Full text of Commercial and Financial Chronicle : October 30, 1947, Vol. 166, No. 4642

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134?

ESTABLISHED 1S39

Reg. U. S. Pat. Office

Volume 166

Number 4642

Dangei oi Oui

New

President, The Equitable Life

gold

on rumors

Mr.

of higher
Parkinson

points ont increase in price would
further

cause

inflation

supply.

money

could

return

Recent

of

Argues

to

our

U.

S.

gold standard.
however

rumors,

un¬

founded, emanating from London
to the effect that the United States

Treasury would increase the price
which
for

it

By JAMES D. MOONEY*

pays

President and Chairman of Board,
Willys-Overland Motors, Inc.

Asserting that taxation principles should be based
not

Mooney contends Canada's exchange difficulties

an

to

$50

multilateral trade and convertible currencies.
tion of motor vehicle to

world.

These mutual relations
of

both

serve

learned
e

x

p

e

by
i

r

the

that

monetary and

interests

economic situ¬

best served by
peace
and

such
our

ation.

implica¬

mutual

ex¬

change

be¬

we
our

tween

stock

James

D.

Mooney

and

of

gold and increase correspond¬
ingly the price paid for subsequent
are

fantastic

so

as

hardly to deserve comment, and
yet we have had a good deal of
evidence recently that the gov¬
ernment and those responsible for

policy when

(Continued

on

hard

page

put

27)

us

as

open

free

as

possible.
In the
dian

United States

neighbors

respected

as

our

Cana¬

admired

are

and

new.

In spite of the
many restrictions
upon
trade
and
commerce
be¬
tween these two

countries, Canada

♦Released
nental

through the Conti¬
Syndicate, Bright-

Press

is the best customer of the
United
States. In turn, the United States

waters, N. Y.

(Continued

on

page

♦An address by Mr.

fore

As

Federation

Associations

of

32)

Mooney be¬

of

Automobile

Canada,

the

We See It

They Seem

for
of

revision

that will place
the
general
welfare

to Be Befuddled

of less

ahead

worthy

length made up his mind to call
Congress into special session. Obviously he has done so with
reluctance. Congress is usually difficult in a
general election
year. This^ne%ill have,almost two added months: in which
to make~trouble for a President
already beset with difficul¬

considerations.

ties which appear far too
profound and troublesome for his
advisers to fathom. Yet it was

the expression

evidently found politically
necessary to "do something" about prices and about the
situation in Europe.
The President has
evolve

a

action

to

conquer

we

must

control

or

"inflation," by which term he evidently means high and
rising prices particularly of items which are important
in the

family budget of low income

far

domestic matters

as

are

groups.

concerned.

That is,

so

As for

peoples
starving and
ameliorate their suffering during the
coming winter.
Either the President's board of
strategy has not yet
made up its mind how it will undertake to do these

abroad,

we

must

prevent

(Continued

Quebec,

them

on page

from

have

come

what

cent

be¬

some¬

accusr
in rev-

tomed

to

years

Dr. Harley L. Lutz

"bi-partisan."
The

conduct

the

of

war

this

on

and

efficiently said only that

of

program

We

supposed to be
since the lives

was

basis,

the

resources

of

all

citizens,

regardless of party, were at stake.
The conduct of

has

been

although

foreign policy
bi-partisan basis,

our

a

on

with

some

flies in the ointment.

suggested

that

labor law be

the

occasional
It has been

Taft-Hartley

regarded and applied

(Continued

on

page

28)

36)

Oct. 29, 1947.

Lithographing Go.

too

kind

tax

The President has at

vigorous, courageous,

outdoor people. In Canada we find
the culture of the old world
and
the vigor and progress of the

in
not

does

augur

are

carrying

held

hopefully

self-

that

be
1948

that

own

the
channels of

revalue

monetary

<s>

EDITORIAL

is

keeping

ru¬

existing

final enactment of tax legislation in 1947
has forced this important issue over into 1948.
Some sort of tax
legislation will be enacted next year, no doubt, over the
presiden¬
tial veto if necessary.
But the fact that a presidential election is to

-

pendence

will not be impaired.

revenue

secure

our

part
now
played
by
gold
in
our

purchases of gold

the best interests of the
people

interde¬

e

rates, government
The failure to

tries. We have

terest

tion

contribu¬

coun-<S>

ence

mors

out

peaceful relations between the United
States, and Canada
and the ease with which the citizens of
either country and trade move
back and forth across the
border, are an example to the rest of the

have

These

jr

The

stimulated in¬

T. I. Parkinson

Points

welfare and

on

politics, Dr. Lutz outlines a tax reduction program to promote
general good while at same time preserving balanced budget.
Stresses importance of encouraging
expanding capital investment,
and recommends income tax rates
ranging from 12% in lower
brackets and maximum of 50% in
higher brackets. Contends per¬
manent growth and
prosperity cannot be obtained by "soaking
the rich," and that with enlarged
production under reduced tax

higher living standards.

an

in

due

trade,
together with high tariffs. Suggests re-examination of tariffs im¬
posed when trade was multilateral. Urges free gold markets,

ounce

ounce

are

bilateral trade restrictions and restraints on free movement of
>ds
goo
and services, Lays situation to existence of inconvertible
"soft
currencies" and too many restrictions on U. S.-Canadian

gold from

$35

t h

Copy

Professor of Public Finance, Emeritus,
Princeton University

Mr.

Society of U. S.

valuation,

a

By HARLEY L. LUTZ

By THOMAS I. PARKINSON*

Commenting

Price 30 Cents

Canada and the United States— The
Right Kind oi Tax Reduction
Their Mutual Economic Problems

Buried Gold
Assurance

York, N. Y., Thursday, October 30, 1947

State and
MARKETS

R. H. Johnson & Co.
Established

Municipal

IN

A NAD I AN

Bonds

SECURITIES

1927

INVESTMENT SECURITIES

Hirsch & Co.
Members New York Stock
Exchange
and other Exchanges

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

Chicago

Teletype NY 1-210

Cleveland

Geneva

London

(Representative)

64 Wall

Street, New York 5

THE NATIONAL CITY BANK

BOSTON

Troy

PHILADELPHIA

Albany

Baltimore

Buffalo
Dallas

Pittsburgh

Scranton

THE CHASE

Members

Syracuse

New

OF NEW YORK

Harrisburg

52

Wilkes-Barre

Williamsport Springfield Woonsocket

Bond Department

HART SMITH & CO.
York

WILLIAM ST., N.
Bell

Bond

Dept. Teletype: NY 1-708

Security Dealers Assn.
Y.

IIAnover 2-0980

Teletype NY

New York

1-395

Montreal

Toronto

NATIONAL BANK
OF

THE

CITY OF NEW YORK

SERVING SOUTHERN CALIFORNIA
SINCE 1927

*Air

Products, Inc. Com. & "A"

Detroit Harvester Co. Com.

WagensellerSDurst, Inc.
investment Securities
S.

626

ANGiieS

Emery Air Freight Corp.

and

ST.

^Georgia Hardwood Lumber Co.
Common

*Prospectus

14

(Incorporated)
•

PASADENA

•

REDIANDS

Established

1899

MEMBER ICS ANGELES STOCK EXCHANGE

CLEVELAND

TELETYPE: LA 68

New York
Chicago
Denver
Cincinnati Columbus Toledo Buffalo




Service

Portland General

Electric Company

on

Reynolds & Co.
Broadway, New York 5, N. Y.
Telephone:
Bell

and Dealers

Analysis

upon

request

request

Members New York Stock Exchange

120

When Distributed

for Banks, Brokers

„

OTIS & CO.
ClAREMONT

Brokerage

Common

Corporate Securities

SPRING

TRinlty 5761
ICS

Underwriters and
Distributors of Municipal

Bond

REctor 2-8600

Teletype: NY 1-635

Hardy & Co.
Members New York Stock Exchange
Members New York Curb Exchange

30 Broad St.
Tel. DIgby 4-7800

New York 4
Tele. NY 1-733

irahauPt&co.
Members

New

York Stock Exchange

and other Principal Exchangee

111
REctor

Broadway,
2-3100

Boston

N. Y. 6

Teletype NY 1-2708

Telephone:

Enterprise 1820

2

COMMERCIAL

THE

(1734)

trade

We

in

&

By M. S. SZYMCZAK* ;

Rights
After analyzing extent

request

and

domestic consumption,

our

kept in

act

will

at

wholesale

above

prewar

Wholesale prices, not con¬

levels.

to

basic

Domestic Causes of

commod¬
currently

are

200%

than

more

re¬

cur

upon

Prices of primary

ities

commodities,

60% above prewar.

nied by a tremendous increase ir.
the volume of currency and bank

favorable

be

Vapor Car Heating

able. The

tral

domestic

t i

o n a

inflation

Commcn

would

S.

Szymczak

flation

situ¬

Extent of Inflation

sale

All of you are familiar with the
changes that have occurred in our

domestic level of prices

the

the Evening

Dinner Session of

Mid-Western

Credit

its

made

of in¬
most rapid

the

in

past 15 months is
disquieting. Whole¬
for instance, have
40%, and consumer

prices,

June, 1946.
both
far-reaching
corresponding developments
since

20%

by

than

rapid and

in this

Confer¬

more

country following the fits

war

credit.

Our

was

total

(cuirency

and

tween

end

the

of

Kendall Co.

threefold

1939

of

1945—from $36

Com. Si Pfd.

be¬

Sold

Bought

the

and

It is idle

of

to ask whether

now

have avoided

could

we

Mitclielk Company

or

some

Members Baltimore Stock Exchange

the

present difficulties by fol¬

lowing

different

monetary

Broadway, N. Y. 5

120

WOrth

ana
Bell

fiscal

policies
the

From
to be

the

during

point of view that had

adopted during the war, our

policies

completely

were

aimed

We

cessful.

ceeded in raising our war

tion

(Continued

Common

suc¬

produc¬

had

that

levels

to

Central States Elec. (Va.)

suc¬

and

at

Detroit Int'l Bridge

Aspinook Corp.

Capital Formation—Life Line of Progress

Frank C. Masterson & Co.

By DON G. MITCHELL*

President,

Established 1923

Sylvania Electric Products, Inc.

Ctctual TilaflteXfr Qu
Taylor Wharton Iron & Steel
U. S. Finishing com. & pfd.
Robertshaw-Fulton Controls

Electric System
Gen'l Aniline & Film "A"
Eng.

Electrochemical
Title Guaranty & Trust
Northern New England
United Piece Dye Wks.
Boston Terminal ZVz-M
United Artists Theatre
Hooker

Dumont Laboratories

Manufacturing
Boston & Maine R.R.
Aetna Standard Eng.

Bates

corporate earnings.

or

kill

Swasey

Newmarket Mfg.

all

In

year

animals

from

Some

have

be

to

acutely

is

plans, which require saving

citizen—in the form
tightening and more work

every

of belt

for

enough

factories, some 12 mil¬
political and other prisoners

lion

with

Hood Chemical

their

bare

are

Kirby Lumber

hands.

They

centration
In

have to invest

U. S. Glass Co.

Fabrics

time,

Int'l Detrola

skill

Time, Inc.

&TememAComptmcj
Dealers Assn.

Hanover 2-4850
1127

mak¬

Don

for

own

country, capital for¬

hand, taken

and, on the other,
misunderstood
and
No national economy

granted,
caricatured,

G. Mitchell

weapons.

By the same reasoning, no na¬ penalized.
tion—regardless of its social or can continue to do both.
political tenets—can dodge the
Take England, for example. She
universal
need
for
capital—the over-controlled
and
overtaxed
"seed

corn"

of

human

progress.

capital to such an extent that cap¬

ital ... formation virtually ceased.

*An address

by Mr. Mitchell at
Annual Meeting of Associated In¬
dustries of Massachusetts, Boston,
Mass., Oct, 23, 1947.

Trading Markets in

our

camps.

mation is, on the one

toil and
in

ing

herded in the Hitler-type con¬

So bad is her
labor
down

plight that

a

on

labor's

own

KANE,

WALTER

Asst.

Mgr.

Writing in the spring issue 0'
"Harvard
"New

Business

England's

American

Review"

Decline

or

the

in

Economy,"

Joseph McManus & Co.
Members

York

New

Stock

Chicago

39

-

Exchange

New York 6

Broadway

Digby 4-3122

Curb Exchange

Teletype NY 1-1610

situation here is that bad—at least

still

you

car

your

well and

eat

drive

can

for pleasure.

Southwest

However, it is true that New
has been falling behind

England

the rest of the country
nomic
tinue

for

measure

turns
can

long

on

you

for

the

past
long

eco¬

con¬

to buy more than

and

produce

you

in its

You cannot

progress.

pay

excess

in

large

from

investments.

continue to

re¬

Nor

pay

a

British higher proportion of the federal

government is now clamping

MICHAEL HEANEY, Mgr.

taxing away $33 a month out of
family income of $113.

terials and

kept

Securities

a

Seymour
—slave labor is used up on ah Karris likened New England's eco¬
unprecedented scale. To increase nomic position in this country tc
Russia's capital in the form of that of Great Britain in the rest
roads, reclaimed lands, raw ma¬ of the world.
I doubt that the

game

N. Y. 5

today

of her capital deficiencies.
addition to the endless five-

Moxie Common

Bell Teletypes—NY 1-1126 &

Curb and Unlisted

aware

cattle.

his

Russia

Soviet

grazer

can't

HAnover 2-9470

<$>-

there won't

be any crop.
A

NEW YORK 5

ST.

It is one of those basic things
Capital formation is the life line of human progress,
that no civilization can get along without.
I mean just that, from the ground up.
A farmer can't use up all of his corn.
Somebody has to save seed for next year's crop.

kill

Federal Liq. Corp.

WALL

Teletype NY 1-1140

breeding.
.Neither can
a hunting tribe

Punta Alegre Sugar

Members N. Y. Security

64

Warning sufficient capital is not being accumulated from private savings to maintain normal rate of in¬
dustrial growth of U. S., prominent industrialist lays prime cause to taxation system which discourages
investment and handicaps venture capital.
Urges overall revision of taxation system and equitable tax
reduction for all income tax payers.
Sees main source of venture capital in retained and reinvested

T

York Curb Exchange

Members New

37 Wall St.,

'

been

26)

on page

Stock

Common

-Tel. REctor 2-7815

Lea

2-4230

Teletype NY 1-1227

war

Loft Candy

BROADWAY, NEW YORK 5

Warner &

Quoted

$102 billions.

Members

York Stock Exchange
New York Curb Exchange

New

New

—

billions to

McDonnell &fo.
120

,

Kingan & Co.

supply
deposits)

demand

end

of

accompa¬

money

almost

World War.

Chicago, 111., Oct. 28, 1947.

expansion

economy

increased

expe¬

The inflationary changes are

by Mr. Szymczak

ence,

of

already

The

consequences.

not

has

prices

since the

address

the

have

risen by about

more

at

dollar will buy
half of what
because

1939

particularly

Bought—Sold——Quoted
Request

agree,

The fact that the process

strides

*An

in
we

will

in¬

rienced.
M.

ations.

American Water Works

our

than

more

it

and

1

of

hardly

interna-

our

current

us

the

of

needs

Most

our

reconcile

7-4070
Teletype NY 1-1548

Telephone COrtlandt

of

however, that

to

is

measure

flation.

cen¬

problem

policy

It is probably
develop a wholly

to

accurate

of national

York Curb Exchange

Street, New York 5

impossible

unfavor¬

o r

Common

branch offices

our

course,

our

may

A

La.-Birmingham, Ala,

original source of our pres¬
inflationary situation is, ol
the war and its economic

ent

about

impacts

Exchange

NY 1-1557

HAnover 2-0700

Direct wires to

fined

are

Stock

St., New York 4, N, Y.

New Orleans,

Inflation

ation. These

100%, and consumer prices
—the
so-called cost
of living—

York

New

25 Broad

The

domestic situ¬

Class "A"

on

serious dilemma.

a

war.

plight of
foreign coun¬

Savoy Plaza

Prospectus

Steiner, Rouse & Co.

economy.

alleviate

tries

Bell System

our

policy confronts

the

3/6s, 1956

31 Nassau

burden

Members

to

Vanderhoef & Robinson

!

Bought■—Sold—-Quoted

At home we face strong
inflationary pressures; abroad we face world crises. Whatever we do to combat inflation
in our domestic economy will affect the position of other countries. And whatever we do
American financial

Teletype NY 1-583

Members New

System

goods, with strict economy in consumption of scarce materials. Wants consumer credit
relation to goods available for purchase and international aid within limits so as not

proper

to

York 5

Savoy Plaza

Louisiana Securities

'

causes of inflation, Federal Reserve Board member advocates reduction in
if possible, by voluntary cooperation and a restriction of credit to increase

Corporation
BArclay 7-5660

*

output of scarce

New York Hanseatic
120 Broadway, New

!

f

Member, Board of Governors, Federal Reserve

When issued
Prospectus on

Alabama &

Financial Policy

Cv. Deb.

12/15/57

Due

Thursday, October 30, 1947

Domestic Credit Problems and International

~

Amer. Tel. & Tel.
New 2%%

CHRONICLE

FINANCIAL

&

Troster, Currie & Summers
Members

tax bill than other sections which
York

New

(Continued

freedom and

on page

Security

Dealers

Ass'n

30)

Buda

PUBLIC SERVICE

Cleveland-Cliffs Iron

We Maintain Active Markets in U. S. FUNDS for
Abitibi Pow. & Paper

Noranda Mines

..

Republic Natural Gas

$2.40 Conv. Preferred

Solar Aircraft Company *

I

Brown Co,

Minn. &

Michigan Gas & Electric

Raytheon Manufacturing Co.

COMPANY

Grinnell
Ont.

Paper

OF NEW MEXICO

90c

Mfg.

Standard Stoker

United Kingdom 4

70 FINE ST., N. Y. 5

i

WHitehaU 4-4970

Teletype NY 1-609




South African Mining Shares

—

SOLD

—

QUOTED

*Universal Winding Company
90c

British Securities Department

v

Conv. Preferred & Common

Memorandum on request
♦Prospectus on request

*Prospectus available to
dealers and banks only

G. A.Saxton & Co., Inc.

% '90

BOUGHT

Company

$i .25 Conv. Preferred "*

9

^Standard Ry. & Equip.

Conv. Preferred

Twin Coach

Common

Canadian Securities Department

Goodbody & Co.
Mem hers N. Y. Stock Exchange
115

BROADWAY

Telephone BArclay 7-0100

1

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

Teletype NY 1-672

J-G-White 8 Company
INCORPORATED

37 WALL STREET

NEW YORK 5

Reynolds & Co.

ESTABLISHED 1890

Tele. NY 1-1815

New YorkfStock Exchange
Broadway, New York 5, N. Y.
Telephone: REctor 2-8600
;

Members

120

Tel. IlAnover 2-9300

"T

Bell Teletype:

NY 1-635

.

Volume

166

Number 4642

THE

COMMERCIAL

the

News

By

Pace

Reduction—Harley L. Lutz___

United

States—Their

Mutual

(1735)

LEEDS

AND COMPANY

Co., Engineers

Cover

will be

Domestic Credit Problems and International Financial

Szymczak

2

Capital Formation—Life Line of Progress—Don G. Mitchell

tinue

Then

let

lesson

con¬

Declares labor and international situations

in

sense

right

stein

greatly clarified.

first

your

of

the

world:

holding

securities.

of them

Better

on

to

dispose

Company.

3

now

you

knowledge

no

obsolete

are

give

us

in

There's

satisfactory through 1948, and corporate profits will

favorable.

2

Big Bull Market Ahead!—John Leeds Kerr

BORN YESTERDAY?

recent

Coyer

31

LlCHTCnSTfi

B. S.

KERR

Engineer economist holds security holders who liquidated following
pessimism, may miss biggest bull market in history. Asserts
some
inflationary elements are now permanent, general business

Economic

Danger of Our Buried Gold—Thomas I. Parkinson

S.

JOHN

Cover

Problems—James D. Mooney

Policy—M.

CHRONICLE

President Kerr &

The Right Kind of Tax
Canada and

FINANCIAL

BigBull Market Ahead!

I NDEX
Articles and

&

&

away at

B. S. Lichten-

The

4

4

Comparison of 1919-1920 and Now—Karl W. Schlubach
Comments

Technical Market Formulas

on

major risks confronting the investor today are not those
of lower security prices. Instead, it
appears to many astute market
have led

(Letters to the

that

observers

Editor)

Jet-Propulsion in the Stock Market—A. Wilfred May

5

Social Theories and Progress—James A. Howe

6

Curb Inflation and Provide Foreign Aid—President Truman

7

European Aid and Marshall Plan—Joseph M. Dodge

the

9

•

•

extremes

,

since

point

Facts and Figures About Industrial

An

major¬
ity of the pes¬
simists do

that

Savings

Bonds

20

Exceed

John Leeds

Redemptions,

Says

Morris
6

Nat'!

(Boxed)

8

9

M. J. Dickey Resigns as President of General Dyestuff Corp.

10

Henry Hazlitt Contends Dollars Alone Cannot Save the World 11
Underwriters Facing Anti-Trust

Suit

13

Junior Investment Bankers and Brokers Association

Baltimore

of

150

on

who

advance

an

of

realm

Thus,

Outlook

ex¬

300

to

would be entirely within

more

the

Ass'n of Real Estate Boards Foresees Brighter

Housing

will

it is generally expressed that

subsequently

possibilities.

we

willing

are

of

maximum
downside

gamble

to

30

points

against

as

sibly

120 points.

odds

seem

were

on

a

the

rally of

a

on

pos¬

Not only do the

uninteresting,

ing that I

assum¬

Formed

16

is difficult for

Antwerp Bonds Called for Redemption

16

in

Swiss

16

not
indicate
materially
higher
prices for securities over the next

Is

Bank

Corporation Makes Exchange Offer

Investment Bankers Association cf America to Open

Convention

30

November

on

18

In fact, I have reached

year.

clusions

the

on

business

Export-Import Bank Grants Additional Credits to Italy

19

based

Treasury Issues Stricter Regulations

22

ground"

analysis

indicates

the

Gold Traffic

on

23

Dodge Survey Indicates Economists Expect Mild

Business

Recession

Next

"on

which

the

clearly

imminence

of

per¬
mar¬

in

ket

Year

24

Tretter Concludes Housing Lectures at Columbia University

history.

The

Loans and Deposits During First Half of 1917

25

Morse Discusses Controls for Distribution Costs

tion for

purchased

has

investors

at

been

who

Regular Features

sets

Page
iEditorial)

We See It

Bank

Reporter

Our

Reporter's

13

Securities

Canadian

Coming

Our

10

Stocks

Insurance

and

in

Events

Page

Cover

the

Investment

higher levels have
a deflation of as¬

Offerings

Railroad
8

8

Securities

12

Ahead

Washington

News—Carlisle

the

of

Bargeron

of

State

(Walter

16

Fungs

News. About

Now

(Panks and Bankers
Wilfred

Twice

Published

Washington

«a a

24

"See

5

May

U.

Place,

Park

COMPANY, Publishers

New York 8, N.

REctor 2-9570

available

on

Other

Patent Office

S.

DANA

$25.00

Y.

Note—On
the

to 9576

HERBERT D. SEIRERT, Editor & Publisher

rate

of

In

week.

made

in

the

last
of

decline

have

per

per

year.

year.

a

assume

these

would not
wartime

the

—

Monthly,

postage

extra.)'

fluctuations in

exchange,, remittances for for¬
York

or

soft

as

level.

sales

rail

D.

Business

RIGGS,

we

would

Every

Thursday

vertising

issue)

(general

and

and ad¬
Monday (comnews

every

(olete statistical issue — market quotation
records, corporation news, bank clearings,
state
!

and

Other

city

news,

Offices:

S.

Salle

La

St.,

Chicago 3, 111.
(Telephone:
State 0613);
Drapers' Gardens, London, E. C., Engfland, c/o Edwards & Smith.

)L

•Copyright

1947 by William

B.

Company
Reentered
ary

25,

York,

as

1942,

N.

Y.,

second-class

at

the

matter

po: t

§he

under

office

Act

have

remained

of

ready

Possessions.

in

United

Territories

Pan-American

Union,

find

$35.00




Prudence Co.

New

However,

Broadway
1-714

it

witnessed.

We

Haytian Corporation

have

Punta Alegre Sugar

psychological depression
and
a
period
of
readjustment
which is probably nearing an end
and
recovery
is now a logical
a

Lea Fabrics
Warren Brothers "C"

prospect.
Basic Bullish
In

tals

it

Susquehanna Mills

Fundamentals

reviewing

basic

becomes

fundamen¬

increasingly

ap¬

DUNNE&CO.

parent that: (1) While certain de¬

flationary trends
ent

are

now

appar¬

degree of inflation in the

some

nation's price structure is certain
to
be
permanent.
(20
Business

Members N. Y. Security Dealers Assn.

25 Broad

St., New York 4, N. V-

WKitehall 3-0272—Teletype NY 1-956
—

activity generally will be at
isfactory
level
this
Fall
through 1948. (3) There is
most

favorable.
been

part

sat¬

a

and
every

the

no

ap¬

sales,
goods

relatively high in
con¬

be

quite

These conclusions have

derived

from

the

Elk Horn Coal

following

factors:

Common

Certain prices may be too high

(particularly farm
other

prices

Radical
time

products)
far

seem

inflation

shortages

is

but

too

based

cure

but

it

cannot

due

higher costs of production
mass output itself puts new
in circulation
flation

potential.

QUOTED

CORPORATION

to

52 Wall St.

New York 5, N. Y.

the

as

money
adds to the in¬

and

—

FIRST COLONY

alleviate

inflation

permanent

any

SOLD

a

Mass production can only
inflation
in
prices due to

shortages

—

war¬

longer

no

BOUGHT

low.

on

threat.

Tel. HA 2-S080

Tele. NY 1 -2425

It is quite pos¬

that farm

commodity prices
especially the grains, may decline
but

this

is

needed

have sustained

prices

have

if

we

prosperity

been

are

to

Bank

such

as

disproportion¬

of

ately high.
Demand

is

great

so

become

in

the

will

types of goods that

unit

to

the

replenishment

filling

one

concerned

of

of

for

New York

all

should not

%

normal

over

inventories

pipe-lines with

Bought—Sold-—Quoted

and

manu¬

facturers goods. The buyers mar¬
ket is the natural market and we
all

are

of

going to have

starvation

for

the

may

time

are now

if

not

come

a

long period

have

we

"sellers

to

markets"

inflationary
(Continued

period.

on

page

Members New York Stock Exchange

wait

which

until the next

U.

year;

S.
of

in

are

war¬

and

1

other leading exchanges

WALL ST.

NEW YORK 5

Telephone DIgby 4-2525

Early

29)

interested in offerings of

B. V. D. Corporation

High Grade Public Utility and Industrial

Public National Bank
& Trust Co;"

PREFERRED STOCKS

Spencer Trask & Co.

Members New York Stock
Exchange

Members- New

Members
per

2-4500—120

System Teletype N. Y.

*Third

Newburger, Loeb&Co.

States,

We

Lawyers Title & Guar. Co.

March

Subscription Rates
Subscriptions

been

been in

their

offset soft

predictions

Lawyers Mortgage Co.

Febru¬

.at

of

I

1879.

(

Bond & Mtge. Guar. Co.

N. Y. Title & Mtge. Co.

Dana

1

v

CERTIFICATES

etc.).

135

REctor
Bell

TITLE COMPANY

Thursday, October 30, 1947

I
t

Established 1908

Members N. Y. Security Dealers Asm.

a

sales

at

was

trary, several publications

Manager

rates.

believed that

WILLIAM DANA SE1BERT, President
WILLIAM

J.K.Rice,Jr.&Co

majority of the
readjustments have al¬

"recession"

Noting that retail sales

spite

funds.

many

goods

in

re¬

led

However,

decrease

durable

declines.

1946

be maintained

first half of 1947 there

Record

Finishing Com. & Pfd-

the

increased

sible

1945.

began to
again be¬

that

"depression"

Record—Monthly'
postage extra.)' preciable

(Foreign
of

goods
This

Publications

account

New

quarter of
soft

available.

came

period of

a

August,

durable goods

as

because
838.00

since

sales

eign subscriptions and advertisements must
be

have been in

we

(Foreign

Earnings
year.

this

9.

page

Quotation

year.

per

Regardless of peak
production in certain lines of acti¬

analysts to
not

ancl
per

Monthly
25

48

ex¬

to last forever.

5

14

have failed, and
been a difficult

pected the wartime abnormalities

adjustment

You

Canada,
Countries, £42.00

Bank
$25 00

prosperity

vity,

Industry..

mind.

time for those individuals who

tail

of

and

CHRONICLE

FINANCIAL

B.

and

article

Dominion

Weekly

COMMERCIAL

Reg.

and

of

last year has

44

Whyfe Says)

Article

Other

WILLIAM

Trade

depression

a

21

Corner.

Registration

17

Observations—A.

The

in

*

Tomorrow's Markets

Notes'

NSTA

Salesman's

Securities

41

Indications of Business Activity
Mutual.

Securities

The

23

Devices
From

Estate

Securities

"Schachtian"

Einzie—Belgium's

Real

the

46

Dealer-Broker Investment
Recommendations

time

14

Utility Securities

8

and

Some business dependent on war¬

20

Governments

Report

Prospective Security
Public

Field

on

had

even

is

have
stocks

common

already suffered

As

reasons

Haile Mines

'

U. S.

temerity to advise the ICC against

for

Private and

year.

sacrifice

to

Us

period of transi¬

a

a

institutional
had

43

over

Behind

States

going through

35

Textron Develops New Quick Dry Textile

Is

United

29

United Hospital Drive Group

Jersey Worsted Mills

Moore Drop Forging

expectation that corporate profits
Deflation

24

Rand-McNally Directory Reveals Large Increase in Bank
John M. Hancock Heads

extensive

on

con¬

picture,

haps the most extensive bull

Prof. Lionel Robbins Sees "Leakage" of British Capita!
F. W.

political

to find

me

militated

against a normal
fairly rapid restoration of
price-cost relationships in nonregulated
industries.
OPA
for

anything
present outlook which does

the

New

General

as

Motors, Allis-Chalmers and Kennecott Copper in 1946.
Unfortu¬
nately, the political factor of OPA
was injected into the situation and

gambler, but it

a

such

concerns

necessary

analysts

sound

see

Aeronca Aircraft Com. & Pfd.

relationships
have
in many publicly

little prosperity for the
railroads in over a year. Strikes
and other work stoppages crippled
large

STREET, NEW YORK

Telephone: WHitehall 4-6551

distorted

this

the Dow Jones

or

99 WALL

may

and

ceed

Kerr

21

M. Townsend
One Way to Begin

not

lows

Blackall, Jr

months

been very

possible

and
of

Price-cost

1947-1948

19

The United States and the World Crisis—James P. Warburg-

Sales

a

anticipate that

Mergers

Appraisal of Some Banking Problems
S.

the

17

Montague

—Frederick

Street

finds

15

Development in the Last Fifty Years—William V. Troutman

H.

with

analysts,
writer

Open End Investment Funds—The Most Significant

—Gilbert

view-

Wall

15

Step Forward in Government Responsibility

Ralph E. Flanders

recent

regulated industries and there has

bearish

13

—Sen.

of

been

12

„

In

1929.

The Crisis Facing Private Enterprise—Chester Bowles

European Recovery—Hon. Willard L. Thorp

pessimism

discussing the

The Railroad Security Outlook—Walter F. Hahn

A

in

security holders to liquidate securities and thereby
possibly
miss
—
the
greatest reversing themselves by reporting
bull
market a buying
upswing. •

some

15 Broad

York

St., N.Y. 5

Bell

Teletype

Stock

135 S. La Salle St.,

1-2033

Street, New York 4

Tel.: HAnover 2-4300

Exchange

WHitehall 4-6330
NY

Members

25 Broad

New

York

Curb

Exchange

Chicago 3

Tel.: Andover 4690

Teletype—NY 1-5
Ai'iarv

-

Boston

-

Glens

Fells

-

Schenectady

-

-

Worcester

quarter

available

C. E.

on

analysis
request

Unterberg & Co.

Members N. Y.

Security Dealers Ass'n

61 Broadway, New York 6, N. Y.

Telephone BOwling Green 9-3565
Teletype NY 1-1666

ftpfm i'f^^^H.

THE

COMMERCIAL

CHRONICLE

FINANCIAL

&

Thursday, October 30, 1947

Letters to the Editor:

Comparison of 1919-1920 and Now
By KARL W.

SCHLTJBACH

Economist, Bache & Co., Members

(2) present price increases are
There is

repeat the post World War I pattern in our economy and that
the contributing causes behind the cautious attitude displayed
past

<»-

year.

is

it

Thus,

generally

asr
sumed that we

have

will

..

J|

had ruled ver.y

ulative

recession in

drained

business

away

ac¬

Street had

in the

good deal of the funds

channels.

from commercial

ranged from 6% to
single day and on the

money
on

a

day of the break soared to 30%.
On this day General Motors de¬

points from 348 Vz and
total of 126 Vz points from tne

clined 68 Vz

spread unemp 1 o y m e n t.

a

reasoning has
something t o
be said for it

ographers were working
to $20 per week.

but his

only recommendation con¬
a plea for more produc¬
Newspapers did not head¬
line the cost of living as they do

sisted of

tion.

but

now

sporadic

consumer

For

1919.

purchase of

general theory that his¬

earnings had shrunk to about
that despite the fact that
automobile production doubled to
two million units.
Railroad earn¬

tory always repeats itself. A study
of the pattern of the decline which

ings were on a decline and had
shrunk from the wartime peak of

down

than the

and

work

a

which do not

at that time

any

hesitate to
be¬

of business cycles will
close

too

on

Nov.

broke

market

was

The

1921.

postwar bull

been built largely on

market had

hopes which suddenly threatened
Hot to materialize.
The tremen¬

there
would

dous backlog of demand was

but somehow the

economy

Strikes and
was
bedevil¬

not function smoothly.

threats

of

strikes

Steel production
had been plunged to 40% of nor¬
mal in September by a strike and
ing all industry.

an

estimated

two

million tons of

production out of an annual total
of 39 million had been lost.
A
nationwide coal strike
on

Nov.

eral

1

Court

August

called

was

of

in defiance

a

Fed¬

injunction and a cer¬
was vying for

to
In

60-90 days

securities

carried

83/4% interest rate and the
rediscount rate reached a peak of

1921. Secondly,
and wages continued to
upward
and
industry's
profit margin was impaired. Also
the sudden rise in the cost of food
made serious inroads in consumer

6V2 % in March of

prices
spiral

In November
of 1919 butter was selling around
75 cents per pound and eggs at
$1 per dozen.
Spot cotton was
quoted at 42 cents per pound at
Memphis, lard sold for 28 cents
per pound and copper for 20 cents.
Yet
wages
and
salaries
had
scarcely kept abreast
of these
prices even though they were over
twice the prewar rate. Thus the
average
hourly earnings in all
purchasing power.

manufacturing
to 47.7

spotlight with Samuel Gom-

Railroad unions were mak¬
ing wage demands on the already
harassed
government - operated
railroads
and
a
longshoreman's
pers.

York

tying

was

industries

rose

in 1914
It is inter¬

22.3 cents per hour

the

New

on

was

fall of 1920.

the

1920

of

loans

time

from

in

stringency

credit

The

continue until the

tain John L. Lewis

Strike

1920

Credit Stringency of

an

1919, it started a de¬
to continue until

12,

cline which

August,

now.

stock

the

When

analogy

an

and

tween then

student

million in 1919.

$117 million to $74

a
set of
of forces at

series

exist at present and
draw

period

the

reveal

will

1919-1920
events

during

in

set

which

cents in 1919.

esting to note that latest
earnings statistics show

hourly

that in
July this year they reached a
postwar peak of $1,234. Yet, on
the

other

hand,

food

prices are

the peak
It becomes
food prices
York.
were
considerably more out of
However, the immediate causes
line then than they are now in rela¬
for the break in the market were
tion to wages.
The white collar
more varied.
Firstly, the Federal
class must have suffered a good
Reserve Board in order to stem
speculation in the stock market deal more, too, as the prevailing
up

of

half a billion dollars' worth
goods in the harbor of New
a

raised

the

4% to 4%%

rediscount
on

rate

from

Nov. 4 and urged

now

just slightly above

they reached in 1920.
readily evident that

rate

York

for

in

bookkeeper

a

was

New

$35 per week and sten-

of

the fall and winter
example, the rail¬

in

of

year

based on more

outbreaks

resistance became more

frequent

brotherhoods announced the

number of clothing
factories and promised to operate
them cooperatively and to bring
And
of

the
on

New

a

of clothes

cost

May

25-50%.

13, 1920, the Mayor

Orleans

proclaimed "Old
Clothes Day" as a protest against
the high price of clothes.
Industrial

at the

production continued

high wartime rate until the

summer

reached

of

1920.

Construction

the

peak of 207% of the
1913 rate in October, 1919.
Fol¬
lowing a seasonal winter decline,
it reached a second peak of 134%
of the 1913 average in April, 1920,

At the peak they
about 11.8% of the

$4.5 billion.

This year

help point
Originally, I took a course on charts primarily to
know what was back of the "lingo" of the chartists, and also to see
if it could be of assistance to me in judging the future.
I have also
read
a
number
of
books
on
various
theories, including Dow.
I
kept charts of various types,<S>
—•
tried

to

follow "rules"

estimates

The
basic
argument
of
Mr.
May's articles that the past in and
of

itself

ture

is

does

not

mulae

of

Theory

should

before there is

sion

signs of

began to appear in the late

spring of 1920 when a wave of
department store sales swept the
country.
A late and wet spring
coupled with a silent wave of
consumer
resistance found most
stores

saddled

were

in¬

with topheavy

ventories; 20 to 30%
not uncommon.

markdowns
In some in¬

striking employees in in¬
dustry suddenly found themselves

stances

confronted with

a

lockout by man¬

unemployment incontinued on page 22)

agements and

confirmation, de¬

a

theories have the objec¬
mind that the length
time of any phase varies to

Cycle
in

of

my

an

extent that extreme cau¬

used in basing con¬
prior periods.
I do
feel, however, that an exception¬
ally long movement in one direc¬

tion must be

clusions

are

set

let

reason

The

odds

investor

an

Psy¬
individ¬
by
long

emotions

favor

mistakes

of

seem

such

on

new

circumstances

to be very

the

basis

that

there

Durez Plastics & Chem.

Buda Company

Kendall Co.*

Carey (Philip) Mfg.

Oxford Paper Com.&
Sold

York

§
•

■ft-

m

Established

-

MOTORS

Request

Members

105 West Adams St., Chicago
Teletype NY 1-672

1956

to

W-




York

request

REctor

LOS ANGELES

but

certainly Mr. May has done a real

pointing out the basic
weaknesses in certain well pub¬
in

service

licized

systems.

chart

Very truly yours,
JAMES S. LINBURN.

Neuberger & Berman,
160 Broadway,
New York

7, N. Y.

27, 1947.

Oct.

Editor, Commercial and
Financial Chronicle:
As the

author of

book on technical

known

al¬

devil his due.
Since the Dow Theory

is singled

particular target, this will
illustrate my contention as well
as anything. I agree with Mr. May
that its "signals" do not have the
slightest element of forecast, and
also that the esoteric jargon and
as a

exponents

cipal

somewhat

prin¬
it

made

have

But,

ridiculous.

as

I

ago

these diffi¬

eliminate

line of
concept. It
Hamilton who really added
and

hew

to

the

Dow's original simple
was

all the frills.

More important, however, is

2-8700

1-1286-7-3

the

the

big moves and, by the same

subject to whipsawing
erratic periods.
Unless
stocks settle down

token,
the

»

Seligman* Luibctkin

&)

Co.

INCORPORATED

A1 Broad Street

in

other

to

fluctuating within the same price

indefinitely and cease to
broad trends—and
it is hardly unjustified "forecast¬
ing" to assume that there will be

range

broad trends—a

Broadway, New York 5

Security Dealers Association

PHILADELPHIA &

charts cannot serve a purpose,

have important
on

consistent follow¬

ing of the Dow Theory will just
as

surely produce good profits in
it has in the past.

the long run as

192G

New

Wires

plan might help to overcome this
human quirk.
I
do
not wish
to imply that

culties

and Other Principal Exchanges

4% Convertible Debentures due

AVAILABLE

N Y

hedging

as a

Samuel Moment worked out some

CORPORATION

Members New York

Direct

market, even

operation, is completely outside
the general experience.
I origin¬
ally had hoped that the formula

pointed out in my book, very sim¬
ple and definite rules which a

Quoted

GRAHAM-PAIGE

Railway Equipment

Tele.

my

pragmatic test of results. After
all, it is inherent in the nature of
the Dow Theory or any similar
method that it must be "right" on

Memorandum

f

the

of

varying interpretations of its

Pfd.

Federal Water & Gas

120

was

are

Art Metal Construction

115 Broadway, New

it

methods ("New

Crowell-Collier Pub.

-

studied

first

I

gotten hold of something, people
seem to hate to let go.
To go short

people who are looking
something different. Neither

ways

for

American Hardware

Telephone BArclay 7-0100

Phone:

would

high.

Goodbody &. Co.

Conditioning

Wakd&Co.

as

a fairly wellmarket
Methods for Profit
Ratio theories always give me in the Stock Market," published
the impression that the originators in 1941) I was extremely inter¬
either had unsatisfactory results ested in Mr. May's articles on the
with whatever system they had subject in the "Chronicle."
been
using and decided to try
Although I agree with almost
something new; or that they were everything he says, I nevertheless
trying to merchandise something also feel that he fails to give the

under

Derby Gas & Electric

I

me

out

Members N. Y. Stock Exchange

-SPECIAL REPORT

indicated,

investor will

years

Portsmouth Steel

Standard

rather

their actions.

govern

in

to

his analysis.

people, as
influenced

and

than

con¬

timing has the objec¬
namely, that the
eventually be out of
the market.
Carpenter, in his
book, makes out a case for it, but
his examples are for a limited pe¬
riod. The one thing that intrigued
tion

on

should

uals,

reces¬

Fur¬

tool.

a

as

moves

a

be traded.

percentagewise from its use

chologically,

real

have
even

must have had a substantial move

check carefully

first

may

market,

the

on

thermore, the fact that the market

tracts

me

ple know when to buy, very few
know when to sell.
Once having

though it does not indicate which
securities

give

Formula

observation that while many peo¬

Dow

effect

reasons

fidence.

for¬

prove

the

the

say,
some

these

of

nothing. The
following of, let us

alone

extent

predict the fu¬

Mathematical

sound.

tion

Signs of 1920 Recession

make

would lose money.

they will represent about 7.5% of

The

and

to future

as

action, not
only of the market, but also of
individual issues.
My conclusion
was simply
that if my judgment
were
based solely on
charts, I

*Prospectus on

U. S. Air

remarks.

my

national income.

Bought

*

Neuberger and Berman, asserts Mr. May has
real service in pointing out weaknesses in chart systems.

a

•

up

such

By 1921 they had shrunk

represented

John E.

door to Dow followers, and

Wilfred May, recently appearing in your publication.
A bit of my own background on this subject may

$3.2 billion in 1919 to $8.2 billion

national income ©f 1920.

major trend changes.
open

Editor, Commercial and Financial Chronicle:

tion

to

to

James S. Linburn of
done

plunge down to 57% by
November.
Exports soared from
only to

in 1920.

common

Mr. May has left

This letter is my personal opinion of the "chart articles" of A.

present, no serious
attempts were made by the gov¬
ernment to lower prices.
Presi¬
dent Wilson recognized the prob¬
lem in his message to Congress,

half

K. W. Schulbach

for $15

the

Unlike

road

but it must be

Loshar says

this belief has been one of
by the stock market in the

previous week's high. However,
at 348 it was selling at about 10
times the 1919 earnings.
By next

of

line

a

20%

wide¬

This

mania

Call

tivity accompanied by
lower prices
and

Money
tight and the spec¬

lectivity in making loans.

|j|

a

greater se¬

banks to exercise

the

«

market behavior

in

people are obsessed with the idea that we will

doubt that a great many

no

Correspondents write Editor regarding Mr. May's attack on Dow
Theory.
Garfield A. Drew holds llisre are certain characteristics

and

no serious obstacle to sales; and (3) present wages
prices are not out of line as they were in 1920.

producing

income in relation to

consumer

Formulas

credit stringency or tight money conditions;

similar, because: (1) there is now no

not

are

Technical

on

produced recession following First World War and points out present

Writer reviews conditions which
conditions

Comments

New York Stock Exchange

Security Dealers Association
New York 4, N. Y.

Certainly,

as

Mr.

May points

out, it will miss a lot of the po¬
tential profits to be had, but on
the other hand, is there anything

(Continued on page 43)

Volume

Number 4642

166

THE

COMMERCIAL

&

FINANCIAL

In

and

Industry

market,

as

note their effects on the structure of the
their wide repercussions in the nation's economic,

inquiry to

well

as

business and political spheres.
For

demonstrating such impact in the market

place, and the uniformity of behavior of the most
popular of these techniques—the Dow
there is available
and

up-to-date

tained

the

in

mented

This is con¬
thoroughly docu¬

1946, dropped

A. Wilfred May

toelow the previous close and
in

11:16

the

the

morning.

industrial

pierced the February low of 186.02 at

At 11:38 Dow-Jones announced that at 11:30
close to the February low of 186.02 and

was

average

at 12:12. when the 12 o'clock averages were printed, the extent of the

break-through

made known.

was

followers of the Dow theory

This break-through

to

the

many

a

bear

mar¬

indicated the existence of

The average closed at 178.68."

ket.

The

sharpest decline

the

trading,

preceding

in

publication

following

and

occurred

with

in
of

the

the

the

day's

volume

of

periods
news

immediately
of the break¬

through of the average.
continued to fall after Sept. 3, the average
Oct. 9, but by the end of the year retraced the
gap to the Sept. 3 closing price.
It is now actually five points above
that close on the day of the break.
The

then

market

reaching

163.12

on

Commission

The
of

the

trading

carried

job of analyzing the character
interviews, 600 of which were

random from the list of transactions

selected at

recorded during the

day and 22 others who seemed to be among the 50 largest buyers

or

sellers

during the day; asking the reasons for their having acted as
they did. and why they chose that particular time for their transac¬

tion.

As reported

(page 17): "The two main reasons given for sales
the price decline during the day and the effect
of the Dow theory. The price decline during the day was the moti¬
vating force for an estimated 45% of the volume of public sales,
while the break or expectation of the break of the Dow-Jones aver¬
by the public

were

of industrials through the 'resistance level'

age

cause

of

estimated 20%

an

It must be

was

the immediate

of public sales."

a

Unseasonally

year ago.

interest

consumer

in

50

as preponderant as was broker or investment adviser
had 37 times the effect of a hot bear tip of the time from

times;

influence:

Walter Winchell

(who thereby seemed to command correspondingly

greater respect than did the professional broker

and 22 times

sel);
the

reason

"market
The

as

important

or

the investor's

as

of large consumers to go
prices has slowed up the rambunctious
scrap market this week, according to "The Iron Age," national metalworking weekly.
Scrap brokers throughout the country found it
difficult covering orders taken at high prices last week, not to speak
of covering a small amount of sales at "technically" lower quota¬
tions this week.
Consumer efforts to depress the price of local
Temporarily, at least,

overboard

the

on

of

Commission

the

Polian, Vice-President

and

Treasurer;

Miles, Secretary.

Garnette

C.

Mr. Polian has

been associated with the firm for
20 years.

Brown

Company Common

Brown

Company Preferred

Brown

Company 5s, 1959

HART SMITH & CO,
52 WILLIAM ST., X. Y. 5

Bell

the reluctance

HAnovcr 2-0980

Teletype NY 1-395

New York

Toronto

Montreal

We will BUY
Une)

changed Securities of

Chic., Mil., St Paul & Pac. R.R.
Denver & Rio Grande West R.R.

Gulf Mobile & Ohio R. R.
Minn. & St. Louis R. R. (Syst.)
Western Pacific R. R.

Gude, Winmill & Co.
York Stock Exchange

St., New York 5, N. Y.

Dlgby 4-7060

:

Teletype NY 1-955

being rapidly offset by importation of substantially greater
areas.
At Pittsburgh, this latest market
trend is adequately pictured by the purchase of a small amount of
scrap at a lower price, while scrap being delivered to the Pittsburgh
district from the East and Southwest is commanding prices as high
as, if not higher than, delivered prices of a week ago.

ACTIVE MARKETS

Soya Corp.

scrap are

Because

of

Pittsburgh,

a

wide variety

Chicago

than
are

Virginia Dare Stores

of factors ill the current markets

and Philadelphia, "The Iron Age" scrap

price composite this week is up 75 cents a ton to

a

new

historial

The advance was considerably less

has occurred diuring the past two weeks, and some

certain that the upward spiral has been arrested.

sources

SIEGEL & CO.
3!) Broadway, N. Y. (»

This view,

Teletype

Dlgby 4-2370

NY

1-1912

however, is not uniformly held in scrap circles.

observation, noting the highly
speculative technique of betting on other speculators' subsequent
behavior, that "Not all persons who sold as a result of Dow theory
(Continued on page 37)

$3

a

ton from a week ago, and at New York where the average
$2 a ton. Activity has also picked up in the South¬

advance has been

TRANSFERABLE

STERLING

west, and transactions immediately bordering major consuming dis¬
tricts have also

quickened, the above trade authority reports.
Major scrap consumers have found that No. 1 heavy melting
steel—a prime grade—has almost disappeared from some markets
under that name.
Considerable tonnages of industrial scrap and
types of low phos grades are moving at premium prices
compared with heavy melting quotations.
This overgrading,
the magazine points out, is bound to be common in a market like

ARGENTINE PESOS
BRAZILIAN CRUZEIROS

various

when

the

SEC's

present

Markets quoted for

any kind of
foreign exchange, free, blocked
or

one.

Another disturbing factor in the scrap market is the

certain
knowledge that some time in 1948 the Marshall Plan will call
for about 2 million tons of scrap to he exported from this coun-

(Continued

on page

35)

internal.

F. BLEIBTREU & CO., Inc.
79 Wall St., New York 5, N.

Y.

Telephone HAnover 2-8681-2
Cables:

ATTENTION

Officers

President;

Out-of-district activity has been highlighted this week by higher

adds these

follows

Smith,

amounts from out-of-district

is up

Dow

there

O.

Building,

& Co.

quotations at Boston, where the average price of heavy melting steel

Putting the Chart Before the Horse
And

Bank

current

coun¬

revealing conclusions regarding the
thinking both before, during, and after, the break¬
through (page 18): "Many other factors made their contribution to
the price decline prior to Sept. 3, but the influence of the Dow theory
is especially noteworthy.
There appears to have been some selling
even prior to Aug. 27 b,y persons anticipating the actions of the Dow
theory, but on that day, after the break-through of the July lows,
Dow selling first became appreciable."
effect

F.

Members New

0.1% BELOW

opinion that

investment
own

too high."

was

and

1 Wall

record of $42.58 a gross ton.

was

warm

STEEL OPERATIONS DIP

acceleration

This mechanistic trend

Harry

Harold

form

Con¬

heavy

at

"technical" trend.

to

weather in some areas dimin¬
clothing with expenditures for
food continuing to run very large.
It was further noted that low
quality merchandise of all types remained unpopular.
Purchasing by retailers was substanital with wholesale volume
in the week also slightly above the levels of both the preceding
week and the corresponding week a year ago.
Some retailers have
revised their buying policies, it was reported, and cancellations oi
overdue orders became more frequent.

emphasized that these two factors with the next most

a

make

the crucial winter months.

important reason stated—that is, the earlier price decline during the
Summer—are all variations of the same element, self-extension and
of

will

PRECEDING WEEK

out the

622

President

nation's reservoir of scrap now held at Army installations.
The
Navy and War Assets Administration also are cooperating officially
with the scrap committee.
In the week retail volume rose slightly above the level of the
previous week and moderately exceeded that of the corresponding

Sellers' Reasons for Acting

conducting

by

the

warning, it is reported, gave impetus to a joint industrygovernment drive to unlock stores of desperately needed iron and
steel scrap required to keep steel mills operating at high capacity.
The Committee has been designated by the Army to act as an
official advisory group on means of hastening the return to the

week

National

Smith, Polian

are

in

at

CURRENT
The

recommendations

this time largely speculative, but a reference to his
more recent pronouncements relative to the matter would indicate
that a restoration of rationing and price control will not be among
them.
A close scrutiny of his remarks would lead one to believe
that an allocation system might be under consideration.
At a meeting on Wednesday of last week in Cleveland, Rober
W. Wolcott, Chairman of the Steel, Foundry & Scrap Industries'
Committee for Expediting Iron and Steel Scrap, told officials of the
steel, foundry and scrap industries and the government that a
calamitous blow to steel production in the United States and to
plans for aiding Europe threatens unless iron and steel scrap is

ished

the market

continues,

report

what

are

The

February, reached a
15-year high of 212 in May, and then declined to 189 on Aug. 30,
the last trading day before Sept. 3.
After the Labor Day weekend,
the Dow-Jones average of industrials on Sept. 3 opened slightly

change

and the highly

collected before

186 at the end of

to

the

Smith, Landeryou & Co.,

summoning the return of Congress to a special
17, next, to consider high prices on the domestic
important problem of aid to Europe.

Nov.

on

Just

gress

issued by the Securities
and
Exchange Commission, which took a full
year to compile, analyzing from various angles
all trading on the New York Stock Exchange
a which
took place during the day of its major
break on Sept. 3, 1946.
The preceding and single day's behavior of
the market is technically described by the SEC
in terms of the averages, as follows: "The DowJones average rose from 92.92 in April, 1942, to
,145.82
on
July 14, 1943, declined to 129 on
Nov. 30, 1943, and rose to 206 at the beginning of

in

Truman

scene

report recently

February.

industrial output showed a slight increase the past
operations in many factories scheduled at peak levels.
Small increases in the production of some types of much wanted
industrial equipment were reported and unemployment claims for
the week ended Oct. 4 declined to 780,000.
This was the first time
in over two years that claims have dropped below the 800,000 mark.
Of much significance was the action taken last week by Presi¬
with

session

study.

research

voluminous and

Over-all

week

dent

theory—

most authoritative, objective,

a

to

of

of

Omaha

Failures

J

preceding articles we have analyzed the direct effects of
forecasting systems on their participants.
Let us now
our

Business

made

name

Forecasting)

"technical''
broaden

is

(ndex

Auto Production

economic, social, and political repercussions.
on

OMAHA, NEB.—Announcement

Commodity Price Index
Food Price

Momentum generated by chart followers entails wide

Changed to

Smith,1 Polian & Co, '3

Retail Trade

State of Trade

5

Production

Electric Output

Carloadings

By A. WILFRED MAY

Series

Steel

The

In the Stock Market

a

(1737)

Firm Name

(r

Jet-Propulsion

(Part Four of

CHRONICLE

Solofret,

New York

DEALERS!

International Detrola
We have

prepared

a

circular

on

the

Southwest Gas Producing

99

STEEL INDUSTRY

American Maize Products Co.
and

low-priced stocks of several speculative Steel

Companies

available

for

Retail

LAMBORN & CO.,Inc.
WALL

STREET

NEW YORK 5, N. Y.

Distribution.

Bought—Sold—■Quoted

SUGAR

MERCER HICKS & CO.
Members

150

Hat'l

Association

of

Securities Dealers, Inc.

FREDERIC H. HATCH A CO., INC.
Established

BROADWAY, NEW YORK 7, N. Y.

Te^phone:

Dlgby 9-4224




Teletype:

NY

1-2813

MEMBERS N. Y.
63 Wall

'

Exports—Imports—Futures

1888

SECURITY DEALERS

Street, New York S, N. Y.

Raw—Refined—Liquid

ASSOCIATION

Bell Teletype NY 1-897

Dlgby 4-2727

€

Schweickhardt, Landry Sales of Savings Bonds
Formed in New Orleans Exceed Redemptions
(Special to The Financial Chronicle)

NEW

LA.—

ORLEANS,

Schwieckhardt, Landry & Co. has
been

the

with

formed

Hibernia

Building
Leonie

cent

B.

in

engage

F. Landry,

Vin¬

and Erwin

D'Antoni,

R.

Mrs. Landry and

Schwieckhardt.

Mr. Schwieckhardt were formerly

partners in D'Antoni & Co.

By JAMES A. HOWE

After reviewing causes

by balancing

statement fur¬
nished the "Chronicle" by Morris
M. Townsend, Director of Bank¬
ing and Investments of the Treasury
Depart¬
to

a

Savings

still

many

prodiicts

great po-

in

the

the

$613,447
gain
in

the

same

by

Traded in Round Lots

riod

Street, Boston

24 Federal

Tel. Hubbard 3790

is-

at

1946 sales in¬

redemption value.

from the Victory Loan.

over

The

with

rent

utah

tables

comparing the cur¬

the

previous year fol¬

lows:

southern oil

Jan.-Sent.

Jan.-Sept

Series E,

F and G

Sales

Bought—Sold—Quoted

written

3,551,051

4,736,434

$1,755,797

$1,142,350

$3.1.91,930

Net

analysis and map of the
Rahgely Oil Field available

New

upon

(OOP's omitted)
$5,307,488
$5,178,784

$3,475,394

Redemptions
gain

Scries

E

Sales

request.

3,014,987

Forbes 6- Company

Net

4,282,705

$176,943

Redemptions

*$808,311

gain

*Net

loss.

FIRST NATIONAL BANK BLDG.

DENVER
Bell

2,

Teletype

COLO.
DN

^

51

RICHMOND,

VA.

LOUISVILLE
Dealers in

VIRGINIA—WEST VIRGINIA

American Air Filter

NORTH and SOUTH

American Turf Ass'n
Consider H. Willett

CAROLINA

Murphy Chair Company

MUNICIPAL BONDS

Reliance

Varnish

Co.

■F. W.-

CRAIGIE&CO.
™! BANKERS BOND ^

RICHMOND, VIRGINIA
Bell System

Incorporated

Teletype: RH 83 & 84

our

well

A. How*

ad¬

forward

uninterrupted,
to

come

an

era

if reasonable
found
to
foreign

pass,

(1)
Overexpansion of credits
against inflated values of securi¬
ties and real estate in the 1920's.

the expectation of a further
in earnings rather than
those then existing, the real¬
increased

that

ization

earnings

not being attained produced

spiral of liquidation, which made

New

Long-Bell
Lumber Company

INVESTMENT SECURITIES
509

$1.50 Per Share Earned
Ended

Philadelphia and

Los Angeles Stock Exchanges
Also

STREET

OLIVE

September

3

New York Curb Exchange

Members St. Louis Stock

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

tion

1946

$1,552 904

$1.50

Earn. Per Sh
9

NORTHWEST MINING
SECURITIES

of

Quotes call TWX Sp-43

1946

dole

Exchange

A.M.,

from

Std.

Pac.

10:45

Time:

to

Floor
11:30

Sp-82

makes total

This

of

Telephone
RIttenhouse 6-3717




PH

Members Standard Stock Exchange
•'

Brokers

Teletype
73

de¬

and activities rep¬

of
-

Peyton

Spokane

Dealers

-

reduce

abnormality, but the situation

remained

unprecedented as to

so

doubts,

arouse

and

fears,

uncer¬

The

rates.

of

inflation

and

of

translated
had

capital

moderate

more

deposits

into

not

were

boom, as many

a

The demand for

anticipated.

new

inflation

tremendous

reserves

expansion

for

re¬

mained
any

subnormal, and never at
time in the 1930's showed

These
nied

measures

by

were

accompa¬

ment

more

seems

practical

to

have

been

most

and effective when

ap¬

plied only to limited activities and
functions.
Central political plan¬

ning and control of ordinary ac¬
tivities such as general business
administration

seem

to have

been

slow, cumbersome and restrictive.

They appear to have delayed, nar¬
rowed, and in some cases, even
precluded individual and group

planning.
They prevented com¬
panies
from
going
ahead
as
on page

30)

At

the

current

per

share

Gulf Public Service Company

Iowa Public

254%

Lake

Underwriter*

Building, Spokane
Branches at

Kellogg, Idaho and Yakima, Wn.

Service Company

Superior District Power Company

"Michigan Gas & Electric Company

Michigan Public Service Company
Missouri Utilities Company
-Northern Indiana Public

year.

the dividend

"/

Indiana Gas & Water Company

Increase

Public
yield
*

Service Company

Service Company of Indiana, Inc.

Sioux City Gas &

approximately 'i'.c.

Detailed

Light Company

Central Illinois Electric & Gas Company
39

dividends of $1.50 pr

for

Hills Power &

Central Arizona Light & Power Company

Electric Company

Southwestern Public Service Company
Texas Public Service Company

*Tide

available for
dealers on request.

analysis

Water Power Company

Tucson Gas Electric Light and Power

CORPORATION

Stock Exchange Bldg. Phila. 2

bank

various construc¬

Black

$1.76

$22

share

is

STANDARD SECURITIES

OFFICE

were

require¬
to

^Central Electric & Gas Company

per

interested

PHILADELPHIA

respect

Reserve

PUBLIC UTILITY COMMON STOCKS

Approx. price—$20 per share

H. M. Byllesby & Company

this

increased

were

(Continued

share dividend has been
payable December 1, 1947 to
stockholders
of
record
November
1.

at

other hours.

Nazareth Cement

Warner Company

the

which

sum

aside.

thrown
ments

the

in

standards

prise.

190%

$3,518,805

$4.50

Earn. Per Sh—

$5.20

on

by sev¬
might
have represented a normal rate of
growth, thereof.
All reasonable
times

eral

cross between a di¬
and productive enter¬

declared

For Immediate Execution of Orders
or

increased

were

reserves

a

Per Cent

Botany Mills

Sterling Motor Truck

programs,

$0.78

Net Profit$8,960,201

Pittsburgh Uys. Co.

volume

to

and

deficit, and used the proceeds

Increase

September

Ended

Months

1947

American Box Board

Empire Southern Gas

the

ex¬

and currency in circula¬
To accomplish these objec¬

resenting

for 9 Months
"(I, 1917

1947

Net Profit

SPOKANE, WASH.

Empire Steel Co.

tion.

rect

$2,979,945

Exchange

Private Wire System between
Philadelphia, New York and Los Angeles

,,

posits

for

individuals,

by

of

stream

available

funds

increase

the

into

flow

Per Cent

New York

,

would

for direct relief,

September 30

Ended

Months

1420 Walnut Street, Philadelphia 2

;

In the 1930's member bank

treme.

EARNINGS

_St. Louis lfMo*

Member of

% »

monetary measures were in
respects unnecessarily ex¬

centralization of
(3) The use of the Government's government powers over industry.
Collective action through govern¬
credit
to
provide money which

the

The

Stix & Co.

Request

York,

stimulate capital

and

tives, the Government spent much
more
than its income, borrowing

BUCKLEY BROTHERS
Members

costs,

ness

penditure

Common Stock

:

the at¬

by

values.

current

Portsmouth Steel Corporation

on

The

,

a

Data

unfavorably.

tempt to collect reparations from confident vitality.
.
If, in the 1920's, oversavings, or Germany, and the unbalanced sta¬
Most of the government-spon¬
any unusual division of the gross tus of London's international ac¬
sored
construction programs in¬
national product or the national counts.
volved a subsidy, direct or in¬
income among their grand classi¬
The cycle of liquidation ran to
direct.
They did not supply at
fications can be said to have been
great extremes.
It abated only once
goods, employment and mar¬
causes
of the depression of the when values were extremely low,
kets, while carrying their share
1930's, the case was not clear many unsound debts had been
of the heavy burden of govern¬
enough to permit any confidence liquidated or readjusted, and the
They added burdens to
forecast. It seems likely that the abandonment of French claims to ment.
other industry, and held forth the
severity of the depression can be reparations from Germany made
prospect of still greater burdens.
better accounted for by conditions it possible to
restore a sound Increases in
government debts and
of detail
buried in the overall credit structure in Europe.
expenditures for other purposes
statistics. Fluctuations in general
had the same connotation. Politi¬
business activity seem to be due Public Measures to Overcome the
cal sentiment favored more steeply
Depression
to a great variety of distortions
graduated taxes. The prospect of
or
variations in economic inter¬
In this country the most widely
more
steeply graduated, as well
relationships of detail. The degree publicized
efforts
to
stem
the as more
taxes, was discouraging.
of these fluctuations is probably a liquidation and to restore business
Taxation on the basis of "ability
function of the particular nature, activity took three principal forms:
to pay" constitutes a system of
magnitude, and degree of these
(1) The use of the Government's
penalties on business success in
distortions or variations which do credit to ease the process of liqui¬
proportion to its degree. In terms
not repeat themselves exactly in dation.
of monetary fines personal busi¬
form, degree or timing. A few of
(2) A policy of extremely low ness success came
to be one of the
such abnormalities of detail were
money rates to discourage savings, most
heavily penalized acts.
the following:
facilitate borrowing, reduce busi¬

were

Gruen Watch

be criticized

may

beneficial influence of low money

created

those

as

ex¬

and exe-

purpose

Others

demands
arising
had been

wartime shortages

such

both

in

cution.

were

tainties which offset much of the

of Depression

Causes

cellent

many

permitted.

eliminated, and in some cases mo¬

upon

PHILADELPHIA

maturities

Special

(3)
from

may

unlikely

when

increase

ST. LOUIS

Beryllium Corporation

become

ones

is not likely
progress will be

such

exchange relations.
such improvement

mentarily excessive supplies had
solutions. are
been created—particularly in farm
problems, and if our social the¬
ories develop in accordance with products.
(4) A number of extraordinary
the distinctive features of Ameri¬
situations
of
unbalance existed,
can tradition.

upon

Bell Tele. LS 186

Long Distance 238-9

Junta

Since such values were predicated

Telephone 3-9137

Floor, Kentucky Home Life Bldg.
LOUISVILLE 2, KENTUCKY

1st

that

1946

1947

company

era

Although it

vance.

that

caused not
only a sharp reduction in the rate
of extension of new foreign cred¬
its, but an attempt to reduce old
had

renewed

f

industrial

.

clude $300 million January carry¬

DENVER

o

normal

Evidence

a

peacetime
Morris M. Townsend

are

price, redemptions at current

sue

10

Tele. BS 128

"

stated

with

an¬

ticipating

pe¬

and, in some cases upon anticipa¬
tion of abatement of interferences

1929.'

and

excellent

were

measures

purpose,

many

foreign loans were
predicated upon conditions at least
no worse than those then existing,

are rea¬

for

sons

1946.

of

Sales

Walter J. Connolly & Co., Inc.

These

Those
in

freely

less

and

granted.
(2) Many

iff

I

the

of

end

1947 exceeded
Preferred

Prior

at

sought

freely

greater

than

of

months

Boston & Maine RR.4

if any,

nine

first

i?

little;

is

ness

i7$i§0

hi

Aggregate pri-r
vate indebted¬

and

gain

.it next to impossible to raise new
capital easily. Expansion of plant
and equipment was impeded even
when new products were involved.
Credit for other purposes was less

into

tentialities.

demptions,,
the
net

be mitigated.

can

<$>-

has

s

s

with

re¬

are-

e

r

new

ex¬

ceeding

production must be adapted to con¬
social organization, and concludes,

within the social framework, depressions and unemployment

powers

as means

ings and equipment, durable consumers' goods, and other products.
These shortages are
a heritage not only of war but also of the depression of the 1930's.
War-time scientific prog-

sight

sion* sales of
Savings Bonds

warns
proper

with

economy

confronted by shortages of residencies, various types of manufacturing build¬

are

brought

Divi¬

Bonds

We

U. S.

compares

Stresses factor of increased production

needs and be marketable.

sumers

largest gains.

depression, Mr. Howe

prewar

Britain and elsewhere.

standards and preventing unemployment, but
Lays down principles for

of raising living

demptions. Series F and G show

According

and remedies of the

present socialistic activities in

sales of all series exceeded re¬

ment

BOSTON

Social Theories and Progress

During first nine months of 1947

Partners

business.

securities
Mrs.

are

the

in

ofices

to

Thursday, October 30, 1947

CHRONICLE

& FINANCIAL

COMMERCIAL

THE

(1738)

^Prospectus

Company

Available

COMSTOCK & CO.
,

A.C.ALLYN»®COMEANY

CHICAGO 4, ILL.

231 So. La Salle St.

Teletype

Dearborn 1501

CG 955

Incorporated

-

Chicago

New York

Boston

Milwaukee

Minneapolis

Omaha

Volume

THE

Number 4642

166

COMMERCIAL

&

FINANCIAL

CHRONICLE

a

Cub Inflation and; Provide

Foreign Aid: Truman

reasons for special session of Congress./Warns of repetition of 1920
France and Italy must receive food and fuel before end of year to avoid economic
collapse and totalitarian rule.

President, in radio address, tells

depression and

says

the

ing

dangers of price infla¬

17.

most

lief before the

of

the

to devas-

year

creases

t'ated

are

They recognize this need, and are
asking for the protection to which

Cause

ter¬

Being

of

Millions

France

tims

and

Italy.

the %

follows:

| I

My Fellow

meet

Truman

President

Congress
on

to

all

of

I

us.

want

to

talk to you frankly tonight about
both of these problems.
Since V-J

Day

—^prosperity

for

peace for all

the world.

we

all

measure

events have raised

new

gerous obstacles

our

dangered

by

The

progress

chart the

in

prosperity

the

threat

is

en¬

infla¬

of

of the world

peace

is

endangered by hunger and cold in
These

obstacles

by

action/

must

be

over¬

prompt and courageous
Legislation by the Con¬

gress is essential.

The need is too

to

or

of

us

can

because
a

a

nomic security and peace in that,
part of the world. It will
take some time to
complete the

consideration of this
make all

the

responsibility for

will

will

recall how

because

1929

wild speculation was followed by
the

depression.

Even

prosperous

today

victims

pective

those who
are

pros¬

inflation

of

made

to¬

is

it.

within

Our

sound.

our

is

economy

It

has

to

power

been

stop

basically

immensely

strengthened in recent years. The

buying

During the

At

present,

ports

at the

We

now

to

clothing
United

Domestic

Let

me

domestic

In

ways

jobs—and
at any

pur

We

prevent further loss and

can

can

meet

needs.

our

mean

Drices ration the essentials of life

by squeezing out the less fortu¬
We

meet

can

problem only by bringing
prices into line with the incomes

people.

our

In
we

place major reliance

untary

action

by

is

why

have

I

upon

vol¬

businessmen,

farmers, workers and
That

system

consumers.

repeatedly

urged voluntary price reductions.
But

the

ment

must

of the

responsibility

extends

of

turn

me

for

reason

respond

The
to

needs

are

better

into session.

they have in

many years.

and

We

goods for

retailers

business

record

earnings.

are

are

and

hunger and cold and human
suffering abroad. It is the prob¬
dren

this

and

men

women

who look to
crucial

We

crisis.
ger

and chil¬

for

us

advance

of

decision

our

If

help at

time.

The

imminent

most

dan-

exists in France and in Italy.

the

economies

of

these

coun-

them

world peace.

to

of war,

to stand

help

and

from

recover

one

free

the

on

devastation

their

own

another and

tribute their full share to

to
a

dominance

dom, and

doing all

support

free

governments

is

need

caused

the

worst
crops_ in
in a generation.
Crop
failures
in
France — the
worst in 100 years—and in Italy i
make it necessary for those coun¬
tries to import half the grain they
need to. live on during the coming

any

Europe

months.
The

free

fuel.

throughout the

other

Fuel

shortage

major

supplies

were

policy,

this

the

part

damage to railroads

foreign

have under

we now

sideration

of

duced

con¬

which

the

ing

and the re¬

efficiency of miners labor¬

on

United States should play in aid¬

inadequate diet have

an

(Continued on page 38)

A

t

A

nnouncmg

people.
THE

IN

CHANGE

FIRM

OF

NAME

LANDERYOU

8c

CO.

SECURITIES

SMITH, POLIAN & CO.
ESTABLISHED

1925

CHARLES E. KIMBALL

424 OMAHA NATIONAL BANK BLDG.

enjoy¬

OMAHA 2,

District

ever

use

NEBRASKA

Representative

more

than

as

F.

HARRY

HAROLD

with

history.

October 20,

Headquarters in St. Louis

1947

SMITH,

O.

GARNETTE

President
Vice Pres.-Trcas.

POLIAN,
C.

MILES,

Secretary

But these signs of
prosperity do
not tell the whole story. Although

production

shooting

is

high,

prices

are

DISTRIBUTORS GROUP, INCORPORATED

up.

Although

nearly

every

one

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

is

employed, many people cannot af¬
ford

essential

items.

high, the buying

We take

Although

national income has reached
of

power

a

hew

A

few

Startling

pleasure in announcing

many

the merger

people is shrinking.
i

figures—and they
figures—show how

are

the

Established

of

1856

cost of
i

living is going up.
Since the middle of 1946 this is

what.has happened:

H. HENTZ & CO.
MEMBERS

Clothing

prices

have

gone

up

AND

18%; household furnishings have
up
18%; food has gone up
40%. The average for all items is

NEW
OTHER

YORK

Edwin

LEADING

EXCHANGES

0. G. Johnson, Stocks & Bonds
We wish to

up- 23 %. • And the cost of living
is still climbing.
In the last three
months it has climbed at a rate
of 16% a year.

Wholesale

prices are also in¬
Since the middle of

creasing.

prices

affect

\

For

■

'•

••

of




us

as

Manager of

our

EDWIN LAVIGNE 6- CO.

TRADING DEPARTMENT

204 Mercy Block

203 Radio Central Bldg.

Yakima, Wash.

Spokane, Wash.

~ every

NEW YORK COTTON

EXCHANGE BLDG.

HANOVER SQUARE, NEW YORK 4, N.

-

our people the in¬
living has been off¬
set by increased incomes.
But for

some

creased cost of

that

R. EDWARDS

become associated with

industry and trade and they wiil
eventually be reflected in retail
prices.-

announce

MR. RANSOM

I9'46, textiles have gone up 30%;
metals, up 35%, and building ma¬
terials, up 41%.
These increases
in" wholesale

Lavigne & Go. and

STOCK EXCHANGE

gone

CHICAGO

DETROIT

PITTSBURGH

GENEVA

Y.

(Switzerland)

is:

depleted

by last year's severe winter. War

furtherance

O. C. Johnson, Manager

.

Member Spokane Stock Exch.

Main 5296

Teletype SP 60

i

Ex-1

world.
In

to

year ;

we can

and

men

essential

so

)

first

western

We believe in free¬

we are

to look forward to

us

food.

has

stable

over

for

recovery

Their

con¬

lasting peace. We follow that
policy for the purpose of securing
the peace and well-being of the
world. It is nonsense to say that
seek

■

!

ceedingly bad weather this

feet,

and

other nation.

or

their

nations

f

j

assist free

men

?

tries collapse and the people suecumb
to
totalitarian
pressures, ;
there will be no opportunity for)

following a definite and
clear foreign policy. That policy
has been, is now, and shall be to
are

the appointment of

record

on

long-range European recov-!
ery plan, we must help some na-;
tions
through
this
immediate j
the

TO

Manu¬

producing

civilian

in

other

of

lem of

f

-|

We take pleasure in announcing

greater

.

-

national income than

our

facturers

a

r

Emergency Aid to France and

In

the

have

wages—than

receiving

chaos.

INVESTMENT

time in the past.
are

being crippled by
paralysis and resulting

economic

have

we

,

winter without

Congress
This is the problem

now

workers

na¬

recov-

gov¬

govern¬

the

If European

they must get through this

ery,

the

The American people now have

even

to

now

calling

^beyond aiding

action.

for

program

Our Foreign Policy

Let

to

free-enterprise

our

a

promise of future plans

tives are to continue their

Italy

we

this

Europe make this
decisive time in history.

a

endangered.

are

dealing with inflation, high prices
and the high cost of
living. Ade¬
quate measures, enacted in time,
are necessary to correct the
pres¬
ent situation.

to

these

nate of our citizens.

ger and cold in

winter

and all the

When it meets I

SMITH,

that

More
at

Farmers
share of

before

about

we

prosperous

been.

ever

first

losing

to

period of crisis is
The perils of hun¬

a

at hand.

All the progress of reconstruction

recommend

prosperity.

many

more

pull away from incomes.

Inflation

speak

are

con¬

goods are not being
distributed wisely and fairly. High

our

rising prices

will

excessively high prices

that

our

time.

same

have—and

States

voluntary

we

as

protect

have—enough food and
and other goods in the

it was in 1929.

But

use.

living and carry
foreign-aid pro¬

substantial

gram

But

we can

standard of

a

on

of

shall

our

with current ex¬
countries, ■ a
far

policies,

sound

comprehensive

Nov. 17.

on

learned that

greater per cent of our production
is available for civilian use. With

to wait until the next regular ses¬
sion in January.

this gain

we

even

all

to

ernment

of

war

output available for civilian

people today is 40% higher than

some

blame

living with less than 60% of

average

of

the

sion

could improve our standard of

we

pressing—the results of delay too
grave—for
Congressional, action

power

place

foreign aid program, but
this is not borne out by the facts.

morrow.

Inflation must be stopped before
it is too late.

to

Con¬
legisla¬

This, then, is one reason why I
calling the Congress into ses¬

upon our

over¬

Farmers

after

been

of

gress

However,
now

the

by

am

own people for
An attempt has

our

goods.

enactment

plan and to
the important decisions

required for putting it into effect.

tion is necessary.

of High Prices

among

available

tinue
to

they suffered after

bankers

mand

reces¬

price inflation was
collapse.
Business¬

suffered

It

we use our

The major cause of high prices
in this
country is the great de¬

own

afford

danger.

followed by
and

skimp

depression.

this

they

to

many

rennember how
1920

is

people are not
in prosperity the

so

a

None

look

it

fairly
being paved for

is

road
sion

hard

and do without.

save

sharing

other lands.
come

how

know

are

and dan¬

path.

tries

who

family income to pay
groceries and clothes and rent.

men

our

find that recent

we

domestic

people,

our

these goals and

ahead

housewife
the

When

have moved

we

steadfastly toward two goals. We
have sought peace and prosperity

toward

I

questions of vital im¬

are

portance

for

and

gency aid abroad.

These

the

of

stretch

Nov. 17 to consider the problems
of high prices at home and emer¬

tion.

the

of

keep up with the high cost of
living.
I know1 of the difficulties

"I have called

Our

worries

not

"men:

cburse

the

know

breadwinner whose earnings can¬

Country-

As

already vic¬
These families

using up savings, they are
mortgaging their future by going
iinto debt.
They are doing with¬
out things they should have.

address

to

or

are

t

The
of

low

of

are

inflation.

of

Used

families

moderate income

I

gains if

new

pro¬

vital

they are entitled. - The govern¬
ment must assume a
larger share

in the cost of living.
Savings

ritories,
part'icu.larly 1'

the

go on to

economic strength wisely.

and

occupied

text

increases in
behind in¬

people,
falling

our

income

of"

recovery

for western Europe.
This
plan presents great hope for eco-,

tion and the rising cost of living.

prompt

emergency re¬

end

long-range

a

7

gram

putting
Harry S. Truman, in a radio message to the people on Oct. 24, expanded an end to
excessive prices and the
the reasons which impelled him. to call a special session of Congress to meet on Nov.
hardships and dangers which ac¬
In his address he linked the need to curb rising prices at home, while affording company them. For this
purpose,

on

ing

compelling need for protection

from

of

President

;

(1739)

L. F.

Austin, Manager

Member Spokane Stock Exch.
Phone 8365

Teletype YAK 24

IVf

One
Public

Utility Securities
planning a $35,000,000 construction

shares of addi¬
on the basis
of one new share for each four
held. Rights will exp?re Nov. 19.
Bids to underwrite the sale of
purchase 214.451

tional

shares

common

be

will

stock

unsubscribed

re¬

ceived Nov. 3.

crystal¬

not finally

have

Plans

lized for the sale of the preferred

the company has

However

stock.

registered 50,000 shares of addi¬
tional preferred ($100 par) and
plans to negotiate for the sale
of

this

stock

the

in

from

Judging
it

trends,

dividend

is

market
that the

recent

estimated

rate

the

on

future.

near

might approximate 4V4%
com¬
pared to 4% on the 100.000 shares
outstanding.

now

The bond issue

be deferred

for some time
and if the company should decide
not to issue preferred stock cur¬
may

it is understood

rently,
bond

that the
may be increased to

issue

$7-8,000,000.
The

stock

common

has

apoar-

suffered

marketwise from
the proposal to issue rights, as is
ently

usually the case these davs.

The

stock is selling recently around 24

compared

with

vear's

this

range

of 30-23 and last ve^'s 30-23.

The

since

1940

has

stock

and

been

has

the

on

1941.

since

traced

been

The

Big

Board

company

was

originally

controlled bv Utilities
Power & Light Corn, (now Ogden
Corp.). but the stork was sold to
the public in 1940 at $24 per share

—exactly the
price.
The

30

had

cents

been

the recent

as

rate

raised

was

nuarterly

maintained

(where
for

four

years) to 35 cents early this
However, a 10 cents extra

year.
was

paid Jan. 15. sn-i the Oct. 15 divi¬
dend
is

raised to 37^

was

understood

that,

the

cents.

It

company

plans to cont'nue the present indi¬
cated $1.50 rate.
stock
In

On this basis the

currently yields about 6V4%.
1946,

$3.31

share

a

earned compared with

previous

year

In the

year.

was

$1.93 in the
12 months

ended

share,

proposed
with

an

new

preferred

estimated

$4.25

"At
it been

more

which

92%

Light ob¬
revenue
from

its

of

of electricity in

cannot

we

suburbs, and adjacent areas
are
largely rural in char¬
acter; the remaining 8% is mainly
steam sales.
Residential sales ac¬
34%

electric

of

26%

commercial

to, say,

If

gross,

includes

115,000
the

the

capacity

of

end

$25 billion, and do so without delay.
to keep the good work up, however,

take

send

to

interested

of

The

peak loads.

is growing rapidly and
backlog of potential cus¬

Hutton

&

New York

Residential

rates

usage

kwh.

Due

per

runs

the

in

are

ceighborhood of 3 cents

kwh.

close

to

substantial

to

Also

in

Co.,

61

Broadway,

cular

of

same

issue

an

are

the

on

high—about 8.8%. However, rates

substantially reduced
With

igo.

current

a year

with

operating
costs
rising
sharply, most State Commissions

are

no

longer
and

hat the Indiana

my

pressing
it

is

for

rate

understood

Commission does

plan to ask the company for
further
cut
in
residential

rates at this

time.

Dwight Manufacturing Co.

Buckeye Steel Castings

Liberty Products Corp.

Crowell-Collier

Rockwell Manufacturing Co.

Publishing Co.

industry and

stocks

analysis of Bucyrus-Erie, YoungsSheet & Tube, and 30 Capi¬

town

tal Goods Stocks.

Yearbook

tion,

Inflation—Discussion of current
factors in "Weekly Financial Let¬
ter"— Newhard,
Cook
Fourth & Olive, St. Louis

of Railroad

Co.,
2, Mo.
&

Informa¬

Edition—Compiled

1947

Eastern

by

Presidents'

Railroad

Committee

Relations—Copies available from
McGinnis,
Bampton
&
Sellger,
61

New York Banks and Trust Cos.

62nd consecutive quarterly com¬

parison of leading banks and trust
companies
of
New
York—New
York Hanseatic Corp., 120 Broad¬
way, New York 5, N. Y.
New

York

City Bank

Stocks—

Earnings comparison for 19 stocks
for the third quarter
of 1947—
Laird, Bissell & Meeds, 120 Broad¬
way,

Broadway, New York 6, N. Y.

Paine, Webber, Jackson & Curtis

Railroad
Week

Increasing

—

Developments

of

the

Current developments

1879

available

on

New

is

memoran¬

a

Orleans,

Texas

&

in

Bends—Discussion

Corporate
in the

current

"Fortnightly Investment Letter"—
H. Hentz &

data

Skilsaw, Inc.

Ill

&

Y.

Bottling—Chicago

Co., 60 Beaver Street,

4, N. Y.

on

Kansas City,

is

available

Also

a

map

of the

Rangely Oil Field.
Utica
Inc.

Cotton Mills,

Mohawk

&

Circular

—

Investing

Co.,

—

Mohawk Valley

Inc.,

238

Genesee

Oct. 31,

American

Telephone

First

Tele¬

&

of related val¬

Boston

Corp.,

100

Broadway, New York 5, N. Y.

memorandum—A.

Co.,
N.

1

Wall

Co.
M.

Research

—

Kidder

Street, New

&

York 5,

Commonwealth

Dept.

Military

tion Bonds

—

Home Life

Kentucky

Corpora¬
— The

Armory

Memorandum

Bond

Bankers

of

Co.,

Kentucky

Building, Louisville 2,

cent

and

the

Morrison

21, 1947

(Detroit, Mich.)

Securities Traders Association of
Detroit and Michigan

Annual Fall

Party at the Prince Edward Hotel,
1947

30-Dec. 5,

(Hollywood,

Fla.)
Investment Bankers Association
Annual

Convention at the Holly¬

wood Beach Hotel.

November, 1948

(Dallas, Tex.)

Security Traders Asso¬

ciation Convention.

Graham-Paige

Motors

Corp.—

analyses of
Osgood Company "B," Tennessee
available

With Central Republic
(Special

are

Products & Chemical and Fashion

to

The

Financial

Chkoniclb)

MINNEAPOLIS, MINN. —An¬
drew G. Engberg is with Central

Republic Company, Rand Tower.
In the past he was with Chrest
& Co.

Gulf

Pre¬

of

Gardens

race

National

Kentucky.

Park.

Industrial

Dealers Asso¬

Windsor, Ontario, Canada.

Y.

issued

Stocks—Comparison in re¬
issue of "Current Quotations
Topics"—Rauscher, Pierce &

(Chicago, 111.)

Security

ciation Annual Dinner at the Ter¬

Nov.

Service

Cities

1947

Illinois

Hotel.

An

analytical guide for investors
quarterly—Merrill Lynch,
Pierce, Fenner & Beane, 70 Pine

Field

Broadway, New York 6, N. Y.

New York.

Security and Industry Survey—

Investment

In

randum—Joseph Faroll & Co., 29

from Medium Grade Rail Issues.

ferred

COMING

EVENTS

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

Southwestern

BROADWAY, NEW YORK 6, N. Y.

Colo.

Co.,

St. Louis &

Chicago; Minneapolis Gas Light
Co.; International Hydro-Electric

Street, New York 5, N. Y.

Gilbert J. Postley & Co.

Co.—New

Oil

Southern

Utah

Alleghany Corporation—Memo¬

Also

Southwest Gas Producing

outlook—

Coffin, Betz & Sullivan, 123 South
Broad Street, Philadelphia 9, Pa.

Broadway, New York 6, N. Y.

Systeni; and discussion of yields

Commonwealth Gas




N.

tories, Inc.—Study and

Nov.

The "Letter" also contains brief

Chicago

5,

Mort¬

and

Haupt

in

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

Loans

gages—Study—Ira

the

New York

Direct Wire to

White

Your Bond Portfolio in Relation
to

graph Co.—Table

New York 5, N. Y.

Readjustment

29

G.

Public

on

Mexico.

Coca Cola

Trust

Street, Utica 2, N. Y.

dum

Established

&

analysis—Forbes & Co., First Na¬
tional Bank Building, Denver 2,

reproduction

above original cost, and

far

Metal—Cir¬

Y.

N.

Conference

costs

Bank

Co., Inc., 37 Wall Street, New

York

low-priced speculative

the

were

&

companies—Mercer Hicks &
150 Broadway, New York 7,

rate of return

figured on original
depreciation
is
very

Master

The

several

steel

Co.,

6, N. Y.
the

Steel,

write-downs in plant account, the

less

National

Smith, Kline & French Labora¬
Industrial Equipment—Study in
the current issue of "Fortnightly
F.

cost

Insur¬

1950).

care

annual

Fire

Public Service Co. of New Mex¬

firms mentioned will be pleased
parties the following literature:

Market and Business Survey"—E.

1,500

detailed

a

Camden

of

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

It is understood that the

company

and

Street, New

is

ico—Memorandum—J.

has

a

available

Association.

ance

Recommendations and Literature

in

in the
Thus gener¬
ating capacity will be increased
45% although it is currently ample
to

Insur¬

5, N. Y.

analysis

Dealer-Broker Investment

40,000

another

and

1949,

latter part of

and

study—Geyer

Inc., 67 Wall

Co.,
Also

satisfied with such extravagance in¬

ues—The

Manufacturing Co.

&

Washington

Co.—Detailed

York

we

by

early

Trading Markets in Common Stocks

Bates

Providence
ance

Public

of about

(35.000

40,000

1947,

informa¬

Corp.

program

installation

kw.

late

Co.—Third

plants.
Based on an 80%
oower
factor, present capacity is
about 256,000 kw.
The company's
construction

is

Beryllium

Portsmouth Steel
Special re¬
port—Ward & Co., 120 Broadway,
New York 5, N.Y.

ing

four-year

available

on

Gruen Watch.

generat¬

steam

from

Also
tion

conserve our

be

Corp.—Anal¬

Portsmouth Steel Corp.—Data—

expenditures

not

Steel

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

definitely.

The
company
produces
practically all its own electric re¬

35%.

quirements

could

we

Chi¬

—

we are

could

industrial

and

in which

Street,

Illinois.

history has
nation and as

is to reduce annual Federal

resources

Company—

Salle

La

Portsmouth

rightly evade."

One of the ways

the

for

Mason

ysis—Bennett, Spanier & Co., Inc.,
105 S. La Salle Street, Chicago 3,

—Secretary of the Treasury, JOHN W. SNYDER.

Indianapolis,

which

count

East

4, 111.

cago

our

as a

South

231

individuals, to conserve our resources; for, both at
home and abroad, we face large responsibilities

about 20. cents a share.

tains

time in

no

important for us,

Indiananolis Power &

not

full year's dividend

John W. Snyder

is charging (over a 35period) amortization of plant
account
acquisition
adjustment
amounting to $215,928 per annum

sale

225

Bell Lumber

Long

resources to enable us to
continue to be a great nation.

year

or

Co.,

Detailed analysis available for in¬
terested dealers—Comstoek & Co.,

sav¬

maining

company

(including

a

basis,

at $2.27 and for 1949 at
These earnings are con¬
sidered ample to support the $1.50
dividend rate.
In addition, the

reductions

the

It took thrift and

today. And it
savings, to¬
gether with constant ingenuity
and stamina, to conserve our re¬

$2.64.

July 31, 1947, earnings ad¬
justed to the current financing
on

our

nation what it is

1948

for

&

Liquidometer Corp.—Analysis—
Troster, Currie & Summers, 74
Trinity Place, New York 6, N. Y.

will take thrift and

Stone &
Webster have estimated earnings
conservative

Power

Street, Milwaukee 2, Wis.

ings, together with tremendous
vision, to make our

On

a

—Loewi

character and

are

tomers.

dividend

from
it

same

calendar

the

for

ings

stock

new

approximated $2.70

increased substantially

estimated at $2.58 pro forma.

District

Superior

of "Business and Financial Digest"

together with in¬
and energy, to
vast natural re¬

savings,

develop

However, fuel costs have
and earn¬

share.

Lake

Co.—Analysis in the current issue

domitable courage

sources.

dividend rate)
a

and

Co., 15 Broad Street, New

York 5, N. Y.

It took thrift

business structure.

Stockholders of lecord

stock.

preferred stock and common
will receive the right to^

5

his &

■

Way to Begin

period 1947-50. Of this amount roughly half
depreciation and amortization funds, surplus
earnings, etc., while funds must> be raised for the other half. The
company is planning to do this by issuing roughly equal amounts of
bonds,

■

required the thrift and savings of many a
person, native and foreign, to provide the funds
which built our great transportation system, our
huge steel industry, our giant oil plant, our magnifi¬
cent farm, industrial, mining and

program covering the
will be met through

Nov.

w-

■

"It

Indianapolis Power & Light *
Indianapolis Power & Light is

Thursday, October 30, 1947

COMMERCIAL & FINANCIAL CHRONICLE

THE

(1740)

8

growth

States Utilities—Study

possibilities

—

of

Ralph
E.
New

Samuel & Co., 115 Broadway,
York 6,

N. Y.

Kennecott
Copper
Corp.—In¬
Co., Inc., Mercantile Bank Build¬
vestment appraisal—Kalb, Vooring, Dallas 1, Tex.

W. R. Luttrell Adds
Special to The Financial Chronicle

COLUMBUS, GA. —William J.
has been added to the
staff
of
W.
R. Luttrell,
Swift
Fielder

Building.

Volume 166

Number 4642




THE

COMMERCIAL

&

FINANCIAL CHRONICLE

Aid and Marshall

Wc maintain

American

net

Plan

markets in

Telephone &

Telegraph Co.
23/4% Convertible Debentures
Due December

15, 1957

and

Subscription Warrants
Copy oj Prospectus available

on request

Amott, Baker & Co
INCORPORATED

EQUITABLE
Wholesaler and Retailer of
Investment Securities

Securities Corporation
NEW YORK

Our

Trading

and

stocks, title company and

bank participation certificates.

150 BROADWAY

Boston

NASHVILLE

RECTOR 2-6565

Department

specializes in real estate bonds

NEW YORK 7, N. Y

Philadelphia

BIRMINGHAM

GREENSBORO

DALLAS

CHATTANOOGA
HARTFORD

KNOXVILLE

MEMPHIS

JACKSON
NEW

ORLEANS

Thursday, October 30, 1947

CHRONICLE

& FINANCIAL

THE COMMERCIAL

(1742)

10

TABLE I

<

from

Insurance Stocks
and

tBank

318

Bank of New York
Bankers Trust

This Week

—

pointed out that the peak in deposits
earning assets of 15 leading New York City banks appeared on
their balance sheets of Dec. 31, 1945, and that since then steady and
Two weeks ago

this column

and

"4

1,310

Central Hanover

1,472

Bank Stocks

Chemical Bank & Trust
Corn

Exchange

First

National

attention was
reached in
.1947, for second and third quarter reports showed
in their aggregate figures. For example, it was

substantial declines had been experienced. However,
§ also drawn to the fact that the subsequent low point was
tt

quarter of
I moderate increases
| the third
.

$22,962,000,000 vs,
on March 31, 1947, and total earning assets aggregated
and $19,019,000,000, respectively.

deposits as of Sept. 30,

shown that

I $22,602,000,000
T $19,276,OOO^OO

1947, aggregated

accompanying tables show how each of the 15 banks has
I fared between the two dates, in comparison with the group as a
+
—
It will be observed that three banks reported moderate declines
'

4,488
1,115
768
619

National

Chase

The

+
+
+
+

2,153
4,741
615
514
120

+ 1.6

__

New York Trust

Public

whole.

+
—

$22,602 $22,962

Trust

City '

^National

S. Trust

i

Totals

+10.8
2.9
+10.0
— 6.3
— 0,9
+ 5.5
621
— 1.4
631
+ 2.2
2,272 2,325 + 2.3
839
888 + 5.8
1,733 1,706 — 1.6
3,790 3,848 + 1.5
527
520 — 1.3
434
438 + 0.9
123
116 — 5.7

$771
244
1,118
1,239
3,731
948

0.6
6.3
3.3
1.2
7.2
2.0
1.3

+ 1.0
+ 5.6
+ 2.3
+10.0
— 1.8
+ 2.0
+ 0.8

Irving Trust

U.

—

2,475
1,030

2,450
975
2,104
4,754
626
504
119

Guaranty Trust
Manufacturers

enjoyed _it immensely, May I also
take. this opportunity to thank
you for your many acts of kind¬
ness, thoughtfulness and coopera¬
tion while I served under you in
the Office of Alien Property.
I send you every good wish and
every warm regard.
Sincerely,
,
1
MATTHEW J. HICKEY, JR.

+ 5.6

316
1,393
1,423
4;542
1,195
783
627

$854
237
1,230
1,161
3,696
1,000
612
645

—

Sept. 23, 1947

Office of the Attorney General

Washington, D. C.
Dear Mr.

in

deposits, viz: Bank of
Best gains were

Hanover and New York

New York, Central

reported by Bank of Manhattan, Bankers
j Trust, Chemical. Irving Trust and National City,
i
With regard to earning assets, the same three banks that reported
f lower deposits again show declines in earning assets, and also, Chase,
Corn. Manufacturers and New York Trust. Bank of Manhattan, Bankers Trust, Chemical and Irving show the best gains in earning assets,
as in deposits, while National City shows about average gain.
<
The next table shows changes that have occurred in reported
loans and discounts and in holdings of Government Securities.
This table shows that aggregate loans and discounts have in¬
creased 5.1% and Government securities have declined 1.4%. Again
Bankers Trust, Bank of Manhattan,^

be

(000,000 omitted)

March 31, Sept.

Bank

of New York

Bankers Trust
Central Hanover

show above long-term governments of ap¬
proximately half a billion dollars,
average gains, that is in loans and
equivalent to +4.2%. The shrink¬
discounts; so also does Guaranty.
age
has been confined to the
Declines are reported by Corn and
shorter term, lower yield issues.
First National. The 36% gain by
Chemical and Irving

small
base. In government holdings four
banks show gains, contrary to the
aggregate trend, Bank of Manhat¬
tan leading with an increase of
15.9%,
6.5%,
tional

followed by Irving with
First with 1.1% and Na¬
City with 0.5%.

It must be

that

Table

pointed out, however,
II hides more than

If it is true

that the immediate

downtrend

post-war

of

earning

deposits
has
been
checked and that a turning point
and

assets

then the above

tables

has

come,

may

recoveries from

average

Corn

Exchange

First

National

Public National
S. Trust

U.

$4,675,000,000,

there has been a
of

further increase

$214,000,000.

important point not
disclosed in the table is that, con¬
Another

City Bank, and New York Trust.
Approx. Same as Index—Bank
of New York; Central Hanover
Bank & Trust Co., and Public Na¬
tional Bank & Trust Co.

trary to the decline in total gov¬
ernments of —1.4% there has been
an

expansion in the higher

yield

Matthew J. Hickey, Jr.. in
view of failure to carry

letter to Attorney

*

U. S. stockholders,

out

he feels he
has

"Chronicle"

The

Hickey's

President of
the

Director of

com¬

were

Alien
M.

J.

Hickey,

Jr.

Clark,

Honorable Tom C.

General of the

N. X

3-3430

WHOLESALE MARKETS IN
BANK and INSURANCE

—

1.4

STOCKS

United

Attorney

Dear Mr.

more

General:

-

than five years

to make
effort,
accepted the responsibility and
duties of
Senior Vice-President
and director of General Dyestuff

since I,

in an endeavor

contribution to the war

Corporation.
I
take justifiable
pride in the part we played dur¬
ing the war.
When earlier this year you so

of INDIA, LIMITED
Bankers

NEW YORK 5:

67

WHITEHALL 3-0782

Wall Street

to

the Government

Kenya Colony

>

Head

NY 1-2875

in

and Uganda

Office:
26, Bishopsgate,
London, E. C.
Burma, Ceylon, Kenya
and Aden and Zanzibar

Branches in India,

BOSTON 9

CHICAGO 4

10 Post Office Square

231 S. LaSaHe Street

HUBbard 0650

FRAnklin 7535

BS-297

CG-105

CLEVELAND,

LOS ANGEIES14

210 West 7th Street ;
Michigan 2837
LA-1086

Russ Building
SUtter 1-6567
SF-573

CONNECTING: NEW YORK. BOSTON,

Providence, Enterprise 7008




Colony

SAN FRANCISCO 4

CHICAGO,
PHILADELPHIA, LOS ANGELES, SAN FRANCISCO
Hartford, Enterprise 6011
Portland, Enterprise 7003

PRIVATE WIRE SYSTEM

TELEPHONES TO:

.»

Detroit, Enterprise 6066

£4,000,000
Capital—
£2,000,000
Fund———£2,300,000

Subscribed Capital

Paid-Up
Reserve
The

I

New York, N. Y.

Oct. 7, 1947

j

.

Brailsford Gov. of

Chicago Stock Exh.
CHICAGO, ILL.—The Board of
of The Chicago Stock

Governors

Exchange at their monthly meet¬

of

reasonable to ex¬

and
in

Company,

porary

was

ner

of Harris, Upham &

At

the

fair

sale

of

of

Noyes

Bank conducts every
banking and exchange

description of
business

Trusteeships and Executorships
also undertaken

meeting,

Illinois

The

Company,
George F.

Company

elected Chairman of the Com¬

was

mittee

on

New Business and Pub¬

lic Relations,

which chairmanship

formerly held by Mr. Buck¬
ley. Mr. Brailsford was also ap¬
pointed to serve as a member of

was

this committee.

Ruth Co. Adds Two to
(Special

LOS

to The

Urbach
R.

F.

CALIF.

have

joined

Ruth &

--

Bertram S»

Nelson and

enth Street.

Staff

Chronicle)

Financial

ANGELES,

Albert O.

the staff of

Co., 727 West Sev¬

Mr. Nelson

was

pre¬

viously with G. Brashears & Co.
Mr. Urbach was with Hill Rich¬
ards & Co. and Buckley

Joins

meeting today, you
enough to declare that

our

properties could
not be expected for an indefinite
time for reasons beyond your con¬
a

same

Brothers,

strictly on a tem¬

basis.

During
were

recent

the

by

created

Governor
fill
the

death of Patrick F. Buckley, part-*

permanent career in the chem¬
or dyestuff field. As a matter
of fact, at that time, I issued a
statement, read by every employee
of General Dyestuff Corporation,
and incorporated in the minutes
of the Directors' meeting, at which
I was elected, that acceptance on
part

to

vacancy

a

my

a

Exchange,

the

of

these

Walston, Hoffman

(Special to The Financial

SAN-

JOSE,

circumstances
will agree, that

.

Chronicle)

CALIF. —Frank

Bumb has become affiliated with

Walston, Hoffman & Goodwin, 12
South First Street.
He was pre^
viously with Hannaford & Talbot.
—

'

Corporation

435 Hudson Street

trol.

NATIONAL BANK

INCORPORATED"

CLARK,

Matthew J. Hickey

General Dyestuff

Therefore, I ask, and I am cer¬

GEYER k CO.

regards.

TOM C.

ical

It is now

Phone—REctor 2-4383

N. Y.

(L. A. Gibbs, Manager Trading Dept.)

With kind personal

readied for a stock
fulfillment of the
mandate
of
the
Congress
to
Americanize these companies by
wide distribution of the stock to
American stockholders within a
few months. Now it appears that
this much desired consummation
is not probable in the foreseeable
tuture.
At
the time I
became
^resident
of
General
Dyestuff
Corporation with your support
and approval, I made clear that I
did not possess any ambition for

offering

ration, both of

a

MArket

,

the pursuit of
will have con¬

in

that

hope

career you
tinued success.

Tom C. Clark and Mr. Matthew
Co., security dealers in Chicago,

merged

General

the

1891

18 Clinton'St., Newark 2,

1-1248-49

I

your

that General Dyestuff Cor¬
poration and General Aniline! and
Film
Corporation could be

Washington, D. C.

NEW YORK 5, N. Y.

1947.

pect

and

poration

Attorney

J. S. Rippel & Co.

request. You

consider your duties and re¬
sponsibilities ended as of Oct. 15,

may

General Clark, says, in

indicated it was

General

Dyestuff Cor¬

The

Telephone: BArclay 7-3500

Teletype—NY

that I accede to your

—

proffered
me
the
ing held Oct. 27 elected Walter R»
General Dyestuff
Brailsford, of the firm of BrailsCorporation and I accepted, you ford &

outbreak of the war:

Circular on Request

Bell

$11,484$11,322

Presidency

States,

120 BROADWAY,

n. c.

+ 1.1

generously

Property Cus¬
todian at the

SECURITIES

Established

business in Chicago.

personal sacrifice your serv¬
ice represents is appreciated.
It is for the foregoing reasons

$>-

res¬

ign a tio n as

the

NEW JERSEY

Exchange

80

has

it

that

and

The

copies of the following corre¬

received

relating to Mr.

which

Bank Stocks

Members New York Stock

505
1,183
2,311
270
282

effort

war

to your own

0.6
+ 6.5
1,140 — 3.6
2,323 + 0.5
256 — 5.2
279 — 1.1
62 —22.5
1,407
538

your

always been your desire to return

General
and Film Corporation, so
distribution of stock to
should vacate his temporary position.

taken over by

Laird, Bissell & Meeds

the

mandate of Congress to merge

spondence between Attorney General
J. Hickey, Jr., President of Hickey &

panies

19 New York City

+15.9
6.0
— 7.2
—15.0
— 0.1
— 1.7
—

Dyestuff Corporation with General Aniline
_!Was to Americanize' these companies by

Film Corpo¬

Co., and U. S. Trust Co.

1947

$372
140
558
653
2,139
463
524
468

General Dyestuff Corp.

Resigns as President of

Aniline and

EARNINGS COMPARISON

3rd Quarter

understanding that you
duties at the re¬
quest of the then Alien Property
Custodian to aid our Country in
assumed

Attorney General

Index—Chase Na¬

tional Bank;
Guaranty

524
463
1,416

+ 5.1

$6,157 $6,468

Totals

First National Bank;
Trust Co.; Irving Trust

than

Poorer

It is my

SECURITIES

Mr.

bank stocks have
doing very poorly this year,

Marketwise,

Corporation

Sincerely,

cent low levels.

been

Dyestuff

Director of General Aniline

the re¬

important category of loans, viz: bank stocks, the 15 bank stocks
commercial. The balance sheets under review have performed as
of the banks lump all classes un¬ follows, since the end of the first
der "loans and discounts", with¬ quarter of 1947:
Better than Index — Bank of
out distinction. Reporting mem¬
ber
banks
of
the
New York Manhattan Co.; Bankers Trust
District,
which include the 15 Co.; Chemical Bank & Trust Co.;
banks under review, show a 12.5%
Corn Exchange Bank & Trust Co.;
gain in commercial loans over the Manufacturers Trust Co.; National

$4,157,000,000 to
and
since
then

Trust

York

New

For
instance,
the both absolutely and relatively,
5.1% increase in loans having declined 11.5% vs. a gain
and
discounts fails to disclose of 4.5% by the Dow-Jones Indus¬
that there has been a very sub¬ trial Average. Relative to Stand¬
stantial expansion in the^most ard & Poor's weekly? index of

from

469
1,094
233
138
25

__

National City

moderate

period,

Trust

Manufacturers

+17.4
+ 4.0
+ 1.0
+10.2
—13.5
— 5.0
789 + 6.0
321 + 5.9
478 + 1.9
1,146 + 4.8
240 + 3.0
142 + 2.9
34 +36.0

744
303

Trust
Irving Trust

Guaranty

reveals.

it

—

Chemical Bank & Trust

offer clues as to which banks
likely to stage better-than-

are

National

Chase

$320
149
601
768
2,140
471

+ 6.4
+ 2.7

$430
76
593
416
1,264
398
64
77

$404
74
505
400
1,252
361
74
81

of Manhattan

Bank

Change

1947

1947

•

is from a very

U. S.- GOVT.

March 31, Sept. 30,
1947
1947
Change

%

30>

as

responsi¬

and Film Corporation.

LOANS & DISCOUNTS

*

U. S. Trust

and

conven¬

as

and

President and Director

as

General

of

soon

as

duties

all

of

bilities

TABLE II

* •

relieved,

ient,

Farmers Trust.

-Including City Bank

Trust.

letter of

Sept. 23, 1947 requesting that you

+ 1.4

$19,019 $19,276

Hickey:

I have before, me your

.

t

the

found

March 31, Sept. 30,
,'V'e
1947
1947
Change

,

Change

1947

$980 $L035

Bank of Manhattan

VAN DEOSEN

By E. A.

%

Sept-30,

1947

own

my

TOTAL EARNING ASSETS

"

DEPOSITS
March 31,

family and
business, I have
work interesting and

tion from my wife and

.

(000,000 omitted)

mam

tain in view of the

outlined that you
I

be

relieved as soon as

conven¬

responsibili¬
ties as President and Director of
General Dyestuff Corporation and
as
Director of General Aniline

ient of all duties and

and

Film

Brown

Corporation. The com¬

pelling reason for this request
the press of my own business
Chicago.

is
in

Rejoins Cumberland

BIRMINGHAM,

ALA.

—

C.

Blythe Brown is again represent¬
ing Cumberland Securities Cor¬
poration in the State of Alabama.
His offices are at 110% North 21st
Street, Birmingham.

Coughlin Visiting N. Y.

that
Edward B. Coughlin, head of
sacrifice * I Coughlin & Co., Denver, will be

May I be permitted to state

notwithstanding
have

made

the

willingly during

the

past five years because of separa¬

in New York on a 10 day

trip.

-

business

Voluma

166

THE

Number 4642

COMMERCIAL

.

most generous

H.

MICH.

has

with

foreign trade is blocked by pegged overvaluation of currencies.
As U. S. produces only 12% of world's food supply, our effort
to feed rest of world must bring soaring prices here, he states.
the

JACKSON,

Cameron

recipients keep imposing "strangling networks" of control, and

Eyen

CHRONICLE

H.

Jackson

become

City

Bank

&

Hallaran

connected

Butterfield

CLEVELAND,. OHIO

,

Otis

is

now

—

Peter

associated

with

(Special to The Financial Chronicle)

.

DETROIT, MICH.
Hamel is

now

—

with Davis,

Co.,
Trust Co.

Building.

&

Co.,

American loans will not bring world
retain their present

As in Great Britain in the past 15
^
<£>to
dis¬
i.

months, these controls will do

These Debentures have been

_

more

tort and para¬

turn to "a real instead of

lyze

technical

produc¬

tion

than

aid

,

ing

to

it.

today

of

normal

overriding
demand it

a

erally or
package."

pegging of Eu¬
other

cies

$5,000,000

seems

to

Robertshaw-Fulton Controls

figuratively,

over¬

oy

Henry Hazlitt

Company

flag, lit¬

on

every

15;Year 3%% Debentures

study will be pub¬

lished in book form in November

curren¬

at

announcement

invite

government should

Mr. Hazlitt's

and

ropean

emergency
our

and "stamp an American

the

is

offered for sale and this

of record only.

give food, not money, to Europe,

two-

trade

are not

diplomatic challenge of Commun'st Russia"; and that wherever

foreign

way

a matter

and

the

to

and

appears as

a world gold standard; that
"accept frankly the ideological

we

; The greatest
single obstacle
revival

basis"

placed, privately. They

merely

all nations to cooperate in restor¬

our

do

can

restore

gold

a

Due October 1, 1962

Appleton-Century.

levels.

valued
Those

are

the chief conclusions of
study prepared by Henry Hazlitt,

Two With F. I. du Pont Co.

among

Les¬
son" and business columnist for
"Newsweek." The study was made

(Special to The Financial

author of "Economics in One

CHICAGO,

ILL.

Chronicle)

Robert

—

Ganser and Bernice L.
have

become

W.

Hammann

associated

Reynolds & Co.

with

public on Oct. 29 by The Founda¬
tion for Economic Education, Inc.,

Francis

Hudson, New
York, under the title "Will Dollars

was

previously with Bache & Co.

and

H.

Irvington

of

on

-

mann

World?"

the

Save

-

17 principles

Mr. Hazlitt outlines

with

conclusions

and

du

Pont

&

&

Hentz

was

&

with

Co.

Co.,

200

Mr. Ganser

Miss

Wayne

October 28, 1947

Ham¬

Hummer

Co.

to

regard

foreign economic aid. Among

I.

South La Salle Street.

them

are:

Food Prices Inevitable

Soaring

As the United States pro¬
duces only
12% of the world's
(1)

This

announcement

appears as a matter

supply, the effort to compen¬
even
in part for the food

food
sate

must

Europe

in

shortage

of record only and is neither

of these securities.

an

offer

to

sell,

nor a

solicitation of offers to buy,

any

The offering is made only by the Prospectus.

bring

"soaring food prices here. The real
solution for the world crisis is not

but to

scarcity
production.

distribute

to

store

re¬

any

'

(2) The so-called

"dollar short

age" is a misleading name for the
efforts of Europe to buy; more
sells

it

than

and

consume! more

than it produces.

(3) Unless we

,

120,000 Shares

undertook ;to dic¬
government ex¬

tate all European

penditures, our help might merely
release
European
internal
re¬
sources for non-essential or harm¬
ful

43A% Cumulative Convertible Preferred Stock
(Par Value $25.00

Price $26.00
per

production and employment
home, or that we can get rich

full
at

Share)

per

purposes.

(4) It is not true that the United
States needs foreign loans to keep

by giving our goods away.
(5) There is no scientific or

Share

ob

way of measuring Europe's
""needs" for aid.
The figures of

jjective

the Paris conference

500,000 Shares

of 16 nations

little better than guesses.

are

Common Stock

loans or gifts
governments
is not the most effective way to
combat world communism.
(7) The business of international
Sending should be returned as soon
as possible to private hands.
(6) Making heavy

to unstable European

•

(Par Value $1.00

per

Share)

*

(8) If an emergency
stitution

is

make

to

loans,

Price $8.50
per

stabilization

or

instrumentality

best

Copies of the Prospectus

the International Bank
Reconstruction and Develop¬

■would be
for

ment, under a
A

Positive Program for

for

a

named in the

may

be obtained in

Prospectus and others

America

any

as may

State only from such of the several Underlawfully offer these securities in such State.

Reynolds & Co.

positive pro¬

America,

v

Mr. Hazlitt

proposed that we "make our own
capitalism free and strong"; that
we lower our tariffs immediately
'"whether

tenters

revised charter.

Recommending
gram

Share

m-

necessary

considered

stopgap

the

public

Blyth & Co., Inc.

Kidder, Peabody & Co.

Lehman Brothers

Union Securities Corporation

other nations do so or

mot"; that we drastically revise
economic policies in Germany

Hallgarten & Co.

(our

permit the Germans
.and Japanese themselves to re¬
store their economies; that the In¬
ternational Monetary Fund be re¬
formed to remove the compulsion
on all member nations to control

Hemphill, Noyes & Co.

\

Hornblower & Weeks

;and Japan to

exchange
fund

rates

managers

conditions

on

and to give the
power

to 'impose

borrowing govern¬

ments; that the United States re¬




W. C.

Langley & Co.
Shields &

October 28, 1947

'

Laurence M. Marks & Co.

Company

■■■:>'

Anton

Hunter,

Terminal
Tower Scott & Co., Penobscot Building*
Building. He was previously with members of the Detroit Stock Ex¬
change.
Merrill, Turben & Co.

&

long as European governments
strangling networks of economic controls.
as

H

With Davis, Hunter, Scott

(Special to The Financial Chronicle)

Alex, B.

—

(1743)

With Otis & Co.

(Special to The Financial Chronicle)

Henry Hazlitt declares American credits wust be ineffective while

revival

FINANCIAL

With H. H. Butterfield

Can Dollars Save the World?
i

&

Moore, Leonard & Lynch

Walston, Hoffman & Goodwin

12

Thursday, October 30, 1947

CHRONICLE

FINANCIAL

&

COMMERCIAL

THE

(1744)

The Railroad

Security Outlook
IIAIIN*

F.

WALTER

By

Railroad Specialist, Smith, Barney & Co.

Security analyst, holding railroad securities are in an "adjustment market," predicts a vigorous bull
market will follow in these issues. Points to heavy and increasing railroad traffic as more than offset¬
considerable pres¬
sure
recently.
The road's 3% bonds, which holders at one time
ting higher wages and materials costs. Sees rails in strong current financial position and in good
feared might be refunded, broke par early this week.
The 6%
physical condition. Concludes rail issues are low in price, but advises opportunistic trading attitude.
preferred ($25 par) has recovered only nominally from the year's
Railroad securities in general have been a source of concern to investors ever since
low of 32 -omoa^d with the 1947 high of 40 and last year's peak
of 45lA.
The common, around 37, is also within easy striking dis¬
May, 1946, when the first postwar wage increase was granted. Until the trend of wages
tance of tne lu4/ low.
The in-<»>
——
~~
is no longer upward, railroad securities will from time to time continue a source of concome return of 6.76% rn the cur-I nally,
it is generally considered
been under

The securit.es of Virg.nian have

,

annual dividend rate is
notably out of line with the in¬

rent $2.50

vestment caliber of the

stock.

In

th$ opinion of many rail men it is
impossible to justify this apparent

confidence.

loss of investment

§1 Probably one of the factors con¬
tributing to
the recent steady
pressure on all Virginian
ties
was
the testimony

securi¬

likelihood that

that there is little

Commission will
allow an
affiliation to Chesapeake & Ohio
and
New
York
Central or an
the

interlocking directorate.
In the meantime, investors are

apparently overlooking the most
favorable aspect of the Virginian
situation, its very low cost ratio.
This is particularly important in

<$>-

those

to

cern

who

hold

and

psychological background bet¬

volume

them.

Thus,

ter

than

theory, pri-

road

traffic

are so many

from

a

since it cannot

m?.Hly because there
able

that the trend
f

o

judgment

is

wages

values and because this

it

is

of

not

likely to

upward,
difficult,
impos¬
sible, to vis¬

brought

has

connection

This

to

Virginian a profitable volume of
freight from New
York
Central and has also af¬

merchandise

Virginian important outlets
for its originated coal
in New
York Central territory.
It is the
contention of the Virginian that
this interchange would be lost if
forded

of

President

Vir¬

brought out in his testi¬
before the. Commission that

ginian,
mony

interchange

the

Central

accounts

with New York
for 49% of the

and shortage

activity

Virginian

quent shorter haul over

50%, which

than

the

of

lowest

months

current

ratio

operating

country.

first

the

the

of

one

was

the

in

for

Similarly,

eight
the

year

to

reduced

was

alone it was
down to 54.7%.
The competing
Norfolk & Western and Chesa¬
59%

of

movement

the

of its total freight

of close to 30%
revenues.

Of

this,

mated that some

it

was

and for August

be

a

the

$3,000,000, repre¬

New

serious blow to

year's business the diversion was
placed
at
at least $10,209,630.
Most railroad analysts, however,
arb not inclined to take this as any
near or intermediate term threat
to Virginian's earning power. For
one thing, even the management
admits that the larger portion of
the

potential loss would be a mat¬

ter of

Brothers Harriman

of Brown

Co., 59 Wall Street, New York

City, will observe on Oct. 25 the
completion of 50 years of service
with the
private banking firm.

gradual deterioration even

if i it did set in.

Secondly, re¬
gardless of the outcome of the
pending petition, the final deci¬
sion will be long delayed.
Fi-

direct descendent of the founder

and

fourth

the

of

generation

Browns in the firm since the busi¬
ness

was

established in 1818.

Mr. Brown is
insurance

a

including

of

Chairman

boards

of

the

directors

cial Union

New

of

Assurance

York

Commer¬

Co. Ltd.

of

London and the Liverpool & Lon¬
don

&

Globe

He is also

a

ican boards

Guaranteed

Insurance

Co.

Ltd.

member of the Amer¬
of Ocean Accident

Corp.

Ltd.

and

&

the

Mr. Brown is

Bonds

as

ber

class

a

been

have

in

an

ceases.

(2) The long awaited business
recession-depression
occurs
and
runs its course or is eliminated as

prospect by its failure to appear.

a

market
sounds like a hedge, and perhaps
it
is
one.
With the domesticThe

of

the

an

board

honorary
of

adjustment

term

foreign

situations as confused as

they are, one who didn't hedge at
least
to
some
extent would be

looking for trouble.
I
want as little of that as possible.
Be
that as it
may, thinking
of
markets as of three types does
seem
to
have
practical advan¬
definitely

only a brief inspection
of past markets will indicate. Cer¬
tainly, in the case of most rail¬
tages,

as

securities

it

better

was

as

ly, in the period 1938 to 1941 the
concept of an adjustment market
was
more
helpful than the fixed
idea of either a bull or bear mar¬

What

ket.
seven

bull

we

years

series of short

markets

covering

in 1932-1934, and rel¬
atively narrow ranges in 1938-41.
wide ranges

In the current

I

ket

think

one

adjustment mar¬
ought to expect

price variations wider than in the
period
1938-1941
but narrower
than in the 1932-1934 period.
Bull

Market

to

Come

People like a scapegoat. They
like a whipping boy. At the risk
of

I'll venture a longprediction, namely, that just
in the years after 1932-1934 and
being

one,

term
as

a vigorous
railroad securities

1938-1941,
in
the

current
we

mem¬

trustees

of

Presbyterian
Hospital
in
New
York City and a member of the
board of directors of Union Theo¬

logical Seminary.

Special Securities

toward

will

follow

adjustment period.

large

segment of the
the best pol¬

GUARANTEED RAILROAD

STOCKS-BONDS

New York 4, N. Y.

Telephone BOwlin*? Green 9-6400
Teletype NY 1-10G3




Building.

the Manager of the
office, Union Commerce

I

think

the

concept

of

an

ad¬

by Mr. Hahn be¬
fore the New York Society of Se¬
*An

address

curity Analysts, New York

Sept. 26, 1947.

City,

by continuing evi¬
rising costs which are
tne

over

of

environment

two, railroad security
to be measurably lower

are

they were in May of this
it will be the result, I feel,

year,

business

traffic

and

decline

rather than of

is

the

These have been pretty well

only by
those
study railroad securities and
ment thereon but also

nection

the

with

industry

immediate

dire

recent

what

to

as

not

of

of

is

the

net

railroad

railroad

to

roughly $8 billions

enues

that

railroad

net

was

billion

$V2

about

the

12 months ended June

lows,

at

in

least

income

in wages

crease

income

entirely.

lows that

a

where it

was

such

ment

the

as

end

in¬

in¬

come.

This
in

is

situation
railroad

the

nothing

industry.

It

when railroad net income
was larger than in any other year
except 1942 and 1943, a 20% in¬
crease in the wage bill would have
reduced such net by about 60%—
other things being equal, which
they hardly ever are.
In 1936,
when the people were pretty op¬
timistic about railroads and when
as

result

a

sold

pretty high, 10% of the wage bill
was greater than the net income.
Much

tention

of

is

the

time

given

great at¬

no

relation¬

these

But when, as at present,
the wage trend has been strongly
upward, then the.y become a mat¬
ter
of
common
knowledge and
comment and

on

of

tion

The upward

I

is

Materials

serious,

but

much doubt that it is as
important a factor at present as
the levels of industrial and agri¬
very

cultural

mine

production, which deter¬

railroad

traffic

volume.

I

that the
history
suggests
that freight and passenger rates
will tend to keep pace with oper¬
ating costs so long as the general
economy
is prosperous and the
say

this

reasonable

the

for

again

be

near-term

further

period
of
earnings for many,

:

expecta¬
is

for

a

satisfactory
but not all,

companies.
I say "many but not all" for the
time, if

reason

ever,

that not in

was

the

in

difference

railroads

dividual

as

there is

as

Pennsylvania doesn't

day.

long

a

much
earnings of in¬
there

to¬

earn

its

Burlington earns its
charges eight times.
Thus, the
term
"satisfactory earnings" for
the industry as a whole does not,

charges and

under

present conditions, mean
companies.
are to have higher freight

railroad

all

If

we

and

rates

for many
not

market in

basic

The

is

pretty good earnings
railroad companies, why

bull

a

that

reason,

nothing

rails?

I should say,

have been
investor's minds
probably continue the
worry about how long the upward
spiral can last and also probably
the thought that the trend will
continue
upward
until
it 'is

settled.
there

will

In many

will

with

for the reason
of railroading

earnings

of

many

railroads satisfactory for a further

trend of wages and

undeniably

rates will

permanent basis.

a

stopped by business adjustment.

concern.

Wages and

re¬

logic of the situation

the

Even
Trend

doubt

freight rates.

freight

excellent

has

1929,

securities

much

new

always
been
true
that
small
changes in wages and rates mean
large changes in net income.
In

their

in

Thus,

natu¬

net

be

cannot

raised

the investing public
One minute you see
it and the next minute you don't!
speaking of railroad

and supplies
higher than in 1939.
basis of the foregoing,

suggests strongly that by the year

rally gives
the jitters.
I'm

Passen¬

9%.

about 12%.

materials

Also, the

completely
figure to

present

freight rates
ton-mile has in¬

about

Higher Freight Rates Coming

income

before the 20%

of

increase

in wages. Thus, an environ¬

crease

up

been

garding speedy, favorable action
by the ICC on the railroad's re¬
cent request for a
10% interim

increase in rates

10%

the net

restores

in¬

eliminates the net
But it also fol¬

all types of traffic

on

20%

a

per

are up

the

there

of

elimination
that

and

fares

On

last, it fol¬
that a

theory,

the

toward

way

has

is about 90%

the

10% increase in wages goes a long
net

there

em¬

increase in

only

Cost

non-operating
rates will be

1939

revenue

ger

year,

in

Since

creased

year,

a

case

wage

17V2%

but

railroad wages $4 billions a .year,
which

the

of

75%.
a

rev¬

a

wages

World

ployees,

wages

With

revenues.

going to
and freight and

worth

after

freight

railroad

and

levels

is

foregoing connection, it
noting that during and
War I,
wage rates
increasing
111%,
freight
rates
78%, passenger rates 48%.
Since
1939
wage
rates have gone up
67%.
If operating employees ob¬
tain a
15%
increase, similar to

con¬

predic¬

granted.

course

traffic

what

the

In

rate increases
The basic trouble
upward trend of
wages and
other costs, particu¬
larly serious due to the high ratio
of railroad wages to railroad rev¬
enues and the resulting low ratio
is

and
on

rates.

passenger

will happen to
substantial and

if

than

happen to

com¬

by railroad

management, particularly in
tions

business

rather

who

plies

justment market—that is a trad¬
ing market—for most railroad se¬
curities fits the current factual

appointed

than

icy in the adjustment markets that
followed the bear markets of 19291932 and 1937-1938.

Cleveland

current

than
of

prices

an

com¬

also the cost of materials and sup¬

For C. F. Childs & Co.
25 Broad Street

for

rail¬

result,

a

next year or

railroad list, as was

Coffin Is Clove. Mgr.
CLEVELAND, OHIO—Robert H.
Coffin, Assistant Vice-President
of C. F. Childs & Co., has been

will

dominant

and

As

primarily wages. And if,

well

ships.

accept the

a

may

aired—not

bull market

theory of an
market, it follows, I
suppose,
that for a further ex¬
tended period the best results will
be obtained from a trading rather
than a fixed bull or bear attitude
If

ties.

those

during

had

was a

bear

and

the

dence

seems

forces

large.

increased costs. In
pessimistic rather than
optimistic, it hardly seems neces¬ any attempt to judge the future
course of railroad security prices,
sary to go into any lengthy recital
of the
factors affecting emphasis should be placed, I think,
adverse
sentiment toward railroad securi¬ on what is going to happen to

are

The upward trend of wages

(1)

adjustment

Royal Insurance Co. Ltd.

Guaranteed Stocks

ties

adjustment market for the past
year,
and will continue in such
a
market until the following de¬

trustee of many

companies

Atlantic Mutual Insurance Co., and
is

which

practical matter to conceive of
years 1932, 1933 and 1934 as
an adjustment market rather than
a bull or a bear market.
Similar¬

Thatcher M. Brown, senior part¬

a

market

the

50 Years with Firm
&

be made for a third

a

Thatcher M. Brown

ner

being either
a pretty

However,

be called an adjustment mar¬
I think that railroad securi¬

road

Virginian— Joining the firm in 1897 following
his graduation from Yale Univer¬
sity, Mr. Brown was admitted as
a
partner on Jan. 1, 1907. He is

year's income avaUable for
charges
before
Federal income
taxes was just short of $7,000,000.
Moreover,
on
the basis of this
last

policy.

esti¬

York Central
interchange of coal and merchan¬
dise freight, would be lost imme¬
diately.
The balance, of roundly
$4,000,000, reDresent'ng coal from
Virginian - Chesaoeake
&
Ohio
]oint mines, would be a question
of gradual attrition.
1 Obviously, anv such less would
senting

Hahn

ket.

significant, however,

is

It

F.

velopments occur:

lines.

from
merchandise
freight.
It w^s claimed that vir¬ peake & Ohio for the first eight
of
1947
had
operating
tually all of this would be lost if months
Chesapeake & Ohio were to get a ratios of 65.7% and 72.3%, respec¬
For the full year 1947 it
voice in the operat'on of New tively.
York Central.
On the basis of now seems likely that Virginian's
1946 business, it was estimated by earnings may reach $4 a share
Mr. Beale that Virginian would which many analysts feel would
s(and to lose more than $7,000,000, justify a more liberal dividend
total revenues the road gets

as

of market—a

of less

Beale,

Mr.

Walter

case can

that
there were to be an affiliation of consistently prior to the war the
Chesapeake &
Ohio with New company had an operating ratio
York Central.

In

kind

ship bottoms resulted in re¬
routing via all-rail with a conse¬

It

set of

completely

which

good

Submarine

continue.

neither

decline

interplay

forces

period until their
plexion changes.

coal goes
to tidewater for water transship¬
ment
to
Atlantic
Coast
ports.
of

bear

extended

or

may

and

that

be

bear

bull.

bull

be

Normally,

ily, by war conditions.
the bulk of the road's

people's
and future

present

not

actually harmed, temporar¬

roads

of

production

regarding future railroad earnings
by concrete evidence of traffic

affecting

if

of the this period of inflationary price
ualize an ex¬
management during the ICC hear¬ spirals.
Virginian is the smallest
tended, robust
ings on the application of Messrs. of the so-called Pocahontas car¬
bull market in
Bowman
and
Young,
of
the riers, but it is bv far the most
railroad stocks
Chesapeak & Ohio, for permission efficient.
Naturally, the operat¬ and bonds in
to sit on the Board of Directors of
ing performance during the war the near-term
New York Central.
In 1930, the years is of little
significance. future.
Virginian built a bridge across This is particularly true of Vir¬
Most people
the Kanawha River at Deepwater, ginian, which was one of the few think of markets
West Virginia, to form a connec¬
tion
with
New
York
Central.

forces

of

near-term point of view,
I should be much more concerned

conflicting favorable and unfavor¬

said

be

yet

other

some

period, the general background is
not likely to be conducive to a
widespread, generally held belief
that
everything will be dandy.
This

is what is needed for a

bull

market, apart from one based on
inflation fear. The latter, I sup¬
pose,

could

there

were

pointing
sort of

a

in

happen.
few

Recently,

vague

signs

that direction.

That

a

bull market would prob¬

include railroad stocks and
large discount railroad bonds even.
ably

(Continued on page 33)

Volume

166

THE

Number 4642

COMMERCIAL

FINANCIAL

&

The Crisis Facing Private Enterprise
By

Office of

"haphazard" price making and
At, present,

Price Administration

of Justice

faced with

from
nical

point of
far

view,

were

Role

than those

ous

which

pushing prices
the

If

cycle
the

price
follows

history of

similar

tions

situa¬

the

in

past,

A

are

upward today.

are

we

economic

lesser

or

Bowles

de¬

the

specific

take that would

could

we

alleviate

greatly
present danger and

our

cushion

are

which

measures

whatever

recession

may

lie ahead.

In the present, political
climate, however, I doubt that we
will take those
steps in time.
If

depression

a

have

serious

would

results,

it

create

It

hardship not

grave

only
among
our
workers
and
farmers, but among our business¬
men.
It would increase already
serious

international

Dismal

tensions.

and

unnecessary though
it would be, the experience should
not

be

me

stress

fatal—provided
this

let

(and

point)

take

we

vigorous and intelligent action
soon

as

economic

an

risk.

The

few

next

years

may represent our last chance to
achieve economic stability under

private
that

enterprise.

challenge,

together

to

conditions

greater

If

if

which

will

we

create

the

and

battle
and
we

will

we

for

have

the

to

short

or

in

our

Alger

glimpse

a

welfare

defeat

people

believe
is

duction

they

theory
and

unlikely

that

depressions

would

folly

on

the

inflations
to

economy.

the

worst

minimize

to

tions

our

be

their

this point.

If

of

convic¬
fail

to

achieve economic
opportunity and
sustained

full

moderate

that

other

will

lead

our

entire

to

of

could

economic

I

would

tried.

system

of political

which

of

be

This

sweeping changes in

emerge

edition

by

they will insist

means

to the kind
out

employment

means,

almost

and

anything
a

1948

Huey Long.
to

certain

discuss

little
to

government,

end

address

briefly discussed.
In the past, the businessman

has
been
faced
with
two
entirely
separate risks. The first risk con¬
cerns

with

his

in

we

are

essence

of

our

The Risk

Government, it

seems to me, has
responsibilities in a

four essential
full

functioning

private

enter¬

The first

private enterprise

respon¬

of Depression

been

have

faced

in

the

Everyone accepts
the need for public education, an
adequate

ket eliminates only

sibility of government is scarcely
controversial.

military

roads and

good
office

ices

efficient postThe role of gov¬
an

system.

ernment

is

in

establishment,

providing these

the inefficient

of tradition or

avoid

to

a

conscious attempt

competition,

but

role

second

of

tal."

,;

Peabody &
&

Co.

be

Among the firms who partici¬
pate in underwriting syndicates
rind

up syndi¬
believed not to
pending suit,
Merrill Lynch, Pierce, Fenand Beane; Lee Higginson &

which

included

be

Association

are

in

It

is

points

that

of

one

of

Indiana

Securities

Dealers*

immaterial.

as

According

the

dispatch

by the Justice
Department is the price mainte¬
nance provisions in the syndicate
agreements.
In the case of the
Service

National

the

change in the pricing
provisions would upset the whole
marketing machinery in the se¬
curities industry was tossed aside

attack

of

of

by

Inc. that any

the

expected

is

the

role

of

umpire

as

to

from

a

United

that

groups

to

go

the

Bankers

has

acsuranres

sought

Justice Department
not

involved

be

in

from the
that it would

the

anti-trust

the individual under¬
writing firms. The Association, it
was
learned, has filed a lengthy
suit against

the Justice
Department first attacked these
price provisions as illegal, the Se¬
curities and
Exchange Commis¬

memorandum in which it contends

sion in its decision stated:

there

in

"Though
sary

to

which

we

decide

think
the

it

unneces¬

point,

we

inclined to the view that the

agreements

are

be-

i

a

is
a

no

justification for mak¬

co-defendant since it is

professional

a

price

now

it

ing

organization

what

I

$2,840,000

Baltimore and Ohio Railroad

acting

make

up

our

economy.

Equipment Trust, Series W

Big Business has developed rap¬
idly during the last 50 years.
It
inevitable

was

that

Big Business

to

ganizations.
wards

Big Labor

This

and

evolution

bigness has led

us

whole hope

a

Equipment Trust Certificates
(Philadelphia Plan)

'

to¬

toward

Big Government, for only through
Big Government, in the face of big
private pressures, could the people
as

2Vs%

to
or¬

To be due

To be

to protect their

annually $284,000

on

each November 1, 1948 to 1957, inclusive

unconditionally guaranteed as to payment oj principal and dividends by endorsement
by The Baltimore and Ohio Railroad Company

interests.

Clearly, it is
roles

of the

one

primary

of

government to see that
reasonable fairness exists between

instance,

to

curb

These

Certificates are to be issued under an Agreement to be dated as ot November 1,1947,
provide for the issuance of $2,840,000 principal amount of Certificates to be
secured by new standard-gauge railroad equipment to cost not less than $3,550,000.
which will

It is

responsibility,

for

monopolies

MATURITIES

AND YIELDS

of

(Accrued dividends to be added)

all kinds whenever their activities

jeopardize the public interest.

1948

are

moving into

lish

minimum standard of

a

below which
should

be

no

1.80%

1955

2.25%

1952

1.90

1956

2.30

1.65

1953

2.05

1957

2.35

1954

controversial ground—is to estab¬

1951

1.50

1950

more

1.30%

1949

The third role of government—
and now we

2.15

living

American family
to fall.
We

allowed

already taken

this direction.

many steps in
We have minimum

Issuance and sale of these Certificates are subject to authorization by the Interstate
The

although today they are
wholly inadequate. Most of us, in¬
cluding Senator Taft, have accept¬
ed the necessity for government
help in slum clearance. The food
stamp plan, which was widely ac¬
wages,

during the 1930's as a
means of assuring
every American
family a basic minimum diet, is
again being considered.
The
now

both
of

Social

appears

political

Security

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

insurance

programs, which is being fiercely
fought by the American Medical
on

the

gress

at

the

coming

doubt that it will pass,

JULIEN COLLINS & COMPANY

Mc MASTER HUTCHINSON & CO.

THE MILWAUKEE

COMPANY

program

the platforms of
parties.
The idea
health

THE ILLINOIS COMPANY

(INCORPORATED)

on

government

Commerce Commission.

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

cepted

distorted

MULLANEY, ROSS &, COMPANY
To be dated November 1, 1947. Principal and semi-annual dividends (May 1 and November 1) payable in New \ork City.
Definitive Certificates, with dividend warrants attached, in the denomination of $1,000. registrable as to principal. Not

offered when, as and if received by us. It is expected that Certificates
in temporary or definitive form will be ready for delivery at the office of Halsey. Stuart & Co. Inc., 35
St., New York 5,
N. Y. on or about November 20. 1947. The information contained herein has been carefully compiled Irom sources consid¬
redeemable prior to maturity. These Certificates are

Vy a.l

session.
I
but surely

ered reliable and, while not guaranteed as to

October 24, 1947.

completeness

or accuracy, we

with

total membership of 716 firms.

serv¬

various

the

Association

Investment

bond

Press

Washington,

govern¬

government

between

se¬
jV,

contention

A

occasionally head

cates,

required for all corporate

curities.

sharply. This

us too

,

The Department of Justice in
Co.; Kidder, taking the opposite view has hinted
Co.; and Harris Hall that competitive
bidding should

& Webster Securities

ment, there may be some contro¬
versy, although I do not think it
should divide

arises

peculiari¬
ties of the business of raising capi¬

traditional.
the

On

that

added

from the conditions and

Barney & Co.; East¬
man Dillon & Co.; White Weld &
Co.; Union Securities Corp.; Stone

maintenance

(Continued on page 36)

medicine, will be debated in Con¬




Blyth & Co.; Lehman
Goldman Sachs & Co.;
Co.; Glore, Forgan &

syndicate,

The second risk with which our

businessmen

Commission

"the practice

Smith

are

past and which they will face
again between now and 1950 is
the risk of a business depression.
The risk of the competitive mar¬

prise economy.

Marketing Associa¬
Meeting, New York, N. Y.,
1947.

Co.;

ner

own

system.

theory that it represents socialized

Oct. 24,

Corp.;

Bros. Co.;
Drexel &

industry

his

illegal under the

Act."

of combining to putchase and sell at agreed prices is
Karriman Ripley & Co.; First Bos¬ not
merely an arbitrary antiquity

ability to compete

own

others

with too much

up

by Mr. Bowles at

the American

tion

closely inter-related with
role,
which
I
have

third

The

Stanley & Co.; Dillon
Co.; Kuhn Loeb & Co.;

&

Public

Association
*An

the

government.

confusion

—including

like

too

on

have

kind

we

ment is

follows:

are as

Morgan

not

are

us

Sherman

Co.; Lazard Freres; Halsey Stuart

pro¬

essential

are

I
see it, is as a guarantor that suffi¬
cient purchasing power will exist
to
purchase each year all the
goods we are capable of produc¬
ing.
This fourth role of govern¬
government, as

fore

& Co.. and Otis & Co.

government's

accept

recurring

the health of
It

to

defendants

as

ton

contro¬

in providing high quality products
help keep our econ¬ at lowest possible prices.
Every
running at full blast. Clearly, businessman who is worth his salt
however, some broad economic should welcome this risk with en¬
planning is essential. If we insist thusiasm for it represents the

the major economic groups.

bring. In the future,

can

are

full

of

role

most

City j>-

The firms expected to be named

omy

still

the heart of

what

and

York

necessary to

The

system.

tradition

of

absolute

equally powerful farm

the average American school
boy.
But
the
American people
have

had

the

only

accept

these

along

New

minimum of government planning

lead

economic ig¬

firmly entrenched in

ment

would

greed—our

present

Horatio

take the role of govern¬
first.
In my opinion, we

us

almost

economic

American

best interest.

Let

major

may result in the collapse of the
capitalist system which has in the
past given us so much.

The

initiative,

own

goods,

a

lack of imagination or

range

his

on

fairer

freedom of the individual. If
fail successfully to meet this

norance

itself, it

a

won

challenge because of

our

our

healthy distribution of
then

work

economic

essential

are

production

accept

we

divides

to

and in what he believes to be his

depression

But let's not minimize the issue
the

acting

man

taken

in

week.

a

as

becomes evident.

or

solution

future

be

fourth

versial

all of us; and second, the role of
the worker, farmer, or business¬

will

repercussions.

Government

democratic agent in behalf of

our

should

There
certain

of

to me, into two parts: First,
role of government acting as

a

gree.

will

steps

lines within the next few years.

seems

bust in greater
Chester

can

situation.

democratic

own

destined for

businessmen

as

The

danger¬

more

you

do about this

within

Read

—

believe

Department attacked pricing arrangements in sale of ji
Reported IBA seeks exemption on
ground it is professional organization.

Department

a

tech-3>

a

T

As noted in last week's "Chronicle," on page 20, the
leading se¬
curity underwriting firms expect to be faced shortly with an anti¬
trust suit by the Department of Justice. It is reported from Wash¬
ington that 17 firms will be named in a civil action by the Justice

serious price inflation. The rise in wholesale prices
since the removal of effective controls in June, 1946, is now roughly 40%—seven times
the increase of the previous three years under price controls with inflationary pressures,
we are

Facing Anti-TriEst Suit

Indiana Public Service bonds.

lower prices to produce larger sales.

urges

13

Department of Justice expected to file civil suit in New York within %
a week.
Controversy dates back to 1939, when Anti-Trust Division *j

Maintaining next few years may represent last chance to achieve economic stability under private
enterprise, former OPA Administrator urges businessmen to cut prices. Though advocating absolute
minimum of Government planning, holds too little Government will end up in too much Government.
Says it is role of Government to guarantee sufficient purchasing power for goods produced. Stresses
public works and Government housing as stabilizer and calls tax system a mess. Attacks present

!

(1745)

Underwriters

/

CHESTER BOWLES*

Administrator,

Former

CHRONICLE

believe it to be correct as ot this date.

14

(1746)

CHRONICLE

& FINANCIAL

COMMERCIAL

THE

Thursday, October 30, 1947

■aa

day, and reportedly meeting brisk
demand.

rially by any evidence of stiffen¬
ing in the Treasury's list. Here
the

Minnesota

Mining

Manu¬

&

facturing Co.'s offering of $10,000,000 of sinking fund deben¬
tures, due 1967, plus

100,000 shares of
stock

Much

true

the

offering of
stock
Kendall Corp. brought to
the

in

of the

With

series

the

of huge utility

telephone undertakings now
the way, the new issue
market currently appears to be

and

of

out

period which will
run of much smaller

moving into
bring out

a

great part of the

any

the

develops

business for

into

the

less

or

Riders

Free

The

fast

in

and

dealers

still

inclined to shiver at the mere

mention of

couple of the recent

a

for

bit of

a

to

"free

a

stock

common

have

in

come

Well,

the story

so

expected.

de¬

goes,

was

all that

allotments

But

it

is pointed

out,

are

as

a

scale

to

financing

one

or

more

SEC

Next

installments.

of

and

of

needs dictated.

call for bids is

a

ex¬

the

on

list

is

R.

H.

$30,000,000

fund
in

of

3%% sinking

debentures due to mature

1973.

Immediately ahead is a pro¬
jected offering of 150,000 shares of
General American Transportation
cumulative preferred, Series

Co.

"A,"
and

which
could

is

a

come

negotiated deal
next

week,

mar¬

ket conditions warranting.

Operations

Bankers had
the
pleasure of
seeing several really fast deals go
through this week, two of them

being offered to the public yester¬

or

pa¬

tience of many a trader. Noth¬

ing is so tiring as dullness.
punctuated by individual Yet it is
during just such a
sorties as Congressmen sound
period that the profitable pur¬
off. Bulls will need patience
chases are made. That Con¬

DENVER, COLO.—John J. Sul¬
livan, Bosworth, Sullivan & Co.,
nominated

been

has

Governor

the

for

of

District

of

3

Dealers,

Inc. $

Malcolm F.

gress and Truman will kick
this col¬ the high prices around is a
umn
emphasized that buying foregone conclusion. Many of
and selling of stocks, if to be the speeches will make
page
done with any degree of fi¬ one banner lines. But unless
A few weeks

ago

erts

&

Harry W.

picture

would

investment

Nov.

V

15.

be

helped

mate¬

an

Co.,

was

Willard, Boettcher &

Chairman of the Nomi¬

nating Committee.

tinue

its

to

inevitable

end.

•

The

Eastman, Dillon, Chic.
CHICAGO, ILL.—James V. Sul¬
livan, associated for the past four
years with Eastman, Dillon & Co.,
has been appointed manager of
the'f institutional-

department

for

the

Chicago office, 135 South La
Salle
Street, Alvin F. Kramer,
resident partner, announced today.
Mr. Sullivan entered the invest¬

business

Federal

in

the

1920's

Securities
was

Kramer.

Eastman,

'i'

Corpora¬

associated with

Prior

Dillon

with

&

to

Co.

with Paul H. Davis & Co.

of record only and is under no circumstances to be construed as an offering
as an offer to buy, or as a solicitation of an offer to buy, any of such shares',
The offering is made only by the Prospectus,

joining
he

was

will continue to

today.

news

Last

Thursday you saw
happened. The calling

what
of

Sullivan Inst. Mgr. for

ment

V

level, this

•

.

E. Warren

Mr.

market

in

was

the talked-about 190

Middaugh,J

tion where he

whole

market

inflationary cycle. Last week
with the market groping for

commodity markets
get the big-*
Garrett -|
| column said that there was gest attention for many rea-'
Bromfield &
too much unanimity of bullish
sons, one of which is that it's
Co., were nom¬
opinion. This condition, it was possible to buy contracts on
inated to the
implied, was dangerous and margin. Were the same mar¬
District
3
Com m i ttee.
John J. Sullivan
gave the market a cream puff gins available in the stock
Nomination is
quality which wouldn't do the market I have little doubt but
generally tantamount to election.
bulls any good.
that it would be making
The election is to be completed by
big

-and

the

Watching Governments
The

when the

Co.,,

the

solons do
something be¬
timing.
This sides beating their chests the
particularly important inflationary cycle will con¬

was

|

Roberts, Sidlo, f
Simons, Rob-J

This advertisement appears as a matter

oj these shares for sale,

will

the

out

ness

NASD District No. 3

refinding mort¬

Macy & Co.'s projected offering

customary to let the latter gauge
the market and set up the neces¬
sary financing frequently involv¬
ing several operations as capital

Fast

$30,000,000

pected shortly.

piece

corporations
their banking
connections, it was noted, it was

Two

first

which

on

when

advice

the

bonds, Series "D" due 1973

gage

of
Before

sought

is¬

new

Consolidated Edison Co. of New

when it could be better handled

in two

the list of

now

York

bidding

attempt large
in

Offerings

Large

over

Biggest is

bereft of

consequence they

inclined

seem

settled

syndicate

definitely in sight it de¬
velops that there are only three
that might be called really large.
sues

banking advice under the oper¬
rule and

stock

the

to

and

noon

price.
Three

officers,

ation of the competitive

the

back

Looking

it will take.

finance

that

quickly

be evidence of some revision of

Corporation

around

made

were

than anything else would

iideas of major borrowers with
regard to the market and what

element

wear

the element of

result

moment

Market in for period of dull¬

*

time

probably

By WALTER WHYTE i

nancial success, had to include

pretty well spread out with the

would appreciate at the

Says—

thereabouts.

Securities!

tory after having served to pro¬
mote a bit more realism in figur¬

more

*

The

Association of £

ing bids.
world

witnessed.

issue, reflecting
widespread demand, would move
to a fractional premium over the
offering price of 8V2.

were

this

that

was

investment

or

Whyte

indi¬

there

that

seems

mand for the issue

the

2.39%

the N ational

keen disappointment.

a

Walter

trading with the Victory 2V2S,
December, 1972 but callable
1967 moving below 101% on the
bid
side
to yield
an indicated
due

in for

days of practical¬
ly nothing before any re¬
sumption of the up trend is

Markets

Recently the group was at the
lowest levels of the year in "coun¬

point to, it

we are

at least ten

some

weeks.

that

next few weeks.

Robertshaw-Fulton

the

offering of

this

What

heaviness for

sustained

seems to me

Tomorrow's

of

Nominates Sullivan

Nipped

big deals which went "sour," but
there is a feeling of relief that
episode has passed into his¬

aggressive

operators who sought

understood

are

cations

bankers

Most
are

one

frame of mind.

It

bankers.

-

price of $36 a share.

a

more

Controls

of and, in some
negotiation stage,

talked
in

cases

of common

too, investors were found

a

ride"

multiplicity of small deals now

5

of

case

to "catch on" for

That is if

being

in

a

operations.
:

market at
Here

held

story

been

ter"

with vigor.

same

50,000 shares

,

new

out

moved

block of
preferred

a

has

undertone

week's market to

special session

a

was

ap¬

❖

#

What to

elemental

that

the

often
which

the

steels,
are

But

much,

broke

great
no

the

on

news.

is that there

answer

have

people who
being in the

many

business

they hear and when the antic¬
ipated event doesn't occur, or
is replaced by
something un¬
expected, the first reaction is
to get out from under.
So
considering the basis of the
advance, 12 points in a few
weeks, it was reasonable to

guard for

a

More next

—Walter
[The

get
de¬
two

Thursday..

are

market; believe most of what

on

can

utilities

still the best

The

be

I

statement of

my

performers.
don't be in a hurry to
question asked most them. They all show a
is
why the market, cline of anywhere from
hadn't
gone
up
too to three points ahead.

over.

a

course an

question.

parently enough to upset the only repeat
slightly tilted apple cart and last week
stocks, like apples, spilled all motors and

The

:!:

buy is of

views

Whyte

in thig
necessarily at any
time coincide with those of the
Chronicle. They are presented ai
those of the author only.]

article

expressed

not

do

Pacific Coast
Securities

decline.

Orders

Executed

on

There is little

about

ing

100,000 Shares

point in talk¬
what caused it.

Pacific Coast Exchanges

The market does not pay

Idaho Power Company

off
It is

performances.

past

on

the future that

counts.

New York Curb Exchange

through the 190
figure but not without some
backing and filling. I still

$20 Par Value

Members

New York Stock Exchange

week I wrote that the market
would

Common Stock

Schwabacher & Co*

Last

go

think

but

so

now

with

last

Chicago Board of Trade
14 Wall Street

New York 5, N. Y.

COrtlandt 7-4150

San

Francisco

Monterey

share

Special

to

The

Financial

Teletype NY 1-928

Private Wires to

—

Principal Offices

—

Santa Barbara

Oakland

—

Sacramento

Fresno

Two With Kinnard Co.
Price $33.50 per

(Associate)

San Francisco Stock Exchange

Chronicle

MINNEAPOLIS,
MINN. — Ar¬
nold
J.
Tierney
and
Emil
A.
Trnka
John

Copies of the Prospectus may be obtainedfrom the undersigned only by persons to whom
the undersigned may legally offer these securities under
applicable securities laws.

have
G.

Arcade.

been

associated

Kinnard

&

with

Established

1856

Co.,

Mr. Tierney was

Baker
former¬

ly with Feromack Corp.

H. Hentz & Co.
Members

Three With King Merritt
Special

Blyth & Co., Inc.

Lazard Freres & Co.

to

The Financial

Chronicle

MINNEAPOLIS,
MINN.—SigOlesberg, Charles P. Vail

ward C.

Kidder, Peabody & Co.

and

Wallace

become

A. G. Becker & Co.
Incorporated

Central

Republic Company
(Incorporated)

G.

Wicherski

have

with
King
Co., Inc., Pence Build¬

connected

Merritt &

New

York

Stock

Exchange

New

York

Curb

Exchange

Cotton

Exchange

New

York

Commodity

Chicago

Board

October 30, 1947.




of

Inc.

Trade

.New Orleans Cotton Exchange
And other Exchanges

ing.
N. Y. Cotton

Wegener & Daly, Inc.

Exchange,

With DeHaven,
Kenneth

Townsend

NEW

Exchange Bldg,

YORK

4,

N. Y.

L.

Fleming, 3rd, is
with DeHaven & Townsend, Crouter & Bodine, 30 Broad Street,
New York City.

CHICAGO

DETROIT

PITTSBURGH

GENEVA, SWITZERLAND

i. ii

i

mmummmmmWumi

& FINANCIAL CHRONICLE

COMMERCIAL

THE

Number 4642

Volume 166

A
1

Asst. Secretary for Economic Affairs,

15

Step Forward in Government Responsibility
By

By HON. WILLARD L. THORP*

\

(1747)

HON.
U.

Department of State
Sen.

RALPH

E.

;

FLANDERS*

S. Senator from Vermont

Flanders, in outlining functions of President's Economic Council and the Joint Committee of

Economic expert of State Department stresses value of advanced
planning in postwar reconstruction and states never before has

Congress

research and

Government for maintaining

complete. Pictures European food
situation and points out shipment of more food is essential to Euro¬
pean recovery. Lays down a long-term recovery program, and de¬
nies Germany will be given priority in receiving aid. Says unless
Europe recovers, the value3 of world's culture and civilization will
planning been

more

be lost to
Never before have
about

the

facts

so

many

international

of

tial

This

life.

is

so many

1946.

chief element of its program was

responsibility
into

International

thrown

Tne second institution—the

Bank

and

struction

for

Recon¬

Development—was

the

planned to provide credits to re¬

American

pair
the
extraordinary damage
wrought by total war and to sup¬
the
development of those
port
areas whose living standards were

people.

We

know that

ac¬

tion

or

tion

on

inac¬

These two organ¬
UNRRA and the Bank,
were
designed to deal with

the

P

man

i

r e s

dent's

only
help

-

three-

is

other

the

Committee

our

abreast of the

the
Willard

of

millions

financial

Thorp

L.

of

needs

countries

the

war-

during

the

reports

his

matters

Since under the American system

most of the questions
condition of Europe

it is vital that there be

us

between

a

and

especially

crisis.

food

the

People
everywhere
are
asking
why the countries of Europe are

suddenly faced with a major food
shortage more than two years
after the war ended.
Has not the

devastation

of

global

the

and

war

economic progress
underdeveloped areas.
encourage

The

other

two

institutions

to

in
in¬

cluded in postwar economic blue¬

and

government, the

constitutional

support of Congress,
agreement
the executive and
the

the

have

been

with

these
employment

production have been at low
We have sought for reme¬

dies to cure
for

legislature on measures needed to
promote the economic health of
the nation.
The Economic Coun¬
tee

have

we

levels.

effectively

act

cannot

cil and the

a

the

flict

with

extent

embark

on

giant experiment in preventive

and maintain

high level

a

of

employment and production, to
prevent a recurrence of unemploy¬

frequently

other

to

in

con-,

such

an

the

suffered.
The

now

that

the

The special

too

themselves

each

rep¬

to

general welfare
has been lost from sight and has

which

We

been

Such has not

case.

served

found

hygiene which will keep

in health.

prove

interests

sickness rather than

a

medicine for the economic organ¬
ism.
We are determined to im¬

Congressional Commit¬
been given the job of

advantage

whole.

concerned
enly when

without

from

total

intently

made to the Pres¬
Economic Council.

transformed into the physical cap¬
recover

to

has

of advantages

special interests would

have

providing credits which might be
to

have agreed

,

.

welfare. ;

general

theory

total

sum

Hitherto,

security and well-being.

needed

that the

nation.

own

ital

the

always been the

our

the

the

often

all our energies to main¬
taining the economic health of the

President

now

we

the

on

Too seldom

policies advanced been

as

of

Right

is

effect

whole.

of

nation

early postwar
period—the first
meeting the relief needs in in¬

concern

rection

a

solvent countries

the second

about

the

approached initially from the di¬
Too

talking

favorable

a

economy as a

resent

borders, not to mention

and

have

have

to the

own

people beyond

of

bend
Ralph E. Flanders

lause

by

back¬

death

us.
In general, the pressure
legislation has been buttressed
with
arguments
that it would

fore
for

the first time

and

Congress

ident

are

we

proper

the

and

an

our

of

gov¬

—

importance in
connection
with
whatever legislation might be be¬

over-all government approach
to the problem of prosperity.
For

economic
state
of
the

meaung

put into

be

against

the life
civilization.
of

What

supple*

devastated

existence,

It is
responsibility that

a

only

Senate, whose
job is to l^eep

thus

lives

can

ground

repercussions
welfare

important,

it

perspective

to

into

important problem the

the House and

Union

mission, not
I had a chance to

them

so

of

make

the

bring

their

ernment; has to solve today.

Joint

the

of

because

most

Council;

izations,

and

•

but because they are tackling the

Economic

abysmally low.

on

we

—

conception

is

One

part will have

our

Says

»

<§—

of

Act

ment

of

fcod.

have

is price of food.

now

whole price program.

our

history this nation is preparing for an all-out attack on the
problem of maintaining a high rate of employment and production. For the first time,
also, we have two new special tools for the task. These tools were forged by the Employ¬

tremendous
which

spot of inflation

sore

j

For the first time in its

intelligent human beings to the gravity and complexity of the world
economic situation and the rapidity with which various aspects of
it are chang¬
them abroad.
Its primary objec¬
ing. It reflects
tive was to sustain life and the
the position of

events

bi-partisan inquiry, and concludes
will have to review

questions

normal reaction

a

and

'

us.

Americans asked

the Economic Report, points out these organizations signify increasing responsibility of
full employment and economic stability. Stresses importance of impar¬

on

Employment
embodies

the

Act

of

1946,

over-all

ap¬

proach to prosperity, provides that
the Economic Council make an
anntial

which

report to the President on
he

base an economic
the newly convened
Congress.
It provides for such
interim
reports as the Council
may

to

message

prints — the International Mone¬ providing the facts on which such ment of men and machines and
may feel necessary.
These have
United States generously appro¬ tary Fund and the International agreement can be based.
the worry and suffering they en¬ been found of increasing valuer
Trade Organization — represented
priated billions for relief?
Are
I want to tell you something tail.
not only by the President himself,
conditions growing worse in spite long-term planning to assure a about
this
committee
and
the
but by
Government's Responsibility
legislators, businessmen,5
of
the aid we have furnished? living and expanding pattern for Council tonight, about what they
We are recognizing that a part newspaper
The first was
editors and, indeed,
Could we not foresee and plan for the postwar world.
are
doing, and about their own
to offer some assurance that cur¬
this eventuality?
of the responsibility for the na¬ all those who need a clear picture
As

of fact, I doubt

matter

a

there

a

was

ever

if

time when ad¬

planning for the world was
as grand a scale as that
by the American Government for
the international problems of the

rencies would
to

provide

tion

be convertible

of

means

a

which

would

and

stabiliza¬

reduce

the

vance

done

on

postwar world. Advance planning
in the political field has given us
the United Nations and man's best
up to now for
United Nations

hope
The

ing

day

with

which

is

now

a

go¬

It is solving prob¬

concern.

lems

lasting peace.

although some

by day,
it

is faced

are

about

which can be
conceived. The early years of the
United States Congress were not
difficult

as

all

as

any

The United
great pride for

quiet and placid.

States

take

can

to the establish¬
of the United Nations.
We

leading the
ment

in the
difficult task of strengthen¬

must

now

more

ing

way

follow

through

and

body,
effective.

this ^international

making it

more

also

plan fashioned to meet t'ne

a

difficult problems of the postwar

period.

During the war the con¬

cept of lend-lease had been es¬
tablished, thus doing away with
one
of
the future
obstacles to

lem

which they were clearly
make

and

we

not

were

unable to
eager to

receive.

to

establishment

the

embraced
four

planning also

important

international

stitutions—two of which

were

of

in¬
de¬

signed to assist economic recovery
and two to provide the basis for
a

abundant

more

ahead.

The first

UNRRA,
relief

life

in

years

institution

established

to

was

provide

a

non-reimbursable basis

to peoples

who could not produce

on

the bare necessities of life and did
not

have

the

means

to

purchase

to

These institutions

planned
provide the framework within

which

it

were

hoped that

was

NEW

better

a

ti

product

e

Their

of

creation

government
a

matter

of

we

economic conditions and pros¬

gov¬

of

have

pects.

responsi¬

The Council also holds fre¬

quent conferences with the Pres-

(Continued

incidental

on page

22)

solicitation of any offer

buy securities. The offerings are made only by the

Prospectus.

ISSUES

established

inter¬

national

responsibilities
where
have never existed before.

they
As

in

the

certain

of

case

planning,

any

assumptions

had

to

be

made, and some of these have not
proved to be entirely correct. For
ore
thing, the plan presupposed
a

$10,000,000 2%% Sinking Fund Debentures due October 1,1967
Price 100%% and accrued interest

degree of cooperation among the

Great

which

to

date

has

tragically absent.

there
tion

Powers

was

of

Secondly,
serious underestima¬

a

the

extent

of

wartime

damage,
the
exhaustion of the
people, and of the scope and com¬

100,000 Shares $4 Cumulative

Bad Food

Preferred Stock

(Without Par Value)

plexity of the task of rebuilding
entire economies whose very fab¬
rics were destroyed.

\

Price $102 per

share

Situation

In

addition, recovery in Europe
has been impeded further by cer¬
tain

other

unpredictable

factors

which have placed large segments
of the population in a more crit¬

position
since

than

today

the

fighting

at

A copy of the Prospectus may

any

we

did

not

margin

of

effects

of

provide

a

stopped.

the

from

Prospectus within such State.

sufficient

safety to absorb the
unforeseen
disasters.

Two

crop failures in
succession
have left Europe at a level of sub¬

sistence

be obtained within any State
as may regularly distribute

such of the Underwriters

Chief among these is the fact that

which

has

Kalman & Company,

slowed down the recovery process
but which threatens whole coun¬

Harriman

tries with collapse.

brought about this grim food sit

eign Relations, Chicago, 111., Oct.
23, 1947.

stood by you

(Continued

on

page

BIyth & Co., Inc.

Ripley & Co.

Merrill Lynch, Pierce, Fenner

The factors which

& Beane

Union Securities Corporation

which,

readily under¬
mid-westerners who

Inc.

Piper, Jaffray & Hopwood
Eastman, Dillon & Co.
Lehman Brothers

Incorporated

Why does western Europe need
grain so badly—now—two years
after the war?

Kidder, Peabody & Co.

Goldman, Sachs & Co.

only

not

nation in Eurooe are those
I am
sure, will be




at
as

the

They were
bold
planning.

*An address by Dr. Thorp be¬
fore the Chicago Council of For¬
.

bility

with

world would be built.

time

Institutions
Postwar economic

looked

lies

Until this time

This announcement is neither an offer to sell nor a

discriminations.

to

health

ernment.

reducing artificial barriers
trade
and
eliminating trade

ical

Important International

by Senator Flan¬

of

postwar recovery by obviating the

necessity for huge payment trans¬
fers
from
our
Allies—payments

address

monetary hazard in the exchange
Tribune" Forum, New York City,
of goods between countries.
The
Oct. 21, 1947.
second was to deal with the prob¬

been

In the economic field there was

tional
*An

ders before the New York "Herald

October 29,

1947.

42)

'

*.*'4:"

•

• •'

-:

11

Stone & Webster Securities

Corporation

Kebbon, McCormick & Co.

16

THE

(1748)

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, October 30, 1947-

durable goods, especially durable
goods dealing with capital invest¬

Formed in Raleigh

bonds, North Carolina State
and municipal bonds and invest¬
ment trust issues.

Jerry

Griffin

I. Griffin,
B. Vaden,

Treasurer.
Mr.
been conducting his

and

has

investment

own

business in

Ral¬

eigh and prior thereto was VicePresident and Sales Representa¬
tive

in

North

An

Carolina

for

55%

was

an

analysis of third quarter

showed

officer

and

second quarter while bond
decrease of 33%. Bal-<£-

a

sales showed

fund

anced

mod¬

erate increase over second

but

results

quarter
approximately

were

6% under those of the first quar¬
ter as will be noted from the fol¬

lowing table.
Mutual

Net

Fund

Sales

omitted)

(000's

man¬

Common

of the trading department for
Kirchofer & Arnold, Inc.
ager

Stock

Bend and

Balanced Specialty

Funds

1947--

Funds

quarter___ $16,600
Second quarter.
10,800
Third quarter..
16,700

said

to

the

to

$18,100
16,300
11,000

one

with

sponsor

stock fund

common

a

common

stock

funds

but the about face in the trend of

sales
in
equity
significant.

of

Gross

Group Securities, inc.

funds

be

may

sales

ning of 1946 have been
First

1946

of

com¬

as

follows:

quarter
quarter..

major dimensions, for which we
can find little present supporting

two

it

could

and

years

ducers

make

think

in the

are

in

next

other

pro¬

shape."

same

Notes

Lord, Abbett's Affiliated Fund
has borrowed another million dol¬
lars making total bank loans of
nine million dollars against
gross
assets as of Oct. 15 of $39 million.

National

lished

evidence, the market may be said
to
be
appraising equity values
soberly in the light of the current
level of business activity and cor¬

Notes

by

No.

National

431,

pub¬

Securities

&

17,200,000

quarter..

21,900,000

Third
Fourth

First

Second

25,400,600

Distributors

dealer

quarter..

quarter..

To

Be Inscribed

Roland

Marble

on

Group, Incorporated

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

Young,

favorite

our

pixie Hollywood comedian, has al¬
ready written his own epitaph,
"Pardon

16,900,000
22,100,000

of Balti¬

more.

to stockhold¬

recent letter

a

William

Fully Invested

Incorporated

William A. Parker, President
of Incorporated Investors of Bos¬

ers,

ton, stated "A year ago there was

that

opinion

this

your

upon

group,

graduate

a

University and
veterans'

of

Princeton

the

of

condensed

at Harvard Busi¬

course

School, and now with Mackubin, Legg & Company, was elected
President. He gives credit for the

ness

idea to a group of his friends in
New York who have
successfully
established

similar organization.

a

1947, witnessed de¬

pressed his sincere interest in giv¬
ing
every
assistance
to
these

clining stock prices for the most
part with the market approximat¬
ing its lows for each year in the
respective periods. Unfortunately,
the average investor is prone to

nothing in the economic outlook
to
justify the abandonment of
positions taken in selected com¬
mon
stocks.
In support of this
view we cited the persistence of

young

inflationary influences,

the large

for

consumer

stocks

common

when

the

the

unsatisfied

demand

capital" goods, the ex¬
However, if the recent strength
in the stock market continues, we tremely low ratio of inventories to
would not be surprised to see sales 'sales, the improving productivity
of labor and the high level of pur¬
of common
stock mutual funds
chasing power. During the past
equal or exceed the volume of

investment dealer,

National
RESEARCH

Since

request from
or

once

12

again.

&

CORPORATION

in

a

"Perspective"

discusses

scholarly and readable

man¬

profits

only experienced no re¬
but
have
actually ad¬

cession,

1894

Bullock's

not

and

business

months

have

Under the above caption, Calvin

from

securities

vanced.
"An

analysis

factors

fundamental

of

the

that

indicates

econ¬

War II the stock market continued
the

120 broadway, new york 5. n. y.
mm

improved

prices,
commodity
prices, and business activity dur¬
ing the past 53 years. It concludes:
"With

the

termination

of

World

strongly rising phase which
in the second quarter of

began

1942, and reached its
war

of

peak

1946,

prewar

Keys tone

a

in

INVESTMENT

appears

prices.

the

market,
used

about 30%
and

only

to

course

activity and commod¬
Currently (Sept. 30)

ity

index

Certificates of Participation

It has since suffered

wholly unrelated to the

of business

Funds

quarter

than 60% above its

more

level.

second

sharp decline which

be

Custodian

the

primary post¬

measured

as

in

the

chart,

by the
is only

above its prewar level

about

23%

above

the

rests

omy

to

a

greater

de¬

"Currently, stock prices in re¬
lation to other prices and in rela¬
tion to earning power and divi¬
dends
not

historically low. We do
that this maladjust¬

are

believe

ment

No

continue

can

Recession

"These

indefinitely."

Visible

Yearley, a graduate of
Hopkins
University, and

connected

now

&

Sons,

is

Stevenson

Things

published

by

"I

follows:

as

at
a

country

.

all

that

.

Vice

Peck,

Brown

President.

affiliated

J.

with

Stein Bros. &

are

Boyce, whose home
Wilmington, North Caro¬
lina, is Secretary. The Treasurer
is Marshall Barton, of Frank B.
Cahn

&

Co.

John

Jackson, of Baker, Watts
& Co., F. Barton
Harvey, Jr., of
Alex.
Brown
&
Sons, and Bill
Reed, of

Robert

elected

Garrett

&

members

as

Sons,
of

the

Executive Committee.

Membership is
who

five

have
years

been
or

non-member

to all

open

in

less,

the

business

affiliated

well

as

men

with

member

as

measure my

point of

view

largely by the activity of our
durable and perhaps our semi-

Bonds

and

Preferreds

Common Stocks

40%.

j

——

First Boston Offers

Kendall Go. Common
An underwriting group headed
by The First Boston Corp., Gold¬
man, Sachs & Co., and F. S. Moseley & Co. on Oct. 29 offered 50,000

shares

stock

of

(no

The

facturers

of

par)

common

Kendall Co., manu¬
commercial

textiles

and

surgical dressings. The stock,
offered at $36 per share, repre¬
sents a portion of the holdings of
H.

P.

Kendall,

Treasurer

presently
35.17%

of

and

who
140,665 shares or

owns

of

President

the

company

its

outstanding com¬
It is
being sold to
diversify his estate and increase
its liquidity.
None of the pro¬
stock.

mon

from

ceeds

will

the

accrue

The

sale

to the

Kendall

porated

in

under

Co.

1924 in

the

of

the

stock

company.

incor¬

was

Massachusetts
Kendall

name

Mills,

Inc. and is in part the outgrowth
of

Lewis Manufacturing Co. with
which Mr. Kendall became associ¬
ated

in

1903.

In

1928,

the

com¬

its

present name
and
acquired Bauer
&
Black,
Chicago. Other important acquisi¬
assumed

pany

tions have been Bike Web Manu¬

facturing

Co.,

South

in 1929 and Pelzer

Bend,

Ind.

(S. C.) Mills in

1936.

who

invite

all

25

charter

young

men

eligible to apply for
membership to the secretary, J.
are

Stevenson
The

Peck.

Association

provide

was

formed

to

meeting

place for the
members, to promote a spirit of
cooperation among them, and to
a

vestment profession. Toward this
last end,
meetings will be held
with men prominent in various

fields of

industry and banking

as

and

will

work

closely

with

the

Baltimore Bond Club.

The

its

subsidi¬

an
integrated in¬
enterprise. Through the
Kendall Mills Finishing Division

it

is

of

the largest

producers
cheese cloth, ab¬
sorbent gauze and finished tobac¬
co cloths and has a leading posi¬
one

in the country of

tion in those trades to which such

products are distributed.
the

Bauer
of

the

& Black
two

Through

Division

it is

largest

suppliers
of
surgical dressings and allied
products in the United States and
one

is

the largest supplier of elastic
goods made from elastic webbing.
For the 28 weeks ended July
12, 1947 the company reported
consolidated net profit of $3,853,-

880,
dend

New

and

company

equal, after preferred divi¬
requirements, to $9.41 per

share

stock.

This

York, Boston, Chicago, and
Toronto
have
similar organiza¬
tions, and there are indications

compared with net profit of $3,382,109 for the calendar year 1946,

that

equal to $8.01

others

will

be

started

on

common

per

share.

throughout the country.

Swiss Bank

(Series Kl -K.2)

PUTNAM

COMMON STOCKS
(Series S 1-S2-S5-S4)

FUND

Prospectus from

locul investment dealer or

Keystone Company

Antwerp Bonds Called
For Redemption

The New York agency of Swiss

City Bank of New
York, as fiscal agent, is notifying
holders of City of Antwerp ex¬
ternal loan sinking fund 5% gold
bonds due Dec. 1, 1958, that $226,000
principal amount of these
have

been

selected

by lot
redemption on Dec. 1, 1947,
through operation of the sinking
fund, at a price equivalent to
100%
of the principal
amount.
Payment of the drawn bonds will
for

Prospectus upon request

Congress Street

HUGH W. LONG & CO.
Putnam

INCCC^OSMtP

48

WAll

STREET

NEW YORK

5, N Y

Fund

Distributors, Inc.

50 State St.,

Boston

be
the

made

York.

iX-V

at

National

the

City

head

Bank

office

of

Corp. Holders

Advised of Exchange Offer

The National

bonds

of Boston




preciation

9%;

31%; Investment
20%; Ap¬

Preferreds

dustrial

The

area.

PREFERRED STOCKS

Boston 9, Massachusetts

and

Baltimore

active support of the "senior" in¬
vestment
banking
organizations

BONDS

50

Bonds

aries constitute

speakers. The organization has the

(Series Ii 1-B2-B5-B4)

Tlie

follows: Cash and U. S.

as

Government

firms, whose residence or princi¬
pal place of business is in the

any

IN

your

divided

in

was

going

haven't

we

serious recession in this
.

with Alex.

further their education in the in¬

Seemed Impor¬
Selected In¬
vestments Company quotes Gen¬
eral
Motors'
Chairman,
Alfred
tant"

to have

investing tlieir capital

Dorsey

members

gree.

Sloan

FUNDS

firm

a

even

feeling

in

on

Real

groups.

Johns

were

foundation.
purchasing power per capita
is well above the prewar level,
and purchasing power per family,
because of full employment, has

stock

ner,

nating, General American Trans¬
portation, General Foods, and In¬
ternational Paper.
As
of
Sept.
30,
Wellington
Fund's $46 million of assets were

Legg, organizer of the

quarterly report for

in

letter

goods and

Prospectus

period it eliminated its hold¬
ing of Cleveland Electric Illumi¬

same

The Junior Investment Bankers <S>

as

Sept, 30, 1946, we stated our rea¬
sons for believing that there was

_

poorest quarters, the third of 1946

early 1946

Mead

and

Shoe,
Illinois Power,
Johnson.
During the
Can,

many years there has
a
strong influx of new blood into the investment banking and
brokerage business.
A group of 25 young men with such interests
in Baltimore have
joined together to form an organization known

and Brokers Association

if I don't rise."

me

depression. With this view
the management of Incorporated
Investors could not agree. In our

market is lowest.

TIES5ERIES

Continental

common

Brake

been

Mr. Emil Schram, President of the
New York Stock Exchange, ex¬

and second of

or

American

stocks:

Nato its

Association of Baltimore Formed

avoid

from your investment

request

August,

and

Securities added

holdings of the following

■*

severe

It will be recalled that the two
prospectus on

July

tion-Wide

long-term interest rates."

country faced an immediate and
sharp business recession, if not a

23,200,000

qua iter

Third

a

During

recom¬

purchase of aviation,

Junior Investment Bankers and Brokers

porate earnings, particularly when
related to the prevailing level of

widespread

$36,200,000

quarter...

Second

1947

depression of

industrial

an

In

quarterly

stock funds since the begin¬

mon

level of 1935-39, a period
of subnormal economic activity.
Unless
we
are
now
confronted

are

have contributed heavily
sharp improvement in the

showing of

SHARES

increase of

an

specialty fund sales

and

average

with

As to

Corporation,

the

BALTIMORE, MD.—For the first time in

of

Sales

leverage

Funds

$17,500
15,700
16,500

First

STEEL

a

mutual funds

reports of leading

the

over

McAlister, Smith & Pate, and was
with Herrick, Waddell & Co. Mr.
Vaden

perhaps a
involving certain
where
prices
and

trucks

reveals that net sales of common stock funds showed

and

Secretary

worry

mends

but

Motors, company's exe¬
cutives have greatest conviction
company could sell all cars and

Common Stocks Regain Favor

and

President

anything

not

General

By HENRY HUNT

business dealing in unlisted stocks

George

"Need

adjustments
production are out of line.

offices in the Insurance Building,
to conduct a
general securities

are

metal and railroad shares.

about

Also:

minor recession

RALEIGH, N. C. — Griffin &
Vaden, Inc. has been formed with

Officers

Research

ments."

Griffin & Vaden, Inc.

of

New

Bank

Corporation

is

notifying

holders of the corporation's bearer
that on and after Nov. 1*
1947, these shares will be ex¬
changeable for hew certificates

shares

carrying dividend coupons Nos. 1
to 25, at the agency's office, 15
Nassau Street, or. at any of the
corporation's offices in Switzer¬
land and England.
The old cer-^
tificates,
according to the - an¬
nouncement, are to be presented
with talons attached, in numerical
order, accompanied by a- list of
numbers.

Volume 166

Number 4642

THE

COMMERCIAL & FINANCIAL CHRONICLE

(1749)

17

Open End Investment Funds—The Most Significant
NSTA Notes
Development in the last Fifty Yeais
By WILLIAM V. TROUTMAN

Investment Analyst, John B. Dunbar &
Co., Los Angeles

Writer traces development of
open end investment
SECURITY TRADERS ASSOCIATION OF CONNECTICUT
At

a

meeting of the Security Traders Association of Connecticut

held Oct. 24, 1947 at The
City Club in
were

funds and cites statement of SEC
they are most
years.
Shows progress and intrinsic ad¬

important single development in financial
history in last 50
vantages of modern investment trusts to different classes of

investors, particularly
income, appreciation and marketability.

Hartford, the following officers

unanimously elected:

regards safety,

as

statement made
by the Securities and Exchange Commission called the
growth of Open End Investment Funds
"probably the most important single development
a

as

rnmp/ifpivC^a

accepted

tory of the United States during the last

a s

vestment

banks and in¬
surance

panies
field

in

aged

the

by

e s

t

is

m

t

to
E.

Graham

George

Eisele

F.

Robert

Bligh

Leslie

B.

Swan

President—John E. Graham, Brainard, Judd & Co., Hartford.
1st

Vice-President—George F. Eisele, Coburn & Middlebrook,

Hartford.
2nd

that
such

A.

Bligh, Fahnestock

&

Co., Tor-

rington.

Secretary-Treasurer—Leslie

B.

New Haven.

| Twenty-three

The
and

ment fund require the considera¬
tion of all investors.
The Prudent Man Rule

For over 100 years the Boston
following will serve on the Board of Governors—E. Holbrook
Bradley, Edward M. Bradley & Co., New Haven; George A. Dock- trustee principles of investment
ham, Hincks Bros., & Co., New Haven; James P. English, Cooley & have been well known for distin¬
guished
service.
This
guiding
Co., Hartford, and Frank J. Murray, Day, Stoddard &
Williams, New
principle is based on the Prudent
Haven.

The

At

a

1830

meeting of the Security Dealers of the Carolinas held

at the

Ocean Forest Hotel, Myrtle
Beach, South Carolina, on Oct. 10, 11 and

12, the following officers

were

elected:

"All

that

trustee

to

conduct

Supreme Court:
be required of

been

invest

is

that

he

how

For

terms,

The

idea

of

practical

be mentioned here that
from 1929 through
1932, the "fixed

quite in vogue.

was

ities
the

companies
Some

value, but the idea lost favor
mainly due to the immobility and
lack

have

In

continuous

of

the

management.
fund an un¬

"open end"

limited

number

of

investors

continuous

management, the in¬
company agrees to re¬
purchase shares at the current as¬
vestment

wage

set

value.

Since

the

"open end"

com¬

American

farm

were

mortgages.

A

All

Funds

the

United

mostly

private

but

enterprises.

'20s.

Prior

to

i929

Detail

Investment

generally

are

lines.

same

This

announcement

of

Treasurer—J. Lee Peeler, J. Lee Peeler &

ment

most

Company,
(Continued

a
on

NEW

Manning, Vivian M.

to

appears

buy,

as

any

matter of

a

these

of

record

securities.

only, and is neither
The

offering

is

an

made

Manning,

page 34)

offer to sell,
only

by

the

nor

a

solicitation

Prospectus.

ISSUE

Greenville,

South Carolina.
The meeting was attended by
from North and South Carolina.

200,000 Shares

approximately 60 security dealers

The

principal address

by Huger

was

Sinkler, Attorney at Law, Charleston, S. C.
SECURITIES TRADERS ASSOCIATION

Air

OF

Products, Incorporated

DETROIT AND MICHIGAN

At

a

recent

was

set for

Common

meeting of the directors of the Securities Traders

Association of Detroit and

Michigan, Inc. the date of Friday, Nov. 21

(Par Value $1

George Elder of Mercier, McDowell & Dolphyn
ing program.
Prince Edward

The cocktail party and

as

Chairman of

dinner will be

held

at

Price

Copies of the Prospectus may be obtained from the undersigned
only in States in

Securities Traders Associations in other States

which

The company's offering of $2,840,000 of equipment trust certi¬
ficates, series W, maturing Nov.
1, 1948-57, was awarded to a
group of underwriters headed by
Halsey, Stuart & Co. Inc. on Oct.
on

a

bid of 99.6191 for

a

rate

offering
Co.; The Illinois

Co.; Julien Collins & Co.; McMasHutchinson & Co.; The Mil¬
waukee Co., and Mullaney, Ross
&

Co.
The

certificates will be

undersigned
which

are

such

legally

Prospectus

authorized
may

to

legally

act

be

as

dealers

in

distributed.

Reynolds & Co.

Laurence M. Marks & Co.

to provide for not
of

the cost,

550,000,

more

than 80%

estimated to be $3,-

of new standard-gauge
equipment, consisting of

1,000 50-ton open-top steel hopper
cars.

Carl M. Loeb, Rhoades & Co.

i

Ball, Burge & Kraus

issued

prices




the

and-in

ter

railroad

2.35%, according to maturity.'

of

Other members of the
group are Otis &

•of 2%%.

Reoffering was made at
to yield from -1.30% to

such

securities

invited and it is anticipated that many will attend.

Halsey, Stuart Group
Offers B. & 0. Equips.

$5.25 per Share

the

ftotel, Windsor, Ontario.

Members of the

23

Share)

holdipg the annual Fall Party.

the Entertainment Committee has arranged an unusual and interest¬

are

Stock
per

Stroud &

Company

Incorporated
October 24, 1947

Company
organized

In addition

corporation

Company, Inc., Dur¬

ham, N. C.
Secretary—Malcolm

offers

this

fer
agent and custodian of all
monies and securities. The Invest¬

'20s did the forma¬

of

companies
for
public
participation gain momentum in

the

More

to

to
the
usual
legal counsel and
auditors, a separate custodian
(most often a large bank) is em¬
ployed to act as the security trans¬

A

States

pertain only

little

the

along the

established around

in

will

President—E. B. Wulbern, R. S. Dickson &
Company, Inc., Char¬
Vice-President—I. M. Read, Frost, Read & Simons,
Inc., Charles¬

com¬

monly known and has shown the
greatest progress, our discussion

very popular.
designed to deal only

were

the

can

participate, while, in addition to

became

were

1900

"In¬

a

secur¬

offered and redeemed on
basis
of
the
current
asset

was

lotte, N. C.

ton, S. C.

Here

fixed, unmanaged group of

moved

investment

or

should
trust"

Scotland. The idea spread to Eng¬
land and the Scottish and English

tion

Fund,"

higher

was

the

hereon

man¬

purposes,

price

type.

Not until the

"Investment

issued

participa¬

of

Holland and about 1880 they were
first accepted by the public in

few funds

the

and

What Is It?

Wulbern

has

certain

Frequently

panies originated in Belgium and

in

activities

agements.

B.

nation

a

investment fund is the most

of

aim of the investment fund

Edw.

funds

the funds

were

"closed end" type,
early in the 1930's the "open end"
type
came
into
popularity, lit

pur¬

Evolution

This, in general, is the rule of

Peeler

the

as

He is to

invested."

Lee

these

higher permanent
and price levels.

prudence,
discretion and intelligence man¬
age their own affairs, not in re¬
gard to speculation, but in regard
to the permanent disposition of
their funds, considering the prob¬
able income, as well as the prob¬
able safety of the capital to be

J.

that

case

shares

market

tion

known

its

and

men

the investment

is
—

toward

shall

exercise sound discretion.
observe

it

ing an adequate income and main¬
taining security of principal, but
also
in
preserving
purchasing

a

faithfully

as

In this

of

States

"closed

lower than the
liquidating value.
Because
of
the
virtual
double
evaluation and limited

successful, not only in yield¬

power

can

himself

doubt

no

Rule, as handed down in
by Justice Putnam of the

Massachusetts

established

was

managed but only

the

was to provide greater se¬
curity for the savings of people
by pooling these savings in one
fund and applying to them the
trustee principles of investment.
Today there are probably 100 such
funds.
After having been tested
by years of depression, social ex¬
periment and war, there is clearly

advantages of the modern invest¬

Man

corpora¬

pose

William V. Troutman

intrinsic

Swan, Chas W. Scranton & Co.,

SECURITY DEALERS OF THE CAROLINAS

fund

today

United

(most often with senior capital).
The shares were
then
(and in
some cases still
are) traded on the
national exchanges or in the overthe-counter market.

years ago the first

investment

in

riot yet

so-called

type.

number

investors
a

the

were

Why?

remark able
progress

of

funds

end"

investment goal.

common

high

standing.

the

Vice-President—Robert

association

an

the

were

An Investment Fund

stage

of

of

or
trusteeship whose sole
business is investing in securities
and whose stockholders have a

company are
fast maturing
John

50 years." ■ Although

"Investment

tion

n-

e n

t,"

through the medium of

the
i

thing.

same

man¬

modern
v

the
fi¬

nance,

funds,

r u s

Company Shares" and "Mutual
Funds" commonly heard in finan¬
cial circles, mean one and the

COm-

of

T

Branch, Cabell & Co.

or

18

Thursday, • October 30, 1947

COMMERCIAL & FINANCIAL CHRONICLE

THE

(1750)

Reynolds Group Offers! I. B. A. Convention
Robertshaw-Fulton Stks

the Hollywood Beach Hotel, Hollywood, VFla.,

Public offering of 120,000 shares

Nov. 30,

4%% cumulative con¬
vertible
preferred
and
500,000
shares of $l-par common stock of

of $25-par

McKAY i

By WILLIAM J.
Both politically and

assuming
The
stage

economically, Canada is steadily

importance from the standpoint of this country.
relationship of the two countries has now gone far beyond the
greater

a

beginning on Sunday,
and ending on Friday, Deb. 5. Tlius, the Association returns
its

of

scene

1940

and

1941

conventions, which

were among
Those who attended them Will

the most successful it has ever held.

Hollywood provides

that

recall

unusually

an

attractive

and

satis¬

factory place for an IBA meeting.

28 by a group of

Oct.

made

was

the

to

Co.

Controls

Robertshaw-Fulton

Opens Nov. 30

1947 Annual Convention of the Association Will be held at

The

underwriters headed by Reynoldsj
the Dominion was regarded as a somewhat insignificant, & Co.
Prices to the public are
although pleasant neighbor, whose activities could be conveniently $26 per share for the preferreq
disregarded in so far as they had no marked bearing on U. S. and $8.50 for the common.
•'interests
^——
————————
At the same time Reynolds &
when

(

r

•

Canada

inconsiderable
fairs
rent

constitutes an
factor in world af¬

longer

no

compulsion of cur¬
events is increasingly directthe

and

ling attention north of the border.
The Dominion
in the past has

only too conscious of its
relative unimportance in contrast
with its great southern neighbor.
been

essence

and Canadian willingness

ability to cooperate has

and

al¬

been fully demonstrated
In fact, until the world scarcity
of U. S. dollars became critical.
Canada was operating her own
ready

"Marshall" plan.

required to set
motion Canadian surpluses of

in

food and other urgently needed
mind also the tradi¬
tional link with Britain, Canada materials, is the implementation
has hitherto been content to fol¬ of a financial scheme that will
low a more or less blind course permit Canada to resume her task
of European relief without further
which has been determined by the
often divergent policies of Britain detriment to her U. S. dollar po¬

"Bearing in

•

and this country.

With regard to

Britain, the re¬

economic
As far
country is concerned, Can¬

spective roles from

an

angle are now reversed.
this

as

As far

sition.

U. S. interests

as

concerned', any expenditure of
will, as a
result of lower Canadian prices in
relation
to the
world-level, be

are

U. S. dollars in Canada

have

they

privately
$5000,000
oi
Rob^rtshaWr.Fulton., Controls', po
33/4% sinking fund 15-year de¬
placed

bentures.

The

■

-

shares

common

offered

Thus all that is

that

announced

Co.

are

being

of

the

Rey¬

behalf

on

Metals Col, the sole holder
of these shares before giving ef¬
nolds

The

this financing.

to

fect

pre¬

the
for
Robertshaw-Fulton Controls Co.
ferred stock is being sold and

been placed

have

debentures

The company

was

incorporated:
Dec. 23,

law on

Delaware

under

1926, as The Fulton Sylphon
and following its organization

ac-i

advantageously

more

Moreover, in view of the fact that
Canadian exportable supplies are

Juiien H.

Jr.

Hopkinson,

Collins

The Board of Governors will submit to the convention the

President—Juiien

For

Chicago.
.

•

Reg¬

This ticket will be as follows:

ular Ticket for 1947-48.

Co..

quired the properties and business)
of The Fulton Co., a corporation
formed under Maine law in Nov-,

employed; ember, 1904. On Sept. 24, 1947,
Bridgeport Thermostat Co., Inc.!
(Del.) and Robertshaw Thermo¬
immediately available, there will stat Co. (Pa.) were merged into.
The Fulton Sylphon Co. and the
be a reduced strain on the re¬
sources
of
this
country.
Thus name was changed to its present
already Canada has made a tre¬
form.
The company is engaged
mendous contribution in this di¬ constituting an indispensable cog
in the world economic machine, primarily in the manufacture and
rection. There is little doubt that
sale of devices for the automatic
the International Trade parleys at the best customer of this country
control and regulation of temper¬
Geneva
would
have
ended
in does not have to display any dif¬ atures and
pressures.
Executive
fidence in taking the initiative in
virtual failure in the absence of
offices are located at Youngwood,
a
"Truman-King" or
the strenuous efforts of the Ca¬ proposing
at the present time is in ^a
position to play a valuable part in
furthering the economic planning
which has as its objective the re¬
habilitation of world trade, and
ada

E.

Collins,

H.

Juiien Collins

:

&

Company,

,

For Vice-Presidents—Hazen S.

Arnold, Braun, Bosworth & Com¬

Toledo; Robert W. Baird, The Wisconsin Company, Milwaukee;
Hal H. Dewar,, Dewar, Robertson & Pancoast, San Antonio; Carey
S. Hill, Hill Richards & Co., Los Angeles, and Laurence M. Marks,
Laurence M. Marks & Co., New York.
pany,

details

Full

the

of

convention

have

program

not

yet

been

The program will,
however, be set up so that the mornings, with the exception of
Sunday morning, will be devoted to business. The afternoons and
evenings will, for the most part, be left free for recreation. There
will be a convention session on each morning from Monday through
Friday. Frominent speakers will address these sessions. In addition
to the convention sessions, there will be two or three meetings of
the Board of Governors; and most of the national committees of the
Pa., and principal manufacturing Association will hold meetings during the convention and will present
"Marshall-Abbott" plan.
nadian representative, who at the
plants at Youngwood, Knoxville, their annual reports at that time. With the possible exception of one
During the week Canadian Na¬
eleventh hour was instrumental
Tenn., Bridgeport, Conn., Scott- or two committee meetings, it is not planned to schedule any business
tionals in the external section of
bringing about a reconciliapreviously insurmountable

in

.

tion of

S.-British Commonwealth

U.

ferences

the subject of

on

dif¬

Imperial

view

In

slightly

were

firmer and the internal Dominions

their

hold

to

continued

recent

Canadian stocks reflected
reaction that took place in

gains.

Preferences.

U.

market

bond

the

of

the

S.-Canadian

of

community

interest

with re¬

the estab¬

gard to foreign relief,

lishment of freer world trade, and

the
New

but

Yorkj

the papers re¬
prospects for

mained buoyant and
further advances in

section

this

are still
favorable.
A few goldthe preservation of private enter¬
mining issues also resisted the
prise, any measure that will serve
downward trend following prom¬
to strengthen the Canadian posi¬
ising drilling results.
tion will be beneficial not only to

the world
Consequently, it is of
vital importance that considera¬
tion be immediately given to a
U.
S.-Canadian
economic
plan
large.

of the
Agreement.

lines

along

the

Hyde

Park

Such

a

within the
the larger plan for

framework of

European relief and would serve as

appropriate foundation. Men¬
tion has already been made of the

SAN

ANTONIO,
&

Newton

5

sistance

of

South

within

the

American

as¬

of

the

scope

vaguely outlined "Marshall" sug¬
gestion, but time is now of the

has

Co.

price of $10 per share for,
the common or 2xk shares of com¬
version

mon

It

redemption1
time at $27 per share, plus

at any

outstanding common'

part

are

Frank

are

R.

Jr., both of whom were formerly
with Pitman & Co.

District Rep. for
appointment of Charles E.
as
District Representa¬

was

formerly Vice-President of Slayton & Co., Inc. in charge of their
Los Angeles office.

GOVERNMENT

James Burnett Lowell Dead
James Burnett
of the New

died
74.

at

Lowell, member
York Stock Exchange,

his home

Mr. Lowell

James

Russell

was

at
a

the

age

of

grandson of

Lowell,

poet

and

York,
sponsors
of Group
Securities, Inc. Mr. Kimball's, ter¬

include

He

Eastern Mis¬

Indiana

Illinois,
previously

repre¬

Distributors Group,

In the investment business since

1921,

Mr.

&

Kimball's previous as¬
with

were

Inc.,

Company,

A.

in

E.

Ames

charge

of

Trading and Customers Relations,
and
&

as

a

partner in Charles King

Company.

II, he served

During World War
as

Lt. Commander,

USNR.

&

(Special to The

Financial

Chronicle)

MINEAPOLIS, MINN.—Paul D.

COMPANY

Herges

Street, New York 5

with R. J. Steichen & Co., Roan¬

WHitehall 3-1874

oke

has

Building.

become

connected

With State Bond & Mtg.
NEW YORK 5,

N. Y.

SECURITIES
Municipal

Provincial

Corporate

NY-1-1045




(Special to The

NEW

Government
RECTOR 2-7231

$10

Parlors

per

per

person

day

above are for rooms with private
baths.
There are also a few units of two double rooms with one
bath. The rates for the rooms in these units will be $15 per day per
The

rates

bedroom

quoted

person.

Most

of

the

rooms

at

the Hollywood

Beach Hotel are double

(with twin beds). The single rooms are limited
and are on the land side of the hotel. As double rooms

in number
will not be

it develops at the last minute
it is suggested that members
make arrangements to share their accommodations.
Requests for parlors will be filled to the extent possible. Some
parlors have two bedrooms adjoining them, but most have only one.

assigned for single occupancy unless
that there is unused space available,

All of the bedrooms

adjoining parlors are double rooms.
able to accommodate a limited

- *

number of
guests who wish to arrive a day ahead of the convention, or who
wish to stay over afterwards. The rates quoted above will apply for
one day preceding and 10 days following the convention.
The

hotel

will

be

also been made whereby Seacrest Manor
available if needed to accommodate any
member houses will, to the extent
necessary, be limited to two bedrooms at the Hollywood Beach Hotel
and their additional representatives will be placed at one of the other
have

the Surf Hotel will be

and

overflow.

If there is an overflow,

hotels.

Representatives of the Hollywood Beach Hotel will travel on
special trains and will furnish passengers with slips
indicating their hotel room numbers. These slips should be presented
to the floor clerk on the proper floor, and the floor clerk will turn
over

the key to the room.

It will not be necessary to register.

will also furnish passengers with
with their names and hotel room numbers.
One of these tags should be attached to each piece of hand baggage.
Frisby and Joseph C. Keckeisen Then, upon arrival in Hollywood all such baggage will be transported
are now with State Bond & Mort¬
immediately from the station by truck and distributed promptly to
gage Company, 26^ North Min¬ the proper hotel rooms.
(Continued on page 38)
nesota Street.
"

CANADIAN

$16 per day
$24 per day
$16 per day

the convention

)

INCORPORATED

TWO WALL STREET

Single Rooms

Arrangements

R. J. Steichen Adds

TAYLOR, DEALE

persons)

rooms

porated in Philadelphia.

CANADIAN STOCKS

A. E. AMES & CO.

through the Office of the Association in Chicago.
Hotel rates will be on an American Plan basis as follows:

Incor¬

diplomat.

64 Wall

guests to the convention, other than members of the imme¬
family of a delegate or alternate.
reservations for rooms for the convention must be made

(1 person)

sociations

Association that only those who

By-Laws may attend an annual
impossible to comply with requests

the

take

(2

sented

securi¬

eligible under

It will therefore be

Rooms

and

Abbett

established policy of the

an

definitely

Rooms

Boulevard to engage in a

CORPORATION

It is

Double

Ohio.

should be made payable to the
Office of the Association in

the

Chicago.

Double

Southern

the

will

Mr.

fees
to

Mid-West

in

Southern

business.

forwarded

and

territory has been announced by
Distributors Group, Incorporated,

ritory

ties

registration

covering

Association

All

& Co. with offices at 3277 Wilshire

MUNICIPAL

Checks

diate

souri,

ANGELES, CALIF.—Cecil

registration fee of $30 will be charged for each delegate and
No fee will be required for wives or members of the press.

A

alternate.

to

Kimball
tive

political implications both

the other nations involved.

this country and

convention.

Southern
The

Europe and their economic and

relief to
to

New

C. E, Abbett & Co. Formed
LOS

PROVINCIAL

mainly to th£ investment banking business. Therefore, a program is
being worked out of speakers qualified to express informed and
views on such matters as the Marshall Plan, interim

are

Leslie

Newton,

is

authoritative

i——B—Wemmm

E. Abbett has formed C. E. Abbett

CANADIAN BONDS

The 1,000,-

formed

been

planned, at this convention, according to announcement by
Edward Hopkinson, Jr., Drexel & Co., Philadelphia, President of the
Association, to focus the major part of the discussions and delibera¬
tions on the world problems facing the United States as a whole, in
addition to considering a number of important problems pertinent

is subject to

of an authorized
issue of 2,000,000 shares.

TEX.—Lentz,

Partners

and

Lentz

L.

preferred

of

share

each

for

held.

Building to engage in the securi¬
ties business.

The

stock.

preferred is convertible into,
common stock at the basic con-}

stock

with offices in the Alamo National

an

inclusion

of the preferred

none
new

Formed in San Anlonio

wartime

scheme would operate

ing Reynolds Metals Co. will hold
500 000 shares of the common and

evenings.

for the afternoons or

sessions
It

Upon completion of this financ¬

000 shares of

Lenlz, Newton & Co.

St.

Louis, Mo.

cumulative dividends.

this country, but also to

at

dale, Pa.. Lynwood, Calif., and

completed and cannot be announced at this time.

Financial

Chronicle)

ULM," MINN. —Lloyd A.

The

hotel's

representatives

baggage tags filled out

Volume

166

Number 4642

THE

COMMERCIAL
and- with

Facts and Figures About

Industrial Mergers

&

FINANCIAL

heavy

estate taxes

CHRONICLE
on

require taking
money

to

estate taxes,

thereby wrecking the
business, it is not surprising that

owners

Member of the New York Bar^

frequently find that if they sell
out* pay the capital gains tax on:
any increment in value, and put
the money into diversified invest-'

Commenting on pressure of Federal Trade Commission to be granted
further restrict industrial mergers, Mr. Montague points
out such action would handicap small business in
competition with
large concerns and will place dead hand of arrested development
upon the national economy. Cites record of mergers, and contends
power to

cause.

mining industries in the United States between 1940 and 1946, a
group of government officials are now besieging Congress

to transform the Federal Trade Commission into
••

that

would

and

trust

Credits in favor of Istituto Mo¬ duction o£ steel to meet
urgent
biliare Italiano for the account- of
the leading Italian iron and1 steel internal Italian requirements grid

Michigan IBA Group

r

shackle Amer¬
ican

business

194

summation

con¬

all" mergers

that are
In June, 1947 the At¬

questioned.

with the fol¬ torney General obtained in Wil¬
lowing fantas¬ mington, Dell, an injunction stay¬
tic procedure: ing the acquisition of assets of
No corpora¬

tion

shall

be

allowed to

ac¬

quire

more

than

$100,000

assets

from

any other cor¬
poration, even
though
there
is
Gilbert H. Montague

competi¬

no

tion

between

them,

unless

the

Consolidated

Steel

by

Corp.

the Columbia Steel Co., a subsidi¬

of

ary

the

United

States

Steel

The effectiveness of the

existing

gers and acquisitions' is carefully
suppressed in the propaganda of

this pressure group of government

the

in

held

for

annual

Association
dinner

meet¬

Monday,

Oct.
27,
at
6:30 p.m. at the Detroit
Club, De¬
troit,: Michigan.Julien

Co., Chicago, Vice-President of
the Investment Bankers' Associa¬
tion of America and nominated as
President

for

the

was

the

forthcoming

principal

mergers

Other

guests

included

A.

Bankers'

Alden

Association, R.

Stevenson, Dean of the School

Administration of the
University of Michigan and M. H.

Waterman, Professor of Finance
of the
University of Michigan.

in

the

1940

and

Commission.

suppress

the following facts:

This clearance will be practi¬
cally unobtainable, because the
legislation urged by this pressure
group, of government officials re¬
quires that this clearance shall be

and
1947, the total number of concerns chairmen
officers
of
the
operating in manufacturing and group. One of the
major activities
mining industries in the United
during the past year has been the

unt'l

tained

clearance

from

conditioned

the

been

has

ob¬

Trade

Federal

long list of
requisite findings by the Federal
Trade Commission, and few if any
upon

proponents of

a

acquisition can
ever
produce the proofs needed
for establishing these findings, and
fewer

still

time

an

afford to wait the

can

spend

and

the

money

Between

States

1940

the

States

but

March

and

and

1940

numbers

March

of

new

United

States

are

follows:

as

1940

tain these findings, before acquir¬

another corpora¬

37,900

1945

194-3

from

jjacket on every small and medium
.•sized corporation, and will guaran¬
tee every big corporation against
the

possibility that its small and
■medium
sized
competitors
can
approximate

•ever

by

merger

or

^acquisition the size and efficiency
of the big corporation, and will
■protect the large competitor, and
will

talk

the

entire

national

This pressure group of govern¬
officials suppress in their

legislation is

because

economic

;any

today

nec¬

now

any

concentration,

form
be

it

firm, corporation, or
them, that has the power

person,

?group of
ito raise

tition,

prices

even

or

exclude

though it

never exer¬

is unlawful un¬
Act, and may
fbe prosecuted criminally and civ¬
illy, and be fined, imprisoned, en¬
joined, and dissolved under that
.Act, as that Act has been inter¬
preted and enforced by the unani¬
decision of the final Federal

mous

-v.

on

March

12, 1945 in U. S.

Aluminum Company

of Amer¬

ica, 148 F. 2d 416, CCA 2 C, and
-In

the

unanimous decision of the

["Supreme
[States
can

,

on

of .the

United

June 10, 1946 in Ameri¬

Co.

et

al

v.

U.

S.,

S. 781.

Relying

cent

Court

Tobacco

7328 U.

Association

Training Course with classes

con¬

School

of

tration of the
gan.

is

unfair

absurd,

for

this

pressure

officials to

government

1,800

13,409

in

mergers

the

much success,
a

sound

Michi¬

and have provided
program for

em¬

Officers of the
Michigan Group
are:
William C. Roney of W. C.

Roney & Co., Chairman; Oscar L.
Buhr, Detroit Trust Co., Vice-

Chairman;
Miller,

1940 and

in

University of

training

tries in the United States between

the

1946, and to suppress all
this phenomenal rise

of

mention

number

of

new

(c)

and

Kenower

$1

for

the
per

Azioni;

the

account

(d)

Gerald
&

of Societa Italians Aceiaierie Cor-

(e)

$2

million

Secre¬

tary and Treasurer.

e

Falck, Societa

for

the

account

Ferriere Lombarde
per

Azioni.

Italiano,^
million, for the

aggregating
account

financing:

removals,

by

mills

benefiting

today's credits should

ing

war

but there

notable recovery.

a

steel

produce

took

an

be

The

from

able

aggregate of well

to

over
com¬

year.

The credits for the small indus¬

trial

concerns

million

supplement the $32

previously

Board

for

the

approved
account

of

by
6(1

medium-sized industrial concerns.

concerns;

(b) $2 million for small rubber

concerns;

-

(c) $6 million for small
mechanical concerns;

electrp-

William R. Ehni With
Gohu &

(d) $10 million for small metal¬
lurgical and mechanical concerns.
Credits
the

approved

January,

1937

earlier

under

earmark

in¬

clude:

chine-works, Montecatini chemical
and

mining, industries, i and Pirelli

rubber'

cable

and

manufacturers

—Aug. 4, 1947;'
(b) $5.8 million for four leading
Italian shipyards—Oct.
1, 1947;
(c) $32 million for 60 mediumsized

'

metallurgical,

chemical

and

rubber

electrical,
firms—Oct.

R.

Chronicle*

LOS ANGELES, CAL.—William
Ehni has become
associated

with

Cohu

The steel mill credits approved
are

Italian

South

&

Spring

Street.

M

Ehni

r.

was

formerly
trader

a

for

Akin-Lambert
Co.

and

prior

thereto

was

for

manager

the

Los

geles

An¬

Corpo¬

ration.

In the

past he headed

1947.

today

Torrey in L A.

(Special to The Financial

Torrey, 634

(a) $23 million for the account
the Fiat automobile and ma¬

16,

and

has been

the

(a) $4 million for small chemi¬

of

reduced

was

damage

iron

which-

large part-of its needs-

a

Capacity

$22

of small

industrial
concerns
within
the
four industrial sectors
eligible for

;

of

industry

Italy-

an

war

1,000,000 tons of steel in the

Credits in favor of Istituto Mo¬
biliare

cal

steel

five

nigliano;

Miller,

Co.,

account

and
care

v

million

Dalmine, Societa
$1 million for

of

Business Adminis¬

These classes have met with

engaged in manufac¬

had built before the

L'Elettricita;

e

ducted at the

manufacturing and mining indus¬

mining

industries

designed to

steel

mills

enable

to

the

purchase

his

in

in¬

own

vestment
Los

firm
An¬

William

R. Ehni

geles.

concerns

in

the

United

these unanimous

This is under

1947, especially since V-J Day.
in

their

this pressure group of gov¬
ernment officials mention the rea¬
for

any

circumstances to he construed

no

solicitation

of

an

offer

to

buy,

any

propaganda

does

of these

1,800

Not

a

as an
offering of these securities for sale) or as an offer to buy, ct
of such securities. The offer is made only by means of the Prospschu,

New Issue

Questioned

by

October 29,1947

whom

they
have testified, they have confessed
that they have not investigated
to find

out

the

Shares

Congressional

before

ees a

mer¬

gers.
committees

for

reasons

these

The Kendall

Company

!

mergers.

Strangling taxation is

a

primary

Common Stock

cause.

Every business corporation
a

(No

pays

par

value)

combined normal tax and surtax

of 38%

(plus 2% for consolidated

returns,

but with a preferential
graduated return of 21 to 38% on
taxable net income up to

$50,000),
required by law, subject to
penalty taxes, to distribute 70%
of the net income as dividends,
and is

unless it
for

can

demonstrate the need

greater retention of earnings

in the

business.

Because
concern

each

is owned

b

Copies of the Prospectus
writers

small

by

a

business

may

be obtained from

only in States in which such

dealers in securities and in which such

any

underwriters

Prospectus

of the several under¬

are

may

qualified

to act c3

legally be distributed,

few indi¬

re¬

viduals, all dividends become sub¬

decisions, the Attorney Gen¬

ject to high individual taxes.
With all the risks and responsi¬

on

eral of the United States has cre¬

mated in the Department of Justice

unit

to

scrutinize

growing
multiplicity
cf
labor
complications, labor laws, volum¬

by Mr. Montague
ifoefore the Annual Meeting of the
<Cotton Textile Institute, New York

inous reports to manifold govern¬
ment agencies, collection of social

merger

*An

address

•City, Oct. 23, 1947.




Ihe First Boston

Corporation

Goldman, Sachs & Co.

F. S.

Moseley & t!1

bilities in business today, and the

all

<a

Bankers'

ployees of local Investment Bank¬

compe¬

cises such power,
der the Sherman

court

of

about

sons

^propaganda the following facts:

«of

it

deceptive

Nowhere

new

Investment

ing Firms.

States between 1940 and March 31,

ment

No

committee

64,500
Jan.-March)

mos.

and will place
hand of arrested devel¬

upon

essary,

various

sub¬

43,100
(3

group

•economy.
.

by

year were

concerns

turing for foreign markets.

starting in the manufacturing and

and

small

competitor,

•the dead

opment

27,200

Certainly

and

21,200

-

medium

the

hurt

■.sized

34,700

1943

1947

This procedure will put a strait-

mitted

the

33,300

—

1944

assets

Reports for the

Rackham Building,
ing and mining industries in the Detroit, under the
supervision of

quired to complete the litigation
proceedings necessary to ob¬

tion.

31,
con¬

1942

ing

31*

starting in the manufactur¬

cerns

re¬

rand

they

from 237,500 to 339,600.

rose

Between

1947,

United
1946.

Azioni;

$3 million for the account
of "Terni," Societa
per L'Industria

Little, former Secretary of the In¬
vestment

per

ian

(b)

of Aceiaierie

between

and

d'Italia, Societa

speaker

and guest of honor.

to supply materials to other Ital¬

following amounts: 1

(a) $7.5 million for the account
of Ilva,
Alti Forni e Aceiaierie
,

Collins of Julien Collins

&

of Business

1,800

manufacturing and mining

industries

Bankers'

their

ing

in respect of improper mer¬

officials.
•
They talk about

Michigan* Group of the In

year,

Corp.
laws

mills in the

The

vestment

to halt before

and

mergers,

The Export-Import Bank announced on Oct. 23
that it approved
additional credits in the amount of
$36,500,000 to Italian industries)
through Istituto Mobiliare Italiano, thus bringing to
$97,300,000 the
aggregate of credits approved under an earmark of

$100 million made
in
January for the purpose of re-<^funds, they Will
activating Italian industry and solid and liquid fuels and certain,
be better off than if
they continue'
foreign trade.
in business.
amounts
of
equipment in
the
The credits granted
today are United States with a view to sus¬
in two
groups; as follows:
taining and" increasing, their
ments

vast governmental

a

bureaucracy*

•

ing Italian industry and foreign trade.

of small business concerns

pressure

:

,1,

;

prq«

Because about 1,800 mergers have occurred in the manufacturing
and

19

Export-Import Bank approve* $36% millions additional grant*r i
bringing aggregate of Italian credit to $97.3 millions, for reactivat- '

pay

By GILBERT H. MONTAGUE*

strangling taxation is their prime

More Credit fo Italian tndusfries

the death of any of the
principal

owners, which may
out a large sum of

(1751)

security taxes, salary withdrawal
taxes, sales taxes, excise taxes,

Eastman, Dillon & Co.

.

Paine, Webber, Jackson & Curtis

Coffin & BusIncorporated

Ilornblower & Weeks

Adams & Peck

Bacon, Whipple & C@<
U

20

THE

(1752)

'V

.

»./[*■

•

i

•

Our

*•

V:'

'

Reporter

COMMERCIAL

An

».

Thursday, October 30, 1947

Appraisal of Some Banking Problems

Governments

on

CHRONICLE

FINANCIAL

&

S. BLACKALL, JR.*

By FREDERICK

President & Treasurer, Taft-Peirce

By JOHN T. CHIPPENDALE, JR.

Manufacturing Co.
Director, Federal Reserve Bank of Boston

i

Asserting government gives lip service to inflation prevention, while being largest single source, of it,
industrialist denies high prices are due to speculation and profits.
Points to British crisis as example

Government security prices continued the down trend, with ad¬
justment this time coming more in the intermediate-term maturities.
These obligations apparently are seeking levels that would be in
line with a \xk% certificate rate.
The .yield of 1.52% for the 2s
due Dec. 15, 1952/54 seems to have brought this issue to an income

of carrying on

...

level that is expected to hold, according to some money market ex¬
perts. . . . There is no doubt that a new pattern of yields is evolving
and the short- and intermediate-term obligations should be the first
N

to establish a new base.

.

.

eligible obligation.

L; To be

.

prices

sure,

purchases of needed obligations.
age

prices should be obtained.

\

.

to warrant scale

the

already been frozen into the economic system. This, however, can be

of.

care

.

It is the developments from here on

.

.

the trouble.

cause

.

.

which is

sibility, is what has the powers that be worried.

inflationary movements would
action by
r

would

rates

money

authorities.

the

faster than

to be broken.

for

ready

.

.

some

of

per¬

is

averaged

yOUr

.

.

all

tighten the money markets, since it
is believed that the Reserve Banks will let maturing Nov. 1 certif¬
off

will

turning them in for the new issue. .
Partial redemption of Treasury bills is considered quite likely
icates

run

order

to

instead

of

the

decrease

credit

base

offset

and

to

.

in
the

extent

some

.

inflow of gold which has been and is expected to

continue substan¬
restrictions are very effective since
they take reserves away from the member institutions. . . .
Tightening of the credit base will have an effect upon the ability
of the banks to make loans, which are increasing very rapidly, as
well as their purchases of government securities.
.
However, this
-is only part of the picture, since the member banks have many
short-term obligations that still can be used to create reserve
balances.
This would offset to some extent the credit limiting
tial.

.

.

These types

.

of credit

.

.

.

.

.

action of the authorities.
the

On

other

...

hazardous.

enough,

ways

.

.

reserves

up

Nevertheless if loaning rates

.

will

most

likely

order to make these loans.

.

.

are

will be

of

these

attractive

.

.

.

.

.

that bank bonds will not be subject

mean

fluctuations,

because

they will.

.

does, however,

It

...

.

to

indicate that price weakness will be taken advantage of in order
to buy needed issues.

with the

105 to 104%

pected, unless there is

service to the prevention

perhaps

thing

.

,

.

It should put a floor under these issues

level looked
a

upon

the lowest to be

as

wild inflationary orgy.

.

.

ex¬

.

NOT ENOUGH

more wheat, hogs, cattle, steel, coal or bring to an end the demand
for increased wages.
.
.
Would higher interest rates mean a decrease
.

in the demand for loanable funds?
bond

prices be anti-inflationary?

|would have

a

.

.

...

.

Would dropping government
No doubt monetary measures

psychological effect, but these would not be effective

to fight the forces of inflation.

[weapons

Changes

in

in

reserve

.

requirements

.

.

in

the

Central

Reserve

Cities of New York and Chicago are being talked about, in

|j junction with other credit restrictive

measures.

.

.

.

con-

This would

I

have

|

the bulk of the excess reserves is held by banks outside of these

|

areas,

I

action.

effect

temporary

a

upon

the

money

markets,

but since

not too much would be gained over the long run by this
.

.

I

'

I

Administration
agencies are

the

impact

desire

of

their

buying on grain prices, you can¬
not superimpose an unprecedented
foreign demand upon a new alltime high
of domestic require¬
ments without affecting the sup¬
ply and, in turn, the supply-de¬
mand ratio, which automatically
In the face of

influences prices.
situation

like

a

politicians,
looking for a scapegoat, yell to
high heaven about the viciousness of speculation, although every
sophomore in economics knows
that speculation performs a vital
in

this,

grain

the

markets.

follow

the
speculator who buys now for fu¬
ture delivery insures that supplies
be
available in a later period
Lest

fail

vou

to

thev may

when

me,

be needed more

The

plan his

production and establish his prices
a

stable rather than

to-day basis.

on

a

day-

Were it not for the

every food processor
have to become a specula¬

speculator,
would

himself

in which

event most

of them would go

broke, for com¬
speculation is a highly
sensitive and specialized art.
modity

Effect of Profits

"Excess

Selling of the longest 2s has been quite substantial the last few

Profits"

also

come




we

It

follow

men

were

something of a cliche to recognize
production is the answer to
this problem, but it is a bit sad¬
dening to reflect on the fact that
the standard political remedy for
that

ills

our

again,

is

controls.

more

primary

any

Here

student

of

economics knows that the way to
stimulate production—and I think
the

only

worked—is

offer

to

incentives

greater
You

which

way

has

ever

greater

and

production.

to

don't have to read history
Just look at our poor

to see this.

British

cousins

England,

of

exporters

the

across

sea.

of the world's great
coal throughout in¬

one

dustrial

history has reached the
point where she can't dig enough
coal to keep herself warm or run
her

factories

hours

40

week

a

without interruption.

Her system
rigid price controls and strict
rationing has brought her food
production to an all-time per ca¬
pita low. Why, you ask? The an¬
swer
is simple. Her government
prefers, with misguided idealism,
to try to get the miners to dig
of

glory of

the

for

coal

more

old

welfare

England,

and

instead of

taking the obvious course of try¬
ing to get them to dig more coal
their

to save

their

pocketbooks.

own

nomic

are

Her

(will they

planners

learn!)

skins and fatten

own

eco¬

never

trying to keep the cost

of living down by

placing ceilings
over prices instead of floors under
production. Touchdowns may be
scored for the glory of dear old
Rutgers, but it is not yet recorded
that

production was ever raised
the

for

sake

possibly in
be

a

sad

of

war

ideal, except

an

time.

commentary

This
on

may

human

nature, but there it is, and all his¬

England's plight,
30 cents a dozen
they get one a month, reminds
of the story of the bride and

tory

proves

where

but

eggs

it.

are

the butcher:

"How much is ham¬

exclaimed; "Why, down at the
store
they have it for

she

corner

twenty-five cents."

"Well,
there?"
cause

why
asked

don't
the

you

buy

butcher.

it

"Be¬

they haven't any," she an¬

the butcher.
"Well, when I don't have any, I
sell it for ten cents a pound."

swered.

"I see," said

The British Situation

might be worth ^while to
digress a minute and discuss the
British situation, for it may be
It

no

exaggeration to say that Eng¬

with

a

and

manner

fi¬

To be sure, these
the crackpot

not from

which
distinguishes the
dominant, party in England today.

group

Rather,

they

businessmen

were

and

bankers like ourselves, but I
submit, considerably more typical
of

the element which has made
that nation of shop keepers greater
than the Attlees, the Laskis, and
the

Herbert

late

only be decidedly infla¬
At least it is becoming

poli¬

in

nancial leaders.

fect

can

a

been

of her industrial

exception,

tionary.

the

on

extending her
my
privilege
recently
to * discuss
England's
present plight in an intimate and
has

beyond our borders fail to
produce, the demand on us will
continue unprecedented.
The ef¬

in

banks doing outright liquidating while others have
*An
address by Mr. Blackall
been shifting into the longer bank issues, including the partially
exempt obligations.
There has been some short covering of trad¬ before the Savings Banks' Asso¬
of
Connecticut,
New
ing positions in the tops near the lows for the year, because traders ciation
believe that they look pretty well sold out.
Ilaven, Conn., Oct. 22, 1947.
>

cies

aid.

significant

of

perhaps, in

own—will hang to

our

considerable extent

the

some

.

long

so

rest

burger?" inquired the young wife.
"Sixty cents a pound," the butch¬
er answered.
"That's outrageous,"

SOLD OUT

.

that,

the

and

enables the processor to

I

.

fact remains

Europe

as

me

v

! days, with

income, and
in 1946,
after inventory adjust¬

sorely than at present. When he
selN now for future delivery, .he

tor

.

States

their effort and

minimize

to

on

I

United

The

only

happen.

possibly

can

Agricultural

function

Although inflationary curbing action will be taken by the
authorities, to halt the spiral, higher interest rates will not produce

i;

are

circumstances

rise.

sincere

market

mo¬

and like government

have little choice
but to go into the larger yielding obligations if the authorities are to
continue the policy of retiring the higher coupon issues with shortterm low interest-bearing obligations.
This should result in a
good demand for the long eligibles despite higher short-term rates
and the credit restricting measure of the monetary authorities.
not

visibly

Government,
for
example,
is
overwhelmingly the largest buyer
of grains, and while I believe that

found to create reserves in

be

government securities, the banks will

This does

unhappily

political considerations,

which

of the

6%

world

unavoidable;
too many are the banal result of
a
greater
preoccupation
with
votes than with long-term public
welfare/ Take the, matter of prices
which are skyrocketing danger¬
ously, especially in food and com¬
modities. If we are going to im¬
pose upon ourselves the task of
feeding Europe (and mind you I
do not say that we shouldn't), we
inevitably create a shortage of
supply against the background of
an enormously expanded demand,

the

for

moment

a

inflation ivhile itself being by
odds^the largest single source
inflationary forces.
Some of

Prices

BANKS AND INCOME
As

my

than that.

institution

an

one

shifting of these securities in order to build
more

for

degenerated

under

fluctuating, the

short-term rates

with

hand,

do

.

of

calls

loan

I'll

Our government,

value of money:

into

about

commodity fields, they are sub¬
stantially less than this—some¬
thing like 1% for meat packers,
for example.

impressions

impact of gov¬
policy on prices and the

having

TIGHTENING CREDIT
war

But
my

to the

as

gives lip

Recent

versa!

to

tivated by

W expiring.

F. S. Blackall, Jr.

rather
vice

only

ments only 2.8% of sales for the
nation at large. In the food and

wisdom

ernment

and the loan trend, especially

currency

I

seeking drops

First,

order to offset

kind of deflationary action, in

inflow, return

with Regulation

so

that they are more

Beyond doubt the money managers are getting

.

for

it

who should be

give you
without claiming

by most

expected

is

deal¬

haps

than

a

number

daily,

best

future—and

measure,

off-the-record

of

Manufacturers,
corporation profits ac¬

current

national

lips,

Convulsive

market followers because the inflation spiral would have

money

gold

.

land's

Association

count

from

distinct pos-

This would probably mean thai

.

increase

.

doubt bring about very drastic

no

.

.

a
.

the

at

on
the price structure.
Ac¬
cording to a recent survey of
profits and prices by the National

Board,
11 e-

are

abuse

.

fect

ing with them

of

.

A spiral of rising prices and wages,
?

some

you g e n
men

of

politicos, despite the

exami¬
nation proves that profits exer¬
cise but a minor and nominal ef¬

for tnightljy
meeting
of

...

Quite well taken

to

share
our

fact that the most cursory

tnese ques¬

extent at each

likely to have a great influence upon the policies that will be
adopted by the monetary authorities. .. . These measures in turn will
chart the future course of the money markets and the government
securities markets.
A considerable amount of inflation has

that will

hands of

tions

The trend of economic conditions in the next six months is very

w

their

for

exposed

am

to

.

.

less your

no

I

RATES

AND INTEREST

INFLATION

is

In that way favorable aver-

...

disclaim any

special powers of prophecy or any access to inside information,
freely to you as it is to me.: As a director of the Federal Reserve
Boston, it is one of my duties, I suppose, to be "au fait" with fiscal trends; but it

me

job, and while

recede from time

may

to time, but this level seems to be low enough

m

Let

which is not available as
Bank of

resistance level

for the longest tops and 105 for the most distant

at about 101 Mj

advises

.

Longer-term obligations should have a good

controls while destroying incentives, and outlines adverse effects of inflation on savings
Sees no immediate rise in long-term interest rates or decline in building costs, but
caution in real estate appraisals.
Sees likelihood of short primary postwar recession.

and investments.

.

.

.

Morrisons.
to

their

It

that,

me

seems

without

prescription

for

United States policy in
extending
further aid to Britain is to stipu¬

requirements

our

certain terms and

contingent
the

contract.

have

in

make

no

un¬

loans

our

performance

upon

Neither

they

of

I

nor

in

mind, in this connection,
the
terms
of
repayment.
They
are
thinking, as we should, in
terms
of
requiring England to.
produce

in

now

being fed.
suggested

As
to

consideration

one

"If I

me,

of

business leader
Mr.

were

Truman, I should tell Mr. Attlee,
'For each so and so
many thou¬
sand tons of coal you
dig in excess
established

of

quotas,

we'll

ad¬

vance

you
another million dol¬
lars.' " In other words, if the be¬

nighted
and
Party hasn't
operate

misguided
brains

on an

restore

the

Some

Labor

enough

to
incentive basis, let's
incentive
ourselves.

such

course, whether ap¬
plied by the British internally, or
enforced by us externally as their
bankers, must come about of Eng¬
land
is going to rise from the

mire.

And make no mistake, gen¬
tlemen, she is currently in a mess,
with

visible evidence of early
Such a policy on

no

improvement.
the

part of the

would

take

subject

us

American

nation

and

would

courage

to

a

lot of

abuse

calumny at the hands of the
ernment-controlled

and
gov¬

Mo¬

press.

mentarily, it might make us un¬
popular, but the day would come
when
Englishmen
from
every
walk of life would

come

to recog¬

nize that in time of need
saved

their

nation.

opinion alone,

we

This

I

is

not

it

is
the considered view of great num¬
bers of English businessmen and
my

bankers; and to the
you

in

extent

make yourselves

can

late

stress;

had

Washington,

you

that

articu¬

should

to get this message through.
If England turns primarily to the
try

Left, the adverse repercussions on
our own politics and
economy are
bound to be

Savings
But

I

far-reaching.

Banks

and

Inflation

digressing. We were
speaking
of
inflation
and
the
question arises as to the potential
impact of inflation upon the sav¬
ings bank business. Because you
am

deal in dollars, both on the re¬
ceiving and paying side, it often
is erroneously assumed that in¬

flation

is

sequence

course,

a

to

matter of

bankers.

little

con¬

This,
of
As dollars

.is not the case.
less valuable, the incen¬
save is destroyed, and the

become
tive to

inevitable

cline
more

tion

result is a sharp de¬
deposits.
What can he
serious, especially in infla¬
in

threatens

(Continued

to

approach

on page

39)

the

Volume 166

Number 4642

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

(1753)

21

The United States iandihe World Crisis
'

'

-

*

Securities Salesman's Corner

V—T-

By JAMES P. WARBURG*

Director, Bank of the Manhattan Company

Prominent banker and publicist

Europe and Asia.

world crisis is impending unless U. S. aid is given to rehabilitate

warns

By JOHN BUTTON

Outlines relief and reconstruction needs and points out political factors impeding

Several weeks ago I

Advocates return to rationing in U. S. and says we should not oppose democratic socialism
Europe because it is on our side against Russia. Contends our policy should be directed only against

recovery.

in

hunger, poverty, desperation, and

against unilateral political action

warns

time

giving restrictive and in¬

or

world crisis.
the

We live in

d

;

in the midst of

we are

acute

an

comfortable well-stocked house,

a

high up on a hill which overlooks
Down on the plain there are floods

plain where dwell the other peoples of the world.

and pestilence
a n

in the United States to realize that

us

with which to

famine.

repair and rebuild.

nately the crisis is sharpened and

We know this.

One must realize that throughout

its

We

large parts of Europe and Asia
today people can see no use in
working beyond the point re¬
quired to eke out a bare living.
The things they would like to buy
with the money thqy might earn
simply do not exist—or exist only

political factors of which we
made more aware every day.

sad-•

are

dened

it.

by

We

send

medicine
food.

and

We

what
to

.

we

can

help

neediest
But

'

do

the^

cases.

on

do not

we

that the floods

-

rising and
will, unless.,
arrested,
en¬

are

lected
all

on

the

James P.

Warburg

do

without

that,

aware
so,

we

hill-top

have col¬
practically

available

equipment for
controlling
flood-

and

waters and

that, unless we make
equipment
available,
the
people in the valley are helpless.

this

The

world

lagging

crisis

is

crisis

a

wholly impeded

or

duction. Because

of

pro¬

great war has

a

been

fought in Europe and Asia,
ravaging those
continents,
ex¬
hausting their peoples and re¬
and

sources

throwing

of

out

kilter the delicate balance of their

economies,

the

Hemi¬

Eastern

sphere—from the British Isles to
Japan

is suffering from acute

—

shortage and much of it is in a
state of political unrest. Peoples,
who have for centuries been self-

supporting,
able to

life

for

for

subsist¬

lowest

if they

Or,

pro¬

can

unable

other

have

un¬

things, they find them¬
to exchange them
necessities which they

some

selves

the

even

level.

duce

themselves

find

produce enough to sustain

at

ence

in

never

that

the

past produced
and have always

themselves

far

this crisis.

has

been

surplus

a

untouched

by

Our half of the world

materials.

food

of

and

raw

Its productive capacity

has increased while that of Europe
and
Asia
has
diminished.
In

value,

money

alone

at

United

turns

the

of

production.
States

the

present

two-thirds

out

entire

States
about

world's

Moreover, the United

is at

present the sole sur¬
producer of most of those

plus

particular things which are needed
in Europe and Asia in order to re¬
start the wheels of production.
Three

Categories of Needs

needs

of

with

ment

tools.

order

of

with

coal.

re¬

ultimate

First, there is the need for food,
Europe

and

Unless

large
and

parts

Western

of

coal from

Asia
over¬

well as some textile raw
materials, this winter will bring
seas,

as

disease and

starvation to millions

of

people. Medical supplies also
belong in this'category.
Second, there is the need for all
sorts of incentive

the

necessities

goods. That is,
beyond the mini¬

mum

of food and

men

desire

fuel, which all
themselves and
their families and for which they
will work. I mean such things as
shoes, clothes, household utensils,
simple tools and simple materials
'

*An

for

address

by

Mr.

before Foreign Policy

Warburg
Association,

Baltimore, Md., Oct. 20, 1947.




to

Coal

other

make

begins

industry
means

from a world-wide
effort to repair the

peoples

of

you've got

world

into two

trying to overcome the eco¬
own sphere of

with

own

not

may

and

way

consideration

little
It

its

in

be

for

the

popular

a

thing to say, but I think it is im¬

realize that in
peoples the
blame for this tragic development
portant for

to

us

of

eyes

other

does not rest

exclusively

upon

the

Soviet Union.
Most
titude

and

Europeans

about the

actions

and

as

recent at¬

the

of

do.

we

many

Soviet

The Soviet

seems to them—as it
us—needlessly harsh, in¬
serving food; it means fuel for considerate and doctrinaire. They
homes, and thus enables men to are aware of many of the distor¬
work in factories. But, to supply tions of
Soviet propaganda.
In
an
industry with coal, you need spite of this, what we consider
Russian expansionism and aggres¬
mining machinery, you need men
with tools in their hands and the sion is not always
regarded in
incentive to use them, you need quite the same light by Europeans
a transportation system to get the
or
Asiatics.
They are more in¬
coal from pithead to factory and clined than we to regard Russian
home. If you supply the tools and annexations of territory as merely
machinery to
rehabilitate
your the recapture of lands which once
means

metal containers for pre¬

coal mines and to get your

trans¬

portation system working—if you
supply your workers with food
and

the

you

have

the

incentive

work—then

to

moved

the

key

log

in

leadership

belonged to Czarist Russia.
are

steel.

rebuild

With

certain

a

machine-tools
You

can

number

of

to

begin with, you
factory equipment.

then make

can

can

repair factories of all

or

Given

sorts.

steel -you

make steel rails and roll¬

than

aware

sufferings

They

of Rus¬

we

and

needs, and
less fearful of her present military
power.

We,

next thing is iron.
Once
have coal and iron, you can

make

more

sia's

log jam.

you

to

seems

to

the other hand,

on

most of

and

Asia

appear

the peoples of Europe
as the
one
ray of

both

cause

alone

we

possess

which, if used,

the
can

certain

raw

materials

or

It

is

curious

a

experience for

American

to

abroad to discover that the United

going.

that

gets

For each factory
under way you need

incentive

goods in order to

workers

more

willing

to

As the process of rehabili¬

continues,

finds

that

it

is

each
more

country

and

more

being able to ob¬
things from other
countries. These imports have to
be paid for by a corresponding
volume of exports. Very soon it
becomes apparent that, unless re¬
covery in the various countries
of major importance goes more or
tain

very

hand,

no

single

coun¬

group of countries can

get
far along the road to normal

or

health.

On the other hand, it also

studying

most

Union, is al¬

equally feared.

In trying to

discover why this should be true
I have run into a number of re¬

First:

Due

the

to

between

separation of
Executive

our

and

Legislative Branches, people
abroad
feel
that
they
cannot
count

on

assurances

or

declara¬

tions

of policy by our President
Secretary of State. Further¬
more, they feel that, in an election
year, our foreign policy is likely
to be swayed by considerations of
domestic partisan politics. This

or

arouses

interests.

qualified

He makes no attempt to sell on these first calls.
His main objective is to sell the idea that he is competent in his
field.
His personality and the law of averages does the rest.
HOW
MANY SECURITIES SALESMEN ARE SEEING TEN TO FIFTEEN
NEW PROSPECTS A WEEK TODAY?
Remember he said pros¬
Drospects

week.

a

PRODUCT.

pects that were QUALIFIED TO BUY HIS

point that made the strongest impression during our con¬
versation was his insistence that the most important factor in making
The

itself

sale

the

was

opportune time arrived.

to be present when the

psychological moment—these insurance fel¬

of the

all heard

We've

being there when the prospect is receptive.
things. He said it was some¬
death benefit check that brought business from other mem¬

lows know the value of
I

him how he found out these

asked

times

a

accident to a friend, or some
think about the bargain they
Insurance when they needed
it.
Other times,
information of births, weddings, etc., through his

bers of

a

caused

people

family,

an

sudden shock that

could get in life

to

through being constantly on the job.

he just ran into
wide contacts and

—1

securities business until it's
threadbare.
A bull market comes along and we say here's your
chance to make some money.
That's our story and there is no use
We've

denying

used

technique

one

the

in

that most people like it better than any other they have
Possibly we could see those 10 to 15 extra qualified

heard.

ever

increase our
to wait until Aunt
stocks and bonds.

prospects that many of us are not calling on today and
business
Minnie

Most

by doing so.
After all, we don't have
dies to find an opportune time to sell

people

always think

stock prices are

going

up

(even when

they are not) and quite likely they just want some new face to tell
them the same old story; over again—whether it's true pr notv The
answer to more business today, or any other t me in the last analysis,
is

to

job thoroughly, see people who'"can buy
give them what they want when they want it.
this way, I've found out.

know

oroduct

both fear and resentment

becomes apparent that, if recovery
sets in at a number of key points

that

in the world's economy, a
power¬
ful push is given to the world

held

Even

How About

...

Leo Durocher?

grapevine has it that we will soon have another new chair¬
for the SEC:
How many does that make in 14 years?
You
think there is something wrong with the job that all these

The
man

don't

able fellows only

last

a year or

two.

After all, some of them became

judges and
one
is now on the Supreme
nate Durocher—any other suggestions?

Court.

V/e

nomi¬

Carley Wilt Fred Schulz Joins
Co. ie Ghicagc E. H. Rollins Dept.

William M.
Mams S

(Special to The Financial

Chronicle)

M.
Carley has become associated with
Adams & Co., 105 West Adams
Street.
He
was
formerly with
Webber, Simpson & Co. and Ben¬
nett, Spanier & Co. In the past he
conducted

ILL. —William

his

own

investment

business in Chicago.

CHICAGO,

ILL.—Fred

so

world

huge

joined E. H. Rollins & Sons, Inc.,
135 South La Salle Street, in their
municipal bond department. Mr.
Schulz was recently manager of
the municipal department for M.
B.

Vick

&

Co.

Over-the-Counter Quotation Services

should

Second:

we

doctrinaire
Political

Factors

The purpose of this homely and

oversimplified
present crisis

free

be

The

that

factor in the

a power

almost

belief
are

and

is widely
becoming as

fanatical

enterprise capitalism

Russians

are

For 34 Years

com¬

about

about
as

the

totalitarian

description of the communism. We seem at times
of
production is bent on attaching such political
merely to indicate the nature of strings to economic aid as would
the economic problem which we force other
peoples to remodel
face at the present time. Unfortu(Continued on page 40)

NATIONAL QUOTATION
Established
46 Front

Chicago

W.

Schultz, formerly with Blair & Co.
and
A.
G.
Becker
&
Co., has

pletely unpredictable.

economy as a whole.

your

your

and

the insurance fellows do it

CHICAGO,

curring themes.
powers

make his sales there, but he exposes
associating with other men who share
I was surprised to learn that he considers

business through

absolute necessity to interview at least 10 to 15 new

an

^

doesn't

He

club.

to

his hobbies and

it

'

how he does most of his business while he is fishing,

me

conditions

the whole better

on

liked than the Soviet

upon

certain

less hand in

try

States, while

his

at

himself

He wasn't missing

was

an

semi-manufactured goods in order

get

borderline situation regarding risk."
he?

a

re¬

push
dead-

the
world's
ing stock.
economy
off
All along the line, as you get center.
We
are
one
of
two
started, you will find yourself up thunderclouds because, under Rus¬
against an increasing number of sian provocation, we seem at times
problems.
Each factory will re¬ to become provocative ourselves.

quire

can give him the answer from first-hand knowledge.
always good to know a few of the boys inside in case

you

is

He told
or

way

,

light in the nresent darkness and,
at the same time, as one of two
great thunderclouds on the hori¬
zon.
We are the ray of hope be¬
sources

it

tricks,

any

camps,

nomic crisis in its

Union much

means

divided

if not hostile

competing,
each

manufacturing
it

First, they know what they are
to the home of Tee in New
York.
I asked him what he got out of such a trip.
He said, "You?
get an idea of how they make the stuff by going into the home
office.
You talk to the underwriters and become acquainted with
the mechanics of this business.
It all adds up and you'd be surprised
how much it helps at times.
If some fellow asks you a technical
a fine point.
fellow was on his

This

We have moved far in the direc¬
a

•

job down to

selling.

Then

tion of

f

,

thing I noticed about this man was his keen interest
in his job.
Not that he tried to sell me life insurance either directly
or indirectly.
We discussed selling intangibles, or, rather, he dis¬
cussed his business.
Those life insurance fellows have analyzed

question,

Asiatics feel

also

the

upon

^

,

first

prosperity had become indivisible.

power,

equipment.
Coal
food through fertilizer;

based

my

advantage.

their

have

we

insurance salesman while traveling
New York.
While passing the

pleasure to draw him out concerning the various
The modern life insurance salesman is a far
different craftsman that the old style insurance man we used to
know.
In the insurance business they have aoprcacbed t' e problem
of selling life insurance from a scientific angle.
We could use some
of the life insurance technique in selling securities much to out
was

realization that not only peace but

transportation,
steel,
machines,
machine-parts and every sort of

have

importance.
fibres.

which

Modern

dependent

their

of

production and
especially for the tools or equip¬

necessity, although this is the

receive food

nity

the

tools

the

tation

and

the

of

by
are

ravages of waxv-away from the
attempt to create a single commu¬

for

work.

fuel

deprived

are

is

away

cooperative

other.

Europe and Asia

of

work

moved

present needs or insurance against
a rainy day in the future.
Third and last, there is the need

into three categories: I shall
name them in order of immediate

fall

verse

to

difficult

more

In the last six months

influence,

more

The

will

The

We, in the Western Hemisphere,
so

they

the

for translating their work
into either the satisfaction of their

purchased in other countries,
have

lost

made

cure

means

our

fighting

have

to

gulf our own
hilltop. We are
not
fully
meaning to

small black market which is

a

hopelessly out of their reach. They
see no point in saving money be¬
cause
they have lost confidence
in its future purchasing power.
The chief reason why people seem

fully realize

it

The

<S>-

-

an

phases of his work.

adequate aid.
It is difficult for

met

the train between Rochester and

011

BUREAU, Inc.

1913

Street, New York 4, N. Y.

San Francisco

22

(1754)

r;:

THE COMMERCIAL

Treasury Issues Stricter Regulation on

U._j_

A

Gold Traffic

I

&

FINANCIAL CHRONICLE

Step Forward in Government Responsibility

(Continued from page 15)
ident and 'his cabinet, known

Secretary Snyder says aim is to implement request of International
Monetary Fund to prevent export of gold for sale at premium prices.

mittee is made up
as

"economic seminars."
The

Thursday, October 30, 1947

of members of increasing profits already normal,

the two parties, and it is by legis¬
lation a Joint Committee of the

Joint

House

and

Comrriittee
of
the House and Senate.
Its bi-parti¬
Senate, also provided sanship and the fundamental na¬

ments to the Gold Regulations issued under the Gold Reserve Act of
1934. .These amendments are in furtherance of the request of the

for

the

Employment Act, has

International

consider

Secretary Snyder

•,

-

Oct. 25 announced the adoption of amend¬

on

Monetary Fund that
prevent in-f•

,,.v

t

e

its

members

take

measures

to

in

gold

at

premium
prices. The
amendments

Comparison oi
'19-'20 and Now

statement

made by

Sec¬
retary Snyder
and the Board
of

Governors

of the Federal

Reserve

Sys¬
asking

tem

American
John W. Snyder

Tn-

(Continued from page 4)
creased ^sharpiy;Oh ^June 20th
the government wheat price sup¬
port program -expired and with
it the $2 per bushel floor under
this grain.
By year-end the price
had declined from a peak of $2.98
in May to $2.01, and by 1921 the
price had gone to $1.44.

divi duals,
banks arid

Discrepancies With Present
{Situations
.

business

enterprises

to

refrain

from encouraging and facilitating
this premium price traffic in gold.

The

amended

into effect
Fine

gold

in

bar

which

form,

port for industrial, professional or
artistic use, has been sold in some
instances

at

premium

number

come

the Treasury has licensed for ex¬

prices

for

account

wide

of

discrepancies

exist in the picture of post World
War 1 and the present scene in
the

United

States.

No

have had

and

permit

only semiprocessed gold to be exported for
industrial use except in cases in
which the gold will be refined or

our waves

of strikes

,

also

to

at

continuing its study of gold

transactions

in

which

persons

The

•

amendments

present
several

changes

ministrative

nature

Regulations.

One

amendments

is

of

in

are

ad¬

the

with

enactments

administrative

or

ac¬

It likewise permits the joint

tion,

cial

sworn

to before

authorized

to

an

method of han¬

now

much

informed

better

and

agement is

offi¬

one

guards against

administer

oaths.

1920-21

on

a

the part of

of

man¬

best safe¬

our

repetition of the

depression.

legislative committee already
considering the same sub¬

at work

jects.

Finally,

ment activities

helps" concen¬

it

trate the whole

of govern¬
the .central pur¬

range

on

of maintaining the material

pose

well-being of

people.

our

and the
•

Thirty-nine Weeks Ended September 29,1947 and

v

Thirteen Weeks Ended

September

September

29, 1947
■New

Ship Construction

Ship Repairs and Reconversions

V1

$

30, 1946

4,153,000

$

8,431,000

September
29, 1947

September
30, 1946

$13,053,000

$25,446,000

the

to

how

Chief

Executive

he

much

the

on

other

will

to decide

influenced

be

hand, shall they in

be

measure

which

President

the

will

gladly publish and support?

Accessories

and

Work

Totals

19,667,000

7,373,000

1,250,000

Hydraulic Turbines

4,761,000

2,051,000

3,749,000

3,674,000

$12,366,000

$15,243,000

$36,469,000

$36,493,000

and

It is perhaps improper to raise

devoted

men

reporting

and

Committee

is
as
yet far from
measuring up to its responsibili¬
ties or opportunities.

the last few weeks

mittees

have

October 22, 1947




Comptroller

subcom¬

Committee

Joint

been

prices

structive suggestions to the Con¬

In the hearings at which
speaker has been present,
attitude of the members has

gress.
your

the

been

highly objective. •Partisan¬

ship

has

been

at

minimum.

a

This is

a good augury for the de¬
velopment of the work of the

Joint Committee for the future.

gained
group

the

to

President

country.

Executive

will

and

wise

The

to

Chief

is

wise

in

this

re¬

spect.

increases,

are

circumstances,
determinations and the
negotiations of our .major

Under

present

the profit
wage

organiza-

union

industries

and

tions

to be private matters.

cease

public matters and must
public in-f
terest in mind, if .business and
labor ate to retain-their present
They

are

be determined with .the

degree of freedom .from govern¬
ment control.

for

talking of the vital
securing high employ¬

production. It is equally

Inflation

Sore Spot of

The

sore

spot of inflation is the

price of food. In the low income
groups it takes up a larger and
larger share of the meager family
This

income.

proportion,

tradi¬

tionally about 40%, rises to 50%,
to R0%, and even higher.
Money
needed for clothing, for education
and recreation, must be spent for
food, and still the nutrition of the
family
is
insufficient and the
health of the new generation is
undermined. And, apart from the
social evils of this situation, there
is the threat that inability to buy;
the

less essential

consumer

goods

will

bring on a recession in im¬
portant manufacturing industries
and a consequent imbalance in the
whole economy.

In

we have not found
profiteering in
food

general

that

it

is

processing or distribution which
takes heavy toll of the consumer
It is in the primary mar¬
kets
and
exchanges and in the

dollar.

production of food and feed grains
and livestock on the farm where
the

find

we

In

increases.

great

opinion, we will have to re¬
view our whole price program.

my

government guarantees sup¬
prices to bring forth the

port

ment .and

maximum

essential that the goods and serv¬

production from our
Why should market
prices be allowed to rise far above
these support prices, bringing dis¬

ices

tress

distributed

making
peoples

need

resulting from this high em¬
ployment and production shall be
justly.
Indeed, it is
unlikely that employment and
production can be maintained at

high levels without such
bution.

Thus

the

two

different facets of the

distri¬

a

really
prob¬

are
same

lem.
A iust distribution

It

is

based

one

must

take

into

account

mana¬

gerial abilities,
the reward
of
special skills and experience, long

training periods, continuity in at¬
tention

to

work,

severe

physical

conditions

under

which

work

is

done, and

degrees of responsibility
attached to the performance of the
duties involved.

A just distribu¬
recognize the produc¬
tive value of savings, aoplied to
development and installation of

efficient

equipment.
It
would also provide for the basic
more

needs

of

those

unable

work

to

owing to age, physical condition,
or
other inherent handicaps.
It

families and

low income

to

our

an

relief for foreign
intolerable financial

burden to them and to us?

simple

extensive

and

those

as

What

complicated

means, not so

of

war

bring
these
primary foods within the
reach
of
needy Americans and
starving Europeans?
time,

can

it

It

be

devised

Unless

facing.

that

these
and

Council

Committee

Joint

like

questions

President's

the

to

the

Congress are

of

find

we

the

an¬

and the needed steps are
taken, our inflation will explode
in unemployment.
Our free po¬
litical and social institutions will
swers,

probably disappear if this happens
and they will certainly not sur¬
vive if it should happen twice.
Sumner

said

Slichter

some

great
problems now facing us are: How
to get along with Russia; and how
to have full employment without

months

ago

that

We

inflation.

the

cannot

two

solve

the

first unless we solve the second.

those able but unwilling to

work.

as

agriculture.

the value of services rendered.

011

prefer this course

not

price

the expense of this
of citizens that is being left
at

behind.

The

Equitable Distribution
I have been

ward

the

One cannot attend hearings such
those we have been holding

without

being

profoundly

Goodbody & Co.
Adds

dis¬

about this very problem
just distribution.
It is becom¬
ing clear that in our larger cities
there are important groups that

to

Staff

(Special to The Financial Chronicle)

turbed

CHICAGO, ILL. —Goodbody &

of

There

are

resolved
concern

in

also

the

questions un¬
legislation which

the second tool for main¬

employment—the

.

Joint

Committee of the House and Sen¬

The

most

serious

questions

to be answered are: How

influence

of

this

the

can

Congressional

be -increased

and

through

what

channels

shall

are

being left behind by inflation.

There is the great class of white
collar

As to

matter

workers,

capacitated

the

aged

dependent

or

on

Co., 105 West Adams Street, have
added

George C. Gordon to their

staff.

Mr.

with

large

groups

who

was

the first question, it is a
of

course

that

the

com¬

With Hanrahan & Co.
(Special

have

to The Financial Chronicle)

WORCESTER,. MASS.—Thomas

lagged behind in the progressive

J.

Hanrahan & Co., 332

One

cannot escape/ the conclusion that

every

formerly

in¬

pen¬

sions, the colored population and
other

Gordon

Hemphill, Noyes & Co.

increase in wages and prices.

it

-

Vice-President and

this

of

service

act?
*

the

of

some

why the influence of the

reasons

>

R. I. FLETCHER

meetings already

are

would not, however, be tender to¬

Committee

By Order of the Board of Directors

to

recommending objectively can in
the long run be of the greatest

ate.

Oti.er

few

These

it difficult

tion would

this question at all, for there can
be but one answer as to which of

taining

6,963,000

the

attend
held.

found

further

in

other

of

holding hearings on
throughout the United
States pursuant to
a
resolution
porting this central purpose, there
introduced by Senator Baldwin of
are nevertheless a number of un¬
Connecticut.
In the holding of
solved problems which will have
these hearings and in the subse¬
to be worked out as we gain ex¬
quent analysis and report of the
perience.
One of these is the
information
gained from
them,
problem faced by the President's
the Committee is having and will
Economic Council.
What are its
have its first opportunity of doing
relations with the President and
serious work and presenting con¬
the Administration to be?
Should

President

Thirty-nine Weeks Ended

mittee have

In

the part of his Council and we
have no reason to believe that our

September 30, 1946

members

been such that many of the more
able members of the Joint Com¬

Unsolved Problems

on

(Subject to year-end audit, charges and adjustments)

leading

abnormally

cases

ceiving high wages and resulting

committees. The pressure of work
of
these
other
assignments has

President's messages will reach a

and

Statement oi Recorded Cost oi Work Performed During the Thirteen Weeks

important ..committee asr
signments. It includes chairmen

investigations of the same sort, so
that the Council's reports and the

these procedures is in the public
interest.
Capable,
experienced

Newport News
Shipbuilding and Dry Doek Company

earlier

and

a

flexibility

from

committee to continue studies and

ment

the requirement that applications
and reports under the Gold Regu¬

lations be

our

away

than

changing conditions which might undertaken by members whose
require
changes
in
legislative time already is fully occupied by

amenable to the
more sensitive to chang¬
point of view of the Administra¬
ing conditions than they were 27
tion and therefore prepare a docu¬
years ago. The resultant alertness

these

dispense

and

and much

Gold

of

effect

to

also

an

once

singly rather than all

rather

lead

its

dling them has greatly improved. thereby or even whether or not
For instnee, our business leaders the report shall be published?
Or,,

within U. S. may be participating.
make

crop up

toward

should

message non-partisanship in its delibera¬
recommendations tions. This should make it easier
Congress.
The law to gain influence on both sides of
does not prescribe any particular both houses of the
Congress.
It must be said, however, that
remedy nor demand any specific
gift of prophecy.
Rather, it re¬ the committee's influence is not
quires, in effect, that the Eco¬ as i yet strongly -fejt an the legis¬
nomic
Council
shall
keep
the lative toody. It .has come in as a
President currently informed of new
and additional assignment

credit

wage

duties

its

of

some

every wage rise demanded
and received by those already re-!

the

to

increases, the ensuing
price increases have as ,yet not
proven a serious obstacle to in¬
creasing sales.
Wages and con¬
sumer income in relation to prices,
processed
and
returned to
the
and to food prices particularly,
United States.
The amended Regulations per-1 are not as far out of line as they
mit the export of gold refined' were in 1920. Exports do not ac¬
from imported gold-bearing ma¬ count for quite as disproportionate .it be a
super-body prescribing
a share of the national income as
terial only when the refiners in
policy for the Cabinet, or at the
they did in 1920 and will enjoy other
the United States do not partici¬
extreme,
merely one of
the benefit of large government
pate in the sale of the refined
many
reporting to the
groups
subsidies for some time to come.
gold. In addition, such gold may J
President?
The orte extreme is
Retail
inventories having
toe exported only when the ex¬
gone
impracticable; the other would be
portation of,gold-bearing material through one period of downward deplorable.
In genferal, the posi¬
from the country of origin and the adjustment this spring are rela¬ tion" of the Council in the Ad¬
importation of the refined gold tively conservative. Construction ministration will 'be determined
into the country of destination do has recently been rising contraby the ability and character of its
not
violate
the
of
laws
those seasonally and in the face of high¬ members.
Its present make-up is
er material costs. Exports of farm
countries.
such as to insure an effective rela¬
commodities are practically a gov¬
I In effect, the amendments im¬
tionship.
Dr. Edwin Nourse, Mr.
plement the request of the Mone-, ernment monopoly supported by Leon
Keyserling and Mr. Clark,
government credits instead of pri¬
tary Fund by preventing persons!
the three members of the Council,
and
organizations
within
the. vate capital as they were in 1919: are
thoughtful men with an un¬
United States from participating; 1920. The parity price guarantee
usual degree of practical expe¬
in the export of gold for sale ati continues until the end of 1948
rience combined with their theo¬
premium prices. It is expected for farm products. True, shortages retical
grasp of economics.
in
housing,
automobiles,
steel,
that
other
countries
will
take,
There is another problem which
measures
of a similar nature to' railroad cars, to mention only a
the Council faces which is of great
control activities of persons and
few, existed in 1920 as they do
Shall it write its re¬
But we have a better bal¬ importance.
•organizations within their juris¬ now,
to or for the
anced economy now, and while ports
President?
diction and thereby reduce the
traffic in gold at premium prices sharp maladjustments are likely Shall it study the problems with
to a'minimum. The Treasury is) to appear, they are more likely pure objectivity and leave it up
amendments

ture

President's

stringency exists now to hamper
While the mechanism provided
business and tight money condi¬ and the method of operation pre¬
tions are not yet in sight. While scribed seem well adapted to
sup¬
we

hoarding. Accordingly, the present

brief

above

it becomes readily apparent that
a

Regulations
Nov. 24, 1947.

on

the

From

receive and

staff to

the

report

back

supplement
the

economic

and

rnational

transactions

in

an

in

and

high,

price rise for the sake of

Lynch has joined, the

staff of

Main Street,

members of the Boston Stock Ex¬

change.

-

Volume >166

Number 4642.

Sees
Writing,

^

COMMEIICJAL &

f Leakage" of British Capita!

Lloyds Bank Review, Prof. Lionel Robbins, British
economist,-calls attention to seepage of British capital abroad*

f

In

in

the

<

October

Lloyds Bank,

issue of "Lloyds Bank Review," published by
of the five great banks in England, Prof. Lionel

one

the

elude

transfer

of

funds

severity of the regula¬

to

parts

of

the

world
was

Bobbins of the

to

on

British

,

hOt more than

^reasons for

our failure ~td remedy
adverse balance on current

few days before

a

he'

K-JpSS

which

may

not have'been serious

Commenting

forbidden?

London School of Economics, in an article entitled
Were they even such as to pre¬
the Crisis," draws attention to what he calls "the leakage'^ clude transfers
tending to increase
capital, to which he
the adverse balance on current ac^
ascribes the using up of over £ 600 permitted a
complete and sys¬ count?
It would restore confi¬
million worth of British external tematic view of the situation. In¬ dence
greatly, if the government
assets since the end of March of deed, it is doubtful whether kt the
could ;giVe a fcomplete affirmative
this year, despite exchange re¬ time he himself was in a position to
this question. For the common
strictions.
The following is the to do so.
For, whereas on that gossip of the market and the
logic
section of Prof. Robbins' ^article occasion he expressed the confi¬ of the
known methods of regula¬
dence that
the August position tion have
relating to this topic:
given many to question
/
When we have explained the would be more favorable, it was
gravely whether in fact there

"Inquest

of

Belgium's uSchachtian" Devices

tions made easier iurther transfers
transfer from here

leakages in

V'

account

LONDON, ENG.—When at the beginning of September a new
Payments Agreement was concluded between Britain and Belgium,

its terms

were

presented

as

indication of the

an

vertibility which is to arise from the conclusion
lar

agree-

amounted

countries.

adoption

•.

;,

-

>

-

.

.

-

=

v

tain

this

even

convertibility.
such

limited

The

situation

a

degree

of

possibility of

had

been

well

most

substantial

dollar
do not

know

derstandings

ment.

agreements.

Agreement
ernment

12

that

says

shall

of

be

of

Loan

"each

entitled

proach the other for
eration

the

a

gov¬

to

ap¬

reconsid¬

the provisions
of this agreement, if in its opin¬
ion

the

of

any

prevailing ^ conditions of
exchange justify

international

Of

resources.

provided for in the Loan Agree¬
Clause

inroads

on

our

course,

we

what unwritten

un¬

lay
We

behind
do

■;

these

not

know,
moreover, to what extent, in the
event,
such
understandings,
if
they existed, were honored. But
we

at

are

least

entitled

to

things have turned out,

as

these

arrangements

isfactory?

Is

there

ask:
were

entirely
no

sat¬

reason

to

suppose

that

tle doubt that had this clause been

on.

invoked

galling

part, although doubtless
to our pride, and out of

such reconsideration."

would

by

the

I have lit¬

government

have found

a

it

sympathetic

our

would

tration.

our

tral

problem.

is

The

not

the

central

cen¬

prob¬

lem, I repeat, is how did it come
about that, being obliged only to
maintain convertibility on current
account, we found ourselves in a
position in which we were losing
capital?

Now,

!
so

far

on

has

the information which
been

available, precise

made

publicly

answers

to this

question

are
not
possible.
The
Chancellor gave many figures to
the House of Commons.
But he

clid

not

furnish

anything




which

drastic methods
_

with

harmony,

hearing from the U. S. Adminis¬
But that

more

have

.

of

better

position and

security of
But
our

the

our

our

even

traditions,
safeguarded
,

the eventual

creditors?

accumulated

wartime creditors

not

London.

There were very tight
regulations on transfers to some
*
parts of the world. It is not so
certain
so

that the

tight

others.
sonable

i

as

ji

TI

regulations were
transfers to

regards
seek

tlemen

but

that

those

who

were

not gentlemen

might take advan¬
tage of the privilege if they were
treated as if they were?
Where

so

much is

dark

and

confused, it is difficult to feel

any

confidence that
tions;

are

so

one's

even

posed with

ques¬

proper de¬
It may well be

gree.of precision.

a

that, in these inquiries, there are
phrases which, for one reason or
another; fail to probe the essential
points. But one thing is reason¬
ably clear, and in any discussion
of these

matters it is desirable to

keep it

firmly in mind.
deal

appeared like

of

An

in¬

has dis¬
overnight and

money

snow

it has not gone, as it was intended
that it should go, in payment for
necessary

I find

imports.

I confess that

it difficult to

see

further

unrea¬

informa¬

tion

could

possibly have happened had

there

not

been

serious

errors

of

high policy, at least of the kind,
if not of the exact definition, of
these I have mentioned.

Schacht to shame.
In

the

first

If this is

place,

she did not go out of her way to
ascertain whether the sterling she

acquired
it is

was

"old"

or

known that

"new," and

large
amount of old sterling balances
has come to be converted through
the
intermediary
of
Belgium.
Moreover, she has secured from
Belgian holders large amounts of
old

now

a very

and hitherto undeclared ster¬

Belgian exporters who had
in the form of stealing
part of the proceeds of their ex¬
retained

surrender

their

for the purpose

dollars.

They

illegal

balances

of conversion into
were

granted

clear.

held

entitled to

was

by Belgians continue to be

collected by the authorities, even

though' they

may have originated
period of convertibility,
there is reason to
believe that Anglo-Belgian trade
lias been heavily manipulated in
before the
/ Above

order

all,

to

the

secure

largest pos¬

sible sterling surplus.

The figures

not yet available, but it seems
that the Belgian Government has
are

made every effort to increase ex-

ports to Britain, and at the same
time it has reduced the purchases
of British and

far

as

Sterling Area goods
possible." An artificial

as

thus

surplus" has

export

been

created,

,

■This

Britain

real

no

considered

is

safety

inconvertible

fixing the
what

be

taught

It showed that

lesson.

a

could

there

-has

experience

a

in

limit; at
high

very

figure, for even such a high limit
; might easily
be reached.^ In any
case, the fixing of high "ceilings?
cuts both ways: it is usually based
on
the principle of, reciprocity;
i ?When; a
country undertakes > tflt
I hold, inconvertible sterling to ■? fhq
i amount of, say,
£ 50,000,000, Brit-:
hold* an

ain has to undertake to

equivalent amount of inconverti¬
ble currency of the country con-»
cerned.
This means that, " while
the
fixing of a high "ceiling"
tends to reduce the risk of losing-

it

in¬

the risk of having to make

exports

unrequited

large

Britain

all,

conversions,

through

gold

creases

ill

Britain

liable

which

Worst* of

afford.

is

can

to

be vic¬
both

timized by the same country

Suppose Belgium works up

ways.
a

sterling surplus of,
£40,000,000, by concentrating
year's exports within a few

temporary

say,
a

and

months,
the

withholding

by

time

at

the

purchase of
British goods. Britain would have,
to part with £13,000,000 of gold.
As soon as this is done, there is
same

nothing to prevent Belgium from
reversing the process, and check¬
ing all exports to Britain while
increasing imports of British and

Sterling Area goods to the utmost
of possibility.
As a result
accumulated
inconvertible

the

could

sterling

used up, and
accumulate

be

Britain would have to
the

under

agreement

of

inconvertible

amount

a

large

Belgian

francs.

this would
Machiavellian
to be considered seriously. On the
A

months

few

sounded

have

ago

too

experi¬
however, it
cannot be dismissed as improb¬
able. So the British authorities in
their effort to satisfy the United
Britain's

basis

of

ence

with

recent

Belgium,

partly

to return to

conditions

tematic campaign aiming

at dis¬

of the Belgian Govern¬

Now

they

have

to

this condition another: it

is risky to
so

it until Britain's trade

have becorro more or

normal.

crediting sterling had facilitated
task

States by

to

the

made

.

devices

accept sterling from third coun¬
tries.
And the sterling balances

less

ment to collect sterling both from

be

operative Belgium

add

For confidence has been severely

to pre-

should

.

bility of sterling. Until the new
Payments Agreement became

im¬

A

shaken.

as

it

*
these

continued to be applied also after
the suspension of the converti¬

sys¬

munity from prosecution.

the arrangements such

so

-.

extent

,

some

making sterling at least
convertible, are liable to
expose themselves to being vic¬
timized by greedy and unscrupu->
ports in circumvention
of
the
lous governments. Until now the
Belgian exchange regulations opponents of convertibility main¬
were induced before August 20 to
tained that it would be premature
ling.

regarding • exchange: control
within the sterling' area.
Were

not

To

limit

Belgium

acquired sterling from third coun¬
tries, in payment for her export
surpluses. This in itself was in
accordance with the rules.
But

how this

J

It is therefore not
to

gen¬

tolerable
balances

were

the only funds which could leave

xi

the gentlemen might be offended
if they were not treated as

con- '

number of simi-

a

Belgian national and from foreign

to
•

the

system of

new

of

<£«

l»ents; In sub¬
stance,
it

have

we

||||

By PAUL EINZIG

the Anglo-Belgium Payments Agreement, Dr. Einzig
accuses Belgium of
acquiring sterling from third countries in order
to require its convertibility.
Says experience proves there is no real V
safety for Britain in agreeing to convertibility above a fixed limit.
on

was compelled to come to 'the
these directions.
of .the prin¬
not,' however, microphone and declare that he
This leads to a further question
ciple
that
had' lost more than another $200
fully explained the catastrophe
relating to the efficiency of our
sterling is to
We are still, therefore,
which has come upon Us; For the million.
exchange control —. and here I become con¬
.using up of our external assets in very much in the dark. For this must ask
my readers to pardon me
vertible if
a
the last few months has proceeded reason, in what follows I prefer
if I appear to diverge into techni¬
country ac¬
at a rate which cannot be recon¬ to ask what seem to me to be rele¬
calities; there is indeed'an un¬ cumulates an
ciled with any known facts con¬ vant questions, rather than to pro¬
avoidable' appearance of techni¬
cerning our obligations on account nounce on the answers with cer¬ cality but the issues involved are amount in excess of the
of current purchases and current tainty.
of great practical importance. The
limit fixed in
The first question relates to the
payments abroad.
The statistics
convertibility' obligation, as we the
agree¬
are indeed still veiled in some de¬
sterling
balances.
Were
these have
seen, was an obligation to
ments; In the
•
'
gree of mystery. But transactions under a control adequate to pre¬ maintain not total
convertibility Case of BelDr. Paul Einzig
which involved the using up of vent an undue withdrawal? It is
but. only convertibility on. current
gium the fig' '
over
£600 million worth of ex¬ well known that the existence of
account. This means in plain Eng¬
ure was fixed at
£27,000,000. On
ternal
assets
since
the
end
of large sums of liquid capital ac¬ lish that the
foreigner was en¬ the basis of the
Anglo-Belgian
March cannot
conceivably have cumulated in London as payment titled to turn into
dollars, if he trade figures this amount was
been limited to transactions on for goods or services delivered for
pleased, | not his capital but his considered in British official
current
account.
A
leakage of the most part during the War, and current learnings. Now the
ques¬
circles as more than sufficient to
capital on a colossal scale is the nominally capable of being with¬ tion?
arises, was such a system
safeguard Britain against being
only explanation which fits the drawn at the will of their owners, viable unless some
precaution ex¬ called
upon to part with any of
facts.
Since we have thus lost has long presented problems of
isted against., the sudden with¬
her much-needed gold as a result
amounts which, on a conservative the utmost technical and moral
drawal hot of net current earn¬
of the working of the Payments
estimate, could have financed, for difficulty. It would be possible to ings but of
gross? — a danger
Agreement with Belgium. And the
piany months to come, the imports write a treatise on this subject which
was
particularly great Treasury « was ■« satisfied that, if
alone.
But one practical consid¬
jof food which we now may have
whilst there existed the
simul¬
to go without, some further in¬ eration, has
only, it succeeds in persuading
long been clear amid taneous
possibility of sudden pro¬ foreign governments to agree. to
the welter of casuistical issues and
quiry seems essential.
hibitions on purchases from this
T
high "ceilings" for inconvertible
In popular
discussion, hitherto, spe c i a 1 circumstances: namely, country,
j Is it not inherent in the sterling balances, the new for¬
the disposition seems to have been that it would be fatal to allow
idea of .current account conver¬
mula of ^"convertibility
without
to
put all the blame on con-? them to be withdrawa; suddehly
tibility that it should be worked tears" would work
satisfactorily.
or
at a very substantial annual
yert&HityMa^
through a system of short-period Criticisms on the
ground
that
the Loan Agreement mnder which rate. ,On that consideration; which
clearings ; ofnet- earnings either
Belgium
might
easily
devise
the experiment in
convertibility depends for its validity on no beg-, way,' rather than by' a system
means
for: accumulating sterling
was .carried
out; >and since .the ging- of the question whether, the which - allows.? the
foreigner, re¬ id excess of £27,000,000 in a brief
rate of withdrawal after
July 15, balances ought ' eventually^ to . be gardless of his own debts, all of a
space of time were dismissed in
when
convertibility, came into *epauLin, full or not,- bhVon th^ sudden' one
fiii^ morning, to de¬ the same way as were dismissed
force, greatly exceeded the rate of inescapable facts and potential^ mand dollar
payment of the gross two to three months earlier the
.withdrawal ' before .then, fit may ties of our balance of. payments, amount of current debts owed to
warnings that
Convertibility
it might have been assumed that
well
be
that
the
arrangements
him. This certainly was the
way would "break
down.
And
once
all responsible opinion was united.
Which had been adopted in
in which it has been
regard
supposed by more the critics have proved to
to that obligation must bear their But in fact • we have witnessed
many that the difficult and deli¬ be
right'even sooner than they
due share of the blame.
But to during the last 12 months, from cate
system of current account themselves had
expected;
argue
simpliciter that the converti¬ the Argentine agreement onward, convertibility would be worked.
Within four weeks from
the
bility obligation, by itself, was re¬ the signature of agreements of And since the
government allowed
conclusion of" the new agreement,
sponsible for all that happened is bewildering easiness in this re¬ themselves to
declare with such
the Belgian sterling balances have
completely to beg the question. spect, both as regards prospective confidence that the
arrangements
already risen to the close vicinity
For the obligation under the Loan rates of repayment and as regards made for
meeting the obligation of the
inconvertible limit.
This
Agreement, as under the Bretton the amount of the balances to be of July 15-were
completely water¬ astonished the British authorities
Woods statutes, to maintain con¬ regarded as free in the periods
tight, the possibility that other
who did not reckon with the skill
vertibility was not an obligation immediately ahead. If the rates looser
techniques
might -be of the
Belgian authorities in using
to maintain unlimited convertibil¬ of repayment in some of these adopted was not
very widely dis¬
and
abusing the terms
of the
ity. It was an obligation extend¬ agreements were to have been cussed.
jSince so much money has
agreement. Yet London had every
ing only to the current account. generalized, it almost seemed as been lost, we are
entitled, I think, reason for
being fully prepared
Now it is just the excess of the if we might easily have been in¬ to
inquire further concerning this
for every kinds of "Schachtian"
withdrawals over and above cur¬ volved in annuities three times
question. We are entitled to ask
the amount of the annuities on the
currency
tricks on the part of
rent
account
obligations which
whether there may not have been
Belgium. For during the period
and
Canadian
constitutes the problem to be in¬ American
loans. too
great an inclination on the
of convertibility Belgium proved
vestigated. I myself believe that, While if we add up the amounts part of the government to
rely on to be easily the worst offender.
having regard to the general de¬ to be regarded as free in the mere gentlemen's
understandings The methods she applied for the
months immediately subsequent to
terioration
in
our
position, in
concerning how the right of with¬
purpose of securing sterling for
particular to the rate at which our the agreements, we reach totals drawal should be
exercised, when the
purpose of converting it into
adverse balance was running, it which, if withdrawn in a lump, the situation was one of such
peril
would
was a mistake to attempt to main¬
certainly have made the that the chief danger was not that dollars would have put even Dr.

jour

23

to

parts pf . this area' Where^ perhaps;
the peculiar conditions of trade or
the lesser

(1755)

„

return to convertibility

long as the present low stand¬

ards'

of

morality

among

ments do not improve.

govern?

THE

(1756)

24

COMMERCIAL

'

A

FINANCIAL

CHRONICLE

Recession Next Year

Raises
*

Soule, New York.

commodity prices,
employment and construction.

Dodge Survey reveals outlook on
industrial
'

production,

opinion of one hundred economists polled

It is the consensus of

that there will be a mild business reces¬

by F. W. Dodge Corporation
sion beginning next spring.

economists connected with business
corporations, financial institutions,<8>
~
The

polled includes

group

•

universities

—

economic

and

re¬

organizations.
X
In revealing results of the cor¬
poration's opinion su r v ey on
search

pressed

opinion on the con¬
outlook. • Thirty-seven

an

struction

anticipate a steady uptrend, 28
believe building will be approxi¬
mately stable, and 11 expect a
steady downtrend. Fifty-eight be¬

prices- industrial pro¬
duction, employment and con¬
lieve there will be an over-all
struction, Thomas S. Holdeh, Pres¬
increase in construction contract
ident of the fact-finding organi¬
zation, said that 75 of the econo¬ volume, the median figure on the
increase expectation being 10%.
mists expected a business reces¬
wholesale

sion in

1948, that 21 did

not ex¬

pect^

a

four

did

recession next year, and
not express an opinion

the question.

on

Forty-one of the economists ex¬

pecting a recession indicated they
believed it would be mild, 19 de¬
scribed their expectation as "mod¬
erately serious," and 11 as "seri¬
ous."
Mr. Holden revealed that there
was

to

wide division of opinion as

a

the

when

would

recession

expected

Commodity Prices
In

the

opinion

of the

of most

economists the index of wholesale

prices as established
by the U. S. Bureau of Labor Sta¬
commodity

continue to rise from

tistics will
153.5

Aug. 23, 1947, through

of

as

will

December,

but

August

next

of

be down by
down

and.

year

further by the 1948 year-end. The
median

commodity index

predic¬

tion figure in the opinion of the
economists was 158 for December
this

150 for August next
year, and 140 for December, 1948.
The majority of economists ex¬
pect a period of price stabilization
when the wholesale commodity
index will reach 132, the median
opinion figure. This would be at
a point approximately 70%
above
the average of wholesale
com¬
year,

modity prices

for the

While there is

a

opinion

to when the oeriod of

as

stabilization

ing all the
time

to

most

year 1939.
wide diversity of

should

begin,
in

time

some

rang¬

from the nresent

way

frequently

1951,

mentioned

the

time

■t
Adolph G. Abramson, S. K. F. Industries,
Inc., Philadelphia; Eugene E. Agger, Rut¬
gers
University, New Brunswick,
N. J.;
E. B. Alderfer, Economist, Federal Reserve
Bank
of
Philadelphia;
R. S. Alexander,
Columbia University, New York; Harold E.
Aul, New York; Jules Backman, Associate
Professor
of Economics,. New York
Uni¬
versity; Robert W. Bailey, Market Analyst,
Evanston, Illinois;
C. Canby Balderston,
University
of
Pennsylvania;
Horace
R.
Barnes, Franklin & Marshall College, Lan¬
caster, Pa.; Claude L. Benner, Continental
American Life Insurance Co., Wilmington,

E.
of

over-sll decline

an

shown

with

the

in

median

ment

Economics,

Providence,

an

production

econ¬

opinion
with

on

36

Economics, Yale University, New Haven,
Conn.; Nathaniel R. Whitney, Economist,
Proctor

The

Ohio.

Gamble

&

Oil

R.

I.;

Willett,

Professor
of Economics, Smith College, Northampton,
Mass.; John B. Williams, Wellesley Hills,
Mass.;

Max

Winkler, New York;
President, International

Zelomek,
tical

Bureau

Inc.,

economists who

Ellen

Deusen, 21-year-old
Wellesley College graduate from

Boonton,

Bussing,

American

Cyani-

Charles A. Dice,

Business

F.

versity,

Donaldson,

Columbus;

Ohio

Wilford

State

J.

Uni¬

Eiteman,

University of Michigan, Ann Arbor; Morris
D. Forkosch, New York;
Stephen M. Fos¬
ter,

Economic

surance

Advisor,

Company,

Professor

of

York Life

New

In¬

New York; Roy L. Garis,

Economics,

University
of
Southern California, Los Angeles;
Russell
Gartley, Glen Ellyn, 111.; Edwin B. George,
Economist, Dun & Bradstreet, New York;
Horace

N.

Gi.bert,

Technology,
.antic

Pasadena;

Refining

Charles

A.

California

John

of

Gill, AtPhiladelphia;
D.

Company,

Glover,

Institute

American Telephone &

Company,

York;

New

Paul

E.

Farwell
O.

&

Haney,
Economist,
Sheridan,
Morrison, Inc., Chicago; Charles

Chicago Association
of
Com¬
Chicago; Hudson B. Hastings, Pro¬

fessor
bert

of

Economics,
Servel,

Haring,

diana;

Walter

ver,

Yale
Inc.,

University;

Al¬

Evansville,

In¬

Hoadley,

Federal

Reserve

Jr.,

of

noin'cs

Stanley

B.

Bank

Hunt,

Chi¬

of

Textile

Eco-

Bureau, Inc., New York; Kenneth
Kansas City, Kansas; Dr. Donald

James,

The

trend

majority foresee
in

industrial

three

last

year as

Fred

an

uoward

production in

of

quarters

next

compared with this year.

opinion indicates an
expectation of approximately sta¬
ble to lower employment

in 1948

compared with this year.

ion

the

on

expressing

Of

opin¬

an

employment

outlook

only three expect a steady up¬
trend, while 30 expect a steady
downtrend, and 45 believe that
employment will be approximately
stable next year.
Construction

Despite

the

mild

expected,
support for the
lar

volume

tracts

will

than this

of

be

business

there is

re¬

strong

yiew that the dol¬
construction

con¬

greater next

year

year.

Seventy-six

York;

Oswald

economists




ex-

W.

H.

E.

Maize

Co., New York; Dean Langmuir,
York; J. L. Leonard, Head, Economics
Department, University of Southern Cali¬

fornia, Los Angeles; William T. Livingston,
Economist, Alexander Hamilton Institute,
New York; Merten J.
Mandeville, Univer¬
sity

of

Illinois,

Palo

Urbana;

Alto, Calif.;

School

of

Stewart

M.

Edward S.

Public

Wiifred

A.

May,

Executive Editor,

Com¬

mercial

and
Financial
Chronicle,
New
James E. McCarthy, Dean, College
Commerce, University of Notre Dame,
Notre Dame, Indiana; Roy W. McDonald,

of

will

be

counts

Deusen

elected

the

first

member

woman

and

Van

Miss

Blonde

Association.

Brokers

entered

who

Deusen,

the investment

blinking field last

through
an
18-month
training course at Smith, Barney
surhmer

&

investment
fers ticker tape to

bankers, pre¬
a trousseau at

Co.,

Winner, earlier this year,
Wellesley College

present.
the

of

famous

hoop race—and thus by tradition

expected to be the first in her class
to
marry—Miss Van Deusen is
out to prove a girl can make her

investment

the

in

way

banking

business.

Research, The Chase National
Bank, New York; Ragnar D. Naess, Naess
it Cummings, New York; Frank D. Newhury, Westinghouse Electric Manufacturing
Corp., Pittsburgh; Paul H. Nystrom, Proof

Marketing, Columbia University,
New York; Arden B. Olsen, Head of the
Department of Economics, University of
Denver;
Elmore
Peterson,
University of
J.

E.

Boulder,

Pogue,

Colorado.

Vice-President, The Chase
Bank, New York; F. E. Richter,
Economist, General Foods Corp., New York;
Robert G. Rodkey, University of Michigan,
Ann Arbor;
John G. Rolph, New York;
John H. Sadler, Secretary, The Kroger Co.,
Cincinnati, Ohio; Olin Glen Saxon, Yale
National

$2,500 and at Ya of 1% on bal¬
from $2,501 to $25,000. Pre¬

viously the bank had paid interest
at the rate of
1% on balances
$50 to $2,500, Ya of 1% on.
from $2,501 to $10,000,
Ys of 1% on balances from

from

balances

and

$10,001 to $15,000.

available

be

personnel and
employees of the War

civilian
Depart¬

ment. From the bank's announce¬

ment

also quote:

we

"Under the terms of the United

States-Philippines

Agree¬

Bases

ment, jointly agreed to last March
by the United States and Philip¬
pine Governments, U. S. Army in¬
stallations are being moved from
the Manila area to Clark Field,

approximately 56 miles north of
the city. Clark Field is now the
principal U. S. Army base in the
Philippines. The banking facili¬
ties and services heretofore avail¬
able to the Army through National

Manila branch
to

be

hence¬

are

supplied through the

Field

Office.

The

Bank's

University

si:

❖

Housing Consultant, and former¬

York,

that at

announces

a

meeting

ly Executive Director of the New

of the

York

lowing promotions were approved:
Kermit P. Helgerson was appoint¬

Authority,

Housing

on

Oct.

29

series

a

of

the Columbia

University School of

Architecture.
covered the
of

field

ticular

The

lecture

general aspects of the

emphasis

New

lecture

second

first

public housing with

in

gram

public housing at

the

pro¬

City.

The

upon

York
on

par¬

Oct.

29

dealt

with the Housing Authority pro¬
gram

and administration. The lec¬

tures

were

for advanced students

Board of Trustees the fol¬

Real

ed
on

Estate

of

the

School

Yorker

and

active

Roy With

stitute.

estate

Mr. Gross, after long as¬
with Realty Associates

sociation

Management, Inc., joined the bank
as Mortgage Supervisor in 1935.
*

*

A

at

Time

new

CALIF.—

New

Street,

York

members of
Exchange.

Stock

the past he was an officer

of New York, lo¬
of the Americas

Street, according to Wil¬
DeBost, President of the

announces that
service is now available.

who

Mr-

Crook, former senior Vice-Presi¬
dent, reached retirement age last
August after 49 years'
service
with the bank. He also had held

Supervisor
the de¬
velopment of the bank's branch
system, of which the office at
the

of

was

Fox, Castera & Co. and its prede¬

responsible for

Fifth Avenue and 29th Street was

unit.

first

the

:J:

Raymond J. O'Rourke has been
elected
Assistant Vice-President
National Bank of

of the Lafayette

according

Brooklyn,

nouncement

Oct.

Carlin,

Jeffreys

to

an¬

an

Walter
President.
Mr.
15

by

became associated with

O'Rourke

1947 and is

the bank in March of

charge of the Personal Credit

in

Department. He came to the La¬
fayette from the Corn Exchange
Bank and Trust Co. of

National

Philadelphia, where he was Man¬

of

Time

the

Depart¬

Sales

ment and also active in its

He

was

organi¬
formerly

also

Sales

Department of Ruth¬
Rutherford,

erford National Bank,
J.

N.

Mr.

is

O'Rourke

a

former

President of the Philadelphia Re¬
tail

Credit

Managers Association,

member of National Federation

a

of Sales Executives and

of

clubs

other

sj:

and

a

number

organizations.

*

*

' Announcement is made that the

of

resources

The

Dime

Savings

Bank of Brooklyn have passed

half-a-billion-dollar
claim

is

made

is

the

that

"The

the
The

mark.

largest^ savings

Dime'*

bank

in

and Long Island, the
third largest in New York State,
and
the
fourth
largest savings

Brooklyn

bank in the United States.

George

C.

Johnson, President of the bank,

in

a

statement issued in the mat¬

stating that "the resources of
Bank of Brook¬
lyn have reached one-half billion
dollars," also says in part "it is our
depositors who have built this large
accumulation
of
wealth.
They
the Dime Savings

have numbered more than a mil¬

half since the founding

lion and

Mr.

of the bank in

points out that a depositor
may now use the Time Saving De¬
pository to make a deposit, with¬
drawal, or to open an account.
His bankbook will be mailed to
him the next day.
"We

Branch

of

title

and

this

DeBost

Adrien V. Roy has become associ¬
ated with Buckley Brothers, 530

Sixth

L.

bank,

(Special to The Financial Chronicle)

ANGELES,

29th

Bank.

ter

Saving Depository has

at Avenue

40th

liam

Buckley Brothers

cessors.

real

been installed in the Union Dime

Adrian

In

in

manager of its Real Estate and
Appraisal Divisions since 1945. He
is a member of the Appraisal In¬

Savings Bank

the

Ray¬

management work for many years,
joined the bank as Real Estate
Inspector in 1936 and has been

cated

West

and

Gross, Mortgage Officer.
Helgerson,
a
native
New

Mr.

Advisory

the

of

Office

Street

mond W.

of Archi¬

tecture.

LOS

Officer

announces

the

of

Board of the Fifth Avenue at

Time

Lee, President of the
Savings
Bank
of
New

Central

York,

New

membership

Manager of Consumer Credit and

*

James T.

Maxwell H. Tretter, lawyer and

City

of

pany

the election of Wilbur F. Crook ta

zation.

heretofore."

Chairman of

the Chemical Bank & Trust Com¬

ager

as

*

*

N. Baxter Jackson,

tions

Rousing Lectures at

sylvania Company for Banking and Trusts,
Philadelphia; Dwight Michener, Associate

Colorado,

to

ances

Cebu will continue to handle reg¬
ular commercial business transac¬

Division

of

will

convenience

only in the Planning and Housing

Director

but the branch

enlisted

Clark

York;

York; Oswald E. D. Merkt, The Penn¬

Army

Philippine branches at Manila and

of

New

States

ac¬

officers,

forth

Columbia

United

the

of

City's

Tretier Concludes

Branch

Field

Clark

accomodate

also

the

for

of the Junior Investment Bankers

Field, the
principal func¬

Officers,

facilities
Van

Ellen

Clark

at

The

to

of

Bank
of
the opening

City

announces

the

Finance

Mar¬

Mason,

Administration,

Cambridge, Mass.

essor

cession

New

Nov.
1, interest will be
compounded monthly, instead of
quarterly as heretofore, at the
rate of 1% on balances from $5

fective

r.

*

branch

a

tion

New

Dean.

.Majority

78 economists

Kent,

Beaufort,
S.
C.;
Richard
L.
Professor of Economics, Univer¬

Products

shall,

Employment

as

I.

Knauth,

111.

sity
of
Minnesota,
Minneapolis;
Kromayer,
Economist,
American

the first quarter and a decline in
the

Champaign.

members;

year

National

Philippines.

Business

Walter Hollowell, Cost Analyst, Den¬
Colorado; Louis Hough, University of

Pittsburgh;
V.

E.

So

and Ellis Weston for
members. Cyrus E.

New York

Eco¬

Hardy,

merce,

additional

*

Clare

Ann

Vice-President.

Changes in regulations govern¬

year

The

New

Organization, Ohio
University, Columbus; Henry P. Dut-

Elvin

45

promotion of John E. Cookfrom Assistant Treasurer to

Assistant

ing interest payments on com¬
pound interest deposits were an¬
nounced on Oct. 28 by the Chase
National Bank of New York. Ef¬

members; F. Peter Goelz for the
30
year
members;
William J.
the

man

badges to the

presented

for

Company of
announced on Oct. 28

New York

Stewart Baker,

J.

*

Oil Company,

Chicago.

ton,

gold

DeHondt, of the
Bank's Main
Office, was elected President for
the coming year.

Davenport, Director,

Economic Division,

and

members.

who has just completed 25 years
with the bank, spoke for the new

the

Company

York State Department of Commerce,
Albany; Herman J. deFord, Chicago; Walter
H
Delaplane,
St.
Lawrence
University,
Canton, N. Y.; Wendell M. Dennis, Man¬

Slate

the

dent of the Club, presided. F.
Abbot Goodhue, President of the
bank, presented membership cer¬

members;

it

in

was

;

President of

John E. Bierwirth,

past year. Louis Waechter, Presi¬

William H. Maeder for the 40 year

Kozelka,

uoward

week

..

*

*

*

The New York Trust

Plant

concluded

steadilv

this

J.,

N.

6:30 p.m."

to

completed their 25 years of
service^ with the bank during the

ing their 30th, 35th, 40th, and 45th
Geo. C. Bisset, Jr.,

Van

remain open

day hours, when we

16. Of

anniversaries.

Colean, Washington, D. C.;

Company, New York;

Oct.

on

neighborhood of the bank and will
as popular as our Thurs¬

become

the 241 members who attended 33

Chairman,

New

of

dorf-Astoria Hotel

Of Junior Inv. Bankers

Hartley W. Cross, Connecticut College, New

Professor

Wal¬

awards to the members celebrat¬

York; Neil Carothers, Lehigh
Bethlehem, Pa.; Cecil C. Car¬
University of Kentucky, Lexington.
William A. Carter, Norwich, Vt.; Delmas
R. Cawthorne,
Miami University, Oxford,

mid

held at the

was

First Woman Member

New

ager,

York

New

new

two lectures

thje 1947 level.

five

requested that their names

University,

Miles L.

The sixth annual dinner of the

Quarter Century Club of the Bank
of
the
Manhattan
Company of

tificates

Illinois,

be

and

York;

New

A. W.
Statis¬

withheld.

be

foreseeing "approximated stable"
production next yem, 27 others
believing
the
trend
would
be
steadily downward and 14 saying
would

Associate

penter,

Ohio;

CAPITALIZATIONS

Courtney

London, Conn.; D. H.

X

"

REVISED

University,

Brown

Co., Inc., New York; Irvin
York; J. G. Campbell, Shell

Inc.,

:r.:NEW BRANCHES

P; NEW OFFICERS, ETC.

had
F.

L. Kemmerer, Associate Professor of Amer¬
ican
Economic
History,
University
of

1948 from

Cincinnati,

Co.,

;

Edward

C.
Brown,
Standard Oil Company of New Jersey, New
York; Robert F. Bryan, Lionel D. Edie &

cago;

expressed

industrial

of

Economist,

Seventy-seven of the 100
omists

pro¬

decline

10%.

as

Standard

Arbor.

stable or decline from the 1947
level during next year. 64 antici¬

pating

Bennion,

-CONSOLIDATIONS

of

Jersey, New York; William Arthur
Berridge, Economist, Metropolitan Life In¬
surance
Co., New York;
Jacob J. Blair,
Pittsburgh;
Chelcie
C.
Bosland, Depart¬

The

duction

G.

Griffin, Professor of Business
nomics,
University
of
Michigan,

majority believe that in¬
dustrial
production will remain

Tucker, General Motors Corp., New York;
Q. Forrest Walker, Economist, R. H; Macy
& Co., Inc., New York; William E. War¬
rington, Philadelphia; J. Philip Wernette,
President, University of New Mexico, Al¬
buquerque; Ray Bert Westerfield, Professor

New

Emler

Industrial Production

Stockton, Professor of Business
Statistics,
University of
Texas,., Austin;
I. Stone, New York; W. Bayard Taylor,
University of Wisconsin, Madison; Charles
S.
Tipptets, " Headmaster,
Mercersburg
Academy,
Pa.;
Rufus
S.
Mercersburg,

N.

Delaware.

Telegraph

is the spring of 1949.

R.

John

The following economists par¬
ticipated in the survey:

begin, with February and

March most frequently mentioned.

Thursday, October 30, 1947

University, New Haven, Conn.; Lloyd L.
ahaulis, Economist, General Aniline and
Film
Corp., New York; Murray Shields,
Vice-President, Bank of the Manhattan
Co., New York; Nathan L. Silverstein, In¬
diana University, Bloomington; George E.

Says Economists Expect Mild Business

:

&

anticipate," says Mr. De¬
Bost, "that this will be used ex¬
tensively by depositors in the

a

1859.

Within that

period their gross deposits in our
bank have totaled more than $2,000,000,000
received

on

over

which

"'The Dime'

they

have

$160,000,000 in in¬

terest dividends*

-

now pays 2% in¬
depositors—it has
never
paid less—and interest is
paid from the day of deposit. De-

terest

to

its

Volume

positors

166

total

now

000.
>

,

a

than 274,- Bank *of Wilkinsburg, Pa., will
<
:■■■■■- also become a branch of the Mel¬

more

-

"Recently 'The Dime' has set up
Mortgage Consultant Depart¬

National

lon

middle

the

about

Bank

November.

of

The Wilkinsburg Bank was

to home loan borrowers."

ceed

#

,

*

assets

total

ex¬

now

$16,000,000.

William E. Howard is President

*

*

found¬
capital of $50,-

Trustees of the Buffalo Sayings
Bank of Buffalo, N. Y., on Oct. 14

of

elected William S. Rogers as Pres¬
ident to succeed Myron S. Short,

of the Wilkinsburg Bank.

who has
been

resigned.

Mr. Rogers has
Vice-President,

Executive

the

Braddock

*

Charles

*

S.

board

directors.

of

after

Executive Vice-President
serving for 14 years as Presi¬
of

gust

President

as

and

25

Up $2,798,860,000

Holdings of Government Securities Decline

of

Bank

loans

discounts

and

as

the

Moose

months

First

National

Lake,

and

Bank

about

Vice-President

as

18
the

of

Marquette National Bank of Min¬
❖

had

Bank Loans and Discounts

Mr.

neapolis.

who

(1757)

Schultz entered the bank last Au¬

❖

Weston,

both

served

National, while

Marshall is President

William G.

the

on

dent

ed in 1896 with a

Its

fronf* Dtrtuth I to

"Star" of Oct. 19, who has been
Trust 'Co.' President since 1932/will remain

&

ment with nine specially trained
mortgage; iconsultants to give a
broader and more helpful service

000.

FINANCIAL CHRONICLE

COMMERCIAL • &

THE

Number 4642

On

which

presents
country's banks
the

Nov.

10, Kansas City, Mo.
will have a new bank, the Grand
Avenue
Bank
of
Kansas
City;

United

States

increased

banks

consolidated capitalization statement for all the
of June 30, 1947. A review of this edition o#

a

as

Directory further reveals:

Bank holdings of U. S. Govern¬

$

❖

in

$2,798,860,000 during the first six months of 1947 to an aggregate ©f
$38,948,957,000, according to the final 1947 ^edition of the Rand
McNally Bankers Directory (The Blue Book), now off the press,

ment securities show a decline of

$3,933,555,000 while other securi¬

profits and
reserves" were re¬
corded.
Addition pi these three
items reveals a cumulative growth

ties register a gain of $55*3,519,000. of $340,190,000 in total
capital
"Cash and exchange" due from funds, bringing the June 30, 1947,
six-story
banks decreased $1,550,100,000 and total to $12,038,323,000.
building
18th - and
"other r resources" declined $3,There are now 19,228 banking
87
years.
Mr. Weston who had Grand which on that day will
forced to take an extended leave
The total resources of all offices in* the United States, of
been President of the bank for be vacated by City National Bank 299,000.
during the summer after a break
the banks in the country on June which
5,018 are national banks;
more than. 23 years, retired from
and Trust Company in its move to
in his health.
He will continue
that post in 1936 to become Chair¬ its new home at 10th and Grand. 30, 1947, were $168,359,335,000, a 9,598 are State banks and trust
as
a
trustee of the bank.
The
Grand
companies; 133 are private banks
Avenue Bank will have reduction of $2,131,575,000.
"Evening News" of Oct. 15 also man, from which office he retired
A decline of $2,464,504,000 dur¬ and 97 are other banking institu¬
an
initial capitalization of $625,in 1941.
said:
*
*
*
G00,
consisting
of $250,000
in ing the six-month period lowered tions, making a total of 14,846
"Mr. Rogers has been a trustee
Dr. Paul De Leon Sanders, Edi¬ capital and
National
$250,000 in paid-up total bank "deposits" to $155,- head banking offices.
since 1927. He became
said the Buffalo "Evening News,"

Chairman

of

the

the

of

Board

will
Which reports that Mr. Short who First National Bank of Scranton, it
modern
retires because of ill health, was Pa., died on Oct. 14 at the age of

Manager

of the Bond Department in 1934.
He was elected Vice-President in
1939

and

Executive

Vice-Presi¬

Short has

been

President

of the bank since December, 1944.
For three years he was President

the

of

Savings Bank Association

of the State of New York. He

is

director of the

a

Planter," and

now

Savings Bank

surplus

$125,000 in paid-up
profits. The President

and

member of the board of directors

undivided

of The Bank of

of

Virginia, at Rich¬

mond, Va., was awarded the hon¬

dent in 1944.

"Mr.

tor of the "Southern

degree of Doctor of Science

orary

by the University of Maryland on

the

will

bank

new

last

25

Co.

the

and

Institutional

Securities Corp.
*

The

Company
State

a

*

Northern New York

of

Watertown,

member

of

Trust

Y.,

N.

the

Federal

Reserve

System has absorbed The
Copenhagen
National
Bank
of

Copenhagen, N. Y., effective Oct.
14.

The

Federal

reports
the

that

in

absorption

tablished

Reserve

at

with

connection

branch

a

es¬

was

Copenhagen.
*

*

*

The

Essex

Trust

Lynn,

Mass.,

announced

20 the

election

Chatfield

Board

Company

Oct.

on

of Mr. Thomas D.

Vice-President

as

of

and

Treasurer of the Company.
*

:!s

National

tion of the University on Oct. 16.
Dr. Sanders received his educa¬

pany

Cashier will be

a

Vice-President of National State

Bank of Newark, has been elected

President of Manasquan

Bank,

of

National

Manasquan, N.

Newark

which

J.

"Evening News"

19 from

of

to

State

advancing

from

Vice-President
While

he

with

retained

and

National

his Manasquan

posts. Upon the death of John
Hulsart he was elected President."

Counsel

G.

of

the

Telephone
elected

&

Newark,

New

Co.,

a

Newark

Walker,
on

N.

J.,

announcement

Cowan,
Mr.

Prudential
Newark

is

of

Bell
was

National

Banking Co. of
according to an
by
Robert
G.

President

Walker

General

Jersey
Oct. 16

director
Essex

of

also

the

bank.

director

a

Insurance

Co.,

of

cover¬

was

as

and

forceful

On

Oct.

joined
the

*

15

the

*

Bond

will

Evans'

been

with

Halsey,

career

Stuart

has

Co.,

&

which firm he joined upon gradu¬
ation from
Earlham
College in
1925.

He

pacities
in

has served in

Chicago.
has

sales

ca¬

the Pacific Coast and

on

For the past 10 years

been

member

a

of

the

Municipal
Department
in
the
Chicago office,
and
principally

Bank

of

Detroit,

Detroit, Mich.
Oct. 6, 1947

June 30, 1947

$

1,150,852,057

resources-

$

1,166.381,355

J.,

that

announces

has

been

James

elected

P.

*

making

❖

that

branch
in
Braddock, Pa.,
the
Pittsburgh "Post Gazette" of Oct.
8 stated:

a

Braddock

National

Bank,

member of the Mellbank

group, will become

Corp.

the Braddock

office of the Mellon National, sub¬
ject to approval of the stockhold¬
ers

of

the

The paper

5,140,648

Braddock

National."

from which

we

Directors

quote

of

14 declared

a

"The change is expected to take

25%

Braddock

National

Ilsley

common

record

stock

Dec.

19, and also de¬
clared the regular quarterly 50cent preferred dividend, payable
to stock of record

Nov.

1

The

Milwaukee

which

the
that

Oct. 23.

"Journal," from
foregoing is
taken,

the

common

dividend

is

subject to a stockholders' meet¬
ing, at a later date, to approve
common

stock from

$2,000,000 to $2,500,000.

place early in November.
"The

&

dividend, payable Dec. 26 to stock

increasing the

likewise said:

Marshall

$

the law firm of Wat¬

Whittaker and

Ess, Barnett,

To

mark

its

lQOth anniversary

Louis,

history

Mo.,

published

has

a

outlining

territory west
River

factors

the

of

Mississippi

bank which started oper¬

no

ation before Oct. 18, 1847, has sur¬

vived the intervening period. On
that day the Boatmen's Savings
Institution
Oct.
is

a

business.

began

On

18, 1947, it is still active and
influential force in Na¬

more

tional

has

it

banking than

ever

It has survived rob¬

been before.

bery and fire, depression and war.
growth has been entirely in¬
ternal; there has been no accre¬
tion of resources
by consolida¬

Its

1926, the bank accepted its fifth
under

the

name

Boatmen's
On

June

became

Bank

National

Louis.

1,

"The

of

St.

of

1929, Tom K.

President

of

the

statement of condition Oct.

6,1947,
reports total resources of $138,095,033; deposits of $128,643,292;
capital stock, common, of $3,000,000; surplus, $3,000,000, and undi¬
vided profits of $336,072.
•!»

has

National

In

its

more

Oct.

than
17

$23,000,000."

issue

the

same

paper stated that the Wilkinsburg




as

been

elected

to

succeed

him

President. Mr. Markle, accord¬

ing

in

1940.

At

that

time

Vice-President

a

of

he

the

to

Associated

Press

Pulliam,
charge of the
real estate mortgage loan depart¬
ment, elected Assistant Cashier.
"All

the

in

promotions

effec¬

are

tive immediately."
*

*

In

*

joint announcement issued
Amsterdam', Netherlands, by
a

»•»

William

a

director

S.

of

Bank

Announcement

the
of
was

United

States

Portland,

Ore.

V.

N.

that

of

Amsterdam, it is stated

the

institutions, subject ta
approval of their respective

the

into

ter

from
The
tional

Bank

Southern

Na¬

Atlanta, Ga.

Citizens

will

&

of

offer for sale to its present
stock

stock¬

100,000
shares of new
Jan. 2, next to increase

holders,
on

capital funds of the bank by $1,500,000. This is learned from the
"Constitution" of Oct. 15,

Atlanta

which likewise said:

been

sold

new

stock has

the transfer

and

made

the bank's capital will be $6,000,000

and

close

cooneration

surplus $6,000,000."

L.

with the Federal Reserve Bank of

Dallas,

Texas

named

on

since

Oct.

1917,

was

an

Assistant

the

National

15

Vice-President

of

dent
"In

of

the

National

addition

to

City

Mr.

Bank.

Childers'

appointment, Mr. Ray announced
the
following
promotions
and
changes in titles:
"William

R.

Hoge,

Vice-President

and

named Vice-President
ber of the board

Cashier,
and mem¬

that

added

of

a

institu¬

our

"the

fact

within

that

too distant future

not

the Am-

sterdamische Bank N. V. will pre¬

sumably

practically

hold

shares

the

of

the

all

of

Incasso-Bank

N. V. will not have any

influence
latter."

the management of the

on

The

agreement in part proposes:

"The Amsterdamsche Bank N. V.

will

its subscribed

increase

capi¬

tal

by fls. 15.000.000.—and conse¬
quently issue 75.000 shares of
fls. 200—each, to be divided in
so far as necessary into subshares
of
fls.
100—each, all of which
shares
will
participate
in
the
from Jan. 1, 1948.

as

"The Amsterdamsche Bank N. V.

affiliated

Childers,

as

next, will lead to

course with
their respective for¬
eign relations unimpaired."
It is

profit
Charlie

1,

tions."
"Each
institution," it is
indicated,
"will
continue
their
banking activities to the full ex¬
tent, thereby leaving the inter¬

a

"This was decided at a special
meeting of stockholders in Savan¬
nah Tuesday [Oct. 14]. The new
stock, $10 par value, will sell at
$15 a share. One million dollars
will be added to the capital and
$500,000 to surplus. Stockholders
also authorized transfer of $500,000
from
undivided
profits ac¬
count to the surplus account of
the bank. When the

Jan.

en¬

which

agreement

an

:Js

si:

newly issued shares
disposal of the Incasso-

places these
at

the

not later than

Bank N. V.

a

fort¬

after this agreement be¬
effective, at the price of

night
comes

100%;

N. V.
shares
Amster¬

Incasso-Bank

the

undertakes to acquire these
this

at

from

price

the

damsche Bank N. V.
"The Incasso-Bank N. V. under¬
takes to reduce its subscribed cap¬
ital

fls.

from

15.000.000
face

—

value

fls.

N. V.
its

of

the

that

500—and

to

30.000.000

—

of

shares

fls.

to

fls.

subshares

the

Incasso-Bank

The

250.

to

off the

by stamping

will hand to the holders of

shares, as

same

are

stamped

off, shares resp. subshares of the
Amsterdamsche Bank N. V. up to
amount stamped off.

the nominal
"As

far

this amount

as

cannot

subAmsterdamsche
Bank N. V. the Incasso-Bank N. V.
be

will

provide

amount by
which

for

the

failing

issuing scrips, two of

entitle

subshare

resp.

the

of

shares

shares

in

covered

the

of directors; Al¬

C. len E. McMurray, Assistant ViceMr. Walton President, promoted to Cashier;

made by E.

advices Sammons, President.

Amsterdam and the Incasso-Bank

stockholders, have "decided to

Portland bank.

Vice-Presi¬
dent, elected a director and Sec¬
retary of the Board; Phillip Reid,
prominent

assets of

active

trative Assistant to J. S.

& Bush Bank

Salem, Ore. He was a director
that pioneer Pacific Coast or¬
ganization when it was purchased
by the United
States National
became

$60,000.
It now has capital and
surplus of $1,500,000, with total

was

capital of

1899 with Ladd

Bank

Marshall.

Walton,
Oregon banker, has been elected

a

the

com¬

mittee; T. W. Rutledge, Assistant
Vice-President, elected VicePresident; Ray Jones, Adminis¬

the Amsterdamsche Bank N. V. of

member of

Jay E. Markle has retired from
management of the Bank
of Commerce and Savings of Duluth, Minn, and Oscar A. Schultz

founded in 1882 with

Vice-

Assistant

and member of the discount

War I,

City
Bank
of
Dallas, and six
1947, when he members of the National City staff
was
elected
Chairman
of
the
were
promoted to positions of
board. To succeed Mr. Smith, the
greater responsibility. The action
board elected Harold T. Jolley as
was taken at the regular monthly
its
seventh
President.
He
had
meeting of the bank's board of
come
into the bank in 1929 as
directors, it was stated in the
Vice-President in charge of pub¬
"Daily Times Herald" of Dallas,
lic relations.
which in part also said:
The story of the bank's develop¬
"Mr. Childers, who will assume
ment in the publication just is¬
his new position Oct. 27, will de¬
sued is by W. G. Rule, Vice-Presi¬
vote himself exclusively to duties
dent of the bank.
Designated as
in the correspondent bank division,
the
"Oldest
Bank
West of the
Mississippi" the institution in its according to DeWitt Ray, Presi¬

Bank of Milwaukee, Wis., on Oct.

states

Following
World
he served as a member of
Advisory Board of the U. S.
War
Finance
Corporation.
Mr.
Walton began his banking career

Corporation.

bank and continued in that capac¬

169,775,299

Harris,

Vice-President

ity until January,

4,839,070

T.

mittee of the Portland loan agency
the
Reconstruction
Finance

of

597,683,969

171,136,978

Arch

President, elected Vice-President

Smith

bills

&

discounted

of

in

611,311,424

curity holdings

the

shareholder

and

important Oregon corpora¬
tions. Among other activities he
has assisted in establis>.ng pulp
and paper mills in the Northwest.
Since 1938, Mr. Walton has been
a
member of the Advisory Com¬

293,188,533

se¬

*

known

director

a

many

259,825,530

Govt,

Undivided profits

Mellon National Bank & Trust Co.
of Pittsburgh, Pa. will establish a

"The

S.

Loans

Presi¬

dent and Trust Officer.

In

banks
U.

is

at

charter

1,076,373,179 1,102,221,168

total ol

a

4,382 branch banking offices.

of

E.

George Knight Budd was the
guiding spirit in the bank's early
development. Detailing the vari¬
ous steps taken through the years
it is recorded that on April 9,

iness.

ing institutions, 75; or

in

Charles

tion."

with the underwriting
syndicating phases of the bus¬

companies, 2,451;

private banks, 5; and other bank¬

Whittaker,

Stores;

and

National

$36,633,000 in "cap¬
ital"; $186,789,000 in "surplus"
and
$116,768,000 in "undivided

dent of Charles Tucker Furniture

concerned

The

of

1,851 branches; State

banks and trust

in

it is stated that "in all of the vast

of

of

become

entire business

Goetz Brewing

M. K.

Gains

banks have

Company; Charles Tucker, Presi¬

Chicago.

Department
Co.

Di¬

and

National

Evans

Manager
of
the Municipal Bond
Depart¬
ment, succeeding John W. Denison, Second Vice-President.
Mr.

Deposits

The Phillipsburg National Bank
Trust
Co.
of
Phillipsburg,

Vice-President

in the
first century of its existence.
In a foreword in the publication

W.

Illinois

Trust

and

Evans

will

staff

the

rector; W. O. Norman, President,
City Bond and Mortgage Com¬
pany; M. Karl Goetz, Vice Presi¬

St.

Thomas

Continental

Total

*

ancl

Wallace

National

of

level

$980,762,000.

of the Boatmen's National Bank of

the degree of Doctor of Laws.
*

of

employees
of City National. Directors of the
new
bank will be, besides Mr.
Aycock: George C. Kopp, a City

son,

dergrift, Commandant, U. S. Ma¬
rine Corp.—the principal speaker

of City National.

remainder

culture.

Gen. Alexander A. Van-

the

now

dent of the

Cash & due from

N.

The

and

Ely,

of a progressive
periodical
and
a
staunch supporter of the policies
and programs for the improve¬
ment of Maryland's diverse agri¬

editor

agricultural

the

"Evening News" states.
*

He

Byrd

hensive

he

Thomas

S.

cited by Presi¬
having a compre¬
sympathetic under¬
standing of farm problems and
farmer
aspirations, as being a
dent

Bank

joining National State,

National,

quan

teller

States.

ern

Mr.

Mr. Brown had been with Manas¬

director.

U.

ing all the South and Southwest¬

Oct.
fore¬

going, added:
"Before

be built around present

Entomologist for the
Department of Agriculture,

The

take the

we

National
H.

liabilities"

a

The Vice-

City.

Mississippi State College, Univerversity of Maryland and Harvard
University. He served as Exten¬

M.

340,250,000 as "other
dropped $7,261,000 to

Com¬

Trust

and

Bank

of Kansas

President, will be John C. House,
now an Assistant
Cashier of City

at the Convocation—was awarded

*

J. Wolcott Brown until last June

V.

R.

of City

director

a

years

sion

Trust

be

Aycock, President of the Vaughn
Investment Company and for the

the occasion of the Fall Convoca¬

tion in agriculture and science at

the
at

occupy

of

Bank N. V."

the

holder

to

;

*

one

Amsterdamsche \

.

26

THE

(1758)

COMMERCIAL

&

•

■

V

V'

Domestic

Eastern

and

that
time

Financial Policy
(Continued from page 2)
thought impossible both at home
and

abroad.

As

a

result, however,

we

en¬

the

tered

postwar period with a
supply that__was abnor¬
mally high in relation to civilian
output.
Millions of individuals
money

and

families

well

as

business

as

regarded as a drain upon our commercial exports went to Ger¬
economy.
Deducting these many, Europe's share in our en¬
export
surplus was even
amounts, there remains a sum of tire
$5% hillion by which goods and larger than that.
services available to our domestic
Combating Inflation by Economic
economy were smaller than they
Isolationism
be

would have been without our ex¬

port surplus.

In

-•

represents less than
one-twentieth of our total nation¬
That

sum

view

fluence

of the

exercised

inflationary in¬
by our export

interna¬
Central*
countries
least for the

Those

conflicts.

tional

and

domestic

intensify

lit Problems and International

European

refrained, at
being, from participating in

European
economic cooperation
would realize that their unwilling
decision

sult,

1947

Thursday, October 30,

FINANCIAL CHRONICLE

■■'

was

justified.

would

therefore,

One

be

re¬

even

Actually,

but also abroad.

omy,
our

anti-inflationary

foreign aid is

possible ah in¬
crease
in production of
scarce
goods abroad. It is true that this
process takes time. In the period
of
transition, we shall have to
concentrate upon domestic meas¬
ures.*
We need to stop the fur¬
whenever it makes

hope than now of a united ther expansion of currency and
Moreover, the Western bank credit, and to restrict temr
European countries would have to porarily the unessential domestic
look to the East for whatever suo- consumption of scarce goods that
port they might be able to receive are needed for more essential purr
less

world.

wholesale star¬
support might be

in order to avoid

vation.

This

abroad.

poses

'

peacetime conditions,
generally had large accumulations
contingent
on
a
fundamental this program will need to be acr
al product of $112 billion during
of
liquid
assets
available for
change in the domestic and inter¬ complished on a basis consistent
the first half of 1947. The drain
spending as soon as wartime re¬
national politics of Europe.
with
American/ traditions.
This
for
financing that surplus, it
upon our resources, however, was
strictions were abolished.
This situation
in turn would requires that the program be vol¬
concentrated upon a small group would seem easy to combat infla¬
Upon the end of hostilities, the
cutting off our make it necessary for us to in¬ untary. The cost of failure would
of commodities in relatively short tion simply by
reconversion
of
industry
from
crease our
of
preparations for pos¬ reach into the pocketbook
supply. Thus, the drain was more help to foreign countries. The ef¬
the production of armaments to
Instead of every business enterprise and of
fect on our domestic price situa¬ sible armed conflict.
the production of civilian goods inflationary than the proportion
tion would be immediate.
The advancing grants and credits to every individual.
.
might indicate.
was accomplished with less delay
foreign
countries, we
long-run consequences, however, friendly
The General Report of the Com¬
Our foodstuff exports, exceed¬
and
with
a
smaller
degree of
would be far more important than would have to spend equal and mittee of European Economic Co¬
friction than even the most op¬ ing $1 billion, for instance, cer¬
any immediate effect.
probably greater amounts for ad¬ operation, to which I referred
timistic observers expected.
The tainly contributed substantially to
armaments
to
defend
Foreign countries are importing ditional
earlier, not only depicts the eco¬
contraction
of
the
earnings of the rise in food prices, which
from our economy more than they ourselves in a hostile world. An nomic state of Europe, but also
war-workers did not result in a played the most spectacular role
can
sell to us. This import sur¬ increase in our military expend¬
points the way to appropriate
reduction
in
total
demand
for in inflationary developments of
plus is not for the purpose of ob¬ itures by one-half would repre¬ remedial policy. For a long time
civilian goods as many had pre¬ recent months. To a smaller ex¬
taining unjustifiably high stand¬ sent larger annual outlays than it has been obvious to careful
dicted.
The accumulation of li¬ tent, the scarcity of steel and ma¬
ards of living or promoting ques¬ all needed credit and relief ex¬ American observers that Europe
chinery also has been intensified
quid
savings
enabled
or
en¬
tionable projects of welfare or penditures for Europe.
Such an needed not less but more imports
couraged the general public to by our exports.
expansion. On the contrary, it is outlay for armaments would be to restore stability at satisfactory
maintain expenditures at relative¬

ly high levels.
At

the

time, the backlog

of demand for civilian

goods,

es¬

pecially durable items, proved to
be an effective substitute

wartime

for

demand

Industrial

for the

armaments.

production

remained

well.
The fact that
and

policies were
during the war

our

both

during the immediate postwar

transition does not

mean

that

we

afford complacency now. Our

can

national

output and

our

national

income, although still at record
levels, have ceased to grow in
terms

real

and

continue

rise

to

This condi¬
tion is the essence of inflation,
and if long continued can have
only in money value.

disastrous consequences.
Inflation

destroys

the

position

of those classes that have to rely
fixed:

incomes. It de¬
purchasing power of
accumulated savings in liquid or
fixed income securities. Lastly, it
on

stroys

money

the

misdirects

the

use

Profits

sources.

are

of

our

being

re¬

made

by withholding commodities from
the market and by using liquid
resources

for

leads

production.
ultimately
to
a

rather than to

rather
Inflation

speculation

for

than

an

decrease

increase in pro¬

duction and employment.

International

Causes

of

Inflation

While the inflationary
is

primarily

our

of

situation
domestic origin,

international economic

activ¬

ity contributes in two ways to the
inflationary pressure: first, by di¬
verting part of our supplies of
goods and services to foreign con¬
sumers,

ing

our

financing

as

for
maintaining
con¬ totally
unproductive and its
sumption
at
subsistence
levels effects would be far more infla¬
to
and
repairing their worst war tionary than foreign aid or cred¬
than $1 billion was covered in a
damage in order to increase pro¬ its. An attempt to combat infla¬
relatively non-inflationary man¬ duction for world recovery.
tion by cutting off our export sur¬
ner, namely by private relief and
The recently released report of plus thus would quickly end in
by private non-bank credits.
the Committee of European Eco¬ intensifying rather than mitigat¬

high and unemployment remained
low.
In fact, after a very short
recession we entered a period of
boom unprecedented in our peace¬
time history.
Our national out¬
put and our national income to¬
day are larger that at any time
before the war, not only in money
value but in physical volume as

successful

The methods used for

our

same

well as by our gov¬
ernment expenditures and credit
transactions which must be used
surplus,

and second, by increas¬
volume of money.

essential

export surplus added in part
our
inflationary trend.
Less




and consumption.

levels of output

According to the report,

the co¬

operating countries and Western
Germany need imports from the
United States that would amount
to

decline

$6 billion in 1948 but

to just over $4 billion in 1951.
Cooperation, which was ing inflation.
On the other hand, these coun-r
than
$4% billion that was fi¬ constituted by 16 European coun¬
Even if the impoverished na¬
tries expect to raise their exports
nanced with inflationary effects. tries in response to the historic
tions of Europe did maintain their to the United States almost a bil¬
Net government expenditures for
appeal of Secretary of State Mar¬ ties of friendship with the United
lion dollars between 1948 and. 1951.
foreign
relief
(excluding
the shall, gives an appalling picture of States, they still would remain
Altogether Western Europe: ex4transfer of goods located abroad the distress brought about by the
economically pauperized. In such pects a deficit with the United
but
including expenditures for war and its aftermath.
a pauperized world, the resump¬
States amounting to more than
UNRRA and civilian supplies for
In 1946-47, the countries partic¬ tion of normal commercial rela¬
$5V2 billion in 1948 and gradually
occupied countries) exceeded $500 ipating in this Committee, to¬ tions and the achievement > of a
declining to $2% billion in 1951.
million and government credits to
gether with Western Germany, sound: international economy
In
the entire ^ four-year-^ period
foreign countries (excluding cred¬ produced only 28 million metric would be
impossible. True, we 1948-51,* the total deficit "is qgtiits for surplus property located tons of bread grains or some six
might not have an export surplus, mated at almost $16 billion. ~
'
abroad) exceeded $2 billion. If million metric tons less than in but
only at the cost of stifling our
These sums would not constitute
the
government had not been prewar years. The production of
foreign trade. Our international
all of the dollar requirements, of
compelled to make these expend¬ other basic foodstuffs declined by
payments might be in balance, but
these countries. - Western Europe
itures, our budget surplus would similar or larger percentages. This in
depression rather than in pros¬
have been correspondingly larger
drop, aggravated by the natural perity. Economic disturbances expects a deficit with ihe rest of
the American continents (Canada
and
its
anti-inflationary effect increase in population, resulted in
have <a way of spreading, and it is
and
Latin
America) ..declining
would have been correspondingly a catastrophic decline in per cap¬
impossible to foretell how far they
from about $2 billion in 1948 to
greater, especially if used to re¬ ita consumption.
Despite large- will reach and how deeply they
about $1 billion in 1951 and total¬
tire public debt.
scale
imports,
consumption
of may affect branches of the econ¬
ing $6 billion- over the entire
The credits included disburse¬ bread fell by one-sixth, of meat
omy
that appear to be utterly
period.
'
:
ments
under
the
British loan by more than one-third, and of sound. Misery breeds misery.
Overseas dependencies of Euro¬
agreement, advances by the Ex¬ fats by nearly one-half.
Cessation of our foreign aid pro¬
These figures clearly show that
pean
countries also will have
port-Import Bank, and smaller
gram could easily lead to a repe¬
still
threatens
small
deficits.
These
deficits
amounts of other loans, especially famine
Europe;
tition of developments in 1929-33.
is
would bring total dollar require-r
those made by the International malnutrition
hampering the
The
abrupt end of our foreign
ments to sums -ranging from $8
Bank for Reconstruction and De¬ efficiency of Europe's labor; and
lending after 1929 was a major
velopment and the International dearth of human energy is ob¬ cause of the international finan¬ billion in 1948 to about $3V2 bil¬
lion in 1951. For the entire fourMonetary Fund. These last two structing Europe's industrial re¬
cial crisis of 1931, which in turn
institutions are not U. S. Govern¬ covery.
year period, the total dollar needs
almost wrecked our own finan¬
ment agencies, but their first dol¬
would reach about $22 V2 billion;
Between
1938
and
1947, coal cial and economic system. Europe
lar advances came out of the in¬
These figures at best are rough
output in the countries repre¬ today could stand such a shock
itial payments made by our gov¬ sented in the Committee of Euro¬
even less well than in
1931, and approximations and it is quite
ernment and had essentially the
pean
Economic Cooperation, to¬ although our economy today is likely that some of them have
same effects as loans by our gov¬
estimated
too
gether with Western Germany, more secure than it was 15 years been
generously.
ernment.
declined by one-fifth and crude
But every banker knows that the
ago, it still has many vulnerable
Another billion dollars of our steel output by one-half. Scarcity
estimates of a prospective bor¬
spots. We need only mention the

This leaves

an

amount of more

nomic

,

,

export surplus was financed by of coal and steel are also restrict¬ possible fate of our cotton and
the
liquidation of foreign gold ing the production of all finished tobacco farmers to illustrate the
holdings. The inflow of gold, by industrial goods.
importance of a foreign market to
adding to the reserves of our
Since Europe is seriously lack¬ many sectors of our economy.
banking system, offset in part the ing in foodstuffs, coal, and steel
Therefore, a complete break¬
anti-inflationary
effects of the
despite the substantial American down of the European economy
Treasury's debt retirement pro¬ exports of these commodities, its
would be calamitous to the United
gram. The final billion dollars of economy would break down com¬
States economically.
the trade balance was covered by
pletely if we abolished our export
the liquidation of foreign dollar
Combating Inflation by Foreign
surplus.
The
consequence
of
balances
and investments.
The such a breakdown would be ca¬
Relief and Credit Assistance

foreign holdings of Amer¬ lamitous for the United States on
other produc¬
political,
and economic
exported
to
foreign
countries tive assets might have been non- moral,
grounds.
goods and services valued at about
inflationary if it had resulted
The moral aspect of the prob¬
$10 billion, and imported goods
merely in the transfer of pur¬ lem seems remote from consid¬
and services valued at only $4 bil¬
chasing power from domestic to eration of financial
lion. This means that we gave to
policy. Ac¬
foreign interests.
Unfortunately,
tually, however, it can be shown
foreign countries goods and serv¬
however, the bulk of the amount
that in the long run a policy with¬
ices valued at nearly $6 billion
represented a decline in foreign- out moral basis is bound to fail.
without receiving countervalues
held bank balances. This shift in
There is much misery in the world
in kind.
the ownership of bank deposits
that we are unable to combat. It
We must deduct from that sum,
was
inflationary because it cor¬
is in our power, however, with lit¬
however, the value of goods trans¬ responded to a change from rel¬
tle exertion to prevent the misery
ferred to foreign consumers that
atively idle to relatively active in
Western Europe from continu¬
already were located outside of accounts and thus increased the
ing and spreading. If we failed
the United States, mainly because
activity or velocity of money.
in this task, we could never again
they were shipped abroad during
The greater part of our export
occupy
a place
of political and
the war to our armed forces. In
surplus accrued against Europe. economic leadership in the world,
many cases it would have
been Detailed statistics are available
to which we are both entitled and
uneconomical to ship these goods
only for merchandise trade. The compelled by our political and
back to the United States,
and
surplus of merchandise exports economic power.
thus
their
transfer
to
foreign
with Europe amounted to 55% of
Politically the. economic break¬
consumers, either as relief or by
sale on credit, can not properly the total. Since most of our non- down of Western Europe would
In the first half of this year, we

Under

sale of

ican securities and

rower

to be

need

screened

care¬

that the loan
proposal is not to finance an un¬
economical
plan.
At the same
time, every banker knows that he
must guard against cutting esti¬
mates unnecessarily in the mis¬
fully to make

taken
are

belief

sure

that

better than

half

measures

Over-strict

none.

limitations of financial assistance?

ruin an enterprise just
surely as no assistance at all..
may

as
-

not com¬
If we compare recent statistics
pelled to sacrifice Europe for the
sake of our struggle against infla¬ of foreign trade between Europe
tion.
This struggle will not be and the United States with the
estimates
of the
Committee
ori
won overnight; the problem is too
complex and its roots are too European Economic Cooperation,
we
shall find that the proposed
firmly set in the consequences of
Fortunately,

our

war

run,

stem

we

finance.

are

Over the longer

however, we can expect to
the

of

tide

inflation

more

estimates

seem

quite reasonable.

The trade deficit of the

"Marshall
the

United

Plan

so-called

countries"

States

was

with

close to

a

certainly by adopting measures
that admittedly add somewhat to $41/2 billion annual rate during the
the domestic scarcity of certain first half of 1947. The Committee
commodities over the short run.

trade deficit

estimates for

The danger
overcome

of inflation will be
supplies of goods

once

1948.

only slightly

larger, and for the

after 1948 a deficit actually

and services have increased suffi¬

years

ciently to catch up with the larger

smaller

demand, based upon the
sion in money

expan¬

holdings and money

*1

than

discussed

measures

in

a

Columbia

talk

place not only in our own econ¬

week's Chronicle.")

1947.

figures
domestic

these

before

Bankers

incomes. This increase should take

20,

annual
of

the
some

of

Oct.

a

(See

the District
Association
ort

page

14

of

last
♦

Volume

THE

Number 4642

166

COMMERCIAL

&

situation. If we in¬ prejudices can not be allowed to
temporarily our advances stand in the way of international
to Germany, however, we could cooperation.
to finance the entire dollar def¬ finance the importation of food¬
In this manner, the assistance
icit.
European countries having stuffs, raw materials, and capital which
the
United
States
may
investments in this country may equipment necessary to start the
grant will have an effect even
be able to liquidate considerable revival of German industry.
We more far-reaching than mere eco¬
parts of their holdings. They also would thus enable Germany to nomic recovery.
The
United
will have to seek assistance from regain a self-supporting position
States today is perhaps the only
other
nations
in
the
Western and to pay for imports by export¬
adhering
without
great power
Hemisphere and to use the inter¬ ing industrial products, as before compromise to principles of indi¬
national financing institutions and the war.
vidual initiative and enterprise,
private sources of credit.
Moreover, we would make it with the greatest possible freedom
indicated by

the experience of the

first six months of this year.
The United States is not asked

the

German

Danger of Our Buried Gold

creased

*

-

The

countries

that

the

foresee

possible for Germany to help in

of economic endeavor in both in¬

rest of

ternational and domestic relations.

largest dollar needs for 1948 are
the
United
Kingdom,
France,
Western Germany, and the Low

the

Countries.

from

gether

countries

These

account

for

to¬

than

more

four-fifths of the total prospective
deficit.
With
the exception of
,

Germany, these countries were of
undoubted, solvency
before the
war, and if proper assistance is
given, they have good prospects
of becoming again first-rate finan¬
cial risks. With the same excep¬

tion, these countries

close to

are

both

politically and econom¬
their principles of
social organization and social life,
although endangered by postwar
us

ically,

and

based upon the same

poverty, are
standards as

our

reconstruction

supplying industrial
today : are available

by
that

Europe
goods

other

no

the

of

The

source.

lack

granted

the

to

struggling European countries
will do more than anything else

strate that

illustrates

with particular clarity
temporary increase in our
export surplus can end the need
for such help, and reduce infla¬

how

a

tionary

here

pressures

at home.

Conclusions

sibility and honesty.
We have
valuable investments there to pro¬

national

causes

tect: investments of

inflation

can

Our

struggle against the inter¬
of

be

domestic

our

our

individualistic sys¬

is capable of providing the
leadership, the vision, and the
practical aid, needed to attain the
cooperation of all nations in eco¬

tem

nomic, political, and spiritual re¬
construction. This is the only way
back to economic stability and a
world at peace.

Lawr.

will be crucial for that of the rest

surplus without creating dangers
to our economic system greater

of the world.

those

covery

Our economy must be exposed to
the risks of continuing inflation¬

The United

Kingdom, France, the Low Coun¬
tries, and Western Germany are
the greatest coal and steel pro¬
ducers of Western Europe.
With
aid that we may furnish, the Brit¬
ish

Western

and

mines

German

coal

be

brought again to full
production. By that aid, coal pro¬
duction is expected to rise be¬
can

tween 1947 and 1951 in the United

Kingdom
the

one-fourth,

by

combined

United

Kingdom
by

many

almost

and

United

in

States-

of

Ger¬

one-half.

This

zones

increase alone would bring West¬

European
coal
production
again to the 1938 level and thus
end the export drain on our own

ern

coal

resources.

Similarly,
steel

is

make

it

the
be

to

production

revived

so

as

of
to

possible for the partici¬
countries to supply the

pating
capital equipment needed for re¬
construction
and
development
mainly out of their own resources.
From 1947 to 1951,

Western Euro¬
output is to rise by
five-sixths, with a proviso that in
steel

pean

1951

the

steel

United

production

States-United

Kingdom
will be only

of

Germany
one-fifth of the total,

zones

of the

as

compared

with almost two-fifths of the total
in

1938.

revival

In

in

plished

this

Europe

while

Western

against

way,

at

can

the

Europe
a

economic
be accom¬
same

time

is

protected
revival of German ag¬

gression.
One

of

the most

important ef¬

fects of the program would

reintegrate the

be to

of West¬
ern Germany into that of the rest
of Europe.
At present, we are
economy

bearing a heavy burden in sup¬
plying
the
United
States
and
United Kingdom zones of Ger¬
many with the imports necessary
to prevent disease-and unrest. In
the first nine months of 1947, the

import

surplus

of the

combined

due -almost entirely to huge
imports to bread grains, reached

zones,

one-half billion dollars. These im¬

ports were just sufficient to pre¬
vent starvation, but they were not
sufficient to provide a diet needed
for efficient.work. Imports of raw
materials

industry, were almost
pletely lacking.

man

If

com¬

merely continued ship¬
ments to Germany at the present
level, we would burden ourselves
with a permanent liability with¬
we

out any

hope of improvement in




the

even

of

use

printing press.

a

needed but the book¬
keepers' entries.
Nothing

was

Now, what happens as gold goes
Gold goes out

out of the country?

the country only to a foreign
government or its central bank
the gold now deposited at Fort and it goes only in settlements o,f
Knox and elsewhere, that is gold trade balances in favor of some
heretofore bought by the Treasury foreign country whose exports to
at $35 an ounce, and its value at this country are greater than its
$50 an ounce or whatever other imports from this country. When
price might be fixed. It would gold goes out of the country the
have the effect of giving addi¬ effect of the process, above de¬
tional
dollars to
the
countries scribed, involving purchases of
of

won

Leeby to Open

tionary effect in that the proce¬ Treasury's books and from the
by which the Treasury ac¬ Federal Reserve accounts. The net
quires gold increases bank depos¬ result is a decrease in bank de¬
Nov. 1, Lawrence R. Leeby will
its and bank reserves available for posits
and a deflation of the
open offices in the Blount Build¬
ary pressures arising out of a con¬
further extension of bank credit. money supply.
under the firm
name
of
tinued export surplus in order to ing
Presently, most of the gold in the
Lawrence R. Leeby & Co., to act
attain a lasting solution of the
Could Go Back to Convertible
country is owned by the Treasury
as broker in over-the-counter se¬
dual
problems of raising world
Standard
and deposited principally in Fort
curities and general market issues,
production and balancing our for¬
Knox. The procedure by which it
It is often asked, could we now
including stocks and bonds: he was
eign trade.
acquired tended to give those
return to the gold standard, that
will also act as dealer in the retail
It is true that in the meantime
countries from which it was im¬
which

want to

we

combat.

shall have to hold inflation in

we

check

by purely domestic

that

and

called

these

measures

sacrifices.

fices in the

quired

to

order

They

sense

that

means,

be
sacri¬

starving.
however,
interests.

eat

we

are

re¬

somewhat

consumption today will make sure
that adequate consumption every¬
where will be possible in the fu¬
ture. Giving assistance to Europe
today will make sure that world

dure

FT.

FLA.—On

LAUDERDALE,

distribution

of

investment

com¬

shares.

pany
Mr.

may

are

less in
prevent Europe from
They are not sacrifices,
in terms of our long-run
Refraining from over-

to

Leeby

ducted his

for. 10

own

con¬

years

ported dollar balances for the pur¬
chase of goods here and, also, to
increase bank reserves with a con¬

fiVm in Washingr. sequent

inflation

of

our

money

ton, D. C., and has ^recently been* supply.
doing business from Miami Beacn.
Procedure

Gold Buying

the

At

New York Stock

the

moment,

Treasury

Exchange
Weekly Firm Changes

buys gold either in the domestic
or
foreign markets and pays for

The New York Stock Exchange
has
announced
the
following

posit with

changes:

is make our paper money
able

redeem¬

demand of the holder in

on

gold or gold certificates?

Yes, we

could go back to the gold standard
abandoned in 1933 because of po¬
litical
hunger for more money
irrespective
of
its
purchasing
value.
We would
simply turn
back to the Federal Reserve the

gold itself and take down on the
Treasury's de¬ Treasury's books the Federal Re¬
serve's credit for gold certificates
Federal Reserve Bank.
of this transaction is or take back any gold certificates

it by check on the

to

a

effect

The

the

decrease

Treasury's

bal¬

that

in

more

our

innocent

days

economic stability will be attained
and that firm foundations are laid

bership

and to increase bank deposits, ei¬

actually issued to the Federal
Reserve Banks. This action would

Swenson

to F.

ther immediately or in due course,

put

for

will

considered

by the amount paid by the Treas¬

enduring

an

A reduction of

peace.
our

mand for essential

domestic de¬

goods, to be

ac¬

complished, if possible, by volun¬
tary cooperation in a free econ¬
omy,
is absolutely essential to
reach'

these

vital

objectives.

this

In
the

Transfer of the Exchange mem¬

change
that

late Edward F.
Leighton Meserve
by the Ex¬
Nov. 6. It is understood

of

be

on

Mr.

the

will

Meserve

individual

floor
of

Interest

act

as

an

broker.

the

late

tions must

leading role.
In fulfilling this role of leader¬
ship, they must see to it that
assume

a

credit advanced to

prise

is

directed

in

expand enter¬
toward

in¬

an

Abraham

Ungerleider in E. J. Roth ceased

the

Geyer & Co. Moves
Los Angeles Gice
LOS

that

consumer

the

here

would
it

Treasury

would

replenish its bal¬

to

need

the Federal Reserve

in

ances

ei¬

borrowing.
of Treasury funds

we

our currency,

next 24

hours

purchasing

power

not

ANGELES,

politically available be¬
they would bring the whole

matter

attention

the

to

of

the

voters.

after
acquiring title to gold by its check
What

CAL.—Geyer

the

does

Treasury

its

future

would

be in*

in

creased.
This would

ments for the

cause

not only for the
24 days but for

confidence

where

confidence

sources

or

the indefinite future, in a position

give all of us greater
making commit¬
future; it would lay

in

the foundation for great
ment

improve¬
expansions and devel¬

and

opments in this country on capital

supplied by those who are willing
to lend for the long term on the

assurance
that
they would get
Co., Inc., dealers in bank and on its balances with the Federal back dollars with somewhere near
insurance stocks, are moving their
Reserve is to issue to the Federal the purchasing power of the dol¬
Los Angeles office on Nov. 1 to
Reserve a gold certificate.
This lars invested. Not alone would it

210

see

for the gold. If the transaction

ended

are

They must also do all that they
do to

Reserve

ther out of taxes or by

Oct. 8.

&

can

ury

Federal

the

These

on

output of scarce
goods with strict economy in the
consumption of scarce materials.

crease

with

ances

be out the cost of the gold and

cooperative program,
banks and other financial institu¬

West

7th Street.

certificate

gold

credit

deposited

when

be the foundation for sound, sen¬

sible, civilized progress in this
Reserve country, but it would be the foun¬
supply of consumer goods avail¬
dation upon which world stability,
as so much money and the bank
able for purchase.
(Special to The Financial Chronicle)
balance of the Treasury is imme¬ world trade, world peace might
The Government of the United
DETROIT, MICH. — Robert E. diately restored. As a matter of be built.
States can expect such coopera¬ Hinds has become affiliated with
The writer is not advocating a
fact, the Treasury no longer goes
tion only if it makes sure that in¬ Hornblower &
Weeks, Penobscot to the trouble or expense of print¬ present return to the gold stand¬
ternational relief and aid imposes Building. Mr. Hinds was
previous¬ ing gold certificates. It has what ard. It would be sufficient for the
no
unnecessary burdens on
our
ly with S. R. Livingstone & Co. is known as a gold certificate ac¬ moment if the consequences of
with

is kept in proper relation with the

Hinds With Hornblower

the

cepted

Federal

by

the

Reserve

is

ac¬

Federal

■

The government must set
example by pursuing a course

conomy.
an

of

strict

in its own
housekeeping. Moreover, the gov¬
ernment will insist upon full co¬
operation
of
the
participating
European countries and will make
sure

that

and

capital equipment,
necessary for the repair of war
damage and rehabilitation of Ger¬

may

now have gold, thereby re¬
gold by the Treasury is reversed.
lieving their dollar shortage and To the extent that gold leaves the
increasing their capacity to spend country, Treasury gold certificates
and buy in this country. It would credited to the Federal Reserve
also have a very definite infla¬ Banks
are
eliminated from the

In Fl. Lauderdale

cies in coal and steel.

funds

which

only by a
kind of flanking attack. We can¬
not directly cut off our export

Today industrial re¬
is hampered by deficien¬

(Continued from first page)
This process
is continuing at
endeavor to take
;he present time and the importathe easy way by resorting to fur¬
;ion of a billion and a half of gold
ther manipulations involving gold.
Such a step would make it easy in recent months has, thereiore,
for the present administration of added that much to the already
our
Federal Government to pro¬ swollen money supply of the counvide the funds for some things
ry. The gold is presumably bur¬
which they might want very much ied at Fort Knox; the Federal Re¬
serve has a bookkeeping entry in
to do but which they would not
favor
in the Treasury; the
want to expose to public opinion its
to the degree which would be Treasury has a bookkeeping entry
necessary, if they had to seek the in the Federal Reserve which re¬
necessary funds by new taxes or stores to its deposits the amount
by the sale of more Government which it paid for the gold, and
the increase in our money supply
bonds.
been
accomplished without
It is a fact that revaluation of has

for

establish
these
only of German coal and steel, to
principles
also of German spare parts abroad.
and
precision
instruments has
Adversaries of our political and
our existing store
of gold would
been a major factor in slowing
economic
system repeatedly have to be authorized by Congress.
down industrial recovery in West¬
charge that individual enterprise If so authorized, it would auto¬
ern and Central Europe. A revival
leads to
imperialistic expansion
matically give the Treasury a
of
the
German
economy
thus and international friction.
The
spendable balance with the Fed¬
would accelerate the rate of pro¬
most convincing argument to re¬
eral Reserve Banks equal to the
duction throughout the European
fute this falsehood is to demon¬
difference between the value of
continent.
The German situation
but

old traditions of financial respon¬

good will and
friendship, if not of capital.
More important still, the eco¬
nomic recovery of these countries

assistance

The

not

They have

own.

(1759) :: 2'

CHRONICLE

FINANCIAL

and the National Bank of Detroit.

their pledges are

kept.

The European countries will have

Joins Merrill Lynch Staff
(Special

to The Financial

DETROIT, MICH. —Gordon L.
Perkiss

is

now

to

the

greatest

affiliated

with

Merrill

Lynch, Pierce,. Fenner &
Beane, Buhl Building.

our

assistance

output
as

of

for

scarce

necessary.

Carl Smith Opens

use

(Special to The Financial

increasing the
commodities

to make further assistance

so

un¬

National rivalries and

credits the Fed¬
dollar value

the

is

Chronicle)

FOSTORIA, OHIO—Carl Smith
engaging in a securities busi¬

ness

from offices at 112 West Cen¬

ter Street.

gold certificate which the

Treasury might issue to the bank.
This

bookkeeping

out

to

pay

for

the

gold

purchased. The ef¬
fect of the whole transaction in

which it had

so

far

as our

cerned is

posits,

an

and

money

further devaluation of

by

a

for

our

dollar

change in the price we pay

gold

were

considered

by

understood

and

the people of this

If it is understood and
considered, it will unquestionably

operation is country.

accepted by the Federal Reserve
as justification for restoring to the
Treasury's
bank
balance
the
amount
which
it
had
already
taken

possible

extent, and they will have to

of

Chronicle)

to draw upon all of their own re¬
sources

count in which it

eral Reserve with the

economy

supply is con¬

increase in bank de¬

therefore

in

money

supply, of the amount which the
Treasury paid for the gold.

be

rejected

matters

are

gency is
unsound

if proposed. If such
left until an emer¬

used as
or

even

the excuse for
fantastic

pro¬

posals, then there is no assurance
that they

tainly
buried

will be rejected.

Cer¬

long as that gold remains
at Fort Knox there is a

as

danger
of
further
devaluation
its
demoralizing financial

with
and

political effects.

23

THE

(1760)

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, October 30, 1947

of sound management and

The

Right pind ofi|Tax Reduction
support of the importance of

(Continued from first page)
as

bi-partisan

a

of

the

in view

measure

substantial

support given
to it by both parties in Congress.
There

compelling

are

reasons,

also, for holding that there should
be

tal

to

our

economy.

moment that

anyone

capi¬

From the
understands

which
the
party at the time has

Representatives

than the minority

members

more

on

This is equally true, how¬
ever, of legislation pertaining to
foreign affairs, labor, and every
Other subject with which the Con¬
gress deals, except that legisla¬
tion other than that pertaining to
the revenues may be initiated ei¬
party.

ther in the Senate or the House.
Politics

vs.

Welfare

accept the thesis that
there should be no politics in tax¬
If

we

revision

problem is that of an
to the question of tax
in terms of the general

welfare

rather

ation,

our

approach

than

terms of

in

vote-getting advantage. Although
it is a large concession to make,
suppose we grant, for sake of the
argument, that the politicians in
both
parties are aware of this
statesmanlike conception but that
they differ as to its practical ap¬
plication
This would mean that
what appears to the observer to
be
a
vote-getting scramble
is

really

of ideals

conflict

basic

a

to the best meth¬

and standards as

serving the general welfare.

ods of

Divergent views on tax revision
advocated in all

do exist and are

sincerity by those who hold them.
first step toward a rational

The

solution is to seek for

common

a

ground upon which these differ¬
ences may be resolved, or at least
minimized. If we succeed in this,
we
shall have the better assur¬
ance

that the coming tax

will

be

designed

so

revision
to

as

serve

public interest.
The purpose
here
is to explore the subject
with a view
to developing the

the

relationship of taxation to

proper

the general public good.
such

In

undertaking

an

we

should hegin by

setting out some
of the basic elements in the con¬

cept
Little

of the general public good.
difficulty should be en¬

countered

reaching agreement

in

here.

Objective of Economic
System

Basic

•

■

The primary objective of a

economic
of

good
should be that
every
able-bodied

system

enabling

to contribute in some man¬
the product of the society
and to share in that product to a
degree
commensurate
with his
contribution.
In other words, the
system should provide jobs for all
person

ner

to

who

are

able to

sufficient
and

to

work

done

work, and income

assure

satisfying
or

a

reasonable

reward for
the
other contribution

We believe that

made.

we

have,

in this country, the best economic

system in the world.
the

free

It is called

private

enterprise sys¬
provides jobs without
compulsion and it yields, for the
great bulk of the workers, the
highest income and living stand¬
tem.

ard

It

to be found

anywhere in the

of

tools,

machines,

There

are

many

reasons

non-economic sort which

portant to these results,
the

freedoms

various

of

are

im¬

such

which

a

as
we

enjoy, but these
here.
factors

In

the

are passed over
economic area, two




formation

need

stated in still
that

will

sharply

more

point

specific terms
still more

is the matter of policy. Are taxes
to be kept high to support greater

that

spending

income

also

can

up

case for sound tax
The most serious defi¬

the

revision.

the

is there

or

a

bona fide

about the debt?

concern

Some of

ciency that is certain to develop, those who opposed tax reduction

the

There

scale.

that

question

of

the

re¬

lower end

duction toward the

angles to this issue which should
be considered together. The first

But

occur.

future

concentration

its

was

be

to

the

for

dividuals, particularly those with
incomes from $10,000 up.
The
change in the rate schedule must
be substantial at all income levels.
The weakness of the 1947 tax bill

persons

is

of
no

with

small incomes need direct tax re¬

lief; but it is too often overlooked
these

income

small

persons

clear up to
income scale. They
do not create their own job op¬
need

tax

relief

the top of the

unless

of capital now on hand,
further capital expansion is not

.

current
even

economic

more

situation, and
serious, it neglects the

requirements of the future.

It is

to

that

say

and

come,

in¬
wellbeing of millions
the future jobs,

of our citizens depend upon an
today as it has been
time in our industrial his¬ adequate recognition of the moral
tory that the experience rate of and economic worth of profits, and
capital formation in relation to upon a removal of the taxation
as

necessary

at any

national

product be main¬
tained. Otherwise, the experience
rate of annual growth will not be
gross

maintained.

Should

there

be

serious decline of this rate of

slackening of
living standards.
New workers
are coming into the labor force at
the rate of about 600,000 per year
and
they cannot all find jobs
without a corresponding growth
capital.

Moreover, the

The

answer

is that

we

free

impede

now

the

operation of the profit motive.

process

do need

taken, however, that the
not jeopard¬

must be

federal

revenues are

ized, for
billion

Before

Public Debt

is

Moreover, the prime ob¬
jective of the reduction, which is
money.

possible the continued
the whole economy,
be realized unless the
is of a character that

make

to

growth
will

of

not

revision

the way for the neces¬

passing to

discussion

a

undertaken

be

must

in

order

realize the vital objectives of

formation

capital

quate

lease of

the

economic

it is necessary to deal

tion

that

has

been

and

re¬

incentives,

with

much

a ques¬

to

the

size

of

_

public

debt

First

their

be given
of the

priority should
income

individual
affects

than

48,000,000

(some

rate scale rather than through in¬
creased

exemption.

1 The

by

tax

here

lined

in

peak; and a substan-

of

the

problems

indisputable,

Part

and

the importance

to

the

July

on

published
and

one

National

The

facturers

presented by the public debt is

revision program
is

which

was

Association

be out¬
presented

to

of

economic

Manu¬

and Means Com¬
1947.
It has been

3,

of

nation's broad

requirements are
considered.
Whatever
-

not
the

tions, the great bulk

the

of

en¬

suing

tax relief will go, to the
small income group. For example,
increase of the exemption by
$100 across the board; married,
single, and dependents, would re¬
duce the revenue at 1945 rates by

an

$1,616

million,
fall

of

in

which

the

classes under $5,000.
crease

of

91.5%

net'income

Such

an

in¬

exemption, however, is

only "chicken feed" for the tax¬

If exemptions

from the present
to-

$2,000

for

$500

were

raised

per person

married

persons,

Ways
11,

in Hearings before the Ways
Committee on Proposed Re*
the
Internal
Revenue
Code,

pp;

latter

amount of increase in the exemp¬

$1,000 for single persons/.and kept
2 These

Means

visions

for the

sequences

duly

The

is very popular but its con¬

course

any

odd

1947); the rates still stand close to
the wartime

right way of tax reduction
through revision of the

is

would

This tax

tax.

persons

more

other

mittee

gravity

for

investment.1

and

to the revision of the rates

we

all,

The

creation

The
now

payers.

the

should consider any tax reduction
at

incentive

adequate

an

to

ade¬

fore, namely, whether in view of
the

venture savings and provide

sary

of the kind of tax revision which

federal budget of $31
still a big lot of big

a

will open

The

an¬

nual
growth, the effect would
quickly be seen in growing unem¬
ployment, a halt in the advance

of

which

barriers

a

especially

There is little need to argue in

the

savings of in¬

must come from the

supply

important. of technological improvement re¬
The first is our immense supply
quires large amounts for the re¬
©f capital, and the second is the
free play which we have tradi¬ placement of equipment rendered
tionally given to the economic ac¬ obsolete by these improvements.
tivities of work, thrift, and risk-?
\
Venture Capital Shortage
bearing.
4!
are

capital

tial portion of the venture capital,
investment that will be needed

the existing tax system is in 1947 on the ground that debt portunities, hence they cannot de¬
promptly and soundly revised, is reduction should have priority termine, through their own deci¬
a
grave shortage of that type of were nevertheless silent with re¬ sions, whether or not they are to
have jobs and income at all. These
needed.
Some of the opposition saving and investment which will spect to the size of the federal
matters
result in what the economist calls budget, a budget so large as to
depend upon decisions
to the 1947 tax legislation was
"venture capital." By this is meant preclude any substantial margin made and steps taken toy 'others.
based on the contention that since
for debt purposes except by the Unless the tax revision is ade¬
the capital that is put into risk
there is now virtually full em¬
enterprises, as distinguished from fortuitous circumstance of receipts quate through the income ranges
ployment, there is no present need
the savings that go into the rela¬ greater than the budget estimates. in which are found the persons
to make further saving and in¬
No in¬ This argument would have greater who must make the decisions and
vestment possible through tax re¬ tively safe investments;
vestment, not even a. government weight had it been accompanied take the actions that determine
vision, because there would be no
bond, is absolutely risk-free. But by insistent pressure from its pro¬ the jobs and incomes of the small
outlet for the funds.
income group, the latter will be
the differences in the degree of ponents for drastic budget cuts.
risk are very great. The areas of
The second facet of the debt the chief sufferers.
Need of Capital Replacement
greatest risk are those which in¬ problem is therefore the size of
The tax rate scale proposed in
This argument neglects the facts volve the development of
new the
program
considered
here
budget. Until this is settled the
of history and of current and fu¬ industries,
new
products,
new we
cannot be sure of a margin of would begin, for the present, at
ture economic needs.
Studies that methods of operation. No one can
(normal and surtax com¬
receipts for debt reduction, to say 12%
have been made of the growth of or should
guarantee these risk nothing of tax reduction.
The bined) on the first $2,000 of tax¬
the gross national product since investments
against loss.
They writer
has
recently
compiled able income and rise to 50% on
1869 show that there has been, are made only when the prospect
budget data which make a reason¬ any taxable income in excess of
regularly
and
consistently,
a of profit, in case of success, is
ably defensible case for a total of $100,000. This is not regarded as
"plow-back"
or
investment
in commensurate with the calculable not more than
$31 billion for the an ideal scale but it is about all
capital formation of about 20% of risks. The present tax system has fiscal
year 1949 without impairing that the budget can stand now.
the gross product. The one decade forced the profit ceiling down to
national defense, the care of vet¬ Later, with further reduction of
since 1869 in which this ratio of a level at which venture savings
erans, or our presently estimated Federal spending it should be pos¬
capital formation to gross product cannot, and will not be made. Yet commitments for foreign relief
sible, as it was during the 1920's>
was
not maintained was that of the dynamic growth of the coun¬
and
assistance.
Even those who to bring all rates down still more.
the 1930's.
It is significant that try has come, in the past, from
insist upon debt reduction instead
In addition to the rate revision,
this was a period of sharply rising the risk investments rather than
of tax reduction should be pre¬ two additional deductions are rec¬
tax rates and also of large-scale the
safe
investments, and
this
pared to support some such total. ommended. One is a deduction up
unemployment. The accumulated must continue to be the case in
The third facet of the problem to $500 on account of insurance
deficit in capital formation from the future.
is of equal imnortance. It is clear premiums paid by the taxpayer
1929 to the present is estimated
In addition to the nation's im¬
that our ability to support
the on the insurance of his own life.
to be $125 billion.
mense stock of capital, the second
debt and eventually to get rid of The other is a removal of the
The reinvestment has been for thing that makes ours the best
it is dependent upon long-range present 5% limitation on deduct¬
two purposes: first, the replace¬ economic system in the world is
maintenance of high levels of pro¬ ible medical expense. Restriction
ment of worn-out and antiquated the recognition which has tradi¬
duction and national income. We of the deduction to that part of
tools and machines through the tionally been given to the free
shall get nowhere fast if we look such expense which exceeds 5%
establishment and use of reserves play of the economic incentives.
merely at the debt payment that of net income limits the privilege,
for depreciation, obsolescence and Until the advent of the socializing
may be made in a single year or for the most part, to the well-toand
the like; second, the over-all ex¬
equalizing taxes, we have so. while
failing to take the steps do. It is the first 5% that hurts
pansion of the nation's capital never sought to limit the amount which are essential to continued and should count.2
of money anyone could make or
equipment.
economic growth and prosperity.
The case for these additional
It has followed rather consist¬ to determine how he should spend In view of the direct bearing of deductions
is on the ground that,
it.
In particular, we have given
ently since 1869, that by a rein¬
capital formation upon the con¬ at a time when the Federal Gov¬
full recognition to the mainspring
vestment of some 20% of the gross
tinuance of high level production ernment is under
strong pressure
of our economic system, which is
national
and income and the need to pro¬
product, there has re¬
to force everybody into a com¬
sulted a growth of the national the profit motive. This motive is mote this formation by suitable
pulsory old age and dependency
product at an average annual rate fundamentally important for the tax revision, it can be asserted insurance
program, and to bring
of 3.8% a year/; In consequence growth and vigor of venture capi¬ without fear of successful contra¬
everybody
into
a
compulsory
tal.
The
socializing
tendencies diction that better
of this growth,
headway will health
which is really
insurance
program,
the
have gone so far that many-busi¬
be made over the next ten years
quite phenomenal, the output per
person who pays his own bills for
nessmen
are
reluctant
to
talk
man-hour of labor has steadily
in
debt reduction
by
reducing insurance and medical care should
about profits, despite a recognition
taxes in the right wav now than
risen, the rates of money wages
have some recognition for his ef¬
of their essential importance.
We
have also risen, the quantity of
will be made by refusing to take fort.
It is extraordinary that one
cannot get the necessary flow of
such action.
goods that could be bought with
can
get complete exemption up
into venturesome fields
a
dollar of wages (the real in¬ savings
to 15% of his net income by giv¬
of
investment without adequate
The Right Way of Tax Reduction
come) has steadily increased, and
ing the money to a philanthropic
recognition of profits as the dy¬
jobs have been provided for a la¬
As to what the right way of organization
which
looks
after
namic incentive which motivates
bor force that has increased from
tax reduction is. it can be granted
stray dogs and cats, The Society
such investments. And without a
27.378,000 in 1900 to 62,664,000 in
at once that all taxes are too high for the Prevention of
Cruelty to
large and steady flow of venture¬
1947.
and
that the tax burden is too animals,
but he cannot get a
some
investments, there will be
The contention that no further
heavy upon everyone. While we nickel of tax benefit for the money
provision of capital is now needed no extension of the frontiers of must therefore aim to provide tax spent for the health and future
overlooks, also, the facts of the the economy. It is not too much relief on a universal basis, care welfare of his wife and children.

that because of the immense,

of real wages, and a

world.
"*■

obvious.

is

is, namely the stock
buildings, and in living standards.
It is retired is by application of surplus
necessary
to
make revenues, that is, the excess of
ships, railroads, and so on that are therefore
used in production, he cannot fail changes in the tax system that revenue receipts over current ex¬
to grant the fundamental impor¬ will permit
and encourage this penditures. But there are several
what capital

politics in taxation. Every¬
body, regardless of party, race, tance of capital as a source of jobs
color, or creed, has to pay taxes. and as a highly significant factor
Like the rain, they fall on the
in the creation of the high level
just and the unjust. Under our production which we have.
system of majority party control
It is at the next step of the
and responsibility, tax legislation
argument that differences of opin¬
imust originate and be sponsored
ion emerge.
It has been held by
Tby a committee of the House of
some
no

dominant

regular
Many re¬
sponsible organizations have ad¬
and
must
have
a
' substantial vocated the adoption of a consist¬
amount of saving and capital in¬ ent policy of debt redemption. It
vestment if we are to continue to is an elementary fact that the
go forward in output, in income, only way by which debt can be
retirement

1447-1475.

deductions

the writer in
lic

were

the Fourth

Finance, 1947,

pp.

proposed

by

Edition of Pub¬

346, 347.

THE

Number 4642

166

Volume

COMMERCIAL

&

FINANCIAL

CHRONICLE

291

*(1761)

■

at

corpora¬

to

the

income

net

classes

under

conclusion is clear.
If exemptions were to be raised
enough to satisfy the ardent advo¬
The

$5,000.

this procedure, the rev¬
loss would be so great as to

cates

of

enue

tion

income

is

tax

too

should be lowered.
of

situation

the

and

place in

estate tax

question

and

corpora¬

for each dependent, the not put reduction of the
loss would be, according tion income tax in first
to Treasury estimates, $5,411 mil¬ its program. There is no
lion, of which 91.7% would accrue that the present rate of
$500

revenue

be

high and

But the facts

made

much

a

come

case

need, however optimistically
viewed, does not now permit
get

adequate tax. relief
throughout the income scale. The both. It is true that additional
fundamental objective of sustain¬ venture capital funds would be
ing capital formation would nec¬ created by a reduction of the
essarily -go by the board and the corporation tax, to the extent of
small income groups would gain the increased earnings after taxes;
but the chief beneficiaries would
only a temporary advantage.
be
the
large,
well-established
Double Taxation
companies, whereas the chief need
Two other proposals for indi¬ for such capital is and will be in
vidual income tax adjustment are the area of small, new business
recognized to be important but which would derive - ho direct
they should be deferred for the benefit from a reduction of the
present. One is the correction of corporation rate. Further, as long
the double taxation of dividends, as the individual rates remain at
preclude

between

income

husband

tax

1945

The

purposes.

loss from

revenue

at

wife

and

rates,

for

total

these

devices,
be about

would

would benefit from the fam¬

ily

division of
is

cost

revenue

income.

Yet

the

substantial

and

there is danger that incorporation
of
these
limited relief
features

interfere with the kind of
thorough-going tax rate revision
may

which

is

fundamental

tax¬

share adequately in

payers are to

the

if all

benefit.

The

reduction

of

The

large and fiscally important

field of excise taxes

much

produces

widely

discussion
who

those

are

elimination

of

which

one

divergent views.

extreme
those

is

all

and

At

one

advocate

excises

except

liquors and tobacco on
that excises are (a;
regressive, and (b) deflationary.

the

At

on

grounds

other

the

extreme

those

are

rates would ease, by so much, the

who would resort to

severity
of
the
discrimination
which these devices are designed

expansion of excise tax yield in
order to permit still more reduc¬

to

The Treasury and

cure.

members

of

mated that

might be

Congress

Again

come.

to offset the

necessary

division of in¬

have

we

demon¬

a

stration that nothing can take the

place of tax rate revision down¬
ward.

medical

the

be

form

percentage
the

because

bottom

would

it

be

This

The writer holds

there

should

stantial
the

reliance

be

sub¬

a

excises

on

that

reason

the view that

always
these

for

growth and pros¬
the soaking process.

permanent

ditions than

are

that
of

the

It is

produce.

the

upon

motives
these

maximum
effective

sbove

rate
as

of

to

$100,000.

of

to

tax

50%,

income

taxable

Under

the

the

1945

the tax rate exceeds 50%
$18,000
taxable
income

rates,

the

level, and it is about 75% at the
$70,000
taxable
income
level.
Rates

such

these

as

defeat

the

•capital formation objective, first,
by cutting deeply into the portion
that

income

would

be

saved

taxes lower, and second, by

destroying

assume

that

incentive to

the

risks in

will

be

save

view of the

taken

out

of

Since every possible effort should

to

others

are

manufacturers,

not, is irksome
retailers, and

a

general

burden, a brake
operation of the
impel men to do
Tax reduction is a
a

free

things.
of

Hence

it

future

as

the

brake

pressure.

is likely to follow, in
it has in the past, that

tax

reduction
involves
only a
temporary impairment of the rev¬
It

enue.

is

entirely possible that

the Government will

getting in
rates

high

rates.
that

harder

when

is

live

and

to

be

can

happily

more

of their respective in¬

is left in their

them

than

getting under
absolutely cer¬
people will work

now

It
the

more

presently be

much under reduced

as

it is

as

spenc!
the

pockets
they like

own

as

case

when

as

much of that insome is taken from
them by the confiscatory power

at

as

is

These

now

taken to be

"depression of 1947" as adver¬
will probably have served
some useful purpose.
The strength
tised

of the labor movement has passed
its

Group
Hospital Drive

John

M.

Hancock

of

Lehman

Brothers has accepted the Chair-

man¬

While

crest.

both

political

parties will use care and proceed

broken

when

80,000

started

were

believed

at

is

years.

not be able to reach the
objective of 1,000,000 homes a
year but the outlook for building
quite favorable.

Apprehension

decade there

a

optimism.

Common Stocks the Cheapest

Property
Almost every form of property
can
be purchased only at prices

materially above 1937 price levels
while

stocks are selling
highs. These com¬
mon stocks have equities in such
tangible things as plant, equip¬
common

below the 1937

ment and current assets.

Motors

carries

General

its plants at very

nominal net plant value, but real
estate has advanced in Detroit,

building costs

and General

are up

Motors has to carry more fire in¬

plants which have
current reproduction cost two
surance

three

on

times

as

great

the

as

a

or

same

plants had in 1937.
the

over

over

for real

reason

homes

new

We may

seems

first time in

in

high level for several

a

slowly in
correcting
labor'sabuses, the turn has definitely
come as evidenced by the passage
of the Taft-Hartley bill. For the

that

normal and there is every expec¬
tation that building will continue

This

suffici¬

of dollar exchange in For¬
eign countries has not been justi¬

ency

situation

corporations

is

but

true

of

most

investors
have lost perspectives.
Common
fied.
The
National
City Bank stocks of leading American correcently pointed out that Foreign porations today represent the onlyExchange held by most countries remaining bargains in tangible,
was more than sufficient for nor¬
property available to the investor.
mal
needs.
When
we
talk
of These equities represent an inter¬
est
in
dwindling
dollar
reserves
we
corporations
conducting
really dodge the true issue. This operations in the only strong re¬
concerns the rising importance of
maining capitalistic nation of im¬
America's
low
cost
productive portance. If stocks were selling at
capacity in relation to that for the a premium there might be some
many

entire world.

Goods produced by
production techniques are in
great demand and will continue to

reason

mass

not

be

II dwarf those which accrued from

in

Dollar
U.

S.

will

demand

for

balances

imports

tend

with

a

many

of

raw

to offset

drop in

years.

decline

may

but

materials

this and

export

our

International

Hancock Heads

even

trade

Situation

deferred
World

The

international

to

pears

recent

have

weeks.

situation

been
The

ap¬

clarified

United

in

States

is

taking a firm stand and the
days of appeasing the Russians are

but

concern

to

be

the

demands

War

I

this

does

The

World

of

case.

War

this

and

nation

might well experience eight to ten
years of sustained prosperity with

only minor periods of business re¬
cession and adjustments to
chang¬
ing conditions.
The
so

pent-up demand for goods
great that the stage setting

is not

Clarified

for

appear

conducive

to

depression.

a

Except for farm commodities, the
price level does not seem too high
and inventories

are not excessive.
Since there is abundant purchas¬

ing

and

power

good demand for

a

and

consumer

durable

goods,

to this end is before the Ways

informed with respect to Russian

substantial amounts of money this:

military

year

for

take

care

Means

Committee

in

a

bill

and
pre¬

pared by Representative Gearhart
California.

of

His
plan merits,
receive, careful atten¬
by that committee.

The

as

we

post-war period.

Many

As

still

first ges¬

ture, it is proposed that the Fed¬
eral

Government withdraw

ing it to the states.
the

support

not

The proposal
of NAM and

migrate.

of

which

under

little

death

tax,

M.

Hancock

a

there

inducement

to

internal

country. Vari¬

an

countries

prosperous

linked with

England's

are

econ¬

pessimism

over

country's future outlook does
justified.

seem

The major reason for apprehen¬
John

other groups, although some have

rates

and

that

omy and extreme

that

from

the estate and gift tax field, leav¬

has

danger of

into the normal
a

in

well

nent than any early war between
Russian
and the
United States.

of

move

strength

is

sources
report
internal collapse
in Russia is probably more immi¬

the

Federal-state
lax relations will be more promi¬
nent

problem

Marshall

confidential

ous

and should

tion

General

conditions

Norman H. Jensen with

For another thing, if the

today come out of their potential states which gave decided conces¬
.savings.
They are neither able sions by way of rates or exemp¬
nor willing to
supply the funds tions were to be the poorer states,
Paine, Webber, Jackson & Cur¬
that are needed, and that will be and
past experience points that tis, 25 Broad Street, New York
needed even more sorely in fu¬
way, it would be a good thing for City, members of the New York

Paine, Webber Firm

ture, for capital formation.

many

over.

in

The taxes which they pay

the

ufacturers' excise, and a proposal

general, still reasonable
have enough, even after present condition
taxes,
for
their
consumption would be
needs.

about their jobs and if this is true,

continuous

is

reductions

persons,

at

3)

page

telling effect on th$ workers,
Laborers are beginning to worrya

commodity

a

discretion, or the volume over the next few
years,
whim, of some faraway bureau¬
domestic
demand
will
take
up
cratic agency in Washington.
much of the slack.

expressed concern over the com¬
manship of the Investment Bank¬
petition among the states that ers Division for the United Hos¬
proposed they fear may ensue.
The pro¬
pital Drive. George K. Coggeshall
through the middle and upper in¬ spect gives the present writer no
of Schoellkopf, Hutton & Pomecomes are in no sense based upon
concern whatever. For one thing,
roy, Inc., Chairman of the divi¬
the consumption requirements of it may be anticipated that the
sion last year, is this year's Vicethose who receive such incomes.
majority of the states would levy Chairman.
tax

farm

shown

times in our
history while the nation was en¬
joying a period of extended pros¬

the

profits if the venture is success¬
ful. It should be emphasized that
the

that

downturn

which

release

for

the income taxes.

requisite

production is more
capital and better capital. Taxa¬
tion, or the lack of it, is never a
direct incentive to work, save, or

are

taxes

essential

most

increased

comes

resistant to depression con¬

more

the substitution of

limitation

proposed

mind

prices have

The tax program

the rich. We cannot build

poor or

In

should be added about

A word

in

perity.

It does not aim to soak either the

for

a

the 1947 tax bill.

transfers of

gradual and it is important to bear

Building Buyer's Strike
here is designed prima¬
Petered Out
rily to promote the general public
The buyer's strike in the build¬
good while at the same time pre¬
serving the integrity of a reason¬ ing industry has been given wide
able Federal budget.
This pro¬ publicity, but it failed to material¬
and a 20 year
gram is not the "soaking" variety. ize
record
was

while

cut.

more

than they

(Continued from
future price declines may be very

outlined

very

60%

a

of the

In conclusion:

tain

far better perhaps to consumers. This source
embodied in of irritation could be removed by

is,, therefore,
program than that

gain far

The

Conclusion

of

At

other

residence.

the

cut

board.1

grounds

from

removed.

likely to lose in death

uni¬
40%

and

program

across

slice

taxes

real

outcome

an

spent

"here would produce a fairly

and

would

be

would

such

of taxation

relation to
outlined

in

expense

met income,

were

states

from

made, in lean years as well as
years, to avoid further def¬
icits and increase of debt, it nec¬
essarily follows that there should
be a good, reliable revenue cush¬
ion for the lean years. The present
selective
system,
under
which
some
classes of goods are taxed

insurance

for

•deductions

•of

rich

the

would

be

who would
be in position to take reasonable

at

states

these states would

subsidies

good

For those taxpayers

"the

substantial

a

tion of individual income taxes.

inti¬

have

increase of rates

some

loss from

revenue

some

large

.

$1,750 million.
The reason for
advising deferral of these proce¬
dures for the present is that they
do not relate to all taxpayers. ability to save nor greater inclina¬
There are perhaps 10,000,000 div¬ tion to save, unless and until his
idend recipients as against more own rates of tax were reduced.
than 48,000,000 income taxpayers
in all. Only about 4,500,000 per¬
Excise Taxes
sons

of

and

July, 1947. It is
prospective home
owners
perity by
are
not balking because
Each citizen has his own self- of higher
prices but, because of
their present confiscatory level, interest, and he will work harder poor quality of materials and in¬
and do more under .the stimulus terminable delays which have oc¬
there would be small comfort for
of that motive than under any curred
after
the
building
has
the investor from reduction of the
other.
We can escape from our started. These things tend to in¬
corporation rate and the conse¬
present plight of inflation, soaring crease labor expense while the
quent forcing into his hands of
prices, and high living costs by workers are on the job without
larger dividend payments to the
extent that Section 102 is applied. increasing our production. Beyond any compensating results. Condi¬
any doubt or argubient is the fact tions are gradually returning to
He would
have neither
greater
•

the other is the division of income

to invest, through an
concession, the income

raised

for

for individual in¬
tax reduction, and the bud¬

stronger

funds

wealth

sion with respect to foreign com¬
mitments concerns the possibility
of our loaning
and

not

money to everyone
getting anything in re¬

turn.

Most people would like the
United States to return to com¬

fortable

isolation.

No

of

one

us

wants to throw our money away
in foreign lands or become in¬
volved in new wars but it appears
that

our

sound

present Foreign policy is

and

States in its
power

realistic.
new

The

role

as

United

the

major

in the world must be

pared to

assume

definite

pre¬

Pont,

corporations

plant

will

of record

and

many

companies

chemical

have

announced

important
plant expansion.
New

plans

for

Jersey Standard cancelled

its plans for construction of

refinery
verse

to

demand. Du-

Eastman Kodak

other

spend

improvements

at

its

Billings

decision

only
and

a new

to

re¬

approve

completion of the project. Westn g h o u s e,
General
Electrip,

i

Archer

-

Daniels

-

Midland

and

other concerns have ex¬
tremely ambitious expansion pro¬
grams
which will not be com¬
pleted until 1950. The pessimism

many

in retail trade circles is not stop¬

ping construction of
stores, at high costs,
suburban

areas.

many

new

in choice
Many economic

problems remain to be solved but
with greater conservatism in gov¬
ernment and a passing of the peak

in

labor's

reasons

the

power,

investors have

for being optimistic
outlook.

over

immediate

respon¬

sibilities.

General Securities Co., Inc.

Greater Labor Efficiency

Stock

major

(Special to

TheI

Financial

Chronicle)

Exchange, have announced
balance. At present
BATON ROUGE, LA.—General
One hears conflicting reports
group of some 16 states, the that Norman H. Jensen has become
Securities Co., Inc. is engaging in
from industrial executives relative
wealthier states by certain stand¬
associated with the firm in the to labor
an investment
business from of¬
productivity but there is
ards of comparison, are heavily
no question about the trend at this
fices at 222 Convention Street. Of¬
taxed in order to provide sub¬ municipal bond department. Mr.
toward
greater efficiency. ficers are George H.
sidies of various sorts for the other Jensen was formerly with Charles time
DeClouet,

the

others,

on

a

Reduction of Corporate Income
Tax

It came as a
observers

great surprise to

and commentators that

the National Association of Manu¬

facturers,
small

representing large and

corporate

industry, should




32 states.
poorer

To the extent that these

states

residents

were

able to attract

Clark & Co. and

ris

&

Co.

Prior

Stranahan, Har¬
thereto

having incomes to spend with Eldredge & Co.

he

was

Union treasuries
the

24-hour

are

daily

depleted and
bombardment

from radio and press of a "depres¬

sion ahead" is

President; P.

F.

Schilling, Vice-

President, and Stella C. DeClouet,

beginning to have ' Secretary.

■

Thursday, October 30, 1947
cumulated ,only

-

(Continued from page 2)
Hum
u/
|
larger proportion of fed- [

is

^UUtlllUCU

eral aid.

"*

"

"

"

the fact

1

with

**>

»

—"tL_

_

England's problem in large income and. employment at peak
measure is up to her own people
peacetime levels, sufficient capiv
but at the same time your eco- tal from private savings needed
nomic welfare is bound up with to
maintain our pre-depression
that of the nation. As a Massa- rate of growth cannot be accumuchusetts manufacturer; I am vi- later because of the federal taxtally interested in any plans you ing program,
have for improving the economy
Sound taxation would estimate
of this area but today I want to and allow for the deficit in capital
talk to you about a national prob- formation which has to be made
lem which if not taken care of up, and the imperative need for
right soon will mean that nothing new capital. If Americans do not
you folks try to do for New Eng- insist upon
thorough-going tax
reforms, ,T
over-taxation will kill
Hid
Will
UC
Vc;jl j
——T
,
land will be very effective
New England needs an America the goose that lays the golden
that
s going forward at at least eggs of better jobs, better wages,
the same economic pace as before better goods, lower prices,
the
depression.
New
England
What do we need in dollars of
needs a federal tax program that capital to keep our nation moving
permits greater savings on the forward at its pre-depression rate
part of the individual so he may of 3.8% a year?
buy more of what New England
Department of Commerce fighas to offer in the way of manu- ures show that during the past
factored product and scenery. New ten years capital formation fell
England needs a tax program that behind by $125 billion. Not all
is not discriminating against her of this deficiency, however, has
with respect to other parts of the to be made up. For example, many

zens'

y New

.

country.

today, while
level, fits New

What I have to say,

national

the

on

England's needs well.
There is a point beyond which
Americans'
incomes
cannot be
taxed if this country is to have

enough
jobs,
wages, goods or profit to anyone:
That is, of course, on the assumpcapital

enough

tion that we

—

want to continue to

the free enterprise
basis. It must be remembered that

do business on

government collects taxes
not reduce the total buying

when
it do

s

power of
transfers

It merely

the country.

•

-

■

'

**

■

w

—

*

j*-

even

moaerate
moderate

they

must

.

sunn

..

crop

ploration,

such

has

1869

through

.

„

#

JLAA.WXA

V

increased

As has been proven in

V

*

*

needed, decade
decade, for investment.

tion

was

Decline in Capital

O

O--

there, is

I

—-r---

from which the so-called
can

tive for venture capital.

Accumulation

rate of 3.8%

(Continued from page 6)
as

gain

they other-

fact,

startling

"Ameri-

deficit

the

reckoning

careful

in

that

shows

three

time
capital

years

venture

of

available will be even greater than

Much

the deficit in total savings.

•

greater!
It's much like the food situation

countries

several

in

ard

of living, rarely failed to im¬

prove

JLUUU

today.

T

•

.1

__

•»,_

not the

Next Few

Years

off crease wage rates and other costs rapid material progress. The an¬
We before increased activity or prices, swer seems to be that such war¬
capital generally than or improved efficiency justified time benefits were obtained onl^y
•appears
available from savings the advances. The purpose was to at the cost of grave dislocations of
but when it comes to venture cap- increase demand, but these rheas- industry which require ultimate
ital—the vitamins of business— ures also discouraged plant expan- readjustment, and only at the ex¬
foods

they are much worse
than overall figures indicate.
need

more

~

we arc CVCH
C* are even

sion.

further behind.
uuuuu.

1U1 UICI

"

Some

-

of

—^

i*

_

the

^

A t-

_

of the

causes

_

from

by and large,.1 depression

but two

the

sources—-?^ initigated

!
ings would grow sufficiently to j
provide a constantly increasing
larger gross the retained earn-

be

-

ih

increase

of

debt

producing still
ments.

The

which

cannot

maladjust¬
give our

graver

war

did

businessmen and scientists

portunity

the

and

Results of the Measures

would undoubtedly 'or prime the pump. In the middle
but starting in 1950 of 1932, before much had been
long as corporate taxes ;done in the direction of planned

such

merly
be

case,

as

remain

where

they

are,

we

can

jdeficit spending, the cycle had

to

an

op¬

do

1929 to the present' peak does not

to

seem

be

abnormal,

the

and

present level is dependent to some
extent

temporary demands
arising from
special
shortages.
Wartime experiences do not seem
upon

lu
that

without

J?a

,

the first

to indicate that the prewar record
of the public measures to over¬
come

depression is unrepresenta¬

tive of their

available to take

the war will be

source

further

in-

in expenditures of the

creases

has dried up our

These next few years are

cal ones.

criti¬
Socially, politically, and

in terms of national economy, we
must progress.

is

Even standing still
to slipping.
The
for savings for capital for¬

tantamount

need

mation

was

never

more

pressing.

On what we do now will depend

kinds

when quires

of savings—that which

A ClAUO
W111V11
Taxes which

kind

same

__j.i_.ij.-__

*

I duce
1

It

central

potentialities.

not

was

until

controls

w

*

-

The

Savings from relief in corporation income taxes would be available as venture capital but the risk ,
for the most part would be in expanding going businesses rather
than the creation of new industries.
Some of
the relief from
excise taxes might become venture capital but not in sufficient
volume to make this an important
us

i___

back

1946;

began

to

when
be re¬

l

an

1

*

'

T

_

_j.

1

jf

be possible,

income.

This leaves

gQ

uncontrollable situation
in- for which no ready remedy would

w-- — — -

savings are: (1) corporation
come (2) excise and (3) personal

source.

we

spending; and that everincreasing dependence on; such
expenditures would finally pro-

might effect these
XAAA^tAV

re¬

If

deficit

Effect of Taxes

of

initial

securities offered for

attained

a

level

new

money

comparable

the poorest years of the
1929 era.

to

even

19191>

The Real Bases of Prosperity

from

recovery

the

Notwitstanding

all

the

doubts

extremes of depression seems to and imponderables in economifc
have been rather rapid, but be- analysis^, and the inability of sta¬
ieause of the timing it appears tistics and economic theory to give
likely that this was a natural re- a concrete picture- of most the
bound front, an unusually sharp details of business, which make the
and severe, decline, rather than the wheels go around, there are cer¬
result of the public measures en- tain statements which

can be

made

The extent to which the with assurance. There can be no
recovery proceeded was very mod- doubt that the intellectual proc¬
erate. The indices of industrial esses of research, invention, mecl>production'we^po higher in 1939 anization, and improvement of
personal income than in 1929. Production per cap¬ merchandising techniques are the
ita, or the amount of goods and genes of industrial progress, and

_

1

*

acted.

services

available for distribution

-

-

that

capital expenditures

means

increase betweftUrthese two dates.
available
Measured realistically in
^

i
the[g°ods, rather than by speeches
/

of capital formation caused protection while otners may be ally are considerable in
caused1
wnue others
oeiaiiy arc c u n ? i u c
«v
depression of the '30s, there risked. The latter is venture cap- aggregate. Because they are ac-




rate

a

national

indefinitely continued without

things that the
gloomy
atmosphere
and
small
It seems to have been hoped that
plant expansion of the 1930's did
— _
.
source of risk capital.
If all other government expenditures would not 'permit. But the- overall in¬
in
our
production
from
conditions were the same as for- reverse the direction of the cycle, crease

a

security and that which
production did not may be risked. Of course, the only taxes as the major source of sav¬
advance.
Without an adequate difference in any business invest¬ ings from tax reduction.
In the small and medium inie
in¬
flow of capital, the American peo¬ ment is one of priority of safety.
^rouDs
ple did not prosper.
savings^ frnm fav
Nevertheless, we recognize that come bioups savin?*? trom _tax
Without wishing to imply that certain kinds of savings require reduction though small individu-i
the

of

pense

which might have been
by prompt central Re¬
tained corporate earnings and sav- ^on hi the 1920's were not. Little
ings. from large incomes.
' could be done about them after
It- might be expected that with the event,
capital,

Venture

comes

Critical

the trend of our
those six decades
unequaled by any other nation. future development. Nor is it
the next decade, enough to have adequate overall
1928-1938; is equally significant— savings. They must be of the right
the other way round. In not one kind—and that is where the long
of these years did capital forma¬ term pinch comes in.
tion reach one-fifth of the national
Capital is formed from two
The record of

lack

war

.

be subject record does not
suggest that [a
to heavy tax penalties." In addi- government-planned and financed
tion, measures were taken to in- peace can produce continuous and

Not you succeed, you will

only are they short of food generally but in strength building,

*

But the record of

level

materially from decade to

decade.

M UiUAJiXVUU

;to the
laxed, a budgetary surplus seemed
problem will begin.
history of paper currency issues,
and debt retirement, retained corIn prospect, an end of rising taxes
Until 1950, then, our tax prob- reason can be found to believe was in
porate earnings and individual
view, and shortages ex>lern is one mainly of creating an that a vicious cycle of ever-in¬
erted their influence, that private
savings at present levels of taxa¬
tion—I can tell you that all of adequate over-all volume of sav- creasing government expenditures expenditures for new plants and
them
put
together
won't
be ings after which the major prob- would be necessary to maintain construction attained the level of
lem will be one of finding enough | business activity by
large-scale 1929, or the volume of corporate
enough.

is

the

of

subject to a variety of conOn the rfecord the combination
trary influences: monetary and of contradictory measures did not
measures
ranging
from prevent some business recovery,
minor inflationary forces to meas- but the
degree of recovery wdsr
ures which were potentially ex- subnormal.
:
plosive; centralized controls which
Since our standard of living has
said in effect: "Wait until we say been
improved by wartime ex¬
go, and then go the way we say;
pansion of productive capacity arid
use our judgment instead of yours; scientific
developments which are
; of course, we may change our a
by-product of the war (even
«ideas at any time without notice
though we had a high degree of
and our directions may be com- centralization
during the war, and
plex, incomplete and obscure, but we had and still have
heavy and
the risk is yours; if you don't do
steeply graduated taxes), it might
well, we may take you over; if be asked whether or

Nevertheless,

in large measure

was

standard

was
Before that period, the stand¬

was

venture savings.

productivity
of
labor
doubled
as
the
result of the
worker being given more and bet¬
ter
machinery
and tools with
"which: to work, that is the added
i investment put behind him. And
af; the-same t-me labor's real
wages—purchasing power—were
doubled.

this

average

living between 1929 and 1939;

WlVAVAVAVj
1930's, therefore, business

M.AA

would dry up and wither,
and this is the

economy

UUI1
don Ul catu U1 the XVUJ. UV/VIA ww v*
of each Gf ViiV> four sources of

Also,

And

the

in

1 j

In the
V11C

•

Without it in adequate amount our

increase per year.

decade since the Civil War

r

The labor is worthy of its hire.

Measures

is invigorated,

life"

of

way

after capital funds—business reserves, U*u a
when
I government subsidies and loan real

eight times as much produc¬

output.

incen¬

no

""""

period, this annual
contribution to capital formation
tion, or at an average

for the

opportunity

no

where there is

worker

Contradictory Aspects of These

in ex¬

capital always aims at
production and employ-

to

In that same

led to

Eastern

ment. Venture capital is the springs fiscal

S?"yGa? pe,n<?'jne" of statistics showing the contribuproducW

ygains

jobs and better pay.

nil.

comp;led .by the National Bureau
of Economic Research, and later

fifth* of the nation s total

of

EurOpe and everywhere else that
nationalization
has
been
tried,,

nearly 48 billion in 1951 and
look forward to a declining con- 'already begun to reverse its dis¬
to more than $59 billion in 1956. tribution to venture capital from tion. It has y^TTo be proved that
nnmn
such ovnon/Utiwfetr virimo tho pump
expendittffbs prime the
That's still a lot of money,
retained corporate earnings.
corroborated by U. S. Department Where are we going to find it?
For the next twn vears
porno- Iin the sense of startinS *n upward
of Commerce data, show that durWithout boring you with a lot
I—J sPlral which, ofWfe under way, will
from

incentive

the

Where capital gains, labor
—more

still

was

or

as

mining, or in

as

V*

Venture

fol- production which adequate capital
This is capital formation, brings about, this would increase
1930

it

gain it is creative.

capjtal requirements and for that

the expansion of going enterprises.

next year and the year

lowir g.
Data

carriage,"

"horseless

a

_

ye*r

automobile when it

the

formation.

national

because

ture, however, after taxes must

from the
who can afford
a
partial or total loss. Venture
capital requires vision to see op- promptly and freely
in
inwonlmrt
portunities in invention, such as i wise would,

dollars needed this year. Allowing for the 3.8% forward march in

w

private

from

only investment
thatis encourages
initiative
arid
the

savings of those

out of production to plant in
anticipation of a bigger and better

our

capital

is

of Venture Capital

Sources

$36' billion of new capital for
mation, plus $6 billion to make up
the deficit, would mean $42 billion

is

^

Venture

savings

We need- more savings in this
country to provide the pver-all

principa

their

keep

way

-

ven-

ceive from secured investments.

because

incomesr

level.

any

this

a
non-confis-

is

Venture capital comes

corn"—in other words the
amount that must be saved each

It

-

_.

carl * ®xPe?t men to risk, their

intact.

"seed

'benchmark?

-

that

we believe total
savings can be built up and ven¬
ture capital encouraged.

savings when the return is little
if any greater than they would re¬

to risk.
*
It will not come from the sav¬
ings of families with small or

machines that would have been
bought ten years ago had capital
been available would already have
been worn out or obsolete. Moreover, it will obviously take time
to accumulate capital, during
which time more machines would
have been worn out or superannuated. Making every conservative allowance, the very minimum
deficit to be made up stands at
around $30 billion,
The faster this $30 billion lag
in capital formation is made up,
the sooner will the nation and our
standard of living again move

or

,

is to protect, not

.

point

---

capital. The return for the

companies because their function

that government spendIn addition to making up for
ing si ould be limited to the point past losses, we must again make
that taxation does not undermine it possible for one-fifth of Amerithe economic progress, of the na- ean production—$36 billion a year
—to be plowed back into capital
tion.
this

savings

from

come

In

such banks
compensatory to the risk else
are not permitted by law to take fthese funds will of necessity seek
long risks with their depositors" ; security.
savings.
I
^s 3Ust as simPte as that.
It will not come from insurance There's mo hocus-pocus about it.

Beycn .1

is

not

catory at

pnool/inff

savings generally speaking
be risked this group repre-

-

schedule

tax

sen*s t^edargest sour^e of venture
.

will

It

of that forward.
Obviously, however, it cannot
from individuals or private
be done at once, but $6 billion a
organizations to itself.
1 v*
.
...
Our problem, therefore, is not year for five years, and with the
how much buying power there is right tax ericouragement, should
in our economic system but who be perfectly feasible. This, I might
is to dn the buying and how.
add, is an extremely conservative
Certain taxes are inescapable, estimate.

what

-

equitable

an

the board—and

payers—across

bank deposits because

money

Now

1

terprises.

spending

the

in venturesome en-

revenues

cfonorollir

CQTrintfc

advocate

we

tax reduction for all income tax¬

be risked but must go

can

income
tViof

I

because

funds

government

reason

Since it is only im the higher
groups—$10,000 and over
that

i,

may
governmeni
government may not risk its uti-i—not nan. n& citi-

national
i

in any

capital will not come

Venture
from

however,

seldom

:panaing economy.
expanding ecunuuiy .

there was no pros¬

of new capital

perity.
Now,

England's Problems

New

to

significance
—

"

during that decade of deficiency

;ive £
receive a

denial

self

into secured investments.

of/a

J

^—*■

'*

-

-

by

[somewhere along the line; they

Capital Formation—Life Line ital and is the first step
of Progress
that

M'

u

e.Q i

w™™

ihn

Q pill Q1
antiial

about sociaUwforms*. 4he actual

are

the

by which most of these in¬

tellectual advances,

are

converted

into

productive capacity, and then,
with the aid of labor, into goods
and services.

Employment, goods

<(k

Volume

TOE.COMMERCIAL & FINANCIAL CHRONICLE

Number 4642

166

Wi..-'
i,

i.

■

and services, ■ and the^ - means «to plies; availability of reliable news, there are functions of society dividuals or groups, and
clearly that the theory of separa¬
cannot
be
administered maintain order and the national tions
and
balances
of
pay for them are created at the Information and knowledge; lei¬ which,
powers
same time.
Output per man, or sure time; amusements, including otherwise than by central govern¬ defense; and no single individual throughout the social organization
the average standard of living, is the radio and- moving pictures; ment: that there are others which or grouping can dominate the State in both its private and public as¬
increased. * Without these proc¬ variety and quality of household are suitable for management by to his or its own advantage at the pects is, probablyw more modern;
is impossible.

esses progress

to be noted that

It is

balance between

a

the amount of

conveniences; and free¬ smaller political subdivisions; and
choice, thought and speech; that there are still others not suit¬
the American system, which has able for any sort of governmental

and other

expense

dom of

and

of

money

the
of

freedoms, rights
others. To make
at its best, po-

and

certainly has been

more pro¬

ductive of notable results than the

this system work

goods and services
theory and practice of supercen¬
means of pay¬ been
relatively • freer from the direction. Different degrees of cen¬ itical parties ought to be based tralization in any of its varied
tralization'have been suitable to on broader lines than the repre¬ forms.! This theory of separations
ing for them cannot be maintained trends noted above, has produced
without constant growth of plant results
which
are
outstanding. ( ifferent circumstances. War has sentation of narrow interests, such and balances of powers has been
and sustained new capital expen¬ Supercentralization
under
any required more centralization than as business, agriculture, labor, or the unique feature of American
ditures. Otherwise the construc¬ name and in all places seems to peace. A degree of flexibility and a particular church alone. Obvi¬ tradition, distinguishing the Amer¬
tion and equipment industries will have produced results in all these adaptability have been necessary. ously one of the first duties of ican way of life from all others.
be depressed, and this will affect respects
results
have
never
been
which range from the
But today activities are so nu¬ government is to maintain such Its
much inferior to the terrible. As merous and technical that subdi¬ separations and such a balance of equaled.
other business
•
/;
To believe that a rapid rate of we have seen* even the more mod¬ vision of powers and functions is power.
By observing from the history
To date, the social organizations of Britain in the period from 1890
erate trend to centralization here more-essential'than ever,
Proper
expenditures for new productive
which have best carried out these to 1911 that a growth of bank re¬
n the
1930's produced subnormal
equipment means overproduction;
organization seems to have re¬
serves ;and
....
,
bank deposits at an
bad business, and general imem- results. quired that functions be carried principles seem to have the best
records with respect to the ma¬ average rate more nearly in ac¬
Once the process of supercen¬ out by persons most capable of
ployment, one must assum e that
terialistic advantages we have be¬ cord with the long-term rate of
such expenditures are made with¬ tralization was started, it seems carrying them out well.
That is
fore mentioned, and with respect growth of
business than in the
out foresight in anticipatioh of a ^'IsaVe^beeh^'u^ulative^ Excess to say:
to
non-materialistic
advantages. past generation here, and the use
market which will- not exist., It sive central - planning; subsidies,
(1) The political aspects of life Those which are
chaotic, like of more frequent changes in money
is most unlikely that overexpan- and penalties on success appear
should be administered primarily
China, and those which have the rates in both directions than in
sion of productive facil'ties in the to have produced conditions call¬
by politicians.
'
highest degrees of supercentrali¬ recent years here, to assist in the
1920's was so excessive as to have ing
for more central planning,
(2) Religion should be taught
zation, like Russia and Spain, are attainment of this objective, were
been* an important cause of the more subsidies, and more penal¬
primarily by ministers.
far behind. Even if we look at accompanied by a more uniform
ensuing depression, if in fact it ties on success, while constantly
(3) Science and medicine should the nationalized
railroads, tele¬ rate of growth of production and
Was to any extent a cause thereof. moving farther from the attain¬ be
administered by scientists and
phones, and airplane factories of a far more uniform rate of em¬
Even in the most active years ad¬ ment
of the desired objective. doctors
respectively.
France, before or after war dam¬ ployment than have accompanied
ditions to capacity were a rela¬ What began as socialistic devel¬
(4) Business should be admin¬
age, we find them far inferior monetary
developments here in
tively small part of total produc¬ oped into Fascist, Nazi, and Com¬ istered by business executives.
and their labor poorly paid. The the
last
generation,
we
could
tive capacity. Plant expenditures munist military dictatorships. Even
(5) Union affairs should be ad¬ record of
Britain, in which cen¬ make changes of policy which
n
almost never merely increase ca¬
England, the government de¬ ministered by labor leaders.
tralization has gone far but not would tend
to mitigate depres¬
pacity.
In varying degrees they sires still more controls without
(6) A similar appropriate sub¬ to the
extreme, is unsatisfactory sions more succesfully. One may
also lower costs and widen mar¬ yet having attained many of its
division should occur at all points.
on
the materialistic side.
doubt that we are in a "new era"
kets.
Unless a country is to stop objectives.
It must be admitted
In order to know who are the
in which the historic influences
growing, a considerable portion that special war-induced condi¬
most capable in any field, it has Is the Trend to Less Satisfactory of
of its labor is certain to be occu¬
tions in Britain require some spe¬
money rates are no longer op¬
Social Organization Inevitable?
been necessary to have a degree
erative.
pied in the construction of plant cial controls temporarily, but it
of freedom from controls, so that
Because both Britain and to a
and equipment.
Not only long- may be doubted that permanent
By observing that most people
men can rise to prominence on the
lesser extent the United States
term progress, but even cyclical supercentralization
are
through
na¬
obliged by financial limita¬
basis of unrestricted competition nave moved in the direction of
tionalization of industry will be
tions to acquire or retain used
activity is imposs'ble if these sec¬
with their fellows in the same ever greater centralization of pri¬
tions are idle. Large new capital successful.
homes and used cars, by ascer¬
field, or on the basis of selection vate and public powers (except
expenditures were unquestionably
taining the costs of new housing,
for the removal of some wartime
Material Progress Is not Without by such fellows. These processes
one of the most important causes
and by discovering the magnitude
seem to have led to the best av¬
restrictions) and ever increasing of the new
of .the fairly well-balanced and
a Moral Basts
housing likely to be
erage level of
selections.
Since penalties on business growth, and
sustained activity of the
1920's.
Many of the advantages of our no man or limited group has been because Communism has shown a demanded, we could discover that
The
it
is not
discouraging effect of the system mentioned above may be
only impractical, but
expert in all things, or has had rapid and long-continued growth
measures of the 1930's upon new
probably imposs'ble to supply hew
considered to be materialistic. Al¬ the
acquaintance
necessary
to (except for some decline in its in¬
capital expenditures seems to have
housing to any very large part of
though the acquisition of wealth select
appointees
well
for
al
fluence in a few places recently),
been a principal reason for their has sometimes
our
population on a subsidized
led to moral, phys¬
jobs, supercentralization appears many have come to believe that
basis in a quantity approaching
poor record.
ical and intellectual deterioration, to have run counter to certain
these trends will inevitably con¬
the needs.
Unless new housing
there appears to be no good reason
limitations which are inherent in
tinue, and that a growing influ¬ is
Origin of the Measures of the
supplied only to those who can
why it must do so. The invention the nature of the world, or the ence of Marxian
philosophy will afford to
1930s and the Record at the
carry it, and the poorer
and manufacture of smallpox vac¬
natural law. This has led to less lead
inevitably to the establish¬ elements
Source
occupy
used
housing
cine; the development of processes
selections
administration
produced and the

,

,

••

•

%
>b

(

.

*

Most of

"apt

policies of the 1930's

our

of British

origin, and formed
a part of
a world-wide tendency
to greater centralization of power
ranging from the milder forms of
socialism, or tendencies thereto,

were

.to

Fascism, Falangalism, Nazism,
Communism.

and

of these

Some

"isms" were

tor

supplying pure water, milk,
the production of wash¬

and food;

ing machines and the mold board
plow, etc., have greatly eased the
sufferings and burdens of others
Although not ordinarily thought
of as charity, such processes im¬
plement the law of charity by

openly Marxian. Oth¬
ers.declared themselves to be bit¬

improving the welfare of others

terly opposed to Marxism.

the

Never¬

theless. Marx's ideas seem to have

been

defensively

influence in all
The

British

or

offensively an

cases.

to sustain

means

largest
gradual
powers

had

the world's

Subsequently the
centralization of private
through mergers and carnavy.

telization

seems

to

our

reduced

have

indicates

analysis

principal

the world
in

reason

and

own

many

tha
why most of
people even

country do not have

abundance of material advan¬

an

been
upon invention and
mechanization which gave it pre¬
eminence in productive power and
Empire

largely built

the

Careful

is inability to produce an
adequate
supply
at
required
tages

prices. The increase in the supply
of goods
and services necessary
even to provide all of own people
with
we

a

standard

may

of

living which
a desirable
measurable
in

visualize

improvement

as

is

dollars only

by a sum many times
greater than the profits of all in¬

new ideas
The rate of dustry. Realistically the problem
to have is to a far greater extent one of
slackened. Britain's once preemi- expanding production and produc¬
'lient position in productive power tive power, than one of better di¬
became less preeminent. Marxian vision.
Measures to relieve dis¬
influences, though never openly tress due to incapacity arising

the

opportunities

and

new

for

enterprises.

industrial advance appears

'admitted

be

to

Marxian,

led

to

from

unemployment, old age,

or
the

and

ment of Socialistic or Communis¬

Within each activity,

private,

appropriate

public and
systems of

checks and

balances, and

ten that

have

states

tic

everywhere.

Both the Socialists and Commu¬

which

from

moved,

such

have

persons

some persons

receive

spe¬

cial favors at the expense of oth¬

nists, and the reformers who do ers no better off. The ultimate
propriate degree of democracy and not acknowledge that they are effect is a vicious circle which is
freedom of competition have been either, but, nevertheless, wish the
restrictive rather than expansionnecessary. It is sometimes forgot¬ government to run more activities istic.
we

a

an

ap¬

degree of de¬

on a

subsidized basis at the expepse

By reducing government expen¬
in the organization of heavily graduated penalties on ditures
to reduce the general over¬
of our corporations, the number individual business success, thus
head, and to maintain a budgetary
of stockholders often being larger starting the cumulative spiral that
surplus in all but considerably de¬
than the number of employees, leads to Socialism and Commu¬
pressed periods, and by refraining
and the boards of directors sub¬ nism, labor under two difficulties:
from so greatly expanding gov¬
ject to election by the stockhold¬
(1) Marx's dire picture of the ernment expenditures in such de¬
ers.
Democracy in the election of capitalistic system is ancient and
pressed periods as to imply heav¬
directors is often more a formal¬ no
longer true.
Reforms have ier penalties on expansion and
ity than a reality, because stock¬ completely changed it. His predic¬
success, we could further mitigate
holders rarely show any initiative, tions about it have not come to
depressions.
and generally vote for the existing oass.
Laborers have not worked
By so designing our systems for
management which tends to be¬ longer and longer hours.
They
come
self-perpetuating, but the have not received a constantly the relief of incapacity due to un¬
employment or other causes that
same is also true of union affairs.
diminishing part of the national
they do not imply penalties on in¬
In both cases, a democratic basis
income. Their opportunities to ob¬
dustrial advance, we could at once
exists which has some opportunity tain
knowledge and enjoy amuse¬
help to mitigate depressions and
to become effective, if the voters ments have not
mocracy even

decreased. On the

are

sufficiently aroused.

contrary the lot of labor has tre¬
indi¬ mendously improved
over
the
cate that the above principles of years in all the capitalistic states
Further analysis seems to

led

have

subdivision

what

to

might be called the doctrine of
separation of the powers of vari¬
ous
activities, organizations, and

which

only
the

have

a

maintained

even

in

fairly satisfactory degree
of

kind

balance

of

powers

their

ease

pain.

By taking note of special con¬
ditions

of

appear,

we

unbalance

which

may

might find it possible

to devise actions which would be

helpful in limited instances, with¬

out transgressing the theory of
separation and balance of powers.
those of the state, in¬
tax penalties on individual busi¬ job. They are good, but they are
(2) The record of supercentrali¬
If the record and the possibili¬
under
ness
success,
and to increasing only relief measures. Only more cluding separation of the powers zation
every
name
has
ties become better known, it is
of:
ranged from relatively less satis¬
supercentralization in the hands production can materially increase
not
impossible that our social
of
(1) Church and State;
factory to terrible, over a period.
government
of
control
of the average standard of living
theories and organization will de¬
If social theories come to be
(2) Science and State;
business! The two world wars ac¬ The primary job is to accelerate
(3) Art and State;
judged by their fruits to date, it velop in accordance with the dis¬
celerated these trends, but they do the rate of industrial advance

increasing

gradually

not appear to

result

of

the

graduated

have been solely the
wars.
The failure

to encourage decen¬
tralization! research, invention and
sufficiently

mechanization

by

was

politico-social

not

overcome

de¬

measures

illness

do

not

and

cannot do

is, therefore, a moral basis
favoring accelerated industria
growth, and less moral basis for
favoring apparently worthy meas¬

for

which result in penalties on
industrial
growth than is com¬

ures

signed tq give social safety, and monly supposed.
to
promote progress by central
The Desirable Social
planning and subsidies, for these
the penalties
expansion. The
average standard of British living
did not increase at the pre-centralization rate.
measures
on

1

increased

success

and

Measured in terms of output per

capita,
living;
food;

or

the average standard of

quality

and

quantity

medical services




and

of

sup¬

hitherto described.

groups, and

There

(4) Business and State;
(5) Labor
organizations

does

and

State.
These
connote

seem

become

inevitable that
a

we

supercentralized

society.

separations
balance

a

not

must

of

of

power

Conclusion

be¬

tween various groups and govern¬

ment, such that the State cannot

If
are

such

records

of

available to date

history
come

as

to be

churches, science, art, carefully analyzed and widely
Organization
the
American
people
business, labor organizations and known,
Although the innate character various other aspects and activi¬ should have a keener appreciation
and abilities of the people,
the ties of life, but may merely regu¬ of the advantages of industrial
abundance of natural resources late^ them within the minimum advance and ever-increasing pro¬
and many

other matters

important, there is
social

run

theories

and

no

are very

doubt tha

the forms

of

the

limits

that

are

necessary:

(1)

to

prevent any particular individual
or

grouping

or

institution

from

social organization have had grea
influence on the moral, aesthetic

impinge

duction.

They should be not only

willing to encourage these

material standards of

Analysis

seems

living

to indicate that

upon

the

proc

but unwilling to have them
penalized. Our attitude should be¬
esses,

getting so much power that it can

and

come more expansionists with
appropriate spect to private industry.

freedoms and rights of other in¬

We

tinctive features of American tra¬

dition,
Marxian

and
move
tendencies

towards them.

powers

1

'311#

should

recognize

re¬

more

away

rather

from
than

If this happens,

it

will encourage the maximum rate
of growth of our production, tend

temporary interrup¬
therein, and help to ease the
pains of such interruptions.
On
the basis of existing conditions,

to

minimize

tions

an

era

vance

prospect.
is |

renewed industrial ad¬

of

would

then

seem

to

be in

If our forward progress

to irregularities, as
has always been under
all systems, the duration of de¬
pressions
should
be relatively

subject

progress

short,

light.

and

their- pains relatively

32

& FINANCIAL, CHRONICLE

COMMERCIAL

THE

(1764)

payments 1$ not in

multilateral

Canada and the United States—
Their Mutual Economic Problems
(Continued from first page)
is

Canada.

of

customer

best

the

multilateral trade and pay¬

that

possible again in a
few years.
But in the meantime
of the inability of other countries we in the United States and Can¬
top pay
for their purchases in ada should do everything possible
monies that are acceptable or to to cope with these conditions for
ments will be

interests of both

best

the

provide us with raw materials and
manufactured goods that we can tries.

the

purchase in exchange for
products we have to sell.

.

coun¬

line be¬
tween the United States and Can¬
On Aug. 7,1 pointed out in the
ada is ah example to the world
"Commercial and Financial
from the standpoint of peace, the
Chronicle," of New York, that this
economic walls that separate us
alleged dollar shortage was an er¬
and do harm to our mutual trade
roneous claim, and unless clearly
are high, far too high, for our own
understood could create mischief.
best interests. 'These complicated
Instead of a dollar shortage, Can¬
trade
and
financial restrictions
ada has a surplus.
However, the
are too lengthy for me to go into
break-down of multilateral pay¬
any detail here.
But by way of
ments, resulting from inflation;
examples, let me point out that all
depreciation o f
currencies i n
countries control exports and im¬
countries that buy from Canada,
and failure of these countries to ports more-or-less today by vari¬
ous and devious means not usually
produce goods for export to pay
known by these names.
for their imports, have created a
The United States is no excep¬
condition whereby the system of
multilateral payments,
upon tion, nor is Canada. Just recently
which the international trade of the United States reimposed ex¬
both Canada and the United

States

operate at the

built, cannot
present time.

was

proof of these conditions, in
1935 to 1939 the yearly
favorable balance of Can¬
ada in world trade exceeded $155
As

the period

average

in spite

million,

of her average

unfavorable balance of $372 mil¬

For

States.

lion with the United

1940-1945, Canada's
average
favorable
balance
in
world payments was $948 million.
In spite of her unfavorable bal¬

the

war

years,

with

ance

Canada's

United

the

than

more

$600

million in

In

world

a

n

$458 million.

sound

of

multilateral

of
i

currency

and

trade

pay¬

which would be the best
and the system upon

ments,

for all of us,

which

international

our

com¬

country
would be in need of seeking for¬
eign capital investments in order
to balance your exports against
your
imports.
Canada, like the
United
States,
is, therefore,
a
victim of soft currencies, bilateral
trade restrictions and regulations
restraining the free movement of
goods and services. Nevertheless,
this inability to collect from the
soft currency countries and pay
developed,

merce

unguarded

the

your

of

these

of

means

of

trade

restric¬

gigantic system
government monopolies. Brazil

tions, including

a

American

other South

and

coun¬

have

tries

adopted
all
these
schemes of trade control, includ¬

ing

at the present

It is not necessary

to go through

the whole list of countries.

illustrations

shortage of

with this pres¬
dollars resulting

from inflations causing the break¬

These

indi¬

enough to

other
of

multilateral

and

to

make it possible

which

able

for

balances

other

from

coun¬

tries. Once again we learn through
experience the simple lesson of
economics

well

so

another

quired

stated

be

natural

or

ac¬

in this respect, of no
consequence. As long as one coun¬
try has those advantages, and the

is,

other wants

seems

and

pay¬

our

with

that

the

United

States trade.

Unfortunately,
such

as

no

Canada

States, have the

two countries,
the

and

United

to restore
sound economic and political con¬
ditions and dependable convert¬
power

these

currencies

countries

will

convertible into

restore
ours

their exports to pay

ports,
k

no

sible

that,

with

one can

under

soft

monies

and increase

for their im¬

say.

the

It is poseconomic

forces of necessity, these countries
will make rapid strides in return-




the

people

in

foreign

benefit

to

of

me

the

and

urgent
United

States and Canada take the

neces¬

sary steps to correct insofar as
possible within their powers, this

dislocation

of

two countries

trade

between

the

resulting from these

external conditions in the rest of
the world.
Such tariffs

ible currencies in other countries.

When

the

would

with

a

restric¬

beneficial

be

to

people of both countries.

The

United

States

of

ucts

a

inadequate. With the removal of
restrictions

the

tariffs

and

upon

importing into the United States
many of these products, we could
add

dollar

United

Canada's

to

hundreds of
dollars.
Moreover,

supply

millions

many

of

American

States

manufacturers

the

and

American

people would benefit
reduced prices resulting

restrictions

trade

Canada's

of

ills

subsidize

the

the

reduce

consumption. You must sell
in the for¬

your

these surplus products

Gold

the

are

in

causes

agitation to
and further

of

your

cur¬

long time I have
a free gold market with
convertible into gold. A
a

with

enough agricultural products for
their
needs.
If
these
countries
would return to sound convertible
currencies
for

gold

market, of course, is
item in the general
problem of free markets

one

broad

multilateral

trade

and

pay¬

over-supplied
agricultural

products you have to sell. Your
markets for these products are in
countries
that do
not produce

money

only

the

of

most

advocated

free

is

States

United

international

miners

value

For

rency.

.

agricultural products far exceeds

multiplicity of

trade. I know there is

products
for their im¬

produce

and

export to

pay

ports, Canada would have ade¬
quate funds to meet all of. her ad¬
verse balances as she did in pre¬
war

years.

ments.

zinc;

host of other prod¬
which our supplies are

and

paper,

of

Inflation and the

and

from

buys

Canada nickel, copper, lead,

I believe in

free markets with

inflated

currencies, bureaucracy,
communism, and all of
of national plan¬

statism,
these

schemes

which restrict the individual
in his freedom and initiative, are
detrimental to the public welfare.

ners,

Motor

Vehicle to Our Modern

minimum of

restrictions, where
everyone can have equal oppor¬
tunity to bargain with his goods
at the best advantage. It is my
opinion that restricted! markets,

a

The Contribution of the

of Living

Standard

in agriculture
much as in the
manufacturer and the city worker.
Motor vehicles have proved one
of the most useful servants, pro¬
I

interested

am

and the farmer as

ducing wealth and

well-being and

raising the standard of living for
all classes of people in Canada as
well as in the United States and

by

from the removal of the tariffs. In

United

States

mutually

more

Canada

exist

as

now

and

trade barriers

between the United

States and Canada

were

imposed

when multilateral trade and pay¬
ments made it possible to
our

unfavorable

favorable

the

cancel

balances

with

balances.

Conditions

return

have

to

than

dependent

restrictions

of

trade

be¬

tween these two countries in

light

these

on

necessity.
I

changed,
trade

and
and

safety of his bank. In the United
States our banking history is not
something of which we can be
too proud. In the past we have
been faced with many bank fail¬
ures.
But sound banking is one
thing, and sound currency and
international trade another. While

this

recommend

action

and

study

matters
some dis¬

banks

your

of present maladjustment in

ages

between

have

Both

the

Canada

countries

two

their

run

have

States

course.

the

and

tariffs

business.

high

on

United

has

Canada

tariff

against

tion

of American

The

amount

many

rather

a

the

importa¬

motor vehicles.

of

soft-currency

are

bureaus that administer the tariff.
I know it is believed that costs

production

are

Canada

because

market

and

iff

of

that

higher
in
smaller

your

without

a

tar¬

American-made

lower-cost

is

we

other

in the United States

countries

is
necessarily a large scale business
of mass production if costs and
prices are to be kept as low as
possible.
I

believe

would

be

producers
duction
would

production

Canadian

better

off

economy

with

fewer

and larger mass pro¬
lower
costs, which

at

enable

Canada

to

partici¬
pate in the world markets more

than

she

suggesting

does

today. I
that Canada

all tariffs against the

suggesting

am

not

remove

the

what

market.

These

bureaucratic
black

are

the

regulations

markets.

Of

in Canada would
gold to France at the rate
set by the International Monetary
Fund, but that is the only rate at
no

course,

of

changed world conditions, and the

cities, represent¬

half

almost
of

cities

towns

the

and

country, had devel¬

the

oped as a result of transportation
furnished by

the motor car.

This

has made it possible for workers
to live outside of the city

one

value

would

which

a

mitted

Canadian should be per¬
sell gold to France at

to

the present time, according to the
Fund. France, of course, should

her

restore

currencies

to

con¬

vertibility, but the Canadian gold
miner is entitled to all he can get
for

his

gold

world, just
other

as

anywhere

in

fect

the

of

standard

and for

of

product.

Like the United
is still

car

the

an

has

broadened

entire

is

the

upon

unmeasur-

the

The

vision of

population.

Greater

richness of life is the reward.

We in this business
sured
useful

that

we

public

are

can

rest

as¬

performing

service.

It is

a

our

duty to furnish the best possible
and most useful motor vehicles at

lowest

cost.

The

these vehicles will

5

States, Canada

predominantly

car

living

un¬

mobility furnished by the motor

the

Agriculture

motor

in

The ef¬

able, but undoubtedly large.

the

the producer of any

be reckoned

believably large figures.

sell

importation

because

I saw in the United
estimate that 54 thou¬

towns and

sand

ing

an

respect

black

immediately. 1

that

suburban developments.

new

my

create

vehicle

motor

and

manufacturing
plants
to
to the price of large
move to the suburbs or to country
sympathies are definitely
districts.
with those people who think they
Motor transportation has made
should sell their gold in a free
market any place in the world it possible for the city department
for the price it will bring. The store to deliver goods to families
International Monetary Fund pro¬ many miles outside city limits. If
poses to fix the rates of exchange. only we could measure the time
For France, for example, the rate saved
and the leisure resulting
of exchange as set by the Fund
from improved transportation, its
is at least 200% above the rate in
With

gold,

that

but

know

is worth and ex¬
actly what a future credit will be
worth when we receive payment.
currency

your

tion

employment in Canada.
all factors to consider,

phase of human existence. It has
been the cause of city expansion

States

of

are

ramifications have reached every

unfavorable balance. It is
important,
however,
that
your
currency be convertible into gold
your

kind

and

its

has

Its beneficial,

the map.

Recently,

that

everyone

really

automobile

purchases from Canada, offsetting

production would reduce produc¬
These

good roads,

able to enjoy the finer

The

increases

States

and

changed

right itself as your
regain ability to repay
obligations to you, or as

United

the

car

now

situation

technical

a

will

their

and

am

inexpensive transportation have
erased the story book differences
between the city and the rural
citizen. As a result of the motor

country.

customers

and

of

city or consolidated schools,
churches, libraries, and markets.
The cultural advantages of this

who

countries

customers.

your

which

purchaser and will vary
with the price of the vehicle, but,
roughly, will range from $400 to
$800. While this tariff adds to the
revenue of your country, it sub¬
tracts from the purchasing power
of your people immediately. In
addition, this tariff, like many
other tariffs, is spent in a large
part in maintaining the costly

the

to

markets because of your un¬

our

tariff is paid

of this

tends

currency

This

im¬
portant products which I know
nothing about, but I do know
something about the motor-car

by

sound,
your
depreciate in

are

as
a result of low-cost
transportation, has the benefits of

ulation,

is
things
time in the future, when it favorable balance of
payment, re¬ of life provided by the special ad¬
be too late because the dam¬ sulting entirely from the default vantages of both the city and the
upon

of motor vehicles

freer

are

Re-examination

before.

ever

countries, the

and

worries about the

in Canada

one

conditions in other

will

countries

and

The investi¬

should be made
removing such

as

trade

benefit, it

Canada

between

trade

to

tions

two

present

investigate
on

have

the

of

countries.

two

Canada to settle her accounts with

their

trade

to

restrictions

the United States with her favor¬

for

the

countries

be

represent

to

interests

may

countries

payments

countries

all

best

tant

and

currencies

in

statesmanship

the

may

trade

conditions

multilateral

ments

the

these

who

economists

and

lateral

economic

convertible

best

eign markets. In normal times the

Price

The

on

business¬

practical

of

composed

have to wait upon many of these

countries, is the restoration

sound

the

interests of your economy.

coun¬

should

commission

The

men

two

cate that the return of freer multi¬

are

them, it will always
payments
be more advantageous for the lat¬
throughout the world, Canada has
ter to buy of the former rather
found it necessary to restrict her
than to make."
purchases from the United States.
It is too costly both for Canada
While this temporarily may ease
rising unfavorable balances due and the United States to wait on
learn
the United States, it will not solve the rest of the world to
the problem, but on
the other again the great profits of mutual
exchange of goods and trade with
hand, will restrict Canada's trade
and reduce her standard of living. convertible monies. Being power¬
The correct solution, which would less, however, to bring about a
be beneficial to Canada and all correction of these political and
of

down

these

t h e se
immediately, and not at

over

time.

In order to cope

ent

tries.

restrictions

present

between

of present conditions is an urgent

manipulation.

currency

by that
distinguished
economist,
Adam
Smith, in the "Wealth of Nations,"
unfavorable
balances
to
the who, in 1776, said, "Whether the
United States is a real hardship to advantages which one country has
Canada

standpoint of

country. It is your largest
Your
production
of

business.

the
other countries.
I mention the price of gold par¬
The members of this association
ticularly because gold mining is a
addition, Canada has many tar¬
.large business in Canada. Gold have a right to be proud of their
iffs
against imports
from
the
has served the world so long as a occupation and their contribution
United
States,
which
unneces¬
money
better
than
any
other to the welfare of every industry
sarily raise the price of these
and every citizen. It would be dif¬
money with which mankind has
to
Canadian
buyers.
port controls on some fifty iron products
experimented, that it is important ficult to state briefly the services
and steel items, and already we Many of these tariffs should be
we
understand the relation be¬ of motor vehicles to both the farm
or
have under export control some reduced
removed,
and
the
tween
money
convertible
into and city worker. The motor car
Canadian consumer would be able
five hundred commodities.
gold and the conversion of the has made it possible for the city
Canada uses exchange control, to buy these products at lower currencies
of
one
country into worker to live in the suburbs and
import licenses, export licenses, prices thus raising the standard another. Without convertible cur¬ still have the advantage of a job
of living and increasing his in¬
import duties and preference trad¬
rencies, freedom of trade and in the city and the city markets
come.
ing with the sterling area. The
The bus and the
credit
commitments are impos¬ and services.
The reasons why these tariffs
United
Kingdom
employs
ex¬
motor car have expanded the city
sible.
change controls, export and im¬ and trade restrictions were im¬
markets.
For
a
long time, we in the
port licenses, import duties cov¬ posed many years ago are under¬
While making it easy and inex¬
United States have admired the
standable. But times have changed.
ering
trade
and
sterling
area
soundness of Canadian banks. No pensive for the city dweller to get
As pointed out,
because of the
preferences.
France employs all
out in the country, the rural pop¬

1946,

balance

favorable

world trade exceed

and

States

vestigate

gation

While

the

from

tural

be re-examined

many years ago

officials, appoint

proper

of mass production and
costs, that tariffs imposed

lower

commission immediately to in¬

view

Already Too Many Restrictions on
Trade Between Us

Dollar Shortage

So-Called

The

a

trade

economic policies and

ing to sound

Today, both countries are victims
of world economic conditions. Our
mutual trade is restricted because

benefits

sight. I, therefore, urge that the
Government of the; United States
and the Government, of Canada

through

Thursday, October 30, 1947

use

buyers of
them for

the production of goods and serv-

agricul¬ j ices enriching the life of all of

us.

Volume 166

Number 4642

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(are

Railroad Security Outlook

(Continued from page 12)
though a high degree of inflation
is contrary to the best
interests

whereas
than

they used
millions.

$16

be

to

more

Milwaukee's

fixed

depreciation charges
$6.6 million in relation to the
$1.5 million fixed charges pro¬
of

posed by the reorganization plan.
Frisco had $4.5 million deprecia¬
tion charges compared with cur¬

by inflation psychol¬
ogy, the stage does not appear set

tion.

around

for

the

subject.

If,

apart
engendered

from

normal

a

bull

a

type

market

bull

market,

why

shouldn't one then
expect
continuation of the bear market
that
began
last
year.
Why
shouldn't one expect

materially

lower

prices

for

railroad

bonds
stocks other than those rela¬

and

tively few

possessed of investment

characteristics?
expect

qne
the

Why

return

a

shouldn't

of

prices

to

extremely low levels prevail¬
ing in periods such as the early
and late

lions

As

result, generally speaking,
railroad
industry
can
stay
a

solvent

if

even

nothing

for

it

little

earns

or

protracted

period
of time.
In a period of stress,
this could prove a tremendously
important factor from the stand¬
point of price.
It would tend to
assure
the security holder
that
temporarily bad earnings would
not deprive him, through bank¬
ruptcy, of participating fully in
a future period of better
earnings.
a

picture

to support such
In the first

view.

a

Good
A

Maintenance

of

with

do

the

that,

are

this

which

place, there is plenty
theory

on average, for years ahead
country will be busily en¬
gaged in the production of all of
the
many
items that make up

traffic.

Even

pessimistically inclined

the

most

that,

agree

setback, industrial produc¬

will

continue

plateau for

environment

rent

admittedly
nearer

aftermath to the

cur¬

Strong

Financial

In

the

are

many elements of strength.
One
of the most important features of

strength is the current tremen¬
dously strong financial position.
Except in 1945 and 1946, railroads
never
in their history had cash
and working capital as
large as
today. At the end of June, Class I
and

working

lions.

After

capital

of

World

$1.8

War

bil¬

I,

that

traffic,

higher

terials

and

supplies,

due to

a

lay

four

of

and

five

times

charges

and

the

have

can't

be

it

serious

It's

money.

between

annual

fixed

companies

that

threatened

with

financial

difficulties

for

greatly

reduced

charges—by

railroads
debt

have

Last year,

$159

charges
million.

On the

figures just
34%

reduction

Class

I

railroads

will

be

only

about

would

require

1S29

and

million—a

•

$82

reduction

about

charges

$46

1932

somewhat

$35
mil¬

fixed

over

A similar 57%

$30

reduction

here, consideration ought
to be given equipment
obligation
maturities.
tioned

debt

and

fixed

charges drastically slashed as in
no
previous bankruptcy period.
its

fixed

charges
reduced from more than $11 mil¬
lions a year to about $1.7 millions.
The reorganization plan for the
Rock Island calls for fixed charg¬
es of about $1.5 millions as against

$14 millions.
ern's fixed charges

over

more

just

maturities

of most other

men¬

are

ex¬

This is true also

are

strength. In
the longer run, the latter will
presumably dictate the price pat¬
tern, but this may not come about
features

until

of the current unsatis¬

some

factory

of

have

pressures

moved.

This

overnight.

will

removed it would

to

not

not

been re¬
happen

Until they have been
advisable

seem

get too bullish on

market

if, through
possible to

even

were

rities.

Just

stock

a

see

take

look

one

at

a

speculative bond chart
covering the periods
1932-1934
and 1938-1941 and see if you want
or

to try.

'

.

bullishness on the
advisable but
restrict long-term pur¬
periods of gloom. For

Long-term
railroads

appears

strength and not to get too bear¬
ish on market weakness. I think

I'd tend to

that

the balance of the time an oppor¬

in

chases

to

major adjustment
period; that later on, when this
period is viewed from hindsight,
it may not show any long trend
of
prices either up or
down.
Moreover, I doubt that it would
be possible to predict the time or

issues

the

valued in relation to others.

we are

a

extent of the several

and

up

tunistic
trading
attitude
seems
advisable,
Efforts may well be
concentrated
on
switches
since,
despite the price adjustments of
the
past
year,
many
railroad
still

under

seem

over¬

or

companies.

lion

or

about

about

four

and

$90

mil¬

one

half

times current annual fixed charges.

and

now

depreciate way
structures apart from ballast,
ties.

Prior to

the

early
deprecia¬
on rolling stock.
As a result, depreciation
charges
are
today larger than they used
to

be.

For

the

June 30, 1947,
charged
their

only

12

months

Class

ended

I

Railroads

income

accounts

with

depreciation amounting to
about $350 million. This is about
the

early

a

year

more

than in

1920's, and about $150

more

a

year

than

in

the

1930's.

North

West¬

are now a

than $2 millions




a

lit¬

year

aspect of

securities

situation

recently

had

I

Railroads

will have when the railroads still
in bankruptcy emerge therefrom.

The

overall

figures

are

no

in¬

dication of how large depreciation
charges now are in relation to
fixed charges in the case of indi¬
vidual

railroads.

Last year, Chi¬
cago & North Western had depre¬
ciation
charges of $9.6 million

compared with fixed charges of
$2.3 million. Chicago, Rock Island

Eniopean Aid and Marshall Plan
(Continued fropi page 9)

to

securities

Line

of

the

Railway

Company

reorganized last

was

that

of the

Air

which
I found

year.

the

equipment
obligations
first mortgage fixed interest

and

bonds

selling for about $45

were

million;
the
income
bonds
for
about $34 millions; preferred stock

be

corrected, so our aid
produce effective results, we

on

figure

Seaboard

to

are
can

selling

occasion

also

will

have

to

export

sound

economic and financial policies.
We would do well to remember
that

of

the

requirements of
sound help to another, whether to
an
individual, a business, or a
nation, is to make certain every¬
thing
the
petitioner
can
and
should do to put his own house
one

in order is

actually and promptly

done.

lion

and

capital and maintenance

This

Whether

want it

we

forfeit it to

or

other nation.

some

not

be

done

too

loss;
shortages of every kind;
a physical, moral, and
fatigue; and an extreme

great

mental

dislocation of all the normal proc¬
of personal and national liv¬

esses

ing.
These

strong

are

briefly expressed but
for using additional

reasons

of the

resources

aiding Europe.
not

can

the

stimulate
and

our

effort to find sound

effective

There

is

structive

solutions.
doubt

no

that

most aggressive

we

take this part, we

factor—Soviet Russia.

no

excuses

its

market

securities,

value

all

of

all

other

assets

edly

will forfeit to the world's
and unstabilizing

we

When you think of this possibil¬

of

And the fact that
there
are
substantial
problems
and obstacles to be faced, at home
and
abroad, should continue to

basis

the

cost

failing to do it.

funds of about $26 million; a total
of
about $67
millions.
On the
cf

States in

United

If the cost is high,

overlook

we

of

because
and

too many

If

should do the latter, undoubt¬

could

of too much destruction

we

not, his¬
for about $7
million; and the com¬ tory appears to have delegated
mon
stock for about $14
million; leadership to us. We are the great¬
a total
of about $100 million. At est power in the world today and
can
be its stabilizing factor.
the end of last
We
year, the company
had net current assets of $41 mil¬ can accept this responsibility, or

leadership

know

is

greatly

for

what

con¬

a

unselfish

and

world

needed.
If
need make
We

do.

we

than the net current assets and
the two cash funds just mentioned
w7ere valued at about
$33 million.

ity,

This is but a fraction of what the

the Paris Conference, Europe has

quire selfishly or to dominate any
other nation, and we know that
already we have given more of

equipment alone is worth, not to

a
population of over 200 million
people. The industrial production

for

mention
and

the

4.000

miles

other facilities

of

road

bore any close

liquid
sented
be

and

owned.

relationship to the

fixed

assets

repre¬

thereby. However, it should

reassuring to the various Sea¬

board
to

Air

know

selling

Line

holders

that their securities

for

prices

small

a

security

of

what

represented.
Somewhat along the same
it

be

may

of

value

to

compare

earnings retained in various
panies in
the

the past

10

lines,

years

com¬

with

market values of their bonds

and stocks. To cite

few

a

instances,

Atchison, Topeka & Santa Fe in
10

past

pany.

80%

years retained $176
earnings in the com¬
If to this figure be added

of

of

amortization

charges—on

the theory that emergency defense

facilities,
standard

consisting
equipment

chiefly

which

of
has

been

fully written off, have ex¬
perienced depreciation of no more
lhan

20%—we arrive at

figure
retained earnings of $259 mil¬
a

of

the

clearly at

so

experienced production
manpower of the Continent is in
this

It

area.

east.

does

lie

not

If this combination

sia,

to

of

the

man¬

and production should be¬

power
come

there is the
of

which

easily
to

being

same

basis,

Central's

last

earnings

plus

10

case

of

Illinois

retained

years

80%

tion

In the

find

amortiza¬

equivalent
common

price

of

stock

around

of Northern Pa¬

cific, the figure is about $42 per
share compared with a price of
$19; for Southern Pacific, about
$82 per share compared with the
price

of

the

stock

readily be
That there

as¬

future

security

as

No

matter

where

look

you

want the
this

food, goods, and credit of
This assistance has

nations

see

which

country.

democracy and free enterprise in
Europe, needs the active and ag¬
gressive support of the United

enterprise system of these United

States.

States

peace

We

not

can

have

real

a

while the European people

afraid

are

that

militant

and

un¬

scrupulous Communist minorities
will

force

themselves

to

wish

to

be

free

and

democratic.

Existing freedoms of
the individual and enterprise need
a
strengthening and supporting
hand, if they are to have a con¬

possible
free

—

fail¬
ing everywhere else in the world

reason

a

only

democratic

dom and production may be

dence

of

its

the

—

from
the
production,
wealth, and resources of the free
people of the United States. Free¬

—but

on

from

come

course

major¬
ities, which have given every evi¬

not

are

is—the

life—which
tect and

develop

we

failing

here.

American
must not

The

way

only

of

pro¬

improve—but continue to
as an

instrument of world

and stability.

progress

tinued and renewed life.

And, we
can
not have a continuing pros¬
perity in this country with a large

With Conrad, Bruce & Co.
(Special

part of the rest of the world flat
its

on

and

more

are

much

tion

LOS

of

Financial

Chronicle)

CALIF.—

Baker has

become

af¬

filiated with Conrad, Bruce & Co.,
530 West Sixth Street.
He was

previously with Hope & Co.

With Morton Seidel
(Special to The Financial

more

LOS

ANGELES,

Chronicle)

CALIF.—

of

solu¬

Stephen J. Kline has become

longer

term

appeared

from

nected with Morton Seidel & Co.,
458 South Spring Street.

difficult

more

The

to

ANGELES,

Francis O.

apparent. The problems

and

much

than

they

here.

con¬

Estimates of the rehabilita¬

have

tion job to be done have been far
too low.
Where we thought in
terms

of

a

apparent
matter of

few

that

is

Europe

and
can

tice, freedom, and constructive

nation.

stock.

that the railroad rough dia¬

why—if American economic
is used for purposes of jus¬

sons

power

World peace, and what is left of

a

quick

Summing up—it

return than any or all other
These are forceful rea¬

nations.

you

around

mond lias many facets.

no

abroad,

$42.
For
Kansas City Southern, the
figure is about $60 per share, i.e.,
about three times the price of the

seen

ac¬

blood and wealth to the world

our

a

also have become

we

to

it will benefit the world situation.

become

back, economically and fi¬
of
nancially.
lion. This compares with funded
While two years after V-J Day
debt of $229 million at the end of
the prospects of Europe
appear
1946 and
on
the common stock
worse than at that time, actually
alone is the equivalent of $106 per
there
have
been
improvement.
share compared
with a market
But, in this time, the penalties
price of around $80 per share. On
of the war
the

desire

a

of

could

our

no

created

possibility

power

have

we

sistance to others—and to oppose
the economic and political slavery
of totalitarian and police States-

contributor to Soviet Rus¬

a

center

it

v/ould cost to replace the
property

west

the

are

represent

that

line the Soviets drew

menace

that

fraction

remember

and

Of course, it has been a
long
time since railroad
security prices

$25.

Class

which

at

the market value of all

up

fixed

the

at¬

the basis of the market prices of
all of their stocks and bonds.
I

charges, the
$84 per share of
compared with a

charges of about $400 mil¬

which

relatively low
price
many
companies are

Moreover, current
depreciation charges of
about
$350 million are within
striking distance of the annual
that

the railroad
to

tention may well be drawn is the

the

lion

had

such

ciation charges.

million

to

amount

fixed

Seaboard

In the cases

ceeded by wide margins by depre¬

in 1946 maintenance expenditures

annual

interest

Of

are

v/ould

early

investor

railroad

of

to

This reduction

times

1.7

of

million.

industry
as
a
whole and its securities, is
the * fact
that
the
perennially
bankrupt railroads have had their

tle

they

were

million

about 57%.

or

was

expenditures

from

of

the

by

reduction of only

a

maintenance

particularly

standpoint
to

them

differently — between
1932, Southern Pacific's

million

the

million.

course, if depreciation charges are
considered a factor of safety as

but

Stated

Highly
reaction

maintenance

12%.

$200 million

from

a

the basis of current figures it

$400
millions
contrasted
with close to $700 millions in 1929.

important,

1929

required

reduce

1940's, about the
tion charges were

with lower coupon bonds and

pon

in

to

rails and

through reorganization. After the
relatively few roads that are still
in bankruptcy have been
reorgan¬
ized,
annual
fixed
charges
of

it

equal to fixed charges.

amount

On

basis of the

given,

expenditures
an

were

now

debt,
cou¬

part

million.
Its
fixed
less than $20

are

fixed

financing, by refunding high

in

expenditures

of

payment of maturing debt without

and

Southern Pacific's

and

purchase

ma¬

an

Railroads

all

of

Using Southern Pa¬
illustration, we find
that
maintenance
expenditures
(excluding depreciation charges)
in 1929 were about $82 million;
fixed charges were about $28 mil¬

many years.

Practically

costs

desire of management to

as

lion

lot

are

fat.

on

cific

tal.

a

expenditures

and

wages

reduced

is

that

much larger than they
in part due to heavier
in part due to higher

1920, they had $400 millions
cash, $600 millions working capi¬
In 1929 they had $700 mil¬
lions cash and $200 millions work¬
ing capital. Cash of $1.9 billions

was

to be,

railroads had cash of $1.9 billions

is in

It

mainte¬

very

used

about

railroads themselves

revenues

small.

contract

Maintenance
now

maintenance

Condition

traffic,

are

to

kept
many railroad companies solvent
during the 1930's.

lion.
in

Such

large and

are

expenditures

nance

relatively

inflationary trends.

Rails

when

ability

outlook, should be a sustain¬
ing force in an.y period of general
unsettlement that may be encoun¬
an

earnings

contracted

earnings

term

as

and

nues

this

which

control.

a

expenditures are usually raised
considerably when traffic, reve¬

and

of

over

has

company

of

measure

This

avoids the question of the

tered

good

high

in reasonable balance. With
plenty
of freight to
move, the railroads
should be prosperous.
view,

railroad

a

a

on

stables prices and
wages, railroad
wages and other costs will not be

This

of the few cost items

one

come.

to

years

expectation, which I think is well
founded, makes it impossible to
suppose that, in a generally favor¬
able

of

fixed charges of $3.5

Another

strength to which
no great attention has so far been
given, as far as I know, has to

of evidence to
support the

tion

of
Milwaukee

had depreciation charges
$10.9 million in contrast to

Rails

feature of

present relation of
maintenance expenditures to fixed
charges. Maintenance expeditures

a

charges

million.

crystal ball, it
in advance
every single development affect¬
ing the prices of railroad secu¬

there

But

Prices of Rail Issues Are Low

The answer, I should
say, is
that there are too
many features
of strength in the railroad
picture
and the general economic

after

$3

fixed

last year

1930's?

railroad

annual

rent

down movements that lie ahead--*

also im¬

portant

charges are about $3V2 mil¬
a year
compared with about
$15 millions prior to the last re¬
organization and over $20 millions
prior to the previous reorganiza¬

of the railroads. But
I'm not here
to talk about inflation
and I'd bet¬
ter drop the

features of weakness is un¬

deniable.

& Pacific had

3a

(1765)

full

more
a

it

years,

or

to

(Special to

be

in
a

more.

The

PASADENA,

now

recovery

likely

decade

is

Joins John M. Barbour Co.

F.

has

Jewett

Financial

Chronicle)

CALIF. —Joseph
become

with John M. Barbour &
zens

Bank

affiliated

Co., Citi¬

Building.

European Recovery Slow
*

In the United States

and

we

we

remarkable

made

a

have made the mistake of

assuming these European nations
accomplish a change in

could
some

With Shader-Winkler Co.
(Special

recovery,

degree similar to our own.

to

The

Financial

Chronicle)

DETROIT, MICH. — Edwin B,
Feys is with Shader-Winkler Co.,
Penobscot

the

Building, members of
Stock Exchange.

Detroit

34

COMMERCIAL

THE

(1766)

&

chant,

(Continued from page 17)

trustee, supervises the investment
program in view of the changing
conditions

and

dles

distribution

of the
fund., Another organization han¬
the

purpose

the

of

shares.

shoe
manufacturer
about their respect¬

and

different

securities.

broad
more

compari¬

In

he would receive four divi¬
ive businesses to feel assured that dend checks during the year and
the ordinary uninitiated could not perhaps one proxy.
Surely this
succeed without long and special¬ simplicity would appeal to the
ized training. Yet these same men busy businessman and the indi¬
stand ready to embark on one of vidual who dislikes figures.
know enough

v.',-

precedents for or against trustees
investing
in
investment
fund
shares
in
states
following the
"Prudent Man" rule, there is a

Open End Investment Funds—The Most Significant
Development in the Last Fifty Years
son,

such purposes.
One fund
a
substantial percentage

owned

are

is

averaging

plan

a

whereby a certain number of
lars is invested
at regular

dol¬
in¬

(in contrast to buying a
definite number of shares). The
vehicle best suited is a security
of more or less volatile character.,

tervals

reports

of its
trust ac¬

by

Averaging

Hollar

Dollar

acceptance and use of the
conservative fund shares for

shares

1947

Thursday, October 30,

FINANCIAL CHRONICLE

plan results in a

The

counts.

the

below

cost

per

share

of

average

which

at

prices

the,

purchases

the

Corporations—Many industrial
corporations and others list se¬ were made, or in other words, >
curity portfolios among their as¬ fewer shares are acquired at high
prices and more shares at low
the most intricate businesses
Safety — The wide diversifica¬ sets, Where the considerations are
that
of
investment
requiring tion offered by the investment long-term, the use of funds in prices. It is necessary that theperhaps the most extensive and company fund is one of the oldest place of bonds insures greater in¬ program be continued without in-,
far-reaching specialized knowl¬ and truest means of protecting come to the corporation because terruption to attain the best re-,
of the tax laws.
For example, a suits. For example, if investments,
edge of any profession or busi¬ principal.
Safety is further en¬
of $100 each month were made
ness.
hanced by government regula¬ corporation receiving $10,000 in¬
come from bond
interest retains from April 1, 1940 to March l,j
and
the continuous super¬
It is the realization of these tion
1946 in a certain leverage fund,/0
only $6,200 after paying a 38')
simple truths that has caused vision by management.
tax, while the same income from a portfolio valued at over $20,000,
many of the more thoughtful in¬
Income—An investor will ask,
investment fund dividends paid would have been held as compared,
vestors to use investment funds. "What assurance have I of con¬
from income would produce $9,- with the total investment of $7,200. •
The amount
"Are
All
Your
Eggs in One tinued dividends?"
340
after-tax
income.
The
tax During this period the price flue-,
Basket?—-When you own shares of of dividends may vary but their
to $7.87 per,
feature is important; whereas in¬ uated from $1.89
continuity is reasonably assured
any business enterprise you are in
terest from bond investments are share—the average cost per share
of
the
diversification.
effect a part owner of that enter¬ because
taxed at the regular corporation was $2.48.
prise. The company is "working" Many of the funds hold in their
rates, dividends from income re¬
Cost for Equal Diversification
for you.
!
In an investment fund portfolios bonds, preferred and ceive an 85% credit, leaving only
your investment money is put to common stocks of America's lead¬
About the only objection to the;
15% of the income taxable.
As ;s
work in many different individual ing corporations; therefore, divi¬
standard for tax purposes, capital purchase of investment funds is
companies and in a wide variety dends can be expected to be more gains dividends are treated as the payment of the difference be-,
stable especially in times of de¬
of industries.
Spreading invest¬
capital gains by the receiving cor¬ tween the bid price and the of¬
ment ownership among many en¬ pression, than they would be if
fering price—sometimes called theporation.
they were dependent upon only a
terprises is a time-tested invest¬
"load." This initial fee paid upon,
Bequests—Present tax laws on
number of sources.
To
ment principle employed to de¬ limited
estates and gifts make it highly purchasing the shares of a fund
crease risk
to capital.
When no our knowledge, there is no case
averages a little more than 8V2%
advantageous to the wealthy in¬
on record of a fund, which places
more than a small percentage of
—in most cases upon liquidation
dividual to distribute portions of
funds is invested an any one se¬ emphasis on investing for income,
no fee or commission is charged.;
his estate prior to his decease. The
curity, a loss in that security that has passed a dividend.
taxable estate of
an
individual it is difficult to make a compari¬
would
have
a
"When You Need Money Most"
proportionately
son
to
an
individual's program
may be reduced substantially by
small effect on the total value of
Let
us
consider the investor
because of the impracticability of ,
the giving, free of gift taxes, up
the fund; moreover, profits in se¬ who holds but must sell several
an
average investor diversifying
to $3,000 per year to an unlimited
curities of other companies might thousand shares of an individual
his
holdings - as
broadly.
To;
number of donees.
These dona¬
compensate for such a loss or re¬ security. It is very rare indeed
diversify $5,000 in 50 listed se-|
tions are in addition to the life¬
sult in a net gain. The diversifi¬ that the circumstances are such
curities would cost (on an average.,
time gift tax exemption of $30,000.
cation offered in investment funds that a large block of stock can be
cost of $25 share) $278 to buy andA wise program of distributing
is very great, in fact, there are sold in a short space of time
$286 to sell—a total of $564 or
portions of an estate lowers the
over
a
hundred different secur¬ without
receiving
successively
11.28%.
A
comparison
of this,
ultimate estate tax and is benefi¬
ities in many of the funds.
In lower prices for the stock.
In a
11.28% to the 814% for invest-,
cial currently from an income tax
conclusion, diversification of in¬ rapidly declining market, prices
ment funds is not justifiable in all
The most practical /
vestments is offered in companies, have been known to drop many standpoint.
medium is the use of conservarespects for no investor would.
industries and types of securities points. Because the funds will re¬
attempt such diversification with,
—

How to

Buy

—

Daily at the close of the New
York

Stock

Exchange

often

and

twice daily at stated times (pro¬
cedure
varies
with
individual

funds),

the

"asset

value"

per

share is computed. This is simply
the total market value of all the

securities owned by the fund plus

all cash divided by the total num¬
ber of shares outstanding.
The

"offering price" at which

an

in¬

vestor may purchase the shares is
obtained by adding to the "asset

value" the cost of distribution and
broker's commissions.
These last
items

definitely stated in the

are

prospectus

of

the

calculated

on a

and
share basis
from stated percentages of asset
value. The shares of any qualified
fund may be purchased through a
brokerage firm.
are

company

per

How to

Sell

In general the funds

guarantee

to repurchase any number of out¬

standing shares at any time they
are offered for redemption.
This
may be transacted directly by the
company's
transfer
agent
or
through a brokerage firm.
Gen¬

erally,

when, the

deemed

shares

"asset

are

commission is

no

the seller—he receives

value"

the

or

re¬

charged

the stated
so-called

"bid" price as quoted in the news¬
papers.

All

large
newspapers
carry
daily quotations of the funds. The
"offering price" and "bid price"
as explained above are listed. Be¬
cause

of

ment

the

the

redemption agree¬
"open end" funds are

listed

not

.

—

,

Where Quoted

-

.

changes,

the

on

but

diminished

this

national

in

ex¬

manner

no

the

marketability of
shares, for they are redeemed
upon notice.
the

—it is wise to remember the

old purchase upon notice any number
at
certain
specified
"Don't put all of shares
your eggs in one basket."
prices, B shareholders of such
funds need have little worry in
Government Regulation—Since
1940 all investment companies are regard to the liquidity or market¬
required to be registered as such ability of their holdings.

proverb,

common

with

Securities

the

times
as

on

to

and

public record,

a

full

state¬
fundamental pol¬

their

of

ment

&

Exchange
keep at all
file with the Commission,

Commission

a

Information

—

It

has

been

tive investment funds so that con¬

tinuity of management, safety and
income are assured, particularly
when the recipient is untrained in

policy of the funds to report to
shareholders complete and

their

full information at all times.

of

tification

portfolio

^

No¬

changes,

tax

order

^me under the
advantages oi>a regulated in¬

distribute

it is necessary
shareholders

the

to

and
icies.
Once
filed, such policies dividends and the source of same,
capital gains realized by the fund.
What Are the Advantages
cannot be
changed or deviated complete lists of securities held
Therefore, most funds pay quar¬
Professional Investment Coun¬ from except with the approval of in the portfolio, tax factors, etc.,
terly dividends from earned in¬
sel for Any Investor—First of all, the shareholders. Further, all in¬ are all available in easy-to-under- come
plus dividends from realized
the investor himself maintains the vestment companies are subject stand reports.
capital gains or excess security
Upon rechecking the above ad¬
right to buy or sell at any time. to the Federal Investment Com¬
profits—usually the latter may be
Upon purchasing an investment pany Act of 1940 and the rules vantages all that can be said in received in cash or stock at asset
fund he simply delegates to the and regulations promulgated un¬ summation is that it is a rare in¬ value at the shareholder's option.
fund the day to day, week to week der the authority of such Act by vestment that offers so much.
This is an advantageous way to

or

to

year

men

management. The

year

that staff these managements

the Securities and

Exchange Com¬
Who

Under the provisions of

mission.

of

Q

Internal

the

Uses

Supplement

the country.

Revenue Act the investment com¬

lion

are permitted to deduct all
disbursed dividends derived from

and

most

complete statistics on
each industry and each company
therein.

Field

rectly to

a

for

cers

men

are

di¬

and its offi¬

company

first-hand

Decisions

sent

are

information.

rendered only after

panies

commission

capital gains and/or income in
computing Federal income taxes.
The companies are not permitted
to sell short or buy on margin.
Most of the investment companies'
charters

set

lfg study, consultation and de¬

tions

such

liberation—and

10%

of

any

one

one,

but

Such

as

are

made

trained

many

these

not

are

by
minds.

their decisions:

(a) Determination of the
term and

economic
and

near-

long-term trends in the
cycle and in the stock

bond markets.

-.(b) Selection of industries with
maximum
appreciation possibil¬
ities and minimum risks; alloca¬
tion
*

of funds to these

industries.

(c) Selection of individual

Determination of the price

(d)

investment is worth

an

buying.

specified restric¬

that

as

more

no

outstanding

all

than

stock

corporation

may

of

be

owned and that no more than 5%
of

the

may

total

of

assets

the

fund

be invested in any one cor¬

poration's securities. These Fed¬
eral regulations and the restric¬
tions set up by the funds them¬
selves
lend
a
high
degree
of
safety

the

to

shareholder's

in¬

assets in

Let

us

of

Small Investor—The investment
funds

provide at low cost a welland competently man¬

rounded

aged
can

investment

be added to

or

program
that
reduced in size

easily.
Large Investors—Many large in¬

place

a

portant to individuals in large tax

of

investments

the risk and

that

a

will

portfolio
balance

opportunity factors in

—

The doctor,

suppose

dentist, lawyer, etc., find the in¬
example that an investor owns vestment funds most convenient
50 individual securities.
During
and
satisfactory because of the
the course of the year—provided
feeling
o f
security
emanating
all are paying dividends—he will
from
knowing that the invest¬
probably
receive
200
dividend ment is being continuously man¬
checks and in addition at least
aged by highly competent indi¬
one or more proxies from each in¬
viduals who devote their full time

for

the market.
Mr. A.

the

S.

Dewing in his famed
"The Financial Policy of Corpora¬
tions"
points out the thought¬
lessness

among
•

v"

.

.

gyman,

.

-This entails
returning of 50 proxies and
depositing of 200 checks, not

dividual
the
to

take

company.

into

bookkeeping

consideration

that

is

the

necessary.

common

Consider the investor who has in¬

investors in these words:
The school teacher, cler¬

vested his capital in one invest¬
ment fund that contains
in its

that

is

lawyer,

all

dry

too

goods mer¬




portfolio perhaps as many as 75

are

shares

elected.

to the

various

The

Institutions—Colleges, hospitals,
churches, endowment funds, fra¬
ternities, fiduciaries and charities
are increasingly using investment
funds.

Individual Trustees —While
there

are

no

clear-cut

vestor

Investment

Funds

designed to meet different in¬
objectives—some port¬
folios
contain
only
common
vestment

stocks, while others only bonds or
preferred stocks—and there are
gradations within the type of se¬
curity held, that is, there are

chemicals, rails, metals, etc. One
is a leverage fund because

permits borrowing out¬
capital; another fund, veryvolatile in nature, is composed of
its charter

side

end

closed

high-leverage

only

fund"

is

composed of common stocks
growth, preferred stocks for
come
and bonds
for safety

for
in¬

The

funds.

"balanced

of

and the management
from
aggressive to de¬

principal,

fensive securities as it deems

current
ness

market

outlook

trend

justify.

and

Therefore,

the investor can choose a

funds to meet

any

legal ment objectives.

the

busi¬

fund or

of his invest¬

negligible in the light

funds is
their

performance

of;

recorded'

as

below.

;
"Food for Thought"

market

1946

The

Funds

performance

Balanced'

conservatively

the

of

most impressive com¬

was

pared with the stock market ac¬
cording to the investment com-:

expert, Arthur Wisenberger,
following compari¬

pany

who made the

and accounts.

sons

market,

stock

the

While

as

Standard & Poor's 90
Index, declined 7.9% and

indicated by

representative Common Stock

41

are

moves

job.

private investment counsel
prohibitive to the average in¬
and this fee charged for
continuous management
by the

is

Stock

Objectives

fund

brackets.

,

Construction of

(e)

fees

no

certain portion of
their money under outside man¬ high-grade, medium-grade, lowagement as a hedge against their grade and balanced bond funds;
own judgment, while others wish
appreciation preferreds or highto • reduce time-consuming detail grade preferreds; income-produc¬
in order to give more attention to ing,
speculative or low-priced
their own businesses. The capital common stocks. Some funds hold
securities in only one industry—
gains dividends are especially im¬
vestors

Professional Man
—

excess

since

additional

Investment

vestment.

Convenience

com¬

panies within these industries.
a,t which

up

having

received

holdings
or
other

when

charged
are

funds

income

one's

to

$2 billion.

by far the most competent in
Years upon years of
experience is centered in each
group.
Available are the latest

all

of

add

the Funds?

Today there are nearly one mil¬
shareholders in investment

are

90%

of the value of the
investment/ The"

year

per

cost of

to

vestment company,
to

1%

shareholder's
Dividends

In

it is attainable,
The yearly:

management fee^averages less^than.

investing.

the

$5,000—but

only

by use of the funds.

Funds declined 3.7%, the conserv¬

ative Balanced Funds declined

on!

only one-half of 1%.

the average

The results indicate that 1946 was

consecutive

fourth

the

that

year

the investment funds on the aver¬
age

have out-performed the stock

market.

1

"The investment

companies and

connected with them:
justifiably proud of both:
individual company records

everyone
can

the

be

and the overall average for 1946.
These

records

add

further

to our long-held opinion

proof

that well

investment

trusts can
invest
money
more
profitably
than the large majority
of in¬
dividuals can do for themselves*

managed

that there is no
measuring composite
the individual opera¬

It is unfortunate

of

method

of

results

tions, for a glance at the 40-65%
declines

in

many

an

individual

stock issue strongly suggests

that

few individuals do as well as

market averages

The
for

fifth

consecutive

sales of

shares

the

in the long run.
record

set

open-end companies'

during 1946 (a year when

trading volume on the New York
Stock

Exchange

strong

evidence

declined),

that

.is

individual

'

Number 4642

Volume 166

THE

_

Ijri^estors

this in ever-ihcreasing numbers."
For six months

ending June 30,

sales for 46 representa¬
funds increased

1947

net

tive

investment

$67.7 million. This achievement
Was accomplished despite the fact
that.trading on the New York
Stock Exchange declined 35% as

the

with

compared

like

1946

period.
'

For the two year period

from
June 30, 1945 to June 30, 1947 the
Dow-Jones

Composite
Average
began and ended at levels nearly

alike—63.98 to 62.56.

afford

This should

excellent

an

opportunity
and the results:

for comparison —
Three
common

stock

funds

Showed

gains in net asset value
per share of 20.1%, 19.8% and
16%; three balanced funds showed
gains of 16%, 14.1% and 12.5%,
Looking at the declining market
from the 1946 peak to Sept. 19,
1946 the Dow-Jones Industrial de¬
clined
a n

21.19%, the Rails 31.08%
e
Composite Averages
representative Bal¬

t h

d

23.94%—five
anced

Funds

declined

15.13%,

15.04%,
20.76%,
15.68%
and
14.15% respectively. The records

Caution!
Do not expect investment funds
to do the impossible over a short

period,

but

they

recognize them for
good long term

are—a

investment

medium

a

degree to be found

in few, if any, other investments.
A single fund is seldom the an¬
to

swer

Three

investor's

an

to

five

are

problem.
usually more

desirable.
And So

We

,

have

whole

vehicle
able

tried

picture
that

present

advanced to

shown

and

is

the

remark¬

assuming

a

the American life that is

affecting and will continue to af
feet our economic, political and
social

life—Economically, by

viding
flow

a

of

capital

markets
ervoir

that

constant and

more

and

of

into

the

equity

wisely directed

tends

pro¬
even

tremendous

a

to

smooth

This influence

similar

exerted

capital
the

swings of the business cycle and
thereby to stabilize employment;
Politically, by providing a medi¬
um for

to

the

take

of average means

man

in

part

ownership
of
American
industry, thereby
spreading ownership to a broader
political base; and Socially, by
producing results which make it
attractive to
funds

save

and

invest, the
increasing at the family

are

security and the
standing of living.

Of

indebted

are

is

now

general, as

formation.

we

our

in¬

believe

All opinions, unless

otherwise noted, are

our own.

who

bid

A special meeting of the Brook¬
lyn Chapter, National Association

of Cost
Oct.

29,

Accountants was held

on

1947 at Michel's Restau¬

by the
are

Mr. Raymond

C. Morse, Presi¬
Brooklyn Chapter pre¬
the meeting and the sub¬
his talk was "Effective

dent of. the
sided at

of

ject

Controls
which

for

covers

Distribution
a

Costs"

problem that has

plagued most companies for many
•years

and

because of its

many

somewhat intangible

Mr.

Morse

is

Assistant

aspects
nature.

Comp¬

troller, of The American Machine
&




SHARPLY

INDEX
-

the Chicago Board of Trade

on

continued

to

high ground for the season, while the December contract

new

ease with which representatives of those companies
selling large quantities of ingots for conversion purposes
on markets throughout the country.
American Iron and Steel Institute announced on Monday

ernment buying

operating rate pf steel companies having 94% t>f

the

steel-making capacity of the industry will be 97.0% of capacity
beginning Oct. 27, 1947, the. highest rate since the week
of June 19, 1944.
This compares with 97.1% one week ago, 94.4%
one month ago and 89.4% one
year ago.
Current operations represent
a decrease of 0.1 point or 0.1% from the
preceding week.
The week's operating rate is equivalent to 1,697,400 tons of steel
ingots and castings compared to 1,699,200 tons one week ago, 1,651,900
tons one month ago and 1,575,600 tons one year ago.
for the w«ek

Loadings for the latest week, Oct. 18, 1947, totaled 954,249 cars,
according to the Association of American Railroads.
This was a
decrease of 2,613 cars, or 0.3% below the preceding week.
It was,
however, an increase of 22,483 cars,* or 2.4% above the corresponding
week

in

1946

week

same

and

in

RAILROAD

increase of

an

180,442 cars,

23.3%

or

above the

1945.

FREIGHT REVENUE

FOR SEPTEMBER

ESTIMATED

AT 13.3% ABOVE 1946
Based

advance

reports from 82 Class I railroads, whose reve¬
of total operating revenues, the Association
estimated that railroad operating revenues
in September, 1947, increased 8.6% above the same month in 1946.
The foregoing estimate covers only operating revenues and does not
touch upon the trends in operating expenses, taxes or final income
results.
In the like period of 1946 estimated freight revenue was
13.3% under that of the current period, but estimated passenger
revenues was 16% higher.
on

represent

nues

American

ELECTRIC

81.4%

Railroads

OUTPUT

Gov¬
dominant factor

high levels for 30 years.
was

a

Other bullish influences included continued unfavorable weather
Winter wheat belt, and an advance of from 75 to
hundredweight in PMA flour buying prices.
Domestic
bookings remained on a small scale with strength in wheat
tending to restrict sales.
Corn prices averaged higher, reflecting comparatively light coun¬
try offerings of both old and new corn.
Demand for lard was only
fair and prices showed a somewhat easier tone as the result of
profit-taking induced by recent sharp advances. Cocoa prices gained
4 cents per pound in the week, reflecting tightness in the spot market

flour

and continued lack of offerings from primary markets.
Cotton markets developed further strength last week.

distributed by the electric light
and power industry for the week ended Oct. 25, 1947 was 4,963,816,000
kwh., according to the Edison Electric Institute. This compares with
4,946,090,000 kwh in the preceding week, and was 7.9% in excess
of the 4,601,767,000 kwh. produced in the corresponding week of last

pound

by continued strong demand for print cloths and sheetings at firm

prices.
Activity

in

There

week.

domestic
Some
of

wools

Boston raw wool market was slower last
persistent demand for fine and half-blood

the

was

a

but

offerings remained scarce.

improvement was noted in foreign apparel wools as the
increasing arrivals of new clip, foreign fine wools. Ap¬

praisals of new clip domestic wools for purchase by the CCC totaled
8,940,656 pounds during the week ended Oct. 10, bringing total
appraisals for the season to date to 76,148,251 pounds.,
■.
„

WHOLESALE TRADE IMPROVE SLIGHTLY

RETAIL AND

OVER WEEK AND YEAR AGO

buying remained brisk with retail volume in the
slightly above the level of the previous week and moderately
that of the corresponding week a year ago, Dun & Brad¬

Consumer

PRODUCTION RISES

AUTOMOTIVE

week

IN

LATEST WEEK-

exceeded

PRICE INCREASES OF 5% FORECAST

street, Inc. reports in its current survey of trade.

The

increasing trend toward higher material costs and the high
price of tooling may result in price increases of 1948 car models
as

much

President

With

as

5% above prevailing levels, according to C. E. Wilson,

General

of

Motors

Corp.

respect to the question of how soon the return to

a

more

normal

delivery waiting period will occur, Harlow H. Curtice, Gen¬
eral Manager of General Motors' Buick Division, writing for the
November issue of "The Buick Magazine," states as his opinion,
that it will be 1950

or

1951 at the earliest before demand and supply

will be in close enough balance to make this possible.
Production in the United States and Canada during the past
week totaled 105,587 units, compared with a revised figure of

89,180 units in the previous week and 87,680 units in the compar¬
able period of last year, states Ward's.

In the corresponding 1941

week the figure was 91,855 units.

country

week's

and

output comprised 99,330 vehicles made in this
in Canada. The U. S. total included 73,105

6,257

cars

and

26,225 trucks, while the Dominion figure showed 4,130

cars

and

2,127 trucks.

NEW BUSINESS INCORPORATIONS UP
IN

SLIGHTLY

SEPTEMBER

There was a rather general but small rise in the rate of new
business incorporations during September although the total number

FAILURES

CONTINUE

Interest in Fall and Winter clothing was

curtailed in some areas
Very little resistance to high food
prices was reported and it was noted that the super markets in many
areas were very heavily patronized.
A very large proportion of consumer income continued to
be spent on food the supply of which was generally plentiful.
by unseasonally warm weather.

,

Canned and frozen foods remained very popular and fresh vege¬
tables and friuits were

of

poultry

quested

2Vz

times

they fell far short of
total of 300 which occurred in the corresponding week

prewar

numerous

as

as

a

year

Increase

was

ago,

1939.
All

of

the

week's

involving liabilities of $5,000
cerns

failing in this size

or

group

concentrated

more.

in

failures

Up from 60 to 70, con¬

outnumbered by

a

wide margin

the 30 reported last year.

Wholesaling, construction, and commercial service accounted
entirely for the week's rise in failures. The number of wholesalers
failing increased from 10 to 18, the highest total for this trade in
any week since May. Construction and commercial service failures,
despite gains from the previous week's level, remained below 10,
totaling 9 and 6 respectively.
FOOD PRICE INDEX HIGHER MODERATELY IN LATEST WEElfc
Continued
in

the

strength in basic foods resulted in

Dun

&

Bradstreet

wholesale

food

a

further moderate

price

index, which

substantial.
large quantities of flour.

and

very

fresh

Utility cuts
with the buying

purchased in large volume.

of beef and pork products were in large demand

fish

Many

housewives re¬

Women's hooded and untrimmeel
popular, while crepe dresses, sweaters and skirts
steady demand.
Interest in fancy silk scarves, hats and
accessories increased and buying of costume jewelry improved. Men's
suits and overcoats were steadily purchased.
Demand for boys'
Apparel sold well last week.

cloth

coats

were

in

were

The buying of both
woipen's shoes continued steady and at high level.
The demand for good quality furniture continued to be large
and the supply of branded major appliances improved in some areas.
Consumer interest in phonographs decreased.
Paints, building mate¬
rials and plumbing supplies remained in large demand with automo¬
bile supplies selling well.
Sporting goods volume, too, was large.

jackets, slacks and wool shirts also increased.
men's and

Retail

volume

for

the

country

in

the

period

ended

on

estimated to be from 9 to 13%
above a year ago.
Regional estimates exceeded those of a year
ago by the following percentages:
New England 4 to 8, East
15 to 19, South 3 to 7, Middle West and Southwest 5 to 9, North¬

Wednesday

of

last week

west 6 to 10, and

Wholesale

UPTREND

Increasing in the week ending Oct. 23, commercial and indus¬
trial failures rose to 81, reports Dun & Bradstreet, Inc.
This rep¬
resented only a mild advance from the preceding week's total of 75,
but a sharp rise from the 1946 level when only 33 concerns failed
in the comparable week.
Despite the fact that businesses failing

rise

per

Inquiries were numerous and medium to better grades were
actively sought by mills. Sales in the 10 spot markets totaled 462,900
bales for the week as compared with 398,600 the previous week,
and 197,200 in the same week a year ago. Consumption of the staple
during September was slightly below trade expectations, totaling
727,448 bales, according to the Bureau of the Census. This compared
with 710,601 in August, and 819,058 in September a year ago.
The
average daily rate of consumption last month was estimated at 33,400
bales, against 33,900 in August, and 39,400 in September last year.
Cotton loan entries showed an increase for the week, as did regis¬
trations for export.
Carded gray cotton cloth markets were featured

year.

the

Spot

higher, largely influ¬
enced by local covering and price-fixing against sales of cotton
to the Commodity Credit Corporation.

result

7.9% HIGHER THAN A YEAR AGO

The amount of electrical energy

of

new

prices averaged about 1 cent

FREIGHT LOADINGS A TRIFLE LOWER
IN LATEST WWEK

RAILROAD

by

to

80 cents per

of this week the.

of

rose

of cash wheat and flour

conditions in the

Foundry Company of Brooklyn,

New York.

PRICE

decline, all grain prices scored further substantial advances
Wheat was the leader as all future deliveries went

The

were

rant, Brooklyn, New York.

;

last week.

high prices

BUSINESS

Distribution Costs

week earlier, The current

in the rise.

throughout the country last month remained sub¬
stantially below that for the corresponding month a year ago. Num¬
bering 8.561, charterings for September increased 6.3% above the
August figure at 8,055, but they were 10.4% fewer than in the like
1946 month with 9,551, according to the latest survey by Dun &
Bradstreet, Inc.

Controls for

COMMODITY

While trade volume

to

of charters issued

Morse Discusses

a

rise of 4.1% over the month's low of 280.24 touched on Oct. 6.

vated

.

the

of

a

and the cash article

Last

information is accurate, we do not

guarantee it.

exceedingly thin compared with the total scrap shipped
plants.
Since earmarked scrap is usually priced on the

steel

35

some key commodities pushed the Dun
&
daily wholesale commodity price index sharply upward
during the past week. The index figure reached a new record high
level of 291.65 on Oct. 21. This compared with 285.54 a week earlier,
and with 236.73 at this time a year ago.
The latest index reflects

basis of current quotations-bn the free scrap market.
This Condition, states "The iron tAge," has been further aggra-.

to

sources

While

The situation has made the total supply of dealer and

broker scrap

into

»»f|^nvww>»»4

Further advances in

immediate

their plants.

Watling,
Lerchen & Co. in particular, and
to all the investment companies,

in

the

importance to steelmakers is the small
national quotations are based. Scrap
plants which used to pass through
brokers and be a stabilizing influence on the free mar¬
earmarked for steel companies and shipped direct to

dealers and
ket

j

Bradstreet

more

Need More Be Said

We

On

Oct. 21, frdm $6.85

on

HIGHER IN LATEST WEEK

amount of free scrap On which
material from manufacturing

level both social

,

that

$6.90

WHOLESALE

DAILY

the eastern scrap markets is
grain markets by government

on

purchases.

res¬

out

(1767)

iinui

figure represents a gain of 8.8% over the $6.34 recorded a year ago,
and is 68.3% above the $4.10 for the like 1945 date.

(Continued from page 5)

j
try to Europe.
to

mm m> »m' U'W ,—»■»<..'Twwitiuww r« ii

■i&M

investment

an

has

progress

role in

to

of

wiumum-w >

CHRONICLE

combining

the investment qualities of Safety,
Income, Appreciation and Mar¬

ketability to

FINANCIAL

The Stale oi Tiade and Industry

speak well for the funds.

what

&

t

MM

b&tomifig awarfe ol

are

COMMERCIAL

>

was

Pacific Coast 13 to 17.

volume

in

the

week

was

slightly above the levels

of both the

preceding week and the corresponding week a year ago.
most types of merchandise continued to be substantial,
Preference for articles of good quality remained evident.
With the
Fall consumer testing period over, some retailers revised their order
Orders

for

positions with cancellations of overdue orders reported in some lines,
Department store sales on a country-wide basis, as taken from
the Federal Reserve Board's index for the week ended Oct. 18, 1947,
increased by 2% from the like period of last year.
an increase of 8% in the preceding week.
For

with

ended Oct. 18,

This compared
the four weeks

1947, sales increased by 12% and for the year

increased by 8%.

to date
#

the rule in retail trade here in
New York the past week with department store volume placed
Substantial

at about

progress

was

35% above the similar week of 1946.

According

to

the

Federal

Reserve

Board's index department

weekly period to Oct. 18, 1947,
increased 23% above the same period last year.
This compared with
an increase of 26% (revised figure) in the preceding week.
In using
store sales in New York City for the

comparisons for this week allowance should be made for
and Newark work stoppages
trucking industry prevailed.
For the four weeks ended Oct,
18, 1947, sales increased 29% and for the year to date rose by 9%.

year-ago

the fact that in the cities of New York
in the

Sfi

(1768)
chasing

(Continued from first page)

or

to

a

prices

or

But

await
about

these, phases of the questions now brought to the fore by the
Chief Executive. Meanwhile, it would seem in order to ex¬

more

wonders how it

workers

less independent of it.

or

one

be

must

tensive

about to fall into that
easy

press certain hopes about
ask of Congress and what

phi¬

what the President will presently
losophy of Mr. Roosevelt, to the effect that the proper proce¬
Congress, either at the instigation dure is to
"soak the rich" (who apparently are believed never
^f the President or at its own instigation, will do in the
to buy anything, anyway) and in one
way or another turn
premises. For one thing, it may be most fervently hoped the
funds over to the "under-privileged third" who would
That before the time comes for Congress to consider
making
quickly spend it and thus maintain prosperity more or less
the large gifts to France which the President now mentiohs,
The trouble with that is that everyone now
he or some one in a position really to know the full facts indefinitely.
knows well enough that it is sheer nonsense.
and ready to give them full and frank expression will ex¬
It is a strange intellectual
hodge-podge that is being
plain why France, more than two years since it was liber¬ served
up in Washington.
ated—France, which is normally quite self-supporting as
respects its food—should now have to be spoon-fed by the
United States gratis—or starve.

Crisis Feeing Private Enterprise

There is

certainly little or nothing in current statis¬
tics to suggest that anything of the sort is necessary.
For our part, we should like to see facts and figures, in
black and white, about the food situation in France—
compiled and presented by competent persons who are
not

obsessed

with

the

idea

that

we

must

bribe

the

French to
many

reject Communism. We think there are a good
others who would, too. We should also like to be

told much
and much

about French balances in this country,
about what the French are doing to help

more
more

themselves.

In the absence of a clear showing in support
being asked for that country, we think the
people of this country should demand that a halt be
called upon present proceedings.
of what is

Similar substantiation of what the President is

now

tell¬

ing

about the situation in Europe is likewise badly needed
case of Italy and a number of other countries.
We, of
course, have no way of knowing what the temper of Congress
is on these matters. It
gained a rather undeserved reputation
us
in the

"economy-minded"*body at

one

legislative branch have been in Europe
this summer. Time only will tell whether
they were really
"on their own." Their visits could, of
course, in some cir¬
cumstances be made a powerful
supporting influence for all
we

inefficient business¬

alike.

The

tistics of the
furnish

as

bankruptcy sta¬

1929

grim

business

1933

to

period
In 1932,

reading.
whole

a

red to the tune of

in

was

the

$6 billion.

must bribe the remainder of the world

businesses

new

maintain

in the

domestic

theater

of

operations.
The President has very
carefully refrained from saying
officially how he would go about "controlling" or
"eliminating" inflation. He and his advisers have, from
time to time, had a good deal to
say informally on the
subject. Little unity or cohesion is to be found in these
comments.

Indeed

they often appear to lack ordinary
consistency. We hear—that is, when effort is being made
to have foreign demand
appear of small consequence—
that the real

of inflation in this country is to be
found in the tremendous volume of
purchasing power in
cause

the hands of the masses, a
power which

initely disposed to exercise in
country.
come,

So

many

and want

they

are

def¬

most of the markets of the

people have

so many

so

much money or in¬

things all at

once,

that it would

hardly he reasonable to expect prices not to respond,
despite the fact that production in many, if not most
instances, is breaking all records from month to month.

So far

so

.

.

.

!

But in the next instance, we are told
that prices are so
high that the people can not buy what they
want or need, and that the continued rise in values
threatens
to place many
things far beyond the reach of most of the
people, at which time a depression is inevitable! To the
curious, it appears

'

little strange that people bid prices up
beyond their own reach—particularly when the process of
production and distribution must in the nature of things
create

purchasing

a

in the amount of the price asked
and received. But there are other
strange quirks about this
reasoning of the wiseacres among the political advisers of
the Administration, and
among those voluble if half-forgot¬
power

ten minions of the New Deal in its heartier
v

.

One of these

the way

days.

peculiar things is the suggestion that
to stop inflation is to take some of this pur¬




nated

directed

and

1 believe that

approach of this

slum

if

con¬

by

is

essential

are going
industry of

we

to

production

match

by
against

clearance

farm

our

potential,

an, ag¬

monop¬

housing and

program,

govern¬

long ways towards
guaranteeing the markets on
its
present
vicious
cycle
of which full production and full em¬
business
monopoly,
featherbed- ployment depend.
ding and politically inspired
But those who feel
the

free

If

housing

that

codes.

ernment

huge market for building

a

materials

guaranteed in ad¬

were

risk capital would be

vance,

anxious

to

boldness

enter

and

this

field

with

imagination.

determined effort to

In

a

that the

see

built by

were

more

private in¬

As part of

this guaranteed mar¬
ket idea, I would like to see the
government guarantee, through a

carefully planned system of pub¬
lic works, that our heavy goods
industries will keep rolling year
in and year out at a high level of
production. There is plenty in this
field for government to do.
We
need

schools

more

schools.
and

We need

better

and

more

better

hospitals

The bene¬

hospitals.

fits of the TVA which have been

brought

to

the

people
of the
Tennessee Valley, should not be
denied the people of the Missis¬
sippi,
the
St.
Lawrence,
the
Arkansas and

the Columbia Val¬

leys.

The timing of such projects
a big factor in maintaining
full production and full employ¬
can

be

ment.

Government

also

can

to

power

purchasing

our

work

by

taxation.

of

a

in

private enterprise system are.
my
opinion, badly in error.

The TVA cost
lars.

Even at the present level of

we
could
bring similar
irrigation and navigation
developments to all of our major

rivers for
—a

be spread
We need

2,000

like

to

it

see

repre¬

I

would

eliminated.

If this

were

done, dividends would, of
course, be substantially increased.
But they would be subject to the
normal
are

income

reported

tax

rates

they

as

individuals.
It
to place
heavy penalty tax on the accu¬

would

be

mulation

neither

by

necessary

of

reserves

reinvested

improvement

or

or

in

which

are

expansion

earmarked for

such investment in the future, but

this

technical

detail

worked out.
I

would

/

also

made, much

be

could

like

more

a period of years.
schopls badly, but

over
more

schools

billion

than $10 billion

more

no

which would necessarily

sum

be

built

We

need

can

dollars.

for

and labor,

see

v

taxes

t

get

If labor

a

of

one

was

the

which A

factors

led to the collapse of 1929.
other

On the

hand, unless business gets

a

reasonable share, there will be in¬

sufficient savings
sential

to

pay

for es¬

in

equip¬
plant

improvements

ment

for

and

necessary

expansion.
I hope

tistics

that

will

adequate sta¬

more

be

developed, indus-industry, on this whole
of output per manhour.
When these figures are available;they should be used as a rational
basis
for
collective
bargaining,

more

wages

There is

a

private

a

do

can

nrovided

we

really determined to ma'ntain

are

enterprise

America.

A

responsibility

system

major share

in

of the

sustained full
production and full employment
must rest on the day-to-day deci¬
sions
of
our
businessmen, our
workers,
these

three

must

be

who, to

for

and

our

farmers.

Of

the key role
by businessmen

groups,

played

large extent, determine
prices,
wages
and
profits

the

which

a

the wheels

turn

of

Amer¬

ican industry.

Let's take the problem of wages

first.

In

every

Civil

War,
productive

generation since
have doubled

we

output.

I'm

raised.

that

ways

In

some

increase

management's
awareness
that
its profit ratio is too high and its

willingness to raise wages without

raising

prices.

where
labor

other

In
is

there

cases,
increase in

no

productivity

profits are

and

where

than

reason¬

.

more

no

able, it may be proper to raise the
price, provided the wages in those
industries are at an unreasonably
low level. There is no reason why
we

should ask the wage-earner to

subsidize the

consumer

third

to higher
which we
constantly high
purchasing power and a healthy
economy — namely, increased
the

But

is

wages

the

look

must

based

wages

road

one

to

for

increased

on

labor

in¬
productivity will
wages to be increased, prof-?
be increased, and' in many;
lower prices in addition.

output

in

crease

allow

its to
cases

hour.

per

labor

This is pot
were

in

as

steady

A

twice

idle theory. In 1946,
at

1919.

about
And

the same
yet, wages

high, and profits
In the 1930's, we had
constantly improved home equip¬
ment, such as vaccum cleaners,
refrigerators, radios, and washing
machines,
with
lower
prices,
as

had tripled.

Business

definite limit to what

government

be

even when there is no
in labor productivity, by

creased,

were

of

facts and

instances, where profits are more
than adequate, wages can be in¬

level

Responsibilities

only three

are

can

caii be built for the

amount.

more

Ways Wages Can Be Raised
There

prices

same

need

we

labor-management relations.

a

not

talking about inflated dollars, I'm
talking about actual units of pro¬

higher wages and higher profits.
That's
the
way
capitalism can
work for the benefit of everyone.
Profits Too High

This

question
of
wages,
of
is tied in closely with the
problem of profits. Industry prof¬
its are high today. I believe they
are far too high for the health of
our
economy.
But profits which
are
too
low would be equally
dangerous. Business profits must
be high enough to provide hot
course,

only

an

and

for

incentive for management
capital, but also to pro¬
vide the savings which will allow
industry constantly to expand and
to become more efficient.14 "
,

duction.

A lack of sufficient

A

part of this increase, of
course, is due to our increase in
population.
But much the great¬
est share is due to the fact that in
our plants have
increasingly efficient and

generation

each

become

the skill of

our

workers has been

steadily improved.
In the 20 years before the war,
the average increase in labor out¬

put

per

manhour was 4%

each

the Second
output was
advantageous, down in some industries and in
to

it

hospitals badly, but 2,000 hospitals

our

taxation.

billion dol¬

a

power,

The

double

only

prices,

the

corporate income tax

gov¬

do the whole job or

can

two-thirds of the job under

even

Our present tax system is a mess.
sents

to

high enough pro¬
portion, we will lack the purchas¬
ing power to buy the goods which
our
increasing productive power
makes possible.
This is exactly,
what happened in the 1920's and

able

ment can go a

to

in

less emotion in the whole field of

gressive program
olies, by an all-out

kind

perj

divided

Indeed,

sumption

come

constructive methods

good.

off

output

be

reasonable fashion between

fails

It is

a

an

should

In these four fundamental gov¬
ernment roles,
carefully coordi¬

what may 1,300,000 homes will be built each
year.

sustain

But

taken

struggling to

Careful, independent study by
dustry rather than by government
intelligent members of Congress could save the United States
sponsored activity, new energies
a
great deal by preventing it from following headlong after would be applied to the task of
the pleadings of the Executive Branch without
any inde¬ increasing efficiency throughout
the whole industry.
pendent inquiry at all.
;
now

taxes

high level of purchas¬
ing power is a government guar¬

homes

to remain aloof from Russia.

And,

sales

and

in

sumption.

administrators, government can do
great deal to help stabilize our
get on their feet and with inade¬ economy.
By its handling of tax
quate reserves which are most rates,
by its timing of public
likely to be wiped out in periods works, by the expansion of social
of this kind.
security payments, by its guar¬
One step which would
help to antee of a minimum food con¬
the

A number of building

time.

the members of the

those who feel that

efficient and

13)

page

low

a

try by
subject

for new businesses.
I would like
to see most of the present excise

antee that

Other Facts Needed

as. an

(Continued from
the inadequate,
The risk of
the business cycle falls heavily on

and

men

increased

an

it may be that the President and his management
are

at

Clearly, thq proceeds resulting
from

goods

some

course,

in¬

of

years
was

and it should continue upward

manhour

Now, of

four

effort

the future.

produced.

most intimate advisers

our.

But, today, according to all
reports, the trend is again upward

a

provide markets for

after
war

of

Some

-

a badly worn
morale
of
our

in

was
The

ebb.

can

strengthened to

degrees.

machinery
condition.

possibly be reconciled with,
purchasing power which is
already beginning to fall short of buying all that is being
produced, or the notion that somehow purchasing power

Lacking

At any rate, the rank and file apparently must
the President's pleasure for more specific information

whether it is

or

the President's notion of

later date.

Details

power away

It is not

else it believes it more effective for one reason
another to postpone such mundane considerations

things,

varying

from the people through taxation!
altogether clear whether this is supposed to fit
into the notion of the President about the cause of high

"As We See It

year.
At the end of
World War, our labor

>

■>

i-:.3

i-

t

>>'

j.n

vestment

in- British

capital in¬

ah4hFf®hCl>

industry

before the war to im?
efficiency resulted ill stag¬
nation. With no increase in labor
prove

output, it was impossible

to^aise

wages without raising * priced;- AS
a
result, between 1930 dnd 1939
the standard of living in these two
countries
actually
deteriorated.
This

was

a

failure of capitalism.
cause of The*1 rapid

It is the direct

march of democratic socialism in

these Two countries today.

Prices; should be high enough

,

Volume

166

provide

to

THE

Number 4642

•-

profit.

adequate

an

Prices should also be high enough
to allow the payment

of adequate

officials know
kind

of

price

will

volume

bring?

In

wages—wages which increase as
productivity increases. The ques-. though he may
tion of how to keep prices at more conservative

reasonable
these

levels

still

and

meet

is

requirements

important

off

the end

ture.

ful

I think you will agree that in
many industries today, prices are
set on a dangerously haphazard
basis. There are, it seems to me
several reasons why the prices of
many of our products have been
unrealistic even in normal times.

decisions.

is the tendency of
businessmen to worship
markups. Markups in most indus¬
One

reason

tries have been established over a

period

of

result

They

years.

the

are

long struggles between
raw material producers, manufac¬
turers, and retailers. Once a per¬
centage markup has been well
of

established,

it

difficult

is

to

no

in

arriving at
But

be

help¬
business
question ' of

can

many

this

how much extra volume a
price will bring is a hard
If you test
lower price in Worcester, Mas¬

lower

research nut to crack.

sachusetts, the wholesalers all the
way from Boston to Hartford will
take advantage of your offer and-,
a
result, your results will be
badly distorted and your test will
be of very little value.

as

And yet, this is the basic ap¬
proach
to
private enterprise—
larger profits, through large vol¬
ume, through lower prices or an
improved product.
This is the
economic approach which brings

benefits

this clearly during my
experience in Washington during
the
war.
Businessmen
rarely
talked about overall profits. Their
main concern was markups. Mark¬

and

were sacred, no matter how
great the overall profit might be.
We bureaucrats changed them at
our peril.

to

p i

saw

ups

As the total volume of business

the markup which
was
proper in a period of lesser
production obviously become dif¬
ficult to defend.
Anything that
we can do to get businessmen to
grows greater,

concentrate

the

on

of

amount

they
make
over
their
whole operation rather than the

money

percentage markups which appear
their books, will contribute to
a healthy private enterprise econ¬

on

to

everyone,

lower

a

businessmen
take

Saint

nomic

Patron

Association

the Na¬
Manufac¬

of
of

price

will

often

are

bring,

reluctant

I will

more

sold at a lower

its

high

time

nessmen

price. And I think

risks

health

of

is

our

our

busi¬

to

take

willing
in

Risk-taking

of

more

were

greater

if they

money

that

direction.

essential

to

system.

Too

today,

Adam Smith said of the

as

businessmen
only

of his

willing

bet

to

day,

own

on

a

Need

More

sure

Enlightened

Business

Leadership

of

responsibility
really

economy

get

we

ship

in

making

work

and

our

unless

enlightened leader¬
business, I am none too

more

in

plished.

If

accom¬

should come, our
system will necessarily

damaged

beyond

recognition.
But even under peacetime condi¬
tions, the challenge to our pri¬
vate enterprise system will not be
easily met.
world

We

fast

moves

these

longer have the time

no

to fumble our way forward as we
did
in the days
of our grand¬

fathers.

monopoly in any form, whether it

the intricacies of

be

industry, but they
anything else.
Their reading is often limited to
the trade papers, the "Saturday
Evening Post," and what Ralph
Robey has to say in 'Newsweek."
With too little time really to think

which

seek

impose

to

re¬

bigger units which
'have
developed
more
efficient
methods of producing and selling.
strictions

on

businessmen

Most

business

The third contributing factor to

little

idea

•costs

them

of
to

what

it

produce

dis¬

tribute their product. We ran into
this situation in many unexpected
ways

in setting prices during the

broad

problems of our
economy, they fall too easily into

I believe the first three factors

which affect setting of prices can

the Securities and Exchange Com¬
mission, and whose grandfathers
a

hundred years ago undoubtedly

iought against public education.

Businessmen,
what

club

another, but if

outside

a

en

more

dif-

a

business which

is

Its vol¬
ume is rather small and its price
Is rather high. The bright young
sales manager suggests that if the
a normal

profit.

price could be dropped 20%, sufjiciept ' Volume would be devel¬
oped to) allow for an increase in

'profit.
fully

He argues his
but

^present
How

it

is

case

skill¬

hard for him

any

facts.

can

the

to

top management




criticizes

liberal—the

at

odds

with

anyone on

conserving
their re¬
sources and in building economic
bomb-proof shelters against the
future.

(Continued from

Fail

fail

cannot

in

allow

America.

ability

our

capitalism to

We

must

make

to

the many.

Today,

basic

a

Soviet

assumption

Government

of

is that

a

depression of major proportions is
inevitable
of

in

that

strong

America

and

depression will

economic

own

this

affairs.

proof has

lished

will

united

war.

people—only

be

we

a

Only

been estab¬

thoroughly
then will it

possible to reach

the

kind

of

basic

international understanding
which lasting peace and pros¬

perity must depend.
The
greatest question of our
day, it seems to me, is whether or
American
its

to

business

tremendous

will

rise

economic

and

political responsibilities; whether
it will produce new and vigorous
leaders who will grasp the issues
of the day and meet them with
confidence and courage.
If

businessmen, who represent

the most powerful force in Amer¬
ica

today, continue to cling to the

economic

cliches

of the

past, our

system will go the way of every
other system which has collapsed,
not because it was basically weak
because

greatest

those

control

of

who

its

had

the

destinies

stubbornly determined
oppose all reasonable change.
were

If,

to

the other hand, American
business
leadership—I
insist it
on

must

large number of followers helping to cor¬
[the Dow' theory's] predictions regardless of their
initial
that accelerated, and accentuated the decline,
which is im¬

be

new

American

business

leadership—rises to the challenge,
we may readily be embarking on
a
new
era
which will spell not
only economic abundance for all
of us,

but a peace which will
generations.

en¬

dure for

Westenberger in L. A.
LOS

ANGELES,

Lorenz H.
a

portant to note. That is, the direct correlation between
the number of
people pursuing a trend
Ponzi-like, and the distortion of the price
structure.

member—and

a

club

goes

to

bat

need

new

business leaders

who

power

We

of

the

in
our

mechanistic," for the
For

example,

one

need

imagination.

more

We

system.

energy,

need,

more

in short,

securities business from

the

.

cally expressed by the market's actual trend.

Blue-Chip Momentum Secularly Increasing
The

effect

of

mass

belief

also

can

be

in

seen

the

long-term
Thus, in
"blue-chips," careful studies show that their rise against
the balance of the market
has, with the exception of part of the war
period, shown a steady secular growth since 1934. The continuation of
this right up to the present can be
appreciated by noting the varia¬
divergence between different groups within
the

case

tions

the

market.

of

in

price-earnings

and

price-asset

blue-chips and nonblue-chips
Average.

rations

between

even

the

composing the Dow-Jones Industrial

Thus, with regard to blue-chip as well as Dow
philosophy, the
greater the number of devotees, the greater and
longer is its likeli¬
continuing to work. This arises from their basic difference

hood of
from

scientific theories. The fact that few people believed Columbus'
theory of a round world did not in any way increase the
probability
of the world's
being flat. The fact that people did believe Franklin
has not been a
controlling reason for outstanding progress in the
field of electrostatics.
In speculation,
however, a theory apparently
become

can

law

a

merely

because

a

sufficient

number

of

believe in it.

people-

How Long the Momentum?

The

number

of

devotees "following the crowd" of a
market
movement, together with that crowd, may get to be
very large, and!
resulting momentum may steadily remain the strongest element
among the buying and selling forces in the liquid market
place.
the

Nevertheless, at

some

point the momentum will collide with and be

halted by extrinsic factors.

pertain

These reversers of the trend sometimes

to

value, sometimes they are imponderables such as Mr.
Roosevelt's price pronouncement in
1937, but they may also be in
the

form

of

other

"technical"

elements.

In

any

the

case

of their occurrence is unpredictable.

timing

One of these

counteracting "technical" elements might, for ex¬
ample, be formula-timing operation.
Formula-timing technique,
irrespective of the qualifying observations that may be made about
it, socially is constructive rather than destructive as are Dow
theory
and the other
trend-accentuating operations.
For the more that
people follow the formula plan's basic principle of
"equalizing" the
proportion, of portfolio fixed-interest and equity holdings and of.
buying on a scale during periods of market weakness, the
greater is
the narrowing of price
swings—all the way to infinity in the event
of unanimous

conformity to such behavior. This process is in direct
contrast to the repercussions from Dow
theory operators who with¬
hold their support of the market during the late
stages of a market
decline and then jump aboard and
help to exaggerate the rise con¬

subsequent advance has been generated.

a

Thus, the Dow category of technical operations distort,
formula-equalizing balances, the price structure.

while

The White House Watches the Ticker

With Thomson, McKinnon
(Special to The Financial

JACKSONVILLE,

Chronicle)

FLA.

—

Thomas H. Hightower has become
associated
with
Thomson
&

McKinnon,

105

West

Forsyth
Street.
Mr.
Hightower was re¬
cently with Southeastern Securi¬
ties

Corporation.

It

should be realized that

stock price movements
fined to the market place, but have repercussions over
part of our society, including the business, general

are
a

not

very

economic,

con¬

wide

and

political spheres.
In addition to the

stock

market

qualitative effects

movements,

on

1926-1929

the public of long-term

and

1929-1932, which are
widely held to be barometrically and thermometrically useful, even
as

single-day market action entails

very

wide effects.

The

attention

paid to the market by Presidents of the United States is again
high¬

Gross, Rogers & Co. Adds
(Special to The Financial

Chronicle)

LOS
ANGELES,
CALIF.—
Phillip H. Gibson has been added
to the staff of Gross, Rogers & Co.,
458 South

Spring Street, members
Los
Angeles Stock Ex¬

With Paine, Webber Firm
(Special to The Financial Chronicle)

BOSTON, MASS. — Albert P.
more enterprise.
Everts, Jr. is with Paine, Webber,
And finally, we need to modify Jackson
&
Curtis,
24
Federal
our
unthinking worship of our Street, members of the New York
narrow
pre-war
capitalism. We Stock Exchange and other leading
need to realize that any economic exchanges.
.

is

reason

which are likewise
should be realized.

public's ingrained feeling that the
so-called insiders'
actions, rather than economic and other extrinsic
factors, can give the key to the market's
future.
Another is the
public's vague belief in the
infallibility of mass judgment as empiri¬

siderably after

CALIF.

Westenberger is engag¬

productive

economic

,

of the basic
reasons,
popularity of Dow theory

some

offices at 210 West Seventh Street.

really understand the eco¬ of the
nomic and political age in which
change.
we
are living.
We need a deep
confidence

"

,

this connection

■

come

reactionary government

the Soviet Gov¬
ernment that this assumption is
false and that we as a people are
capable successfully of managing

on

It is this factor of "a

that

which must find its outlet in

be

cause

our

efit of the few but for the benefit

our

theory
betting in anticipation of others' subsequent
buying or selling beof psychological
excitement caused by the succession of
"up-tick" or "down-tick" quotations.
are

prove

system
work efficiently—not for the ben¬

when

Thus the essential behavior of Dow
operators and similar trendiollowers ma.y be conceived of as follows:
Whereas other speculators
may buy a stock in expectation of someone
else subsequently
taking it
off his bands at a
higher price because of news of higher
earnings or?
because of increased
popularity from other causes; or may sell it short
for converse
reasons; the followers of the
break-through-point

validity

Should Not Allow Capitalism to

We

5)"-\r

page

actually believed in it. Many sold simply because
they realized its
potential impact on the market."

roborate its

the

masse.

We

take

often

are

particularly if the critic happens
to carry that unfortunate label of

so,

Let's

moreover,
have
a bad habit of

me

the

•do

tnaking

to

seems

thinking of themselves as kind of
a
gigantic club. The members of

met if we only
"have the will and intelligence to

is

reac¬

oppose the
income tax, social security, TVA,

successfully

fourth

the

of

some

In the Stock Market

tionary old-timers who

bef

The

seen

of

following blindly the ing in

of

one

"

war.

individual

or

the

on

actually
or

their

hard

mastering

have little time for

leadership

haphazard pricing in some indus¬
tries is lack of adequate figures.
Although a great many business¬
men know their costs thoroughly,
many
others have surprisingly

work

conscientiously in

the habit of

Haphazard Pricing

terms

but

The

days.

and

tions

capi¬

capitalism go by the board in
country after country simply be¬
the capitalists stopped be¬
lieving in what the system could
provide and began to think in

war

Intelligent businessmen should
take
up
the fight against real

big business combines, secret
price agreements between busi¬
nesses
which on every subject
Ibut price are vigorously competi¬
tive, or small business combina¬

Where trouble exists,

cause

not

Businessmen have-a grave share

be

among

are

thing.

present

are

the

private enterprise
many
businessmen

thing they tried to do was
figure some means of avoiding
the rigors of the free market.
And yet, there is a great deal of
honsense written and said on the

institutions
the most efficient.

with

wrong

We must prove to

make

first

nopoly.
business

capitalism.

nothing

would

to

evidence of mo¬
In fact, many of our big

is

a

confident of what will be

tiot prima facie

our system,
much, must

so

gamble that a heavy pro¬
portion of the products sold today

turers, once stated that whenever
two businessmen got together the

Subject of monopoly.
The fact
that a business is big is, in itself,

promises

it is in the way we practice
talism.
Already, we have

out

the chance.

constant state of

a

can—if

the

ume

CHRONICLE

fathers knew.

establish what kind of

extra vol¬

FINANCIAL

only we have good
sense
and good judgment—con¬
tinually evolve into .something far
superior to anything our grand¬

of

The second

tional

and

producer
alike—and
yet
largely
because
it is
hard
to

omy.

problem in the fix¬
ing of prices is the monopoly
problem on which I have already
touched.
Adam Smith, the eco-

consumer

in

is

There

just

a

system

&

evolution,) and that
which

''

Business research

change it.

s

dock with

the

of

be.

may

many

elders to jump

knowledge of how deep the water

the biggest single challenge which
businessmen will face in the fu¬
;

a-lower

effect, the
manager — right
be—is asking his

sales

young

roughly what

even

extra

COMMERCIAL

lighted

in

the

historical

Treasury Morgenthau.
lished

in

In

record
an

kept

Secretary of the

"Collier's," this former Cabinet member reports that in

October, 1937 President Roosevelt
serious

depression

certain

major policies by

market.

by former

excerpt from his diary, recently pub¬

was

at hand
a

and he were led

and

were

single day's

to decide that

a

galvanized into adopting

severe

break in

the stock

This despite the fact that actually the peak of the business

cycle, according to Willard L. Thorp's "Business Annals," and other
objective indices, had been passed the previous May, and despite the
President's

April.
nomic"

own

pronouncement about excessive prices the previpus

Thus violent stock market action—whether induced by "eco¬
or

"technical" causes—is invested

with attributes for

Sometimes,
man

a

even

by the White House

decisively interpreting existing conditions.

President,

as

well

as

the witch-hunting Congress¬

Sabath, unwittingly follows the chart-ists!

38

(1770)

THE

I. B. A. Convention

Provide Aid to

CHRONICLE

Opens Nov. 30

Those traveling

to Hollywood by other

means

than the special

trains should, of course, register at the hotel desk in the regular way.

(Continued from page 7)

rebuilding of fuel
of France

reserves

Thursday, October 30, 1947

Saturday, Dec. 6

Italy have been nearly ex¬
hausted by the cost of their impo ts since the end of the war.
ana

Special trains for the convention will
York and Chicago to Hollywood and return.

New York Special
Pennsylvania RR.

Lv. Washington

Pennsylvania RR..

In addition, special cars

Pittsburgh to be attached to the
New York special train en route, and from Detroit and St. Louis to
be attached to the Chicago special train en route. The schedules for
will be

cars

as

Friday, Nov. 28

;

Central Time

Ly. St. Louis

New York Central Syst.

Ar.

New York Central Syst.

6:00 p.m.
10:40 p.m..

Chicago Special

12:25 a.m.

Indianapolis

Saturday, Nov. 29
Indianapolis

Lv.

follows:

7:55 a.m.

SPECIAL CAR

Going

operated from New

be

1:45 p.m.
11:35 p.m.

Sunday, Dec. 7
Ar. Pittsburgh

ST. LOUIS

will be operated from Cleveland and

these trains and

*

•.

-

Ar. Washington

Convention Transportation

stocks.

Tut: financial

FINANCIAL

(Continued from page 18)

Europe: Truman
the

&

Returning

Curb Inflation and

prevented

COMMERCIAL

*

KLing prices in the United States
and in other countries where they
must

the

have

buy

further

pur chasing power

reduced

q£ their

re-

lpaiuing.funds. They now; face the
coming winter without sufficient
resources to pay for essential food
/and

fuel.

Ti

figures tell the story.

e

France

with

neeos

present funds, until
December, but she will

the end of

enter the new year without funds

to

for essential

pay

French

will

imports. The

$357,000,000

need

to

them until March 31, 1948.

carry

Italy will not be able

even

Italy

have

must

her

carry

until

additional

Dec.

31

to

and

$143,000,000 to
the first quarter of

difficulties

have

also

beep encountered in the occupied

Germany,

—

Japan

and

Kcrea. Additional funds will have

to

be

appropriated

order for
tion i»i

Lv. Baltimore
Lv. Washington

R. F. & P. R. R.

Atlantic Coast Line

6:00 p.m.

Lv. Jacksonville

1:20 p.m.

Fla. E. C.

6:25

this

to maintain

us

these

in

year

posi¬

our

a.m.

12:25 p.m.

R,y.

Returning
Eastern Time

Friday, Dec., 5
Fla. E. C. Ry.
Atlantic Coast

Lv. Jacksonville

Atlantic Coast Line
R. F.

Ar. Baltimore

&

P. R.

11:00

R.

Ar. 30th Street Phila.

be

delayed

until

Urges

Conserving

the
way

reduces the necessity for pressing
forw rd with our voluntary foodsavirg

Dollars

program.

priated
fee-*

by

the

appro¬

Congress cannot
if there is no

4:41 p.m.

Baltimore

44.39

35.08

22.60

will

rot

fhe

States,

be

food unless
the United

enough
people of
vast

quantities of
grab.
I am deeply gratified at
the
splendid
response
of
the
Amcrvao people to our national
food-s~ ving
program.
It is an
t effort to meet
th'e: needs
of

save

humanity.
Even

fro

Europe
short

the

proposed aid
the people of
winter wuT^fee on

country,

this

rations.

and

will

be

dties. But

Hp

without

our

definite

Washington

41.75

33.87

39.22

30.53

19.67

Certificates covering Pullman space will be issued in

Tb°

the

two

problems I have been
ing with you tonight—high

prices
roH

home

and

hunger

phi-oad—present a challenge
people.

We

could

inact'o-.

choose

We

the

could

course

wait

of

until

depression caught up with us, un¬

People

looking

tramped

for

the

aggression.

we

That

hope and

totalitarian

would

other
and

do this

is

course

we

can

know

a.m.

Lv.

Southern Ry.

11:45

a.m.

(ET)

Southern Ry.

the

that

fort

we

a.m.(CTj
(ET)

roads

will

vention

Lv. Hampton

Seaboard

Ar. Hollywood

Seaboard Ry.

1:25

Ry.

8:15

a.m.

(ET)

a.m.(ET)

our

self-

it

is

the heartfelt

people that

to

at

handle

within

our

peace

power

to lead

and plenty.

resolution and

shall achieve

united

L. & N. RR.

should

be

oar

L.&N.RR.

8:30 p.m.

Drawing

purpose.

(CT)
(CT)

a

rooms,

rooms

and




goal.

roomrrjate.

One-way Pullman fares
will

be

as

(including Federal tax)

r

Drawing Room
L. & N. RR.

1:30

a.m.

(CT)

C. & E. I. RR.

2:00

a.m.

(CT)

Chicago

C.&E. I. RR.

8:30

a.m.

(CT)

Indianapolis

$50.60

Eastern Time

Pennsylvania RR.

8:00 p.m.

Pennsylvania RR.
Special

3:10 p.m.

Saturday, Nov. 29
7:35

New York

a.m.

Returning
Eastern Time

I

New York

1:45 p.m.

Special
Pennsylvania RR.

8:50 p.m.

Pennsylvania RR.

8:25

a.m.

DETROIT SPECIAL CAR

33.88

27.26

17.25 '

23.24

14.84

Certificates

covering Pullman space will be issued in lieu of
regulation Pullman tickets.
Certificates will be mailed if applica¬
tions are received promptly.
Otherwise they may be picked up at
the office of Charles R. Perrigo prior to 5:00 P.M. on Friday, Nov. 28.
Pullman reservations for the return trip should be made at
Hollywood.
Representatives of the railroads will be at the Holly¬
wood Beach Hotel throughout the convention to handle such reser¬
vations.

•

Cleveland

Harry

Lv. Detroit

B. & O. RR.
B. & O. RR.

B. & O. RR.

3:15 p.m.

4:40p.m.

i

9:35 p.m.

Saturday, Nov. 29
Lv. Cincinnati

4:25

Chicago Special

a.m.

Detroit

Special

9:30 p.m.

Detroit
Toledo

I

Southern Ry.

9:55 p.m.

Sunday, Dec. 7
Ar. Toledo

B. & O. RR.

5:30

a.m.

Ar. Detroit

B. & O. RR.

7:20

a.m.

T±tlSmirsons)
|^55.66
t 55.66

Pittsburgh

!

j

43.93

i

St.
7:35

New York Special

3:10 p.m.

a.m.

should

be

made

—— From Hollywood
Drawing Room Compartrn't

(2 Persons)

(2 Persons)
$41.40 -

$51.87
.

50,60

,

,

40.77

,

Car—Pullman reservations should be made

?(2Persons)
1
$51.87

10:55 p.m.

Pennsylvania RR.

Commerce

Pittsburgh-19£Pa. Drawing rooms and compartments will be avail¬
able.
Ori^-way Pullman fares (including Federal tax) between

Eastern Time

Pennsylvania RR.
/

Special

(2 Persons)
$43.93

Drawing Room

Friday, Nov. 28

Union

through M. M„ Grubbs, Grubbs, Scott & Co., Union Trust Building,

Going

Ar. Washington

reservations

Pittsburgh and Hollywood will be as follows: :

PITTSBURGH SPECIAL CAR

Lv. Pitsburgh

Car—Pullman

To Hollywood ——
JQra,Wing Room
Compartm't

2:06 p.m.

Saturday, Dec. 6

Kraus,

made

Compartment
(2 Persons)
$43.93
.

—

Fla. E. C. Ry.
Southern Ry.

&

Burge

be

One-way Pullman fares (including Federal tax) will be as follows:

Eastern Time

Lv. Jacksonville

Ball,

Kraus,

should

through Ralph Fordon, Watkins & Fordon, Inc., Penobscot Building,
Detroit 26, Mich. Drawing rooms and compartments will be available.

Returning

Friday, Dec. 5
Lv. Hollywood

G.

.

reservations

Drawing Room
(2 Persons)
$55.66

Eastern Time

Ar. Cincinnati

Car—Pullman

Special

Bldg., Cleveland 14, Ohio.
Drawing rooms and compartments will
be available.
One-way Pullman fares (including Federal tax) be¬
tween Cleveland and Hollywood will be as follows:

Going

Friday, Nov. 28
Lv. Toledo

22.02

29.90

through

Sunday, Dec. 7
Ar. Cleveland

23.23 '

34.44

43.02

Atlanta

Friday, Nov. 28

Saturday, Dec. 6

.

45.66

•

Bedroom
(1 Person)
$25.99

Chattanooga

Going

Ar. Washington
Lv. Washington

Compartment
(2 Persons)
$40.78
36.40

(2 Persons)

Cincinnati

SPECIAL CAR

to Hollywood

follows:

Ar. Chicago

Washington

to assign those requesting bedrooms

necessary

compartment and a

Lv. Evansville

Lv.

'

made through Charles R. Perrigo, Hornblower & Weeks,
The yellow form which accompanies this bulletin should

be used for this

3:15 p.m. (CT)

Ar. Nashville

4:30

L. & N. RR.

Saturday, Nov. 29
ef¬

reservations.

such

Chicago Special Train—Pullman reservations for the going trip

exhausted, it will be

Atlantic Coast Line

Ar. Washington
Lv. Washington

reservations.

(ET)

Atlantic Coast Line

Montgomery
Lv. Montgomery
Ar. Birmingham

Lv. Cleveland

Pullman

return

Hollywood.
Representatives of the rail¬
the Hollywood Beach Hotel throughout the con¬

(CT)

(ET)

Ar.

and

handle

not

at

a.m.

9:00 p.m.

Lv. Jacksonville

CLEVELAND

lieu of regu¬

if

12:45 p.m.
1:15 p.m.

Fla. E. C. Ry.

Saturday, Dec. 6

over¬

peace

will

made

be

be

to

Drawing

Friday, Dec. 5

Ar. Evansville

mailed

be

compartments, and bedrooms will be available.
compartments will not be assigned for single
occupancy unless it develops at the last minute that there will be
unused space available.
.When the supply of drawing rooms has
been exhausted, it will be necessary to assign compartments to those
requesting drawing rooms.
When the supply of bedrooms has beep

Returning
Lv. Hollywood

will

promptly.

Committee

Chicago.

again.

obstacles

the world to
With

12:25

Sunday, Nov. 30

Ar. Cincinnati
once

be taken which will

h

Syst.

Certificates

tickets.

applications
Otherwise they may be picked up at the
Jansen Hunt prior to 5:00 P.M. on Friday, Nov. 28.

received

The

(CT)

4:55 p.m.

Chattanooga

prosperity confronting this nation.
Tt

(CT)

4:25

If

help

become

wish of the American

come

take

home, relieve hun¬

neighbors

governing

to

halt the spiral

ger a^d cold abroad and

friend lv

actio'"'

the

forthright action.

of inflation at

I

be

of defeatism and cowardice.

iimelv

Pullman

office of E.
8:30 p.m.

Southern Ry.

demo¬

become easy victims of

Cur

Syst.

New York Central

streets

Other

jobs.

cratic nations would lose

course

New York Central

living standards sank, and

our

our

are

and

to the American

til

lation

Lv. Cincinnati

Lv. Atlanta

,

21.45

Richmond

They should

aid

of

contuur ng support of this nation
for th« free peoples of Europe.
-

Chicago (Cen. Station)

many

emergency

assurance

,

6:05 p.m.

They will be cold,

will

nee*3?

46.92

Sunday, Dec. 7

with

this

^

$49.45
46.92

(1 Person)
$24.84
23.69 '
23.69

6:20 p.m.

Friday, Nov. 28

the dollars to buy. There

we.

Bedroom

Compartment
(2 Persons)
$38.87
36.97
36.97

Philadelphia
Wilmington

■v V-'

' pngry people

f^od

to Hollywood

tax)

New York

Saturday, Nov. 29
Lv. Indianapolis

Grain

My
action
in convening
Congress on Nov. 17 in no

Federal

follows:

as

(2 Persons)

Going
Lv.

be

roommate.

a

(including

Pennsylvania RR.

readily be seen that Con¬
gressional action to meet these
cannot

compartment and

a

Drawing Room

areas.

January.

made

a.m.

can

ree^

be

One-way Pullman fares

CHICAGO SPECIAL TRAIN

It

RESERVATIONS

Pennsylvania RR.

Ar. New York

.•

Train—Pullman

3:55 p.m.
4.32 p.m!

Pennsylvania RR.
Pennsylvania RR.

Philadelphia

Ar. Newark

Special

1:45 p.m.
2:55 p.m.

Pennsylvania RR.
Pennsylvania RR.

Ar. Wilmington
Ar. North

should

will

Ar. Richmond

York

bedrooms

4:45 p.m.
11:15 p.m.

Line

Saturday, Dec. 6

Washington

a.m.

7:50a.m.

.

reservations for the going
through the New York Transportation Come
mittee, of which E. Jansen Hunt, White, Weld & Co., New York,
is Chairman.
Drawing rooms, compartments, and bedrooms will be
available.
Drawing rooms and compartments will not be assigned
for single occupancy unless it develops at the last minute that there
will be unused space available. When the supply of drawing rooms
has been exhausted, it will be necessary to assign compartments to
those requesting drawing rooms.
When the supply of bedrooms
has been exhausted, it. will be
necessary to assign those requesting
trip

2:25 p.m.

Fla. E. C. Ry

Ar. Hollywood

Hollywood

3:45

New

Sunday, Nov. 30

Lv.

L.&N.RR.

L.&N.RR.
PULLMAN

3:10 p.m.

Lv. Richmond

Wilmington

Ar.

get through
1948.

areas

12:44 p.m.
12:54 p.m.

an

of

sum

Series

$142,000,000

Pennsylvania RR.

Lv. Evansville

.

1:30 a.m.

a.m.

Pennsylvania RR.
Pennsylvania RR.
Pennsylvania RR.

to

get through the rest of this year.

a.m.

Pennsylvania RR.

Lv. North Philadelphia
Lv. 30th Street Phila.

11:10
11:25

Chicago Special

Ar. St.Louis

Eastern Time

Pennsylvania RR.

Lv. Newark

Central Time

Ar. Evansville

Saturday, Nov. 29
Lv. New York

i

Sunday, Dec. 7

Going

Lv.

her minimum

meet

can

Returning

NEW YORK SPECIAL TRAIN

Louis

Special

5

Cars—Pullman

1

Compartment
(2Persons)
$41.40
reservations should be

made

through Harry Theis, Albert Theis & Sons, Inc., 314 N. Fourth Street,
St. Louis 2, Mo.
Drawing rooms and compartments will be avail-

able.

One-way

fares

Pullman

between

Federal tax)

(including

Hollywood will be as follows:

St. Louis and

~"

(2 Persons)
$48.19

RAILROAD TICKETS

tickets should be

Railroad

than

other

always right, and frequently low the average national income
he knows it, though he be during the war which brought it
,■
not adverse to putting over a fast into being.

even

of bank or another,
finding outlets in
the bond market for

:

vac..

•

in the others'
them

the

to

will not be able to supply railroad tickets.

banking laws.

important that those planning to travel on the special trains
or cars specify that their railroad tickets be routed so as to conform
with the routes of the special train or car in question, as set forth
in the above schedules.
It should be noted in this connection that
It is

these

Under

are

conditions,

rates

in

can
a

be

construction.

appraisals:

doubt that we

no

and prices
of reason,

by any known standards

judged
of

under¬

have

Costs

stances,

the

faced

with

and

difficult

a

circum¬

is

officer

lending

have

I

these

Under

value.

dilemma,

trend

w.

facts—the indicated

two

permanently
higher
building
costs, and

institu¬
housing and

gone a precipitous rise,
in many cases are out

fell
somewhat,
but,
what is equally significant, banks
1 ended more and more to offer
other inducements in the form of

These

dangerous era for

tions which lend on

naturally

it

get away with

can

the matter of

Take
There

field and to grasp
fullest extent per¬

mitted by the

if he

one

mounting deposits caused each to
ook for investment opportunities

purchased from local ticket agents.

?9

not

the necessity to

They will be able to advise as to fares and as to the form of tickets
best suited to individual needs. Those in charge of Pullman reser¬
vations (see above)

type

one

ftWl)

CHRONICLE

formerly certain classes of busi¬
ness went more ot less by custom
io

Compartment
(2 Persons)
$38.30

Drawing Room

& FINANCIAL

COMMERCIAL

THE

Number 4642

Volume 166

w:X.~

.7r-;-;v;

■■

level
of
rising

the

of national income—offer a

certain

reassurance

officer

and

to the lending

the Real Estate

Ap¬

praisal Committee though I offer
this comforting thought without

intent to put you off guard.
gentlemen who must base
future mortgage security on pres¬
any

You

ent

of

estimates

value

are

con¬

that

doubt

many fronted with a complex and trou¬
gratuities to lenders — free title
banks
have
taken
mortgages blesome problem.
round-trip fares do not ordinarily apply when the Florida East search,
free
construction
and
somewhat out of proportion to the
.Coast Railway is used in one direction and the Seaboard Railway scrow services, free
appraisals,
Nevertheless, the virtual' mora¬
values
involved.
Unwise
in the other.
Accordingly, to provide for those traveling to and and the assumption by the banks real
torium on residence building dur¬
loans tend to find their way into
from the convention, a special tariff will be in effect under which of
ing the war days, the cumulative
many of the other costs inci¬
round-trip fares will apply.
Ticket agents will be on notice con¬ dent to new construction projects the mortgage portfolio, either be¬ secular growth of the nation in
cause the borrower appears to be
the interim, and the obsolescence
cerning this special tariff.
which were formerly absorbed by
good, or because the loan looks ol a
V
For the information of members, round-trip railroad fares (inhe borrower.
large proportion of our na¬
too substantial to allow to go by tion's
dwellings
and
business
eluding Federal tax) to Hollywood from points served by the special
Many bankers view these trends
default to some other institution,
structures combine to offer vir¬
.trains and cars are given below.
These fares were in effect at the with alarm, but they are in keep¬
or
just because the lender has tual assurance that there will be
time this bulletin went to press.
They were subject to change, how¬ ing with the times—an end prod¬
such an excess of additional funds
ever, and an increase was anticipated in the near future.
Informa- uct of free competition under the that he doesn't know what else to an abundance of 'building con¬
struction in the foreseeable future,
;tion as to the new fares and their effective date was not available
aws of supply and demand. True,
do with it. In a period of stress
which would appear to promise
at the time this bulletin went to press.
ihey pose a problem for the fu¬ in the years to
come, some of you ample outlets for the placing
Philadelphia— $82.74 ture, as costs rise and incomes these loans
Cleveland
$94.82
Atlanta
$42.72
may
come home to
of your mounting deposits.
In¬
Pittsburgh
94.82 perhaps shrink, but there is noth¬
Detroit
92.63
Baltimore
75.15
roost, and the item of "Foreclosed
deed, it is not difficult to con¬
Richmond
64.69 ing static about them. When com¬
Indianapolis-80.73
Real
Estate"
will
Birmingham-_
49.91
reappear
in ceive that sometime within the
St. Louis
80.79 mercial banks found it uneco¬
Montgomery-_
45.48
Chattanooga-51.35
many
a
bank
statement from next ten years, you will be faced
Toledo
88.55 nomic to handle demand deposits
Nashville
61.07
Chicago
89.82
which, happily, it has been absent with the problem of applying a
Washington
72.05 for free, they did not hesitate to for a
New York
89.47
Cincinnati
73.03
number of years past.
ceiling to the ratio of your mort¬
impose service charges. When and
Wilmington
$81.88
There is no sure cure for this gage loans to total resources, for
if
necessity calls for it in the
condition, but a few possibilities the wise banker will steer a care¬
field of lending, you will doubt¬
deserve the careful consideration fully
chosen course between a
less take a leaf from their book
of bank loaning officers.
Where fully invested position on the one
In
the
meantime,
the
interest
the mortgage appraisal seems un¬ hand, and ready liquidity to meet
rates which you gentlemen offer
duly high, it seems reasonable to any mass demand for cash, on the
the thrifty public
on their de¬
no

•

,

.

—

—

Appraisal of Some
Banking Problems

An

(Continued from page 20)
explosive stage, is that there is a
sudden rush to convert cash into

This, under extreme cir¬
cumstances. can assume the pro¬
goods.

portions of a run on the banks,
which is a prospect which none

I

Now

not

do

these

present

them will

occur.

It is my own

opinion that somehow the course
of inflation will be halted short

contemplate, the of any really explosive phase,
look, for example, for certain de¬
memory
of 1933 being only too
recent and
vivid in our minds. flationary trends to set in, espe¬
of

to

likes

us

Beyond this, savings banks, like
other business institution,
have expenses to pay, and with
constantly rising costs of opera¬

every

tion, it becomes increasingly
ficult to make ends meet.
.

dif¬

these circumstances too,
investment problem assumes

proportions. While bonds,
savings bank books, are pay¬

serious
like

dollars,

in

able

it by

no

bv

will

the

and

be

—for

means

sufficiently
jsolvent condition to pay off his
debt, even in depreciated
cur¬
rency. It is significant in this con¬
inflation in a

if

rather

the

more

it

a

little
medi¬

is

later

economic cycle

first
be

right

turned

prognosis, let

if

depositors, axe
customers who must
held by merit and

they

are

not

to

be

is

Relations

more—much

more—

could do to lure the cau¬
tious public into your tombs of
finance.
While I do not counsel

that you

now.

of your

submit

elsewhere.

There

deal for a mo¬

us

some

and

Savings Banks' Public

So, passing for the moment the
more
dangerous elements in the
ment with

I

your

as

all

of

won

service

postponed

apt to be
corrective phase in the

well

as

it is

severe

more

than

which

of you have needed. Your
resultant submission to the needs
of trade indicates an appreciation
of the fact that your borrowers,

many

must, I hope it

it

sooner

We need

corporate maker
bonds will survive the ef¬

fects of

a

worldly,

world

I think it wili

cine for all of us.

follows that the
of such

that

out and say

neck

recession would be salutary

brief,

petition reared its ugly head. It
brought into your sacred precincts
an
element of
realism, of the

cially if the price rise goes very
much further. Indeed, I shall stick

come,

Under

the

I think the savings
banks, on the whole were bene¬
fited measurably when crass com¬
In

frigntening prospects by way of
implying that all or indeed any
of

posits can scarcely be called ex
travagant!

immedi¬

turning

savings

banks

into

hot-

dog stands
a lot could be and
should be done to humanize them.

insist

on

heavier

amortization

other.

during the earlier stages of the
loan,
until
the
residual
value
stands in a safe relation to prob¬
able

replacement
conditions.

worst
least

would

be

to

cost

fiscal

in

unrest

a

period

such

as

of

we

world

are

ex¬

periencing.

the

under

Another

That danger should not be

dismissed

Post-War Pattern Will Be

at

aid

Repeated.

and

modernize

I am one of that school of econ¬
appraisal procedures.
Here, it seems to me, is a job for omists who believes that the char¬
pattern
of
business
experts who are unswayed by acteristic
person-al considerations, local which has followed every war in
recorded history will be repeated
pride, or the desire to make a
in our present situation. The sosale. I am glad that Mr. Lockyer
has touched on the problem of called
double
dip—a * primary
appraisals
today,
for
it
is
a
post-war recession of relatively
troublesome one, and I know that brief
duration
after
the
initial
his counsel and guidance is far sudden upturn which character¬
more
competent
than
anything izes the end of hostilities—should
which I could offer. Irrespective
be followed by an extended pe¬
of appraisals, however, never for¬ riod
of
prosperity, which may
get that character and ability to well assume the proportions of a
nay
are
the real and essential dangerous boom. Finally, a sec¬
elements in the bank-borrowing ondary post-war depression, per¬
relationship.
haps five to ten years hence (an
I should
guess
ten rather than
Home Building Prospects
five) is, in my judgment, more or
Since
the
less inevitable. Indeed I am of the
financing of
new

streamline

'

home construction is one of the opinion
that the primary post¬
Why don't you, for example,
primary avenues of investment of war depression has already set in;
simplify the process of making the
Interest Rates
mutual
savings
banks,
it certainly it has been felt in broad
deposits? Encourage deposits by
nection that mortgages, and espe¬
might be interesting to take an areas of the durable goods indusThe recent debt retirement anc
mail, and find, for heaven's sake,
cially residential mortgages, have the
unpegging
of
government a simpler and more convenient objective look at the present state Iries; but these primary post-war
proved to be a pretty sound me¬ bills v/ould seem to indicate that
of building construction and the recessions
are
always selective,
method of assuring title to savings
dium over the years, even after
prospects for increased activity in affecting some businesses acutely,
interest rates will go no lower
deposits than through the posses¬ this field.
allowing
for all
defaults and
Others hardly at all.
Indeed, as you know, the prevail¬ sion and exhibit of that archaic
losses. According to a recent study
Here
we
have a chart which
ing rates for purely short-term device, the pass book. If I want
Savings Banks and Depression
by Dr. Lintner of the Harvard
money on Treasury bills and the
tc make
a
deposit or a with¬ compares in graphic form the vol¬
Business School, which appeared
Because savings banks draw the
ume
of residential
construction
like are up sharply. On the other
drawal, I have to carry the darned
in' the September 20th issue of the
hand. 1 do not envision any early
and the costs of construction dur¬ bulk of their deposits from those
thing to the bank, haunted by
"United States Investor," the mu¬
are
the
more
substantial
hardening of rates of major pro¬ the fear that I shall lose it en ing
and immediately following who
tual savings banks of Massachu¬
The wage earners, and from there up
portions for medium to long-term route and have to go through a the two great World Wars.
setts, a group quite comparable to
base indices of the two periods, to those who are in reasonably
government bonds or for corpolegal process to get my money.
your own, netted, during the pecomfortable financial circum¬
rates of bank-eligible character
The whole silly business is a relic by the way, differ, the year 1915
ried from 1931 to 1945, inclusive,
This leads naturally to the ques¬ of the horse and buggy days and being the base in the first case stances, I do not believe that the
an average yield of 3.9% annually
and 1939, in the second. In other mutual savings banks have much
in' their mortgage portfolio after tion of rates on loans. It is not as outworn as the mode of trans¬
words, in both instances we are to worry about from a primary
-allowing for losses.
This, mind rurorising that there occurred port which gave those days their
p r e-w a r
conditions post-war recession. As I have
within the past few years, a gen¬ name!
A signature card,or other comparing
you, covers a period of the most
with what transpired subsequent¬ said, I think its effects will be
"concentrated loss experience suf¬ eral softening of mortgage rates means of identification, and a
There is a similarity in the salutary in the long run in check¬
The trend of interest rates and ledger card in the bank, supple¬ ly.
fered by savings banks in nearly
the competition among lenders mented by a monthly statement post-war pattern of both curves, ing in some measure the serious
three-quarters of a century. Com¬
but they differ primarily in the inflationary pressures which con¬
for placement of loanable funds of deposits and
withdrawals to
parable figures over longer pe¬
y
made this inevitable.
There has be sent to the depositor by mail, fact that, currently, construction front us today.
riods are 4.6% between 1907 and
The fiscal concomitants of the
been an increasingly vigorous com
would be far more secure and of costs have not reached their peak,
1945. and 4.32% between 1926 and
two
years
after the war's end, boom
period
which
inevitably
1945.
Dr. Lintner suggests that petition among the various types incalculably greater convenience
of banks and other lending agen
to all concerned. Encouragement nor, for that matter, has the rise will follow should occasion you
even if these net yields were re¬
cies for mortgages. Before I was of banking by mail would save been quite so precipitous. If past much more concern. A major in¬
duced by one-half of one per cent
elected a director of the Federa
who knows how many man-hours experience is a guide, however, it flation
could, although I don't
to 'allow
-for
operating
costs
Reserve
of needless travel from home or seems- probable that peak prices think it will, bring about a flight
Bank, I served simul
ate problems.

■

"Mortgage lending has

been good

business for savings banks in
of

tb*

losses

loans." ."•■■■*

But

in

spite taneously as a director of three
these Rhode Island banking institutions

'

foregoing
rates are
long-term averages
not alter the fact that

the

medium '
and

absorbed

do

or

explosive inflation, no less than
explosive
deflation,
bankrupts
many a borrower, whether indi¬
vidual or coroorate. Thus the se¬
lection of suitable media for in¬
vestment
difficult

-becomes
increasingly
inflation
runs
its

as

course.




office to bank and back,

and the

foster de¬
—one a
commercial bank, one
positor good will and tend to in¬
mutual
savings institution, and crease your assets.
So far as I
one a
building and loan associa
know, this suggestion is original
tion or cooperative bank, as we with me, but I think it is a good
call them ovei there. In this triple one; and if existing law or regu¬
capacity, I had an unusual oppor- lation won't permit it in any par¬
ticular case, I suggest that you
tunity to sense the growing rival
get busy and have the laws and
ry between these three forms of
regulations changed.
banking institutions.
Each .was
There is a danger, of course,
gunning for the others* business
with

no

holds

barred.

Where

whole

in

process

would

catering to the public to exThe customer, unhappily, is

cess.

will

the

coincide

more

or

less

recognized beginning

with

of the

from the dollar which would dis¬
courage

savings and thrift, and
wholesale withdrawals.
and bust cycle might load

primary post-war recession, for,
indeed, inflation of construction
costs is one of the major breeding
forces of recessions. It also seems
inevitable that the cost of build¬

encourage

ing will level off thereafter at
figures permanently higher than

any
secondary post-war
depression. Coupled with a major
break in the bond market, such a
condition could
be catastrophic.

the costs of pre-war

building.

By way of parenthesis, it is in¬
teresting to note that national in¬
come, even

in

a

post-war depres-

sion, historically never drops be-

A boom
you

up

with mortgages based on

excessive valuations, which could
necessitate wholesale foreclosures

during

Clearly this is a day for the ap¬

plication of wisdom and restraint,
the exercise of the soundest

for

'—'V*

40

(1772)

COMMERCIAL & FINANCIAL CHRONICLE

THE

production

THe United States and the World Crisis
when there is to be

(Continued from page 21)
themselves

in

im¬

American

the

I have been shocked at the

sia.

age.

this is true
to
some extent. Many of our leaders
—and perhaps many of our people

for

to which

extent

Undoubtedly

feel

to

—seem

is

there

and

no

totali¬

between

communism

tarian

kind

the

or semiemerging
Eastern Hemi¬

socialism

democratic

of

that

distinction

real

socialism which is now
in

the

of

most

Scandinavia

only

has

One

sphere.

Britain

or

visit

to

or

—

for

matter, Finland or Czecho¬
slovakia—to see how great is the
difference between a totalitarian

state, such as Yugoslavia,
country in which people

police
and

a

think as

talk and

and

write

they please, even though the big
estates have been broken

landed

and big business has been put

up

public ownership. It is hard
us
to understand that a sys¬

under
for

which

tem

has

benefits

many

brought

us

so

Europeans and most Asiatics are

public control or
ownership than they are of pri¬
vate monopoly. But it should not
afraid

less

of

difficult for

be

to understand

us

self-respecting
people
likes to be told by even the most
benevolent outsider how it should

that

no

its domestic affairs.

run

kind of free enterprise
in

talism

Europe

or

Asia

capi¬
is a

physical impossibility—even if it
were
desired by the people con¬
old

The

cerned.

which

to

power

groups

There is little chance for the for¬

private capital.
You can't have capitalism without
of

new

capitalists.
Democratic Socialism
If

intend

we

structive

to

on

Our Side

pursue

a

have

to

seem

we

sentence—which

fresh

cut

like

through

wind

confusion

the

for¬

"Our

keen

a

fog

of

the so-called Tru¬

over

Doctrine—read

man

policy

follows:

as

not

is

directed

country or doctrine
poverty, des¬
peration and chaos."
against

any

but against hunger,

I

hope those words are still the
key to our foreign policy.
No
matter what the Kremlin may say

do, I am convinced that this
approach is still the only
and peace. It is

or

sane

road to recovery

that

time

re-affirmed

we

it—in

The

fourth

and

last

reason

I

given, to account for fear of
in the world, was

was

influence

our

inclination to take unilateral

our

action, and thus to undermine the
prestige and effectiveness of the
United Nations. The two examples
most frequently cited were our
intervention
in
Turkey
and

Greece, and our present apparent
desire not to route Marshall Plan
through the United Nations
machinery. The danger of delay
and obstruction in the United Na¬

tions

foreign policy, we can¬
lose any more time

recognizing that democratic so¬

cialism is on our side in the strug¬

to preserve human freedom
and dignity. If we fail to recog¬
nize this fact, we shall drive some
of our best friends into the totali¬
tarian wilderness. It is worth not¬
gle

channels

is

recognized, but
the fear persists that, by avoiding
present difficulties, we may be
storing up trouble for the future.
So much for how

friends

the

across

we

look to

water.

important, I think, than how
we look to those who may for the
moment be blinded by hostile sen¬

And

let

in

order

violent

even

We

than that upon our

economic

so-called

imperialism.

not recognize these So¬
as our friends, but
totalitarians recognize them

may

a

policy

sane

successful.

of

First

things

we

direct

part

a

efforts

shall

We

of

the

enemies.

recurring theme I
found abroad was the impression
third

dominant,
segment of United States opinion

that

a

if

strong,

considers

war

not

with Russia inev¬

itable, and that an important part
is actually contem¬
plating a preventive attack upon
the
Soviet
Union with
atomic

of this group

to

re¬

productive

our

other

than

those dictated by normal business

sonable

their most dangerous

have

channels

into

considerations

The

domestic

of

demand.

consumer

others

not

making a rea¬
out of satisfying

profit

shall have to
that

of

manufacture

need

making

want ourselves.

we

the

at

some

We

things

expense

things

that

We shall not

have to produce more, but
produce differently—and we shall
only
also

have

to

consume

less

our¬

selves.

weapons.
any

of

is all too obvious what an atomic
war

would

mean

to victor as well

as vanquished.
Surely it is clear
that, even were we to conquer
Russia without receiving a scratch
in return (which is a most un¬
likely hypothesis), we should then
merely have
saddled ourselves
with the job of occupying a coun¬
try considerably larger than our
own
and of policing
a people

vastly more numerous. We have
some
measure
of what such an

undertaking would mean in our
current experience with our zone
of
Germany,
where less than
twenty

million

people

are

in¬

volved.

upon returning
absence of two months

Nevertheless,
from

an

abroad, I myself have been shock¬
by the pre-occupation of the

ed

press

with

the

facts,

and what the facts
mean in terms of intelligent selfinterest,
they
would
be
wise
enough and generous enough to
accept the implications.
These
implications are not pleasant.
I
see no sense in being other than
completely frank about them.
As I

it, we cannot success¬
fully tackle the job which lies
before us unless we recognize and
remedy the mistakes we have
made

see

in

the

recent

past. Imme¬
diately after hostilities ceased, we
did three
cut

off

irresponsible things: We

Lend

Lease

without

any

attempt to work out some sort of
a postwar bridge to normal
con¬
ditions; and we went off food ra¬
tioning. A few months later we
removed price controls and prior¬

ity allocations. The result of these

Will We Have War?

and the man in the street
the question of whether and




sense

a

we

were

business

to

distributed.

Our
if

and

three

actions

was

postwar recovery

abroad, and to let
omy

to buy planes

run

to

our

friends

our own

hog-wild

into

econ¬

an

un¬

healthy inflationary spiral. Every
housewife

knows

what

this

has

beginning

correspond

up

our

to

resources

to later

and
we

tackle

is most likely to
other areas.
Once

bridges

are

it,

tb

than

in

the

overreach
of

number

them

try to build at the
again leaving some of
spanning
only
part-way

across

sold

and tanks and guns

our

sense of justice.
Great Britain is our
point of maximum
Distasteful
though
it
our

obvious

be,
western
Germany
is
probably, because of its coal, the
next point from which a limited
may

could

recovery

most

spread into other
limited
not

I

areas.

quickly
say "a

recovery" because I
to suggest that we

mean

build

do
re¬

Germany beyond the point
quickly to restore the

necessary

of
her
neighbors. Other
points in Europe at which a small
amount of assistance would prob¬

ably

produce
the

maximum

Low

results

Countries,

Czecho¬

slovakia and Poland. In Asia there

probably two points of maxi¬
leverage: the rehabilitation
surplus food producers—
Burma, Siam and Indo-China; and
mum

of

the

again distastefully — the reac¬
of Japanese light indus¬
try to produce incentive goods for
the entire Continent.

—

tivation

re¬

not
first

must

our

ourselves

the

risk

Europe,

most

will not always
predilections

—

to

to

even

are

selected, we must
minds to throw in
at each crucial spot an amount
of help which will really accom¬
plish the desired purpose. It will
be better to pick fewer spots, and
really do the job where we decide
make

to

nor

we

of

From a political point of view,
France, Italy and Greece are the
hot-spots of Europe, while China,
Korea, India and Pakistan occupy

similar

position in Asia. These
hot-spots
constitute
a
danger to our wholeundertaking: first, because their

a

political

two-fold

internal

instability makes it ex¬
tremely difficult to appraise just

what and how much could be

complished by

ac¬

given amount of
expenditure; and, second, because

our

a

attitude

own

political issues
countries

is

ance

and

tion.

In

China

at

toward

stake

confused

prejudice
the

or

of

case

in

the

these

by ignor¬
predilec¬
India

and

additional

an

difficulty
arises from the sheer
magnitude
of immediate need on the
part of
the vast, chronically undernour¬
ished populations.

river.

in order to hold the fort until we

made

up

our

Lease aid.

Qualifications

minds about Lend-

The British

said

But

have

wanted

that

And

going

conditions
But

is

into the

the

do

to

roughly

all.

I

attached

to

am

not

technical

unwise

the

loan.

important simple fact—
which few people here realize—
is that, having made the insuffi¬
cient loan, we then proceeded to
cut it by another 27%.
Not be¬
cause we meant to do
any such
an

thing, but because we removed
price controls and let our price
level
sky-rocket
out
of sight,
which meant that the $3,500,000,000

which

the

British

that global sum which

had

bor¬

rowed would buy only

about $2,500,000,000 worth of our goods.
The
same
sort of
thing will
happen again to any loans we may

make, unless we control our home
economy.
These are the kind of
facts which I think the people are
entitled
to
have placed before
them.

Our
moment

tremely
lem.

In

Problem

government' is
order

of

or

areas

or

areas.

(2) Countries or areas which
are capable of rapidly re-activat¬
and which require
aid that

at

this

ultimate

im¬

are:

First—how to re-activate world

can

be

only a type of
quickly supplied.

(3)
Countries which are not
going to use external aid to build
up or maintain excessive military
establishments, or to distort their
economies
for
political reasons

(such as striving for autarchy), or
merely to improve their living
standards
at
the
expense
of
achieving economic health.
finally,

And,

safely

sence

sufficient

of civil strife but the exist¬
of

government which does
not permit the draining off of the
fruits
of
production
into
the
ence

a

pockets of either corrupt officials
or predatory private monopolists.

must

without saying that
desiring
our
assistance

goes

qualify

by

making

be

their

feel

we

subtracted

from

earn

the

total

resources

nance

world recovery. If we allow

available

to

fi¬

political anxiety or even human¬
itarian sympathy to carry us be¬
yond
both

that point, we shall fail
the world and ourselves.

These

are

of the

some

able realities with
we

must

if

we

unpalat¬

which, I think,

quickly become familiar,
intend

to

harness

our

strength to the task in hand.
There remains
tant

element

factor of which
comes

acutely

sations

with

the

a
an

other impor¬
psychological?

American be¬

aware

in

we are to dis¬
great responsibility,
have not sought but

we

history has laid

must

gratitude.
act

as

if

learn

We

we

giving what
unselfish
out

of

not

must

knew

upon

to

us,

expect!

know —and?

—

that

we are

give, not out of
generosity or pity, but:

wise

we

self-interest

common cause

ing

and

If

which
we

conver¬

Europeans

Asiatics alike.

charge

one

—

which

which
have
political
stability to attract private capital.
This means not merely the ab¬
Countries

(4)

achieved

nations

struggling with an ex¬
difficult two-fold prob¬

portance the two halves

follows:

Countries

for other countries
1

It

Two-Fold

as

which,
when re-activated,
will become
important suppliers or markets
(1)

ing their machinery of production

nothing.

not

thing is clear: whatever*
stop-gap aid we render in these
humanly and politically important
but economically doubtful
areas,
must
be rigorously held within

maximum

our

whole job—or else

Caution

One

The

purpose.

negotiators believed that
Congress would refuse to appro¬
priate more because, supposedly,
the
American
people
wouldn't
stand for it. So we built a bridge
three-quarters of the way across
the river—which is no bridge at
all.
Had the
American people
known the facts, I believe they

A

Maximum

qualifications for a point of
leverage will neces¬
sarily
be
both
economic
and
political. They might be defined

at the time that the amount

insufficient for the

for

Leverage

knew and

was

impede the

of

remain

hungry

recovery

into
these points

faced

been

still

and

measures

spread

investments.

investments had

These

relief,

on

carefully

which

of her former

most

of

care¬

restrict the
but also apply to both types of
operation the principle of throw¬
ing in our weight only at care¬
fully selected points of maximum
leverage. Our help must be con¬
centrated
at
those
points from
only

only with reconversion to
peacetime production,
but also
with an adjustment to the perma¬
loss

under

all

would

cold

allocating

covery

Britain, which was sup¬
posed to bridge over the gap of

nent

there

In

to Great

income from foreign

the

are

immediate relief

example:

was

them

mil¬
lions, with world recovery still
just as far away as ever. There
is no surer way to fail than to
attack the secondary problem of
relief as if it were primary.

the spring of 1946, Congress
authorized a loan of $3,500,000,000

Britain

is required.

health

though great,

—

them

spend

countless

In

re-conversion.

mobilize

could

give

me

cruelly

minimum.

resources

we

and

ful control—are not unlimited. We

confronts

Let

economy,

feet is to be effec¬

down to the absolute

insufficient

face this is¬

which

a scatter-gun attack,
precision target-shooting

where

Unfortunately, the simple arith¬

Eastern

own

to

without

metic upon which our calculations
must be based—especially
now, at

tive, United States relief of hu¬
man misery must in itself be held

to tell the Amer¬
real facts about

the world.

in

its

upon

to it that

priorities

of

who examines the dire

of the

the

order

crucial

Hemisphere
is at once forced to the grim con¬
clusion that, if United States aid
toward putting the world
back

great test which faces
bi-partisan leadership in the

situation

the

way

off

one

needs

next few months is whether it will

people the

at

world's

If too

in

in

leverage.

Any

The other

ican

the

con¬

But

shall merely waste our

we

covery.

squarely—whether or not the
people are given a chance to face
it at all in an election year—will,
I think, be the supreme test of
our two-party system.

have the courage

stave

which

criteria.

exist

the

In

sue

our

the

establish

will

or area

the

must

catastrophe,
not
enough resources will be left to
prime the pump of world re¬

accept both food rationing and
price controls, as well as a certain
amount of actual deprivation, if
they understood the facts—if they
were talked to as grown-ups and
not as children—and if they felt
that whatever system was put into
effect would operate
efficiently
and, above all, fairly.
we

in

now

recovery plan will be still¬
born. If too much is done merely

tary rationing. But I believe that
the American people would gladly

not

order.

reverse

relief

of

all

to

yard¬
that

it be expected

can

country

any one

absolute

not

are

resources

the

You cannot do that by any volun¬

or

in the
is done

sectors

price of what remains for the do¬

Whether

interim

plan can
into effect.

immediate

level. We shall have to make
things even scarcer than
they are today in order to do our
job abroad, and this means that
we
must
not only control
the

what remains is fairly

that

in

before
any
be worked out

little

some

see

These

sticks. Nor

elapse

come

wage

but

self-

Chronologically these problems

leadership working together, as
they did in wartime.
We shall
have to control prices and main¬
tain
a
stable purchasing-power

consumer

must

and put

labor

and

farm

and

conditions

recovery

rectified.

be

become

their peoples in their governments
and in themselves.

criteria

were

must

so

and

form

which

all

mistakes and that they
In plain lan¬
guage—and I think we must use
plain language even in an election
year—we shall have to re-estab¬
lish some degree of overall plan¬
ning and control by government,
they

trade

nations

world

over

responsible for them. What con¬
cerns us now is to recognize that

would

I believe

that, if the American
people were given a clear picture

I do not believe that
responsible official of our
government—or, for that matter,
any
sane
citizen — is seriously
thinking of such action. Surely it

In

world

various

Second—how to prevent a fur¬
ther calamitous deterioration of

not

cialist leaders

as

takes.

and

the

peoples may again
supporting.

me

make

to

market

try¬
ing to fix the blame for these mis¬

you an

put before you,
very briefly, what seem to me the
essential principles we must fol¬
low during the next few months,
now

her

of

not waste time

us

them

Principles to Be Followed

sources.

Europe for an attack, more

Let

the

timent.

ism in

the

terms

basket.

more

Com¬
munist International singled out
the leaders of democratic social¬

connection that

this

in

recent manifesto of the new

in

our

This is

all, there are certain
must do here at home.
We cannot supply even the world's
most urgent needs out of our pres¬
ent
exportable surplus of con¬
sumer's
goods and capital re¬

ing

meant

mestic

words and in action.

con¬

not afford to

in

called "the cold war"

gotten the key sentence in Secre¬
tary Marshall's now famous speech
at
Cambridge last June.
That

have been weakened or destroyed.
mation

of

aid

The fact is that a restoration of
our

continuation

with the Soviet Union—the extent

not be appli¬

may

cable to other peoples. It is even
harder to understand that most

now

to take

seem

we

the

granted

what is

that

can

with Rus¬

war

that

Thursday, October 30, 1947

of mankind.

in

the

Sav¬

men's lives matters less than
save their self-

helping them to
respect.

This is perhaps the most diffi¬
cult requirement
meet. Here too

we

shall have to

and
we shall not fail—
mutual aid amongst each other— if the American people are
given
that they must put their financial the information to which
they are
houses in order and, above' all, entitled and the chance to make
firmly establish the confidence of their own decision.
maximum efforts at self-help

Volume 166

THE

Number 4642

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1773)

Indications of Current Business

41

Activity

The following statistical tabulations cover production and other figures for the latest week or month available
(dates
shown in first column are either for the week or month ended on that date, or, in cases of
quotations, are as of that date):
Latest
Indicated

steel operations

(percent of capacity)

Equivalent to—
Steel ingots and castings produced

Nov.

2

Previous

Week

AMERICAN IRON AND STEEL INSTITUTE:

Week

97.0

Month

Ago

97.1

Year

89.4

Crude oil
Crude

(net tons)

Nov.

2

1,697,400

1,699,200

1,651,900

1,575,600

output—daily average (bbls. of 42 gallons each)
to stills—daily average (bbls.)

Oct. 18

Total

shipments

5,245,300

of

4,732,600

5,296,000

5,280,000

4,712,000

16,519,000

16,388,000

14,796,000

2,176,000

2,253,000

1,906,000

Manufacturing

5,445,009

Mixed

6,217,000

6,539,000

1.993,000
6,275,000

8,542,000

8,777,000

8,772,000

Total

sales

of

101,713

CONSTRUCTION,

of

1,983,820

81,987,000

86.G53.000

23,057,000

22,254,000

21,626,000

61,312,000

61,098,000

59,283,000

60,407,000

lons

57,776,000

57,279,000

56.934,000

60,808,000

Domestic

Total

sales

domestic

therms)

therms)

(M

S.

construction

Public

(bbls.

of

42

gal¬

950,862

931,072

931,766

Refined

715,287

743,248

712,453

718,000

imports

Indicated

products

(bbls.)
imports

«bbls.)

consumption—domestic
stocks

and

Oct. 23

$141,719,000

$91,338,000

$136,183,000

$55,203,000

AMERICAN

of

Federal

84,959.000

57,208,000

£3,105,000

29,871,000

Oct. 23

56,760,000

34,130,000

52,078,000

25,332,000

Number

Oct. 23

municipal

50,306,000

29,869,000

43,802,000

24,090,000

Volume of

6,454,000

4,201,000

8,276,000

OUTPUT

Bituminous

(U.

coal

S.

BUREAU

and

lignite

Pennsylvania

anthracite

Beehive coke

OF

OF

Oct. 18

(tons)

12,610,000

12,750,000

12.240,000

12,787,000

Oct. 18

(tons)

1,223,000

•1,330,000

1,256,000

1,199,000

Oct. 18

STORE

SYSTEM—1935-31)

SALES

INDEX—FEDERAL

133,300

•135.500

134,100

123,300

RESERVE

AVERAGE=100

369,265.000

162,373,000

5,557,000

10,816,000

150,000

August:

DOLLAR

299

•304

301

295

of

280

2,450,669

BANK

Sept.

30:

$140,078,000

$132,792,000

41,940,000

46,762,000

$350,000,000
19,702,000

9,210,000

8,407,000

16,959,000

14,352.000

11,350,000

12,484,000

2,100.000

1,100,000

59,000

11,260,000

5,896,000

6,623,000

$218,940,000

$206,307,000

$199,827,000

Exports
Domestic

shipments
warehouse

credits

exchange

Based

•280

•2,439,244

OUT¬

RESERVE

YORK—As

Imports

Dollar

.Oct. 18

280

2.499,295

ACCEPTANCES
FED.

—

NEW

Domestic

DEPARTMENT

4.067,000

ASSOCIATIONS—

motor carriers reporting
freight transported (tons)

STANDING

MINES):

(tons)

6,978,000

3,711,000

50,000

1,242.000

of

BANKERS

COAL

9,408,000

7,028 000

export

(bbls.)

TRUCKING

Month

162,144,000
152,586,000

10,455,000

3,223,000

(bbls.)

1G3,483,000

4,624,000

(bbls.)

152,978,000

10,969,000
50,0C0
7,294,000

output

159,237,000

178,951,000

oil

Oct. 23

and

67,958

170,257,000
oil

gasoline output
output
(bbls.)

Increase—all

Oct. 23

construction

State

.

136,693

77,685

1,834,181

INSTITUTE—Month

production

crude

RECORD:
Total U.

1,629,530

146,057

69,870

(M

sales

each)

954,249

NEWS

Private construction

1,945,809
1,722,067

134,098

therms)

(M

July:

82,202,000

Benzol

ENGINEERING

114,794

Month

(bbls.)

ENGINEERING

91,527

1,779,852

pounds)

therms)

gas

PETROLEUM

80,912,000
22,516,000

Crude

Oct. 13

sales

gas

AMERICAN

ASSOCIATION OF AMERICAN RAILROADS:
Oct. 18

(M

gas

gas

Natural

Natural

CIVIL

Ago

August:

7,290,000

Oct. 18

freight loaded (number of cars)
Revenue freight rec'd from connections (number of
cars)

Year

Month

August:

5,399,900

5,167,000

16,298,000

Oct. 18

Revenue

Previous

(DEPT.

ASSOCIATION—For

Oct. 18

(bbls.)

of

(thousands

GAS

Oct. 18

Stocks at refineries, at bulk terminals, in transit and in
pipe lines—
Finished and unfinished gasoline (bbls.) at
Oct 18
Kerosine (bbls.) at
Oct. 18
Gas oil and distillate fuel oil (bbls.) at
Oct. 18
Residual fuel oil (bbls.) at
Oct. 18

I

5,268,400

PRODUCTS

COMMERCE)—Month

Oct. 18

(bbls.)

Kerosine output (bbls.)
Gas oil and distillate fuel oil
output
Residual fuel oil output (bbls.)

i

WROUGHT

AMERICAN

runs

output

ALUMINUM
OF

AMERICAN PETROLEUM INSTITUTE:

Gasoline

Latest
Month

Ago

94.4

goods

on

tween

0

stored

foreign

and

snipped

be¬

countries

EDISON ELECTRIC INSTITUTE:
Electric output

Total

(in 000 kwh.)

Oct. 25

4,963,816

4,946,090

4,956,415

4,601,767
OUTPUT

COAL

FAILURES

(COMMERCIAL

STREET,

AND

INDUSTRIAL)—DUN

&

BRAD-

INC.—

Bituminous
Oct. 23

81

75

77

33

Month

(BUREAU

coal

of

COMPOSITE
steel

iron

(per lb.)

(per

Scrap steel

gross

(per

Oct. 21

3.19141c

$36.96

$36.96

$36.93

$28.13

Electrolytic

(E.

&

M.

J.

$41.83

$39.50

$37.75

$19.17

COMMERCIAL

PAPER

FEDERAL

COTTON

copper—

Domestic refinery at
Export refinery at
(New York) at
(New

Lead

(St.

Zinc

York)

Oct. 22

(East

St.

21.350c

17.300c

80.000c

80.000c

52.000c

15.000c

15.000c

35.000c

8.250c

14.800c

14.800c

14.800c

8.100c

Oct. 22

at

21.425c

80.000c

Oct,. 22

Louis)

21.200c

21.300c

Oct. 22

at

21.200c

Oct. 22
Oct. 22

at

Louis)

10.500c

10.500c

10.500c

9.250c

21.225c

Govt.

Average

•469,400

500,100

BANK

OF

—

NEW

Sept. 30

AND

$244,000,000

$241,000,000

LINTERS—DEPT.

MERCE—RUNNING

14.150c

MOODY'S BOND PRICES DAILY AVERAGES:

S.

OUTSTANDING

RESERVE

Lint—Consumed

$148,000,000

Oct. 28

corporate

1102.84

tl03.37

1T03.83

COM¬

BALES—

Month

of

727,448

Linters—Consumed
In

consuming

public

Month

oi"

of

as

spindles active

127,766

81,339
164,636

156,795

51,538

41,641

21,410,000

21,197,000

21,643,000

90,926

Sept.

30

of Sept.

as

4,331,089

53,491

of

as

Sept.

8,19,058

1,154,267
833,113

2,583,306

September

establishments

storage

710,601

1,137,516

September

consuming establishments as of Sept. 30
In public storage as of Sept. 30

Cotton

Bonds

OF

In

In

U.

5,033,000

563,700

QUOTATIONS):

Straits tin

Lead

51,922,000

4,994,000

tons)—Month

Coke (net tons)—Month of September

YORK—As of

METAL PRICES

51,020,000

5,136,000

(net

2.73011c

Oct. 21

ton)

gross

3.19141c

Oct. 21

ton)

3.19141c

tons) —

met

52,350,000

Anthracite

September

Beehive

Finished

Pig

of

PRICES:

lignite

September

Pennsylvania
IRON AGE

and

MINES)—

OF

30

1,959,310
74,556

f 103.69
COTTON

SEED

—

DEPT.

mills

(tons)

Oct. 28

113.70

113.89

115.04

Oct. 28

118.80

118.80

120.02

121.04

Received

at

Oct. 28

116.80

117.00

118.00

119.20

Crushed

A

(tons)

Oct. 28

113.50

113.89

115.04

116.02

Stock

Baa

Oct. 28

106.04

106.39

107.80

108.52

108.88

110.15

Oct. 28

115.25

115.24

116.61

117.60

Oct. 28

117.60

117.60

118.60

120.02

OF

COMMERCE—

110,15

Oct. 28

Aaa

Aa

Railroad

Public

Group

Utilities

Group
Group

Industrials

116.41

112.00

S.

Govt.

DEPARTMENT

—Month

Oct. 28

+ 2.31

+2.27

_Oct. 28

2.97

2.96

Oct. 28

2.71

Aaa

+

2.24

2.83

Railroad
Public

Group

Utilities

for

seasonal

seasonal

variation

adjustment

DEPARTMENT

STORE

SALES

Industrials

MOODY'S

2.71

2.65

2.60

FEDERAL

2.81

2.80

2.75

2.69

ERAL

2.96

2 90

2.85

3.39

3.37

3.29

3.16

3.25

3.23

3.16

3.03

2.89

2.89

2.82

2.77

2.77

2.72

2.65

Oct. 28

COMMODITY

INDEX

Oct. 28

2.77

FERTILIZER

ITY

INDEX

BY

ASSOCIATION—WHOLESALE

448.3

453.2

42S.5

225.6

234.1

287.4

270.7

269.2

258.6

239

(average

244

179

234

246

206

227

•215

216

210

•206

200

monthly), unadjusted
daily), unadjusted
(average daily), seasonally adjusted
Stocks, unadjusted as of Sept. 30
Stocks, seasonally adjusted as of Sc-pt. 30

299.9

294.6

331.1

Building
Fertilizer

and

drugs—

170.9

167.8

149.5

217.6

215.4

214.5

297.8

159.5

159.2

159.1

125.0

232.7

232.6

226.5

154.5

machinery

152.4

149.6

128.2

Oct. 25

135.5

135.5

134.0

136.9

136.9

135.7

125.1.

Oct. 25

127.1

127.1

127.1

116.6

Oct. 25

combined

Orders

received

Production

ASSOCIATION:

217.2

214.3

211.0

from

(tons)
activity
(tons) at

Oct. 18

Building

allied

145.6

143.3

144.2

157.9

158.0

158.1

125.1

190.9

190.1

189.8

160.1

178.5

180.0

182.3

175.6

190.4

189.2

135.5

141.5

141.2

141.2

140.7

126.3

115.7

115.4

115.0

35.0

.Oct. 18

151.1

150.7

15C.3

TUTE
of

184.0

183.3

180.9

134.2

124.7

125.1

122.2

98.2

.Oct. 18

132.7

132.7

131.9

115.7

.Oct. 18

commodities

116.5

116.1

115.1

102.5

Manufactured

LIFE

than

farm

products

than

farm

products and foods—

are




for

31

taxable securities;

3"/,419,113

37,242,938

35,308,680

INSURANCE—Month

$1,047,741,000 $1,104,368,000 $1,125,829,000
324,048,000

325,896,000

211,648,000

186,066,000

Total

346,116,000
238,591,000

$1,583,437,000 $1,616,330,000 $1,710,536,900

NEW BUSINESS

INCORPORATIONS— DUN

BRADSTREET, INC.—Month of Sept.—
ESTATE FINANCING
OF

U.

S.—HOME
of

8,561

8,055

$315,305,000

Savings

and

Insurance

LOAN

$316,093,000

BANK

August:

Loan

Associations

70,277,000

ledning

INCOME

KYS.

of

Miscellaneous
Income

Net

146.3

Federal

130.9

117.5

Dividend

151.7

152.7

133.7

151.0

151.1

129.7

139.3

139.0

138.0

112.8

previous figures given

were for

non-taxable.

income—

60,958,447

available

for

fixed

income

from

fixed

income

charges

charges

common

&

2,875,943

74,671,789
40,322,812
3,297,828

78,729,775
42,052,744
3,650,35.3

75.574.945

3,007,784
36,803,915

3,723,071

taxes

38,402,391

33,080 844

29,478,529
1,355,617
20,548,355

28,460,541

3,524,813

defense projects

equip.)—

29,444,900
1,346,250
21,322,717

structures &

stock

preferred

•Revised

15,553,057
78,582.729

11,562,292

3,080,449

1,365,765
2.17

5,438,630
2.15

935,075

954,867
12.006,575

appropriations:

On

of

63,029,672

23,124,233

83,325,291
4,595,516

37,024,984
(way

On
Ratio

60,201,058

16,589,285

77,547,732

income

173.6

151.1

$994,787,000

CLASS

Contingent charges

152.1

350.8

S.

Commerce Commission)

deductions

after

175.0

18

U.

income

152.4

Oct. 18

OF

July:

Net railway operating
Other income
Total

135,202,000

institutions

ITEMS

(Interstate

—Month

106,541,000

135,093,000

$988,446,000

SELECTED

Income

50,564,000

165,781,000

Miscellaneous

I

254,765,000

51,378,000

banks

71.622,000

250,612.000

companies

Savings

176.0

HI Oct.

9,551

IN NON-FARM

Bank and Trust companies

Oct. 18

Oct. 18

other

commodities other

tFigures

July

INSTI¬

Group

Amortization of

—IllIIII]

products

of

Industrial

Oct. 18

All commodities

•Revised figure.

OF

Depreciation

groups-

Raw materials

15,007,960
$279,769,309

September:

114.4

.Oct. 18

Semi-manufactured articles

as

—

Total

.Oct. 18

products.

Housefurnishings goods

Special

146.2

.Oct. 18

materials
and

PURCHASES

Ordinary

Mutual

.Oct. 18

metal products

Miscellaneous

98

598,569

.Oct. 18

lighting materials

Chemicals

101

440,769

.Oct. 18

:

Metal, and

161,534

102

471,355

.Oct. 18

products

Fuel and

181,483

101

445,358

LABOR—1926=100:

Hides and leather products—.
Textile; products

17,546,119
$309 630,500

355,589

.Oct. 24

All commodities
Foods:

185,582

152,814

.Oct. 18

DEPT.

17,307,950

Individuals

OIL, PAINT AND DRUG REPORTER PRICE
INDEX—1936-36
AVERAGE=100

Farm

185,868

165,049

Oct. 18

S.

ultimate customers

BOARD—Month

162,060

Oct. 18

.

orders

WHOLESALE PRICES—U.

of

INSURANCE

AREAS
Oct. 18

Percentage of
Unfilled

consumers—

omitted)

ultimate customers—month of

184.4

)

(tons)

ultimate

$305,854,600

Number

LIFE

REAL

NATIONAL PAPERBOARD

to

(000's

121.9

Oct. 25

groups

INSTITUTE:

sales

July

ol

178.5

Oct. 25

materials

Fertilizers

All

ELECTRIC

July

154.2

173.0

Oct. 25

materials

233.2

190.6

Oct. 25

Chemicals

220.3

256.5

190.3

Oct. 25

Metals

274.5

262.5

195.0

Oct. 25

Textiles

307.8

261.3

Oct. 25

commodities

308.3

Oct. 25

Miscellaneous

214

237.7

315.3

206.2

Oct. 25

Livestock

All

231.4

Oct. ">5

Fuels

Farm

233.1

238.6

Oct. 25

Grains

238.6

Oct. 25

Farm products
Cotton

201

Y.

(average

month

cils

183

FED¬
N.

Sales

Kilowatt-hour

COMMOD¬

Oct. 25

and

OF

Sales

Revenues

Fats

DISTRICT,

BANK

331.il

GROUP—1935-39=100:

Foods

RESERVE

RESERVE

Sales

EDISON

NATIONAL

273

1980-39 AVERAGE=100—Month of Sept.:

Oct. 28

Group

270

"235

SECOND

—

2.98

Oct. 28

Group

<281

297

(FEDERAL

Oct. 28

Baa

323,317

365,270

Aver.=100)

Oct. 28

A

570,781

102,148

163,321

September:

Oct. 28

Aa

167,130

447,489

289

SALES

SYSTEM)—1935-30
of

943,425
594,275

30

1-2.26

2.90

Aug. 1 to Sept. 30—

to Sept. 30—r

1

STORE

RESERVE

Without

Bonds

Average corporate

.

Sept.

(tons)

Adjusted

MOODY'S BOND YIELD DAILY AVERAGES:
U.

Aug.

income

figure.

.

stock
to

fixed

charges

1.95

42

(1774)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Thursday, October 30, 1947

United

no

would be effective.

must he token in
many
It sets

States could feel assured
that assistance which it might give

simple remedy, but that steps

directions#

up production targets.
It
parts of the
This
suggestion
met
with
a
proposes steps which are being
live in the greatest food-produc¬ covery movement.
world has contributed to the dis¬
ready and vigorous response. In taken and will be taken to
bring
ing area on earth.
Wheat is the most important appearance of dollars in
foreign fact, the Committee of European about
internal
stabilization.
It
Trained observers of the De¬ food in
foreign trade because it is hands. In those countries which Economic
Cooperation, represent¬ proposes combined or coordinated
partment of Agriculture have? as¬ the cheapest source of calories in have tried to maintain free chan¬
ing 16 nations, which met at Paris action to solve production
sessed the situation and reported terms
prob¬
of
of
volume and
of
cost* nels
trade, consumers have in response to the suggestion of lems
and to provide for the free
the reasons in minute detail.
In Luckily, we have had large wheat turned to American
goods to sup¬ Secretary Marshall, has now made and
efficient flow of goods and
the main, the cause for the imme¬ crops in this country for the last
ply their wants, and the result has its first
report. After more than labor. It looks towards the even-'
diate situation is
unusually bad six years, due in part to unusually been a marked reduction in dol¬ two months of
tual solution of the
study, analyzing
weather conditions
problem of
cold of al¬ favorable weather. The 1947 wheat lar reserves. This in turn has made
European resources and require¬ deficits with the American conti¬
most unprecedented intensity last crop in the United States will ex¬ necessary restrictions
against im¬
ments, the Committee has devel¬ nent, primarily by reduced re¬
winter
that froze
seed
in
the ceed the highest previous record ports from the United States. The
oped a coordinated program to quirements as its own
production
ground, spring floods that washed by more than 200 million bushels. relationship is now very clear be¬
achieve recovery and free western increases and
out crops and topsoil, followed
by increased ex¬
by However, bad weather conditions tween the supply of dollars in
Europe of dependence on outside ports. All in all, it is an extraor¬
summer droughts that seared the
have resulted in a short corn
crop foreign hands and the volume of
help. Its report contains striking dinary document when one con¬
already meager crops. The dis¬ here so that our export of corn American goods which they can
evidence of the sincerity of these siders that it was
astrous freeze in France, for ex¬ and other coarse grains will be buy.
prepared in less
nations in
attempting to increase than ten weeks, that it constitutes
This year it is estimated that
ample, resulted in a 1947 wheat greatly reduced, and relatively
production • and
overcome
the agreement
crop that was the worst since they large amounts of domestic wheat we will ship some $15 billion of
by 16 countries, and
bottlenecks which have
have been keeping - records.
plagued that each country has pledged it- ~
are being fed to livestock instead goods and services abroad. At the
their
recovery thus far.
self to use all its efforts in
Secretary of Agriculture Clin¬ of corn. Exports to Europe from same time we will have imported
making
ton P.
its full contribution to the
Anderson, who visited Eu¬ other sources are expected to be a total of little more than $5 bil¬
The Recovery Program
pro¬
rope this past summer and saw somewhat larger than last
gram.
4
lion
The
worth
of
year,
goods—a record
recovery program is de¬
Of
where thousands of tons of pre¬ but
particular interest, is the
not) enough to offset the fail¬ high but a figure only a little more signed to achieve certain specific
cious wheat had been lost, con¬ ure in I E u r o
p e an
production. than one-third the value of our goals which will result in a self- attitude expressed towards restric¬
cludes that "western Europe has Larger American exports of wheat
tions on trade.. As
exports. This year's difference is sustaining economy
you all know, ,
by 1951. In¬
had a combination of bad circum¬ this year are therefore a
the lack of convertible currencies
neces¬
being
financed
by
loans
and creased production keynotes the
stances almost without parallel in sary part of
and the shortage of commodities
recovery in Europe. grants of various kinds, relief ap¬ entire
program, as a glance at the
farming history.
have reduced European trade vir¬
Farmers
have As you all know, various volun¬ propriations
and
World
Bank objectives for 1951 will show:
struggled against too much water tary and cooperative measures are
loans, and out of the small re¬
(1) Restoration of prewar bread tually to a barter basis, with de¬
in planting season and too little being taken to increase the avail¬
tailed export and import controls
serves
of gold
and foreign ex¬ grain and other cereal production,
when the grain was coming into ability of wheat for export. This
change still held by some foreign with large increases above
applying to practically all com¬
prewar
is very serious
maturity.
These
failures
were
modities.
This is, of course, not>
business, for wheat countries. Now, these grants and in sugar and
potatoes, some in¬
within a pattern
already made is a key item in any foreign aid credits, which can be
true only of European
countries,
used for creases in oils and fats, and as
dark by lack of seed,
fertilizer, and program.
and these same restrictions else¬
American products only if they fast
as
expansion
in
livestock
machinery — disaster piled upon
No blueprint for the reconstruc¬ consist of
where have had their
or are convertible into
retarding
products as supplies of
earlier disappointment." It is esti¬ tion
feeding
of Europe's industrial
effect upon European
plant is dollars, are almost exhausted.
stuffs will allow;
progress, i
mated that the reduced
produc¬ worth the paper it's printed on
The member countries have agreed
This does not mean that our
(2) Increase of coal output tc
aid
tion in Europe will mean that Eu¬
unless the people who work on
to abolish as soon as possible the
and assistance has gone down the 584 million
tons, that is 145 mil¬
ropean food imports will have to
it are nourished.
The human ef¬ rathole.
abnormal
In the first
restrictions
which
at 1
be increased by the equivalent of
place, mil¬ lion tons above the 1947 level (ar
fort required to achieve increased
present
lions of persons are alive
hamper
their
mutual
250 million bushels of
today increase of one-third) and 30 mil¬
grain, even production cannot come from
peo¬ who
trade," and "to aim, as between £
would have been dead or lion tons above the 1938
to maintain the low
level;
consumption ple who are underfed; interest in
themselves and the rest of the
diseased without food from this
(3) Expansion of electricity out¬
levels of 1946-1947.
upholding the democratic way of
world, at a sound and balanced
country. In the second place, much put bv nearly 70.000 million kwh
However, these factors, serious life cannot
spring from despair¬ reconstruction has been done— or
multilateral trading system based *
as
40% above 1947 and a growth
they are, only overlie long- ing souls who want
for bread. railroads are
on
the
principles which
have
term conditions
operating, ports are of generating capacity by over
inherently weak. The situation, then demands the
eruided the framers of the Draft
cleared for traffic, roads are re¬ 25 million kwh.
Western and southern
or
two-thirds
European well-considered
generosity
and paired, and factories
Charter for an International Trade
are
countries have never produced
ready for above prewar;
thoughtful sacrifice of every
Organization."
operation through reconstruction
enough food to maintain without American unless we
(4) Development of oil refining
are
to lose
made possible
In
the last analysis, it is by
imports what Americans consider all for which
by American sup¬ capacity in terms of crude oil by
we have fought and
a tolerable diet.
plies and equipment. Finally, the 17 million tons to two and one- principles such as this that the
Before the war, worked
during these critical years.
western • Europe imported about
Report must be judged, rather
As Secretary of State Marshall necessary raw materials like coal, half times the prewar level;
half its bread grains and a
cotton and copper, which
used to
(5) Increase of crude steel pro¬ than its statistical estimates.' We
very pointed out recently: "The con¬
be purchased with
large proportion of its feed, grains nection
exports, have duction by 80% above 1947 to a can be certain of one thing,, that
between the individual
from eastern Europe,
including American and world affairs is un¬ been made available to permit level of 55 million tons or 10 mil¬ any estimate of requirements for
eastern GermShyr This Tfffra-Eettjieir factories to operate. All these lion tons (20%) above 1938;
the next four years is bound to *
mistakably clear —

(Continued from

15)

page

sites

essential

so

to

broad

a

re¬

duction

in

other

—

^

v

,

,

trade

ropean
any

has

not

considerable

existed

extent

to

during

the last few years.

The reasons
this are that crops have also
been poor in eastern
Europe, and
military devastation and political
for

uncertainty have been great.

Add

to these difficulties the
decreased

emphasis

on

large-scale

tion of grain which
land tenure reform

produc¬

results

from

plans, the lack

of

fertilizer, and the support of

occupying armies. This means but
one thing
for western Europe—
increased

reliance

on

the

non-

European world.
World
current

^

Sg-

food
year

production for
will be slightly

the

below last year, a year which only
equalled prewar levels.
At the
time there has been a sub¬
stantial gain in total
population.
In a few countries,
same

including the

fz

United States, food

consumption
In many other

is above prewar.
;

fr

countries

is

capita
dietary reduction ranging as high
a

per

s? 35% of prewar.
Fuelled out in energy units, the
cKef of the average non-farm in¬
dividual in France contains about
2.200

calories

fourth
r,;

there

take.

less

a

than

day—about
his

in-

In

Greece the figure is 2,100, while in Italy, Germany and

Austria, the citv dweller
to less than
more

%•

one-

prewar

may

1,950 calories

a

fall

day—

than one-third less than the

average American eats today. And
it must be remembered that the
calorie is only a measure of heat

|

energy that food contains; it tells

I

nothing about balancing proteins,
carbohydrates, or fats, nothing
about

vitamins

and,

of

nothing about palatability.

course,

It is

clear that the

European countries

must have

their first require¬

ment

¥

the

as

elimination

of

their

our
foreign
have made prbgress
possible, and
policy has entered the American
home and taken a seat at the fam¬ many nations are now back to in¬

dustrial

ily table."
Aside

from

the

there

present

is

fact

barely

that

at

enough

food produced in the world to
go
around even if it is
served

the

and

blunt

carefully con¬
equitably distributed,

fact

is

that

the

areas

where the shortage is most acute
are

likfwise the

areas least able
for imports of food.
This
situation is what is commonly re¬

to pay

ferred
In

to

as

some

the

dollar

countries

shortage.

Italy and
France, for example—it actually
amounts

to

a

—

dollar

Fundamentally, it stems

famine.

from

an

production

neighborhood

1938.

of

levels in

90

to

However, much of this

duction

itself

has

gone

the

100%

of

pro¬

into

re¬

construction, and exports have not
increased sufficiently to make any
appreciable dent in the trade defi¬
cit. And the appropriations which
have
are

been

made

by the Congress

running out.
More

Assistance

Needed

(6)

Expansion of inland trans¬
facilities to carry a 25%

greater load in 1951 than in 1938;
(7) Restoration of prewar mer¬
chant fleets of the participating

assistance would be
required from
United States. Country after

the

can

sell abroad in order to

sistance.

This

had

for some time and

live.
That is exactly what has taken
place in the countries of western

Europe.

Total

war

left the physi¬

cal resources of these
countries in

after item to
war

our

been
we

evident

added item

program of post¬

assistance. However, this kind

For such

wrong.

do

can

there

are

which

no

figures in

period,

no

and

uncertainties

many
man

a

than guess,

more

foresee.

can

the Report

The

useful

are

as indicating the general order of
by 1951.
main, European produc¬ magnitude of assistance which its
tion will supply the capital
equip¬ authors feel is required, but they

In

the

ment needed for these expansions.
These goals are based on the

be

would

they

the first

assumption of assistance from the

figures

as

clearlv

known

par¬
rec¬

ognition of availabilities in the
Western Hemisphere. It suggests
the need for assistance in com¬

would

be

asked

to

contribute

about $16 billions.

Meanwhile,
Government

of piecemeal approach became less

determine what it

and less

in

achieve

United
taken

States

steps

to

leave

the

elements

more

of

the

•

They

definite in describing

which they propose to
their joint effort to

course

follow

that :

ins'st

requirements.

can be more

recovery.

Germany Not Given Priority
I

should

one

like

to

comment

on

r

assertion that has been made
times

in the foreign press,
that Germany is to be given some
kind of priority in the Em'onean
™anv

recovery

the
has

they

immediate
the

to

much less certain of their

are

United States during the next four
years.
The report of the Paris
Conference is an estimate of the

impoverished productive machine country was indicating in conver¬
and depleted financial reserves. sations in Washington, that its ef¬ modities and credits over the
four
forts
to
It is brought on when a
achieve recovery were years
country
totaling approximately $22
is forced to buy from abroad more still dependent upon American as¬
billion, of which the United States
than it

be
one

countries

During the spring, it became deficit anticipated by the 16
increasingly apparent that more ticipating countries and the

in

this

The

program.

States has

United

special responsibility

a

It

case.

is

true

that

we

wisely

satisfactory, both to those

safely and

can

believe that the German economic

undertake.
A committee situation must be improved; Ger¬
headed by Secretary of the Inte¬
many is not only in bankruptcy
rior Krug has been appointed to
today, but it constitutes a serious

virtual ruin—industrial
plants de¬ responsible for our foreign policy
stroyed, transportation facilities and those concerned with govern¬
wrecked, mines closed, agricul¬ ment expenditures.
survey the impact of foreign aid drag on the economic recovery of
tural lands despoiled.
Furthermore, it became increas¬ on the raw materials and natural all of Europe. With production at
Not only
were the essentials to
production ingly apparent that the problems resources of this country and has 40% of prewar; with coal: steel,
destroyed or seriously damaged, could not be evaluated in terms already made its report. A second and fertilizer at
exceedingly low i
but the normal
individual
countries.
Each committee headed by Dr. Nourse levels, it
ways
of doing of
seriously limits the prog¬
business were disrupted.
of the Council of Economic Ad¬ ress that can be made elsewhere.
Trade, country found it difficult to plan
both

in

and

between

countries,

Whole

economies

was

limited.

were

dislocated to the extent that

they

were

outside

forced

help

minimum

for

to

the

necessary

depend

on

irreducible

to

sustain

life.
And all the
while, U. S. pro¬
ductive capacity, not only undam¬
aged but in numerous cases ex¬

ahead

in

the

absence

of

knowl¬

edge about the plans and probable
course

of

other

countries

with

visers

the

was

appointed

affects

American

economy

as

necks

of Commerce Harriman

ress

ining

limiting a country's prog¬
have not always been within
its own borders.
On June 5, in a speech at Har¬

vard

University, Secretary Mar¬

panded by war, has been turning shall stated that before the United
out goods and services at the rec¬ States could
proceed much further

vate citizens headed

States

the
to

the

whole.

by Secretary
is

exam¬

ability

of the United
the requirements
nations in their re¬

meet

of European

covery

a

on

Prosperity

equally

is

true

indivisible.

indivisible.

that

It

is

depression

is

The

lag in German
third committee of pri¬ production is clearly too great for

Finally,

a

examine

to

assistance

of

which it had important trade and
financial relations.
The bottle¬

ord-breaking rate of about $200 in its efforts to facilitate European
basic calorie deficiencies in order billions annually to fill our back¬ recovery, the countries involved
log Of needs as well as the re¬ should agree on the requirements
that workers will have the incen¬
quirements from abroad.
This of the situation and what they
tive and strength to produce the
very
disparity between produc¬ themselves could do through a
coal and other industrial
requi¬ tion in the United States and pro¬ joint?
effort, in order that the




•

port

plan.

Its

survey

pected to be completed

is

soon

ex¬

after

the
to

good

lift

what
can

of

Europe.

German
above

A

program

production

The Report of the Committee of

i

some¬

its present low level

hardly be regarded either

as

giving priority to German recov¬
ery, as if that were something en¬
tirely

apart

from

European: rerecreating the Ger¬
giant which has twice plunged
European Economic Cooperation the world into war. We are fully
analyzes the present condition of conscious of the need for security
Europe and lays out a definite control over * Germany, and. have*
course
of action;
It recognizes offered, among other steps, to join
that there is no single panacea, in the enforcement of a
security
the end of this month.

♦

covery,

man

or as

,

Volume

166

Number 4642

THE

treaty which would assure con¬
tinued
demilitarization through
inspection

for

the economic
man

40

production

part

of

But

years.

front, increased
is

a

v.

-

.

.

(Continued from
which

necessary

European recovery
program, and should be included
therein.

4)

page

I

believe it

to say that
40

is

aspects.involved in the immediate
taking to relieve

a

a

better,

his

on

judgment than he

Committee.

But

the

over-

Tiding consideration, it
me, is that

for

good

seems to
cannot fail Europe

we

our own

sake. There

reasons

are

many

for this.

I do not wish to
over-emphasize
the economic factor.This is not
a
matter where careful
calcula¬
.

in

tion

economic

decide

what

terms

course

should
should

we

one

can

that

assure

with

us

finalitv

anv

recovery, program will
prove effective. But we do
know
that we have
many economic ties

with

Europe, that

we

are

accus¬

tomed to buy and sell in
the Eu¬
ropean market, and that a
collapse
in Europe will
require consider¬
able
readjustment in
our

own

economy.

But the iss"e should be
decided
a broader basis than
that. Two
world wars should have
taught us
that we ennnot
isolate ourselves
from the inevitable consequences

with

rope.

mately

whom

we

But

I

do

admit
in

think

that

the

it

long

connected

by

ties

thought and technology, are
threatened by violence or desti¬
tution.

In

-

our

own

self-interest,

we
cannot afford to let
Europe
walk the last mile down the road
to ruin.

is only fair to
make

money

whereas

run,

people who try to beat the
ket, do not.
s':

In

:!:

'

most
mar¬

his

formula plan
comments,
May is apparently familiar
with only a few such
plans. He is
right on the types he mentions,
but the Burlingame
Plan, for ex¬
ample, will always function even
if there is a "permanent new era"
with a price range of 200 to
1,000.
A formula plan is not
expected to
make spectacular
profits, but an

8% average return with
virtually
no risk or work is
surely not un¬
attractive.
*

good

Mr.

some

May

real

any

a

instance, back at

July

l'ast

of

(Dow-Jones

with

the

was

market

should

a
as

have

was

a

heen

the

materials

food

dimmish

First

,

out

gradual

a

fuel, and
Europe wdl

of

begin to disappear."
come
chaos, and

would

that would

of

for

and

supply
anri

halt

come

tyranny,

perhaps Communism, perhaos
surgent Fascism.

In all

European
civilization
Wh'ch ours descended would

tually be
Dark
the

blotted

Age

new

and

continue

to

from

that part of the
culture and civilization

world's

would be lost to

Fortunately,

;

from
even¬
a

descend unon
And
the
values

have

we

receive

and

would

continent.

which

out

re¬

hkelihood,

the

alternative

us.

we

to

we

can

brighter

a

de¬

and

some sacri¬

envisage at least

the
possibility of a prosperous,
stable, and democratic Europe.
By
extending our vision and exerting
our
strength now we will not deny

ourselves

the

chance of having

a

strong and friendly partner that
will

work

with

us

in

expanding

world prosperity. It is a momen¬
tous decision, yet I cannot,
see that
the choice is difficult.
One
lies

way

certain

the other
of

disaster

offers

for

real

Eurone;

possibility

European recovery.
Americans willingly made

rifices

and

during the

worked
war

Allied

victory

decide

for

a

a

world

ourselves

we

much

sac¬

harder

to make certain
and

the

an

right

to

kind

the

of

want to live in.

we are

Surely
willing to make lesser sac¬

rifices

now

and

defend

which

we

in

order

the

to

Finally, what about the diffi¬
culties which might have been en¬
countered

by

hypothetical

our

;

Dowist? In the first
place, tremen¬
psychological odds would
have been against him. 38% of
the time, or almost 19
years, he
would have been out of the mar¬
ket.
As an example of this, he
dous

would

have

had

to

January of 1940
funds

fact

for

sell

and

out

sit

almost 4V2 years.

that he

would

buy in again

at

at

sold

which

he

in

his

on

The;

have had

to

exactly the level
out

is

not

the

(Plus)
%

Amt. In

(Less)

(Less)

Amt. Out

Divi¬

Range

Rise

(net)

Cap. Gain

Broker's

(gross)

dends

Taxes

Comm.

30

45-

64

$100.00

$142.30

9.09

32

10.57

59-

.97

60

1.70

139.85

142.23

11.28

.60

21

51-

1.13

92

80.40

151.78

273.31

11.17

30.51

25

70- 84

1.70

20.00

252.77

303.32

17.38

12.64

27

81-

2.22

84

3.71

305.84

317.19

21.03

2.84

28

2.49

65-

86

32.30

332.89

440.41-

27.07

21

26.38

82-

3.09

99

20.75

438.01

528.90

25.38

22.72

3.87

22.00

11.13

329.86

52

84-164

1,775.09

3,466.75

340.72

9

422.91

127-131

3.15

3,363.59

3,469.54

76.87

26.49

2.11

3,492.59

3,566.28

52.94

27

18.42

22.80

3,572.5-3

4,387.10

268.64

203.64

31.84

market

a

range

new

highs

one

in

whole,

Average

were

there

in

were

Simple

new

issues.
reverse.

period with

around

only nine

lows

many more

just the
this

there

new

individual

was

nearer

204,

there

highs while

actually 61

new

common-sense

lows.

observa¬

no

into

(2)

Dividends

are

based

on an

(3) Capital

gain

taxes

that

accuracy, it is believed the

listed

him,

for

he

would

have

had

to

sell out at

immediately

time.' I

recognized

hope

excerpts

Mr.

from

May
the

at
can

fore¬

casts

of prominent Dow authori¬
This might indicate whether
net their consensus, at -particu¬

ties.

annual

figured

of

five-point loss!

a

publish

yield of 3% of the

out, figured

are

results

Again, it has been assumed that
Dow theory confirmation points

approximately correct.

of the amount in etod amount
months of each swing.

the

57.
This not unreasonable adjustment
would change a
one-point gain

$4,420.26,

claim is made for

have

we

buy in at 62 and

the

Although

examine

to

I'm

future

a

influx of buying or selling or¬
ders at a Dow confirmation point.

were

(1)

May intends in

con¬

an

able

NOTES:
above figures are

so

In

Mr.

Where

28.24

145-178

psychological

example, as buying in at 59 and
selling out at 60, it is more prob¬

27.33

142-145

this

siderable and expensive (for the
Dowist) changes in our tabulation.

20.97

6

if

even

could be surmounted,
sider the practical problems.

results (I think Mr. May
will show) would necessitate con¬

9.91

95.30

point

And

block

These

4.40

216.72

by

Balance.

buying
opportunities,
etc., all passing by.

article

DJIA

Mos.

Final

situation

sure

No. of

42.30

for

over four
long years, watch¬
ing dividend income, stock solits,
rights, stock dividends, and special

average

for the total number of

on

the

basis of 25%

or

lar

times

chosen

sufficiently
present

maximum

unanimous

at

random, is
definite, and

clear,
even

to

permit of

spe¬
of profit, it
being assumed that all transactions repre¬ cific action
by one who wished
long-term capital gains (including the next to
last, which is to follow it. If not, if there is
doubtful).
confusion, hedging, or disagree¬
(4) Brokerage commissions are estimated
by figuring 0.4% of ment,
how
could
a
real
life
the total of the

sented

amount in and amount
out, in each case.
(5) The "amount in" is the
preceding "amount out" after adding
dividends and subtracting both
capital gain taxes and brokerage
commissions.

-

would-be
results

Dowist

even

to those of

hope to achieve

remotely comparable
our

man

of straw?

In

On casual examination, a capital
appreciation of 4300% over a pe¬
riod of less than 50 years would

interest.

appear to be excellent.

is

might

other

But what

investment

have accomplished?

I

methods

am

decided that the fairest
the

point
put

account

of
In

in

view
other

a

of

was

of Mr.

words, if $100

never

interest

series

compound

(interest

from

compound

conclusion, although I have
long been an appreciative reader

compounded

almost

May's interesting columns,
have
I enjoyed
a

before
so

much

as

h's present

one

on

forecasting.
I
look forward
eagerly to his next article
with just one slight reservation:
I
hope that hereafter Mr. May

monthly) for 50 years, what an¬
as an example, that Mr. nual
rates
would
accumulate
Carpenter could show how $4,400 and $1,600?
mar¬
I found that
a
formula timing plan, with net 7.6%
would
ket was actually much weaker
develop
approxi¬ will leave statistics to the chart¬
dividend income added to capital
mately $4,417, and 5.6% approxi¬ ists and confine himself to the
than it seemed on the
surface, a rather than eliminated (as in his
keen analytical "Observations" at
mately $1,672.
phenomenon invariably
appearing published examples), would better
It is
seen, therefore, that the which, in my opinion, he tops the
this result
around major
appreciably. Since this Dow follower,^.in effect,
tops.
gained field.
Now, I happen to use a moving opinion, however, is not likely to but slightly more than 2% per
JOHN E. LOSHAR
impress Dow theorists I have se¬ annum over the
New York, N. Y.
man that bought
average
ratio of new lows and
lected for comparison what they and held!
Oct. 27, 1947
highs just because it gives me a
may consider one of the least
An appraisal of the risk element
pro¬
clearer picture of what
ductive investment management must
is going
remain
essentially a matter
on in this
particular respect than methods: buy and hold.
of
individual
judgment.
Since
If a
1 can get
"buy & hold" man had even the most ardent Dow enthu¬
by reading the raw data
bought the same $100 of DJIA, siast does not claim
every morning. I submit that be¬
infallibility
INC. at 45 and (as did the
Dowist) for his theory, and remembering
cause I use such a
ratio, I am not purchased additional stock with that our
Dowist made 13 complete
bemused by fallacies of
A
new
past per¬ net dividend income at the end of in and out
quick-drying
textile
transactions, I think
formance any more than it would each actual bull and bear swing, the risk assumed must
fabric and finish that eliminates
be consid¬
his capital in
be a fallacy to assume
September of 1946 ered
that the
relatively large. In general, the drudgery of ironing has been
would have amounted to about
approach of heavy black clouds
furthermore, I think it will be developed by Textron, Incorpo¬
$2,100.
(As a matter of fact, if admitted
that
the
person
who
means rain.
he bought
rated, and it is anticipated that its
additioal stock with
buys and holds the DJIA stocks is
There are certain characteris¬ his dividends as
impact
will
revolutionize
the
received, or at assuming a
relatively small risk.
the end of each year. he
tics in market behavior
would
Does an extra 2% per year war¬ women's lingerie business accord¬
common
have done
to all major
substantially better.) rant the assumption of a consid¬ ing to announcement
changes of trend for
by Royal
But assuming he finished
with erably larger risk?
very obvious and logical
That, again, Little, President of the company.
reasons, ouly $2,100, and even
deducting is a question which can be an¬
"under-surface" strength or weak¬ capital
The
new
fabric
will
"neither
gain taxes (selling him out swered
only by the individual in¬
ness
being one. It is just plain at the end for an absolutely fair
vestor, for himself. But in order shrink, sag, bag, cling nor run,
common sense to look
for them, comparison) we find him with to substantiate my opinion that and its silk-like finish—product
$1,600 as against the Dowist's a 2% difference
and if a ratio makes the
should not in¬ of a year of experimentation —
visualiza¬
$4,400.
volve a large risk differential, I has the
tion easier, should one
eschew it
advantage of a durability
In seeking a standard
by which offer (without
comment) the fol¬ the silk never had." In
because he might be
a test a
labeled a to compare these two
results, I lowing table:
"chart fiend"?
new light-weight
slip of the mate¬
Type of Security—
Approx. Yield
rial dried in IIV2
minutes with
Short term Government bonds.....
GARFIELD A. DREW
1.2%
the aid of an electric
Grade A RR. bonds, or
Director of Accounts
fan, and a
high-grade pfd. stocks
3.2%
Low grade preferreds, or DJIA stocks
United Investment Counsel
medium-weight one in 15 min¬
5.2%
.

tion of this fact told
anyone with

certain,

market

H. G.

experience that the

.

Textron

have

that grim

pressing prospect. By
fices now

con¬

572.23

Average)

few

day

to

bear

1,898.14

good reflection of

On

of

each

TABLE I

ratio for

much

it

lack

at

527.69

Never¬

the

year,

204

other words, it

the

market

firmation point:

578.70

one

Industrial

around

was

use

Instead,

unstable
industries
will

of the

(2) A comparison of these re¬
sults with those which might have

out

8.44

not put anyone

momentum needed to
get the pro¬
gram under .way. Life in Eurone

increasingly

confirmation, and sells 100%

acting

are

logic.

being made daily and

uncertain,

100% into the market at each bull

A demonstration of what,
theory, could have been done;

228.00

bewitched

says,

do"e. and

and

include:

90

Average

ffrind

and added to
principal. The fol¬
lowing table traces the growth of
Any fair attempt to do this must the initial
$100 as our Dowist buys

:

93-305

The

ivill become

I'd like

83-

say:

if it is done too late, it
will be impossible to
provide the

accomplished!"

70

"ratio-ists" are,

many

the high than the low, and if the

"If

we

purpose in the lunatic class.

For

in

what

to try to close this door.

*

tions there

nothing
is
done,
a
catas¬
trophe will develop as stocks be¬
come exhausted.
If too little

criticizing A. Wilfred May factors

biased

a

16

A
as

&

far for the year of 212 to 186.

Paris

by followers
theories; and,

as risks
assumed, and dif¬
presentation of the ficulties encountered.
statistical table included
in his
In the
demonstration, I have
article of Oct. 23 "What Profit
tried to approximate
present con¬
from
Dow
Theory?"
Mr. May ditions
by estimating the effect
showed how any "Dowist" buying
of income and
capital gain taxes,
in at the bull confirmation points
and brokerage commissions.
Us¬
and selling out at the bear confir¬
ing the data in Mr. May's table, I
mation points would have missed
assumed that $100 of a "Dow
large proportions of actual, market Jones
Industrial Average, Inc."
rises during the past 50 years.
was purchased at 45 in
June of
Unfortunately, he left an obvi¬ 1897 and sold at
64 in December
ously open door to Dow followers of 1899. Dividend

in

What may
happen in Europe if
we
do not help stabilize condi¬

is problematical.
renort
has
this
to

accomplished

"(3) An analysis of such relevant

(1)

*

Mr.

who may wish to

of

race,

it

will

theless, that does

inti¬

are

*43

I am not
defending the Dow
income was es¬ important point: consider, rather,
Theory. I have no use for it, par¬ who may say "Don't merely look timated at 3%
(rather than 5 or the psychological implications in¬
ticularly as generally expounded. at what we missed: look also at
6%, to allow for income taxes) volved in sitting on the side-lines

without

Eu¬

in

good profit

a

patterns of the past and

bf major
happenings abroad. His¬
tory proves that we cannot remain

him

again in 1942-1946.

on

seeure when the countries
of

little for

a

1938-1940, and made

follow.

As a matter of fact, no
such calculation can be
made. No

would

following the Dow Theory
which, after all, would have saved
him grief in
1929-1933, given him
a good
profit in the 1932-1937 bull

hungry Europe as well as in the
long-range aid for complete and
lasting recovery envisaged by the market, lost

Paris

letters

for

the last 20, 30, or

have by

are

(1775)

of other investment

You've probably received
many

fair statement

a

over

years, there is not one investor
thousand who has done

in

we

CHRONICLE

Chronicle":

bottoms?

Certainly there can be no ques¬
tion, that there are humanitarian
steps

FINANCIAL

Editor, "Commercial & Financial been

be shown to have al¬
closer to the tops and

can

ways come

.

Humanitarian Aspects

&

Commentsion Technical Market Formulas

on

Ger¬

any

COMMERCIAL

maintain

principles

fought.




for

Develops New
Quick Dry Textile

Oct. 27,

Average of about

1947

20 Railroad stocks

Speculative stocks

7.2%

9.2%

utes;
(and higher)

neither

ironing.

garment

required

,

„

44

(1776)

THE

COMMERCIAL

FINANCIAL

&

Now
•

•

ABC Vending Corp.,

Oct. 23
I stock

(par

Offered—To

share.

per

persons representing important customers and to cer¬
tain key employees with a view toward benefiting com¬

pany's
who

business.

Stock

is

being

stockholders

by

sold

will retain the proceeds.

American Cladmetals

Co.

commercial

operations.

Business

—•

The

was

company

American

Fire

and Casualty Co.,

Orlando, Fla.

10

(letter of notification) 12,500 shares ($10 par)
^common.
Price—$24 a share. Stock will be offered for
subscription to stockholders
for

each

two

shares

basis of

on

one

Underwriter—Southeast¬

held.

Securities Corp., Jacksonville, Fla.
in securities.
ern

For investment

•

Americana

Furniture,

Inc.,

North

Rock,

Little

Ark.

Camden

23

filed

100,000 shares

additional 285.000 shares of

(100 par)
common

and an

common

•

Pa.

General corporate purposes.

Eagle Mining Co.,

Seattle, Wash.

Oct. 20 (letter of notification)
200,000 shares of common.

underwriting.

•

East Utah

Pro¬

For mine development.

Mining Co., Salt Lake City

'

Oct. 27 filed 1,075,000 shares (100 par) common.
Under¬
Eberstadt & Co., New York.
Offering—To

Co., Baltimore, Md.

writer—F.

filed 90,935 shares (no par) common.
writer—Merrill Lynch, Pierce, Fenner & Beane.

furniture.

ing—Stockholders of

record

right to subscribe

or

in

East

No

(letter of notification) 720 shares of 5% cumu¬
Price—$100 a share. No underwriting.
buy additional vending machines and merchandise
sale

filed

Duvernoy & Sons, Inc., New York (11/3)

•

Oct. 27

for

shares

be

Proceeds—To

Underwriting—None.

Unsubscribed shares will be sold

Co., Inc., New York, and Herbert W.
Baltimore, Md. Offering—To be offered
publicly in units of one share of preferred and one share
of
common.
Price
$5.10 per unit.
Proceeds — To
finance completion of its factory and for working capital.
Business—The company is being incorporated this month
and nlans to engage in the business of manufacturing

To

1,000,000

Doughboy Bottling Co., Pittsburgh,

•

lative preferred.

&

filed

Oct. 27 (letter of notification) 1,614 shares of 5% cumu¬
lative preferred stock (par $100). Price—$100 per share,

issuable upon con¬

Schaefer & Co.,

To

(letter of notification) 50,000 shares of 6% pre¬
ferred ($5 par).
Price—$5.75 a share.. UnderwriterMcLaughlin, Macafee & Co., Pittsburgh, to acquire and
equip a bottling plant.

ceeds—To increase

—Gearhart

underwriting.

Oct. 24

are

Candimat

will
will

($1 par) capital stock,
by amendment.
Price
develop mining proper¬
ties in Flint Lake locality of Ontario.

offered to stockholders of record Oct. 22
in the ratio of one new share for each four shares held.

•

22

Underwriter—Name to

(11/7)

Price—$17 per share to warrant holders.
capital funds.

common

common

Dogpaw Gold Mines Ltd., Toronto
Oct.

Sept. 19 filed 100,000 shares ($5 par) capital stock. Un¬
& Sherrerd, Philadelphia.
Offer¬

version of the preferred and exercise of 35,000 common
stock warrants to be sold to underwriters.1 Underwriters

unit, 4,655 shares of
share and 10,000 shares of

a

by amendment.

Fire Ins. Association

Rights expire Nov. 6.

$10

be held for conversion purposes.
No
retire debt and for working capital.

Water Service Co.

(N. J.)

each at $30 a

one

be sold at

series of

preferred,

derwriter—Butcher

publicly.
Oct.

of

exchanged for out¬

shares will be
6%

3%% bonds, series
C, to be sold through competitive bidding.
Probable
Bidders—Halsey, Stuart & Co. Inc.; Blyth & Co., Inc.;
Union Securities Corp.
Company also filed 15,652 com¬
mon shares (par $25) to be underwritten by Dean Witter
& Co.
Proceeds—Will be used to retire $900,000 bank
loans, to reimburse the treasury for expenditures on
construction and for other corporate purposes.

ing—Shares

-

of

Oct. 21 filed $1,500,000 first mortgage

share

new

Registration

1927, on a
share for share basis, with a cash adjustment.
Unex¬
changed shares of new preferred and common will be
sold publicly.
Proceeds—To
Price—By amendment.
redeem unexchanged shares ox old preferred.
Business
—Public utility.
California

-organized in 1945 for the manufacture of cladmetals.

Oct.

standing shares

(11/5-10)

Oct. 10 filed 1,000,000 shares ($1 par) common.
Under¬
writer—Mercer Hicks & Co., New York.
Price—$1.50 a
share.
Proceeds—To buy machinery and equipment for

Thursday, October 30, 1947

INDICATES ADDITIONS SINCE PREVIOUS ISSUE

ing—The preferred

13,300 shares of common

Price—$7.50

$1).

(10/30)

New York

(letter of notification)

in

CHRONICLE

be offered to

stockholders at 300

common

a

share.

Un¬

subscribed shares will

be offered publicly.
Proceeds—
develop mining properties in Wasatch County, Utah,
Business—Mining business.
To

machines.

—

•

American

Oct. 21

To be sold

at

No underwriting. For working capital.

par.

American-Marietta

Oct.

Co.,

Chicago

130,0000 shares ($2 par) common.
Under¬
writer—The First Boston Corp., New York.
Offering—
125,000 shares will be offered publicly and 5,000 to
certain executive personnel.

Price by amendment.

ceeds—To finance expansion

O

Electric

Power Co.,

Va.

Roanoke,

$28,000,000 first mortgage bonds, due i977,
and 75,000 shares of cumulative preferred.
Underwriting
—The

bonds

will

be

offered

at

& Co.

competitive bidding.
Halsey, Stuart
Inc.; Harriman Ripley & Co., Inc.; Glore, Forgan

& Co.

Offering—New preferred will be offered to hold¬

Probable bidders:

ers

of its

basis of

The First Boston Corp.;

outstanding 4V2% cumulative preferred

one

ceeds—For

retirement of debt

construction.

new

and

partial financing of

Business—Public utility.

Associated Telephone Co., Ltd,
Oct.

16

Pro¬

(11/3)

ceeds—To

reimburse treasury for capital expenditures.
Bids—Expected bids will be received Nov. 3.
•

Austin

Oct.

Consumers

Cooperative,

Inc.

22

and

(Texas)

500

for

be

Oct.

will

29

before Nov. 20

each

offered

10

through

Offer¬

given the
the basis of

27

filed

Paper Co.,

Omaha,

Neb.

share.

Power

Golden,

writers

are

Enumclaw, Wash.

•

Oct.

California Oregon Power Co.,
28 filed

ferred

and

Medford, Ore.

42,000 shares ($100 par) 4.70% series
42,000

writers—Merrill

shares

($20

par)

Lynch, Pierce,

common.

Fenner

&

pre¬

Under¬

Beane,

Francisco, and E. M. Adams & Co., Portland, Ore.

San

•

17

Co., Chicago.

17 filed

Gold

Ridge, Inc., New York
(letter of notification) 45,000 shares of capital
(par $1).
Price—$1 per share.
UnderwriterStein Bros. & Boyce, Baltimore.
Proceeds for working
capital.
Oct.

20

stock

Graham-Paige Motors Corp., N. Y. (11/5-7)' '
17 filed 233,320 shares ($1 par) common.
Under¬
writer—Allen & Co., New York.
Price by amendment.1
Proceeds—To repay bank loans and for working
capital,!
Oct.

Kansas

15

■mi

Wi
>

-

;

'

k

CORPORATION
Boston

New York

Chicago and other cities




•

Pittsburgh

DeSoto

Candies,

p

preferred

and

19,655

shares

of

common.

5.000

shares of preferred and common will be offered in units
»:

CO

%

de<*

Me*hers
BROKERS

a„J

B»"0"

a

I*:•:<

m'

\S65

W

York

Sto

C^ckG°

Inc., Miami, Fla.

Oct. 22 (letter of notification) 5,000 shares of 6% cumu¬

lative

'

lit
m-

notification) 750 shares of 6% preferred
stock (par $100). Price—$100 per share. Underwriter—
Charles
Conrad, Oldwick, N. J., Vice-President in
charge of advertising. Expansion in the compiling, edit¬
ing and publishing two publications: "The Debutante
Register" and "The Debutante Tradition."

,

'

Debutante Register Foundation, Inc., New York

(11/3)

FIRST BOSTON

I »

\

Oct. 27 (letter of

The

,

Transportation Corp. (11/6)]
150,000 shares of Series A preferred. Un¬
derwriter—Kuhn, Loeb & Co., New York. Price—$105
a
share.
Proceeds—To
pay
off indebtedness and for
working capital.

(11/18)

(letter of notification) 9,000 shares of common.
Price—$11 a share. Being sold on behalf of Charles J.
Davis, President of the company.
Underwriter—Dempsey-Tegeler & Co., St. Louis, Mo.
•

.«[

Under-,
Campbell, McCarty & Co., and Keane & Co.,

24

Oct.

a share.
Proceeds will
$100,000 loan and to reimburse its

Inc., Wichita,

..

common.»

General American

scheduled for Nov. 18.

Mfg.,

($1 par)

Gabriel

ton &

filed

Davis

—

Co., Detroit, Mich.

100,000 shares

Co., Cleveland
(letter of notification) 10,000 shares ($1 par)
on behalf of Wm, H. Miller, a director of the
company, to be sold at market.
Underwriter—Sills, Min-

$30,000,000 25-year 1st & refunding mtge.
bonds, Series D. Underwriting to be determined by
competitive bidding. Probable Bidders—Morgan Stan¬
ley & Co., The First Boston Corp., Halsey, Stuart & Co.
Inc.
Proceeds—To redeem $30,000,000 of 3%% 20-year
debentures due 1958, at 102. Opening of bids tentatively

Oct.

filed

common,

Colo.

Consolidated Edison Co. of N. Y., Inc.

.

Oct.

Offer-

Corporate and Public Financing

a

Expand sales

Price—$7 a share.
Proceeds—The shares
being sold by 14 stockholders who will receive pro¬

Oct.

commission of $1.25
repay

Co., Inc., New York.

ceeds.

treasury cash.

Placers, Inc.,

a

Parker

both Detroit.

(letter of notification) 9,872 shares ($10 par)
common.
Price—$30 a share. Company will sell the
stock through- investment bankers or security dealers

•

(letter of notification) 400,000 shares (10 par)
common.
Price—500 a share.
No underwriting. For
mining exploration and development.

21

8

pay

R.

Fraser Products
Oct.

Illuminating Co.

Co.,

(11/6)

products, etc.

—

Central

Inc.

(letter of notification)

Edward
of

Sept. 26 filed 254,989 shares (no par) preferred, series of
1947.
Underwriter
Dillon, Read & Co., New York.
Offering—To be offered share for share plus a cash ad¬
justment for outstanding $4.50 preferred. Unexchanged
shares of new preferred will be sold publicly.
Price by
amendment.
Proceeds—To retire unexchanged shares
of old preferred.
Offering indefinitely postponed.
Colorado

its proceeds to increase

Frailey Industries, Inc., New York
Sept. 26 (letter of notification) 34,500 shares of class A
stock
(par $1).
Price—$5 per share.
Underwriter—

Co., Inc., Alexandria,

Electric

use

100,000 shares ($1 par)
class A common. Price—$3 a share.
Underwriter—Batkin, Jacobs & Co., New York. To purchase new machines
and equipment, to pay off some current liabilities and
to add to working capital.

(letter of notification) 11,519 shares ($10 par)
Price—$25.50 a share.
If selling agents are
engaged names will be filed by amendment.
To reim¬
burse company's treasury.
(Ohio)

will

company

Florida Rami Products,

Aug. 1

20

Cleveland

The

working capital.

common.

21

Under¬

Purchase of inventory,

will be sold to L. D. Sherman & Co., New
York, the
principal underwriter, at 60 cents a share. The under¬
writing discount for 80,000 shares will be 50 cents a

La.

be used to

Cal-Creek

'

Y.

common

(letter of notification) 80,000 shares ($1 par)
behalf of the company, and 15,000 shares
($i
par) common on behalf of officers and stockholders. ITie
80,000 shares will be sold at $3 a share. The 15,000 share#

Helicopters, Inc., Seattle, Wash.

(letter of notification) 1,500 shares of common
shares of preferred.
Price—$25 a share.
No
underwriting.
For business operations.

Oct.

N.

Aug. 21

40,000

Central Louisiana Electric

and

Inc.,

Empire Projector Corp., New York

underwriters.

(letter of notification) $140,000 of 5% notes, due
1957, and 3,800 shares ($1 par) common.
Notes to be
sold at face amount and the common at $1 a share.
Un¬
derwriter—H. P. Pratt and Co., Seattle, Wash.
For re¬
duction of current liabilities and purchase of additional
helicopters.

Sept.

Co.,

Unsubscribed

Proceeds—For construction pro¬

Oct. 9

Oct.

Sterlizing

writer—Reich & Co., New York.
etc.

shares ($1 par) common.
Under¬
writer—Kirkpatrick-Pettis Co., Omaha. Price by amend¬
ment.
Procee'ds—To be added to general funds.
Busi¬
ness—Paper business.

•

Steam

Sept. 22 (letter of notification) 65,000 shares of
stock (par 100).
Price—65 cents per share.

be

on

held.

now

publicly

Electric

Under¬

common on

Carpenter

Oct.

filed

$6,000,000 first mortgage bonds series D
due > 1977 and 150,000 shares of cumulative
preferred
stock (par $20).
Underwriters—Names to be supplied
through competitive bidding.
Probable Bidders—Paine
Webber, Jackson & Curtis; Stone & Webster Securities
Corp., and Mitchum, Tully & Co. (jointly); White, Weld
& Co.; Kidder, Peabody & Co., and Lazard Freres & Co.
(jointly); Halsey, Stuart & Co. Inc. (bonds only).
Pro¬

on

by amendment.

the

on

share for each four shares held.

new

will

Central

29 filed

Light Co., Raleigh, N. C.

gram.

manufacturer.

Appalachian

Oct.

Pro¬
Business—

of operations.

share

new

Price

Power &

8

shares

•

24 filed

Paint

Oct.

one

nf

notification) 80 shares f$100 par) com¬
and 2,500 shares ($10 par) 6% cumulative preferred.

mon

•

Hostess, Ind., Akron, O.

Carolina

i

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Volume

166

THE

Number 4642

COMMERCIAL

&

FINANCIAL

CHRONICLE

Probable bidders:

W. C. Langley & Co., Shields &
Co.,
White, Weld & Co. ^jointly); Otis & Co.; Blyth & Co.,
Inc.; Lehman Brothers. Offering—The preferred will be

NEW ISSUE CALENDAR

offered

publicly while the

stockholders of record Nov. 5

common

October
ABC

30, 1947

one new

Vending Corp

Common

Price

will

common

be

offered to

the basis

on

of

share for each four held.

Rights expire Nov. 19.
Registration statement covering

by amendment.

became effective Oct. 21.
Proceeds—For new
construction purposes.
Bids—Bids to underwrite unsub¬
scribed common shares will be received Nov. 3.
common

November 3,

1947

Associated Telephone Co., Ltd
Debutante

Bonds and Pref.

Register Foundation

Preferred

Duvernoy & Sons, Inc

Preferred

Greil Drug & Chemical Co

Preferred

Indianapolis Power & Light Co

Common

Jarnel

November 5,

:_Bonds

1947

York.

Common

Graham-Paige Motors Corp..

Jersey

Publix Shirt Corp.—

Common

(CST)--Bonds

Shore

1947

(B. L.) & Co., Inc

Common

debentures

Macy (R. H.) & Co. Inc
Standard Oil Co

Common

November 7,

Oct. 10

To be

Camden Fire Ins. Association

Capital Stock

Mass. Bonding & Ins. Co

Capital Stock

West Disinfecting Co

Preferred and Com.

November

10,^1947

Heyden Chemical Corp

(letter of notification) 95,000 shares of
sold at market.

_X_—Debentures

12, 1947
Bonds

Wheeling & Lake Erie Ry

-Equip. Trust Ctfs.

November 17,

Preferred

18, 1947

Consolidated Edison Co. of N. Y. Inc

Underwriter—George F. Breen,
working capital.
Issue will

For additional

privately.

Greil Drug & Chemical

Debentures

Co., Pittsburgh

(11/3)

Will be offered to certain trade creditors in satisfaction
Of outstanding indebtedness.

Harbor Plywood

Corp., Hoquiam, Wash.

<Dct. 24 filed 538,005 shares ($1 par)

(Md.)

Harness Racing Association, Inc.

filed

$500,000 10-year 6% cumulative income
debentures and 125,000 shares (10 par) common.
No
underwriting.
Price—$1,001 per unit, consisting of $1,000 of debentures and 100 shares of common.
Proceeds
—Proceeds will be put in escrow and will not be used
before definite dates for a meet have been
assigned to
the association by the

Business—Operation of

race

Co., Inc.,

San

Francisco,

Racing

common.

Under¬

Price

by

amend¬

Proceeds—To pay off bank loans and to finance
construction of new facilities.
Business—Manufacture
of plywood products.

Hawaiian-Philippine Co., Manila, P. I.

Ltd., Toronto, Canada

a

share.

Proceeds—For rehabilitation

Lemke

Oct.

(B. L.)

& Co., Inc., New York

Underwriter

Co., Inc. Price by amendment. Pro¬
ceeds—To pay off a bank loan and for expansion and
additional working capital.

Manufacturing

Co.,

Inc.,

(letter of notification) 75,000 shares (500 par)
common.
Price—$3.62a share.
Underwriter—F. R.
&

Co., Inc., New York.
and for working capital.

To pay off bank loans

postponed indefinitely.

pire

tfthe basis of

one

common, reserved for conversidfTof the preferred.

Lock Nut Corp. of America

$12.50). Under¬
Price—$12.50 per share.

proceeds—To

repay

& Co.,

Inc., New York

(11/6-7)

Oct. 22 filed

$20,000,000 25-year 2%% sinking fund de¬
bentures, due Nov. 1, 1972.
Underwriters—Lehman
Brothers and Goldman, Sachs & Co., New York.
Price
by amendment. Proceeds—To pay off $7,400,000 of notes
expansion and improvement program estimated
$25,000,000 during next five years.

Manhattan Coil Corp., Atlanta,

Price at par.

bank loans and finance construction.

holders of record Oct. 29 will be given the right to subScribe to the new shares at $17 per share in ratio of
share for each 10 held.

Rights expire Nov. 17.
Proceeds—Added to working capital.

Indianapolis Power & Light Co.

(11/3)
50,000 shares ($100 par) cumulative pre¬
ferred and 214,451 shares (no par) common. Underwriters
—To be supplied by amendment. For
preferred (possi¬
bly Lehman Brothers). Common by competitive
9

filed




28.

The

be

each.

offered

at

102.507, while the preferred shares
and the common shares at $4

par

Proceeds—To

retire bank indebtedness and to
finance purchase of machinery and other plant equip¬
ment.

Boston

New

bidding.

Co.,

Inc., Greensboro,

N.

C.

Oct. 1 (letter of notification) 60,830 shares ($1 par) com¬

publicly at $3
ment

share and 41,293 shares will be offered
a

assets

Providence, R.

I.

share.

Underwriter—Main Line Invest¬

Co., Merion Station, Pa.

Modern

Oct.

22

stock.

Wholesale

(letter

of

Price—$100

For expansion of business.

Co., Columbia,

notification)
a

share.

$100,000

S.
of

No underwriting.

C.

•

New

Freight
(11/19)

N. Y.
Oct.

Lines,

Inc.,

Riverhead,

28

(letter of notification) 1,950 shares of common
(par $100). Underwriting—None. Pay reconver¬

stock

sion costs of vessel and for
•

Co.,
machinery and equip¬

working capital.

London

working capital.

t

Northern Indiana Public Service
Co., Hammond.
Ind.
'
29

filed

272,694 shares ($20 par) cumulative prefT
Underwriters—Central Republic Co. Inc.*
Chicago; The First Boston Corp., and Blyth & Co.
Inc.,
New
York.
Offering—For subscription by common
stock.

stockholders

basis

on

common

prove
•

of

preferred share for each
Unsubscribed shares will be

one

shares held.

Price—$21

share.

a

its public utility system.

Proceeds—To im¬

Business—Public utility.

Northwestern Public Service
Co.,

Oct.

28

filed

82,000
be

shares

filed

($3 par)

by

the

on

Huron, S. D.
Under¬

common.

amendment.

Offering—For

basis of

one

share

Price—By amendment.

for each five shares held.

Pro-'

ceeds—To be added to general funds.

Business—Public

utility.

Orange Concentrates Associates,
Oct.

21

Inc.,

Boston

filed

108,000 shares ($1 par) common.
No un¬
derwriting.
Offering—The shares are owned by Nation¬
al Research
Corp., parent of the registrant, and will be
offered for purchase by its stockholders.
Price—$7.75 a
share.
Proceeds—National Research will receive
pro¬

ceeds.

Peabody Coal Co., Chicago

(11/12-13)

Oct. 23 filed $12,500,000 of 15-year series

A first mort¬

sinking fund bonds.
Underwriter—Halsey, Stuart
Co., Inc., Chicago/ Price by amendment.
Proceeds

gage
&

—To

finance

ization of

construction

of

new

mines

and

modern¬

mining properties in Illinois. Business—Min¬

ing business.
Portland

(Ore.) General Electric Co.
(11/3)
$6,000,000 of first mortgage bonds, due 1977.
Underwriting—To be determined by competitive bid¬
ding.
Probable bidders:
Blyth & Co., Inc., Lehman
Brothers, and Merrill Lynch, Pierce, Fenner & Beane
(jointly); Halsey, Stuart & Co. Inc., The First Boston
Corp., Harriman Ripley & Co., Kidder, Peabody &
Co.,
Equitable Securities Corp. and White, Weld & Co.
(jointly). Proceeds—For property additions. Bids—Bids
for the purchase of the bonds will
be received at
of Marine Midland Trust

Oct.

3

City,

filed

up

office

Co., Room 232, 120 Broadway,
to noon (EST) Nov. 3.

Corp., New York

140,000 shares

(11/5-14)

($1 par)

Under¬

common.

writer—Reynolds & Co., New York.

Price by

amend¬

ment.

Proceeds — The shares are being sold
by three
stockholders who will receive proceeds.
Public Service
1

filed

Co.

of

Indiana, Inc.

(11/3)

$15,000,000 first mortgage bonds, series G,t

due 1977. Underwriters—Names to be
supplied by com¬
petitive bidding.
Probable bidders: Blyth & Co., Inc.;
The First Boston Corp.; Glore, Forgan & Co.;
Halsey,
Stuart & Co. Inc.; Kuhn, Loeb &
Co., and Harriman
Ripley & Co. (jointly). Proceeds—About $4,000,000 will
be used to reimburse the

treasury for expenditures al¬
ready made and the remainder will go for additional
at office of

preferred
Increase

capital and construction of warehouse facilities.

vertible preferred and 100,000 shares ($1 par)
both of

$6.12V2

—

a common

Price
share.

—

$10

a

Proceeds

The securities

are

being sold by 12 stockholders who will receive proceeds.

requirements.
Bids—Bids will be receivedt
Sidley Austin, Burgess & Harper, Room 2000,1
Salle Street, Chicago, up to noon (CST)

La

Nov. 3.

Reading

Oct.

28

filed

class A and
class B

preferred share and
—

South

common.

Straus & Blosser and Brailsford & Co.,

Chicago.

11

•

Munising Wood Products Co., Inc., Chicago
Sept. 29 filed 50,000 shares ($10 par) 5% cumulative con¬
Underwriters

*

\.;:

construction

•

of

19,537 shares will be offered to stockhold¬

a

Co.,

For purchase of

Publix Shirt

Chemical

of which

the

Proceeds—

Oct. 22 (letter of
notification) 1,000 shares (no par) conqiPrice—$100 a share. Underwriter—Barrett &

Rights expire Nov. 6 and unsubscribed shares will
be sold publicly. Proceeds—For expansion of business.

at $2.50

transfer

Bonding and Insurance Co.,

held.

mon

one

*

England Butt

mon.

(11/7)

Sept. 19 filed 100,000 shares ($5 par) capital stock. Un¬
derwriter—Geyer & Co., New York. Offering—Offered
for subscription to stockholders of record Oct. 7 at
$26
per share on the basis of one new share for each four

ers

common

working capital.

New York

Massachusetts

exchange of

for

Rights ex¬
is part of a

Oct. 13 Hied

Ga.

May 20 filed $500,000 5% serial debentures, due 19491957; 12,000 shares ,($25 par)
cumulative converti¬
ble preferred and 85,000 shares ($1 par) common.
Un¬

Merritt

{Household Finance Corp., Chicago
pet. 9 filed 222,485 shares (no par) common (stated
value $10 a share). No underwriting.
Offering—Stock¬

©ne new

Nov.

registrant.

•

General corporate purposes.

to cost

the basis

on

Un¬

Oct. 6 (letter of notification)
24,000 shares of 5% cumu¬
lative convertible preferred stock (par

(R. H.)

stockholders Nov. 6

subscription by shareholders

(11/17)

derwriter—Sills, Minton & Co. Price—$15 a share. Pro¬
ceeds—To reimburse
treasury for cost of redeeming 50cent preferred.

Electric Light Co.

share for each two held.

Offering—-The shares will be offered to
common

program whereby Consolidated will
of its Nashville division to the

Oct.

Hilo-(Hawaii)

Pet. 27 filed 25,000 shares ($20 par) common.
UnderWriting — None. ~ Unsubscribed shares will be sold at
auction after Dec. 22, when subscription warrants expire.
Offering—For subscription to common stockholders on

Oct.

Consolidated's

writing—To

Sept. 25 filed 100,000 shares ($10 par) 75-cent cumula¬
tive convertible
preferred, and 100,000 shares of Class A

Rochester,

New York

Sept. 19 filed 200,000 shares ($1 par) common.
Under¬
writer—E. H. Rollins & Sons, Inc., New York.
Price—
)By amendment. Proceeds—The shares are being sold
by 36 Stockholders who will receive proceeds.
Offering

0

(11/6)

22

Macy

Corp.

Corp., which, in turn, is parent of the
registrant, has agreed to purchase shares not subscribed

for otherwise.

eight

will

#—A. G. Becker &

Hickok

(Tenn.)

offered publicly.

—The debentures at

(11/10)

pet. 22 filed $6,000,000 15-year debentures.

Nashville

To reduce bank,

Oct. 7 filed 820,834 shares
($1 par) common. Underwrit¬
er—Avco Manufacturing
Corp., parent of Consolidated
Vultee Aircraft

properties. Business—Mining.

derwriter—Kirchofer & Arnold, Inc., Raleigh, N. C. Price

program.

Heyden Chemical Corp.

—The Bankers Bond Co.,
Louisville, Ky.
loans and for working
capital.

erence

and for

Sept. 24 filed 500,000 shares 7% cumulative preferred,
[oar 10 Philippines pesos per share (currency basis one
pieco equivalent to 50 cents). Underwriting—No underWriting. Offering—For subscription by common stock¬
holders on the basis of one share for each 1^4 shares
Price—$5

24 (letter of
notification) $250,000 6% cumulative
preferred ($25 par). Price—$26.50 a share. Underwriter

Commission.

June 27 filed 300,000 shares
($1 par) common treasury
stock.
Underwriting — To be supplied by amendment.
Price—50 cents a share. Proceeds—To
develop mining

No

Myer-Bridges Co., Louisvilte, Ky.

track.

writer—Ray T. Haas, Chicago.

ment.

Owned.

•

Oct.

Legend Gold Mines,

preferred.

Oct.

ment and for

23

($10 par)

Proceeds—To pay off bank loans used to
finance
Business—Telephone business.

Providence, R. I.

Laurel

shares

—

share.

•

writers—Eastman, Dillon & Co., New York, and First
California

150.000

(letter of notification) 60,000 shares ($1 par)
Price—$5 a share. Underwriter—H. P. Carver
Corp., Boston. To retire debt and for working capital.

Lushas

Oct. 28 (letter of notification) 40,000 shares of 5% cumu¬
lative convertible preferred stock (par $3); 200,000 shares
Of common stock B (par 600) reserved for issuance upon
Conversion of preferred.
Price—$3 per share.
Under¬
writing—None. Not to exceed 15,000 shares of preferred

0

Telephone Co., Honolulu

filed

construction.

•

common.

45

underwriting. Offering—The shares will be offered for
subscription to common stockholders.
Price
$10 a

For

Liberty Loan Corp., Chicago
•

24

•

1947

Liberty Loan Corp., Chicago
November

common.

July 22

Common

Peabody Coal Co

Mutual

two shares of Nashville common in
return
share of Consolidated common and
$18 cash.

Boston

Maryland

New London Freight Lines Inc

November

Inc.,

Koch Chemical Co., Winona, Minn.

Oct.

1947

Heating Co.

•

Oct.

of

Johnson Automatics,

Common

General American Transportation Corp.--Preferred
Lemke

&

Co., Philadelphia. To retire present loan of
$20,500 and to add to working capital.

be placed

Florida Rami Products, Inc

Gas

&

New York.

November 6,

(Pa.)

working capital.

Sept. 10 (letter of notification) $25,000 first mortgage
sinking fund debentures.
Price, par. Underwriter—

Common

Wisconsin Pub. Serv. Co., 11:30 a.m.

To build plant and for

Bioren

American Cladmetals Co

Point Pleasant, W. Va.

(letter of notification) 124,000 shares of common.
Price—60 cents a share.
Underwriter—E. W. Hoy, New

Portland General Electric Co., Noon (EST).-Bonds

Public Service Co. of Ind., Noon (CST)

Lumber Co.,

Oct. 16

(17771

stock

(Pa.)
200,000

Tube Co.
shares

(no

par)

500

cumulative

participating stock, 50,000 shares (100 par)

stock, plus

issuable

an

upon

indeterminable number of class B
redemption

of

the

class

A

Underwriter—Aetna Securities Corp., New York.

stock.
Offer¬

ing—Class A stock will be offered publicly and class B

(Continued

on page

46)

46

(1778)

THE

(Continued from page 45)
will

stock

be

sold

of copper

to

pay

Proceeds—To

bank

stockholders.

loans.

offered

share.

a

tubing.

(Wash.)

•

Texas

Eastern

Oct. 24 filed

an

Underwriter

Gas Co.

—

the

common

Oct.

23

Co.

Inc.,

Fort

(letter of notification)
Price—$1

Colo.

shares

15,000

share.

a

retire

loans

G.

Title

for

and

Proceeds

—

price of the

repay

•

$138,027,000 owed to the United States

Plants

Co.

of

©

S^erer-Gillett Co.,

Marshall, Mich.

24

(letter of notification) 10.000 shares ($1 par)
common.
Price—$6.50 a share.
Underwriter—First of

Michigan Corp., Detroit.
for w rking capital.
Silver
Oct.

13

par)

For construction

purposes

and

The

company will issue one share
bonus with each share of preferred sold.

as

through officers of the company.

of

common

To be

sold

For operation of busi¬

ness.

Buckle

Mining Co., Wallace, Idaho
1,500,000 shares of (10c
Price—20 cents a share. Underwriters—F.

stock.

share.

(letter of notification)

E.

Scott, Pennaluna & Co., J. E. Scott and Morris George,
all of Wallace, Idaho, and John Erickson and Harold
Gribble, both of Mullan, Idaho. For mine development.

•

to

Development Corp., Jacksonville,

Fla.

Jul>

©

Inc., New York

writer—Southeastern Securities

Corp., Jacksonville. For

working capital.
Ccuthern New England Telephone Co.
O't 20 filed 100,000 shares of capital stock (par $100).

Oct.

&

Light Co.

29

the

proceeds

to

be

used

for

construction.

new

Prob¬

underwriters:

•

Oct.

(letter of notification) 1,000 shares of preferred
$3,000 shares of Class A common.
Price—$100 a
preferred share and $1 a Class A common share.
To be
sold through officers and directors of the
company.
To
organize and operate business of publishing

pamphlets and magazines.

Wayne,

presently contemplated.

reported company in addition to sale of 50,006
preferred shares and 214,451 common shares now in
registration may market between $7-$8,000,000
bonds,

Oct. 22

Unistrut Corp.,

not

Indianapolis Power

and

•

^letter of notification) 8,000 units consisting of
one
share ($10 par) 6% cumulative preferred and one
sharp ' $1 par) common.
Price—$12.50 per unit. Under¬
zy

is

mon

a plan to increase authorized common from
1,000,000 shares. Issuance Of additional com¬

Halsey, Stuart & Co. Inc.;
Co., Inc.; Lehman Brothers; Blyth & Co. Inc.

photographic

Southeastern

approve

able

Trigon Press,

I

ip

Oct. 6 (letter of

Oct.

15% above such

expected to be made in December.
F. Eberstadt & Co.,
traditional underwriter.
Stockholders also will be asked

Union

Block, Misscula, Mont.
notification) 2,400 shares each of no par
common and no par
preferred.
Price—$125 a preferred

not more than

Elliott Co.

436.260 to

Montana,

stock at about the time of the offer¬

Dec. 11 stockholders will vote on
creating a new class of
110,000 shares of cumulative preference
stock, junior to
the existing 5% preferred.
Public distribution of 60,000
shares of convertible cumulative
preference stock

The

Insurance

ranging from approximately the market

common

ing of the debentures to
market price.

Proceeds from the sale of

debt represents the balance due on
the purchase price of "Big Inch" and "Little Inch"
pipe
lines.
Business—Operation of the two pipe lines.

($1 par)

Underwriter—John

To

Corp., Houston,

and

Government.

Colo.

Perry & Co., Denver,
working capital.

Transmission

the basis of

on

share

tures are to mature-in 15
years and will bear an interest
rate to be determined
by the trustes but not to exceed
3V2%.
The conversion price of the debentures will be
set at an amount

$120,000,000 of first mortgage 3^2% pipe
line bonds, due 1962, which Texas Eastern
plans to sell
privately, simultaneously with the sale of common, will
be used to

Products

Molded

Unsub¬

unspecified amount of (no par) common.
Dillon, Read & Co., New York.
Price

by amendment.

Son

tp
$5 of debentures for each
held, and unsubscribed balance sold oh
competitive bidding to underwriters.
Probable bidders:
Morgan Stanley & Co.; Halsey Stuart & Co. Inc. Deben¬
stockholders

common

Texas

(letter of notification) $300,000 ($50 par) pre¬
Price—$50 a share.
Underwriter—Shea & Co.,
Boston; and Smith, Landeryou & Co., Omaha, Neb. For
payment of loan and current obligations.

common.

•

Consolidated Edison Co. of New
York, Inc.
Dec. 1 stockholders will vote on
authorizing the trustees
to make
$57,382,600 of debentures convertible into cornmon stock.
The debentures, are to be offered at 100

be offered publicly through under¬
writers at $23% per share. Proceeds—For working capi¬
tal to meet expanding
operations.

Sept. 4

Collins,

sold

(11/6)

Rights will expire 3 p.m. Nov. 5.

ferred.

&

Unsubscribed shares will be

Thursday, October 30, 1947

for

scribed shares will

—

Seder

share

one

of record Oct. 21, in ratio of one new share for each five

shares held.

New York
Oct 27 filed 150,000 shares ($1 par) common.
Under¬
writer—Hayden, Stone & Co., New< York.
Price by
amendment.
Proceeds
Shares are being sold by two
stockholders—145,800 by Robert Z. Greene (President)
f nd John F. Moran, of INew York.
Business—Maintains
and services coin operated merchandising machines.

o

of

Oct. 2 filed 584,320 shares ($10 par) common.
Under¬
writer—F. S. Moseley & Co.
Offering—Shares initial¬
ly are offered for subscription to common stockholders

Corp.,

Seattle

basis

Standard Oil Co. of Ohio

17

Rowe

shares held.

the

on

CHRONICLE

business.

—

v

stockholders

FINANCIAL

Price—By amendment.
Proceeds—To
be
added to company's capital funds.
Business—Insurance

(Pa.) Glass Corp.
(letter of notification) 1,000 shares ($100 par)
common.
Price
$100 a share.
Underwriter — Kay,
Richaras & Co., Pittsburgh, Pa.
To pay off debt and
purchase equipment.
•

&

publicly.

Rochester

Oct.

to

each V-k

Price—$6

Business—Manufacture

;

COMMERCIAL

Mich.

Oct. 20 (letter of notification)
100,000 shares of 25 cent
common.
Price—25 cents a share to stock¬
holders of company. No
underwriting. To pay off mort¬
gage and for additional machinery and
equipment.
stated value

United Fish & Cold
Storage Co., Juneau, Alaska

&

Phillips Petroleum Co.
29

1,000,000
Nov.

it

announced

company
statement

tration

with

shares

of

the

expects to

SEC

common.

Oct.

file a regis¬
covering about

31

Stockholders

of

record

17 will be

given the right to subscribe to the stock.
Rights will expire on or about Dec. 2.
Phillips said it is
expected that the offering will be underwritten
by a
nationwide group of investment bankers headed
by The
First Boston Corp.
Proceeds will be used to retire bank
loans which, as of Oct. 10, amounted to

$4tf,375,uU0.

®

Sunray Oil Corp,

Oct.

27 Clarence H. Wright,
President, announced that
financing in connection with the merger of Pacific

the

Oct.

Western

13 (letter of
notification) 150,000 shares ($1 par)
preferred stock.
Price—$1 a share.
With every
100
shares of
preferred stock the purchaser receives 25

Otis

Oil

Corp.

Mission

and

Corp. into Sunray will

shares of

be accomplished through an increase in
funded debt and
the issuance of convertible second
preferred stock. From
about $36,000,000 to $50,000,000 will be

Proceeds—To repay advances from American

cers

amount

Telephone & Telegraph Co. and finance extensive post¬

tion

stockholders

Underwriting—None.
Offering—To be offered for sub¬
scription to stockholders of record Oct. 30, in ratio
of ore new share for each five shares held.
Price—$100
share.

per

construction program.

war

common as a bonus.
To be sold through offi¬
of the company. Acquisition of a
ship and installa¬
of cold storage
equipment for the processing of
fish in Alaska.

required.

will

depend
of

the

on

extent

to

which

The

minority

Pacific

Western accept the cash offer'
of $68 per share which is to be made
by Sunray Oil Corp.
is expected that funded debt will be
increased by
about $25,000,000.
If holders of one-half of the Pacific'

It
©

Sru'thwest Gas

Producing Co., Inc., Monroe, La.

•

Universal

'letter of notification) 10,950 shares of common
behrlf of H. P. Farrington, President of the company.

on

To

te

"-Id

at

market.

Underwriter

—

E.

H. Rollins &

Sons, Inc., agents.
•

Ccu'hwest

Oct
rn

Natural

Gas

Co.,

Shreveport,

20

("letter of notification) 25,000 shares of
behni* 0f R. M. Craigmyle, President of the

To b# c?~id at market.

company.

Underwriter—Craigmyle, Pinney

Oct, 8 filed 15,000 shares of 5% cumulative
sinking fund
preferred (par $20) and 21,499 common shares (no par).
Underwriters—Preferred: The First Trust Co. of Lincoln,
Neb.; common: Schneider, Bernet & Hickman. Purpose—

Houston, Texas

Sept. 26 filed $1,200,000 of 4% subordinated debentures,
due 1955, and 120,000 shares ($1
par) common. Above
securities to be offered only in combination with certain
securities of Well Service Securities
Co., in units of

$1,000

of

subordinated

debentures

and

100

shares

of the company and $92
principal amount of
7¥>-year notes due 1955 and one share of common
(par $1) of Well Service Securities Co. at $1,193 per
unit.
Underwriting—In addition, Well Service Securi¬
ties Co., an affiliate, will sell
110,000 shares of common
of Spartan to Spartan's officers and
employees at par.
Proceeds—To provide working capital.
common

•

28

filed

writer—Lee

80,000 shares

pany

Price—By

is

selling the

proceeds

amendment.

selling 46,234 shares of

are

to

remainder.

defray part

leased plant at

of

the

Offering—To

Proceeds—Stock¬
common

and

Company will
cost

Punxsutawney, Pa.

Under-#;

of

com¬

use

Specialty Papers

Oct. 22

(letter of

preferred

on

Business—Manufac¬

Price—$"04

a

share.

Co.,

•

at

face

The securities

securities

(which

No

common.

sold

see).

of

the

Co.,

Houston, Texas

7V2-year notes and

underwriting.

amount

and

common

at

to be sold in combination

are

Snartan

Tool- &

Service

Co.

Proceeds—The

company will use pro¬
purchase of 110,000 shares of
Spartan common and for other expenses. The common
is being sold by C. P.
Parsons, President of the company.

from

West
Oct.

the

notes

Disinfecting Co.

Proceeds—Of

the

total,

the

is

company

shares of preferred and 25,000 shares of
balance of securities are
being sold

selling
common.

2.500

increased

•

Oct.

28

by 14 stockholders.
]

Motor Co.,

Cleveland, O.

Oct. 28 filed 275,000 shares

scription by stockholders

on

basis of

Underwriter

Offering—For sub¬
one

raising

outstanding common stock*
9,300,000 shares. i\o puone

in

preferred

stock will

common

has

under

$22,000,000

The

consideration

to

finance

it

offering,

The

stock.

N.

To

S.

shares held.
Unsubscribed shares will be sold pub¬
licly.
Price—By amendment.
Proceeds—For working
capital. Business—Manufacture of trucks and buses.

Mich.

is

be

offered

through Breene &

($5 par) common. No under¬
Offerine—To be exchanged for. stock of U. S.

Graphite Corp, Wickes Brothers and Wickes Boiler Co.
in connection with a
plan to merge the three companies
into the registrant.

Loewi

&

Co.,

Milwaukee.

•

financing

plan,

UnderwrHers—The First Boston
Corp., and Kidder, Peabody & Co., New York.
Offering—The shares will be




it

is

Oct.

21

from

(bonds only).

stockholders voted

to be offered for

future

near

on

shares held.
•

to

increase authorized

initially

the basis of

one

new

Proceeds for working

Wheeling & Lake Erie Ry.

sideied

Nov. 12 for $3,940,000 of

The certificates

mature

share for each two '

capital, etc.

(11/12)

are

bids to be

dated Dec.

1, 1947, and will

bidders:

Halsey,

Stuart

& Co.

Inc.;

Salomon

Bros. & Hutzler.

UNITED STATES

GOVERNMENT,

m-

STATE, MUNICIPAL AND
CORPORATE SECURITIES

(11/5)

Sept. 30 filed $4,000,000 30-year first mortgage bonds.
Underwriting—To be determined by competitive bidding.

Blair

Probable bidders:

Halsey, Stuart & Co. Inc.; Shields &
Forgan & Co., and Harriman Ripley & Co.
(jointly); W. C. Langley & Co.; The First Boston Corp.
Proceeds—To repay short-term bank loans.
Bids—Bids

6- Co.

INC.

NEW

:^0

YORK

.

for purchase of the bonds will be received at Room
231

South

(CST)

on

La

Salle

Nov. 5.

Street,

Chicago,

up

to

10:30

1100,
a.m.

con-

equipment trust certifi¬

semi-annually from June 1, 1948, to Dec. 1, 1957.

Probable

V$TLANTA

•

BOSTON

PHILADELPHIA

>

subscription to stockholders in the

Thd^company has issued invitations for

publicly through underwriter.
Price—
prices.
Proceeds—For investment.

Wisconsin Public Service Corp.

stock

400,000 to 600,000 shares (par $5). Additional shares

market

on

said,

Probable

Waukesha Motor Co.

Underwriter—

common.

Offering—Shares

may

approximately $12,000,-

Wisconsin Investment Co., Milwaukee

Sept. 29 filed 370,000 shares of

con-'

bidders include Stone & Webster Securities
Co.; Halsey,'
Stuart & Co. Inc.

Co.; Glore,

Springfield (Mass.) Fire & Marine Insurance Co.
29 filed
200,000 shares ($10 par) capital stock.

its

thought,

be ready for the market by March next.

may

cates.

Oct. 20 filed 770,000 shares

of cumulative

Talbott, Board Chairman.

be made.

Power Co.

company
some

program.

share for each

2 V-i

Corp., Saginaw,

The

about

Electric &

reported

for

struction

are

($1 par) stock.

—Hornblower & Weeks, New York.

to

other sale of

or

Virginia

plans

Co.

The

The company will use its
proceeds to repay bank loans
and for working capital.

writing.

be

offering

000

and

White

will

preferred stock
Probable underwriter:'

public offering.
&

include $10,000,000 in bonds and

(11/6-7)

12,500 shares (no par) $5 cumulative pre¬
75,000 shares (50c par) common.
Under¬
writer—Coffin & Burr, Boston. Price
by amendment.

•

Eastman. Dillon

for

17 filed

ferred

to holders of the present 4]/4%
preferred stock of Sunray'
and to minority stockholders of Pacific
Western, and
about $18,000,000 of convertible second
will be issued for

1,200

Price—The

the

Western minority stock
accept the cash offer, about
$34,000,000 of 4V2% prior preferred stock will be issued

Based

Dayton

Brock, licensed dealers.

Oct.

Heights,

will be offered to stockholders and
unsubscribed shares
will be offered

notification) 422 shares

behalf of

be

share.

a

$110,400 of 4%

($1 par)
will

ceeds

its

purchasing its

ture of carbon products.
•

notes

Service Securities

filed

Wickes

common.

Higginson Corp., New York.

public.

holders

(no par)

17

shares

Speer Carbon Co., St. Marys, Pa.

Oct.

Muskegon

of

4%

the

Oct.

increase

working capital. Offering—To be offered
for subscription to stockholders, the
preferred at par
and the common at $15 per share.

Co.,

of

notification) 5,400 shares (no par)
Price—$10 a share.
To pay obligations and
for working capital.

with

Investment Co.

Spar'an Tool & Service Co.,

(letter

common.

$1

Southwestern

21

Well

& Co.. New York.

To

Oct.

La.

common

Camshaft

Mich.

Oct. 20

•

•.

BUFFALO

PITTSBURGH

•

•
ST.

CHICAGO
LOUIS

>

COMMERCIAL

THE

Number 4642

166

Volume

FINANCIAL

&

CHRONICLE

generating capacity at the com¬
pany's Lower Salmon Develop¬

Lavigne Co. & Johnson Goldman, Sachs Group Idaho Power Co. Com.
To Merge Inv* Business Offers Bonds and Pfd. of Stock al $33.50 a Share
SPOKANE, WASH;
The
underwriting
headed
brokerage
offices
of
Edwin Mini Mining & Mfg.
Ay Blyth & Co., Inc., and Lazard
:

An

—

Lavigne & Co. and O. C. Johnson
have been consolidated according
4o

announcement

by Levi Austin

of

Yakima, Wash, who recently
purchased the firm organized by
the late Edwin Lavigne in 1922.
Mr. Austin was manager of the

a
'

'

office.

Yakima

•

in

•

of Yakima, while

charge

will

Johnson

•

continue

will

He

the Spokane

act

as

office.

Mr.
of

manager

Goldfnan, Sachs & Co.; Kidder,
Peabody & Co., and Piper, Jaffray & Hopwood headed a public
offering Oct. 29 of $10,000,000 of
2%% sinking fund debentures due
Oct. 1, 1967, and 100,000 shares
of $4 cumulative preferred stock
of Minnesota Mining and Manu¬
facturing Co., makers of Scotch
tape, coated abrasives and other

ment

&

Co.

4%

of

power

preferred
: \

share.

stock

at

Idaho

at

River

capacity at the company's Malad
development on the Malad River
estimated

to

$3,613,000,
bution
cost

Financial

Chronicle)

CALIF.

—

with F. H. Breen &

Co., 609 South

Grand Avenue.

approximately
additional distri¬
at

Joins Frank & Belden

estimated

an

Special

approximately $1,000,000.

thur

program will be
supplied from
the company's treasury and from

Frank

additional future

to The Financial Chronicl*

MINNEAPOLIS,
M.

Molmer

&

MINN. —Ar¬
is

-

Belden,

with

now

Inc.,

Roanoke

Building.

financing.

-p.{
Associated with Blyth & Co.,
Proceeds from the. sale of the Inc., and Lazard Freres & Co. in
products.
The debentures
are
priced at 100%% and accrued in-> preferred and common stocks will the common stock offering are:
ae used for additions to the com¬
terest and the preferred shares at
A, G. Becker & Co. Incorporated;
Mr.
pany's
transmission Central
production,
$102 per share.
Republic
Co.
(Inc.);
and distribution facilities, includ¬ Graham, Parsons &
the
W. L. McKnight, President of
Co.; Hallgar-

The company

'

The

Connell
G.
Cowan
and
Walter
Federman have become connected

Balance of cost of the construction

company's
$102 per

to

ANGELES,

cost

and

facilities

of

(Special

LOS

estimated

art

47

Two With F. H. Breen Co.

in

approximately $9,425,000
and 15,700 kilowatts of additional

are

the

Snake

of

cost

offering today
(Oct. 30) an issue of 100,000 shares
of common
stock
(par $20) of
Idaho Power Co.
at
$33 50 per
share. This offering is simultane¬
ous with offering by Wegener &
Daly, Inc., Boise, Idaho, of 35.000
shares

the

on

southern

group

Freres

(1779)

DIVIDEND NOTICES

,

title of Edwin Lavigne & Co, will
be retained.,

]

Both

i
-

Austin

Mr.

and

of

are
members
Spokane Stock Exchange.

Lavigne

Austin

Mr.
•

has

valley for 31 years.
Mr. Johnson,
who came to Spokane over two

'

from the sale will be used as addi¬

tional

capital
and
connection with an extensive

authorizations

formerly with MerPierce,
Fenner
&
at Seatle; he has been in

Lynch;

•

Beane

approximately $13,The major projects in¬

000,000.

i

vestment business for 18 years.

cluded

in

The firm's

offices

Yakima
•the

Spokane office is in
Building.
In

Central

Radio

the

are

maintained in

The

Nominating

Committee

of

13 have

tions for

the following
whose

Committeemen

;expire

nomina¬

Governors and five

two

will

terms

ucts

Francis

Governors:

of

White, Weld & Co., to
Irving D. Fish, Smith,
Barney & Co.; Philip L. Carret,
Carret. Gammons & Co., to suc¬
ceed B. Winthrop Pizzini, B. W.

.Kernan,
succeed

»

Pizzini

Co.

&

District committee: Carl Stolle

A.

G.

i Richard

F.

Co.

&

Saxton

succeed

to

Tuyl

Co., to succeed Philip L. Carret;
Kitche, Geo. D. B. Bon-

John H.

f

bright

Rochester,

Co.,

&

to

suc-

ceed Roy W. Doolittle, Doolittle,
Schoellkopf & Co., Buffalo; Paul

;
•

Devlin & Co., Inc.,

G.

F.

John
Pierce.

to succeed
Merrill Lynch,
&
Beane,
and

Wark,
Fenner

James J. Lee, Lee Higginson Corp.,

i

succeed Francis

to

i

■

•

Additional

Kernan.

candidates

a manu¬

abrasives

of the

development

quality recordings, which is now
produced in
commercial
quantities.

Wanted

by

counter

firm.

old

will

have

authorized

shares
a

a

by

meeting Oct. 27,

be

established over-thesalary, liberal ac¬

offered

to

1947, will be callable in whole, or

no

in

of

Members

Committee

>

•

were

the

Nominating
George N. Lind-

Swiss American Corporation,

say,

John

jt Chairman;

C.

Maxwell,

Tucker, Anthony & Co.; Frank
Dunne, Dunne & Co.; Michale J.
Heaney. Jos. McManus & Co., and
Frank C. Trubee, Trubee, Collins
& Co., Buffalo.

:
.

ing

to

$102

ferred
after

series of pre¬

12,

In
tures

to

the

new

SITUATIONS WANTED

stock listed

York Stock

on

A group headed by Reynolds &
Co. and Laurence M. Marks & Co.

24 offered

Oct.

200,000 shares
of Air Products, Inc., $1 par value
y common
stock at $5.25 a share.
The money will be used to pay
I bank loans., purchase .equipment,
build a plant in the Middle West
on

position.

Box

ft Financial
New York

1023,

and

$or

general

poses.

corporate
'

.

She

company,

.

N. Y.

years'

N. Y.

experience

Eastern

Address

U.

Box

Financial
New

with

City firms—desires

tion.

K

S.

of Eaton

connec¬

references.

Commercial
Park

25

t

•

incorporated

in

of

machinery and
equipment for the. production of
oxygen, nitrogen and other gases;
the leasing and sale of such ma¬
of

in cylinders, the manu¬
facture and sale of welding and

October 24,
1947

EXECUTIVE
treasurer

tered

of

sound

as

investment

individual.

practical

Well

.

ac-

tivities. After giving effect to the
financing, the company

current
will

have

;

outstanding

experience

to

in

record.
&

Secretary & Treasurer

CASH

8.

Box
&

will

held

of

Edward B.

Co.,

Oct.

<

30.

Coughlin, Coughlin &

Chairman of the group, has

named

a

Donald

F.

Committee,
Brown,

including

Boettcher

&

Co.; J. H. Myers, Harris, Upham &
Co.,

and

Fred

C.

Ulrich, Peters,

Writer

&

Christensen,

Inc.,

to

share and

a

cents

declared

($0.15)
upon

of

M 1014,

extra

The Rocky

Mountain group in¬

stock

of

MACHINE

ADDING

Detroit, Michigan
October

out

Southern

A

Participating
15,

on the Class A
and
Convertible
Stock,
payable
JD"7, to stockholders of record

November

1947.

December
A

15,

participat.ng

dividend
of
50
cents
per
A
Participating and Con¬
January
30,
1948, to
January 15, 1948.
A
dividend of
50
cents
per
share on the
Common
Stock, payable January 30, 1948, to
stcciuioiders ui
record
January 15,
1948.
share

on

vertible

the

New

Class

Stock,

stockholders

of

York,

payable

record

C. CAMERON,
October 29, 1947

1947,

payable

December

stockholders
November 15, 1947.
to

|

Accountant
of

supervisory

~

Zj experience in large stock brokerage

■—

ZZ and

Z

public

desires

of

civil,

concerns,

responsibility. 5

knowledge

operations,
chanical

accounting

position

■5 Excellent
Z

years

of

mining

engineering.

financial

and

me-

Mature,

2 nancially responsible.

Willing

jj;

A regular quarterly dividend of

250

per share on
the Common
Stock has been declared payable

November 29,
ers

1947, to stockhold¬

of record November. 15,1947.
M.

E.

GRIFFIN,

Secretary-Treasurer,

States Lines

United

Common

Stock
DIVIDEND

New York, October 28th,

Z

Y.

payable December 15,

1947, to

stockholders of record at the close of businew

November 15, 1947.
A regular quarterly

3, 1947 who on that

date hold regularly
($1.00 par) of this

issued Common Stock

dividend of Seventy-five
Cents (75c) per share on 1,298,200 shares of
Common Stock without par value of Southern
Railway Company, has today been declared,
out of the surplus of net profits of the Company,
for the fiscal year ended December 31, 1946,
payable December 15, 1947, to stockholders
of record at the close of business November

Company.
Holders of former

stock issues of the

Company entitled to issuance of Common
($1.00 par) in exchange for their
holdings will be paid this dividend when
exchange is made.

Stock

Stockholders

have

who

not

yet

ex¬

certificates for
certificates now

16 Wall Street, New

Place, New

N.

declared,

the payment of a quarterly dividend of
sixty two and one-half cents ($.62
payable December 16, 1947 to hold¬
ers of Common Stock of record December

share

addresses

H

8,

Twenty-five

the preferred stock

to 2

nllllllllllllllllllllllllHIIlHIHIIIIIIIIIIir

York

on

permanent,

Commercial
25

share

.

has authorized

changed their temporary

and Montana.

1015,

Chronicle,

per

Checks in payment of these dividends will be
mailed to all stockholders of record at their

rado, Wyoming, New Mexico, Utah

H

($1.25)

of Southern Railway Company has today been

The Board of Directors

15, 1947.

A

Box

Cents

1947.

fi- Z

travel.

Financial

1,
record

of

Company

1 Senior Stock Brokerage |
many

Treasurer.

regular quarterly dividend of
per share on the 5% Con¬

Railway

^iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiir^

ZZ

held
divi¬
end¬

earnings for the
31, 1947:
dividend of $1.50 per share

DIVIDEND NOTICE

With

meeting

following
fiscal year

Company

1

CO.

a

the

of

Commer¬

Financial

N. Y.

2

LEATHER

at

October

ing

S. F. Hall,
Secretary

1947

22,

town

Z

firms in Colo¬

dends

STATES

oi
Directors
1947
declared

share have

a

the

payable December 10,
1947, to shareholders of record at the
close of business October 31, 1947.

Z

cludes investment

dividend

COMPANY,

experience in

out

an

Chronicle,
25 Park Place, New York 8,

—

present candidates;

29.

vertible Preferred Stock has been

DIVIDENDS

A dividend of One Dollar and

be

Ecaru

October

A

quarterly dividend of fifteen cents

($0.15)

all phases of municipal busiIness.
Familiar
with office

for

UNITED

The

i

declared
A

AVAILABLE

office

THE
I

31V40

CONSECUTIVE

186th

Coughlin, Coughlin &

Association

the close

Box

Financial

Municipal Bond Man

Vice-

Bankers

at

Burroughs
185th and

of fifteen

years

Philadelphia, Pa.

years

been

Over 20

JOHNS HOPKINS. Treasurer
October 28, 1947

manu¬

capacity.
heavy re¬

assume

Excellent

Commercial

1021.

of

extra

an

secretary and
firm.
Regis¬

Twenty-five

Chronicle, 25 Park Place, New York

annual

773,306

shares of; common- stock and 105;323 shares of class A stock.




qualified

sponsibilities.
P

cial

gases

J cutting equipment and other

shareholders of record

of business November 5, 1947.

Presently employed

firm.

vestment

Manufacturing

H. C. STUESSY

ing

America

chinery^ and equipment,, the, sale

'

to

Place,

management, supervision of
books, trading and retail sell¬
ing.
Would consider open¬

Rocky Mountain group of the In¬

of Directors

Company,payableNovember25,1947,

&

N. Y.

8,

dividend

and

re,

share, on
the capital stock, par value
$13.50 per share, have been
declared, payable Dec. 20,
1947, to stockholders of record Nov. 21,1947.

Treasurer

Company has declared a dividend of
Seventy-five Cents (75c) per share on
the outstanding common stock of the

leading

new

Best

1016,

Chronicle,

York

shc

per

dividend of 50c per

DIVIDEND NO. 91

Security Analyst

pur¬
•»

1940, is engaged in the design and
manufacture

Edward B.

65c

Cleveland, Ohio

The Board

25

semi-annual

A

Checks will be mailed.

THE UNITED GAS IMPROVEMENT CO.

Chronicle, 25 Park Place,

8,

Secretary

pay¬

business

of

EATON MANUFACTURING COMPANY

(itW

the New

Chairman,

Company,
close

the

desires

Commercial

BURROUGHS

COLO.—The

for

.

at

Edmund A. Harvey,

securities
M

Edwin 0. Wack

October 20,1947

Long experience doing order work in
over-the-counter

Exchange.

DENVER,

will be mailed.

Cents

Seventy-five

October 28, 1947

To Hold Election
election

of

Tobacco

record

of

TRADER

Reynolds Group Offers
j Air Products Stock
Rocky Mt. Group 1BA
j

§er share Series, payable December 1,
tock,4^% on Cumulative Preferred

Y.

December 1, 1947, to stock¬

on

November 10, 1947.

of

shares

issued

1,951,530

regular quarterly dividend of One Dol¬
lar and twelve and a half cents ($1.12Ht)

V

share has been declared upon the
Stock and Common Stock B of

American

holders

stock, there

preferred

business

Secretary.

per

Common

the

deben¬

V

New York 3, N.

dividend

regular

(750)

year

of

2%

1951,

prior to such year.

addition
and

each

for

retire

will

Dec.

shares issued

are

share, together

per

fund for this

common

.<

A

The

with accrued dividends. The sink¬

after

of

BELL,

&

169th Common Dividend

able in cash

will be considered duly elected.

.re¬

O.

1947, to holders of record at the close
of business November 3, 1947. Checks

experienced man with
desirable
contacts.
Complete
facili¬
ties, statistical department, etc.
Box
G 1030, Financial Chronicle, 25 Park
Place, N. Y. 8.

and management in executive

are

close

,

NOTICES

Fifth Avenue

111

an

with successive reductions there¬

nominations

Weeks

will be

ceived, the candidates nominated
by
the
Nominating
Committee

additional

If

Whiting,

the

at

1947.

BUTLER BROTHERS

facturing, mining, finance and secur¬
ities, in ell
phases
of
accounting,
taxes, S. E. C. and State regulations

prior to Nov. 17.

record

19,

C.

A

count, liberal commission basis

sinking fund, beginning Oct. 1,
i950, sufficient to retire 60% of
the issue by maturity. The 100,000 shares of preferred, part of
250,000

of

November

The Board of Directors has declared the

part by lot, at $105 per share
if redeemed prior to Dec. 12, 1948,

nominated

and

IMCOflPOflATCO

com¬

being

debentures

per

stock,

TRADER

for

is Scotch sound tape, a mag¬
recording
tape
for
high

The

Board

day

Cents

WANTED

are

stockholders at

may

HELP

of Directors of this Company has
declared a dividend of TwAy (20c)
share on the outstanding capital
payable December
15.
1947
to share¬

The
this

Co.; Wegener & Daly,

DIVIDEND

period since 1925.
products

recent

netic

t

Inc.,

/

Stubbs.

ing use among highway depart¬
ments and outdoor advertisers. A
pany

Van

52,800 kilo¬
watts of additional hydro-electric

numerous

&

Abbe,

for the installation of

than 40 years,

the

Abbe; H. D. Knox, H. D. Knox &

1

the principal projects
continuing construction

the

&

LINE

STREET

plant for

a

has been

coated

of

company

Board

Shields

Co.; Paine-Rice & Co.;

BROAD

New York, October 29. 1947

holders

Northwest

are

Among
of
the
Scotch tape
(the
company's trade name for pres¬
sure-sensitive
adhesive
tape)
coated abrasives, adhesives, col¬
ored roofing granules, and Scotchlite, a reflective color sign mate¬
rial which is finding an increas¬

in

under construction.

Among
are

but its prod¬
have been greatly diversiried

the

Jan. 15.

on

plant and

The company
facturer
more

presented

now

PIPE

COMPANY

ten &

Co.; Wm. P. Harper & Son
& Co.; Kidder, Peabody &
Co.;
Morgan Stanley & Co.; Pacific

BUCKEYE

30

manufacture of miscellaneous

the

Associaiton of Securities

Inc. District No.

Dealers,

Scotchlite

in full of short
term bank loans aggregating $3,000,000 made by the company for
interim financing of such facilities
repayment

the
equipment of a

program

and

expansion and improvement of
the general factory and office fa¬
cilities at St. Paul, Minn.

Deceives Nominees
National

this

construction

products,
both
near
Hastings,
Minn., a roofing granule plant at
Corona, Calif., an adhesives plant
at
Los Angeles, Calif., and
the

Mercy Block.

NASD District S3
•

of Sept. 1, 1947,

as

aggregated

the; stock brokerage and bond in-

ex¬

improvement pro¬
which unexpended

pansion and
gram
under

rill

•

in

working

years ago, was

'

that proceeds

the Company, stated

Superin-

been

tendent of Schools in the Yakima

ing

THE

~

Park Z

5

as they appear on the books of the
Company unless otherwise instructed in writing.

J. J. MAHER, Secretary.

available

at

engraved

Trust Company,
York 15, N. Y. are

Bankers

urged to do so.
CHAS. F. BRADLEY, Secretary
One Broadway,

New York 4, N. Y.

48

(1780)

THE

& FINANCIAL

COMMERCIAL

CHRONICLE

Thursday, October 30, 1947
tough

BUSINESS BUZZ

sure

to

from the Nation's Capital

jljL f l/U

heavy

JL Ir IMl

G. Nourse.

for

some

financing

capital

from

cate¬

between
and

goods

food

machinery.
pushing E-I bank

for

this:

better

Dr. Edwin

one

pressure

come

and fuel—like farm

into

is

will

loans

of

Reason

The domestic affairs "ball" to keep your eye on

resisting

this

make

gories

V/v* ■
-

for

Republicans as well as from the
Administration, Its job will be

on...
Behind-the-Scene Interpretations

time

for extending foreign aid. Pres¬

It

will

He is Chairman of the President's Council of Economic

look

a

little

budgetwise, being made

to appear to be

an

asset.

Thus he heads up the official White House "brains trust"
domestic economic matters.

Advisers.
on

Don't

under¬
standing the totally unexpected
special session call—unexpected
as

to its earliness—Nov. 17. It was

Dr.

almost

Nourse

alone

among

the President's official

family who
legislation be

that some
proposed aimed at stopping the
irise in the price level. The State
department always has been for
the special session. Most of the
urged

rest

the

of

too much about the
executive
$10,000 sal¬
ary to take
$50,000 with some¬
body else. Without naming any
names, if you examine a few of
their backgrounds, you will find
that they are boys who seldom

^

$

Cabinet

against it—and

has

been

have most

so

of

to

meet

next

without

ses¬

could

into

legislation
December.
middle

until

not

or

December,

expected

after

ernment

the

political

continually letting young law
graduates eventually get big jobs,

home

They pre offered big dough be¬
industry wants to buy their
government background, and way.
around
Washington,
Then, too,
many
business executives do a

go

cause

The

Year's.

fight

dog

little

a

sooner.

Nourse's

advice

apparently

prevailed against Cabinet
bers

Interior Secretary
few

and controls

Thus,

Krug only

the

before

days

session call, said

to

mem¬

various subjects.

on

a

special

that allocations
not necessary

were

adjust domestic industry

to
foreign aid. And Krug was the
official charged with doping out
the relationship of foreign aid
to

U.

is

S.

Agriculture

resources.

enthusiastic

not

for

grain

trade margin control legislation.
*

*

*

what

Nourse

relating

for

proposes

domestic

the

as

economy

*

turn

H:

if Mr. Tru¬
man
can
get the stop-gap aid
through before the holiday re¬
cess, he will consider the
early
special session justified.
is

will

$4 billion. Three
million of this cut

400

from

come

individ¬

reduced

ual income tax rates. Six hundred

ing married taxpayers in all states
to file separate returns.

is

wants

Congress.

to

The

put

with

over

Nourse

report

is

expected this week, maybe before
this

issue

gets to

you.

$

Jji

Note

from

Congressional

"split"

$200

million

estimates.

ally

on

will

be reflected in

be

things.

on many
*

White House

to

Vice-

President of

the Brookings In¬
stitution before he became head

of

Council

"full

trust."

"brains

the

set

was

the

revenue

This

the

under

up

to

$4

will

cut

billion, Re¬
the rate in

"That's

Granny—she's

to

from

accrue

separate

re¬

The

30% cut on lower
10% on the up¬
will stay, as in the last

incomes
—

the

—

next year.

ward
H:

Before

to

20%

getting too excited

write

the

tax

hired to do
for

the

em¬

cil of Economic Advisers. Hence

everybody

expected

"Economic
into

that

the

Council" would

obscurity—an

anonymous

accidental

slip

vestige

of

the

House

scheme.
Hi

Hi

December.

the

excitement

Their

when the

come

of

bunch of kids out¬

a

toy store window in mid-

a

will

recommendations

Magill committee for tax
are spread on the records

reform
of the

Ways and Means committee
hearings, early next month.
#

❖

❖

The committee headed by Ros-

❖

well

otherwise.

felt

Nourse

Tall,
elderly,
dignified,
Dr.
Nourse
gives the initial appearance of
being a befuddled professor. Then
he slips in some brezzy slang at
the most unexpected times. He is
not

befuddled.

He

made

his
mind at the outset he was going
to make something of the job of
being Chairman of the Council of
Economic Advisers

—

or

up

else. He

Magill will have some fetch¬
displays. There will be at¬
every businessman's
Christmas stocking. But don't get
excited, yet. There is still some
heavy plate glass between the
toys and their coveters.
Santa
won't come this year, probably not
ing

tractions for

H*

First

realize

off

committee

Magill

has succeeded to the point where

the

whole

tax

revision

with

House

listens

to

him

deep respect.
*

Hi

of
Hi

the

case.

the

whole

show. That will appear

ning

President

come

opposes

cut.

Republicans

that

back

into

teeth at the first
the

negative,

one

of

the

reliances

when the
an income tax
plan to throw

the

no

White

House

opportunity. Yet
tax cut idea, is

Truman-Nourse

for

the

No

commit¬

but

too

appointed in April 1945

by

the

then

Commerce

Means

and

the

the

toured

retary Snyder has been saying all
this year that if individual in¬
tax

come

overall

reduction

tax

revision

is

can

held

up,

be under¬

taken. He will

nothing.
H:

about
is

lot of talk

a

taxing cooperatives.

substantial

sentiment

There

for

re¬

moving the tax exemption of some
of the larger, more successful co¬
operatives.

When and

if there is

overall

revision bill, some of
earnings investments of the
tax
exempt
groups
might
be
caught.
But
any
concentrated
drive to remove the exemption of
the cooperatives is too much like
an

the

taking
in

an

takes
and

on

unnecessary

election

long

a

the

can

show

what

tax

before senti¬
be mobilized against it.
means,

Hi

H;

There

enemy

year. Then, too, it
build-up—hearings

like—to

exemption
ment

an

now

foreign

will

the

out

mer

Their

main

com¬

large

play

a

very

not

But

this

propose

a

revolution in the patent laws ia

1948—"because next
look like

a

sideration of such
one

year

doesn't

time for careful
a

con¬

subject,"

as

member explained it.

Herter's

on

are

directives

which

Hs

Here

legislation.

from above, from the

come

Hi

in

its

report:

Reorganization
Rails

group.
«

of the things the

some

Old

lean

will

Herter committee

shortly will say
Foreign aid on a

Domestic & Foreign
Securities

substantial scale is needed to stop
Communism. The total of needs,

however,
Paris

is

not

great

as

committee

asked.

as

That

to

the

is

set-up and mandate to

the Paris committee. Realistic

New Issues

the

because European requests were
padded. The padding was not due
to European skulduggery so much

M. S.WIEN & Co.
ESTABLISHED

re¬

adjustment

of
some
European
currencies is absolutely necessary
if foreign aid shall work. After

Members
40

N.

Y.

1919

Security Dealers Ass/'n

Exchange PI., N. Y. 5

HA. 2-8780

Teletype N. Y. 1-1307

readjustment must come stabiliza¬
England perhaps presents
the toughest long-term economic

tion.

rehabilitation job of
Hs

m

Administration

that

Trading Markets:

all.
$

sources

thought
is
being
given to requiring aid recipients
to pay in their own currencies—
useless directly to the U. S., but
requiring foreign governments to
budget the cost. It will keep the
foreign governments from think¬
ing U. S. aid is just so much free
Hs

It

now

Hs

appears

port-Import

bank

Ralston Steel Car

indicate

serious

to be little

doubt but that the Herter
will

aid

policy

bread and circuses.

❖

appears

will

affairs, and the like) will ham¬

as

*

There will also be

Truman.

committee

to

(appropriations,

tees

words also from the

side

Europe

Standing

subject.

heavily

none

foreign

of
to¬
aid

study
commit¬

all,

or

policy

leadership

whole

leadership,

might adopt
of it. You are going

to hear kind

the

Republican

which

Secre¬

Oregon Portland Cement
Riverside Cement K & B

Spokane Portland Cement
LERNER & CO.
Investment Securities

H:

that the Ex¬
will

have

10 Post Office

Square, Boston 9, Mass.

Telephone Hubbard 1990
a

Teletype B) I

the

studying
overall

include

fight

inflation.




main

against

Too

much

be lost

would

run

Ways

HAnover 2-0050

Teletype—NY 1-971

many

changes long needed to

centives.

Important as he may be in in¬
fluencing White House thinking,
not

is

subject.
can

that

This

was

Firm Trading Markets

Empire Steel Corp.

promote tax equity, business in¬

Nourse

does

❖

H:

the

White

just

was

mittee

next.

shaping

committee. The latter

business

time

going to get more

are

dead

a

It

track the personal income tax cut

short

a

side

the Coun¬

bill.

lot of the brain work

a

*

Within

excited than

was

over

the specific, enticing proposals of
the Magill committee, also bear in
mind that this committee will not

for

government fiat the miracle of

ployment" plan

better

question. This is the committee

17 %,

around

something

versus

All that

got through with the "full

H*

in the last tax bill.

on

middle brackets will be limited

full employment at high wages.

left when Congress

H:

sing the same tune
henceforth, only louder. It is safe,
because Republicans plan to side¬

vetoed tax bill. The cut

fundamental alteration of

patent laws.

tary Wallace, at the request of

in

the

the

executives

was

part

enough time for final enactment

Sec¬

by

guarantee

15—hardly

about

advantage

the

employment" act of 1946.
intended

to
to care."

need for business tax relief.

per

know

enough

Administration

of

not, but there Is

President
committee is March

The latter, in turn, was origin¬

ally

old

young

where

most

or

tee

the middle brackets—the group

turns.

prefers

"mister"—was

called

publicans

will

*

Nourse—who

Dr.

hold

To

other

than

less

to

:I:

that, keep an eye gener¬
Nourse, for his thinking

thinking

$100

returns,

some

committee still studying a pos¬

the

authoriz¬

million is the
estimate

$600

—

official

curtailment

After

from

come

thinking.

You will also then know what Mr.

Truman

will

government,

here.

sible

tax cut of

billion,

million

Truman

/\LE.xajs>!>£R

hopper

what those steps are, you
will get a pretty good idea what
President

a

income tax reduction bill into the

Nov. 17 — the day the
special session opens. This bill
will provide for a personal in¬

the

Believe it

pre-view of the tax
situation: Unless stopped, House
Republicans will plunk the new
a

and finances to foreign aid. When
you see

down

£bscc>&

Here

in

times out of Christian charity and
some times to learn what
goes on

On the other hand,

come

So first watch for the details
to

Hs

way ouside the gov¬
world.
The government

is

after
the
Congress

to

New

made their

whip

before

shape

Shortly

of

be

may

with

month,

special session. These

a

committees

sji

*

special

a

sion. The leading Congressional
committees were due anyway

earlier special session just starts

the Congressional Democrats.
H»

with

government

who has to leave his

to whether Mr. Truman will get

anywhere

cry

underpaid

There is much speculation as

Dr. Nourse is the key to

if that

And
a

revenue

thq
plan¬

were

Republicans,

Susquehanna Mills

All Issues

$4 billion individual in¬

tax cut, thus will have to

limit what they propose in the
way

FOREIGN SECURITIES

of

business

the* overall

Furthermore,

tax

tax

relief

revision

time

will

rflBL MARKS & P.O. IMC.

in
FOREIGN SECURITIES

bill.

SPECIALISTS

work

against enactment in 1948 of the
overall revision bill. The target
date for getting this bill out of

50 Broad Street

Hill, Thompson & Co., Ine.
Markets and Situations for Dealers

New York 4, N. Y.

AFFILIATE: CARL MARKS & CO. Inc. CHICAGO J&_

120

Broadway, New York 8

Tel. REctor 2-2020

Tele. NY 1-2660