, as so¬
conditions brought about by ne¬
marketable public debt.
Because
becomes more and more
cessities of war finance and by ciety
of
the
large bank holdings of
interdependent, the necessity of
such debt, a degree of restraint underlying changes in commerce
and industry, the Board's judg¬ relying upon group, action rather
on further bank credit expansion
than
individual
action
grows
ment is that the problem of Sys¬
has been exercised.
tem credit policy
needs careful greater and greater.
In addition to these policies, the
Group action may be either
study and consideration at this
System has made vigorous use of time.
This is
essential because governmental or nongovernmental
has

available

methods

selective

of

in character.

Thus, the business¬

statutory authority under Amer¬
ican democracy is the source of man may seek a tariff or a rail¬
liquidation " of outstanding loans the
System's credit control pow¬ road or a ship subsidy to protect
for
carrying government secur¬ ers.
From the standpoint of the himself against undue risks, or he
ities purchased in war loan drives.
constructive
functioning of the may turn to business and trade
It has made maximum use of its
Reserve System in future finan¬ associations to protect his inter¬
powers to determine margin re¬ cial
He may even join trusts or
developments and from the ests.
quirements for purchasing or car¬
standpoint of the public interest, cartels to keep down. what he
rying corporate securities.
Fi¬ it is desirable for Congress to de¬ considers undesirable competition.
control.

It

has

the

encouraged

it has
maintained with termine the policy which should The farmer may seek a tax on
minor
adjustments its selective be followed with respect to the oleomargarine or an embargo on
control over consumer credit.' As
questions
which
have
been Argentine meat or a parity price
a
result of these selective credit
brought to its attention by the or government loans or govern¬
measures, a significant contraction Board.
ment subsidies of bne kind or

interruption of f income
accidents, old ag^
death,
and
unemployment.
In
other words, we should strive to
devise a system which will spread
income over periods of nonearning. as well as over periods at
earning. - This
can
be
accom¬
plished to a i large extent by a
comprehensive system of social

However, in the
when it is used to
specific program of ac¬

against

due to sickness,

narrower sense,

describe

a

tion, it is usually confined to gov¬
measures
designed to
eliminate want by preventing the
loss of current income,,
ernmental

,

.

,

Many well-meaning and social¬
ly-minded people believe that if
we

maintain full employment

can

and

full

production

there is

insurance

no

has

ities

occurred

and

some

*

*

re¬

We

have

*

,

the

traced

another;

v

and

role

straint

has been imposed on the
function of the Federal Reserve
expansion
of
consumer
credit. System in credit control from the
Thus, banks have had a greater System's beginning. The record is
margin of flexibility for accom¬ one of
constant 7 adjustment
to
modating transitional credit needs
rapidly changing financial condi¬
of commerce and business without
tions.
Certainly the System has
excessive
pressure " for
further been flexible in its credit
policies,
overall expansion in bank credit
but this has been necessary in our
and the monetary supply.
■■ •
,
dynamic, free enterprise economy.
.•'-iv:.
V-".
t
It is a good thing at this point of
The Legacy of War Finance i
reappraisal of the Federal Re¬
From the standpoint of Reserve serve
System to view the System's
System credit policy, the legacy credit control problem in terms of
of war finance is a radically al¬ such
long perspective; some as¬
tered banking situation.
Tradi¬ pects of this problem appear in
tional instruments of general Re¬
quite a .different light.
serve
credit
policy have been
The
System
since
inception,
weakened, at least as far as re¬ most observers would agree, has
straint of bank credit expansion been a vital force in the financial
is
concerned;
In
other
words, development of a free economy.
,

.

-

these methods aire

he may join farm
and farm coopera¬

or

organizations
tives to

able

himself

assure

reason¬

a

income.

stable

and

-

The

worker may

seek government leg¬
islation prohibiting court injunc¬
tions or a Wagner Act preventing
employer interference with labor

organizations, or legislation plac¬
ing a floor below wages and h
ceiling over hours; or he may re¬
sort

economic

his

to

through

unions

labor

power

control

to

working con¬
usually
largely upon
governmental action to protect his
hours,

wages,

ditions.

must

and

The'

rely

consumer

rather

interests.

Thus, we have a law
providing for meat inspection, a
Pure Food and Drug Act, laws
regulating weights and measures,
Federal

a

Commission

Trade

to

longer two- The problem of the future is to enforce truth in
advertising, and
be used enhance its role in this respect in of course an
Office of Price Ad¬
either to discourage or to encour¬ the public interest. The contribu¬
ministration which undertakes to
age bank credit expansion.
This tion of the System's credit policies control prices. '
1
is because commercial banks, with to the
public good would clearly
Sometimes the yearnings for se¬
their large holdings of government seem to lie in
maintaining bank¬
curity on the part of businessmen,
securities, possess a medium for ing and monetary conditions fa¬
farmers, workers, and consumers
obtaining funds at will 'with which vorable to a stable and rising
clash.
In
fact,
sometimes the
to expand other types of loans and level of
production and consump¬
yearning for security of the very
investments.
They can sell such tion,
without
inflationary
or
same individual as a businessman
securities to the Reserve Banks speculative pressures and with¬

♦

no

instruments that

way

and

the

create

can

reserves

which

out

the

or

undue

monetization

of

be used as the basis for mul¬ public
or
private
debt.
Such
credit expansion.
The Re¬ banking and monetary conditions
serve System in its responsibility
would be "sound" in any mean¬
for maintaining orderly conditions
ingful sense of that word.
in the government securities mar¬
may

tiple

ket and for

of

interest

ities
to

National Air-Mail Week

secur¬

is

compelled by its policies
provide
the
reserve
funds

/

Postmaster Albert Goldman

nounced

on

Oct.

1

that

an¬

National

sought by commercial banks. This

Airr-Main Week will be observed

situation

presents

control

on

reported

to

from Oct. 27 to Nov. 2, 1946, and
invites
the
public to visit the
General Post Office, 31st to 33rd

Congress in its last Annual Re¬
port. It is a problem that needs

Streets and Eighth Avenue, where
an exhibit of air-mail
maps, air¬

the

future

which:

be

to
ers

.

these

on

of

the

problem

a

credit

Board

for

studied

carefully by bank¬ mail time tables, and an electri¬
and business men.
cally operated air and train time

The
trols

area

is

of selective credit

another field

careful

in

con¬

need

of

schedule
the

says:

developments have induced the
System to put considerable re¬
liance for specific purposes upon

Mail

selective

credit

control

map

main

Wartime

consideration.

farmer

or

a

worker

clashes

with his yearning for security as
a

consumer.

men

they

Naturally, business¬

and ^ farmers

want to get

sell

as

and

workers

high prices for what
producers

and

pay

low prices for what they have to

protecting the pattern
rates

a

.

"The

are

on

lobby. •> Mr.
;v

•

purpose

Week

is

display in
Goldman
-v-

of National Airto

*

encourage

the

buy as consumers.
Under such
conditions, it is of course neces¬
sary for the government to under¬
take

instru¬
the

of air mail service considered

most

expeditious

means

of

all

of

these

yearnings for individual security
in order to achieve the maximum

amount of

general security

paid

to - compensate for a
reasonable proportion of the wa^e

of

loss

sustained.

set

up

current

these

a

income.

people

fail

to

However,
realize

of

the

physical

disability,

.

old age and death. In our modern

society

these

greater

interruption of earnings
greater destitution than

far

and

hazards

However,

far

cause

numbers of persons are unable to

tem.

protect themselves

for

governmental

cumstances.

The particular form of

with

which

are
other well-meaning
socially-minded people who

Contributory

what has

come

security.

to be called social

Hardly

a

decade

ago

the very term social security had
not come into existence.
Now it
is in the process of acquiring such
inclusive meaning that its use¬

fulness

as

a

term

to

describe

a

ments, both during the war period
proper and during the transition. mail transportation, and to bring

specific program of action is in
danger \ of - becoming
impaired.

This

Thus,

draw

has
a

enabled

line

the

between

System
limited

to

and

general objectives of credit policy.
In view of its

war

to the attention of the public the

reduction
8

emergency ex¬

cents

to

in
5

air-mail
cents

rates

per

from

ounce

or

we

find

world statesmen
social security is

asserting

that

the main

motive of national life.

We find it listed

as

a

chief

objec¬

longer- fraction thereof in all territories tive in the Atlantic Charter.
run
credit control problem with of the United States and its
In the large sense in which It
pos¬
which the System is confronted,
session and to members of the is used by statesmen, it covers
the Board, as you know, has asked
all of
the
essentials of
decent
abroad, including
the Congress also to give consid¬ armed forces
human existence, such as housing,
eration to the addition of con¬ Canada and Mexico, effective Oct.
education, health, and full em¬
perience and

sumer

also

of

credit control

the

as

a




perma¬

2 f»

•

ployment—as well

as

require

elimination

analysis

much

demonstrate

that

socialism

social

to

and ^circumstances

at the

able

loss

aims at

income

of

often

for

tractive

himself

dividual

such

nanced

way

case, and is usually fi¬
out of general tax reV,~

enues.

A

,

,

Single Comprehensive System
T

believe

that

is

it

perfectly
single com¬
prehensive contributory social in¬
surance system that would cover
all of the major economic hazards

feasible to construct

encouraged
at¬

more

a

beneficiaries and by the
employers of the potential benefi¬
ciaries.
In contrast, public assist¬
ance is payable only on the basis
of a showing of need in the In¬

Socialism

a

loss

wage

tential

should do is to establish
• b a si c
protection

build

usually pay¬
a portion
sustained, but

are

to compensate for

the

name implies, is
mainly supported
by contributions made by the po¬

against loss of income, upon which
to

•

large families than to high wage
earners with no dependents. Con¬
tributory social insurance, as its

minimum

the individual will be

a

to pay a greater proportion of
benefits to low wage earners with

social £ security recog¬
nizes that all that a government
a

and

as

However,

program

system

usually constructed in such

redistribution of wealth.

a

insurance

However, the benefit formula is

without

which

cause.

Public Assistance

applying a means or
needs test in the individual -case-

It does this by
providing individuals with a min¬
imum degree of protection against

changes

fcje

cannot

own resources..

without

social problems.

the

vs.

system benefits
of

time creating serious

same

which

systeqi of public assistance. Under
a
contributory social insurance

and

social security proceed from dia¬
metrically opposite goals. Marxian
socialism is based upon the theory
of the class struggle.
Social secu¬
rity is based upon the theory of
social solidarity.
Socialism aims
at the destruction of private en¬
terprise whereas social security is
designed not only to preserve but
to
promote
private ; enterprise.
Social security enables a system
of free enterprise to encourage
invention, improvement, elimina¬
tion of waste, variety and con¬
tinual
adaptation
to
changing
ideas

priqr

the sys¬

As you know, there is a basic
difference between a contributory

sometimes confuse social security
and socialism.
However, it does

not

of

^

There
and

families

met out of their
-

occurred

a

their
17rv f'\

:

that have

establishment

Therefore, there is also need
basic
and comprehensive
of public assistance to
meet the needs of individuals anjd

'V ;

"'"-.J"'

*; \

which

to

the

a.

workers

of

this

well-being,
country are exposed.
The sim¬
through the well-known devices
plest way to accomplish this pur¬
of individual savings, private in¬
pose would be to use the present
surance, and home ownership.
Federal old-age and survivors in¬
; • When we undertake to establish surance
system as a foundation.
a social security system designed
Under that system there are al¬
to provide a minimum basic pro¬
ready individual
wage
records
tection
we

eliminate want,

thus

and

established

not

are

and

of

degree

new

striving for strange
ideals; nor is it even

viduals.

ing

for us to depend upon
strange and new methods. While
social security in this country is a
necessary

relatively recent development,
been

a

familiar

function

other countries.

concerned is

are

we

the

system

Social Security Not Socialism

nized

security

Certainly an insur-*
system cannot insure against

ance

hazards

against these
through non¬

means..

sys¬
pro¬

tection under all conceivable cir¬

to

hazards

comprehensive

even a

contributory social insurance
tem cannot provide complete

unemployment, even the. unem¬
ployment that occurs during a
period of deep depression.
Ex¬
perience has shown that large

economic

out

made

by the
workers of this country and by
their
employers,
supplemented
ultimately with some contribution
from the government, represent¬
ing the entire community. ; '

great economic hazards

sickness,

of such

cost

financed

be

contributions

of

though we achieve the goal of
full employment and full produc¬
tion the working people of this
country will still be confronted
with

The

should

benefits

that

even

has

Security 1 >i ;

Social

an
use

reconcile

to

benefits

are

to

.

bank credit for carrying secur¬

which

under

specific social
security program to prevent loss

need

nally,

in

Thursday, October 24, 1946

v:

of

and

.

of

Indeed, it is

maintained
mechanical

74

million

accounts

indi¬

are

through the
equipment, at

be¬
use
an

average cost of 12 cents per ac¬
count per year., There is no rea¬

it

son

recog¬

government

for

These

why these individual records,

cannot be used for the determina¬

in

tion of benefit rights in the case
of
unemployment insurance as

one

function of government

Which has well as
temporary and permanent
grown and
is growing, despite
disability
and , .medical
care.
changes in government and two
Through
the .use
of -teletype
world wars. We have a world his¬
equipment the individual records
tory-and world experience upon could be made
instantly available
which to base our planning and
to any local office throughout the
our
action.
Indeed, we already
country;, so that claims could be
have in our own Social Security
processed without delay. V t Act the fundamental elements of

of social security de¬
eliminate want.
It is
only necessary for us to extend,
expand, and improve upon our
present Social Security Act in the
light of the experience and think¬
ing that has developed since that
act was passed in 1935.
^
a

program

signed

to

,

Since the

security of the large

majority of people is dependent
their earnings, the focal
point of our efforts should be to

;

v

Employers would have to make

only the four quarterly wage
ports

they

already

make

re¬

under

the Federal old-age and survivors

insurance system.
in

sharp

contrast

This would be
with

the

209

reports ah employer is now

re¬

quired to make under the old-age
and

survivors

and

the

insurance

system

upon

provide

reasonable protection

ment

51

different

insurance

laws

unemploy¬
if

he

hap-

Volume 164.

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4536

pens

to

these

juristUcttons.;.i'.<;/• r*;/

be

operating

in

,

all

.

be used

for all phases

of

such

a

system of contributory social in¬
There' should

surance.

established

unemployment

be

advi¬

committees and, in the

sory

of

also

representative

compensation,

local

::

: • The fact that is
possible to de¬
centralize claims determination is
evidenced by the experience de¬

veloped

under

the

Federal

old-

and survivors insurance sys¬

age

tem.all

claims

are

claims

The

taken

place

old-age

under

and

which

to

four

under

and

different

drawn

benefits

under

the

calculated

of

that

I

the

on

made

were

ject to appeal to

a

tative / tripartite!;

locally, sub¬

local represen¬
board
which

would

be

too

becomes.

Iii

hazards. -From

ministrative
np

longer

,

groups * should
from the

protection

there

why

any

be /excluded

;and

there

is

every

reason

ease

of workers for small

'

;

mail

carrier

and

in

urban

they could be purchased

offices.;/■■■/v

areas

at

post

Payroll Deduction

.

;

-

self-employed

sons

against

temporary

there would be

ployee

loss

wage

no

to

serve

specific

or
as

test

a

of

entitlement to benefits.
However,
it would be
perfectly feasible to
insure self-employed

persons

against

the

other

economic

haz¬

ards mentioned,
years it
is probable that the current costs

all

of

the

benefits

count

in

suggested,

than

covered by a total combined rate
on

depending

on

provided.

This

both

payrolls of 8%,

the

exact

benefits

would

employers'

include

and. employees'

contributions. The total combined
normal rate at the present time is

5%.

However,

present

.

;

,1

under

rate.

Act. this

9% by Jan.

; " I'':1:;.

il,11949/

Universal. System Best
believe

that

a

unified

prehensive system of social insur¬
ance

that

offers the greatest
there

overlaps

pr

will

assurance

be,.no

gaps

or

anomalies in the pro-

tection.fthat

is

afforded

against




how

,

Decentralized Administration

v

The

administration

always
the

believe

that

enterprise is simply this:
some

insurance

previous

history and
beneficiary has
Therefore, differ¬

wage

past

income

has

been

which

able

to

an

de¬

velop -is; given some recognition.
In- contrast, under
any system of
public assistance, since the assist¬
is

ance

based

it

need,

a

the

on

remains
person

individual

true

that

the

saves

the

health

course

centralized

all

that

so

and

thorities could
on

be

necessary
doctors
and

health

au¬

subject to ad¬

local

a

be de¬

basis.

'The

local

hospitals and doctors should
be permitted to choose the method
of remuneration which

they de¬

sire.
Besides free

a

insured.

individual

is

recognition given to

length of time
entials'in

there

of

insurance should of

of

choice

remuneration,

should

provide

of

system

choice

-

of

physicians and free
choice
of
patients. The professional organ¬
izations themselves should be re¬
lied upon to assist in the main¬
tenance and promotion of desir¬
able professional standards.

less *he

Voluntary

organizations

that

possibility of

no

a

proyide health services would have
of

invidious

an

tive

of

great

distinction

individual

virtue

of.

destruc¬

morale.

The

contributory

a

health

insurance.

voluntary

however

intelligently and sym¬
pathetically administered, creates

important role under

an

tions

others
not

cooperative

that

paying

,

are

a

system

So

would

organiza¬

hospitals,

for health services

? provide

rectly.

with

concerned

doctors,
these

or

but

services

di¬

•'

"

•"•'

do

■

der

the

State.

laws

of

Neither

,the long

than

more

would

delay that

one

there

be

who

simply to relieve it after it

occurred.

exists in^ always be

now

from,

move

takes

has

one-

State to

line

of

;

State Benefits

combination
insurance

-

of

a

national

social

system

temporary dis¬
ability and unemployment insur¬
there is great need for

ordination

between

the

insurance

the

State

various

know, sev¬
unemployment

agencies

with

old-age

and

have

experi¬

the

Federal

survivors

greater

coverage

Federal and

insurance

provisions

any

success.

uniformity

State laws

before

v

is

of

in
the

neces¬

extended

use

could be made of the Federal old-

ords

survivors insurance

by the various State

ployment

insurance

unem¬

cover¬

provisions is of- course desir¬
even

though the Federal old-

age and survivors
ords

are

not used

employment
since

to

rec¬

agencies.

Greater uniformity in the

able

use

it

?

siderable
course

The

insurance

by the State

insurance

might enable

•

rec

un¬

agencies,

employers

carbon copies of one wage

a

between

portion

sustained

cover

lately.
Of
distinction must

sharp

cover

loss

con¬

attention

a

first be made
to

the

of

and

cost

American

insurance

the

wage

insurance

of

medical

Medical

to

care.

Associa¬

tion, which, as you know, is op¬
posed to a system of contributory
social insurance to
of

medical

to

cash

care,

cover

is

not

indemnity to

the cost

opposed

pay

a

por¬

tion of the wage loss due to sick¬
ness.
-

of

the problem of
spreading the costs
of
medical
I believe we
care,
must

recognize, that

large

and

people

the

government

poll

the

last

this is

act.

that

tion,

as

a

of

years

medicine

implies
medical
by physicians
employed - by - the
government;
health
insurance, on the other
hand, implies a system whereby
services

provided

favor of
sory

result

is

wholeheartedly in
the principle of compul¬

covered

sons

cial insurance fund for the
ices they render.

serv¬

In other words,

and

the Canadian
Association has gone on

as

tributory

:

-

?

System,

-

mented

So

much

In

by

for

hqalth insurance is

a

system

in contrast,
a

system for

/;?•

since the Social Security Act was
passed is many times the amount
written in all the previous years.
As

you

insurance.
em¬

there

prehensive
insurance

contributory
system

social

supplemented

the

feasibility and desirability

of additional insurance to supple¬
ment the. basic insurance protec¬
tion

provided under the govern¬
I am confident that

ment system.

insurance

companies

public: to
tection

obtain

An

Let

the

It would

protecting

people of this country against
economic
bed

releasing

necessity

selves.

hazards,

of

It would

a

them from

helping
be

not

an

them¬

effective

Thrift

.

Plan

also not forget that un¬
contributory social insur¬
system, the financial base is
automatically
provided.
The

der

us

a

ance

workers of this country and their

employers

for

pay

that

are

for

giving

received.

the

benefits

It is not

a plan
everybody something
for nothing but a plan for organ¬

ized thrift. As former Prime Min¬

ister
of

Churchill

social

said, the

insurance

is

essence

"bringing

the magic of averages to the res¬
of the millions."

cue

•''/*///•//:

I

do

not

pretend that the pro¬
gram I have outlined will usher
in. Utopia.
who

Even

and

necessary

lieve

basic

that

there

so,

believe

minimum

a

security is

unwise.

result

social forces.
convinced

of

un¬

They be¬
by
and

large, is due to personal
quacy/ and
derelictions
than/the

are

that providing

destitution,

inade¬
rather

impersonal

Therefore, they

that

are

government

any

action aggravates rather than

re¬

lieves the problem.
must

we

agreb that

so¬

cial security does substitute hopes
for fears.
It really comes down

to

question of just how much

a

faith

we

have in the

and

in

democratic

Putting it bluntly,
whether

side

must

by

be

the

driven

the

fear

common man

government.
must

we

common

to

deman

himself

exert

of .starvation

or

whether it is hope of reward that
leads to high endeavor.
/

If the

needs to be

common man

driven by fear of starvation there
be

can

a

little

very

of

law

of

is

man

land, and the

the

common

mind, reliance
as

worthy

a

of

has

a

the

the

will

Indeed,

fear of

on

motive

the

force

is

slave nation, not a

* The greatest
just

certain

shall inherit

man

starvation.

vote for
my

starvation-

be

for

democracy the will

common

make

hope

of democratic government.

success

history

net

pro¬

insur¬

V. V;/

::..Vv

Organized

free nation.

safety

private

ance.;;;:.'

system—would provide only

a

additional

through

comprehensive public assist¬

provide

generally

;

believe that this government sys¬
tem
educates
and
induces
the

a

people of this country.

radio,

are

ance

minimum basic security for the

from

the

several large life in¬
companies that are bas¬
ing their sales promotions largely

not

com¬

noticed

and

surance

to

a

have

may

advertisements

In

Public Aid
health

suggested—namely,

feather

also

already happened in the case of
the Federal old-age and survivors
insurance system.
The amount of
group
annuity business written

phasize that the twin program I

medical

but

to provide still better
security for himself and his fam¬
ily through individual
savings
and private insurance.
This has

have

major

practice;

Supple-

conclusion, I should like to

the

care

pro¬

Advocates Comprehensive Con1

socialized medicine is not only a

medical

services

favoring the principle
of compulsory health insurance. ;

system for spreading the cost of

of

Indeed, it

Likewise,

Medical
record

a

spe¬

health

.

individual

I think

thirty

over

with

health insurance.

vided.

who

a

of

>

.

this

.

•

Associa¬

assumed
leadership in de¬
manding that the present health
insurance system be made more
comprehensive in terms of per¬

by

reimbursed from

taken

shows that

has

medical service is provided by
private, competitive practitioners
are

been

Medical

tinction between socialized medi¬
ized

has

years

experience

insurance,

we turn to the question
protection against the cost of

cine and health insurance. Social¬

country that
Every un¬

,

British

a

demand. by

this

ten

is

so.

The

When

medical care, again it is essential
for clear thinking to make a dis¬

of

there

.

growing

the

in

surance, since it has received

involved in

are

a

by the individual citizens
country.
A sound social
security
program
makes
these
costs more bearable by distribut¬
ing them more systematically and
equitably.
Because only a minimum basicsecurity would be provided, there
would be every inducement to the
of

some

governmental attempt to meet

any

biased

Perhaps before closing I should
say ; something, about health
in¬

,

using

records with considerable

However,

co¬

you may

mented

sary

defense

Health Insurance

covering what
might be termed the long-term
risks, such as permanent disabil¬
ity, old age, and death, and State
systems covering the so-called

the

secondary,
against human
a

want.

But, regardless of whether we
have a straight national contribu¬
tory social insurance system or a

of

Therefore, it must
first line of defense

and public assistance

Need of Co-ordination With

ance,

a

Though hazards

a

provide

borne

method

the

free

.

would

In fact, in a very real sense the
costs of insecurity are now being

on

\

I

ing been split between more than social > insurance system is that
; one
State or drawing duplicate it-prevents human destitution be¬
benefits because of qualifying un¬ fore it occurs rather than under¬

age
com-

of free

I

Under;;'social

more

-

the

automatically be¬

it
nonoccupational accidents
and diseases.,,
•

:

age and

Social; Security

combined
comes

even

norr

failing to draw benefits
because of his wage record: hav-

eral

of contribution

to the full

worker
;

new

more

discuss

our

Thep reasori

:•

than

compensation;

covers

the

present
system
of
public
assistance
can
be
and
should'be strengthened.

fronr been

way

\

there would be

systems.: As

be

the

though he - may have
many
States. :4, Thus,

even

worked

both the present benefits
and the

benefits, would

all

short-term risks of

; During the first few

of

ranging

,

or

employer-em¬

relationship

different 'Stalter.un-

another;

i because

inclusive

more

justment

per¬

unemployment

disability

merely

fact; there vyould be ; much' contributory social insurance sys¬
consistency thaflfexists now' tem fits in better with a system

mal rate of 2.7

It would of course
not be feasito. insure

blt

is

workmen's

public

ers

>An 8%

adequate compensation for
physicians
and
hospitals

hospitals

the payment of benefits to work¬

"v.-;■

to

and

called upon to treat them. In the
broader sense, health insurance

However, time will

me

diseases

Federal

Then, of course, it should also gets by -way of assistance. More¬
borne in mind that under a
over, in-order to get assistance,
national system a worker's total the :,
applicant must submit to a
earnings, historyis taken into ac¬ needs/ or a /means test, which,

a

ing contributions made by the
employer and the employee.
In
rural areas the
employer could
purchase these stamps from
the

believe

by

the

be

through

system;
system the employee
would be furnished with
a
stamp
.book in-rwhich
stamps would be
placed by his-employer evidenc¬
Under such

permit

than

and

.

In

em¬

ployers it is administratively fea¬
sible to extend
coverage
the use of a stamp book

be, ,operated

accidents

a

one-tenth of 1 %

standpoint of providing

why they should be included.
the

is

to

agreed that, in
recognized deficiencies,

of

the

,

rather

one

compensation has re¬
sulted in providing more
adequate
medical care for the victims of

strengthen our present system of
public assistance, which should
States

no

generally

spite

with

year

ad¬

an

standpoint,

any - reasort

seems

circumstances. Therefore, it is im¬
portant
that * we
also : greatly

continue

that

sure

arrangements

$210.00 to $546.00 at a weekly rate
varying" all the. wayrfrony; $15.00
to 425.00. / Likewise,- employers
with exactly the same experience
with unemployment have to pay
contribution rates ranging from

coun¬

try is subject in varying
degrees
to these

re¬

employment insurance laws; ?At
present, a worker with exactly
the
sameearnings record- can
draw unemployment benefits:ib^a

possible, since

all of the
population of this

>

automatically

course

underthe 51

sirable
and
necessary that Hhe
coverage of such a system be ex¬
tended as widely as

more

Government.

would of

increasingly de¬

against hazards that have already
occurred or can provide adequate
protection under all conceivable

not

individual's, past: earnings,
I believe they should be, they
an

as

death, it of

work

to

more

age, and

insure

throughout the entire country.
However, if "benefits are related

covering all of the hazards that I
have mentioned of

course

social

national contributory social

flect differences in wage rates in
the various parts of the country.

temporary
disability, old

workmen's

Retirement Act and the

would be familiar with
local labor
market conditions,";
'■i/
ylf a comprehensive contributory
social insurance
system is adopted

unemployment,
disability, permanent

would be too much to expect
that all human destitution would
be " eliminated.
No
system
of
can

am

abandoning work¬
compensation insurance. It

it

insurance

already is operating

would think of

must,

we

United

arising out of occupa¬
is, workmen's com¬

that

—

men's

combined

inflexible because of the necessity
for uniform provisions applicable

case

unemployment insurance if the

decisions

a

more
in keeping with
system of free enterprise than
system of public assistance.
I

It would be

minimum cost.

system of compulsory health
insurance applicable to accidents

and diseases

recognize that
even with a comprehensive
con¬
tributory social insurance system

well.

as

record developed under the

insurance -system

de¬

system, because I believe
that a contributory social insurance

one

the

which

loss

wage

proven

maximum amount of security at a

than

national

a

surance

survivors benefits

now

question might be raised

laws.".

States but

in

to

need.

proven

system

'

State

related

or

system

more

have

,

Every

think

I.v Some

compensation

surance.

a

surance

believe : that ;more realistic
cisions would be made in the*

I have laid more-emphasis
the development of a com¬
prehensive contributory social in¬

erans'

compensation, and vet¬
legislation. Until recently*
surviving spouse could /also

system because the benefits would
be

systems of compulsory health in¬

ance.

upon

medicine;

workmen's

tralized claims determination that

ployment

including

national

a

countries

tion

Railroad

unem¬

attack,

state

thirty

pensation. I

old-age and survivors in¬
system. ,
-• • ■ ■
■ v,, :

State

of

system is

Federal

under- most

the prevention
be a two-

on

must

both
social insurance and public assist¬

State laws,

cen¬

exists

pronged

Republics has

our

wage

insurance

draw

attack

our

care

Only the Union of Soviet Socialist

namely, old-age and survivors in¬
surance; United States Civil Serv¬
ice f Retirement
System,
State

are

the- Federal

survivors

under/any

killed

is

Federal

However,

has

system is in contrast with the

or

Railroad Retirement Act

decentralized

determination

who

kinds of

have

system 97 % of
determined in the

office.

system

benefits

a

Under that

local

of/ destitution

worker

circumstances

ing the decisions.

talk,

insurance

public retirement
system.
On the other hand, it is
possible for- the dependents of a

taken into account in mak¬

were

spreading the cost of medical

and does not replace the
competi¬
tive private practice of medicine.

As I stated at the outset of
my

fy for retirement benefits under
the Federal old-age and survivors
other private or

case

local tripartite appeals boards to
niake certain that all of the indi¬

vidual; and

report for^ both Federal and State

'' '
present it is of course possible for- purposes.'. V ' •
a person to have worked an in¬
A
Two-Pronged Attack
sufficient length of time to quali¬

A single string of offices could

.

risks /covered* V At

the •various

of

2103

war

been fought

that

free

this earth.

in

to

people
We

can

absolutely certain that as the

forces

of

democracy advance the

postwar world is bound to be one
of

greater and greater social se¬

curity and less and less individual

insecurity.

THE COMMERCIAL &

2104

Thursday, October 24, 1946

FINANCIAL CHRONICLE

MMl

credits, grant¬
ed
by- the International' Bank,
available for purchases by mem¬
ber foreign nations in the United
Economic ; co- diet of semi-starvation.
To"
, lift
States.;, Further, 'these loans will
reasons- for that,
nations
takes these
peoples; to higher levels
mop up purchasing power, now
operation among
would enhance their own welfare
ex¬
idle in private bank deposits, and
place largely J through
the
/4
PQ^triflOi
as
well as their contribution to
change of goods and services, but
put these funds to work, in our ex¬
the welfare of the rest of the
it'is important to keep in mind
port program.
' fj'
1 •
'<
world- The FAO is also consider¬
then become dollar

International 0r_
•

(Continued from page 2077)
^
have taken the place of open and
fair

trading,

dealings

illicit

the

...

...

are

goods in ; the
for export but

be

moved, because

_

.

—-C

..

.

.

the

currency,

,

o>v.

~

States for the or*
ganization of ITO and the Charter
of
the
ITO which. the United
States has prepared/
After this
meeting-is over, there will be an¬
other meeting in "the spring of
1947 to discuss mutual tariff con¬
cessions and then a conference in

by the United

■

the summer of 1947 to adopt a
between nations can
The United States has a deep final form of organization.
It is
ing plans for bringing greater sta¬
interest
in
the
only
if
there
is
cooperation
cultural,
scientific,
the hope of the United States that
exchange rates, ex¬
bility in the marketing of "sur¬
in
many
other
ways.
A
growing
educational
and
welfare
organiza¬
the
final
agreement
reached
will
port
and
import
controls" and
plus" agricultural commodities—a
tions of the United Nations not so go far towards removing barriers i
other trade barriers, the gummed and mutually profitable trade de¬
matter
in which the American
much because they may contrib¬ to trade and towards increasing
up transport system with its slow- pends on arrangements for stable
farmer has been deeply concerned
and equitable rates of exchange.
ute indirectly to world trade but the commerce and shipping of the
passenger trains, limping freight
for years and which can be solved
A weaker nation can buy and sell
because they help strengthen the world.
service and run-down personnel
only by international cooperation.
more abroad if it can develop its
Conclusion
I
foundations of international coEverywhere there is need for
The
International Labor Or¬
own resources and technical skills
operation in general. The UNESCO
repairing, rebuilding and recon¬
Such then is the wide scope and
ganization
(ILO)
which
was will advance the mutual knowl¬
and
raise
its
living
standards,
and
struction. Everywhere there is de¬
varied character of the program
founded in 1919 and which main¬
mand for coal and cotton, iron and it may need the help of stronger
edge and understanding of peo¬ of international economic coop-,
tained its activities during the
nations to do so. World trade can
ples
through
communications, eration on which the United
steel,
lumber, chemicals,, tools,
Second World War has had the
popularize education, d e v e 1 o p States is now embarked. In prac-V
machines, the thousand and one be helped if the producers and
workers of all countries feel that cooperation of the United States educational activities, and make
things by which our modern eco¬
since 1934. American employers,
tically all the organizations of the
nomic civilization is carried on. it is carried on by equitable meth¬
for
cooperation
in
intellectual United "Nations through which
workers and government officials
Everywhere there are calls for ods with due regard for the wel¬ take an active part in the confer¬ activities. The practical results of such cooperation is to be carried;
more hands
to do the work and fare of air countries and for fair
such cooperation are likely to be
ences and committees of the ILO
out, the United States plays a
for
more
skill
and v technical working standards in the making
a great increase in foreign travel,
in order to rationalize competitive
leading and decisive part.
The
knowledge to give it meaning and of the goods. The exchange of conditions in world trade so as the development of tourist trade,
original drafts of the agreements
direction. And what is even more goods is fostered by foreign travel
the growth of international trade
to protect the better living and
and,', charters
themselves 5 have
and by closer cultural relations
in books and publications and in
important, everywhere there is a
been drawn up by American ex-J
working conditions in. advanced
school and laboratory materials
desire deep in the hearts of the which enable the citizens of one
countries and to raise standards in
perts in the various Federal de-v
and equipment, and a growing in¬
people to start all over again, to country to know better and; to
less
developed
countries.
You
partments. and embody the basic.
want more of the' goods of other
terchange of technical ideas and
pick up the broken threads, and to
are familiar with the work of the
policies of this government. In¬
make a decent and prosperous life countries. And above all, world
of research.
The World Health
cidentally, in the work of drafting X
ILO in your own industry, with
can
prosper
and expand
in a new world of promise and trade
Organization should promote the these documents the point of view
the progress it has helped to make
only
in
a world in which there
interchange
of doctors
nurse's Itftese aocumems "ie
WJL
peace.
■
.
is peace and as much freedom of in the life of the seamen, with its
1 oUi^r-.incf
intprf»st<3
has been repEverywhere in Europe there is
efforts
to
improve
competitive pharmacists, as well as world.of
shipping interests has been rep¬
also the feeling that no one nation movement as possible;
trade. in pharmaceuticals, chemi¬
resented by the participation of
The foreign economic policy of conditions in world shipping.
can do the job alone. At no time
cals, hospital and surgical equip¬ the staff of the Commerce De-'f
The Bretton Woods organizations
in recent history has there been the United States today is guided
ment of all kinds.
partment. The representatives of
the
International
Monetary
such recognition of the need for by this larger concept of inter¬
the United States Government are
national cooperation. In January Fund and the International Bank i Proposed International Trade
working out economic problems
active in all the specialized agen¬
and February of this year it was for Reconstruction and Develop¬
Organization
by international cooperation. Only
cies of the United Nations and in
ment—are largely the result of an
than
in
other
all countries working together, it my privilege to be in London at
Perhaps more
than
in
other
_
. , _
of
American
and matters, the United States has|the Economic
is realized, can find the resources the First Assembly of the United interchange
Nations as an adviser from the British thinking. The first of these
and use them in such a way as to
taken the lead in promoting the cil in
meet effectively the reconstruc¬ Department of Commerce at¬ institutions, the Fund, is designed proposed International Trade Or- in
to eliminate the currency and ex¬
tion needs of the devastated and tached to the United States Dele¬
ganization.
As i you know
we!
process of give and take..
handicaps
which ham¬ emerged from the war with the ocratic
to the Assembly. Since change
war-shaken countries of Europe. gation
ocratlc process
That applies also to the war-af¬ then I have also had the opportu¬ pered foreign trade during the 30s trade V of
the
world
throughly
It would be futile to deny
nity to attend sessions of the Eco¬ and the war years. The Fund has hamstrung by a maze of restrict- difficulties in the path
fected areas of Asia and Africa.
nomic and Social Council as a now begun operations and its first ive
regulations.
While some of national
economic
We witness these difficulties al¬
member from the Commerce De¬ task is to establish new rates of
V
War's Economic Effects
these have been removed or re¬
most
daily
in the meetings of the; ;
among
all member laxed, many of them still remain.
One comes back to America with partment to the advisory staff of exchange
John G. Winant. In this way; I qpuntries which will bring them
a sense of relief and with a feel¬
Furthermore,
Furtnermore,
they are uvenam
tney
overlaid - Economic and Social
closer relation
with
have watched the steps by which | into'
IIJL LU UAUkJVi.
X
•— economic
ing of gratitude for having been
by new restrictions due to the de- of the
the United
States has tried,- in! realities. As and when conditions sire of each country to protect its
j connected with the
spared - the horrors inflicted by
U
+V>/i
r*tVi<ar>
natinnQ I
xxri 11
11 qp
its
with the other nations, require, the Fund will use its resources and manpower for the tions. 7 Cooperation . is
the war on Europe. But just the concert
to hammer out the structure for powers
to
prevent
temporary urgent needs of reconstruction. | by the fear of
same one cannot close one's eyes
,
to the difficulties which the war world-wide international coopera¬ shortages of dollars and of Other These
controls
throughout
the 1 lingering passions of wartime ex* has left in its wake also for us. tion in the economic and social scarce currencies from hindering world
will not disappear auto-!perience, by nationalistic
While we have been spared de¬ field. It is no easy task and the the purchase of goods by foreign matically—they must be removed (mind,
by conflicting
struction by bombs, rockets and result may seem slow to some of nations in the United States and or at least weakened by the com-; aims and purposes, by
/
elsewhere.The
members
of
the
mon action of all nations.
r;
| standings, as to each
eco- guns, we have suffered deteriora¬ you, but if you consider that it is
Fund
also
undertake
to
promote
tion in land, forest and mineral only a little over a year since the
The
proposed
- International inomic
world was in the grip of ,war, the exchange stability, to refrain from
ort„efit„t00iand by "power-pohtics", consid-v
resources as a result of the heavy
Trade
Organization
constitutes erations which intrude themselves arbitrary
changes
in
rates
of
ex¬
needs of war. We have fallen be¬ progress made in building the edi¬
our principal line of attack upon
into the sphere of social-economic 7
hind in farm building, housing fice of international cooperation change, and not to use exchange
restrictive trade practices.
It has
~ .7 . and currency restrictions as com¬
action//,'//;//
and many of the conveniences of is considerable.
been designed to accomplish the
;
petitive weapons in world mar¬
But ..we cannot let .these diffi¬
life. And} our very advance in
following'
major
reforms
in
world
/Value- of ^International
' kets.
.
...
,
4 culties discourage; us, nor should
technical efficiency and industrial
Organizations
i The
second
of the Bretton
we: over-emphasize them. All co¬
plant has created problems in re¬
If you will look at the chart, Woods institutions, the Interna¬ 1. The reduction of tariffs, trade operation:, implies differences *o£
adjustment in management-labor
barriers
and
the
elimination
of
tional Bank, is to help the expan¬
view and of interest which have
relations, investment, foreign you will see that the organizations
the discriminatory treatment of
for world cooperation already set sion of
world trade by making
to be reconciled. / Argument , and I
trade and public finance which
nations
in
international
trade.
up
and those projected are- in¬ loans for the rehabilitation of
some friction are part of the job)
are still ahead of us awaiting solu¬
tion. While our production records tended to supplement one another wartorn areas and for the devel¬ 2. The elimination of all measures of hammering out a common pol-?
in
the
destructive of world trade by icy. :It is part of the job of the
general task of promoting opment of undeveloped economic
are
the envy of all nations, we
providing opportunities for the United Nations .: and the special* ;
ourselves are not entirely at ease world peace on the basis of great¬ areas.. Large parts of the world
are still virgin territory in so far
er
social-economic
welfare
for
all.
reciprocal expansion of world izedi international
as to. how long we can maintain
organizations
trade.
v
s
/
' 1*
1
■
connected with the United Nations
them without a serious break that At the top of the structure are the as the: use of their natural re¬
sources
is
concerned.
In
these
Security
Council
and
the
General
will spell depression and unem¬
3. Assistance in the industrial de- to throw light on underlying con- '
Assembly of the United Nations— same areas and elsewhere mil¬
ployment.
velopment of member countries. flicts even if that is accompanied
the embryo of that Parliament of lions of people are eager to learn
some times by a glaring and noisy
Thus, we in the United States
4. The expansion of the producman which has been the hope and
how to do things the modern way
are also realizing more and more
display of verbal fireworks.
As
/
tion,
exchange
and
consumption
that the war has wrought a change ideal of the greatest thinkers and and have the capacity for higher
time goes on, the positive results
Y of goods.
*
• •
'•
development.
Th eir
in our relations with the rest of prophets of all times.' The main technical
achieved — that of , clearing the5. The maintenance in all coun¬
minds and hearts of the people
-he world. We now need more than organ of the General Assembly is progress in this respect will mean
tries
of
high
levels
of
employ¬
more
the Economic and Social Council
goods for themselves and
ever before many of the minerals
and of pointing the way to con¬
ment
and
real
income,
i
more
interchange
of
goods
for
with its several commissions and

stores

which

which

cannot

trade

that

-

grow

artificial

of

1-

.

American business, trade

-

-

-J

and

—

1

'•

-

—

*

-

.....

•

Atw%

*

^

-

,rr_

;

and Social Coun-^
promoting its policies and
seeking the reconciliation of
divergent views through the demof give
the
of intercooperation,
.

xiavivuuA

.

ua vu

^

vvwvviivw

Council and
specialized organizations
United Na-

*

+

obstructed
insecurity, by the
habits of/:
short-run
misunderother's
systems and social ideals

^

-1-

—

>

,

,

,

t

other

and

raw

materials

coun¬

sub-commissions. And working in
coordination with and under the

we

use our vastly ex¬

general guidance of the Economic

need to work with other

tries m

putting to

all

cooperative action—will

structive

which

other countries produce. Above

the ' benefit

'■ •
The Bank

of ' the

world

a

as

' *' .
make loans under

6. The

solution of all problems

in

assert

themselves to the

benefit of

the field of international com- all.
y
mercial policies through collab- t j Meanwhile, we must also real*
its present charter up to the full
"oration among members.
Y; ize that theVsuccess of the United
amount of its authorized capital *> These ends are to be accom¬ Nations and of the specialized in¬
which stands today at $7,670,000,plished through the creation of a ternational organizations can be
000.
Those loans may be made centralized
agency
which will no greater than the degree of pop*
directly or the Bank may guar¬ watch .over the application of
ular support which they are able
antee
or
participate
in loans commercial and business practices
to obtain. They deserve our full
which are locally floated. If the
in accordance with the principles
loans
of the- Bank are, wisely of the Charter to which the mem- support and our patience..,Espe¬
whole.
•

can

;
;

'

panded industrial facilities so
to

as

and-Social Council are the several

maintain .steady work and in¬ specialized 7 agencies
for

comes

heed

we,can
skills

world

people.

We

concerned "with

apply °ur resources and of
the

for

cannot

we

our:,own

peaceful world in which ited

a

benefit

of

all, and

•

areas

which

are

definitely delim¬

and with specific tasks

international

and development.

readjustments

,

,

J -;

- -

y-.

•- •

keep the peace of the

The United States has much "to

by our own efforts alone.

gain from the work of each, one of

inade, they should result in a very bers will have subscribed.

substantial/* enlargement of the
producing, capacities of the world
own problems, we too must seek
Agriculture Organization (FAO),
and. consequently- in the totaL vol¬
the goodwill and cooperation of for
instance, has set itself the task"
ume of - tradef which must- be
other nations.
of
And

so,

in

trying

to

solve

our

these organizations.

helping

-

.

International
■

Cooperation

Needed

■

It is customary

*

*

*

;

•

The Food and

through research and

otherwise to increase agricultural

production and jto raise standards

to express this of

nutrition

around

the

v

world.

[j^pwed,^ j.y ■ ^ y
I

■

International Loans in U;v S.

j As' things now stand; it is quite

While cially

groups

like

those repre*
which
basic

Woods organizations sented at this conference
concerned with such
have already been establshed and are
the

Bretton

.

are

now

.

starting

jVashington,

the

operations

International

Trade Organization is

project stage.
nations,

in problems

eration

of international
as

trade

and

coop¬

shipping

only in the should make those organization^

The delegates of 18

chiefly, members of the

the

subject

tinuous

of careful

study and give

and con?
them all

Economic and Social Council, are help possible by way -of sym¬
of the world are still likely that the:Bank will float a
substantial
proportion of its loans meeting now in London to dis¬ pathetic understanding and con*
agricultural * - work
cooperation in terms of foreign carrying *> on
cuss the specific proposals^ made *stractive suggestions
trade. There are, of course, good r with primitive tools and live oh a in * the United -States;" These will

hped

■

of

international




economic Large

areas

tzc

/:;■-'■'"^■}^hV^t'
'rti.H'

■:'■■'

•

ln'M)

ft. 4.

■ * •

>'

;THE COMMERCIALS FINANCIAL CHRONICLE

JVolume 164 ' v Number 4536

/V|.

i

'k,

(Continued from page 2078)
problem into bold relief in this
period of transition.
'
J>;One of the outstanding phenom-

v

,

ena

of

the

recent .war

this

was

transactions

bound

are

to

enter

cline

international

the

into

sheet.

The

inward

and

balance

very

movements

are

nized

conducted

or

so

never

so

outward

of

synchro¬

no

as

to

elim¬

extraordinary capacity inate the use of capital transac¬
to produce goods and services. By tions. Moreover, the freedom of
the same token our capacity.to national money markets and se¬
equip and maintain large armies curity markets in a free enterprise
in many oversea theatres and to economy makes the flow of shortsupply, through lend-lease and term and long-term capital a nat¬
other means, billions of dollars ural element in the conduct of in¬
worth of supplies and services was ternational business.
unprecedented and exceeded our
International Capital Transactions
best hopes. By the second quarter
International capital transactions
of 1945 when we reached our peak
of annual rate of national output are certain to play a peculiarly
of approximately $206 billion we important part for some time to

E
■

bad

already

passed

beyond

the

come.

Our economy is geared

high

wartime peake of lend-lease and
other shipments but they were

to aid in

still running at an annual rate of

of shattered economies in

than

$14 billions in the
transfer of goods from the United
more

a

level

of

production

to

and

meeting the requirements
Europe,

clined

sharp

goods

services

equivalent

abroad.

Transfers

this

cate¬

growing volume of ; relief ship¬
ments through UNRRA and trans¬
fers under the Army civilian
sup¬

plies program.

■

-

'

•

depression " of

the

the

'

•

more

early

rapidly

than

the total imports of
foreign
countries. The wide gap that de¬
veloped between them persisted

Imports Related to
Domestic

except that in the case
the United States gained

enced

Generally speaking, United
States
purchases
from
foreign
countries

this

normally

to

sponse

vary

business

country.

in

re¬

conditions

Since

a

in

relatively

Alternate

current

after

as

trends

flected in

ports

World

War

I.

in

a

and

imports.

a

With

exception of his war
Anthony-Paul Grafftey-

Smith has been with the Bark of

England since 1923. Mr. GraJ:cey'

-

Smith

re¬

is

some

re¬

erset and stud¬

ied

as

expands
and
business pros¬

reason,

the

higher

Mr.

degree of ecOnomic stability
throughout the world than we ex¬

services.

though "straight" ingly high level there is an in¬
v; war were characterized not only lend-lease practically ceased with creasing tendency for our people
? by normally high transfers of the conclusion .of hostilities in the to engage in foreign travel. More
goods abroad—exceeding a Value Far East the outward flow of dollars come into foreign hands
of
$16.8 billions in 1944—but goods and services is continuing arid this in turn tends to stimu¬
these transactions were directed on a high level. With the sharp late exports.
largely by governmental agencies decline in lend-lease and other
American Shipping
as
distinguished from direction unilateral transactions other items
Even

and operation

by private traders will assume an increasing import¬
peacetime. Strategy and mil¬ ance. During the war many for¬
itary need governed the nature eign countries accumulated sub¬
:•> and course of international trans¬ stantial dollar balances, which to¬
as

in

fers. Goods and services had to be
made available in all parts

world

-according

to

of the
over-all

an

plan. The building and Operation
ships were integral I parts of

of

the program.

Transactions

Wartime
The

wartime

United

Large

accounts

of

the

During the interwar

period'net

payments by this country

on in¬
shipping account also
contributed to
the foreign sup¬
gether with gold holdings will ply of dollars. Except for the first
provide substantial means of pay-; three years immediately following
ment. Yet despite the size of these World War I, when the world was
assets- they
can
provide only a abnormally, dependent on Ameri¬
fraction of total requirements. At can shipping, payments to foreign¬
a time when most nations of the ers exceeded receipts throughout
world have assumed definite ob¬ the entire interwar period. The
ligations by virtue of their mem¬ data relating to the shipping ac¬
bership in international organiza¬ count for this period reflect the

ternational

States

reflect the excep¬ tions- which are designed to
of the
pro¬ progressive deterioration
large volume of goods mote and maintain currency sta¬ American merchant marine in the
transferred. Contrary to the struc¬ bility and economic
expansion, no wake of the shipping boon re¬
ture and inter-relationship'of the constructive
purpose
would
be sulting from the first World War.
American ships became engaged
international transactions in time served if this
country were to
of peace the wartime account con- drain the outside world of its gold relatively more and more in the
coastwise trade with the result
tains high value - for goods and and financial resources.
services transferred for which no
Net liquidation of foreign gold that by 1929 only 42% of United
equivalent for goods and services and dollar holdings in the six States oceangoing tonnage was
received from abroad is shown in months
ended
June
30,
1946, engaged in foreign commerce as
the balance of payments statement. amounted to $800 millions while compared; with - 61%' in 1920. De¬
The major part of these "unilat¬ government
loans
and ; credits, spite attempts to subsidize and

tionally

/

eral"

transactions

lend-lease

of

consisted

which

entered

the

international

merchandise

which, accounts in connection with lendduring the period of straight lerid- lease sfettlement> 4 foreign surplus
!# lease transfers from March 1941 property sales, and Export-Import
tb'September 1945, amounted to Bank disbursements amounted to
approximately $40 billions. It is $1.5 billions.
•

~

otherwise assist
American ship¬
ping under the Merchant Marine

ized

by wide fluctuations in

level

of

economic

contributed to

activity.

.

that

the

overall

cost

i

"

'

■

,v.;

.''

;

A ■'

r

of

therefore

travelled

widely on behalf of the Bank.
of
Throughout
World
War
II
activity * and
imports. Grafftey-Smith
served
in
the
The result was sharp variations armed
forces. The outbreak of the
close relationship in the level

business

in our purchases of
goods and conflict in 1939 found him second
services abroad. Closely related to in command of a
yeomanry tank

these
ratic

developments was the: er¬ regiment on the Continent. This
of capital move¬ regiment he later commanded in
reflecting the sudden shifts Lybia in 1941-42.

behavior

ments

of

American interest in foreign
In : 1943 ; Grafftey-Smith
was
investments and the fluctuating made chief financial officer of oc¬
preferences for American securi¬ cupied
enemy territories in East
ties and dollar balances.
Africa and in May the same year

During the postwar transitional
period

our

exports will

assume

to

an

increasing degree the, nature

of

shipments

abroad

account. For the time
ever ;

on

private

being, how¬

civilian

supplies furnished
by the military in occupied coun¬
tries

and

relief

shipments made
through UNRRA will remain im¬
portant. The flow of relief goods

during

the

amounted to

lion

first

half

of

1946

approximately $1 bil¬

about 17%
chandise transfers.
or

of total

mer¬

These trans¬
fers will, of course, taper off
rap-;

idly toward the end of the

he

became
of

cer

Chief

AMGOT

Financial

and

Offi¬

moved

with

the 15th Army Group in the inva¬
sion of Sicily and Southern Italy,
i

With the amalgamation of AM¬

GOT

the

and

for

Italy,

came

Allied

Commission

Grafftey-Smith

Joint

Chief

Financial

be¬
Offi*

cer along with Col. E.
H. Foley,
Jr., who had been general corinsel
Treasury Department

of the U. S.
and

who is

Assistant Secre¬

now

tary of the Treasury.

Grafftey-Smith

was
promoted
Brigadier in January, 1945. He

to

holds

the

.decoration

Com¬

of

mander of the Order of the Brit¬
ish Empire arid has been awarded

portion of United States trade car¬
ried in domestic vessels continued

year, be limited to LfNRRA

the American' Legion of Merit,

to

These will continue until the end

Acts

of

1928

decrease

ceipts

-

Bank

has

,,

r

t ment of

the

England, and

A. P. Grafftey-Smith

ment in many of our
foreign mar¬
kets
especially because of the

p a r

year.
The present program of relief ac¬
tivities will, after the end of the

and

and

1936

the

the

ratio

pro¬

of

re¬

v.

V.

the
and

For eign De-

This

ments to

P

a c

i f ,i

ship¬
.destinations.

'

estimated

has

in i

Overseas

the

economic unsettle-

at

Grafftey-

Smith
been

} ports of goods and services will pects begin to sag. Similarly when perienced,;after >eWorld War I.
,/*/ The global character of modern continue to exceed very substan¬ business activity is high and na-j During the interwar
period our
tional income is on a correspond¬
war means global effort. Our in- tially our purchases of goods and
domestic econdmy was character¬
ternational transactions during the

Bank

the age of 20;
Since 19 2 8

States to foreign countries.

■

in Fiance

and Spain bef o r e
joining

large part of merchandise im¬
however, to expect that the con¬
ports consists of raw materials and structive
steps taken towards ef¬
semifinished prpducts • the de¬ fective
international collaboration
mand for these goods moves up as will
operate in favor of a

activity

was

born in Som¬

I

large volume of ex¬
large margin over

There

Director

the

service,

Then,

the requirements for
rehabilitation^ were

now,
lief and

Executive

of the Fund for the U. K.

<

.

Many of the

Series)

a

A. P. GRAFFTEY-SMITH

slight¬

a

international transactions are
similar to those which we experi¬

„

(Twenty-third of

Asia

ox

ly larger rather than smaller part
of- the trade.

:

Conditions

And World Fund

throughout the upswing after 1932

our

business

ex¬

in

gory were limited to the small but

tends to decline

our

which

received from

was

period

reconstruction

for

During

much

largely from the
drop in the transfer did

and

Asia, and elsewhere. During the
of

world

vigorously.

thirties, United States exports de¬

resulted

t

country's

-

210S
A'

expand

Current Trends in International Transactions
;*

V&

•

.

,

to

payments

continued

to

of the first quarter of 1947

while

Hald

;

Appointee] Head

Loans and Credits
decline.
military civilian supply shipments Of Internal Auditors
N
includ¬
to occupied areas will continue v Arthur E.
ing services of various kinds, will
Loans and credits are now be¬
Since the nature and importance
Hald, Auditor of Cditfor at least three riionths longer. solidated
reach more than $50 billions by coming an increasingly important of shipping receipts and
Edison Ccu of N. Y., was
payments
Post-UNRRA relief shipments on elected President of The Institute
the time all final settlements are factor in the balancing of our in¬ in
the
balance
of
international

©f the lend-lease program,

concluded. In accordance with the

ternational

mutual-aid

credits have recently entered the

arrangements

made

between the United States and the

accounts.

Substantial

international balance sheet in

foreign "lend-lease" countries our nection

with

the

various

con¬

settle¬

payments are*influenced by na¬
defense policy as well as
by the volume of foreign trade

tional

the future of this item cannot be

a

much

smaller

countries

are

scale

also

to

certain

being

consid¬

ered. On the import side .govern¬
ment purchases will also remain
for

some
time a factor in our
surplus property -held, gauged by past experience. More¬
abroad
and
disposed " of there. over, the ratio betweenv-receipts purchases of goods abroad.
value of so-called reciprocal lend- Small amounts of domestic sur¬ and
There are certain other govern¬
payments is exceedingly un¬
lease received by this country, v plus may also be sold abroad on certain since
changes in freight mental operations, such as the cot¬
With the cessation of straight credit terms. Lines of credit, such rates and
ton
rehabilitation program for
competitive factors may
lend-lease the volume of "gift" or as the dollar "loan" of $3.75 bil¬
considerably influence this re¬ Germany and Japan, which will

international accounts carried a
counterpart item representing the

ments

on

.

unilateral

transactions

began

recede. The level of these

actions

has

been

a

to

trans¬

general indi¬

cator of the degree to which the

% government
t

participated in our
international transactions. During

lions granted to

If

our

level of domestic

produc¬
tion remains
high and exports
for some time provide substantial
continue
at
approximately the
"offsetting" capital items balanc¬
present level of $10 to $11 bil¬
ing the 1 corresponding value of
lions, imports may rise to possibly
goods purchased from the pro¬
$7 or $8 billions. Under such cir¬
ceeds. The lending capacity of the
cumstances
United
States
ship¬
Export-Import Bank has been ex¬
ping would be able to handle the
tended to $3.5 billions. Up to June
present volume of cargo even if
30, 1946, loans amounting to $2.7
foreign shipping were to increase

-

>

!




Auditors for

1943-47

Victor

Z.

Brink, Vice President,

Continental-United Industrie* Co.,

Inc., was elected First Vice-Presi¬
dent; Harris R* Symes, yThe De-4
Edison
Company, Second
Vice-President;
and
David
B.
Mathias, Bankers Trust Company,
troit

ex¬
treasurer. J. K. Laurentz, of The
imports. Credit lend- Brooklyn Union Gas
Co., has been
lease shipments are rapidly com¬
appointed
Secretary.
The
an¬
ing to an end, and foreign surplus
nouncement issued by the Insti¬
property disposal programs are

ports

and

nearing completion. The govern¬
ment's
foreign credits program
will make possible the financing
transactions in goods and services
of
a
substantial
part of future
whereas by the second quarter of
shipments. These facilities will be
1946 this interest in international
indirectly augmented by our con¬
transfers had fallen to about 35% billions have been authorized with
tribution of $2.75 billions to the
its proportion of our foreign trade
©f the total.
/
International Monetary Fund and
$727 millions actually disbursed. carried.
Other important changes in the
by our share of $635 millions in
Because of these shifts long-term
The
forces
determining
the
United States balance : of intercash and $2.54 billions in guaran¬
capital
transactions
during
the course of United States exports
national
payments
during
the first half of 1946tees to the International Bank for
have resulted in have usually been more varied
transitional period relate to the
Reconstruction and Development.
a net outflow of
capital for financ¬ and complex than those respon¬
•capital side of the account.. Since
ing foreign requirements which sible for the behavior of imports.
In contrast with the currency
the goods and services transferred
amounted
to
In general, changes in the dollar disorders and economic
$1,502 billions
as
instability
to foreign
countries are seldom
of
compared with $1,210 billions for volume
exports
have
been which provided an uncertain basis
of the same value as those pur¬
the entire year 1945.
for
closely related to variations in
foreign trade financing after
chased
from
abroad the
settle¬
Some of these basic changes in basic economic conditions in the World War I
the
government's
ments i arising out of day-to-day
this country's
balance of inter¬ principal
foreign markets. But program of participation ; in the
transactions may involve the use
national payments began to de¬ here
again there may develop revival of international economic
of credits and loans. Even in the velop when Japan surrendered in shifts
in emphasis as happened revival during the period immedi¬
rare
case
of an annual balance August, 1945. Even though goods even prior to World War II. After ately ahead should permit the de¬
and services- supplied- to. foreign exports
to Europe had reached velopment of international trade
between outgoing 'and* incoming
countries remained high there was a peak in 1925 they dropped to and investment on
private account
trade
and
service
transactions
nevertheless a sharp decline from lower levels whereas shipments to on
p.
sound ■ and
self-sustaining
short-term and long-term capital the high wartime total. This de¬
most other countries continued to basis.
b
'v

| the first half of 1945 government
participation
involved
74% - of

Internal

at their annual meeting held Oct.
7 at the Hotel Roosevelt, N. Yn

influence the total volume of

Britain, extended lationship.

in the interest of world recovery
and world trade expansion, will

of

tute added:

'

„

■

The annual meeting was a part

of The Institute of Internal Audi¬

tors'.

Fifth / Annual

Conference

Which began with a reception at
the

Roosevelt,

lasted

Oct.

on

6

and

through Oct. 8. Sessions of

the Conference
executives

in

were

attended by

industrial, banking,

insurance, public utility, arid ac¬
counting fields. Of special interest
to them
livered

the
an

and

are

at

a

series of papers de¬

the

Oct.

8

sessions

on

organization and operation of
internal
its

auditing

deparment

coordination with

public

accountants. Mr. Hald succeeds

as

President of The Institute, Curtis
T.

Atkinson,

Consultant

Inc.

of

Chief

Accounting

Fbasco

Services,
-

'

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.

■

.•

•

•

•

;

:

...

THE COMMERCIAL & FINANCIAL CHRONICLE

2106

Industrgpil

The high sched¬

speedy end.
1
'
"
•
,
; The measures that -need to *be
taken should be taken, and they
can be taken without compromis¬

into action.
1933, in what
thought to be a bold attempt

to put' such an idea
In the spring of
was

to

produce recovery, an appro¬
priation of $3 300,000,000 was made
for pubi c works cs part of the
National Recovery Act of 1933. By
the fall of

public works could not
merely by appropriat¬

that

ent

1933, it became appar¬

started

be

ing money. Public works require
long and detailed planning, legal
investigation, site acquisition and,
in

tion

enabling legisla¬
and local govern-

cases,

many

State

by

A'A'm ^'."V/ / '• "•'''"SK?"'

'ments.

■

Public Works Not Antidote to

Depression
The idea of
lic works

using standard pub¬
way of supporting

a

as

purchasing power in time of de¬
pression had failed.
The record
of
Federal
public works as a
means of overcoming a depression
was

a

disappointing

because

we

had

one,

been

partly

led to ex¬

pect too much, and partly because
during the years preceding the
depression the necessary prepara¬
tory work had not been done. Our
disappointment should not cause
us
to reject the
use
of public
works as one of the means of sup-

sporting the level of private busi¬
ness, but it should make us re¬
vise our expectations and improve

the idle time too.

prices is forced higher still
by the uncertainty of how: long
the periods of idleness will be. A
retailer
knows
that spring and

ule of

winter

come

therefore he
costs.

and

year,

every

can

figure his annual

In

construction, who knows
how long a boom may last or when
it may come again?
Illegal Restrictive Measures
The restrictive measures in the

industry are in many cases in¬
genious, in some cases illegal; in
all cases for the purposes of price
maintenance

and

the

of

control

competition.
In. spite of exten¬
uating circumstances, it is un¬
wholesome in the national interest

to go along indefinitely with an
industry which for its own sur¬

vival has

to

have-

of the

element

a

considerable

outlaw in it.

•

As

long as illegal practices are con¬
doned on the front of restrictive
collusive

rules, they will be
excused wherever they can be ex¬
and

make or to, fortify a
position.
Toleration of
illegal practices leads to a special
kind of cooperation between gov¬
ernment, labor and business—the
cost of which is paid for by the
consumer-citizen,
both in high
ploited

to

power

,

we

and: act

can

to

should organize

and

bring

this war to a

'set

as ari .'offthe free play of economic
elsewhere in the, business

to

forces

system^

.

These

menare :

tistical units which

erly moved

from

can

one

not'1 sta-•

be prop¬

column of

Today,

with

Let me
refresh your memory with a few
quotations. "To meet our obliga¬
tion, we will need the same drive
and ingenuity that made possible
the spirit

the

of that report.

miracle

of

war

production."

be raised."-'Pri¬
vate enterprise must assume; the
"Our sights must

leading role in this task as it did
in the task of war production,"
"On the assumption that the rec¬
ommended legislation is author¬
ized promptly the program should
move into high gear by the end of
the first quarter of 1946." "It will

dynamic program to achieve
this goal."
"Neither business-asusual,
labor-as-usual, buildingas-usual,
n o r ■' Government-asusual will suffice." ;
take

a

we
see some signs cf
in housing but the gen¬
eral picture as of October, 1946,
is profoundly disappointing.
The

Today

progress

t

so

produc¬

What

the
we

level

of

employment in
industry should

construction
set.as

full-time

longrtime program?
tion has been made

take

as a

Stabilizer

normal

rough standard the

age
rebuilding of our
plant once a generation,

in 30, years.
.

for

a

The sugges¬
that we might
-

aver¬

physical
say once

This suggestion has

the appeal of

picturing each new
generation ;vturning over, to :lhe
next
generation
new, : modern
structures
instead
of
old, out¬
.

moded

.-

schools

houses,

and

fac-

The precise level, around which
f.should idirect our efforts to¬

to

its

of

•own

the policy itself.
Decision as to
level, whether in terms of dollars
of men employed, is a matter of
public policy.
It will be decided
after considering such questions

or

hs how much

of

^our product wd

wish to put into brick and mortar,
what the requirements of the peo¬

reduce

tiees

for

industy

which

is

the

construction

notorious".




All these

sibilities io the veterans in hous-

drop the pretense
living in a peacetime
economy* 'As far as the unhoused
fng

until

that

wo are

we

that the; industry requires certain
immunities under the \ Sherman
Act and State anti-trust, laws; it
should be subjected to

correspond¬

should

be continued, even under
stabilized production,! these

high

practices should be sanctioned by
law and

supervised by .an appro¬
priate regulatory body; ' "
•
The construction industry sta¬
.

bilized
tures

by public works expendi¬

and regulated by a'.govern¬

ment agency

would be a different
industry from what it is today. It
would still be competitive, just as
the radio Or the banks
lines

or

the air¬

competitive;'it is pos¬
sible that the industry would be
even more competitive
than it is
today." The dominant factors in
are

industry would turn to inner¬
economies

as

their

of bidding for a larger secion of the construction pie, and
since under these circumstances ia

way

pie is assured, who. will
complain if the quality is "im¬
proved?
'
t
larger

.

.

An
for

.

industry that is -lookedf to
,

least

at

8%

of

the

national

product is certainly a matter of
national

when

concern,

particularly
things the
stabilize

in the nature of

not able to
without resorting

industry is

itself
to inef¬
ficient, restrictive practices which
increase costs, postpone .innova¬
tions, and introduce elements of
lawlessness into the industry.

The

industry vis
source

of

of

indispensable v as a
essential public works,

housing and transportation, and

as an

outlet for the investment of

the people's savings;.it will be .the

recipient of billions of dollars of
planned public expenditures over
the "years.v; It is certainly discuss¬
able that the industry should have
the

opportunity under the law to
reorganize for the most efficient
service to the community as a

pri¬

vate, competitive construction in¬

dustry.'
It may well be that

the. 1940's

will be the decade of the construc¬
tion

industry^ the period when it
out of unregulated anarchy
an orderly pattern of-effec¬
tive competition. Just as the rail¬
roads in the 1880's, the banks in
the 1900's, and the Security Ex¬
changes in the 1930's were reor¬
ganized and regulated in the pub¬
lic interest, so the pattern of the
construction industry may be re^drawn in the years immediately
ahead—a pattern that will give
stability and order to the industry,
efficiency and lowered-cost con¬
struction to tile public, and sound
public works programing: to the
Federal Government. A
grew

into

Improvement in Construction
Technique
!\c

v

!

Finally, our long-term objective
is to bring into the construction
industry
the fruits of technical
be attained.
The magnitude of
and
managerial V knowledge, ; to
any construction stabilization pro¬
raise the industry to its appropri¬
gram over a period of 20 years
would
make
possible dramatic ate place in terms of productivity
changes in our national physical and efficiency. We cannot expect
plant; Unless there is some com¬ even a distant approach to this
prehensive concept of what is at¬ long-term objective until we have
tainable, there will be* great waste made good progress on ouh interr
through the undertaking of thou¬ mediate objective, \: the achieve¬
sands of unrelated, efficient de¬ ment of reasonable stability.
tails.
This is not a justification
A
Benefits of Stabilization
■;
for a formalized, unified, and im¬
Stabilization of the construction
posed
national public works
straight-jacket into which the fu¬ industry can be confidently ex¬
ture
public construction of the pected to yield important benefits.
country will be tied. It is simply First of all, stabdity of employ r
■

.

,

that the whole is

ment should eliminate the uncer¬

that
many a poor cake has been'made
from worthy ingredients.

tainties and' fe*r<3 w^i^h make the

an

observation

greater

than

its

parts,

Wants Congressional

,

It is not necessary to recite In
specific detail the restrictive prac-

following which the
System' was cs-!
be found

Reserve

tablished.' If it*' should

vations: and

our

First of all, it taught us
appropriate place in terms things.
productivity and efficiency, to that the scale on which'public
costs and prices, increase works must be pressed in order to
annual earnings of workers, and do any substantial good in a pe¬
give a regular and reasonable riod of unemployment is vastly
would
pay
for the time when
there was little or nothing to do. margin of profit for successful en¬ greater than we had been led to
terprise. When this has been done, believe. Indeed, it is so vast fhat
This kind of pricing,
though the time will have come to re¬ the use of
public works as a means
necessary
for survival, presents build most of our country. Today of.
stabilizing the whole economy
some
difficulties.
In
the
first
we
cannot afford to use and to through the phases of the business
place, it takes the cost of idle time
The
enjoy
the physical /plant
and cycle must be abandoned.
and adds it to the cost of active
structures which we well know most we should expect—and this
time so that the active time car¬
is no small gain—is that we may
how to design and build.
ried a heavy total expense.
In
Let me discuss these three ob¬ be able with public works and
the second place, no such price
conservation to stabilize the con¬
jectives separately.
.V
schedule can be maintained un¬
struction industry itself, so that
less outsiders are kept from com¬
Short-Term Housing Objective
it would have a more even level
ing into the industry, and unless
First, the short-term objective, of activity throughout the year
insiders understand more or less'
speedily to house the veterans and over the years.
specifically what the rules of the and to relieve
In addition to magnitude and
the
distressing
game are and it is made "con¬
pressure
for housing generally. administrative difficulties, there
venient" to follow them.
We cannot discharge our respon- is another reason for abandoning*
in its

Commission

the

*

way—to establish and to hold
a price
structure high enough so
that the days and hours of activity

that

ward., reasonable stabilization of
the industry is less important in
some ways than the acceptance of

•

companies,

re¬

same

we

.

mortgage

would

that

reorganization. Such

investigation should be of the
dignity and competence as
of the National Monetary

an

ing regulation. If some of the re¬
strictive practices of tha industry

Public Works As

.

and

sult in in its

peacetime conditions prevail.
I have just re-read the report
of Feb. 7, 1946, to the President
from the Housing Expediter.
We
need to recall the language and

•

all found, it necessary—each

recommendations

Federal

an

ple for physical plant may be,
high level of tive of ships and planes and tanks;
how rapidly we wish to restore
employment and with our acute has not yet shown its ability to the
national domain, and the pres¬
bulk of construction over a period housing shortage, the construction deliver the goods as far as hous¬
ent and prospective efficiency of
of time arises from private de- industry is very much in the pub¬ ing is concerned.
To be sure,
the industry.
mand, and that the greater the lic eye. Many programs and many there is far more housing, started
A second lesson which has been
proportion of private demand, the reforms are being put forward and completed this year, than the
learned as a result of the experi¬
healthier the
industry will be. and the voices of those who .speak professional forecasters predicted
ence of the 1930's is that the pub¬
Optional public works should be are heard against an increasingly in late 1945. So we have accom¬
lic will not tolerate expenditure1
looked to only as a balancing fac¬ audible background of discontent plished something, but it is not
The record is not good. by the government*which it be¬
tor, not as the main source of de¬ and despair. .No longer is it pos¬ enough.
lieves to be wasteful. Leaf-raking
sible to analyze and discuss the
mand for construction."
"v
*
Most of the blame for the re¬
and boondoggling are condemned
The
construction
industy
is obsolete structure and practices of tarded performance is properly
by public opinion and even the
the construction industry in the
placed on the 79th Congress for
greatly involved in public works
inefficiency which results from
obstructive
delays
in
passing
expenditures, no matter what our quiet of critical detachment.
the employment,,.,of the incom¬
In connection with the housing
legislation that was indispensable
policy on public works may be,
and
the all-important and which every thoughtful ob¬ petent unemployed, or from the
and the construction industry is a problem
failure to use known labor-saving
construction industry, there has server knew; had to be passed
costly and a wasteful industry.
The
been much confusion and needless sooner or later, ; Meanwhile, the equipment is frowned upon.
;;:"t , The reasons are not hard to
controversy because we have not precious spring months slipped by. public rejects the sophisticated ra¬
find. Every phase of the industry
tionalization that some purchasing
distinguished among several ob¬ The excuse that lobbies and spe¬
is subject to the feasts and famines
power is better than none at all.
jectives, each one of which is good. cial interests were "too powerful"
of seasonal and cyclical demand.
The argument that public boon¬
As I see it, we must keep before is no excuse.
The plain fact is
The circumstances, which
cause
doggling is neither better; nor
us simultaneously three objectives
that the 79th Congress was too
one family
tq decide to build a
worse than private boondoggling
—A, B and C; A, a long-term ob¬ weak to perform its legislative
house, cause /thousands to decide
is to no avail.
jective; B, an intermediate objec¬ function
efficiently "under
the
the same way at the same time.
The insight of the people in this
The circumstances which
result tive; and C, a short-term objec¬ ordinary pressure of a representa¬
tive. They must begin at the same
tive, democratic government. Let respect is sound. It is obvious that
in a profitable outlook for the
time, which is now even though us hope that the provisions of the wasteful effort at public expense
building of a factory by one com¬
is done at a social cost. HThe jus¬
there ..terminal points are long, in¬
LaFollette-Monroney
Act,
the
pany
will simultaneously affect
tification that had the labor been
termediate and short in time.
Legislative Reorganization Act of
thousands of companies.
On the
The
short-term
objective
is 1946 passed at the close of last unemployed, nothing at all would
other hand, when families
and
be produced in unconvincing. Even
businesses cannot or do not wish speedily to house the veterans, session, providing for first steps
and
to
relieve
the
distressing in Congressional reorganization, though the waste be less, it is still
to build, broad, general,, causative
undesirable.
that ; people ■ have for will not be by-passed or emascu¬
factors are at work which create pressure
some place to live.
The interme¬ lated by the 80th Congress.
:
> :: There is another reason why the
depression for the construction indiate objective is to create reason¬
So much for the short-term ob¬ purpose, scope, and scale of pub¬
dustry. -•../;
-.A'.: A ' ■'AAA/A
able stability in the construction jective.
lic works programing should be
A Seasonal Industry
;
'
under public discussion.
It is de¬
The private construction indus¬ industry through advance plan¬
Intermediate Objective—Stability sirable that the
public should ap¬
ning of public works and conser¬
try has tried to adapt its practices
vation projects, and through the
Our intermediate objective is to preciate the magnitude of the pro¬
,so
that the several elements of
skillful timing of optional projects. create reasonable stability in the gram, and should approve the pol¬
the industry could survive under
The
long-term
objective is to construction industry, throughout icy well in advance of the time
these adverse conditions.
Archi¬
when
detailed
operations
will
bring into the industry the fruits the year and over the years.
tects, building contractors, build¬
The
of
technical
and
managerial
experience of the 1930's have to begin.
Only in this way
ing supply companies, labor, fi¬
knowledge, to raise the industry with public workfe taught us many can true economy of expenditure
nance

planning and scheduling.
We must never forgehthat the

our

companied by a Congressional inyestigahob- of. the] ladusty with

accounting sheet to another in
order to preserve a balanced level
of employment.,; Nor can they be
shifted long distances from their
ing in any way our desire and ex¬
homes to places and at times con¬
pectations for the abandonment of
venient to the business cycle.
wartime
measures
as
soon
as

prices and in the corruption of his
government.
• arsenal of democracy,
,

into

forcing them out again

veteran is concerned, the war is
still going on; His war is our;, war;
and

men

^^ebnstFuctioh :>;in :}u,stryA mnd

practices spring from a common
When
tne
oreaituown
came
in need, to make sure that the scale
of prices obtained when there is
1929, nothing of a practical nature
had been done to make it possible work to do is sufficient to pay for
(Continued from page 2082)

\:{ ' 4

Thursday, October 24,1946

hundreds of thousands of

Needed: Reform of Construction

vv"',k-■

.'/•<

■'

' .'V---v-.'-r■■ '

*

.

and

Investigation

industry irresponsible, always
fighting for its life. Second, con¬
struction costs should fall sharply
and the earnings of workeYs: and

know, it is my opinion the profits of contractors. should
Third the total public
that a program for stabilizing the increase.
a general cure-all for the business
could be
cycle., This, other reason, is. the construction industry through the construction program
ac¬ well
planner1
'. ^".rf-^nly a stahuman undesirabilitv
bringing use of public worK*
the idea of using public works as

As you

Volume 164

Number 4536

THE COMMERCIAL &
FINANCIAL CHRONICLE

2107.

bilized

industry would produce

vastly

these good products at
as well,Reasonable

a

greater

quantity of con¬
output and,-over a pe¬
time,-would change in a
fundamental way the structural,

lower costs

duplication and waste in capi¬
tal
expenditures, services, and
facilities, for which the public
pays in its rates or taxes, or

stability of
industry at high levels of ac¬
tivity. would be a bulwark of na¬
tional prosperity and a great tool
American environment.
Obsolete of fiscal policy. ! d
\
buildings could not stand before ,1 But the setting is really broader
the match v of; an efficient con¬
still.
Prosperity in the United
struction industry. ■ ' y' v
States is the first requirement far
struction

riod

the

of

,

V~

.

'In

dosing, let us see the con¬ a prosperous
industry in broad per¬ Fortunately, in serving well our
spective.
The industry is inti¬ own
interests, we serve at the
mately associated with the every¬ same-time the interests of all peo¬
day life of every one of us.~. It ples who look to us both as a
gives us our homes, our factories, market and as a source of goods
and' services.
and our places of business.(It
pro¬
/.yy
■■ ■
••
streets,

our

ways; our

and

harbors,

our

high¬
waterways,
our

our bridges,
and our tunnels.
It
protects
the
national,
domain
against irreparable loss.
Reason¬

regulation

have been

benefit all elements of the indus¬

ies

to

world

only be made if

able to

use

our

terms of

and

peace

of

to

degree that ignores
public responsibility and; welfare
of country."
,No major economic issue con¬
fronting the people of the United
Spates today can be intelligently
a

not

the

Would

topple

like

house

a

cards.

i -

^.

"The Key

servicedaffect

•the daily lives of all
people, in¬
fluence the destiny of
every enj terprise.
I
speak l of ; national

A most serious
complication^
and one which may well dis-

va.

rupt
tems
!*

est

sense when I emphasize that
it is, in fact, the key to efficient
distribution. I am convinced that
if we do not soon " consummate

that

will

riers

d.

ownership, there may be no
private industry left for which to

upon' regulation of trans¬

fostering
tended

away

care

of

stage

the

practical

|?

outright

*

•

5'

,;V
;

"

owner¬
:

of f state d socialism

definite program

are

The groundwork

and authorities which regulate the price of transportatation.
When

y,'yy- '."J!Mjjj| V

,

tation

j

in

labor relations

Act'of

were

Transpor-

1920

by

passage of the Railway
bor Act of 1926, :C

loss of revenue in the
rates which he must pay, or, pri¬
vate V investors .' must
absorb the

declining net income.

This

is

not

or

a

true

of

the

manu¬

the major part of his
gross rev¬
enues from the sale of his com¬
modities and performs

focal

for

his

vate

has

and

up

(Continued from

(

his

economic

position

of

Individually

and
shoulder

ownership.

a

publicity-grabbing; outfit.

box

score

in, the primaries
the

as

Dunn

to

sults.

accomplish the

They

same

re¬

that the differ-

say

is that under the bonus
plan

ence

all the

employees will participate
in the fruits of the
increased pro¬

The

Survey in Greenwich,
Connecticut, shows that his CIO-

|

we are a great people for saving.
face through word usage.

our

When

menace

asked

whether

the

he

late

thought

would ever have Fascism in
the United
States, he said, "Prob¬

:we

they

ably, but they will probably call,
it Anti-Fascism."

be.
The real menace is in
their gift for publicity and confu¬
sion of the public mind.
y
Reduced Productivity

someone

Long

may

Sees

2074)

duction, whereas in the incentive
achievement1 plan there is an effort to
measure
conducted by ! each individual worker. Of
course,

their

on

page

followers 'tend

So I say that
lem is to create
-

the part of

'factors

r;

quirements.

terial

which

material
among
matter

major prob¬

our
an

understanding
citizenry of the

our

contribute

wellbeing,
them

of

I

to

and

would

our

first

rate

this

indivdual productivity.

wellbeing, and I mean es¬ Until we deal with
it, and deal
sentially the attribute of high.' with it
A Sound Approach
constructively, thee the
productivity—high individual outj( current
so-called boom will re10 years the Association put per worker. It is the-tendency main
largely

A For
which
work

no

iated, accepting bonus plans which

ever

only as an incident to his
marketing and n distributing re¬
T

can

collectively, they must
the responsibility for the
adoption
of national
policies under which
this industry can
survive in pri¬

counted, he may find that his in¬
fluence has been enormously ex¬
aggerated.
Even his followers, in
the PAC of the CIO are
chiefly

.

count

grave

transportation.

on

ac¬

I

on

-

t

represent has been- at
this problem. We have

the

La-

March

of

this

illusionary and will

toward reduced

productivity which have to. be measured in inflation-

is at the core of

problem durin this postwar

our

ary

terms rather than in terms of

year,

and such

-

now

an

under way.

ual

processes,

into

chines

that

transportation systems, each being
permitted to use any type of fa¬
the

.

-

-

.

.

,

in

—

unit, of .domestic buying
Private ownership and

sphere

greatest

usefulness.

■




of

■

.

-.

r

.

is
ir

a
--

be

dependent

abandoned; people
upon

are

.

■

'

•

•

•
..

i.'..rElf

I

-

t

i

I'

nessman,: the

so

go-between

was

employer, is only

that

he

is

an

a

intef-

mediary who brings the worker
into touch with raw materials and
.

tools and brings the product

,

the worker into contact with the

not a trivial detail in our nation's

i

customer who meets all elements,

material wellbeing.

! of

,

•

,

.

'

•

business

costs,

including

■

I

somewhat amused

was

a

few

months ago when a delegation of

CIO

the

unions

visted

our

one-

time

ally, the Soviet Union, and

came

back with

elaborate

an

li^kpr costs, tiie
cost

Union.

the

cost of taxes, the

materials

and

services

others, the cost of
depreciation, or the wearing out
of the tools, and the growing old-

eco-

fashioned of the machines, and
also
COfit of capital that is,
the return to the owners for the

This delegation discussed,

with

great sympathy, the incentive system in the Soviet Union

and

of

of

J nought, ftom

nomic report of life in the Soviet

of

VSe

savings.

So when

rather inclined to praise
one of the forward looking

was

greases are added to the cost
it as
s'leet. they must in turn be passed
steps in the Socialist Republic of ,alo»g to the customer. .It is the
Soviet Russia. Yet this same union
j customer who is asked to assume
group thinks that the incentive
system in the United States is improper

stand

and

squarely

in

opposition, to f

the incentive system.

•I

^Q

hrpair

in

thnt linp

CIO union there, the United

Auto

Workers,

somewhat

on

their face by

backing down
opposition to
They are saving

is

their

incentive plans.

saying that they still

they are in

one

other

that

' 1

<

cases

\ I

3

burdens, not the

-f '

are
.-

1

only the

go-

You might

say that these facts
elementary that they don't
heed to,be stated, but a group of

being nego'

Polltical. Personalities dominated

the front pages last autumn after
VJ-Day by preaching the reverse
doctrine.
They were telhng you
and

me

and

140

million

other

Americans that it would not only
be

possible but, in the nature of

things, feasible to increase costs,
including wages costs, without in¬
creasing selling prices to the cus-

but

instance, and two
•>.

is

| are so

I was in Toledo the other day
and I found indications that there

The

additional

uie

businessman who
inhumane, and they > between.

won't accept incentive plans,

it.

I
Third: That regulated
transporvast tation be excluded from
anti-trust

».

Consequently, there
*

cannot

its

economic

work

men

output,

,

.

the.largest

misunderstanding

,

no

with which

overall

.

;

work.

_

most

'

men

period,

steadily
rising
and at a sharper and higher
JBI
rate than prevailed in competitive
countries; throughout the world.,
So, this matter of productivity is

competitive

-

control;over

recent

reorganized, by orderly and grad¬

'

s

with which

Up to this; that any gains exacted in collec¬
matter how tive bargaining are at the expense
The Association offers the fol¬ much the human factor
may have of the employer.
And business¬
lowing recommendations, which it been petted, we offset the effect men have fallen for that
sophistry
is prepared to sustain when called of this on
and
have
productivity through
contributed to the mis¬
upon by Congress to do so:
perpetual
improvement in
the understanding by not
making it
.First:- That common carriers be quality and quantity of, the ma¬ clear to the public that the busi¬

investigation is

has

.

single

,

Henry Wallace

;; I say that the major problem
before us is proper appreciation,
of what is responsible: for our ma¬

own

attack upon

.

pbweri

If

stands

transpor¬

services

-

limited

-?*
Ickes?"

great power and the

.

.vpolicy that, has!;since beets" efficient services at the lowest
IvfeS extended to all other basic cost to meet the respective
public
:
transportation: The strike of the
;
.industries during emergency
needs/;;';vV" AsBrotherhood of Railway Train¬
,periods.•
We advocate the
principle of
men! only six months
ago, forgot¬ 2.
Government, as a policy, now competitive "department stores"
ten
already
by' most
business :
promotes direct competition be- in
transportation,
each
selling
leaders, is a glaring example of
f
tween its capital* which need every type of service—thus
sup¬
taking the enterprise principle ,too
]
earn
no. return,; and
porting
the security of the overall
private
much for granted. This strike was
capital, which must earn a re- private investment by earnings
a "trial balloon":—a test case.
And |
derived from all forms of facili¬
K turn.
1
!
•"
President Whitney of the union,' a
I
There is now about $40 billions ties.
••v:V'v..
staunch advocate of government
f
of -government capital invested ;
Under present national
policy
ownership, was able to throttle
in
transportation; six times aa the transportation dollar, paid by
the economy of the country in
C much as in 1920.
the public, is divided
48 hours.*,.' A; •; !V • •
among hun¬
-; n
> ■' \"-ti r
Moreover, federal funds are be¬ dreds of unrelated
enterprises,
Government ownership of trans¬
ing used to promote various eaeh trying "to sustain
itself, sep¬
port in the United States would ;
branches of transportation
by arately, in private ownership—
open the door for the socialization
over 50 federal
with
not
agencies,
unre¬
enough traffic to go
of our entire economy, including
lated as to policies and
prac¬ around in peacetime.
agencies of distribution and mar¬
tices. To none of these is dele¬
Second: That every
appropriate
keting.
' v '
'
gated^ responsibility
for
the inducement be
offered for facili¬
economic position of the com¬
Freight rates, which enter many
tating voluntary consolidations of
times into the distributing mech¬
mon
carrier
industry
as
railroads
and
other
forms
of
whole.
anism, would be subjected to po¬
/
transport.
Over 78,000 miles, or
litical dictation.
3. The several forms of
nearly
one-third of the Class I
transport
Ten million voters
(employes
are either
greatly restricted or railroad mileage, is now depend¬
and their families) would be add¬
prohibited from owning or
ent on less than 6% of the total
op
ed to the federal payroll. erating all types of transporta¬ ton-miles. Much of this
mileage
Bureaucracy would have un¬
tion
facilities
each

.been laid for

the

primaries this year. And we build
them up when we talk about their

producer who derives

set a precedent in national cility that, will provide

;,

,

enterprise.

trUnsportatioh, ; are

removed from the

;

their attempt to discredit and un¬
dermine 4he principle of private
:•

*

controlled by federal procedures. that have no relatlonship whatever to the statutes

-

'

-

a

car¬

solely

agriculture,

longer ignore the implications of

PAC has failed to get out the vote
level pi and to deliver the
goods in the

cuted

carrier

pur¬

The Pattern for Nationalization

following

common

revenues

of

finance

..

ship.

M Leaders

his

leaders

■

increasingly

of
management.
-Unless
trends are reversed, the

next step, will be

the

for

:

■■

emphasize

me

.

poses, government has reached the

present

its

the

industry,; and

will

into

1

:

Whatfs Ahead; lor the II. S.?

either by

by government

or

that

unnecessary
go

*

„

from regulation and towards

full control." For all

now
being proseby the Department of
Justiee. Iff anti-trust prohi-

to

*

conclusion, let

a

business

*

:

>

portation—obviously justified in
the public interest.
But, for 60
has

are

shipper

of

commerce,
national defense,

of

In

regula¬
as

major

:,

■,,,

'

car¬

such

system of
in
which

each, derived

bitians prevail over regular devoted a long period to research ing reconversion
improved material wellbeing, heinto the physical
financial, and period.
tory statutes, long-establishIn some quarters it has cause, my
friends, costs are rising
ed competitive
regulatory.aspeets,
of the industry. become unfashionable in the last,
relationships
everywhere.
Our costs are
rising
between shippers and con- Two years ago. we advocated that few years to be productive.
Vast not only because of
monetary and
sumers,; producing areas and Congress lose no time in creating pressure groups have been organ- fiscal factors which are
operating
the machinery to conduct an im¬ ized to restrain
♦;
agencies of transport will be
productivity, to in that direction, but they are risdisrupted. Chaos in distribu¬ partial and thorough reappraisal put quotas not only on the exer- ing
concurrently because of other
of national
transportation policy. tion of human energy, which may adjustments.
tion would be inevitable.
House Resolution
318, providing be to some extent jusifiable, but
!•
b. Wages,
the largest
for such a survey, was adopted by also to
•;/Public Pays
put quotas on the output
item:* of
cost
in
commonthe House of
Representatives in of the iron slaves*: the machines
There is the

>

this

-

increasingly

.

socialistic government will make
own rules! *
-.''K "A;- ;i
In 1887, the United States em¬

state

r

to provide

of

revenues

L"

A

its

years

attempt to apply regulation

f

vate

distribution.

this country, is the

or

are

the

sys¬

common carriers with one
hand and anti-trust controls
1with the other. Common car-

industry in pri¬

efficient

of

it

the

can¬

shipper who is wholely de¬
pendent upon this form of trans¬
portation must make up for the

tation

distributive

AiAto

the

preserve

the

be

transportation

from the transportation of
persons
and property.
Every ton of traffic
which it loses means either that

facturer
.

make

:

large

Its services

be continued

derives

regulation.

;

should

a

industries.,
;, ■;

objective of national poli¬

tion

reorgan¬

business,
up.

bulwark

loss, in

transportation policy in its broad¬

common-carrier

subjbct-

Two examples will suffice:.

*

Ttahspdrtatiori

now

to

cies

common

standard and character of
of common carriers

pre¬

^bes bankrupt, it

bloodstream

conflicting federal-stat¬
utes 4 and' opposing policies of

.

Industry

If it

just fold

rier

„

& Transportation is
ed

ordinary

Furthermore, the

.

f^Specifically:

The

econom¬

thus

of

in

agencies

lowest possible basis of
individual rates, will leave a
net
return sufficient to attract
private
capital on terms no less favorable
than those
enjoyed by other

and eliminate all' prefer¬
and discriminations. •

ences

carrier is not the
kind of private enterprise as

private capital

,

broad public interest and a lack
of public understanding, or will¬
ingness to face this most crucial
of aR domestic issues.

riers,

It is

ownership.

Government Ownership Through
,

reorganizing the

and must

of

activities

result

from the

single, in¬

common

the

2086)

page

considered except in the ,light of,
Public Default •
In my candid
y'; tins background..
^
'
opinion, present
£; The present-day transportation policies and principles of regula¬
problem lias been" brought 'about tion'will inevitably
lead; to gov¬
by the play of all of these forces, ernment
ownership of .'this in¬
with a resultant disregard of the
dustry. '

barked

gross

promo¬

tional

learned to think in

we

transportation,

small.

operation of basic industry, public
services, and natural resources

,

provide

a

must

competitive

Fifth: That Congress define the
extent to which the Federal Gov¬
ernment shall continue its

for

Transportation
(Continued from

'i-s:

traffic.

war

Fundamental Differences
A

the

National

is

-

cluding the necessity for
izing its balance sheets.

we

unparalleled

same

policies

cies

-

That regulation of all
domestic common car¬

of

on

ruptcy,
tory volume of

contribution
can

/

the verge of bank¬
twice saved by the transi¬

advantages to establish here, at
home,: a high standard of pros¬
perity and democracy.
;
■

try, and will giye to the people all

•

types

/
j.. For 30 years the majority of
our
regulated transport agencies

time that

are

able stability in the industry will

i

Fourth:

riers be centralized in

cumbersome and slow.

We must succeed at-home if we
are to succeed abroad. * Our
great
freedom

,

sferted

tory authority.

bankruptcies.

own

account. And, if private own¬
ership is to prevail, national
poli¬

the supervision of the
regula¬

Obviously, the common-carrier
dependent, federal agency respon¬
industry is over-regulated. The sible
only to the Congress.
and peaceful world.
administration
of

struction

vides

to

which must be absorbed
by the
private investor in recurrent

?,

,.

laws when the
methods* costs, and
proposals of camera are subject

a

Z,

.

'

(Continued
*
' *
■

on

page

2108),

of

products^of their year's labor, i pletely abolish him, they looked
(Continued from page 2107)
i
■
These
elemental' truths were upon him with disdain. i
lomers. They were right in saying
On the way ; up,
the foundation stones of our na¬
my
friend,
that it was theoretically possible
tional
economic
greatness.: In Marriner Eccles, Chairman of the
to offset higher money wage rates
because the annals of American place of such medicine which has Governing Board of the Federal
Reserve System; advocated infla¬
business are replete with evidence proven itself, it has been profit¬
able and popular in recent months tion as a means of ending the de¬
that that is what we have done
and years to offer patent medi¬ pression in the mid-30s.
How¬
through the years, through the
cines, quack therapeutics. For ex¬ ever, he has been disturbed in
decades, but we achieved that mir¬
the last three or four years be¬
acle in former years by adding ample, instead of striving for a
balanced national economy with cause his advice has been, taken
to the productivity of the wrnrker
some sort of equality of exchange
so wholeheartedly.
He was get¬
and the tools. • The reason that it
between agricultural and indus¬ ting uneasy and wanted to reverse
didn't work out this time was that
trial groups, the
Senator from himself. He didn't share this en¬
at the very time when we were
Montana offered an easier * way thusiasm of Senator Murray of
marking up jponey* wages, we
out. The problem of balance re¬ Montana that you could make a
were
simultaneously putting re¬
careful calculations and bull market perpetual, so early in
straints and quotas on output so quires
minute study, but he offered an the year he tried to calm down
that we did not use the higher
easier formula.
Senator Murray the bulls in Wall Street by rais¬
money wages to increase output
introduced a full employment bill ing margins on listed stocks to
per worker per hour and thus off¬
so
that we would always be at a 100%.
That was supposed to
set the rise in the unit cost of
the. top, always at the crest of calm down, the. rise; but it didn't
production. _r
non-stop boom. He would always wprk ' that i way. in view* of the
Prior to June 30th last when
haVe a one-way street in securi¬ swollen money count. At the time
the OPA act expired, in authoriz¬
the break came and when cour¬
ties, in business, and in life.
ing more than 200 increases in
Of course, the Congress modi¬ ageous traders might have step¬
price ceilings, the OPA itself was fied the bill; and in passing it, it
ped in and bought on the way
publicly certifying to the error of didn't achieve that perfection that
down, they found, under these
the doctrine which its leader had
the Senator had in mind, so that new
margin
rules,
that they
been / circulating
the previous we did have a slight slip-up in the needed not
only courage but a
autumn.
Since then, after our
stock market last month.
And, considerable amount'of cash. So
holiday of price fixing during the of
course, Representative Sabath
the effect of the rule was to make
summer
and the resumption of
of Illinois was outraged after he the market thinner and exagger¬
controls, the OPA has been mark¬ had been led to expect the milate the movements up and down.

Though
part

opposed to the return of the
OPA, the OPA has rendered an
were

and

indirect

to business

the

away from price increases.
These increased ceiling prices

onus

,

.

backhanded service

in taking some of

/ have been made under Federal
auspices and with political bless¬
ings, but I wouldn't count too
much on that alleviating factor.
In the long run,
the customer,who determines. your success, is
to

going

be

more

interested in

technicalities and
in American indus¬
try has been based on a different
type of performance.
Your suc¬

results
your

cess

v

than

success

has been

based on your gen¬

perpetually fighting costs
achieving the miracle of pay¬

in

ius

and

ing higher wages to workers in
and better things

the form of more

in

exchange

for a week's work,

;

,

at

work, the effect of the rising
in business and in the se¬

curves

markets would
incumbents to stay in.
curity

help

the

Each

of

was

us,

Byt

what

Market Break

we

had

.

under the American

for

the

future//If

each made our

they
Why takes,
In old- washed out

of the facts?

bit unknowable.

system, was entitled to make, our
own
mistakes in estimating' the

probabilities
Reasons for

a

would

own

have

mis¬

been

on

and

ways

maiming and killing the




with the obligation to>
the economic process so

eaves, us

clarify
that

their freedom intel-

men use

igently.

As

had a temporary con¬
ception of what was essential and
non-essential. ; As part of that
war
effort we deliberately tried
o
attract workers from civilian
rades into critical war industries.

free people we are
entitled to be foolish; we are en¬
titled to be fallacious.
We are

Of

If

enemy, we

it was necessary to
part of the war effort.
Whether it was wise to do it the

a

technically entitled to be
but

as

people

a

price for

our errors

we

and blunders.

can

as

to

Support Truth
charge of the War Man¬
effort. I told him that the
In presenting the truth, the ob¬
department
stores
and
banks jective truth, not anybody's gild¬
around the Los Angeles area found
ing of the lily, because the times-.
great difficulty in getting clerical are too serious for that, you busi¬
help with which to carry on be¬ nessmen come into the
picture. It t
cause of the very much higher wage
is up to the businessmen to re—//;
rates offered in the war indus¬ establish their
prestige before thetries.
Paul McNutt said, "That is
public—and there shouldn't bo
■ <
wonderful.
That is just what we
any fudging of the truth.
When
want."
I don't think that was a men of
in

was

power

,

know

management

far-seeing

very
even

•

because, truth, based

view

in wartime situation,

in or¬

get the wartime production,
have to service the war work¬
in the banks and, to some de¬

der to
you
ers

it

express

without

the-

scientific research,,

on

they should have the
simply
fear

to-

courage

and

forcibly/
offending
the lady who was;

any

such people as

of

in the stores,
But let that my hostess in a border state, a
member in good standing of the* C/
point slide.
•
It was the official policy, League for Women Voters, whothrough disparity in wage rates, might regard an exposition of:
to attract men out of the civlian realities as a symptom of reac—
trades and into the critical war tionaryism.
industries.
Therefore, when the
I say, if arithmetic is reaction¬
armistice came what the country ary, then let's be
reactionary.
1/
needed was a reversal of that pol¬ say that, if
using words honestly
icy so that there could be a return is illiberal, then let's be illiberal,.
gree,

flow

tion

of

workers from the

industries

back

•

muni¬
the

into

Let's not be intimidated by labels,.
I

that somewhat facetiously „

say

interdicted civlian My own serious recommendation^
trades.
But this ill-considered, is that we should not
only ex¬
though seemingly plausible doc¬ pound the truth forcibly, but that,
trine,
of
maintaining wartime we should also identify the truth
take-home pay was an effort to with somewhat attractive labels—- v
freeze the situation and make that that is, good
intelligent merchan¬
healthy readjustment more diffi¬ dising—and
that
we
can
then.
temporarily

and much slower. We are stigmatize
Henry Wallace ancf all*
paying for it in shortages in the the vendors of political blue sky
stores, shortages of materials and and indicate that we are opposed*
unbalanced inventories • through¬ to them because
they don't knowr &
out the nation. But the policy was what they are
talking about.
predicated on a wrong premise,
The late Orlando F.
Weber, aon the idea that we had too little
cult

great

industrialist,

soid

once

purchasing power at a time when "Nowadays a liberal is a
fellovsr
money in circulation was greater who
is liberal with the truth.""
than ever before in history, at a
Let's identify in the
public's mind1;
time ; when
bank
credit
was
that true liberalism, which can
greater than ever before, and at b® measured in more and

better*

things for the
be

average

family, can; :

provided best under the Amer¬
competitive system, based on.

ican

its record through the
decades, in
producing more and better goods t

than

can

any

other system in the-

world.

The American industrial*.
system has the right to be called*
progressive, liberal and forward

looking.

When

make

you

that

clear you

destroy the fakers whov
have appropriated these attractiveand seductive labels.

The time is;

now

ripe for clarification, for the-

first

time

in

than

more

a

dozen

for the housewives of the*
nation and the workers and others;

years,

are

beginning to

They
and

in

are
more

a

ask

mood

scientific,

.

;

wrong,,

terrible /,

we pay a

bring clarity; to the
people so that they will use their /
freedom on the basis of precise
in looking to '
way we did is beside the point. knowledge, then,
We did it deliberately and with this period ahead, we can do so !
with
our eyes open.
greater
enthusiasm •:/ and
>
5.
f
During the ..war, when I/re¬ greater confidence.;;/•
turned from Southern California,
Business Should Have Courage <;
called on Paul McNutt, when he
course,

do that

time, giving to
in the process.
But
did the market break?
the
customer
more
and better
under this new concept of central¬
fashioned days the news services
goods for his money. You achieved
ized
economic
planning in Wash¬
and newspapers,
with which I
that
miracle in
the i: American
the mistakes made are a time when the liquid assets in
have been associated, were naive ington,
competitive system through fight¬
whoppers
because
they are made the hands of the citizen, in the
enough to expect their financial
ing costs, through elimination of
writers to give immediate answers not only by the men who formu¬ form of war bonds and other sav¬
waste, through the elimination of
to f such questions, but now we late the opinions, but they are
ings, was unprecedentedly high.
needless motions, through the degiven the sanction of government
are in a more scientific period. At
velopment of better processes,
the
behest
of
Representative and all of us are expected to fol¬
Economics "by Ear"
through more efficient tools and
low them.
After V-J Day the
Sabath, the Securities and Ex¬
through the increased use of me¬
statisticians and economists of the
We have men in public office
change
Commission
is
undertak¬
chanical energy.
That is where
Federal Administration were ex¬ who take their economies by ear
ing a prolonged investigation as
your success lies.
You may be
They fore¬ rather than by eye, who know
to why stock prices went down. tremely pessimistic.
driven
by forces beyond your
It would be discourteous to the shadowed a quick depression with little_about bookkeeping and care
control to reverse that trend.
If
They have made the read¬
commissars to discuss this subject widespread unemployment, run¬ less.
you go along, you ought to go
ning not less than eight million. justment more difficult. The re¬
pending
a report.
along reluctantly and with per¬
on
the engineering
But in a purely unofficial way, On the basis of this forecast, it conversion
petual opposition because the ef¬
the President side is well within the know-how
without government sanction, we will % be recalled,
fect of rising costs will be to put
The diffi¬
can
look at the; charts and the recommended an extension of the of American industry.
a ceiling on the improvement in
records and see that stock prices unemployment benefits increasing cult readjustment has been the
American living standards.
the amounts and number of weeks changing of men's minds from the
had been rising\for
some four
There must be an understand¬
over which they would be paid.
thinking of a wartime economy
years.
Someone ought to staft an
ing on the part of workers, farm¬
investigation as to \yhy tljey went However, it wasn't a good fore¬ into the thinking that is needed
ers, civil servants and others that
cast.
It proved to be a very bad for a peacetime economy.
up so fast and so far—why the
we exchange goods
and services
"r I; '
market was devoid of the reac¬ forecast,
The missing link in this whole
with one another, that all of us
We didn't have the depression. transition has been popular un¬
tions that it normally would have
as specialized workers
exchange had on the
We
way up that would
had,
instead,
shortages
of derstanding of the fact that one
the products of our year's labor
have tested each rung of the price goods and of labor. With that'bad worker is the customer of the
with other specialized workers,
structure on the way up.
But our economic thinking came a series other worker and that if you
and that the important thing is to
political planners, who want to of upsetting policies which were make it tough for other workers
get down the costs so that, in make us all rich and
happy by needlessly disturbing to the econ¬ to buy goods through arbitrarily
terms of our hours of labor, we
government fiat, had determined omy, such as the belief that in the increasing costs, you are building
produce more in an hour's work that the
effort to ward off unemployment
way to have a perpetual
up trouble for the future.
and have more to exchange in re¬
I was riding in a taxicab in
one-way bull market was to not we should do something artificial
turn for an hour's work.
In order
only ever-expand the money and in increasing purchasing power. New York a few days ago.
It
to keep
the economy balanced
credit count from $55 billion to The Administration, in its desire was one of the few new cabs in
and thriving, it is desirable that
to ward off this depression which the streets.
The driver said That
the major groups proceed in tem¬ upwards of $180 billion, but also
wasn't
coming, sponsored pres¬ he had paid close to $2,000 for the
po and harmony so that they can to manipulate the gadgets with
sure group demands that we en¬
cab which he could have bought
trade
with
one
another.
If, which speculators worked in such
large purchasing power through for $1,400 before the war. I don't
through political miscalculations a
way that unanimity wojjfld pre¬ marking
up
money
wages
and know whether he was entirely
or through pressure group force,
maintaining something equivalent accurate in the figures, but the
vail on Wall Street from now on.
not based on reason and underto wartime take-home pay.
In trend is that way. To me it was
For
example,
though
short
standing, one or more major eco¬
other words, it became the offi¬ a
dramatic presentation of the
nomic' groups are pushed out of selling was not entirely outlawed,
cial public policy of the United fact
that when the automobile
balance with the others, that is
the provision was made rather States to interfere with recon¬ workers
in
Detroit arbitrarily
an undesirable trend, not only for
version and to stop the healthy marked up their wage cost and
the groups directly involved but subtly that you, could only sell
readjustment which should follow other costs, they weren't hurting
for the country as a whole, be¬ short on an up tick of the stock
the transition of war economy to the owners, as assumed, but they
cause prosperity rests on balanced
ticker, not on the way down. The a peacetime economy.
vr
were hurting other workers, such
income relationships among all
idea was to hamstring the bear
Let me spell that out in detail. as the taxicab driver who is their
the producing groups, who give
and make it difficult for him. Al¬ During the war, when we turned customer.
employment to one another by in¬
Where does this leave us?
I
from making things for the use
terchanging among themselves though they weren't ready to com¬
while, at the same

'

lenium, so he called upon the
I' say that the nefarious char¬
patriarchs of Philadelphia, who acter of this loose economic think¬
were
to safeguard our personal
ing by our commissars of Wash¬
riches,
to investigate
why the
ington,
Philadelphia and else¬
stock market had gone down.
He
where is to give the people of
intimated that Wall Streets bears
the United States the idea that
were the culprits, 'and, if so, sug¬
they don't have to succeed any¬
gested they should be thoroughly more the hard way, that a formula
punished and sent to jail.
He has been found for financial, in¬
made it clear that their activities
dustrial and labor success through
not only disturbed the financial
legislative panaceas.
The effect
plans of many good private citi¬ of this full
employment propa¬
zens, but also that they had polit¬
ganda has been to deflect popular
ical implications too. And though
attention from the realities which
Representative Sabath didn't spell make the
economy flourish.
it out, the market crash probably
Let's see if I can illustrate that
upset Hannigan's hope that in face
in another way.
After V-J Day
of all the adverse political factors
the future

of

families

American

concentrated

means

the

ing up other ceilings.
businessmen
for , the most

million

35

and

S-?

What's Ahead for the U.

*

Thursday, October 24, 1946

FINANCIAL CHRONICLE

THE COMMERCIAL &

2108

questions.. %

for

a

better

intellectual9 /

explanation

of what makes the*
wheels go around and what
pro¬
vides
prosperity
and
material!

wellbeing.
Take Advantage of Public

/v

,

if

J

Ferment

Businessmen will muff the bait
they don't take advantage of

-

this ferment which is underway,.
They should do what they can to
make
this
a
greater nation

through

disseminating
popular
understanding of the economic*
They should do it

fundamentals.
in

the

ciety.

interest

Our

contrast

of

our

records

with

the

at

whole

home,

more

so—

in

meager

achievements of other nations inmaterial progress, show that the*
great fountainhead of sociological?
advance lies in improved indus¬

try, in the use of manpower ifa
conjunction with more and better
tools and

quantities of me¬
under the com¬
petitive system. Competition calls
upon the individual to make the
basic decisions aiid it operates
chanical

more

energy

!

'

'

-

iVolume

164

Number 4536

through the merit
system, giving the
who

stockholder,

foregoes his right to

in return for

spend

intangibles, if

return, at least

THE COMMERCIAL & FINANCIAL CHRONICLE

incentive

or

the

hope

turn.

not

of

a

re¬

the
United
States, through the
high productivity in American in¬
dustry, to the saving of the Soviet

take

Union

will be indeed more constructive.

when

its

badk

Was

had

we

in

sent

of

capital is a lot of non¬
You face a capital cost in
Soviet Union or
any social-

the

istic

-

state

just

as

do

you

in

a

capitalistic

society.
You
have
costs in those
foreign economies
incidental to the wearing out of

"

tools.

The chief difference is
that

©n

all-powerful state, a dictatorial
state, decides for the people how
much

of

the

year's

production
shall go into
production goods
and how much into
consumption
^oods.
Then the commissars on

high specify what types of goods
should

be

•taking
.-and

made

consumed,
from the housewife

away

other

and

customers

freedom

of

«choice.

;

;&

So, in the transition from
capitalistic economy to a social¬

istic economy you don't
•cost

of

capital,

<cate to

the

"determine
and

Likewise,

merely allo-

you

dictators

what

what
in

the

shall

shall

right to

be

be

saved

consumed.

totalitarian

a

omy
you
take
worker freedom

the

save

econ¬

away
from the
of decision as to

the type of job he will seek.

£

During the last
War,

'

1944,

we

had

6^2%

only

of the world's
population and less
than 7% of the world's land
area.

We produced two-fifths of
all the
combat munitions made that
year
would

—you
\!

have

friends, that
record

as

there

a

thought,
result

.

have

would

greater enthusiasm

than

this

been

there

today for the American
•

my

of

is

corrmeti-

tive system which met the test of
as
it has met the test of

war
:

peace.

C

-

In spite of the mouthings of the

■./

decadent

politicians who, in the
middle 30's told us that industrial

plants.had

been

fully built and
that our future was
largely be¬
hind us,
implying that all we had
to
in

,h

do

to

get

met the

challenge of a critical
period.
By 1940, when the Low
Countries fell and France was de¬
feated, we took a realistic look at
factories and

our own

tlemen,

our

and

against
fice

Lend-Lease

Russia?

of

fronts

the

blood

the

advice

other

that

he wanted to

as

he

himself.

He

intolerant

of
re¬

was

ity
to
produce
and
shocked to learn that,

war

Garden he tried to isolate

us

As

look ahead and

we

the issues and the

not

itable
some

which

and

will

shake

As

■

.

w

ment.-

cited

The

shows

record

we

that

that

were

we

the

ahead,
we
see
political
change in ferment.>; We see the
possibilities«: of
competitive re¬

in

effort

will

industry
be

to

made

that

so

get

an

costs

I

have
out-

produce the world in the other
fellow's game of making of lethal
It was an astonishing

weapons.

performance and
a
compelling
demonstration to the whole world
•

and

to

people at home, of
the superior potential productiv
ity of the American competitive
our

system. You will recall that while
the

war

was

on,

even

Uncle Joe

Stalin, himself, doffed his hat to
the American private enterprise
system and said that

I

had done

we

much to contribute to the
over the Axis. \

victory

•

f' ' [

Comes September 1946 and
begin to forget the sequence

events.

we

of

A fellow who had
grown

up
in, Iowa and who had not
shown any too great
competence

cither
or

as
Secretary of Agriculture
Vice-President, at least no

enough

to

somehow

position
merce.

or

of

win
other

renomination

got

Secretary

into

of

the

Com¬

Just

why, I don't know
I contributed what I
could, at the
time his nomination was before
the Senate Commerce Committee
to putting on the record his con¬
spicuous unfitness for the job, but
he was put there
anyway.
He

made

a

speech

in./ New

York

several weeks ago and he
seemed to overlook in that
speech

"

■

the contributions that

we




customer

made in

revive
the

tradition

a

of

courtesy to
before it ? is
necessary.
If you

customer

long

competitively
do

that, you will build the con¬
tacts, the friendship and the lead¬
ership that you should strive for.
As

look down the

we

long aisle
going to
laboratory

of progress ahead, we are
find that the current
of

And

of the doctrines which have

seemed

seductive.

so

sense of the

mon

The

com¬

American work¬

ican

competitive

test of
any

system met the

and peace better than

war

of these so-called

orders, which

are

new

neither

social

new

or

orderly.
We

when

the
the

psychological
man

on

the

street is ready to accept this more
sensible view.
In your contracts

with

employees, with
your own stockholders, and with
your friends, you will find that
they look to you for leadership.
your

own

Take

abroad

has

all

or

self-satisfied.

sense

of

Apply

salesmanshio

and

merchandising to the intellectual

home.

But

the

them to

on

re¬

taken

this

legal

to

power

and

force

exporters

to

anything. Business men
perhaps prefer to do of their free
will

what

they fear the govern¬

ment might otherwise force them
to do. They are prepared to
go
well

out

of

their

in

way

that the government should
no

for

excuse

sumption would be divided

con¬

as

fol¬

lows:

order
have

intervening.

Per¬

Industry—

Tons

Building materials industry...
Chemical industry...
;
Household heating

order

the

not

flow

of

to
ex¬

ports.

Perhaps they are so keen
on
recovering their prewar mar¬
kets that they are prepared to
cut

down

profits

minimum.
V

on

exports to

7

Whatever

\

the

L

,

,

,

there

reason,

a

is

a

growing feeling in the country
this
export drive is now
grossly overdone. It should have
that

been

a

2,050,000
1,950,000
1,550,000

1,200,000
950,000

„

,

Glass

and

Paper

Leather

of

the

austeritv.

war¬

Indeed

this

policy is decidedly short¬
sighted, and is apt to defeat its

own

end.

One

of

main

why

reasons

output is still inade¬
that there is very little

quate is

the worker

beyond
spend

buy for his

can

his

rations.. He

futile

on

and

goods

does

not

worth his while
to

earn

more.

to

is

apt to

and

serv¬

consider

exert

Now

money

if

it

himself

he

could

only

buy the things he would
really like to have, it would be
all

different.

volume

of

To

goods

him would be

a

increase

the

available

for'

good investment

from the point of view of

raising
Temporarily there
would be, it is true, less available
export.

The

trade

balance

figures would become less favor¬
able.

But

the

resulting

increase

110,000
?
50,000

J.7

requirements..__.__15,260,000

,in

would

be

the

be imported from
tries, and exactly

foreign

Great

coun¬

6,000,000

from the United States of
from 1,800,000. to

tons

America,

2,000,000 from
from 1,200,000 to

Britain,

1,440,000 tons from Germany, and
from ! 720,000
to
1,200,000 tons
from Poland, but it is evident
that
all
these
figures have only a
theoretical value since it remains
to

be

the* various

whether

seen

countries

been

also

ments

mentioned will

be

in

a

Among

unloaded

there,

have

important

free

shipr-

both

from

U.

S.

A.

and

from Brazil sent outside of the
U. N. R. R. A.-Italian
Government
and the

made

by

Import and Export BankGovernment
spinners

their

agreements-

have

preferably
there, and

purchases

paying cash they have guar¬

anteed

themselves

unexpected
tions.

against

exchange

any

fluctua¬

However, it is exactly suck

preference that has increased the
demand for dollars in

Italy and

has

worsened the position of
the
Italian currency and that has
in¬
duced the government in
Rome to

stop

the

authority

Customs

Officers

Italy cotton

and

rials without

given
to

to

admit

other

raw

the

into

mate¬

requesting the For¬

eign Trade Ministry permit. Here¬
after only such
Ministry will be
allowed

to

grant

such

permits

and, therefore, it is evident that
the import
requirements of the
country will be dependent on the
Italian foreign trade
policy much
more than on the
actual

economic

situation of the
country.

Stock

Exchange Ass'n

position to supply the quantities
of coal in
question, commencing
with
Poland, with which Italy
has not signed as
yet any com¬

Nominates Governors

mercial

the Association of Stock

the

agreement,

various

and

branches

whether

of

the

in¬

dustry will actually be able to de¬
velop the activity requiring such
imports of fuel. To mention one
in this

.case

ficient; to

connection, it is suf¬

refer

to

the

which

is

dependent

the

on

de¬

mand

arising from the building
industry. In this regard the ques¬
tion must, be asked whether*
build¬

ing will be resumed in Italy while
the.

government

blockade

maintains'

against

the

the

raising of
lodging prices so that the capital
invested in buildings does not re¬
a:

The

remuneration higher than

for

the
of

thing

said in connection with
and steel

may be

the

iron

industry, and the engi¬

neering industry, the activity of
which is dependent also on the
liquidation of the war damages
by the Italian Government.
Increase
Of

Artificial

course, there is
there are certain

no

have

greatly

1946) and could have
pects

of

the

further

there

of coal;

course

670,000 kg. in Jan¬
5,237,076 kg. in August

to

uary

doubt

increased

their output in Italy in the
of 1946 (from

As

be

a

even

years:

present

demand

fact, with
for

v'f

rayon

textiles from

Wilbur

Nominated to

output of

owing to the

tion

of

the

supply of

rials which

industry

short.

a

matter

are

of

Nominating Committee for 1947:
Sidney L. Schwartz, Sutro &
San Francisco; Russell A,
Ballou,
Schirmer,
Atherton
&
Co., Boston; Patrick F. Buckley,
Harris, Upham & Co., Chicago;

Co.,

Atkins, Shearson, HamCo., New York; William
Haffner, Wilcox & Co., New
&

mill

The

mate¬
en¬

rather

fact,

for

son,

Co.,

H.

of

consume

copper.

on

Levante

to Rome cannot be car¬

owing to the shortage of
On

the

I

other

hand,

in

Crary,

Los

E. F.

Angeles;

is

York;

Edgar

Hutton

&

Henry? U.

Harris, Harris, Upham

gomery,

(Genoa)

report

Co., of Chicago;

Hammill &

Allan

railway

ried

Committee

the

composed of Roy E. Bard, Shear-

New

' Sestri

Nominating
submitted

which

example, the electrification of the
from

two years to

:

ques¬

especially in the

gineering
As

raw

serve

Gardner D. Stout, Dominick ;&
Dominick,
New
York;
William.
Wymond Cabell, Branch, Cabell
&
Co.,
Richmond;
Harold
L.
Bache, Bache & Co., New York.

York.

industry, instead, cannot raise

the

!

three years:

serve

fill unexpired terms:

B.

a larger quantity
disposal. The chem¬

ical

;

/

Hoye,
Chas.
W.
Scranton & Co., New
Haven; Al¬
bert D. Far well, Far
well, Chap¬
man &
Co., Chicago; Benjamin H.
Griswold, III, Alex. Brown
&
Sons, : Baltimore;
Lyon
Carter,
Estabrook & Co., Boston; Harold
P.
Goodbody, Goodbody & Co.,

of soda at its

!

three

G.

Robert W.

Furthermore, there is the

;■•'!v/r/■

Nominated to

should there be

shortage of coals.

serve

Bradford, J. C. Bradford &
Co., Nashville; James M.
Hutton,
Jr., W. E. Hutton & Co., Cincin¬
nati; i M. Donald Grant, Fahnestock &
Co., New York; W. W.
Cumberland, Ladenburg, Thalmann &
Co., New York; Leonard
D.
Newborg, Hallgarten & Co.,
New York; Thomas F.
Lennon,
Delafield & Delafield, New York.

overseas markets the
Italian rayon output could be in¬
creased to 8,000,000 kg. monthly

soda

follows:

as

to

J. C.

pros¬

developments
larger supply

matter of

a

Governors to be voted on at
Annual Meeting and Election
Association to be held on

New York.

Fibres

industries,
artificial fibres industries,

the

as

in

of

Exchange

its nominations

the

Renominated

6 and 7% paid on
the capital invested in trade and
same

announced

Monday, Nov. 18,

against

industry. The

Nominating Committee

Firms

building-

materials industry the
activity of

of the output would enable Brit¬
ain both to export more and to
more.

industry

proportion • of
3,560,000 by the Italian coal out¬
put while 11,700,000 tons should

should

the

industrial

220,000

150,000

requirements

covered

which

of

coal

Such

position of Britain is not so des¬
perate that it would call for a
continuation

400,000

....

industry..

industry ;

Total

that

state

cellulose

industry......)

Electrotechnical

had rejected the American Loan.
As
it is,
the foreign

exchange

810,000

pottery industry

and

Rubber

evil if Congress

necessary

cotton

Textile

Vz%

with

the

Italian

ceive

in

program

ing the 1936-1940 period.

Iron and steel works____u_

...

excess

200,000 tons
of cotton against an
average year¬
ly cotton trade of 99,000 tons dur¬

Italian

tion

interfere

to

Railways and mercantile marine. 2,600,000
Chemical & metallurgical cokeries

haps they want to prove the ef¬
ficiency of private enterprise, in
the hope that the government, for
considerations • of
expediency,
might slow down its nationaliza¬

for

some

higher

do almost

about

snug

ex¬

position

a

7even

have

manufacturers

production.

economic life to clarify
the issue for others.
Don't be
stubborn in your views, don't be

at

the

advantage of this opportun¬
ity to use your special know-how
our

of

Their zeal is due in part to their
desire to be on good terms with
the government. The government

ices,
at

are

moment

price

warning so seriously that they are
giving away their goods at bar-*
gain prices.

er, farmer and

ordinary citizen is
going to recognize that the Amer¬

a

exporters

time

many

the

from taking undue advan¬
tage of -the present situation by
charging
"extortionate"
prices.

virtual

neoole the fallacy of

British

frain

for

own

of

are

than

degradation, starvation and fa¬
mine abroad is going to
clarify
our

in

government called

shorter pe¬

riod

surgence

freight,
import

not really neces¬
sellers' market British

obtain

prices

we can

the

did

to

x.

look to

we

of the
; foreign

exporters would be in

clarify the peoole's mind in these
days of complications and con¬
fusion.

spite

and

cuts

In

sary,

taking the long view and looking
ahead as to the. kind of country
his will be for my children and
your children.
I say, on the side
of hope and promise, that the op¬
portunities for progress and deunlimited if

in

ported goods

out

Government experts the coal

Tax!

"" '

Such

type of recess:on may
be
beneficial. I am

are

payable

ex-Purchase

price

on—that

velooment

prices

this

goods.

;|of; the industrial hangers-?

nrideed

is

duties that foreign importers have
to add to the

inev¬

are

Tax

ground

insurance

the!' short-

of

which

the

V

thinking of the

talking

recessions

erm

Purchase

no

extent

some

on

be

American people; but until we do
that, we will have endless hurdles.
am

justified

are

goods

And

What

see

is

are

exported. But in some
instances
they, prices
of British
goods abroad are lower than their

is before us, my friends, I say that
economic greatness and progress
are ahead of us if we can
clarify

accord¬

ing to the point of view of Italian

industry
" 800,000
Electric industry..
—7 / 470,000
Engineering industry....^....... ' 450,000

British

get him outi
We should
hankful for small favors.

requirements during 1947, it

Foodstuff industry

that

moves

Italian

interesting to note that

an

the

loaded at Genoa about

the

to

at

disposal
industry, and during
period from September 1945
August 1946 have been un¬

the

■,

cheaper abroad than they
in Britain in so far as
they

on

from

to

remarkable

more

obtainable at all. To

remaining friendly allies.

It took the President four

even

is

reference

materials

raw

of the Italian

agricultural
"

•

is that many British manufactures

this

years

•;rying to liquidate his ideological
adversaries by calling them isoationists, but in Madison Square
our

coal

drive..

are

You know Wallace went around

the country during the

capac¬

under

What is

with him.',*•

verse

export

an

Britain.

reverse

anybody who wasn't ready to

on

with them British goods the likes
of
which
are
unobtainable
in

giving for several years,

nasmuch

effort

They leave the home market un¬
provided for, in order to be able
to carry out at least part of their
large foreign orders.
Travelers
returning from abroad bring back

sacri¬

on

in! line with the capacity of the
to buy.
I say that the
return of competition,, the return
narcotics of the 30's, for the first
of
selling .will be an. entirely
i, -decade in our national
history, we healthy development which will
had failed to add
anything net to make for long-term
progress. T
; our store of tools. > But we fever¬
say to you businessmen here this
ishly set out around 1940 to remorning, don't wait until you are
pair that !. retarded development
forced to recognize a competitive
and to make good the
delay in situation;
discount ; it now;
be
building new plants and equip¬ read for the months ahead
and
-•

most

of

and,the industrial¬

certain

"

the textile field there is

of Ital¬

Coal Requirements

With

ment have concentrated their ut¬

sent

we

scheming against the Soviet
He berated us, by impli¬
in his address, because we

lad been

of

branches.

(Continued from page 2079)
hating and fearing this govern¬

scheming

Was

American

followed

lad

ization

Drive Overdone?

Union?
cation

Export

ian agriculture

on

the billions

were

in

over

administrators

to divide the existing wealth,

we

V

was

Is British

multiple fronts
relieving the Russian armies.
Henry Wallace said, in effect,
at Madison Square Garden in New
York, "We should stop scheming
against the Soviet Union." ; Gen¬

full year of the

produced upwards

we

British armies

to favor the motorization

cru¬

in

..

of 40% of all lethal
weapons made
in the Axis and
United Nations

alike, though
<

"

(Continued from page 2077)

important share of machinery

an

Lend-

fallacy that if you Lease; and the overlooked the
shoot the
capitalist, you avoid the cial effect of the American

cost

If all of us cooperate and
advantage of this golden op¬
portunity, then the next chapter

up

great

sense.

field.

again the wall; he overlooked the
millions

The

■

\

& Co., of

Scott,

Mont¬

Scott & Co., of Philadel¬

phia, and John L. Clark, Abbott,
Proctor

&

Chairman.

Paine,

of

New York,

Thursday, October 24, 1946

THE COMMERCIAL & FINANCIAL CHRONICLE
2110

the Commission ment that deficiencies in the first
to reverse letter of comment be cured, would
the undesirable trend away from defeat the entire program, unless
the use of the red herring by giv¬ the first letter of comment were
to buy before the effective date,
received in ample time for the is¬
; y'i
it was required to comply with ing these assurances.
suer to complete the preparation
certain
standards.
In
general,
Comment on the Proposals
*
of the necessary amendments and
these were that the red herring
L The projected rules would i;o prepare, print and file the red
should be a fair summarization of
lerring
prospectus at least ,48
the salient information in the reg¬ make an important/contribution
rent proposals of

for Red Herrings

The Outlook
(Continued from page

opinion concerning the merits
of the security; (2) it bears a spe¬
cific legend limiting its use to in¬

or

2071R

which
reasonably accurate and
formative purposes only; and (3)
complete information and bears a
five exact copies are filed with the
specific legend limiting the use of Commission a certain number of
date,

effective

the

before

contains

informative pur¬
poses only, will not constitute an
attempt, or offer, to dispose of a
security nor the solicitation of an

the

prospectus to

offer

deemed
complete,!
prepared
of the information
the
registration
To

it.

buy

to

on

basis
in

the

,

contained

least 48 hours

Commission at
before the registra¬

tion becomes

effective.:

the

developments which gave rise
The Securities Act of

and
to

them.

amended, provides that
the effective date of a registration
statement shall be the twentieth
day after .the filing thereof or
such earlier date as the Commis¬
sion may determine, having due
regard to the adequacy of the in¬
formation respecting the
issuer
theretofore available to the public,
and to the public interest, and the
protection of investors. Until the
effective date, it is unlawful for
any person to use the mails or the
1933,

the

-v

final prospectus may
consist of a red herring which as
attached to and made part of a
"document" containing such addi¬
tional information as is necessary
to correct inaccuracies and to sup¬
The

2.

complete understanding of

A

amended to cure all
deficiencies cited in the Commis¬
sion's first letter of comment. Five
copies of the red herring must be
with

vv-

import of these proposals requires
a consideration of the background

statement as

filed

-

Background of the Problem

plement inadequacies in the red
herring. The red herring and the
"document" together must contain
all the information required for a
complete prospectus
under the
Securities Act. ,
1
,

as

interstate commerce

channels

of

to sell or

offer to buy the

ties

the

through

The intention of

attempt

.

Iiours before the effective date.
;o
the promotion of the purposes
should 1 not
of the statute by assuring to un¬ A red herring put into circulation
stress or emphasize the favorable
derwriters and dealers that a red within a matter of; hours before
as against the unfavorable aspects
herring prospectus will not in it¬ the effective date serves little pur¬
of the security; should contain no
To be useful, red herrings
recommendation or opinion as to self constitute an attempt to dis¬ pose.
should be distributed several d^ys
the merits of the security; and pose of securities or to solicit of¬
in
advance
of the effective date.
fers
to
buy, provided that the pre¬
should be clearly marked to in¬
scribed conditions are met.
The While the projected rule does not
dicate
that
it
was & informative

statement;

j

any

intent

When

these

only and to negative
solicit

to

standards

orders.
were

rules would have the effect of re¬

which may
inger in the minds of underwrit¬

moving

met, the red her¬

of

dealers, brokers, corporations and
and individual in¬

institutional
vestors

without

Act.

'

This

was

the

the

of

violation

'

1

general situation

a

dealers

proper

In

2.

doubt

any

and

ers

ring could be sent to underwriters,

as

to the legality

to

be

postponed until the first'letter
is received.
Conse¬

De

of 'comment

the

quently,

red herring.

order

prohibit distribution before filing,
it does require that distribution

protected by

entire

of

workability

program

the

depends .upon

a

rules, the red her¬ speeding up of the Commission's
; ring must be prepared on the basis procedure in examining registra¬
tion statements.
'
'»
of the information contained in
proposed

re

.

registration

oe

statement

"as

prospectus may
consist of the red herring which
4.'

The 'final

by and large, it seemed to
fairly well until April 30, amended to cure all deficiencies
On that date the Commis¬ cited in the Commission's first let¬ is attached to and made part of a
sion issued a statement of policy ter of comment." This provision is "document" correcting any inac¬
curacies or inadequacies in the
regarding requests for the accel¬ far too restrictive, ^undoubtedly
Any person- receiv¬
eration of the effective date where more so than the. Commission in¬ red herring.

and,

work

1945.

red

medium

otherwise.

prospectus or

securi¬
of a

an

,

istration

determined) before

days (not yet
it is used.

be

reasonably accurate and
the red herring must be

represent

1

the Congress in

herring prospectuses had been tends.
In the
statement of pol¬

circulated. The

icy made it clear that the Com¬
mission would not accelerate in

common

mission

,

first

,,'

practice
to

"

-

place, it

note

for

1 ' ing a red herring prior to The ef¬
has been fective date need receive only the
the Com¬ "document" if both are delivered

deficiencies

as

by the same person.

Under this

the % Commission would
3. Any person to whom a red her¬
been
circulated
containing ma¬ fact material and which the staff no longer require proof, as a con¬
waives after conference. dition to acceleration, that every
ring prospectus was sent or given the effective date was twofold: to terial inaccuracies or inadequa¬ oftep
prior to the effective date need be slow down the process of distri¬ cies, until the Commission had re¬ While only material matters may person who received a copy of the
sent
or
given only the "docu¬ bution, and to afford opportunity ceived satisfactory assurances that be intended, the rule literally re¬ red herring had also received a
ment," if both are sent or given for public and professional scru¬ by apprporiate means the nature quires that "all" deficiencies be copy of the final prospectus. It is
of the material amendments had cured.
Thus, if there is not pre¬ implicit in the rule that the liaby the same person.
tiny of the proposed issue. It was
These proposals are intended to
contemplated
that
during the been communicated to those per cise and exact compliance with oility of the particular -transmit¬
the
deficiency
letter,
notwith¬ ter of the red herring would be
encourage the printing and use of waiting
period there would be hsons to whom the red herring was
red
herrings.
To supply them widespread dissemination of in¬ distributed.
standing that it may refer to im¬ satisfied by his sending a copy of
the "document" to the recipient
with
"teeth,"
the
Commission formation among dealers and the
An immediate result of the an¬ material deficiencies or to defici¬
encies later waived by the Com¬ of the red herring. In other words,
would refuse to grant requests for
public generally with respect to nouncement of this policy was to
acceleration of the effective date the issue. At the same time it was create a general doubt in the mission's staff, the red herring the underwriter would no longer
where it believed that the under¬ contemplated that no sales, offers minds of underwriters as to the would not have the protection of be held responsible for transmis¬
the rule. Hence, the requirement sion of the final prospectus by the
writers had not endeavored to ac¬ to
sell, or offers to buy, would be advisability of continuing the use
dealer.
This will go- far to re¬
complish an adequate distribution made until the effective date.
of red herring prospectuses. Com¬ should be limited to the curing of
the
practical difficulties
of
red
herrings.
Underwriters
deficiencies;
and
the move
the Commission's material
Obviously, public and profes¬ pliance with
would be expected to get red her¬
standards
for
acceleration
in¬ Commission's first letter of com¬ created by the Commission^ -ear¬
sional scrutiny cannot be stimu¬
ment
should concern
itself ex¬ lier statement of policy regarding
rings into the hands of dealers,' lated merely by the filing of a volved several practical difficult
ties. An underwriter might keep clusively with material deficien¬ acceleration.
particularly those who may be registration
statement,
even
asked to join the selling group,
5. The Commission would refuse
careful records of the names and cies.
though a copy of such statement
and would also be expected, to
Secondly,
if the Commission acceleration of the effective date
is open to public inspection. Only addresses of dealers to whom he
have an adequate supply of red
delivered red herrings, and yet be continues to cite as a deficiency where it believed that underwrit¬
a small segment of the public can
herrings available for, persons in¬
unable to supply the "satisfactory the failure to include price and ers had not tried to accomplish
possibly have opportunity to in¬
terested in learning about the se¬
assurances" necessary to obtain underwriting data, the rule would
adequate dissemination of the red
spect the statement. The Con¬
curity.
"
'
•
acceleration. Since the Commis¬ perhaps inadvertently, require £
herring.
Some uncertainty may
gress, recognizing this fact, met
sion's
statement
of
policy
referrec
arise on the question of what con¬
On the other hand, the Comsubstantial
and
drastic
change
in
the problem for the period sub¬
to all persons to whom the red present $ underwriting
mission would continue its exist¬
practice stitutes an attempt at* adequate
sequent to the effective date, by
ing policy of refusing acceleration requiring that the sale of a regis¬ herring was distributed, the 'un¬ Instead of supplying such infor¬ dissemination, particularly where
was
required to in¬ mation immediately before the the underwriter does not contem¬
where materially inaccurate or in¬ tered security be accompanied or derwriter
prescribing a compulsory waiting
period between the filing date and

any case

where

various

red herring had

a

matters which

.

adequate red herrings are circu¬ preceded by the delivery of a
lated, until, corrective informa¬ prospectus to the purchaser. While
tion has been communicated ; to no express provision was made in

receiving the red her¬ the Act for a medium of transmit¬
ring. The Commission believes, ting information to -prospective
however,
that
fhis
would no purchasers during the waiting
longer constitute a problem under period, there can be no doubt as
the proposed procedure,' since fu¬ to
the
Congressional
intention
ture red herrings would probably that information should be dis¬
the persons

amendments required

the

by the Commission's first letter of
comment and, presumably, would
not be materially inaccurate or in¬

adequate.
,

'

'

"

V;

;v-

;

After the effective

date, the red

seminated during that

prospectusby simply at¬
it to the necessary one-

taching

"document."
The
requirements of the

two-page

or

prospectus

Act would be met when a person

who had been f urnished

a

red her¬

ring would be given in addition,
by the person who furnished the
red herring, the "document" in¬
corporating the red herring by
reference and containing the in

correct in¬
supplement in

formation necessary to

accuracies and to

adequacies in the red herring.
The

•

final

Commission's

,

pro¬

posal relates to the use of "sum¬
maries" of the information in
registration statement before the
effective

date.

posal such
constitute

Under

summary

a
an

this

pro¬

would not

attempt or offer to

dispose of the security, nor a so¬
licitation of an offer to buy the
security, provided: (1) it contains
a fair summary
of the most sig
nificant information in the regis¬
tration
cure

statement

all

.as

amended

deficiencies cited in

to

the

Commission's first letter of com¬

ment, does not stress or empha¬
size

the

favorable

aspects

as

against the unfavorable, and does
not

contain

any

period. In

the

fact, the Committee Report on
House draft of the Securities

herrings from

age:

the difficulty

16

(bR

(now

program

.

17 (b) ), is not
communications

selling group or dealers

generally of the nature of .a se¬
curity that will be offered for
sale after the effective date of

statement,

to
full in¬
formation respecting such a se¬
curity. This could easily and ef¬
fectively be done by circulating
the offering circular itself, if
clearly marked in such a man¬
ner as to indicate that no offers
registration

the

circulate

among

the mem¬

is now the prac¬ plate the formation of a selling
tice, the underwriters would be group. This uncertainty will tend
disappear, ■' however,
as
the
required to include it in the red to
herring.
The rule,
therefore standards are crystallized through
i?,
should except price and under¬ administrative precedent.-

effective date, as

writing data from the deficiencies
to be cured in the red herring.

6. The

them

of

draf

the

able for underwriters

.

succeedec cited deficiencies. The question of
whether
a
deficiency has been
practical
device
for cured is frequently a matter of
buy should be sent :or would
be accepted until the effective circulating information during the
opinion.
Underwriters may toe
date of the registration state¬ waiting period.
hesitant to gamble on the ultimate
ment. (House Committee Report
If underwriters and dealers are outcome. A "clearance" letter: or
No. 85, 73d Cong., 1st Session,
again to be encouraged to circu
telegram, by furnishing assurance
late red herring prospectuses or that the standards for acceleration
pp. 12-13).
- ;
Early in the administration of other forms of information during have been satisfied, would en¬
the Act, the red herring pros¬ the waiting period they must !be courage them to proceed with the
assured (a) that the dissemination distribution of red herrings,
f
pectus emerged as the most ef
to

abuse, the Commission
in

discouraging the development

of

the

most

.

vehicle

fective

sion

of

for the

information

transmis¬
the

during

waiting period. In order that the
red

herring should not run afoul

of the

prohibition against making

provisions relating to the
of "summaries," • as

distribution

distinguished from red herring
prospectuses, are the least effect¬
ive portions of the program. This
is due primarily to the. absence of
any
adequate standards for the
preparation of asummary. -If
this omission is left unremedied,
it may result in widespread ne¬
glect of the summary as a means
of circulating information during
process which made it difficult for ment. This objection can be over
the
waiting period, particularly
them to supply satisfactory
as¬ come by adding a provision mak¬ since the use of summaries is per¬
surances
that later amendments
missive and not mandatory.
';: ''
ing it permissive for the red her
had
been
communicated to al
In
its
memorandum, accom¬
ring to cure any other deficiencies
persons to whom the red herrings which may come to the issuer's
panying the proposed.-/rules, the
were
distributed. It was simpler
attention before the red herring is Commission states that ""the vpry
many
underwriters believed, to used.
'
X. V'. v?;
nature of the summary makes it
abandon
the red herring alto¬
Finally, it would be /.advisable impossible to establish an absolute
gether. ■
'
to provide for a "clearance" letter standard of what it must contain
While
the
Commission's 'ob¬ or
telegram to be -sent by the —that there must be a certain lati¬
jective may Rave been sound, Hie Commission to : the underwriter tude of independent judgment;alJ
means used to achieve the objec¬
when the red herring is deemed lowed to the. author/';. Neverthe¬
tive were unfortunate. In seeking
by the Commission to contain the less, there is ample precedent, for
to correct what may have been an
information necessary to cure the a specification by the Commission
Thirdly, under the present

a

rule, it would be inadvis¬
to distribute
an amended red herring based on
the underwriters over the distri¬ later deficiency letters or changes
bution of red herrings. Accord¬ necessitated by altered conditions
ingly, underwriters , grew more since such a procedure would not
and more reluctant to jeopardize conform
with
the
requirement
the granting of requests for accel¬ that
the red herring be
based
eration by
setting in motion
upon
the "first" letter of com

ity. It is, therefore, possible for
underwriters who wish to in¬
a

of

country,
no
adequate
controls
could feasibly be maintained by

which merely describe a secur¬

form

of later identifying

selling group included
dealers in various sections of the

bers

,

concerned with

dealers, their

them increased. Where

bill, apart from Section

The

the

employees. As the
number of such persons expanded
and

salesmen

Act

recommendation offers to sell or soliciting offers




quire into the identity of all per¬
who had received the rec

sons

suggested the very medium to be
employed, in the following pass¬

herring could be made part of the
final

not in

.

.

reflect

are

will not in itself constitute an

at

tempt to dispose of the securities
in violation of the Act, and • (to)
that it is not likely to delay

accel

eration of the effective date of

registration statement.

the

The cur¬

general matters -to. be'in¬
omitted from a sum¬
mary. For many years the 'Com¬
mission's -rules have authorized
the omission from a prospectus
of various items contained in 'the
of the.

cluded in or

statement; By enu¬
which could be
omitted, ►the Commission estab¬
lished standards upon which; an
issuer courd safely rely, in pre¬
the prospectus.
'These
3. 'Five exact copies of the red paring
recognized - standards will
herring must be filed with the well
Commission at least 48 hours be-> serve as a guide to the prepara?
fore the registration statement be¬
tion of -the red herring prospectus
comes
effective.
This require¬
ment, coupled with the require- under the proposed rules., They
registration

merating the items

-

Volume 164
will ,not

Number 4536

serve

THE COMMERCIAL & FINANCIAL CHRONICLE

<■■■*'.

guide to the summary will supplement the red a map are, at
best, guesses. One
summary, since herring prospectus and not be a of the great gains tnat can come
contemplated fhat the sum¬ substitute for it.
Consequently the with the completion of the organi¬
mary will be a more condensed red
herring
will
be
generally zation of the Bretton Woods insti¬
instrument than the red
herring. available to correct any mislead¬ tutions is an increase in the ac¬
But ;the approach used
by the ing impression which might other- curacy and speed of these tabula¬
Commission in fashioning the con¬ wise be created
by the more con¬ tions. But until there is much imtents of a prospectus would be densed
summary.
In the second pro.vementvin the bookkeeping of
equally valid with respect to the place, the summary must be filed
many nations which are looking
summary. •
with the Commission a
^
specified to us for goods, the signal that the
The Commission has gone even period before it is used. This re¬ detour has
begun will be the same
further in the case of newspaper quirement
should not only serve time-honored one that betrays the
prospectuses. Jts instructions for as a deterrent to unfair
slanting or financially embarrassed business
various registration forms
have, emphasis, but should afford the man everywhere—the nation will
permitted tne deletion from news- ! Commission
opportunity to de¬ be reported slow-in-the-trade.
paper advertisements of a great mand
any
necessary
changes.
In the case of
foreign trade, it
many
items of the registration •Finally, the
summary could not is the nation
as a whole, and not
statement
which
could
not
be lawfully be
used
after the ef¬ the individual
buyer, that becomes
omitted from the. offering
date unless accompanied slow.
pros¬ fective
The «buyer may be solvent
pectus.
This
procedure
was
by a prospectus conforming with and
liquid, with an abundance of
prompted by the need for brevity the requirements of the Act. With
local currency with which to
pur¬
in; a newspaper prospectus.
A these
safeguards, the
potential chase dollars; but. if his
country
siipilar need for brevity exists in dangers in the ,use ,of .a
summary; has incurred an
adverse
balance
the -summary. Like the
newspaper ate .negligible as compared with of
payments in international ac¬
prospectus, the summary would the advantages to be derived from
count, the dollars cannot be pur¬
merely direct public attention to its development into ah instru¬
chased with Jhis loqal
the salient
currency.
points in the registra-' mentality for the circulation of The
only way that he can honor a
tion statement. Since the
summary information under proper stand¬ bill of
exchange drawp in dollars
behrs some
relationship in pur¬ ards.
;
' >
,
.
is to - deposit the local
currency
pose 'to the newspaper prospectus,
; TJhe proposed program, amend¬ equivalent and
.engage to make
the Commission : might -readily ed ,as., above
suggested, - should further deposits to meet any de¬
adapt the existing standards for haye ,the effect of
promoting the preciation in its value until dol¬
newspaper- prospectuses
to
the broader dissemination -of informalars are again ^available.
summary. If this were done, the' tibp;dtirihg
|the waiting period. It 1 The sure signal that the detour
summary could well develop into represents
a
material
advance has
begun is a report that a na¬
a favored device for
disseminating over the Commission's existing tion
is deficient in dollars ;with
information; during ithe waiting policy with respect to red
herring which to
pay -for imports from
period; -: :U z
; <• -' «,
prospectuses. Under the present the
United States.
iThe development of the sum-!
Having agreed
policy, the power to withhold ac¬
,pn that point, our problem is to
mary should not be restricted be¬ celeration constitutes a
deterring determine its
significance.
It is
cause of the"
possibility that un¬ factor, to the 'circulation (of red
likely to represent something more
scrupulous persons may unfairly herrings; under the proposed
pro¬
than
temporary ^congestion, be¬
slant lor emphasize the informa¬ gram the same
power would be¬ cause
the local
tion it contains. The Commission i come an
banks, by drawing
encouraging factor. The
9{Lday-drafts
on their bank cor¬
has ample power to deal with that outlook for the red
herring under respondents
iin
the United States
possibility. -In the first place, the the new program is far brighter
in accordance with
powers con¬
program. contemplates
that the than it has been in the past."
ferred by the Federal Reserve
Act
in such -a
situation, can create dol¬
preparation

/

as

of

a

nations, in the expectation
they will shortly be able to

a

it is

,

,

,

t

at

the rate for prime commercial pa-

currency fie can continue to sell;
but ;that will eventually tie up
his capital .unless .a market for
these focal currencies is created
by private investors in the United

per.

States

present

that the

is

cost .of

;

such

Lnancing-—,currently around 2xk%
per

slightly

annum—runs

above

With the loanable funds of

our

who

investments

contemplate

making

The recent¬

overseas.

banking institutions by no means ly : issueel .report 5 jof the Colmer
fully .employed, and their accept-: Committee .on The Postwar For¬
eign .Economic Policy
an£e power in only nominal use,
of
the
tliere

be

United States estimates that in the

question with re¬
the availability of funds postwar period our private foreign
to-finance our exporters and im¬ investments,, with proper encour¬
porters, <at rates so moderate that agement, might amount to as much
as
it is certainly fair to say that
$2 billion a year. This is a
any
,can

no

spect to

business which cannot readily ab¬
sorb them had better not be .en¬

tered, into.

■

„

*

•

.

v

*

*

sound and effective way to
aug¬
ment the supply of dollars avail¬
able for payment of our
exports.

It is subject to the limitation that

The

Export-Import Situation
provision must be made for the
appreciate the problem in-; remittance, in dollars, of the in¬
vqlved in the financing of our; terest and dividends on the sums
foreign trade as differentiated; thus invested abroad. It is further
from financing our foreign
traders, subject to the qualification that
let us take a look at the current the practice of foreign investment
To

foreign trade figures. In June, our must be continuous, because its
commercial exports rose to $684 cessation would curtail the expan¬
million, the highest level for any sion of our exports and its .re¬
month since December, 1920. Total versal would diminish them.
exports, including UNRRA and
Foreign Loans to Finance Exports
Lend-Lease shipments, were $878
^ What about -foreign foans to fi¬
million, the highest level in 26
June imports at $385 mil-; nance exports? The fundamental
fact about a foreign loan is that
lion, were 5% below the $406 mil¬
lion high for fifteen years reached it is a deferred import. In other
April, 1946.
These figures mean words, the stimulation of exports
years.

that

after

caused by
imports of

a

-

short

our
raw

interruption
greatly enlarged

materials for

war*

created

through loans involves a
corresponding restriction of ex¬

ports
This

when

the

loans

are

paid.

statement

js subject (to the
purposes, and enormous expendi-!
lures for the maintenance of oqr qualification that a foreign loan
armed forces around the world,' may possibly ;be used for a pur¬
atra time when we had neither
the goods to export nor the
ships
to carry them, we have reverted
to Pur normal position as creditor'
in visible international

count.

1 /V.";

-\-.VV

;

'

trade

'/-I-.:

■

ac¬

'

-'i/:'

pose1, which
cient

will

additional

generate

suffi¬

dollar

exchange
during >its life to provide for its
payment at maturity.
A .considerable .distortion in
balance of trade with

our

any .coun¬

The .basic principle of foreign try can be financed by .a loan
trade/.is that it is ,a .trade, and; wjithout detriment—indeed, with
as long as the
tracle must ultimately balance. We mutual benefit
adverse balance is not-so severe
can give to the limit of .our
pro-,
or so protracted
that an ultimate
ductiyrty, but we ..can .trade no
—

more

goods

than

purchasers;
pay for out of what we buy
frqrp .them plus what we pay them
for services, such as freight and.
foreign travel, plus what we give!
them in .remittances to relatives
and friends.
our

can

Of

if the exporter is
accept payment in local

course,

content to




balance becomes impossible.
difficulty is to agree upon
traffic signals for the

The
some

journey

such

a

detour.

discussing how
the .detour has
map.

to meet

a

We

can

one

realizes

start

on

by

that

begun.

Not by a
The statistics of the balance

of

use

ently receive from
Foreign
■

v

:

1920,

deficit,

loan.

are

are

1

Fownes Stock

>

a

government who haye
$6 billion loan to Rus¬

first
of

that postponement of the
payment
process, -while useful, is possible

only if a favorable atmosphere is
provided for its foreign invest¬
ment

arranged

a

f

our investment bankers through
public .offering, the risk is :qn

"in

pending repatriation.

and

a

It

is

a

world of peace,
prosperity,
liberal trade policy, there

well be a revival and con¬
tinuation of American private in¬

vestment

large scale, includ¬
ing a reinvestment of the profits
of industry,
that will put the pe¬
riod of net repayment far in
the
on

a

ples is

no

easy

matter is supplied

by the fact that, while the Pres¬
ident's Budget Review, in
August,
estimated

our

and

Development,

taxpayers will share the risk

quarter

that oUr foreign credit

but

was

$567

million.

Since

July 1, repayments of Ex¬
port-Import Bank credits have

with

those of the other subscrib¬
ing nations. In any event, for our

exceeded
rowed

funds

foreign traders export has served

to

middle

the

new

loans

from

bor¬

by $33 million.

Up
September, the

of

its purpose, which is to sell
goods
a realized
profit. But exports

United

for

but $400 million

sold by our
foreign traders and
paid for by our investors and tax¬

$3% billion credit, which was con¬
siderably .below the earlier esti¬

will not result in benefit to
people of the United States

payers

the

until wte ,as a

Kingdom

had

withdrawn

of 'the approved

mate of needs

during this period.
"Business Action," the weekly re¬

.nation have received
from others, in products and ser¬
vices, the equivalent of the prod¬

port of the Chamber of Commerce
of the United States, of .September
16, predicts that "for the fiscal

ucts and services which we have
supplied to them. And that means

year

that

ing the British credit and loans
through the Export-Import Bank,
does not seem likely to exceed $3

international loan, like a
single purchase, can be paid only
with goods and services. The trade
cycle, no matter .how long and
an

un¬

the

public offering of securities

Fownes

The
offering consisted of
100,000 shares of $1 par value
capital stock at $9.50 a share.
'
The ^company's present Ameri¬
can
set-up was accomplished by
an incorporation under New York
laws in 1921. The Sherrs

control
from

of

this

company

.acquired
in 1936

Fownes Brothers & Co., an

English

partnership,

members

the

of

and

Fownes

from

family,

whose glove

manufacturing enter¬
began in Worcester, Eng¬
land, in 1777..
prises

The American company is
capi¬
with ,300,000
shares of

talized

stock, of which 200,000
by the Sherr

retained

are

to be

interests,

the underwriting managers said.
The American company maintains

plants at Gloversville, Amsterdam,
Fultonville, Worcester and Broadalbinal in New York State.

Evidence of the fact that Roth

program
would: require
$4,168
million for the fiscal
year, the
total actual outlay for the first

construction

Sale

the release and the use of credit
in accordance with sound
princi¬

the

payers.
On loans to be arranged
by the International Bank for Re¬

on

future."

was

investing public. If the loan
arranged through pqr govern¬
ment, the risk is now on our tax¬

i

son.

conceivable, .the reporhstates, that

strained

by

are

company, and part of those of his

responsible for the operation
Export-Import Bank. They
usefully set opt in the first

may

by worry about :yvhere
the dollars are
,coming from. The

do is to

which

•.

of the National Advisory
Council, transmitted by the Pres¬

prompt

loan has .transferred that
worry to
others. If the loan was

can

conditions

outside the sphere of finance."

of .our

payer.

the traffic sign at
green, and trade
proceeds at a merry clip, unre¬

organized action

Brothers & Co., Inc.,
sia, and proportionate amounts to
The shares
China to develop a Yellow River glove manufacturers.
for sale are part of the holdings
Authority — are fortunately 're¬
of Ivens Sherr, president of the
spected and observed by those who

up past-due bills and pro¬
vide dollars for current .purchases.
Qur slow-in-the-trade customer is

set

to¬

sum

favorable to production, and of
those the most important fall

which promises to

,

proposed

The proceeds of the loan

devious, and certainly much

products

principles—though they
Van Alstyne, Noel & Co.,
seem not to restrain the
do-good¬ derwriters, on Oct. 21 made
ers in our

And right here is where the dan¬

dangerous.. The loan has

the

work, and the

These

■

clear

more

i

'

life

consists .of

create

goods for export of
dollar value at least
equal to the
interest and amortization on the

United States are not to
cease, a
loan of some duration is indicated.

more

suggested

a

Foreign Loan Policy of the United
States Government." Among other
ther purchases of
goods from the things, the statement emphasizes

Is .the detour ended? Not at all.
the contrary, it has become

; or

skill, unless the enterprise will

the
local banks to
meet
with
shor.Lterm credit measures. If fur¬

On

frequently

have

increased only by an increase of
production. All that any official

create useful

temporary

a

basic—so funda¬

an

of men's

foreign materials

mand for dollars is too severe
for

be

have

tal of human prosperity can be

Nor should a foreign loan
be used to finance
any enterprise
which requires

ident to the Congress on
March 1,
1946, entitled "A Statement of the

to

world

domestic

report

again reported

I
so

—
a
part only,
essential part, of its
mechanism. - The wealth of the

though

terial.

a use

It is

economic

nor to finance any domes¬

be put to

across

"Finance is, after, all, only a
reflection
of
commercial
and

tic enterprise which can be
built
with local labor and local ma¬

or

ran

the

leave it ringing in your ears:

our

that we can usefully and
willing-'
ly receive. That means that for-'
eign loans should not be made to

borrower's

be

of

that it be displayed in bold type
in the Board Room of every pub¬
lic financial institution.
May I

necessities, but to the ability
of the recipients to
produce, ulti¬
mately, an equal volume of goods

the

which

mental—that. I

own

finance

might

record

in the report of the
Economic Conference of

quoted.

be

the

statement

a

Foreign loans should, then; be
geared not simply to our
ability
to produce goods in excess
of

wisdom

some

In that search, I

past.

.

Should

excess: of

ger lies.

for international financial
collaboration was taking form, I

Brussels

Made

'

/

us.;

Loans

our

plan

thought

in production from them
the equivalent of what
they pres¬

When

ultimately be made.
years
ago,
when

Several

extracted from

receive

of living,

a

may

our

capital, and in the fur¬
ther expectation that they will ul¬
timately be able to increase their
output to the point that we will

their standard

rise of production to levels
out of which repayment in goods

yearly at least sufficient goods
services, of the sort that we
willingly and advantageously
receive, to compensate us for the

demand over supply. We
haye • iben, at least a caution
sig¬
nal, indicating that the excess de¬

(Continued from page 2077)

of; acceptance .credit

exchange

and

and

.

lar

ment in

can

,

-

that
send

us

r

ment

2111

1948, the outlay in the inter¬
national finance program, includ¬

billion

and

may

not

run

Offered a! $4.25
An

issue

of

a

Sh.

shares of
common stock, par value
$1, was
offered to the public Oct. 22 by
John J.
York.

$4.25

50,000

O'Kane, Jr., & Co., New

The
per

stock

share

as

offered

was

at

speculation.

a

The .company; was incorporated
in Delaware Sept. 13, 1945, and is
the sole
all

in

owner

of the formula and

patents, copyright, trade marks
connection

with

the

name

"Konga." Konga is a carbonated
soft drink*sold to the general pub¬
lic in bottles at 5 cents.
is

made

with

from

essences

a

Its flavor

secret

formula

distilled from

fruits,
The pro¬

herbs, roots and barks.
ceeds received will be

u$ed by the
company to expand its activities
throughout the .country by sales
promotion,
for

the

advertising, etc., and
purchase of additional

machinery,
|

materials,
.

etc.

\iimm

—

that

usefully it is postponed, -can even¬ high." -;■
' - •! • :••
tually be completed only by re-,
There is reason to hope that the
versing the normal position of the. voice and Influence of the global
.

Bramhall, Barbour Co.

,

United

States from that of a net
exporter of goods and services to

that

of

.a

net

importer

of goods

and services.

Essentially,

our

-

program

for

economic assistance to the United
and Allied Nations consists of the

of trade and international
capital

delivery

movements which constitute such

current

of

some

billions

productivity

to

of

our

planners

To Be Formed in NYC

and super-lenders has
waned, and that our loans for re¬
construction and development will

is being formed with offices at 25

be

Broad

extended

and
which

those

,to those countries—
alone—in

countries

conditions

production
funds wRl

.exist.

favorable

So

used,

for
our

Bramhall, Barbour & Co., Inc.,

Street, New York City, to

in the -securities business.
Principals of the new firm will be
engage

H.

Keasbey Bramhall and Phillips
Mr. Bramhall was

sqpjply machinery and f. Barbour.

equipment to multiply men's la¬
friendly bors, with a resultant improve¬

formerly

a

Merle-Smith.

partner

in

Dick

&

-

THE

2112
V

issuer is

the

Pitfalls and
(Continued from page

\

2083)

ments are available to any
,

,

ularly.

in making ihese

purpose

comparisons was to establish what,
idr want of a better term, we will

The
principal differences revealed are
can

•

iields

these:
1. A

experience."

of

loan
importance of

and

types

in

difference

loans in the

the
aggregate as earn¬

ing assets;

the nature and

2. A difference in
-

.

of

importance

the investment

portfolio;

deposit struc-

':.

///,/;;

•'y ture.

These observations suggest

j

pitfalls

discuss

should

/;:////,{/.,/ ../>'■'•/

services

that
and

reg¬

balance,;
than

have, on
dollar value

greater

a

funds

"exported"

settle

to

"imported" products and

vices.

(Again, I "am

ser¬

that
my statement over-simplifies the
case.) They flow into your bank
when
you
have' convinced the
public that you can and will,
cheerfully and courteously, pro¬
the

vide

maximum

aware

of

uable
will

service

at

Again val¬
obvious—it

guideposts are
amply repay you

to

con¬

stantly study the economy of your
community, its relative advan¬
tages or handicaps and prospects.

with k especial refer¬
ence to
(1) loans for productive I need say nothing on the vital
purposes;
(2) . investment prob¬ importance of your public rela¬
lems; and (3) deposit character¬ tions program; you have already
istics..
*<" proved M your astuteness in that
guideposts

.

,

I

"order of impor-I
will discuss
them in inverse order to what I
suspect is the weight of your
interest.
It might be appropriate
to stop right here and mention
something that I have come to
regard as Pitfall Number One—
something which I have heard
described as an "occupational dis¬
ease" of bankers, a charge which
in
my
opinion is not justified

subjects in
tance"

since
every

any

this

affliction

walk

of

is

found

in

life.

What I have reference to is the
belief

attitude

or

field.

that

one

has

Let

-never

instead

but

all

ment

such bonds. True,

constituting a major seg¬
bank investment port¬

;

long time.

a

least until the
end of the war, there was little
activity in eitner corporate
or
municipal bond flotations. In the
past too many banks have said,
"This is a specialized field;! know
nothing about it, so I'll turn the
problem over to somebody else."
These are specialized fields, but
you are not justified in turning
your responsibility over to some¬
one

1940,

else.

at

Least of all should you

expect a seller of securities to be
in

position to discharge fully the
obligations of an investor.
Fre¬
quently and naturally, the inter¬
ests of buyer and seller are 'dis¬
a

similar.

-

-

tions

are

two

,

t

-

securities—the

of

The

tion

me

rest

just add, however

on

your
to

answer

'

laurels.

our

third

ques¬

is

illusive, and I do not be¬
it permits any categorical

lieve

propriate to the two classes.
■

In

answer.

the

past you have
had a very great number of small
accounts, a relatively few mediumsize

accounts,

and

frequently

no

large accounts. In many instances
your deposits have been predom¬

inantly

time

deposits.
As you
succeed
in
"breaking ( into the
commercial field," so to speak,
you will attract more and more
of

the

larger

accounts.

and

more

volatile

And whereas the nature

and

bonds,

where the risk

interest and
due

is

are

to

such

a

in

almost be considered
non-existent.
They enjoy maxi¬
mum shif tability,
"Credit"

bonds, on the other
hand, are long-term loans with
varying degrees of shiftability and
of

the

intimate

They
even

see

in

in

each

each
new

new problem,
opportunity, a

striking parallel to some situation
of the past which did not work
'out as hoped and, instead of seek¬
ing the causes of failure of the

nitely worth while to analyze reg¬
ularly their deposits according to
classes of ownership, to chart the
trend of

each

of years

and to make projections

class

over

a

period

based upon the economic orospects of each class. An explana¬

language of

that

are

some

■

:

few

Some of

best

our

op-

V /:- /'■

/...;

and a pit into which
banks have fallen, some to
after tears and/travail,
others
to
disappear forever, r I

many

have

herit the earth."

/

for you

but philosophers have ob¬
"how
the
mighty have
fallen," and "the meek shall in¬
power,
served

these particular

/•//-:'

This brings us to a new depart¬
ure

Contemporary thought seems to
place a premium upon size and

in

mind:—

Failure

to

obtain and maintain

full and complete credit informa¬
tion.
/ ■
•
/: r
'
/.,■,..

authorities

informed

that

believe

municipali¬
ties face insoluble problems which
portend decay. I shall attempt no
prophecy, but suggest that the
standard railroad crossing sign—
certain

of

large

our

Stop, Look, and Listen—is sound
i

ft

z

•-

Much

what

of

ments of

said

been

should

sound commercial loan

a

be

not

the

abandoned simply
form of the obliga¬

tion has been changed to a bond.
'

Loan

All
their

too

many

Pitfalls

banks look upon
as
something

file /

credit

which must be maintained to sat¬

isfy the examiners. It is hardly :
necessary
to add that no good
bank entertains any such point of
view, for nothing could be farther
from the truth.

has

concerning municipals is equally
applicable to corporate bonds. It
is axiomatic that credit require¬

heart of

the

mercial bank.
obtain"

The credit file is

successful com¬
It is not enough to

any

balance

sheet

statements/:

If
will
dearly, perhaps more than
can afford.
V \
V'" ?

annually and let it go at that.
you

pay
you

fall into that trap

you

est

need similar' statements for
preceding years, and a thorough

analysis of such statements made

lies, namely loans, let me sim¬
ply mention three further sources

by someone who can see through
the figures and read the signs, tell

of possible

whether the

1.

trouble:

Allowing yourself to be lulled
into

relation¬

false r sense

a

because

m

of

security

larger bank also
of the corporate is¬

some

holds

some

sues

you

Chase

can

are

holding.

Even

mistakes

make

and

prospective borrower
good competitive basis in
the industry, obtains efficiency of
is

on

a

operation, and enjoys quality of
management, etc. An X-Ray pic¬
ture is of little value except in the
expert. To do a good
lending money to "big"

hands of an

it is just possible they may be
in a better position to protect

job

themselves

that your

or

"if

worse

comes

l to worst"—absorb the loss. You
should

tions of the United States Govern¬

yourself have adequate

current credit

and

information

local

in

business it is also

necessary

analysis be so clear and
your knowledge of the industry so
complete that you could see that
a
loan to
a
borrower,/say for

would be bad business
bank and your cli¬
must admit at the same time that 2.
Substituting "ratings" by com¬ ent, whereas a loan for $300,000
would be sound for you both. That
the degree of credit risk varies
mercial agencies for individual
is often done and it is good busi¬
enormously.;; To some this may / credit
analysis.
Historically
ness
when the lender knows his
appear to be an unwarranted po¬
//the commercial agency ratings
business.
sition, but I assure you it is the
^,
*
*
have shown a tendency to fol¬

ment—that

"credit*'

all

bonds

other

even

bonds

are

though

we

.

the need for current
financial and operating statements
Beyond

c

you

Before, turning to;the field in
which I believe your major inter¬

ships and personal characteristics

all
the
answers—that of the small ones is more uniform associated with most of your loans.
there is nothing new under the and
their analysis simple, con¬
A major pitfall arises from the
sun.
Nobody has all the answers, versely the nature of the larger
possibility of confusing the two
and the only safe plan is to as¬ accounts is
frequently more vari¬
types.
sume
that all past experiences able and
analysis must be made
For the purpose of our discus¬
and
all present
knowledge are in greater detail, and at more
sion, let us assume there is only
nothing more than "points of de¬ frequent intervals.
Many com¬
one "money" bond—direct obliga¬
parture" for charting the future's mercial banks have found it defi¬

All/ too often men with
years
of experience in banking
tend to solidify in their thinking.

chances

emerge

already

course.

soundness of issue.

of issuer with

point

that it may

devoid

lomanufacturing center,

,

pitfall may be found
confusing size and importance

principal as and when

reduced

a,

erations.

-

,

because

obligations
of nonpayment of

"Money" bonds

the

Another

so-called

"credit"
bonds, and you must be able to
distinguish between them; Differ¬
ent investment techniques are ap¬
money"

obligations of the same

and credit

issuer.)

designa¬

broad

in

cated

and

obligations
of; the
issuer. particular products or types of
(True, you will find cases where manufacture will predominate and
the revenue obligations are supe¬ you will find it necessary to be¬
rior in quality to ; the .full .faith come thoroughly familiar with the

advice.

There

lems and techniques of retail
wholesale trade.
If you are

eral

of

Since

political

without. risk or.
in the same risk category as gen¬

the evidence points to govern¬

folios for

or

the
bond / is
even that it. falls

.

,

not going to take up these

am

lure activities to

ments'

/. -:

citizens

its

of

the minimum of cost.

3. A variance in the

banker

factors

Deposits flow into your Com¬
munity when the products and

for

■ -

marked

these

watches

who

State

a

subdivision;; that

Guideposts of Commercial Banking

Banking Changes

;*';'My

*.

.Thursday,..October 24,,1946

COMMERCIAL & FINANCIAL CHRONICLE

•

..

concerning every corporate is¬
sue in your portfolio.
/•
: v

$100,000,

for both your

'

tion

the

of

technique employed
safer course to follow. It simply
low
rather than
precede the / In a book released two weeks
time than we have
means that,-except in the case of
previous effort in order that the at our disposal
market.
And that leads us to ago by the Research Committee of
today. Should any
direct
current hope may be brought to
obligations ,of the United
the final "pit" that I shall men¬ Robert Morris Associates entitled
of you be interested in making
fruition, •; they
find V themselves such a study of. your own bank-r States,: you will satisfy yourself
tion in the investment field.'/ / "The Credit Department, a Train¬
as
to
the
risks
involved.
;*
taking the easier course, which is and I cannot emphasize its value
3. Playing the bond marketi—shift* ing Ground for the Bank Loan Of¬
to say "no."
Please do not mis¬ too strongly, if you will write me
ficer" appears a paragraph which
Recently quiescent, but due for i;
ing the composition of your inunderstand
me;
the
successful at the Federal Reserve Bank of a sharp revival, is the issue of ob¬
conveys
my
thought in words
//vestment
portfolio
witheach
banker has
to
say; "no"
many Richmond we
rpore effective" than I can com-*
shall be glad to ligations by States and their po¬
passing whisper of theu innu¬
times, and when that is the proper send you
litical
subdivisions,
:
obligations
Z/' '
$
explanatofy material
merable "experts" who furnish mand:/ »."
answer,
he should say it with and the necessary forms.
which, for the purpose of this dis¬ //"confidential"
Z;
"A financial
statement is a
information to
kir dly finality. What I am trying
cussion;
we will lump together in¬
all. Personally, I do not believe
Guideposts—useful in charting
'picture,';* and - most / financial
to say is that we should approach
to
a
class and call municipals.
that buying, and selling bonds f
men
your
future
course—have been
frequently refer to it as
each new day with an ooen mind,
Generally
speaking,: municipals
mentioned.
Let us state certain
with a view to obtaining a net
such. * If the analogy is pursued
saying, to ourselves, "This is the
have a* good—though "spotty"— :
pitfalls and leave them without
profit, from * the - day-by-day
further, the balance sheet may'
dav
when I shall think a new
record.
But some inexperienced
.;/ fluctuations of the market has
any discussion.
be referred to as a 'still picture/
;
thought, encounter a new idea,
and unwary investors have fallen
vi any V place ; iu
in
that it 'freezes'
a
moving
a
commercial
or aid
in some new endeavor to
into a trap by assuming that mu¬
'
Pitfalls
/ bank. /Not that a bond
once
process or business phenomenon
tmrrove the economy of my com¬
y
.i
T +
.
.
■
J
*
# •
.
nicipals are "money" bonds. That
at a stated place and at a stated
bought shall be retained "come
1. A sense of complacency and
munitysimply is not true. The evaluation Y hell or high watnr" but rather
time.
By the same token, the
J self-satisfaction arising from a of risk in the
V But enough of that—and back
municipal credit
purchase for yield- to maturity
profit and- loss statement may ;
period
of
increasing / deposit field is a fairly well established
to our particular tonics with cur
or call should be the underly¬
be likened to a 'motion picture/
aggregates,
/ -'
/
.
,
attention turning first to deposits.
technique and, before you enlarge
ing philosophy.
v
intended to show business his¬
2. A sense of confusion or be¬ this section of your portfolio, you
Of course none of you are ac¬
tory in the making and !n be¬
Time marches on, so, let us turn
wilderment ; arising
would do well to obtain some one
from
the
cepting deposits for the first time,
tween balance sheet dates.
The
:
complexity of the problem and or more of the available tex^s on our attention to the field of per¬
but since many of you in recent
'still' shots, set up side by side,
;
resulting
in
failure
to
You
keep the subject and engage in a little haps major interest—loans.
years have begun to seek accounts
may be thought of as portray*
constantly informed regarding serious study. Lack of compre¬ have specialized in a type of loan
from
so-called
commercial cus¬
ing the condition of a givei}
the economic factors affecting hensive financial information con¬ where, by achieving a sufficient
tomers, it seems in keeping with
business
at
stated „ intervals.
volume, you have been able to
your
community, and therer stitutes a major problem.
irv subject to include a few gen¬
However, .taking a- picture o£One special note of caution be¬ rely considerably upon what we
eral
observations.
In ; order * to* Vvfore your deposits. ;■
little Jimmy only on his birth*
orient our thinking we might ask 3? Failure to constantly strive for fore passing on: some cause for might term the law of averages in
days will not explain such de^
the field of credit.
By pooling
ourselves three questions: rv =
/'{.as much economic diversifies- concern is seen in the developvelopments as physical growth,
your
experiences
and
observing
tion
among your- depositors as [ment of revenue bond financing.
1. Where
and
how do deposits
changes, in features, or personsstandards
applicable to
the nature of your community I; have in mind here securities certain
V originate?.
ality changes. Sole reliance oiv
which rely solely upon the rev¬ large numbers of borrowers with¬
/■
will permit. /■. /'V//
the snapshots will cause the ob*
2. How and why do they flow to
enue
from some, specific source out the necessity of exhaustive in¬
4. .Failure
to
server to miss such occurrences
correctly appraise
,'pnd from your bank? //)////;..'
and are not supported by "the full vestigation
in; individual cases,
the possible consequences of a
as Jimmy's summer at the farm,
3. How can.you know when they
faith and taxing power of the is¬ you have been able to place your
lack' of economic diversifica¬
or
the time when a tendency •
are going?
v
suing unit.
Each separate issue risks upon what might almost be
tion when it cannot be achieved,
toward
chubbiness
first; oc-ftermed an actuarial basis. But in
Let's state our answer 'to the
and adjusting your course of requires- individual appraisal and
cur-red,. /• Aside
from • general
first question this way: The ag¬
every prospective purchaser entering the field of what we shall
action accordingly.; -;
r
• *
knowledge as to how well ot
should demand complete financial call "commercial" lending these
gregate deposits of the banking
; '
'
■-'■■■.' ■
*
.s •
i*. poorly he was eating in that pe-4
information before buying, and as¬ techniques will be of little if any
system as a whole increase when
Investments. v. >:>. {
>
riod; such changes in little Jim*
sure
himself
also
that
current value to you./ No one of you will
loans increase, increase when in¬
my could not accurately be acbe able to
develop a sufficient
Now, let us turn our attention operating statements will be avail
vestments increase, increase from
counted for except through a
a
net
inflow of gold, increase briefly ; to another field in-which able throughout the life of the volume to achieve an "averaging"
'motion picture/ record of the
of risks./You must become spe¬
your
past experience has been bond. Credit standards appropri
when currency in circulation out¬
>
whole, ? period.
Furthermore^
somewhat limited—investments: >- ate to
private ventures in similar cialists in whatever type or types
side of banks decreases and, in
:
when- Jimmy .was, , seenw riding
Most of your experience here fields,; subject to adjustments ^ne¬ of -"Commercial")!oan& are avail¬
each case, vice versa.
I am over¬
:
his,/, bike, whistling'. with, to
able, in - your respective commu¬
simplifying the matter somewhat, has been, with governments,: but cessitated by the different powers
? hands
in his pockets/ crying
if you are going to be active in of "the;issuers, should apply.
" nities. "If your-bank is located in
b^t that is sufficient for our pur¬
? ovdr ah injury; or winning all
a* distributing * center,) you ~ must
poses.
Valuable guideposts indi¬ commercial banking it is not like-* H It is an error—a pitfall, if yoti
the marbles in the neighborhood^
become familiar with the prob¬
cating future
deposit develop¬ ly that you will confine* your fu« please—to assume that- because
requires

t

more

-

.

,

.

t

,

.

,

..

.

,

*'

.

.

,

•

.

.

*

-

■

•

.




'Volume

164

Number 4536

*

THE COMMERCIAL

v

i

FINANCIAL CHRONICLE
&
.2113

:'V lie became something real, vital, off other
creditors, make further
and functional; and the observ¬ loans to revitalize the
company
er's attitude ' towards him, be¬ and assume an active
part in the
cause
of increased
familiarity management of the business.
It
with
in

his

activities

them

becomes

livened." ',

.

If you
-

,

and
;

\V

greatly

the

latter

Let's

course.

ex-

pend the time, effort, and expense
to develop adequate credit infor¬

,

patience

bank

left my hotel in

volved

bound for Warsaw, Poland. I had
my plane ticket and reservation

-

ing field and stay out!!
definition

tutes adequate
is

possible

time to

of

No

what

condition

—but when you

cision, unless
overwhelming,

since

it

varies

of

business

from

holders

the

upon

the

forts

pending upon the nature of the
operation and the risk element in¬

prises.

volved. j:V; ■;:

Inadequate

Perhaps

;,.•

;

to

••'Some years ago an old arid well

established

ing in
The
tor

company

of

one

large

various

was

operat¬

amounts

of

credit

been

at

successful

so

period

of

years

ceased

to

demand

that

over

the

these

ly

with

substantial

"A

to

a

it

fixed.

watch

tomer

such

specu¬

are

the

rare

.

More

home

by "the

watch

will

commercial

able

ran

banker

was

-discussing with me the problems
Of a particular line of business en-*
Oeavor, one into which incident¬
ally some of you have ventured I
understand,—I refer to the truckring industry.
He felt that he
rneeded complete financial infor¬
mation
monthly,
and
in
some
cases additional reports were re¬
quired weekly!
We cannot spend much more
"time on this particular subject but
there
is
one
additional
pitfall
which
we

must

be

mentioned

before

leave—I have in mind sending

rgood money after bad.
Probably you do not
be

of

reminded

this

;

.

need to

since

you

:have

operated on a principle of
^establishing
reserves
currently
;and
charging
potential
losses
^against these reserves as they ap¬
pear.
But will you have the
■"fortitude to continue this healthy

borrowing customers.

was

5.
-

bank.

your

the

Thus

cases

to be

cease

you

wherein

pledgee and

a

become

an

Never

lower' your

V

owner.

or

irresponsible

repair

competition.
If
competitor is taking away

business by granting credit

;

on

ious to know if the cuckoo clock

your

man

was cur¬

terms, then if your con¬
clusions are unchanged, let him
have the .business—you cannot

The customer

'How

afford

"Fine,' said the
'only
the
cuckoo

man.

But

do

not

and

been

guideposts

many

being

made- annually

Morris

Associates

by

Robert

in

Con-

because your standards

you

petition, it becomes imperative
that you review your require¬
ments. Again, if you are satis¬
fied you. are right, go ahead.
if

taking long
chances it may be your com'Tjpetitor who is the smart bank¬
er after all,'
you

are

,

for that association—if you do not

ate

already hold

You 'cannot

membership in the

a

Morris

Associates

would do well to

bank

just

entering

commercial

the

credit

historical

file

seek

studies

To

one.

the

in

you
a

field

big

a

and

of

way

credit

suggestions available from the

Associates
It

is

against

should

is,

invaluable.

much
error

mistakes.im

be

easier
to
guard
than it is to correct

A familiar credit

"The

best

loans

max¬

col¬

are

with

than

the

work

their

responsibilities.

grow

and

men

with

of

the

greater

for

as

possible,

I

for

hope

sumed

have

none

that

of

sense,

out."

have

you

I

was

ready

Not

11:00

Then

a.m.

cawe

have

as¬

banks

In: fact

most

thoroughly

are

anti-climax.
count

-vtfV

airport at 9:15, after we had
gone through customs, we were
told that the departure for War¬
saw would be
delayed until 10.430

ho^^oultl

But

it?

on

1

'

■

*.•##*•

.

•'

.

,y.

Flying fro**" Prague to Zurich,
by Sw^sair was an unusual eit~
porierice.

As

seems

customary

with European
airlines, the plane
took off with
seemingly

word

perfuac-

the Czechoslovak airline, a
tory, if any, testing of the motors;
goverrimeptenterprise" of course, and it flew unusually
low, es-r
thak there would be no plane to pecially over Switzerland, where
Warsaw until Monday. I had a our
altitude above towns seemed

choice
and

of

going

taking

back

chance

a

to

afternoon

Swissair

Zurich,,
I

which

plane

to

fortunately

had

unexpectedly cancelled

seat.

chose

the

only about 200

or

300

feet.

One

could see the upturned faces
of
people in the streets, high church
steeples at St. Gallan and Gossan

Monday
of waiting for the

or

one

Prague

on a

departure,

were
virtually
within
"arm's
reach," and outside towns as we

latter

course, rather flew low alongside the Swiss hills*
than "reenter" Czechoslovakia.
.-Vi." we could see farmers a few
hundred feet away virtually at
At the. Prague Airport
eye-level. It was like a ciossDuring my several hours wait country ride in
hedgehopping au¬
at the Prague
airport an employee tomobile on a
sunny Swiss after¬
gave me the reason for the can¬
noon.
cellation of the Warsaw
flight. It

nothing • to
do
with
the
weather, but with a shortage of
Something had happened
to
require
slight
repairs 1. on
planes.

another

plane.

delayed

a

This

would

of

score

of. them

Shares

have

A

at

Warsaw
the

flight

moment.

and

the

Europe

was

Vienna

travelling from
Prague. I had wanted

to

to go from Vienna to

American

knew
either
is

experi¬

last week in

ence

the

my

Warsaw, but

an

Army

in

Vienna

of

no
way to go directly,
by plane or* train. Vienna

island

Russians'

in

grip,

•

an

area

and

for

in

the

and

be

authorities—one needs

a

Russian

road

pass, which for Americans
either unobtainable or obtain¬
able only after

is

me

was

long delay. The
Army's official advice
to go to Warsaw from

Prague.
This raised the question of how
reach

mally

Prague. One could nor¬
fly, after a two-hour bus

trip to the Vienna airport, Ameri¬
cans
must
use.
The
airport is
about 18 miles away
by shortest
route, but the Russians make us
use

a

part
to

35-mile

of

winding route

as

their

wear

program of trying
out American interest in

Prairies"
tells an avoiding them has become almost
Europe.
In
any
case,
when I
amusing story which may have a "second nature"—a reflex action
wanted
to
go,
all
American
message for us today. Back in the seemingly .controlled
by, instinct flights over Czechoslovakia were
days when Chicago was only a and requiring little if
any con¬ suspended,
■practice when the dollar figures
due / to
"political"
frontier village a .young
couple, scious effort. Nor do I -want to reasons5
involved are substantially larger
(aninternational meet¬
John
Smith and
leave
the
Peggy
Myres,
impression that operat¬ ing?) This meant travel
.-and when the famliarity which
by sur¬
came before a justice of the
peace ing
a
commercial bank is like face means.
comes with regularity is absent?
'
A'^
to be married. This
justice of the walking a high wire without any
Perhaps one illustration will
The Army advised me that the
peace had in fact just set himself net—where one
suffice:—Some years ago a com¬
slip is fatal. The
overnight train from Vienna to
up in the business and actually fact
is, I was asked to discuss
mercial bank made a loan to a
Prague was out of question for
had not been legally installed in these
obstructions in the road and
company for operating purposes.
me, since I had no Russian road
the office.
He was aware of this have therefore
not dwelt upon the
^Bad management or bad luck, who
deficiency, but the situation called long stretches of smooth concrete pass. There is another train from
can
tell, seemed to plague the for
Vienna to Linz. It arrives at Linz
action, so he did the best he where most of our traveling is
company and the
loan was re¬
at about 1:30 or 2:00
could by performing some kind of done.
a.m., just
An
average
driver
can
newed from time to time without

used

mortgage

common

of

stock

199,000
of

Red

to

pay

off

a

$149,000

the company's plants
machinery and equipment; pur4
chase additional bottling
equip-f
on

ment; build additions to the plants
and acquire
new trucks.
Uoozt
completion of the financing 309,-r
000 shares

of

.The

company

franchises

stock

common

be outstanding.

ground

travel—according tq U. S. Army

of

Moore & Co., and Euler & Co. The
stock was priced at $1.50 a shares
Proceeds from the offering will

The
mail

Also indicative of conditions in
Eastern

Market

offering

Rock Bottling Co., of Youngstown
was
made Oct. 22 by Frank (L

cancelled

was

last

very

three J pasengers
could wait.

public

shares

Warsaw,

the

on

passengers

bound for the Netherlands. Since
there were only three
passengers
headed for war-mangled

to

you

all.

an

you

the

to

,

all commercial

at

safely in Prague next day
ever
meeting a Russian.
After so much
ado, this was reqPS
without

to take off

was

.•

rived

early
The plane
only at 10 o'clock,
but one
always must be well be¬
forehand, the airlines insist. At

Saturday morning.

on

ti,

will

i

bas-i- exclusive

for

bottling and sell-^
ing Red Rock Cola, Clicquot Club*
Ginger Ale and Soda and Hep, a*
lithiated
lemon
drink,
in
six
counties in Ohio and Pennsylvania;
with
a
population of approxi-^
mately a million people. The ter-r
ritory
includes
such
principal!
cities
as
Youngstown,
Cor\ton;
Warren, Massillon, Alliance, Niles/
Salem, East Liverpool and Lisbon
in Ohio, and Sharon and Farrell in.
Pennsylvania. Beverages of The
Purity Bottling Works, a 45-year-;
old concern in Warren, Ohio, ac¬
quired by Red Rock earlier this;
year, will continue to be bottled
under the name of "Purity." >

_

FIG Banks Place Bebs.
'

V- }

A successful

offering of

an

issue

*

curtail.

There were other obliga¬
the company and finally

tions of

the

day

came

band."
time

The

was

$6,500.

the choice of

the
that

letting "nature take

ing through bankruptcy, in which
the

bank

would

probably

have lost the entire loan, or put¬

ting

up

additional money to pay




and

t

the handle the smooth stretches but
it
.

-

.

of Illinois

ss:

To

all

requires

cessfully

the

world

traveling

Greeting.
Smith and

to

suc¬

the

rough

of

you are

many

to

been

together

does,

and

do

anywhere

as

old

inside

precinct, and when

my

this

road

for

the

first

time, while I have bumped along
over

coperas

negotiate

places. And since

Peggy Myres is hereby certified
folks

driver

.

Know ye that John
go

good

a

it for 28

^years, our trip has
primarily a study in detours,

rather than

ant places.'

a

'

travelogue in pleas¬

of debentures for the Federal In¬
termediate Credit Banks has been
concluded

with the Prague train. Therefore
Americans using that route have
to wait in Linz 23 painful hours

Charles R. Duma,
fiscal agent for the
banks. The financing consisted of
$39,910,000 1% consolidated de¬
bentures dated Nov. 1, 1946, and
due Aug. 1, 1947.
The issue was
placed at par.
Of the pror^ds
$30,645,000 will be used to retire
debentures,
maturing
Nov.
T,
1946, and $9,265,000 will be used
for new money purposes. - As of

in

Nov.

in

issuing
......

Peoria County

The bank had

its course" with the company go¬
case

ceremony

when some other "State

decided
to
"call
bank loan at

creditor

a

couple this license:

a

a

at

Wagon
Lits
for
the
sleeper to Vienna, I boarded the
jammed night sleeper, and I ar¬

for exit when

I reached the airlines
office

American

such bank has stumbled into all of

them.

bought

ticket

•

•

,

correspondent's advice. Without
Russian road pass I

to go." In
"checked

up

every

who

fallen into the many pits I
mentioned or that any one

have

Here indeed
was
a
dilemmaL
What I did was to follow a news

are

.

your commodity.

responsible if I went that
way
without a road pass, so I
gave u»
that idea.

currency
as
well as
custom, controls at
every border.
You leave "packed

you.

After all, what you have to sell
service
and
they provide

is

they, are made.".Her- commercial banks
Asbury, in his book "The familiar with all

Gem

any

women

and

you

lected when
bert

in
as

.

But

cooperation
with the Federal Reserve System. 6. And finally continually strive
to develop your personnel and
Incidentally, would you consider
it out of order if I put in a
pay them salaries commensur¬
plug

Robert

currency

there

another

carries out

are

lower than those of your com¬

explored
will
be

found along the way. A most val¬
uable one*is the industry studies

otherwise.

versely, if business is coming to

;

despair; the varied

credit fields have

do

to

one

travels

one

to

had

standards

under pressure from unwise
your

When

country

from

any new field until
that you ,can ef-

reduce

you

of headaches Is the business which

and down with such ra¬
pidity that you must watch its af¬
fairs almost daily. The other day

and

er

little

spend the night
there, and next day take an
early
morning train to Prague. But the
Army told me they could not be

Prague yesterday

-

sure

your

one

Europe today,

or

profitable to both the borrowV

backs out every hour and
says,
"What time is it?" ' "
-

moves up

mean-

worked, and asked the customer

customer,

likely to bring your share

liberty
changes

terms which you have conclud¬
ed involve undue
risks, review

The repair

repair

;Yr

at

are

effect

Accept and apply the philos¬
ophy that every loan should be

fixed

and

are

and

does it work?' asked the watch

•against the exceptional case that

must protect yourself.

man

replied, Yes, I fixed it.'

ex¬

ception and not the rule, but it is
you

it

took

if he had fixed it.

You understand

cases

'

A few years
clock

repair

far¬

go

profits
from
speculative
efforts.:That goes for both you

..

.

A month later the customer

shop.

and deeper until it was hope¬

that

3.

repair shop to have

The

to

pocket.

my

So

fectively, efficiently, and profitqbly operate in it.
{
Avoid all attempts to secure

■

4.

He brought it

effort

in

from

great

numer¬

rules, but in the

don't enter
you

,

a

down with work,
and
suggested to the customer that
he fix it himself.
So the cus¬

late in other fields, getting deep¬

involved.

j'v

cuckoo

a

the

Never overreach your
ability or
organization.
In other words,

*

v

such
are

will

': time, respect the rules.
2.

loaded

banks.

lessly

\

makes

you

endeavor

in the

v

express.

mine

bought

to

passed

er

of

that didn't work.

it.

to

to

You

country and
to

i

of
ventures

inexperienced

trying

am

friend

he

ago

information

lines

but

"outsmart

other fellow and play the
game
according to established rules.
If you
don't approve of the
rules—then this is still a free

-

field

your

hobby of clocks,

banks
interim

required by the creditor
The company had used its
credit

bank

can

I*

had been

established

if

the

you

ther and last longer if
you work
rather than against
the

banking are to be
The efforts of sincere¬

interested

thought

What had happened?

financial

analysis

in,

Here is his story:—

.'Something which would have been
unlikely if not impossible if the
indicated

experts

as

with

send

a

losses

commercial

one

to

failures.

ous

caused

Public Relations Committee of the
American
Institute of Banking,
tells a story which points up the

suddenly, without
warning, the business went on the
rocks

than

try

For- every
that succeeds there

reserves.

have

reserves

guideposts,
!'■ v'-

Don't

policy

a

or

field."

enter¬

produce unexpected
results in any field. D. C. Armanino, Chairman of the National

j-eports.4Then

its creditors.

-

amateurs

boring
financial
centers, y The
type of "operation and fluctuating
credit
requirements
indicated
clearly the need for interim opcrating and balance sheet state¬
ments supplementing annual au¬
dited reports. ; Bui the operation
been

1.

doubt

into commercial

throughout the state and in neigh¬

Jiad

such
adequate

course,

successful.

established

-

Of

credit

and in order to
needs, banking con¬

had

nections

the

profitable

more

become

times,
its

supply

stock¬

your

of

is

You must secure, or yourselves

southern states.
business called

our

of its

nature

give

observations which you may call

good money after bad
simply because it felt it could not V
afford to take the loss
currently. f

;

:

,

to

more

two

or

evidence

benefit

presupposes

.''V'' ' ;r \.

illustration

an

the

me

pitfalls
choose:

de¬

a

—take your loss and turn your ef¬

generally,

and from business to business de¬

■Would be in order:—

face such

conclude by inviting
attention to a few general

your

tures work out that
way, not at all

con¬

consti¬

credit information

time, depending

Now let

or

Europe

(Continued from page
2080)
flexibility, I Czechoslovakia,

Conclusions

.

make

mation, then, let me urge you— not yet paid. You get the point
I am sure—not that all such ven¬
get out of the commercial bank¬
clusive

Within

.

a
long story short—that
"My
remarks
have
consisted
finally had over $60,000 in¬ largely of a statement of occasion¬
in that business' and
to ally overlooked pitfalls in fields of
date, after 10 years, $15,000 has commercial banking which
many
been charged off and the loan is of
you
have
recently entered.

en-

::

v,.

not prepared to

are

chose

interest

commission.> comes I am to
marry 'em good and date 'em
back to kivver accidents."

time

what

to

miss

the

for

passes

connection

third

a

rate

hotel, I was told. The Linz route,
however,
requires
no
Russian
road

ing Prague
to

—

means

but

circumvent

an

,

1, 1946, the total amo""t of
outstanding will" be

debentures

$316,565,000.

Vienna

to

of reach¬

Black-CIawson Comply

obvious ef-,

the

road-pass system—is to
from

b,y

York,

pass.

An alternative
fort

New

Russiansgo

by bus

Bratislava

in

HAMILTON, OHIO—The BlacrkClawson Company is
a

securities business.

engaging in

1

THE COMMERCIAL &

2114

FINANCIAL CHRONICLE

The Boom Is Here
be

realized

The DIPs Struggle for Peace

8

r.v

Thursday, October 24, 1946

(Continued from page"2073)

that many industries

a favorable pattern Will have been
(Continued from page 2072)
and trades are still suffering from
established for other important
most exactly the same extent as
a labor shortage and will be more
labor' crises in the critical next
they were by World* War I. If all
inclined to- add' employees? than to
six months.
other things were equal, we would
drop them, for a time at least.
The
obvious ■" signs,* however,
expect about the same degree of
Total wage" payments; therefore,
deflation as occurred in; 1920-21. point to exorbitant demands on should decline less than industrial
But other things are not equal. Chrysler, to an extended Strike,
production.
;;
;
; f
i r
ah
unsatisfactory ultimate
The government is committed by and
:i
Dividend and interest payments
perhaps requiring a
statute to support farm products settlement,

the United' Nations as good
and

bors

This

':i':

isolation..

war.

the

United

the

talk Of war. No* nation wants

Assembly

abandonment by Every nation needs peace.
States of a policy of F TO' avoid war-and1 rumors

symbolizes

1

this; hall will joinT me in rejecting

of the

meeting

that every deleg'ate in

1 am sure

neigh¬

friends.

warm

.77

hanger of

7"*'

countries

The overwhelming majority of
the1 American

peace

regardless
party, support the United Na¬
people,

as

and

the peoples- of all

war

must

not only cherish
ideal1 but they must

an

develop- means of settling conflicts
probably go- down relatively of
further - increase
in automobile'
prices at 90% of "parity" with-the
1 between
nations
in '? accordance
7r
less, for corporations- have gen¬ tions.
prices of things farmers buy. If prices to: an extent that may erally been very conservative in ■'
They
are
resolVed
that
the ;with principles* of' law .and justice.
shrihk
the
demand
for
cars.
Such
such supports are successful, they
their disbursements to stockhold¬ United
The difficulty is- that it is easier
States, to,- the full limit of
a pattern would point to a
repe^ ers.
will hold the inevitable deflation"
Entrepreneurial income, in¬ its strength, shall contribute to to get people to agree upon peace
tition of the labor difficulties that
to about half that suffered 26 years
cluding that of farmers; Will be off the
establishment
and mainte¬ as* art ideal than to agree' Upon
slowed down our industrial ma«ago; In the earlier era- moreover,
quite sharply. Undistributed prof¬ nance of a just and lasting peace principles of law. and justice* or to
chine so drastically in the early
farmers had greatly Over-extend¬
it's of corporations may likewise
j
agree to subject their own acts to
among the nations of the world.*
of
this year.
Further¬
ed
themselves creditwise. They months
shrink widely, but this is a rela¬
...However, I must fell you that the collective judgment: of man¬
(and their bankers) learned from more, it would mean that the dis¬ tively small item in the over-all
'
/ --7
.•*;*;
the'American people are troubled kind.
created which
that experience, with the result locations already
picture. Our estimate is that; a by the failure of the Allied na¬
The Path to Agreement V
that farm mortgages- have been could conceivably be corrected in
24% drop in industrial production tions to make
more progress in1
But difficult as the* task may be,
reduced1
by almost
$2 billions7 time by an increase in productive would be translated into a de¬
their common search for lasting the path along which1 agreement
since the war began" and farmers efficiency and1 relatively moderate
cline of only about 20% in na¬
peace. "
/ .
may be sought, with hope of suc¬
are in the strong^t financial po¬ deflation in* certain fields, will be
:
7
tional income, bringing that fig¬
•
a;;
cess, is clearly defined. - r ;
,'v
sition in their history. There won't extended even further.
ure down to the neighborhood - of
UN Not Concerned with Postwar
be the wave of foreclosures and
In the first place, every mem¬
$135 billions from the recentdevel
The Cross-road Before Us O
v,i'7'7'77^■; Problems 7;• .4- .;:''777 ber of the United Nations is> le¬
bank failures that accentuated the
of close to $170 billions. (These
In other' words, we stand at! a
It is important to remember the
earlier deflation.
gally and morally bound' by the
references
are
to
annual? rates
cross-road:' The
sensible
path
intended place of the United Nd«
Charter to keep the peace.
More
Finally, urban buying power,
rather than calendar year totals.)
leads to a relatively painless cor¬
which plays an important part in
Another widely used index of hl2nSTrntoward this goal, specifically, * every : member*: is
rection
of the excesses* already
The United Nations—-as an
organbound to refrain in its internadetermining farm prices, is un¬
general prosperity is disposable
committed. The other leads to a
ization—was
not
intended
to' tional relations from the threat, or
likely to slide to the extent it did
income; which is the total of in¬
piling
up of further excesses, and
settle the problems arising imme- use, of force against the territorial
4-*in 1920-21.
:
come' payments less
;
taxes. It is
a strain' of wage-cost-price
rela¬
currently running at art annual dlately out of the war. The United integrity-: or 1 political -independ¬
Farm Price
Drop Imminent
tionships the correction of which
Nations was intended to provide ence of any state.7
rate of arourtd $144 billions. The
would- require a major economic
the means of
The fact remains, however, that
maintaining inter:
will-

.

•

-

face

we

a

severe*

drop

,

in farm readjustment. It would be

Despite

prices and farm' income.
the supporting elements
much

as

20%

the

as

to 25%. When you

one-sixth

remember that close to

population is ort

working

the

if

nature

crying

a

path

second

our faith
has been worn

have chosen, but

mentioned, it couldvrun

just

of

I

shame

were

in human
so

thin in

circumstances

of

set

described

neighborhood'
Consumers'

$115

of

•

billions.

part to black market operators.
Once
building
materials 7 are

and that the current excess of pro¬

flowing more freely, perhaps by
next summer, this situation will

phenomenon
The

mere

and- prices

tion

to

new

homes

will

come

down

4

u

of

these

prob-

{he

Charter

'the*

of

Nuremberg

,

war, just as many economic meas¬
urements in 1921 were well above

duction

over

consumption

is

a

current

rate

of

con¬

sharply. Used houses Will decline
In view of the well-adver¬
correspondingly; indeed, there is ity.
to believe that the peak of tised large deferred demand for
residential
prices
has
already goods and similar large accumu¬
been passed. Moreover, many of lated
buying power, we would
those who have been forced to expect a drop in consumption to

exorbitant prices will walk
away from their mortgages when

be small relative to similar drops

building costs shake down.
Regardless
of
the
beneficial
longer-range effects of this cor¬
rection, its' shorter term reper¬

for

pay

in

previous depressions.

Assume

a

freer hand

tried

the' bar

before

of

interna.
t,

™

^"ss&sswrs
xsaisfiscsst
tlS*'
of the world know

setWements have- S mS l,lat' thet*e cari be
peace
tfd5unlas® « « Peace with justice for

peace'

j

„

bulw

a

t"?,?
our

more"

to race; creed or color-

• search
for
everlasting
rest upon the four essential

secondary and
freedoms.
lasting postwar boom.
T-w*

set the stage' for a

toSr!S all—justice for small nations and
for
nations andi justice'for
these settlements
individuals without distinction! as

permlnmt peace

I submit that

and

peace,

^'r^rd^he

J.

four freedbhis.

attainment of the

:shall attain freeSbm from

oro

Returning Competition

all, we must prepare for
sumption would cause a drop of two problems that have been al¬
more than 7 % in productive activ¬
most wholly absent from our op¬

reason

opportunity and

to carry out its

long*range task of tional justice'
L those of any year before World' providing peaceful means* for the i
adjustment
of
future
War
f. Relative to the present,
some of which might arise out of
however, they look like hard
times.
;
ft' would' be a mistake to dwell
too long upon the indicated diffi¬
culties ahead. They will serve a
own ^'rAnnnsihillffM
?m«T
*' The Pe°Ples
highly useful purpose, we believe.

of p'eak prosperity.
adjustment of produc¬

the

ter

differences)WJ^ 'Pfar?

«

for

*

,

of high costs. Our in¬ and
August
combined,; roughly
vestigations con v i rtce us that 7V2% of total manufactures were1
prices of new homes have ad¬ added to inventories,: largely of
vanced out of all proportion to-the goods in process. True, inventories
rise in legitimate materials prices are still by no means excessive in
and building wages. In part, this relation to sales. The fact remains,
jBy bringing, down the price of
is due to excessive profits^ taken nevertheless, that: they are pro¬ food and building, by halting the
by builders and subcontractors; ceeding rapidly in that direction,* perennial demands of labor for
in part to the waste entailed in that any important downturn in1 benefits oiit of keeping, with pro¬
delays caused
by shortages of consumer buying would adversely ductivity, and by increasing pro¬
materials, supplies and labor; in alter the relationship with sales* ductivity per man hour, they will

corrected,

settlement

spending,, recently at

t
Ih the second place, I" remind
nre after you that23 members of the United
leen madfe. Nations have bound -themselves by

iv.

U

ah; annual

because

largely

+

rate of $122 billions,
+^lb^tely ^)ns^^di Tri^urtal to the principal that
to negotiations among the
years- that we* cannot dis¬
might well drop to $110 billions.
tAllies- planning, initiating of waging a
regard this possibility. of
These figures still add up to a ,as distinguished from the United ■ War
aggression is a crime
Assuming that organized labor high level of activity relative to Nations. This was done l'fi order
jlSgainSt humanity for which indito
takes the second road, how severe
give the United Nations a bet- viduals as well as states shall be
that which was known before the

recent

farms, this is not a prospect to be
a
decline is to be expected? The
brushed lightly aside.
A third storm' signal is to be first consideration in arriving at
found in the building field. [Resi¬ any estimate must be that we are
dential contract awards have al¬ now producing at a greater rate
ready turned downward, - partly than we are consuming; For July

be

t

might bring it down to the

above-

-

Above

erations in recent years.

The first
is the return of competition and
the second is the reappearance of
business

Both

failures.

sent

challenges

men.

The first

to

will

you. as

means

pre¬

credit

that you will

want,
These
to
nrp
are

freedom

and
are

which

niPrtf?pH

p edg

from

a

the

United

brings closer to

nation

tT

nfrT

Nations

nndpr thp Pharfpr

undpr

Lher

fear.

freedoms

fundamental
all

.

freedom of speech, freedom of refreedom from want.

tne^Cnarter. ^an(j

To the attainment of these free-j
Along this path we can find5 jUsdoms—everywhere hv the world— ttce for all, without distinction-bethrough the friendly cooperation tween the Strong: and the weak
cf all nations, the Government and
among nations, and Without dis¬

people

of the

United States are crimination

among

individuals.:

dedicated.
*
l."-After* the peace has been made,
credits, ;
The fourth freedom—freedom I am convinced that the United
10 %.
That 10%, combined with for every such refusal will mean
from fear—means, above all else; Nations can and will prevent war
say 7% representing the adjust¬ a loss of business to
your firm at freedom from fear of war.
between nations and remove the
ment
of
production to present a time when every sale may count.
This freedom is attainable now. fear of war that distracts the peo¬
cussions could be disturbing, un¬ consumption would make a total The second means that an
equally
Lately we have all heard talk ples of the world and interferes
1 v
settling
the
construction trend of 17%.
fine discrimination must be exer¬
about the possibility of another with their progress toward a- bet¬
for a time.
However, economic trends al¬ cised in granting credits, for the
V7?) ^7;:'a.4
world
war.
Fears
have
been ter life.'7$47^
most always go to extremes.
In risk of losses through bankruptcy
It is difficult to measure the
aroused all over the world. •
4
7 The war has left many, parts of
all probability production would
will again be an' extremely live
repercussions- of the deflation we
ahead

in

these

fields.

for

Much

the

a

moment

that

it

is

only

have to

exercise a fine degree of

,

discrimination in refusing

time fall below the reduced

one.
After the last war business
War Fears Unjustified
consumption. The huge failures: were
depend upon (1) the extent
very light through
These
fears
are
unwarranted
of further inflation of wages' and, inventories now existing would be the middle Of 1920; after which
and unjustified.
7/7,/■•.,7.: ?;■ 7.4
eaten into. Assume that the sag
consequently, of finished goods
they rose" from an average of
of production below consumption around
However, rumors of war still
500
a
month to" almost
prices within the next few months
and (2) other labor developments should be 7%. That would point 2,500 in December, 1921'. A repe¬ find-?willing listeners- in certain
to
a
total
drop of 24% in aggregate tition of this
places. If these rumors are not
in the near future.
pattern lies ahead
production of goods. The Federal as- the business enterprises1 now checked they are sure to impede
world recovery.
Union Demands Crucial
Reserve Board's monthly index,<
77 7'
7
being formed5 meet the first severe
I
have
been
reading reports
The tip-off on the first may be now standing at 178, could bog tests of a: competitive economy.
down to 135—no mean drop. This
from
many parts of the world.
Credit men; will' have to go back
provided by union demands on
is not advanced as a definite fore¬ to
These reports all agree ort one
work!
'7777\,
Chrysler and results of negotia¬
tions there. George Addes> Sec¬ cast, but seems- to us to be well
■MM
major point—the people of every
nation
are
sick
of war. They
retary-Treasurer of the UAW, said within the realm of possibility
during" the next year or two.
know its- agony and- it's futility.
a few days ago, "This month we
f
No' responsible
government can
present our demands to the
Wages on One-Way Street
Chrysler Corporation and we shall
ignore* this universal feeling. \j
Such; a drop in industrial pro¬
fight for their realization with all
The United- States' of America1
NEW ORLEANS, LA.—On Nov.
the power and militance at our duction would probably be trans¬
has- no wish to make war, now or
lated
into
a somewhat smaller de¬
command." From all indications,
1, Walter H. Weil, Walter H. Weil, in the future, upon1 any people
cline iri national income. In the Jr., partners in Weil &
Company, anywhere in the world1. The heart
too,
Chrysler
Will
be
equally
first place, it is extremely doubt¬ and Sam Cahn will bC admitted
tough. The resulting atmosphere
of our foreign policy is a sincere
ful that wage rates can be re¬ to
is far from reassuring.
partnership" in
Kohlmeyer, desire for peace. This nation will
duced.
Organization
has
made
If
this
should
Newburger
&
Co.,
Carondelet work patiently fov peace by every
prove* to be
them flexible in only one direc¬
Building, members of the New means consistent; with self re¬
merely stage setting' on both sides,
Whatever decline York Stock Exchange.
we
could take" considerable ert-^ tion—upward.
spect—and security". Another
takes place in wage income, there¬
It is understood that Charles
couragement. If the
union de¬
world
war
would shatter the

See

level

will

of

,

Newborger

'

mands

are

moderate and

a

reason¬

able settlement is arrived at
soon;




To Admit Weil & Calm

fore, must be largely the result of Loeb,
unemployment. Moreover, it must

a; partner in

will do business

as

Weil
an

&

Co.,

individual.

hopes of mankind and completely
destroy" civilization as we-know it.

the world in tufmoil. Differences

have arisen among'

the Allies.v It

will not help us to pretend1 that
this is not the case. But* it is not

necessary to
ferences.

exaggerate" the dif¬

;

For my

?

part) I believe there is

ino difference of interest that need
stand" in the way of

settling: these

problems and settling them in ac¬
cordance with the principles ' of
the United'Nations Charter. Abqve

all,, we must , not' permit differ¬
ences in economic, and social sys¬
tems to stand in the way

either

now

of peace,

in the future.

or

To

permit the? United Nations tb be
broken

ihtp irrecortsiliable parts,

by different political philosophies
bring disaster to the wohld.

would'

So far-

as1

(Germany and Japan

concerned; -the United States
is resolved that neither shall again

are*

become

a

cause

for war. We shall

continue to seek agreement upon
peace

terms

which

both Germany

ensure

that

and Japan remain

disarmed, that Nazi1 influence in
Germany be destroyed and that

i"

•'.►■*'

\

j

/

Volume

164

Number 4536

THE COMMERCIAL & FINANCIAL
CHRONICLE

2115

•

the

>

•

the war lords, in
Japan be eliminated forever.
; The United States, will continue

of disputes as well as
them. The exercise of neither: veto

to

rights

nor

make

peace

of

power

1

seek

settlements

arising from
just to all states,
large and small, that uphold the
/; human
rights and fundamental
freedoms? to which the Charter

the

that

war

are-

da not

'':

contain

conflicts. I•
A

; .;

y.' *

between

peace

based

the seeds of

the

v:

-

quick

a

new

and

'?'!
"/'■ '£•('
nations-

tfie "ravages of

"

it

is

it

able

to

no

force its attainment at the earli¬

the

est possible, date.

tween nations.-,

tion/of

the " public

methods

;

of

settlement

of

-

-

,

/Removing War

Settlements. All-Important

.

the

Nations

fear

of

the

We

na-

tions

the

reach

to

agreement

;v peace, settlements.

•

•;

First,
ment.

-

a n

establishing
of

ful

energy, that
for peace¬

use

^

v;

There must be accommoda-

tibn by all the Allied nations in
Wiiiclt. mutual't adjustments- of

.

;

lesser national interests

.

in order to
>

the

serve

tefrest of all in peace,

.

are

made

J

These

t

and
\

agri¬

must also prepare and strengthen
the United Nations for the tasks

;■>

Organization

Organization;

be

can

.

is

that

ahead

lie

ments have

after

the

settle¬

of

rope.

..

im¬

an

is essential

over

be

of

that

created

in

from UNRRA

caring

new

for

as

been made.

re¬

on resettling the refu¬
displaced persons of Eu¬

# ^ 'All, member nations, large and
small/ are represented here as
equals.

Wisdom

is

:

nations

r

large

able

mo¬

to receive those;

toward

few years! toward: the: realization
-of anotherthe four freedoms-*
freedom from want.

the

upon

bers

,

]The

;

V

highest obligation of

Assembly

a

that' will be lasting

a, peace

justice.

-La seeking unity we should not
be

concerned

differences

about

freely.

'

should

which

the

this

end.

United

Na¬

has

than

the

world

'

•

the

of any who, are fearful
effects of free and 1 frank

discussion
l-

The-

the United Nations.

in

United

States

throughout
•all

the

humanity

world,

of-

us

the- fullest

bly and in the Security Council.

demonstrated" in

The

United: States

has: already

u

.

of the

more

the

leather

the

an(j

enjoyment of life.

a

.

,,

mean

we

do

there

are

people

.

••

t

,

assBVAaa
PVar^ii
.?SLn ^

f

not

our

in

!hi?!

.

torce. Now it

point

population this is
worid's big nations.
our

country! only 6%

+•

ge P°Pulatlon>
+a la^e+ ^orkl.nf
is true that in

0f

that. tioned;

recognize

^

ctatPS!

fh

.

and

diets,,

people, is

our

the

of

one

the

of

one

But,.as menpopulation ebnstitutes-

o£ the total world papu¬

mean

that there
numbers

foreign

are

ger

competi.

have

high standards of living For
mstance, z not long
ago.; I drove
one

But

on

share of land>

in

such

cities

and

tween

and

^

[iflua^e
^ejng

reiation

number

expianation

a

gome

of

seem

for

our

the.

be-

of

an

in-

q^ewell-

countries

Where j have recently been have
wide lands and a density of
popurlation less than

our

the

even

and

habitants, does not

j

what.ywould be

course,Hsuch

of

comparison disregards factors of
fertility, accessibility and climate,
Nevertheless, the extent of our

while, a- fraction of?land>

people

including the ter-

and

area.. This
figure corresponds
closely to our 6% of world population> so that we WQuld se^ io
have no m0re than an equit?bie

e? ver^

the

.

land

parts of the United States. Many
of them had four-car and five-car
of

,

is

possessions, actually
comprises but 7 % of the total world

that drive; They were houses such

1%

,

our

United states,

as

garages

.

pvnini?!nM+a^dvanceid the
to
explam
living standard

stories

of

the best residential sections; of a
large! Sdutli; American cit5^ : It is
a beautiful
city, and I have never

k^mes than I saw'

at

thou

extent of our country—the
amount
of land area<, Again it Ts
tme that
in this respect we are, one of
the
large
countries.
However,, the

con-

very

through several streets in

where,

,

.

^

who

and

intervals

SsnSlsS^eof tanl,

_of individuals

countries

level

not ,infreauent

-

not

are those where the
of people exist at a bare

subsistence

republican form

•

indiaj

masses

chief

0.

m

extreme,

At the other

ours.

Belgium

is

a
country
which has little land and is densely populated. In both instances the

granting of large loans andt credits

bers of the

and

;

and

direct

many

ways

its

among peoples is

ewn,

nec¬

exchange of grave concern about economic re¬ essary to this task.
The United
information, pro¬ construction that will repair the States, therefore attaches great iimportance to all. activities
motes/imderstanding and there¬ damage done by war.' " :r'
designed
fore

contributes

in

the. long

run

!

We

have

tcr the removal of the fear, of war

in

and

United

some

of the causes

of

war.

■/

The .United States believes that

the

rule

unanimous

of

accord
_

Security Council im¬

poses upon these members a. spe¬

cial obligation.
'

in

among the five permanent mem¬

free

afgymentsr and

■\

t^coUon.. Weuse"^'

i

upon the high level of
national .wealth
does
not

a

pledged under the United

.knowledge

rariinQ

the extremely wealthy conHying standard is markedly lower
a
very
small fraction of than ours,
the total population;
Below this'
So although size of population,
relatively ; small wealthy class,
and of land area; may be factors
,to break down barriers to
mutual however, the pattern differs greattne paxxein uin accolinting for our living standunderstanding and to wider tol¬ noweyer,
ly between the United States and
,h
, ard,
they are nott off fundamentai
fundamental
erance.
other nations. Here the great ma¬
i.;.*'".1;/ •,
importance."
The United States will
support jority of people are in a middle
the United
Nations with, all the economic class which has a very jj„ Perhaps the most widespread
resources that we possess.
misconception as to the basis of
comfortable,

The

:

tt,

Emphasis

,

great importance to the principle
of free discussion in this Assem¬

in

made 'to the

of

sssss

built
the premise that since
wars rvery small group at the top
begin in the minds of
pyramid whose base is a
men, the
defense of peace must
be con¬ tude Jiving m
structed in the minds of
men, and poverty by our standards.. ^
that a free
In those countries, as in
exchange of ideas and

cooperation.

norm

magnitude
pertain to nearly all the materials
which humans need for
health

re-

capita
goods far

per

upon

attaches

Need for Economic Reconstruction

a

Cultural Organ^- abroad
may
live
m
beautiful
ization, which is meeting in No¬ homes, as much as 90% is likely
vember, is a recognition of this ,tO hve im hovels., The usual patfact
tern; is one of a very wealthy but
That organization is

self-interest alike demand of

and

are

al, Scientific

.

the view
of

'year

iss*5 'sa&rjss

siderable

believes

'
look

us

world, and onethird of all the
soap. Percentages
of a similar order of

quantity of consumer
above that obtained by
any other

not

The United Nations
Education¬

■"

imporIn«. these
constructive
tasks
1 tance of freedom-of speech to the 'which concern
directly the lives
cause
of peace,
f do not share and
welfare
of
human
beings

:

that

every

challenges to

Nations Charter,

great opportunity lies before

us..

clear

/
Americans

tive form of economy.

mation—the right of the
people to
know--as among the most
impor¬
tant of those human
rights and
fundamental freedoms to which

had before.

ever

A

is

ceive

.

States

to

the-

shall succeed.

we

0f
coffee, half or
rubber, 35 %' of all

tanned

J

of government and to our

or

We regard freedom of
expres¬
sion and freedom to
receive infor¬

'

•

demonstrate

work

to

annually.

It

these

concerted; effort must be made to
break down the barriers
to a free¬
flow of information
among the na¬
tions of the world.

we

expressing

The United
States believes that this Assembly

.The,"United

/:'

toward
of the

political

•

food, shoes, shirts, dresses, soap,
gasoline4, electricity-—used per cap¬

Similarly, the> figures cited- do

completion,
this Economic
and
Social
Council, its commissions^
and related specialized agencies.
11:
provides more complete and
effective
institutions
through

the unity of/all members in be¬
half of

together

structure

help

42%

situation.)
SW0Sf
is meant

services, or educational
facilities.
To improve the lot of

Free Flow of Information
Needed

tions in' this, field is now nearing

man¬
to promote

way as

because it is founded upon
,

this

is to speak for all

kind in such
/

The

to

Aerators,

medical

refugees who do

reasons ofv

world

marginal regions, there are many
who do
not
have proper

religious, belief.

of

work

supreme deliberative/body.

homes for.

Charter pledges the mem¬
the - United
Nations to

The

.formation of collective policy.
* This
Assembly is the world's

seek

we

everlasting

la standards!* iT'f common'lation and yet we/se a far ^
knowledge that in the slums of
worid's® SutputVmajorhcon°sume?

not wish to return to their
former

war •

equally

nations

judgment to bear

the* fear of

remove

progress can be made in the next

bringing constructive thought and
wise

to

from the world unless substantial

mercy,., guide
as

a11 the automobiles

the quantity of consumer
goods—

our

,

The United Nations: will! not be

size/ Small

contribute

can

with; the.
/

the

not
or

fortunate
standard of living

By

V

»,y

'

nopoly of strength

™

;

There will be similar
tasks,
magnitude, in the Far

forces adequate to prevent,
Organization
and in
acts- of aggression.
joining with other nations
peace

With His

riches, or that immigration here
has been the goal of generations
of
ambitious, adventuresome folk
from other lands.
'
1

year

and

the United States to
authorize this
country to do its full part, both
in financial support of
the Inter¬
national
Refugee'

Council may have at its disposal

peace

us

world.

prfwhoinhaliftbS Enfted'

ita

great

East.

agree¬

and

sustain

curfes^ afto

wito

''

as possible in the

tasks

gees -and

of

It

Organization

time to take

order that the Security

wisdom

and

bring

m-d6
feelings oicondescension

riot with
not

■

for * preparation

press

ments in

world

well-being.

wfft

\! '

Assembly can do much outcome.
<
The
United
tdward recreating, the spirit of
States
considers
On behalf of the United States
this a matter of great
;
friendly cooperation and toward I can say ;we are not
urgency in
discouraged, the
cause
of
;> reaffirming those principles of the f We shall continue to? seek
restoring peaqe and
agree/ in
th^ cause of
? United Nations which must be
humanity itself.
apment by every possible means.
i
I intend to urge the
plied1 to the peace settlements. It T At the same time we shall also,
Congress of
-

the

us

fx!stsbln°EuiopLWhiCh^

ly

tions,. helping; each other oh a
basis of equal, rights^
In the field of social
reconstruc¬

this

the

upon

their

another specialized
agency in this
field—the International
Refugee

give to It. The future safety of
Nations, and of every

This

of

possibilities

patriating

nation, depends

life

that all peoples

\ ;
The Assembly now has before
it
forr adoption the- constitution of

United

partnership

of

May Almighty' God, in His in¬

„

perma¬

Why Our Standard
Of Living Is
Highest

a

realized only by the
cooperation
of. members of the United
Na¬

the

member

mon

nations

develop

development

early

the

a

peace and coim-

of

areas

all

to

portant step forward.'

we

among the peoples
for their common

in¬

dustrial

edents in the law of nations. Each

can

security and

that

able

economic

will be^ worth1 everything in*

and good faith that

finite

as

partnership^—a

'*

We believe

Health

per¬

peoples.

porary expedient but
nent

areas,

be

without setting fundamental prec¬

severance

greater in-

Per-

a

tion and advancement the
comple¬
tion of the Charter for a
World

ments that will remove

tiom

by

,

the deadly
tions to respect *the legitimate in^
Tear of other weapons of mass de¬
•'i terests of all "states ' and act as
struction, in accordance^ with the
good neighbors toward each other,
; same resolution; *■ ••
' /.
ivfr '.Lastingv
agreements:-, between?
Each of these obligations is
go¬
; Allies cannot be
imposed by one
;V nation nor can they be reached at ing to- be difficult to fulfill. Their
.fulfillment will require the ut¬
the expense of the- security; indemost in
perseverance
and good
Ti pendence or
integrity of any na.^
faith, and we cannot succeeed
i;

being

The American
people look upon
the United Nations not as a- tem-r

:

agree-

only, in accordance
the Allies will not help us.
Agreements designed to remove with the Assembly's unanimous
resolution of last winter.
the fear'of war can. be reached
:>
Secohd,. we must reach agree¬
only by the cooperation of naamong

London

cultural modernization.

purposes

United' Nations.

(Continued from page
should be able to
2074)
reap the bene¬
^
Yet/even those countries to the
fits of their
with other, nations. Let
own? labor and of:
south have, by and
their, own natural resources.
large, an aver- at a few.,
^
dge living scale no better
There are immense
than, ty- Only qo/ q£ +ne world'*?
possibilities
in many parts of the world for

;

international

atomic

will will ensure its

d 'r: misunderstanding

now

well-developed

healthy

fulfilled..

we must reach an

controls

Propaganda that promotes dis-

t

t js u s t

r

on

remain to be

war

in

believe!

own..

be¬

toward the removal of the fear of

first

requirement is for the Allied

less

should

-

Fear:

Organization;

the world.

Two of the greatest
obligations
undertaken by the United Nations

United

the

war,

'

•:

the

to act together to re-

are

the

move

of

members

States

Tt must be the
determined pur¬
of all of us to see that the
United Nations lives and
grows in
the minds and
,the hearts of all
pose

but the indus¬
trial and agriculturalprogress of

*

If

United

creation; of the International

devastated

chamber to

disputes

at¬

highest importance to

paratory Committee.
/ /
;;;;
;
This country, wants to see, not
only
the
rapid- restoration/ of

applica¬
peaceful

and

council

a

the

,v-.v,.v:

•

,

The

discussed

function-

continuing

< ■'

".

structure.

Trade-

continuously, the Security Coun¬
cil represents a most significant
development in international re¬
lations—the

!)y-

must \ complete

we

both in

the making of the
peace
settlements and in the fulfillment
of the
long-range tasks of. the

taches the
the

are

/

Now

;

can

.*■

is

The world is
crying for" a'just and durable
peace with an intensity that must

Peace

United Nations.

fully qualified for that

Because

war.

,

rights:

purpose.•'

from

recovery

majority

brought into relationship-with: the

acceptable
because
they are just to all concerned.
The Security Council is intended
to promote that kind, of agreement

on

world and

settlement
for airing

universally

justice will make possible an early improvement in livirig
conditions
throughout
the

I

promoting

secure. There is
substitute for agreements that

V-' pledges all its members, and. that
•{y

for

means

This obligation is

to seek and reach agreements that
will-enable them and. the Security

We

every

participated

measure

Nations

have

separate

in

actively
by the

this

end.

taken

such

>

of

action

our

as.

the

reciprocal

ization,

the

International;

for

ment and. the International Mone¬

Charter toward -their fellow
bers. of

the

United

mem-

Nations

and

toward the maintenance of peace,

it is- essential; to the

future of

the United Nations that the

mem¬

bers should use the Council




as

a

Reconstruction

and

Develop

tary Fund, members of the United
Nations have proved their
capac¬

ity

for

toward
tives.

constructive ..cooperation
economic* objec¬

common

In

addition, the Interna¬
tional Labor Organization is
being

tion of necessities- and

uries

,

The

,

Bank

yes, even high, liv¬
the
ing standard. Nearly everywhere
abroad the widespread distribu¬ -the

The. use of force or the threat
of force anywhere in the
world to
break the peace is of direct con¬
cern to the American
people.

Through the' establishment of
the Food and? Agriculture Organ

J Council

"

,

trade-agreements^ program.

1 ties

ta fulfill the responsibilithey have assumed under the

,

.

.

addition

national

renewal

taken

toward

stitute

course

of

which

marks

small lux¬
economy

our

"

history has- made

one of the stronger nations of
the world. It has therefore
placed

iii-

conspicuously lacking.

--

us

special responsibilities to
our strength and to use
rightly in a world so interde¬
pendent as our world today.
upon us

conserve

it

The American people recognize

these special responsibilities.
We
shall do our best to meet
them,

American
belief

been

living standard

that

our

is

has

country

exceptionally endowed with
We do, in fact,
natural resources, but

natural resources;

have many
let

us

examine

a

few to

see

Higher Living Standards Not! Due f we compare in this respect
to Natural Resources
the rest of the world.

how

with

.

While

precise figures are not
readily available on a worldwide
scale, there are sufficient statistics to provide revealing indices
of the comfort and well-being of.
the American

people

as

compared1

Of the. total amount of poten—
tial water-p'ower for generation of
electricity in the world, 5% is
available within our borders. On
the basis of our proportionate land

(Continued

on page

2116)

THE COMMERCIAL &

2116

FINANCIAL CHRONICLE

schedules and introduce new con¬

Why Our

Standard

Of Living Is
(Continued from page
area

tle

and

less

teriais

population, this is a lit¬
than what might be re¬

share."

"our

garded, as

veniences

if

it

the

From

is

this

2115)
another

is

standpoint,

ruptcy of the inefficient—even if,
thereby, the progress of the effi-

seedlings would have taken eight
years.
But his competitors ap¬
peared one day with $2,500 worth

cient

of young trees which they set out

a more

with their

prices, all others are compelled to
follow suit, whether they can 'af¬

may

-

most

with oil as an energy
But the oil industry, which
active

in

scientific

re^-

search, is not in despair. It be¬
lieves that ample opportunity will
be found for the use of all energy

plentiful
consumer goods,

of

production

power

whose plot was swept by fire. To
obtain salable stock again from

compete
source.

maintained that they are

primary basis of

competition.
atomic

meet

to

travelers

Tomorrow

Highest

from

for

a

world

total

of

When it seemed
nature

and that, even

be

should

7% of the
how can we account for the fact come
products—
that
the
United States, 'which sible to find new and useful em¬
Just about our share and no more.
must import virtually all its tin,
ployment for the oil thus dis¬
There are many essential raw
turns out 85% of all the food in
placed.
materials of which our country
the world preserved in tin cans,
In American corporations most
has no indigenous supply at all,
or that well over half
of all the of the people in top positions got
or only a small one.
We have lit¬
tires in the world are American- there
by virtue of selection in
tle
or
no
natural rubber, tin,
made although there is not a sin¬
competition with other individ¬
nkkle, manganese, mercury, co¬
gle rubber-tree plantation within uals. Few of them started out at
balt, industrial diamonds, or quartz
our borders?
the top or were born into their
'V'''[/■ 'V :
crystals for electronic equipment,
jobs. They have had to sharpen
All these are vital to an industrial
Profitable Use of Resources
their abilities in contest and have
civilization. Our-indigenous sup¬
Possession of abundant natural had to
prove their capacities. The
ply of lead,^coppet,'^chromium, raw materials can no doubt con¬
former board chairman of Jersey
uranium, linseed oil, bauxite, and
tribute importantly to the achieve¬
Standard, recently retired, began
a host of other essentials are low
ment
.of
a
satisfactory • living his working career in a pumping
In proportion to our use of these
standard, but any hypothesis that station of an oil pipeline company
materials.
it is the determining factor is where his duties included sweep¬
In this connection it is interestclearly not- tenable.
*
ing the station floor.
America's trees comes

forest

of Texas,: speaks of
iron deposits, coal veins, under¬
University

ground oil, etc., as "neutral stuff,"
and
terms
them
"natural re¬
sources" only after human effort
and skill have been applied.

the
proved oil reserves and

have

We

world's

about

35%

of

coal reserves.
of the volume of iron
ore lying in American earth vary
from 25 to 50%
of the world's
store,
These (figures appear to
50%

of the known

I Estimates

the

I

evident,
tem.

.

made

in

New

but

England

are

son

'

the

other.

built largely

petroleum.
automobile re¬
quires about 30 pounds of rubber
per year.
Brazil has some coal,
gasoline;

that

means

On the average, an

and

their

among

has

iron

ore

deposits

are

the richest in the world.

It

considerable areas favorable

that lead to action."

1

already in ex¬
istence and possibly wishing to
expand their service to the public.
It was suggested to one of our af-:*
filiates there that they could increase

was

sys¬

is

framed

and

tions

cartels,

exercised

or by govern¬
associations in

trade

and

collaboration.

Let

cite

me

some

examples.
As

.

suppose

a

corporation wishes to put out a
new line of goods or a young man
wishes
the

to

for

kind

open

retail

public.

a
shop of some
merchandising to

In several

European

countries neither would be allowed
to

do

unless they could prove

so

such a busi¬
ness previously, in the same ter¬
ritory,
.
they

had

operated

If the young man could not fur¬
such proof, his shop would

nish

have to

be

operated by someone
previously operated
Failing these re¬

else who had
a

similar shop.

quirements, he could not go into
this

be

business

particular

this

in

ser-

particular territory. Vested inter¬
ests are not confined to "big" bus¬
iness.
Throughout the industrial
fabric the division of existing bus¬

This

'

found to

was

impossible, since all soft-drinlc

licenses
vice

in

the

stations

areas

where

had

operated

distributed to others. The

ser-*5

been

existing

soft-drink merchants had in effect :

purchased the right to do business
in the

area

and at the

same

time

had acquired a protection against

competition. When it was further
that the drinks might
be given away as an extra feature
of the stations' service, we were

suggested

informed

illustration,

an

from their

revenue

to be serviced.

by governments, by trade associa¬
ments

the

vice stations by selling cold drinks
to patrons waiting for their cars

,

and

This

affected businesses

only in broad principle, as it is
in this country, but in detail. Reg¬
ulation

:

somewhat differ¬

a

ent sort of trade restriction.

what

American

4

-

Again, while in South America,
I encountered

actually

had

'

•

this

also would

be im¬

Giving away the drinks
would be interpreted as lowering

possible.
the

price of gasoline to the cus-

tomer, and prices in that country
were fixed by the government.
Such restrictive practices amount
to birth control in business. They
allow

not

do

new

a

f)

large number of

businesses to

come

into

and then allow the public by

being
their

patronage decide which shall swv:
vive. Control is taken away from <;

ernment. The effect
to put people

business
And

on

who

can

are

hardly be;
already in

their mettle.

what

is

the result

of

the'

„

,

,

The

products and services and to keep
; *
'
hampering prices down.
this philosophy as it af¬
\ Competition in Oil Industry
•
"Economist"

London

re¬

ferred recently to the
effects of

It said:

fects British business.
"It is difficult to deny
is

a

that there

sluggishness about British ac¬

industry, with which I
particularly familiar, is espe- p
cially competitive. Each one of'
scores of companies is striving to \
The oil

am

price, that is to the ben¬ of personal behavior soon finds tions, public and private, that does
efit of the general public.
Mis¬ himself under the strong pressure not exist elsewhere.
; There is
develop new business and to hold'
souri will take part of New Eng¬ of
community disapproval, and no no active discontent, but also no it. As a result of such effort, theland's shoe business, New Eng¬ business
organization
can
with sparkle or enthusiasm. . . . There price of ;* gasoline has declined
land will have to develop some
impunity gain a reputation for is a conspiracy of labor, capital from about 30 cents a gallon' irt
other activity to fill the gap, and
and the state to deny enterprise 1920 to less than 15 cents cur¬
cheating or gouging.
the resulting diversification will
reward.
The
embattled
American competition is tough, its
rently, exclusive of taxes. And ir*
no
doubt be ultimately to her but it is not without rules.
trade association movement has
.

Here

also

we

have

.,

industry

competing with industry. Oil com¬
petes

vigorously with coal as a
In response, the coal indus¬

Most of these rules

are

unwrit¬

ten, tacitly recognized ones. But
a number of broad principles have

.

.

locomotive

that

burns

powdered

coal, a smokeless household stove
to use bituminous coal of even

expression

in

law

the

or

Sherman

Clayton anti-trust acts.
our

otherwise

conr-

plain loudly about these laws, I

•

■

the meantime quality and service
(put) any attempt to reduce costs to the public has steadily gone up.
prices by greater skill or en¬ Quality as measured on the octane '
terprise under the ban of 'destruc¬ scale for example, has gone up

tive

pecuniary return and by his own
colleagues of any social
"The

same

process

reward....

has been ap¬

since

1928

ing), from about 60 to 78. Authorities have estimated that this

quality

improvement

alone

has

American public hun¬
dreds of millions of dollars through
saved

...

..

.



i2fii

in'

ziSffiB

.

-

(while price was fall¬

the

improved engine performance.

By contrast, in one South Amer¬
of oil. It is the the poorer grades, and a new fully
believe
this
occurs
because
of plied to the wage earner as well. ican country, where the petroleum
original home of natural rubber. automatic stoker for home'heat¬
The whole effect of the growth
their ambiguities or when they
business
is
under
government
Yet Brazil has one car per 342 ing. It is fair to wonder whether
feel that the laws are being un¬ in
strength of the trade union monopoly, gasoline retails at the
persons, while the United States
that research group would have
movement—indeed,
one
can
say
fairly interpreted or administered
equivalent of 55 cents per gallore
has one per five persons.
Fur¬ been set up if the coal industry and does
not arise from any dis¬ its deliberate intention—ha§ been
including tax. In any part of the ,
ther, all Brazil's autos are im¬ had not felt the pressure of com¬
approval of the laws themselves. to divorce the worker's income
United States similar grades would
ported. Some are assembled, but peting forms of fuel.
The Federal Trade
Commission from any dependence on the ef¬
none
is
actually manufactured
sell for 1.5 to 20 cents a gallon.
Many of us have witnessed the Act and the Robin son-Patman Act forts he makes.
within the country.
Like Brazil,
A further consequence of our
growth of transportation by bus are other instances of rules of
"The growth of trade associa¬
the Dutch East Indies are rich in
and, private auto all but eliminate fair play in our system.
:
tions, of price-fixing and market- system is that it puts a premium
petroleum and rubber and have the electric street car. Today we
The spirit of sportmanship in sharing devices—the whole appa¬
some iron ore.
But there are few
upon efficiency, which leads to
see
the airlines competing-with
ratus of protection, in fact—is in¬
our competition was illustrated by
autos there, and none is made
low prices and high wages, which,
the railroads, and we see the rail¬ a recent newspaper report about spired by nothing so much as by
locally.
>
the desire to prevent the bank¬ in turn mean that more people
a
Considering natural raw ma- roads, in turn, speed up . their
: nurseryman
ia .New; .Jersey
for the presence

•

v

and

and

Although

businessmen sometime's

.

.

competition.' The industrialist
fuel.
who discovers a way of making
formally established.: For exam¬
try has set up a research organi¬
better things more cheaply (which
ple, the American conviction that
zation which is working on such
is what he is sent on earth to do)
competition is a good thing finds
developments as a gas turbine
is deprived by. the state of all
been framed in

:

complete but fair competition that
American business practices—the

system in which one of the car-r> ;
dinal
principles
is
that
there' A
importance than
should be as few obstacles as pos- f
the creating of new opportunity.
sible to the starting of new en¬
Producers, wholesalers and re¬
terprises or the expansion of extailers of a given product may be
isting ones?
The result is that
banded together in an association.
many pebple do start businesses,
If a merchant attempts to open a
from the small bakeries, hardware
business without joining the asso¬
stores and newsstands up to great;
ciation, he will soon go bankrupt
factories and department stores.
for lack of wares to sell since the
And since the system leaves it to
cartel will not deal with a nonthe free choice of the public to ;
member.
And the gates of such
decide
which
enterprises
shall
"trade
association" ^membership
prosper, and how much they shall
are often closely guarded. ;i
prosper, there are powerful in-1; '
centives to business to improve,
The British Situation

lower in

good.

.

the public and placed in the hands
of a small group or with the gov-:

iness is of greater

.

For an automobile is
of steel, that means
iron ore and coal. In the course
of a normal life of eight years it
consumes. 16 times
its weight in

any

today be-*
competitors, both
whom, in their different ways,keep a sharp edge on the motives

In all the countries I visited in

But the per¬

who violates the conventions

thaty they

...

ot

When

about

not.

or

"Britain finds herself

Europe and Squth America, trade
—especially in its : competitive
aspects—tends to be regulated not

.

of natural re¬
sources. In fact, if the mere pres¬
ence of natural raw materials in
a country were enough to assure
to its people a plentiful supply
of goods made from those ma¬
terials,
a
country
like Brazil
would have more automobiles than

it."

on

them

known

never

support the idea that we have
been highly blessed
by nature.
not the exception.
developed.
;
But it must be remembered that
In considering in detail how
the existence and extent of min¬
Competition Coupled with
business
is
conducted
in
the
eral resources in any location can
Fair Play
United
States,
and
comparing
be determined only by wide and
other business patterns with our | I have said that American com¬
persistent exploration. So the fig¬
petition is exceptional not only
ures
on
the proportion of these own, a characteristic of the Amer¬
ican system, of vital significance, because it reaches throughout all
resources situated in the United
levels and cross-sections of Amer¬
States
probably reflect not so becomes evident. This characteris¬
ican industry but also because it
much that we have more of these tic is competition—and competi¬
is coupled with fair-play. Critics
materials than other people as tion of a very special kind.
of the competitive system, both
Now it
is true that in most
that we have been more energetic
here and abroad, often overlook
in seeking and developing them. other countries there is competi¬
this fact. They tend to regard the
This interpretation is supported tion, of a sort, in business.
But
competitive system as a carryover
by
the fact that although the it is most certainly not the Amer¬
into civilized society of the law
What makes Amer¬
United States has only one-eighth ican brand.
of the jungle, as a conflict which
of the world's land area geologi¬ ican competition different is that
admits
no
rules and in which
cally favorable for the occurrence it is complete and far-reaching
only the very strongest and most
of petroleum, we have discovered and, what is most important, it
ruthless
survive.
Obviously, if
about two-thirds of all the oil found has been developed in conjunction
people are going to live together
in the world to date. This is sim¬ with a code of fair-play.
in an orderly, productive, happy
ply because any person in our
Here in America competition is
society, such conditions cannot be
country can win the rewards of complete, that is, there is compe¬
allowed to exist among business
finding oil, so there are more tition at all levels and from all
units any more than we can allow
Americans looking for oil than directions.
Geographic areas, in¬
competition among individuals to
there are in other nations. If the dustries, corporations, new inven¬
be settled with knife and pistol.
rest of the world were explored
tions and people, all compete one
Any idea that American busi¬
as intensively for mineral wealth
with another.
.
ness
competition is a claw-andas the United States has been, it
Here, the South competes with fang proposition is a misconcep¬
is likely that our proportion of
the North in the manufacture of tion. There
are, of course, excep¬
reserves
would decline percent¬
cotton textiles.
The West com¬ tions to this generality just as
agewise.
:
J
petes with the East in shoes.
If there are exceptions to the gen¬
It is impossible to attribute the Missouri can make and distribute
eral rule of forbearance and po¬
American standard of living to a shoes which are as good as those

superabundance

with

they had done previously, it

*

liteness in social life.

restrictions

talked

efficient machine and cuts

tween two great

competition, they
would say, "but we tried that and
it didn't work, so we felt obliged
to
modify competition and put
certain

...

ford' to

American kind of

uq&ue element
The N. W. Ayer & Son adver¬
of the American economy?
What tising agency recently conducted
is a more adequate explanation a survey to learn the starting sal¬
than any of these others for the aries of the top executives of 50
wealth that has been.made avail¬ of the largest businesses in the
able to the masses of our people?
United States.
The average for
These were questions that kept the 1943 men surveyed was $13.40
arising in my mind as I traveled a week. Only seven had started
and talked with people abroad. at more than $25 weekly. "
It seems to me that the answer
In Europe a man who starts fair¬
lies in something less obvious than ly low in a business organization
size of population, area of land, and ends up as a chief executive
or
the presence of natural re¬ is referred to with something akin
sources. I believe it is an intangi¬
to amazement.
In this country
ble, but none the less real, quality such a career occasions little com¬
of the economic system we have ment because it is the patternWhat then is the

that the

competition might
really distinguishing fea¬
our

and
distribution, I mentioned it to va¬
I met in my travels,
And frequently, while; admitting
that
they do not practice the

■

i ing
to observe
that Professor
Erich W. Zimmermann, of the

once.

me

rious persons

•

;

of

to

is also impeded.
In a
competitive economy, such as the
American, when one firm acquires

ture of American production

-

'

equipment to put

own

him back in business at

if the atom
supplant
petroleum
in
cases, it will be entirely pos¬

sources

Thursday, October 24, 1946

,

Volume 164
can

buy

goods
In
are

the

great

United

THE COMMERCIAL & FINANCIAL
CHRONICLE

quantities

turn out.

we

the

money

,'y

•

of

-

States, not only

are

else.

factory worker

can

ouy a pair

of work shoes with the

wages of
three and one-half hours of
work,
to

the

labor

English worker has

nine

-enough to buy
and
24

in

Italy

hours

shoes.

hours

make

pair of work shoes

a

a

of

to

must

man

work

for

in

put

a

pair of
:ir[:y ;y:V
v ''

.

^

In

the

United

States

it

takes

work-hour

one

to make a cotton
It takes four hours in Great
Britain and nine and one-half in

shirt.

pre-war

Germany.

Sixty

Sweden.
turn

\ :

■

v

■

present,
out

forts

mistic.

of

become

:• :
workers

Russian

the

on

!'-X' v,V

only

average

a

fraction of the work produced
by
A U. S. coal

.American laborers.

Has

workers

productive.

It

;

from

times

seven

much coal

as

as

against different po¬

litical and economic ideologies, it
is important that Americans have
a clear appreciation of the accom¬

there is

American

terial

no

other realms.

coincidence

that

of personal

farmer, veloped in

;

our

using American power-driven
•equipment, produces four and a

not

or

stock

prices

return

price

and

solid

com¬

of

elimina¬

wage

controls
for

reasons

better

to

fit

be

decisions

1y

alT

and

industries

this

tinue

at

least

might

through

sive

"No Grounds For Further
Stock

terial

Liquidation"

rapid

rise in

natural

stock

result.
.

,;

prices
,

was

Organized labor was, however,
quick to sense the situation and,
greatly encouraged by the
ernment, filed and gained

Gov¬
wage

demands

member

down

bank

reserves

from

$1.5 ^billion to
less than $0.5'billion in the first
half of the year. (they are now
back to $1 billion); Reserve Bank
came

.

.

Excess

a

credit fell from above $25 billion
to less than $23 billion (now back

that
narrowed
profit
margins by raising costs against to $24 billion); high grade bonds
fairly rigid price /ceilings; and came off about' five points from
when it was apparent that the March to
September; acceptance
Government was considering price rates increased; commercial
paper
control via profit control in the rates
were
thrice
increased,, in
early part of this year the market July, September and recently, \
experienced the sharp February
The effect upon the stock mar¬

decline.

yHv'y y' ■v'i'V'V

Then

OPA

months to

with

ket

few

a

before termination

run

became far

only

■

more

liberal in inters

preting statutes and lifted prices
with the result that potential

gins

widened

went to
Then

new

and

stock

prices

highs.

came

the

/ ;
hectic

with OPA prospects

mar¬

..

•

,

summer

shifting

rap-

Idly between expiration and con¬
tinuation; and when OPA finally
went

back

on

the

books

to

be

promptly

followed by recontrol
and rolled-back prices the market
straightway broke.
Monetary

Controls

'

A contributing factor to the de¬
cline of stock prices was the suc¬
cess of the efforts of the
monetary

authorities

to

restrict

credit

and

tighten money rates in the name
of inflation control. Since the first
of the
of

year

a

total of $17 billion

debt has

been retired; $2 bilof certificates were retired
Sept. 1st, $2 billion more on

liop
on

Oct.

1st

and

will be retired

another
on

$2

billion

Nov. 1st.




direct and indirect—indi¬

was

rect in the sense that the upward

adjustment of
rates

called

long-term

for

some

interest

adjustment

in stock yields and direct in the
sense that the monetary policies
caused bank

liquidation of securi¬

ties.

i'v

But

'vy yy

market

prices appear
adjusted to the changes that

well

have

now

occurred.

Industrial

stock

yields have widened from close to
3% to more than 4% and over¬
all

dividend

payments are in¬
After a typical four

creasing.
weeks

of
panicky
liquidation
prices stabilized and the intensity
of
liquidation steadily declined
after Sept. 3rd.
Some dividend

reduction

and

cuts

in

the

period
ahead may occur, but these are
unlikely to be general and the

overall

trend

of

payments

likely to be upward for
period
1947

of

months.

earnings

aggerated
current

may

earlier

a

further

Estimates

have been
this

is

year,

of
ex¬

groups." 1 -\'

ma¬

'"H.* y

n

the

longer

ism

is

the

It

as

itself

18

the comment

days,

and .Without

red-herring pros¬
pectus can be issued. Often, too,
questions arise which require not
just one but two or more answers

as

Standard
Texas

structure

and

in

the labor situa¬

tion, reasons are lacking for be¬
lieving that such a major read¬
justment must take place. We may
face such a juncture some time

red-herring

It
of

available

would

course,

real spiral of deflation, but here
another 'another /bridge that

does

not

approval
mal

time

herring

four

weeks and the available data
sug¬

gest

present reason
prehension on the fiscal
"no

The

decline

commodity

prices

strued

as

rather

than

ap¬

score.

agricultural
be

con¬

favorable
unfavorable. Lower
commodity

raw

prices

material costs for

industry and reduce living costs
for

workers

and

there

seems

slight reason for concern over the
purchasing power of farmers after
the large earnings and accumu¬
lated savings of the rural popu¬
lation

For

during recent vears.
Higher Prices Likely
a

55%

Si

!

52

Carbon_

U.

S.

Gypsum_

U.

S.

Plywood——

U.

S.

Rubber—

t.t.

s.

Steel

92%
_108

l

58%

—

57%

*

70%

page

New Issues

on

2073)
Comment No. 4

The

proposal is a step in the
right direction but it does not go
far enough. A reliable

firm, feel¬
ing it is responsible for any state¬
ment it issues, would hesitate to
distribute any prospectus without
first
clearing up all points of
doubt.

Underwriters

would

have

to be relieved of all

responsibility

for

made

the

statements

red-herring

prospectus

there

be

could

ceptance

of

It

be

would

agent

of

after

hold

a

some

the y

before

general ac¬
Caffrey's plan.
just too easy for an
any

Mr.

the

new

in

SEC

issue

some

years

floated

was

underwriting firm

to
ac¬

countable for such incorrect data
as could
appear in the red-herring
prospectus that Mr. Caffrey would
permit the industry issue. Some¬
thing very much like the synopsis

Mr. Ceffrey talks about is greatly

needed, too. Investors should have
the

chance

to

obtain

information

about

coming new issues quickly
easily and the synopsis would
give them this chance.
•;
and

•J-*Comment No. 5
Incorporated in the SEC rules
covering underwriting procedures
should be a provision enabling
investment
initiative

bankers' to

themselves

red-herring

take

in

,

prospectuses

the

putting
in the

hands of prospective purchases of
new issues during the twenty-day

different

story,

give some consideration to this
particular angle of the problem.

firm could issue

a

the

SEC

in

ad¬

be

saved

and

Mr.

suggestion

a

real

might then
possibility. A red-

prospectus

vestor to read it before

buying.

The synopsis idea is more prac¬
tical, I think. The average in¬

;;

dividual

investor would be

more

likely to read the synopsis. But
here again, delay in receiving the
SEC's first letter of comment and

necessity of clearing up un¬
questions would remove
any
advantage
that would be
gained by its use as proposed.

.

considerable preiod it has

1

•

v

,

; >

|V;.\
■'
y.y

Mr.

Caffrey understands the un¬
derwriting business, I believe, and '■
trying to be help¬
ful.- To my mind, permitting un¬

'

I do think he is

derwriters

ring
t

to. distribute

prospectuses

o m e r s

red-her¬

their

to

immediately

cus-

following

their publication

would only aid
the SEC to accomplish its avowed
objective in the matter—the edu¬
cation of the possible investor.
«

:

Comment No. 6
-;y

y I agree with the SEC that every
effort should be made to get in¬

formation

about

to the investor

hours
There

new

issue

is

no

reason

red-herring

sufficient

care

speedily be made
prospective buyers.

out

than twelve

before he is asked

original
with

a

sooner

to

why—if the
is prepared
—-

it

-

y;

buy.

,

y

can't

available

*

to

The original y;',
undoubtedly was the intent draft of the red-herring prospec¬
of Congress Ho give the investor tus would mean more to the unthe chance to find out something
derwriting firm if it knew in ad¬
about
a
new
issue
during the vance that the material the pros¬
waiting period and study should pectus contained would be the
be given to ways -and means by information
would
most
that
which investors might be given
likely go out to the investing pub¬
this
lic. But I agree with those who
opportunity.
There
is
no
doubt the SEC is showing a co¬
who think that speed would be y
operative attitude and, so far as assured in getting vital informa¬
the underwriting industry is con¬ tion about new issues out to the
cerned, this is a good sign. I won¬ investors if the SEC were to give
der, however, whether it would a clear definition of just what it
tv
be legal for the SEC to carry out
means by the solicitation of new
Mr. Caffrey's plan without first business by an underwriting firm,
changing the law.
during a waiting period.
/
It

.

must

broadly

agricultural
will reduce

in

for

Cal

Sulphur

Carbide

69%

—

tus is being reopened at this time,
I certainly think the SEC should

would
then
really get out in time for an in¬

settled

past

36

38%

_

___

un¬

receipt of the more for¬
of comment, valuable

would

the

the

a

cus¬

such

letter

been

for

a

from

of

vance

yet require
crossing.
Government
bond
prices • have

rising

be

their

red-herring
prospectus/, two or
days after registration. If
an underwriter could
get a verbal

Caffrey's

is

if

to

pros¬

three

become

flationary effect upon the econ¬
omy they could conceivably exert
enough influence to bring about

48

waiting period prior to the effec¬

make

yet

but it does not appear
to have arrived.
v
An important factor may be the
policies of the fiscal authorities.
If these continue to exert a de¬

47%

.

tive date and, as long as the question of the red-herring prospec-

to

next year,

a

Oil of

Gulf

Union

;;

tate

to require major

liquidation.- To
date, in the banking situation, in
inventories, in the evolving price

46 %

Mfg.

from the SEC. Firms would hesi¬

pectuses

necessitous

42%

&

Chemical

for

no

tomers if there Were any
settled questions.

point

Mining

Phelps Dodge
Pittsburgh Plate Glass,,..
(N. J.)

at least ten days to get
the SEC's first letter of
comment,

not be witnessed until and unless
the' economy becomes so strained
and

Mining & Smelting™,— 35

Standard Oil

he

certainty that
materially lower stock prices will

at some

67%

-

Monsanto

takes

sometimes

virtual

59%

—

Youngstown Sheet & Tube——— 66%>

prospectus

such additional data

.

ly i;

; Apart from the favorable con¬
notations of elimination bf most
governmental controls, an impor¬
tant reason for avoiding pessim¬

but

projections of 1947 pros¬

■

Depression Not in Sight

•

(Continued from page 2076)

in the case of the raw

as

66

Rubber

&

Oil

Minnesota

(Continued from

show

impres¬

or

Tire

Hudson Bay

.

convincing

95

_162%

Easy for Investors fo Get Data

y

or

appear as

;

.

Refining

International Paper
Kennecott Copper

first

wanted.
that the to¬ profitable
operations.
In; many The reason I wouldn't rely on the
talitarian systems of fascism and
fields materials may continue too
half times more than a Russian
synopsis
alone
is
that
every in¬
communism not only restrict or
scarce
and
impediments to un¬ vestor is looking for some special
farmer, an American steel work¬ prohibit competitive business but
interrupted operations too great piece of information which
er produces as much steel
also
might
as three
restrict or eliminate other
to permit of early highly
not always be covered
pros¬
^Russians,
*
by the
liberties. In all history, there has
perous
operations.
It
is
to
be
re¬
In one city I visited
synopsis.
abroad, the not been any important society in
called,
however, that in most
-driver of a tank-truck for trans¬ which there
Comment No. 2
was freedom of wor¬
\'V
periods of prosperity a large num¬
porting petroleum products re¬ ship and freedom of speech but
We have not yet formulated a
ber of industries and
companies
ceives a wage of about $45 ^pej:: not economic freedom. Whether
definite reply
to Mr. Caffrey's
fail to participate.
month.
Wages for tank - truck economic liberty grows out of po¬
''Probably the groups with the general proposal. We think that
drivers in New York
City are litical liberty or the other way surest
what he suggests is a step in the
earnings
prospects
over
5ibout $275 month. Yet despite this around seems beside the
point. the near term
right
direction,
however.
We
period are the com¬
higher wage-rate, the cost of sell¬ What is important is that they ap¬
modity and raw material stocks— heartily approve of any move that
ing, distribution and collection of pear always to co-exist.
will help the investor to
such
get in¬
groups
as
chemicals, oils
payment for products from termi¬
For, as has been said, "Our way
formation about new issues in ad¬
paper, building materials, rubbers
nal to customer is about 1.75 cents of
vance of actual effective date. We
living together in America is and steels. The
manufacturing and
per gallon in New York as com¬ a strong but delicate fabric. It is
assembling companies have large wonder, though, whether Mr. Caf¬
pared with 3.25 cents in the Euro¬ made up of many threads. It has
potential earnings, but a further frey's proposal would be of much
pean city/; Naturally the wage- been woven over many centuries
period may elapse before these help in that direction. We wonder,
earner can be
paid more when ef¬ by the patience and sacrifice of
companies can produce in the too, whether the law wouldn't
ficiency thus reduces the unit-cost countless liberty-loving men and
have to be changed. Our thinking
continuous fashion necessary to
of operation. There is no secret women. It serves as a cloak for
is not clear on all points yet and
large scale profits. A high level
about this efficiency; it is not a the
our
protection of poor and rich, of
lawyers are helping us to
public purchasing power should
guarded formula.
The methods of black and white, of Jew and
sustain the operations and earn¬ study the proposition. ylyy;;yyused
in the
United >, States are Gentile, of foreign and native
Comment No. 3
ings yof such groups
as " retail
available
to
businessmen
else¬ born. Let us not tear it
asunder, trade, movies and
Mr. Caffrey's proposal concern¬
liquors and
where.
But
here
competition for no man knows, once it is de¬
these
could
experience worth¬ ing the alleged desirability of the
forces business constantly to seek
stroyed, where or when man will while
advances, but the rate and broader use of the red-herring
better and better methods and to find its
protective warmth again."
degree of improvement does not prospectus is not very practical

liberty,

Products

Chemical

Gulf

con¬

the

44

_

.

Underwriters Agree With SEC It Should Be

';

wnl

movement

Steel

Corn

Dow

Goodrich

will

quarter of next year.

contributing to

Group Distinctions:

time

the moment

that

Recent
Price

Bethlehem

levels

may not soon be violated,
that the next major movement of
the market will be upward and

current

-

recent

nessed

a

the following:

;

Rolling Mill—34%
Archer-Daniels-Midland
;
33%,

period of months combine to sug¬
gest that the lows recently wit¬

apprehension,

current

American

prices, dividend payments and
earnings and the outlook over a

com¬

and

not reasons for

rather

to

at

below

of¬

to

the

•

depend
interim events, but certainly
the present levels

upon

"y

in

Allegheny Ludlum Steel__

Whether

Elimination
of
controls
does
not mean that all
corporations

land devoted to ideals

a

agricultural
a

conditions

of

;

profitable operations.

It is

method of doing business has de¬

in

will

realm leads to limi¬

the

more

decline

,

believed

value

are

Stock—•

•

level

stocks

good

market

prosperity and that view still

that

>;

fer

holds.

conditions, but here, too, such de¬
velopments
scarcely
deserve
bearish interpretation since they

terwoven with all the other aspects
that
limitations of fundamental

Russian miner in a given
period
of time.
An American
.-a

and

to

making.

Among

could

prior

schedules

The economic
aspect of human living is so in¬

would

one

expect the beginning of the real
period of post-war reconstruction

hopeful attitude.
We will prob¬
ably read announcements by more
corporations of postponements of
expansion plans and reductions of

ma¬

earliest

or

but

well-being..

one

200

the

to

are

essen¬

than

believe

though late 1947

as

about

down

tion

involved in

more

system

looked
be

follow at all that any general col¬
lapse of productive activity is in

petitive

vitality lies, in attempting to
improve it we may inadvertently
impair that vitality seriously.
And

close to the

up

modity prices,

tial

the

pessi¬

.

to

will, in their dynamic fluctuations,
which will probably
continue, get

A

our

understand where its

■

,

2117

the-next several months and
thereafter to have some decline
into next summer, but it does not

the

system and of
what makes it go. This is not to
say that our system is perfect as
it operates today. But unless all
us

>v.

reasonable

over

change, and of propa¬
ganda and emotion-charged state¬

plishments of

overly

prove
.

points

sucn

ments for or

may

seems

that the Federal Reserve Board
Index of Production
may experi¬
ence
a
further rise of 10 to 15

Accomplished

In these days of accelerated so¬
cial change, of the stresses arising

.miner, using American methods liberty in
^and
machinery, produces more tations in
•than

individual

the
more

What Free Enterprise

of

work-

iiours. go into an average radio
made in a United States
factory;
171
in
Great
Britain; 262 in
At

pects

high but real
also higher than
any¬
The average Amer¬

wages

whereas

develop machines by which the ef¬

wages

where
ican

Number 4536

,

CHRONICLE *

THE COMMERCIAL & FINANCIAL

2118

Thursday, October 24, 1946

provided it does something

Government In Business
over public opinion.
If you doubt
be coming home. Now that over
80% of the veterans are home and that these people have been try¬
there would be many of them have no place to ing to perpetuate price control
live, the politicians are squirming and other forms of government
public regula

(Continued from page 2075)
*

men

and never
need

no

tion
is

greedy,
for

even

business.

of

hundred

One
banks

were

State

ago

years

allowed to issue cur¬

in many States there
was little or no supervision.
The
result was that many "wildcat"
banks
abused the privilege by
and

rency

issuing

over

which

currency,

promptly went to a discount un¬
der its face value and the public
could never be certain what its

,

"

is

more.

subsidies

priorities,

credit, when the real
less regulation, not

easier

and
need

will.

effort to solve the

an

by

problem

has

existed and probably never

never

in

around

That, however,

situation1 which

ideal

an

|

always strictly honest

were

for

Intelligent and far-sighted gov¬
regulation of construc¬
tion during the war might have
gone
far towards preventing a
housing shortage today.
But it
was
easier to temporize and let
the future take care of itself and

not
only in housing but also in other
just what was done,

is

sale

for

are

Their

fields where government has as¬
money" would be worth
sumed
control ^ over
business.
or next week.
This
Most'people knew that price con¬
unsatisfactory situation was reme¬
trol without rationing and wage
died by establishment of Feder¬
control wouldn't work, but price
ally supervised
national banks
control was—I emphasize the past
and by extension of supervision
tense—popular with the voters
by the various States.
No doubt
and rationing and wage control
the speculative bankers of that
weren't.
So the first was con¬
time protested that the ^govern¬
tinued and the last two were
ment was ruining their business,
dropped. The»results are familiar
but, looking backward over the
to all of us.
years, I am sure that bankers to¬
^
'-l \
1 *
x V *
-"O'A

businessmen

unorganized.
Mr.

before

Controls

No -man can stay in business
indefinitely if his prices are con¬

■<;;

frailties permit.

sixty years ago many of

Some

£ the principal railroads were in
hands

the

who

speculators

of

manipulating rates, service
and securities for their own profit
were

regard to the public in¬
The result was the estab¬

without

Controls Essential to Price

Cost

trolled while his expenses are

al¬

lowed to follow the law of supply
and

demand.

only

so

He

continue

can

long as his working cap¬
out and then he must

ital holds

shop or go into the black
So the bootlegger, whom

shut up
market.

weeks,
his

changed

of

But how

made

personal

butchers

many

calls

the

oh
own

would
agree
that public
supervision of banks has been a
good thing and that it has been
administered as well, as human

recent

disappearance

consequence

even

day

In

Truman

to

well

from

congressmen

How

districts?

many

written letters to their

How

congressmen?

other

many

written

have

businessmen

or

to
their
congressmen
amending
the
one-sided
labor laws that have been put en

spoken
about

the last

the statute books during
ten

eleven years.

or

This is

an

election

members

of

Congress

Both
their

year.

and

opposing candidates are especially
sensitive to the troubles of the
voters.
Let them know if gov¬

more

another

that

known

of the people living in so-

many

called

slum

which

areas

Sen.

Byrd Criticizes
Personnel Increase

have

in Government

been condemned to make way for

public housing projects are eco¬
nomically unable to pay the rents
charged in the new subsidized

buildings t; and
other

merely move to
somewhere
else.

slums

There

social or eco¬
gain in such activity than

is

nomic

but

meat from the markets.

their

,i<

numerous,

slum

a

is

It

mQre

no

there is in allowing private enter¬

prise to erect new housing with¬
out subsidies.
'
.,

have

1

are

mind, butchers were particularly
hard hit by price control and the

"paper

i

newstand.

any

on

is great and grow¬

power

tomorrow,

'*

and magazines which

ing, so don't underestimate it. \

.

ernment

that

regulation, just read their official
newspapers

transfer

than

location.

.

thing which

This is the sort of

life insurance companies and sav¬

ings banks have already begun to

opinion it is a splen¬
As soon as materials

do and in my

did

thing.

available

become

stabilized,

come

build

can

costs

be¬

expect

may

If private enterprise
and operate housing

of it.

more

and

we

then there will be no
government housing ex¬
cept to provide for persons actur
ally residing in the slum dwell¬
ings which are to be torn down.
projects,

need for

the field of

remains in

There

"government in business" the nu¬
government corporations
formed during the past 15 years

merous

wide variety

with power to to a

(Continued from
V-J

2075)

page

Day, while 11 effected slight

reductions.
were

The

largest increases

in Veterans' Administration

with 116,943 additional employees,
Post Office Department with 106,486
(including the 53,277 em¬
ployees v reported for the first
time in Sept., 1945), State Depart¬
ment with 9,188, Treasury Depart¬
ment with 7,451, Interior Depart¬
ment with 7J587, Agriculture De¬
partment
with
4,896,
Federal
Works Agency 'with
3,556, Na¬
tional Housing Agency with 3,279/
and Federal Security Agency with
2,365. Due to consolidations, the
Labor Department has increased
25,688. In addition to these in¬
creases, the War Assets Ad minis¬
tration has taken on 18,928; addi¬

tional employees.
"The

War

and

Navy Depart¬
reductions totaling
1,253,333 employees, from 2,532,313 in Aug. 1945 to. 1,273,980,in
Aug. 1946. Most of these em¬
ployees werev of the. indpstrial
type, working on war construc¬
tion projects such as airfields jand
ments reported

things. Many of these corpo¬
ruining
rations were created by Executive
roads and in shipyards and ar¬
your business and tell them what
Orders under broad grants of au¬ senals. Prodf of this statement is
you think ought to be done about,
thority
by
Congress,
others
were
the fact that since Nov. T945, acit.
Remember, there are always
created by existing government
cording to reports submitted .tomany pressure groups opposed to
business
interests
which
are corporations which had been char¬ the Committee, 563,610 such in¬
tered by Congress and still others
dustrial
employees have been re-*
flooding the desks of your conernment

of

is

regulation

and all others with let¬
telegrams,
petitions,
etc.
Unless
businessmen make their

gressman

without

created

were

any

ap¬

leased. Since Aug. 1945 the emer¬

parent authority.

gency war- agencies have released
there was no or transferred to other agencies
voices heard, how can they expect control over the forming of gov¬
111,909 employees, reducing their
the
lawmakers
to
understand ernment corporations by other employment from 159,773 in Aug.
their problems?
And don't ne¬ government corporations or by 1945 to 47,864 in Aug. 1946.
glect < the Senators.
There are executive order and few of thorn
"Summarized; a comparison -.of
only two from each State and it had to make any public account¬ Aug.. 1945 and Aug.11946 per-*
fair in the matter of freight rate
A long step sonnel statistics discloses that the
may not be so easy to call on them ing of their funds.
selling steaks, white shirts, new
forward was taken last year when War and;
increases, its record over the past
Navy /Departments and
automobiles, nylon stockings and personally, but one can write let¬
fifty or sixty years has been one
the Government Corporation Con¬ the emergency war agencies re**
ters to them.
of general fairness and reason¬ apartment. leases.
trol Act was approved, providing, leased 1,370,242 employees, and
Thus can government regula¬
ableness.
It would be hard in¬
Government Competition In
among; other things, that no new

terest.

thought we had got rid of
lishment of the Interstate Com¬
when the Eighteenth Amendment
merce
Commission, with regula¬
was
repealed, has come back in
tory powers over railroads. While
through the side door. Only now,
some of us feel that the Commis¬
instead of doubtful Scotch: and
sion right at present isn't being
"needled"
beer,
he
has
been
we

to

deed

government

that

argue

regulation

has mot

railroads

of

place—become

regulation that is bene¬

would like to live under such con¬

by private business brought about
regulation or supervision by Fed¬
eral or State governments. / The
administration

actual

of

govern¬

ment

regulations has not always
been as impartial and honest as
that of banks and railroads, but
that is what we may expect from
human nature.
Where, then, are
to draw the line between gov¬

we

ernment

To

that question I might

answer

which

ball

to

should be
nor even

dom of choice in the ways of

an

ing,

a

manager.

Regulation vs. Government
Operation

v

There

But as long as we prefer> free¬

say

that
government
umpire, not a player

is

what prices it can charge, subject

regulations of
Our
competitive

automatic

the

to

has produced the high¬

economy

enforcing the rules of the game,

est material standard of

actually
running a business.
The trouble
of late has been, however, that

world

Government has not contented it¬

economies—or,

the

on

one

hand,

and

umpire,
governing

self with enforcing, as an

the

time-tested

the

transaction

rules
of

business,

has added hundreds of

but
rules

new

has

them

Yet that is the

sy/ung at a pitch!
the

business

world

of

for the

means

freedom

up

to

we

individual,
to

fail

as

succeed, or whether
want the doubtful security of
to

as

paternalistic government which
will never let us out of its watch¬
a

ful

care.

The war provided a per¬

today.
fect

in

such

us—whether

is

freedom

we

situation

millions

The choice, there¬

us.

fore,

if

before he

rather,

want

well

and his accountant

stand¬

allowed to know any¬

as are

thing about

which

yer

living the

known—a

people living under controlled

of

ine how many
a

ever

ard which is the envy of

which confuse the players.

Imag¬
hits would be made
batter had to consult his law¬

liv¬

must restore the freedom
of business management to decide
we

competition.

between

difference

a

A

excuse,

for all

Action

sorts of regu¬

Not

Whining

Needed

But all the

wailing and whining
large and small,
will not stop unnecessary and un¬
warranted government regulation
unless it is accompanied by ac¬
There are strongly * organ¬
perpetuating many of the controls tion
which had no real reason for their ized
political
groups
tirelessly
There agitating for more and more gov¬
existence even in wartime.
is no reason, for example, why
ernment
control,
in
order
to
some
of the labor and materials weaken
private enterprise
and
which
went
into
goods "lend- pave the way for political dis¬
leased"
to
nations which hap¬ turbances which will enable such
of
which
had
nothing whatsoever to do with
winning the war.
Now that the
war is over,
the excuse of "na¬
tional emergency" is still used for

lations,

many

of

;

far

So

control of business.
problem of. gov¬
ernment competition with many
businesses.
Electric power utili¬
ties have long suffered the com¬

government

There is also the

businessmen,

.

temporarily on our
might now have been diverted

side
to

to

the

amount
erans

be

construction
of

housing

of

for

a

certain

the

vet¬

whom everyone knew would




increase their
own
power.
Their
members
often
turn up in the most unexpected
places and, in the aggregate, they
exert a great deal of influence
groups

to

Congress and

that all govern¬

corporations now operating

ment

net reduc¬

732, which results in a

1,037,510 from 3/49,769 in
Aug. 1945 to 2,612,259 in Aug.
1946. This would appear to be an

tion of

under

charters

/State

cally 1 will be

.

<

Tax-paving
real
estate
have the competition of
subsidized public housing.
The
ultimate effect of these activities

tion.

by, government can be summarjzed in two words: Higher taxes.
The voters in some localities have
come to understand this and have

proposals

rejected

Perhaps

plants.

New

of

voters

issue

to

new

municipal power

bonds to finance

%

the

day

some

City

York

:

will

to the point of understand¬

come

ing that they are paying taxes

to

the deficit of the City's
transit system under a five-cent
fare.
''
■ ■
/ ■' ' ;. *
make up

arguments in favor of pub¬

The

lic housing are more difficult to
answer than those in favor of mu¬

nicipally
out

With¬
^business can¬

owned * utilities.

labor supply,

a

and expand and with¬
out adequate housing, labor sup¬

cluded

specific provision, pro¬

a

ply remains static or diminishes.
Because of prevailing rent ceil¬
ings on new construction and be¬
cause of shortages of certain ma¬
terials, private builders have been
doing little building since the end
the

Therefore, say the
public housers, if private enter¬
prise cannot or will not build,
then the government should step
in.
Thus, we have a situation

of

where

war.

the

government,

through

the continuation of rent ceilings,
is

helping to create the

very

hous-*

ing shortage which is used as a
justification for its entry into the
real

estate business on

a

broader

war.

"Slum

thing

1

;

,

and

clearance"
no

one

is

is

a

fine

against it

agencies of the govern¬

Eric Mellg^en

<•

Summary
To

sum

up,

government super¬
of
certain

business

of

vision

types has been beneficial and
comes
harmful only when

be¬
the

government stops being an um¬
pire and tries to become a man¬
ager; direct participation in busi¬

government is warranted
only in cases where private busi¬
ness cannot or will not supply the
by

ness

facilities necessary

public

to meet a real

Right at the mo¬
to be in the

need.

ment the trend seems
direction
ment

in

change
are

of

a

little

business,

any

not "on

less

govern¬

but

it

and senators

the moment an attempt
increase

it.

may

day if businessmen
their toes" to; protest

to their congressmen

scale.

civilian

private ment which admittedly took on
enterprise.
Many
government additional personnel from 1940
corporations ? have, done a great through 1945 for additional war
deal of good.. Both business en¬ work should feel the need to in¬
terprises and
individuals have crease employment % further , now
benefited from the activities of that the war is over, yet just this
such organizations as the Home is taking place. Some additional
Owners
Loan ,Corporation,
the personnel are undoubtedly re¬
RFC, the Federal Deposit Insur¬ quired over the 1939 total to deal
ance
Corporation : and
many with problems of the war's after¬
others.
But to1; leave the door math, but I reiterate that as a re¬
sult of the war we have surplus j
open for government corporations
to enter any business without re¬ personnel as well as property for
gard to private corporations al¬ disposal. The'failure of the de¬
ready engaged in it, is both un¬ partments > and agencies to ac¬
fair and unsound.^.Fortunately, it knowledge this/may /well force
the Congress to make further re¬
appears that we have passed the
•
peak in the formation of govern¬ ductions mandatory."
ment corporations—at least until
the next depression or the next
hibiting competition with

not prosper

,

pened

of

automati¬
liquidated on June
30^1948, unless Congress rein¬ appreciable reduction if it were
petition of tax-exempt municipal corporates them prior to that date. not. for the fact, that in Dec/1939/
Annual budgets and annual audits when, the country started on its
plants which are able .to sell
are required.
..
national defense program, there
power
at lower rates because
they
pay
no
taxes.
Country ; Where a corporate charter re¬ were 928,836 Federal employees,
of
War
Department
banks have felt the competition quires an Act of Congress, there exclusive
of the Production Credit Associa¬ is -opportunity
for open debate civilian employees stationed out¬
tions and other instrumentalities over its proposed powers and the side the continental United States.
usual result is that there is in¬ It is incomprehensible why the
of the Farm Credit Administra¬
owners

ditions.

borrow from the language of base¬

.

Business ^

its

tyranny by

a

ficial and that which is harmful?

of privilege

stances where abuses

years

many

Ihe/old-line departments^in-;
///// government: corporations/ canvbO: dependent establishments^. * and
chartered except by specific Act
I have been discussing
postwar agencies increased 332,-

tion—a good thing in its proper

properly belong to business
management in a free economic
order.
Of course, if we want a
completely
managed
economy,
where every person is told what
work he has to do, where he can
live, what he will eat and • wear
and what he may do with his
money—then price control would
be in order, provided we could
find managers with sufficient in¬
telligence to manage everything
and, provided further,; that we

could cite many other in¬

One

For

,

unwarranted extension into fields

benefited the public.
r.

ters,

is made to

;

Join Grimm & Co.
Eric

G.

will become
& Co., 44

Mellgren

associated with Grimm
Wall

Street,

He

Exchange.

City,

York

New

members of the New

York Stock

formerly

was

partner in W. J. Banigan

a

& Co.

Gessing with
Grischy

Horan &
(Special to

The ■ Financial

CINCINNATI,
rence

Chronicle)

OHIO

G.

Gessing

&

Grischy,

is

Law¬

—

with

now

Union

Trust

Building. Mr. Gessing was

previ¬

Horan

ously with Edward Brockhaus
Co.

*•

.

.

V

v

&

iv

X.K

t....

•V '■;

Volume

164

Number 4536

*

THE COMMERCIAL & FINANCIAL CHRONICLE

ready oppressive, without increasing the same by regula¬
tory requirements, whilst at the same time attempting to
reduce spreads.

Regulation -Shenanigans''
(Continued from page 2071)

•'

mission.

dress

This

on

copy should
before Oct. 21.

or

If you were not
cial

statement,

you

\r;.

\

;

The two

be received at the above ad¬

strate

reviewed

an

these

in

letters

demon¬

NASD lack of

ready

a

i.

1(

H.

•

Underwriters Take Exception to J. Arthur Warner

Such missive prompts the
following questions:
l. y Was the subject of sending this communication
taken up with the Board of Governors of the
NASD?
Did
.the members of the Board have

Trying to Pin Market Slump

to be

of the

Board, then what authority does the Executive Direc- said before, that gets the most for
the corporation and the under¬
tdr claim, that -is, pursuant-to- what provisions of -theu^by- writer." '
'
'
laws did he give the "order-contained in-the letter of
OcL m3
He ended on this note:
as
1946?
*
M .
S*
^ feluctaftf as I am to suggest any
2; :
Assuming that th^ letter itself wa? duly authorized}' "furthertebptrols, I think that if we
give this subject some earnest
r every recipient who was bh the. alert would
naturallyj^sk thought" mpst of us will come to
himself; is' the whole thing legal and' proper, is the Secur¬ the* conclusion that these under¬
y

legations

absolutely true and

were

it could be proved without ques¬
that underwriter and cor¬

,

tion

...

'

,

porate

.

.

*

ities and

Exchange CdhlmissiOri'request' referred- tp:an the
Jletter;;dne^q which "each ^greteredbrol^
reply? In other words,*doesn;Uthe' NASD have some-rp'-*
-

•?-spoiisibflity"tQw!iM^^

:-;h^tah^^case^ tb<
advise v themrpf
their^TigKt&^duty : arid Tobligatidn 'Th^f^

cial statement sent out to all

a

not all

registered brokers and dealers

insofar

as

the

:*

to1 the

Sept. 30, 1946. V

According to its text, it

tered brokers and dealers."

_

It required the addressees to

: ■ v.

with

addressed, "To all regis¬

furnis]^; the CpmmKsipn

statement of financial condition as
of,Sept. 30, 1946,
which statement should be filed with the
Regional Office
not later than Oct.
15, 1946, pursuant.to Rule X-17A-5.
a

Mr.

as

—

Warner

with

^our midst and they
should not be permitted to pursue

the

like

It

pick¬

a

implies it needs—more
than it has already to deal

the

situation.

The

SEC

Comments

Mr.

on

v.

:

...

Comment No. 1

writer.

issues
that

sons

not

X,

\

;

Mr.

Underwriting

which

writers do

actual

facts

which

he

instance

the

of

kind

account for

to

general
,prices. -?■

decline

no

of

the

in

If

known, a large
have

issues

all

in

price

not

but,
than

In fact,

determine

price.
Under¬
try to establish a fig¬
ure for a new issue
they are get¬
ting out which will be as close as
possible to the price that will be
,

established in the market that
be

developed

for

can

the

particular
issue but this is only in conform¬
ity with the established practices

industry. It looks to me as though
Mr,vWarner is just' looking for a
scapegoat

rea¬

gives.

chinations of underwriting houses

is

fraudulent practice that Mr. War¬
ner alleges to be common in the

cent

for the

it is ihe
market always and not the ma¬

hhtyilow—nor has been—in the
'position to have.
In the under¬
such

at

would warrant.

of

the

or

in

where they have, not more
the
conditions
of
the
market

_

just isn't
his business.
The complaint he
statement, therefore,
presumes
degree•. of knowledge

Then followed

of the trade.

security

.

*

Mr.

Comment No. 3

Warner

would

deny

the

-

of securities need not be

supplied, and that particular

parts of the form need not be answered.
All of the information

"This is

for the

.

-

a

full

ordered, must

statement

of

financial

time

/;

true, he would have done
the industry a service by reveal¬
ing the events he describes when
says are

they

taking place.

were

Under¬

writers can't be held accountable

for price movements up or down.

interesting observation:

special statement which is not

required under Rule X-17A-5."
this

was

-

Then there appeared this

,

'

furnished, it

affirmation.

or

a

substitute

condition

regularly

Security values are always deter¬
mined by general market condi¬
tions.

,

.

There

--

was

months

back

-

.

Such

-

-

period

a

few

a

when

a

statement

conclusion

one

.

.

leads

to

either

.

;

we

,

;

,,

charges which he
underwriting industry
wholly
without
meaning

are

without

-

names

mention

(and

of

actual

firm

the

names of other
parties involved and without such
other proof

might be cited.

as

customer has
for

to

recourse

A

the law

the

adjustment of any claim
arising out of misrepresentation of

issue. If there is any substance
at all to what Mr. Warner
alleges,
an

specific

instances

spiracies"

he

of

the

claims

"con¬

should

be

cited.

V.

An

the

new

would

securities

not

have

stock prices that
Mr;,
suggests.
An abundance
issues is only one of many

new

factors

that

can

contribute

decline in security values

to

a

but, all

by itself, an excess of new issues
would depress the market no more
three points or so.
When¬

than
ever

it

pose

of

becomes

difficult

to

dis¬

stock

is¬
in the aggregate, it is usually
possible to sell the shares over a
numerous

new

sues

longer period of time in smaller
quantities.
"% '*
' ''v
But

I

defy

to

anyone

tell

me

when the market is going to turn.
I ask just when should an under¬
writer

advise

not

suer

plans.

a

to

go

is

the

It

prospective
ahead with
last

issue

is¬
his

of,

no

one

can

pos¬

sibly know in advance just which
one
this is going to be.
New is¬
sues are readily absorbed
by the
market, then all
of
a
sudden,
without warning, there is a rever¬
of trend. In fact, an expand¬

sal

rect the situation is ridiculous.

would

Warner has not thought this thing

;

.

.

-

..

Commision

to

direct

the

filing of

Where do the Securities Acts
*

or

a

"special statement"?

the rules grant it such

thority? If those who by Rule X-17A-5
^reports of financial condition,- in fact

are

statements" not

tive Office

a

copy

Commission?

\

'

with the

V

activity.
The

:
curse

^ "

of

over-regulation is sufficiently over-burden¬
some
already without belaboring those in the securities in¬
dustry further, every time the Commission is on a witch
hunt.
.

»

The cost of

doing business in the securities




serving

meeting
answer

It

field is al¬

I

sorry

No.

2

J

,

the

to

is merely

that Mr.

me

Warner

not

an

be

impossible for

latory body of

any

kind

a

It

regu¬

to

con¬

trol the market in the way

he sug¬
it
were determined that a particular
market could absorb only two out
of four given issues, on just what
basis could a regulatory body de¬
For

gests.

cide

which

floated

and

instance,

two

suppose

issues

which

two

kept off the market?

should

be

should

be

The regu¬

investing

can

only talk

the

intimate

business

as

an

not

can

details

of

he

pretends.
Actually, he is attacking the un¬
derwriting function itself.
It's
just a case of sour grapes.
as

,

There

just a few of us in
the particular branch of the busi¬
ness

to

are

which

Mr.

Warner

years

much

of

time

we

is

are

are

now

public

in

latory body would—at once—be¬
come exposed to all sorts of influ¬
ences, including political
string-*

pulling, and it would be extreme¬
ly difficult for it to formulate any
order at all.

devoid of

Besides, I don't think thev mar¬
intelligence.
For ket is so bad now, anyway.
I
there has been too have just returned from a visit to

and

many

this

kind

talk—its

of

had less of it... especial¬

ly from those who should

know

better.

in

underwriter

Therefore, he

all

was

I recall, not so long

as

ago.,,
He is
himself and

the

the

trying to win the favor

of the SEC with whom he

know

character

at

not

was

as I would have liked to
Mr. Warner on the spot.

seems

outsider.

v"

; It is said that the market break of
Sept. 10, and the de¬
sire of the SEC to
get at the bottom of it, is behind all this

.

am

subject, difficulty,

to file with the Execu¬

of the financial statement filed
f».-■

I

wherein lies

Now then, if all this is so
perplexing, why does Wallace
Fulton take it for granted and instead of
probing the

premise that those who
these United States

Comment

;

required to make

do so,

.to compel additional
"special
required by the rule?■••v;

just naively advise NASD members

underwriter.

au-

the right of the Commission

y

entirely beyond the control of the

the

West

where

Comment

Warner's

No.

4

the labor
If

our

in¬

,

set the prices

of new securities too forecast of the future depends, of

oeace

his

South

industrialists

mistic about the future.

course,

that

to the

charges

the SEC and others were intimat¬

say

the

against dustrialists were pessimistic, then
the underwriting industry can be that might be a cause for concern.
answered point for point.
Just It was generally estimated toward
how far the industry should go in the close of the war that reconver¬
formulating a reply is a question, sion would take about a year but,
however, as it is evident that Mr. because of labor disturbances and
other causes, reconversiori is tak¬
Warner is only looking for some
ing longer. The five years of pros¬
cheap publicity..
"
perity which the business men
It is strange that underwriters saw lying ahead has now been ex¬
should be accused now of having tended to seven years or so. This
Mr.

with

to

Coast and
found

angry, very angry, over

high when only three months ago

facts

I

situation and OPA, but not pessi¬

pointing his finger and I think
I am sufficiently well acquainted
the

a

long series of new offerings which
up to then have been successful,

s

^

:)

on

the

on

Warner
of

of

excess

market

but

„

,

various

hurls at the

Mr.

Rule

not

or

5

ing market must reach a turning
Warner charge with the respons¬
point at some time or other as
ibility for sifting the wheat from otherwise stock values would in¬
the chaff?
Who is to say what crease
indefinitely and this is im¬
should be bought and by whom?
possible.
Would he have more government
Mr. Warner's implied suggestion
overlords selected for this task?
that
the
granting of additional
Have we not had enough of this
powers to the government regu¬
sort of thing in this country?
; latory bodies might help to cor¬

anything
are not
venturing any opinion as to would sell and it
is
doubtful through, or he doesn't understand
X-17A-5, which requires members of whether any statement of cau¬ the difference between a country
national securities
exchanges and-registered brokers and tion to any prospective purchaser that operates under Constitutional
dealers to file periodic statements ctf their financial
law, such as ours, and a dictator¬
condi¬ of some new stock issue in the
To give the power to any
stock
prospectus itself—even a ship!
tion with the SEC, is legal., ~
• '
«
statement that would go so far as group of men to decide what rep¬
We will not attempt at this time to
resents
a
sound new issue and
say whether such to say that the stock was purely
rule constitutes an
arrogation of legislative powers, not in- speculative—would have had any one that is not, goes far beyond
tended to be granted
deterring effect upon the public's anything ever yet advanced by
by the Securities Act.
even the most ardent advocates of
impulse to buy.
Prices can be
We will assume for the purpose of this discussion
only high in a market at one period statism and national socialism.,;
that the rule itself is in all
respects lawful.
and low in the same market at
The balance of Mr. Warner's re¬
That being the assumption we ask what
right has the another period due to influences marks rest upon the unsound

whether

the

No.

know Mr. Warner but

that breaks and

re¬

investors of this country, "the du¬
some five
negative injunctions. Thus it
Anybody can have hindsight.
bious right" to invest in certain
provided among these that answers need not be pre¬ If .Mr. Warner knew so much
new securities
which, in his opin¬
pared by independent public accountants, that audit, re¬ about the conditions he says ex¬ ion, represent
"disgraceful public
isted,
why - 'didn't- he- mention
quirements need not be followed, that certain market val¬ them before?
Whom
would
Mr.
If the things he offerings."

be under oath

do not

effect

shrunken

Warner

of' new

deteriorated

under¬

an

have

all the facts were

now

number

is.

„>

value to the extent

Warner's

9':-f' V\ ''.-••• .r

Warner

case.

a

was.

ues

or

huge profits from buying up the
stock at the issue price and then
selling it later at the higher mar¬
ket price which developed.

al¬

just isn't true, either, that all

new

pocket pursuing his prey."

writing field myself, I know of
was

need

bridled in

Mr.

original communicati6ii,t)fitt#

not

in such

;jf';ff:: •.»;

similarly treated

would

power

finan¬ received follows:

subject matter is concerned

4:-^This takes us-hack
SEC dated

were

SEC

ready has authority to intervene

views which the "Chronicle"

registered brokers and deal¬
ers?
The last
paragraph of the NASD letter which says.
Tf you were not
requested by the SEC to file this financial

did, as he
"conspire" against the
investor, the

interest of the

corporations should
not .he^permitted to wander un¬

..

Was the request of the Commission to file

best

writers'-and

matter?
3.

management

suggested,

,

1

issue,

new

-

authority

,

"insiders," such as members of
family of an individual under¬

the

Comment

with

^

~

setting them

were

was last June that the
before it proposed Rule
X-15C2-3 which would
prohibit

I

knowledge that the
sent, and if they did, was it trans¬ conspire to foist upon unwary charges are wholly without basis.
buyers a security at the highest I know of not a single instance
their approval or with the
approval of the possible price consistent with the of such dishonest
dealing with
majority of them?
"
market's ability to absorb the se¬ the investing public that Mr. War¬
0
"r If the communication was sent without the
curity; and at a price, as I have ner talks about.
Even if his al¬
was

they
It

SEC had

Them

on

(Continued from page 2076)

any

mitted

that

too low.

writer getting out a

FULTON,

Executive Director."

'

;

communication

ing

requested by the SEC to file this finan¬
employees of his firm, from par¬
Straws like these indicate an administrative intent to
ticipating in the offering because,
may, of course, disregard this letter.
increase rather than relax the powers of administrative as the claim
went, underwriters
Very truly yours,
; ' ;
«- •
*
and these "insiders" were
bodies, through means of doubtful interpretation.
reaping

;

;

directives

initiative, and to our mind,
servility of that organization to SEC purposes.

WALLACE

:

,

,

'

'

2119.

upon

the maintenance of

in the world.

■'

How

Abandonment r

Sees No Quick

Con¬
immediately after the elec¬

Such

fantastic,

is

condition

a

law.

the

that

present price

control

one.

Every¬

law is such

messy

a

*

v

that

thinks

is

it

his

-or

/

supposes.

T:,.

thinks

be-

bad

is

law

the

*

it does not give him power

cause

-of

•

r

ControL

great

the

Actually

weakness of the law is that it did

.

give him power to decontrol.
f'X-n it did not seem to occur to the
Administration when last spring's

price-fixing debate was going on

i

it would

that

In Congress

y-

ever

-strongly want the power of de-control. That power could have
been inserted in a single sentence.
Congress • could
have; provided

*

-

r

either

"that

.

QPA

bis

President

item

the

or

could

administrator

trol any

.

the

decon-

all/items at

or even

to

have

occurred

to

any-

body. As the bill stands, it is hard
to decontrol anything (apart from

,

,

/. agricultural '• products) V without
finding elaborate positive reasons
for

for

j
v

doing--so? It must beshown,
example, that "supply has
into balance with

demand, prices fall.
When demand,is. in excess of.-supPly, prices rise. After the rise,

„
'

•

.

,

a

of

excess

■

demand and supply balance. The
price rise itself brings the demand

:

and supply into balance.Tt leacis

;

to

when

price is held below

a

the price that a free market would
| fix, it necessarily makes demand

;/

supply. If the
present law
taken literally, there
might
be

never

the

decontrol.

any

-

doubt
and

all

items

now

on

cannot

number

a

furbelows

that

are

from
are

be

of

price

con-

few items

very

called

no

frills

important

either to living costs or to business
costs. To control all items
that are important to living costs
and

V to

business costs would still be

control

the

great bulk

could

not

prices of steel

or

say

coal

aluminum

copper or

not

of

the

Certainly the Adminis-

economy.

( iration

and
consequences
of inflation,
diverts
public, attention
away
from; the

cess

or

that
or

the

ore

lead

or

were

important to business costs. It

that the value of
fallen.; This
value o£ the, rponetary

money

fall in/the

unit is reflected in' a rise in com¬

modity prices, The increased vol¬
of money and bank credit is

ume

in turn caused by

the cumulative

budget deficit,

will have

basic inflationary

a

situation,
regardless
of *' "what
slumps or jolts may occur inside
situation.

"v

crisis

recent

The

in.

meat

trated

not

or

that the

say

milk

or

shirts

or

this increase

blamed
market.

Poultry

on

and

the

eggs

free
were

they said, because they
under ceilings. But the
that poultry and eggs
went up was clear. When price
ceilings on meat made meat im¬
possible to get, the demand for
meat was concentrated on the only
available substitutes, and eggs and
poultry prices were forced up be¬
going

up,

were

not

real

reason

cause

of

this

abnormal

demand.

When the ceilings were taken off

beef/ lamb

pork, the im¬
mediate result was a drop in the
and

price of poultry and eggs, because
the
abnormal
pressure
of
de¬
when

could
beef

are now.

from

taken off. Similarly,
ceilings were removed
margarine and other fats,
was

the

the immediate consequence was a

decline in

the price of butter.

illustrated

a

much

wider

eco¬

get the decontrol of prices with
the speed that is now essential it

President's




economic / freedom., <ZA

under* ;

world

free

is

or

who

economy

not

afraid

more

in

of

some

it

than

government control. /;, j

greater

sure

that it wants

and

has

a

longer

no

free economy

developed

even

left-wing ;.of

a

/

■

large/

Zorganizations/and

/

propaganda

actively - promoting
schemes of government planning

ings

were

removed from meat, the

Price Administrator for this five-

State

region

he declared, spent a total

ernment controls which

have pen¬

every* Crevice of/our life
and work/ The government has
;
Of Goods
;
had practically complete author¬
What you have is a certain total
sole; responsibility, and
volume of money or money in¬ ity/and
the, private citizen almost none,
comes bidding for a certain total
for everything that has happened
volume ofv
etrated.

>

.

goods. If .

that

volume

you

increase

of. money- or; money

incomes without increasing corre¬

,

or

been done

in America during
The past decade

these many years.

supported;/ unioniisih; will '/ lead
.

them, but most of the unions still
believe in
salvation by ;greater

V

benevolence, higher
wages, less work and more price
controls, -and few are willing to
face / free
collective bargaining
and a free labor market, least of;
all in depression. [.Even scientists,
teachers and other 5 professional
groups have caught the pandemic
disease of political power and are
bringing their influence to bear
in many ways against the restora¬
tion of economic freedom.
;
government

.

provided a perfect test of
government spending, government
"Of course, government here or;
planning and government control,
elsewhere does not want to see
and today the American people
hold down the price of part- of
a free -economy revived in Amer¬
are now exposed to a demonstra¬
those goods, you must either pile
tion/ of /the consequences which ica, despite all its pious protesta¬
up a certain amount of unspent
tions about free enterprise,/for^,/.
Should be.-conclusive or/convinc¬
savings in the Hands of the public,
the main business of the bureau¬
ing if we can learn anything from
or you
must divert that unspent
cratic
State everywhere
is * to/ /
experience.
We
might
at
least
ex¬
amount to the uncontrolled goods.
maintain and expand the; enorpect
that
the
coming;
depression
We
may
compare
the condition
mous increase of power and con-/
would cure them of the consumer
with that of a balloon ; that is
trol it acquired over the economy
purchasing-power
theory
of
pros¬
"filled with a given volume of air.
as consequence of the war.
Since;
for it has never before
If you squeeze it at one place, it perity,
nearly every other government; in
been tried on such a colossal scale
will stretch all the more at some
the world has an immense vested
and Vith such complete failure.
other, because the air has to go
interest in preventing' the resto¬
"The chances of restoring or
somewhere. Similarly, if you pre¬
ration of a free economy in this
vent money from having its ef¬ preserving
a
free economy in country, our own government has
fect on' goods
at one place, it America depend' mainly unon how been busily engaged in' negotiat- ;
must
all
the
more
affect it
at the American peoole will behave
ing global economic agreements
under
the conditions they
face
some other place. The money has
and arrangements which compel
to go somewhere.
during the next five years. They and in effect guarantee the con¬
;
are
now
moving into a" major tinuance of a politically controlled
Now, if this is true, it brings
decline in production, economy in America indefinitely.
us
to some conclusions that are cyclical
extension
of
international
precisely the opposite of the con¬ employment and prices which will The
speeded and made collectivism through the economic
clusions usually arrived at. Uni¬ probably be
deeper
and
longer
by
the
polio'es
versal
mechanisms of the United Nations
price-fixing
must
ulti¬
that have been pursued
during
mately lead to a totalitarian econ¬
organization has become for the
the past 13 years of expanding
omy. But what does partial pricerest of the world a powerful safe¬
fixing lead to? Its ultimate effect, government control of the econ¬
omy.
It will put an even greater guard against the revival of a free
even if it does not discourage the
strain upon our capacity of selfeconomy in this country.
/
j.
,
production of the items controlled,
"Such a revival is not impos¬
is not to reduce the general price discipline than the depression of
the
1930's, and there is reason to
level at all, for in squeezing down
sible, but as matters stand it; is
the
peo¬
spondingly the volume of goods,
the inevitable effect is to push up
the prices of those goods. If you

has

•

v

the

prices of the controlled

com¬

modities, it merely forces up the
prices of the uncontrolled com¬
modities.
We may apply this principle to
the general belief that price con¬
trol

should

removed

be

from

everything except rents. Now for
political reasons, I am inclined to
agree with the conclusion that this
is
probably the most desirable
next step, so long as it is recog¬
nized that the

solution

is

a

tem¬

Wholly apart from the
question of equity, when we hold
down rents,
what; we do is to

porary one.

divert that much
power

more

My

own
we

conviction is that the
get

ple

are

meet it without
resorting to another foreign war
they were then to

rid

of price

con¬

sooner

we

can

achieve

to

of

the

because real remedies
as

long

believed in.

men

always

on

on

horseback who is

hand in a crisis of .

the rest of their
of

offer

fake

escape
or

freedoms for an

with
The temptation to

phoney

money.

security

the dilemma of depression

get permanent power by

method
any

this

to vote away

kind to invite them

will

be

very

either

strong

for

administration that may be
1952.

"One may

as

are

false

not ap¬

ones

are

hope we have learned

of
problems of prosperity from
experience of the past 13

something about these solutions
the

a

And the

plied

another dictatorship by one

or

in office from 1948 to

commodities.

sooner

American
today better able than

doubt whether

purchasing

to the bidding up of other

maximum, balanced production.
sooner we can get rid of
price controls, also, the soooner
we
can
deal properly with the
question of controlling inflation;

da,y after

the President anounced that ceil¬

sumers,

the

j,r

Volume of-Money vs.' Volume

trols, the

The

much

by

down the

r

has been overlooked.

declared that OPA
ceilings had never governed the
entire
economy.
American con¬

better,

go

a

/ /American-business is

continued,

leave, the

nomic principle, and it is this that

only be done either by the
ignoring,
with
the consent of Congress, the provisions of the present law, or,
can

Administration's

a

not

Uncontrolled commodities. J

Now, these dramatic consequences

,

My personal conviction, therefore, is that if we really hope to

.

of

the monetary unit has.

.

.

the

It is because of this ex¬

war.

mand

;

That
than
beginning of

circulation.

in

tripled\ since
the

prices of

.

ybltime • of" fnOney and

money; and credit has more

stockings
were not important to
living costs.
; And when OPA had compiled a
complete list we might not find
-ourselves very far from where we

-

.

.

or

con¬

which

promises), would

remove

trols. But there

•

symptoms

try and eggs. The price controllers

tration

•

attempting to
the

not

from

important to living costs or
business costs. This requireif sensibly followed (and if
fulfilled quickly as the Adminis¬

;

with

to

price law that the OPA

before Dec. 31 must take off

trols

■

merely

most graphically by what
happened
to poultry and
egg
prices. When beef, lamb and pork
were
put back under price con¬
trols, the immediate result was
an increase in
the price of poul¬

ent

.

deal

by

control,

price

brought out dramatically a very
important aspect of price control
that has been almost universally
overlooked. This aspect was illus¬

and

of

//,/ Some hope seems to be left
/ about the provision in the pres¬

•

I But perhaps even more Tmporthah\th|s vis "the fact - that

tarit;

tween demand

were

♦

lost." I '

this

-

-

rider the battle was

a

greater than supply. It 'necessar¬
ily perpetuates an unbalance be¬
requirements

X

of

we

pur¬

chases and procedures to increase

:

horse

vantage of higher profit margins.

their

J, production, in order to take ad,4

/

does

But

reduce

measure

of

the

restore -

America

in

controlled commodity country might appear to-be. more
because we have been
rest of the hopeful
situation unchanged; its effect lis living for 13 years of peace and
actually to boost the prices of the war under; almost" complete gov¬

price of

by deficit financ¬
ing and by artificially low interest
rate policies still being- persisted
in. As long as this situation lasts,

consumers

-

lost; for want of a shoe
for want of a
the rider was lost; for want,

shoe was

bank .credit

free economy. When supply is in

/

"whether we are to
rest of the road to
the
totalitarian dictatorship-and lose
;of also
/our .political /and cultural
the OPA Admin¬
freedoms which can survive only

what happens to the prices of
other > $150,000,000,000 : worth

the horse was lost;

free

/ market they balance at the free
:l market price. That, in fact, is pre¬
cisely the function of price in

decide," he

likewise

/■ "It will

rest of

to

,

only at

a

years."-

next; few

the

in

wants

.

balance

price. In

during the
'f. //;//./; //

from the war

recovery

or

-

increased

a

well as our

future world peace as

bility during the past decade, and
it is hard to find any one here

.

real, cause of inflation.
The re&l cause of inflation is the

demand."

come"

the prospects for

will, determine

.

beginning

,

into

demand

now

,

and

a

is

No free economy, nor
other kind of freedom, is free♦
It has to be paid for by self-dis¬
cipline, self-control, self-sacrifice,
and in all these respects the pros¬
pects / are
not
promising.
All /
groups among the American peo- ->i
pie have been weakened and de¬
moralized
by the expansion of /
government power and responsi;
any

-

Supply

//This is
:

whose

meaningless requirement.

come

that

issue

the price.

to control purchasing power and
'mixed economy' cannot long ex¬
production we have to professional services, certain lux¬
ist in America or anywhere else. consumption based upon the gos- /;
worry' about. For - a shortage, in uries/etc. To/the extentthatthe
Every!: economic 4system % *m hst pel-according to Karl Marx and
nails may, as it is doing,
slow prices of controlled commodities
Agricul-.;
move toward freedom/or; become JohmMaynard Keynes.
down the entire building industry., are kept
/down by price-fixing completely controlled,? and such ture is afraid of a; free economy
The slow-down of building con¬
consumers
will be
able
to
get
and / wants'
government; price \
control always requires complete
ductionwin ^ ;iri ? turn • have,; its. them : for less/ They: will; haVe control * of the life; and "work of guarantees, subsidies? and world
repercussions on the whole busit just that • many more dollars left
stabilization plans.' ; Some/labor
ness
situation. In business, not over to bid up the values of the Individual citizen.- ; ; ;
leaders
have
begun
to
doubt
less than in [war, /the/old/ simile
the" uncontrolled commodities. In; : "The; prospects- for revival: and where the
road, of government/
applies; for ;want of a hail, the other words, to - hold down the survival of a free economy in this

own

seem

j

.

wage

this

nails, for example, discourages or goods? I suppose
the production of nails," istrator had in mind such things
it is not merely that one item
as
real • estate, / security, values,

discretion, without having
/ to giye any reason, for it. But
«uch : a simple clause does not

'

on

//■;

;/;•

If ; the public, "is buying $250,000,000,000 worth of goods, and
the government controls the prices
of
only; $100,000,000,000 - worth,

buy and sell
and sub¬

aids

America," he predicted that "the
outcome of the great debate in

ac¬

v

reduces

Tiot

:

consumption,

crucial items. It there¬
by * discourages or slows down
production. Sometimes the effect
of this is extremely broad.-If an
ill-considered
price
ceiling -.|on
margins

wish to discuss.

can

"Discussing
the
topic,
"The
Future.. of the - Free Economy in

doubt

very

they

without

production controls, price
fixing and unlimited
spending by government."
// / Z

figures of this sort. But
the figures will do well enough to
illustrate the principle which; I

It

profit

has

which

and

accuracy

In fact~I

OPA

the

the

for

figures.

revive

to

sidies,

curate

inflation.

but it reduces or eliminates

Mr. Truman apparently

that

whether

these

able

services

and services. Now

vouch

cannot

1

against inflation. But it is begin¬

not only encourages

power. He is right about this, but
X in a different way than he himself
v

worth of goods

ning to. be rocognized, at last, that
so far from this being true, price
It does this in two main ways.

give him
administrators ; sufficient

law because it does not

goods and services at
scope.
After the
order
decontrolling

meat, he estimated OPA was still
controlling about $65,000,000,000

of

control actually prolongs

bad

a

in

and preserve
here the kind of economic system

maximum

President's

chief if not the sole weapon

the

.

Truman

000 worth of

its

Inflation

/ Until, I believe, - a few months
the Administration view was
accepted by most people in this
country that price control was

agrees

'

and

ago,

that this is so, but
there is very little agreement as
to why it is so, or • in precisely
what its messiness consists.' Mr.
body

(Continued from first page)

$250,000,000,000 a year, and the
OPA ha'd only, been controlling
the prices of about $100,000,000,-

V

;f"' •

Price Control and

not think it will be
very
quickly
abandoned.
One
jreason it
will not be abandoned
and yet I do

price

present

the

repeal

to

tion

Thursday, October 24, 1946

of

calling a special session of
gress

I."W:

Ciisis Coming: Virgil Jordan

Government Controls ?

Long

(Continued from page 2070) •

is

COMMERCIAL & FINANCIAL CHRONICLE

THE

2120

?'-t■':-.;-::'':::--:v:V /'v ■ ^■'i.

■:r■;:;

V:-

/"

r~": ■' :

^-y—.*_

our

years.
omy;

/ But to keep a free econ-,

intelli¬
in'a people.
it and believe in

requires more than

gence

or

experience

They must want
it and

have

the capacity to pay

difficult to imagine.

very

It will

hard work, which

not only require

nobody is willing to do any more,
but such things as
the power

curtailment of

of unions and govern-^

restoration, to

ment to fix wages,

management of the power to hire
and

fire

the basis of produc¬

on

elimination of the

tive efficiency,

the

and

shop

closed

stopping the use of
force

the

check-off,

government to

growth

of

unionism,

limitation of government borrow¬

ing and
many

spending, and changes ir*

othei' conditions upon which

most groups

have come to depend

in one way or

another and which

most Americans
as
*

"That

coming
more

is

one

crisis

than

take for granted

normal today.

necessary or

reason

will

another

and

/
the

why

probably

be

business de¬
a

pro¬

found unheaval in American

li£e.,?

pression

may

mean

.Volume 164

Number'4536

THE COMMERCIAL & FINANCIAL CHRONICLE

.

telling. They are a matter of per¬
sonal distress to millions through¬

Reasons for Stock Market Break
r

(Continued from

will'

2082) •
and
appraise the current1 situa¬
tion, we list below the principal
page

fill,

1.

Russia, and fear of

tivity, profits.

f.

•3., OPA.
4.

■"

j

.

Construction

industry bottle(3).

necks due largely to

r;.
5.

Transition

sellers'

from

to

buyers' market with prospect
of increased competition.
*6.
;//>

; 7.
lv

Inventories, publicized
ing to peak levels.
-

lis-

as

Tightening of instalment credit
rates

increased

versus

operating costs.
9. Foreign
liquidation
frozen" securities.

10.
11.

"un¬

of

reconverted

from

Undigested

There is

more

new

capital issues.

doubt that

no

their

in

while still others

some

are

of

continuing

a

threat to the achievement of
imum business volume and

profits.

max¬

reason¬

determine

To

the

ally to these several factors by the
mass
of investors, and therefore
•

in

tomorrow's

likely to exert

news

continuing in¬
decisions,
better place to look
a

investment

on

no

than within the market itself.
There is

shown

herewith

stock

common

price

Bar-

31 individual stock groups
V-J Day; at their 1946 highs;
.and on Oct. 3, and the Dow-Jones
ages of

price averages

on

From this data

we

percentage

the

same

dates.

have computed

of

the

postwar

price gains lost in the subsequent
sell-off; and the total percentage
•decline from the 1946 highs. Note
that the groups which have fared
the worst, and are now selling at
below levels prevailing at the

•or

«end of the war, represent

pally the durable
tries—automobiles,

princi¬

goods

indus¬
farm, office,
railroad and electrical equipment.

the building mate¬
rials, iron and steel, and nonferrous metals (copper, etc.)
groups
are

price

clined
1946.

payrolls, work¬

the

recent

permissible

ment

reduction

installment

of

pay¬

period from 18 to 15 months

under government regulation and

are

still above

levels

their

war-

have de¬
less than average during
On the other hand,
the
and

-chemica 1,

efited

These industries have ben¬
to

important extent by
"repeal of the Excess Profits Tax,
:and labor is less of a cost factor
than in the durable goods lines.
Several

an

conclusions

may

be

•drawn from these brief compari¬

(1)

the "war" theory as a
market influence is minimized by

sons:

-the
or

fact

that

the

durable

goods

"war" industries, with the ex¬

other

and

still

■

durable ■'goods
assure

over,

the

a /

capacity
protracted

standing

cars

which
opera¬

period

current, obstacles

been removed.

un¬

have

Furthermore, outinstalment

consumer

only one-fifth the level
1941 and personal savings are
unprecedented levels. Should

the

are

Production

Facing, at the end of the war,
a

backlog of new automobile de^>

is still anticipated




at

in

be

outrun

Building material
Chemical

stand-

lower income bracket

people who
ordinarily constitute part of the
new car market, there is no doubt
whatever that plans of the major

companies

to

priced

models,

doned

due

to

produce
tentatively

"low"

construction

diffi¬

aban¬

culties,

will; be resumed. The
automobile industry has always
been
facile
in
developing the
greatest possible market foi; its
product.
lated

been

that

previously

18

-cent

calcu¬
in¬

wage

creases, added to wartime gains,
would raise manufacturing costs

part."*
*

Similarly,

retailers'

lack; of

Electrical
Farm

sales

to

isons.

demands. The threat became real
at the end of August with respect
to the

Chrysler-CIO contract, and
in our opinion was the principal
factor in the subsequent selling
wave,'
;

*

^

differences

Labor-management

are

riot

new.

I,

labor

Following

World
demands, imple¬
mented by bitter strikes, resulted
in
wage
increases
(126%
over
prewar), much greater than dur¬
ing World Wdr II to date. How¬
ever, it has been the intrusion of
War

Administration steeped in labor
politics that has created conster¬

nation- among

ply of goods and transition to a
buyers' market, consumer pref¬
erences
will again become
the
ruling factor in trade. "Ersatz"
merchandise

investors.

A

Retail

more

important

labor leaders

are now
advocating
absolutely free col¬
bargaining without gov¬

return

to

ernment interference. In
are

addition,
beginning to appreciate
compensation, produc¬

that labor

-

'

Inventories.*

has been

no

such accumulation to

date, if only for the
manufacturers
been

unable

as

to

a

reason

whole

obtain

that

have

the * ma¬

than

political

mand

supply-de¬

consideration; tardiness of
in increasing railroad

ICC

sellers

are

com¬

peting^forthe pconsumer% dollar
than during the past year," have
been; additional} factors very dis-?
turbing to investor psychology.

capital

new

issues earlier in the year, accentu¬
ated rather than being directly

responsible for the decline. In ad¬
dition, there has been a tendency
to reappraise the near-term out¬
look of individual industries, such
as the airlines, in the light of re¬

peculiar

believe these

we

to

are pass¬

ing phases of an exceedingly com¬
plex transition, not only from war
to

but

peace,

chronic

also

from

depression

to

a

prewar

postwar

world in which
well

state

political values as
are in a mild
upheavel.

price levels

as

of

Conclusion
It

seems

•

>

clear that most of

our

difficulties, including labor truculence, stem from political consid¬
erations and carry-over of a spirit
of waste and profligacy which un¬
deniably characterized much of
the war effort. Lifting of meat
controls
and speeding of OPA
machinery
to
break
remaining

"price bottlenecks" will have

a

salutary effect upon business
psychology, but the real need is
for willingness
of the man at
bench

lathe

or

to

do

an

honest

day's work for much more money
than he has ever gotten before.
The physical needs
an

almost complete

growing out of

wartime lapse

civilian

goods production pre¬

ceded by years
too

well

of depression, are

known

to

require

re¬

73.4
66.0

21.3

49.4

77 l

23.9

18.8
29.4
•

96.2

127.7

30.7

61.8

29.3

242.0

33.1

50.0

63.6

23.2

,

_!

(heavy)—

______

iron_______

55.4

.

54 7

•

10.5

t

78.8

* 60.5

62.6

48.9

111.3

89.4

110.2

88.1

106.1

20.0

11.4

17.9

12.1

89 2

32.4

142.8

101.2

46.8

29.1

108.0

34.5

55.0

28.5

102.5

23.5

'

3i.8

46,7'

38.3

79.6

30.6 v

56.9

.

21.9

66.0

85.6

42.1

58.7

21.4

35.8

24.0

82.0

33.0

61.0

47.5

'65.8

22.1

40.5

—,

41.7

55.3

68.7

105.4

57.8

81.0

52.3'

—

r

50.3

53.3

equipment

Textiles

18.1 \

56.8

139 0

'43.8

_____

—,

'

-

34.4

"

50.1

—

_

138.7

20.7

37.8

merchandise________-v___^-______^

65.5

50.5

.

'

75.9

49.3

-■

14.0

38 6

122 9

30.2

83.1

608

21.2

62 1

815

23.2

S&O

'

62.7

17.4

69.6

104.8

76.2

81.3

27.3

58.6

69.5

55,6

127.5

20.0

94 5

24.8

212.3

171.6

85.0

19.3

53.1

68.3

47.7

135.5

30.2

—32.3

43.6

34.7

78.8

20.5

Tobacco_______________——______
Average, all

groups—

Dow-Jones Average:

Industrials

-

——164.4

S,:;"———
Utilities

—

Economists See End of Price Inflation in 1947
R.

(Continued from page 2081)

S.. Alexander

Brig.

Gen.

{Columbia

University);

Murray

Ayers (The Cleve¬
Sherwin C. Badger (New

nomist,

Leonard

P.

land Trust- Co.);
England Mutual Life Insurance Co.); Dr.
Benjamin H. Beckhart (The Chase Nation¬
al

Bank);

son

W.

S.

Company);

Brush

Cable
M.

(Consolidated

Robert

Economist,. Western

W.

Burgess

Valley

(Professor

Prof.
Soule

Edi¬

Dr.

College);

Standard

sey); Dr.

Ohio);

Dr.

Dr.

New

W.

Cumberland

mann

&

(School

Co.);

Louis

Rev.
of

(Ladenburg,

Bernard

W.

Commerce

Jer¬

University);

Wendell

Thal-

Dennis

fessor of Business
Organization, Ofeio State
University); W. J. Donald (Managing Di¬

rector,

National

Electrical

Association);
dent, Lionel
Prof;

of

■

Dr.
D.

William

&

Edie

Technology).
Stephen

New

M.

York

Garbade

Co.,

Foster

Life

Insurance

(Assistant

Inc.);

(Economic

Roy

Advisor,

Co.);

Treasurer,

L.

Garis

W.

H.

Shell

Oil

(Professor

phone

&

Telegraph Co.); Dr. Richard J,
(Economist and Statistical Co¬

Gonzales

Dr.

Humble

Lewis

H.

Oil

Haney

&

Refining

(Graduate

Co.):

School

of

Administration, N. Y. University);
Haney (Economist, Sheridan, FarMorrison, Inc.); C. Frederick Han¬

E.

well

&

sen

(Director

Co.);

Dr.

of

Research,

Charles

sociation

W.

T.

ings (Professor of' Economics, Yale Uni¬
versity); William F. Hauhart
(Professor
of
Finance,
St.
Louis
University);
Dr.
Donald

L.

Kemmerer

(Associate

Professor

of

American Economic
History, University
Illinois); Fred I. Kent. (New York); Dr.
Willford I.
King
(Committee for Consti¬
of

tutional

Government);, William H. Kniffin

(President, Bank of Rockville Centre Trust
Co.);
Dean
Langmuir
(New
York); Dr.
Frederic

Edward

Lee

(Professor

of

(Assistant

University of Illinois); Dr. J. L.
Leonard
(Head,
Economics
Department,
University of Southern California); Arthur
D. i Lewis f
(Manager,
Economic
Analysis,
American
Airlines);
William
Livingston
(Economist, Alexander Hamilton Institute);
Hans Widenmann '(Carl M.
Loeb, Rhoades &
Clarence D.

Staff,

National

search);

tor,
Roy

A.

Long

Bureau

Wilfred

Commercial
W.

&

McDonald

(Member Research
of

May

Economic

(New

Re¬

(Executive

Financial

Institute);

President,
Ragner

York).

Dr.

J.

General

(Vice

Foods

Roland

Co.);
Statistical
Electric
one

be

I.

Illinois);
The

Dr.

Chase

Glen

Sun
sun

(Yale

Na¬

Savings

(Manager,

Division,
umsion,

Young
(Manager,
Westlnghouse

who

asked

that

his

and
name

Canada's New Savings
Bonds Attract
Canada

Savings

Buyers
Bonds,

which

went on sale Oct.

15,

by

Montreal

the

Bank

monthly
for
a

of

just

summary,

publication, to have
ready

very

reported

are

response.

that their sale marks

ing

in

Oil
uu

Sta¬

Co.);
v^u.;,

University);

its

released
met with

Observing

an

interest¬

development in Dominion

new

finance, the bank

states that

bonds'

attractive

novel

and

the

fea¬

tures have been designed
primar¬

ily to provide

a

peacetime invest¬

ment medium for those millions ol

Canadians who acquired investor
status

through

Government
war

;

the

bonds

savings certificates.

The

bonds

new

are

security priced at
2.75%
a

purchase

wartime

par.

interest coupon,

better return than is

able

from

term

now

issues

ten-yeai

Bearing

avail¬

comparable

outstanding. Their at¬

tractiveness is heightened by
fact that they may be
the

bonds-,

monthly
which

par

interest.

may

in denominations

as

be

assignable.
hold

more

No

one

and
The

purchased

small

non-transferable

the

cashed by

registered holder at

accrued

a

they give
now

of

ol
and

^

a

as

and

J, H. Riddle

of,., Mutual

Saxon

E.

Department,

Manufacturing Company)

economist

(Economist,

(Economist,

Saurino

Research
wesearcn

Olin

(Vice

Bankers Trust Company),;
Robinson.

Charles

&

\yithheld.

Bank);

Cummings);

President,

Hercules

University of Kentucky); Dr. Max Wi-klei
(New York);
Wilson
Wright
(Ar— t-onq

are

Benedict

.isticai &
<s
tistical

Frof.

(Chicago,

Corporation);

Association

Banks);

&

Bank); F. E. Richter

(Vice President,
Dr.

Morgan

National

(Naess

Palyi

Pogue

National

Chase

Naess

Melchoir
E.

Shepard

The

D.

Treasurer,

Edi¬

Chronicle);

Dwight Michener- (Associate Director of
Research, The Chase National Bank); Dr.
Herman E. Michl (Economist, Cotton Tex¬
tile

Motor;

&

Cork

Eco¬

nomics,

Co.);

(General

Col¬
Uni

(President, Tan
America, Inc.); Paul J

Grant

O.

Hardy (Chicago As¬
Commerce); Hudson B. Hast¬

of

Tucker

Company);

Business
Paul

ol

George

Watson

of

Power

of

Economics,
University of Southern Cali¬
fornia); Charles A. Glover (American Tele¬

ordinator,

University);

(Presi¬

Company, Inc.);.
(Stevens Institute

Ennis

S.

Merrill

Weber

Manufacturers

Lionel-D.
Edie

D.

Eco¬

Co.);

(Department

Roy
Wenzlick
(R03
Co.); Nathaniel R. ""•'lne\
(Economist, The Procter & Gamble Co.);
Edward Wlest (Dean,
College of Commerce,

Finance,

M.

and

Manhattan

I. Stone (New York);
(Headmaster, Mercers-

Tippetts

Council

Wenzlick

Dempsey,

and

Princeton

Rufus

Corp.);
ners*

Donald R. G.. Cowan (Cleveland,
V. Cox
(Dean, School of
University of Chicago); Dr. Wil¬

S.

J.

of

President

The
Smith

Academy); James Trant (Dean,
lege of Commerce, Louisiana State
versity).
/

of

Co.

of
G.

(New York) ; N.

Charles S.

Garfield

Business,
liam

Oil

(Vice

Bank

burg

J.

Economics,
University);
Miles ;; L.
Colean
D. C.); Stewart P. Coleman

(Director,

Shields

James

Economics,

(Chief

Electric1 Co.);

(Missouri

Clark

tional

of

72.1

95^8

64.9

—

,——

Steel and

So also have' exaggerated rumors
of foreign liquidation; the tech¬
nical aspects: of ; marginless trad**

90.0

.

(average).

High

12L6

•

105.4 :•/
:v

__________

1946

44.8

93.6

—________

Postwar

82.5

55 n

,

problems

13.5

105.1

(Manager,
Economic
Division,
American
Cyanamid Co.); Dr. Charles A. Dice (Pro¬

conversion

38.0

115.1

79 0

ply costs; and the probability of
narrower, profit margins in some

ing, and the flood of

134 3

65.2

62.3

St.

more

53 5

75.4

/

rates in line with wages and sup¬

lines when

86 3

(Washington,

updn
the

23.1

61.9
65.7

65.3

—

finance

Columbia

the .fact that its
been based more

have

7q'o

113.8

Rubber

J.

The- OPA and
decisions

-jr'q

Paper________——____

Ray

disappear,

Other Factors

But

fore, is that the

will

479

equipment——

Packing

;v

that they have

however,

10.8

33 7

Oil

compar¬

reached record peace-time levels,
but that with a more normal sup¬

131 5

129.4

Machinery
Office

relation

,:.?.

.

reason,

these.

they

in

1939

44 1

chams__________—86.6

___

Manufacturers, wholesalers and
are
becoming increas¬
ingly wary,, it is true, of the 1 in¬
ventory situation. Not for the

dis¬

lective

less
on

63.7

equipment.

equipment

Insurance

retailers

tinctly encouraging factor, there¬

a

25 %

based

36.5

48.2

55.0

Instalment

to the current volume of
As of the latest figures

nearly

are

33% unless compensated for
by increased labor productivity per

hour. In addition to the resulting
squeeze on profits where labor is
important cost item, it was
observed that the resulting in¬
crease in the cost of
living would
undoubtedly generate fresh wage

and

and beverages
mining
Grocery chains

in

available, department store stocks

191.0

zinc

Foods

still; inade¬

are

33.9

Gold

single

total f inventories

53.4

__

equipment

Railroad

hands

43.2

—

Dry goods

be

can

-

a

1—-% Lo~s~

Gain Lost

—

-

»■

some

an

__

Drugs

shipments

,

has

;It

_

Copper, lead and

"Ersatz"

automobile

at-r

1946

;

—

Motion pictures-..-..'.—

by

at

afford

High

r__?;

ponents together ^ at the; right
place at the same time. The ship¬
an

which

V-J Day

____

Investment trusts
Liquor

forestalled

prices

Oct. 3,

...

due to simple inability under cur¬
rent conditions
to get all com¬

ment : of

insurance

stocks—available

1946
__

Banks

this disposition is uniform
throughout all branches of in¬

have

bank

current

From

manufacturing
transport

Air

that

ventories

preferred. stocks,

and

po¬

.-rr:

.

A

Automobiles

current
a

trade.

ible

nar¬

or

re-*

"touchrand-go," but with majqy
defensive issues—such as convert¬

far

\

,

and

could

adequate to
1939 as

factor

security market is still

been

""

goods

ruling

solved the

have

/
*

processed

materials

needs based upon

the

class

Until

enough."

issues

.

raw

trade.

at

„

combined

quate

models

of any

Aircraft

postwar

current

•

im¬

inventories

which

levels

peace-time

believe that

Automobile equipment

considered

at

have- "had

all; these

claque will be superseded tractive yields and the
opportu¬
by the needs of the peopbe as a nity of
participating in a
re¬
whole, and detect signs that they sumption of the
upward trend. J',
^
1,
"
:" BARRON'S GROUP STOCK AVERAGES
V V v

level of 183, which was

a

We

interests

substantially below the amount of

prices still be out of reach of the

> During
recent weeks, the in¬
building materials group despite
crease
in manufacturers'" inven¬
high construction costs; and (3)
tories has been
continuously pub¬
most
important, action , of the
licized as a dangerous portent in
automobile group specifically in¬
the current economic
picture. The
dicates that the labor situation,
last postwar depression, it will
including renewed wage increase be
recalled, was set off by the
demands under government spon¬
dumping of unwieldy inventories
sorship, has been the principal
of raw materials which had been
depressant of postwar security
accumulated during the
preceding
markets.
period of price speculation. There

mand which it

basis,

same

truly

is

prices.

equipment. In these instances in¬

bottlenecks, in view of the betterthan-average performance of the

vs

the

there

litical

The

,

an

extent, there is an urgent and
precedented need for new

tivity, and selling prices are di¬
ceptions noted, have suffered most
rectly
related,
and
that
still
in the present market, whereas
higher wages will mean another
"'peace" industries have been rela¬
boost in the cost of living. While
tively buoyant; (2) possible con¬
uncertainty still clouds the labor
sumer resistance to higher prices
horizon, some light is beginning
has not become a factor as yet,
to show through. v/ : ; ;
'
: v t
nor
have
construction
industry

Labor

234.

to

dustry / except • automobiles and
other
types
of
transportation

oil, merchandising,
liquor, motion picture and other
rsimilar groups were still selling
a
government stubbornly perpet¬
•as of Oct. 3, in some cases con¬
uating wartime powers and an
siderably above their V-J, Day
"levels.

amounted

merce, /

gain was accounted for to
portant extent by higher

which

previous

any

record.
row

as

for

production

above

"

•

sharply higher new /car prices
will affect potential sales to some

aver¬

on

•end

the

on

volume

■

relative weight attached individu¬

•which

truck

and

men

While

the

at

Exceptions

But—

ing a leisurely 37 hours per week.

of

the

minimum.

a

production
was only 41% of similar output in
1941—with
an
average
of 20%

importance;

Ton's

were

'

1939

land

corrective other than efficient

no

"100," Au¬
gust shipments of all types of
manufactured goods, as reported
by the U. S. Department of Com¬

were

auto

tions

are.

is

changes

models

'

Based upon

total

probably of transient
or'waning economic significance;

there

to

design

1941

required

advances.

the

out

for current pro¬
duction, much less lay in a stock
against the possibility of price

On

emphasized

items

,

terials

during the first 9 months of 1946/

loans

fluence

last

planned

the above factors have been over¬

the

to

peace-time use,
time-consuming de¬

expense,

the

once

able

to

avoid

and to

will

Marginless trading.

others

years

,

terms.'
Rail

three

the

lay and

war.

least

automobile industry has
plagued more continuously
than any other by wage
demands,
strikes, and parts shortages. Auto¬
mobile plants had been quickly

which
are
supposed
in
varying degrees to have contrib¬
uted
to
the
decline,
and
will
weigh: these against the back¬
ground of the market itself:

2. Labor—wages, strikes, produc-

at

been

factors

,/

take

2121

person

than $2,000 of the

$50;
non¬

may
new

securities, although each membe*
of
,

family

a
.

limit»

r

.

may

hold up to this

•

/_/

Tomorrow's

a

look

at

the market did in the

Orleans

ous

Whyte

day at 169.86. As a mat¬
what was more im¬

ter of fact

portant was that it opened
that day almost six points
above
the
previous
day's
=By WALTER WHYTE;
market is to advance again close.. In doing that it left a
must hold above the 170 vacuum of about four points.

Says—

it

Both bear and
bull news generally known.
Which will take precedence is
Dow

figure.

life

Markets

time

Anybody who thinks that
Tuesday's (Oct. 15) whoop-ee-

reflection of
speech and nothing

closed down

day was a

Truman's
else.

The fact is that at least

v

now

was

vacuum

gap i or
closed.

Now the important thing to
before that event¬
ful
Tuesday the market watch was the action from
showed there was something the gap close. The market* was
in the wind; something that again in dead center.
If the
meant anything,
would bring higher prices. advance
For despite the newspapers- averages had to stay above a
"informative"
stories there certain predetermined point.
was
somebody with money In this case the point is 170.
who was buying stocks in an¬ Breaking that level (make it

the

discount
twice.

the
not

thing
react in

same

They act or

The public acts
on such action
insiders unload. This,

anticipation.

It is

news.

on

that the

insurance) the chances

that-

were

would go
old lows, around

prices

down to the

the

In both

prove

to

than

would

be

policies most of which apparently
was designed to serve the inter¬

creditor's

Most
has

'

•

'

1

••

*.{,■'}}'•■

.

Members

Curb

Exchange

Cotton

Exchange

York

New

York

New

Inc.

Exchange,

Commodity
Chicago

Exchange

Stock

York

New

Trade

of

Board

;

tape

Orleans
And

Cotton Exchange

other

now

CHICAGO

rather

PITTSBURGH

as

rea¬

[The.- views, expressed tin this
not necessarily *at any •;£
time coincide with those of the y
Chronicle. " They are presented as *
,

article do

of

break

That to me is one

now

of the sil¬

Investiga¬

yet.

liest reasons

is

needed

tors

a

whipping boy

gentleman from New

will

made
tive

another. The statement

Bank's representa¬

by the

considered

be

for

an

from

appropriate ap¬

Mr.

Beyen

restated

V

;

the ..basic

will be given "for

rule that loans

,

from

l'- i

that

states
for

made

goods.

loans

financing of WELL DEFINED
PROJECTS of reconstruction and
the

do

all

these

issues

for

development"

vious

the

offer

reflect

making

This

Crucial Issue

As

questions are

is

rule

unanimity

only.

result, it will be up to the

a

dress

that

"the

bank was study¬

ing policing methods
actions so that the

for its trans¬
money ad¬

vanced

'for

Pacific Coast

Securities
'

definite

purposes

used in accord¬
ance with the terms of the con¬
tract and he was sanguine on the
would actually be

crucial decisions are

its

However,

should

can

management to decide how
interpreted
and these decisions will be re¬
flected in the terms of the first

enabling statutes- which will
placing of World Bank
the lists of eligible in¬
vestments '(New York State has
already passed such a law).*
.
permit

bonds upon

Considerable opposition can be

expected in many legislatures If
the debates on the British loan
can
be .considered a precedent.
Doubts

will" be

whether

the Charter should be

ings can be

agreements.
hardly be any doubt;

can

lending organization the
Bank should set forth a clear-cut
as

a

segregation and should
effort to enforce it
strongly and rigidly as possible.
This would mean that all dis¬
bursements would be made for

rule

of j

make

every

as

unpaid portion of a loan. ^
:

/It

policy

the

with

>

asserted that this
would be in agreement

may

be

spirit of the Charter
feels strongly that

and the writer

actually true but he has
to admit that this opinion is not
is

this

legislatures
will have to

pass

Bank

that

However, before

be done, the

of the several states

of

the

under

these

agreement that World Bank ob¬
ligations; will have to be sold
mainly to institutional investors;
only they will be in' a position to
absorb the large volume of bonds'
the Bank will float within the

conflicting ideas and
interests which could be adopted

solution

disappear^
&

that

the

quite natural,
for the Charter is a compromise
concerned.

^

doubt

there > is one point
greatly strengthen
position of those in favor of
segregation. r
- "
'
-"
:> Market experts are in general
i

which

pointed out in the pre¬
article, the Charter pro¬
are not very clear as far

these determining

as

time.

no

; ;

fairly obvious.

was

visions

of dur¬

arguments will be advanced
quite early in the game and the
difficulties the Bank will face in

this

As

is

next few years.

the

.

very

SEGREGATION.
as

short

a

There

.

and

granted without

they would simply

within

special instances of the
crucial
problem which is

Segregation

cer- )

In this way, there
would be no possibility of using
the purchased goods as collateral

merely
real

will

And V they

the importation

for

able

>

doubt ; that

no

•

than

a

the'purpose

circumstances"

There

ShalLRef

Supervised

advisable

the "specific" requirement.

Yet

loan

praisal.
Use of Loan Funds

to procedures that
be less effective

first class chance to argue

a

away

the rules and
exceptions
for
one

should

this angle

be

have

them

would be under heavy

or

have

certainly

standpoint.

"special

to relax

grant

expressed as to
small sav¬

accumulated

safely invested in an
lending abroad in
bad - experiences of
the inter-war period. To refute
these assertions proof will have
to be furnished that the Bank and
its
prospective borrowers
are
making and will make every ef¬
fort to safeguard these obligations
in which savings banks and in¬
surance companies have invested *
their
funds. Evidence
that the
doctrine of segregation is being
enforced and that ample collat¬
eral is being provided for would
go far in silencing such opposition.
; I The Bank as well as the bor¬
rowing governments will have to
be fully aware of this situation.
After all, nobody: would; suffer
more
than the prospective bor¬
rowers
if opposition , to invest¬
ments
in ; World
Bank
bonds
should develop among the people
at large. Everything possible will
have to be done to avoid such a
situation.
* ■ <•'{
organization
view

of

the

•

achieve this fully supported by the actual
would be words of the Charter which may
be
interpreted
in y'a
different
in accordance with the strict pro¬
visions
of
Article
III, " Section way if the creditor viewpoint is \: Mr. Beyen* 111 his address, has
given less weight. The "special pointed to the cooperative char¬
5(b) of the Charter.
acter of the World Bank which
Undoubtedly, it was useful to circumstances" — clause makes
has been also emphasized in the
remind prospective borrowers of such interpretation entirely feas¬
aforementioned article. If all in¬
these rules as laid down by the ible.
terested parties will keep that
Charter.
However,
bankers are
Disregarding Creditor Interests
spirit of cooperation constantly in
well aware
of the considerable
May Hurt Borrowers •
rpind, satisfactory solutions Will
difficulties in enforcing similar
Opponents of the doctrine of be found for even the most com¬
terms in commercial loan agree¬
segregation
will be motivated plex problem and the Bank will
ments
particularly if the loan mainly by considerations of na¬
proceeds are to be used for many tional prestige and sovereignty. prove its worth in the years to
come by financing loans to Gov¬
diversified purposes and over a
They will argue that it is incom¬ ernments for "prudent and pro¬
lengthy period of time. Customers
patible with the position of an ductive expenditure within their
independent and financially sol¬
lAddress by J. W. Beyen, Dutch Exec¬
territory", as stated recently by
utive
Director
of
the
Bank before, the vent government to permit any
Hugh Dalton, British 'Chancellor
Savings Bank
Association of New York. international
organization ■ t he of
the"
end."3

Executed

^

-

.They will, attempt to have the
proceeds of the loan transferred /,
into their Treasury accounts and *
will use them for-the purchase of
materials
and
foodstuffs
rather)

"specific projects" "except in
special circumstances." Are Mr.
Beyen's "well defined projects"
the equivalent
of the Charter's
"specific projects"?
Apparently
they are, but some astute lawyers
may
feel differently and they

out
that the Bretton
Agreements were well de¬
signed to make posisble a satis¬
factory credit policy;
however,
there was every expectation that

to

,

of

Woods

Bank

en¬

-The

than less troubles and

Charter

should

on

credit

pointed

practical

Orders

r

tainly'plead the existence of "special; circumstancesJ'--:
/ffi iV ;
,

more

the

of

special attention to the provisions
of the .Bank .Charter.2 'fit was

pressure

difficulties.

important is the in¬
terpretation of the term "well de¬
fined projects" as used
by Mr.
Beyen. Article III, Section 4 (VII)

ganging up upon helpless loan
applicants. '- " '
-? .r " ■
Spme important issues facing
the Bank's credit policy decisions
have been discussed by the pres¬
ent writer some time ago with

the

result from

such „terms.

agree

Even

considered

proposals

enforce

to

reason

unusual events.

cotton

only.}--

those of the author

unavoidable- red

may

of

more

to

sure

policy. That this statement should
have been made by a representa¬
tive of one of the prospective bor¬
rowers seems to be a very adroit
move.1 For it will be much easier

N. Y.

SWITZERLAND

The actual

:

,,

&:f'J:--WaIter Whyte f

iw

it will be under considerable pres¬

Bank

statement

issues

important

some

Exchange BWg.

DETROIT

GENEVA,

ago

iCsK';;

if: Moi:e next Thursday.

will not be
"careful study of
specific purposes and in such a
such projects and the use of- the
page one news, as are the
way that the goods produced or
money shall be carefully super¬
"reasons" for it.
According vised."
purchased with the proceeds of a
,V„,
loan would be available and ac¬
to the official version, a spec¬
He added during a press con¬
tually used as a collateral for the
ulator was being sold out. ference following his prepared ad¬

Exchanges

NEW YORK 4,

years

Bank will

World

taken the opportunity to

bate and to make a

permits. *: So I according¬

and the
N. Y. Cotton

The

interference'with..their

forcement

"

New

resent

and

business

intervene in this "whispered" de¬

a

The

H. Hentz & Co.

particular groups.
appropriately, the

of

ests

go

ly allowed for

of

the

may

through the re¬
highs, 177.05.

tion
,

as

for the Icotton break will

good deal of gossip and,41confidential"
reports
about
these

public in the market—and
these came into the list on it's back again—an ordinary
technical reaction can carry
Saturday's set-back.
them lower than normal ac¬
Established 1856

close.

seems

son

were

.

I
have
purposely placed
15; Gulf, Mobile & Ohio at \%
stop 10; International Paper these stops some distance un¬
at 43, stop 38, and Boeing at der the buying points.
With

Practically all of

the results

often

Industries at 17, stop hence the stops.

23, stop 21.

then,

stocks., in

certain

in

1932.

World Bank Faces Crucial Decisions

On the down-side you have
oversimplifying
a market phenomenon, but if news of new strikes, increased
I tried to interpret it differ¬ tax selling and more consum¬
ently, I wouldn't have enough er resistance. On the. up-side
space to answer it.
you have potential big earn¬
In expectation of the ad¬ ings, and an anticipated Re¬
vance, I recommended a list publican Congress to give it
of stocks.
Of his list the fol¬ impetus.
So far the market
lowing were available at the doesn't show which factors
prices mentioned .below: will play- the biggest role,
Dresser

cases

If it held the chances equitable by borrowers themselves
rather
than
originating
from
were
equally good that the creditor countries which recently
market would make another have been under heavy attack of
cent

breaks

writer

the

and

break

(Continued from page 2082)
set such powerful precedents ihat
subsequent
changes will
meet
strong resistance.,- ■
•
The significance of these forthT
coming decisions has been duly
recognized in the interested cir¬
cles. As a result, there has been

is

of course,

market

160.

effort to

know,

„

wasn't interested.

now,

a

169 for

reason

.

three days

ticipation of the news.
{!, I have often harped on
subject that markets do

didn't

days before the deaths of
heads of the companies.

two

On Oct. 17 the loss was

1.69.

what

In both .analogy between * the; cotton
were
made break of last 'week and the

sales

the

cases

immediate
forerunner of similar markets 2.59, and then came two more
with averages "down
is living in an ivory tower. days
about .50 for both days.
The
That
market is an

for

given at the
Kreuger and Toll

situation occur¬

that

correct

red. The averages

lower prices, how much and

service*^Among

On Oct. 16 the first effort to

problematic.

doo

was

to

and Eastman Kodak.

them
earliest opportunity.

the

at

running

time

same

time..

called to the Stock

was

this Exchange

so

or

short sales

the

abhor

nature

1932

teletype

a

writer

V"-

in

and at the

and try to. fill

vacuums

become known for some

not

result the

a

I. don't think a single
"explain" his speculator had anything to
writer was doing a daily col¬ system,; The explanation was do with tit; no more than the
writer wa&resporisiDle for the
umn for a paper now extinqt^ sioaplq;f;^ The ; tape> showed
••

Back

t

If

apparently chos- phenomenal. .As

was

en.

succeeding days: On Tuesday
the
averages
went up to
176.52 after closing the previ¬

Markets
Walter

take

let's

Now

what

Thursday, October 24, 1946

$ FINANCIAL CHRONICLE

THE COMMERCIAL

2122

steps

to

,

Such procedure

.

on

'

•

LAMBORN & CO.
99 WALL

Pacific Coast Exchanges

STREET

NEW YORK

5„N. Y.

Schwabacher & Co.
Members
New

SUGAR

New

York

York Stock Exchange
Curb Exchange

Chicago

New York 5, N.

14 Wall Street

Export$—Imports—Futures

San




Francisco

Monterey

—

Y.

Teletype NY 1-928

COrtlandt 7-4150
Private Wires to

DIgby 4-2727

(Associate)

Board of Trade

Principal Offices

—-

Santa Barbara

Oakland
Fresno

—

Sacramento

Reprinted in the "Commercial and Finan¬
cial Chronicle," Oct. 17, 1946.
2 "World Bank's Success Dependent on
Credit Policy," "Commercial and Financial
Chronicle," Aug, 22, 1946.
3 According to a report in the New York
"Herald Tribune" of Oct. 16, 1946.

amount
trol

as

of

interference and con¬

may

be inevitable

for the

segregation. They
innumerable admin¬

elected

Exchequer
and
of the

Chairman

newly
Board

of Governors of the World BankA

enforcement or
will advance

istrative and legal

obstacles and

4

According to a report in the New York
of Oct. 17,. 1946.

"Times"

Volume 164

THE COMMERCIAL & FINANCIAL CHRONICLE

Number 4536

2123

in
•

Acme Electric Corp., Cuba,

N. Y.

ly

t June 26 filed, 132,740 shares ($1 par) common stock.
Underwriters—Herrick, Waddell & Co., Inc.,. and First
^Colony Corp.
Offering—To be offered publicly at $5
"a share." Proceeds—Company will receive proceeds from
the sale of 68,880 shares and four selling stockholders

price of $200.
will

be

used

pay

net proceeds ($292,940) $50,000
current bank loans; about $20,000

machinery and equipment, and the reworking capital.
Y7\

'

mainder for

©

.

No

i

*

r

Acme-Hamilton1*

1

Aug.

Mfg^Coiv-;^

filed 50,000 shares
; stock '($20 par) * and 82,000
29

5%

cumulative

preferred

|| ratio of

a

•*

^ holders. 7 Prices—$20

a -share for the preferred, and
$11.50 a share for the common; Proceeds—Company will
J apply proceeds tp^fully , discharge secured demand
notes, mortgage4 notes C: and partial discharge of de- if
7
; benture indebtedness. Offering temporarily postponed.
,

of

capital stock- reserved for issuance

of 15-year 3 %

convertible debenture

upon

bonds

It also

ance

upon conversion of

Estimated
the

shares of

covers

net

share

held. ; Unsub¬

be

common

reserved for issu¬

preferred. Underwriter—New-

being sold by three stockholders.
of $2,300,000 will be used by

proceeds

company to pay off bank notes of about $1,100,000
to purchase additional
machinery and equipment

and

in the amount of

$1,200,000. Offering date indefinite.

Beaunit Mills, Inc., New York

on or.

shares

mon.

conversion
are issued

before :Nov, 8, 194).
At Oct. 10,-the company had
565,632 shares reserved for such issuance and 20,457,011

will

receive proceeds from the sale of all
of the preferred
and; 100,00 shares of common. The
remaining 50,000
shares of common are

$100 principal amount of debentures for each

Livingstone & Co.
Offering—Company is offering the 7< shares of common into which they would have been
50,000 shares Of preferred, while the 82,000 shares of 7 convertible.
The principal amount of debentures of¬
cbmmon are being sold for the account of certain stockfered will-be $350,377,300 in the event that all shares

-

common

common

burger & Hano, Philadelphia. Price—$25.50 a
preferred
share and $12 a common share.
Proceeds—Company will

Underwriting—

shares ($1 par) common 7; 6 shares of stock held. Company will withdraw from '
stock.'"Underwriters—G. LV'Ohrstrom & Co; and S. R. 7yregistrator any debentures not subscribed for and the.

'

1

of

Sept. 27 filed 53,648 shares ($25 par) 4^% cumulative
convertible preferred and
150,000 shares ($1 par) com¬

underwritng. Offering—Debentures will be offered
subscripton to stockholders of record Nov. 8 in the

for

shares

Artcraft Hosiery Co., Philadelphia

;

American Telephone & Telegraph Co., New York

able upon conversion of the debentures.

share for each

new

purchased by the
underwriters.
Price—Public offering prices by amend¬
ment.
Proceeds—Net proceeds will be used to retire all
unexchanged shares of $6 prior stock and to redeem its
outstanding 7% preferred stock. Temporarily postponed,

Och 17 filed $350,377,300 15-year 2%% convertible de;bentures, due 1961, and 3,503,773 shares of common issu-

■

a

scribed

by; amendment, i Proceeds—Net proceeds, with
funds, will be used to redeem $20,000,000 of 7%
cumulative preferred stock at $115 a share plus accrued
dividends. Indefinitely postponed. :
;
7
f
;

Of the
to

will be used for

of

;V

other

common stock to underwriters at an aggregate

*

/

Price

the proceeds from the sale of 63,860 shares.
Company
also will receive proceeds from the sale of 20,000 war¬

,

American Locomotive Co., New York

.

ISSUE

July, 18 filed 100,000 shares each of $100 par prior pre7 ferred stock and $100
par convertible second preferred
stock. Underwriting—Union Securities
Corp., New York.

"

rants for

INDICATES ADDITIONS SINCE PREVIOUS

Sept. 27 filed 180,000 shares ($2.50 par) common. Under¬
White, Weld & Co., New York. Price — By

writer

•

were

—

outstanding, a total of 21,022,643 shares; Price 7, amendment. Proceeds—Of the total, 140,000 shares are
$100 principal amount of debentures.
being sold by St. Regis Paper Co., New York, and the
Aerovox Corp., Bedford, Mass.
Proceeds—The proceeds' will be used to provide sub- 7
remaining 40,000 shares are being sold by I. Rogosm,
Aug. 22 filed $i;500,000 of 5% sinking'fund debentures,
sidiary and associated companies with funds for extenPresident of Beaunit Mills, Inc.
due 1961, and -50,000 shares ($1 par) commonxstock.
sions, additions and improvements to plants, for extenUnderwriter—Ames, Emerich & Co., Inc., and Dempsey 7 sions and improvements to company's own plant and for ?
Berbiglia, Inc., Kansas City, Mo.
& Co., Chicago. Offering—The debentures will be ofgeneral corporate purposes.
Sept. 12 (letter of notification) 41,000~~shares of 5%
fered publicly." The common shares will be issuable upon
cumulative convertible $6 par
preferred. Offering price,
American Water Works Co., Inc., N. Y.
thO exercise of stock purchase warrants for purchase of
$6 a share. Underwriter—Estes, Snyder & Co., Topeka,
common stock at $2 a share above the bid price of such
March 30 filed 2,343,105 shares of common (par
Kans. To pay outstanding indebtedness and
$5) plus
expenses and
common on the effective date of the
an additional number determinable
registration. Com"to open five additional stores in Kansas
only after the re¬
City, Mo. Offer¬
sults of competitive bidding are known. Underwriters— •
pany will sell warrants for 25,000 common shares to the
ing postponed indefinitely.
—$1001 for each

.

.

r

,

*

*

*

1
7

underwriters at 10 cents

■

*

To

The remaining war-

warrant.

a

rants will be sold to officers and

employees of the comi| pany. Price—Debentures at 98. Proceeds—Company will
use
$1,025,000 of proceeds of debs, for payment of an
Indebtedness to Bankers Trust Co., New York. Balance,
f Will.be added to:,
working capital. Offering postponed. -

YY7 Air Lanes, Inc., Portland,

Me.

: /

share and T cent

1

in the State of

a common

share.

by amendment.

Probable

bidders include

Byllesby

e

V

If

on

Nov. 1. in. the

ratio

of

one

additional share

for

Offering—Shares

were

sold

to

the

July 29, 1946 at $10.70 a share. They
will be offered to the public at $12.50 a share.

336,550 shares common stock (par $1). Un¬
derwriting—No underwriting.
Offering—Stock, will be
offered for subscription to common stockholders of record

Co.

and

underwriters

Lead &" Smelting Co., St. Louis

7 Sept. 6 filed

(letter of notification) 15,000 shares each of preferred and common.; Offering price, $10 a preferred

*

filed

American Zinc,

Oct. 9

>

be

Dillon, Read & Co. Inc., White Weld & Co., and Shields 7 ^7
Black, Sivalls & Bryson, Inc. (10/28-31)
& Co. (jointly), and W. C.
Langley & Co. and The 7
July 29 filed 100,000 shares ($1 par) common stock.
First Boston. Corp. (Jointly), Offering—Price to
public
Underwriters—F.' S. Yantis & Co., Inc., and H. M.
by amendment.
1.7; :|7i: 7-:;7':77..
-77;: -7:777; r :7-77777:7:-7
on.

■;;i

"

Blumenthal (Sidney) & Co. Inc., New York
Aug. 30 filed 119,706 shares (no par) common and sub¬
scription warrants relating to 30,000 shares thereof.
Underwriting — None. Proceeds—For reimbursement

-

Sept. 10 filed 30,000 shares
preferred and 500,000 shares

offerings are made
Maine, they will be made by Frederick 7 each two shares held. The subscription'offer will ex- ;
pire on Nov. 21.
Unsubscribed shares will be offered;;'
Co.,'Boston, r To complete plant and equipof: companyV treasury
for
funds
expended
in re¬
7 for subscription to officers and directors of the
>
ment and to provide working capital.
company. 7
' . *. *;
;■ 7
demption of
3,907
shares
of '• 7%
cumulative
pre¬
-/ v
Price—^By amendment. Proceeds—Working capital.
;'y *>
'
''
~r
\
^
•'vy.j i
ferred on April 1, and for funds deposited in trust for
American Broadcasting Co., lnc., N. Y.
redemption
on
Get.
1
of
Ansley
Radio
remaining
preferred
shares.
Al¬
Corp.,
Trenton, N. J.
i June 27 filed 950,000 shares ($1 par) common stock.
though it was proposed to offer the stock for subscrip¬
Aug. 29 filed 70,000 shares of Class A cumulative con¬
Underwriter—Dillon, Read & Co. Inc., New York. Offertion to stockholders at
$10 per share, company on Sept.
vertible preferred stock ($5 par) and
tying—A maximum of 100,000 shares may be sold by com70,000 shares of
20 decided to withhold action at this time..
common
-:-7:77Z vV
(50c par) and warrants for 50,000 shares of
pany to persons, firms, or corporations with whom the
3

t

:i O. Adams &

*

*

-

.

.

-.,.

.

.

.

7 corporation had network affiliation
agreements on March
31; The remainder will be offered publicly.
Price by

7 common stock to be sold to underwriter at 5c per share
;7 warrant and exercisable through Oct. 1, 1951 for pur¬

.

*

chase of

amendment. Proceeds—To

prepay notes payable to acquire radio station WXYZ, to construct broadcast trans$ mitter for station KGO at San Francisco and for working

Treat

*

*■

'

<•

'•

i.v

t.*

(7,\r

«•*

American

*

v*?.

Cladmetals

common

&

at

$1 per share. Underwriter — Amos
Offering—To the public in units of one

Co.

p share of preferred and
$7
-

7

per

unit of

common.

.

one

Boston Store of

writers—Paul H. Davis

share of common. Prices—

Offering—Preferred

share of preferred and one share of
Proceeds—To retire bank loans of approxone

and for working capital. Temporary postponed.
.'July 3 filed 196,500 units comprising 196,500 shares of
voting Common stock ($1 par) and 589,500 shares of nonArkansas Western Gas Co;
voting common stock ($1 par)r each unit consisting of
i
1 share of voting common and 3 shares of non-voting 7 June 5 filed 33,639 shares of common stock (par
$5).
i
common.
Underwriters—None—the company intends to
Underwriters—Rauscher, Pierce & Co; Inc., and E. IL
Rollins & Sons Inc.
distribute its common stock directly to the public. OfferOffering—Stock will be offered to
the public.
j log—Price $6- per unit.
Price by amendment. Shares are being sold
Proceeds—Net proceeds estimated at $1,179,000 will be used to pay a mortgage on
by six stockholders. ,
\
plant, .pay accounts payable, purchase equipment, for
Armour and Co., Chicago
7 building alterations and working capital.
J ;
July 12 filed 350,000; shares (no par) cumulative first:
American Colortype
preference stock, Series A; 300,000 shares of convertible >
Co.y Clifton, N. J.
second preference
Aug.. 12 filed 30,000 shares ($100 par) cumulative pre¬
stock, Series A, and 1,355,240 shares
ferred stock.^ Underwriter—White'j Weld & Co;
Price 7; common stock (par $5).; Underwriter—Kuhn, Loeb &
by- amendment!
Proceeds—Net proceeds initially ; will
Co., New York.
Offering—The 350,000 shares of first
,
be added to general funds, however, the company anticipreference stock will be offered in exchange to holders
pates it. will vsei the funds for. its building ana expansion ; of its 532,996 shares of $6 cumulative convertible priori
: program.
Offering date indefinite. :
,: preferred stock at the rate of 1.4 shares of first prefer-

&

will

($50 par) 5% cumulative
($1 par) common. Under¬

Co.

and

have

Stroud

&

Co., Inc.

non-detachable

stock

purchase warrants for purchase of 30,000 shares of
mon

stock

com¬

of the total

common, 375,000 shares will be
offered for sale for cash. 30,000 shares are reserved for

7 imately $100,000, to purchase wood-working machinery

Co., of Pittsburgh

Chicago, Inc.

issuance upon exercise of warrants attached to
preferred
and 95,000 shares are reserved for issuance
upon exer¬
cise of outstanding warrants. Price—By
amendment.

-

>

Proceeds—Net proceeds, together with other funds, will
be used to pay

the company's. 2% subordinated note in
principal amount of $5,268,750 and accrued interest.
Offering date indefinite.

-

the

.

<

1

Bowman Gum, Inc., Philadelphia

Sept. 27 filed 268,875 shares ($1 par) common. Under¬
writer—Van Alstyne, Noel & Co., New York. Price—By
amendment.

Proceeds—Stock

is

being

sold

by

share¬

holders who will receive proceeds.

^

ence stock for each share of
$6 prior preferred.
Shares
7 of first preference not issued in exchange will be sold *
Seph 25 filed 75,000 -shares»of; common stock (pari $1). v to underwriters. The,<300i000 shares of second preference
Underwriter—Riter & Co. Proceeds—Stock being sold 7 stock will be offered-publicly.
The 1,355,240 shares of 7
for account,of Harry
common
will be offered for subscription to common Bloomberg, President. Price—By
amendment. *:7777''';' V:. 7y7:7T7:7777 7/-7:77.V:/-./77
stockholders of the company in the ratio of one-third
k

t

.

t

f-;v.

j

■

'■}

'x'

\

.

•

-,i

■

„?:f American Limoges China Corp., New York

•

t

Braunstein
;

(Harry), Inc., Wilmington, Del.

Sept. 25 filed 12,500 shares ($25 par) 4^% cumulative
convertible preferred stock and 50,000 shares (200 par)
stock. Underwriter

common

New York. Price—
a

share

for

$25

a

C. K. Pistell & Co., Inc.,
share for preferred and $11
—

common.

Proceeds—7,000 preferred shares
the remaining 5,500 pre¬
ferred shares and all of the common are Heing sold by
7777'-.v;
(Continued on page 2124)
are

being sold

by company,

☆

I7>7'|7:'. —SPECIALISTS

Corporate and Public Financing

IN

—

Underwriters and Distributors

United SfateslGovernmenl' Securities
"

7'

7'4

of

'

:Corporate and Municipal

'■

V:-; State and Municipal Bonds

•

Securities

The

C. J.DEVINE

FIRST BOSTON-

&

CO.

Kidder,Peabody^Co.

INC.

CORPORATION

.

48 WALL

Boston

•

New York

•

Pittsburgh

and other cities




•

Chicago

Chicago

•

ST., NEW YORK 5, N. Y.

Boston

•

Cincinnati

Philadelphia
*

St. Louis

•

•

HAnover 2-2727

Pittsburgh

♦

San Francisco

Cleveland

7

'

Founded 1865

Members of the New York and Boston Stock Exchanges
New York

Boston

Philadelphia

Chicago

THE COMMERCIAL & FINANCIAL CHRONICLE

2124

satisfactory.

2123)
-■
/{/r'.Vi.-;.
stockholders. Net proceeds to the company, es¬
at $147,500, will be used to prepay to the ex¬
(Continued from page

present
timated

$24,031

to

Cameron Aero

:

Best Associates,

Brewers

•

(10/28)

Inc., N. Y.

Oct.

Engine Corp., New York

shares of capital
Bell & Co., Inc.,
Purpose, working
capital. Business—Company plans to pursue the ex¬
ploitation of a plan for brewing and marketing a uniform
premium beer to be known as "Brewers' Best Premium
Lager Beer."
,
'
(letter of notification) 52,000
Stock (par $1). Underwriter—W. H.
Philadelphia. Price, $2,875 per share.

Camfield Mfg. Co.,

Grand Haven, Mich,

July 29 filed 220,000 shares ($1 par) common stock. Un¬
derwriters—Gearhart & Co., Inc. Offering—Of the shares
100,000 are issued and outstanding and will
be sold to the underwriters by three stockholders at

registered,
Briggs & Stratton

Corp., Milwaukee

Aug. 9 filed 76,000 shares (no par) capital stock. Under¬
writers—A. G. Becker & Co., Inc., Chicago.
Price by
amendment.
Proceeds—Shares are being sold by stock¬
holders.

$4.50 a share for their own account. The remaining
120,000 shares are being offered by the company. Price
$4.50 a share. Proceeds—Company's share to pay rene¬
gotiation refund in amount of $180,000 to the U. S.
Government, and for additional working capital. Offer¬
ing date indefinite.
r

Temporarily postponed^

(N. Y.)

Brooklyn

Union Gas Co.

May 3 filed 70,000 shares of cumulative
i ($100 par). Underwriters—To be filed

preferred stock
by amendment.

v.

•

(10/28) £

Hoboken, N. J.

Camro Company,

19,950 shares
cotriihoh
—
Leason & Co., Inc.,
share. Purpose, working capital.

Oct. 21 (letter of notification)
stock
(par $1). Underwriter

July 23 rejected two bids re¬
ceived for the stock.
Blyth & Co., Inc., and F. S. Moseley & Co. and associates submitted a bid of 100.06 for a
4.30% dividend. Harriman Ripley & Co. and Mellon
Securities Corp. bid 100.779 for a 4.40% dividend.
In¬

v

definitely postponed.

/ July 8 filed 150,000 shares ($1 par) common stock.
Underwriter—Dempsey & Co. Offering—Stock initially
will be offered to common stockholders of Admiral Corp.

V

Bids Rejected—Company

Brown &

Bigelow, St. Paul

July 19 filed 35,000 shares of 4y2% ($100 par)

Chicago. Price, $7.25 per

at

cumulative

tock.

plus

Carscor

15,921

shares of common stock.
Under¬
supply name of an American
underwriter by post-effective amendment.
Offering—
To the public at $1 a share in Canadian funds.
Proceeds
—For a variety of purposes in connection with explora¬
tion, sinking of shafts, diamond drilling and working
writer—Registrant will

'

\

'*

."

Buffonta Mines Ltd., Toronto,

Sept. 12 filed 1,000,000 shares
rency) common/Underwriting

pay

cago
ance

«

Can.

A

y

)

^

\*

'

I

^

!' /

Coi* Springfield,

stock other than the Middle
which holds 38,564 shares of such stock. If
preferred stock are de¬

than 150,000 shares of old

posited for exchange the number of shares to be ex-

California Oregon Power Co.

May 24 filed 312,000 shares of common stock (no par).
Stock will be sold through competitive bidding.
Under¬
writers—Names by amendment.
Probable bidders in¬
clude Blyth & Co., Inc.; The First Boston Corp.; Harri¬
man Ripley
& Co.
Offering—Stock is being sold by
Standard Gas and Electric Co., parent, of California.
Bids Rejected—Standard Gas & Electric Co. rejected
June 25 two bids for the purchase of the stock as un¬

UNDERWRITERS—DISTRIBUTORS—DEALERS

Industrial, Public Utility, Railroad
and

Municipal Securities

Hemphill, Noyes CSb Co.
Members New York Stock Exchange
CHICAGO

ALBANY

PITTSBURGH




•

■

TRENTON

^DIANAPOLIS
WASHINGTON

I changed will be pro rated. Shares of new preferred not
issued in exchange will be sold to underwriters.
Pro¬

proceeds from sale of shares not issued in
exchange will be used to redeem old preferred at $110

ceeds—Net

a

share and accrued dividends.

Aug. 30 filed its ($5 par) capital stock. Company's name
is to be changed by post effective amendment to Central
& South West Corp. (Del.)
Prospectus will be issued
in connection with the public invitation for sealed bids
for the
as

purchase of a sufficient number of such shares
will be constituted upon consummation of a

same

proposed merger into the issuer of American Public
Service Co., to provide funds for retiring the preference
shares of the issuer and American Public Service Co.,

the merged corporation.
Possible bidders: Glore,
Forgan & Co.; Lehman Brothers-Lazard Freres & Co.
(jointly); Smith, Barney & Co.-Harriman, Ripley & Co.
(jointly); Btfth & Co., Inc., Stone & Webster Securities
Corp. and First Boston Corp. (jointly). Price by amend-

not

for shares of
by amendment.

exchanged

Underwriters

ment.

for each

sold

be

"'s;:

to

Offering indefinitely postponed.

Candy Co., St. Joseph, Mo.

Sept. 12 filed $2,500,000 of 4% sinking fund debentures,
due 1961; 100,000 shares ($20 par) 5% convertible cumu¬
lative preferred, and 170,000 shares ($1 par) common.
Underwriters
F. S. Yantis & Co., Inc. and H. M.
Byllesby and Co. (Inc.), Chicago, and Herrick Waddell
& Co., Inc., New York. Offering—Common will be of¬
fered for subscription at $10 a share to common stock¬
—

holders

at

of record
for

will

rate
on

be

employees.

of

Oct.

one

share

for each

19. Shares of

offered

for

Price—The

sale

to

two

shares held

not subscribed

common

officers, directors and
will be offered at

debentures

100 and the preferred at $20 a share. The common will
be offered to stockholders at $10 a share. Pursuant to the
.common stock subscription rights, F. S.! Yantis & Cowill purchase 100,000 shares of the 170,000 shares of
common for investment. Any of the remaining 70,000

shares which

are

not subscribed for by

directors

and

employees

stockholders and

will

be

sold

to

the

proceeds, estimated at $5,856,125, will be used to pay the balance of the purchase
price, amounting to $5,150,000, for acquisition of the
candy manufacturing business operated by Clinton In¬
dustries, Inc., as its national candy division with plants
In St. Louis, Mo., and Chicago. The balance will be used
to redeem its 4% serial debentures and for additional

Clary Multiplier Corp., Los Angeles

;

Sept. 3 filed 150,000 shares 5V2% cumulative convertible
preferred stock (par $5). Underwriting—Maxwell, Mar¬
shall & Co., Los Angeles. Price—$5.25 a share. Proceeds
—Net proceeds, estimated at $650,000, will be used to
repay a $90,000 bank loan, to construct a factory and
office building at San Gabriel, Calif., at a cost of about
$250,000, and to purchase additional equipment, esti¬
mated at $250,000.
The balance will be added to work¬

ing; capital. Offering jtempprarily postponed.
Climax Industries, Inc., Chicago
Aug. 28..filed 150,000 shares 5% convertible cumulative

preferred
standing

($10 par)
common

and 250,000 shares

($1

par)

out¬

s^ock. Underwriter—Brailsford & Co-

Offering— company is offering the preferred and Gen¬
eral Finance Corp., issuer's sole stockholder, is offering
the common for its own account. Price of preferred $10
per share; price of common $4 per share. Proceeds of
preferred to pay company's indebtedness to General
Finance Corp., purchase equipment and real estate and
for working capital. Indefinitely postponed.
A
c

„

j

August 15 filed 300,000 shares ($1 par) common stockUnderwriters—Emanuel, Deetjen & Co., New York. Price
by amendment. Proceeds—Company will receive pro¬
ceeds from the sale of 150,000 shares and Generoso
Poper
President of company, who is selling the remaining 150,000 shares will receive proceeds from these shares. The
company will use its proceeds for payment of mortgage
notes, open account indebtedness and for purchase of
additional equipment. Any balance will be added to
working capital. Indefinitely postponed.
Colorado Milling & Elevator Co.,

Aug. 20 filed 70,000 shares
vertible

preferred

stock.

Denver, Colo*

($50 par)

cumulative con¬
Underwriter—Union Securi¬

ties Corp., New York.
Price by amendment.
Proceeds
to the proposed issue of preferred stock, the

—Prior

company

Central & South West Utilities Co.

v

will

Colonial Sand & Stone Co., Inc., N. Y.I

Aug. 14 filed 150,000 shares ($100 par) cumulative preferred stock.
Underwriter—To be determined by com¬

more

share

one

Falls, S. D.

off $3,000,000 loan from First National Bank Chi¬
and Harris Trust and Savings Bank. Chicago, bal¬
working capital. Offering deferred indefinitely.

West Corp.

development of gold min¬

Sept, 23 filed 10,000 shares ($50 par) 5% cumulative
preferred and 120,000 shares ($2.50 par) common. Under¬
writer—H. M. Byllesby and Co. (Inc.), Chicago. Offer¬
ing—Of the common, 110,000 shares are being sold by
stockholders/ The remaining 10,000 shares are reserved
for issuance upon the exercise of warrants attached to
the preferred. Price by amendment. Proceeds—To re¬
imburse treasury for purchase of machinery and equip¬
ment at a cost of $98,386 and payment for new building
being constructed at estimated cost of $223,700; balance
for purchase of additional machine tool equipment.

PHILADELPHIA

,

holders of its old preferred

ing properties.

NEW YORK

•

petitive bidding. Probable bidders include Dillon, Read
& Co., Inc.; Smith, Barney & Co., White, Weld & Co.;
Glore, Forgan & Co.; Lehman Brothers and Lazard,
Freres & Co. (jointly).
Offering—New preferred stock
will be offered on a share for share exchange basis to

$1 par (Canadian cur¬
— George F. Jones Con¬

Burgess-Norton Mfg. Co., Geneva, III.

Chase

III.

ine., Buffalo, N. Y. Price—$1 a share, American cur¬
The underwriting commission will amount to 20

*•

'*

CentraL Illinois Public Service

rency.

cents a share. Proceeds—For

^

cago. Offering—The stocks will be offered to the public
at prices to be supplied by amendment.
Proceeds—To

;

j*' \\\~* 'Jv. "■ ' >S-x y*''

'«

_

\

^

May 29 filed 35,000 shares of $2 cumulative preferred
stock, series A (no par), but with a stated value of $50 a
share, and 175,000 shares of common stock (par $1).
Underwriter—Paine, Webber, Jackson & Curtis, Chi-

to redeem the out¬

Gas and

(

Central Electric & Gas Co., Sioux

shares will be offered publicly and
the remaining 70,185 shares will be offered in exchange
for 23,395 shares of Class B common of American Gas
Machine Co., of Albert Lea, Minn., on the basis of three
shares for each Class B share.
Price—$10.25 a share.
standing Class A common shares of American
the outstanding preferred stock of Brunner.

*

i

Of the total, 110,000

Proceeds—Net proceeds will be used

capital, etc.

Porcupine Gold Mines, Ltd., of Toronto,

capital.

of

shares

working capital.

June 24 filed 400,000

Manufacturing Co., Utica, N. Y.

Sept. 13 filed 180,185 shares ($1 par) common. Under¬
writers—George R. Cooley & Co., Inc., Albany, N. Y.,t
and Mohawk Valley Investing Co., Inc., Utica. Offering—

corporate

Ontario

offered to the public. Of the total common,

Brunner

available for

Indefinitely delayed.

'

additional will be
the company
is selling 67,500 shares to underwriters for public offer¬
ing and 55,177 shares are to be offered in exchange for
outstanding capital stock of Consolidated Printing Ink
Co., Quality Park Box Co., Inc., and John Beissel Co.,
which will become subsidiaries. In addition, stockholders
of the company are selling 322,521 shares to the under¬
writers for public offering. Price—Preferred $103.50 a
share; common $26.50 a share. Proceeds—Net proceeds to
the company will be used to redeem unexchanged shares
of 6% preferred at 110%
and for increasing general
corporate funds. Offering indefinitely postponed.
in exchange

be

will

balance

fixtures;

purposes.

ing—19,079 preferred shares will be offered to 6% pre¬
ferred stock on a share for share exchange basis. Shares
issued

Ltd., Toronto

Proceeds—$75,000 is earmarked for pur¬
equipment, and tools, jigs, dies

$3 a share.

and

rate

Unsubscribed

underwriters. Proceeds—Net

chase of machinery and

Underwriters—Reynolds
& Co., ($1
Newpar)
York.
Offer¬
f(referred
stock and 427,558 shares
common

not

shares held.

underwriters. Price by amendment. Proceeds—Working

officers,
Canadian Admiral Corf).

stockholders at

common

7%

2

(letter of notfication) 60,000 shares of common.
Offering—Price $2 a share. Underwriter—R. A. Keppler'
& Co., Inc., New York.
Proceeds—To demonstrate the
Cameron Engine by flight tests in company-owned plane.;

18

Oct.

a

Ind.

Aug. 21 filed 90,000 shares (no par) common. Under¬
writers;1— Glore Forgan & Co., Chicago. Offering —
Common shares initially will be offered for subscription

when market conditions improve.

liabilities.

possible outstanding $149,300 mortgage

tent

Central Soya Co., Inc., Fort Wayne,

Blyth & Co., Inc., and First Boston Corp.
share, and Harriman Ripley & Co. bid
share. Stock will again be put up for sale

bid of $28.33 a

of

Thursday, October 24, 1946

plans to call its $3 cumulative convertible

pre¬

ferred stock for redemption at $55 a share plus accrued
dividends.
Funds for the redemption will be supplied

by

a

short term bank loan.

Proceeds from the sale of

preferred, together with other funds, will be used to
repay the bank loan. Indefinitely postponed.

^

Columbia Aircraft Products Inc., Somerviller

June

26

filed

150,000 shares ($4 par) 30c cumulative
preferred stock, convertible into commoni
initially of IV2 shares of common for
each share of preferred.
Underwriters—Floyd D. Cerf
convertible

stock in the ratio

Co., Inc., Chicago. Offering—Company offered 59,585Mr
shares for subscription to present common stockholders
of record Aug. 6 at $4.50 a share in the ratio of one share
of preferred for each share of common held.

Rights

expired Aug. 20. The offering to

common

stockholders

[Volume 164

-

'

Number 4536

THE COMMERCIAL & FINANCIAL
CHRONICLE
competitive bidding.
Probable bidders include
Morgan
Stanley & Co.; Lehman Brothers; Shields &
Co.; Harriman Ripley & Co. and The
First Boston Corp.
(jointly).*
Price by amendment. Sale
Postponed—The company on
Sept 19 postponed indefinitely the sale of the

NEW ISSUE CALENDAR

**

'

'

■

>

t

(Showing probable date of offering)
October 24,
Baltimore & Ohio RR.
12

r

noon

V.

(EST).,

Foote Mineral

v/; \v

•

____Equip. Trust Ctfs.

Co

October 25,

par)

October 28,

..Capital Stock

(EST)

Leader Enterprises Inc
Merchants Factors Corp.-

Bonds

Pref. and Common

-Preferred

Pacific Gas & Electric Co., 10 a.m.
(PST)_- -Bonds

Sharot-May Co.—————————Common
October 29,
Atchison

Topeka &

12

(EST).'

noon

writers—Aronson, Hall

^

■

-

-

*' ..'

Northwest Airlines Inc

1946
Preferred

>

Common

—

•ouipment. manufacturing
Offering date indefinite, v

——Preferred

November 4,

1946

Felt & Tarrant Mfg. Co.—

Films Inc..

Common

Class A and Common

November 5,

1

1946

Bonds

-

Debentures

—

Common

-

Plastic Molded Arts Inc

by

Equip. Trust Ctfs.
Preferred

1946

Inc.,

.

'

*

a

'

'

new

annex

to

present

share. No underwriter. To be
offered by the company
directly to the purchasers. For
general corporate purposes. '
a

Corp., New York

June 28, 1946 filed
20,000 shares ($10 par)
lative convertible preferred stock.

4%%

cumu¬

Underwriters—To be
supplied by amendment. Price—$12 a share of
preferred
and $7 a share of common.
Proceeds—Estimated net pro¬
ceeds of $3,420,000 will be used for
working capital.
Commonwealth Telephone
Co., Madison, Wis.
Sept. 23 filed 16,071 shares ($100 par) $4
cumulative

preferred. Underwriters
Paine, Webber, Jackson &
Curtis and Stone & Webster
Securities Corp. Offering—
Shares will be offered for
exchange for $5 cumulative
preferred, on a share for share basis, plus cash
adjust¬
ment. Shares not
exchanged will be sold to underwriters.
Price by amendment. Proceeds—To
redeem at $110 a
—

share, plus divs., all unexchanged old shares.

,

,

.

um, Tully & Co., Los Angeles.
Price by
Proceeds—Of net proceeds,
$1,000,000 will

additions
for

being sold by six share¬

.

York.

Offering—Stock will be offered to stockholders

at rate of

one-half share for each share held.
Unsub¬
be sold to underwriters.
Price by*
amendment.
Proceeds—To be added to general funds.
scribed

shares will

and

purchase

improvements to
of

additional

company's

machinery

Crooksville KO.)

Oct.

Jackson, Mich.

unspecified number of shares (no
par)
Underwriters—To be determined by

18

>

•

Dow

Oct.

17

Chemical

V Cyprus Mines, Ltd., Montreal, Canada
May 31 filed 500,000 shares of common stock

Duluth (Minn.)

Oct.

•

filed

62,000 shares ($25 par) 5% cumulative
preferred stock and 71,950 shares (par $2)
40,000 by company and 31,950 by certain
stockholders. Underwriters—Paul H. Davis &
Co., and
convertible

stock

ment.

.

buildings and to retire bank indebtedness.
Offering date
indefinite.
■
1
#
;

Joist, Inc., Washington, D. C.

of

notification) 1,471 shares of
Offering price—$20 a share.
No

no

par

under¬

To advance interests of company.

Deep Sea Trawlers, Inc., Seattle, Wash.

Oct. *7

(letter of

notification)

1,000

shares

($100 par)
common.
Offering—Price $100 a share.
No underwrit¬
ing. For construction and operation of deep sea trawlers.

*

*

*

(letter of notification) 12,000 shares ($5 par>
common
and 8,000 shares
($5 par) Class B
common.
Offering—Price $5 a unit.
No underwriting.
For purchase of additional flight and
servicing equip¬
ment, payment of deferred salary balances, for
working^
capital and other expenses.
A

t

Dumont Electric

•

Corp.,

.

New York

Aug. 29 filed 94,000 shares of

common

Underwriter

Corp.

—

First

Colony

(10/28)

stock

(par 10cV
Offering — 25.000

partnership.

•

III.

Airlines, Inc.

$6

of

per

share.

Proceeds—Net

the

company's 25,000
eral corporate purposes.

(par $1).

Inc., Cicero,

/

15

Class

Durasite

proceeds

shares

will

Corp., Clearwater, Fla.

from

be

for

the
gen¬

'

Oct. 11

(letter of notification) 99,000 shares of common
purchase warrants covering 50,000 shares Of com¬
mon. Offering—Price $3 a common share and five
cents
and

a

warrant.

Underwriter—Amos Treat & Co., New York.

*

writing.

(11/5)

;

•

Price,

Toronto.
Offer¬
ing—Shares will be offered to the public at 75 cents
a
share.
Proceeds—Net proceeds, estimated at
$300,000,
will be used for
mining operations.

capital stock.

Mich.

AkUg. 12 filed 80,529 shares ($1, par) class A stock, con¬
vertible into common stock
(par $1).
Underwriters—
Maxwell, Marshall & Co., Los Angeles. Price—To public
$10.25 a sharer Proceeds—Net proceeds, estimated at
$694,761, will be used to pay off loans and accounts pay¬
able. Offering temporarily postponed.
/:,./■

sale

Underwriters—Sabiston-Hughes, Ltd.,

(letter

Midland,

shares being -offered by Dumont Electric
Corp., and 69,000 shares by Dumont Electric
Co., a limited

rangement of existing facilities or for purchase or re¬
demption of the bonds presently offered.
Business—
Manufacture of wide variety of
types of steel.

14

Co.,

filed

Drayer-Hanson, Inc., Los Angeles

cumu¬

Corp.,

Davisbilt Steel

~

/

(letter of notification) 90,000 shares of $1 par
Price, $3.25 a share. No underwriting. For
working capital..-',-"■/: ;■
;;*• \■■; .■ ;/'•••

and

company's $12,217,000 of 15-year 3Y^% sinking fund de¬
bentures, due 1955, at 102. The balance will be used for
purchase or construction of property additions or rear¬

•

•'.

•

and

Price by amendment.
Proceeds—Net pro¬
ceeds will be used to redeem on or
before Dec. 31, 1946,

26

:

to be expended for general
corporate purposes. /

plants

York.

common

'•

be used for

Crucible

July

Manufacturing Corp.,

common.

China Co.

Danly Machine Specialties,

&

amendment.

Steel Co. of
America, N. Y. (11/5) >
Oct, 18 filed $25,000,000 of first
mortgage sinking fund
bonds, due 1968.
Underwriter—The First Boston
New

Boston.

Electric

$30,000,000 15-year debentures, due 1961.
Underwriter—Smith, Barney & Co.,, New York. Price
by amendment.
Proceeds—To be added to cash funds

-

:

Dormitzer

t'lY;:/;

stock.

equipment,
and $900,000 will be
applied to the payment of outstanding bank loans. The remainder will be
added to work-»
ing capital. Business—Production of
dairy products. -•

•




$5.50

—

Dictaphone Corp., New York
July 25 filed 65,347 shares (no par) common stock. Un¬
derwriter—Merrill Lynch,
Pierce, Fenner & Beane, New

•

Oct.

the sale of 851 shares of
preferred. The remaining shares
and all of the common are
being sold by
Ben Weingart, President and
director.
Company "will
add the proceeds to
working capital.

an

Stock is

—

-

,

of preferred

stock.

Under¬

—

holders who will receive
proceeds.

pur¬

Shillinglaw, Bolger & Co., Chicago. Price by amend¬
Proceeds—Company will use proceeds, together
with a $1,000,000 bank
loan, to purchase machinery,

Aug. 9 filed

-

machinery and equipment and to

Consolidated Hotels,
Inc., Los Angeles
Aug. 9 filed 97,363 shares ($25 par)
4%% convertible
preferred stock and 150,000 shares (50c
par) common.
Underwriter—Lester & Co., Los Angeles.
Price—$25 a
share of preferred and
$9 a share of common. Proceeds
-—Of the total, the
company will receive proceeds from

common

by

Typesetting Co., Detroit, Mich.

share. Proceeds

a

writers—Kidder, Peabody & Co., New York; and Mitch- j.

•

Baltimore, Md.
(letter of notification) 150,000 shares
($1 par)

Cd.,

Price

Dobbs Houses, Inc.,
Memphis, Tenn.
Sept. 27 filed 75,000 shares ($1 par) common. Under¬
writer—Emanuel, Deetjen & Co., New York. Price—By

v.Offering—Price $100 a share \
subject to the exchange of 1,100 shares of
company's 6%
and 7% preferred.
No underwriting.
For retirement of
preferred.
'

Spring Corp.,

Commonwealth Aviation

Angeles.

Sept. 25 filed 70,920 shares ($1 par) common.
C. G, McDonald &
Co., Detroit. Price

writer

/'

.

Los

Temporarily postponed.

Oct. 14 (letter of
notification) 2,000 shares of 4%
lative Class A preferred,

Building Corp., Washington,

notification) $300,000 of unsecured
Offering price, at par.
No underwriting.
Par¬

Consumers Power

Detroit

Creameries of America,
Inc., Los Angeles
Oct. 17 filed 15.6,986 shares
($1 par) common.
Under¬

of

Price, $1

/

Cor,

exploration program. Indefinitely
postponed.

capital.

V

,

&

Proceeds—Of the shares
being offered
company is selling 100,000 shares and
15,000 shares are
being sold by a stockholder. The
company will use its
proceeds to provide additional
factory space and

•

21

.

•

common

subsidiary, balance working capital.

class B stock.

working

Douglass

Proceeds—Part of the estimated net pro¬
ceeds will be used to
pay a bank loan.
The remainder,
with other
funds, will be used to expand a drilling and

share.

Underwriters—First Boston Corp., New York. Price
by
amendment.
Proceeds—Go to Joseph
Levy, President,
selling stockholders. Offering date indefinite.

stockholders
will be offered to the public
through underwriters. Price
—$5 a share. Proceeds—Approximately
$55,000 for pay-S
tnent of Federal taxes;
$250,000 for payment of a loan;
$50,000 as a loan to Palmer Brothers
Engines,

Oct.

Nelson

amendment.

Under¬

Crawford Clothes,
Inc., L. I. City, N. Y.
Aug. 9 filed 300,000 shares ($5
par) common

"

excluded the two principal stockholders
who waived
their rights to subscribe. The
remaining 90,414% shares
-and shares not subscribed to

Comfort

,

.

Pref. and Common

construction of

'

stocks

common

Underwriting—H. M. Byllesby and Co., Inc., Chicago,

,

4,1

>

.

November 25,

0

Derby Oil Co., Wichita, Kans.
July 19 filed 131,517.3 shares ($8 par)

M

*

,

Maltine Co.—.

payment for
office building.

:

York

office building.

1946

Chicago & North Western Ry.
12 noon (CST)—±

notes.

and

space

be

15

and

per

will

amendment. Proceeds—Net proceeds will be used for
construct a new
expansion of business consisting of airline
The balance will be added to
catering and
working
restaurant
capital. Offering date indefinite.
and coffee shop/operations. Date of
1
,v
offering
indefinite.
•

1946

Corp.-—*

November 7,

tial

$8.25

DeMornay-Budd, Inc., New

balance

Copco Steel & Engineering Co., Detroit •
Aug. 19 filed 115,000 shares ($1 par) common. Under¬
writer—E. H. Rollins &
Son, Inc., New York.
Price

chase

November 6,

(letter

Price

The

by amendment.

Crucible Steel Co. of America

17

Co.

for.

(letter of notification) 270,000 shares (20c par)
common.
Offering—Price $1 a share.
No underwriting.
For expansion of
plant and business.

preferred.
Underwriters—Otis & Co. and
Prescott & Co., Inc.
Offering—To the public.
Price—
$25 a share.
Proceeds—Estimated net proceeds of $1,356,200 will be used to redeem its
outstanding 4% deben¬
tures, due 1967, to pay certain debts and for additional

—Common

People's Service Corp
Zatso Food Corp.—.—

Oct.

•

Oct.

convertible

^November 1, 1946

Medical

&

starting operations of four plants, two of which al¬

ready have been contracted
added to working capital.

Cooper Tire & Rubber Co., Findlay, Ohio
July 17 filed 60,000 shares ($25 par) 4%% cumulative

—.Common

Espey Manufacturing Co..
Standard Brands, Inc

Columbia

of
*

Proceeds—To repay demand loans and for
general funds.
(Originally company filed for 80,000 preferred shares
par $25 and 350,000 common
shares.)

,'i~l

Sales Agreements

!

October 30,

Pari-Mutuel Totalizer

:•

—-Equip. Trust Ctfs.

—

Dow Chemical Co

and

Continental-United Industries
Co., Inc.
Aug. 2 filed 150,000 shares ($1 par) common.

1946

Santa Fe
—Conditional
Central of Georgia Ry.

Company anticipates expenditures of $300,000 in 1946
and $300,000 in 1947 for
equipping and absorbing costs

Alstyne, Noel & Co.
Offering—Price by amendment.
Proceeds—For rearrangement and
expansion of the com¬
pany's manufacturing plants, acquisition of additional
tools and facilities, and for
additional working capital
requirements. Offering temporarily postponed.

Common

added

purpose.

(10c

Underwriters—Van

..Common

Dumont Electric Corp

2 filed

proceeds to company of $1,007,913 will be
general funds to be applied for corporate

to

Continental Motors Corp.,
Muskegon, Mich.
July 8 filed 250,000 shares 4%% cumulative convertible
preferred stock, Series A ($50 par).

-Common

El Paso Electric
Co., 11:30 a.m.

net

share. No
underwriting.
equipment and for

a

,

Capital Stock

—

common. Price

purchase

,

i94«^2:l^1^:.',r;■■{:^

Black, Sivalls & Bryson Inc.___
Brewers Best Associates, Inc.—
Camro Co.

Co., Inc., Jackson, Miss.
300,000 shares (200 par) common. Under¬
writers—Names by amendment.
Price, $8 a share. Pro¬
ceeds—Of total,
company is selling 150,000 shares an«L
remaining 150,000 shares are being sold by
Apponaug
Manufacturing Co., Inc. Principal stockholder estimated

advertised for Sept. 24.

12% cents
plant machinery
working capital.
:
To

1946

Helicopter Air Transport Inc._

were

Continental Mining Co.,
Kellogg, Ida.
14
(letter of notification) 1,000,000 shares

Oct.

_____Preferred and Common

Delta Chenille

Oct.

stock.

Bids

1946

2125

.For

machinery, plant renovation and
Offering date indefinite.

working

capitaL

y

V

El

Paso

(Texas)

Electric

Co.

(10/28)

Sept. 27 filed $6,000,000 first mortgage bonds, due 1IH6L
Underwriter—By competitive bidding. Probable bidders
include Stone & Webster Securities
Corp.; Halsey, Stuart
& Co. Inc.
Proceeds—Net proceeds together with gen¬
eral

funds, will be applied to the redemption of its'
$6,500,000 of first mortgage bonds, Series A, 3Y4%. due
1970, at 108. Bids Asked—Bids for the purchase of the
will be received up to 11:30 a.m., EST, Oct. 26
90 Broad St., New York City.

bonds

at office of Epsco, Inc.,
©

Oct

Elgin
16

(III.)

Sweeper Co.

(letter of notification)

common.

To

be

offered

prior preference stock
common

rently,

for

each

in

57,462 shares (no par>
exchange for outstanding

(no par) on basis of 6 shares ot
of prior preference. Concur¬

share

holders of prior preference

surrender

their stock

and

receive

are

$25

given option to.,
in cash and one

(Continued from
share

of

be

$5

a

in

common

Chicago,
to

page

exchange.

a

Offering—Price $35 a common-

Ross & Co.,

Mullaney,

1

'

Empire Millwork Corp., New York

Foster & Kleiser Co.,

offer to holders of Class A

Co., Salt

$1,000 of insurance at $2 a share. No underwriting.
capital and surplus required by law to qualify
old line legal reserve capital stock life insurance com¬

Shares

are

'

,

>■{.*

*

'

K A

.

,

'

V

<

'

'■

"l

•>-

Espey Manufacturing Co.,

\

1 ■>

•»'

-

(10/30) :

N. Y.

Inc.,

j,r-

14

(A. B.)

Farquhar

<

.•

.-•••••

1 ••

:v-j'

tract entered into last

•

.,

dendsi! li also

and Aronson, Hall&

Proceeds—To pay

-'j

;■

-

-

Hartfield

Engineering and Manufacturing Co.,

General

•

St.

par) 5% cumulative iion-v Johnston, Lemon & Co., Washington, D. C. Offering—
preferred and 100,000 shares ($2 par), common.To be offered to the public at $8 a share.
Proceeds—?
Underwriters—Dempsey, Tegeler & Co., and J. W. Brady
Company is selling 60,000 shares and stockholders are!
&' Co., St. Louis. Price—$10 a preferred share and:$5 a!! selling 40,000 shares.
The company will use its proceeds]
common
share.
Proceeds—Net proceeds, estimated at
to pay the costs of opening additional stores and to/ex¬

vertible

($25 par)

f

pand merchandise in its existing stores.
; porarily postponed,
..
••

outstanding bank loans*

Feb, 27 filed 185,000

.

Shares

July 24 filed -200,000 shares ($1 par) common stock*
Underwriter—Van Alstyne, Noel & Co. Offering—Offering does not constitute new financing but is a sale of
currently outstanding shares owned by members of the
Meyers family, owner of all outstanding stock. After

:

giving effect to the sale and .assuming exercise of certain ¥
warrants

and

-

an

'

4

Felt

A

'

,

Tarrant

/

"

/

Manufacturing Co.

Sept. 25 filed 251,340 shares of
Underwriters

y

common

;•

'

-

(Canadian Funds).

1'

(11/4-15)]

stock (par $5).

Lee

Fiduciary Management, Inc., Jersey City, N. J.

a

company may

ment and

share.

Proceeds—To

capital so
expand operations in the field of develop¬

reorganization financing.

films Inc., New York

-

|

,

(11/4-8)

filed 100,000 shares ($5 par) class A stock and
300,000 shares (10 cent par) common stock, of which;
200,000 shares reserved for conversion of class A. Each:

initially convertible into 2 A
Underwriters—Herrick, Waddell & Co., Inc., New York. Offering—To be offered!
publicly at $8.10 a unit consisting of one share of class A H
stock and one share of common stock.
Proceeds—$201,- :
QOO.for retirement of 2,010 shares ($100 par) preferred ?
stock at $100 a share; remaining proceeds, together with:
other funds, will be used for production of educational
share

of

class

A

common

stock

Florida Food

Sept.

23

(letter of notification)

26,400

shares

Fla.

Class A1

working capital.

stock

an

share.

commission to the selling,
exercise of options. Price—$5 a
of company and for

on

Foote Mineral Co.,

Philadelphia

and 83 shares of preferred on




(10/24)

1,025 shares of common
behalf of Norman Wood-:

'

•

'i

refinancing
-

■

/-'

'

Griggs, Cooper & Co., St. Paul, Minn.

construe-:
vPP P;
.

12,000 shares ($1 par) f
common.
Underwriters—Kalman & Co., Inc., St. Paul.
Price—$25 a share.
Proceeds — For improvement and
modernization program. Offering indefinitely postponed.
(letter of notification)

Grolier

Society, Inc., New York

July 29 filed 18,500 shares at $4.25 cumulative preferred
stock ($100 par),
with non-detachable common stock
purchase warrants entitling registered holders of shares
of the $4.25 preferred to purchase at any time 64,750
shares of common stock at $16 a share at the ratio of 3%
common shares for each preferred share held; and 120,-j

Proceeds—Net proceeds will be added;1
date indefinite.
;; \ 3
*

by amendment.
.

indebtedness. Partly as a

Proceeds—For

& Co.,-Cleve-;
the preferred;

stockholders are selling the common shares.,
Price—$25 a share of preferred. Price for the common,

shares and

Crosby, President and James Manoil, Treasurer, will act
as selling agents. Offering—Of the total 500,000 shares
will be offered to the public and the remaining 136,500*
shares will be reserved for issuance partly in payment
agents and partly

convertible

($1 par) common stock. Underwriters—Otis
land, Ohio. Offering—Company is selling

City, Nev.

:

York

of 4%% ($25 par) cutoiu-/
preferred stock r and 33,884 shares

28,1946 filed 20,000 shares

lative

Canyon-Boulder Dam Tours, Inc., Boulder

Sept. 3 filed 636,500 shares ($5 par) capital stock. Under¬
writing—There will be no underwriting but Everett N.

firms: Buckley Bros.; Durand
Earle May & Co., Palo Alto, C&liff»

(Henry) & Co., Inc., New

Holt
June

Temporary postponed.
Grand

v:

of the following

Co., Tucson, Ariz.; J.

to replenish working capital.

departments. and

'v-.:;v.1

Hollywood Co|orfilm Corp.,

more

selling 120,000 shares and 90,000 shares are being sold
by shareholders. Company will use proceeds for expan-P
sion and modernization work, establishment of new;
retail

42 East Ave.,
share of each.1
and working
1 .; ! v-

Burbank, Calif.; .
Oct. 16 (letter of notification) 119,500 shares of ($1 par)'
capital. Price, $3 a share. No underwriting contract, how¬
ever, 55,000 shares to be issued to or throiigh H. R. O'Neil ,
of Buckley Bros., Los Angeles, will be sold by one./or},:

Goldring Inc., New York

Sept. 3

Pet. 16 (letter of notification)

Publishing Co,, Inc.

(letter of notification) 10,000 shares of preferred*
(par $5) and- 10,000 shares of common stock*:

-/s-v'
e

Sept. 27 filed 210,000 shares (100 par) common. Under-:
writer—Merrill Lynch, Pierce, Fenner 8c Beane, New:
York.
Price—By amendment: ] Proceeds—Company is

$1).
Underwriter—Blair & Co.
Proceeds—Working
capital. Company was formerly known as E. H. Borchardt
& Co. Issue may be placed privately.

Inc., Philadelphia

-

capital. Business—Publishing.

at $11 a share. Price
by amendment. Offering temporarily postponed.

tion program.

Food Fair Stores,

\

Helicopter Digest

purchase warrants to the selling stockholders at
to purchase up to Aug; !,

working capital and funds for development and

Aug. 5 filed 60,000 shares ($15 par) cumulative preferred;
stock.
Underwriters—Eastman, Dillon & Co. Price by
amendment.
Proceeds—To be used to redeem 15-year
3%% sinking fund debentures, due 1959; and $2.50 cum¬
ulative preferred at $53 a share.
Balance will be added >
to working capital.
Temporarily postponed.

?

(par $1). Underwriter—Frank P. Hunt,
Rochester, N. .Y* Price—$6 per unit of one
Proceeds—Purchase of machinery, paper

is

Products Corp., Belle Glade,

Camden, N„~ J.

'Helicopter Air Transport, Inc.;
•
(10/25 )
■

Oct.-18/(letteroLpiotification)'50,000-shares* of/?capitali
stock (par 10c). Underwriter—Putnam> &-Uo. as to. 5,500
shares;; issuer plans sale of 44,500 shares ■ for its own'
: account. Price, $3 per share. Proceeds—For acquisition
of additional .helicopters and related equipment: and ^

York

stock (par $10) and 26,400 shares of common stock (par*'

•

•

,!-•

Alstyne, Noel & Co. Offering—The 300,000 shares are
Issued and outstanding and being sold for the account,
of certain stockholders.
Company has also issued 55,000

of
•

.//J-

Oct. 15

stock.

films.

amendment. pffering-r»-Pirice

Aug. 28 filed 355,000 shares ($1 par) common, ol/which:
55,000 shares are reserved for issuance upon, the exer-'.
else of stock purchase warrants.
Underwriter — Van

stock

Stock

amendment.

.

June 25,

shares of

ing Co.;Underwriter—By

i 1949, common stock of the company

increase

shares
certain stockholders.

being sold by

are

10 cents a share entitling them

Sept. 27 filed 867,420 shares ($25 par) common. Under¬
writer—No underwriting.
Offering—Stock will be of¬
fered for subscription to common stockholders on the!
ibasis of four additional shares for each one share held.

Price—$3

Proceeds—For; mine development.

Glensder Textile Corp., New

Higginson Corp. and Kidder, Pea- !
body & Co. Offering — Shares are being sold by share¬
holders after consummation of proposed changes in com¬
pany's capitalization and the merging into the company
of Comptometer Co. Price by amendment.
;
4,
—

^

Oct. 2 filed 300,000 shares ($l par) stock.;Underwriter—- ,
Mark Daniels & Co., Toronto. Price—40 cents a share r

option, the Meyers family will retain
ownership of approximately 58% of the common stock.
Offering temporarily postponed.
V "
...

Tdrontof -Can. 4

Glencair Mining Co. Ltdr,

' {

Raplds, Mich.
of commomstock ($2 par).!

acquired by selling stockholders in exchange for 432,900
shares of common stock (par $3) of American Engineer¬

July 31 filed 50,000 shares of $1.25 cumulative converti¬
ble preferred stock series A ($20 par) and 150,000 shares/
(10c par) common, all issued and outstanding and being
sold by eight selling stockholders.
Underwriters—Van
Alstyne Noel & Co.
Price by amendment...Proceeds—
To selling stockholders, Offering temporarily postponed.

Frocks, Inc.

Offering tem^j

Hayes, Manufacturing Corp., Gr.

*

on

Inc., Los Angeles

Stores,

Oct, 21 filed 50,000 shares ($10

cumulative concommon; and
$893,000, will be added to working capital and will be
an unspecified number of common shares to permit con¬
used to finance the company's new product, the "Gemversion of the preferred. Underwriter—Stroud & Co., : co" space cooler (an air conditioning unit) and other
Inc., Philadelphia. Price—By amendment. Proceeds —
corporate purposes.
Business—Manufacture of shapers,
Proceeds will be used to redeem $355,350 4^% sinking
which are machine tools,
» •" li: /
fund mortgage bonds, due Aug. 1, 1957, to pay off •
certain contracts and chattel mortgages of $72,000 and
Glen Industries Inc., Milwaukee, Wis.

Fashion

^

June 27 filed 400^000 shares ($1 par) Common / stock.]
Underwriters—Van Alstyne, .Noel & Co., New York, an,d

Louis, Mo.

vertible preferred; 45,000 shares ($5 par)

$800,000 to reduce principal

wiR;.use;upin,O5iimatelY^402,00

cost of ac^^^!;consh^tio?iyand;% the ^purchase of a manufacturing plant ■ in .Chicago;
ance for working.papital.,Offering-date •indefinite.
plant, and for .working capital.^\ In¬

equipment of new
definitely postponed,

Co., York, Pa.

Sept. 26 filed 30,000 shares

•• •

& Co.

(letter of notification) 59,500 shares ($1 par)
common; stock purchase warrants, 40,000; the under¬
writer to designate who shall subscribe to 22,500 and the
company to designate who shall subscribe to 17,500; not
exercisable until the expiration of one year after public
offering. Offering—Price $5 a common share and 5 cents
sv warrant.
Underwriting—B. G. Cantor & Co., New
York. For payment of debt and working capital.
Oct.

Benton Stores, Inc. and its affiliates from William Book-;
and Maurice Hoppin pursuant to terms of a con- <

man

.

,

'

i

•

Thorndike, Inc., New York. Price, $4.50 a share. Pro¬
of all the outstanding stock of the

&

ceeds—For purchase

August 15,. Business—Operation of}
shares. Pricerrr$6-a share. Proceeds iH stores telling women's kand children's wear.
—For purchase of sweet potatoes, plant expansion, addi/
•Hammond lnstrument :Co., Chicago
tjonal storage facilities, research'and. development*work
Aug. 8 filed 80,000^ shares i($l;: par) common.
Under¬
and working capital.
Ju
writer: Paxil H. Da vies Z&lCo jChicago.
't
vV. ,V. ."'"fVj
**«ji
^ *** * V 'JZ \ >,»! 1 *j'•S'* 'A'"'"'•••
Price by amend-'
:
General -Bronze Corp., L. I.
nient:^ Proceeds-r^et vproceeds ?wiU be hsed ;to xedeemi
July 26 filed 115,000 sharesof./cumulative convertible!, its' outstanding 6% cumulative preferred stock. at an
<•;
estimated cost oL*$213,258r exclusive of accrued divi-|
preferred stock ($25 par). Undervi^it^FS^W.^C. Langley

being sold by stock¬

holders.

(50c par) common. Under-,
Gillespie & Co., Inc., and Childs Jeffries

the remaining 100,000

t,

5 filed 105,000 shares common stock (par $1).
Underwriter—Straus & Blosser, Chicago.
Price—$11.50
—

]

-•

York

100,000 shares

23 filed

Oct.

writers—E. F.

is selling 350,000 shares and two stockholders,..
Roland E. Fulmer and Louis H. Newkirk, Jr., are selling

Ero Manufacturing Co., Chicago

Proceeds

have agreed to waive

Halliday Stores Corp., New

•

Columbia, S. C.

$3 per share.*1 Holders

preemptive rights. Offering date indefinite.

their

company

Sept.

share.

(par $l).j
Offering—Btock is being of¬

fered to present shareholders at
of approximately 200,000 shares

making exchange

preferred on share for share

Fresh Dry Foods, Inc.,

Co., Jacksonville, Fla.

17 filed 270,000 shares of common stock

Underwriters—Blair & Co.

Aug. 30 filed 450,000 shares (100 par) common. Under-,
writer—Newkirk & Banks, Inc. Offering—Of the total ;

To raise

a

Gulf Atlantic Transport'n
Jan.

Offering temporarily postponed.

price by amendment.

per

i

-

cash adjustment. Proceeds—Approximately
$1,060,950 for redemption of class A preferred; balance
for expansion, working capital, etc. Dividend rate and

(letter of notification) 90,000 shares of common.
to policyholders at the rate of 11 shares

'

<

basis plus a

be offered

pany.

mon
$14 a share. /Proceeds—To retire $6 cumulative ]
preferred, pay notes," discharge a lo^n. Offering tem¬
porarily postponed.
t
*•
♦ * ''

stock, all
Price; by

San Francisco

Co., Inc. Offering—Underwriters are

&

fering temporarily postponed.

an

Torrey.

Graham, Jr., 100,000 shares of issued and out¬
Prices, preferred $100 a share; com-.|

standing common.

July 29 filed 100,000 shares of $1.25 cumulative con¬
vertible preferred stock (par $25)! Underwriter—Blyth

new lines of products and expand the business. The-,
remaining 100,000 shares of common stock and the pre¬
ferred shares will be sold by present stockholders. Of¬

Oct. 16

common

Co., Inc.

and

Byllesby

and J. C.

York

indefinite.

date

amendment. Offering

add

Equitable Life & Casualty Insurance
Lake City

Fabrics Corp., New

July 29 filed 110,000 shares ($1 par)
outstanding.
Underwriters^Cohu &

:y

Aug. 28 filed 50,000 shares of $1.25 cumulative converti¬
ble preferred stock, (par $25) and 150,ObO shares of
common
stock
(par $1). Underwriters—Van Alstyne,
Noel & Co. Proceeds—Corporation will receive the pro¬
ceeds from the issuance of 50,000 shares of the common
stock which will be used to increase productive capacity,

•

M.

Philadelphia.

by stockholders accepting this option at

share.

stock. Underwriters—H/
Offering—Underwriters to'!]
purchase from the company 18,500 shares of preferred!
and 20,000 shares of common; and from Fred P. Murphyi
shares df $1 par common

000

preferred share. Underwriter —r Butcher & Sherrerd,
Proceeds go to the selling stockholders. -

offering to purchase the shares of common

are

recived

Thursday, October 24, 1946

CHRONICLE

and Anita M. Wood¬
share and $100 a

director of the company,

ward,
ward.

2125)

Foreman

To

& FINANCIAL

THE COMMERCIAL

2126

to,

general funds. "Offering
;:

;■{:i}-.,>:¥()■¥

■

■

rHp

(Edward) Co.,,Los Angeles
•
,
Oct
12 (letter of notification) 20,000 shares of no parr;
common.
Offering—Price $4.50 a share.
No under-,,
writing.
For working capital.
\ h > * ** {
t

Hyman

.

.Illinois Power Co.,

Decatur, III.

filed 200,000 shares ($50 par) cumulative pre-'>
ferred stock and 966,870 shares (no par) common stock.
June 17,

Underwriters—By competitive bidding. Probable bid-;
ders include Blyth & Co., Inc. and Mellon Securities :

(jointly) and Morgan Stanley & Co. and W. E.
(jointly). Proceeds—Net proceeds from Ihe
sale of preferred will be used to reimburse the com*:
pany's treasury for construction expenditures. Net pro¬
ceeds from the sale of common will be applied for re¬

Corp.

Hutton & Co.

cumulative convertible preferred stock:
common prior to the redemption
date. The balance
will be added to treasury funds.;
Company has asked the SEC to defer action on its finflnrino nroeram because of present market conditions/
demption of 5%
not

converted

into

Volume 164;

Number 4536

THE COMMERCIAL & FINANCIAL CHRONICLE

International Dress Co.,
Inc., New York
Aug. 28 filed 140,000 shares of
common stock (par
$1).
Underwriter—Otis & Co. Offering—Price

H

*

$10

Proceeds—Selling

stockholders

will

Offering date indefinite.

—Michigan;wilLu$£vHet proceeds from
at 106.75 and interest.

proceeds.

•

.

>,y.
■

•

'

redeem

be purchased

105

and

accrued

dividends

all

$

^

—$10

ex¬

27

filed

100,000 shares

($1

par)

unexchanged

stock.

common

& Co., Detroit. Offering—
To be offered publicly at
$8.25 a share. Proceeds—Pur¬
chase additional
facilities, expansion, etc.

(III.) Citizens, Inc.
(letter of notification) $25,000 of
4% preferred
stock and
$25,000 4% debentures.
Offering—Price $25 a
unit." No
underwriting. For working capital.

definitely postponed.

Oct. 15

| Lake State
for

Co., Detroit.

100,000 shares

&

Offering—Price $2.50 a share.
Proceeds
.for working capital to enable issuer to produce its
prod¬
uct, an" automatic dishwashing machine in

the

commercial

.quantities.

Offering delayed;} due to

market

basis

•
v

•

•.

&

com¬

.share and $5 a preferred
share. Underwriter—
Gearhart & Co., Inc., New York.
Proceeds—To replace
( working capital used to
promote new publication called
Fashion Trades and to provide :
additional
•

working

Macco Corp., Clearwater,

j

-

Calif.

(par 40c).

25

-of

Oct. 15 (letter of

common

175,418

con¬

•
Merchants Factors
Corp., New York (10/28)
'Oct. 21 (letter of
notification) 2,877% shares 7% cumu¬
lative and participating preferred
stock (par $100). Un-"
.some

$100

Co.

share for

by

common

stock

and
•

stock

preferred.

Of the

being registered, company is selling 40,000
shares,
Middle West is selling 57,226 shares and
Halsey, Stuart




be
■

Higginson Corp.,

&

Proceeds—Shares

Chicago.

Webster
are

out¬

Tempora¬

Price—By amend-'

ment. Proceeds—The stock is issued and
outstanding and
is being sold by shareholders. Names
of the selling
stockholders and the number of shares to be sold
be

by each

supplied

$35

a

Co., Inc.

8,500 shares of
share.

•

common

Underwriters—

Proceeds—For redemp¬

National Hie & Mfg.
Co., Anderson, Ind.
7 (letter of
notification) 50,000 shares

stock/
rate

of

1

share
No

June

Underwriters—Newburger

& Hano, and Kobbe, Gearhart
Price, $6.75 a share. Proceeds—Net pro¬
the company from 62,000 shares, estimated at
$350,200, will be applied as follows: About $111,300 for
retirement of outstanding preferred
stock; $41,649 to '
purchase 100% of the stock of two
affiliates, and bal¬
&

for

each

2%

shares

underwriting.

capital.

v

ance

the

other

3,000

The

purposes.

shares

will

to

go

pro¬

selling,

O-Cel-O, Inc., Buffalo, N. Y.

price, at
■

450

shares

par

of

common.

$45

par

Offering

Not underwritten.

par.

Ohio Associated

(•..(.'

Telephone Co.

Sept. 11 filed $3,250,000 of first mortgage bonds, 2%%
series, due 1976; and 35,000 shares (no par) $2 cumulative
preferred bonds to be sold privately. Underwriters
Paine, Webber, Jackson & Curtis and Stone & Webster
Securities, both of New York. Offering—Of the preferred
being registered, 21,000 are being sold by the company
and the remaining 14,000 are
being sold by General
Telephone Corp. Price—By amendment. Proceeds—Net
—

proceeds

to the company will be used to redeem its
$1,770,000 of 3V2% first mortgage bonds, due 1970, at107%%; to repay $1,450,000 in bank loans; to pay Gen¬
eral Telephone Corp. $937,518 in retirement of its
6%
cumulative preferred owned by General and to reim¬
burse its

treasury for funds previously expended.

held.

Old Town Ribbon & Carbon Co. Inc.,
Brooklyn

Sept.

outstanding

Price—By

are

being

sold

by

140,900 shares ($5 par) common. The
being sold by three stockholders. Underwriter

—The First Boston

•

■

>

.

Oxford
11

-

filed

are

ment.

Corp., New York. Price—By amend¬
'

.
.

;(.;:((

Radio Corp.,

Chicago

,

'■ .y •

.

(letter of notification)

60,000 shares ($1^ par)
share.
UnderwriterFloyd D. Cerf Co., Inc., Chicago. For payment of note/
purchase of machine tools and testing equipment and
"for general corporate purposes.

For additional working

and

19

shares

Offering—Price

$5

a

Pacific Gas & Electric Co.

(■;(

and

from

stockholders. Offering temporarily postponed.

Oct.

Newburgh Steel Co., Inc., Detroit
Aug. 2 filed 30,000 shares of 6% cumulative convertible
preferred (par $10), and 30,000 common shares
($1 par).
Underwriters—Names by amendment. Offering—Shares
.issued

to

$197,000 for other corporate

ceeds

Oct.

are

Co., Incr

ceeds

•common.

.

($1 par)
Offering to stockholders for subscription at the

amendment.

Port Arthur, Texas
J'.: V'/
(letter of notification) 1,000 shares each of
$100
par cumulative preferred debentures and
$100 par cumu¬
lative preferred stock; and on behalf
of Lyle Bishop,
President, and his family, 1,000 shares of no par com¬
mon.
Offering—Prices $100 each for the debentures
and preferred and $75 a common share.;
No under writ- (
ing. For purchase of equipment and
working capital.

byr amendment.

National Manufacture and Stores
Corp,, Atlanta

Oct.

Nu-Air-Wa Co.,

Oct. 14

17 (letter of notification)
preferred and 450 shares of $5

bonds,

common

will

bidders in-

Blyth & Co., Inc.; The First Boston
Corp.; Stone*
& Webster Securities
Corp., and Harriman Ripley &
Co., Inc. (jointly). Of the shares
registered, 182,667 are
being sold by Midland Realization
Co.; 54,426 by Mid¬
land Utilities
Co., and 146,923 by Middle West Corp.

Oct.

outstanding $2.50 class A non-cumulative stock.
Postponed indefinitely.

exchange basis to holders of itsf
prior lien, $6 no-par prior lien, 6%
(no par)

(par $1).

Bosworth, Chanute, Loughridge &

June 12 (letter of
notification)
stock.
Offering price,

'

common

Indefinitely

offered

preferred and $6

,

an unspecified number
($2.50 par) com¬
shares. Underwriters—First Boston
Corp., New York,

Lee

will

'

Co.

elude

•

Underwriters—Stone

amendment.

Clement A. Evans &

share

outstanding 7%
•

shares of

tion of

($100 par) cumulative preferred
($10 par) common stock.
Un¬
derwriters—To be determined
by competitive bidding.
Probable bidders include
Blyth & Co., Inc.; Kidder, Peabody & Co.; The First Boston Corp.;
Harris, Hall & Co.
(Inc.); Merrill Lynch, Pierce, Fenner &
Beane, and Ira
Haupt & Co.
Offering—New preferred will be
a

;

,

r

Price

mon

stock and 120,000 shares

on

.

National Aluminate
Corp., Chicago

share. Purpose, working capital.

due 1976; 14,000 shares

v

Sept. 27 filed

but

Michigan Gas & Elec. Co., Ashland, Wis.
June 24 filed $3,500,000 of
series A first
mortgage

,

standing and are being sold by stockholders.
rily postponed.

company may employ
individuals to promote the sale of
the stock.
Price,

per

13 filed 250,000

preferred stock).
Securities Corp., and

shares

present

;

C.). Co., McKeesport, Pa,

to

($1 par) common stock.
'Underwriters—Goldman, - Sachs & Co., and Hemphill,
•Noyes & Co. Price—By amendment. Proceeds—Net
pro¬
ceeds go to 11 shareholders who
are
selling the stock
:
being registered. Offering temporarily
postponed,

Iderwriter—None at

(G.

June 28 filed 28,960 shares of
4%% cumulative preferred
stock ($100 par),
250,000 shares of common stock ($1
par) and warrants for 28,960 common shares (attached

( 11/7)

Service

!

Nugent's National Stores, Inc., New York
21 filed 85,000 shares
($1 (par) common stock.

are

v

May McEwen Kaiser Co., Burlington, N. C.
filed

per share
shares ofof preferred and 20,000 shares

National Alfalfa Dehydrating & Milling
Co.,
Lamar, Colo.

*

Plains, N. Y.

22

20,000

$5.75'per share. Proceeds—Of

postponed.
(

vertible preferred stock
(par $100). Underwriter—East¬
man, Dillon & Co. Price—$100 and dividend.
Proceeds
together with funds from loans, will be applied to con¬
struction cost of new plant and
laboratories at Morris

Aug.

Remaining

will be offered to officers and
key em-

ierred stock at $109 a share
plus dividends.
„

£

notification) 2,900 shares of 4% %

will

Underwriter—Smith, Barney & Co. Price by amendment.
Proceeds—Redemption of outstanding 4%% pre-

Utility

Holding Company Act.w*•

common.

Headed by Stern Brothers & Co., Kan—
Preferred and 20,000 shares of
be offered
publicly.

—-

common

common

June

Lynch, Pierce, Fenner & Beane. Proceeds—The
shares are being sold by Consolidated
Electric and Gas
Co., parent of Maine Public
Service, in compliance with
geographic integration provisions of the Public

Public

offered under competitive bidding. Probable

;

•

par¬

Offering

Murphy

Merrill

Indiana

underwriters. Proceeds—To pay bank
loans;
purchase of additional equipment and facilities.

Co.,

Kansas
v• (,((v

(and to increase working capital.

Corp.; Kidder, Peabody & Co.,* and Blyth &
Co., Inc.
(jointly); Harriman Ripley & Co; Coffin & Burr and

Proceeds—To

be sold to

Brewing

being sold by the company. Proceeds—
Proceeds together with other
funds, will be used to pay
off $181,909 balance of note held
by Schroder Trust Co.,
New York; to finance a proposed
expansion program

filed

Maltine Co., New York

common ~

and

Preque Isle, Me.
150,000-shares ($10 par) capital stock.
Underwriters—To be determined
through competitive
bidding. \ Probable bidders include The First Boston
June

share.

a

Indefinitely postponed.

.

fered^td^public. ^^OO share

Maine Public-Service
Co.,

•

Price—$16

Barney

( ployees at $4.75 each. Price—Preferred $25

company.
4

City.

sas

shares

—

/

Smith

ticipating preferred and 40,000 shares ($1 par)

supplied by amendment
Offering—Stock will be offered
publicly in the U/S. at
.40c a share (Canadian money).
Proceeds—Proceeds,
.estimated, at- $75,000, will be used in
operation of the
,

and

Underwriters

%
■

.

Co.

•'/%.(/

Mines, LtdL, Toronto
stock

indefinitely.

Aug. 28 filed maximum of
384,016 shares of
stock. Underwriters
by amendment as shares

■•//v;/(•/'/

Sept; 25,-filed 41,327 shares ($25 par) 5% cumul.

.

June 7 filed 250,000 shares of
capital
Underwriters
Names to be

////;/.'•/

temporarily postponed.

-•

Northern

Mountain States Power Co.

Muehlebach
(George)
*■(/ City, Mo//(;r

Sept. '25 filed 100,000 shares <$1
par) ? capital stock.
Underwriter — Dean Witter
&.Co., Los Angeles. PriceBy amendment. Proceeds :^ To
pay off outstanding
;bank loans.
">;r
Mada YelIowknife Gold

V*.'

'•

Sale postponed

Northwest Airlines, Inc. (10/29)
Co., Inc.; Kuhn, Loeb
Sept. 19 filed 271,935 shares ($10
par) common. Under& Co. (jointly); Harriman,
Ripley & Co.; The First Boston Corp." Offering—Shares, ( writer — Auchincloss, Parker & Redpath, Washington,
D.
C.;
The
First
Boston
are
owned by Standard Gas & Electric Co. and con¬
Corp., and Hornblower & Weeks,
New York. Offering—Shares are
stitute 56.39% of the
offered for subscription
company's outstanding common.
to common stockholders of
Sale Postponed—Standard Gas & Electric
record Oct. 15 in ratio of one
Co. asked for
additional share for each two shares
bids ;for the; purchase of the stock on
held, at $18.50 per
Sept. 4, but the
share. Rights expire Oct. 28.
sale has; been
Unsubscribed shares will

(letter of notification) 150,000 shares of
(100
57,000 shares ($5 par) 6% cumulative

mon

,

of present holders.

June 6 filed 140,614 shares of common stock
(no par).
Underwritersr-rTo be determined by competitive
bidding.
Probable bidders include Blyth &

.

common and

>

»'■■■■'''■■■'TC

12.

Underwriter—Cruttenden & Co. Offering—All shares
are issued and
outstanding and being sold for the account

■

August 19 (letter of notification) 14,000 shares ($10 par)
common stock,
offering price $20 a share. Underwriter—
Clany M. Seay, Jackson, Miss, will undertake to obtain
signatures authorizing subscriptions for the stock to
create capital and (surplus for
operation of business.
Company is to be organized in Mississippi.
; t >
I
"

(Leader Enterprises, Inc., New York ( 3.0/28-31)

/capital.

The underwriters

Mississippi Fire, Casualty & Surety Corp.

•

working capital,

a

withdrawn Aug.

selling stockholders.

Langevin, President of the Company.
Offering
-Price $5,125 a unit
consisting of one share of Class A
stock and one-half share of
common.
3,000 units are
reserved for sale to certain
officers and employees of
the company, s
Underwriter—Hill, Thompson & Co., Inc.,
New Yprk.
Proceeds—For payment of indebtedness and
to increase

cents

share.

-

,

Northern Engraving &
Mfg. Co., La Crosse, Wis.
Aug. 29 filed 70,000 shares ($2
par) common stock.

wdrk» Business—Mining.

of Carl C.

preferred, Series A. Price—10

a

were

1,000 shares sold for

every

'■

,

stocks,

con¬

par) com¬
mon on behalf of the
company and 19,000 shares of ($4^
.par) Class A and 9,500 shares of the common on
behalf'

convertible

shares for

a

and for the issuance of
$22,500,000 of bonds and 2,300,000
of new common
shares. The SEC has extended to Nov.
30 time within
which refinancing
may be carried out.
Bids for the
purchase of the bonds and the common
stock which were to be
received by the company Aug. 13

a discount on the 1,000,000 shares of 15 cents
/each. Proceeds—For exploration and mine
development

Oct. 3

Sept. 26

Ltd., Toronto,

(will receive

,,

Langevin Co. Inc., New York

par>

of 250

-the company. Price—60 cents

conditions.

(letter of notification) 39,000 shares
($4 par)
vertible Class A stock and 19,500 shares (10c

Mines

1,250,000 shares ($1 par) common. Underwriter—R. J. Hale, East
Aurora, N. Y. Offering—Of the
total company is
selling $1,000,000 shares and the re¬
maining 250,000 shares are being sold for the account of
the principal
underwriter, brokers and dealers, which
shares they will receive as additional
compensation on

($1 par)

Underwriter—Keane

Gold

Oct. 21 filed

Products, Inc., Jackson, Mich.

benefit of issuer.

Midas Yellowknife
Canada

•

Aug. 27 (letter of
notification)

; common

•

•

President

Corp., White,
Weld&Co.-Kidder, Peabody & Co. (jointly).
Offering—Bonds and common stock are
being offered in
connection with a
compromise recapitalization plan
approved by the SEC, on June
24, 1946, which among
other things
provides for the elimination of all out¬
standing debentures and preferred and common

Offering in¬

Kankakee

Friedman,

New England Gas and
Electric Association
July 11 filed $22,500,000 20-year collateral trust
sinkingfund Series A
bonds, and a maximum of 1,568,980 com¬
mon
shares ($5 par);
Underwriters—By amendment.
Bidders may include
Halsey, Stuart & Co. Inc. (bonds
only), Bear, Stearns & Co. (stock
only), First Boston

Underwriters—Cray, McFawn
•

Samuel

each selling 15,000 *
preferred and 15,000 shares of common. Price
share for the preferred and
$6 a share for the

common.

Michigan Steel Casting Co., Detroit

.

-June

by

and

Secretary-Treasurer, respectively,
shares of

shares of prior lien and preferred stocks.

Chicago Title & Trust Co., a
stockholder.-No under¬
writing. For expansion of
building and plant facilities.
•

at

Cohen

and

change wTill be used to redeem $375,000 3%% serial de¬
bentures, due 1951, at 101.2 and interest. It also will

Subscription rights terminate
shares will

preferred not issued in

new

2127

Maurice

Net proceeds from sale of com¬

and from shares of

mon

;'

"Kane County Title
Co., Geneva, III.
Sept. 25 (letter of
notification) 4,000 shares of common.
Offering—To be offered to
stockholders of record Oct. 4
for
subscription at $30 a share at the rate of one share

•for each two shares
held;
Nov. 3. Any unsubscribed

Proceeds

bonds to redeem

$3,500,000 3%% series A first mortgage bonds, due 1972,

share.

per

receive

& Co. Inc., New York, is
selling 22,774 shares.

4

Series

P

$25,000,000 2%% 1st and ref. mtge. bonds,;
due June 1, 1981.
Underwriters—Names by

amendment.

Corp.,

(10/28)

filed

Blyth

Proceeds

—

Probable bidders include The First Boston

&
To

Co.,

Inc.; Halsey Stuart &
part of construction

finance

(Continued

on

nage

2128)

Co.,

Inc.

program.

Plastic Molded Arts, Inc., New York (11/25)
^t
(Continued from page 2127) '{
•IbMs Invited—Company will receive bids for the purAug. 27 filed 60,000 shares Of preferred stock ($10 par)
and 75,000 shares of common (par 50c).
"chase of the bonds at its office, 245 Market St., San
Underwriter—
2 Herrick, Waddell & Co., Inc.
Offering—Company v is
Francisco, Calif, up to JO a.m. PST on Oct. 28.
offering the preferred stock to the public, while the
common is being sold by certain stockholders.
Prices—
Pacific Power & Light Co., Portland, Ore.
Preferred, $10 a share; common, $4 a share. Proceeds— '
July 10 filed 100,000 shares ($100 par) preferred stock.
Proceeds from sale of preferred will be used to purchase
Underwriters—By amendment. Probable bidders' include
equipment, pay bank loans, and other corporate purposes,
Blyth & Co., Inc., White, Weld & Co. and Smith, Barney &
Co. (jointly); The First Boston Corp., W. C. Langley & Co.;
Portis Style Industries, Inc., Chicago
Harnman Ripley & Co.
Offering—Company proposes to
Sept. 27 filed 110,000 shares ($1 par) common. Under¬
issue the 100,000 shares of' new preferred fort the purwriters—Brailsford & Co., and Shillinglaw, Bolger &
pose of refinancing at a lower dividend rate the .67,009
Co., Chicago. Offering—Of the total 100,000 shares will
"Outstanding preferred shares of Pacific and the 47,806
be offered to the public and 10,000 to employees of the
preferred shares of Northern Electric Co., in connection
company. Price—Price to public $6.50 a share. Price to
with the proposed merger of Northwestern into Pacific.
employees $5,525 a share. Proceeds—Shares are being
In connection with the merger, the outstanding preferred
sold by four stockholders of the company who will re¬
stocks of Pacific and Northwestern will be exchanged
ceive proceeds. The registration showed that the com- '
4share for share, with cash adjustments, for the new prepany changed its authorized capital from^4,000 shares
jtefred stock of Pacific, the surviving corporation, Offer¬
($100' par) common to 400,000 shares ($f par). Each
ring price—To be supplied by amendment.
shares of $100 par common was changed into 100 shares
of $1 par common, which exchange was consummated
Pal Blade Co., Inc., New York

shares of common stock only, which will be
stockholders of record Sept,

issue 454,465

■

,

June 28, 1946 filed 227,500 shares ($1 par)
Underwriters — F. Eberstadt & Co., Inc.

Sept. 23.

capital stock.

'

Offering —
225,000 shares are outstanding and are being sold by 10
stockholders, and 2,500 shares are bfcipg sold by A. 1».
Marlman to all salaried employees, indefinitely post¬
poned.
ftfltlg IS 1|?M
'

■,

''

'

'

Palmetto

:

Fibre Corp.,

•

'

Portland

(Ore.)

Transit Co.

(as amended) 60,000 shares of 5% cumu¬
lative convertible preferred stock (par $25) and 300,000
shares of common stock, of which 80,000 shares will be
sold to Pacific Associates Inc.. at $6 per share, ^so an
undertermined number of common shares for conversion ;
June 14 filed

•

Washington, D. C.

preferred. Underwriters — First, California, Co.;
Scherck; Richter & Co.; Weeden & Co.; Allen & Co., and
Rauscher, Pierce & Co. Offering price,'preferred $26.50

of

August 16 filed 4,000,000 shares

(100 par) preference
stock. Underwriting—Tellier & Co., New York. Price
50 cents a share. Proceeds—The company will, use esti¬
mated net proceeds of $1,473,000 for purchase of a new
factory near Punta Gorda, Florida, at a cost of about
: $951,928. It will* set
aside $150,000 for research and de¬
velopment purposes arid the balance Will be used a9
operating capital.

share; common, $7.50 per share.

per

writer—Underwriting arrangements will be supplied by
^amendment, but it is contemplated that Van Alstyne,
"^Toel & Co.,v New York, may be one of the underwriters.
Offering—Company is making an exchange offer to

,

stockholders

of

Textileather Corp., Toledo, O.; The
Passaic, N. J.; and Astra Realty Co., New
York, for the purpose of acquiring the controlling in¬
terests of the companies. Pantasote Plastics will offer
; three shares of its common, plus"% of a share of pre¬
ferred, for each share of Textileather common. It will
offer

two

shares

of

its

each shares of Astra

for

common

shares of

common.

nated debentures.
and

.

of

preferred

and

250,000

shares

of

of (30,000 shares

of which

common,

company will be applied to make loans to Textileather
-and Pantasote for various corporate purposes.
Pari-Mutuel Totalizer

Corp., New York

(11/6)

75,000 shares of common
(10 par).
Offering price—$2.75 a share.
Underwriting
r^Howel, Porter & McGiffin, Inc., New York. For man¬
ufacture of pari-mutuel totalizing machines and for
other corporate purposes.
Peninsular Oil

Corp., Ltd., Montreal, Canada

26,19^6 filed 20.0,000 shares ($1 par) common stock,
tJnderwrite^s—Blyth. & Co., Inc. Offering—Company*
will sell 130,000 shares to the public through the under¬
writers and 70,000 shares to Bethleham Steel Co. Price—^
At a fixed price based on market (approximately, $4,"533,750). Proceeds—Receive short term bank loan for
building, machinery, and working capital.
Rowe Corp.,

sharei,

purchase
I

J.ui"

.

machinery

other

and

equipment.

•; People's Service Cof-p! Philadelphia (11/1)
Oct.

18

(letter of notification) 50,000 shares ($10 par)
Price, $10 a share. No underwriting. Manu¬
facture letail wearing apparel.
*
common.

Pharis Tire & Rubber
;

vertible

share.

Proceeds—For payment of loans and to

BFC and to complete construction of

ness—Manufacture
;

materials,

.

^

of

tires

and

common

pense

tire

and

repair

-J/,'.

Sept. 23

(letter of notification)

common.

Offering—To

be

underwriter, White, Weld & Co. Offering—Terms Of
offering and price by amendment. Proceeds—Net pro- •
ceeds will be used to redeem company's 5% cumulative
prior preferred stocks and an unspecified amount will be
advanced to Taggart Corp., a subsidiary, for redemption

for

Republic Aviation Corp., Farmingdale, N. Y.*

($50 par) convertible pre¬
ferred stock. Underwriters—Hayden, Stone & Co., and
Kidder, Peabody & Co.
Price—By amendment. Pro¬
ceeds—Proceeds, together with bank loans, will be used
Oct.

9

filed 100,000 shares

increase working

to

necessary

Republic Foil & Metal Mills, Inc., Danbury,
Conn.
•■■■'
V

1966; 2,500
and 15,000
shares of common stock (no par);
Underwriting — No
underwriting.
Offering—The securities being registered

Sept.

6 filed $500,000

shares of

preferred and

be sold at

of

care

options which it

ment for past

a

and

share.

before

No

shares to take

give
run

to manage¬

over

a

a

the

share within 18 months and

expiration

underwriting.

business.




For

of

the

the
will

not registered with the SEC.

common

be

added

earlier

Alabama

option,

exploitation of

at
its

Co., of

shares.
proceeds will be used to restore working

The balance of

to

share, and

a

Proceeds

general corporate funds.,

—

Proceeds

,

l

'

f

date indefinite.
r'~

*

%

'

,

'7

'

t

,

{

1

Sardik Food Products Corp.,
.

w

/
.

1

1

^

;

t

1

New York

May 29 filed 175,000 shares of capital stock (no, par).
Underwriter^t-George F. Breen, New York. Offering—
Of the total being offered company is selling 155,000
shares of which 9,524 shares are reserved for possible
sale to F. G. and P. F. Searle on or before April 30,1947,v
at

remaining 20,000 shares are
stockholders. Price to the public $12
Proceeds—Working capital, purchase equip¬
plant, etc. Registration may be withdrawn. ,■

$10.50 per share and the

being sold by two

share.

per

ment and

Inc., Atlanta, Ga.

Scripto,

Aug. 7 filed 25,000
ble

shares ($10 par) 5%

preferred stock and 244,000 shares

cumul. converti¬
($1 par) common fk

Underwriters—Clement A. Evans & Co., Inc., At¬
lanta.
Price of preferred $10.75 per share; price,of com-1
mon, $5,625 per share.
Proceeds—Company is selling
the 25,000 shares of preferred to the underwriters at
$10 a share and stockholders are selling 244,000 shares
:
to the underwriters at $5 a share. - The registration
stated that 24,000 of the 244,000 shares of cOmmpn are
stock.

period of four days following the;
registration for sale to employees,
directors at $5 a share,; The company also

being reserved for a
effective date of the
officers and

is selling 200,000
of the company
use

its proceeds

at

for

^

^

Seaboard Finance Co.,

,

Washington, D. C.

240,000 shares of common stock (par $1).
Underwriters—Van Alstyne, Noel & Co., and Johnston,
Aug. 29 filed

Lemon &

Co.

Offering—Certain stockholders are sell¬

.

issued and outstanding shares. Company is
100,000 shares. Price by amendment. Proceeds
company's 100,000 shares proceeds will be used

ing 140,000

Republic Pictures Corp., New York

Registration
shares of $1

and 277,231

originally filed

July

31

covered

.

-

184,821

cumulative convertible preferred ($10 par)

shares (50c par) common stock, with Sterling,

Grace & Co.

as

underwriters.

Company has decided to

offering
—From

to reduce

and

for

outstanding bank loans and

other

nnctnnnpfl

;

executives
50 cents a warrant.
Company will :
general corporate purposes. Offering

stock purchase warrants to

date indefinite.

secur¬

Price—The notes

100, the preferred at $100

at 10 cents a share.

The pur¬

public.

of the recission offer is because the

period

six months and provide that the stock

be purchased at $10

thereafter

to

services, the options to

*>f two years and

$15

proposes

previously sold to

with interest and reoffer them to the

were

wishes to have available 6,000

common

private subscribers for an aggregate price of $464,384.
offering to repurchase these securities

will

company

notes, due

of 3Vz %

preferred stock (par $100)

3lk%

ities

one

deeined

Such funds are

intends to acquire and its large backlog of peace-

share for-each

the basis of

capital.

in view of the additional facilities that com¬

share held. Price not disclosed although it is stated that

on

preferred. Both securities are

cumulative
at

proceeds as advances to
Pulp and Paper
whose common stock the company owns 25,000

:

S

stock (par $2.50).
Underwriter—Tucker; Anthony & Co., New York/,. Pric^ j;
—By amendment. Proceeds—The shares are being sold
by stockholders who will receive proceeds. ' Business—
Production of plastic injection molding machines.

pose

present stockholders

$2.50

$52.50 a share plus accrued dividends.
In addition, the company will apply $2,675,000 of the

Oct. 11 filed 120,300 shares of common

subscription to

may

its

redeemable

Corp.! Worcester, Mass.

The company is

14,164 shares of $5 par

offered

Co., flew York

Sept. 27 filed 150,000 shares ($100 par) first preferred.
Underwriter—To be supplied by amendment. Probable

holders; Offering

Reed-Prentice

include notes,

Phillips & Benjamin Co., Waterbury, Conn.

of printing directories.

St. Regis Paper

Midland Trust Co., New York.

•

biulding. Busi¬

a

tubes

' ^rA

t4

by amendment.
Proceeds—Nat E. Heit, President and
director, and Harry Preston, board Chairman, Secretary
and Treasurer, will receive net proceeds as selling stocky

a

replace

«"

^i

San-Nap-Pak Mfg. Co. Inc., New York

con¬

working capital expended in purchase of building from

!rx

Proceeds—Estimated, net proceeds of
$476,362jwill bq used to pay off a loan from the Marine

preferred. Underwriter—Van Alstyne, Noel &

£o. and G. L. Ohrstrom & Co., New York. Price—$20

'

(

Directories, Inc., Bowling Green,

capital.

lime business.

Sept. 27 filed 100,000 shares ($20 par) cumulative

Offering

Price, by amendment.

1,000 shares of no par com-*
Offering price—$100 a preferred share and $1 a
share.
No underwriting.
To defray initial ex-»

mon.

By,; amendment.

pany

Co., Newark, O.

*

cumulative preferred and

Co., Bridgeport, Conn.

(D. M.)

|

Ohio
(letter of notification) 200 shares of $100 par

16

Oct.

\

1 ^

Rural

•

Business—Graphite bronze

Under¬

Proceeds—Net proceeds will be used to

drilling

New York

July 29 filed 100,000 shares common stock. Underwriters
—Hayden, Stone & Co. Offering—The selling stockholders, who include Robert Z. Greene, President, are offer¬
ing the shares to the public through the underwriters,

July 24 filed 80,000 shares ($1 par) common stock. Un¬
derwriters—Dunne & Co., New York.
Offering—Price

writer—Sabistoi\ Hughes, Ltd., Toronto, Canada. Price—
m cents a

No underwriting.
to the selling stockholders.

Manufacturing Co.

Rheem

-

(par $1).

common

of $22.50 to $25 a share.

Sept. 27 filed 100,000 shares (250 par) .common. Under¬
writer—Van Alstyne, Noel & Co., New York. Price—

Oct. 17 (letter'of notification)

Sept; 3 filed 600,000 shares of

excess

date indefinite

15 filed 100,000 shares ($1 par) common. Underwriter—White, Noble & Co. and Smith, Hague St Co.,
Detroit. Price—$3.50 a share. Proceeds—Net proceeds

Read

Eari

and

June

Oct.

go

received under the exchange offer) are to be purchased
from selling stockholders. Proceeds — Proceeds to the

-

in

and the balance (which are part of the shares to be

pany

•

not

Proceeds to go

Price by amendment.

to selling stockholders.
bushings and other products.

12.853 shares of preferred and 50,000 shares of common
to be purchased by the underwriters from the
com¬

are

Fruhman

Leo

Morchower, all officers of the company. Offering—Price

of

It is proposed that under¬

offer publicly a maximum

Hebert,

C.

Ernest

Fruhman,

Inc., Dallas, Texas

notification) 4,000 shares ($20 par)
cumulative preferred on behalf of Sidney
of

(letter

15

convertible

Graphite Products Corp., Chicago

Randall

"

writers will

No

$1,000.
capital.

for

common

Rhealee Stores,

•

Oct.

notification) $175,000 of 5% subordi¬
Offering—Price in units of $100, $500
underwriting.
For general working

Oct. 10 (letter of

of

share

one

its

proceeds to the Company will be added to working
capital.
—Net

Precision Scientific Co., Chicago

•

Pantasote Co.,

Pantasote- common," and -12

300,000 -by
stockholders.
Underwriters—Names by
amendment; Offering—Terms : by amendment. Proceeds

Pro¬
will be used to pay
3% notes held by National Bank of Detroit, $75,000 to
reimburse treasury for sums spent in acquisition of the
electrical division plant of the company, $30,000 for con¬
struction of space for executive offices in the economy
baler plant, and. the balance will be deposited with gen¬
eral funds. Offering temporarily postponed.

Sept. 27 filed 60,000 shares ($25 par) 4^% cumulative
preferred and 1,352,677 shares ($1 par) common. Under!

•

May 4 filed 400,000 shares of common stock (no par),
100,000 shares are being sold by company and

ceeds—Of the net proceeds, $250,000

Inc., Passaic, N. J.

s

,

of which

cumulative convertible
Underwriter—Van Alstyne,

preferred stock ($10 par).

will

Reynolds Pen Co., Chicago

July 5 filed. 75,000 shares 5%
Noel & Co. and associates.

Pantasote Plastics

underwritten,

not be

for their own account.

Precision Parts Co. of Ann Arbor, Mich.

;

offered for subscription to

5 to the extent of one share for each five held; Issue

commercial paper
temporarily

corporate reasons. Offering
.

•; a

'

■

....

.

Volume 164

Number 4536

THE COMMERCIAL &
FINANCIAL

CHRONICLE
2129

V

\

Sharot-May Co., Inc., New York

(10/28)

"/

.

.

Oct. 15

(letter of notificatibn) 90,000 shares of common
(par 25c). Underwriter—Hautz & Engel. Price—$3
share. Proceeds—To pay outstanding debt 4o its

stock
per

,

balance for expansion.

v

Super-X Corporation of America, New York
Oct. 16 (letter of
notification) 100,000 shares of $1 par
; common.
Offering price—$3 a share.
No

&For organization

,

factors,

/•

v'/.

/

*

Manufacturing Corp.

?

'

'r-

«•

'•*1

>

>

&

K* fV;*.

;,.

underwriting.•>'■

of business..

-<*■

Swern
Solar

preference stock at $110 a share
and accrued
dividends
and 1,386 shares of
second preference
stock at $100 a
share and accrued
dividends.
The
balance will be
added to general
corporate funds;
:
v.

'

K/'.-y

1

,

Co., Trenton, N.

'West Coast

Airlines, Inc., Seattle, Wash.

Aug. 28 filed 195,000 shares common stock
(par $1),
Sept. 2 filed 245,000 shares
80,000 shares of $1.12% cumulative con($1 par) common. Under¬
Underwriter—C. K. Pistell & Co., Inc.
writer
Offering—Com¬
preferred stock, series A (par $20).
Auchincloss, Parker & Redpath,
Under-; pany is selling 45,000 shares, and
Washington,
eight selling stock- r D. C.
Price—$7
a
share.
% writers—Van Alstyne, Noel & Co. Price by amendment.
Proceeds—Will be used for
holders are disposing of the
pay¬
remaining 150,000 shares,
ment; of various expenses,
Proceed*—Net proceeds will be applied for the
repayment of bank loans,
redemp- • price—$10.50 a share.* Proceeds—From
45,000 shares- .purchase of equipment and for
tion of outstanding series A convertible
sold by
preferred stock
working capital.
June 14 filed

iVertiMe

which

| ceeds

—

are

also

not converted into common stock.
will be used for additional

company .wilLbe applied^to- working
Capital
initially. ^•;■■

Such pro-

•

July 12 (letter of notification) 44,300 shares of ($5
par)
cumulative convertible preferred stock and
44,300 shares
(par 50c). Offering—Price $6 a share for
preferred and 75 cents a share for common.
Underwriter

& Co.,

—Amos Treat & Co.
Proceeds—For payment of notes,
mortgages and for general corporate purposes.
Offering
temporarily postponed.

unsubscribed shares will be sold to underwriters at
same
price. Price — Public offering price of unsubscribed
chares by amendment. Proceeds—Ftr
expansion of plant
facilities and for additional
working

Tele-Tone Radio Corp., New York *v
Aug. 1 filed 210,000 shares of common stock
(par 50
cents).
Underwriters—Hirsch & Co.
Offering—Com¬
pany is offering 75,000 of the shares
registered. Eleven
stockholders are selling
135,000 issued and outstanding
shares, for their own account.
Offering—Price

vertible preferred.

Underwriter—Ames, Emerich

con¬

Inc., Chicago. Offering—To be offered to common stock¬
holders-for subscription at $25 a share in the ratio of
one preferred share for
each five shares of common held

capital.

postponed.

;

Offering

$6.75

Springfield
Oct.

(Mo.)

filed 8,817 shares ($100
par) series
cumulative preferred. -Underwriters—H» M;

E

4%%

Thew Shovel Co.,
Lorain,
Oct. 18' (letter of

stock one share of new preferred
plus 50c
in cash and for each share of series D
stock one share
of new preferred
plus $1 in cash and a $1.25 dividend
payable Jan. 1, 1947. Shares not issued in

common

exchange will
underwriters; for public offering *at $104. a;
Proceeds—Will be used to retire the series Q,
stock at $103 plus dividends and series D stock
at $105
plus dividends.
sold to

$35 a share.
York,

Standard Brands, Inc., New York (10/30) »
Sept. 6 filed 220,000 Shares $3.50 (no par) cumulative
preferred. Underwriters—Dillon, Read & Co. Inc. and
Blyth & Co. Offering—First in exchange for 200,000 out¬

—

the

capital of the company, and
estimated expenses, it will

deducting $5,000
$995,000 as surplus.

after

classify1

United States Shoe
Corp., Cincinnati, Ohio
Aug. 25 filed 24,000 shares ($4 par) common. Under¬
writer—Ben j. D. Bartlett & Co., Cincinnati.
Offering—
Shares will be offered to the
public • by seven stock-:
holders, who will receive the entire net proceeds.
Price by amendment,
Offering postponed indefinitely.

ferred at the rate of 1 l/10th shares of new
preferred for
share of old preferred.
Price — By amendment.
^Proceeds
Company will use net proceeds from any
shares sold to the public to redeem all
each

unexchanged

Mich.

Mines Ltd., J Ontario'

July 18 (letter of notification) 5,500 shares of 4%% first
preferred stock series B ($50 par). Offering
i>rice, $50
a
share.; Underwriter—First of Michigan Corp., Detroit,

Proceeds—For enlargements and
improvements of power
plant facilities. Offering date indeterminable at
present.

general

corporate purposes. Offering date indefinite;
Stereo Pictures Corp., New York

Yalsetz Lumber Co., Portland, Ore.
Oct. 4 filed 14,000 shares
($100 par 2% cumulative Class
A preferred and 2,000 shares
($100 par) 2% cumulative
Class B preferred. Underwriters
None. Offering •—

Oct. 14 (leter of
notification) 2,985 units of stock, each
unit consisting of one share of

$6 cumulative (no par)

preferred

stock

and

one

Stocks will be offered for sale to customers
and former

•share of

common stock (par 50c).
Underwriter—Ayres
Barley & Associates, Inc., (165 Broadway, Suite 1717)

customers of the Herbert A* Templeton Lurnber Co.
with
whom the registrant. has an exclusive sales
contract

$100 per unit. Proceeds—for, working
capital, machinery, equipment, etc.
—

be sold to Templeton.

Price—$100

a

shares

holders

are

chares.S

Price by amendment.

and

Of the total, 200,000

underwriting

reimburse treasury for funds spent on June 26 to retire

Offering tem¬

Underwriter—Goldman, Sachs &
selling stockholders
the company

ferred and

Co.

stock

(par

$5).

; stock.

Offering—Eight

are

stockholders.

~

Price by amendment

"building construction

improvement fund." Offering date indefinite.
Street & Smith

writers—Glore, Forgan & Co.
represents

a




$3.45

share,

a

wick

selling

as

Purpose—To acquire all of the equity in War-

Gardens, Inc., which

owns

real1

certain improved
.

..
..

stock

waukee.
Under¬

Offering—The

offering

,

'

k

%\

.

1

|

,

K'

«

>

1 \t"x

1

t^

i

the

..

*

'

i

Offering—Company

is

offering 75,000 shares of preferred; the
50,000 sharee
common are
outstanding and being sold by four in¬

of

dividuals for their

own

account.

Price by amendment.

Proceeds—Proceeds

from the sale of the
preferred stock
will be used to
provide funds for a wholly-owned sub¬
sidiary, retire loans from banks and from White's
Em¬

ployees Profit Sharing Trust, and for
additional working
capital. Offering date indefinite.
:
^
.

Winters & Crampton
Corp., Grandville, Mich* Aug. 28 filed 119,337 shares of common stock
(par $1).
Underwriter—E. H. Rollins &
Sons, Inc.
Offering—r
Company is initially offering the stock to its common

holders at the rate of

share for each two
shares held.
Proceeds—To retire a conditional
obligation held by the Reconstruction
pay off bank loans of
$600,000, and foi
one

Price by amendment.
sales

contract

Corp.,

working capital.

t

v

^

.

Wisconsin Power & Light
Co., Madison, Wis.
May 21 filed 550,000 shares ($10
par) common stock to
be
sold
at
competitive bidding.
Underwriters—By

amendment.

Probable

bidders

include

Merrill

Lynch

Pierce, Fenner & Beane; White, Weld & Co.;, Glore
Forgan & Co., and Harriman Ripley & Co.
(jointly*;
The Wisconsin Co., and
Dillon, Read & Co. Proceeds-—
Part of the shares

are to

be sold by Middle West

top holding
erence

of

Corp.

company of the System, and part
stockholders of North West Utilities

by pref¬
Co., parent

Wisconsin, who elect to sell

common

which

will

be

such shares of Wisconsin
to them upon the

distributed

dissolution o| North West Utilities

Co.

^

Yolande Corp., New York

*

will

amendment.

and
be

by

shareholders.

supplied

by

The

amendment.

Proceeds—Company will

use

Courts & Co., Atlanta; Irving Rice &
Co., St. Paul, and
Maxwell, Marshall & Co., Los Angeles and New York.
Price—$10 a share.
Proceeds—Estimated net proceeds
of $400,000, together with $87,125 from the sale
of 10,250

additional

purchase

shares to J. William

common

President, at $8.50
of

a

10,995

total price of

$220,522 from Mrs. Gertrude

of

L.

Herbert

Yolande Corp.

Miskend,

President

Korsh, sister

Treasurer; of

used to redeem at $110 a

company's 625 shares of $100
ferred

S.

and

Of the remaining proceeds, $68,750, plus

dividends, will be
stock.' The

additional working
com¬

-respective
Price

Anchell, Vice4
share, will be used partly for the
shares of capital" stock of Island

balance

par

will

share the

6% cumulative

be

used

to

,pre¬

reimburse

the company's treasury for
previous expenditure and for

.

(par $1). Underwriting—Loewi & Co., Mil¬
Offering—The shares are being sold both by

company

amounts

f

White's Auto
Stores, Inc.
Aug. 29 filed 75,000 shares $1 cumulative
convertible.
preferred stock ($20 par) and
50,000 shares common
stock (par $1).'
Underwriters—First Colony Corp. and
Childs, Jeffries & Thorndike, Inc.

Needlework,. Inc., of Puerto Rico, out of a total of 11,000
outstanding shares. The shares will be purchased for aJ

Underwriter—

-

; Webster Electric Co., Racine, Wis. »
Sept. 3 filed an unspecified number of shares of

-

part of the holdings of the present stock¬

holders. Indefinitely postponed.

share.

a

:

and

stock.

common

at $7.50

notification) 39,948.shares of capital

estate at Red Bank, N. J.

Publications, Inc.

July 17 filed 197,500 shares of

share, and 3,500 shares

certain employees

Offering price,

agent.

mon
.

Offering—

through the

Ray H. Stillman, Eatontown, N. J., will act
-

Proceeds—Net proceeds from the sale of the
company's
shares will be added to its

a

sold

Warwick Apartments, Inc., Red Bank, N> J*
Oct; 8,(letter of

disposing of 62,000 shares, and
will offer 40,759 shares initially to its pre¬

common

shares will be

pt $8.50

Underwriters—

& Blosse?.

Offering postponed indefinitely.

Stlx, Baer & Fuller Co., St.Louis
common

group

will be offered to

porarily postponed.

Aug. 28 filed 102,759 shares

stock which are to be sold

Sherck, Richter & Co., and Straus

the sale of 51,000 shares by the
company will be used to

par.

4

17 filed 50,000 shares ($1 par) common stocks
Underwriters—Headed by E. F. Gillespie &
Co., and in¬
cludes Childs, Jeffries &
Thorndike, Inc., New York;

for the account of certain stockholders.

disposing of 140,000 issued and outstanding
Proceeds—Proceeds from

5,000 shares of preferred stock, $100

—

by amendment. Price
by amendment. Proceeds—Will be
used
to
redeem.
$625,000 4% bonds and $638,600 first
and second deben¬
tures; balance for working capital.

Sept.

Velvet Freeze, Inc. ;
July 24.filed 203,500 shares of

selling stock¬

'v *'

*

Oct. 7 filed
80,000 shares ($5 par) 50c cumulative
con+~y
vertible preferred stock and
100,000 shares ($1 par) >
common. Underwriter
Names

share for each class

of stock.

Stern A Stern Textiles, Inc., New York
Aug. 29 filed 101^80 shares of common stock ($1 par),
Un#>ew>Bmf
Pari M. Loeb, Rhoades & Co. Offering-

51,000

common.

-whereby all the lumber produced by the registrant will

.

Company is bffering

par)

Wheeler, Osgood Co., Tacoma, Wash.

'

Finance

Upper Michigan Power & Light Co.,
Escanaba,

March 27 filed 500,000 shares of
capital stock (par $1).
Underwriters—Otis & Co. Offering—Price to public by
amendment.
Proceeds—Net proceeds will be added to
the general funds and will be available
for

Tfew York. Price

constitute

(.$12.50

porarily postponed.

City Bank of Cleveland, executors.
Price,

proceeds

will

standing shares of $4.50 cumulative preferred. In the
offering price of the new preferred is
$100 a share, holders of the old preferred will be grant¬
ed the opportunity to
exchange their stock for new pre¬

non-convertible,

behalf of the

shares

.

•

par)'

—

event the public

mon-voting,

($5

United Benefit Fire Insurance
Co., Omaha, Neb.
Oct. 7 filed 50,000 shares
($10 par) common. Underwriting — None. Price
$30 a share. Proceeds
The
company stated that $500,000 of the $1,495,000

,

1,647,037

^

Underwriter-^Smith, Barney & Co,, New
proceeds go to the selling stockholder.

•

p Steep Rock Iron

on

The National

filed

each share of
common or preferred
held. Unsubscribed
shares will be sold to
underwriters. Price—By amendment,: Proceeds—To
reduce bank loans.
Offering tern--

estate of Frank A.
Smythe,
deceased; Chauncey B.' Smythe, - Alan - W. Smythe and

share*

shares of old preferred at $110 a share.

Aug.: 14

Ohio

notification) 2,000 shares

,,

Underwriter—Kuhn, Loeb & Co. Offering—Stock will be
offered for
subscription to holders of
outstanding pre¬
ferred stock and common
stock in ratio of
Vs share few

•

•

of series C

•

,

Westinghouse Electric Corp.

a

by them. They are also selling to Hallgarten & Co., for $1,500, plusr $360 as a
contribution
toward the expenses of
issuance, options to purchase an
additional 18,000 shares of the issued
and. outstanding
common.
Proceeds—Net proceeds for the sale of com¬
pany's 75,000 shares will be used for
increasing working
capital, with a view to entering the Frequency Modula¬
tion and Television fields at an
advantageous time. Of¬
fering date postponed.

Payson &
Co., Portland Me. and The Moody Investment
Co.,
Springfield. Offering—Stock will be offered for ex¬
change to holders of series C 6% preferred and series D
5% preferred on the
following basis: For each share

I>e

Western Lease &
Royalty Corp., Denver, Colo.
Oct. 18. (letter of
notification) 400,000 shares (5c par)
common. Price 5c a
share. No
underwriting. To pur-;
chase gas and oil
leases and royalties.
s>

outstanding;

common owned

City Water Co.

16

underwriter.

•

share.
Options—Selling stockholders are also selling to
the underwriters at 7 cents
per option warrant options to
purchase 18,000 shares of the issued and

Soya Corp. of America
Aug. 28 filed 375,000 shares (par lc) common stock.
Underwriter—Peter Morgan & Co. Price market or
$4-.
per share, whichever is higher. Proceeds—To
repay'RFC ;
loan, to buy Canton Mills, Inc., and for working capital.

-

Taylor-Graves, Inc., Saybrook, Conn.

common stock

Seas Manufacturing Co.,
Detroit, Mich.
Sept 3 filed 40,000 shares ($25 par) 5% cumulative

■

"

f

capital. Offering temporarily postponed.

'

^ West Virginia Water Service Co.
Aug. 6 filed 46,400 shares
(no par) common.
Under¬
writer—Shea & Co., Boston.
Price, by amendment.
Proceeds—Shea & Co. is
selling 26,400 shares for its owa
account and the
remaining 20,000 shares are being soldL
by Allen & Co., New
York, with Shea as

:

manufacturing

facilities in the amount of
$600,000; for additional inven¬
tory amounting to $400,000, and for additional
working

by

about $210,-

000 of its net proceeds to redeem 645 shares of its
prior

•

Oct.

capital.

Zatso Food Corp., Philadelphia
18

preferred stock (par $100) with

Price, $100
for

(11/1)

(letter of notification) $100,000 5%

general

per

common

unit. For purchase of

conduct

of

business.

cumulative

stock

raw

as

bonus.

materials and

Underwriter—Ludolf

Schroeder, 1614 Cambridge St., Philadelphia.
(Continued

on page

2130)

jd

2130

Prospective Security Offerings
(NOT YET

V'VV :-

REGISTRATION)

IN

• * INDICATES ADDITIONS SINCE

1

tiV>

r-

ft w.:

».vv-'-»

PREVIOUS ISSUE

[EDITOR'S NOTE—Due to the paper situation, we are limitingl
coverage of "prospective" financing-hi this issue to only those
undertakings which have come to hand during the past week, thus
omitting the items of this nature which can be reported in previous
issues.
We regret the necessity for this action: and will resume the
usual complete tabulation as early as circumstances permit.]
our

(Continued from page 2129)

■

the Hose of the Stock Exchange Oct.:
22 was postponed indefinitely following a decline in:
Light Co., Montana Power Co. and Texas Utilities Co. , lprice.vIn 1943 a block of 85,000/shares was sold at $43.90,
The remaining 85% of the stocks of these utiliUes;would,share ,and ;inr the foUowingiyearv704,12L; sha_res were:5
be divided ratably into exchange units to be offered, tosold at $45.25.
4'
American Power & Light preferred shareholders:-'
^
• '
» '
o„
•
Chicago & North Western:Ry; :(41/7>;*
Atchison Topeka & Santa Fe Ry. (10/29),,*-<■ - Bids, for the purchase of $10,140,000 equipment trust.
Bids^will be received by F. G. Gurley; at 80 Ei'Jacfeon^ certificates^toibe dated Dec: li l946^:and;due serially ihi
Boulevard, Chicago^ up tot nooni (CST)^ Oct; 29, .fprUhe?^ *equal annuaL instalments^ will bereceiveh at Oompany's^

will

20 stockholders

Dec.

vote

on

authorizing

issue

an

^

6% defiled with
the SEC a plan for recapitalization of the company. This
calls for a single class of stock consisting of 1,100,000
shares ($1 par) common. Under the plan American Gas
would sell at competitive bidding enough shares to pro¬
vide the $12,210,578 due holders of its 5 and 6% deben¬
tures. All the remaining common stock would be distributed to holders of present securities on the following
basis: sixrthfrteenths to
common stockholders, fourthirteenths to holders of scrip certificates and threecounsel for the holders of $50,000 of

as

office 400 West MadisOn St., Chicago, up to 12 noon CS'IV
will provide -funds
: Nov. ;7v; Dividend * rates
to be*specif:ted in bids: * ,PrGb- *
financing the acquisition of railroad equipment under
able bidders include Otis & Co.; Salomon Bros. & Hutz- conditional sale agreements, in five lots, viz.L (1) . not;
ler; Harris, Hall & Co. (Inc.); Halsey,Stuart &,Co,Tnc.»to exceed $2,904,000; (2) not to exceed:$927,-80O^(3-)^not^

lowest interest rates at which bidders

bentures of the company, Percival E. Jackson

i

American

•

for

to exceed

began

•

each $5

:

•

S. Commission

New York State Electric &

•

of the Alleghany Corp. to sell ablock
of Chesapeake & Ohio Ry.

of more than 100,000 shares,

$13,000,000 3%% bonds and $12,000,000 5.10%' preferred
stock. Plan also provides for issuance of an additional
$3,000,000 preferred to be applied against cost of new
construction. Probable bidders include Blyth & Co. and'

✓

United States Government,

First California Company

State, Municipal and

Co. Inc. (bonds

vi&

■

Our Sixteen

INC.

Serve

Offices

California and Nevada
*-

CLEVELAND

^CHICAGO

Commonwealth's- recapitalization *
sufficient.. common stock,1 to
$13,500,000, to be invested in Southern Co.*s sub¬
cash

for

plan

sidiaries and

cash

a

upward now for months—
the feeling is that the money mar¬

um on

been

of

wartime

in

the

treme

ease"

money

market has passed. But it
credit con¬

holds that "basic easy

The

?

two

Treasury's

billion

plan

to
its

of

more.

retire
debt,

is

due

needed

funds

obtain

of

demands

credit

to

(-

The

capital market is

no

longer

geared primarily to the needs of
the Treasury for purposes of fi¬
nancing recovery and victory and
the

government is not in the posi¬
tion of taking care of industry's
capital needs.
/
As ■ a consequence of the war
period, however, and the deficit
financing which went before it,
the

banks

supply

heavily

invested

in

government

securities.
At

the

availing

moment

itself

of

the

its

Treasury,

huge

un¬

cash balances piled up
closing war loan drives,

necessary

in

the

and

seeking to dry up some of
the surplus money around as a
guard against inflation, is soaking
up some of its short-term paper

held by the banks.
If,

as

expected, private industry

borrows

from

the

banks




in

in¬

noon.

were

larly

losings nb

is expected that com¬
will be keen: particu- ;
since the undertaking is

more

mission.

are

that the

Securities

the

and

com-

Ex¬

change Commission with a view

expediting actual marketing

as

much

possible.

The banking group
the

award

will

be

offer the new stock
ers

of the

obligated

to

first to hold¬

present 7 and 6% pre-

ferreds on an

exchange basis with

used;,by the
,

Stock Issue

foregoing issue will pro-:

Presumably satisfied that the
listed security markets have re¬

for
expansion and improvemehts=an&
liquidation, of bank^ loans; among;

gained: their equilibrium after the

other things.

vide the company with funds

Influence of Government on Business and

Accounting to Be Discussed by NACA Group
Ef Peloubet, partner of^ the firm of Pogson* Peloubet Ji
certified public accountants; will address the Third Technical r
Session of the Brooklyn Chapter of the National Association of Cost
Accountants on the subject, "Influence of Government /on Business
and Accounting," at the Park-Vanderbilt Restaurant, Park Plaice *
•t

"

Maurice

& Co.,

.

and
Oct.

Dow Chemical Co*

Avenue, Brooklyn, N. Y.^ on.; Wednesday,

Vanderbilt

largest- industrial

the Dow

$30,000,000

of

to

gress

on

and

he

will discuss

the International .Con-,
Accounting held in New
1929

and in London in
Past President of

York

in

1933.

He

new,: l5-year**d&*

ing the past few. years and the ef¬
fect
these
special codes, rules,

the New Jersey

#

v.*. "V/

to the Commission's competitive^

bidding rule, but is being handled

negotiation
and

egate

the

business

agencies that

Since this issue is not subject

company

ing survey for the U. S. and Brit¬
He was a del- ♦

ish Chiefs of Staff.

ernment and also as an advisor to

business has had to live with dur¬

bentures.

by

perience in the service of the gov¬

Co., involving

Chemical

between
its

bankers,

the
it

could reach market immediately

evening,

30, 1946.

-Mr. Peloubet has had wide ex¬

the

of

financing operations to go t into
registration with the SEC in re¬
cent months is that projected by

/

which wins

be

to finance its extensive
construction program.
^

One

to

as

new

.

will proceed without delay
to put the issue in registration
with

proportions,
the di¬
underwriters
v„

•

Proceeds will

Com¬

pany

reported.

now

The

Large

with

line

which

company

the

-

,

Indications
-■

Service

Public

Alabama

in

like to handle.

of organizing

authorized : by

'

considerable in^th^ way of equity,,
offerings welled up in distributors' hands, but substantial progres£ in plaOing- of such issues is

Since this is a.new money

petition

hut

to bid for the 64,000 shares
of
new
preferred stock which
Birmingham Electric Co. is seek¬
have

output.

not of unduly large

time in the process

to

.

for additions to plants,
production of new products and
broadening of markets for current

to be spent

,

issue, it

accommoda¬

groups

ing

refunding

Monday.

called for bids
on its projected Z%s this week,
to be opened at its offices in
San Francisco during the fore¬

mensions

Underwriters

eries of America,

again the undertaking
represents a new money opera¬
tion since funds will be added to
cash which is and will continue

The company

Birmingham Electric

themselves

find

now

mortgage bonds next.

business

tion at low rates.

Reserve

for

base

2% %, 25-year first and

can

market since the close of the war.

a

Bjids

in its program, bankers
will be bidding for $25,000,000 of
new
Pacific Gas & Electric Co.

chiefly, however, to

fact that member banks

through use of their large hold¬
ings of short-term governments as

the

quired period of hibernation.

change

altered.

been

total thus far this
years to $19 billions, turns atten¬
tion anew to the change which
has taken place in the money
bringing

,

the

not

have

ditions"
This

upon

Provided there is no cause for

its latest bulletin notes that "ex¬

post-Labor Day deluge, Cream¬
Inc., has gone
into registration for 116,986 shares
of commoh stock^bf $tparvalue.
The break in the market; leftv

the expiration of the re¬

adjustment for the premi¬
existing issues.

Pacific Gas Asks

ket, sooner or later, must reflect
Board in

new-construction.

Here

these developments.

The Federal Reserve

(wherr

becomes effective).

realize

creasing' volume — the trend has

V;tiE:,

'<

Southern Co., New

sell

h (KjjfiUv-

i-'v;-

Head Office: San Francisco

ST. LOUIS

PITTSBURGH

PHILADELPHIA

■

York
October 22 Commonwealth &
Southern Corp: filed'
with SEC a proposal to. organize Southern Co., as a step
in its program for compliance with the corporate sim¬
plification and geographic integration requirements of
the Holding Company Act. The Southern Co. proposes to

NEW YORK
BUFFALO

& Co. (jointly) and

only).

v'

:

Underwriters and Distributors

Blair 6- Co,

(jointly); the First Boston Corp.
Halsey, Stuart &

Smith, Barney & Co.
and Glore, Forgan

INCORPORATED

Corporate Securities

■OSTON

Gas Corp.

company's proposed to
issue $13,000,000 1st mtge. bonds due 1976, interest not
to exceed 2% % and $12,000,000 preferred stock, dividend
rate not to exceed 4%, the proceeds to be used to retire

Chesapeake & Ohio Ry.

Oct 23 the plan

15% of the common

will sell at competitive bidding

are

sold to-ten institutions

Nov. 6 SEC will hold hearings on

plan, the value of both preferred stock rights combined
would total $253,084,000. Upon approval by the SEC and
issuance of an order by aU, S. District Court, the com^
pany

r
sale

offers at competitive

to

proposes

planned/ for ;early: D^embei^vT1iei:3fe wfere
in September, $936, at; I09&\
and are currently redeemable at U0; The preferred stock,
is callable at $115 a share. Probable bidders include
Halsey, Stuart & Co.; Inc. (bonds only);* The First;
Boston Corp.; Harrinian; Ripley &
Dillon, Read 8c
Co. Inc.; Central Republic Co. (stock) andBmith, Barney\
& Co. (stock)." •'

sales

and Blythe & Co., Inc.

First Boston Corp.

It

$33,000,000 of bonds and $10,000,000 of new preferred
stock and to contract a bank loan of $4,000,000. These

Electric Co.

(Ala.)

mortgag^ 3%% bonds and'$4,00(^000 of $8

stock.

ferred

authority to issue 64,000 shares of new preferred to
be sold at competitive bidding. Shares would be offered
in exchange for outstanding 7% and 6% preferred stock. *
Probable bidders include Dillon Read & Co., Inc.; The

1946, Of each $6 preferred share at $150, and
preferred share at $137. There are 793,581
shares of the former issue and 978,444 shares of the latter issue outstanding. On the basis established in the

?

Birmingham

i

reported company planning to refund its $38,000,-*

OOO first

purchase of

for

June 30,

on

•

Oct. 23 company applied to Alabama P.

'

•of

the

for

r

i11$ || 17, +? * %^ j *-r s ^
Kansas City Power & Light Co*
^

Oct 23

$7,620,000 equipment trust
certificates^ series R, to mature in 10- equal instalments'of $762,000 each on Nov. 1, 1947-1956 will be received J
up to 12 noon, Oct. 24, at company's office, 2 Wall Street,
New; York;; Probable bidders include Halsey, Stuart &
Co. Inc., and Salomon Bros. & Hutzler.
Bids

Light Co.

Power &

S<fn

(10/24)

Baltimore & Ohio RR.

hearings on company's plan for
^retirement of its $6 and $5 pfd stocks, through voluntary
exchange for common stocks of five of the company's
subsidiaries or through later payment of cash. The plan
would establish the fair and equitable value of the rights
SEC

22

Oct.

ahd Middle West banks.

(4) not to exceed $2j024,900,a und"

$2,352,000;

(5) not to exceed $2,744,400.

warrants.

thirteenths to holders of
'

->

'

Co.

& Power

American Gas

Oct. 22

-

&

1,000,000

■

common stock after

Florida ; Power. &.

Light Co., Kansas Gas & Electric Co., Minnesota Powers

shares of a new class of preferred stock
which will be a junior issue, pending retirement of the
6% cumulative preferred stock. Probable underwriter,
The First Boston. Corp.
of

of fivO i subsidiaries, namelj^

stocks

*

Aluminum Co. of America

•

/■

'

-

various government

fied

is

a

Society-of Certi- :
Public Accountants, Director,
New

York State Society
Public Accountants,

regulations," laws, forms and re¬

of

the

ports will have on our future. •
A Certified Public Accountant

of

Certified

of,.New York,. New Jersey and
Texas, Mr. Peloubet was consul¬
tant to the War Production Board

tute -of Accountants, National Di¬

-

and to the U. S.

and

was

Navy Department,

in charge of

ah- account-

Treasurer

rector

of the American Insti¬

of NACA, Director

of the

Arbitration Association of Amer¬
ica

and-a~ member

of

the

countants Club of America.

Ac¬
..

•

Volume

164

Number 4536

"Towii

THE COMMERCIAL &
FINANCIAL CHRONICLE
a full-dress discussion of which
may instigate a climactic' re-examinatioh "Of the basic
concept of the entire World Organization;.

Meeting of

Moves to Western
!

*

.

'

•

4\

'

*

i liberative
body."

~

routine matters to be determined by this
Assembly include agreement on the 1947 budget
$25,000,000, of which the United States will shoulder
49%;
the admission of new member
nations; approval of agreements with
the specialized
agencies, as UNESCO, the International Labor
Office,
at about

,

de-

supreme,

a

And

Security Council; and that most knotty problem- of
permanent site for the entire Organization;;

is

There is

f
I
*

Should the Town Hall meetihg technique
unfortunately -prevail
—iri a context of long-winded delay—the effeet- will be- a severe
boomerang against the public's morale/ President Paul-Henri Spaak
of: the ^Assemblycpn two occasiims ^dda^ exhibited oxtreme senshr

tivenes^ regarding, such; public reaction. In hia initial address

I Hall
*

he^plaintively

'i mptor

-at- City

as

.

^lunchephy:
•*'

he^deVotedrconsiderable effptt^to-'Self-defens^^egarding
the organization's "weakness," his defense
being based en the world's

encouragement
Organizations.

6.

Mere Wishing for Peace Insufficient

-

for

in

*;

next

thieiibeffectivlhess..depehdihg; wholly

six

.

weeks are

a

'

Railway Company, has today been declared,

payable December 16| 1946, to stockholders;
of record at the close of business November

be mailed to all stockholders of record at their
addresses as they appear on the books of they

and

Red

Crescent

Company unless otherwise instructed
J. J.

countries,

in

conjunction

a

hbt:

with^e^aatdal

in

writing.

MAHER, Secretary, Q

with

NATIONAL DISTILLERS

regular
and
share on thb out¬
standing Common Stock, payable on November
I, 1946t to stockholders of record on-October
II, 1946. The transfer books will not close.

The

Bobby-Soxers* Delight

President

our

psychology.. It

THOS. A. CLARK
:

.

treasurer

■

bad

Was

judgment because, instead of
confining the knowl¬

■

per

September 26t 1946.

andshowecf;

misconception of

any

dividend of 25tf

extra

INTERNATIONAL

apathy to the comparatively small

HARVESTER

if ft COMPANY

of

The

Directors
of
International
Harvester
Company
declared
a
final
dividend
cn
the
commmctr' stock of the Company for the
fiscal

ending October 31, 1946, of forty cents
per share, payable December 20,
1946, to
of
record on November 22,
1946.
same- time;
the Directors
declared- a
quarterly
dividend
of
sixty-five
cents
'36c)

year

(40c)

stockholders
At

to

'itidividual hero worship we
of the more powerful Security Council .having been; so
burely are again
vividly and recurrently demonstrated,^ what chance is-there for truly
^Aiqg the bull's eye. For every bobby-soxer,
^^ffgfitiVe^ action'oh: any Of the controversial issues
relevator
by the Assembly?
boy, stenographer, truck
^
driver, as well
~^"By*Way"Of contrast, thfe Council Of Foreign Ministers which-will -as Park Avenue
hostess, is feverishly interested
\ i* be in session in:New York AcOiicutrentlysbeginhmg. Nov. 4, must -pitch "in? one
colorful glamorous
j right *in and make - crucial and concrete decisions; First; of all -in
Molotov, the American public's own "inter¬
i importance, the Ministers must come to
grips with drafting a neace

| impotence:

Checks in paymenf of these dividends will'

?

people attending, it broadcast this to
f36wer" is ohiy that of v
rebommendatioi^ not of absolute directiori. the whole world. Moreover, it overlooked the
| Just. like f the * Economic and. Sbcial Council, thS Assembly has nb fact that the American
public is interested! in<
*, enforcement "teeth"; it depend^ oil moral
suasion oil the,part of the.
personalities far more than in
issues.
And. as
public to; implement*its-;proposals j.with t action. tfSo,
>

quarterly dividend of Seventy-

out of the surplus of net
profits of the Company^,
for the fiscal year ended December 31,
1945,;

Spaak's bawling-out this morning Of the
American public for lack of enthusiasm
was both- stupid

edge* of
matter^which "are >uled important by < a- two-thirds „-tfoter arid; these
iiumber
matters which are considered routine
by a simple5 maj ority vote? Its

*

A regular

five Cents (75c) per share on 1,298,200 shares
of Common Stock without
par value of Southern

stationed in non-^eriemy countries.

Assembly

| by the member states. The Assembly has no veto powers but decides;
£

declared, payable December 16, 1946, to
stockholders of record at the dose of business
November 15, 1946;

children's emergency fund.

the

binding,
their voluntary acceptance

on

on the Preferred Stock
of Southern Railway Company has
today been,

Cooperation, iri Paris,

Cross

Red

York, October 22,. 1946.

share

per

items, any one of a number of PRODUCTS CORPORATION
controversiaL'^oliticar sounding board" matters can be introdueed-—
The Bftard: bf Dlrectbr9 has declared a
as the former
"abortive attempt of Russia- to have the: Allies
report quarterly dividend of 25tf per share

*

the

the

overrun

*

Success, for

of

($1.25)

In addition to the 53
Scheduled

The

ddWs and Lake

New

A dividend of One Dollar and
Twenty-five

Cents

and subsistence allowances for various commissiohs.,

children

8. Establishment of

Contrasting Realism of the Councirof Foreign Ministers
v
Unfortunately, the "debating society" character of the General
-Assembly will' be thrown into sharp relief when the Council- of
s Foreign Ministers of the
Big Foui? concurrently* meets NoV; - 4. - • FOr
the- Assembly proceedings; scheduled to
sprawl over Flushing Mea^
*

a

15, 1946.

of Intellectual

UNRRA.

*

^

Travelling

7. Aid

The other realistic note sounded

byr President Truman- today^Wafi.
?
nis cautioning that the people's desire fof
pe4ce^-ih lieui of War1—as
ph ideal is not enough to»preveriti war. Not 'only aggression itself, but
r tyUlihgness to feffain frqm national
sovereignty for the benefit of the
^international collective interest, ;is the basic indispensable element
in any successful world organization;•
'
^

4i.-Transfer, of the Institute
to- UNESCO.
5: Formal

lack of any better alternative.

irr

selecting

consume

*

commented on the public's alleged -lack of proper
revealed in the spectators'
apathy toward the morning's
cavalcade of delegates. Agaih iri his address at the City-s

enthusiasm

agenda, to'

these six and one-half
weeks and more. In fact the formal
agenda has just been inflated
to 53 items,^
by the addition of the following eight being handed in
from the recent sessions of the
Economic and Social Council:
lr A-report of~ the Council's first three
sessions^
2. The Council's request for authorization
to obtain from the Inter¬
national Court of
Justice, advisory opinions on legal problems.
3. A request for a
$300,000 load for the establishment of the World
Health Organization.

| such indecisiveness perhaps additionally indicated by the President's
| major emphasis today on the "UN's humanitarian agencies?
< ,r",

|

dearth of

no

DIVIDEND NOTICE

-!■

v.

the

body really be? Will the ^Assembly
supers-debating society, voluntarily or in-

f voluntarily- abstaining from \making enforceable decisions?

i

Company

and the Provisional International Civil
Aviation
Organization; elec¬
new members of the Economic
and Social Council and

will this

I merely resolve itself into

Railway

tion; of the

r

»^4... How "deliberative"

Southern

Some of the relatively
session of the UN

\ • - The eo.ncrete' query Confronting, all thoughtful, observers- of the
I Current '-proceedings "was
significantly indicated' by Mr. Truman's
I succinct assertion this afternoon; "This is
the,world's

DIVIDEND NOTICES

The Miscellaneous Agenda

Hemisphere

(.Continued from first pagfe)

,

2131

the

share on the common stock payable Janu¬
15, 1947, to all holders of record at the

per

%

ary

close

of

business

December

on

SANFORD

B.

16,

1946.

WHITE.

;

Secretary

-

J' treaty with
erations

:

Germany; •> whose periphery

have

only 'the Paris
delibmust examine; the controversial
made aUParig-on, the? draft treaties^with
J^umania;

skirted.

Also

is sfill raging.

East-West

v.

been

DIVIDEND NOTICES

181st

A-dividend
share

has

stock

of

.

dividend of

of fifteen cents
($0.15) a
Been declared upon the
BURROUGHS
ADDING

record

of the British Government

the

at

close

(n establishing independence in India.
November 1, 1946.
Progress similarly is being, made in solving-the problems imln-

donesia, arising in the liberation of the Netherlands East Indies from;
Japanese occupation. The major issue still in controversy there arises,,

business

common

15#

Ahd, "of

courso,; the

highly' controversial

and

State

Department

policy-makers And our military leaders.
diplomats want to pursue a policy,

;;

P.

:.tw«

Duiulier, Treasuter,

INDUSTRIES, INC.;

SITUATION WANTED

Trader Available
Experienced

THE

desires
lished

over-the-counter

connection

with

...

Of -course' this overall indecision is

accentuated by the

tainty of our future relations with the Soviet Union. With
^inatid status with Moscow as mutually "fluid"_as it now is,

estab¬

"decide whether

now

to

definitely embark

of jreiying on the United Nations for

our

on

a

whole-souled policy

future security; or

whether

to establish "defensive-offensive"
out- the

strategically located bases through¬
globe—thereby involuntarily sabotaging thk World
Organ^

ization.

bers in social and economic

matters, and regarding provisions for

treatment of native populations.

i

'

'

the

•

"!

.V'4

" ;v

Re-examination of the Veto

Also oh the provisional agenda is that volcanic item—the
veto;




l948r

of

record

November

4-;
GRIFFIN,
Sectetary-Treasurisu
'

1

M. E.

NOTICE

Kingdom of The Netherlands

High-Class Confidential Executive
Secretary

-AVAILABLE
Ready and
of

able^to take

large affairs.

Capable of making
matters and; |s

By
is

fully

-DeclarationOf

Netherlands Securities
%

The Office of the Financial COunselof of

—

been

Has

had

of

and

and lighten the business burdens of

over

•

,

any >

-

.

^

prompt

excellent

long

capable

Stocks, Bonds
Has

an

of

reason

and

of

years

satisfactory, decisions

correspondent,
experience

in

,

i

,

the

on

r

■

important

(

Securities

business,

jsuccessfully making satisfactory adjustments
Real
Estate investments.

Executive head

of

and is advanced
thereto.'
•

experience

in

modern

ns

an

business

administrator
methods

and

and

pertaining

any

,

clean

and

orderly

circumstances.

mercial

&

in

a

' t'

personal

Financial

life

and

can

be

depended
>■■■.■■

■

■■

lands

securities

and

owned

who

are

held

in

the

corporations

by

domiciled

not

or

United
or

States

individuals

resident

in

the

Kingdom of the Netherlands have to be de¬
clared

to the Netherlands Royal
of
September 17,
194r as

pursuant

16,

E-100

by Royai Decree F-272 of Novem¬

1945.

The declaration period has been extended

personality^ with training and ability to handle difficult
problems, and placate diversified minds and individual
desires.
a

as

ber

Agreeable
Leads

Embassy, 25 Broadway,
4, N. Y. informs interested par¬
previously announced, that Nether¬

York

ties,

amended

coordinator

details

Netherlands

New

Decree

of

important financial enterprises.
abstainer, and trust-worthy in every
respect.

valuable

If interested

v":

has

payable December 1, 1946

FINANCIAL

Alert mind,

Again, some of the American:proposals are likely to-run into
criticism, if not actual opposition,: by the
Russians—regarding the
"open door" factors of equal treatment for all United
Nations mem¬

Pre¬

value)

par

SITUATIONS WANTED

man

we cannot

Siy^c

Convertible

8, N. Y.

uncer-

diplo- '

5%■

($25.00

16j

Married, 33' years, old;
Box L 1017,
Commercial & Financial
Chronicle, 25 Park Place, New York

RED CROSS

the

stockholders

the

our

on.

Stock

to

trader

well

quarterly dividend of-

share

firm.

to the World .drganization's basic OOncept—of international
coopera-*
— the
military service, concentrating*, on the preservation of

,!

regular

been deelared

tion

*

4

Philadelphia, Ph.

=

New Tork;, October 17„ 19461

Secretary

While

seGhrity^ want- to keepf undejr; tl. S. control all? formerly-mandaited
territories; which conceivably might! be needed for security purposes.

22,1946

'

Geo. W. Evans,
...

conforming

.

I

October

15, 194ft

Volubly disputed

Ah the One hand our

payable

JOHNS'HOPKINS;" Treasurer

ber 2, 1946 to stockholders Of record November

SUPPORT

/-

declared;

THE UNITED GAS IMPROVEMENT CO.

cor-

ferred

Palestine issue. cannot ba: settled by unilateral Pi? bilateral
policies of

per

Stock,

share on

per

stock of the

pbrAtion, payable bh Decem¬

per

\th&BigPoweris,rbutphly!;b^an^ihcluSive:actte
plafed Trusteeship Council of thO tinited Nations.
* "
?
disposition of the Japanese-mandated islands presents, a
special
fjfdbleM: The American position involves a difeel eohflict batweerV

cents

Dec. 18> 1946, to stockholders

A

^ii6t!waht thes6:Marids ihtluded lihdef^^th^doihihatidi^of^fe'Jay^
;

65

Capital

of record Nov. 20, 1946.

from the demand by the Indonesians that the new
territory take in.
Sumatra; and other islands, whfereas the Holland- Government does^

-

*

har been

has

of

the

on

value $13.50 per share,

par

quarterly

a

the

WHITE, Secretary

WOODALL

Detr'6it,Miehigan,
October 15,1946

of

the

share

Bbardi of Directors

this dhy dfeclarfed

DIVIDEND

dividend

A

CORPORATION

CONSECUTIVE CASH

MACHINE COMPANY,
payable Debringing self-government 4° member
10, 1946, to shareholders of
the worldfs half-billion; dependent peoples is the constructive action

*

SANFORD B.

DUMOftT ELECTRIC?
THb

the

has

at

of

DIVIDEND NOTICES

,

dollar
on

1946,

2,

declared to stockholders of record
business November 4, 1946.

close

now

at this session of the Assembly.
The United Kingdom on Monday submitted draft terms of
agreementsfor its African mandates* •,France and
Australia have similarly: sub¬
mitted drafts covering their?
mandates; and Belgium and New Zea-land have definitely promised* to Submit them in the near
future.
The outstanding recent event in

r

Molotov

'

•ference, will finally- be established

.

M;

Quarterly dividend Nd.
113
of one
and seveht.v-flve cents
($1.75) per share

preferred stock payable December

rift

Trusteeship 4n Important Issue
seeliis that the tJnited Nations' Trusteeship
Council^ wbich
liaCbeenTdebated ever siiice the beginning of the, Sam Francisco ConIt

HARVESTER
COMPANY

Frank Sinatra."

they

^'recommendations
I Bulgaria, Finland, and Italy,
regarding which the
?

national

INTERNATIONAL
"■

upon

under
.?V'

interview, please write Box S 1016 Com¬
Chronicle, 25 Park Place New York 8.

to

December

1,

1916.

44';<

Securities

for which no declaration is
filed will become VOID in accordance with
the

terms

of

Circulars

said

and

Decree.the

^

necessary

fofms

o'£

declarations may be obtained at the Office
of the Financial Counselor of the Nether¬
lands
New

Embassy, 25 Broadway, Room 1132,
4, N. Y., and at any Consular

York

Office

States,

of

the

Netherlands

in

the

United

Building at 63 Park Row so as
to • complete
organization on an
industry-wide
basis.
At
Guild

the bank is willing to give its em-;

Organize Banks
And Brokerage Houses of Wall Street Community

ikival Unions Now Seeking to
By EDMOUR

ployees granted in the form

GERMAIN

reached high pitch on Wall Street this past week
as Financial Employees Guild, CIO group, sought actively to in-fg;
vade field heretofore private happy hunting ground of United Fi-||
Employees,

independent union. UFE still in midst

an

of A. M. Kidder & Co.

nounced

mass

7

The Financial Employees Guild
has not been entirely without suc¬
cess
in making inroads into the
New York financial community
but, on the surface at least, the
United Financial Employees
to possess some ad¬
vantage. The UFE is firmly en¬
trenched in the New York Stock
Exchange, or so it thinks at least,

conducted

&

even

this presumption on

its

financial district.
The relation between the Stock
Exchange and the UFE is not ex¬
tution in the

actly

a

happy one at the moment,
The union is seeking a

the union
if the union refuses to pledge it¬
self to a no-strike agreement. The
another

contract with

Exchange thinks that its

request

principle. The union
claims a no-strike clause in the
contract would under certain cir¬
cumstances force its members to
a

For detailed index of
r.'->

next

"r'::

,

;*

C 'i.'.O

2071

contents see page

Thursday from 3;30 to 4:30 p.m.

-

Page

V

Overdone?—Paul

Mutual Funds

elec-

2i25

Security Issues Calendar ___l_
Observations—A. Wilfred May

,

Reporter

Our

Reporter's

Commons & Pfds.

•

_2130

1 t'

,1

'

•

1

'

**1

,

* *

_2084

FOREIGN SECURITIES

______»2082
2091
2123

Securities Salesman's Corner

Registration

Securities Now in

«

.

2076

Railroad Securities
Real Estate Securities -LL...

Tomorrow's Markets

.

NEW ISSUES

;-Report_-'L*_4_^>^__r_^„^__^__^_yfc

Prospective' Security Offerings-^—
Public Utility Securities__:___

2122

(.Walter Whyte Says)

pertaining to opening

* See Mr. May's story on cover page

.

'

*

_2087

2

Governments

on

Ralls

2086
.2079

;

Our

Old Reorganization

:_2078

New

last week
dramatic

.

;__2079

Einzig

j

NSTA Notes

session of UN General Assembly.

M.S.Wien&Co.
ESTABLISHED 1919

40

Exchange PL, N, Y. 5

HA. 2-8780

Teletype N.Y. 1-1397

Co.

lunch-hour

Trading Markets in
Allen B. DuMont Laboratories

Jefferson-Travis Corp.

Lear, Inc.
148 State St.,

Majestic Radio & Television Corp.
Radio & Television, Inc.

Tel. CAP. 0425

Boston 9, Mass*
Teletype BS 259

:

:

N, y. Telephone HAnover 2-7914

Wilcox-Gay Corporation

lege when it asked for it last
incorporating a summer.
Members of the Guild on Sun¬
25% wage increase, and other de¬
mands, with the Exchange but the day voted in favor of empowering
Exchange feels that it would be the union to call a strike at Peo¬
ple's Industrial Bank if the bank
worse than useless for it to sign

is

Co.

contract,

new

•

&

Harrimari

2090

Drive

Export

however.

-

INDEX

election

an

bargaining rights
employees of Brown

Securities

British

Is

Employees Guild
rallies at
the corner of Wall and
Broad
Streets Tuesday and yesterday to
advance the cause of unionism in
general and its own cause in par¬
ticular, succeeding in attracting
huge crowds that ran into the
hundreds, though not all of them
employees of the firms and banks
they want to organize. The UFE
is very much upset over the fact
the police is allowing the Guild
to conduct street rallies when it
denied the UFE a similar privi¬

part, if it is that, would , tend toi
give it some advantage as, from
some
points of view, the Stock
Exchange
may
be rightly con¬
sidered a central, pivotal insti¬

•

State -Labor

The Financial

•^would appear

and

y

Dealer-Broker Investment Recommendations-

employees of the Curb now cov¬
by three^^ jpontracts ;for set)"arate divisions ^of the employees
there. The UFE is also negotiating
for the runners of Stern, Lauer
ered

•'i

(Continued from page 2071)
Regular Features
Canadian

if
perhaps, as would seem at<^
witH A. M.. Kidder & Co; are ex¬
present writing, not too effective
attempt to obtain a foothold in a pected to commence shortly. The
UFE is also in the midst of ne¬
field which heretofore has been
gotiations with the N. Y. Curb
pretty much the private happy
hunting ground of the United Exchange. One master contract is
Financial
Employees, an inde¬ being sought which will cover all

V

the

-%<•-

•

fion at Brown

pendent union.

-

of y

rally for all of messengers and guards of Wall Street
Building on Park Row tomorrow at

r^v Union activity reached a high pitch on Wall Street this
as the Financial
Employees Guild* a CIO group, made a

';rr:

collective

for

rally of all mes¬
guards of Wall Street
firnis at the Pulitzer

the

conduct

will

Brothers

Financial Employees Guild has an¬

At Guild's request, State Labor Board will conduct an
Brothers Harriman & Co. next Thursday. /

Board

among

banks and firms at Pulitzer
5 p.m.

also,

request

sengers and

banks and

P:

'.Wp'tyrf:\j~:

*

conduct a; inass

negotiations with New York Stock Exchange and has opened nego- J
tiations with Curb Exchange.' It has won election among employ¬
ees

con¬

announced

has

Guild

The

tract.

of a

that tomorrow at 5 p.m. they will-

Union activity

nancial

guaranteed by

salary raise

Thursday, October 24, 1946

FINANCIAL CHRONICLE

THE COMMERCIAL &

2132

matter of

Gearhart & Company
INCORPORATED

negotiate with
the union. The union announced
yesterday however that the bank
has agreed i to meet with repre¬
sentatives o fthe union. On Mon¬
to

refuse

should

day, the Guild won a State
Board election among the

-

r-::-

,

45 NASSAU STREET,

Labor

Suburban Elec. Sec.

Av

■'

\ '-.v.

y

Dealers Association

Members New York Security

Rogers Corp.

Thompson's Spa Inc.

NEW YORK 5

TEtEPHONE

PHILADELPHIA TELEPHONE

REctor 2-3600

Enterprise 6015

Airplane & Marine

BELL TELETYPE
new york

1-576

Schoellkopf, Button & Pomeroy

mes¬

guards, - vaultmen, ele¬
operators and porters of the
cross their own picket lines and
the union refuses to put itself in Irving Trust Company, 146 to 61.
this position. Further negotiations There were" 236 eligible to vote
; on the contract will take place in this election and 220 did vote.
There were six challenged bal¬
Saturday afternoon.
Last Thursday, the UFE won a lots. One ballot * was blank and
State Labor Board election for six were void.
The Guild's street demonstra¬
collective bargaining rights for
f the employees of A. M. Kidder tion, on Tuesday was partly di¬
rected
against the Bankers Trust
Co.; 76 to 64. There were 150
^eligible to vote and 144 did vote; Company in protest against a 10%
bonus
granted by the bank to its
j/ There were two challenged votes.
I/14.U.V
V*
U.WJ
Xixv
J
very
day.
The
One ballot was blank and one was employees that
void. Negotiations for a contract union wants any bonus money

Worcester Trans. Assoc.

sengers,

Boston Real Estate Trust

vator

^

*

C;y.

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-y.'.'y.v

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Ralph F. Carr & Co., Inc.
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We epecialize in

Morris Stein & Co.

•

Industrial Issues„

Established 1924

;

alt

Insurance and Bank Stocks

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HANOVER 2-434X

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Teletype—N. Y. 1-971

BRITISH SECURITIES

.

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Investment Trust Issues

Public Utility Stocks and Bonds
TEXTILE SECURITIES

Securities with

Firm Trading Markets

a

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Frederick C. Adams & Co.
Specialists in
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Boston

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24 FEDERAL STREET, BOSTON 10
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Tele. BOston 21

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FOREIGN SECURITIES
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Bonds, Preferred and Common Stocks

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Signal

Eastern

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REMER, MITCHELL &
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120 Broadway

New York 5

Telephone COrtlandt 7-0744
Bell

Teletype NY 1-886




Empire Steel Corp.

<

of

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Delhi Oil

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^General Products Corp.

Lumber & Timber

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Traded

,

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Amos Treat & Co.
40 Wall St.

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Markets and Situations

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