Full text of Commercial and Financial Chronicle : October 7, 1948, Vol. 168, No. 4740

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oct S

m ADM.

LIBRARY

Association Convention. Issue

American Bankers

ESTABLISHED 1S39

Pat. Office

Reg. U. S.

Price 30 Cents a

Holds

M. DODGE *

By JOSEPH

American Bankers Association

Retiring: President,

Detroit Bank, Detroit, Mich.

President, The

It is

endangering economic progress/ :

Sees heavy taxation

•

Sept. 26-29, at Detroit, Mich.

Evans Woollen, Jr.,

in San Francisco.

;
The

real"pleasure to welcome this large representation of the
country to the Seventy-Fourth Annual Convention ol

session,

President; F. Raymond Peterson is chosen Vice-President, and
Treasurer.
New division officials also chosen. Addresses by Joseph

M. Dodge as

Says legislation has been directed mainly against banks, and relation
of banks to Federal Government has become matter of prime con- ■
cern.

Association
74th Annual Convention

succeeds Joseph
Frank P. Powers is re¬
elected
M. Dodge, Marcus Nadler, Frank Rathje, Gwilym A. Price, Fred I. Kent and Ralph Stone given herein. Convention adopts
resolutions
inflation, housing, and supervision of bank holding companies.
Next annual meeting
day

four

Conducts

presidential address retiring ABA President attacks inconsis¬
tencies of government fiscal policies and anti-inflationary actions.

1 In

Copy

American Bankers

Fight Fallacies

Inflation

October 7, 1948

York, N. Y., Thursday,

New

Number 4740

168

Volume

Association, held in
Woollen, Jr., Chairman of
succeeding Joseph M.
^Dodge/President of the Detroit Bank, and F. Raymond
Peterson, Chairman of the First Paterson National Bank &

four-day 74th Annual Convention

of the American Bankers

Detroit, Mich., Sept. 26-29, before adjournment elected Evans
the American Bankers Association.
The fact that we meet this year the Board of the Fletcher Trust Company, Indianapolis, as President,
in the home city of your President, which does not occur very often,
of the

banks

makes it some-<?;

/thing

special

very

EDITORIAL

for

occasion

I sincere¬

me.

hope each
will re¬
member this

of you

convention

|fl
"One World"

especially
pleasant and
worthwhile. ./-■

it
possible

wish

/•/I

were

give credit

Z by name to all
of the indi-r

—

1948 Model

few years ago, led by the late Wendell Willkie,
of influence in this country were much given to
"One World." It was never altogether clear what

A very
many men

talk about
the
this

really was intended to mean but the leaders of
"school," .if such: it may be termed, were strongly an¬

term

tagonistic to "isolationism" on our part, and usually were
ardent supporters of the idea of some such world organisa¬
,-f"'
;/\
have made tion as the United Nations which somehow would eliminate,
major'contributions to our work in or at the least allay, the international jealousies and rival¬
the past year.
Unfortunately, time ries which since the memory of man runneth not to the con¬
will not permit. However, it will
trary have endangered and often ruptured the peace of the
Joseph M. Dodge

to you if I

not

the

Association

news

who

viduals

say

chair-

committees, their

sions and

that

world.

officers, commis¬

(Continued on page 38)

' ^

Mr.

Wc have

Dodge at the

Seventy-Fourth An¬
American
Association, Detroit,

Convention of the

nual

Bankers

Mich., Sept. 26, 1948.

after the shooting ceased in World War II,
have behind us a considerable period during which
United Nations have been actively functioning. It

and

is, therefore, interesting and instructive
what sense, if any, we may regard this

Willkie's and

what the prospect of
substantial part of the objectives of the
the others. It is the more fitting that we

STATE

AMD

Sold

York Stock Exchange

Wall Street, New

Street, New York 5

York 5

Troy

Albany

Elected

President
:

Evans

the

Mr.

Woollen

Hotchkiss

Woollei/ Jr., Chairman of
of the Fletcher Trust

was

educated at
Yale Uni¬

and

School

versity, receiving his A. B.

degree

(Continued on page 54)

board

Indianapolis, Ind., the
of the
Indian¬
He was advanced to the

Company,

newly elected President
Association, is a native of

apolis.

Bonds

Woonsocket

OF NEW YORK

Scranton
Springfield

Washington, D. C.

HART SMITH & CO.
Bell

Teletype NY
Wires

Private

THE CHASE

HAnover 2-0980

1-395

NATIONAL BANK

Connect
THE

Bond Dept.

Teletype: NY 1-708

New York

Montreal

Toronto

CITY OF NEW YORK

Amsterdam

prepared

have

•>+

'■

i'-'t..

\u-

V.--/

Distributors of

'•

"■

Bought—Sold—Quoted
'

'■

'
'

/; .'V

Gordon Graves
INSTITUTIONAL
30 Broad Street,

& Co.

Established

WHitehall 3-2840

Tele. NY 1-809

1899

(Incorporated)

New York

Cincinnati

upon

Chicago

Columbus

Est.

1896

Denver

Buffalo

Telephone

Gepoeation

Stock Exchange

120 Broadway, New

Toledo

Public Service Co.
v

Dominion Securities
■i.

England

■

',//•;

•...

upon

v
'/■ •. .;
request

request

SUTRO BROS. & CO.
Members New York

CLEVELAND

BONDS & STOCKS

Analysis
Copy

Securities

OTIS & CO.

New

CANADIAN

Corporation

Municipal

and

Corporate

INVESTMENTS

New York 4, N.

General Foods
Underwriters and

company;

OIL

Tel.

Woollen, Jr.

52 WILLIAM ST., N. Y.

Syracuse

Buffalo

Harrisburg
Wilkes-Barre

Philadelphia Providence
Buenos Aires

THE NATIONAL CITY BANK

PHILADELPHIA

BOSTON

PANCOASTAL

year.

Evans

MUNICIPAL

memorandum

•.

last year.

SECURITIES

■

post

Bond Department

White,Weld&Co.

eleeted

the

Quoted

64 Wall

was

—
—
—of President from the vicepresidency
of
the Association,
which he > held during
the past

State Bank,<£—

BONDS

1927

Established

INVESTMENT

Chicago

Kanabec

State and

Company /

London

the

Minn, was retained in
office of Treasurer to which
Mora,

R. H. Johnson & Co.

Gas

Western Natural

Boston

as Vice-President for the ensuing
Woollen. Frank P. Powers, Presi¬

Municipal

Transmission Corporation

J.,

Powers

Gas

Texas

Members New

dent

Co., Paterson, N.

thus succeeding Mr.

year

Corporation

Transmission

Trust

Frank

Woollen, Jr.

(Continued on page 54)

Bought

to consider in
globe as "One

World," and to speculate as to

attaining any

Texas Eastern

Lord, 1948,

reached the year of our

three years

the

address

♦Presidential

now

Evans

40 Exchange

Place, New York 5, N. Y.

and

111

Bell System

Teletype NY 1-702-3

Boston

York Stock Exchange
Principal Exchanges

New

other

Broadway, N. Y. 6

WOrth 4-6000

York 5

REctor 2-7340

IRA HAUPT & CO.
Members

Teletype NY 1-2708

Telephone:

Enterprise 1820

THE

Interstate Power Co
New
6

Common

Deb.

Fear

Stock

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, October 7, 1948

Psychology From the Investor's Viewpoint
Alabama &

Escrow

Certificates
BOUGHT

SOLD

—

Louisiana Securities

QUOTED

—

New York Hanseatic

Bought—Sold—Quoted

Corporation
120

Broadway, New York

BArclay 7-5660

Teletype NY

Steiner, Rouse

1-583

Members Kew

25 Broad

York

Stock

St.r New York 4, N. Y.

HAnover 2-0700

New Orleans-

Lonsdale

Company

& Co

Exchange

1-1557

La.-Birmingham, Ala,

Mobile, Ala.
Direct wires

branch

our

offices

Bought—Sold—Quoted
Prospectus

Request

Over the Counter

mc donnell & Co
Members
Neio

120

York

Stock

Neiv

York

Curb

BROADWAY,
Tel.

Securities

Exchange
Exchange

NEW YORK 5

REctor

2-7815

120

Broadway

New York 5
WOrth

4-5879

Members
Neiv York Stock

Exchange

Netv York Curb

Exchange

Chicago Slock Exchange
39

Broadway,

DIgby 4-3122

LAMB0RN & CO., Inc
WALL

New York 6

STREET

NEW YORK 5, N. Y.

Tele. NY 1-1610

SUGAR

RADING MARKETS IN=

Raw—Refined—Liquid

Mining Stocks

Exports—Imports—Futures

Oil Stocks

Low Priced Industrials

STEIN & COMPANY
(successors

Goulet

Members Nat'l Ass'n of
Securities
27
1

William

St.,

Stein)

Dealers, Inc.

5, N. Y.

Montgomery St., Jersey City

Tel. DI 4-215)0

2, N. J.

Teletype NY I-lOnjj

Ashland Oil &

Refining Co

Common

Bought

NATIONAL BANK

Stock

and

of INDIA, LIMITED

Sold

Standard Oil Ky.
Bought

and

Bankers

to the
Government
Kenya Colony and Uganda

Sold

Head

Office:

26,

Bishopsgate,

London, E. C.
Branches

Colony,

India, Burma, Ceylon, Kenya
Kericho, Kenya, and Aden
and

Zanzibar

—,

Incorporated
1st

Floor, Kentucky Home Life
Bldg.
LOUISVILLE 2, KENTUCKY

Long Distance 238-9

Subscribed Capital

Reserve
The

Established

£4,000,000

Paid-Up Capital

Bell Tele. LS
186

.—£2,000,000

Fund—i

Bank

£2,500,000

conducts

(every
description
banking and exchange business

Trusteeships and Executorships

1856

also

undertaken

H. Hentz & Co
We Maintain
American Markets For:

Members
New
New
New

York

Stock

York

Curb

Board

New Orleans Cotton

Industrials

Canadian

Exchange

Exchange,

And other

Canadian

Exchange

Cotton

Commodity
Chicago

Exchange

Cotton

NEW

Exchange

British

Exchanges

Exchange Bldg.

YORK
.

CHICAGO

GENEVA,

4,
-

DETROIT

WE ARE

Banks

Securities

SWITZERLAND

Utah Southern Oil Co.

Securities

Goodbody & Co

PITTSBURGH

Long-Bell Lumber Co.

Equity Oil Co.

and

African

Members N. Y. Stock
115

Exchange and

BROADWAY

Telephone BArclay 7-0100

Other Principal

MEMBERS

Exchanges

NEW YORK 6, N.
-■

INTERESTED IN

Amalgamated Sugar Co.

Trade

South
N.

Mining

Canadian

Inc.

PINE

NEW

Teletype NY

1-672

TEL.

STREET

YORK
WH

3-901S

SAN
LOS

FRANCISCO
ANGELES

STOCK

EXCHANGE

1500

EXCHANGE
•

RUSS

SAN
'

BUILDING

FRANCISCO

TEL.

DO 2-0773

Volume

168

Number 4740

THE

COMMERCIAL

INDEX
Articles
Inflation
Fear

Fight

and

Dispute concerning SEC
Cover

___.

Stone Chadwick
'yr

f
]

*<
>".■

clear.

'■[

—Edward Hopkinson, Jr.____7-

tion of pertinent law and for

Unpegging of U. S. Bonds Not Needed—Albert O. Johnson _1

Our Farm Problem—Emil Schram. 1

among

12) "Any security issued

Leffingwell-________>j.-c.^_"_;
__•

;

The Growing Debt Burden in Gas
Industry
—Edmond M. Hanrahan
The

____

.12

Tell 'Em What's Right With
America!—Homer A. Vilas__

Banks Have New Competitors—Frank C.
Rathje.
An Incentive Plan for the

Our Economic Dilemma and the

Snarled

Economics

'■/}

______

Fifty Years of Trust Service—Ralph Stone
Our

"Forgotten Man"—Gwilym A. Price 20

The Outlook for Banks—Marcus Nadler:

and

______i_. 247 ;

Way Out—Fred I. Kent___^_

Retailing—James E. McCarty__

SEC and Municipal

Securities (Editorial)

Paul Dent Bordwell Rebuts Dr.
R.

Spahr

First National Bank of Boston Holds Postwar
Price Rise Is
Not Due to Money Supply or Bank Operations

Henry Besse, Head of Boston Stock Exchange, Urges
Upholding Free Markets

nowhere

appears

the

YORK

WHitehall 4-6551

Com.

U. S.

Pfd.

Finishing Com. & Pfd.

are

Dorset Fabrics

Capitol Records
Texas Eastern Trans.

*Pror,vectas

Established
Members N. Y.

request

1908

Security Dealers Assn.

REctor 2-4500—120

already-

over

J.K.Rice,Jr.&Co.

not its view.

powers

Corp.*

Tennessee Gas Trans. Co.*

history gave rise to the general belief that it was
legislative intent clearly expressed to exclude from the

was

STREET, NEW

United Piece Dye Works

"any municipal corpo¬
specifically exempted.

Bell

dealers

Broadway

System Teletype N. Y. 1-714

municipals.
has

our

has

the

come

attention

an
assertion by the
right to determine whether a

dealer, in municipals has sufficient
capital to support the
scope of his business. The SEC claims that it has the
right
to stop such
operation where in its opinion the capital is

inadequate.

••7

Empire State Oil
Equity Oil
Mackinnie Oil & Drilling

National City Bank of New York Holds
Inflationary
Pressures Still Present

Outside of Rule X-15C 3-1 (Securities Act
of 1934)
which provides the
aggregate indebtedness shall not

Railroads Ask Rate Increases and Grant Pay Rise__

exceed 2,000 percentum of net

____

Monetary Fund

____

;^7-

•

Utah Southern Oil

capital, there is no statu¬
tory minimum capital requirement, and the
Commission,
although it toyed with the idea, has never set one. Had

Camille Gutt Defends Operations of International

been set by the SEC under its
rule making
powers,
would have grave doubts of its
validity for after all
there is a limitation to the

BOUGHT

one

Reader Voices

Suspicion of Communist Plot in SEC "
33
7

Committees Named to Study Proposed Formation of
Mid-West

Stock

Exchange!_____

______—

Charles A. Ward, of Brown and
York

powers.

Export-Import Bank Grants Additional Credit to Mexico____

delegate its
followed

Bigelow, Addresses New

Society of Security Analysts

_______

National City Bank of New York Opens New Branch in
Brazil

Illinois Securities Dealers Association Holds First Annual
Golf Outing

37 7

—

Benjamin Graham to Talk at New School

Bank

See

and

It (Editorial)

Insurance

Business Man's

Canadian

________Cover

Stocks

Bookshelf-!—

Securities

_—
—

Dealer-Broker—Investment

Recommendations

Rearmament and Lend-Lease"______

;__

From

Washington Ahead of the News—Carlisle Bargeron___
7
Indications of Business Activity—
56
Mutual

Funds

.___!

NSTA Notes-

News About Banks and Bankers..

Observations—A.
Our

Reporter's

Our

Reporter

Wilfred

May.

Report

Prospective Security

!____—

Utility

Offerings—

Railroad

able.

Securities

_______

Securities Now

Registration

The State of Trade and Industry

Tomorrow's Markets (Walter Whyte Says)

Washington

You

and

____

___

—

elements

Twice

Weekly

Drapers'

and,

The

COMMERCIAL

FINANCIAL

and

WILLIAM

DANA

Park

Patent Office

ary

WILLIAM

DANA

SEIBERT,

RIGGS,

Publisher!

President

vertlsing ,issue)

(general

and

Other

•

ad-!

plete .statistical .issue — market quotation
'records, corporation-;news, bank clearihgs,

state^and.;city.hews,.,ifetd,)i.:.'
Chicago

111.

$25.00

and-, every/ Monday, .(com-;

".;,y "Other" offices7 7135"

Salle'.j-sO

State

Eng-

Book Value $89

Earnings

$26

NET

1947—$5; yield 22%.
QUICK $19.
Single class of

stock.
No
debt
or
bank
loans.
Total assets about 4 million dollars.
Data

request

Congress

George Birkins Company
40

Exchange Place, New York 5

WHitehall 4-8957

Trading

Tele. NY 1-1404

Specialists

All

UPSTATE

clear, incisive and readily understand¬

NEW YORK

making

are

powers

characteristic of the Securities Acts of 1933
(Continued

0G13);

matter

office

post

the

Act

Febru¬
at

page

SECURITIES

GRODY & CO.
Members Natl. Assn. o( Securities

Dealers, Inc.

Exchange Place, New York 5

DIgby 4-3280

Tele. NY 1-2698

11)

interested in offerings of

Countries,'$42.00

'►

per

States; ' U.

per

Note—On
rate

Earnings- Record

;"f-L

Monthly,

Foreign; postage extra;;)

account

made

the. fluctuation.* in

New

Zz %

due

1954

year.

exchange, remittances for for¬
eign subscriptions end advertisements must
be

York -funds.

A v-i

Spencer Trask & Co.

Quotation Record-—Monthly,;
(Foreign postage extra.) '
(

Corp.

PREFERRED STOCKS

Members„Neio York. Stock Hxcliange

year.:

year.

WANTED

Central States Electric

VOtber Publications
and
per

OFFERINGS

High Grade Public Utility and Industrial

Rates

United'

are

New

March

..-v.'.''.: .' ;•

Monthly
$25.00

the

S. vLa :

(Telephone:.

C.,

Possessions, Territories and Members of'
Pan-American Union $35.00 per year: ,:ia
Dominion
of
Canada. *$38.00
per
year*

1948

news

the

under

Subscription

Bank

Thursday

second-class

Y.,

Subscriptions

Business Manager !

Thursday, October 7,
! Every

1942,

1879.

9576

HERBERT D. SEIBERT, Editor &
WILLIAM

25,

York,

COMPANY, Publishers

2-95.70

Company

Dividends

the intent of

was

Cash

have

Smith.

•

Reentered

Place, New York .8, N. Y.

REctor

London,

1-1434

Gardens,

Edwards

York

CHRONICLE
•'

Reg.

c/o

Coal

"acting.

are

New

Price $21

—all of these

■Published

contended, and still do, that the protection
extended to the public on the basis of
common law fraud is
wholly adequate.
'v Statutory fraud is
something else again. Of course it
can be
specific. The very purpose of a statute is to
define,
to clarify.
However, when loosely' drawn, when incomplete
in itself, when surrounded
by delegated rule

Securities Salesman's Corner

;

making power'to thus restrict
municipal business done by any dealer.
Statutory fraud, as distinguished from common law
fraud, can be elusive. As we understand the elements of
the latter, these are: the
making of a representation which
is false; with
knowledge of its falsity and intent that it be

______

Securities-.-

our

part we do not think it
for the Commission
by its rule

Public

limited to municipals.

Therefore, if our position is correct^ the amount of
cap¬
ital, in and of itself, may not form the basis of
any discipli¬
nary proceeding except as limited
by the above rule and

These

St., New York 5, N. Y.

2-4930

Gauley Mountain

and finally the representation is acted
upon with
reliance thereon, to the
damage of the person so

—______

Governments^

acted upon,

REctor

making

the volume of

14 Wall

SEC tenet.

belief that

QUOTED

who has closely
has observed

anyone

rule

today neither the Congress nor
the Commission has
prescribed any minimum capital re¬
quirements and that thik applies to dealers in all
types of

for

Coming Events in the Investment Field

Einzig—"British

course

Commission's

securities and is not

Regular Features
As

our

powers.

the

that this is not

It is

delegation of Congressional
The legal concept is that
Congress may not

______

SOLD

Orvis Brothers & G>.

Regulations »/__

■

WALL

tried

you

obsoletesonus?

your

Telephone:

above

Thomas I. Parkinson Tells Policy Holders That
Treasury's
Monetary Policy Injures Them

•

of getting out

entanglements.

instance, have

;

securities of

instrumentality" of the States

-There

For

dumping

are

—

Commission that it

—

ways

financial

The Commission claimed that insofar
the fraud provisions of the Acts
were concerned it

Newburger & Co. Inaugurates "Visualization" Plan

such

There

Territories."

possessed regulatory and disciplinary

Governing Stock Trading

guaranteed by the United States

municipal

measure!

passed, it listed pleasanter

under Section 3(a)

operation of the Securities Acts all dealers in
municipals.
.'When the Boreri Bill was pending, the SEC made it clear

—6

Chase National Bank Honors 25-lrear
Employees

was

think

even

drastic

This

Gold__T

word

In the 1934 Act, the

\
rate

this

P. Boyland, NYSE Chairman, to
Suggest Changes in
SEC Laws

Pon't

legislation quieting controversy.

new

"Exempted Securities"

one or more States

State."

the
;

American Bankers Association Holds 74th Annual
Conv.__Cover
The

"ROPE"

Need for reexamina-

quotation from the statute although it no doubt was intended
that this is embraced in the
phrase "political subdivision of

in SEC.

power

TtnsTtm

by the District of Columbia, or
State of the United States, or by any political sub¬
of a State or
Territory, or by a public instrumental¬

The

States Viewpoint—Elvin H. Killheffer__

any

can

AND COMPANY

involving delegation of Congres¬

Securities Act of 1933
as

Territory thereof,

division

ity of

,■

Money at Work—Harry D. Comer

United

}

others

any

Business and Finance—"Gluttons for Punishment"
—Robert P. Boylan

ITO—A

When the

High Cost of Living—Roger W. Babson

The

B. S.

Statutory
adequacy in

Statutory definition of fraud

making

How to Control Inflation—R. C.

law fraud and their

common

in Securities Acts

sional duties with rule

Stock Market Action
Contradicting the News—John E.Miller

Not

(1415)

dealers in municipals.

powers re

the protection of investors.

Market for Manufactured Gas Securities

Elements of

.extracts.

CHRONICLE

Municipal Securities

Pa*e

Fallacies—Joseph M. Dodge

»>

FINANCIAL

The SEC and

News

Psychology from the Investor's Viewpoint

—Nathaniel

77,

)

25 Broad Street, New York 4
,

'. '

Tel.:

:j:-y' >f.:

7^'; Albany

HAnover 2-4300

'7
_

Members

Teletype—NY 1-5
Boston

Glens Fails

New

York

135 Si. La Salle

Curb

Tel.: FINancial
.

Schenectady

Exchange

St., Chicago 3
7.

2330
...

C. E.
Members

61
J.. 7..

Worcester

due 1948

Unterberg & Co^
N.

Security

Dealers

Ass'n

Broadway, New York 6, N. Y.
Telephone BOwling Green 9-3565
Teletype NY 1-1666

(1416)

THE

COMMERCIAL

.FINANCIAL

CHRONICLE

Market ion Manufactured Gas Securities
By EDWARD HOPKINSON, JR.*

•

Thursday, 'October 7V"1948

Stock Market Action

The News

Partner; Drexel & Co., Philadelphia

In calling

attention to proposed heavy capital investment in manufactured

industry, amounting to
more than $500 million in next five
years, Philadelphia investment banker compares investment posi¬
tion of securities of manufactured gas companies with those of-electric
companies.
Cites reasons for
inferior

investor's

regard for

gas

By JOHN E. MILLER

securities

Market Analyst,

Analyst

(1) belief gas is not a growth industry; (2) higher
operating ratio in gas industry; and (3) greater confidence of public in rival electric industry.
Urges
more research and greater control over
operating costs to create investor's confidence.
gas

Contradicting

as:

L/,

New-burger, Loeb

& Co.

great significance in market's
extraordinarily stable
performance against background of public's fear of
or business
depression. Advocates selective bullishness, with
buying directed to steels, oils, rails, motors and rubbers.

and

sees

inactive

war

During the ensuing five years, it is proposed that more than half a billion dollars be
Seldom has the market been confronted
with a more
confusing
expended on the renewal and enlargement of manufactured gas facilities. This substan¬ and disturbing picture than in the past two months:
the chaotic and
tial sum of money is nearly one-half of the
threatening international situation and the semi-annual
present depreciated capital investment in these
debate over

facilities.

rate

the imminence of

indicates
of

lies

illustration of this condition

there will

exceedin g
that
of
any

the decrease, during this
period,'in the ratio of in¬
vestment in plant per dollar of

the

higher interest

operating

revenues,

ing

similar

from

3.7

con¬

struction

riod.

far

same

pe- ;

That

asked

dicates

your
of

the

problems

inherent

went

This decrease gave

substantial

cannot

ings

tremendous

E.
Hopkinson, Jr.
There appear
to be three causes basic to a pro-

program.

former

for

depreciation.
source
is
shrinking

the latter
a

and

appreciable extent during

any

those years, all of the reserve

plus

capacity

many

cases,

rejected
sales

;

new

because

limit "of

used

was

sur-

! that,

address by Mr.

Hopkinson ;

will'be

D0ssible

City, N. J., Oct. 4, 1948.

This

because;

so,

the

securities

sales,

reasonable,

eco¬

Furthermore,

basis.

re¬

financing becomes difficult.
Investment Position

Gas

Securities

What, then is the relative re¬
gard in which manufactured gas
securities
market?

are

held in the financial

find

indices

which

completely useful in revealing
this position. This is because by
far "the
larger number of cus¬
tomers
receiving
manufactured
gas are served by joint companies
in which case the relatively profit¬
are

electric

the basis

ties

the

business

has

which

the securi¬

joint companies have

PLEASED TO

ANNOUNCE

mentators

the

ASSOCIATED

WITH

OUR

manufac¬

deflation.

some

theorists,

the

gust lows by
rails

orthodox

violation

did

the

not

ESTABLISHED

YORK

IBIO

STOCK

WALL

THAT

The
in

fact

the

provoke

that

face

BOWLING

and thp remaining fjve carry
1

GREEN

rating.

the

seemingly

selling

about

3.66%

compared

the

average

yield

five

also rated B 1
about 3.19%. While the

the

lone

manufactured

have

given

One of these

answers

make

satisfactory

any

yield

comparisons of the manufactured

5-2400

bonds

rates

rated

B-l

only

Poor's

two

because

apparently

electric

manufactured

one

issues

gas

company

possessing a high investment
rating and where it is possible
to

make

comparisons of a fair
issues, bonds of the
gas companies sell to yield about
number

n>
72

rated
us

issues

than

the

manager of our new york office

literature

can

somewhat
which

fail

com

one

fol¬

investment

disparaging

the

similarly

electric

panies. Furthermore,
lowing financial and

note

the

treatment

manufactured

gas

in¬

dustry receives from such writers.
I

Members
New York Stock

Boston Stock

Wall

New

Street

York 5,

N. Y.

not say

attention by your own bankers on

Exchange

Ill

this is justified, but
simply report it as a fact, which
has probably been called to your

L. DAY & CO.

many occasions.

Devonshire
Boston 9,

Street

Mass.

few

months ago.

the

rubbers

also

hold speculative promise.

Robert H. Adams With

Goldman, Sachs & Do.
MASS.

Adams

now

Goldman,

—

that Robert

announce

associated

with

the

its

own

many

been per¬

against the Western Allies,
certainly not in the foreseeable

dilemma will be found.

bond

has become associated with

and

ad¬

excessive

intention of actually going

stopped

STREET

Herzer

motors

manufactured

sell at

gas

companies

interest rate of approxi¬

mately V2% higher than do those

(Continued

As
the

on page

53)

the

market

have

while

that

the

Federal

their

Street.

the

previously

with

Adams

Boston
Mr.

office,

Adams

was

Rothschild

outlook,

likewise

its

& Co.

industrial

given

have

them

Russians,

solution

here

seems

answer—that

wholesome and necessary

readjustment
certain

now

coddling

sort

some

lines,

taking place in
important decline

in business is in prospect. In fact,
the pressure of demand for steel

and

the

nonferrous

intense

metals

suggest

that

the

production of the heavy industries
for

long time to come will be
only by the availability

limited
of

materials.

depression
orders

The

the

ingredients of

certainly not to be
enormous backlog of
books of the

heavy
industries, to say.nothing of the
requirements in connection with
the

armament

and

European

re¬

covery programs.

Coming

Appreciation

Coal

1948

Edition

—

Bituminous

Institute, Southern Building,

Washington, D. C—paper.
Gas

Facts—Statistical record of

gas

utility

industry

the

United States 1947—American Gas

Association

Victory

the market should

better

ures—

the

Republican
From here

have

Bituminous Coal Facts and Fig¬

are

found in the

opportunity to ap¬
probability of;a Re¬
victory
in
November.
Governor Dewey has made sig¬

praise

As I have indicated, the bonds

Robert

war

future; and that

that category. Thus, we find only

Karl P.

popularity of
The

their

is that Stalin

rating, I do not believe much
significance can be placed on this
single example and I was unable

Mr.

completed

from

described

(as it often does) to

company bond rated A was
low or lower than many elec¬
tric company issues of the same

pleasure in announcing that

have

| Standard

We take

likely

justment

plexing the financial community;

KlNGSLEY

rails appear to have es¬
solid base, and the oils

that

was

of the things that have

9-7060

The

on.

tablished

dan¬

suggests

answers

has

1048

that they will figure
prominently in strength from here

Hegarded in its broader aspects,
the
market
by its performance
appears

average yield on the five
plus issues of a recent date

!•

suggesting

Sachs & Co.

declined

type that is commonly

was

gas
.

OCTOBER

renewed

volume

situation

gerous

plus,

DEPARTMENT

BROAD

promising groups. The
tape action of the steel shares, for
has
been
outstanding,

instance,

BOSTON,

BOND

SO.

Au¬

Decline of Trading Volume

which

123

Dow

their

liquidation.

turbed;-

j plus

gas

PHILADELPHIA 9

STREET

to the most

gas
companies,
which
I as unimportant, originating with
found, However, only one is the more impulsive boardroom
as high .as. A
by. Standard: following, whereas large holders
& Poor's (you will recall that A 1
of. securities were not
unduly dis¬

raise

EXCHANGE

NEW YORK 5

not

change in the
pattern of selectivity that has pre¬
vailed for a long time.
The mar¬
ket itself has given its own clues
any

industrials and

gas

NEW

to ,be

now

only 1,210,000 shares. Signifi¬
cantly. and to the consternation

much

bonds

possible

technical

rated

G. C. Haas & Co.
MEMBERS

newspaper

devoted to the discus¬

was

yield

NOW

com¬

on
Sept. 27. when both the in¬
dustrial and rail
averages violated
their August
lows, the turnover

electric companies,
IS

evidence

likely

ex¬

diminishing volume. On the July
19 break, the turnover was
2.560,000
shares; on Aug. 11, it was
1,310,000 shares; on Sept. 20, the
volume was 1,260,000 shares; and

WARD

much

capitalism.

Although the market has given

quite

was

the

capitalizing the
aspects of devastating

was

almost certain to have cannot but
with capital and

encourage those
who believe in

were

atomic warfare,
space

elimi¬

perform¬

this

traordinary. While the radio
gruesome

capital gains tax, it
tremendously favor¬
able effect in
broadening the mar¬
ket for
equities.
A
Republican
administration such as we are
a

strength to indicate that it is
in a buying
area,
there is

relation

by the market

modification

the

have

was

REGINALD

MR.

would have

sufficient

background,

ance

Sept.

Considered
news

means

nation

tured

The
ARE

175.84.

served

been evaluated.

intra-low

the face of this, each
successive
decline from the July low was oh

"S™1gLC aS?o£| the total volume of capital needed/
Atlantic

presently exists
sales, if you

gas

sell

placement of obsolete equipment,
which progress in your indus¬
try must be based, will be delayed

securities,

dividends

clear that

acceptance' for

bonds

points,

these

nomic

Furthermore,
it
be
freely assumed
admissible rate of

any
on

unable

able

not

interest

With

months,

additional decline in the
industrials was less than 4

sion

sold.

i should

reached.
*An

can

why
is es¬

From that time

than two

needed to provide the facilities for

gas securities will determine the
rates
at
which
these
securities

been!

you

cannot avail yourselves of the

are

record, to fiessential construction
of

tell

It is also

ing for increased

own

degree

between

had

this

its

In: program.
be
The

up.

ratio

capacity

nance

sales .had to
the
absolute

proper

and

based

own

need to

favorable market

gas
companies
generally
have
spent, before the ! been paying out in dividends a
war, on a similar project.
Sec- higher percentage of their earnondly, the replacement of obso-1 ings than the purely electric comlete and wornout equipment has;
panies or natural gas companies,
lagged for two decades, because j Even in joint companies, the reof the depression of the '30s, and, quirements of the electric division
more
recently, the unavailabilityj are so great that the gas division
of materials during the war years, i
may
no
longer be able to rely
In the third place, new plant is on
the investor's confidence in
needed to keep step with the
in-j the former, to make available its
creasing demand for gas. The war I heretofore modest capital needs,
brought an increase in manufac-j It is, therefore, of paramount imtured gas sales amounting to 34%,
portance to the gas industry that
using 1939 as a base; and, since it there exist a favorable market

for the sale of its.

mounting daily and lagging
increases, it is clear that you
in no position to afford high

you

will furnish only
the
total require-

de¬

averages

total

interest rates.

be spent now for every one which

to enlarge plant

the

this

Berlin

ominous

approximately 10 points in
an intra-day low on

are

The

showing.1

Ihe

few days to

costs

would have been

not possible

industrial

on,

rate

of this magnitude. First of I ment.
It
should also
be
noted
all, the depreciated value of the; that in spite of their need for
dollar requires that two dollars
j capital funds, the manufactured

the

July 19 of 179.58.

Nor do

gram

was

clined

the

your

low cost of raising money
sential %to
your
business.

source

fraction

confidence

turn

supplied out of earn¬
out ' of appropriations to

reserves

mid-July
suddenly took

reveal¬

rates

securities.

de¬

lack

When

crisis

cumulative effect,

business recession, yet in the face of
this it has

most remarkable

industry,
and making it increasingly diffi¬
cult to find purchasers for your

needed

sums

investing public in

of satisfactory

appearance

The

financing such
a

which

during the six-year

earnings ratios, which a return to
an
adequate margin between ca¬
pacity and sales would rapidly
dissipate.

speak here in¬
awareness

period.
ceptive

have

you

made

companies once have to start in¬
creasing
the
interest
they pay

420

Bureau

Statistics,

Lexington Avenue, New York

17, N. Y.—paper—$1.

the

publican

nificant reference to the need for

revision

order

stimulate

the

tax

structure

production. If

Wandering

Scholar—M.

Bon

—John Day Co., Inc., 62 West 45th

Street,

New

cloth—$5.00.

York

19,

Y.—

THE

Number 4740

168

Volume

(1417)

FINANCIAL, CHRONICLE

COMMERCIAL

William H. Bluhm Joins
Steel

The

Production

•Electric Output

First California Co.

Carloadings

and Industry

Business Failures

Auto Production

1933-1948

being devoted to the effects of
foreign policy, on the farmer, and on busi¬
ness.
But strangely, even in New York the interest evinced in
the details likely to follow the presumably imminent ending of New
Deal-ism
has
been
quite negligible.
Let us
herein
first
take stock
of the status of the
and conversation are

ink

Much

Dewey victory on our

nation's" investment

and

nature

the

On the West

today, estimate
possible changes, and

This latest

a
constant long-term
legitimacy, and accepta.
ability of the American common stock, as has
occurred in England, France, and Holland.
Life
insurance companies in some 35 states at the end of

Also

;

have

seen

growth in the seasoning,

the

the pressure is

1947 owned
represented a
1940. Further¬
constantly increasing for giving New York and
legal permission to add equity shares to their

remaining states

portfolios,

costs, would add

becomes effective Oct. 16, covers conductors, train¬
yardmen, yardmasters and dining-car employees who are repre¬
sented by the Order of Railway Conductors and the Brotherhood of
Railroad Trainmen.
Negotiations on the increase have been under

advance, which
Wilfred May

billion of preferred and common stocks, which
gain of 12% over 1946; 37% over 1945, and 100% oyer

$1.4

Montauk Club in

$672,500,000 to rail revenue, on the basis of estimated 1949 traffic.
/ On Monday of this week the railroads granted a wage increase
of 10 cents an hour to 175,000 operating railroad personnel.
The

quoted).

being regularly

request, based on current operating

men,

would

Wage Committee for the carriers,
add an additional $55,665,000 a year

costs.

He further

Railroads

railroad workers,

ally.

investment community is com¬
prised by the fKgtion's army of stockholders. The estiinates of their
total niupber\ range from 16 million dowir to the 6 jmillion figure
recently Arrived at by the Federal Reserve Board. In the opinion
of
this
writer, a plausible estimate is the 13 million recently
made by Lueien Hooper on the basis of a very large number of

Loomis, Chairman of the Western
estimated the increase
to the railroads' labor
stated, that if this same pay rise is applied to all
the carriers' costs would rise $381;170,000 annu¬

since Sept. 14 and Daniel P.

way

„

of the

stockholders' lists which he

examined.

have over 100,000

Hooper found that 21 companies each
shareholders, 19 corporations have from 75,000
Mr.

to 100,000, and 27

companies have between 50,000 &nd 75,000.
But—despite the sufficiency of the Street's plant, and despite
the appreciable seasoning of our securities, the investment banking
and brokerage professions have nevertheless become constantly less
active, of constantly diminishing importance in the affairs of the
nation—and unprofitable.
„
.
,
.
„
The drastic decline of

the Street is concretely evidenced by:

the United States at the close of 1947
to.$410,000,000,000, the Department of Commerce revealed,
leaving debt outstanding about $17,000,000,000, or 4% above the
*.

^Private and public debt of

amounted
total

at the

1946.

end of

•

the end of 1947 totaled $172,200,000,000, up $22,400,000,000 from the end of 1946.
It represented 42%
of the total net public and private indebtedness outstanding.
At the
end of 1946 this net private debt accounted for 34% of all out¬
Net

private debt outstanding at

standing debt.
i•

* V.1'" *

'''oV"

■

buying decreased slightly in the week, retail
dollar volume remained moderately higher than that of the corre¬
While

consumer

sponding 1947 week.
Seasonal promotions of Fall and Winter mer¬
chandise met with favorable consumer response.
The preference for

medium-priced merchandise of good quality remained evident.
Wholesale volume was a trifle, below the level of the preceding
week but slightly exceeded that of the corresponding week a yeai
,

Despite the fact that
Stock Exchange has
risen by 25% over the past 20 years, the annual volume of trading
in them has fallen by a full one-half during the period.
Currently
the volume of certain full clay sessions (such as when World Series
baseball is competing for attention) barely equals that of former
Reduction in Stock Exchange Activity.
the number of issues listed on the New York
(1)

single-hour periods.

Boycotting the

Money

(2)

New orders and reorders of women's fall and winter
a moderately high level, but trading volume in

ago.

continued at
was

somewhat below the level of a

STEEL OPERATIONS
YEAR

■

The decline in the

Stock Market.

apparel
textiles

week ago.

EQUAL MARCH 15

HIGH RATE FOR

97.5%

There will be a scrap shortage

this winter, and a greater shortage

seriousness of the long-term
outlook is veiled by a temporary surcease from worry, states "The
Iron Age," national metalworking weekly, in its current summary
of the steel trade:
"
'
*'
'• v
'
but for the time being, the

public popularity of -risk capital is highlighted by a recent study
made by the SEC. This shows that sinee 1939 individuals' holdings
ol'
corporate securities remained practically unchanged in total
amount—in the face of a concurrent increase in their personal cash

next year,

holdings by $82 billion, their $58 billion purchases of U. S. savings
bonds, and their $50. billion payments into pension and insurance
reserves.
Hence we must arrive at the unfortunate conclusion that
the stock market's relatively small (25%) price rise during that

More steel has "beeriVmade recently because shipments of steelmaking scrap haVe been heavier.
Scrap coming from Germany,
while not large, has given some buoyancy to steel makers' hopes,
but what interests steel people is that present scrap prices will prob-^
ably stay in suspended animation for some months at least, accord¬
ing to the magazinej
The reasons why the price of steelmaking scrap will not go
down much, if any, in months to come, "The Iron Age" notes, are:
(1) long-term. shortage is still present, (2) steel firms need every
ton of scrap available, (3) increased price of pig iron tends to sup¬
port scrap prices and (4) there is a greater use of scrap by electric

period

was

brought about by mtra-investor trading and not from
by additional buyers

the devotion to the market-place of new money

(3)

Money Staying Away from New Issues.

In 1947 the total

0.4 of 1 % of our national

Investment in- new common stocks was only

0.9% in 1926, and over 4% in the 1929
of the depression now bearing down on the

income; against 0.8% in 1925
boom year—a
investment

measure

banking industry.

;

furnaces.
Reasons for the
'

The
world

reasons

may

lowly state of the investment

for the above-cited

the following causes, at least

be objectively ascribed to

part.:

v. *

Institution of Federal regulation over the

(1)

of action and hence

activity of the underwriter and emasculated the

liquidity of the stock exchanges. Whether for good or
the

attractive

evil social ends,

been largely removed from se¬

asset of liquidity has

curity-holding by the Federal Reserve Board's
of margin

securities field,

which has hamstrung the freedom

via the New Deal laws of 1933-35,

the price is not exnected to move up to any great
extent in the months to come, the trade paper adds, are: (1) better
inventories at /the mills, (2) better shipments to mills with less time
The reasons why

Dcg-Days

stringent application

requirements, and by its discriminatory barring of

lags, (3) the knowledge that a few more
more
scrap from hiding places and (4)
scrap

coming in.

i>...

dollars won't bring out any
prospects of more German

■.

everything on scrap, however,
The slight feeling of expansiveness
in the scrap trade is deceptive.
Prices may be stabilized and
supplies may be a little better than expected, but it is an ominous
satisfaction.
When more capacity comes in late this year—and more
next year—demand for scrap will be heavier than ever.
And the
The

which could upset
rise in the price of steel.

factor

would be a

(Continued on page 50)

security -

MARKETS

Time Inc.

MAINTAINED

Dravo Corp.

Ashland Oil & Refining
$1.20

Convertible Preferred

Kingan & Co.
American Maize Products Co.

Kerr McGee Oil Industries, Inc.

Roosevelt Oil & Refining Corp.

(Common)

6% Preferred

FREDERIC H. MATCH

MERCER HICKS & CO.
Members

Nat'l

WALL STREET,

Telephone:

DIgby 4-57.00

MEMBERS N.

NEW YORK 5, N. Y.
.

Teletype: NY 1-2813

CO., INC,

Established 1888

of Securities Dealers, Inc.

Association

awarded

was

silver

dinner, com¬

service medal at the

memorating his 25th anniversary
Mr. Blaetz will now

with Home.

charge of the

assume

midtown

Avenue,

office

which

Home's new
Vanderbilt

will

open

about

1, 1943.

Nov.

Emile Z. Weinberg Opens
;

Emile Z. Weinberg

has opened

William Street, New

offices at 57

City, to engage in the se¬
business.
He was for¬

York

curities

merly

branch

manager

for

H. Hentz & Co.

19436587

CANADIAN
MINING

STOCKS

HART SMITH & CO,
HAnover 2-0080

52 WILLIAM ST., N. Y. 5

Teletype NY 1-895

Bell

Wires

Private

Connect

Toronto

Montreal

New York

Royal Bank of Scotland
Incorporated by Royal Charter

Branches

throughout Scotland

OFFICES:

LONDON

Bishopsgate, E. C. 2

1727

OFFICE—Edinburgh

HEAD

Smith-field, E. C. 1

West

Charing Cross, S. JF. 1

Burlington Gardens, IF. 1
Wr. 1

64 Netv Bond Street,

TOTAL ASSETS

£153,656,759
'

Banks:

Associated

Mills

Glyn

Williams

Co.

Deacon's Bank, Ltd.

Arkansas Western
Gas

Company

Common

Stock

Profit

Net

Year

Ended

$0.38 per sh.
0.51 per sh.
0.82 per sh.
0.91 per sh.
1.17 per sh.

99,752
133,336
214,428

238,825
307,049
6

Months

Ended June 30

0.84 per sh.

220,133

Current dividend

$0.20

quarterly.

Approximate Market 13"<s

Bought—Sold—Quoted

Roosevelt Oil & Refining Corp.
Convertible

also

at the

honor

Brooklyn, Oct. 5.

GROWTH—

(Continued on page 57)

TRADING

his

given

ner

Railroads.

(1,375 on the NYSE);
and in the number of issues listed (1,417 with a
market value of $70 billion) and unlisted (50,000
members

Secretary at a din¬

made, Resident

carriers on Friday of last week asked

industry the

former man¬

Blaetz,

of the Brooklyn office of The
Home
Insurance
Company, was

ager

strike worked to restrain

Commission to grant the nation's roads an
additional 8% hike in freight rates which, if granted, will raise them
52.7% above prewar levels, according to the Association of American

in the number of brokerage and
banking houses; in the number of

exchange

rail

the

large,

investment

stock

Coast the current shipping

Henry

the Interstate Commerce

investment community

the

Home Insurance Honors

continued

in the corresponding period

point.

high

Status of the Street

Population-wise

level prevading in weeks past and

manufacturing activity in that area, but notwithstanding this, total
unemployment insurance claims showed a moderate falling off in
the week, resulting in total employment and payrolls remaining at

concerning investing
policy under the likely surrounding conditions.

still

industrial production was

total

whole;

was

Co.

1947.

finally arrive at conclusions

;

country

somewhat higher volume than

to reflect a

community

extent of

the

For

maintained at the high

Street.
He was recently
Dempsey-Tegeler & Co. and
an officer
of Livingstone &

Spring
with

Investor's Future

With the Implications for the

Chhontci.s)

Financial

ANGELES, CALIF.—Wil¬
liam H. Bluhm has rejoined the
First
California Co., 510 South
-LOS

Food Price Index

By A. WILFRED MAY
WALL STREET

Commodity Price 'Index

The

(Speciul

Trade

State of Trade

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(1418)

THE

COMMERCIAL

LETTER

How to Control Inflation
,

By R. C. LEFFINGWELL
Chairman of the Board, J. P.
Morgan & Co. Incorporated
Assistant Secretary of the
Treasury in the First World War

Paul

ternative

Asserts moderately
higher interest rates would be trivial compared to burden of infla¬
tion and says
pegging of U. S. bonds by Federal Reserve may make
inflation control impossible. Hits at
increased reserves
curb while keeping
government bonds at par,

"roughest deflationary
Holds

gold

in tool chest of Federal Reserve."

weapon

currency

not

remedy

against

inflation

between

managed

paper

resumption

in¬

the

ability
make

But

Our

and

imports

de¬

pends

spends

hope of Euro¬
pean

continuance of

tinua
Am

ness,

Euro¬

upon

banks

and

borrowed

prices; but

reserve

supplies.

for

mistaken money
prone to say in ex¬

high prices, "Oh, it
money that did it,
the crops, or the
weather,

the

tions,

lending to busi¬

cheap

was

strong deflationary
they did in 1920, and

from

policies are
planation of

such

measures

government

spends

the money it

wasn't

authorities for not tak¬

our

now

Reserve

Apologists

depends

economic

blame

our

mone.y

ness

Leffingwell

strength
strength; weak¬
weakness. Let no one, then

breeds

buyer; and

mem¬

recovery. Economic

pean

ing

ber

rican

prosperity

tax

Federal

con-

nee

bankers,

the

.or

corpora¬

the labor unions."
indeed, the crops and the
or

And,
weather,

1929, and 1937. This is no time for and fear and
confidence, and other
rough management of our econ¬
things do have a lot to do with it.
omy.
It is much too easy to start
Cheap money does not operate in
a
depression; and not at all easy I a vacuum;' There are
always other
to stop it
forces
After

the

The inflow of gold from
abroad,
to pay for
urgently needed sup¬
plies to make good shortages due

the

application
huge war loan

war,

Treasury's

(created
by over-bor¬
rowing in the Victory Loan) and
its current cash
surplus to the re¬
tirement of government debt held

by
the
Federal

commercial

Reserve

perhaps

illation.

Now,

loan

banks

Banks,

however,

ernment

expenditures for defense

and

European

for

reduction

and

recovery,

taxes,

have

re¬

Reserve

Furthermore, there is often a
time lag between monetary causes
and
'

their

consequences.

Delia

tionary monetary policies initiated
in 1920,
1929, and 1936, and in¬
flationary monetary policies
adopted in 1927, did not have full

duced or eliminated the
prospec¬ .effect until months or years after¬
tive surplus, and postwar
inflation wards. ' : vjj',
jV'l
v
has
become
troublesome.
The
Though prices tend to vary with
Joyous game of leapfrog between the amount of
money, the tend¬
prices and wages has become a
ency is overcome
if the money
danger to that innocent bystander, isn't
spent, for then velocity, or
the general public.

turnover, is lacking.

Three Meanings of Inflation
The

three

word

and

the

senses.

used

cost

may

printing

money in such

lose

in¬

mean

the

that is money inflation.

people

living: that is

money
within the limits of sound

mean

gradual rise in prices

price inflation.
flation

supply

money:
Or it may

unsound

money

paper

quantities that the

confidence

in China
have

the

now.

price

and

inflation

and

but

Thus, for instance,
half a column to

persist,

make

price

can

money

effective.

the

present

the
war
in¬
in the
supply of money, that
currency
and bank
deposits,
which is about three times
what
it was before the
war.
This in¬

pleasant

to
have plenty
High wages, high profare

cause

inflation

creased

money

the

cost

that

of
cost

supply represents

difference

the

war

which

and

between
the

was

part
found

the

raised to 6%

combination

gold

coin

standard

States

I made

measures

1929, the
rate

thus permitted

were

depress market prices
ment bonds and

for govern¬

to increase
yields

short-term Treasurys, whereas
today the placing of floor prices

was

Aug. 9, 1929. The under the
market by the Federal
high interest rates Reserve
banks commonly referred
subsequent banking difficulto as
"pegging," insulates

and

governsome length
t.es produced weakness in govj ment security prices from such
periectly possible, -tnus; ernment bond prices with
inter-j credit restrictions.
trying
to
distinguish
myself mittent; .severe declines in quota-i
It is clear,
therefore, to quote
plainly from those who feel that tions., •
| a popular saying, that "something
some
To check the
vague
and
unimaginable
tendency toward! new has been added."disaster would overtake us if we
Federal
commodity price
inflation
that Reserve
banks
for
tried
to
restore
many
years
gold .payment. asserted itself in 193G and
Eventually Professor Spahr y did following devaluation of the 1937,[bought and sold government sedol-

contrary, I argued at
„

that

discover that I was not
trying to
claim that gold redemption in the
United States was
did

not

think

back

and

policies by the F e d e r
Government, commercial bank

paragraphs he had written

sharply.

the. bonds

opposite assumption, thus'leaving
in the ,mind of the reader' a
most;

j in

serious

confusion
as
to
1 actually did
say.

was

And

what

j ments

eight points

consequence at the time.
To

check

current

but

they

The

value

Federal

are

doing

market

open

undertaken
pegging
short-term governregular policy.
And

only since November, 1947 have
they been pegging prices of long-

inflation

Reserve System is
raising
requirements
of
member

they

operations

government

re-[have

term government bonds,
iSo long as this

are being clbne.
The.
Board of Governors of the
Federal

which

one

little

declined

increased

were

Long-term

the

influence credit conditions. Only
1
j in the past several years, however,

it; three things

again, where I said that

sound
currency
fluctuates
very

requirements

serve

the

pencil

financ-j

j ing

worthwhile

blue

curities

lar and adoption of def
icit

impossible, but

j continues,

reserve

pegging policy
do not have to fear

that the government bond market

banks

will decline

sharply again as it did
following the three inflation pe¬
riods that occurred earlier in this

gradually.

Professor Spahr says," "He
appar¬
ently would
not
have
a
fixed
standard
that
would
measure

lifted their discount rale, but the
century,
rate
is still low at 114%.
The!

Treasury

Reserve

banks

have

...

that would itself

one

fluctuate

that

establishing

Should

higher

statement that

not

fluctuate

currency
value

In view of the cautious

should

As I also

specifically stated that
of

gold

payment,

only in the United
all

countries

are not

Russian

States

the

controlled,

not

but

world

which
was an

credit

measures

that

tures

paper

would

seem

place.

government

ject

group

"Although
ment

the

redeemable
says that

sonal

for

comment

The
on

upon

this

group of
appropriate
by Professor

not

know

what the remainder of that
quota¬
tion means!"
Quite so, Professor
Spahr. In fact, you do not know
what the article

whole

real

parently believes in the inherent
contradictions
of
the
capitalist
system, which must necessarily
time

system

proper

such

time

that

function
is

(Continued

produce

The

1932.

the

monetary

"record

change,"

prices
current

in-

they
we

fail to recognize the

between

the

situation

today and similar situa¬

that

Thei;e

instruc-

are

be quite mis¬

can

are

occurred

the

page 63)

,•

that

effective

combat

possible

banks

can

credit

re¬

inflation

long'as member
help themselves to ad¬
so

eral

Reserve

today and that
1936-37.

and

these

any

conclusions

analyze

government

bond

selling

to how

market

likely, to act in the period ahead.
Foremost, there is the fact that,
today, the Federal Reserve banks
are

maintaining orderly and stable

flationary

pressure.

obligations.

1929-33

era

and

Group Three,. Savings Banks

' N. Y., Sept. 30, 1948.

Albany,

in¬
low

pegging the market for

believe there is

measure

truth in each of these contentions.

Undoubtedly, the restrictive
that have

measures

combat

are

far

the

less

been

current

drastic

credit

adopted
inflation

and

slower

acting than those thatwe're
check

the

three

the

'•

the

disadvantages,

,as

;

well

advantages; of adopting

economic
in

taken

preceding in¬
.

But
as

fore

keeping

long- and short-term governments.

*An address by Mr. Johnson be¬

Association of New York,

inflation

artificially

rates

levels by

flations.

the

It is said that

term

Treasury

Reserve

become .rampant

the

encourage

only

markets for both long- and short-

1920,

bonds

mar¬

1920, 1929-33

must

banks, thereby adding to the in¬

differences carefully before

drawing
the

government securities can secure
funds for loans and investments

terest

Istriking differences be*

tween the government bond
ket

past

dis¬

ditional reserves at will
by selling
government securities to the Fed¬

means.

point of disagreement
here
is
as
follows: iProfessor
Spahr, like the Marxians, ap¬

from

face

any

but

tions

ir¬

per¬

whether

banks.
It is argued
savings banks, insurance
j,.;./' J 1 companies and similar holders of

the

Historical analogies

differences

argu¬

the

bond

_•

leading if

in¬

" says,

managed

most

himself,

The

tive,

currency,
here Vhe
sound currency should

judgment

Spahr

end

Nation?

Bordwell: article

dependent

officials."

private

Spahr

fundamental

seems

not

Professor

thus

that

personal judgment
of officials or 1 sub¬

pressure

terests,"

the

mark

that a
sound
currency's
operation "should not be depen¬
any

not

In other words, will
history re¬
peat itself in the shape of a break

saying

striction

„•

I
specifically repudiated
"managed currency" idea by

dent upon the

question

policy of maintaining an or¬
derly and stable market for gov-

re-1

Will Band Prices Break?

currencies

out

Modified

this

tended

objective for monetary
Professor
Spahr's stric¬
against managed and in¬

convertible

The

Abandoned?

are.

ultimate

policy.

ernment securities through support purchases will or will not be
being taken to combat vigorous
continued by the Federal Reserve
inflation
tendencies, are we to
banks.
expect
that
government
bonds
Arguments are being advanced
will again drop well below
par, as from
many quarters that the sothey did in 1920, and show large
called pegging policy should be
depreciation
as
in
the
1929-33
modified or abandoned. It is con¬
period, and in 193-3-37?
^
strictive

into'/a

statement that it should fluctuate
in value. I do not follow. \
J

resumption

Pegging

other

changes I coupon rates on the new shortwould
be
obscured."
By
whatj term issues it is offering in exsubtle process of
argument Pro- j change for maturing obligations
lessor
Spahr
transforms a
flat: But
these^coupon rates are als'

0f bonds

sec-

minimum prices. Restrictive
credit

the

inflation of stock

is not possible. But
such statement on the

tne

asters

to investors.
The
(Continued on page 42)

the

United

par

Federal Reserve discount

possible, in wartime;1 to meet out
of current taxes and
current sales

most^

would like

supply of

crease

the

is,

Money Inflation

man

the

without

demand

first

roughly

Every

over

hardly exist, and

that

The

cheap.

its, large dollar incomes,

other

come

things, gold imports*
Treasury surplus, the time

can

To check

deyotes

around

market loans in 1928 and

the

will aggravate the
inflationary ef¬
fect of the great
money supply.
All these

of demand

;

Where

re¬

conse¬

from

80's.

disproying ray

controls,

and

has

low

alleged statement that restoration

been

rapid turn¬
of money, increased
velocity,

never

though mis¬
taken tendency to concentrate on
price inflation, which is the result,
and give too little
thought to the
cause, which is money inflation—

sgreeable.

there

goods

tional payments are in balance.
There is a natural

recession

danger that

cess

controlled;
sound, and will be, so long as our
national budget and our interna¬

cf money.

war

it has

war

by fear—by fear of Russia

things;
be

retarded

lag, and retarded velocity, tend to
obscure the matter,
but, broadly
speaking, prices reflect the sup¬
Amer-I
ply and cost of money.
An ex¬

and these must
but our money is

too much
money, too

and since the

tarded

the

inflation,

velocity of the increased

supply was
conditions and

war

over

money and fly from it, and prices
rise precipitately:
as, for instance,
in Germany after the First
World

War,

During the

money

inflation

different

quite

may mean a

the

war

quence

change, but

sur¬

actual

Federal

credit, in spite of the inflationary
cheap money policy.

war i

spent, and the
vitally necessary increase of gov¬

the

reduction

the

are

and the Treasury

plus, have made possible

seemed

sufficient brake

balances

to the
war,

and

,•

balances

to be misunderstood,
published," but some of
Spahr's r comments on

at work

mortgage rates.

y^e

of
commodity prices that
loiiowed tne -end of
World War I, r~——y|;^V
>f
the Federal Reserve
banks in 1919
1936-37, the F e d e r a 1 Reserve
and
1920/raised their discount
banks did not
rates so that
recognize any ob¬
by May, 1920, the
ligation to step in and
rates, were
buy all
7%
on
commercial
offerings of long- and short-term
paper and 6% on War
paper. Lib¬
government obligations at
fixed
erty
bonds declined in

you

mis-state my position so
seriously
to require correction,• J >

both
seller

mqney to keep up bond prices;
but it wants to
prevent the

i t y;

the

of
the

keep food prices down
by price fixing and rationing. The

American
pros p e r

best

money to keep up farm
it wants to

recovery

rests upon the

and

the

both.

give us

The

23,

financial

some

article published in the Sept.
1948 issue of the "Chronicle^

ob¬

benevolent government tries to

"If

says,

...

are now living through the fourth
period of inflation in our
lifetime.- The three earlier
of these
inflation periods culminated
a i ise m inteiest
in
lates and a
substantial decline in
prices of Govern¬
ment securities.
To check the inflation

want

don't

professor

living.

demand

and low prices for the

upon

t hem.

man, and woman,
the high cost of

worlds, high prices for

take

don't

Twain

.-J?: J jJ-

■

Mark

every

jects

exports

Chronicle:
As

Company

Editor, Commercial and Financial

fare

■

and bust.

ica

■

pay¬

authorities who manage our
money and control our affairs
are
rightly anxious to avoid deflation.
They must not risk bringing
on a depression
here by too drastic
measures.
High levels of employ¬
ment and production in
the United States are
necessary to our own
welfare
and
<$——
':7'"
to
the
wel¬
to have
them continue
forever.

The

Banks Trust

holders; (2) danger of loss
institutions; (3) danger of precipifating cashing of savings bonds; .and
(4) a refunding problem for
the Treasury.
Lauds savings banks for
retaining long-term governments
and. sees 2^/2% rate
adequate, despite increase in J
of confidence

gold

Vice-President, Savings

Holding, in fight on inflation, lowering of government bond
prices
i> is not necessary, Mr. Johnson lists disadvantages of
"unpegging":'
as:
(I) danger of flood of selling by

standard

Executive

ment.

world.

and

currency

eventual resumption

boom

By ALBERT O. JOHNSON*

Dr..

asserts

by U. S. alone.
Explains his proposal tor world
system on accepted central bank-;
ing principles making possible

denouncing it

Bonds Not Needed

Bordwell

immediate
coin

inflation

Dent

convertible

supply.

money

Unpegging of U.S.

Spahr in previously-published de-i
bate with him, created false
al-j

Thursday, October 7, 1948

EDITOR:

Prominent banker, warning
against strong deflationary measures,
blames postwar purchases of
government obligations as preventing
excess

THE

CHRONICLE

On Gold

•

FINANCIAL

Rebutting Dr. Spahr

I This

article
(copyrighted 1'J <'8 by Time
Inc.k by Mr., Leff ing well is
reprinted front the October Issue
of "Fortune" with the gracious permission
of the publishers of that magazine. I

natural contraction

policy must be wei'ghed

balance

gent decision

before

can

(Continued

be made.

intelli-

What

page.45).?"'w

Volume

163

Number 4740

•

: -

COMMERCIAL

THE

•

"•

FINANCIAL

CHRONICLE

Our

From

Washington tfNN
Ahead of the News

(1419)

Farm

Problem

By EMIL SCIIRAM*
■■'v'

By CARLISLE BARGERON
It

would be amazing, nevertheless there are indications that i|t
happen, if the State Righters, or more commonly termed the
Dixiecrats of the South
they despise the term—should turn out to

President, The New York Stock Exchange

In analyzing farm problem in light of price supports and recent technical
developments, Mr. Schram
maintains aim should not be parity, but
equity between divergent interests.
Says if fiscal soundness
can be maintained, more
people will have better things at less real cost, and urges a balanced
budget
based upon a fair and equitable tax
structure, without discrimination against generation and flow of

may

capital.

—

save

Southern States for Truman.

some

can

tins

South

It would not

that they

seem

Caro¬

preaching,

the song and dance
is his song and

was

lina, Missis¬
sippi, or Ala¬

bama

circumstances,

whether

working

his

the

members

the

toral

elec¬

their

Truman.

this

kind

situation
not

Bargeron

But

the

states

Kentucky arid North Carolina
which
the
Gallup Poll has

re¬

ported, and according to that poll,
Dewey would carry both of them
if the vote of the Republicans and
that of

the

State's

combined.
and

Righters

But

isn't

combined

result, Truman
plurality in both of these
1

were

has

states.

Both
of these
states, inciden¬
tally, have respectable Republican
parties.
A
Republican
Senator
from
Kentucky is now seated,
seeking reelection, and a Repub¬
lican Governor has. just retired.

North

Carolina

Smith

racial

went

1928

bitter

sue

which

State

the

and

feeling

just

against

against
Also,

current

supposed to be
the religious is¬
Tarheel

the

turned

the

Yorker.

famous

the

State

had

many as two Republican Con¬
gressmen.at a time.
The
question
arises
as
to

Whether

there

were

State's

Rights tickets in those two states,
the

dissenters

would

unite

under

the Dewey

banner. In this event
carry these two states,

would

according to the
haven't

polls.

united
Truman

stands

and
is

they

But
the

lead.

the

He is also in the lead

matter

polls
State
oh

him

show

whereas

*33%.

the

carried

figure;

higher

much

90%. On this basis..
has
dropped
tremen¬

say,

down

Roosevelt

Truman

interesting,

too,

take

Georgia.

formation

slate of

•;

cer¬

have

true, it

was

anti-Truman electors.

obvious,
man

would

State

this

course

that

ago

trie

Well, that hasn't happened.

the

retiring

to
Have a slate of electors strong for
Truman. They aren't pledged to
-

Righters.
dications

done.

been

But

seems

they

fold-up

the

State's

Georgia, and the fact that Truman
still

the

lead in Kentucky
Carolina, is not doing
the State's Righters any good.
North

The happenings are a little dif¬
ficult
to
understand, too.
This
writer knows something about the

than

say

had

issue

between

that without
been

State's

Morgan

Stanley

Co., .after
Oct.?6, made
offering, of 129,672

secondary

shares of Public Service Electric
&

Gas Co.

ence

stock

stock,

75 cents.

no par

offered

was

share with

per

$1.40 dividend prefer¬

common

The

value.

at V $26.75

dealer's discount

there

Righter

and

Trumanite, the former would have
swept the State.

In fact, the same

thing that the State's Righters

are

invitation'was influenced by
concern

litical

over

situa¬

rapidly developing

saw

situation in which certain

t—a

elements

po¬

attempting

vvere

exploit the .discontent

urban

cost

consumers

among
the high

over

pi living and the fears

revolu¬

and

ex¬

the

were

targets.'

bring
commodity
to

time

same

purchasing

enormous

belt

farm

sta¬

power

the
of

Eastern friends
have little patience with the farm
my

problem.
Why, they ask, don't
"they" let the law of supply and
demand take its course?
Or, in
referring to Federal legislation, I
hear
it said
that
"they"—who •

"they"

be—don't know

may

When I hear

what it is all about.
such

Two With
Merrill

Lynch Co.

iespecial

The

Financial

Chuoniclei

MIAMI

BEACH, FLA.—Robert
McKay and Robert L. Mund-

herik

affiliated with Mer¬

are now

the

rill

Lynch,
Pierce,
Fenner
&
Beane, 100 East Robinson Avenue.
.

With

KANSAS
W.

Tumy

The

Prugh,
Combest & Land,
Inc., 1016 Baltimore Avenue.
He
formerly
with
Wright, Snider Co.

Precott,

The

Herrick,

greatest inter¬

time, Win¬

our

Just

year

ago,

in addressing the Alfred E. Smith
Foundation,

marked, "We

are a

may

re¬

Socialist Gov¬
have heard of

^
Chronicle)

HILLS, CAL.—Louis
joined the staff of
&

Reed,

Inc.,

guarantees is
history. We got suf¬
ficient production for our needs
at home, for our military estab¬
a

satisfaction

Chronicle)

Churchill

the

staff

has

—

been

Thomson

y-,v

Wal¬

added

Mc¬

Kinnon, 105 West Forsyth Street.

(Special1 to

ST.

The

LOUIS,

Brady Staff

Financial

Chronicle)

MO.

—

Nicholas

Davenport has been added to the
staff

Brady

Co., 411

North Seventh Street.

Bugen is engaging in

J.—Mace
securities

business from offices at 326 Warren

Street.

and

prob¬

wishful

ponder

over.

Mr.
if the
or

"theirs"
alone.
The
to speak and think of
other groups within the nation us
tendency

purpose

"they,"

meaning

those

Wash¬

ington who have to grapple with,
problem.

stitutions

ity

Our democratic in¬

imply shifts in author¬

the

result

elections.

Churchill, with his deep instinct
for

the

essence

process,

showed

have

solve

democratic-

our

the

way.

farm

people

keen

alternating

affection

for

of the past and a

problem,

and other problems as well.

Being

between

the

place

ting.

craving for im¬

with

the

vent

far

tion

not

well.

perfect

equal

;

/;.

party

if ouf

and

other

had

na¬

done

propose

Platforms

major

political

cast aside

farm

program?

platforms of both major

litical

•

either

legislation
The

size

•

Farm
Does

swinging too

direction,

one

upset¬

emotions

apology. They pre¬

pendulum

score

conflicting

do not call for

are

bewildering

likely to

are

These

freedom

provement, the changes which

po¬

parties, in language which

its

problems

good

any

by referring slightingly t$

at times is so similar

to make

it difficult to distinguish one from.

(Continued

on page

44)'

BOSTON

ST. LOUIS

wish

have

by every
precept
that
I
natural abhor¬

for artificialities in

have

the

conviction

our

mar¬

New

Stix & Co.

England Lime Common

Boston Terminal Co.

INVESTMENT

3V2S, 1947

509

SECURITIES

OLIVE

STREET

that,
the

St.Louis l.Mo,

DAYTON HAIGNEY & CO., Inc.

■
■

Street, Boston

Private

New

York

WOrth

••'/'

....

j
t

•

Members St. Louis Stock

pos¬

normally,
producer

'•'

Exchange

Telephone—

4-2463

be best served when markets

can

function. with
restraint.
markets

the

The
is

when

Holding Pfd.

Boston Edison

75 Federal

strongest

and

consumer

Boston & Maine Prior Pfd
Boston Railroad

that,

say

sense

common

Trading Markets

the

least possible
manipulation of

less

repugnant

government

groups

for

of private citizens.

myself,

like to

much

SPOKANE, WASH.

to
the

NORTHWEST MINING
Trading Markets

American Furniture Co,

I
my farm with
the minimum of regulation and of
all the other apparatus of agri¬
culture in 1948, I have to recog¬
should

LYNCHBURG
'iiiiiiiiiiiiiiiiiiiiiiiiiiiiHilllilliuiiiir

run

SECURITIES
For

Bassett Furniture Ind.

Immediate Execution of

Quotes call TWX Sp-43

Exchange

Std.

A.M.,

Dan River Mills

from

Pac.

other

10:45

Time:

Orders

Floor
11:30

hours.

Sp-82

STANDARD SECURITIES

Mace Bugen Opens
PHILLIPSBURG,

did not speak as
were
not. his

We have

manipulator than when it is done

Joins J. W.

all

Churchill

Government

has sustained large
numbers of
people in war-ravaged countries.

sible
Financial

complex

matter

the

JACKSONVILLE, FLA.

war,

Effectiveness of the

kets.

McKinnon

farm

the Price Control Act of 1942. The

know,

Joins Thomson &
The

When

leader of the Con¬

servative

thought necessary that farm
be stimulated; hence

rence

far

knowing that
the export of food after the war

Wilshire Blvd.

(Special

it;,

agree

not

simple,

Nor

rapidity

Churchill.

might

some

production

the

Financial

Waddell

involved

became

was

M. Wiskow has

8943

not

all

are

for this

reasons

wisdom

lishment and for export.

With Herrick,
Waddell & Reed
(Special'., to

the

the future is Concerned.

with

policy.

of the

aware

Chronicle)

financial

CITY, MO. —Porter
has become affiliated

BEVERLY

support

policy, whether
as

Prugh, Combest

well

(Special

pious position with respect to the

ent.

the

words

national figure
ston

—have

not

taking

party in opposition to
•it—perhaps you have heard of
that, too."
There is nothing un¬
ly understood.
As a farmer who
has necessarily participated in the usual in this casual observation
government's farm program—and when first read, yet it contains
in itself implications of
not without serious misgivings at
a pro¬
times, I assure you—I take no found sense of unity which we
price

lem,

I cannot but recall

phrases,

that—and I

highly important that the

dleman's.

its full

absorb

can

industrial production.

our

Sometimes

ever

kind of

makes

problem
which is exclusively the farmer's
or
the city dewller's or the mid¬

the

and

share of

turned

bilize industrial prices so that
the

all

—

with less pressure on the pocket-

ernment—you

they

served

book

which

problem—it

stability
into
farm
prices at a level where the vast
consumer population of our high¬
ly industrialized areas can pay

tion v of

which

problem

Memorial

interdependent,

thinking will not make it differ¬

farm

isting among our farm producers
resulting from the violent reac¬

;

discretion

sense

life

realities of this situation be clear¬

doubt,

raised

have

current

genuine

State's Rights movement in Geor¬

gia and I

with

one

your

apparently

Texas,

that

have wondered, more
once, whether I had taken

leave

turvy.
Our

Schram

Truman's when I agreed to make this ap¬
i;'-..v:?:; pearance at this time.
I must
admit that my decision to accept

the close; of business

are

Righters in

in¬

Secondary Offering M

Wxll

•

South

some

though

tion that I

theless.

and

Solid

at least

they

State

M. Stanley Handles

ter

The

several
are

saviour.

the

railroads which

farm

sy
Emil

realized

the

not

were

Frenchmen Radical Socialists first
and Frenchmen second.

would rather

you

use

world trade in farm products top-

time,

Perhaps
me

tionized

towards

states there

strong Truman supporters, never¬

bitter

program.

history
of
the
We must face the

center of

background such

tion

the

resounding plati¬
tudes, but Chicago is the home of
agricultural machinery and the

debate.
But in the meantime,' it is in¬
I assure you that I am not look¬
teresting to note that the Demo¬
cratic high command should not ing for any award for valor, al¬

be Talmadge's explanation of wha'

has

they

and of government with disdain
when the other party is in
power,

is only one step from the

farm

would, in the nature of things, be

governor,

him. it is true, and that

will win as; expected, before this kind of an
audience, to make some contribu¬
'

Republican,

Governor.

In¬

stead, Talmadge with nothing vis¬
ible to worry about, having jus'
won a gubernatorial election hands
down, suddenly decides to agree
with

free

situation

hear

and

simon-pure

individ¬

.considering

entire

the

return

question

facts,

actions is out of the

the

time

abrupt

ual

group

citizens

farm

Win

really

told, with Her¬
Talmadge in the saddle.
were

that

commodity markets and

sophisti¬

was

this

tainly

this writer's in¬

was

months

informed

and

cated

this

that

45,000

his race for
S. Senate, and Roy Acuff,

another

dously in popularity, but he hasn't
dropped enough to lose the State.
It

least

questionably

note of what has just happened in

before

realities of the situation.

know

is to be found

just retired National Chair¬
of the Republicans, will un¬

man

in Texas.

Much is made of the fact that the

plenty, Industry of
newspaper agriculture. I

saying

are

and

New

has

nize .the

there knew, more¬
50,000 over, that our
votes
cast
for
States
Righters national farm
Thunnan and Wright.
would
If tnis is policy
the case, then Carroll Reece, long¬ be the subject
time Congressman from the State af controversy
will

Carlisle

;

have

Competent

observers

State's Rights

seems

steam.

does

Louisiana.

anyway.

paign,

could.

is that Truman

the South

movement

exist

that

the

are

In Tennessee, the

Presiden¬

the

point

way

the

under

people

manner

defeated

that

something

with

they

over

I am

quite

sure

wonders,

probably not dis¬
turbed because the assumption all

pledges
aga'nst

to vote

not

Yet

been

nominated

One

effective

college

have

Talmadge;

dance.

here

When, in the middle of last July, I accepted your gracious invitation to
speak on this
occasion, I was well aware of the fact that I was taking on a serious and difficult
assign¬
ment.
I knew that I was
making a commitment to appear, at almost precisely the half-

"Remarks by Mr. Schram before
luncheon
National

meeting
Grain

sponsored

Trade

Fifty-second

Annual

Grain

Feed

and

tional

Association,

Oct.

1948.

Council

Convention
Dealers

Na¬

Chicago,

111.,

Scott, Horner <Sl
Mason, Inc.
Lynchburg, Va.
Tele. LY 83

LD 33

lllllllllllllllllllllllllllllllllllllilllllll

CORPORATION
Members Standard Stock Exchange
of Spokane

Brokers

Peyton

Dealers

Underwriters

Building,
Branches

Spokane
at

Kellogg, Idaho and Yakima, Wn.

•

(1420)

THE

COMMERCIAL

The Growing Deb! Burden in Gas

FINANCIAL

CHRONICLE

Thursday, October 7, 1948

British Rearmament

Industry

By EDMOND M. HANRAHAN*

Securities

Chairman,

Chairman Hanrahan calls attention

pointing out bulk of
debt

tinuation

Exchange

And Lend-Lease

Commission

dangerous financial aspects of gas industry expansion program,
financing has come from issue of senior securities.
Holds rising ratio of

new

equity capital is

and

of uneasiness, and

cause

present

warns gas industry has discounted too heavily
Urges strong capital structure for gas companies.

prosperity.

By PAUL EINZIG

Commenting on Britain's rearmament program and its
effects,
Dr. Einzig says it may mean an increase in
strength against an
external enemy merely to be offset
by increased strength of internal

con¬

glad to be here with you today to discuss certain financial aspects of the
gas industry.
As you are all well aware, the natural gas industry is engaged in an expan¬
sion program of epic proportions.
The construction of the great transmission lines is in
the

very

most

mantic

ro¬

tradi¬

industry appears to be due to the

tion of Amer¬

ican

joint action of two powerful cur¬
rents, one reinforcing the other.
is the extraordinary expan¬

enter¬

One

The

prise.

sion in business

scale of activ¬

activity since the

ity

ond

involved,
engineer¬
ing triumphs

achieved

become the cheapest as well as

shift from

the

gas.

places

many

desirable

other

fuel

great

most

lines

household and industrial

30-inch

steel

pipe

present

thou¬

1928-1930, is based not
oretical

sands of miles

the

E. M.

Hanrahan

I ing shortage.

of people,

the great rewards that come
stuff

such

success

There

that

been

dramatic

has

appeal

important in the

success-

became

temperatures

financing and construction of |
projects as Texas Eastern,'
Tennessee Gas, and the other great
j
lines as has the lure of profit.
It j
i-PLirt
44-Vi nt
2
4"Vl
is significant that in no other in¬
^

have

■»•"! f\

1 V»

great

many

that

consumption.

new

industry

gas

have

m..

the

dollar

domestic
little

volume

than

electric
crease

investment

the

utility

all

-1

fourfold;

industry

in the

this

about fivefold;

was

our

and

sources

from

requirements
about

the sale of

man

the

new

raised?

money

the

arms

iuce

the

for

X1.

•

.if

stock, and only 15% from
of

common

million of

stock.

new

in¬

the bulk of the assets

but in

the nat-jof

Above

preferred

1948.

little less

than $50
million in

Furthermore, proposals

how

affect
' " '

under discussion in responsible in-

dustry circles
to

billion

indicate

that

dollars may

during each of the next few

their

considerable portion of i

the

profits,

the

industry,

stock

played

only

shall

aid

was

the

cover

tion, Atlantic City, N. J., Oct. 5,
1948.

■

balance

Paris

the

large

studied
sources

sale of additional

common

stock

j has also played but a small part in

year.

SrouP have issued common stock.
A

striking characteristic of the

senior

securities

issued

their

While this was
sufficient, after relatively short life; all have heavy
providing for debt retirement and sinking funds or serial maturities.
working capital, to finance re¬ The principal reason for these feaquirements during the late '30's
(Continued on page 58)

This announcement is neither

expected

"gap"
As

the

result

Marshall

Britain's

from

the

aid,

intended

Marshall

aid

bun

offer to sell

any

nor a

of these shares,

solicitation of
>

into

send

First

National

Bank

the

Security

—

Los

..V

Public Service Electric and Gas Company

Future

Gold—

City

Co.,

Ltd., 544 Howe Street, Vancouver,
B. C., Canada.

and

economy
must

balance

pay¬

considerable time.
in mind, how¬

some

borne

that today Britain is indus¬
trially much better prepared lor

ever,

than

rearmament

she

eight

was

that it seems
(Continued on page 63)

years

ago,

rea-

current

position—Hirsch & Co., 25
Street, New York 4, N. Y.

Broad

Estabrook

Chase

Business

Can

New

York

Developments

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

serv¬

Bank,

Pine

Nassau,

"So

New

You're

New

Tax
on

particular

tion

Guide

For

tax

current
on

the

1948

laws

individual,

reference

se¬

should

Institute of the

ers

new

homes in

building projects of leading lo¬
builders—Dime Savings Bank
Brooklyn, Fulton Street and

the

from

Avenue, Brooklyn, N. Y.

Stanley

—

Outlook—r Leaflet-

Heller

Co., 30
Street, New York 5, N. Y.
&

Pine

fully informed—also
chapter on voting

booklet

rent

Wall

situation—Cohu

Co.,

Street, New York 5, N. Y.

Steel
Peter

Wall

Highlights

Oil

the

Com¬

Under

Calvin

ment—Brochure
vestment

firm

—

McDermott

Circular—
&

Co., 44
Street, New York 5, N. Y.

Bullock
on

Manage¬

American in¬

companies issued in ob¬
of

the

founding

the

ago—Calvin Bul¬
lock, 1 Wall Street, New York 5,
years

Y.
*

Furniture

American

Co.—An¬

alysis—Eastman, Dillon & Co., 15
Broad Street, New York 5, N. Y.
Also

York

Citizen'*"

with

Pure

—

35 East Wacker Drive, Chi¬
111.

pany,

cur¬

"Good

connection

train

Market Trend—Leaflet

young

cago 1,

servance

Market

Vote"—

and

the

contains

Lynch, Pierce, Fenner &.
Beane, 70 Pine Street, New York
5, N. Y.

Home Build¬

telling

how

why of
and containing other in¬
formation about which everyone

Freedom

Long Island

the

voting

prepared

the

Going

handbook

capital gains and losses—

Merrill

Leaf¬

Overseas—Booklet

15, N. Y.

and their effect

—

let of current developments in the

National

corner

Street,

5, N. Y.

Benefit

describing foreign banking
ices—Chase

Co., 15 State Street,

Boston 9. Mass. and 40 Wall

Railroad

the

How
Your

De Kalb

available

City Banks Stocks—

Favored

Preliminary

earnings comparison
19 New York City Bank Stocks
Laird, Bissell
&
Meeds,
120
Broadway, New York 5, N. Y.

Studies and

momentum

Props Against Depression—Dis¬

Monetary

Memorandum—Western

cal

J9//S

re¬

which

cussion in "Investors' Almanac"—

October 7,

get

imagine that this factor
likely to play any impor¬
part
in
Britain's
internal

ments for

Library of Homes—Presentation

MORGAN STANLEY & CO.

pace

gathered

An¬

curities with chart for determina¬

a Share
$26'A

long it

who

1940
not

tant

Those

slow

rearmament

how

seen

rearmament

stride.

member

geles, Los Angeles, Calif.

Investor's

129,672 Shares

(No Par Valuer

reasons

firms mentioned will he pleased
the following literature:

Business Conditions in Southern

Brochure

$1.40 Dividend Preference Common Stock

obvious

interested parlies

California—Summary

with

Price

for

its

will

It is understood that the

offer to

ex¬

Recommendations and Literature

.Vein Issue

For

take

Americans

decline of

re¬

import

Dealer-Broker
Investment

Street

rearma¬

agreement

part

benefit

drain.

will

payments.

distribution

York

Not

posi¬

;

never

entire

was unable to supply : raising new funds. Aside from the
internal sources all of the I fw0 new transmission lines, only
funds required for expansion. The ! fhree of the
companies in our

$100 million

tion of the American Gas Associa¬

from

The rate of expansion in the gas i
group
of companies we
had available from such
*An address by Commissioner a little over

HanrShan at 30th Annual Conven¬

dollar

the dollar position
would
anything but reassuring. Mar¬

$305

jmany others,

spent!
years. |

the

ment

industry..,%• | minor part in the financing proThough most natural gas com- j Sram of the industry. While com¬

retained

now

like
rearmament
is

Even in the absence of

panies accrued substantial sums'mon equity has been materially
through depreciation charges and I increased by retained earnings, the

1939 to $630

requirements.

all, everybody would
to

increase

the government has not disclosed
its exact plans and in
any case it

Einzig

remains

civilian

know

a rearma¬

which is bound to

funds raised by the

times—from
in

Paul

out¬

ural gas

million

Dr.

jthe sale

natural-gas industry capital
expenditures increased
over .12

the

gold

re-

put

undertaking

cult
to
estimate the
extent
to
which rearmament will add to the

or-

will

This

accentuate

causing
a
considerable
widening of the "gap." It is diffi¬

iers

ports,

placing of

:>ig

requirements and

that

ihe

the

countries.

expected

ment drive

.abor.

aggravate

relinquished in favor

continental

sult

acute

Jeared

ernment is

c o n-

shortage

was

sale of senior

Britain

rearm

gold

owing to

cern,

likely

was

considerably the pace at which
Britain is using up her
dwindling
reserve.
And now the gov¬

power

alone

armed

new

through the sale of bonds, about
4% through the sale of preferred

from

services

Our study shows that the bulk

in which

the

have

the

tion.

Exchange Commis¬
manner

releases

group of the principal natural gas older companies, about 87% was
companies have financed their ex-; obtained from the sale of bonds,
pansion program since 1945. The j about 3% through the sale of pregroup consists of 19 companies ferred stock, and 10% from the
which had assets on Dec? 31, 1945 Isale of common stock. As can be
of over $2 billion and which hold ! seen from these
figures the sale

private

increased

about, one-third

internal

How

1L.

and

rate far exceeding that of business
generally. Between 1939 and 1948,

companies

heavily concentrated in natural obtained through the

sion as;to

appears

gas, I am restricting my remarks : securities.
Of the $245 million
.02
i
^
here today to the financial devel- j raised by the two new
pipe line
opments in that portion of the in- [companies over 80% was obtained

effect

Capital From Senior Securities

in¬ Securities

phenomenal'rate,

raised

money

companies, it

other

re¬

securities.

the

sources.

enterprises been projected and fi- dustry/A good part of what I have
to say is drawn from the results
The capital expenditures of the of a study made by the staff of the

natural

$550

from

internal

the

new

two-thirds

nanced.

creased

from

construction

from

amount

obtained

raised

group

Because the expansion has been
s0

new

securities and the

new

the

their

home

degrees

years

decision

greatly

The

deferment

one-half

Of this

was

Excluding

drastically

reduce

to'

Gas.

the two

industrial

I lower during the periods of peak

ful

householders

uation.

causing

sale of

curtailed, and the installation of

such

dustry

and

Government's

i ndustrial

mainder

emotions.

the

this
as

had

consumers

the

are

a press-

gas

that supplies to

two

ENG.—The

sit¬

economic

companies,
of
finance
entirely

December, 1945 to June, 1948

million

acute in many communities last

winter

the

nessee

dream. new space-heating units forbid¬
dramatic appeal here den; moreover, appeals were made

stirs

mind

American

the

ventures

and
from

the¬

know all too

well, the shortage of

numbers

benefit

the

for

resources

large

you

level.

LONDON,

assistance from United States

probable rise in dollar deficit.

has been received with mixed
feelings.
On the one hand, most people
feel that rearmament is
necessary and inevitable.
On the other hand
many
people fear that rearmament would

million by the two new transmis¬
sion lines, Texas Eastern and Ten¬

exploited

reality of

present

to cover

capital expenditures totaling about
$700 million, including about $250

The

potential

of vast unused

waiting

i but on the hard

nation,

the harnessing
natural

estimate

market

the face

across

line

this group of companies made

that i of
a

pipe

from

the

many

their

rose

has

uses.

unlike

program,

tures
New

fuels

gas

for

flinging

early '40's, it became wholly
inadequate when capital expendi¬

course,
had to
from outside sources.

end of World War II and the sec¬

the

and

Sees British need for

enemy.

review

Light

Industry

Review

the

Research

analysis of the dis¬
of Electric Power &
Corporation.

American

Oil

Industrial

solution plan

New

Furniture

(Continued

Co.—Data

on page

59.),

?v\:

THE

Number 4740

168

Volume

COMMERCIAL

FINANCIAL

CHRONICLE

laws it passed in 1932-34.
production has already
the price rise
in some
commodities. A supply exceeding
demand
has already
shown up

crazy

The

High Cost of Living

broken

By ROGER W. BABSON

record decline in dollar's purchasing
bad condition will continue so long as labor leaders
and politicians are making money from high prices.
Recommends:
(1) increase in productivity; (2) don't buy what you can do with¬
out; and (3) have Congress repeal crazy laws lassed in 1932-4.
says

Public

American

Enemy No. 1

time

been

have

taken

out.

That's

about

and

two

one-

times

half

much

they

and

(2)

(3)

New

ductivity
wait
can

had pre-war.

have

There
been

(3)

all

fellow workers to

use

(2)

fronts,

repeal

some

could

well

between

and

mean

item

in the

the

specialist

present

his book

"uptick" for

owned

rules,

54 Years Old
Calvin

Bullock,

the securities busi¬
that the Exchange
might submit suggestions to the
SEC looking to certain changes in

New York

the rules of poor trading.

continued

investment

firms

have

amended

ing

City,

the

cializing

One rule which the floor trader

would

account.

Calvin Bullock Firm

they affect
ness,"
and

the prosperity.

own

the

one

United

the

Wall

States

Roger

creased

130%

54th

I founding this

anniversary
year.

Per

States has in-

levels.

1940

over

Incidentally, folks in Kansas, the
Dakotas, and the great Northwest
have
had- the greatest increases
-f"
v\
trouble is that prices are
much higher—more than twice

,*• in income.

The

high

still going up—that
and mine now buy
any.time since the

and

dollar

your

than

'less

post-Revolutionary days of the
1780's.
Cheap, automobiles
and
housing, for example, are now out
,

reach

the

worker.

average

this bad condition will con¬
tinue
so
long
as
labor leaders
Yet,

politicians are making money
high prices.

and

from

Dollar

Low

New

will buy

One hundred cents today

purchased
post-war clothing

only 40% of the food it

The

pre-war. '

declined

has

dollar

approxi¬

mately 50%- of its pre-war value.
A dollar spent today to keep a
roof overyour Head Will buy" but

rentals,

89 cents worth of pre-war

housing is only about
60 cents worth of pre-war value.

while

new

TEN BILLION EUPS OF E0FFEE

when you consider its
purchasing power, in
terms of radios, cars, refrigerators,
butter,
milk,
bread, suits, and
shoes, will buy only about half
the things it bought in 1940! Infla¬
tion is our major national head¬
ache today — our Public Enemy

fee from Brazil to the United States than any

No. 1.

The dollar,

all-round

picture today is much the
same as it was after the last war
when the dollar was worth only 50
cents in terms of the goods and
The

study
business cycles shows that in¬

services
of

would

buy.

rXVER the past 30 years MISSISSIPPI SHIPPING
^ COMPANY'S Delta Liners have carried more col-

last year.
dollars.

other line
Operating through New Orleans and
other Gulf ports, the Delta "Coffee Fleet" brought in
over 2>700,000 bags of the brown berries last year—the
the

The

world.

tions for

^equivalent of more than 10 billion cups lor America's

business

itself out.

usually

boom

burns

So prepare yourself. A

of reckoning will as surely
follow as does night the day.
day

The President and our Congress

offered

our

the West

Coast

end

sure-cures

119 passengers and with a cargo
capacity of
a million cubic feet, were built at a cost of

than 7 million dollars each.

Far-sighted management, shrewd operation and the re¬
investment of capital in sound expansion, have enabled

Today Delta Liners, including three great

post-war luxury cruise
to Brazil, Uruguay and

Stop the Boom!

have

Mississippi Shipping Company established the
regular steamship service between the Gulf and
South America, nearly 30 years ago, one 5000-ton
steamer formed
the Delta line and the capital was

$50,000.

passenger service was put into operation
Three Delta Liners, each with accommoda¬

Equipped with all
furnishings, safety and navigation devices,
•including radar, they form the finest licet of ships ever
to
go into regular South American service.

first

the

exceed 15 million

the modern

When

characterized
by
cheap
money and a business boom. But

half

coffee drinkers.

flation follows wars. This is usu¬

ally

now

luxury

1946.

over

Capital and surplus

Delta

and freight ships, sail weekly

Line

further

the

Mississippi Valley's inter¬

national trade with the South American and African

the Argentine and monthly to
of Africa—a service established early

continents.

present inflationary spiral. I
of no time in our history

know

where

major price rise was ever

halted by
the

result

and
I

surplus of

This

politics. High prices are
of a shortage of goods
and

money

recently explained

—

another advertisement

Securities
Southern

stales.

economic

Corporation

development

of various

laws which Roosevelt had

passed

the series

E(j nit able

will

the

published for more than 10 years by Equitable

outstanding

featuring

zcclcome

South

industrial and-commercial,
opportunities

supplying capita!

contribute

funds

concerns

to sound

the

further

enterprises.

to force higher prices. Since 194041

the

run

supply of

the

have
short

needed
on

has out¬

money

supply of goods.
or

wanted

People
things

supply and have had the

NASHVILLE

NEW

DALLAS

them.

against

buyers

one

to buy

have

bid

another for available

are

things which
stop

this

three
we

BIRMI NGHAM

G REENSBORO

NEW

ORLEANS

MEMPHIS

Securities

inflationary

are

Corporation

JACKSON. MISS.

President.

help

spiral.

high prices and inflation

AND

Brownlee O. Currey,

fundamental

can

CHATTANOOGA

goods. Hence, prices have soared.
There

YORK

ARTFOR

VI LLE

K N OX

for the. first time,

money,

If
the

322 UNION STREET,

NASHVILLE 3, TENN.

TWO WALL STREET,, NEW YORK

companies, is observ¬

capita income
in the United

Babson

spe¬

management

post-war

earnings.

Street,

of the oldest

spurts in individual

stock.

specialist

to sell stock from the

book for his

early date with
respect to the 1933-1934 Acts as

This

and

Commission at

difference

"bust"

Under

with the Securities and Exchange

the

account and

is not allowed to take stock from

produce to

producing.

stock

sales

6, Robert
P. Boylan, Chairman of the New
York Stock Exchange, said that
he "hopes to have a discussion

supply and encourage

and

prepar¬

Securities Acts.

According

self-control and religion

buying

sale

New York "Sun" of Oct.

things which

our

Exchange is

of
own

confining his
"long" stock under the
price of the last sale.
Another
sought-for change is that affecting

of New

i't

' V '

then capacity. In other words, let.

get along without,

have, Congress

in
'

Religion

in full

awhile for buying what we
now

lots

his

ing to discuss with SEC alteration

our

with

tion. Lets buy those

(1) increase our pro¬

along

Use

York Stock

that imposed a few years ago pro¬
hibiting any member of the Ex¬
change
from
purchasing round

tremen¬

dous

should

are

of goods

legislation,

Deal

'.(1a. V , f.
Let Us

Suggest Changes
Trading Restrictions

Chairman R. P. Boylan

natural
eco¬
nomic laws and with politics will
cure
neither inflation nor defla¬

surplus of money and

balance
will result.

greater

Tinkering

people are tem¬
porarily prospering by flirting with these enemies.
The American
people today have more dollars than at any time in our history,

taxes

•,

nately, like Enemy No. 2, which is liquor, too many

after

economy

today is inflation; but unfortu¬

nearly $2,000,- f
000,000—even result of (1) a shortage

along some manufuacturing lines.
Shortages still exist along such
lines as steel and autos. But given

Mr. Babson, commenting on
power,

Increased

(1421)

5, N. Y.

its

(.1422)

THE

COMMERCIAL

FINANCIAL

CHRONICLE
at

Paget Sound Power & Light Co.

Pennsylvania Brevities

Maryland Drydock

Corporate News and Notes

(Reports

Request)

Kent-Moore Organization, Inc.
(Prospectus

Available)

BUCKLEY SECURITIES

Philadelphia 2

New York 5

PEnnypacker 5-5976

WHitehall 3-7253
between

Philadelphia, New York and Los Angeles

developed accord¬
ing to expectations, Warner Com¬
pany, in 1945, started an extensive
program of improvements calcu¬
to

increase

the

productive

building

material

Stocks

able

Philadelphia Transportation Co.
& Common

but

Chestnut

Street, Philadelphia

Phila. Phone

New York Phone

Locust 7-1477

WHitehall 4-2400

ing and modern
ing equipment.

concrete-truck¬

will

reach

and

facilities

contemplated
of

about

the

three-

was

fourths completed and paid for
by the end of 1947.
Additional

Atlantic City Electric

Botany Mills Com. & Pfds.

demands

for

the

company's

Buda Company

products,

both

current

Dayton Malleable Iron

prospect,

have

resulted

extension

Gisholt Machine

Twelve

Haskelite Mfg.

the

additional

steel

barges

Parker Appliance

to 90, are

Stromberg-Carlson

order for delivery

next year.

Thus far the cost of

improvements has been largely

Byllesby & Company

PHILADELPHIA

OFFICE

Stock Exchange Bldg., Phila. 2
Telephone

Teletype

RIttenhouse 6-3717

PH 73

Philadelphia's

five-year

improvements,

now well

Pittsburgh Hotels 5-1967
Lehigh Vy. RR. Annuity 4%-6s
Altoona & Logan Vy. EI. Rwy.
Common

South

provements,

pleted

Jersey Gas Common

the

Samuel K. Phillips & Co.
Philadelphia

Packard

Bldg.,

Stock

Exchange

Philadelphia 2

Teletype

COrtlandt 7-6814

slum

the

are

Pennsylvania Turnpike and

Elec.

Com.

the

Delaware

delphia.

Warner

contracts

for

Company

main

sand

and

for

material

costs

per

the

current

Power

year

PITTSBURGH

Ludlum

are

Rates

gravel.

extension,
was

tons

Turn¬

ground

broken
use

The

last

for

week,

Utility

plant.

programs

Harbor
reduce

The

huge

company's

amount

Action will also

amount

reduction

remaining

ordered

mil¬

about

;

795,000

is scheduled for

capacity by
to approxL

tons.

Earnings for
months of 1948

Cigars

customer, is not affected as
rates apply only to Penn¬

new

about

was

the

pine

show

increase

months,

however,

decrease

compared

share.

and

payable
Dec. 1,

when
This

$22.71

nine

believed
the

the

was

per

equiv¬

preferred

backlog, at
production, will

company

middle of 1949.

into

rate

the

New business is

being hooked at about the

with

$2,271,060

Company's

carry

will

first

the
are

same

current rate of

Net profits for

quarter.

the

period,
reported.

alent

Cig¬

Inc.
reports
sales
of
all
brands of cigars running at about

the June

000.

debt

June

through 1953, but the com¬
has the privilege of pre¬
paying maturities.
It is consid¬
ered
likely that directors may
call $1,200,000 bonds for
payment
Dec. 1, reducing debt to
$1,800,-

1947

rate

per

pany

completion by the

Bayuk

com¬

$2.25

1949

Installation

PHILADELPHIA—Bayuk

funded

$300,000

middle of 1949.

quarters,

declared

the preferred, 75 cents
than the regular amount.
on

The

facilities will increase

new

mately

has

announced

will

cost

company's ingot
300,000 tons a year

users

sched¬

new

has

pany

construction

the

electric

large industrial

Co.

$5,500,000.,

Water

Consolidated
Gas, Electric
Light & Power Co. of Baltimore,

same

shipments.

sylvania.
Bell Telephone

Rising
terials'

costs
have

duction

of Penna.

labor

arid

ma¬

outrun

from

$2 to
dividend

quarterly

$1.50

NSTA Notes

the

payable
by
parent, American Tele¬
phone & Telegraph Co.
'

Bell to its

last

making the announcement:
F. J.
Chesterman,

week,

President

failed to

of
earn

Bell,

said:

even

the

"Bell

NSTA

NOMINEES

FOR

1949

OFFICERS

Edward E. Parsons, Jr., Wm. J. Mericka &
Co., Cleveland, Chair¬
man of the
Nominating Committee of the National Security Traders

reduced

dividend by nearly a quarter of
million dollars, which amount

taken
from
surplus."
He
stated that company's surplus is
now
less than it was in 1920
was

although total investment in the
business is
times

Mr.

now

large

than three

of that date.

Chesterman

that the trend

pointed

out

particularly dis-

turbing in view of the huge post¬
expansion and improvement

war

program

estimated to involve the

raising of well
in the

$100

over

million

mmm

next few years.
*

Supplement¬

the

taken

and

ars,

2,600,000 tons of

dividends

share.

per

Allegheny

—

the

The

the'same

nr.

Edward

Welch

Clair

Philco Corp.

ing these city, state and govern¬
ment,

meet

on
company's
100,000
$6 preferred on which ac¬

cumulated

$59.25

electric

The

the

Castings

quarter's

melting furnaces,
soaking pits and auxiliary equip¬
ment at its Brackenridge,
Penna.,

Cut

Public

Steel

for

three

❖

affiliate,
Safe
Power
Corp, to

•

dividend

Allegheny Ludlum Steel
<

Commission has ordered
Pennsyl¬
vania Water & Power Co. and its

also

Steel

•

General Steel
Castings,will
Oct. 22 to consider final

com¬

plans

Pennsylvania

General

between $4 and $5.
*

production

lion bonded debt.

$1.16 in 1945, $2.92 in
$3.33 in 1947,
Esti¬

were

mates

the

PHILADELPHIA-—Directors

war.

Earnings
1946

an¬

span,

require 300,000

and

concrete aggregates.

Phila. Elec. Co. Common

the

mon

has

piers and

chorages of the $40 million

scheduled to

City

extension

Bridge south of Phila¬

which

Merchants Distilling Com.
Nor. Ind. Pub. Serv. Com.

and

Memorial

pike

"Atlantic

clearance

eastern

construction

estimated

N. Y. Phone

PH 375

cost

playground developments.
Later
large projects, plans and financ¬
ing for which have been com¬
of the

Members

million.

Larger items include subway ex¬
tensions, express highway con¬
struction, "street
improvements,
water
supply and storm sewer
construction, airport and port im¬

1500 Walnut St. 6-1950

since

unit
*•'

■

were

revenues of

for civic

increase

wages.

reported

labor

>30%.

cover

increasing
Bell^Telephdnq "Cri. otf
plan Pennsylvania,
necessitating a re¬

templated.

under way, is
expected
between $300 and $400

Cambridge Bldg. 3s 1953

price

higher

7 j. •/:

•

cigar-making machinery,
recently completed, is expected

1948

increases

higher

depreciation

reserves.
Debt ex¬
pansion is not immediately con¬

The installation of new,
high¬

■)••/; • />■/*

made effective in order to

successively

provided for from earnings and

H. M.

sales

■

speed

refrigeration

indicate

moderate

use.

by Nov. 1 and the
reductions to be effective Nov. 15.

which will bring the fleet total

Purolator Products

full

'.//

well

costs.

„

ules to be filed

program.

into

come

tobacco,

$100 million, compared with
k$7£ million last year.
■, \
In
August
and
September

How ever, sharp upturns in
gross
sales and net profits have been

Commission

and

new

by $1,170,000 annually. Benefici¬
aries wilL be Metropolitan Edison
Co., Pennsylvania Power & Light
Co., Philadelphia Electric Co. and
the Pennsylvania Railroad.
The

expenditure

$4,700,000,

and

the

months.

division

added

ahead

three

Estimates

prosperous

lies

year, 'according to a spokes¬
for Philco
Corp/. Plans call

last

War¬

Company's most

its peak

rates to four

The program, which originally

that

the

the like 1947
period due to higher
costs of leaf,
wrapper and filler

/c!" °

era

quantity;
production in¬

including dredges, marine
transportation,
wharf
facilities,
storage, processing, concrete-mix¬

Teletype PH 257

probable

seems

end

ities,

1421

volves expansion in related facil¬

H.N.NASH&CO.

'••• ••.;

almost limitless

expansion

industrial,

ner

inter-de¬

pendence. of its operations, an in¬
crease at
one
point in the chain
requires increases
at
all
other
points. Basic materials are avail¬

private

ing.

public and private building which
would follow the close of the
war,
and which has

division by about 30%.
Because of the close

Bank & Insurance

'4n

upsurge

per week, is ex¬
stepped up to 8,000

10,000-a-week schedule early
in
1949.
Although
company's
radio
volume
is
running about
30% ahead of the like period last
year, television dollar volume is
expected to exceed radio in the

ex-<?>

are

backlog

the

capacity of its

Philadelphia

2039, Pfd.

year

for

commercial and residentialbuild¬

Anticipating

lated

3-6s

full

pected to be well above the $12,-

44 Wall Street

Wire Systevi

the
man

540,000 record total for 1947.

CORPORATION
1420 Walnut St.

Private

the

4,000

to fbe

week;- toward

per

PHILADELPHIA.—Charles Warner, Chairman of the Board of
Warner'Company, producers of sand, gravel, central-mix
concrete,
lime and lime products, states that
gross sales for the first
eight
months were $11,700,000, an increase of 30% over the
like 1947 period.

Results for

about

pected

/Thursday, October 7, 1948

PHILADELPHIA
of

television

sets,

—

Hall

H. Frank Burkholdcr

Production

now

scheduled

Richmond Cedar Wks. Com.
Roberts &
*

Offered

Mander Common
only

by prospectus

Bought—Sold—Quoted

Available Publications

E. H. Rollins & Sons

Valuation and Appraisal

Incorporated

RAILROAD EQUIPMENT CERTIFICATES

PEnnypacker 5-0100

1528 Walnut St.,
;

New

York

Philadelphia 2

Boston

Valuation and Appraisal

Chicago

CITY OF PHILADELPHIA BONDS
Morton A.

Trading Department Active

Price-Earnings Ratios

123 Public

Western Pennsylvania

and Yields

Association,

announces

President:

Utility Common Stocks.

First

Cayne

Harry

Arnold

the following slate for officers for 1949: H

Edward H.

Vice-President:

Welch, Sincere & Co., Chicago.
Clair S. Hall, Clair S. Hall & Co.,

Cin¬

cinnati.

Issues
Direct

Wire to New

CHAPLIN
1

and

Copies

Members

Floor, Peoples Bk. Bldg,
Grant 3900
Bell

;

-V'.....

Incorporated

•

SI Broadway
NEW YORK, N. T.
WHitehall 3-4000

Treasurer:
New York
:

,
.

System Teletype—PG 473

Second Vice-President:

Secretary:

STROUD & COMPANY

COMPANY

Pitts. Stock Exch.
New York Curb Exch.
(Assoc.)

PITTSBURGH 22, PA.

Frank

rities Corp., Nashville, Tenn.

N. Y. Stock Exch.

19th

Request

York City

123 SO. BROAD

STREET

PEnnypacker 5-7330
Allentown

Pittsburgh

NEW YORK 5, N. Y.
-

Lancaster

gross

-*..r

•

will

Arnold,

Paine,

Webber,

Jackson

Curtis,

held

the

Association's

National

Convention

gratifying to advise our members that we are over $11,000
advertising to date for the "Chronicle's" NSTA Convention
Supplement.

Year-Book
Bill

LIBBING
It is

Scranton

Dallas, Texas, Nov. 14-18.

WOrth 4-8400

Harry

City.

Election

120 BROADWAY

PHILADELPHIA 9, PA.

Burkholder, Equitable Secu-»

Morton A. Cayne, Cunningham & Co., Cleveland.

Summers, of Troster, Currie & Summers,

former NSTA

Volume

168

Number 4740

(1423)

President, is to be congratulated for,the largest ad (half page) for the
week, which will represent their firm as well as their corre¬

past

spondents in

upon

You will

your

Thanks again, Bill.- We

,;7V

support.1

shortly receive a letter from
will make good use of it.

very

trust you

Convention issue.

our

depend

ways

K. I. M. YOUR NSTA

•

your

al¬

can

Business and Finance

•' 7
Committee and
;

"Gluttons for Punishment"

__"BUY ADVERTISING"

By ROBERT P. BOYLAN*

HAROLD B. SMITH, Chairman

Chairman of the Board of Governors, New York Stock Exchange

;-7,:.\V;

Yearbook

Committee, NSTA
Pershing & Co.
'
' ' "
120 Broadway
New York 5, N. Y.
SECURITIES TRADERS' ASSOCIATION
AND

Commenting

terical

outbreaks, reflecting,

financial markets.

our

Says such attacks reflect

Terry Snowday, resident manager of E. H. Rollins & Sons,
Inc., investment dealers, has been elected President of The Securities
Detroit

and

Michigan.

Clarence A. Horn of the First of Michigan

Calls for rebirth of confidence in

economy.

succeeds

Other officers

Corp.

are:

<$>-

its

seas,

but by

leadership i n
e j develop¬

own

midst.

ment

international

t h

com¬

dustry.

all

typifies

b 1

o n o r a

business.
a

fi¬
both

—

public

and

private
Bechtel

George

roster

Elder

they

did

not

bear

victory of

Minton

Clute, Straus & Blosser and George A. Reuter, Baker,

Simonds & Co., constitute the Board of Directors for 1948/49.
The Securities Traders' Association, now in its 14th year,

to
Robert

Boylai

the

decisions which

grave

government faces.

who

speak

can

of more than 200 employees and partners of Griswold
Street investment houses.
It is an affiliate of the National Associa¬

composed

of Secuiities

tion

Traders with

members- In

other

financial

centers

of the

country.
Mr. Snowday has been in the securities business for

10 years.

He is

fect

College, Danville, Ky. At that institution he was a member
famous, "Praying Col&pelg," football team, and a teammate
of Alvin "Bo" McMillan, now coach of the Detroit Lions and former
Indiana University mentor.
*
1
*
/
7'
the

SECURITIES DEALERS OF THE CAROLINAS

nual Meeting on Oct.

Their

indeed.

all

for

know that

the

Undermining

persons

1948 An¬

8 at Pinehurst, N. C.

the

fore

Boston

Firms,

Boylan

Stock

Exchange

and

sumed.

tisan

little

old

The

business

This

has

is the

con-*

familiar

confi4

undermining

dence

been

curse

re¬

pari

have

witnessed

paign to discredit

For

security and to that of other

tion,
are

before

measures
under ' way.

shapes up,
knowledge

Now, as
single genera¬
of
preparedness
National policy

stitutions.

shameful

The

our

cam¬

business in¬

attack

continues.

The fact that the seeds of distrust
and

mobilized nation will be respected

suspicion have been planted
great many minds, particu¬
larly young minds, is evident from

by the

men

what

this

of
our
strength
prompts .these brief re¬

be¬
the

Stock

Exchange

which

Mass.,

Sept.

flections

of
we

30,

1948.

very

wisely,

that

only.

the

strong,

in the Kremlin.

It is

mine
are

this

read

suppose

and

that

hear,

good people

you

of Boston realize that you are ex¬

tending

hospitality
(Continued on

evening.

have peace

problem/

Whether

Boston,

practice

matter

them.

cern

politics in America.
a long time—since the early
up
to this very day—we

joint dinner meeting of the

Association

The SEC and Municipal Securities

Mr.

dustry

twice

pre^

tion of American business "and in¬

necessary
task of rearming
the face of ominous threats to

our

world

^Remarks

i930's

time such as this when
is ( in
confusion and
when
the validity of what you
represent is being disputed, not
only in large areas across the

larly,;,at

We. have. again, taken,

„

others

are

occupied with the great American
game of politics that the reputa¬

freedom-loving peoples.

not find here inspira¬
encouragement, particu¬

could
and

short and there

juncture* in world af¬
fairs.
:' (7■■
We have engaged in what, thus
far, has been a fruitless quest for
peace.

Unfortunately, there are many
whose memories are very

groups

this critical

the

Confidence

Business

our

that may have to be taken at

ures

unaware of the deep sig¬
nificance of these facts of history
who

Dealers of the Carolinas will hold their

one

pletely

tion

The Securities

long

the American economy. ;
would- have
to be
com¬

One

than

their wisdom and their
foresight have had a profound ef¬

Veteran of the First World War, and a graduate of

Centre

ism—is

courage,

armed forces three
The performance of

American

Vice-President, Charles C. Bechtel, Watling, Lerchen & Co.; Secre¬ have distinguished themselves—
represented here in pledging to
tary, George J. Elder, George A. McDowell & Co., and Treasurer, as
industrialists, as developers, as our government complete and unEdward J. Miller, Andrew C. Reid & Co.
These officers, in addition
exponents of progressive capital¬ deviating support for the meas¬

tonight
page

59)

(Continued from page 3)

and
and

1934—a

statute

can

and

faltering, inadequate

deceptive guide.
Does the SEC

This

have

jurisdiction of those who deal

announcement

is not

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

The

ex¬

clusively in municipals? By exempting municipal securities
1934 did the Congress intend to
exclude from SEC jurisdiction all dealers in municipals?
There are sharp differences of opinion on this subject, one
that ought not to be in doubt.
What to do?

buy these securities.

from the Acts of 1933 and

Of
SEC.

course

favor the complete demolition of the

liquid markets,

forerunner of

American way

our

large

Short

Pacific Gas and Electric
First and

complete state

stimulator of departure from
of life in which personal initiative

participation in business,
plays

$75,000,000

;

Company

opinion, it has been the bane of free and

our

Refunding Mortgage Bonds

Series R, 3lA%, due June 1, 1982

part.

of this

broad remedy, Congress should at least
subject of municipal securities, the dealers
in them and the powers, if any, that the SEC has or should
have over them. Here, we advocate a complete absence of
any authority in the^Commission. After such perusal Con¬
gress should legislate; Without weasel words or generalities,
there should be clear statutory provisions which will lay
controversy at rest.
•*.
.7'. 7 •..
\

Dated June 1, 1948

the

re-examine

Price 100.517% and accrued interest

...

Gen. Am. Investors

Elects Under Pres.

The Prospectus may

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

Banks & Holcombe With
Louis Whitehead Go.

•). General American Investors

Co., Inc., whose President since its
organization has been Frank Altschul, announced that at a meet¬
ing held Oct. 6, Mr. Altschul re¬
signed as President and was
of

the

board.

Mr. Harold F. Linder

was

Louis

President of the company.
Mr.

Linder

board of the
and

since

its

1946.

has

served

ern

company

Executive
He

since 1945
Committee
director

The National Radiator Co., Inter¬

and

state Department Stores, Inc.,
other industrial

companies."7

wholesale

representative

Commonwealth
announces

and

Holcombe, Jr.,

Banks for

many

for

are
.

Stock

Holcombe

Exchange, while Mr.

was

GREGORY &. SON
I

with

Montgomery,

SALOMON BROS. & HUTZLER

AMERICAN SECURITIES CORPORATION

L. F. ROTHSCHILD & CO.

A. C. ALLYN AND COMPANY

INCORPORATED

BLAIR &CO.,

INCORPORATED

INC.

CARL M. LOEB, RHOADES &CO.
E. F. HUTTON &. COMPANY

BURR & COMPANY, INC.

HIRSCH &. CO.

•

GREEN, ELLIS &, ANDERSON
KEAN, TAYLOR & CO.

WM. E. POLLOCK &. CO., INC.

IRA HAUPT &. CO.

A. M. KIDDER &. CO.

REYNOLDS & CO.

recently

Stone

/Peyser77-777;:777<"7T-

•

SCHOELLKOPF, HUTTON &, POMEROY, INC.

formerly with

Adams & Peck and

•

(INCORPORATED)

years was

general partner of Luke, Banks
Weeks, members of the New

York

OTIS &. CO.

Co.,

Banks

associated'with the firm.

Mr.

Investment

that Morton

Frank

now

the

HALSEY, STUART & CO. INC.

Whitehead

Co., 44
Wall Street, New York City, east¬

elected

Chairman

elected

7-' -77

•

our

ago.

years

the spirit of unity which
prevails everywhere with respect

of Bos-

tonians

conceded that
it was the efficiency of American
industry which assured the final

affect

fi¬

The

nance.

atmosphere

remain

must

industry won for it the
directly and vitally upon the ur¬ admiration and respect of our own
gent
necessity
of
keeping our people and of the entire world,
country strong in preparation for our enemies included. Praise was
any
eventualities that may lie lavished ungrudgingly. A grate¬
ahead.
No internal' discord can ful nation applauded.

It is

sound

nance

business

symbol, also,

existing

yvar, this country
strong.
7:7
It is universally
of

our

tension, it would be
for any of us who are
gathered here tonight to concen¬
trate upon the problems of our

us,

the

elements in

some

difficult

Bos¬

ton,

Charles

and in¬

merce

Snowday

business.

always a refreshing experience to come to Boston.
We associate this city with,
the great traditions of our republic.
We are accustomed to think of Boston as a center of
culture, but we also take pride in its devotion to the spirit of individual freedom and
enterprise,

Terry

our

It is

and

Federal agencies regulating business, and holds

United States and cessation of senseless attacks

MICHIGAN

Association

business and finance, Mr. Boylan points out dangers of these hys¬
they do, irresponsible hostility and complete lack of understanding of
on

present lack of vitality in capital markets threaters

OE DETROIT

Traders'

political attacks

October 6. 1948

-J

12 "(3424)

THE

COMMERCIAL .&

FINANCIAL

CHRONICLE

tries
i

■

also

have

■'

...

■• • • l

•

By HARRY D. COMER*

—

y y.yy:y3y.■:

Manager, Research Department, Paine, Webber, Jackson & Curtis,
Members of New York Stock Exchange

nopoly

Secretary of the Navy Sullivan recently declared that the United States
War II not with radar
American

India,
great
No!

nor

this

deserve

-fine

T and

tribute;

fast'

of? the

aday
we

more.;

rv: the
-'

pace

work-

w o r

are

•

l d

prone

-to

forgetful*
;;;ne'ssf We are
.

f yso deeply
denied
!

Africa

of, such

This is not the

all

—

foreign countries

Perhaps

Have

f h

cor.*

about

American\ workers,

job,

the
out-producing the world.

are

now

on.

If there is to be a real restoration
of

peace

the

from

must

basically

come

industrial

and

agricul¬

than

energy

because they couldn't feed
"The Roman Empire

effective

them.

energies and

■

collapsed

of our

use

natural

our

at any time.

7 How

were

hurnail

4'and

present

• •

weapon" with

which

have

made

progress

kind

energy,

fore

of those who
us.

have gone

be¬

them have been
of

•

Similarly in the business field,
than

tude

peacetime, army

our

debt of grati¬

An address by Mr. Comer be¬
fore the Detroit Rotary
Club, De¬

troit, Mich., Sept. 29, 1948.

have

and

women

Yet, many
always been undernourished.

Millions

have

through

the

jority
of
hungry.

starved.

ages,

the

humans

Down

vast

have

ma¬

gone

7%., ,y/yy

"The

ancient

Assyrians.

Per-»>

sians, Egyptians and Greeks

were

less

Last January, Standard Oil Co.
millions, struggling unsuccess¬
fully to keep bare life in wretched (N. J.) assigned a group of en¬
bodies, have died young in misery gineers and economists to make a
and

world-wide

squalor.

"Then

tion

for six thousand

„

circumstances

The

be construed

offering of securities for sale,
offer to buy, any securities.
offer is made only by means of the Prospectus.

offer to buy,

or as a

solicitation of

as an

or as

and

other

men

tain facts have emerged from their

preliminary findings which
great interest to
The

straining backs-for six thousand
years—then suddenly, on only a

The

MONEY AT

\v3T;-/

%The American

System of Indi¬
Enterprise is the only eco¬
nomic1 set-up which
provides In¬
vestor, /Producer and Consumer
with freedom of

llffiftriunit?: AJri¬

der this

system, the instruments
production, the farm lands, fac¬
tories, machinery and railroads
are owned
directly by the people.
We
have
the
driving force of
of

9,000,000 separate enterprises.
of

these

work

customer.

for

Here

pushed the

United

States with

bidding of the humblest

boss, the
real
democr

the

sumption.

largest

total

Russia,

user,

the

even

man,

and

per

■ii

October 5, 1948 the

right

regard electric
tors.
running

share for 1,223,000 shares of Common Stock of

pany as set

its stock¬

[

#10

the Com¬

forth in its Prospectus dated October 5, 1948.

The First Boston Corporation has been
engaged

Company

organize security dealers

for shares of the

new

by the

obtain subscriptions

stock.

.-Xvw-':-;■ y.'y7-

Any member of the National Association of Securities
Dealers, Inc. may obtain a Prospectus and a copy of the

;

i Participating Dealers Agreement containing full information
| with respect to this ottering, the solicitation of
subscriptions
| and the compensation payable therefor by communicating
j with one of the following at the office of The First Boston

and

"We

toilets

William B.

Chappell
;| Eugene R. Hussey

100 Broadway, New York, N. Y.1 Federal Street, Boston, Mass.

S. Davidson Herron..... .525 William Penn

I; Richard M. Delafiekl.

Place, Pittsburgh, Pa,

have

porcelain
ne¬

back-

ern

today the
nuclear physicist is
taking over
and finding ways for
subduing to
human uses the infinitesimal
tinywithin

power

new

true

that

many of these
developments had their origih in

other

countries.
of

are

little

But

value

the

have

world

extending

inventions

the vast

outdistanced
and

the

progress

.Washington Bldg., Washington, D. C,

Just

what
this

has

been

has

world

has

ever

known?"—(Quo¬
tations from
"Mainspring".)

Dealer Manager
-

October 7, 1948

.■

-■

Factors Not Responsible

Perhaps
answer

the

rule

that

out

were

some

not

re¬

sponsible.
blessed

with

Yes,

America

natural

resources.

But

these

here

centuries ago, when the red

same

resources

Each

of energy in
these supplied

requirements;

our

water

accounted for the remain¬
<

the Standard Oil experts

point out

that

opinions vary greatly. But
say
that most authorities
agree
the application of atomic
power will come gradually, start¬
ing possibly in stationary power
plants and large ships.
they

roads

seem

to lie ahead in

were

the efficiency of our
they will do more
fuel, (2) applying
human effort and ingenu¬

Increasing
machines
work
more

Resources?..

Last

meeting the needs for energy: (1)

good way to find the

first

factors

source

Two

.The First Boston Corporation

of petro¬

use

tremendous.

On the subject of atomic power,

re¬

power

unprecedented

which

been

for the first time, petroleum
together, equalled

48%

transformed
a
hostile
wilderness into the most prosper¬
ous and advanced
country that the

has

less

ity in developing, and distributing
the available supplies.

Dieselization of railroads is an
example of greater ef¬

excellent

casts

cus¬

car,

vote

helps to determine which
business shall grow and give in¬

creasing employment, and on the
other
hand,
which
shall
be
weeded

cient,

out

as
unwanted,
out-of-date.

"'.MONEY
capital)

ineffi¬

AT WORK (American

has

with

ers

provided
tools,

work¬

our

better

ma¬

chinery, than the workers of

any

other country.

Our superior tools
equipment
produce
more

and

things
We

unit

per

have
or

human

found

that

effort.

inven¬

natural

amount

until

resource, does
much unless and

something is done about it,

to make

of it.

use

hundred

years ago it took
only $557 worth of capital to pro¬
the
tools,
machinery and
plant facilities used by a single

vide

American worker, He labored 70
hours a week for a bare existence'.

Today it takes 11 times

much

capital to privide these tools.
worker

His

puts

40 hours

hourly earnings, in

dollars

they

are

were a

times

The

week.

terms

high

century ago.

In terms

purchasing
power
(that
is,
goods), they are about 5% times
as
great.
Over this century the
gross value

uct has

of the worker's prod¬
in almost exact

increased

proportion to the

amount

ital

his

invested

from

the

New

of cap¬

job.

York

(Data

"Sun," Jan.

5, 1948.)
All

of this was made
possible
political and social structure

which
out

America.

der.

burst

Edward S. Croft, Jr.....

coal

the

benefits

discoveries

adequate
/

and natural gas,

quickly

Philadelphia, Pa.

Russ Bldg., San Francisco, Cal.

year,

in
y:

Expansion in the
leum

majority of people in all

Dennis H.

and
.
^

walks of life.
".

needed

volumes.

raising

plain' fact is that

for

where

ideas

new

standards of living unless and un¬
til something is done about them

sponsible

McCarthy

by the av¬
American.
y\;
Today there is no world-wide
shortage of potential energy re¬
sources.
The real problem is the
development of these resources
as rapidly as demand rises, and of
distributing
the
various
fuels

the

source

this

erage

anything that has gone be¬
-v N ;;■/"/
//. ■:'■ '■

"It

structure
a

much energy as is used

that it bids fair to

vast

dwarf

fore!

the

tapping

child

average

Africa, the average person uses
about 6 million B.t.u.'s each year.
That is less than one-fortieth as

the brawn of man—and

atom—

woman

basis,
the
higher. Every

British thermal unit, is the stand¬
ard
scale
for
measuring energy
in fuels.) '■'■// 3
.y•
In Asia, Oceania and most of

age
of power,
substituting
steam, electricity and gasoline for

ness

capita

per

about
250 million b.f.u's each year. Can¬
ada ranks second/ with 210 million
b.t.u's' per
capita.
(The
B.t.u.,

refrigera¬

from

country uses, on the

and

common

moved

231 Siuth LaSalle
Street, Chicago, 111.
David A. Field.......... Union Commerce
Bldg., Cleveland, O,
John K. Parker ........1616 Walnut Street,

win¬

granted

...

America
j.

take

tables,

lights,
water,

breaking drudgery into the mod¬

and

1 Corporation indicated;

America

rug's,, chairs,
chimneys for

cessities?

of record

refrigerator,

shirt

new

One

U. S. A. stands

baths

holders

with

only 11%.

floors,

The Columbia Gas System, Inc. is ottering

con¬

second

credited

was

erations—we

world

Every time

All

one

that

tion,

buys

not

45%

hovels, without window or
chimney; then, within a few gen¬

dows,

tomer
or

of machinery is far and
the world's greatest user of
energy.
Last year we accounted

"Why did families live for six
thousand years in caves and floor-

System,Inc.

its vast

array

less

Columbia Gas

world's

in action.

racy

for

to do the

they'use of

away

citizen?

here today.

rise

has

are

consumption of energy up almost
70% in the past 35 years.

their

small part of the earth's
surface,
the forces of nature are
harnessed

Subscription Offer

steady

machines

carry

energy—

present, and future.
This
study is still in process, but cer¬

years?

"Why did meri walk, and

survey

past,

suddenly, in one spot on
planet, people eat so abun-i
dantly that the pangs of hunger
are
forgotten.
"Why did men,'die of starva¬
this

goods
This is under

great intelligence.

we owe more

men

1 It

energy.

vidual

en¬

abled

great

strides

producing wanted goods—is

fices

sucn

such

—

it.

toy do this?

machinery,/Machinery
answerp Machinery y- and

Management in America .have

because famines

For 60 centuries this

the future

human

exclusively Amer¬

WORK—the driving force of free
enterprise,? individual
initiative,
or whatever.else
you want to call

resources

jn the Old World1
rfhey:-accomplishment ,y;of
iglobe has were /the rule rather than the; wonders beyond the invagination
that-we forget been inhabited by. human beings 'exception.''j of the rest of the Worid.;^/vv/y. ,
A few years
the past.
"Hunger has always been nor-1
It is much like ourselves. •, As Henry
ago William Green
Harry D. Comer
-Eveh to this day famines1 of .the A F of L pointed out that
well
to
re-1 Weaver1
(of General Motors) mal.
mind
o u rpoints out so clearly in his book, kill multitudes in China, India. one man with modern
machinery
selves frequently that there is a "Mainspring," people in the past Africa.
In the
1930s thousands can accomplish as much as
45,000
past—that it has an eternal bear¬ had just as strong desires to live upon thousands starved to death women could with their
spinning
ing on the future—and that our as we have now.
They had fully on the richest farmlands of the wheels two centuries ago.
nation's heritage is most precious as much physical strength as the Soviet Union.
;=N>. ;:;.'77y
'-£■
Physical Energy
—thanks to the efforts and sacri¬ average person today, and among
"Down through the
ages, count¬
-

and phys¬

augment

different

using

is! the

economic

J
able

machinery
an

atoms work better here than else¬
where? The "secret

than any other
people, anywhere,

about

process.

material

tion.;

will continue to be-the rule.

physical

talking

Other nations have
long had access to these.. Why do

say yes.

only

energy

ican

intelligent people, but in spite of other people?
Now we are on
their
fertile
lands, they were the right track. Whether or not
we have
never able to get
superior intelligence, the
enough to eati
They/ often killed their babies plain fact is that - we have made

of this great na? in famines.
The French were
dy-i
Only through our help can ing of hunger when Thomas Jef-i
the people of Europe and Asia re? ferson was President of the
United
As late as 1846 the Irishf
gain a-good measure of self-suf¬ States.
ficiency,
yyithqut • which; only were starving 7 to . death and noone
was
starvation, misery ;! and disorder
particularly ysurprised,

activities

tural

ical

use

labor is not

be flat¬

tered in this regard/and

about

are

Economic Energy

intellect?

we would like to

Diesels,

energy.

talk

harder
The

superior

total

People

work

ATOMS AT WORK.

average than we do.

Are"

nation's

When

energy

were

railroad consumption of en¬
ergy would be cut at least 50%.
Railroads now consume 11% of
the

elements.

work harder? No!

ican railroads
total

have

answer.

■/:

any

•

Russia,

and

China,

even

doubt, our<»>
young men working-people. Sixty-one million

mo¬

were

the atomic bomb. Said he: "The secret weapon with which But even if
true, this is
small part of the answer.
15 million of the finest young men this world has ever known.'!
Without

won was

things

elsewhere,

reserves

World

won

These

available

comprise every group and profession.
Points out need for new capital and
discouraging effecis of heavy taxation, and concludes money when put to work wants greater security
and greater freedom.

iron, coal, copper, alu¬
lead or other ma¬

terials.

it affects investors who

has

ficiency. It is estimated that if
80% of the locomotives on Amer¬

coun¬

supplies

minum, zinc,
are

Mr. Comer lays American progress not so much to natural resources and hard work but
putting money
to work in the form of capital applied to providing workers with better tools and more
machinery. Says
solution of problem of compensation to capital is toughest assignment confronting monetary authorities

vast

America

resources;

Thursday,-^October1, 7^. ;1948

roamed the land. Other

man

leaves

their

men

own

initiative, aided
WORK

the

remarkable

free

affairs.

work

Individual

MONEY AT
of. America's

root

accomplishment

-in

bettering the lot of her citizens.*'
The

Wages

How

Money

Work

Put

Money

Work:

First you have to get the
money.
The surest way to get it is to earn
it and to save it.
Thrift is more

than a homely virtue.
It is an
individual and national
necessity.
It is thrift that made
possible the

financing of our great enterprises.
Savings
provided
the
f u n d s
needed

buy

the

machinery

which enabled American
to do the grand job of

business

production

which

won

the

hope of winning the
Productive capital (that

the

war

and

now

only

peace.

money

is,

at work)

cannot

come

of thin

out

air. In order to have cap¬
ital people must refrain from
con¬
suming all that is produced.: - A
good illustration of- saving and
thereby forming capital is the

(Continued

page

57)

;

Volume 168 '-'Number 4740

(1425)

COMMERCIAL:FINANCIAL CHRONICLE.

THE

;

them-4 savings in our history, the gov-'
ernment's own figures show that
♦>***!*'* •"
exchange industry next;to nothing has been added

them.. They must speak for

selvesJ;}r,4).vv
The

With

America!

President, Association of Stock Exchange Firms

Partner, Cyrus J. Lawrence & Sons

reference

to recent

business

ment

Discouraging Government

must

"Wall Street" and says
recognize they create dangerous conditions. Urges
educational program by business and calls for revision of Securities
Exchange Act of 1934 and repeal of taxes hampering industrial

campaign strictures

(

not

Restrictions

Wall

for

Street is Main

gathering—usually of highly

Street. It

tisan

com-

par¬

individuals?

With our modern methods of
prises
all
those
frugal, communication—our modern press
successful accurately and efficiently report¬
Ame r i c a n s ing the news (and you may be
who
believe sure the pronouncements of candi¬
in the Ameridates for the highest office in the
land are news)—a set of condi¬
can way of

life.

It :

Homer A. Vilas
stockholders of

tions has been created which

half

million

only

the

world

sure

campaign

lions

course

insurance

policyholders.

Wall Street is America.
am

gluttons

honor

the

Stock

Boston

Ex¬

change and its members who have
made

the

such 'fine

contributions

progress

moral

England's

New

material

and

welfare

and

to honor the NevV York Stock Ex¬

change and its members who, by
circumstances, have made similar
contributions to the - nation ^and,
indeed, the world. I am just as
certain that you are as glad as we
are to acknowledge the designa¬
tions

which

upon

have

been

bestowed

by those self-appointed,
heirs to the leader¬

self-anointed

ship of American political life. We
have

alter

the

of the United States in its

excellent company.

Business, in all its aspects, must
recognize that modern political
campaigns—American as they are,
and understood as they are by the
voters—do create

some dangerous
conditions,
internationally
and
domestically. .Effective
methods

must be

developed and utilized to

counteract that misunderstanding.

the

must

government.

the peace. Together

with govern¬
ment, working in unity; they have

will

take

face

these

political campaigns change
very few votes; yet these
cam¬
paigns each four years become
and

The

men

elaborate.

America

made

•,

create disunity,
the faint hope that they

sure,

influence the decisions of
the citizens. And they know that
may

they

cannot

answered

effec¬

tively by their methods—for how
many

enough

citizens

would

emotionally

the

tinue

for

the

largest

functions

its

perform

J. C. Bradford Absobs

Nashville Securities

■

WBW—■

■

J. Osborn Wood to

liquid

bonds.

v-:7: r.~/

TENN.

that

announce

Oct. 1, 1948,

most

consideration,

as.

sonnel of Nashville

Securities Co.

with their own.

Firm Name

Changed to

Marxer,Jones & Co.

Open

DETROIT, MICH.
Marxer

name

scot Building,

Stock

troit

changed

added

The firm

—

Co.,

their

Exchange

has

Marnell

the

firm's staff. '

has

iHI

responsibilities,

full

Pennsylvania Railroad

stirred

come

Equipment Trust, Series U
2V2% Equipment Trust
Dated

July 1, 1948.

•' ■

./..■:.

Certificates

each July 1 from 1949 to 1963

Philadelphia Plan

MATURITIES AND YIELDS
1949

1.55%

1954

2.30%

1959

2.575%

1.75

1955

2.375

1960

2.60

century.

1950

1.90

1956

2.45

1961

2.625

history has there
improvement in the
standard of living crowded into
so short a period.

1951

2.05

1957

2.50

1962

2.65

1952

2.20

1958

2.55

1963

2.65

1953

will

mark

nearing the half century

Never

been

the

twentieth

all

such

The

story of business must

mand— in the

schools, in the col¬

leges, to all the public—in
The

are

busy

truth
so

American

at their

must

own

it.

become'

must

not

us,

are

depend

articulate.

entirely

great organizations to

when,

and if issued and

Commerce Commission.

Salomon Bros. &

Hutzler

simply

Drexel & Co.

words, business

offered subject to prior sale,

subject to approval of the Interstate

un¬

jobs. The

presented

other

received by

people

they will have the time to ab¬

sorb

These certificates

a way

that will create the desire to
derstand.

•>

told by all the means at our com¬

through all available media. They

ciation of Stock Exchange Firms,

Maturing $645,000

Issued under the

/ r,v

the United States today. Soon we

meeting of Members of
Boston Stock Exchange and Asso¬
dinner

,':/}■

(Final Installment). -v

White, Weld & Co.

upon

speak for

October 7,1918.'

Penob¬

members of the De¬

to Marxer, Jones

James

;

and I know, do not last long.

has been merged

has done. Businessmen who do.not

the business and peri

,675,000

always

Street,

York Stock

members of the New

Exchange,

J.. ',C,

—

Bradford & Co., 418 Union

NEW ISSUE'- £•'.

Businessmen must tell their story

in the

—

with honesty of purpose, and with
the
national
welfare
the. fore¬

must

Boston,-Mass./ Sept.

;

NASHVILLE,

delphia Stock Exchange,
sales department.

by life insurance companies.
Where is business to get its funds

despite

1948

Beach Hotel.

& Hutzler.

ness

(Hollywood, Fla.)
Associatio:
convention at the Holly woo
5-10, 1948

Investment Bankers

influ¬

world

by Mr. Vilas before

*An address

Dec.

Stearns & Co., 1 Wall
Street, New York City, members
of the New York Stock Exchange,
announce that L. Eugene Marx is
now
associated with the firm as
Bear,

for good'which it is today.'
be sure, business must con¬

ence

who make these care¬

less statements which to some ex¬

tent,

later.

Adds

is mounting evidence of
misconceptions of how the
actually works.,
find in talking to young men

value. It has
rather definite that

their

them,at
come

public

egates coming from NSTA Con|
vention—details to be announced

try's progress, as they are doing Chas. Taggart & Co.
today, v. Industry
and commerce
Three to Sales Department
cannot long continue to be fi¬
PHILADELPHIA, PA.—Herbert
nanced by indebtedness. This is
not the place to regale you with J. Mathias, Arthur Edward Stange
facts and figures. The banking and Charles A. Taggart, Jr. have
authorities are frightened by the become associated with Charles
increase in bank loans in the last A. Taggart & Co., Inc., 1500 Wal-.
year in only the principal cities. nut Street, members of the Phila¬

why,

Orleans

New

Eugene Marx Joins
Bear, Stearns & Co.

They express concern over the in¬
crease in long-term loans to busi¬

(New Orleans, La.) ?
Security Traders
entertainment for del¬

Nov. 18, 1948

disagrees/ with , that. But taxes
must not interfere with the coun¬

Traders AssO*

ciation Convention.

what's

tell

•1

has come to accept
campaigns every
four I
years as one of the phenomena of and women who have had the ad¬
a great democratic republic. I say
vantage of good schooling both a
"everyone" with reservations. I distorted view of and lack of con¬
should
say
almost everyone in fidence in the future of our econ¬
this country has come to recog¬ omy. The greatest virtue of our
nize campaigns for what they are. society is the freedom of criticism,
I am reasonably certain that those and the right to be wrong, but to
things are said by candidates who hear some of the critics one would
that miners
still
worked
have their tongues in their cheeks. think
I, am reasonably certain that few long hours for a mere pittance and
but the crackpots believe
these that the conditions existing in the
statements. They are made under English textile mills were repre¬
sentative of working conditions in
the mistaken opinion, I am sure,

gullible

that

Taxes Co-Manager of its Municipal Bond
Department.
Mr. Marx was for¬
No one merly a partner in Salomon Bros.

business economy

Everyone

wrong

now

Tex.)

14-18, 1948 (Dallas,

National Security

gross

political

that

Nov.

for so long about
with America. It's

country.

There

Campaigns

Political

to the Convention.

adequate for the proper
of.

conduct

this

become ar¬

Association

industrial and commercial

progress

Chicago
of NSTA
passing through Chicago on way

Luncheon for members

individu¬

right with America.

channels

proper

1948 (Chicago, HI.)
Traders Club of

Bond

accel¬

expansion,-if sound companies'
stocks sell at prices to yield 7 and j ■: KNOXV1LLE, TENN. — J. Os¬
Responsibilities of Business ;:
born Wood, formerly an officer
8%
and even■<more, /and every
American / industry,
of
Jack * M.
Bass
&. Co.,1 will
commerce
time
a
company
announces
its
and finance have done a wonder¬
intention to finance through sale shortly form his own. investment
ful job in history. They did it in
of additional common stock', the firnrf, it is understood, to conduct
the
war.
They are doing * it, in
a general securities business spe¬
stock takes a nose dive? Some¬
this cold war. They will do it in
body in authority -could find out cializing in Tennessee . municipal

you

can¬

current

the

not

through

capital

attitude toward world peace.

proud to be one of these
—
one of those puppets,
among
other
characterizations,
who has made a contribution, in¬
finitesimal as it may be, to the
progress of our country—to the
marvelous methods of production
—to the wonderful spiritual, moral
and social well-being of our coun¬
try—the wonder that is America.
We are gathered here tonight

that

would

what's

risk

and

investment

Nov. 13,

much

time

of course, as all busi¬

flow

the

point out that
our
great United States
Senators felt it necessary to as¬

coroprate enterprises. It comprises

are,

must be

must

itself.

business

Gentlemen, we have been hear¬

ing

is, restricted by the inequit¬
able tax laws which are stifling

necessary

millions of bank depositors—mil¬
of

ally and collectively

and

legitimate

business

ticulate.

ness

one

than

Business

erated..

normal progress.

not go unchallenged. To show that
this
has
been
recognized it is

millions

and
Of

com¬

prises millions
of individuals,
partnerships

which

better

party

Traders

Security

Club of St. Louis'.

has used to do

the

experience of 14 years. They must
be revised to permit business to
function in the real public in¬
terest,

(St. Louis, Mo.)
Tentative date for annual elec¬

Oct. 11, 1948
tion

The effective ways which

behind which seemed to
Mr. Chairman, my fellow Wall Streeters—my fellow gluttons of
be to punish an entire industry
privilege—my fellow puppets of big business—my fellow. Americans.
for its part in the debacle of 1929,
You will, I am sure, be happily willing to join with me in acknowl¬
rather than to correct its faults
edging that we are Wall Streeters.
Personally, I am proud of it.
I so that it. could function ade¬
am
compli-<$>
quately and properly. Those laws,
mented to be
the thousands to hear a business¬
as well as many others, should be
branded
a
man defend the position in which
reviewed now in the light of the
—

Meeting.

themselves—

concern

only the financial community.

them

restrictions - by government. We
are still operating under the emo¬

he has been placed by statements
made
at
an
hysterical political

Securities

business methods. No one can tell

theory

Streeter

(Pinehurst, N. C.)
Dealers of the Caro-

Oct. 8, 1948

linas Annual

Public opinion must be made to
the virtues of American

We, like you of other industries,
confronted with discouraging

tionally drafted laws of 1934,

must

Field

Investment

realize

are

and commercial progress.

Wall

EVENTS

with which business and govern¬

in this direction.

progress

Speaking to members of Boston Stock Exchange, Mr. Vilas makes
„

CO MING

remiss in
should and

entirely

been

not

By HOMER A. VILAS*

A\,',

stock

individuals to their holdings
of corporate, securities. What will
this respect.
But it
happen when business can no
can do more to create a better un¬
derstanding of its services to the longer sell debt securities and the
institutions- warrt
the
economy
of -the nation. And it financial
can improve those services.
I am ratio of debt to net worth re¬
duced?
It .is a
serious problem
proud to tell you we are making

has

Union Securities Corporation
Stroud & Company
Incorporated

been

& Co.

been

(1426)

THE

COMMERCIAL &

FINANCIAL

CHRONICLE

The ITO—A United States
Viewpoint

Securities Salesman's Corner

By ELVIN II. KILLHEFFER*

E. I. du

By JOHN DUTTON
You
was

have

few of

heard

waste

about

time

them.

Delegate

people who were so opinionated that it
with them—maybe you even know
along and study human nature it doesn't

take long for us to understand
known "type categories."
Some

that
are

people

fall

into

generous, tolerant

certain
of

the

and

negotiated and reexplored.

investors

like the

can

one

ever

about anything.
Some
going to tell you about now.

wrong

The idea of

do you think of a fellow who
calls himself an^investor
yet during the past 20 years has never sold a
security if he had to
take a loss?
The only time he ever sold
anything was if it showed
a profit.
He has a collection of several
hundred odds and ends of
every kind and description which he has
picked up
and

this

"crazy quilt" he calls his portfolio.

Once in
a

while he makes

profit)

shake him
well

for
to

loose

from

his

meaning salesmen
certain

trade

security

dubious

have

pointed

out

several

him

that

"Now, there is

)

indicates that
vince
in

his

him

should

that

first

all

have

outlook

has

too

safe

many

individual

structive

useful

tional

most

being in¬
the

British loan of 1945.
the British

number

now

tial

sug¬

Havana

Conference

pacity of

the

six

"The
an

this

from

Employees With
Almost

Dinner

the

Office of United

Not

1,100 of the 1,263

and* women

the

staff

men

Chase National Bank
with 25
more

of service

years

the

attended

or
a

dinner and
entertainment in their
honor in the
grand ballroom of
the
Waldorf-Astoria Hotel Oct.
6,
1948.
Arthur W.
McCain, Pres¬
ident of
Chase, was host and prin¬
cipal speaker.
This year's

•(

total

1,263

vet¬

erans,

representing almost 15% of
the entire Chase
organization, in¬
cludes 158 who
reached their 25th
service
anniversary this year.

Common at 17
1

■

have

covering

prepared
a

proposed

liquidation of $85 a
dividends on the $5
With
a

new

plan
share

analysis
for

Lake

$12

dividend

the

near

.share

this
seem

future.

worthy

your

mat¬

en¬

test

of the first magni¬
tude and requires a staff about
equally divided between lawyers
and clairvoyants.
Will

Clayton,

Department
himself

speaking for the
State, qualified

master of understate¬

ment

Bank, Paris; J. Edward
Healy, Jr.,
Vice-President in charge of the
branches

the

Canal

Zone and

lian E.

Panama, and Miss Lil¬
Gray, of the Panama staff;

Lawrence

representative
five

C.
at

Freer,
San

members

Chase

bank's

complicated and difficult.
It

is' all of that and

more.

Ne¬

•'

private
in

"■

initiative

world

,4'

necessity

•

placed

Request

of reliance

and

free

competitive

world

enter¬

recovery.

our freedom of action
in regard to domestic policies.

""The present Havana Charter is
not
consistent with these
prin¬

ciples,
and
the
United
States
should withhold acceptance of
this
Charter and seek
renegotiation."

Obviously, then, I do
the

Havana

shigh

think

not

Charter achieves

standard

necessary

the

com¬

mand general adherence.

mentioned

ambiguities

A. G.Woglom & Co.
Incorporated
53 State

LAfayette

St., Boston 9, Mass.

3-8344

Tel. BS 189

before

KINNEY-COASTAL

address
the

by Dr.

Fourth

Killheffer

Plenary Meet¬

OIL

& M. CO.

COMPANY

OIL & GAS CO.

B. E.

Simpson & Company
California
Building, Denver 2, Colorado

3101

now

most

appraising is

important

treaties

ever

moment

which

later

the

ago

will

con¬

negotiated

well advised to know

are

what it contains before our
gov¬
ernments ratify it.
Does it imple¬
ment the noble objectives?
Do we
agree with its

obligations
and

imposes equitable
they acceptable?
Do we

are

want
Do

principles? Are the

super-state
want

The

of any kind?
planned economy?

United

States

Chamber

resolution, from which
that

says

ference
What

not

quoted,

want

inter-*'

domestic

our

heard

affairs1.

Havana

from

delegates would indicate that
of Latin America, do not

your

you,

welcome interference by a
super¬
anymore than we do.

International

Foreign

Authority

Trade

Over

Panacea?

Underlying the idea of
authority to

ternational

in¬

govern

duced

perhaps

reducing
the

even

forced

abolishing tariff and
restrictions, is a panacea for

other

world's

ills.

There :was

genuine meeting of minds
fact

issue

this,

the

disagreement on this
seriously
threatened
the

good relations between the Amer¬
ican States dt Havana.
Trade
tween

between

nations,

persons,

be¬

and

necessary

desirable for the purpose of satis¬
fying needs or wants.
Trade is
the mechanism through which we

exchange
wants,
To

most

way

are

of satisfying

ways

the

which

goods. But there

our

additional

important

produce

the

of thinking,

goods.

produc¬

important,

our

that

attempt to induce or force trade"
by requiring abolition of neces¬
defensive devices required to

sary

protect

induce efficient produc¬

correspond

with

verbally at Havana.
how

this

could

those

stated

You may ask

happen?

Were

cause

there

was

can
be no trade.
If effi¬
cient production is increased, con¬

sumption

other.
arose

out-

tion is p utti ng

horse.

be¬

genuine meet¬

isn't

contract. That there

either

genu¬

meeting of minds is amply at¬
tested by a mere reading of the

.Charter.

there

had

increase

the cart before the1

Actually much of what is

today called trade is not

pay

ine

will

both. Stimu¬
lation of trade instead of produc-'

ing of minds which, as you know,
is a first requirement of any valid
was

likewise

and trade facilitates

But

consumed in

each

there

trade

unless

in fact.'

nations

can;

for the imports they receive
in

money

Inability to
ficient

pay

production,

been

other goods.'

stems from insuf¬
which

has

Bell

Teletype DN 157

meeting of minds on the prin¬
ciples, it, would/not have been

two-fold effect.

necessary to write
almost
all, if not

DRILLING COMPANY

Established 1929

Telephone KEystone

and

the
or

tion is the

not

"An

CRESSON CONS. GOLD M.

one

tracts

Super-State

are

No Genuine Meeting of Minds

basically, this situation

KUTZ CANON

interpreted by the international
tion, is wrong in principle.
f '
bureaucracy which is to be ITO.
unnecessarily ambiguous through¬
Production precedes trade.
In
The interpretations
may not satis¬
out.
To say that, is not only to
fy anyone and most likely will 'fact, unless there ;is production,

PRIMARY TRADING MARKETS

ITO and

What

terfere with

maneuvering

MACKINNIE OIL

consulative and advisory
body.

trade is the theory that
constantly
increasing international trade in¬

•

unon

Analysis

larly if the organization would ad¬
here to the
original ideas of a

com¬

should

likely

nounced as the purpose of the or¬
ganization. Indeed there has been
general approval of these, particu¬

pos¬

Outgoing Registered Mail Depart¬ ing of the Inter-American Coun¬ the delegates not clever men?
cil of Commerce and
Production, Yes, perhaps too
ment also were in
clever, so that
attendance.
Chicago, 111., Sept. 22, 1948. "
much time was

year

investigation.

such

"The
declarations
further
should preclude any activities
by
the organization which would in¬

cessarily complex, its language is

Francisco.
the

when he said: "The Charter

•

about

long and detailed and technical."

bank's

preferred stock.

payments

-Here from distant
points to at¬
tend the dinner were
Edward G.
Krieger, Manager of The Chase

Both issues
appear undervalued and
are

ter, article by article. As
of fact, to do so i£

ter

ap¬

proximate
in

commerce.

prise to release the regenerative
forces
which
alone
can
bring

may

outside

enterprise

the-

state

organization must provide

the

Suc¬

government have had the patience
the time to
analyze the Char--

durance

inter¬

constituting

the

earnings currently
running at
of
nearly $1.00 " per share,
month, the common should

and

women

charter

private

Nations.

accrued

rate

per

the

among

January.

All

$5 Preferred at 70

Miss Bernhardina
Jehli, who will
complete 39 years of service
next

and

Maine Central R. R.

service

people

many

affecting

Annexes

Copies

Tompkins, Assistant Cashier, who

completed 49 years last
July, and
Samuel
Rosinko^ of the Purchas¬
ing Department, who
completes
his 49th year in
January. Longest

matters

"Stress

records among
by Charles H.

International Trade

longer talking about

lofty and somewhat nebulous gen¬
objectives
originally
an¬

Chamber,

merce.

doc¬

Charter

national trade and

ca¬

for

Resolutions.

obtained

States

which

;and

Charter

appended

the

that in dis¬

you

Havana

eral

itive declarations in behalf of the

organization

are

and

with

by the annual meeting

United

various

consisting of nine chap¬
containing 106 articles.
To

this

prin¬

Organization to provide for col¬
laboration, consultation and ne¬
gotiation among the nations on

ument

held

the

,•

ters

fairly substan¬

particularly

jectives of

adviser.

Havana

agreement

maintenance
The

foundation.

I quote:
Chamber of Commerce of
the United States
supports the ob¬

The Charter

proposed

Such

"The

member

the

Trade

belief.

solid

agree

from

lead¬

attended the
as

U. S. delegation in

Manufac¬

keystone in that foun¬

resolution

and

this^year. Nominated

Ur&ted States, I

the

Na¬

Foreign

same

area

for

by the^ChamberVof Commerce of

of the

the

ciples and the procedures for their
implementation.

ing finally to the Conference at
Havana and the signing of a pro¬
posed
Charter
for
an
Interna¬
tional
Trade
Organization,
on
March 24 of

the

dation should

under¬

of revisions

National

built

The proposals have

con¬

organization, to endure, must

Employment."
gone

business

such

Association

Certainly

Government, perhaps

principle these
gestions entitled, "Proposals
Expansion, of World Trade

performing highly
Representative

States,

expressed
an

At that time

are

merce

influenced somewhat by the
loan,
endorsed

International

Council and the Chamber of Com¬
of the United States have

re¬

set of pro¬
with
the

connection

May I remind
cussing

amicable

functions.

turers,

State, when it made

cess

are

force

United

have

itiated by
Department

States

posals

MAYHEM!

men

re¬

and

cartels

economies which require controls

;

that

associations

cent

H. Killheffer

United

j.-

the

fosters

of trade.

interpreta¬
to

Trade Organization can
at¬

the
Dr. E.

(especially
securities), be sure to call him on the
telephone some day
4nd ask him what he thinks
of a certain
stock—then listen
while he tells what
patiently
you already
know, and thank him.
But what¬
ever you do, don't
try to tell him how to
rearrange his investment
portfolio, or to sell any securities if
they show a loss,
The moral of this story is, of course, that you not
such a horse to
only cannot lead
water, and cannot make him
to make him think
drink, but you have
he is
leading you. The woods are full of"
Kinds of peculiar
all
people.
In order to sell
securities, the same as
anything else, you must first of all
know your
as
prospect as well
your
merchandise.
Frankly, I'd like to see any
down with this
theorist vsit
fellow's portfolio and
start to tell him
with it.
what is
This would be one
wrong
time that the SEC
would have to send
its flying squadron
around to help
protect the fellow who
I
tried u
FROM

longest service

believe

ternationally,

situations

not

for

been made in¬

knows

The

lead

ideas

one.But from the
of
salesmanship that obtains business such an
approach
this man's
problems will not work.. ; ~
In other
respects this investor is
quite intelligent.
He con¬
ducts his business in an able
manner, he is thorough as to detail
Concerning his records, etc. But DON'T ARGUE
WITH HIM,
he says, "The
If
Democrats saved
America," alright let it be that
Way.
If he says, "Most women
don't know how to
keep house,"
<•). K. on that too.
If he
says, "The president of that
company is a
itrook," so be it.
If he called
you one day and told
you to buy a
very speculative stock and a
year and a half later
the company
"IVent out of business, DON'T
EVER MENTION IT.
If you know
that HE KNOWS a lot
less than he
thinks/he

Chase Bank Honors

will

tempts to im¬
plement these

standpoint

fact

relations but to strife and disillu¬
sionment.
.1.
;

obvious

Several

deposit box to ever begin to
supervise them properly,
as we all know, no investment can be
bought and put away
without constant
review, especially in these changing times.
If losses should be taken
Again,
(and there is no way under
the sun to
escape them) certainly the smaller
loss is nearly
always less pain¬
ful than what sometimes
becomes a very large

tions

everyone.

^.lso,

dbout

would

benefit

Sound investment
procedure
to reach this man
and con¬

able

state

susceptible of several

ethical

trade,

changed, from one that was
promising
and the only thanks that
they got for their

point to all this.

pregnant with future difficulties.
Provisions' so
written
as
to
be

conduct

had

someone

also

the

that was not,
trouble was a rather curt retort that
things looked all right and if
lie decided to sell he'd let
them (know.
There is no doubt about
the fact that
prudent selling would have eliminated
many a poten¬
tial loss.
one

but

11 y accept¬
able rules for

occasions

the

and

criticize

univer-

years,

keeps on buying.
(if what he sells shows
On

monopolies.

genera !<$•

and

dynamite itself couldn't

treasures.

world

switch

otherwise it stays in the box and

organization to provide a forum for discussion of
problems com¬
mon to all nations
engaged in international trade, is not new in the United States.
It has
long been recognized that an exchange of views, plus a will to
cooperate in forming a set
of

are

What

during the

Company, Inc.

Holds Charter places greatest burden
v

just

admit that he

Nemours &

world planned economy, and advocates whole matter of
regulation of international trade be

well

ideas

others, patient with new suggestions, and all the rest.
Quite
often, however, we run into that obstinate kind of man
who

won't

Pont de

to Havana

Conference, which drew up Charter for International Trade Organization, denounces
it as impractical and complicated and as
giving lip service to private initiative and enterprise, while
providing for spread of socialistic doctrines. -Says Charter would set
up an international bureaucracy

argue

Thursday, October 7, 1948

supply needs at the very moment

exceptions to
all, of them.
the attempt
to

Bluntly

stated,

reconcile

the irreconcilable

failure.

was

incompatible

when

not
to

normal

with

managed

demand

duced

Removal of restrictions to trade
is ;

normal

f may be

It creates
for

imports

enough goods

exchange for

imports.

Such

ab¬

are
even

pro¬

the

situation

profitable for banking and

(Continued

page

47)

Volume

168

COMMERCIAL

THE

Number 4740

steel

industry in general, and the

Corporation in par¬

ticular, is very much like a custom- tailor.

of the

Every order of steel is just
I

measure,

for its

tion,

And its sale is

taste

particular

shape and size,
just

are

in composi-

the clothes
to

go or more

of them has its

requirements and seasonal peaks of de-

mand. These industries, in turn,

such

unpredictable variables

depend

the weather,

foreign relations, the general national

fill

picture, and

most

widely fluctuating buying habits

public.
industry, the buyer calls the

And whether the

urgent or not,
orders

is fast

tune

the steel-maker
to

must

slow,

be ready

exacting requirements

Constantly striving to find
to

cope

duction

the

Tl»

ways

and

means

with this problem, and to keep
rolling at

a more even pace,

pro¬

one

important activities of the industrial

family that serves the nation
Steel.

United States Steel

UNI

the

Yes, in the steel
tune.

different steel-conone

short notice.

our

we wear.

the needs and

consumer.

suming industries. Each
own

much made to

use,

subject

of the individual

There

(1427)

and international economic

of all,

United States Steel

CHRONICLE

FINANCIAL

...

United, States

Corporation Subsidiaries

„

(1428)

THE

COMMERCIAL

FINANCIAL

CHRONICLE

Newburger Inaugurates

;

Thursday, October 7, 1948

has been negotiating with the
Export-Import Bank and the Inter¬
national Bank for loans.
1;
It is anticipated that, as the construction
program becomes fur¬
ther advanced,
,

"Visualization" Plan
PHILADELPHIA, PA.

operating economies will be achieved which, with
increased revenues, will be reflected in improved
earnings. Net oper¬
ating revenues for the first six months of 1948 were about 5% better

New-

—

burger & Co., 1342 Walnut^ Street,
members

the

Philadelphia
hats

started

New

Stock

York

and

display of the lat¬
products of companies whose

est

are

listed

the stock

ex¬

change since the firm believes
stockholder

should

know

the

some¬

thing of what stands back of the
stock

first

certificate

The

owns.

exhibit

lobby

by the firm in its
the Ritz Carlton Hotel

is of Philco

Corporation products.

Products of other companies will

follow later

on.

than last year.

American &

Exchanges,

Foreign Power

Judge John D. Clifford, Jr., of the U. S. District Court in Maine
recently approved the latest recapitalization plan of American &
Foreign Power, approved early this year by the SEC but
strenuously
opposed by a committee representing the second
preferred stock¬

reciting the history of American & Foreign Power and of
proceeding before the SEC, Judge Clifford in his

Plan of

$7
$6

Security Holder—

(public)-—

preferred

(public)

2nd

Bond

,1;^

Salomon Brothers

case

Share
values
the

In setting

119.00

123.00

15.00

18.00

0.60

$65

"packages" of

and

$58

1944

Equips.

Salomon Bros. & Hutzler heads
an

underwriting group which is
offering a new issue of $9,675,000
Pennsylvania RR. Equipment
Trust

Series

1xk%

equipment
certificates, maturing from
July 1, 1949 to 1963. ; The cer¬
tificates
are
issued
under
the
Philadelphia plan and are priced
to yield
1.55% to 2.65%. 'They
trust

being offered subject to

are

Salomon

offering

Bros.
are

Securities

Hutzler

the

Drexei & Co., Union

Corp., White,

Weld

Co. and Stroud &
Co., Inc.

Kepler With

Dfempsey-Tegeler
(Special

The

Financial

Chronicle)

LOS ANGELES, CAL.—Donald
M.

Kepler has become associated

with

Dempsey-Tegeler

West

Seventh

formerly
lands,

manager

Cal.,

& Co., 210

Street.

office

of
of

was

plan and $15 in the 1947-48 plans.

disparity between these assigned

restrict

nonessential

imports severely have continued

supply

0.30

$58

receives

about
1

common

only
$8.1

for

by their construction programs,

But

such

values

new

low

with

while

85% this year) it

rate

seems

obvious that

its
the

millions

findings

:'n

for

the

proposed

of 15 for the

common

securities

(they have been
large junior issue,

selling

might be
Foreign Power Deb. 41/4S.

stock also

seems

somewhat

the high side. While pro forma
earnings have been around the $2
level, foreign exchange conditions are somewhat unfavorable and
the operating companies need cash for construction
programs. Under

First National Bank of Boston

of Government and

In the current

lays it in large part to lending role
program for farm products.

price

issue of the "New

England Letter," published by
Boston, the Administration's policy of
fighting inflation is brought to task, and data is furnished which indi¬
the

First

National

Bank

cates rise in prices since end of the

liberal, loans

farm

and

Letter":

The rise in prices since the end
of the war, however, cannot be
attributed
to

nor

the

money

supply

operations.

bank

struction materials, since
May, 1947, to supplement retained cash and
proceeds of local

financing. New property additions from Jan. 1, 1945

30, 1948 totaled approximately $81,000,000, and

the

Red-

subsidiaries

Cali¬

programs necessitated

are

electric energy.

still

actively

engaged

large-scale

many

of the

construction

by the continuous increase in the demand for

In order to obtain additional funds, the company has

is due to the Government's

war

supports

Says the "New England

program.

Since

est

charges constitute such

small

proportion of total operating costs
that any further increase in rates'

would not be much of

influence
ers

restrictive

prospective borrow¬

long

there

are

oppor¬

1945, total loans and investments tunities
of

member

banks

have

declined

by 11%, while the total money
supply has also declined during
period, as shown by the ac¬
companying chart.
On the other
the; Value hand, factory payrolls and whole¬
of the old securities would work out
aslfollows: $7 preferred, $98; sale prices have chased each other
$6 preferred, $85; 2nd preferred, $4; common stock, 20 cents.
sharply upward.
Prices and pay¬
While American & Foreign Power
(parent company) as of rolls during this period increased
March 31 still had a comfortable cash
than
50%.
.That
there
position, the company has had more
to make net advances of
$18,000,000 to subsidiaries, mainly for con¬ should be such a close link be¬
these conditions it is difficult to forecast
just what the dividend pol¬
icy would be on the new stock. Iif the absence of any assurance on
this point,At would seem safer to estimate the value
of the new com¬
mon around 10, or about five tirhes?
earnings. On this basis

to June

change in

Says Postwar Price Rise Not Due to
Money Supply or Bank Operations

not realistic.

Seaboard income 4M>s sell at
Erie 4V2S are 69 versus 83 for

American

(!nd

72, compared with 100 for the 1st 4s.
the 3yss. SUiPaul 41/2S,sell at 73 compared with 101 for
the 1st 4s.
On the basis of these
comparisons a market price around 70
The price

new

be made of current
prices for senior bonds and debentures of recently
reorganized railroads. Thus St. Louis San Francisco 4V2S are

estimated

different, would not require
to the fairness of the plan.

interest rate, would sell at lower levels.
In order to
practical idea of probable market value, comparison may

at 61, compared with 85 for the 1st 4s.

amount is somewhat

stock

some

reserving jurisdiction, the SEC has indicated that the sale of
approximately similar terms, even if the interest

these debentures on

lower

obtain

by sale of $35,000,000
existing mar¬
prove feasible. However,

3V2S to a group of insurance
companies, but under
ket conditions this exact deal
may no longer

are

before the end of the year) there has been some
conjecture regarding
the provision that the $50,000,000 debenture 5s
(now around 93%)
shall be
redeemed, presumably at the call price of 107%. Partial
funds for such retirement were to be
raised

it is obvious from the

values for the

Referring again to the reorganization plan (which in the absence
appeal to a higher court might be expected to become effective

selling around 93xk

First

fornia Co.

and the market prices for the
old. that
With the present debenture 5s

ap¬

proval of the Interstate Commerce
Commission.
Associated
with

in Latin

situation

necessary

the estimated package values, the new debenture
par, and the new common stock at $30 in the

were

wide

Hufzler Offers

the foreign exchange

years

new

\ 70

6.00"

cash, debentures and new
stocks, and common stock

3V2S

valued

Price

113.00

$6 preferred
preferred and common.
Electric Bond and Share
debentures and 67 % .of the new common
stock.
,

yiH—Vot;

$142.00

(millions)

for

Plan

22,'47

$133.00

(public).
(public)

and

*Total
the

Final

of May

$115.00

preferred

Common

thought that the exchange might
adopt the idea on a nationwide

Recent

Amended Plan

Oct. 26.'44

preferred

interest, comments, etc., with the

...

two

local currency balances have not accumulated.

points out the salient features of the three
plans. Using a
"money equivalent" for purposes of
comparison, he shows the follow¬
ing values as assigned to the different
security holders (a fourth
column has been added
showing recent market values):

which

scale.

last

the simplification

holders.

Indicated Dollar Values*

Newburger
relating to

the

decision

has- requested
& Co. to keep records

America has deteriorated and some
exchange rates were reduced in
1948. However, some of the countries which have found it

exchange for the remittance of reasonable earnings on foreign capital.
Because of this fact, and because of the
unusually heavy cash require¬
ments of the subsidiaries occasioned

The plan has been approved
by
the New
York
Stock
Exchange

Penn. RR.

;'V

this

tween these two items in

period

of making profits.
This
does not mean, however, that the
expansion of bank loans, when
industrial production is bumping

the

Veiling, is

not

factor to inflation.

contributing
is, and the

banking fraternity has launched a
voluntary program to curtail un¬
wise

expansion

adopt

credit

and

cautious and critical

a more

attitude

toward

speculative

and

non-productive

loans.
Nor'; do
object to the steps
taken by the fiscal authorities to
impose reasonable restraints on
most

bankers

relatively low labor productiv¬
ity is understandable, since wages
directly and indirectly account for bank lending.
about 90% of total manufacturing
The battle
costs.

Retail

food

prices

since

not

won

January, 1946, have advanced by attacks

54% and food accounts for at least
40% of the average family budget.
Yet

top

rarely

the

factors

that

predominate in the postwar rise in
the cost of

Street
the

session
rise

last

July

the

cost

living. Instead, a bar¬
spending
of verbiage is hurled at Wall

rage

and

the

bankers

villains

chief

bank credit while pur¬

suing confused and contradictory
policies in other lines.
Although
officials
Congress was called into special

government

refer

against inflation can¬
by concentrating the

being

combat

living,

the
the

money

was

urged for a vast array of projects
total
cost
of; which
would

the

fanning the aggravate the
very condition our
What are the
legislators were asked to correct.
The stock market, which is
;
While .the- government is at¬
supposed to symbolize Wall
tempting to stiffen the terms for
Street, has shown the least evi¬
private borrowings, at the same
dence of inflatiop.
Brokers' loans
time it is maintaining an easy
have declined 73% from the 1945
flames of inflation.

BANK

facts?

SECURITIES

Industrial stock prices are
of the 1929 peak.
Divi¬

peak.

but 47%

dends paid to stockholders consti¬
tute but one half as much of na¬

BONDS

tional income

Despite
taken

the

they did in 1929.

that

advance

place,, bank

loans

21% of national income

CORPORATE

STATE

48% in 1929.

MUNICIPAL

paid
half

The rate of interest

•

less

and

non-

banking

been

have

heavy sellers of government

se¬

business and mortgage loans.

This

aggravated inflation, particu¬

FACTORS IN THE POST-WAR INFLATION

Co.

MEMBER NEW YORK STOCK
EXCHANGE

BROAD

BOwling Green

PHILADELPHIA

STREET, NEW YORK 5, N. Y.

9-3151

Teletype NY1-752
CHICAGO

7"————:

LOANS AND INVESTMENTS
)

HARTFORD

—

ALL MEMBER BANKS
2MBEB

n j 1
"

curities for the purpose of making

has

than

institutions

was
two larly in the building field, as it
Furthermore, inter- has intensified bidding for labor

decades ago.-

Eastman, Dillon

but
against

are

bank loans is
much, as
it

has

policy in its own financing
providing support above par

money

for its long-term securities.
result of this policy, some

1946

' J

I <

*
1947

t-r

j
.
'till

1946

i_L

Volume

168

Number 4740

COMMERCIAL

THE

FINANCIAL

CHRONICLE

(1429)

j
:

MAKE

■

'-J

'•

CARS

FOR

SAFER

YOU

:;Lv'w

•

£■■

•

j;-.»

r-f;

Steering

That "turn" leads

You're
the

looking at steering parts of

body removed,

They

arc

so you can see

attached to

a car

rocky roads

—every

This is
neers

bumping

over

rutted

railroad tracks

the steering mechanism of

...

evaluate, accurately, the strength

help them build

cars we

Electronic devices tell

the

make for

extra

you.

engineers how the

tough steel is reacting to these scientifically applied

This information,
of roads
.

plus grueling tests

all kinds

plus still further laboratory checking

helps them select the best materials and

efficient

This is

most

designs for vital steering parts.

into all the

•

Chrysler Marine & Industrial Engines

•

Dodge Job-Rated Trucks

•

reason
we

why

we are

manufacture

owners

steering

cars,
.

needed for

any

Plymouth, Dodge, De Soto and

this extra

greater

the road.

care means surer,

confidence and

peace

safer

of mind

CORPORATION
DE SOTO

DODGE

Oilite Powdered Metal Products

are

able to build

steering systems

driving.

Chrysler

CHRYSLER
Airtemp Heating, Cooling. Refrigeration

cars

far stronger and safer than

PLYMOUTH

example of practical imagination in

testing—one big

normal

road conditions.

con¬

car!

unique test Chrysler Corporation engi¬

created

steering parts

strength and safety into

possible strain and twist that driving

ditions put on

of these

special apparatus which

produce the effect of sharp turns
.

—with

them.

and

test—practical imagination in testing at Chrysler Corporation

straight to safety!

can

stress

•

Mopar Parts & Accessories

CHRYSLER
•

Cycltweld

THE

(1430)

COMMERCIAL

FINANCIAL

Banks Have New

CHRONICLE

Thursday, October 7, 1948

Competitors

By FRANK C. RATHJE *
It

President, Mutual National Bank

today to pre¬
strictly personal
recent develop¬

purpose

sent to you some

observations

ments in the

President,

monetary and fiscal

which

our

making

u c

these

comments

you

that

know

visualize

do not speak in

but

sense

rather

before

So.

likewise,

debt structure

has

now

have,

Federal

have,
a

bond

our

portfolios

being built.
should

bonds

constitute

They should not
speculation.
Speculation in Government bonds
for the purpose of gaining a profit
be

vital influ¬

medium

the interest

marketwise

manage¬

for

differential, and

profit

well,

Valuation of Government Bonds

in the

parties in interest that

many

able in

free

has

the

books of

premiums

that

expenditures.

bank

would

only at

For these indis¬

par,

bankers

the

Reserve

above

that

cost,

who

favor

bond

there

tained.
the

heartily approved if there
permanent

assurance

most
was

There

the

pro¬

Federal

those

are

program, and
who favor
its
is

main¬

now

Full intelligence warrants

inquiry

the

source

the current urge to abandon the
Federal Reserve support program.

that the pre¬

mium would always remain at the
same
level.
However, in a free

market,

of the bankers of the nation. Some

ate.

bond

miums

prices will fluctu¬

interest

melt

reality that

rates

rise,

pre¬

and the cold
loss exists must be

away,
a

dealt with.

be said that that urge does

can

not

come

from

the

want

storm.

With

the

dollar

materially below

which

realized.
For every dollar
gain previously made by this
speculative activity, there has fol¬
lowed, more recently, a corre¬

par,

above,

were

provoke
would

It is

nity to

earn

and make

in,

bond
par

market

might well

Such

market

the opportu¬
higher interest rates
many

vention,

74th

Detroit,

Annual

Mich.,

Con¬

Sept. 27,

1948.

grow

With

one-fifth

activities

not

en¬

the

take

issue

industry,

total

our

na¬

tional income taken to meet gov¬

expenditures, thought¬

ful students of the economy have

already expressed

constitutes

burden too

heavy to

successfully
carried over / a
long period of time unless we are
willing
and

discard

expanding

dynamic

our

economy.

While the power of the Federal
Reserve

System

continue

bond support program
be limited only by the

assurance

the

seems

amount of

principal

lending

Growing:

Competition

Other

avoid

supply if

further

would

distortions

our

economy.

One

the

alleged reasons for
requesting authority to increase
reserve
requirements of commer¬
cial banks
eral

was

Reserve

ture.

this

be known

connection, it is to

that in the year begin¬

with

restrain the lending

System.

Now

passed

by selling Gov¬

ernment bonds to the Federal
serve

the

Re-/

that' the

law

has

been

by the Congress, and the

this

Federal Reserve has exercised its

authority, the program has in part
"jelled" in the past week. From

increased their

and

ings

than

double

the

surplus

amount in force at the end of 1929. 7

In this

same

pression and

period, in spite of de¬
war,

the company's

tripled.

funds

have

than

Assets, which have quad¬

rupled,

are now

ing

billion dollars.

one

closely approach¬

New England Mutual Lile Insurance Co.

loans

and

investments

Non-member

cies

increased

over

$15

in-

their

lending

MUTUAL

LIFE

INSURANCE

COMPANY

CHARTERED

AMERICA—1835

well.

causing

and

The

-interest

consequences

distortion

rates

prices,

exist

that would normally
free market, cannot be

permanently and forever escaped,
whether

they

perceived

immediately

are

understood

and

indiscretions

whether the

are

re¬

alized, after the passage of time,
their

when

consequences

are

un¬

alterable.
The Capital Ratio

oft-discussed

The

which

Federal

members

are

Reserve

System

in¬

their

loans
during
the
period of time by $5 billion,
only one-third of the total of the
creased

"The bank

ties

problem

institutional

lend¬

/' If the urge for increased
serve-requirements was for
sole
as

purpose

now

■

That

If it

does
to

sound to

give

un¬

re¬

bank the opportunity

capital beyond its fair
capacity,
especially
in

ing its
earning

states

those

under the

the

say

the

laws
upon

ment

banks

organized

state, banking law.

cash

least,

bonds

considered
fore

which

double liability

shareholders

sug¬

course,

operate in a manner that will
the necessity of increas¬

the

obviate

still impose

did the chairman of the

par

and Govern¬
could well be

non-risk

assets

be¬

computation is made of the

deposit

ratio

relates to its

of the bank as it
capital structure. An

no matter how
Board, that re¬ rigid in liquidity requirements,
requirements be extended from the hard and fast rule of one

Federal
serve

was

statement,

capi¬

assets."

quires a careful interpretation of
the words, "risk assets"; but it

re¬

of curtailing credit,
being extended, the

inequality and, therefore,
fairness.

supervisory authori¬
urge
directors
of

tal in relationship to risk

same

non-member,
ing activity.

strongly

banks to maintain adequate

billion.

Banks

all

cover

chartered

banks—member
banks

banks

and

alike,

being

banks—then

escape,

the
state

dollar in capital to ten dollars in

deposit

liability,

would

fully

7777.Y-:;-

7/,7 7"

justi'fied. Y'.

would

to be sound that the

appear

avenue

Reserve

non-member

Trend Toward Socialization^

same

requirements should like^ 7: A comment on the worldwide
wise be visited upon the insurance trend toward socialization and the
reserve

companies, savings and loan asso¬
ciations, and the finance compa¬
nies, by like congressional action.
The

constitutionality of such-an
enactment will be questioned. I
quote from the Constitution of the

coin

money

and

value thereof.",

regulate

the

Inherent in this power to regu¬
the

must

value

credit,

the

alone

legal

does

money,

power

there

regulate

provision of the
is meaningless. This

not

solve

all

the

constitutional

questions
involved, but it does supply a
basis for study of this very impor¬
tant
question
involving
credit
control, the necessity of which the
or

authorities

advocate.

Y>-;

strongly

merit in the urge
for the enactment by the Congress
for increasing the reserve requirer
solely for

the

purpose

free

markets

merited.-; ;7-7v
World
the

Wars

:
I

and

;

involved

principal
countries
of
the
in
huge debt structures.

world
The

its

principal element of debt is
requirement

that. it

paid.

Ultimately, payment can be made
only by production. The willing¬
ness
to
produce
has
declined
since the war's

losophy

seems

end, and that phi¬
to extend world¬

wide.
In
and

Fmgland, France, Australia,
other countries, one

many

finds marked evidence of
toward

sbdialization

trend

banking,
in industry, and in the utilities.
This is due in part to the huge

volume
exists
tax

public debt that

in these countries,

now

and the

burden, both direct and indi¬

rect, that these debt structures

•<

If there is any

ments

abandonment

this

Constitution

FIRST

rates

$672

lending by $3 bil¬
In total, all of these agen¬

lion.

the

by
banks

their

Creased

reserve

Boston

George Willard Smith, President
THE

prices

and

billion.

late
more

loan
associations,
fi¬ capital ratio to deposit liability
companies, mutual savings seems to have found a partial
banks,
and
government -; credit solution in a joint statement of
agencies, excluding those extend¬ the supervisory agencies, and I
ing foreign credits, increased their quote:
!,

Federal

nance

"The Congress shall have power

This

the

that law relates to

and demand

loans

United States, Article I, Section 8:

INSURANCE IN FORCE NOW> EXCEEDS
$2,500,000,000

that

Treasury, coupled with the Fed¬
eral Reserve System, can perma¬
nently defeat the law of supply

and investments by $6 billion. Sav¬

provide the Fed¬ non-member

authorities

practice, however, there

Institutions

source

gest,

commodity

Credit

constitutes

question of supports, but I do be¬
lieve that a course of action could

the

gold certificates in its possession,- demand that member
banks, and
yet there is the rule of reason that
only the member banks comply
puts a limitation on the increase, with this demand
in the money

By that process, they can
the interest ra'te struc¬

dominate

that

concern

this represents a percentage which

funds recaptured

well-: be

can

great nation. That will
and achieve greater ac¬

power

early years of
address by Mr. Rathje at
decade, while bonds sold at
meeting of the National Bank Di¬ fluctuating prices above the sup¬
vision of the American Bankers port level.
Association's

wisdom

levied

marketwise profit by

this

*An

government

finds the initiative that

their

continuing
gaged

have lived

storm.

afford

bond market at

sunshine.

sponding dollar of loss.

file

and

fluctuating bond
market, careless alike of sunshine
may

many

rank

outside the banking system

groups

Prior to Dec. 24, 1947, specula¬
tion in Government bonds created

profits,

the

taxes

are

one

ernmental

abandonment

others

continuance

interest

would

discussed

support

are

that premium provided for as the
accrues,

System.

that

much

bond

maintained by the

gram

premium,
and carrying them at
with amortization of

par,

A high volume

addition,

extent.

ture.

since

complishments must be preserved.

Uppermost in the minds of the

have found his way into the Gov¬
ernment bond market.

at.

the

else,

curities

Pegging Government Bonds

Government

bonds

Federal Reserve Banks, and little

questioned. A large portion of tax

reached unreasonable proportions,
and the speculator would never

Buying

reduction in cash

equivalent

increase

have

never

net

spending,. , in itself,, ning July 1, 1947, and ending June
30 of this year, insurance compa¬
contributes to the swollen pur-,
nies disposed of nearly $3 billion
chasing power in the hands of the
of United States Government se¬
public.

jus¬

Govern¬

carried

ment bonds to almost an unlimited

the

now,

government

built this

near

restraint

the', reduction

unjust penalty.

could

hands

in the earning assets of the

seen

credit, the life
which follow
from the increased money supply insurance companies and the non1
bank lending agencies have
be*
resulting from support purchases
come so important that they must
by the Federal Reserve System. In
be
considered
along
with
the
practical terms, this means real-f
istic and determined achievement banks in the national credit pic¬

where

remained

banking business.

bonds,

bonds

to maintain the

burden,

crease

inflationary forces,

revenues

rule

market at

contribute

cretions, the banks of the nation

ment

ing this

ing system, and the banking sys¬
tem only.,
A further study of all

member banks, and an in¬

its

and

sal¬

government surplus is neces¬

sary

have paid, and are now paying an

the

Congress

support program, upon the bank¬

activity is now centered in lend¬
-.A.UA'77- '■v''77.7'' ing agencies outside of the bank¬
this study, it is to be recog¬ ing system.

valution of

Government

would

maintained at that level by
limited supports provided by the

which were
purchased at premium prices. Had

were

bonds

tified activity in or outside of the

point first to the policies that
followed

been heretofore, is not now,

never

and cannot in the future be

al¬

invest¬

sound

ment for money.

and

time

the

ways

constitute

debt

risk to the

the

Government

ment.

Re¬

of the

can

effect, will be

nized that continued achievement

Federal

our

the future will
ence

the

did not intend to be unfair in cast¬

Reserve System.

were

past, the in¬

which

problems that

hope and

assurance

par, or

commonly

indiscretions

discretions

reasonable

Government

fortunate, in¬
deed, had this been recognized by
all parties in interest, and espe¬
cially the United States Treasury,

who lived

men

time.

those

past."

provide

It would have been

recent financial his¬

some

our

not

immediately charged off and
its carrying value reduced to par.

History records indiscretions in

term

does

bring

to the

lives of

that the Federal

sure

authorities

justified.
summarize, it is to be real¬
ized that, in theory, the Federal
Reserve System can buy Govern¬

what

developed
a

premium paid and,
therefore, should not be bought
unless the premium so paid can

Frank,C. Rathje

forefront, all to the
end that we may recognize their
existence and give their influence
proper weight and thought.
the

profit

and

which would warrant

the

extent

our

pocket

same

studied

premium constitute

of that

items of

tory

the

Government bonds purchased at

the

things that lie

critical

made

well

always sustain the loss.

ahead.1 B

:77-7.77

:■/

been

regretted that the

that

than

effort

cause

of the factors involved would have
be

is much

simpler
the

States.-

that

looking back¬
ward

now

American shores in interference with free markets.

our

fully

realize

non-bank lending agencies
operating within the United

many

expanding their loan operations in competition with banks
Says it is sound
and constitutional to impose same reserve requirements on non-bank lend¬
ing institutions as on banks, Warns of "dim footprints" of socialization on

trends,
should

upon

serve

current

exten¬

given to casting similar restraints
the lending activities of the

banking, former ABA President reviews

bond price support program and effect of new bank cash reserve
Sees insurance and finance companies benefited from these
regulations, since they maintain no legal cash reserves and are constantly

credit

further

sion, then thought might well be

requirements.

affairs. In

restraining

and Trust Company^,

Bank

government

c o

City

In commenting on current trends in

environment

all

Chicago

en¬

tail.

We, in America, have been

com¬

paratively free of the trends to-

of 7.

:.i Continued on page 41)

Volume

168

.THE:;COMMERCIAL & .FINANCIAL CHRONICLE

Number 4740

(1431>

—r

1853

Ota

(S'Jf

1948

BALANCE

—

SHEETS

June 30, 1948 and December 31, 1947 :
*JUNE 30,
ADMITTED

','.y

ASSETS

Cash in Office, Banks and Trust

Companies .:•*

United States Government Bonds

First

104,334,731.64

24,963,562.47

24,840.96

Reinsurance Recoverable

3,984,382.15

10,549,897.28

9,904,935.42

Admitted

Total

Losses

Paid

955,227.36

2,796,195.95

Assets

1,586,270.95

Admitted

1,886,092.82

$284,378,185.69

$193,896,657.82

$140,029,197.00

$ 91,473,696.00

36,087,051.00

23,904,922.00

2,703,937.03

3,720,000.00

3,500,526.00

3,718,542.91

Assets

LIABILITIES

Reserve for Unearned Premiums

Reserve for Losses

Reserve for Taxes

Liabilities Under Contracts with War
Reinsurance Reserves

Shipping Administration

;

1,802,382.37

1,650,557.00

2,435,232.99

2,746,852.05

$186,558,326.39

$127,214,569.96

Liabilities
Total

Liabilities

Except Capital

Capital

Surplus

.......

—

4,186,920.66

Agents' Balances, Less Than 90 Days Due

64,539,027.59

Companies

Real Estate

Other

59,492,297.55

8,572,145.80

Mortgage Loans

Other

.$ 26,330,163.87

122,593,453.09

Associated

1947

$ 31,574,697.95

Other Bonds and Stoeks
Investments

DECEMBER 31,

1948

•

Surplus

;■

$19,899,926.49 $15,000,000.00

.f.

77,919,932.81

Regards Policyholders

Total

...

97,819,859.30

51,682,087.86

$284,378,185^69

66,682,087.86
,

$193,896,657.82

The merger

into The Home Insurance Company of nine of its former affiliated companies went into effect on June 1,-1918. The figures given here include
the'consolidated condition of The Home and these nine companies as of June 30, 1948. They do not include consolidation of The
Georgia Home which
was not
*

merged into The Home until after June 30, 1918.

NOTES: The values of Bonds

amortized basis. Insurance Slocks of affiliated companies

are on an

Surplus. All other Slocks at June 30, 1918 Market Quotations. Securities carried
required by various regulatory authorities.

are carried on a basis of pro rata share of capital Stock and
$9,992,761.23 and Cash $50,000.00 in the above statement arc deposited as

Canadian Assets and Liabilities have been adjusted to the basis of the free rate of exchange.

'erectors
Lewis L. Clarke
Blinker

•

Guy Cary
•

r."

;
'

Lawyer

■'> \

CHARLES G. Meyer
The Cord

William
In,on

Edwin

Meyer Company

Dune

harold H.'HELM

Savings. Bantu.

BaYLES

norkrt Cor,

President,

Chairman of Executive Committee,

Mc An en y

Coast Line Railroad Co.

Chairman,

fU'/s Guarantee & Trust Co.
^rnsr Committee,
Title

■

Lawyer

Rqcer W. Babson*
Chairman of Board,
Babson s Reports, Inc.

EaRL G. HARRISON*
,

robert B. meyer*
The Cord Meyer Company

John A. Stevenson*

IIenry C. Brunie*

President,

President,,

pmn j\juttl(li z,//c Ins. Co.

v.ha 1(1.1..s a. louchin
Vice President &

Empire Trust Company

Champion McDowell Davis*

c(w counscl *-

Frederick B. Adams

•

Chemical Bank & Trust Co.

Harvey D. Gibson
Manufacturers Trust Company

/
Real Lstate

Vice

Percy C. Madeira, Jr.*
President,
1
Land Title Bank & Trust Co.

President,

lawYcr

George

George Gund
President,
Cleveland Trust Co,

DeBoST

——

*14 Tr

IVAN EsCOTT

•/

A'Ia""C C°a5t L'"e R"llr0ad C°'

Vice President

Warren S. Johnson*

C.StEVENSON NeWHALL*
Chairman of Board,
Pennsylvania Co. oj Philadelphia

ROBERT W. DoWLING
President,
City Investing Co.

President,'

Elected July 12, 1948

*THE HOME*
Home Office: 59 Maiden Lane, New York 8, N. Y.
FIKE

•

AUTOMOBILE

Peoples Savings Bunk & Trust Co,
of Wilmington, /V. C.

■

MARINE

Harbin K Park*
r™, Wr

VY'

cL^Tctrda

toiumbus, Georgia

°f

BOYKIN. C. WlUCHT*
Lawyer

(1432)

THE

An Incentive

COMMERCIAL

know

you

that

the

FINANCIAL

CHRONICLE

Thursday, October 7,. 1948

Plan for
By

All

■<;'.

de¬

GWILYM

PRICE *

President, Weslinghouse Electric Corporation

and

enterpriser. If he is to risk
capital, he!must be given a
wage increase. It is one increase
long overdue; and when it comes

cisive

factor
in
producing
the
postwar boom has been industry's
program
of
capital
expansion.
Without it, the
i '

ferred stock.

predictions of
eight

million

unempl

o y e

would

tax

have
true.

come

not

the

wage-earners

ing^.sens e,
including
plant
expan-

American
least

e q u

and

Gwrilym

new

p m

Price

;

inventories

increased

and

sales

volume-

lion jobs came true, well ahead of
schedule and without noticeable

help from Henry.
remember that in

year

tures

1947,

totaled

would
more

than

Here

billion.

equivalent

one-half

the

are

sin¬

been

tional income not
it

the

expendi¬

such

$26\'z

have

our

from

accumulated

loans,

other forms of

to
na¬

which

corporate

new

bonds

and

indebtedness,

$10 billion:
From

sale- of

stock, -$iy4

billion.

That last figu'-e ie small enough.

than

last
was

year's

*From
at

First

74th

address

expenditures,

That

venture

Geneial

Annual

American

of the total of

by the sale of

stock.

common

centage

capital

paid for

smaller

percentage

betterment

new

tiny

per¬

capital

tells,

by Mr. Price

Session

Convention

Bankers

of
of

the
the

Association,
Detroit, Mich., Sept. 28, 1948.

during the. next decade the
ent

value

their

pres¬

plant after 60

year's of growth.
There are about
three and one-half million busi¬

enterprises

ness

this

country,
exclusive of farms; and the needs
of* many* of* them'are on a propor¬
tionate scale. The economist Sum¬

kets, actual and potential, to fur¬
nish the demand
ner
Slichter
has
estimated
the
necessary to ab¬
sorb the-product of this
enlarged shortage' of capital in this country
plant. *. Americans are both physi¬ today as high,as-$75 billion..
Never in our history have the
cally and psychologically able to
produce, distribute and consume mOne'y markets been called upon
all

the

goods and services

repre¬

sented by the graphs and tables in
our

10-year forecast, or in yOur's,
in anyone's.
)•■).'■

to. face .such

the capital

the

.task.

come

•

Where

from?

stockholder

What's Wrong With the Picture
the familiar phrase,

what

with this picture? What is

wrong

reeded to make it completely at¬
tractive? Just one essential ingre¬
dient is

missing, and that is
capital. Industry cannot

tinue

to .finance

past profits,

now

its

ven¬

con¬

progress

out

Well,
the

and

en¬

terprise, supplied rnuch of
money in the past. He is the

the

man

who, with

must .be.

supply

courage

they are
completely commit¬
Higher costs are narrowing

current

profits.

There

with

its

fixed

al¬

to borrowing,

burden

prior

charges.

So we must look to new
venture capital to finance an im¬
mensely increased share of capital
expansion—and to provide jobs
for the additional
come

600,000 workers

the American

scene

One

way to
state the dimen¬
sions of the problem is to remind

large part of what is
today.
What present in¬
ducements is he being offered?
Let me show you, in terms of one
company, an example of a prac¬
tically universal situation.
,

/' An'Example
Last, year,

share'.

order

the company

paid

$1.25

that $1.25,
first had to pay Fed¬
pay

eral and state income taxes total¬

ing 85 cents

share. That

was

only

the

beginning. Our stockholders
paid * surtax rates ranging from
19% to 85%; but take as an ex¬
ample the stockholder — neither
nor

income taxes

dividend

the poorest—whose

were

his Westinghouse

in the 50% bracket.

year

average stck e>i-

change prices, that
cash

return

him

gave

slightly

net

than
doubt,

2%. With that remnant, no

he could then pay the other taxes
levied on him by all branches ol

titlous

the

yields of
stocks

and unethical;
greatest fault is that it
stands squarely lirij the way of en¬
larged productive facilities, lower
costs
and
prices,'. higher living
standards, and continued full em¬
ployment.
'

■Karl Marx listed

income

tax

the graduated

one

any

evi¬

why

buy

some

have given'his

wouia

lavde

tax-exempt' bonds, Why some put
money in savings accounts,
why others buy insurance and real

our

estate and

the

extra

summa

burden

cum

which

other

their

commodities—anything

indeed, but
So

stocks?

common

much for cash

about

the

holder's

return.

security

What

of the

investment?

stock¬

What

about

the

allegedly high profits so many
companies are making? Well, talk¬
ing again in terms of our company,

tax laws have laid

capital.

burden

will

would

sales; ahd though

sales

1928,

comparison is

our

times

those

were

only

profits

our

three times

five

were

large. This year, the
less favorable.

even

reasonable standard of

any

se¬

curity of investment, of insurance
against the larger risks taken, of
provision against lean years, our
profits—and those
companies
than too

high.

as:

low

than twice

much to build hnd

unfair

than

any

and

fill

the
it

cause

capital
to

flow

the

debt

reduction

and

fixed

cor¬

charges,

through the substitution of ven¬
ture capital for bonds,
loans, and
other forms of debt. Since the ef¬
of such debt are most ac¬

fects

centuated

in
the downswing
of
cycle, with a tendency to
deepen and prolong the curve,

the

government policy should be
cerned

than

even

con¬

with that factor

with

now

the inflation¬

effects of expanded credit.

ary

rather

Today, it; costs

.v,

of many other

too

are

—

that

normally and productively again.
A major advantage of eliminat¬
ing double taxation on dividends
porate

1947

help

reservoir

because I know it best, our

profits
high,.in terms of dollars. But
they represent a return of less

will

the wages

Lifting

single measure to promote
widespread
investment
and
to
bring new businesses into being.

are

further

benefit

would

come

through the adoption of the cor¬
porate form of operation by many
businesses'%hieh. 'now forego its

equip plants
as
it did shortly before the war,) adt'abtages:;)bGfC5iuse'; of;, the ;tax
Depreciation allowances are too penalties- involved. " This' is par¬
low and make profits more ap¬ ticularly true of small businesses;
It takes at least

working capital to

with the

now

op¬

physical
volume as in 1941. Nearly every
company's break-even point is at
an
all-time high;
ours
is more
than

three

1940.

times

and

borrowed

they

have

was

surplus

inventories,
large

and
which

sums

must Prepay
out of).future
or from investment by the

profits

owners

hard-to-get, ' take-a-

national

capital

structure,
is needed

available. If
where

near

clearly

sustain

present,

our

venture

than

are

now

come

any¬

the goals which are so

before

the
existing
multiplied many
times. What is needed to persuade

supply

must

us,

millions of stockholders to add to
their

other
first

present

stake

individuals
direct

cause

their

make

investment

our

200,000
year,

ment should be offered that—as in

business

partnership that
a
mighty

become

may

in¬

dustry?
Capital Now

High Enough
To

all

these questions, there is
answer. The wages

of venture capital ard not high
enough after the tax collector has

proper

the
are

this
country each
possible encourage¬

provided for their
growth.

birth and

How would the government re¬

place its present
source

such

necessary?
estimates

dividends
than

the

revenue from this

replacement

were

begin with, casual
tax

; revenue

.from

are

uniformly higher
1947, dividends
only 3.6% of national

facts.

personal income. Year after year,
only one-half to two-thirds of the
dividends
paid J by
corporations
show up in dividend
receipts, re¬
ported by individuals for incometax

purposes.

government's

result,

revenue

source—probably

the

from

this

than

one

less

billion

dollars in 1947—is out of
all proportion to the penalties the
tax
imposes
on
initiative
and

thrift, and the hobbles it fixes
on

national income and therefore
the whole economy.

Actually, the proposal should
a
long range beneficial ef¬

have
fect

government

revenues.

Jay McGraw has pointed out: uBy
allowing people to save more and

capital

people with

for the forgotten
stockholder, the owner

many

new

enterprises, Con¬
a bigger

actually insure

ahead. More

business will result and pay more
taxes.
That is the only
way a free
carry

program

tax return in the years

incen¬

taken his bite. We need

tive

every

gress can

inevitable

man—the

by renewing the incentive to risk

Wages of Venture

show

importance of
enterprises
that

ment should be

other

periods of our history—will
bring out of nowhere the one-man

are

the

launched

our

country's future? What encourage¬

grow

sense

amounted to

chance venture capital.

Merely

and

invested

their profits and

plants

have

same

what

Corporations

most

inequitable)

its

apparently

some

dence needed

erate

LOUIS. MO.

Doth

but

common

their earnings.

75%

ST.

holder's hands shall be free from
income-tax liability. The present
practice of taxing income twice is

high of-capitalism. If,las Dr. Slichter
stocks, and why has said, our tax system in the
the
best-re-) United States might just as well
garded companies have been sell¬ have ybeen devised for the anni¬
ing at from five to eight times hilation of capital, ! am sure Marx
are

parent than real.

International Shoe Co

made.

of the most
shows how fic-; potent weapons for the destruction

government. That

than 7%

Westinghouse

dividends

common

original $2.10.

man

upon

the richest

each year.

depended

needed

because

ready visible limit

who

almost

ted.

common

But one-half of it represented pre¬
ferred stock.
Only half, just a
bit

national industrial plant;-and
there is equal4 indication of mar¬

ture

the

«-+0<"kbolr!f>r kor>t 62V2 cents out of

our

bank

and to point out

long ago.

very

sources

That

profits, $15!4 billion;
From

even

need for continued

came:

From

The trend

well.

.First,; eliminate
the
on
dividends by pro¬
viding that dividends in the stock¬

In his case, a total of $1.47 Va' went,
to the tax, roller+ors, "'bile tb?

There is ample indication of the

ac~-

-necessary

and off relief rolls. That was why
Henry Wallace's, vision of 60 mil¬

You

front in 1947.

the

but

order to

of that 1947 figure of slightly
over 2%
of canital exoenditn^es;

that, at the other
extreme, the electric utilities of
this country will have to
ipatch

j capital

double .tax

;

else

only

not

provide this incen¬
tive, two corrections, I think, must

happening
enterprise on

was

free

you

can

1948.

kept those eight million at work

gle

downward.Common" and
preferred stock issues are provid¬

ing

receivable

carry

ent,

larger

counts

one

else

is still

modern-

ization,

anything

what

say,

and

than

of 'ithis

everyone

Contends proposals are practical and will benefit
and salaried workers as well as owners of
capital. Holds profits

exaggerated.

th^ ultimate and all-

interest,

owners

portion of individual's in¬

around

taxes.

;

but

it will be

handicap to industrial expansion as well as
Urges as remedy: (1) repeal of double

(2) reasonable limitation

are

better

dividends and

taken for

come

strict account-"

Sees in this serious

impulse toward over-extended credit.

Capital ex¬
penditure
by
industry—us¬
ing that term

his

Estimating capital expenditures in 1947 at $26% billion, Mr. Price points out
only $1 % billion came from sale of stock, of which one-half represented
pre¬

free

economy

can

the tax load."

Regarding this, double taxation,
proposals have beer. made.

Volume

Number 4740

168

Most of them aim, only at reduc¬

tion;

in x

them.
a

are,

principle,

find

edy
that

All,are

need

is 'total

none

compromises with

taxes.!' Vn. •
much is

come

and

sympathyv with

be taken by the government in in¬

.involve .complicated,
" paper work. /I

many

calculations

THE'COMMERCIAL

How
able

comes

mine

■,'

"fixed,

limitation"?

point,

palliatives,

remedy. 'The rem¬
elimination.
Once

,■

That

point will differ with different
people.; as their reactions differ.

remedy * is .administered the
patient will be on the way to. re-~ But it might be generally agreed
cbvery. "
that a man deserves and should
;V'
.

Limit Proportion of Income

get at least half of the results of
* his efforts. A Standard and Poor

Taken by Taxes

analysis sets this figure, 50%,

^ .The second step to be taken to
the
dangerous
drought of
venture capital is to place a
fixed,

"a reasonable accurate

end

reasonable limitation
tion of

that por¬

man's income which

can

ical dividing
the

psycholog¬

line, for beyond that

taxpayer has to figure that out

every

additional

dollar

CHRONICLE

might vearn, the government will

reason¬

some

initiative.

FINANCIAL

••, get .more than: he will."

•;

taxation on personal in¬
begins seriously to under¬
individual

Harold

Stassen

Spring ■••that '
never

income

any

cept during war.
which takes

last

government
take more than 50%

should
the

declared

the

person

ex¬

"A government
than

that," he
said, "is killing the future of its
average \ citizens < and weakening
more

had

shown

man's

income

the

incentive., in the

meaning

three

since the end of the war.

seeing

Europe,

years

almost

all

sorts

selves,
and

prosperity has resulted.

This country has no special dis¬

pensation to free it from the uni¬
versally applicable rules of incen¬

as *

under laboratory
conditions, the
employment of strange economic
principles in an attempt to solve
postwar economic problems. Those

tive.

Taxesr which take too much

of what

duce

the

man

peacetime.

tive.

been

the

clear

and

other

instruc¬

hand, where

European countries, most notably
Belgium, offer their people a re¬
ward

for

the

and their

use

capital,

their

labor

we see that men

The effects ot such

every

gateways to New York flows the fabulous stream

that makes this the

world. Title Guarantee & Trust

greatest metropolitan area in the

Company has been serving the bank¬

ing, trust and title insurance needs of Metropolitan New Y'ork since 1883.

CHARTERED

1883

BANKING AND TITLE INSURANCE OFFICES
176 Broadway
MANHATTAN

370 East 149th Street
BRONX

196 Montague Street
BROOKLYN

6 East 45th Street

Bridge Plaza North

160-08 Jamaica Avenue

MANHATTAN

LONG ISLAND CITY

JAMAICA

TITLE
ST.

INSURANCE

WHITE PLAINS,

MINEOLA, LONG ISLAND
Member Federal Deposit
Member New York

OFFICES

RIYERHEAD, LONG ISLAND

GEORGE, S. I.

Insurance Corporation

Clearing House Association

N. Y.

taxation

personal incentive is bad enough;
investor

worse.
!

Average of 1 flight

many

tend to pro--

stagnation- here

tory and double taxation.
!

3 minutes.

incentive,

it is

We know how great

(Continued

IA 6UARDIA AIRPORT

commerce

earns

same

TO NEW YORK

driving them¬
has spurted,

are

GATEWAYS

Through the

are

production

•—have

was

earlier

about

body of opin¬

Gallup poll,
which indicated that a majority of
the American people opposed the
taking of more than 50% of a
an

deal

that issue

system." That Mr. Stassen
considerable

ion behind him

have learned, or relearned,

great

principles have offered the sub¬ that they have produced else¬
jects
of
their
We have already cut our
experimentation where.
everything except incentive. The incentive dangerously, and no¬
results—lethargy and stagnation where more so than in confisca¬

the long range strength of its eco¬

nomic

We
a

even

is the
page 48)

THE

(1434)

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, October 7, 1948.

By MARCUS NADLER*

abuse

believes

who

Anyone
the

economy

country

without

indefinitely

Professor of Finance, New York University

can

Asserting for

day

some

paying the penalty for our mis¬
takes

must

inveterate

optimist.
For

the
of

num¬

ber

years,

economy

United

the

U. S.

general,, but particularly in the
mortgage field, which if continued

has been abused,- Dr. Nadler cites
farm price support, public works programs, and heavy Government
spending
as
aiding inflation and hampering sound banking. Looks for continuation of
inflationary boom with expanding loans and firmer interest rates. Holds bank
deposits will show no substantial change and bank loans to large corporations
will decline. Foresees higher yields on long-term as well as short-term
obligations, and lays down 10 rules for banking.
;
some

years

economy

will

distant future.

has

been

begin¬

products, and the time Is not far

feel

off when the government will be

are

based

forced to use

and

they

prevent

duced when the ERP

ning

the

conse¬

quences.

The
of in¬

the

Our-exports

taxpayers' money to
food prices—and hence

cost

end and

proceeded fur¬

living—from going
discussing the Farm
Price-Support Bill,
Representa¬

ther than after

tive Buck of New York stated

when

ment,

World

Nadler

cently that the Bill is

down.

has

War

that

unfortunately the end is not

and

not

yet in sight. To be sure, inflation
not destroy the real wealth
nation

does

nor

farmers—is

than

greater

the

Law

was

passed

down. At that

the

freedom

for

the

small

to operate

dustrial

management

sighted
when

planning.

the

say we are

and

opposed

confronted

are

with

price

floors

*An

fore

the

practice?
under

There-

farm

many

address by Dr. Nadler

Second

General

are

ation.

barely three
should

be¬

Session

countries

;

of the

Association,
29, 1948.

American

Detroit,

studied

range

The

either

the

range out¬
period of transi¬

covers

void

created

Bankers

Mich., Sept.

our

actions furnish

our

example

worthy of emulation?

the

range

short

during which the

effectiveness

the

business pattern
immediate period ahead

the

The

will be affected by:

(1)

The

rearmament

which has

great

injected

uncertainty

program,

element of

into

the

eco¬

(2)

The

reduction

has

increased

income
at

out

the

taxes,
dispos¬

the

people with¬

"time

same

bringing
supply
of goods or a ^reduction in tne
total expenditures of the Federal
increase

the

Eaton

and

indirectly

parts and

tractor

every

now

customer."

Eaton

equipment

business with

customer

sitated

increase

commodities

many

prices

internal combustion
,

every

home with

tractor,is actually

car,

place in the majority of today's
engines—automotive, aircraft, marine, implement, and

industrial.

j '

and

will

which

assures

large

be smaller than in 1947.

will

(5)

Farm

legislation,
which
parity support at the

level

and

high

assures

large

income

for

:>>

pent-up demand for
housing and such basic commodi¬
ties: as railway equipment, farm

many

the volume of

instances

these

loans, notably

con¬

loans...

ercise

fluence

—

iron castings, springs, and lock washers.

The

transportation and communication systems and the oil companies are
among the largest users of Eaton products—so when people travel
by train, air- '
plane, or bus; when they use the telephone or send a wire; when they buy gaso¬
homes, they

The

,V(6)

These factors combined will

products also play an important part in the comfort, convenience,
safety of modern home-life. Manufacturers of refrigerators, ranges,: '
washing machines, electric irons, and many other domestic appliances look >

line for their cars, or oil to heat their

depending

MANUFACTURING,
.

Plants: CLEVELAND

MASSILLON

DETROIT

SAGINAW

•

General

BATTLE CREEK

•

Offices:

MARSHALL

•

Eaton.

upon

COMPANY

CLEVELAND, OHIO
VASSAR

•

KENOSHA

•

rearma¬

strength

how

clear

peace¬

security
of
the
In view of the huge pub¬

the heavy Tax burden,
inflationary conditions
prevailing in the country, even the
layman can ask that the military
the

leaders

and

partments

the government de¬
involved exercise due

restraint

and

military

strength

mind

that

without

soundness

does

eco¬

not

pro¬

;->■

The Outlook

With

bear

security.

this

for

Banking

outline

economic

political conditions in mind, it
possible to examine more

now

tivities

ex¬

strong inflationary in¬
on the
economy; and so
they last, no sharp de¬

long

cline

of business

the

level.
the

of the

tures

WINDSOR (CANADA)

consideration:
increased

of. the

be
drastically
curtailed.
The
Treasury, therefore, will not be in
position, qs was the case during
1947 and: the early part of
1948,

influence

deposits.

the

ultimate

ef¬

still uncertain.

volume

during 1947.
to

Gold

is over,

rency

volume

greater

currency

likely to increase

increased

defense

expenlfi

in part compensated by
decline in other federal outlays,
are

few years.

(2)

The

volume

and

tions

may,

inventories:

buy¬

loans

total

present

volume

however,

corpora¬

not

able

their credit require¬

assets

needed

by them to their
particularly if fixed
are-included, is bound to

assets,

rise, and partly because of the in¬

capacity of the country; and above

of .credit,

ments, partly because the ratio of

ability of

tightening

loans

result pri¬

medium-sized

obtain all

their

the

production and distribution. Many

ers' resistance; the increased plant

all,

marily of the increase in prices,
and production costs. So
long as the inflationary forces
continue, industry and trade will
need
more
working capital to

small

increase

wages,

finance- the

the

outstanding.

deposits from

been the

the effects will not be pronounced.

penditures plus the other factors
previously enumerated will mere¬
ly
counteract
the
deflationary
forces already becoming evident.
The deflationary forces briefly
are:
the Tilling, of the pipelines;

probably

should, therefore, show a
degree of stability than
case during the past

1948-49, and particularly if

the

will

moderate decline in the

year

.tures

States; .and

after the seasonal demand for cur¬

expenditures
within the appropria¬
already made for the fiscal

military needs do not absorb large
quantities of scarce materials, a'n<
and

will continue

flow to the United

tions

kept

bank

probability, the
volume of loans will increase al¬
though not on the same scale as

has

ar<*

all

ment

the

movement

are

and

taxes, the ability of
the Treasury to redeem
maturing
obligations will in all likelihood

armament

expendi-.

Government

The

program
of which

Be¬

reduction/in

now

total

may

This conclusion is based

following

witness

one

following assumpt'ons:
(1) The total volume of bank
deposits will not witness any ma¬
terial
change * from the ^ present

activity can be
expected.
Of these
forces, the
most
important is the. rearma¬
fects

banks,

the

Qn the whole, it may be expected
that
the increased
military ex¬

are

all

debt,

cause

(8) Dissaving by many people,
accompanied by an increase in

permanent mold gray

only

economic

and

un¬

should reach their peak in 1948.

and

Eaton for

the

people.

Program,

though

Eaton

not

tell what the

can

military

and

sumer

effected

time affords security to a nation
only if it does not sap its economic
strength and does not undermine

doubtedly lead to others.
(4) The
European
Recovery

"Eaton

layman

machinery, and automobiles.
(7) Continued. large expendi¬
tures for plant and equipment, al¬

valves, tappets,, valve lifters, valve seat inserts, valve

springs, and valve guide castings find
'A.

large amounts
it will be of
importance that econo¬

make

war

automobile, truck,

that

means

spend

purposes,

has

during the

of the Eaton Manufacturing Company!

truck, every farm with

im¬

closely the outlook for banking.'
As regards the day-to-day ac¬

and child in the United States Is'

production. This
a

volume of exports of all kinds of

filled, when aid to Europe

every

make

commodities, although in all like¬
lihood total exports in 1948 will

and the rearmament program

into practically

economic

Eaton Serves 142 Million Customers
directly

nomic

farmers.

woman,

mies

vide

prices

man,

military

Government.

wartime

every

for

lic

nomic outlook.

continues 'the

ALMOST

perative

the utmost

(3) The third round of wage in¬
creases, which has already neces¬

from

long

conditions

that

ments both at home and abroad.

outlook

private enterprise.

overlooked.

develop¬

economic

neither

ment program should be or
much it should cost, but it is

13 closely J nterwovep with

look

and

However, there are also a number
deflationary forces working in

of'

about

The Economic Outlook

that

the economy which should not.be

examinj* the outlook for banking,

general

Should

for

a con¬

evident

two

but also in spending and consump¬
tion by the people as a whole.- No

able

The

banking is for

the

country such as
during the war. It

developments is to the
interest of the country as a whole.
Neither augurs well for the sys¬
tem

outlook

the

volume of loans accompanied by a
moderate firming in money rates.

which

and 'political

quite

(2)

other branches of the Government

against this economic and
political background that we must

business

witnessed

these

long run; or
controls
over

employment, large national
income, and an increase in the

whicl|

affairs in the

our

full

institute

Seventy-Fourth Annual Con¬

vention

and

large extent

immediate

business and

tragic indeed
that
after V-J Day
again be forced to
billions of dollars for

con¬

later

tinuation of the inflationary boom,
a
high level of business activity,

elabor¬

tion

ciency

seri¬

situation

system of private enterprise. But

The

inflationary
a

happen

will

handle

short

immediate future.

meet;

years

defense

viewpoint.

example to other
respects
the
effi¬

has

What

depends to

how

the peacetime draft.

short

set

outlook

the

bound

are

the

government
were

range

•

spend many
national

can

economy

only

purpose,

sidered.

employ¬

revenue

international

and

the

well known and needs

major rearmament program which
will be very costly
because of
the sharp increase in prices. We
are called upon to aid in the re¬

Yet

time

readjustment and depression.

habilitation of the western world

controls.

provide

which

serious

current domestic demand. For the

time, what will take

is followed

The

time

try is operating at capacity and
is a shortage of steel and
labor, public works — many of
which could be profitably post¬

Now

enterprise. We
to

ous

.there

today

quences

present

will be slowing

boom which terminates in

in¬

coun¬

occur

coming—when, who knows?—but
history tells us ithat every major

far-

of the

and

war

and

Yet

economy

place

ment

This,

the swollen expenditures of gov¬
ernment? The day of reckoning is

profitably and

believers

great

are

concerns

their

and

business

compete successfully.-

increases.

likelihood, will

business

groups—notably professional peo¬
ple, executives, and "white collar" poned—are being constructed, and
workers—has in many instances the number of civil servants is
been drastically reduced.
' 'f increasing. The cost of govern¬
ment is mounting: if expenditures
of all types of tax-levying bodies
Farm Price Program
are
included,
theyprobably
We profess to believe in and
range between $55 and $60 billion
adhere to the system of private

what

competition from the rest
world

Price-

Farm

economic

difficult
concern

1939, the income of other

monopoly

re¬

pent-up domestic de¬
many
types of heavy
goods and for housing will have
been met and the expansion of
plant and productive facilities of

democracy. There is unrestrained
monopoly in, many labor unions,
and it is becoming more and more

groups—organized labor

some

Yet

name

however, and weakens the eco¬
nomic security of many sections
of the population. The purchasing
power of the savings of the people,
consisting of fixed-income-bear¬
ing securities, pensions,- insurance,
and savings deposits, has been cut
in half as compared with 1939.
This raises questions of great im¬
portance. While the real income
and

the

all

re¬

a guaranty
high cost of living will
down for two years and
was
passed for no other

Support

distribution of wealth and income,

the

purpose.

affect

everybody alike. It leads to a re¬

that

does

comes

will

consequences

(1) an accentuation of the
spiral of wages and prices and a
further decline in the purchasing
power of the dollar, with conse¬

important - roles.; The long
view extends to the later
period, when economic conditions
will depend primarily on the then

for

flation

Marcus

drastically

the

either:

play

the

mand

process

Dr.

envisaged and

are now

range

large,-but they
shaky foundation;

are

will

:■

not counteracted by economies
other branches of the govern¬

are

already

are

larger than

abused;

and
we

„

If, on the other hand, military
expenditures v should
be
much

States

.about a reduction in
construction* in the not

bring

building

(3)

some

banks to increase

loan commitments.

The

movement

loans,

Volume 168
however,
Large
to

will

not

requirements
loans

from

uniform.

and

will

corporations

endeavor

continue

firming

meet

their

through

this, in turn may
volume of loans made

banks

companies,
reduce the

commer¬

such corporations.
insurance
companies
adopted a policy of selling

Some

life

have

their

government

obligations

quired during the
invest

the

and loans

than

cash

long-term

insurance

and

cial

THE:

Number 4740

in order to

war

proceeds

yielding

ac¬

securities

higher return

the

maximum of 2%% paid
by the Government. The securities
thus sold by the insurance
compa¬
nies

are

present bought either
the Federal Reserve Banks or

by the agencies of the
Treasury.
If they are
bought by the Federal

profits

could

rate

COMMERCIAL

The

of corporations,
a
the over-the-counter

not

be resisted

banks

FINANCIAL

long
will

range

depend

outlook
for
largely upon

general developments in the

re¬

CHRONICLE

coun¬

sented

try. If the spiral of inflation con¬

change in

tinues in 1949 and the volume of

by borrowers. The greatest
money rates will prob¬
ably take place in the short-term
sector, with the result that the
spread
between
the
yield
on
short-term and long-t.°rm obliga-"
tions will be narrowed; The Gov¬

ernment

tinue
sale

Bond

to be

Bonds

should

continue

the

investors,

authorities

monetary

lower

peg

tap

slightly below par.

faster
new

than

Con¬

gresses bound to give considera¬
tion
to new banking legislation.
The first step was taken by the
when

Board

large scale,

increase

expected, then the

now

sion

Goyernment

institutional

should

Congress during the

con¬

supported; but if the

of v long-term

will

market

loans

eral

ses¬

the

empowered

Governors of the Fed¬

Reserve

reserve

special

System to raise the

requirements

of member

forces

operating

the

conclusion

given the

issues
.

the

inflationary

that

powers

they

to raise

are

reserve

beyond those re¬
cently fixed by law, they can pre¬
vent

the

further undue

volume

hence
the

bank

loans

deposits,

time

same

increase

and

maintain

at
an

orderly Government Bond market.
The

suggestions made by some

officials

of
of

ernors

mittees

no.influence

op¬

requirements

that this measure alone

have

economy,

much

position to it. The monetary au¬
thorities apparently have reached

System

can

in the

without

passed

was

banks. Although everybody knew

may

(1435)

the
the

Board

Gov¬

Federal

Reserve

Congressional

raise

number

com¬

ques¬

(1) Would the quantitative
trol

the

Reserve

con-,

authorities

the money market
really be
increased if the reserve require¬
over

ments

are
raised
beyond those
permitted by law and at the

now

time

same

are

the

commercial

position

banks

sell

their

government

obligations freely

the

Reserve

Federal

fixed

price?

the

Banks

Reserve

au¬

thorities

continue to support the
price of. Government Bonds, there
is a possibility that if the reserve
requirements are increased, com¬
mercial
ment

banks

will

securities

Banks in amounts

tions:

(Continued

sell

govern¬

the

Reserve

page

than suf-

49)

Reserve

Banks, they further com¬
plicate the credit problems of the
monetary authorities, particularly
since
to

the

ability of the Treasury
maturing government

redeem

obligations

has

goyernment

decreased.

obligations

the

are

ac¬

quired

by the agencies of the
Treasury, it reduces the ability of
the

Treasury to utilize

accruing
deem

the

maturing

the

the funds

agencies

obligations

commercial

re¬

held

banks;

and

this

process, too, interferes with
the credit policies of the
monetary

authorities.

Small

banks

sections

whose

in many parts of
the country are
already lent up to
the limit. It is not
uncommon to
find commercial banks in
some

60%

ume

loans

amount

their

total

vol¬

deposits. These banks will

undoubtedly be forced

to adopt
lending policy.

careful

spite of the higher level of
business activity and the
steady
increase
in
prices
and
wages,

greater
cised

caution

today

;

loans

than

the

loan

exer¬

granting

the

was

Every

ago.

should

case

good

ye.r

the

time it is made. It turns out to be
bad loan only later. The

process

inflation will

last

not

forever

fact, there is already a seriom
danger that prices may soon reach
a
point where many groups will
to be

cease

buyers except of basic

necessities.

bound
a

decline

take

prices is

place;

and unless
careful policy is followed
by th'

banks
find

now,

them

some

themselves

will

position

where they will be forced to make
substantial write-offs. Since the
ratio

capital

assets has

actually

many

risk

banks

not

are

a
position to
write-offs with¬

make substantial
out seriously

resources

decreased,

affecting their capital

resources.

The

Trend

Interest
in

Interest

rates

have

Rates

firmed

and

all

probability will witness a
further minor firming in the not
too
distant
future.
Emphasis
should

"minor,"

placed

the

however,

for

HOW THE CHASE CAN BENEFIT YOUR BUSINESS OVERSEAS
The Chase makes

tion in the money market of what
took place in 1920 is out of the
other

of the

that

Treasury and the certainty

drastic

convert

into

credit

the

control

Effecting Collections

interest rates will very
assume the following pat¬

likely

further

rate of return

increase

r%
>>

rise

the-counter rate.

the

all

Making Remittances

Supplying Credit Information

the
.

further

•

Opening Commercial Letters of Credit

_ -

short-term gov¬
ernment obligations followed
by
an
increase in the discount rate
and

Assisting in arranging Business Connections

Supplying information

Exchange Conditions and Regulations

over-

Many Chase correspondents in the United States

probabil-

ity,

will

crease

also

the

witness

yield

AAA

corporate

state

and

municipal

in¬

well

use these ser¬
doing, they can save
in the transaction of their

vices

obligations.

extensively, having found that by

their

long-term

bonds

centers

Cashing of drafts under Travelers* Letters of Credit

would

present

prosperity
serious depression. The in¬

crease

tern:

than the position

reason

banking facilities directly available in the world's commercial

through its own foreign branches and close correspondent relationships with leading
banks throughout the world. Among the services provided are:

question and cannot haopen if for
no

customers

overseas

The time is not far off when
longAAA corporate
obligations

both time and money

business.

*,'

term
will

sell

The

yield 3%

increase

counter

prime

rate,
credits,

and

further

the

rise

better.

warranted.

All costs and
prices in the United

States
since

have

1939,

terest

mained
present
the

increased

while

prime

the

current

WwuS®'.

in¬
t

exceedingly
costs

sharply

rate

credits

has

low.

production

volume

booklet "Hoiv the Chase Car,

Benefit Your Business Overseas

long overdue;
is

Send for our

over-the-

particularly
was

t
J

repeti¬

word

re¬

With
and

business

„

THE chase national bank
OF THE

CITY

OF NEW YORK

Mtmbtr Ftdtral

Dtposit Ituuranci Corporation

•

24"

(1436)

Thursday, October 7, 1948

Fifty Years of Trust Service
By RALPH STONE*
The

subject

these

Retired President and Chairman of the
Board, Detroit Trust Company

observa¬

tions, "Fifty Years of Trust Serv¬
ice," 53 to be exact, having been
suggested by the executive officers

the

personal

hope,

1hat

too,

you
will bear with
me

preach

vision.

bit.
This

half

century
known

the

trust

business.

Mid-iWnter

You

Trust

Confer¬

.February, 1947.
The point to be made here is
that you have had to keep pace
ence

with

this

progress

rapid

in order to intelligently
your trusts. New and

administer

difficult problems, far reaching in
their effects,
have kept you on

toes.

your

You

have

members.

The

St.

first

proved

the public, whom you serve, that
the modern corporate trust organ¬
come

to be

ing the solutions
plexing problems.

an¬

meeting was held in Detroit
Aug. 18, 1897 with 117 mem¬

There

could

are

all

use

2,871

now

the

min¬

relations.

trust

half

institution

century.

But

familiar

are

would
lems

which

it.

discuss
of

are

to you.

concern

most

with

have

this

you

Instead
two

vital

prob¬

present

been

facing

one

which

since

ever

the trust powers were granted to
banks in 1913, 35 years ago, name¬

ly:

Does the

small

ment pay, and
be done about

trust depart¬
jf not, what should
it?

kept itself,
constantly in¬
During v that

well

equipped at a
creasing
expense.
period the nation passed through
five depressions or panics.

institutions
these

with

emerged
colors

Trust

from

flying,

all

proving

their financial soundness and good

management.

are

ship

suffering unusual hard¬

because

rates

of the cost of

sociation, Detroit, Mich., Sept 27,
1948.

decreasing
trust

fund

cost

But I do feel that the

Less

than

have

$25,000.

over

onstrate

the

trusts,

your

positive

worth

while

action respecting them.
In the
hope of furnishing some stimulus
to

such

action,

have

tried

only

and

medium

New

sized

York

that

the

all

the
each

adoption

amendments

that the trust institution

serving

The

1947

troller

report
the

these facts:
That

of the Comp¬

banks

"■

there

are

1,511

exercising trust

Avenge,
trust

Banks

powers.

It
,

;

per

the

' all

only
gross

and

sources

earnings

by
of

their

ments.

the

trust

City)
3% of

trust

assets in

very

thorough

depart¬
•'

■

The average individual trust of
the 1,511 national bank trust de¬

made

Banks

York,

cover¬

1941, stated

fol¬

lows:
"That the operation Of the Per-

Note that

these

are

which

gross earn¬

know

important

what are,

would

be, net

How

will

that

look
for

have

after

all

together.

been

simplify
*

think
trust

practically

about

the

value

departments

Research

years'

thing of the
of

the

trust

risks

the

time

when

little

over

total

gross

addition

only

If the man-power and the

•

ISOLDS

cost

the

trust

money

department

much

than 3% would they contribute to
the gross earnings of the bank? I
have

idea

would

And

the

time the

MEMBERS OF:

that

considerable.

would not be sub¬

bank

jected to the liabilities of the trus¬
New York

Curb Exchange
Chicago Stock Exchange

Chicago Board of Trade

Detroit Stock Exchange

Commodity Exchange, Inc.

Boston Stock
Exchange
.

......

tee

relationship.
There may be
advantages of a small
unprofitable
trust
department
which justify its continuance?
Is
it not time, after 35 years of
trial,
and study and debate within the
collateral

Trust

DETROIT

PITTSBURGH

Division, to settle the

tion?
Branch Offices

CHICAGO

same

So much lor

problem

GENEVA, Switzerland

of this

trust

•*

I know that this

minds.

outline

small

partmehL
small' trust

classed

Need

with

him.

some

This

changes

for

Higher Trust

Compensation
A further suggestion—and it re¬
to what I have just said. I

lates

refer to the great need of increase
in

trustees'

can

Here

compensation.

done

least

New

and

fee has been

York

possible

Michigan

Executor's

State,

anywhere.

the

J statutory

Administrator's

increased

only

once

since the year 1846.
That was an
increase of 1% in 1931.
So, for
85 years this particular fee re¬

mained
pense

unchanged, while the ex¬
of operation increased many

fold.

■

think

lations

public

and

which
ness

that

experts

public

our

could

result

authorize

attitude

willing¬
.compensation
with the high
a

keeping

grade

trust

service

And

should not stop

re¬

create

legislative

would

formed.

the

ques¬

of'

Associa¬
somewhat

bring about.
Anyway here is the suggestion for

should be transferred to the bank¬

ing department, how

3%, at the most, to the
earnings of the bank?

the

what it may be worth.

gross

Banking

in laws which I believe would not
be too difficult to

earnings from the trust business
to

Therefore if I

officers

the

Bankers

plan would require

it worth

the bank

directors

some¬

given

•

"balmy" upon the subject, so is
Mr. Stephenson and I will be glad

liabilities

and

School

American

tion.

experience,

relation.

and

supervision
and

risks

"|.

Department

Graduate

after

and after they have learned

adminis¬

by our own Gilbert T.
Stephenson, Director of the Trust

managements of state and national
banks

■

„

advanced

separately.

their

and

would

I learned after writing this
sug¬
gestion for regional trust com¬
panies that it had already been

course, that some trusts
show a profit and some a

taken

operation

very

naturally

ail

made?

villages

That

tration.

proper

expenses

towns and

ous

including a correct por¬
tion of salaries for supervision
by
officers.

regional

company, so to speak.
The
automobile has brought contigu¬

expenses,

bank

combine—a

can

trust

earnings after deducting the abso¬
lutely necessary and unavoidable

will

CO.

this

trust'

and in counties where the smaller
banks : have
trust
departments

day and the average trust depart¬
ment $100 per day.
ings.

survey

Let

This plan
prob¬
ably would not be necessary in
large cities already supplied with
profitable trust organizations. But,
consider
whether
it
might not
work in average sized towns and
the nearby surrounding country

gross

Superintendent
year

individual

each trust depart¬

of the State of New

ing the

the
effi¬

departments. ■ In this way :
profits of a business large
money will return

the

according
to
the
Average volume of trust assets partments,
:'i'i Comptroller's report, earns $1 per
volume

that

will

company with the stock owned by
the banks which surrender their

Federal

Kansas

from

came

the

in each trust, $115,356.

Teletype NY 1-999

leading Exchanges

one

approximately
enough to make
earnings of banks from to the banks.

York

amount

and other

the

organization be

that

national

Uptown Office—Sherry Netherland Hotel, 781 Fifth Avenue

Exchange

administration.

Bank

department, $37,945.

Average

its

combined

Reserve

earnings' (per

STREET, NEW YORK 4, N. Y.

Exchange

merits

departments

volume

following:
gross
earnings

gross

Superintendent

trust

New

also shows the

Average
trust, $$92.

the

Stock

mind

community

shows

Currency

NEW YORK COTTON EXCHANGE BUILDING

York

Its

ciently administered by one work¬
ing organization which, naturally,
would be very much smaller than
the combined organizations of the
departments so combined and, in
fact, just as, if not more, efficient

the

regulating fees, result¬
average increase of trus¬

I have often wondered what the

New York Cotton

small

increased

State laws

loss,

New

have

icport

effect,

Established 1856

COMMODITIES

York

trusts

kinds

•

would

the overhead
chargeable to the
output, and therefore the greater
the profit.; So why not combine

outside

likely, of

STOCKS

and

outweigh its disadvan¬
The central principle of

what

It is signifi¬

New

deductions

Telephone ROwling Green 9-8420

own,

suggestion.

tages.

larger

cities

City.

this

department

60 BEAVER

recklessness

retired trust official

not

may

ing in an
a public institution tees' annual commissions of 37.8%.
Also of challenging significance
people of moderate in¬
is the fact (ascertained from the
comes, and not exclusively the socalled wealthy, as some have sup¬ Comptroller's
report
and
from
posed.
.;Vv;
./ surveys made in Michigan, also by
is,

his

make,

corpo¬

day for the average trust and
$100 per day fordhe average trust

H. HENTZ

the
a

whose opinions are unofficial and

per

■t

Merger Suggestion
all

abandon of

submitted to the State Legis¬
lature and had a lot to do with the

$370.

annual incomes

by the

operation

been

trust institutions in New York

City, and

year,

These figures dem¬

beneficiaries
some

Trust

being

average

ment, $12,862,209.

take

operation

compensa¬

which you all
trying to bring about
a tough
problem, too,
in this period of
rising costs.

Division, consisting of

the

increased

and which is

was

the

arrived, in the interest
of both your institutions and
the

has

have

-Vv rate trust accounts (mostly in New
York
City) is conducted at an
acceptable margin of profit."
-

$1,200,

living?

I know very well that I cannot
tell you anything which
you do
not already know about these two

time

vision of the 74th Annual Conven¬
tion of the American Bankers As¬

the
upon

investments and the
sky-rocketing

problems.

*An address by Mr. Stone at the
Annual Meeting of the Trust Di¬

return

"That

cant

The

who

tion, subject to a resistance which
you all have met, and decreased

accounts, is unprofitable."

agency

shows that 54% of trusts adminis¬
tered by trust institutions have
an
annual income of less than

reported

•

The first of these
you

during

has

solution

estate accounts, trust accounts, and

per¬

satisfactory basis. Thefe

The notable circumstance
First, as to the problem of the
well known in the
manufacturing
small, and in-fact of the medium about this report is that it was
business, viz: the greater the vol¬
based largely on the operation of
sized, trust department.
ume,
the less the proportion of

and

these

A survey made-by the
describing
development of Division,
completed
last

the

sonal Trust

well-

Problem of Small Trusts

mem¬

second is: What is your
duty
necessity to the beneficiaries of your small
in today's business of
managing and medium sized trusts who are
property
and
aiding
in
the dependent upon the income from
smooth running of family affairs them for their
living expenses and

ization has

facts—also

known to you—and to suggest in
what ways you might aid in find¬

Sept. 22, 1896,

utes assigned to me
the growth and

tremendous

and

organized
on

the

nual
on

Anniversary of the Trust Division
the

I need not

heard all about that at the Fiftieth

with

bers.

this period and how they have af¬
fected

was

assemble

bers.

describe the vast changes

even
j

Louis, Missouri,

Age

Material
and the Machine Age

vari¬

ously

Ralph Stone

record, just a paragraph
the history of the Trust Di¬

on a

is always the chance that a proper
solution will be found. A natural

people

serve

With

For the

seem

institutions

out trust

confiscatory taxation on fixed income groups and suggests
only practical remedy for their relief is a truce among warring elements
founded upon
justice.

unavoid¬

able.

Points

ment

of inflation and

nces

seem

always trying out departmental re¬
adjustments to put tne trust depart¬

of trust services and contributions

progress

trust

for

refere
which

rich, and stresses problems of small trusts and
departments. Recommends community merging by trust companies in
operating trusts, and higher compensation for trustees. Depicts adverse effects

Division,
I
hope I may be
excused

history and

made by Trust Division of ABA.
of moderate means as well as

Trust

the

Mr. Stone recounts

now

think,

per¬

too,

trying.

de-

problem of the

constantly in your
I know, too, that you are

Duty

the .Trust

Institution

The "Forgotten" Trust
.

Now

your

Beneficiary

the second

problem,

duty- to the beneficiaries of

THE

Number 4740

168

Volume

your trusts who are in the "fixed
income" group known today with

others

"forgotten" groups,
being ground be¬

the

those

who

are

tween the

millstone of ris¬

upper

ing costs of living and the nether
millstone of constantly reducing
income
from
investments.
The
of

beneficiaries
medium

trusts

sized

ing power of their savings of ap¬

difference

problems to the solution of which

much of the necessities of life. The

our

high

and rapidly mounting cost
government
adds,
through
taxes, to the prices of everything.

tically

you

can

your

contribute

trusts:

Purchasing

"forgotten" group be¬
no
champions in

the

behalf of

Inflation and the Reduced

Power

Dollar

cause

■

The

the

bonded debt is

Federal

quarter of a trillion dollars and,
approxi¬

with the indirect debt, is

between

much

very

this

income

and

our

property of those who have placed
it in your hands for care and pro¬

which

tection

should

from the taxpayer as
91% of his income; and

fense

own

Federal Estate and State

Federal

own

takes

what

skill,
and

tax

away

much

over

there

Inheritance

(1437)

Inheritance.

proximately 25 billions of dollars.
So your beneficiaries' income is
cut in half, and with that one-half
they can buy only one-half as

only members of this group. It is
called

FINANCIAL CHRONICLE

eyed" economy which crept upon
it gradually. It will be a long and
difficult proeess to straighten it
out. Here are some of the major

the

not

are

country is suffering from a "cock¬

and

small

your

COMMERCIAL

which

taxes

confiscate

prac¬

of
hp has accumulated by his
ability, hard work, thrift
sacrifice?

self

difference

between

80%

alert

danger

signal which

to action in de¬
trusts? There may

you

your

something in what that Boston
citizen said in the opening sen¬
of

tence

"Being

his

which

will

mind,

sound

read:

spent

cent I had."

every

there much

this

practical
of property and the

Army

Government Employees

Reliable sources say that one
trillion dol¬ confiscation
lars. Six ciphers have been added Communist "abolition of inheri¬ out of every ten in gainful occu¬
legislative halls or in public office, Bureau of Labor Statistics shows
tance"? Have we, therefore, really pations is on a government pay¬
the dollar will shortly be to our government cost arithmetic
and no remedies are proposed for that
in the later half of this 50 years a Communist principle at the core roll. We used to shudder as: we
its relief. Others in like situation worth only 50 cents. There are
have

retired from

and

who

those

are

professional

business

active

life,
such as pensioners of all
kinds, school teachers, ministers,
factory and mercantile workers,
farmers

and

businessmen

small

by dint of hard work and
thrift, have saved and invested
their
savings.
It includes
also
"white collar" workers employed

who,

those

smaller

which

ones,

on.

added the religious,

the U.

S. mately one-third of

deposits, mostly

which

than 50 billions of dollars of

time
all

the

banks

from

savings, in
the

50-cent

dollar

means

that

government

spending

and

Confiscation?

savings depositors in purchas¬

The

requirements

outstanding

of the "Communist Manifesto" by
Karl

government tax system? It
only a step away from the

our

seems

saw

the

mounting

Karl Marx slogan "From each ac¬

in¬

other influences, has caused a loss
to

considering; that is

As to Taxation—Is It

flation, brought about by tremen¬
dous

are

millions, to billions, to tril¬

lions.

United

States—national, state and mutual.
A

Marx

and

Frederic

nation

cording to his ability, to each

(1) Heavily Progressive In¬
come
Tax; and (2) Abolition of

time

not

for

trust

you

inquire

whether

not this trend towards

practical

Bankers:

Our

yourselves

confiscation

the

billion dollars.

Advertising Builds Your Sales of

the

being seriously impaired

are

NATIONAL

by reductions in rates of income
and by increasing costs of

BANK

CITY

return

operation — another nut-cracker
operation. Some colleges and uni¬
versities, hospitals, homes for the
aged, etc.,
Our

and

cultural

seriously

are

include

trusts

of these endowment funds.

many

So this
;

welfare

social

life
Your

threatened.

All

problem also is yours.

these

slender

their

see

melting

incomes

the
inflationary
by

: away

vicious

working of
forces, among which

the

are

Federal

farm

prices of
the rapidly

support

and

products,

con¬

strikes,

stantly recurring rounds of
the

Travelers Checks

faced with extinc¬

are

national

tion.

mounting cost of all kinds of gov¬
ernment.
These are
among
the
„

of the rapid rise in the cost

causes

They

section of
a

meaning

are

those

this

millions

60
in

welfare

occupations—the

gainful
of

—

has

there

stated,

jobs

millions.

been

million

"forgotten"
friendless

States
Senator, in a
article, estimated their

United

number

the

are

society. A while ago

our

magazine
often

these

living

groups.

the

"for¬

gotten" group- is certainly of vital
importance to the national econ¬
omy. But it seems that they are
susceptible to compact organ¬

not

ization, and therefore have no vot¬

ing
influence.
They
lobbyists, no leaders.
On .the
other hand,

have
all

other

of our economic and social
are
highly
organized
into

groups

life

which

blocs

the

swarm

and

Congress
and

halls

state

legislatures,

government

centers

They openly threaten
and
public
officials
with political oblivion unless they
do their bidding. You know who
generally.

The

majority of

your

clients and prospects

are

interested in travel—read

legislators

and how well equipped
and well financed they are. Some
of these
were
organized in self
defense to resist legislative attacks
and others to gain special favors
and advantages. To be elected and
re-elected to public office, if you
so aspire, you will be subjected to
the
enormous
pressure
of these
they

are

publications carrying National City Bank of New York Travelers Check
advertising. Often, all that is
tion

your

because you

necessary to

make

sale is

part when clients withdraw funds. It is

collect % of 1%

commission is remitted to

a mere sugges¬

profitable business

all sales and keep it all—no part of the

us.

blocs.
This is not the

place for

Write for

lecture

leaflet

economics, for which I would
qualify anyway. I do think,

showing

you

how

tie in with

you can

great

upon

not

however,

that this is

international

advertising campaign

occasion

which it is proper to urge
you
to dedicate a part of your
time
to
participation in public
service to
exert your influence
upon

bringing

about

measure

and

"forgotten"

the

other

groups.

of your

working hours in this

There is

way.

THE

NATIONAL

CITY

trusts.

There is
,

BANK

Head Office: 55 Wall Street, New York

better way of serving
Member Federal

your

&5an/dn<f

so-

but in-the line
official duty to use part

your

fylu/e

fyfai/d

I think

it is not only proper
of

result

of relief to your trust

beneficiaries
called

corrective

will

which

measures

quick remedy. The

Deposit Insurance Corporation

horrified

Today the Federal

budget is nearly $40 billion. Fed(Continued on page 41)

whose endowment funds,
especially the income from

them,

and

announcement,, within the
of most of you, that
the Federal budget had passed a

stunned

government
millions. The

the

country
and

the

recollection

officers

Engles,

are:

ac¬

cording to his need."

cost

was

charitable and

institutions

educational

index

not earn

should

these

price

the

mostly

businesses,

enough to grant wage and salary
increases, also retired professional
men,
lawyers, doctors, dentists,
and

The

has

NEW YORK

(1438)

THE

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, October 7, 1948

Our Economic Dilemma and the

Way Out

By FRED
The

position

new

which

has assumed in

country

^ .'V

I.KENT*

Director of the Bankers Trust
Company, New York City

our

its rela¬

tionship with the other nations of

Prominent banker, laying blame for

the world makes

time

it advisable for

just what obli¬
gations

not

to ascertain

United

has

have been necessary nor
desirable, if
and adds that if U. S.
help is extended

the

States

why.

is also impor¬
tant
that we
look

the

into

corporations. Lays inflation to Government

private enter¬

prise
its

status

well

average

Fred

Kent

who

carried

we.

infiltration

the

through persons
placed within our gov¬

were

and who

structure

deliberately

were

not, at first, recog¬
nized for what they were.

manner

diplomatic

the

ernmental

negotiations with other countries

means,

ports and the

government

break down the mental resistance

have after all.

and

inconceivable

almost

nation such

honorable

that

how

the United States

people'from

our-

carried

constructive

beliefs

within

into

them

envy,

to have

which

gress

created

the Con¬
which had the right to pass
upon them if it had so demanded.
These
decisions
resulted in
the
swallowing

There is

question but that

outstanding in sound
The

constant

closed World War II under condi¬

personal desires for advancement
without responsibility could not

tions

help but leave its mark

it within

that

our

to have

power

would

have

made

possible for the nations

fine people.

involved

great destruction brought
by the war to have begun re¬
building
their
national
lives

promptly and effectively.
To be
sure, the mentality of all peoples
had been so upset through war

and

that

the

existed, that

difficult

vicious
peace

bring about, although
this country had the power to
guide
such
developments
into
world

our

purposes

great

was

the weight of this

who

many

the

A very different

word

ordained to preach
God were led into

were

following the line that made for

brought
into being than that which exists

destruction.

today.

emotions that

could

have

been

The

integrity

Unfortunate Propaganda
There is not the slightest doubt
that the propaganda of the 1930's,
which was carried on in the United
States bv those in government as

*An address by Mr. Kent before

the

74th

annual

meeting

the

State Bank Division of the 74th
Annual Convention of the Ameri¬

Bankers Association, Detroit,
Mich., Sept. 27, 1948.

can

freedoms as

tion. Where

was

turmoil

seriously rocked the
people.
It was

our

only from such accumulative
rogression in the mental
our

ret¬

power

people and their normal be¬

liefs

their

that

was

own

responsibilities

possible

for

Lithuania

could

control
would

among the nations
that
crucify peoples by placing

them under totalitarian
powers.
It is inconceivable that if our

big bear.

responsibilities which

the

that

that resulted in the

disintegration
of the peoples among the

European nations.
Without

introduction

line,

creation

life

which

unrest

the

calls

for

every

solely for the

cause

they could

cept

under

there

Dealers

sity

see no

its

false

would have

for

been

Marshall

any

pur¬

hope ex¬
promises,
no

neces¬

Plan.

In¬

stead, all surviving peoples could
bent their energies toward

have

restoration

PUBLIC UTILITY, RAILROAD

they

lived.

the

where

areas

Their

governments,
with
small
loans,
could
have
started
the
recoveries; and as
such
recoveries
proceeded,
the
people would have become more

and INDUSTRIAL SECURITIES

and

contended. They

have been able to
toward
that

see

complete

came

from

would

the progress

rehabilitation

their

own

work.

Contentment and happiness could
have

W. C.

Langley & Co.

Members New York Stock
Exchange

115

Broadway
Tel.

New York 6, N. Y.
BArclay 7-8800

4 ^

been

the

order

the

day.

This country could have done its
part in a natural, normal manner

without being led
diose schemes, or

into any gran¬
into the inter¬

polation of political
foreign countries.
Under conditions

however,
duty

was

endeavor

Our

power

into

way unperturbed and control
things which we give in such
manner that as they are
accepted,

community, (anywhere
in
his
country—without interference by
his government except as he may
trample upon the rights of others.
Every man may own property
and

can

ment

depend upon his govern¬
protect him in his right

to
so.

that

wise

makes

government

possible,

that

they exist,

with

all

major portion of their returns.

Until those to the left obtain suf¬
ficient power to require that gov¬

ernment,

through taxation, con¬
large part the earnings
profits
of
those
receiving

fiscate in
and

medium

nually,

Riveting Socialism
of

will

was

an¬

the

jeopard¬
however, pri¬

never

ized.

At present,
enterprise cannot function
normally and freely as it should

the

people,

with

smaller

Britain

the
we

people
help to

particularly
incomes

those

who

must

depend for their jobs and most of
their conveniences of
living upon
the use of investment and venture

capital that represents
come

over

sums

tem

under

excess

in¬

required for liv¬

ing purposes—capital
available

that

not

present

our

sys¬

of taxation.

There is
the

oil

avail

Britain

Great

large incomes
capital in

vate

further vital part of

private

under

What

and

venture

United States

greater freedom is evidenced for
the peoples concerned.

enterprise
system
through corporate

which

forms

business

and

industrial

procedure, those with smaller
who

comes

can

save

in¬

something,

rivet the fetters of socialism upon

however

them, and lengthen the time that
they must suffer under such con¬

benefit
made

ditions before they can save them¬

selves and

companies, which in turn invest
their deposits so as to further
pro¬
duction, which also increases the
number of jobs available.
Further,

ard

reach

toward

stand¬

living that is not possible

under
great
bureaucracies,
but
that is easily attainable under free

enterprise? By assuring ourselves
that

the

Britain

will

aid

will

not

Great

extend

wasted,

curtailing the free¬
dom of the British people in any
way, nor will we be demanding
that they govern themselves in
our
way. Instead, as givers, we
will control our gifts only to the
extent necessary to make them in
our opinion — most effective for
the British

people. As givers
opinion should prevail.

little,

receive

can

the

such

savings. This is
through their use

possible

savings

banks

and

insurance

after sufficient

accumulation, sav¬
ings from small incomes may be
invested

directly in income-pro¬
ducing securities.
Such invest¬
ments help furnish the
capital that
makes
also

production

possible

helps to create

tion

mass

and

produc¬

conveniences
that
may
have been tested and found to be
value by those

supplying

ture

our

ven¬

capital.

Undoubtedly,

many

of those who

have advocated
taking the earn¬
ings and profits in large propor¬
On the other hand, if we delay
tion receiyed by those in the
mid¬
the breakdown of a government
dle and higher income
brackets
which; wishes to
nationalize its
have
not; realized that if this
people and thereby destroy them,
method of taxation continues in
we will be wasting our
substance, the
United States, it will serious¬
we will be sacrificing the Ameri¬
ly injure those with smaller in¬
can
people needlessly; and we
comes as well as our whole
will be prolonging the hardship of
people.
Further they
apparently do not
the British people. The same pro¬

cedure

should

country;

that

sustenance

is,

aid

and

every

should

where

give

it will

enable the

people to do their part
toward the accomplishment of re¬
covery as

quickly

possible. We

should put no pressure upon them
of

know that in the United
States,
47 % of dividends
paid in an aver¬

age year, including such dividends
as
went to hospitals and educa¬

tional institutions,
etc., were paid
to those with incomes under

$5,-

000

kind by trying to force
help against their will. They

any

our

selves

whether

ceive what
under

not

the

they
may

terms

their

to re¬
have to offer

that

care

interest.

believe

ing

the

from

waste
the

the

world,

standpoint of

Simple Government
The

private, enterprise system
only the simplest form

requires
of

government—one

bureaucratic

either

our

year.,

and

are

justified, however, in further¬

our

Private Enterprise Requires

should be left free to decide them¬

will

naturally

best

line is to go our

catered to the Russian power
manner
in which we did

communist

to such

own

war¬

the

of many

peoples of Europe.

the

helped to
create. It is only because we are
responsible in these ways which
we 'brought
upon ourselves that
we
are at all justified in under¬
taking the Marshall Plan. In fact,
such a plan would not have been
necessary nor desirable if we had

answer

trying to bring order out

chaos

the

our

which

be able to do in the interest of all

jhe communist line,

operate, will be to en¬
deavor to further unrest by claim¬
ing that we are trying to force
our own way of government upon

opportunity to obtain
tremendous power, we have as¬

walk

Distributors

Marshall Plan

pose of furthering discontent so
that the people might be brought
under
a
totalitarian power
be¬
—

Naturally

for

but also in the Far East where

we are

trying to help.

saved
up

the iree-

dom, of the p&opies whom

had

little

been

buch ways as can ieaa to

slightest doubt
but that by the short-sightedness
of our representatives in dealing
with Russia, not only in Europe

the

Underwriters

perfect right, without in¬
fringing on the rights of others,
give what we can, particularly
as
it requires great sacrifices on
the part- of our people, only in

Necessary

sumed

enterprise?
under

is free to carry on as

man

he may wish—in his home, in his

the

peoples of Europe into position
their
own
lives, we
recognize the fact that we

There is not the

her

every

free

system

prevail

totalitarianism.

remake

have

■

not

represented the
forces of evil when they demanded

have

having been carved

Russia Made

who

have

brave

and

the benefit of the

gave

enterprise

higher incomes, including profits,

Estonia, Latvia

could

freedom,

from

spending

ideologies,

must

the four freedoms

are

three countries of

those

we were at
the
advancing the four
the policy of our na¬

to go

Finland

free

leaves to those with medium and

the

forward into Germany
which they reached first, even the

them,
through their negotiators, to give
to

exemplified in the Europe of to¬
day?
If our armies had been al¬

rant

result

representatives

our

time

their

for

This says to our people in no un¬
certain terms that in trying to put

being

were

totalitarianism,

and

our

any

communism

concessions

same

make

Again, and this is most impor¬
tant, a system of taxation must

feed the
it. From

not

that

to do

our

disas¬

and

must

standpoint

is
we

totalitarian¬

Interest

socialism leads to communism and

to.'Russia.':

were

high places by the voice
people.

propaganda that it weakened the
influence of the
churches,
and

very

sound channels.

selfish

for

of the

forces

was

upon

movement of

the

lesson from

which

forces

deliberately forced to leave

made

the

unfortunate

that

which

power

This means,

us.

concessions

trous

armies had been in position to
the Allies but that they

voted into

conditions and propaganda devel¬

through

thought dissipated the integrity of
the country, and many who had
been found guilty of breaking the
laws in ways that were dishonest

the

oped

Such

previous
ism,

take for

While

totalitarian

have learned

giving to that power of a strong
Germany that the Ameri¬

can

being
deliberately
walk of life by

every

opposed to

hold in

day.

them

the

of many nations by
great totalitarian power, and the

hammering of criticism, smearing
of others, and the development of lowed

made

that could

can

have been repudiated by

accomplishment.

exists

that

for

wish to help.

Enterprise

Just what

bring

striving to
must fully
realize
be successful only if

way

to¬

situation

this,

chaos. In

base such contracts as we
be willing to undertake with

country has
manner
of
is in
the interest of the people.

who made them

national

had

time

command

our

out

order

con¬

which

may

doubt

the

this

power

upon

People

help is extended in such a
that it will nullify the unrest

through agreements in
which it had a part, into the inter¬

led through
into

evidence

history of
proved
beyond

that

tricably,

been

World War II

moment, let

The

and extravagance.

waste

be playing a part.

may

the

Free

our

negotiations in which it took part
to have
been tied up
so
inex¬

nation

not

of those in other nations

those whom

ao;

something for nothing, our
people lost the sense of upright¬
ness
that throughout the life of

may

our

greed, and hatred and the desire

could have allowed itself through

had

sider

not catered to Russian power

thinking net natural to

were

ways

had

1930's and

false

re¬

of the radio by

use

those in and out of government to
of

the

before, during, and since the close
of the war, we begin to wonder
just how much intelligence we

people, we would have been will¬
ing to accept decisions of those

following its end.

communist, line

high
of intelligence; and yet

World War II and the

which

our

cause

back upon our entry into

look

nation

position taken
negotiators as the war

This propaganda itself arose be¬

ourselves
a

at the bottom

was

unfortunate

closed and

this

country, we
have piided
upon

others,

of the

to¬

day.

threaten¬
Says Marshall Plan would

pressure groups

system
ascertain

and

or
we

war¬

improperly it will foster rather than
allay unrest and totalitarianism. Defends private enterprise and denounces
our
inequitable taxation as well as growith of bureaucracy and Government

assumed

and

had

Now for

negotiations* attacks false propaganda and
ing free enterprise and faith in our institutions.

people
where

serious international situation

our

own

operations

that

does

that

not

come

not

carry

within

the

sphere of individual citizens.
Such a system
requires a govern¬
ment whose
»fiV

only police activities
'Tp—r-f.

Volume

in the

168

community, state,

or coun¬

for the protection of the;
rights of every citizen.
To carryon
under private enterprise, no
police surveillance need be cre¬
try

are

that

ated

thoughts
of

aimed to

control the

actions of the citizens

country who can live under
the complete freedom of their own
wills- provided they do not tres¬
a

the rights of others.
with private enter¬

pass upon

fit

prise,

laws

make

should be aimed to
possible for men to ex¬
ercise their freedom and provide
protection "for them in doing so.
This

that

means

must

communities

with each
other through their local govern¬
ments
by arranging for protec¬
men

tion

cooperate

property and by arrang¬
ing through taxation for essential
community services such as roads
and

such
of

and the extension of
methods of control

sewers,
proper

water

and

power facilities as
protection from mo¬
nopoly.
The central government,
in addition to regulations which
may be necessary for private en¬

will

COMMERCIAL

THE

Number 4740

the

United

Government

States

ment

operating under an annual
deficit, which, of course, explains
the great increase in the'national
debt during this time of peace.
There

greatly prolonged by the gov¬
procedure which was
to
develop controls' over
enterprise.
In other- words, the
controls
that
were
engendered
prevented recovery and proved
conclusively that the private en¬
terprise systemi as it had previ¬
ously existed in the United States

in time of peace the mar¬
if they are free, serve the
purpose far better than any acts:
agents,1 who, regardless
whether their intent may be

the" people

are

the activities of the

created b,y

forces

Controls

commodities which had

many

supply

and

demand

one

would

If they did,

possibility oi

continued.
It

ities

that

needed

are

such

under

terprise

function

the

conditions

country today is due t'j
positive cause, and all of the
hoped-for remedies that may be
applied to the effects that may b(3
developed from the cause are use¬
less and futile as long as the cause
our

one

remains.

unfortunate

that,

many

people do not realize that such a

govern¬

ative of millions of people as ex¬

situation

must

develop

The
ment

cause

excessive

spending;
(Continued

under

on page

in¬

railroads

and

We must work at democracy

that will
preserve the rights of all its citi¬
In

zens.

the

ways

communities

(not

the Federal Government), systems
of education
should be fostered
and made available to the families

all

citizens

against

taxation

received to meet its costs.
It

inevitable

seems

that

world

velop

which

desire

special

de¬
con¬

equilibrium

between pressure groups
furnish
protection
for

that will
all

the

people. Where it does not do this,
hardship is inevitable, and. the

Less than four weeks from

greatest

good

number

cannot

Americans will go to

for

the

greatest

exist.

begins

government

When

introduce

in the bureaus is misap¬
plied. Such portion of the people
as
may be employed in govern¬
of those

bureaus
group

pressure

better

established

could

country

to express

their

if they were engaged
enterprise production or
services necessary to enable

such production
The ability
in

to be carried

grateful

electing the heads of their government.
be the

will

largest free election in the

It will be held at

time when the secret bal¬

would

recognition
their

citizens

closely watched from the far¬
.

thest

corners

of the earth.

In these troubled

benefit

would

and

fellow

greater
well

themselves if they became a part
of the private enterprise system

are

dealer

will

publish it.

public service, "So You're Going to

being given

away at

states

marketed.

If there is

Oil

near

you,

write for

1, Illinois.

days it is the responsibiL

ity of every American citizen to make democ^
racy

tive efforts.

work.

That is

ing

Government

why The Pure Oil Company is offer¬

a new

booklet, "So You're Going to Vote."

Corporations

Principally during the last dec¬
and a half, government cor¬
porations have been formed which
carry on in competition with pri ¬
vate
enterprise;
these
should
largely be abolished. Following

This handbook tells young

Americans the

ade

1933, the government got into the
way
of
promiscuous
spending
which increased the national debt

enormously,
so

that it

billion

before

out.

This

the

was

total

in time of

from

1933

1941

peace,

even

rose

World

peace,

total of $22

$55
War

billion
.11

broke

increase, in time of
$7 billion greater than
debt

following

World

War I. In large part, it was waste¬
ful and unnecessary and was due
to the rapidly increasing bureau¬

of the period, which ham¬
pered the productive capacity of

and

hows

whys of voting, and contains a

wealth of information about which everyone

should be

fully informed. It covers such vital

things

how to mark

counts,

how

•what officials
how

vote

from your
This

ballot to be sure it

know the candidates and issues,

are

authorized in polling places,

case

of illness

of absence

voting neighborhood.

16-page, f pocket-size pamphlet con¬

tains the

chapter

voting from the widely

Distributed

as a

public Service by Pure Oil
dealers

throughout 25 states,

cracy

the country, made it more expen¬
sive and therefore
more
costly
to

the

ation

people, and increased tax¬
from

$1,792,000,000 in 1933
$6,880,000,000 in 1941.
j
As a natural resiilt, when we
entered World War II, we started
to

with

heavy taxation and

large

debt, with annual government
penditures

which .had

ex¬

increased

from

$4,611,000,000 in 1933 to $13,862,000,000 in 1941.
The result
was that during the
period from
1932

the

opening

of the war,

prod-i

Pure Oil

sure

one to:

The Pure

Company, 35 East Wacker Drive, Chicago

rather than having their

energies
applied to the development of
costly interferences with produc¬

Pure Oil service

where Pure Oil

being challenged in many other lands.

bu¬

government
receive

are

the American Heritage Foundation

stations in the 2 5
ucts

lot is

permission

Vote" is

world.

on.

of those who may be

unnecessary

reaus

connection with the Freedom Train. We

for

free

the

praised booklet, "Good Citizen," prepared in

approval of the American democratic system

and

themselves
in

the polls

for

purposes

their

serve

today, millions of

bureaucracies,
freedom
of
the
people is curtailed, unnecessary
costs are created, and the ability

ment

democracy work

should

Government

maintain

to make

human

groups

pressure

sideration.
aim

with Pure

govern¬

and until that to

people, should also

such

may

Inflation of the kind that exists
in

special regulations that
will require the carrying on of all
businesses

Inflation Cause

develop

public utilities in

the

exist.

afford

terest

American people if they are to re¬
ceive
the
best
service
possible

brought about through the initi¬

which

there

their

material

there are

war,

controls

can

ernment

duction.

certain

be carried out by gov¬

of measurement, how fix¬
ing the price of say one raw ma¬
terial affected the prices of and
therefore the ability to produce

means

ingredients the raw
question in varying
of
quantities and qualities.- Black
good or bad, cannot operate with markets were created, and pro¬
in
the effectiveness of free markets. duction
many
things was
This is true because no man can stopped against the interests of
have the understanding that rep¬ the
people and against proper
resents the pulls and .slacks that pricing while government controls

which

could step in and de¬
interferences that wasted
time of those engaged in pro¬

time of

ends, such'
abolished at

war

kets,

velop

During

should

once, as

ernment

Price

soon

controls

than under conditions where gov¬

the

government controls.

Just

aimed

for

directly
or
indirectly
through the markets. " '■

While price controls prevailed1 the resumption of controls in'this
required for war production, following World War II, the peo¬ country as is advocated by so
government must see that they ple were fooled into believing many these days who can see only
are turned into channels that will
that they were effective and in one phase of the situation and do
meet war needs first and civilian their
interest.
They cpuld not not realize the complex structure
of the vast numbers of commod¬
requirements afterwards.
"
i comprehend,as
they
had
no

seemingly no doubt
depression of the '30s

better

ercised

are

ernmental

far

For instance;

(1439)

tain kind's of raw materials which

was

assume.

CHRONICLE

where there are, scarcities of cer¬

was

but that the

must

FINANCIAL

46)

(1440)

THE

COMMERCIAL' &

FINANCIAL

CHRONICLE

-('

Thursday, October 7,1948

Reginald A. Ward Is'

Karl Herzer N. Y. Mgr.
Willi G. G. Haas A Co. For R* L. Day & Co.;

G.
C.
Haas &
Co.,
(Street, New York City,
>

of the New York Stock

that

-announce

has

*in

Swift Is Sales

with

bond

department
'New York office.
He is
Vice-President

ciated

them

firm's

Eldredge & Co. and operated his
own

1946.

that

During the war he served with

Rowland

Swift

has

rising

brink

John F. Garvey will acquire the
New York Stock Exchange mem¬

John

that

bership of Edward T. H. Talmage

J.-Gallery,

thfe

firm."" Mr.

associated

become

with

•

Gallery "was

Alfred

Noyes,

state

mind

TOTHE

dom.

McCarthy

respecting

eco¬

business,

and
oppressive.
Other
spokesmen are querulous

melancholy.

Seldom

does

continuing government

simism

blurs

business

the

leaders

vision

and

pes¬

our

confuses

FOIl MANY YEARS we have sought to help you

ment program.

attempt to inter¬
pret government policies designed

exacting

In this work

gratifying

institutions

many

invest¬

your

almost

when

to make futures

measure

throughout

point

chaos

■

■.

have enjoyed

with

success

requirements

necessar

ilya^rejia1j)ie jndle^ of

Consequently,

long

not

objectively the service
what you have

Your

first

quality.
We
our

ago

have

'f'

tried

offer

has

performance

however,

that

difficult

the

good

proved

abilities

our

suggestions.

handle

effect

given

broad

experience

large

blocks

the market.

securities

without

undue

We maintain exhaustive records

considerable

help

the

These

confidential

when
of

rights. We have witnessed
ascendancy of an organized
whose

movement

the

you

selling opportunities.
98 offices in

are

maximum

Here,

96 cities

the

market,

number
we

can

think

you

buying

you

people

Produce

want

will agree,

lifetime,

our

men,

Merrill Lynch, Pierce, Fenner & Beane
Underwriters and Distributors of Investment Securities
brokers in Securities and Commodities
70 PINE STREET, NEW YORK 5, N. Y.
Telephone:

WHitehall 4-1212

era.

should

out

and

have

seen

public office,

produce and

our

our power

power

to con¬

and then maintain that bal¬
by the adjustments time and

sume,
ance

events dictate.

Against
have

such

background, I
appraise our
economic position and to

been

current

project future economic expectan¬
cies as applied to retailing in the
remaining
months
of
1948.
Candidly, I do not believe that
even
the Divine Auditor himself,
could find any order or rationali¬
of

miserable economic

the

practices

that

have

under¬

country in the past
15 years, and that have brought
lis tb our present position. Conse¬
quently, I hope that you entertain
our

false

resolve

hopes

about

ability
complex

future

our

have

economy

spectacle

witnessed

people

our

the

being

state of confusion

regarding war potentials. On thr
basis of uncollectible foreign loans
have

witnessed

the

reasonably

auditor,

all

where

that

have

policies

may

remarks, I

should like to voice this

conviction.
that

That

despite

personal
.conviction
is,

the

clamorings

noisy
minority
groups,
special
pleaders
and
woefully
misin¬
formed reformers, it is my im¬
pression that the vast majority of

artificia1

despite

some

tions in

our

the

and

inflation

our

economy.

We
of the

governmental
encourage
the growth
seen

"welfare state" and propa¬

gandize new concepts of need. In
1933, a needy person was a jobless
person. State concepts of need, are
now

defined to

include

pensions
relief, medical attention, advanced
schooling, and a galaxy of other
nebulous

and

poorly

defined

needs.
,

meeting

Division

Dry

Goods

of the Small
the
National

Association,
111., Sept. 30, 1948.

else

sort

native

tures

stubborn be¬

temporary

disloca¬

economic system, that

are

and

way,

will

most

he "needs" it. Who, in this
is going to pay for it? Ob¬
viously, the middle classes.
cause

case,

I submit that

ing in

the

spending

our

present think¬

governmental

area

and

extravagance

wage,

our

Our

Federal

Government

financially in the
condition

all

price, profit considerations,

think

must

that

resolved

country is whether
to

first

the

governmental

units. It has the largest debt. This
be
paid. And as impor¬

tant,

the

fact

that

has

not

spending tax revenues
printing
press
money
by

but

been

the
printing:
"selling" them to the

round-about
bonds

and

process

banks.
A few months ago, we were in¬

that

Federal

income

problem
in

our

shall elect

experiment
-—an experiment wherein the state
is omnipotent—where private in¬
dustry is non-existent and where
individual has

ism.

Retail

shall

individual¬

freedoms—or whether

reaffirm

system

faith

the processes of
and distribution are

where

production

our

had

momentarily gone above expendi¬
tures, but that is not cheering.
Federal taxation is much higher
than

can

tolerated

country/ When
nation's

free

controlled

has

the

activities

not

are

have

iThey cannot
they had. What¬

resources.

retain the energy
ever

by the central govern¬

ment, free

enough

20%

over

economic

income the government now
should

spent

debt

re¬

duction, not in spurious loans and
extension

of social and welfare
activities among the people of the
The primary
concern
of
Federal Government is national
world.

defense. With

great

behind

war

it, a heavy burden of international
aid, and the possibility of a war
ahead, the Federal Government

Limits to
In

the

same

and

you

Our

Foreign Aid

area,

can

strongest

think that

find

common

ground with ex-President Hoover,
who has suggested in the

poorly
badly
publicized
report, that our aid to
European countries must be pre¬

circulated,

Hoover

follow the Russian

the

possible

worst

should

ecopomic
fu¬
associated

is the spectre of government.

that

anarchistic and chaotic.

economic

our

irrevocably

with the problems of wages, prices,
and profits.
Suspended over the

Stores

Chicago,

its

system has all the elements of
vitality
and
strength
to
guar¬
antee the happiness and security
needs to be put in the
of all our people.
fiscal position now.
It seems to me, that in a nomi¬

problems

have

the suggestion

—

where

taking us.'

are

our

draw

been

now—and

prelude to

enlightened

can

are

current

our

the record

aid

government

listener will receive and

give.
This
laughable form
when a government promises to
"give" something to someone be¬

stimulation

the

formed

economic problems.
As

for

convey

lief and unyielding conviction that

make

instrumentality of the omnipotent,
state.

implicit belief that taxes
paid by someone else.

reaches

asked

signed

*An address by Dean McCarthy
Offices in 96 Cities

job is to find the

the im¬

invariably

Consume

and

our

Americans hold

be of special service.

Department

another

who

the

someone

"Soak the Rich" is the best slogan.

that

espousing evangelistic schemes de¬

and

people

use

will

the

for

of force. Another fallacy

of Power to

correct balance between

activities

sion of property—and to the right
to earn a reasonable profit.

hierarchy
Institutional

—

can

Arguments

Basically,

upon

too, that government
"give anybody anything."
oniy transfer income from

plied

years.

Correct Balance

know

barons

whipped into

accomplishment of buying and
selling objectives.

Finally,

government into
it clearly

where

showing the distribution of investment securities
by

coverage

areas

better—viciously attack the
unchanging
concepts
associated
with the Christian right to owr
property — to security in posses¬

relating

important requirement involves the ability

are

know

have been called upon

quality of issue and type of institutional
buyer.
records

busi¬

our

ate

through

gone

written in

We have observed so-called liter¬

Further, the variety of

the vital factors of market
supply and demand.
Another

have

put to shame the overt acts of the
unenlightened industrialists and

evaluate.

Research Department in
analyzing securities lend

has

secure.

wej^have witnessed

"trespass

bring

know

someone

appraised ii
some
degree of

order out of the economic turmoil

the robber

think,

solve

our

the

economic

labor

guidance of

Areas

lifetime .and in

our

ness»careers,

the

requirement calls for

institutional problems that

an|
l

analyze

in terms

reasonably

Economic

right to expect.

Here,

substance to

.well a man

obligations. \

organization measuie.4 up to

bordering

Trespasses of Government Into

country^ both large and small.| But\succes& is not'

significant

must

are

zation

the

cannot

someone

excepting

spark of enthusiasm enliven their
statements.

the

events

that

value

pub¬

dull

and

meet

exploding

past 15

in
riddles. Politicians' radio speeches
are

form of taxes.

into

not know how to talk to the

official

headlong

and it is becoming in¬

age

creasingly difficult to appraise the

government, we
have
had
exposures
that prove
conclusively that government does
to

rushing

are

new

•

We
James

misgivings

quarters it .is

nomic futures.

lic,

foolishness,"..but in cer4 create wealtn. Government can
political wis-j only; get its. reye.nues by taking
them from you and me in the
'

economic

futures.

area

and

where the economy is reasonatny
free of governmental interference.

effort, but profligate expenditure of our re¬
social product to which every-: sources by government. You and
Lreaiize tnai gaverhment does not
one has the same clamf. * This

At every
turn, we are confronted
with the bitterness of
uncertainty
that brings to the surface all
of

the

initiative

the

leader regard¬

private

the resulf of individual

that

American

business

our

—

left

Economic Fallacies
>
wholly without success, sometimes
redistributing income withou^leg- i You and I have observed with
islative
backing.
According to; growing concern the public debt
this political school;, income is not accumulations
caused
by • the

optimistic

ing

bring them to the

may

—

time, we have been ex¬
to a political school that

posed

the most;

even

—

our

would redistribute income by fax-'
ation.
That school has not been

attitudes"..of

/Ay>v*«;v.,I,>*'7v ttEv.'v"

whether the next few steps

in his compel1 i n
g ,boo

measures

country at the present time, the industry leaders
darkness, and they are not sure whether

our

for¬

merly with Glore, Forgan & Co.

precipice.

k,
on
Oct.
14 will
become
a
"The Edge of
partner in the New York Stock
-the
A b y s S,".
Exchange firm "of La Branche &
.rather suc¬
Co., 50 Broadway, New York City,
cinctly points
and

has

"marginal" businesses disappearing. of '

immeasuraule

there is solid
ground in front of them

South La Salle Street,

announces

ever so
many industries in
staring into the future as into

are

many

and urges retailers to protect themselves
by giving true picture
causes of rising
prices.

sales depart¬

ILL.—Lehman Bro¬

Jr.,

bleak tax future ahead, with

been

La Branche Admits

thers, 231

and prices and

wages

Supports profit motive in business

Gallery With Lehman Bros. John F. Garvey
CHICAGO,

to find and maintain correct balance between nation's
power to produce and con-/
Attacks government trespasses into economic areas and
exposes current economic fallacies. Sees -

sume.

former

Dame "4

future in light of recent trends, Dean McCarthy points

economic

our

basic task is

out

office, 14 Wall

Herzer

ment of their New York office.

General
Eisenhower's staff in Washington.
later

and

Europe

York

Reviewing misgivings regarding

the

manager

Mr.

made manager of the

the rank of Colonel with SHAEF
in

By JAMES E. MCCARTHY *
Dean of Edward N. Hurley
College of Foreign & Domestic Commerce, University of Notre

Co.,

partner of F. S. Moseley & Co.
R. L. Day & Co. also announces

firm, R. A. Ward & Co., from

1938 to

Day, &

•
asso¬

the New York Stock

New

Street.

Exchange,

former

with

members

of their

director

and

Mgr.

Karl P. Herzer has become

Reginald A. Ward

become associated
the

63 - Wall
members
Exchange,

dicated

just what

without
own

we can

afford

injuring

our

economy.
We
ourselves too, if it is
intention to put the world on

might
our

seriously
country and
ask

permanent

American

dole

basis

taxpayer
paying the bill.

and

with

the

worker

Despite the brave word^s and
pious incantations of profesional
politicians
and
amateur
econ-

have

telling

that

need

fears over our herculean

national

debt, the service cost of
that debt alone is representative
of a withdrawal of $b billion a
year irom
the blood stream of
American industry. We are told
that the debt
token

can

be serviced and

payments against principal
if

made

our

operates

economy

produce or merchandise a product
of merit that is truly competitive
from

view-point* To es¬

price

business,

other view-point, is an
invitation to economic disaster.

pouse any

the

prices,'

area

omnipotent government is one of
the
nasic
orfenders
for by its
policy

guarantees to
agricultural

parity

other

and

farmers

level— fiber producers, they have con¬
tributed more to the underwriting
I wonder if you gentlemen have
of high prices of living than any
an unquestioned confidence in the
politicians' contributions designed combination of manufacturers and
retailers
could
achieve,
even
to maintain
our
economy on a
$200 billion

upon a

a year

$200 billion

had the disposition
such a scheme of

they

though

level?

year

to embark upon
A

Bleak

Future

Tax

date, I would suggest that

you

yourselves to underwrite
schedules that
will be assessed against your busi¬
nesses and against your personal
incomes. Whether you like it or
not, This is the bleak tax future
prepare
new

and higher tax

that confronts

us.

can

annually.

The

of $50 billion of our

excess

money

the inter-related

exist

area

wages,

prices and profits again take us
right back to concepts that have
been propagandized by the wel¬
fare state for the past decade and
a

half.

farmer and

The premise that wages are too
low and that prices are too high
is

complex problem/

vicious oversimplification of

Man's

only just

the brains he
the

skills

* -

born

was

these / personal attributes
always received adequate
rewards.. Unfortunately,
there
came
into our political-economic
Scheme of things a new concept—
Oswald
Spengler
calls it the
"Political
Wage." The political
wage is a wage dictated by the
state and designed to maintain its
political sponsors in positions of
authority, i suspect no one here
today is naive enough to believe
that wages have followed a purely
evolutionary
pattern.
Actually,
existing
wage
patterns /• have
have

their

current

con¬

troversial heights by reason of
governmental pressures; 1 think
no
one
on
the
employer side
would
particularly complain of
high labor costs if there were a
corresponding increase in effi¬
ciency. Such, /however, has not
been

the

case.

are

now

faced

humiliating conviction
and exposure to the fact that high
labor costs and low production
records
may. well
combine to
drive many of our marginal man¬
ufacturers and service industries
with

the

out of business.

implications of high
and

controlled

manufacturers

technicians for

the
labor costs
escape

production, many
are
turning
to
new

tools and

content

manufacturing.

for

The

industrial. workers

was

es¬

trial

people
about

American indus¬
home to an

brings

American family of four

check of
$54.00 each week. One does
an

average

pay

not have to be a statistical wizard

implications of these wage adjust¬
ments will flow down and influ¬

that food
costs have the first claim against
rationalize

ence wage strucutures not only in
manufacturing but in service in¬
dustries' as well.
Moreover, we

anticipate Federal, State and
municipal employees successfully
prosecuting claims for augmented

American family
lesson in the eco¬

average

worker

average

the steel/ electric
automotive
industries. The

tablished" by
and

than, merchants

nomics of finance.

(2) The wage pattern for Amer¬
ican

farther

average

simple

fact

$54.00. Rent, heat, and utilities

the

order.

that

balance

may

the

remains

sentative of your area

Whatever
is

repre¬

of competi¬

pricing

must,

profits

But

profit.

might fight themselves in
ward inventory position.

wages

that

mands

and

fourth
will

antees

curity,

fails

which

its

the business firm that fails
a profit is not
destined
be with us for very long.

increases

will

•

profit

that

and

distributed

can

interests and

areas.

Consumer resistance to ad¬

see

day

generation may not

perform something worthy

serving the common interest
since profits are essential to the

not

creation of

new

maintenance

be remembered."

industries and the

extension:;

and

existing industries.
knows

Man

sutbborness

but

this,

worthy

with a
better

he rails against what he
to be the extravagant

purpose

considers

profits of industry.„ Last year, in
1947, AiYierican industry on a dol¬
turn
of- slightly
more
than

lar

$200,000,000,000
reported a net
profit
of
about
$17,000,000,000
after taxes. Of this sum, about $8
billion

was

distributed in the form

dividends. The remaining sum

reinvested in business

was

and

—

this, it must be noted, is indus¬
try's guarantee that there will be
continuing jobs.
Despite the modest earnings of
industry,-* we are confronted by
the apostle of a new credo—those
who believe and urge that our
We

one.

should

economy

has

name

profitless

had the spectacle, a

even

few months ago,

whose

a man,

associated

been

with

suggest¬
ing that it might be a good thing
for the country if business were
to operate without a profit for a
aspirations,

few years.

the

take

profits

not

are

business

that

view

upon

extrava¬

gant level, rather if anything, they
on

the

low

side.

And

im¬

suffer the

No words better express

the guiding policies of Tide Water

Associated Oil i Company
Daniel Webster.
sive

than these immortal lines from

Tkey ring with the

leadership) that seventy

same

years ago

spirit of

progres¬

built Tide Water's

pioneer pipe line from Bradford, Pennsylvania, to the sea
...

the

same

high resolve that today makes VEEDOL "The

World's Most Famous Motor Oil."

from under financed business.

of marginal type producers in the
period immediately ahead because
of the absence of capital funds to

rehabilitate

some

businesses.

The

ord

for

have always
followed wages and the current
high prices of both consumer and
hard goods is nothing but a reflec¬
tion of higher production costs.
According to some of our political
and according to some
illiterates/American in¬
dustry is united in a sinister con¬
spiracy to push prices to astro¬
nomical levels in their quest for
greedy profits. Actually, nothing

TIDE

of the
short

range

and

pattern

the

remaining

months of 1948:

(1) Anticipation of a .change in
political complexion in our

the

men

the hopes of

that

Federal

the day
planning

that

minds of these optimists—but un¬

only in

measure

futures

are

secure

of his ability to

casual

are

about to end. Even

study of the Republican
•

would

fortunately,

OIL

business¬
of profligate
and
Federal
our

knows

every

MOTOR
GASOLINE

national affairs, will serve to en¬
courage

platform

and

San Francisco

the retailing fra¬
might follow the follow¬

spending

Every

further from

Tulsa

involves

ternity,

ing

York

predictions—with
misgivings, I
economy, insofar

enlightened
industrialist
enlightened retailer

OIL COMPANY

New

great

the truth.

could

p'ASSOCIATED
k

present to draw upon

suspect that our
as

WATER

range

within

not

timidity

messiahs

economic

Retailing Pattern

only have the documented rec¬

Wages
course,

1948

that stem

prognostica¬
my area of
specialization and since, like you,

tions

Higher Prices Follow Higher
of

consequence

Since -long

Prices,

on page

in dividend form to the owners is

'not

disabuse
many

the
; our

THE

PETROLEUM

DEDICATED

INDUSTRY IS
SERVE

MANKIND

themselves

vancing prices will be angrier and

land, call

whether we* also, in our

The business that fails to make

observation, that there
stepped-up elimination

reflect

(Continued

build

de¬
against

wage

in advancing food costs as well as
in the consumer and hard goods

institutions, promote all

its great

make

our

expectancy

assessed

develop the
of

awk*-

business, there will be a propor¬
tionate increase in prices/ These

tion.

forth its powers,

employees, its community and to
our
economy as a whole. More¬
to

resources

profits is derelict to its owners, its

funds to finance the change-over.

Juct

business
to make

American

The

futures.

portantly, I think that American
management men must meet the
challenge to increase profits or

the

our

are

round

the

spring which guar¬
independence, our se¬
our
ambitions, and our

well

the

(3) I take the view that in linb
the recent upward revision

the

are

their

with

industrial and
financial future of America. It is
of

retail

Failing this, they

sights.

has ever suc¬
cessfully resolved the problem of
what constitutes a reasonable or
barometer

simple facts,

reorient

Business Profits Essential

This

will be

these

against the politicians

and

policy change costs money
again, some of our small and
marginal manufacturers are find¬
ing it hard to find the capital

the

look

that many of our

No one, of course,

ma¬

chines that will reduce the labor
cost

immediate future.

need

believe

that industry strikes

Presidential

attempt

politicians
commit,: themselves.
Despite this,"tne anticipation of
change
will „ produce
business
optimism that augers well for the

Because
I

price support schedules.

with and

acquired. Nor¬

mally,

mounted

study, or * even compensation. These claims will
which our be granted.,

platforms to

over,
;

monopoly are

has

leaders

who have ordained the unrealistic

institution

the

higher wages are misdirected
—actually, the industrial worker
should
be
striking
against the

fair

;

that

perplexities

the personal

offer

read

for

pate nothing less than this order
government that proposes spend¬

would

observation

antici¬

of events from national and local

ing in

Parenthetically,

exploitation.

On the basis of all the evidence
to

...I.

omists

(1441)

COMMERCIAL & FINANCIAL CHRONICLE

THE

Number: 4740 /

Volume 168

PROGRESSIVE INDUSTRY
FAITHFULLY

AND WELL

35)

GO
»*tt-

(1442)

THE

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday, October 7, 1948

•
*

•

call that these burdens of
legisla¬
tion
and
control
are
in R some

Besse Urges Upholding
Free Markets
President
stand

Boston

Stock

Exchange

citadels of free enterprise,

and
At

securities

says

evolved through

As
we

of trial

public

interest

and

were

busi¬

function.

less

citadels

function

prise,
t

stand

and

the

market-

our

own

restrictions

the

nation's

•

taxation

his- talk

auction

may
most
the
agency

trusted to
So

long,

these

them

bases

markets

orders

the

counts and
son,

its

dire cted
U

wars,
'

conditions

long-term

message

inflation

on.

bank

investments, the

Parkinson message points out that

the

changes can be made under
existing law and would slop vio¬

Equitable poli c y h olders. lent additions to the
money /sup¬
The new bro¬ ply.
;
-• •
' " •
;!,.
chure, second
Emphasizing that every insur¬
.

the

unimportant

the mechanical power

Hitler's

people,

homes

production, production

created

tools

and

the.

series

ance

u,".'

by faith and *'con¬
capitalistic sys1
'

J'T.T'V'-/

est

icies

busi¬

Life

Such faith is not spontaneous. It
endure
only
so

will

long

<f.

cial and

Parkinson

ness

and

hold pol¬
through the

you

them

urge

Insurance

otherwise,

circles,

will

•

Contact

companies in which

finan¬

"big stake

Association,

to join in the effort to

end

en¬

they fetter

thoughtful Americans, ever as¬
piring to a better and better world

hand¬

in which to

en¬

use

public

the

our
determination that free room
markets be maintained.
Strength¬ I times
1(2)
ened and expanded
they will serve

the

generations

petuating
America
Our

the

its

the

ket

five

which
may
expand
supplv by five times

not

the gold.

(3)

I begin another year
executive officer, I

candidates

your

for

Congress demanding that Ihey give
this matter serious
attention. and

at least commit

our
money
the price of

voring
In

■

for Federal bonds.
Above all, write your Con-»

gressman

thereby providing banking funds
the

are

support

(4)

Treasury continues

themselves to fa¬

Monetary Commission.

foreword to

"Dollars, Prices,

creased

our

buy gold and bury it in Fort Knox

per¬

nation-and-

are

The

For the Boston Stock

chief

pledge

blessings
problems

they

world-wide.

Exchange,

come

know today.

major

regional,

supply

money

the price of the bonds.

every

effort to

The

banks

these

use

and

in¬

You,"

The

Equitable

Presi¬

banking funds to make dent writes, "Our Congress, our
long-term loans or buy bonds and Federal Reserve Board, our Treas¬
mortgages.
These "frozen" assets
increase bank earnings but en¬

merit

and

ury,

banks

our

are

drifting

toward further increases in our
danger the liquidity of bank
funds, excessive supply of money. Since,
to Take ■ Serious
and inflate the
the end of the war our
money supply.
inventory rof his
Govern¬
own
The
individual responsibility in
resulting > adulteration of ment marketable debt has gone
the
the dollar, the
down $39
Samefdirection.
pamphlet continues,
billion, but our money
"reduces its purchasing value
just supply has gone up $16 billion,

continuing confidence

public

ancr

of the
I ask every man here

of four quarts of
quart of milk reduces
its food value."
Urging the Treas¬

President

Company
elected

travel

pleasure.

n v

The

Ohio

causes

cludes
ties

Mr.

the

operation north,
from Chicago. Look

are

brand

Hiawathas tak¬

ing to the rails... new equipment on exist¬
ing Hiawathas
a total of nine thousand
miles a
day of Hiawatha service!
...

<9('a a

New Hiawatha

equipment includes ears
with the
glass-roofed Skytop Lounge, and
new-type drawing room parlor cars. There
are
spacious diners with fresh decorative
schemes. Tip Top
Tap cars with snack

ffiawatha

yeal/

sections and cocktail
rooms,

coaches with
'

CHICAGO

I Milwaukee\ 7
/

ST. PAUL

AND

pacific

Look

the

reclining chair

elected

new

to say:

cember for

the

and

1947,

national

board

Sengstacken, Passenger Traffic
Manager, 708 Union Station, Chicago 6,

three-year term.

Chairman

Milwaukee Road
The friendly Railroad
of the friendly West

the

effects

pressures

passage

farm

the

time

and

the

National

York, which

decline

City

goes on

.4'; ••Y.'v

■

farm

prices

Ohio

to support the farm mar¬
into
the
income
stream.
described
in
a
subsequent

article, the Treasury will be di¬
verting vast sums, which other¬
wise

will

power

E. Nichols, Vice-Presi¬
Ames, Emerich & Co.,

Chicago investment bankers,

was

elected

a director of
Gerity-Michigan Corp., at the annual meeting

Mr.
fill

supported accord¬

vacancy

was

Soss

elected to

the

Michigan board, also is
of

less

wheat

farmers

than

money

because

the

ton

will

last

crop

smaller and the

have

both
slightly

year,

was

price lower.

Cot¬

farmers, however, will have

half

billion dollars
income than in

larger

Gerity-

The

director

will

Manufacturing Company
Detroit, and of the Aerovox
Corporation of New Bedford, Mass.
of

price

the

inflation

declines, inflationary

gigantic

production

the

—~——L_—

♦

livestock

animal products, sell¬
ing at high prices relative to corn.
Prices of
oilseeds will
or

average

greater

crop

sold

than

the

market

com

more
corn

indicates, because
move

cash
a

supported market.

record-breaking

terms

tially larger.

"Moreover,
farm

favorable

price

most

the

crop

itself
will

form

income

modest decline
affect

cannot

farm

purchasing power as did the drop
in 1920, for
example, since farm-'
have unparalleled resources in
war bonds and

ers

cash and

relatively

small debts.

On Jan. 1, 1948 farm¬
liquid assets exceeded $22 bil¬

ers'

lion
lion.

"The

1947, by selling

Nichols, who

drastic

are

chases

kets,
As

D. E. Nichols Director
of

still present.

are

ingly.
Donald

Still Present (

fear

collapse, but points out, despite this change in

might be applied to checking
Group at the Cincinnati meeting. inflation
by reducing the Govern¬
Joseph M. Vercoe, of Vercoe & ment
debt, into the farmers' hands.
Co., Columbus, was chosen Vice- Farm income and
purchasing

dent

from

away

automatically brings new infla¬ lower than last year despite
sup¬
tionary expenditures, made by the port of flaxseed at $6 a
bushel
in .Government in
loans
and
pur¬ again, but the crops are substan¬

of stockholders.

the national financial structure."

Cardwell, of Hilliard
Louisville,
Ky.,
was

Son,

elected

travel

II.

Illinois.

the

civil

was

Marion H.
&

■

"The
1946

the
group's annual meeting
Cincinnati Sept. 28.
He will take
office on the IBA board in De¬

Next time you're in
territory, we invite you
a

terms

Bank of New
Ewing T. Boles

President.

rooms.

ride the Hiawathas for

published

for

two

map.
Milwaukee Road

thrill.

big lounging

to the disappear-,
liberties and total

bringing stabilizing forces into play,
any an¬
alysis of the outlook must also take account of
the inflationary forces
and their
supporting effects," says the October
"Monthly Bank Letter "

Chairman
new

and

"Although

headed

Group

consequent

farms and factories

the Ohio Val¬

ley

map!

There

that:

the

regimentation is the dissolution of

and

sentiment

•.

and

Boles,

who

sentiment

•V

Kentucky. "
in

and

securi¬

Ohio

swing

in¬

orthern

con¬

warning

Inflationary Pressures
Notes

brokerage

ern

west

message

with

first step

Nsfiotial Oily Bank of New York Sees

firms in south¬

northwest and

living has

Group,

which

now

Parkinson

"The

purchase,

support,

national governor of the

represent

ley

are

cost

America
to

Hiawathas

Reserve

gold

—

bond

the Ohio Val¬

Federal

dollar

35%."

anee

flation

Bankers

day ol

the

The
cludes

modify immediately the three in¬

Columbus, has been Government

estment

Association

9,000 miles

and

gone up

cne

and

ury

COLUMBUS, OHIO—Ewing T.
Boles,

y»m

addition

water to

By Ohio Valley
Heady lor

the

Boles Elected Oov.

their debts

and

were

$9 bil¬

Their liquid assets were
2%

times their
the

war

debts, whereas before

their debts

times

were

their

liquid assets,
This store of
savings justifies them in spending

current

income

them the
ment

and

means

other

freely and gives
buy the equip¬

goods

been waiting for.

they

have

Meanwhile, city

people will not have to allot quite
as

[

the representatives
officials of other life insurance

inter¬

spread

our

the fight on
inflation, the bro¬
chure urges them to take these
four steps:

V; wh ich
Ras
•1 caused wide¬

fac¬

policyholder has

^entitled, "Dol¬
lars, Prices,

alike the fruits of

are

Europe,

comfortable

tem.

Federal

cial

are

peace,„ no

chain

form

war

fidence

success

crushed

tories

credit,

role

by their clients.

States Treasury is little less
plot against the thrifty because it is shrinking
savings ac¬
decreasing the value of life insurance, Thomas I. Parkin¬
President of The Equitable Life Assurance
Society charges in
another spe-«ev—

than

American

and

—not because

effectively

The monetary policy of the United

perhaps

vital

our

flowing from the

governmental
use

"adulteration", of the dollar.

sight of the

tests,

brochure, entitled "Dollars, Prices, and You" he attacks

not

unnecessary monetary infla->
closed with pi'emium. notices;, to
tibn.".f,rj..;" :
policyholders. "■ y,
(2) Contact your banks or bank¬
•
live, can clearly count
icap the Stock Exchanges them¬
Summarizing the causes of in¬ ers and urge them to stop the use
upon fair treatment from govern¬
selves but only because they are
flation, the Parkinson message of banking facilities to inflate
the
factors detrimental of the inter¬ ment; from labor, and from us
points out that: •
money supply.
who contribute equitable and effi¬
'
ests of the thrifty and
courageous
(1) The Federal Reserve con(3) Write to the Federal Re¬
cient
marketability to the shares
men and women of a
great nation.
tinues to buy Government bonds serve Board
pc the Secretary of
representing
their
participation i above
To be honest with ourselves and
the Treasury and
in free enterprise.
par—"Supporting the marurge immediate
to benefit
jket," they call it—thereby creat¬ modification of the
by the past, we pre¬
Erosion: and
defeat
are
the
existing gold
sent here tonight
might well re- wages we must expect if we relax ing new banking funds that mush- purchase procedure and the mar¬

Mr.

stated:

members find the

markets

our

constitutes

the inequalities in
legislation are prob¬
lems of Regional £tock
Exchanges

regulated,
carefully
conducted boards
through which
execute

rules

the securities

fairly

members

the

destructive

course

Besse
The

what

era,

securities.

are

the
Harry W. Besse

of which

peace

cient

lose

victory

from

link. In

sound business practice.

effi¬

ability

they

enter¬

through ages of trial and
This code is the crystalizaof
the
experience of
our

members

equit¬

able and

free

that

tion

contribute

only

error.

their efforts
to

restricted

than

evolved

gthen

r e n

perpetually, for

citadels

In second

to preserve that which, we
fortunate enough to inherit?

stems

the Exchanges will continue
I hope they continue

prise,

should

further

America's

enter¬

but

moment

ness,

free

Treasury's Monetary Policy Injures Them

con¬

what

maintaining
of

universally,

world

that

free markets
as

Parkinson Tells Policyholders That

practices

arduous than any in the
past,
may yet be our lot.
Should we
not
ask
ourselves

merit the confi¬
aid in their

past

have been,.and
now, the envy of the rest

one

doing

nation,

are

fact

the

now

joint dinner meeting of the Boston Stock Exchange and the
Association of Stock Exchange Firms held in Boston on Sept.
30,
Harry ,W. Besse, President of the Boston Stock Exchange, urged his
a

dence

the

for

error.

hearers to accept their individual responsibility to

are

demned.

exchanges

ages

due

measure

which

much

their

income

for

purchase of farm products.
are getting cotton
goods and
foods at lower

prices

the

They
a

few

now, and as

Volume

168

"time

goes on they can • expect to
buy other clothing and foods more
cheaply."
»

its

FINANCIAL

CHRONICLE

000,000

Raits Ask Rate Increase and Grant Pay Rise
Petition ICC for

Continuing its discussion of de¬
flation and

COMMERCIAL

THE

Number 4740

8% rise in class rates with additions to charge

per

had

State

highways, and in Federal

and

local

Oct. 1 for

governments,

higher

and

year,

ex¬

increases

year

than this.

The

men

chop is already in the current
figures of gross national product
and national

having demanded

com¬

day lower than those

arrangement

railroads.

continues

The

the

new

same

offset

In their

costs.

The

petition for

8% gen¬

then

sufficient

rev¬

increased

This,

the

leave

roads

return

contend,

ex-

ating costs had increased $3,503,-

rate

increase,

the

and 3.88 %

4.24%

would

net investment

1949, respectively.

freight

BOSTON, MASS.—Goodbody &
Co.,

members of the New York
Exchange,
announce
the

Stock

opening of
State

for 1948 and

Street,

Maxwell

The

$9,511,000,000 in 1949.

increase

Western

New Office in Boston

branch office at 50
under the manage¬
E.
about 40.8%.
Bessell,
The petition esti¬
mated actual results for the first formerly a partner of O'Connell &
Co.
Joseph B. Moulton will be
seven months and for the remain¬
assistant manager.
Henry C.
der of the year indicated rail op¬
Flory and Herbert Higginbotham
become
Goodbody's regis¬
erating expenses of $7,435,000,000. will
tered representatives.
Operating revenues were expected

railroads stated their annual oper¬

pay

75%,

Recovery
and

ciease

new

occupy

Goodbody branch will

the

former
and

offices

the

the entire

personnel of the latter

firm

the

Co.

will become

practically

associated

ex¬

■

situation

strong

the

metals

but if it should

weaken the Government will give
support in this

also, through
program of
stockpiling strategic materials.
purchases

"Finally,
keeps

doors

the

drastic

Re¬

holders

bond

policy

Federal

bonds, and is

against

.either

credit

open

Government
ion

the

present

the

credit

serve

area

under

cush¬

deflation

market

the

supply.. This policy is in¬
flationary. Whether it is danger¬
ously so is a matter upon which
opinions differ and debate is now
raging.. All can agree, however,
that it provides general support
against deflationary influences."
money

Jones, Hayward Form
Commodities Firm
i

William

Jones

•

Ashton

and

Hayward announced formation of

the

t i

,'b

commodifutures

e s

kerage
firm j of Hay¬
ward, Jones
& Co., with a
membership
r o

the

ork,

New

Mem-

phis, New Or¬

leans and Dal¬

las cotton

ex¬

changes. Part¬
ners

WiU

are

tlfam R, Jones
Ashton

..and
H.
William

"the

office, and J.

Memphis

Mr.

Hayward,

who

Jones

in;
York

will

the v'New

C. Pulliam

office

Jones

former

Vice-

President, of Schroder Rockefeller
& Co., Inc. and prior to that was
associated
Bank

with

Trust

Mr.

has

been identified

ton

business

will

have

1900.

New

York,

offices

phis and Dallas.

James F.

Hayward

with the cot¬

since

addition

firm

Chemical

the-

Co.

•

the

Mem¬

Donegan With
Dept.

Laird Co. in Tax

I James F. Donegan has become
associated

with

-Broadway,

Laird

New

•

Co., 61
City, in
For' the

their
tax
department.
past>20 .years; Mr.\ D
has
been with James B. Taylor &
Co.,
of which he was a partner. '
' "
.-

York

—I

;

has modernized the

Bary to Manage
Dept. for F. S. Smithers

See

what

F. S. Smithers & Co., 115 Broad¬

New York City, members of

way,

the'

New

announce

York

Stock

Exchange,

that Marquette de Bary,

•

formerly with Harris, Hall & Co.>

Inc.; has become associated with
them

manager of

can

do for your

Businesses of every type
the country report

v'}-!

over

savings ranging up to

savings bank's system!

ing the first year—and then ran on year
after year as
your

check your present set-up

with Nationals. Savings

which often paid

specifically the saving

THE

NATIONAL

Of course,

CASH REGISTER

IIS

local National representative to

their accounting

for the whole National installation dur¬

lower operating costs. Ask

30% after mechanizing

their munici-

-pafdepartme^

business!

and size all

there is

and report

you can

cost

expect.

obligation.

COMPANY, DAYTON 9, OHIO

with

Goodbody organization.-J

•

continues

O'Connell

Program

sustain

Goedbody & Go. Opens

ment

eral

new

Eastern,

which

while freight rates increased only

ap¬

The

in¬

since

their

costs

to amount to

differential.

25% in¬

that

passenger

disbursements under

new on

"The

yielded

Southeastern roads. Under the

expected it to
depressing effect when it
it has been taken in stride.

port leVel.

Eastern

but

authorized

and

plies

forecasters

not

•:

crease.

income, and although

European

will

came,
From

the

agreement

new

5 cents

the

promise, the conductors and train¬

This

•have

granted by the railroads

since the end of the war.

"Exports have declined some
30%, at an annual rate, from the
peak reached in the spring of 1947.

•some

leading railroads, on Oct. 4, as a result of an agreement with railroad
employees'
organizations representing conductors, trainmen and
yardmen granted a 100 per hour<*>—
pay
increase, effective Oct., 16.1 isting arrangement, the rail workThis is the third round of wage j ers' pay on the Western lines was

penditures for defense, which will
be higher in this fiscal year than
last

been

had

Grant pay increase of 10c
hour to four operating brotherhoods. •

appeal to the Interstate Commerce Commission on
increase of 8% in all but a few freight rates, the nation's

Following

1939,

freight rates,

enues

particularly
on
plant, to decline in 1949. Again an
inflationary offset is present, in
the prospect of greater spending
by

fares and mail and express

spending,

ness

since

creases

coal, coke and iron to meet rising costs.

effects, it is noted

that "most observers expect busi¬

(1443)

CASH tCGlSTlNS

ADDING MACHWtS

ACCOUNTING MACHINES

(1444)

THE

COMMERCIAL

CHRONICLE

FINANCIAL

Thursday, October 7, 1948

which

Cult Defends

Operations of
International Monetary Fund

Managing Director, on occasion of presentation of Third Annual Report of organization to Board of
^Governors, answers criticisms and "misconceptions."
Says responsibility of restoring international,
payments rests primarily on government of each country and each, in turn, must
cooperate to establish
international exchange stability.
Concludes, when difficulties are considered, Fund has done its job

efficiently.
Camille Gutt,

Managing Director of the International Monetary Fund, on the occasion
presenting his Third Annual Report, delivered an address in which he outlined the prob¬
lems facing the Bretton Woods Institution and
strongly defended the organization against
'the
criticisms
of

<♦>

■and,
t

what

"mis¬

e r m s

when countries will be able

come

provide

their

conceptions"

own

directed

against it and

come

ments

operations.
text

solved

The

and

countries

■
";
sacrifices, the
.

new

will fall

into

There

solved.

points

country has the primary responsi¬
bility. That government alone can
take the measures to expand its
output and to place production on

reason

ment

fact,

out,

efficient

fateful

very

vent

production.

consid¬
The

government

in¬

itself.
know

tion will continue.

own

reason

for

We have good

their

needs

and

thus pre¬

and must do for

can

else

from

it.

can

discussions

with

I
our

members that they realize this.

time

national

has

when

come

inter¬

cooperation should be

The various

that have

measures

countries to restore their

been

taken

meet

the critical payments situa¬

Western

Hemisphere

countries

have given to other regions of the
world. It has been recognized by
the aid that the European coun¬

tion,

the

particularly

past

the

year

materials

which

have

not,, directly or in¬
at the disposal of
those with whom they trade, at
one time or
another, the facilities
within
their
capacity, however
modest. This has made it possible
to

continue

steps

essential trade

being

are

taken

while

restore

balanced world economy.

Inevitably, because the need for
aid has required the provision of
very large resources, this is the
phase of international cooperation

some

years

will

continue

the most important. But

be,

must

International

Payments

They

with

There

output. We have good

problem.

hope that the time will

are

another

side

International

international

the

payments

responsibil¬

Investment Bonds and Stocks

equipment.

national
reserves,

cies

These

will

it.

The

face

become ,s

countries

through

the

Two
I

the

other

Fund

and

international

take

conceptions

which

opinion.

have

two mis¬

some

number of criti¬

been

directed against
happy side of this
is that, in general, they
The

International

ters that the

been

said in

some

quar¬

lem of international
payments, with the actual position of the
monetary reserves, and exchange countries
concerned.
In
other
policy. It has been established as quarters, on the contrary, the view
a
permanent institution, because is expressed that the Fund has
these are continuing international been remiss in its
duty because
problems that will require con¬ it has sponsored exchange prac¬
tices

contrary to its avowed aim
of exchange stability.
To the first
criticism, there is ample reply in

carrying out its international
responsibility, the Fund can suc¬
ceed only to the extent that its the

genuinely believe in in¬

the

even

ference

and

Bretton

Woods

ciples should
Article

XIV

be
of

allowed.

the

Hence,

Fund

Agree¬

Fund's •;
refer

would

Annual
Report, f I
particularly to the

beginning of the second part de¬
reservation, to
submit voted to an examination of the
their exchange problems to inter¬ concept of exchange stability ver ¬
national jurisdiction. Each coun¬ sus exchange rigidity.
Therefore

purposes

of the

Fund; but they can use the
leeway thus given them in this
difficult time.

very

Our
in

members

their

they

the

expect

a
practical ap¬
their problems.
They

can

to
that

will

attempt

well-being is related to the
operation of the Fund.

ized mold, unsuited to their econ¬

omies.

They realize that the

the

Fund

member

dealing

look

I should like to answer the second
one.

member

government,

members

effective

institution

Fund

the

will be.

ber's situation from the member's

point of view, and to provide such
advice

and

such

practical kind
out

essential

member,

This

the

which

«fact

gentlemen—the

full

financial

.you

leaders

cooperation
the

and

between

Fund.

the

And

countries

your

must also stress that full coopera¬
means

cooperation that

in both directions.

When

runs

and

second,

that

damage on
of other countries.

Usefulness of the Fund
Another
with

general

which

misconception

should

relates

Fund.

There,

the

usefulness

Industrial

Public

•

Utility

Railroad

•

surmount

exchange policies

Foreign Bonds

their

Bank and Insurance Stocks

gether

poor

forces

Underwriter
\

Distributor

•
.

!■

•.

progress

arrayed

other,

would

appear

Only

they

may

rapid

each

hope

Dealer

t
<

*•»-

Fund

Not

against them and
n

Country

The experience

Philadelphia

Boston

San trancisco
Private Wires

Pittsburgh
Cleveland

j ;

Chicago

Washington

years

has

subject to the will of any

one

country. It is

ternational
to

all

offices.

■

the

Fund

genuinely in¬

institution.

•-

other purpose
and

that

has

•

world

pe¬

are

some

has seemed too

sary powers,

cum¬

Again, I think such conceptions
belied by reality.
As to the

are

period in which
my

mind it has in

living, to

are

some

respects

than, the hopes which

condemn

aloofness and

any

one

never

so.

We have
have

solu¬

it has ad¬

tion other than the
vocated?

thought

always been ready

less

were

Bretton Woods conference.

material

point

that, had

Woods

always

been eager to take

of view.

think

four

after the

years

hostilities^

despite

the immense and incredibly thor¬

ough

destruction

human

lives

wealth

which

had

and

taken

place throughout the world during

world's

have

It has

been told at Bretton

that

cessation

the

other respects

certainly exceeded them from the

forward by the

member, since

some

entertained at the time of the

to examine the considerations put

five

have

preceding

material

reached

the

years,

recovery

would

stage described

in the first part of the Fund cur¬
rent

tical

considerations,

economy

es¬

have not

objected, in the end, to solutions
which

did

mediate

than to work with

through its-members in

tablishing

been

of the past few sometimes, recognizing these prac¬

shown

For

in which

into account the realities and the

is not

New York

living.

one

practicalities of the situation. And

Subject to Will

One

make

measuring the

overcoming them.
•

to
to¬

the

disequilibria

Fund,

economic

indeed.

prospects

very

our

such

profund

ber seeks the advice of the

country concerned may find it
impossible to follow the Fund's
difficulties.
Separately, indiffer¬ advice.
Ought the Fund at that
ent to the effect of their foreign
juncture 'adopt
an
attitude of

Bonds and Stocks

Canadian and

They must be aware at leave it" basis, irrespective of con¬
It may
necessity sequences or reactions.
happen that the member
coordinated
international well

effort to

the

opinions are
varied and contradictory, accord¬
ing to peoples and to countries.
Some argue that the Fund was
too,

exceeded,

peoples.
for

•

deal

mem¬

all times of the absolute

they
the

must

—

taken by a
suitable to its

are

inflict

not

economy

stress the Fund cannot limit itself to giv¬
to your governments and to your ing this advice on a "take it or
of

State, Municipal and Revenue Bonds

measures

first,

problems,
will

assistance

will enable it to

its own problems. The
duty of the Fund is to

that the

see

I have stressed that there has to

tion

mem¬

bersome to be efficient.

concept becomes
part of the basic policy of every

the

way

with.

the

other the Fund,
But
although equipped with the neces¬

I shall not elaborate upon it.

this

standard¬

riod

The

United States Government Securities

Fund

not intended to function in

its

that

assured

are

dealings with

ternational cooperation and agree,

try has to realize how intimately

con¬

without

successful

the

1944, it was evident
provision would have to be-

that

work

It has

policy of the Fund is
one of these institutions. It is
par¬ unrealistic, that it tries to impose
ticularly concerned with the prob¬ rigid par values, not in keeping

members

our

made to fit them into
op¬

contradict each other.

know

this

their way into pub¬

extent found

lic

have

been set up to deal with the prob¬
lems
of a world economy. The

cooperation.

both

increasingly continuous regard to the

Misconceptions

should

the Fund.

tinued

This is, I think, a realistic at¬
titude, in keeping with our duty

proach

cisms

inter-,

institutions.

been, recognized
situation
through the institutions that have

Fund

materially

fication of the collaboration of all

which

Monetary

realize that in

problems

will

important. The best way to meet
these problems
is through self
help and mutual aid, by intensi¬

forget

has

long and hard one;

second, that,, without losing sight
of the ultimate goal to be reached,

ment, which permits members to
apply temporarily certain meas¬
ures of exchange restriction.
Of
payments, on monetary
course, in their foreign exchange
and on exchange poli¬
policy, these members must have

intensify

members

ity

stability is

exchange

the nations to work together/

that there is another
form of international responsibil¬

International Responsibility

and

been, and for portunity to comment

which has hitherto

members

our

do not obviate the need

measures

our

put

sometimes

Not

promote?

It means, first, that

handicap that would be imposed made for a
postwar transitional
them by a sharp reduction period during which certain lee¬
of essential imports of
food, raw way in applying the Fund's prin¬

there

directly,

in the least.
the road

upon

truth,

countries

system in contradic¬
principle which

set up to

were

inaugura¬ spirit of the Fund Agreement.
Recovery PeopJe seem often to forget that,

European

for

few

the

Program, will give

tries have given to each other and
to
some
countries overseas.
In
are

payments in a way that will as¬
sure them a tolerable level of im¬

some

sponsoring

tion with the very

given cases it is
psychologically pos¬
sible
to
reach
it
by successive
more
active concept;
because I stages only. Thirdly, it meant that
believe that the Fund can better when what we
thought to be the
help its members if the work of best plan, had been rejected as
the Fund brings them into more
impossible of immediate accom¬
continuous and even closer rela¬
plishment, we preferred to have a
tionship with each other, and with country
choose
a
second
best
the Fund, in dealing with their
scheme
rather than
do
nothing
exchange and payments problems. and thus worsen its
predicament.
the

not

when countries will be able

provide

their

to expect that the time will

reason
come

going

now

order,

govern¬

domestic

chronic dependence on ex¬

all parts of the world offers prom¬
ise that the expansion of
produc¬

vestment that is

That

put its

can

cessive imports or a chronic dif¬
ficulty in supplying adequate ex¬
ports. This is the job that each

the

basis.

alone

finances in

erable progress has been made in

huilding

assuming that, because these
problems are difficult, they can¬
not

job of placing each
a position to restore

international payments is one
for which the government of each

for

report

depending

its

Gutt

experience of the past few years
should be enough to dissipate it.
Our danger today is rather that
pessimism."•

basic

country
Camille

with-

out great

Basic Job Is for Individual Nations

problems
1

reserves

continued grants. All this will
take time, but it can be done.
•

postwar

whole*-1

work

opportunity to work out their
problems
without
the /serious

economic

share, has been generally recog¬
nized. It has been recognized in
a concrete
way by the aid that the

spread feeling
of opti m i s m

members

our

depends
willingness of

purpose

the

upon

heartedly with each other,
through the Fund. I emphasize
this necessity because I believe

disordered, it will be impossible

for

this

largely

tion

monetary

was

wide¬

that

satis¬

economy

ment

ports. This international responsi¬
bility, in
which
all
countries

manner^ by exports and
international investment, without

If there
any

be balanced in

can

have ,a

can

factory

remarks

with

needs

countries

place their international
payments in order. The achieve¬

further reducing already depleted

The
h i

follows:

their

We have good
to hope that the time will
when
international
pay¬

reason

its

for

output.

ity. If the whole world

all

chance to

had

constitute the im¬

application of the policy

mean

illogically?

that

we were

That

fields
up

act¬

were

report,

events
our

should

have

not

pletion of recovery is
layed

of them

measured

expectations.

difficulties,

recommended.

Did this

ing

not

annual

hardly have believed it. In other

number
some

The

com¬

being de¬

political

internal,

most

international, which have

manifested

themselves

since

the

which still remain
unsolved, and which weigh heav¬
ily upon us.
reasons why the Fund
nothing? / As long as
two years ago, in the letter trans¬
mitting to you the Fund's first

annual

either through its
Executive Directors, or through
its staff or its Managing Director.
It has studied their problems and

LETTER

changing circumstances and new
facts, amongst which the Euro¬
pean Recovery Program stands as
a

Mexican Credit

steel

major factor.

Suspects Communist Plot
In SEC Regulations

directors

of Ex¬

port-Import Bank of Washington

announced

today
tion

favor-

credit

the
of

Nacional

authoriza¬

$1,500,000 in
Financiera,

of the
Mexican Government, to enable it
to provide financing required by
La Consolidada, S.A., a Mexican
steel

financial

agency

credit, which will be guar¬

one

three

Marquez to

operations

integrated

Recently the company ex¬

its operations by the in¬
stallation of a new rolling mill
outside of Mexico City and
an
additional open-hearth furnace at
Piedras

Negras in northern Mex¬

ico in order that it might be
better

position to serve the grow¬

needs of

Be Part, in

the Mexican

panded

ing

company.

The

basis.

whose

industry
conducted

are

board

S.A.,

EDITOR:

Consolidada

major producers

The

P. Vernon

term of five years.

Extends Additional

$633 million of foreign exchange.
It
has
adjusted
its
policy
to

by the United Mexican
will be amortized over a

States,

when asked to.

said

THE

anteed

Export-Import Bank

provided technical assistance
It has sold over

has

"no"-—that
the Fund must move, even in dif¬
ficult times.
Since then, the Fund
has continuously been acting in
its dual capacity of monetary ad¬
visor and financial help. It has
report,

members,

its

Are these

should

close touch with most of

been in

end of the war,

(1445)

FINANCIAL CHRONICLE

THE COMMERCIAL &

Number 4740

Volume 168

increasingly

in¬

the firm

Kchlmeyer

ORLEANS, LA—On Oct.

NEW

name

of Kohlmeyev,

Carondelcfc
York.

Newburger & Co., 217

Street, members of the New
Stock

Exchange,

was

changed to

Kohlmeyer & Co.
P. Vernon
to

mitted
on

Marquez will be ad¬

partnership in the firm,
Mr. Marquez was for-:

Oct. 14.

associated

merly

office

Orleans

with

the

Merrill

New-

Lynch,

Pierce, Fenner & Beane.

dustrialized Mexican economy.

Reader asks if crippling of stock market may not be aimed at over¬

throwing

our economy.

Editor, Commercial & Financial Chronicle:
As

SEC

know, the N. Y. Stock Exchange has been crippled by

you

regulations to

point where it no longer

can

function in its

role of supplying new money

through equity financing and the liquid¬
ity of the market has been impaired.
Do

think that this just happened this way or that it was,
a communist plot to destroy our form of government?
The Reds have penetrated our State Dept., Treasury, Welfare*
you

is, part of

and

other

and

government

opportunity

Does it seem

bureaus.

could have

been overlooked by

logical that such

them

tying

our

financial center under gmse of aiding the public, etc.?
It seems to me that these laws are all part of a huge

cripple

plot to
country—and that like their efforts in other directions

our

they have pretty well, succeeded.

Why not show them up for what

they are—laws not to help the investor, because they injure him, but
laws that fit into a plot to destroy and overthrow the economic s^de
of our form of government.
'
(Signed) AMERICAN.

Appoint Committees to Study Proposed
Formation of Mid-West Stock

posed

morning session

exchange

spent in a general discussion of

was

FRIENDLY

ship would embody the member¬
ship of the exchanges from all the
cities, and five permanent com¬

quite

mittees

change, but

were

pro¬

appointed

for

the

bit

commitments

were

made

solidation.

are

The meeting was simply a fact¬
finding and organization meeting
to form a permanent set-tip for

The committees

follows:

(1)

Membership

whose

duties

are

Committee
consider

the

feasibility of developing a membership that will be available to
a prospective ex¬
change, taking into due considera¬
tion the rights and privileges of

all members of

all

present

of the vari¬

members

exchanges, and consider the

ous

possibilities

setting

mem¬

berships and the total capital to
be made available to the proposed

exchange.

V-j.'

\ >

_•>.c:

(2) Stock List Committee whose
duties

to review and study and

are

discuss

the

issues

traded

now

•;v;;. (3) Communication and Clear¬
ing Committee whose duties are
to

the best form of

discuss

munication

and

com¬

clearing machin¬

for the proposed exchange.
(4) Government and Organiza¬
This committee's

ery

tion Committee.
duties

are

sentation
one

consider

the

allocated

repre¬

investigation and
study of all aspects.
Additional
meetings
will
be
scheduled

of Governors and the committees

exchange,

(5)
Odd-Lot
Specialist and
Committee. This committee is as¬
i

early date.

Members of the committees rep¬

19-17, the builders

P'uller &
Merrill

Co.; Homer P. Hargrave,
Lynch, Pierce Fenner &
Beane; Charles R. Perrigo, HornWeeks.

Cincinnati:
D.

HELP BEAT

Willis

Gradison

Do It!

get

jour scrap

A. Hinsch &

dealer

Co.; Joseph B. Reyn¬
Benj., D. Bartlett & Co.
Charles H. Tobias, Westheimer &
Company; Charles Steffens, Presi¬
dent, Cincinnati Stock Exchange
Cleveland:
&

Lloyd

under way) and the speedy rail and
Minneapolis-Moline would
completely,

perhaps for some time.
Continued

production

meant

Modern Machines would be
farmers

livery
all-out

sooner.

that

need the world over.

Friendly cooperation, hard work, and in¬
genuity kept MM plants in operation.
Hundreds of thousands of dollars
in
workers' wages were protected. And the
production of MM VISIONL1NKD TRAC¬
TORS,
HARVESTORS.
the
BALE-OMATIC, and other quality MM MODERN
MACHINES continued uninterrupted!

Will

Sell it to your local scrap
helping to produce more

critical demand wherever men work their

land!

Birchard

I. Cun¬
ningham, Cuningham & Co.; Rich¬
ard A. Gottron, Gottron, Russell
&

Co.;

Clemens

Russell

Gunn,

Gunn

Carey & Co.; Arnold McClintock
Hornblower

Weeks; David G.
signed the study and investigation
of trading techniques and the ex¬ Skall, T. H, Jones & Co.
Detroit:
John
O.
MacFarlane
ploration of the possibilities of a
Executive Vice-President, Detroit
new specialist and odd-lot system.
After an early luncheon at the Stock Exchange; Paul I. Moreland
Mid-Day Club,"all afternoon was Moreland & Co.; Andrew C. Reid
taken up with individual commit¬ Andrew C. Reid & Co.; Laurence
tee meetings with adjournment at P. Smith, Bennett, Smith & Co.'
Armin H. Vogel, A. H. Vogel &
6:00 o'clock.
>

-A dinner was held at the Chi¬

Co.

Minneapolis: Clifford S. AshClub at 7:00 p.m. On Satur¬
day morning at 9:15 a general mun, C. S. Ashmun & Co.; Merrill
M. Cohen, J. M. Dain & Company;
meeting of all the committees was
held in the Board of Governors' Charles L. Grandin, Jr., Piper,
Room of The Chicago Stock Ex¬ Jafl'ray & Hopwood; G. M. Phil¬
Co.;
change, at which time a coordi¬ lips, Caldwell, Phillips &
nating committee was appointed, Robert M. Rice, R. M. Rice & Co.

Minneapolis Moline

cago

whose

duties

will be to work in

St.

Louis:

Brokaw,

permanent Friedman, Bi'okaw & Lesser, A. A.
committees
and
arrange
time, Christophel, Reinholdt & Gardner;
dates and places for future meet¬ John H. Crago, Smith, Moore &
Co.; Bert H. Horning, Stifel, Nicoings and discussions.
Homer P. Hargrave, Chairman laus & Co.; John A. Isaacs, Jr..
of the Board of The Chicago Stock Semple, Jacobs & Co.; Spencer H.
Exchange said that, in his opinion, Robinson, Hill Brothers.
cooperation

with

the

Minneapolis-Moline
Power

Implement

MINNEAPOLIS

farm machinery at a time w hen an
effort in agriculture was a desperate

metals back into production channels.

prevailing prices. Remember, you are

delivered

Ir assured quicker de¬

mm resorted to emergency measures. mm's

MODERN MACHINERY to meet

olds,

Minne¬

have been forced to close down

special shipment of pit; iron was a stop-pap measure temporarily easing this
material shortage. You can help eliminate the shortage /or good. Get all of

Co.; Don D
Kuemmerling; Neil Ransick, Chas

Prescott

MM plants in

smelter service,

THE METAL SHORTAGE... Your Scrap

t o keep its plants open

Except for the fast, hard-hitting job don«
by Oliver Mining Company (which em¬
ployed bulldozers to remove hundreds of
tons of snow even before the mining could

January 12, 19-48, the first two cars of pig

Ralph W. Davis, Paul H. Davis &
Co.; William A. Fuller, William A.

PRODUCTION!

received

apolis. The remaining pig iron—totaling
3,000 tons—arrived within a few days. Vive
thousand tons of iron ore had been mined at
breakneck speed in the dead of winter—att
unprecedented achievement!—'shipped 1,100
miles, smelted and refined, and returned
1,200 Miles IN ONLY 28 DAYS!

Negotiations began, and on December 15,
the Oliver Iron Mining Company opened
its Duluth, Minnesota, pits for off-season
operations. Five-thousand tons of ore—85
cars in three trains—were shipped by pri¬
ority rail the morning of December 24 to
a blast furnace in Texas, 1,300 miles away,
one
of the 'longest ore runs by rail on
record. The shipment reached Texas Dec¬
ember 31, and processing began at once. -

Governor; John R. Burdick, Floor
Governor; James E. Day, Presi¬
dent,
Chicago
Stock
Exchange;

were

resenting the Exchanges were:
Chicago: Walter J. Buhler, Floor

each

of the exchanges on the board

of the proposed

detailed

blower &

the various exchanges.

by any exchange.

future

iron

of
MM
MODERN MACHINES, VISIONLINED TRACTORS, and POWER UNITS
were confronted with critical shortages of
materials, chiefly metal. Stockpiles were
dangerously low. The supply of new metal
through normal channels was inadequate
to
support normal production. l:or one
reason or another the normal sources of
pig iron were temporarily cut off or their
production drastically curtailed. MM was
faced with the prospect of a complete shut¬
down—periling the jobs of thousands of
MM employees and halting the manufac¬
ture of badly-needed MM Modern Machin¬
ery. The alternative was to find additional
metal im(Mediately/
In earlv December,

through the meetings in exploring
the
possibilities for a new ex¬

a con¬

COOPERATION, HARD WORK

INGENUITY KEPT MM IN

Enterprise at Work!

Free

accomplished

was

study of the details of such

AND

member-<$

whose

Exchange

CHICAGO, ILL.—Committees*representing the Cleveland, De¬
troit, Minneapolis-St. Paul, St. Louis, Chicago and Cincinnati Stock
Exchanges met at the Chicago Stock Exchange. Oct. 1.
The

told

it can

Company

MINNESOTA

THE

(1446)

COMMERCIAL

FINANCIAL

CHRONICLE

mirrorS,
enterprise

investment company shares

rise arid fall in the price of your
in

large part, only the breathing, so to speak, of the free
system. Your investment company shares, therefore, should
comfortable

1948

Thursday, October 7,

well

constitute

productive position for your investment
field."—Written by Edward C. Johnson,

funds iri the 'live' property
President of Fidelity Fund.
1
upon

four investment

National
research

request from

dealer,

from

securities

corporation

420 BROADWAY, NEW YORK 5. N. Y.

Government

By HENRY HUNT

frotpectus

With

Hedge Against War

clouds gathering on the horizon again, over the months
ahead investors will be seeking an atomic bomb-proof shelter for
their funds. Actually there is no such
thing as a war-proof invest¬
war

under present day conditions.
However, mutual funds, par¬
ticularly balanced funds of the better managed variety, constitute
about as good an all around war hedge as the average investor is
apt to find for his money.
:
•
.' • * ,

ment

risks is

even

necessary than usual. And by diversification, we
industry diversification among common stocks but
ownership of some better grade bonds and preferred stocks.
When the writer entered Wall Street in 1925, the road to wealth
seemed like a one way street—all you had to do was to buy the right
common stocks.
Such is not the case today. In the first place, it is
far more v difficult under present conditions to
pick r the winners.
In the second place, even if you select the right common
stocks, you
will need a crystal ball to tell you when to get out of them. In the
event of war, the armament stocks are a logical selection but don't
forget that the shares of aircraft manufacturers declined in price
during the major part of World War II, even during periods when
many stocks were rising.
After more than 20 years in Wall- Street, the writer has come to
the conclusion that particularly in times like these, if you follow
at
middle-of-the-road policy such as mutual funds offer, you will be
better off in the long run.
:
mean

not

only

also the

iillSl*1*1

%><*

H0R"t«Jf|Vs

CO.

-T

"Live"

vs.

"Dead"

"Investment

Companies

are

natural accompaniment of any prop¬

;

old and honored institution in

England and Scotland. Many men of wealth in those countries hire
trained experts to look after their estates while they devote their
time to politics or sports.
"People of smaller means, many years ago, discovered that if

and hired expert managers to

they pooled their investment funds

supervise the investment of them, they could be assured

rriake and
suitable

almost

income

entirely

from

that

Britain, the

source..

not

income,

capital.

statement is made that Mr. 'A' is worth 5,000
not

that his net worth is 5,000

mean

is 5,000 pounds

"Shares

they

once

sterling

are

$20,000

Investment

emphasis

the

instance,; if

pounds sterling they do

pounds but that his net income
V

per year.

Companies

obtained, but

For

Britain

sold

seldom

are

passed on from generation to gen¬

are

eration, by will, at death, and successive generations derive a liberal
income

from the

ownershipp of shares.

"Virtually all the successful companies in Great Britain are of
great age compared to similar companies in America.

Property

"Many persons appear to believe that if a security fluctuates
widely in price, it must necessarily mean that the security is spec¬
ulative or risky. The reason for this belief
probably lies in the fact
that speculative securities do of course fluctuate
violently in price.
But it doesn't follow that price fluctuations necessarily
imply risk,
are a

.''V " -I'

Early History

because price fluctuations

bulletin.

There are so many imponderables in the topsy-turvy
interna-}
tional and economic situation today that diversification of investment

Efficiency !

"During World War I it cost the government $2,000,000 a day to
run the railroads under government ownership while during World
War II the government received $3,000,000 a day in taxes from the
rails. Thus, the railroads under private management played a vital
part in the war effort, saved money for the government, and made
money for themselves."—Quoted from a National Securities and Re¬

the Alliance of Duridee,

For example,

Scotland, the largest in Great Britain

was or¬

ganized in 1888; The Investment Trust Corporation of London, the
second largest was
of

companies

organized in 1888, and the Industrial and General
in

paid

have

continuous

dividends

their

theke

1889.'' All of

third largest was organized

London, the

shareholders

:
4
erty which might be called live'; that is, not closely related to cash. throughout the period since their organization. r ( x
Government bonds and so-called high grade bondfe^ for
"But there is one fundamental difference between American and
example, are
'dead' property because they are so close to the nature of cash itself. British Investment
Companies. In Great Britain, the promoters and
"The fact that security prices are quoted
continuously tends to
s

emphasize these fluctuations much

Fundamental
investors Inc.

than

with

sponsored

skeptical

was

pushed

here

lending
from

tition with the banks.

contributing to them. The
ernment's proposals for anti-infla¬
multiple and intimate relationship
tion legislation, the efforts of the
with

ciples.
i

the in¬

official

unexcelled

composed

lected

about

concern

factors

member may realize. Under¬
lying the extensive formal organ¬
ization required in an association
age

much

which

effective

activities

add

being part of

tion

parent

With

upon,

Soviet

they
ones.

Thursday, October 7, 1948

banking business, and in 'compe¬

have the unusual satisfaction

can

only

July.

want

doubts

Federal

this spirit and storehouse of abil¬

every public address and
letter sent to each bank in

present problems and

about

creases

the

mem¬

source

the power
accomplish.

abroad, the internal and external
problems of foreign aid, the in¬

de¬

energy

for the benefit of the whole

grow

Alarms

problems of our business.
quality of these men and
willingness to go to work

bership
strength

indications that
into still greater

many

may

many men

abilities

outstanding

lessen

too

repeat, that
the greatest reward which comes
with an ABA official position is

evidenced

ments,
pand

during- the past
year.
I
have
acknowledged your contribution

but they
increasingly

us,

few

the association with

serious tempo.
There have been
indications that the
future

phase

every

have

strange

CHRONICLE

continuously

(Continued from first page)
and members and the official

FINANCIAL

into detail about that program.
You have heard about it and have
been
a
part of it

Inflation Fight Fallacies
men

comes

spigots—govern¬

deficits

fiscal

and

policies, and government and pri¬
vate credit policies.
Primarily, it
is government which

these

opens

spigots and it is government that
must close them.

Throughout

history,

reasons

for

inflation

mained

the

same.

been

war

standards
the

ily,
an

are

money. But living
not improved.

They

to imDrove temporar¬
then prices increase at

and

accelerated

rate

pleasant

standards

can

and

services
and

raised

of
that

comfort

not by

and

destroy
Living

illusion.

production

wealth
and

re¬

have

appear

the

These

attempts to raise
living by increasing

supply of

only

real

standards

the
have

only

useful
add
of

goods
to

the

the
users

increasing the supply
money
incomes, or

money,
credit.

itself; and very defi¬
nitely from the financial and eco¬

stand

nomic

face this

prices

the

should understand is that the high
cost of living is the result of the

problems

country
the

foreign

which

result

situation,

and

war,

gov¬

About

all

most

about
are

too

persons

inflation

high.

under¬
is

What

that

they

Volume

wages and farm commodity
prices are to be supported at ex¬
tremely high levels with taxpay¬
ers' money while,
at the same

take in

knows, just how much
the foreign aid and an expanding
defense program will continue to
enlarge the monetary purchasing
power in this country, while at
;he same time reducing the sup¬

time,
consumers
are
to
have
everything they need at prices
they can afford to pay.

ply of civilian goods. Foreign aid
contracts the supply of commodi¬
ties, materials and products which
otherwise might go to supply our
own
markets.
Military expendi¬
tures are essentially unproductive.
Their combined effect is to delay

difficulties

change

Public

year

gov¬

expenditures divert

re¬

which otherwise would be

sources

available for meeting

requirements.

consumption

Whether at the

na¬

tional, state or local level, public
spending competes with individ¬
uals and business and
materials and

chasing
those

labor, and puts

not

the

last

fiscal

the

produce

things the public needs and
In

state, and local taxes took about
$50 billion from consumers and

one

time

i;ional

every

consumers,

surprise anyone.
It

impossible

seems

one

can

that

sume

the

that

foolish

has to

one

expenditures

any¬

as¬

for

pay

government

which have been made possible by
debt.
Every individual-knows it
be

cannot

But

his

done

affairs.

borrows

Since

when

the

increase his

purchasing

his

power

debt; but he knows he must
off

this

pay

billion

diversion

must

can

wage

and price

increases

brought to a halt by the
of financing the flow
goods at increasingly higher

prices.

only

In fact, this

can

tain

larger

need

points out the

Turnover of Bank
is

another

is that with

an
increasing rate of
the present large total of de¬
posits could result in advancing

use,

prices

entirely

crease

Deposits

factor

rate

over

can

arise

bank

without any in¬
existing volume of
deposits.

the

answer

to these and other

not

which

deposits.

turn¬

Inflation

only

from

the

amount of money means available
but also from its rate of us. Dur¬

ing and after the

war,

have

been

over

extremely

high

total deposits

and

their

low.

turn¬

Recently,

the rate of turnover has been in¬

and

dangers of credit

creasing.

not

emphasized.

recognized

that

controls
be

But it should be
if

used

the economy are to
combat inflation, then

wage controls are an essential part
of them.
In the planned econo¬

mies
or

abroad, whether socialistic
totalitarian, controls over how

and

where

the

(Continued

efforts

on page

40)

Pro¬
To

our

the

added

THE

the

we are going we are
much of the total in¬

the

country to
that

purposes

continuation

freedoms

and

CHASE

present

our

industrial

our

NATIONAL BANK

govern¬

endanger

ex¬

OF THE

OF NEW YORK

CITY

pansion and progress.
At

time

when

for

need

investment

for

resources

the

ex¬

pand production is greatest, gov¬

STATEMENT OF CONDITION, SEPTEMBER 30, 1948

is using far too large a
part of the total resources of the

ernment

community for its

own

This tends to reach

purposes.

RESOURCES

point of di¬
minishing returns, and to shackle
a

the

forces which in the past have
insured
our
great
progress
in

business expansion

and

Cash and Due from Banks

$1,334,054,549.07

increased

U. S. Government

productivity.

1,545,408,567.44

Obligations

capital is not coming into
industry, and the sources of risk
capital to spark new enterprise
have begun to dry up. This alone
can
retard the further expansion

Loans, Discounts and Bankers'

When dollars

one

of production.

Accrued Interest Receivable

and
less

one-half years, corporations have
invested
about
$64
billion
in

this

plants

value

paid

purchasing
on with a

later

value

purchasing

has much the

ing only
was

borrowed at

are

same

power

much
power,

effect

Dearth

borrowed and

able

create

net

result

inflation

that while you may get more dol¬

issues
rest

ternal

out

what

even

dollars for

jobs.
come

prices

come

from

resources

business
and

Only about $3

(new equity

has

tained

you buy.
When we boast
$250 billion annual nationa

expanded

present

new

billion has

lars for the work you do, you have
pay

In the last two and

meet

volume

pay

the rest.
The

State and

and equipment, increased
inventories, and accounts receiv¬

pay¬

refusing to

Capital

New

part of what originally

of New

new

stock

capital).
debt

The

and

in the form of

in¬

Municipal Securities

•

126,084,840.74

Acceptances

1,449,812,200.87

Customers'

■

9,251,872.81
.

•

22,611,638.59

•

18,983,052.89

•

Acceptance Liability

Stock of Federal Reserve Bank

Banking Houses

7,950,000.00

30,360,703.00

♦

Other Assets

2,958,853.82

re¬

$4,602,996,416.64

earnings, depreciation re¬
the reduction of other

serves, and

we
are
simply boasting assets.
At the same time, unit produc¬
high prices, because what is
a
high price paid by one man is tion costs have been rising. Wages,
materials, transportation and util¬
part of high income to another.
The very
combination of the ity rate increases are being more
high level.'of the dollar, symbols and more rapidly translated into
cost and price increases for all
of income and wealth, of full em¬
ployment; of low interest rates types of production and produc¬

income,

LIABILITIES

about

Other Securities

Mortgages

55,520,137.41

•

„

and of

high prices is its
ing of inflation. : ,/• .;
Inflation

and

Low

own warn¬

Interest

Rates

tion

components.

Attempts
to
hold the wage and price line have
fallen, and the wage price spiral
has

become

openly

apparent

Deposits
Dividend

[,206,943,483.13

Payable November 1, 1948

Reserve for

Taxes, Interest, etc.

Other Liabilities

Acceptances Outstanding

•

2,960,000.00

•

10,007,311.59

12,542,409.80

$ 30,128,612.09

Making

to get is al¬
ways inflationary.
The responsi¬
bility of the government for an
excess of easy mortgage credit as
money easy

Less Amount in Portfolio

everyone.

factor in our inflation and in
pansion of money incomes do4s
producing high building costs and not increase output and the
ability
prices
has
been
consistently of the nation to meet its needs.
pointed out by financial and eco¬ Wage rate increases which out-?
nomic authorities.
It is a process strip gains in
production per map
of making purchasing power out hour lead
to price increases and &
of
steadily
increasing
current falling standard of living. Dis¬
building prices.
Curing inflation posable personal income is
ity
by Dumping credit into one area creased to a greater
degree thap
of the economy under government the
increase
in
production.
sponsorship,
; while
demanding higher income without a highdf
a

curtailment

the

use

credit

in others, obviously is absurd.
One

the results of the

easy-

credit

and

grams

is that in the last two and

one-half

loaned

low-interest-rate

years

there

has

$26 billion on
mortgages of less than $20,000
over

pro¬

been
new

production

can

mean

prices

the

same

for

amount

goods. ' If productivity does
increase as rapidly as

<jf
ndt

payrolls,
the payroll dollar
inevitably buys

high prices.
'{•i

This debt, which

ir • v

-i-t

23,752,805.50

Contingencies

•

21,114,382.77

•

Capital Funds:
Capital Stock.

•

Surplus

$111,000,000.00
154,000,000.00

Undivided Profits

60,676,023.85

325,676,023.85
[,602,996,416.64

United States Government and other securities carried
secure

public and

trust

deposits and for other

purposes as

$311,684,220.00

required

less and less.

With labor and pro¬
duction facilities at maximum
use,

there

rent

Reserve for

only higher

is no such thing as a nopone-to-four-family residence inflationary wage increase unless
properties. This represents a very there is a corresponding increase
'
™large indebtedness created at cur¬ in Drod.uctivit.v
productivity.
eac

6,375,806.59

There is evidence that industrial

productivity has not increased as
rapidly as payrolls.
More ex¬

one

attempts to explain fcqw

Member Federal Deposit Insurance

government

over

The significance of this

Governments avoid this issue by
using the power to postpone the
day of settlement; or by paying
off what they owe through their
power to print money, which is
legal tender; or by some form of
direct or indirect debt repudiation.

pres¬

inflationary problems, we are told
that price controls,
allocation, and
affects the progress of inflation
rationing should be reimposed. A
and
can
contribute
to
higher
prices. We must not overlook the corresponding need for just as ef¬
fectively imposed wage controls is
importance of the

a cer¬

credit

too much

money or

There

continue

It prophesies

the wrong

place, or rude
handling can easily turn a boom
something much less pal¬

long as business has the
available capital or can obtain it
from new borrowing.
This poses
a
problem for those who would
control credit expansion by arbi¬
means.

timing,

into

trary

national basis. A mis¬

At the rate

diverting

part of what he has.

Recovery

where

possible to reach the point

steadily increasing Federal Gov¬
expenditures for military
and other purposes now amount¬
ing to about $35 billion a year, and
increasing state and local govern-?
ment expenditures now aggregat¬
ing about $14 billion a year.

debt

all

April

It is

sure

on a

ernment

by spending less or
producing and earning more.
If
he does not, he goes bankrupt and
loses

$30

ment

result of rising prices.
An individual can temporarily

until

and

war

European

come

na-

is' another $17 billion.

gram

personal

spends, it is done
without saying at the time that
something certainly will be taken
away from the people to pay for
it.
The something is taken by
direct or indirect taxation or by
depreciation of purchasing power

between

supply at the

this year, European aid alone
iad taken nearly $13 billion of
our
wealth.
The estimated cost

government

and

resources

dollar
four dollars spent by
high prices should not

balance

demand

consumer level.

ernment

one

"easy

are

extremely higher
unfavorable

in either employment or

spending about

with

income.

producers; and it was spent in
competition with them for what
they have produced.
With gov¬
for

assumed

become

can

aurdensome

uses.

federal,

year,

credit,"

pur¬

into the hands of

power

who

industry for

borrowers

(1451)

atable.

spending, of lending, of subsidies,
and of credit guaranty programs.
The primary inflation force lies
in past government debt increases,
a
long continued policy of ex¬
cessively easy money, and the $40or

continually

CHRONICLE

control

high cost, of war, and of govern¬
ment, reflected in the debt and in
the budget.
It is a product of

ernment expenditures.

workers

FINANCIAL

have

the

billion

COMMERCIAL

THE

Number 4740

168

Corporation

are

pledged

permitted by law.

the

THE

(1452)

COMMERCIAL

tional

Inflation Fight Fallacies
1

(Continued from page 39)

FINANCIAL

CHRONICLE

security

expenditures; for
and operating
subsidies for merchant shipping;
for
extravagantly high support
prices for farm commodities; for
large

construction

pository

Thursday, October 7, 194B

most, personal

and

business financial reserves, and as

community
and

leaders

financial

economic thought,

the banks

We must

stop generating inflation
by a strong and consistent disin¬
flationary policy with respect to
the budget, loans, guaranties ancl

and bankers of this country have
subsidies.
This will provide the
ket, and overproduction is begin¬
enlarged social security benefits a responsibility to cushion with surplus from which to reduce
gov¬
ning to appear in some areas.
and lower retirement
their
own
ages; for in¬
stability
anything ernment debt progressively, and
Competition
and
price
cutting
creased foreign aid, and perhaps which
may happen.
That is the then we can work off the infla¬
have reappeared.
Net exports
for rearming Europe; for greaterprimary social responsibility of tion we have by putting our en¬
have
been
declining.
There is
than-ever appropriations for riv¬ the banking business.
less pressure from foreign demand
ergies to increasing production
As a nation, we cannot cure in¬
ers,
harbors,
and
for
public
and productivity.
When this is
resents the ultimate loss of both as a result of European crop and
works; and for larger payments to flation by continuing any of the made certain, the problem of car¬
freedom and enterprise, and we production increases. Bumper do¬
the states on their own projects.
evils which brought it about. It
rying on the policy of supporting
should note the most significant mestic crops have reduced prices
At the same time, state and local is not an economic illness that
the Government Bond market be¬
can
result in the most planned and of many- commodities nearer to
government expenditures continue be stopped by pleasant potions comes a
relatively minor one.
The rate
regimented economies is a sta¬ their support levels.
to rise and their deficits increase. and
pat phrases. The awkwardness
But if the Government returns
of
bilized poverty.
saving
is
declining
Dollar
New projects are being added and discomfort of the cure is in
to
volume has increased due to in¬
financing another series of
and nothing taken away.
Controls Are Not the Answer
There inverse ratio to the ease with budget deficits, it will mean re¬
creased prices, but unit volume
is
constant
which the germ took
pressure
for
more
hold and suming what was done before and
However, controls are not the has not increased corresponding¬
spending for new programs and grew.
The cure is not a painless during the war, which brought on
answer.
Domestic
They deal with the effect ly.
production
plus
enlarged
demands
for
the
old process.
the inflation problem we have to¬
of
inflation and not
its causes. price
increases
has
begun
to
ones.
We have been engaged in
If we really intend to stop in¬
day. We cannot battle high prices
They merely repress
the high press on the money supply. So far
a
process of freezing steadily in¬ flation,
money has to
be made with the same fiscal policies used
price system of inflation.
Break¬ as inflation represents a demand
creasing
expenditures
into our hard to get from the government
to meet the demands of war itself.
ing or refusing to use the fever exceeding supply at the existing
government budgets.
thermometer
does not
stop the price level,; we have evidence of
The real public issue is to what
fever.
Controls
drive
inflation a turning point in many lines of
extent the United States Treasury
underground and official figures goods.
and state and local treasuries can
On the other hand, in
never
show the facts of blacksupport of
be
subjected to continually in¬
market
prices
and
unavailable continuing demand, we have the
creasing
burdens.
Recently
it
merchandise.
They stifle the acts unsatisfied markets in automo¬
was reported
that more than one
enterprise
and
production biles, in steel, in housing, and in
of every ten workers in the United
which would
The general pressure
provide what the manpower.
States
is
on
a
public
payroll.
Illinois Central common stock has continued to fluctuate in a
people need and want, and create continues for higher wages. Some
very
There are additional millions re¬ narrow
range considerably below the year's best levels for quite some
unbalances
and
stagnation.
In prices have continued to increase
ceiving direct cash benefits from time. Also, despite the fact that its investment status has been im¬
peacetime, direct controls do not although mostly in the areas af¬
the government.
With foreign aid proved materially in the
fected by higher labor costs and
even work well in a police state.
interim, the stock is still selling almost 10
added, there are payments from points below the high reached in*
To have to try them is a confes¬ material shortages.
Military ex¬ the
public purse, of many billions 1946. It is a victim of the
sion of failure.
To use them as a penditures continue to" increase,
general to more than $90 a share of com¬
of dollars to many millions of per¬
sense of uncertainty that has been
mon stock
process of forbidding the surplus and other public expenditures re¬
outstanding.
sons.
Government costs and gov¬
main large and may increase sub¬
generated by the foreign situation.
Aside from improving the in¬
of money to show in prices, and
ernment
benefits strain the ca¬ It is
of placing normal economic trans¬ stantially.. 7 77--7
impossible to guess how long vestment status of the stock the
"7;'" .
pacity of an already heavily in¬ this general lack of interest in debt retirement
actions under the terms of po¬
program has add¬
debted
Public Expenditures
country and give us a stocks is apt to last.
litical compulsion.
However, it ed to potential earning power
house haunted by the spector of
does seem almost inevitable that
The future of public expendi¬
through
a
reduction
in
fixed
Actually, the forces of deflation
inflation.
and inflation may turn out to be tures is shown in the proposals for
eventually high earning power charges.
These charges are by
Every citizen should question and the improved debt structure now down to an
more
in balance than many be¬ spending more and more money.
indicated level
whether we have such inexhaus¬
must be recognized in the market of around
lieve.
There has been some evi¬ There are more federal subsidies
$10,350,000. As recently
tible resources that we can sup¬
as
1941 they were above $16 mil¬
price.
dence that urgent demand is over for
easy money mortgages; pro¬
port our present indebtedness and
Illinois Central, despite a gen¬ lion.
The reduction is equivalent,
for
many
products.
Consumers posals for public housing and for the continually expanding pro¬
erally good earnings record even before Federal income taxes, to
are being priced out of the mar¬
slum clearance; for additional na- posals to use government funds duringthe
depression years, is $4.40 a share of common stock
without destroying, by inflation or
one
of the few railroads in its outstanding.
Even with fixed
by increased taxes or the reimpo- class that has not
resumed divi¬ charges of $16.5 million the com¬
sitiony of
wartime
controls, the dends on its common stock.
In pany had reported earnings on its
economic and.

workers

applied and what
they are paid for their work have
become
the
principal issues in
achieving results according to the
plans. None started out that way;
but all ended that way.
This rep¬
are

personal

the

and

which

initiative
made

freedoms

and

enterprise

possible

what ;we

have

today.
.Every tune

BANK

■

165

7/7

"Founded

;

->'r

•

problems at the local

own

subsidies

special privileges, we
economic
planners

provide

the

with,

1824

Broadway, New York

one

;

•

CONDENSED STATEMENT OF CONDITION
At the close of business, September 3(1, 1943

To The extent that
self-reliance

and

ASSE.TS'

us,

his

pay

$ 453,763,340.32
365,209,025.18
State, Municipal and Public Securities
105,839,458.82
Other Bonds and Investments
5,057,671.00
Loans and Discounts
520,865,371.65
Banking Houses
\
536,722.81
Other Real Estate2,231,356.95
Credits Granted on Acceptances.
19,311,395.53
.

Accrued Interest and Accounts
Receivable

3,072,379.00
1,359,823.46

$1,477,246,544.72

the

Undivided Profits
Reserve

Taxes, Expenses,

4,124,855.93
4,264,189.21
1,125,000.00

etc

Dividend Payable October 1, 1948

Acceptances Outstanding $25,241,324.55
(Less own accept a n ces
; 7. held in portfolio)
2,710,320.53

ahead

that

best

believe.

can

10,775,388.85

Deposits

1,324,085,140.48

$1,477,246,544.72
at $50,996,222.72 in the
foregoing
deposited to secure public funds
for other purposes required by law.

statement are

that it is

The

direction toward

our
problem expressed
well in the Mid-Year Report

the

Council

Economic

Ad¬

these words:

typical for inflationary
speculative booms to collapse
sentiment

business

confident

...

cisely when

No one

some

can

event

still

tell pre¬

series

events
might
touch
off
a
change in the economic situation

rapidly

national

than

might

tension

ments

...

lessens

pre¬

if inter¬
..

put
to
the
test
price and cost adjust¬

(could
be
to continue

enough

are

...

whether

production

made)

fast
employment

without

serious
i

cutback.
There

everywhere

adjust policies
definite

so as

need to

to make

contribution to

some

stabiliza¬

tion and to do everything that can
Charter Member New York

Clearing House Association

Member Federal Reserve System
Member Federal Deposit Insurance

Corporation

were

since

dend

be done to spread a sense of cau¬

the

this

resumed

1931.

the

that

year

non-cumulative

The

after

stock

common

divi¬

last

paid in 1931, marking the end

favorable.

unbroken

1860.

had

been expected among rail
that disbursements on the

analysts

logical

ex¬

pectation although there

responsibility

events.

the

hub

around

which

the

nation revolve,* as- the re¬

severe

re¬

traffic

term

position

Illinois Central appears

erable

growth

service

highly

There has been consid¬

and

the

aggressive

very

traffic

new

parts

the

management

building

is
up

The manage¬

sources.

ment is also

traditionally particu¬

may be
delay caused by the suit re¬
cently instituted by representa¬
tives of preferred holders to col¬

riods of

declining traffic has been

notably

successful

lect

penses

larly

cost

conscious,

soma

dividends

•

they

The

for

number

of high earnings is to be

years

found in the character of the

pany's
only

debt

structure.

faced

was

with

few years ago as

maturity

com¬

The

what

been

road

problem

the

Earnings have
largely in
reducing

used

these

maturities.

1941-1947

the

years

non-equipment debt was re¬
tired, mostly in the near maturity
groups.
The latest official an¬
showed

ductions

nearly

early

this

year

questionably

formances
current

ably

and

top

earnings.

$15

already

^educed

further

Hugh Head at Harrison
&

CINCINNATI,
Co.,
Union

members

the

Cincinnati

Stock

re¬

Moreover,

recent

York

Exchanges,

and
an¬

that

nounce

has

Loveland, Jr.,
and
Hugh L.
Head, Jr.,
have
joined

announced,

low

Building,

New

this

un¬

augmented

have

roundly $89
as

OHIO—Harrison
Trust

Franklin

possible that they

ally do\vn

prob¬

compared

millions

maturities

F. 0. Loveland and

Based merely on the 1948 retire¬
1950-1955

For the

earnings will

year

recent months.

ments

ex¬

All of these

$15

and

been

getting

pe¬

with $10.25 in 1947.

than $108 millions

nouncement

appeared
an unsolv-

1950-1955.

years

under control.

and

factors augur well for future per¬

non-payment of

dividends in the face of
of

years

earned.

were

reason

prior

their

the
been

z a

are

actu¬

organi-

t i

o n.

Mr.
was

formerly
Vice

$80 millions.

balance

Loveland

millions.

sheets

a
Pres¬

ident of

Field,

show cash and equivalent of more

Richards

than

$74
prospects

year

millions and earnings
over the balance of the
highly favorable. Obvi¬
ously, the question of meeting ma¬

the Cincinnati

are

turities

period

due

problem.

the

F. O.

1950-1955

longer any serious
Were it not for the fact

that most of the bonds

was

Equivalent

Company
charge

office.
Loveland, Jr.

was

also

of
He
in

the investment

through early 1948

sense

the

common

would begin soon after resumption
of
dividends
on
the
preferred.
This still appears as a

whole.

as a

long

dividend record that stretched

back

of the

toward

The

personal and business transactions

and

industry

was

falling due
in
those
years
are
non-callable
the whole situation could prob¬
ably be cleaned up right now. The
reduction in non-equipment debt
from
the
beginning
of
1941

tion

stock

common

cession year 1938, the worst year
of the depression decade for the

also

able

find

and

Securities carried

about

pared to deal with it

22,531,004.02

said

ation may dominate what happens
in the future.

very

preferred

lapse

attempt

only

was

from an acute foreign situ¬

away

Other Liabilities

and

look

while

forContingencies.

Reserves for

Unclear

easily can
be much more sensitive to change
than most people are inclined to

and

$110,340,966.23

penalty.;

the future pattern of events.

visors in

$25,000,000.00
75,000,000.00
10,340,966.23

of the

Situation

present situation is

Capital StockSurplus

will

individual

completely unclear.

LIABILITIES

have

purchasing

dividends

when

see

The

the

every

Present
We

Cash and Due from Banks
U. S. Government
Obligations

with

of the dollar and endangers

power

Other Assets

to regiment

character

all
.

excuse

the economy.
•

•

depreciated

;

■

one

level and turn to the government
for an answer to it, asking for

TRUST COMPANY

■

our

fail to solve

fact,

department of the Union Central
Life

Insurance Company,

and the

Central Trust

nati.

Mr.

Master's

Company of Cincin¬
Head,
who
has
a

degree

Investment

Banking from University of Mich¬
igan, was formerly associated with
Field, Richards & Co.
.

Volume 168

dumber 4740

COMMERCIAL

THE

What

Banks Have New Competitors

donment of free markets.
Yet, a
careful study of the
many things
that have-, been advocated in the
halls of Congress indicates that

ward

can
on
'

observes the trends

one

socialization

countries,
dence

large

the dim
footprints of socializa¬
tion and free market curtailment

finds

one

that

its

to¬

European
much evi¬

development is in
result of unsound

measure a

governmental policy and not due
to

the

failures

of the free

enter¬

already be found in the sands prise system.
American shores.

our

for

Control

well note the proposals

can

government-subsidized

could

rent

the

well

banking system

lead

domination

low-

(to

all

the

had, and there is

legislation would constitute

monopolistic

parture
from

small

de¬

proportions,

nance

business.

With

15,000

industries.
of

Fi¬

every

banking system

banks,

have

never

possibility of,

domination

of credit.

sources

government

lifeblood

housing which have been in¬
troduced at each of the recent ses¬
sions of the Congress of the
United
States.
The enactment of such

A free

the

banking

enterprise system, system is essential to the preserva¬
especially so when the housing tion of a free economy.
shortage is rapidly diminishing.
If we are to continue to live
free

our

Another

and operate in a free economy,

be found in the
sugges¬
tion made to the
Congress which

and
right to choose, then
for us, as bankers and as
citizens as well, to speak frankly

would require the banks to
deposit
an
additional reserve of 25% in

the issues involved

government

tive

tion

place"

limita¬

the

market

can

that

mean

example

freedom

the

securities. This v/ould
50% of the assets

some

banking system would

subject to the direct control of

maintain
it

proposals,

and

principle
there

hgs

would

been

established,

made

by that

agency.

might well

accomplished
vested

and

solely in

ernment.

direction

bureau of gov¬

Profitwise,

the

•

special

of 25% in short-term
gov¬

reserve

ernments

ferred

its

might

well

pre¬

increase in the cash

reserve
requirements;
but
the
principle is adverse to a free and
independent banking system.

but

condition

and

operation),
being at the be¬
ginning of human civilization, we
could
get
somewhere with the
problems which are now blocking
"survival

of these

dubious
with

interest."

"forgotten"
and

the

officials

and

free

Head

taining
would

the

good
the

serve

the nation.

the

(in

Cash, Gold

new,

best interests

(Direct

—

number

the

President—are
ganized
dates

President

down,
of

vote

for

strongly

or¬

force

-public

abolition

create

position

for

total

office,
to

from
the

oppose

useless

offices;

functions

new

candi¬

govern¬

ment

calling for new public* jobs,
with resulting increase of cost
and

taxes
the

support

them; to add to
pay-roll; to in¬

government

crease

salaries; and to otherwise

pile up the already execessive
burden of government.

Here, too,

field in which you can be

ful.

t.,

faith

the

future

State

"Forgotten"

...Groups

;;
There is

it)

measure

gotten"

..."

plan (I do not

which .might
of

relief

Let

groups.

government
the

issue

proceeds—as

these

the

bonds

recom¬

afford

now

"for¬

Federal
and

use

done

it ;to. support
prices of farm prod¬

ucts,;: (officially

billion
lars

stated

five hundred

this

come -of

year)
the

cost

the

come

years

million

one

ing

Discounts

and

in¬

tax'returns

for those years
would furnish the
necessary'(infor¬

mation. -If thatr does
mot 'furnish
-

for your "patience in

Securities

•!"

•

Total

prices

society

and

7,000,000

Figures of Foreign Branches
of United

merely

permanent

6,864,553

and
.

Other^
.

5,757,388

29,247,090

•

162,500,000

.....

Total

2,325,000
$ 77,500,000

36,329,782

276,329,782
$4,912,440,813

are as

September 25, 1948.

States

Government Obligations and $737,230 of other assets are
deposited
$216,951,291 of Public and Trust Deposits and for other purposes
required or permitted by law.

to secure

(member

of the Board

Wm. Gage Brady,

-r

federal deposit insurance
cc, f

Chairman

•

corporation)

•'

of the Executive Committee

President

W. Randolph Burgess

Jr.

Howard C. Sheperd

CITY BANK FARMERS TRUST COMPANY
Head

the

living. The way out is not
by government aid to groups. It is
by an unselfish approach which
result

24,432,869

etc

Undivided Profits

$4,912.440 813

cost of

will

Discount

;

Surplus

2,661,774

S320,142,528

eco¬

increases

Capital

27,843,118

Chairman

up more taxes which in turn

raises

Dividend

10,739,479
Branches

with

for:

Expenses,

Portfolio

Transit

Interest, Taxes, Other Accrued

7,200,000

national

our

piles

$35,172,348

sidies. It would only make the
situation, bad as it now is, worse.
All spending and
doling out of
public funds to selected groups
of

$45,046,431)

Unearned Income

21,217,081

International

Reserves

2,731,430

Banking Corporation
Bank Premises

increases

omitted)

Bills.

Unearned

Federal Reserve Bank

ances

Items

for

living established by

however,

o] September 30, 1948

1,349,605,149

.....

and

Other Assets

plan,

263,166,196

Office: 22 William Street- New York

Condensed Statement

basis

oj Condition

o] September 30, 1948

prosperity fair and just to all.
The plight of your trust benefi¬
ciaries

and

other

the

creating of public

opinion which will force the war¬
ring elements of our democratic

society to
of

which

agree

will

upon

come

truce out

settlement

ASSETS
Cash

and

Due

(Direct

Obligations
Agencies

State

and

may

profit-sharing

all.

some¬

and

pation by all groups of the Ameri¬

Other Assets

and

sincerely

and

inter¬

whole¬

heartedly working for the good of
all, would

soon

Bank Premises

Total.

and

Deposits.

$ 96,953,727

(Includes United States War
88,992,214

1,044,651

Securities

•

Loan Deposit $4,449,420)

•

;

...

Reserves

4,240,561

8,714,885
100,475

Capital

•

$10,000,000

•

♦

10,000,000

742.383

1,278,616
*.

Surplus

600,000

•

$ 23,442,125

......

Federal Reserve Bank

Stock

.......

Real Estate Loans
in

Advances

thing else; but, whatever it is, it
is long overdue. Similar
partici¬

people, forgetful of self

;
'

Municipal Securities

Loans

Other Federal

Other Securities

fairness

Fully Guaranteed)

and

Banks

from

LIABILITIES

U. S. Government Obligations

founded upon Christian
principles

justice

omitted)

dollars only—cents

"forgotten"

groups is hopeless unless you and
other good citizens devote a fair
share of your time to public serv¬
and

(in

•

3,053,343

•

2,516,551
$130,485,243

Undivided Profits

Total.

9,290,955

29,290,955
$130,485,243

$7,845,882 of United

States Government Obligations are deposited to secure the
United States War Loan Deposit and for other
purposes required or permitted by law.

(MEMBER

bring order out of

FEDERAL DEPOSIT INSURANCE CORPORATION)

chaos. It would restore representa¬
tive government in its true
and
of

replace/ the

governmeritbiy

present

sense

system

pressure blocs.

Chairman

of the Board

W. Randolph Burgess ;

f^w ob¬

listening.

Accept¬

and

20,569,603

additional

make

upon

Acceptances

relief,

Liability

78,822,061

Customers' Liability

nomically unsound—as unsound as
many
Federal Government sub¬

can

1935-39. 'Their

are a

out of upwards of 50
of trust-service. Thank yow

$4,567,484,131

Loan Deposit

1,584,583,351

Municipal Securities

and

Loans

wages.

Such

est,

groups

employers and employees regulat¬

dol¬

of their income

-Real Estate Loans

payments out of government bor¬

bring the* in¬

"forgotten"

up to the average

for.,

These, gentlemen,

State it is?

(Includes United States War'

ances
.

upcm.

State-

servations
years

Deposits

$1,547,041,050

Other Federal

adequate

Banks

from

Other Securities

America.

ice

A Relief Plan for the

mend

use¬

,.r

York

Less; Own Accept¬

votes, members
families, relatives and friends— tics, and upon the formula now
total of
30,000,000 votes. The being used in agreements between

New

LIABILITIES

Fully Guaranteed)

Agencies

Progress in

this direction would truly warrant

great

Due

and

Obligations

With this

financial affairs.

dollars only—cents

U. S. Government Obligations

philosophy
in government, we can hope to
live again in an economy that will
make
possible
the exercise of
sound judgment in all phases of
our

oj Condition

■ASSETS

to sound monetary policies,
by grodual processes, reconstitut¬
ing the good of the old and re¬

was about 45,000,000. So it is that
the holders of Federal, State and
local government
positions, their
families and friends
two-thirds

Including Domestic and Foreign Branches

turn

based

done

re¬

the

average of the total votes for the
last
four
Presidential
elections

the

Office: 55 Wall Street, New York

Condensed Statement

govern¬

well.

rowings

know,

THE NATIONAL CITY BANK OF NEW YORK

the U. S. Bureau of Labor Statis¬

you

political
well be the goal
as

just

possible anywhere.

least

four

1943,

are

done in New York

The regional trust
company may
not be the answer. But I be¬
lieve
its
possibilities should be

co¬

legislation, with laws

regulations

number 5,948,000.
Each of these millions controls at
now

State in

was

recommendation

thoroughly explored.
I
believe
American too, that the situation calls for a

the

all

statutory fees

trust clients.

but

earnest

and fair. It

Among these is the business which Superintendent of Banks, resulting
the banking department receives in an average increase of trustees'
in deposits and desirable loans to compensation of 37.8%.
If it can

groups seems

and

creases

profit, maintain their trust
departments because of what they
regard as collateral advantages.

the

and

dollars-and-cents

net

The future

discouraging

sincere

operation

fully

(Continued from page 25)
government

fittest"

the

of "self

worthwhile

into

came

progress. I refer to the law of the

law

to them that reasonable in¬

prove

unnatural in their

which

Fifty Years of Trust Service
local

public il¬
likewise
indi¬

part,

Ownership

employees

staffs

cated.

One
more
Inform the
comment:
Reading
public, from,
of life, will
over
this manuscript yesterday I whom your business comes, as toin an honest and un¬ felt I had not made
entirely clear rising costs and the reasons why
selfish fashion, in public life, both
my
suggestion as to "regional" handling trust business nowadays
directly and indirectly. •
trust companies. So I would like to calls for expensive expert services
If we could only repeal or modi¬
clarify it. There are 2,871 members of a variety and extent which no
fy two of the natural — or per¬ of the Trust Division. It can be
single individual can render.
haps we should say unnatural— taken for
Go
to
granted that such of
your
legislatures
and
laws
(natural in their inception these as do not show an
actual
walk

take

Stock

eral, State, County, City and other

lations

all

monetary and fiscal policies.

Fairness

vigorous program for increasing:
trustees' compensation. An
aggres¬
sive campaign by your

have

mental authorities

came

ing system,

vigor

may

could

people, of every walk of life, a
way
certainly can be found to
bring them the relief to which
they are entitled.

;

assets

If that au¬
into unsound hands,
which sought control of our bank¬

thority

the

subject to control

government

and

limitation

the nation

(1453)

in all

expendiency, can
of the Congress and other

the extent to which
the banks

the

clear

Short of another war, we shall
time to study and improve

congressional

(Once

make

lasting and perma¬
people, in every

basis if

legisla¬
that their effect

consequences

recognized.

our

action.

our

with full force

and

agency. It is impor¬
tant to realize that the
25% could
well be increased

by subsequent

government

nent

socialization and the aban¬

seek

CHRONICLE

this 50-year review of trust serv¬
ice is that we will come out of

(Continued from page 18)
ward

FINANCIAL

President
Lindsay Bradford

1
,

(1454)

THE

(Continued from page 6)
ond

cause

Treasury
since

the

policy

money

and

the

extreme

pursued

the

tion, the

Russian

After the

Reserve

First

World

Treasury and Federal

1920,

in June.

inflation

and

standard.

defended

This

losses to

did

and

defend

opened

Thus
war

gold

classically correct
hardship and

many people, but
the gold standard

the

door

long
period of great prosperity, which
only ended in 1929.
After

the

Second

World

such

freedom

action.

Too much of the public debt
owned

financial
drastic

institutions

break

dear

the

bond

too

was

Reserve

to.

of
1932 and

would

take

Nobody wants
be

very

to follow

their

the

decision

authorities

that

middle-of-the-road
ternative

there

Pegging

far

this

from the

increase

resulted

the Federal Reserve
So far,

war

is blameless.

however,

its postwar

purchases of govern¬
obligations have prevented

natural

contraction

supply

money

the

from

ex¬

taking

place after the government's war
spending stopped, and have kept
money artificially cheap, Federal
Reserve action is responsible for
inflation.

elastic

monetary

system should be capable of
traction
and

well

the

Federal

con¬

expansion;

Reserve

bond

buying operation has kept the
cess

afloat.

money

money,

too

people

Too

much

too cheap,

easy,

borrow

too

ex¬

leads

much

and

spend too much.
indicated

was

the authorities

of G

the

foreseeable

for

That

was

commitment

limited

understood
not

not

The

but

period.

could

future.

to be pegged, as we say

was

coloquially.
tract

the

con¬

plan

was

market.

There

more.

It
was

consideration paid for it.

The

bonds had been sold and
paid for
years

before

guaranty.

"for

the

without

There

custom

guaranty.

been

banks

and

maturity.
bonds

their
to

were

then

bonds

with

guaranteed par
demand at any
of
savings

the

sale

penalty for collec¬
maturity was rather
savings bond sub¬

before

rough

before

If the holders of bearer

for their bonds

tion

bonds

the

scribers.

Pegging is disconcerting to in¬
and

It is

invitation to sell

level

reserve

elsewhere

Congress,
"emergency"
increase

had

also

legal

of interest rates

of bond

prices.
cost

moderately

the

taxpayers of
interest rates

higher

banks;

this

24%.

Summer's

authorized

4%.

The

Board

additional

short-term

gov¬

cash of 25%

demand deposits of
proposal which has

been

pressed lately, but has
hot, it seems, been withdrawn. The
Federal Reserve thus asked power
to

freeze, in cash or government
securities, up to 61% of commjercial

bank

The

reserves,

would

cities,

reserve

the

"reserves"

not

are

ordinary

available

loans

tral

and

operate with

the

legal

are

reserves

They

sense.

meet

con¬

was

moral

foreseeable

any
no

authorizing
Any

The

I do

general

the

been

any

price
statute

pries

in their investment
policies as to
be unable to endure a
moderate

increase in interest rates and
duction in bond prices.

future"

has

re¬

They will
if they hold
maturity. No more
moderate change in interest
lose

never

penny

Legal

assets

Federal

reduce the investible assets of the
commercial

rates is to be

desired, or is to be
expected, from unpegging, with¬

out

active dear money

which is not suggested.

policy,

Continu¬

ing the pegging policy will ulti¬
mately be more disturbing, and
result

bonds

when

than the

break

worse

the

peg

the

is removed,

policy of maintaining an
but
orderly
market,
suggest.
The longer peg¬

unpegged
which I

be..

the

Board

reserve

ments

ties

peg

Federal

the

Reserve

hands

should

suggest

and

determine

what
to

support

extend

have

its

from

to
the

hands

time

give

and

average earnings. A
public policy requires that
good; times
the
commercial

banks should

have good earnings
from sound loans and investments
and

add

their

master instead of the Federal Re¬

against the inevitable rainy day.
In bad times, in time of
trouble,
high legal reserves add to the

too

call

loans,

idle

Banks,

sell /securities,

balances at the Reserve

and

Actual
ferent

come

out,

abruptly

left

itself.

c.W.v
Reserve

Requirements

To counteract the inflation that

its

cheap

money,

bond

pegging

the

are

market

open

Federal

Reserve

••

cus¬

matter,

maintains

are

and

very

are

dif¬

great

Every well-run bank
high

proportion

loans and investments of the first
of

eligibility and liquidity,

to be able to meet the needs

its customers

withdrawal

must

meet,

not

cents

and

for

loans,

for

deposits, which
20

it
30

the dollar but 100 cents,
the

loans, and

dot.

These

investments

liquid
are

try to
and

long

for

short money

make

Sisyphus.

The

HARTFORD, CONNECTICUT
United Stales—The largest

bank in Connecticut

Sept. 30, 1948 Total Resources $152,325,094
MEMBER FEDERAL DEPOSIT INSURANCE CORPORATION

hand.

powers at

eral

Reserve

seek

and to at¬

and

failures

without using the

power,

In 1933 the Fed¬

Board first received

in an emergency and with
approval of the President, to
reserve requirements.
In
got power, without any

power,

the

and without approval
President, to double the
statutory reserves; and it used

emergency

the

it.

Now, again, it has asked more
much more, to change re¬
serve
requirements, and has got
some
small part of the power it
power,

Federal

granted,
the

long

go a

member

their

Reserve

the

use

therefore

and

deprive commerce, industry, and
agriculture of recourse to pri¬
vately owned commercial banks
to
meet their legitimate needs.
.

increased

eral

Reserve

Board

would, if

to deprive

way

banks

resources,

of the Fed¬

power

Board

Washing¬
ton, during the last 15 years, over
the 12 regional Federal Reserve
Banks

and

over

banks,

and

its

govern¬

power

the

and it would

reserves

Reserve

Banks

ment

bonds.

trict

credit'

banks

and

the

would

the

Re*

Inflation

the

credit

control

outlet is the Board's policy.

ture

the

Yet
bank

and : commercial

currency

deposits

re-

commercial

it at

expand

and

source

buy

Thus
at

Banks.

serve

ordinary money, and
money • is
high-powered
for it is the basis or foun¬
are

which

superstruc¬
and bank de¬
As the official

the Federal Reserve may create a
volume of ordinary money that

several

times

amount issued."
ury

large

the

When the Treas¬

surplus, which has been used

to retire bank-held

debt, has van¬
ished, the .continued purchase of
government

eral
a

securities

Reserve

net

money

increase

ered money

with

will

this

Fed¬

involve

high-pow¬

policy

resources

banking system,
and with growing dependence on
that government

board, and other

government agencies, for the sup¬

ply

are

the

and

money

breath

Price
Instead

credit,

industry,

merce,

life

which

com¬

agriculture.

and

Fixing

monetary control, or
in addition to monetary
control,
price fixing and rationing have
been proposed—and for the time

being

rejected.

resuscitate

these controls in peacetime would

reduce

production,

markets,

revive

increase

and

black

the

infla¬

tionary pressure, by reducing the
supply of goods in proportion to
the money available to buy them.
Fixed

low

duction,
ing

prices discourage
increase

and
of

power

mand and

Power

permitting
Board

reserve

the

make

requirements

ing

the

supply

the

pro¬

spend¬

spenders.
are,

De¬

thus further

freeze prices without

Any

general increase in
reserves, if neutralized by

profit

out

crease

shortages.

have

government

securities,

except to

transfer

earning assets from the

commer¬

Unless

dangerously

curtails

the

available

neutralized,

deflationary.

quantity

it
It

credit

industry,

commerce,

agriculture, instead of merely

increasing

the

cost.

moderate

increase in interest rates

may

the

production and in¬
To freeze wages

sible.

peacetime

desirable

freez¬

take

soon

effectively it would be necessary

labor.

ineffectual,

would

wages

Federal Reserve open market pur¬

and

private

our

method of credit control is not

Banks.

for

unbalanced.
Much

changes

legal

commercial

alization of much of the

and aggravate the in¬

Reserve

as a

the

demand

still, threaten the Ameri¬
people with effective nation¬

can

the

currency

pamphlet on "The Federal Re¬
serve
System—Its Purposes and
Functions" says, "the issuance of
a given amount of what has been
termed high-powered money by

task

cial banks to the Federal Reserve
the

lack

have

tributes mistakes

chases

1792

bureau

m'ore power,

legal

sound.

fourth oldest hank

and

The

Federal

The

board

would increase commercial banks'

The

ESTABLISHED IN

too
en¬

administrative

any

scarce

cheap is

money

Too

AND TRUST COMPANY

The Board's proposals

flation.

HARTFORD NATIONAL BANK

opin¬

asked.

posits is erected.

reserves

their

meet

With

they are a much
instrument
to
be

ment

Facing Two Ways

dation

yet

importance.

but the government bond market
not

tomers' needs.

order

should

capital funds

time

market, and not
by "a policy

should

longer

sound

credit

holding the bonds at or above
par, which makes the market the

The peg

seek

maintain

serve.

and

occasions."

Board, it is

board, however well meaning and
highly regarded.;
The tendency of any govern¬

ah !

instru¬

proper

and

control.

control

;

money,

tied

the

used
•

The

tain

free

credit

reserve

The

not

rate

Banks.

borrow money, in order to main¬

make

may

unduly

that

trusted

suggest that they'
increased by the

that
of

ments

the

inflation control impossible.
Federal Reserve should be

banks
them

move

ion'

powerful

Congress, that the legal
ultimately
be

instrument

and riskier loans and investments

The

injustices,

should

greatest respect for the Fed¬

System) and j
not by administrative decree, and I change
1935
it
that changes, in reserve requirej

general trouble by forcing banks

■

do
be

infrequent

eral Reserve

equal lor all banks, that it should
be fixed by law (as it was during
the first 20 years of the life of

will

worse

thus

the

non-

Reserve

than

says,

do the

policy of making money
Banks, scarce at the commercial banks
blocked
accounts, bearing no in¬ by keeping them short of reserves,
terest. They cannot be withdrawn
which is deflationary, is not con¬
or
used except in proportion to
sistent with the policy of keeping
net losses of deposits or in
liqui¬ government bonds at or above
dation!
Too high legal reserves
par,
which is inflationary.
To
the

their bonds to

obligation

fully satisfied, by the lapse

imprudent

These

unneces¬

pamphlet on the Federal Reserve
"Because changes in reserve
requirements are a very power¬
ful instrument the.y are used only

cen¬

for

most

you may
make money dear but must never
make
it unavailable.
The same

else¬

That

Strong's old maxim that

injustice, by

locality;

1937.

lapsed with unprecedented speed,
the
truth
of
Governor

reserve

located

requirements

now, but I
should not

commercial banks, forced de¬
posits by the commercial banks in

country cannot in

have

proved

not, of course, suggest low¬
legal reserve requirements

ering

principal factors,

of managed deflations, when
production and employment col¬

explainable only on historical and
political
grounds,
become
of
greater importance as reserve re¬
quirements are increased.

the

banking and financial insti¬

tutions

course

concerns.

sterilized

are

those

member banks.

policy

going

reserves

banks

cities,

banks

securities

cities, those in

where

discount

heavily

sell

the accident of
different

the

Reserve.

sary

between

of the business of the commercial

most

tion

the

to meet increased
requirements.
The
legal reserve require¬

reserve

form

those least able to bear it.

and

reserve^

tingencies in the ordinary

taxa¬

reserves

and

different

Federal

tool

the

weapons

the

of
one

securities among

borrow money

ments

The

though by no means the only
factor, in precipitating the defla¬

reserves

very uneven, and some
would -doubtless have
to

banks

Inflation is the
of

was

low interest rates.

burdensome

chest

the Federal Reserve

increase

and

not

are

re¬

elsewhere.

so-called

cost

all

deposits in central

cities, 55% in

and 49%

Board

aggregate

not

session,

reserve

would be

trivial compared to the
inflation to the people.

ernment securities
of

serve

The

from

proposed

all

vestors.

oanks

legal

cities from 26 to 36%,
cities from 20 to 30%,

flationary

liquidity

legal

The distribution of

reserve

and

of them.

some

government

thority to make further increases

tral

ample

increased

against

the

10% in required cash reserves
against demand deposits; propos¬
ing to lift the legaP limit in con-

denial

stop business.

increase in legal reserve require¬
ments is one of the roughest de¬

What the commercial

need

than

call

payment

reserves

Banks

gentle deterrent where

of credit may

against all'their liabilities rather

commercial banks in order to

required cash

actual, reserves;
assets that are re¬

Reserve

kept there.

the

maximum permitted by
law, ex¬
cept in central reserve cities; and
the Board sought legislative au¬

a discount, in the
bonds, or with a loss of
interest, in the case of E bonds.
Thus the buyers of savings bonds
suffer a penalty if they demand

that

the price of par or better for the
war bonds
would be maintained

price

be¬

maturity at

ging continues

J: On Christmas Eve, 1947, it

for

savings

their bonds

tion, for it bears
high cost

are due to or supported
increased money supply.

the

cess

non-negotiable
redeem

case

living

ment

memory,

invented in the Thirties,
increasing the legal reserves of

the

its

Federal

most

Bond

Higher living costs for all are too
al¬ high a price to pay for abnormally

but

Price Inflation and the

bonds

policy, no
iy4%

iy2%.

issues

fore

wrong

now
to bring on depression and
unemployment. However, it is not

easy

for

bearer bonds, it did give a guar¬
anty to the holders of the various

memory

Board

drastic action.

any

subscribers

warning not to buy, because
nobody quite believes the peg will
vivid to permit the^ hold, or fully trusts the present
and

money;

Federal

risk

prices due

depressions of 1921,

1937

was

outright by the banks and

the

time,

War,
however, the authorities felt they
had

States

again

unhappy

the

action caused much
grave

United

turned

was

guaranty

and

the

Board

serve

expedient,
that

the

the Federal Re¬

prevent them from making loans
to business.
The Board increased

raised to 6 % in

was

rearma¬

true,

quired by law to be deposited at

Government, when it undertook to
finance the war,
gave no price

dear

the authorities terminated the

bank's

Thursday, October 7, 1948

not the frozen

au¬

Reserve

early in

January and 7%

CHRONICLE

the

War

thorities felt free to adopt
money policy
the bank rate

crisis,

ment, tax reduction, and reduced

Although

FINANCIAL

policy supports,

surplus for debt retirement.

Federal

war.

of time and by subsequent events,
such as the third round of infla¬

cheap

Cheap Money

How to Control Inflation

■

COMMERCIAL

That would be
and

draft

socially

politically

It is not

for
un¬

impos¬

right to draft labor

in peace to work in the mines and

factories for private employers.

High

prices

are

not,

speaking, inflation; they
dence of

the

fects

It/is
fact
of

evi¬

are

it, the result of it.

fixing is not
tion.

properly

Price

remedy for infla¬

device for concealing

and

suspending

the

it—for preventing

ef¬

prices

Volume 168

Number 4740

•

from

reflecting r the
increased
quantity of--money. ' We; would,

partly -; demonetize
make

money

sound

means

have.

and

money
useless unless

THE l COMMERCIAL

safe

That

money.

Postwar Economy

scarce.

Though so very important, the
cheap money policy is not the
only inflationary force, by any

by coupons.
But the
money has been created, and will
have to be honored.
Sooner or

interest rates and bond
p
Pin.

1.1

| long-ago

the

The authorities should sail

channel

narrow

Since

1914,
not

•

busts.

did

from

booms

not...do

The

and

ernment

in- the

hundred years of peace from 'Na¬
poleon to the Kaiser. It did not
prevent

v'Os

the

inflation

the

various
to

measures

put

gov¬

keep

not

abject

obedience

well.

late

industry,

•_

Our gold reserves
Public works
are sufficient'
construction, state
and national, should be eut down.
to
maintain a sound

now

nal

Postwar extravagance in this field

for

naivete

who

those

advocate

expansion and contrac¬
tion of public works
expenditure

exter¬

our

the

proves

currency, and

to meet

meet the

costs

and

free

are

money

war.

fully

and

obligations.

The dollar is the most
generally

planned

and frozen

Fifth' Ave.

44th

140

ways

Broad way

swollen

sound,
currency today. It

gold

standard
has proved itself
able to meet the
gold export demands of
the great¬
est war of all
time, when we were
buying
and
' spending
heavily
abroad and were

lend-leasing

:exports

them;

and

meet

Madison

Ave.

60th

ROCKEFELLER CENTER OFFICE
Rockefeller Plaza at 50th St.
PARIS

•

BRUSSELS

•

world has

today

ever

keep

our

own

world

^ace

not to

result

our

the

Our job
and

domestic

for

curbed.
and

Banks.

This

defenses in
convert
a

would

possible

-disastrous

peace.

•

The

the

place

for
of

reserves

our

the

Federal

and

perhaps

abroad.
coin

but

meet our
;v

not

have.

Gold

Neither do

legal

Let

bank-held

inflation

•

and

most

voluntary loans

Banks.

Without

debt

that

mone¬

generous

Though of

nrocflnf

nApU.

present

„

be'

must

that makes
so

strong.

commercial

Now

the

element

Federal

weakness.

Reserve

has

50% gold against its
currency and

deposit

liabilities

required

Evidently
.safer

our:

than

margin

Let

not

stacles
case

its

par

banks,

pegging;

still

only
is

would

were

create

reduction

balanced

reserves are

What the

Banks

high actual
reserves

need,

reserves.

much
if

the

(necessary,
,

and

other most

16,729.41

$2,797,782,916.97

100,000,000.00
200,000,000.00

65,330,450.68

Capital Funds

Deposits

365,330,450.68

$2,319,634,017d7

Treasurer's Checks
Total

Outstanding

24,473,478.61

Deposits

2,344,107,495.78

Acceptances
Less: Own Acceptances Held for

20,563,342.13

15,551,888.25
3,000,000.00
653,963.15

Investment

5,011,453.88

Accounts Payable, Reserve for

Expenses, Taxes, etc

69,139,119.11
88,344,970.51

Total Liabilities

$2,797,782,916.97

Securities carried
moneys as

$155,074,188.66 in the above Statement

required by law, and for other

cheap.

I do not suggest an active
dear money
policy, or any defla¬

tionary steps.
even

dread

deflation

than
inflation.
The
of debt and taxes would be
intolerable
at
a
low
level
of

are

pledged to quality for fiduciary

powers, to secure

public

purposes.

and

have

again.

production.
mass

must

unemployment

The task is to control the

necessary, without pegging, and of

maintaining

Federal Re¬

government

source

and

have,

High actual

tinued

bonds, should be

until

reestablished.

normal

The

con¬

market

WILLIAM

prices, at- par,- and

KLEITZ

DIRECTORS
GEORGE G. ALLEN

Director, BritishAmerican Tobacco Company, Limited,
and President, Duke Power Company

WILLIAM

BELL

President, American
Cyanamid Company

WALTER S.FRANKLIN
The

CHARSKE
Committee

Chairman, Executive
Union Pacific Railroad Company

J.LUTHER CLEVELAND
W.

PALEN

CHARLES

Chairman of the Board

JOHN

President, The Great
Atlantic 8s Pacific Tea Company

WINTHROP

STUART

CROCKER

CRANE, JR.
President,
Crane 8s Co., Inc., Dalton, Mass.

DAVIS

Chairman of the Board,
Copper Mining Company

Chairman of the Board,

CHARLES S.

Kellogg Company

KLEITZ
MUNSON

President

Chairman, Executive
Committee, Air Reduction Company, Inc.

WILLIAM

GEORGE E.
.

POTTER

ROOSEVELT

Retired

of Roosevelt 8s Son

President,

The Columbia Gas System, Inc.
W.

Anaconda

MORRIS W. KELLOGG

WILLIAM L.

President, The
Presbyterian Hospital in the City of New York

JOHN

CORNELIUS F. KELLEY

The M

COOPER

Vice-President,

HARTFORD

CONWAY
P.

Executive

Pennsylvania Railroad Company

LEWIS GAWTRY

of Davis Polk Wardwell

Sunderland & Kiendl

EUGENE

W. STETSON
Chairman, Executive
Committee, Illinois Central Railroad Company

THOMAS J.

WATSON

President, International

Business Machines Corporation

CHARLES

GANO

authorities

President

DUNLAP

President, BerwindWhite Coal Mining Company

CHARLES E.

WILSON

relatively low legal should, however, stop the automareserve
requirements, with a re- tic supply of money to the market
suiting, high --margin of
safety, to -peg:*, bond

CLEVELAND

orderly market in

and

LUTHER

Chairman of the Board

prices
not

desir-

able

j inflation without deflation, a very
ob¬ difficult job.
The policy of Sup¬
the porting government bonds
when

banks, too
a

budget, though

smaller,

of the commercial

weakness.

25%.

statutory

ourselves.

but'- there

further

legally burden

money

safety

for

high legal

serve

and

reserve

Total

Reserve

reforms, will not stop the inthe margin, as has
been
j flation. Money is at the root of
unwisely proposed, would intro¬ the matter, too much
money, too
reduce

duce

.....

Undivided Profits.

tariffs, and reduction in sub¬
sidies and civil
expenditure, and
continued high taxes, and a sur¬
plus for debt reduction.
But

our

position

to-do

there

reserve

requirements

should

legal minimum, it is the
margin

or. excess

I conclude that there should be
price fixing, no change in the
gold standard, no increase in re¬

140,761,017.35
4,763,395.78

thing

course

1,312,309.50

Capital
Surplus Fund

;

Banks

would

8,115,144.00

....

margin for

reduction.

Conclusion

Federal

Dividend Payable October 1, 1948
Items in Transit with Foreign Branches

effective

gold

increase

15,466,830.63

LIABILITIES

control, for deficit financing

serve

the

10,294,085.30

Mortgages

Total Resources

need to

9,000,000.00

•

important

budget.

can

to provide a

not med¬

..........

Other Real Estate

de¬

Kiy
ijuc
by the people to their gov(jcujjic
i/w
vfivij
ernment from their
savings,

tary

Reserves

mistaken

very

the

pends in part

reserves

Reserve

96,572,647.92

and Accounts

......

Bank Premises

inflationary. < Taxes should be
sufficient to meet all
expenses and

certificate
currency,
gold standard currency. That

dle with it.

reduce

Control

gold

is what

the

need

further

there

obligations,
^necessities,

our

people, not the banks, and

balanced

Re¬

use

made

Banks, not in the pockets of
people.
In
the
reserves
it
confidence at home and is

available to

the

Obligations
Acceptances

Interest

Receivable

kept

This is not the time to

Last

gold

juictue

serve

gives

Credits Granted

927,435,810.67

....

...

Stock of Federal Reserve Bank

Accrued

698,319,091.48
1,026,486,872.28

credit

debt.

into

:y"_'
our

might

recession

should

Other Securities and

with

government should greatly
increase its efforts to sell bonds

our

deflation-in time

buying

The

Reserve

weaken

of war, and

case

or government
credit
for such purposes.

circula¬

Federal

our

estate

Real Estate Bonds and

and

Margin requirements in
to stocks and commodities

real

bank

out

tion, might be to create, in panic
or;
wartime, - an insufficiency of
reserves

re¬

borrowed money, consumer credit
and installment
buying, should be

currency

paying gold

for

important

Obligations

Loans and Bills Purchased
Public Securities

important economies in

Speculation

reserves, into the hands of

people

Hand, in Federal Reserve Bank, and Due from

U. S. Government

the civilian field.

the

other

high.

The

should

ductions effected in domestic civil
service personnel, and there must

tinker with

it.

There

adjust¬

needs

increased

inflationary condi¬

crisis

our

RESOURCES
Cash

September 30, 1948

Banks and Bankers.

tions.

responsibilities, ! in regard

war,

speaking,

present

gravest

the

endured.

good for
our

economic

under

for

far

world

what

peacetime
'

able

postwar

generally

Condensed Statement of Condition,

■■:/

>■

Bonuses, pensions, social secur¬
ity, and other benefits should not,

our

being .paid

currency

the

ments

not ^

net exports.

good

very

our own

MADISON AVE. OFFICE

have

economy

St.

LONDON

DUNN

V
White

President, The J. G.
Engineering Corporation
Member Federal

ROBERT

President, General
Electric Company

WOODRUFF
Chairman, Executive
Committee, The Coca-Cola Company

Deposit Insurance Corporation

are

and

We must cling
the free ways,

MAIN OFFICE
AVE. OFFICE

balance wheel to avoid boom

The pork barrel was to
acceptable currency in the world. and bust.
become the safety valve!.!.'
As such it has to
!
bear the burden
of much of the
Our tariffs, though
world's trade; and
they have
the best
hope of the future is that been reduced, are still too high.
other currencies will
They are inflationary, for they
ultimately
be
based on a dollar
keep out some goods, increase the
exchange
standard. That would mean
prices of others, and increase the
our
gold reserves would
need of grants and loans to for¬
become in
effect the world's
eign countries > to v pay for our
gold reserve.

employed.

Guaranty Trust Company of New York
FIFTH

sound

energetic

in all its aspects.
to the good ways,

the enterprising
the dreadful loss of life and I people.

war,

our coun-

as bees.
Let us stay so.
If
would stay so we must
reject

the

part

our

may

busy
we

and

vive the hideous consequences of

cur¬

use

things

KT-—CJ

sound

a
great
Most of all

our

prosperous

done

have

■T """.

inappropriate under

are

present conditions.
....

limited to

wealth.

pr0Ud tha1 we have kept
to

apart

have
some

and
11.-1

4.U.

farm prices (parity prices, subsi¬
dies, loans), which were adopted
when agriculture was a depressed

deflation of the early

rency, if they are conserved
the support of that

America

things well and

by paying taxes and buying bonds

winning two world wars, and in
helping the world abroad to sur-

the

fell

health

'nilH
try

„—w

world

deal to be proud of.
we have to
be proud

immunity

the

some

gave

early Thirties or for financ¬
ing the war that ended in 1945.

•

o—-

uvv*u*wtiK/

the

between

Scylla and Charybdis, between in¬
flation
and
deflation,
between
means,
.*
later "prices
tend to
reflect the
cheap money and dear money; but
The activities of lending cor¬ not with the tiller tied like a
money supply.
toy
V /
'
porations formed by the govern¬ yacht on the pond in Central
ments to subsidize housing,
Gold Currency;
ex¬ Park.
:
1
They should buy and sell
porting, etc., are inflationary, and government securities in accord¬
Some suggest as a
remedy for
ance
witix
inflation tne return to gold cur¬ should be curtailed or suspended arice with their own good judgin an inflationary period.
\ rment of the money market's needs,
rency. Yet gold circulation never
wivi*

(1455)

decisions of the Treasury
loxrol
/vf
about the ni.nnar level of interest
proper
rates for curing the deflation of

1..^,-.

ac¬

companied

let

CHRONICLE

prices gradually settle fhemselves;
but
not
make
money
dear or

■

.hmild
°UUU

FINANCIAL

St.

(1456)

THE

other,

page

contain

down

pledges

^maintain farm
prosperity through
flexible price
supports and other
measures.
At
this stage of the

Presidential

ready

campaign,

apparent

that

both

al¬

candi¬

dates

have taken these planks of
platforms seriously and re¬

.the
cent

tendencies

farm

products

newed

the

have

emphasis

prices

led

The

"old

Republican,
vative.

debil"
not
a

The

biggest

technology.

welfare

the
or

conser¬

"debil"'

According

the

bureau of Agricultural
Economics,
farm worker now
produces

each

enough

agricultural

support himself and
others.

recently

worker

himself

and

the

products
as

farm

nine

than

to
13

1920, one
supported

other

persons,

and

a century
earlier, himself and
only about three others. It is es¬

timated that
its

;

equipment

modern tractor and
now

saves

about

850 hours of man labor
compared
with the time
required with the
animal power and
equipment used

the

farm

future

shipments

have

products abroad.

FINANCIAL

CHRONICLE
The

farmer

Akron

Thursday, October. 7, 1948

....

must
expect
factory worker to be

the

nearly

The

decreases

corn,

wheat

The
war

months after the

tobacco.

during

produce

remembers

more,

heavy

and

exorted

years

were

flour

farmer,

with

that

the
and

peak prices fol¬

lowing World War I, farm prices
halved themselves. The
banker in
areas

doubled

the

nation

was

rise.

compared

not

interested irt get¬

help the farmer,

independence
another

call

relatively
supply
would

Monetary Side

one

can

see

the

conditio^

"debil"—inelasticity

it—is

The monetary side of
the ques¬

tion

the

books

of farm

eral

equipment

the
The

responsible.

should

not

create

impression that, for all

pathy

with

the

government's

farmer,

efforts

respect

small

increase in;; the
food, it is estimated,
drive prices at the farm

the

purchasing

articles

cause

it moderately' favored f the •
-1
farmer's financial status.,- Never-1
theless, - it'is Interesting- to ' note 1
that/ following the inflated period *
of Wdrld War? T from the F
Ulf ot*

pensioner
may

and

hope

•

comrtiodityv ■ prices/ not" invi one;
single year'from the - Fait of 1920
to the Fall of 1941
did the- prices /

which

the

farmers

received

ex-*:

the pricesthey, had to pay.;
This is a stretch of more than 20
years, of
hard '< work
and
ceed

hours.

And

could

years

population
As

not
we

was

long;

one

those

that the farm
truly prosperous*

say

services,

larger bonus

com¬

power with

that

the

review recent years, we
see
that, it/took another world
pension, or for his output, but no¬
body; can - g a i n - permanently. catastrophe; World War II, to pro-1 duce a condition when
Reckless increases in the
prices re->..
supply ceived
by farmers rose above the;
Of money will make
money wortu
prices /they.J were /compelled toless, like- any other;; commodity,
pay. /Since 1941, the farmer
and in the process sow
has;:
disunity. : been
/ u n u sua! 1 y
prosperous./'
fDo we want a budgetary sur¬ Farmer indebtedness has
been re- * '
plus at the expense of taxes whuch
duced by/17% / savings have
been
check
investment
to piledyup In
necessary
liquid/form; while-'
jobs?
The farmer's stake in in¬
enormous sunis .have
been spent.>- /
dustrial employment is
vital, for in farm" mechanization/and ifri->
there is no ;
question about itproyeptients. 7
j
r/
; J
''
variations in demand, governec,
or

maintain

farmers

buy equivalent (except for tobac¬

and

beat the game
by getting more
dollars for his
crops, or his work,

sym¬

and

worker, the white col¬

worker

am blind to the unsound¬
of certain phases of the
situ¬
ation.
The whole concept of
par¬
ity can be riddled full of holes.

The farmer

business executive alike

the

parity, I

modities

factory

lar

Concept of Parity

home.
in gen¬

continue to expand the

supply of money.

companies.

1914

grafted that'
selected be¬

1916 to the Fall of
1920/ when the*
farmer benefited from high farm '

Question

has
to
be
holdings, retail sales in rural
brought
trading centers, and the orders Prices will not come down
farm

that would give
agricultural

econ¬

through

base and'It could be
the base period was

/ *

Chase of prices and
wages.

is disconcerting.
nevertheless,'.the

areas

large,

Originally in 1933, parity was in¬
tended, as you know, to re-estab¬
lish prices to farmers at a
level

pride in
be, to be told

may

demand, the agricultural

omists

ness

matter how fierce his

average,

farm world is
very prosperous, as

enjoying

and frustration which it
meant, in
addition to the loss in dollars and
cents.
It doesn't

that

and

the large
closings while the

unprecendented prosperity
during
the '20s. I remember in
the '30s
selling corn in the crib for 12
cents a bushel and the heartache

rural

some

1935-1939

remembers

number of bank
rest

the

1910

years

res-:

tive as he watches the cost of
food

ting $2.45 for a bushel of corn if
it buys as little as
Food exports in the first
half that some farmers are likely to
$1.50 in cloth¬
of this year were down
ing, gasoline, or an electric toaster.
headaches
in
the
20% from have
future,
last
year's levels
despite ERP. and the increase in bank loans in Nobody gains in the end from a

rural

back

liberal

re¬

com¬

Democrat

their

mitments to preserve the
of the farmer.

problem

Our Farm Problem

(Continued from
the

COMMERCIAL

co) to the purchasing power of
agricultural products in the base
be twice as much.
I felt uncom¬
period August, 1909—July, 1914. by
changes in industrial employ* ■;'/;///'/'A .Parity
a, generation
Balance//}/';'/
ago.
In the Great fortable when I recently sold corn But in the Price Control Act'of
ment
are
the
major/ factor
in
As for} the present and
Plains, modern farm power and in the crib at $2.45 per bushel- 1942, parity for a
future* i '
lon^ list of determining/the prices of farm
in fact, I
should:, the recent) sharp - decline «
equipment will produce and har¬
made.the. sale because I products was completely aban¬ products.- Industrial
employment, in fa'rrh^comrtipdity prices be
doned
felt the price was too
for
alternative standards in turn,
vest an acre of wheat with
good to be
exA'Vhinges on capital invest¬ tended an
around
additional 10% below"
true.
..T that would yield higher prices and
ment.
three hours of man
T; / : / _* ///.,•':/ *
prevents levels; and should Induslabor, some¬
ceilings would not be set below
Looking for More Security //
times even less, i In the
/ Name the capital poor countries trial/ prices >;■ stabilize at
110% of parity.
days of
present •
The farmer is
j
and you name the
looking for more / The
countries with levels,/.prices which the: farmer
horses and modern horse-drawn
*•
Agricultural Act of 1948 is
low-living standards;.^, Just' be¬ pays and which he receives would
security.-; Before he is criticized, a
compromise measure.
It con¬
-equipment, the average was about
cause it is hard to
be about in
let us admit that this trend is
get emotional
balance/. I want /to /
tinues, generally speaking, the ex¬ about
eight man hours per acre. In the
capital as one properly can stress that, from/a
visible
purely, eco-> /
isting system, of supporting "basic" about the
everywhere.
When
the
farmer and the worker nomic point of
jjmall grain area, increased out¬
view,/ and with'//
and -iSteagall commodities
at 90%
depositor in a bank is ready to
makes it all the more
regard to the Welfare of; all- the :' •
imperative
put per farm worker over the 11-,
of parity until.the end.
of 1949. to .repudiate
give-up bank-deposit insurance; with
irresponsible attacks people, our/nearest /approach/ to x?
"some1 exceptions; as to this
year period from
1935
to
1946
on Wall Street
or La Salle Street.
the factory worker social secur¬ date.r
periods of prosperity came .when
,r/
Thereafter, the Act pro¬ Right
amounted
to
fully;; 52 % .V Talk
no\y great industries which theseprice /relationships /
ity," and" the' businessman ' inter¬ vides for a new method of com¬ will
have};./
about
need large sums of
the industrial revolution!'
capital ii been in balance /of near--balance; y
national" trade agreements calcu¬ puting parity and for a'variable
employment is to be
as was/ th
And: this is the
e/ca se in-1925 and' 192B J J
maintained,
level, of price :
economy that we lated
support, ranging are worried about their
to increase the demand- for
increase and again in; 1936 and
from 60. to 90% of the
sometimes hear
early; 1937/' '
referred
to : as
modernized ' in debt because
of the state of the II
his1, products, it will,;bedtime to
parity/;,'and with /the
./ decadent or mature.
Certainly-"we-have;//d//farm'/
percentage equity markets/ But that is
;;/ ';V.1
U ask the farmer to
ant
give up the ef¬ variations based oh the, yearly ether
prbblern^AIe-faetf/W^havn^mdre;/}'
matter,' the
solution
o.
i • Larger
fort made to moderate the forces level of supplies of -each com- •
thanonefarrn1, pTpblem/dependrhg'/ /
Crop Production,
which * cannot, come
about
by oh whether/we .are
Less Farmers
modity in relation to a-"normal
talking about //,
affecting his welfare. • - ' • ■
resurrecting scapegoats for politr- the Mi
supply." ' '
ssissippi} delta or/AberdeenV//}
,..."
Larger crop production and a
cal purposes.
V
Fortunately for the farmer and
South Dakota-//
/;■/-/,///'}
The Act represents an
The,, problem is/;f/
better-fed nation > are
improve¬
The quest for s e cur it
being ac¬ the country ,as. a whole, * agricul¬
y fails different, too,- for/the :eityl
ment, because it modernizes
wqrker/L;
pari¬ whenever ' inflationcomplished with a farm popula¬ ture faces the
who thinks in terms of
reduces
the
future "embattled" ties by setting as a base for
fbod costs;' *
the value of
tion that for some time
savings and cheats the or the /scientist VconCerhed /.withi/i
has been to
meet
changing conditions in price of each commodity the aver¬ frugal."; Deflation will
soil
not be ac¬
erosion.
age of the. most
shrinking in relation to the total excellent
Problem^ar^;/ih-14;
recent-'ten-year cepted Where
shape. « The
balance
suffrage is universal evitable /in a dynamic^sUeiety-—'
period.
But the final result is
-population. And over the horizon sheet of.
if • it .means Vast
agriculture showed an not reached until
unemployment We will/, never - completely solve r'
the base is ad¬
is the
Sound fiscal1 policy .is; essential tc the farm pmblem for
never-ending search
in improvement in
all time any; /
pr.opr.ieto rs' justed so as to convert it into an
avoid both of these evils.
factories and
:.
morc/Jhah the labor problem or, v
adjusted 1909-1914: base.; In
laboratories—prom¬ equities from less than $44 billion
real¬
With all our
shortcomings, dif¬ the/prbblem/of education./ In/a /
ising new products and methods to
ity, standards based on past re¬
ficulties and
approximately $103 billion be¬
maladjustments, we democratic society we don't/seekthat I will cut down
lationships are bound to be tardy
still further tween 1940 and 1947. The ratio of
haye done 4 magnificent job ifc to; }freeie I /any} situa tion I forever/
in reflecting
altered condition's/
the; man hours needed to grow
these Urtited States.
More people The high bbjeetive should not be
assets to liabilities at the end of An.
improvement, too, is that min¬ are at work
and
than
j harvest crops. The cotton 1947, it is significant to
anybody daree parity;/::but/equity . between; di- -..
note, was imum/-support prices for basic hope for a few
years ago, although vergent'Ante/estsf and, by'
picker is said to have reduced the 13
keeping V
commodities—wheat, corn, cotton; some bold
to 1 against
souls thought 60,000,00t
approximately 5.3 tobacco, rice and
any/ohe interest from
dominating/' / ?
peanuts — are
picking
costs
of
an
Arkansas to 1 in
people might be employed.in the we/cdritihued/th
1940, and liquid assets are tied
fuhctm^ without; /
directly to the supplies of 1950's
xplanter from $45 to $4.50 per bale.
and others/ gave
large. - This is-in sharp contrast these' crops." Support prices
synthetic rending the1 social fa brie by inter/ •
de/ prescriptions as to how this
Every harvester that leaves our to the
goal nehihe/strife/}; Whiie ;h therefore,/ >
pend on the willingness of
conditions after the end of
proi- might be reached. Is the
shores is an active
price o; have no ready-made solution
agent, once the World War-1.. Not that the scene ducers to keep supplies in line
for}//
meat too high?
It isn't due to the farmproblem; and dh? not
with
demand.
wartime crisis is
Production
ex-://}
over, in cutting is cloudless.
conj- the farmers, wicked
Farm .land values trol
packers oi piect /that' .it will' be solved • iir. the>;..
methods in the 193Q's failed
the
thankless A Europeans,
bu1 sense /of a 100%'; perfect plan,/1
partly because while acreage was
V/
reduced, yields per acre increased. very largely to the fact that con- say with-confidence; that if we}//
sumption-per capita has increased can
/LARGEST FINANCIAL INSTITUTION IN
THE NATION'S CAPITAL
orlly, /maintain Tiscal sound-,/,
The effort to build
stability into from 126 pounds in 1935-39 to 155 n ess, we will :wox*k toward
providour
/
economy by various means is pounds.'The simple truth is that ing more people with better
things
understandable.
It has been
sug¬
more people are
'
;'
eating more meat at less real cost.
gested that stability of real in¬
and the supply, for 1948 is esti¬
come
Yes, we not only have a farm ,'j
should be the objective
by mated at 21.1 billion
pounds, far problem; we have many problems. .?
placing a floor under income and
above the 16.2 billion
Most important among our needs
the levying of extra
pound 1935heavy income
is a sound fiscal policy: a bal¬
39 average, but about
taxes during
10% under
booms, which I im¬
anced budget based
agine would not be popular. But the peak
upon a fair
supply of 1947.
the farmer cannot have
and equitable tax structure
his cake
that;
Peak Shaved Off Farm Prices
and eat it, too. What
bothers me
will permit our
down

20%

and

net

income

may¬

•

—

The

RIGGS

than

to solve
*

NATIONAL

of WASHINGTON, D. C.

FOUNDED
'

BANK

1836

problem

the

unwillinness to recognize the ne¬
for sound fiscal policies,
because these policies
endanger
the farmer's future as
well
of the rest of the
nation.

regulations

that

the

prices,

ESPECIALLY WELL EQUIPPED TO HANDLE
THE ACCOUNTS OP

CORRESPONDENTS AND NATIONAL CORPORATIONS

CorporatiQn
ment

Federal Deposit Insurance
Corporation

lion and

Federal Reserve System

and

gram
•

the

govern/

bilf

in the current fiscal

price

support

pro/

underwritten with what

appears to be

I funds.

other

practically unlimited

want to create farm

'surpluses and budgetary deficits?

better

that the

now

shaved

off

living than

tion

farm

balance

being attained between

Exchange

realize,

know,

the

Agriculture has

prices

farm

financial

index

that

this

country.

its

pro-},

the

)

«,

out

;

-i

would

you

country

that,

thi§ mission, I

and

are

continue

which, thus far, has

our

country

my;farm/

a standard

living superior to that

assure

■

progress

well-being of the other
of

complete

brought to

received by farmers for^the
./
'."V }
~

continue

knowledge

the

farmers

■

life, recognizing

necessary

by farmers

recognized gauge

population

tt,

will

enlightenment

understanding of what they

This index
accepts prices paid by
and

flow

and

economic facts of

Department

received

which index is
of the

generation

The New York Stock';

that

you

relates the prices
paid
to

gram

between farm and industrial

the

of capital.

wages and
we

freely without discrimination;

against

income.

Commodity

agencies could reach $3

year

Member

and

economy to func-,

feeling

been

that

the cost of
and

the price support

the

has

peak

BANK

cessity

I have

imperfect schemes

farm

For example,

ROBERT V. FLEMING,

•

the

while
am

any

world."

not

selling r

}zr^ •-/,
'.'M-

carrying..

effects

of U.S.

support operations are

neutralized,
f.'

'■

<vo\

the Treasury had a

?When

jarge

_>y'\yy:v:Ay-:^

•

(Continued from page 6)

the vindicated

disadvantages] dence that the price pegs would

be reduced by
successive small
amounts, adding to the pressure ol
liquidation by holders who want
i^ThereiSjf irsf, (Ihe-dangeroLa
to avoid further depreciation.
flood of selling; by holders whc

unpegging the government se¬

curities "market at this time?

fear
lar

to,

even

severe

Some claim that

than

would discourage liquidation
investors who dislike taking

par

and

the concentration of holding*
in the hands of a limited numbe:

small Toss if

large * institutions, the marke'
could become quite disorderly i:

selling wave ,shquld ;get. undei
;; way
whJie buyers hold. off to see
how, much lower, the market will

reduction in

the pegs to a level slightly below

that which occurred in 1920. With
the' huge H. size of our public deb

'go,-

Ux-.

Secondly,

•

loss.

But

investors

know

most

that

not mind taking i
they think that tney
thereby will avoid incurring l
much bigger loss later on.
;
do

rates rise.

the

danger

that confidence vin some, financial
institutions might be impaired |l

tion of credit is thereby retarded.
But
this .holds
true
equally

whether the price pegs are some¬
what above par, at par, or some¬

widespread publicity were giver
to a break in government bone what below par.
)
prices at a time when it-is known
:;
Serious Consequences of
that these bonds constitute a large

institutions.

remember that

a. break

Please

in govern-

the third

place, there is the
possibility that a decline in priced
of marketable government bonds
would precipitate some cashing of
savings bonds by nervous holders

This

tive.

would

are

create

attrac¬
a

need

for large amounts, of cash by the

Treasury at
would

time when financing
difficult

made

dis¬

turbed bond markets.

Fourth, the Treasury would be
a serious problem

ing of the

Restrictive

credit

obligations
agencies.

ber, 1945. The last issue of bonds
with a coupon above 2M> % came
out in March, 1939. The amount
of Treasury bonds with maturities
of more than 5 years outstanding
has declined to $64
billion, or

sum

Federal

achieving

Treasury

are

curity market is in a disordered
state.
Should
the
tense world
situation

require

disturbed

raising

the

large amounts of

money,

new

government bond

mar-;

ket would become intolerable. /,
It is important to note that-the
chief

reason

advanced for 'unpeg-

ging the government bond marke*
is to make credit restrictions more

effective.
in

themselves

restrictions

these

But

government

precipitate

securities

will make the decline
ment bonds

selling
and

in govern¬

much more severe

has

been

suggested

some

quarters that government securi¬
ties be unpegged but that bank
credit be made easier at the same
.

time by reducing reserve require¬
ments or otherwise. Such a pro¬
gram
an

The increase in
ments

banks

there then would be

need for

doing much to re¬

and combat inflation

selling

all

thus

are

under

ing to be less
new

loans

will

desire

view of the increased demand for

and to
sues

forward to

economists who
tell

that,

over

Condensed Statement

duction>

throughout

re-

i g h tv - be -interpreted

the

country, as

evi-

for

short-term marketable is¬

for

which

should continue
orderly market
holdings, which give
high degree of liquidity,:

these

them

market

ready

COMPANY

oj Condition

IK E S O I

1 Even

E s

♦

U. S. Government Securities

State and

622,104,418.52
996.786.737.73

U. S. Government Insured F. II. A.

•

4,422,093.42

Mortgages

Municipal Bonds

Stock of Federal Reserve Bank
Other Securities

31,323,457.23

3,037,500.00

18,913,902.47

Loans, Bills Purchased and Bankers' Acceptances

581.511.933.74

Mortgages

15,480,122.56

Banking Houses

10,213,466.50

Other Real Estate
Customers'

497,695.40

Equities

Liability for Acceptances

5,639,964.61

......

Accrued Interest and Other Resources

earning

to > preserve

6,161,205.92

.....

1,296,092,498.20

effective is the. -in¬

in the interest rate

tificates

Cer¬

on-

Indebtedness

set

Li A It I LIT IE S
.1;

:■

,.;o

by,

United States Treasury. That

rate

K <

by increasing loan rates.

power

crease

close oj business September 30, 1948

as at

Cash and Due from Banks

Surplus.

recently raised from ll/s
to lJ/4%. I think it can be raised

Undivided Profits

by gradual stages to 1
and per¬
haps even to 1%% without affect¬

$41,250,000.00
60,000,000.00

Reserve for Contingencies

was

long-term bonds.
consequent
lifting of
the

ing the pegs
The

whole

short-term
would

influence

ing

credit

interest

have

upon

because

rate

restrain¬

the

use

commercial

banks

do not have to compete with each
other for loans if they can operate

profitably
term

conditions

quote

income from short-

interest

banks

rates

increased

are

borrowers

6,863.379.12

charged

Liability

Endorser

Other Liabilities

Deposits

uses

1,237,500.00

6,065,921.63

Acceptances and Foreign Bills

011

1,967,058.68

18,992,126.21

■

;

2,125.898,390.80

United States Government and other securities carried

public junds and

trust

deposits and jor other

£81,485.342.41

purposes

required

pledged

are

to secure

permitted by law.

a
DIRECTOR S-

the

these

the

checks

reserve

EDWIN

held

banks,

•

the

Federal

BKINECKE

President, Lincoln Savings Bank
JOHN L. JOHNSTON

Chairman.
West

Atlantic^ Gulf and
Indies Steamship Lines

ALVIN <;.

OSWALD L.

BRUSH

KENNETH

Corporation

President, Dana Corporation

■

F. MaoLELLAN

GERl.I

President, National Dairy
Products

GUY

President, Gerli & Co., Inc.

Corporation
HENRY

Peahody & Co., Inc.

GEORGE J. PATTERSON

D. GIBSON

VON

ELM

of the Board

WILLIAMS

President, Westi rig house

Coal Co.

Air Brake

•

Head Office: 55 Broad Street, New York

{

Chairman
ALBERT

President, Scrunturi & Lehigh

President

Corporation
VAUGHAN

President, Curtiss• Wright

R. PALMER
President, Cluett

Chairman, Tttisi Committee
L. A. VAN BOM EL

President, John P. Maguire & Co., Inc.
C.

City

President, Home Insurance Co.

ERNEST STAUFFEN

Savings Bank

President, United States Lines Company

HARVEY

JOHN P. MAGI! IRE

of the Board,

JOHN M. FRANKLIN
PAOL1NO

R1CIJARD

V. SMITH

HAROLD

JOHNS I ON

of America

|FLANK;AN

New York

JOHN T, MADDEN
President, Emigrant Industrial

CHARLES A. DANA

Vice President
HAROLD

President, United Biscuit Company

President, George A. Fuller Company

Vice-Chairman

Simpson Thacker &' Bartlett

LOU K. GRAND ALL

HORACE C.

President, Lambert Company

Chairman. American Home
Products

WILLIAM G. RABE

FREDERICK CRKTSCU

TheSperry & Hutchinson Co.

EDGAR S.i BLOOM

accounts

inflationary

Chairman,

are

its balance to nay off its

obligations
Reserve

7,184,244.30

$2,296,092,498.20

eral. To the extent that the Treas¬
ury

Payable October 1, 1948

take-it-or-leave-it basis.

Finally,

Outstanding Acceptances

charged
sharply

afford

can

Dividend

127,883,877.46

such

Under

governments.

26,633,877.46

•

Reserves for Taxes, Unearned Discount, Interest, etc.

A second

quarter of the whole,

TRU ST

to enter into
investments and

of the member banks at the Fed¬

24.

J
come

over

Manufacturers

pres¬

banks increased very sharply imrhediately after the pegs were re¬
Dec.

In the

have enjoyed and
to enjoy a stable,

are

But

decreased

rate structure.

By limiting new issues of its se¬
curities to non-marketable bonds

Wz% Rate Too Low?

eager

and

government

yields, rather than

advance in the entire

the

There

se¬

types of
investors to the Federal Reserve

duced

and other bond

through

long-run, a 2Vz% interest rate on
long-term bonds is too low in

the Government bond market.

to replenish reserves are go¬

sure

the

government

sibility of good that could come When the Federal Reserve banks
it.
A number of critics of buy United States Treasury ob¬
the pegging policy recognize this
ligations from member banks or
arid so they suggest, that the negr any other holders, the reserve
should merely be lowered a little account balances of member banks
rather than abandoned altogether
on the books of the Federal Re¬
A reduction in the price pegs to serve banks are
increased, and
par, or to a small fraction below thus the excess reserves of the
par, would avoid the more serious members become greater. When
consequences
that would follow the Treasury builds uo its bal¬
ending the pegs altogether. But ance at the Federal with checks
hgre also the ill effects would far drawn on commercial banks by
exceed any possible benefit.
We taxpayers and others remitting to
do know that selling of govern¬ the Treasury, excess reserves are
securities

between

differential

public debt. About $10 billion of
these bonds are held by the Re¬
serve-banks and Treasury trust
funds.
Furthermore, the longest
term marketable bond issue of the
Treasury is callable in 19 years.

little

disadvan¬

the

tages'and dangers of unpegging

the

from

ment

the

and

light of these considera¬
tions, I think that mutual savings
banks have acted wisely in hojjd-*
ing long-term marketable Treas¬
ury bonRs in large Amounts, They
have obtained a good rate of re¬
turn on these investments. They

System restricts
the willingness of these banks to
expand credit.
True, they can
obtain
the added
reserves
they

Treasury can
the pegs in any event, v
neutralize support purchases of
For the reasons just stated, J
long-term bonds by the Federal
bfelibve the ill effects of unpeg¬ Reserve banks through retiring
ging the government bond market maturing short-term bills and cer¬
at this time far outweigh any pos¬ tificates held
by these institutions.

••••;

banks

Reserve

would be meaningless, for borrowers
credit, policy : would
since
the
the government bond mar¬

ket to rise above, the floor so that
:

believe that the

incurring

without

require¬

reserve

member

Federal

easier

cause

and

ments.

structure

protracted.

funds

trust

up,

strict credit

the objectives
those who favor lowering or

curities to the Reserve banks.

and

Reserve

the kind currently being applied,
without unpegging, seem capable

refunding $50 billion of obliga¬
tions maturing within one year at banks that
government se¬

estate, mortgages,
increase ma¬
terially from present levels. In,
other words, interest rates could
rise through a widening of the

Treasury issue

measures

the

marketable

prices.

peg

need

time when

term

savings

All in all, therefore, we can see
that serious consequences are

confronted with

sales

since the Victory loan in Decem¬

by holders who desire to pre¬
re¬
pare
for
shifts into maketable moving the price pegs on govern¬

bonds when discounts

yields on long-term corporate
and municipal bonds, and on real

long-

new

bonds and of special issues of its

prices would bring likely to follow from unpegging
corresponding price, declines - for the government bond market. A
other bonds,; and would raise the slight reduction in the pegs would
question of whether real estate be of little value and could greatly
mortgages with low. interest rates accelerate for a time liquidation
and a weakened price structure of these securities by banks and
for underlying properties should other investors, thus defeating the
be valued at a discount.
X
purpose of those who favor lower¬

net

from

tions

bond,

ment

not had

their maturity is shortened, it

is likely that the 2 V2 % yield will
be adequate on these bonds even

........

We have

amounts of its short-term obliga¬

bonds. As the amount

Unpegging

percentage of the investment port¬
folios of.these

moderate

of these bonds outstanding in the
hands of the public declines, and

capital. I will not undertake here

The chief argument against peg¬
ging the government, bond market
is that the effectiveness of restric¬

there

long-term

However, even if these economists
are correct, I still feel that it is
possible to retain a 2 */2% coupon
rate on long-term. governments,
while
other
long-term interest

break in prices simi¬

a severe

retirement

-15

present structure of interest rates.

budget surplus about gone, this is
no longer possible. However, the
Treasury still obtains funds for
the

(1457)

to estimate the long-term demand exists among commercial banks,,
' for capital, tor to fay5whether;this -the Treasury; helps to maintain- a
Remand can be -satisfied withvthe strong market position for > its

budget surplus it was able to re¬
tire maturing short-term obliga¬
tions in large amount. With the

are

FINANCIAL CHRONICLE

COMMERCIAL &

THE

THAN

HANKING

OFFICES

Company

City

CREATE It

NEW

YORK

European Representative Office: 1, Cornhill, London, E. C. 3

Member Federal Reserve

System

Member New York Clearing House Association

•

Member Federal Deposit Insurance Corporation

THE

(1458)

COMMERCIAL

FINANCIAL

CHRONICLE

there is such ability on the part of
which
results o in
profits

stop because people think they are
having a good time even while

(Continued from page 27)

Added

series

have
tion

the
of

increased
and

been

wasteful

people

into

will
and

that

seriousness of

tude

United

When

government

spends

spends and is wasteful in its

which

department,
happen
are

the

when

loosened, the effect

people is to
part.

cause

ernment

deficits

conditions

hardship

runs

that

under

on,

this is

not

to be

the

be understood

their

erally

into gov¬

just

present

seem

form

destructive
taxation

how, if continued, it will lead

which

great

into

has

period

spending

appreciated;

and

therefore it is extremely hard

our

taxation,

goes

of stagnation

prevailed

never

since

the

private

which

has

•

HOME SEEKERS

•

depth of thought

see

place,
possible to produce suf¬

not

all

have

can

everything

them.

that

this

Back

fact, which is simple to compre¬
hend, is the method under which
things are produced. It is impor¬

that

tant for

the

this

see

clearly be¬

it lies at the bottom of

cause

whole

private

enterprise

Someone will have

sold

prices

which

smaller incomes

our

system.

putting
gadget or con¬
venience that it is possible the
people may want.
Tnrough his

phe¬

together of

HOME OWNERS

some

initiative

friends,
reach

the

the
in

new

few

part; and
be produced

may

Many

kind

take

can

gadget

people.
of

may

enough position

sufficient numbers to

are

help of

development

sound

with the

that the banks

sell to

such

that

gadgets
be

can

pur¬

chased only by those with medium

high incomes—people

who

can

afford to make the experiment of

utilizing the gadget before it is
fully develoned. As it is utilized
and its deficiencies
corrections

visualizeu

are

made

are

the

and

serviceability of the gadget is in*
creased. At some point along the
line, it becomes sufficiently useful
that

the

attracts

savings

and

have

been

who

investment

profits
able

those

obtain

more
than, they need for their
daily living and who are seeking

to add to their income with¬

-ways

out

too

great risk.

Money is ob¬
tained, in this way, that enables
a great increase in the number of
units of

the

people

smaller

and

those

smaller

with

incomes

could afford

buy and exneriment with the gadget before

NEW

was

perfected, and those whose

savings and profits had been such

HOME

DIME

BUYERS

SAVINGS

EXHIBITION
BANK

THE

BROOKLYN

smaller

t&e

homes in
seventy-five building projects of leading local builders. Complete informa-

those

the

Write for your
copy today

and

only

funds

JLIllVill/

FULTON

STREET

AND

SAVINGS BANK
OF BROOKLYN
DE

KALB

AVENUE

are

who

obtain

FEDERAL

DEPOSIT

INSURANCE

CORPORATION

de¬

belief

only

through

mis¬

God

that

has

made our

nation

people

who

decrease

want

the

things that

profits

them

under

advantage of those

lower

people

and

less

such

impossible

hell,

world

ure

conveniences

that is

life

production

mass

greater

and

that there

their

can

and

would

provided. Bureau¬
cracies not only slow up and elim¬
inate progress in increasing the
are

incomes.

feeling

Instead,

masses

that they

be¬

imagine

communistic

godless world.

constantly hear of the fail¬

private enterprise

because

part of the

the

propaganda
It does not seem to

day.

but ac¬ be realized that private enter¬
through
their prise, even in the United States,
operation, with the production of has during recent years been so
things that may have already been tied down by controls, interfer¬
developed.
ences, and taxes that its function¬
tually

distribution,

interfere,

During war, the striving of
to

carry

results

men

the

dis¬

ing has not been on the basis of
true private enterprise.
"

covery and development of many,

things
That

not

was

and

available
true

with

the

before

World

peace

Attacks

war.

War

II,

came

new

groups

that

clamored

be turned to peaceful

could

uses.

new

present,

therefore, we have
such things that have been
added to those which existed in

Pressure

Unfortunately,

things

and

processes

Groups

the

{

pressure

many areas that have
for
controls
of
other

groups have been effective in ob¬

taining

legislation

that

has

been

many

harmful

the prewar period.

groups,
when they are
successful in their activities, elim¬

However, the

needs of the people, as

density of

population grows, will soon catch
up with them.
If taxation con¬
tinues

take

the

away

funds

called venture

all

inate the freedoms that

way

would

unrest

has

tional

enterprise,'

smaller

and

will reach

the

smaller

purchase
incomes

period of stagnation,
inevitably be followed

which will

by retrogression and
lower

standard

people.
system

by
we

The

lower and

living

by the
enterprise

private

that has

made

possible

for

workmen
throughout
the
United States to have
automobiles
in growing

present day; but the ability
legislative bodies to prevent

pressure

from having their
The building of

groups

trial.

become

almost

nist

line,

the

cells

as it has spread out from
of
infiltration.
HoW-

evbr, there is no purpose in attack¬
ing the communist line as it can
be

beaten

souls

and

if we study our oWn
eliminate envy, greed,

and

hatred, and re-create in

came

continue,

government
controls
that will smother it.
i

toward

instead

j,
i

will

begin to
dictatorship; and

our

arise

government

move

will

example

free

people and the production of
country helping the peoples

our

other nations to go
forward, we
will become useless to
them, which
will

increase

the

difficulties

na¬

great has
been the influehce of the commix-,

devices {cannot

then

neces¬

in this

electric power and ability to util¬
the radio and other electrical

ize

are

to protect private enterprise
and all of the people.
Therefore,
private enterprise is not on trial
sary

inventions, better
processes
in
production,, and lower eosts that
enable

Such

groups.

pressure

capital that would
otherwise be used to further new

Our

United

been

that

rest

States

has

our

carried
since

it
being, 1 surrounded as
by the enormous un¬

has

way

been

created in the world
ers

our¬

and

v'.'

mavelous

into

it has

God

political

deliberately
by the seek¬
whose

power

gimes could hot exist with

re¬

world

at peace, meaning not only peace
bet ween, nations but peaceful con¬

ditions

life

The

their

among

peoples.

•

United

■

own

;

States, through its

living throughout the world, in¬ private enterprise system, its ac¬
cluding, in particular, the United tive
willingness to
help
other
States.
Our people, because of
peoples in distress that has been
our
private
enterprise
system,
evident
throughout
its history,
have

gone

far ahead

nations in their

other

general ability to

produce conveniences of living for
distribution

upon

them will be

advantage

constantly, through their

the special

with

things

number

godless world that could be any¬
thing other than a veritable end¬

number

and

living of all the people, but also

that

the

through

the hard

work

ahd

great production of its people, has
put itself in

position to lead the

effect
world out of the chaos in which it

trophe

than

upon

countries where

greater catas¬

those

they have

known the progress

never

in better liv¬
our

people.

Those with smaller incomes do
realize

that

suc¬

through

any

cannot

however,

negative
ment

procedure

appease¬

partial acceptance of false

principles which lead to destruc¬
tion.

Reduce Government Expenditures

today.

cessful,

ing that has been the lot of

not

exists

other

Its future and the future of

the world depend upon the ability
of

people

our

cast

out

envy,

their

greed,

and

ing discriminated against because

greater interest lies in demanding

desire

others

that the government reduce its ex¬

nothing that have been insidious¬

penditures

ly put in to

and

through

ability,

which
MEMBER

enced.

by expenditure through bu¬

reaucracies, increase the

wide

the

therefore, of the great

CTTfe TMllyfl?
UW

unrest to lead the

statements which take in the
pub¬
lic that such devilish

those

with
sufficient
ability and in¬
genuity to make them serving the

therefore

seen

greater

with
it.

been

activities, increasing the standard

Open Daily 9 A.M. to 3 P.M.—Thursdays until 7 P.M.

obtain

have

private enterprise system and

who

tion is available.

not

people

easily be

savings

work

new

the

not

produced at all.

can

how

Long Island Home Builders Institute

for

incomes

it could

veloped
It

A Pietwtati&K

them in

taking the
risks involved in manufacturing
greater numbers of the improved
gadgeC it would not have been

fact,

LIBRARY of HOMES

'Window-Shbp' the

warrant

possible

See t£e

incomes, ft makes it impos¬
sible for such things to be pro¬

Our

Now, if there had not been those
who

COMPLETELY

small

THE

for those who desire

easy

cause

people,
through arousing their envy, into
demanding the impossible, and so

with
.,

It is

that they
with

manner

obtained

costs go down.

those

proportion, electric re¬ selves. the love ofproduction of the gadget frigerators, washing machines, etc*, fellow men.1

concerned, and at the same time
cheapens its cost. Greater num+
bers, therefore, become available

WELCOME

can

afford.

can

living in such

can

idea that

results in the invention

own

HOME BUYERS

incomes have

ficient units of

manner

the

smaller

that others have. In the first

enterprise

made

with

requires

it is

nation. Under present

system cannot exist in the
in

and

bring

made

desired by

that all of the people can¬
not have at opce all of the
things

our

soon

by the people gen¬

how

being

needed

Things Wanted

the

taxa¬

existg in this country

today. Again, it does not

already

were

veniences

tion which

the

destructive

them, will, enable
multiple manufac¬

great.
It is only because
living which have people as a whole and
particularly Communism cannot exist side by
been so widely distributed in the
side with faith in God that the
those with small
incomes, they be¬
United States among all classes of
come useless
for this purpose in communist lines with their build¬
people.
the hands "of government.
When ing of unrest strive to tear down
transferred to government, such religion in its every form.'
Cannot Have All

inflationary
also

made

been able to obtain the many con-

generally

present

earning

ture of useful articles that

propaganda
a great number of
people.
It has
can be effective and
dissipate the
been
because of such
ability to duced. Instead, therefore, of the existence among our people of the
utilize profits and savings
that greater profits received
by tho3e feeling of brotherly love and the

that

for

things

which

those

seem

it
because

grown,

and increase the number of units

the

our

birth of

wild

the

in
can

but

reason

ple is inevitable.
While

period,

the part of the peo¬

exists

today

have

those

process

penditure is not only at the bot¬
tom

This adds to the disruptive

movement, which

waste

atti¬

people.

sive and wasteful government ex¬

every

upon

the

United

of which they have'
Now,
when
the
government kill the forces that
are
funda¬
benefited the whole takes, through greater taxation, mental to the attainment of' a
people, have been able to use the profits made by those whose better and better standard of
liv¬
those
profits to add something ability and ingenuity has enabled ing.
The people cannot afford to
new to production or
to expand them to increase the
conveniences allow themselves to be so influ¬

realized by the people that exces-

strings

purse

wiser

has

increasing production and
the number of jobs that can
carry
wages all of which is in the
interest of all of the people.

be retained by

can

inevitably

government
expenditures

which

States

It does not

and

certain

part

the

itself;
profits, in

upon

who

high

others

the growth and

country

built

those

the

sprees,

our

has

brought about.

exists

today, without cut¬
ting out waste and excessive ex¬
penditures
by
government,
we
will
open
the way to national
bankruptcy.
.

lead

the

kind

the

alleviate, through

government controls, the inflation
which

Apparently this the only way in
which recovery from indation of

If we fool ourselves into think¬
we can

spending

the bringing of

into control

even

due

ing that

lead

money

turnabout

spirals

costs

though it is
primarily to excessive gov¬
ernment spending.
inflation,

use

rises which
of produc¬

developed

have increased the
the

has

cause

wage

progress
States possible.

they are approaching the pre¬
cipice over which their standard
of living must fall. Just as the
activities of government in the

vent.

the

nomenal

able for

which, if they

Our Economic Dilemma and the Way Out
brought under control, inflation
is going to continue in spite of
anything that can be done to pre¬

Thursday, October 7. 1948

...

they

confiscate

their

are

want

own

making

are

efforts

profits,

government

through taxation,"they

should* be* extrenrely thankfuTthat

seem

that it

can

cut

the

high taxes of those in the medium

us—and

and

higher brackets and enable
.

#art of tiieii* incoihe to be avail-.

hatred -and

wanting

our

upon

Christian

the

false

something for

minds to mislead

our

nation

resumption
with

the Gbd of' the universe.

faith

ih
1

THE

Number 4740

168

Volume

COMMERCIAL

States

The I TO-A United

really

advocating

While

scheme?

States

CHRONICLE

FINANCIAL

Department

such

United

the

State

pro¬

posed it, the people of the United

States

Viewpoint

in pro¬
duction of its wealth, still strongly

the

age

of nations.

economy

What

only dam-

can

saying is that in¬
production by different

creased
liations

will

not

inter¬

decrease

national trade but will increase it.
These issues
conflict

flict

States,
On

Havana.

the

Central

nations

con¬

and

leading participants.

were

this

South

America, and the United

the

sion

into headlong

came

hand

one

the

was

United

obses¬

States

in-

for

creasing multilateral trade
through abolition or drastic reduc¬
tion of all forms of

the

tions

of less developed countries
improving their standards of

for

Provision
bers
of

living through economic develop¬
ment.

been

drawn

chiefly by the

industrially
It

countries.

developed

natural

was

tempt to

for

them

at¬

the status

pieserve

quo.

Being realists many of them rec¬
ognized the present impossibility
of compliance with many of the
principles and rules. Nevertheless,
these
were
accepted in theory,

only provided they

able

were

exceptions and escapes en¬
abling them to avoid compliance.

secure

Havana,

instead

participants, 54 nations
resented.
real

great
comprehension

few

were rep¬

had no
what the

many

proposed Charter contained. Some
delegates told me they had seen it
lor the first time

Position
.

arrival there.

Nations

Undeveloped

appeal of the chapter
economic
development
was
The

the

less

demanding the riEfht to em¬

final

fensive devices to enable

live

countries

were

velopments
these

the

and

The

countries

industrialized
tinue

con¬

using them.

made

international

thing

envisages

tries,
desire

That trend
to

excepting

not

States.

tions

visible

make

United

the

based

economic

stable and

coun¬

condi¬

simultane¬

If for a
the contra¬
diction in terms, we see producers
trying to improve on the natural
law of supply and demand and
seeking the help of their govern¬
ments in the attempt.
And gov¬

ously

improve

moment

usually

ulating but end

begin

reg¬

by controlling.

materials,

funds,

and

ficial
make

jus¬

there

skills."

managerial

their

ing

I think

it is correct to say that

most

people of the United States

have

the

greatest sympathy with

the desire

of the

for "economic

other Americas

Not

'development.

only sympathy but a positive will
to help in constructive ways.
I

But

■

fear

provisions
snare

the

and

the

that

pertinent

Charter

are

delusion. Some of the

interpretations

heard

Havana

may do great harm through mis¬
representation of the realities.

;

First of all,, do you realize that

centralized international agency

Again

power.

then,

should
an

United

the

should

favor

perience

which its

idea

warns

States

forts

Now

ernment

Some of

and

way

im¬
provement of conditions?
First,
a number of controls aimed,
the¬
oretically at least, in assuring
tions,

particular devel¬
"more effective and

Charter, make
opment in a

economic manner."

That decision

might be well founded
not.

The

who

men

make

it might

the

another.

lead

not

doubtless had

political
V J

enough experience
bureaucracies

A i t

.no

«.

<•

to
ti-i

enterprise, decisions are
thousands of individ-,

uals

different

volving

(Continued

planning.

times

on page

States?

good

that

feeling.
The

point

important
facilities

these

available

can

by direct dealings and agreements
between the people who have the
facilities

who

those

and

Intervention

them.

by
of

Members

want

govern¬

ITO

does

add to the available facilities.

controls.

and

Neither
ernments

banking

intervention of gov¬

can

Members add

the

you

What the
"public investment"
impermanent thing on which

should

reliance

much

not

The

favor.

offered

Send

our

collection

your

items for Paterson,

New Jersey

and

vicinity to

and

for prompt

complete

present trend toward govern¬
ment-to-government loans is not
with

complete

the

use

facilities

institution.

available capital funds.
Charter calls

invite

just superimposes political di¬

rection

handling

volume

available is not increased
thereby. Only the administration
of the loans is changed.
Such

of capital

all

loans

take

often

too

flavor.

wrong

in principle.

will

the.y
Private

available

Resources

Capital

po¬

think

litical

ital

$75,500,000

than

$5,700,000

are
cap¬

for the

Chairman

PETERSON

RAYMOND

de¬

sound

enterprises,
provided the terms are fair and
there is genuinely adequate se¬
curity. It ought to be remembered
that just as bad money drives out
velopment

than

funds

of the Board

BENJAMIN
.

RIAL

President

;

JOHN

good so also government financ¬
ing is apt to drive out or dry up
private fund sources.

First

DEIGHTON

Vice-President

ANDREW De RITTER

Charter

Vast Invasion

Executive Vice-President

Private Enterprise

The whole

of the

invasion

vast

Charter

KEYSTONE

THE

COMMUNITY

the

private en¬
terprise principle. All of the ob¬
ligations, in fact all of the pro¬

visions,

bers

shall

may

every

escapes

what
or

governments

international
of

sponsibility

and

or,

COMPANY

still,

supposed

international,

the

by
a

Members

in¬

unsullied
national

Member countries

their citizens.
mean

PATERSON, NEW JERSEY

con¬

trade

worse

governments,

untouched

Does this

AND TRUST

Therefore, the Char¬

ternational bureaucracy whose re¬

purely

Paterson National Bank

Mem¬

master plan for the

governments
creature

shall not do

are

case.

duct

use.

Members

ter

directed

are

exceptions

that the United

FEDERAL

RESERVE

SYSTEM

•

THE

NATIONAL

BANKING

FEDERAL DEPOSIT INSURANCE CORPORATION

and

producers

single

This

and

difference
of private

taken

Nonethe¬

peace

small

enterprise and that of a govern¬
planned economy.
For in

puts and others take, I
challenge its fairness and doubt
its permanence.
Such a system
will

ment

private

States

aspirations

with

great
principle

ITO will interpret pre¬
cisely what the obligations are.
If interpreted as a vast game of
put and take in which the United

ties of human nature.

have

must

one

the

between

less,, the

and

You

there

at best.

will interpret it one

bureaucracy will be as human as
and I, subject to all the frail¬

,vou

Then to improve condi¬

men

Here

remember¬

United

the

some

Members

might hinder it in another.
ITO
might decide that another country
could,
in the language of the

sta¬

calculated

risk

What do other nations think it is?

what

While it might help a
in one instance, it

happens when gov¬
to demands of

respond

stability.

the

number

people to assure them
and yet aid them' in

bility

•the whole nation and it is further,

stability.

what

ernments

their

today.

tremendous risk involving

once

terms

the most part, in the
hands of private citizens. What is
the limit of the power of the gov¬

such

development

improve

risk

some

may

is taken, it is at

for

are,

Why

other countries want

agency?

ex¬

own

against?

thought. Ef¬
usually involve

countries

if the risk

The facilities named

of this kind.

No such

planning accounts for the progress
made by the United States. Quite
the contrary is the case.
Why,

contradiction

the

number

Or,

and the confusion of

■

for the world?

Stability is static, whereas im¬
lies

which

him

Members are govern¬
ments, we in the United States
are
concerned about obligations

of this sort can introduce a planned
economy

di¬

plan
ideal.

program or

that

viewed

demonstrable need.

and

risk

break

politically?
If he does not, stability may be
preserved temporarily and stag¬
nation result, as can be witnessed

provement is dynamic and therein

The

which

for

and

some

the

take

equip¬

modern

placed. The United States govern¬
ment has no capital except what
it taxes away from its citizens.

tification

controlled

can

rected into

Shall the government of¬

posed.

technology ; and techni¬

hope it is clear that I make a
and
treasonable protective devices

These may

be done within the limits of

is to

too

distinction between arbitrary

taken.

them.

pass over

must be

re¬

complexes,
planning
just how every human

paper

is found

most

Risks

sianic

which to the planner seems

the answer

trend

para¬

number

more
far-reaching.
obligates Members to
in "providing capital

cooperate

and those that find legitimate

•

Probably

this

explain

certain

upset the controls aimed at sta¬
bility.,
At
once
a
problem
is

action

private enterprise.

doxical situation?

ernments

some¬

engaged

are

people in government who, unfet¬
tered by any lessons of painful
personal experience, develop Mes¬

much

Article

cal

Cooperation

Charter

not

Moreover, they could see kll the
exceptions which permitted older

which

Requirement

ments

by every
its development.

not

de¬

only asking

the

agency.

the devices used

use

other country in

con¬

country

development

de¬

grow,

the

hands

and

very

should

decision

new

ploy reasonable protective

can

are

then,

How,

Mem¬

This, plus adequate in¬
formation, can aid Members in
avoiding unsound ventures and
selecting suitable ones. But the

economically
developed nations as the prohibi¬
tions on import restrictions were
repugnant.
strong

advice

such

the securing

assisting in

ment

Earlier drafts'of the Charter had

advice

structive.

protection, and

other, the natural aspira¬

talking

know that I am not
imaginary situations

believe

(Continued from page 14)
transportation but

who

States

There

(1459)

SYSTEM

or,

48)

in¬

at,

THE

(1460)

COMMERCIAL

The ITO—A United States
(Continued from page 47)

/./?<(. most,
v

single division of produc-

tion.

There is

of V several

•

•'

decisions

not the inevitable

were

far less likelihood

favor

than to other

cartels:

tion

corre¬

all

sponds with United §tates policy

say

are

being; wrong than:
single individual or bad, then the remedy is not more
small group. That is particularly cartels.. And if they are evil when
private hands, operation by
true when the thousands are peo- in
pie of long practical experience government does not make them
in
their fields and
7
are
y';;
risking holy.
that

•
.

their

and- not

the

The

Charter,

however, asserts
funds
taken
from
its
citizens the
contrary, for while Chapter V
through taxation by the govern¬ condemns these practices in pri¬
ment.
Failure to remember these vate hands, the
longer Chapter VI
simple truths1 accounts for peo¬ provides for creation of inter-gov¬
ple everywhere asking their gov¬ ernmental cartels to be adminis¬

■

wealth

own

intervene.

ernments

intervene,

difficult for
to go beyond regu¬

governments
lation

Asked

not

actual

control.

And the

boys with the Messianic complex
are usually, handy.: >
,

the

United

States

tered

United

nations,

CHRONICLE

would

conditions.

That

;

The

chaotic

what'we

Charter

recognizes
through its excep¬
tions provides for indefinite con¬

depends absolutely on the amount
of savings we can accumulate and

tinuance

of venture

ITO

to eliminate.

that

fact

and

was

the

conditions which

It is self-evident that

rules

covering

plexities

all

clear set

the

that the

fered

time be

and control.

global

planning

v.vy/.t.7:ii.';"■■■

*.■

were many reservations
different articles of the Char¬

There,
! ;

fact

The

that

United :States

proposals
'-V;

■

...

■

that

for

iri the ier; " Not by- dne

group

original nations,

the

ITO.only

have

made

proves
share of

full

our

•

those i who believe they, have the
wisdom and
comprehension en¬

vana

but by

7;'v

there

know

are

It would

attach them.'

the

have

.■■■■■■■■

/v/ i'

abling them to plan for the whole

ablirtg

■>£?.■

-r

enr

the Charter.
There is little,.if
anything; in it that would indicate

nation?

ft?

^' 7"V'7;";:-;7;:^

No: discussion

Charter
the

General

iffs

and

Commission
mer.

does

not.

it is proposed that

now

embrace

different

and,

one

think*- cannot

produce the results that
To

which

ours

does.

it seemed that the United
lost an excellent opportu¬

States

nity at Havana to extol the vir¬
tues of the system that has
given

whatever prosperity we enjoy.

Many nations might have learned
of things

worthy of emulation had

been

them.
who

Instead

was

Havana,
that

energetic

describing

that,

anyone

in regular attendance at

testify

can

many1 hours,

the

fact

day after, day,

devoted to the detailed dis¬

were

meptiOn

Agreement

Trade

States

economy.
The
United
has prospered under one

the 7 Havana

should omit

planned

system, yet

before in

ment

of the

devious devices of

restrictionism,
planned
thus

S t

t i

intense

and

s m

economies.

had

and

Interim

ITO.

Tar¬

the

for¬

substantial body of the text
the Havana Charter was in-

This

cornorated.

said, in
the

done, it

was

order to, make effective

tariff

changes-.

corporation

However, in¬

this

text

was

putting; into effect a
considerable portion of ITO with¬
out legislative "approval.
; '
means

The Interim

ITO

Commission of the

established by resolution
of the Havana conference. It was
was

given

number of.specific,, func¬

tions; --These

terim

all,; logical

are

activities

for

such

can

agree

tions.

lative

approval. Such approval is

States for all treaties.
without

legislative

Proceeding
in¬

approval

indoctrina¬

the

debates?

Was

impaired.

Quite

terim

restrictions?

was

devising exceptions and
sound

principles

spent

escapes

that

present restrictive practices could
be continued

This

United

and expanded.

brings

States

criticism which

longer

Organizations
the !

all

are

These

objections that I

sumption

that

ganization

The

Charter

inconsistent

oplies.

might

have

Ha¬

This

position

with the

good

as¬

trade

perform

or¬

useful
recom¬

Chamber
United

States

own

world

some ; new

but rather because of
intelligent self-interest.

through

can,

consultation

and

processes

collabora¬

tion," gradually

arrive at agree¬
ment on broader principles.
7'"Rome was not built in a day,"
it is

Neither will

said.

nent

ITO

time, which is to
ses

evolution

say,

must

erected

perma¬

short

that proces¬
be given a

chance. Dr. Brock Chisholm, new¬

Director

elected

General

WHO, recently said:
"A

careful

examination

results, achieved

the

Geneva will,

however, show that slowness and

and

efficient action."

Despite the history and experi¬
of

States and

the United

its

and

assemble

that

the

failure

nations

the present Charter will result in

chaotic conditions in international

The first

the

seems

system

can

Are

Proposals

Some

will

that

say

two

out

time ago*

some

;

If this

thought

to stock¬

occurs

holders, obviously it will occur to
others.
But it is only one more
item
of
misunderstanding; in a
long, long list of American mis¬

ter for ITO

gives the minimum of
lip service to these proven suc¬
cessful doctrines, whereas it" ac¬
cepts and provides for the spread
doctrines of socialism.
of

record

socialism

conceptions of the economic

sys-

that

sure:

I of

some

the

greatest

berieficiaries of that system have

ployees

invasion
of
human
rights,
in¬
cluding the right to private own¬
ership of property and the prac¬
tice of private enterprise, is clear
before us if we will only examine
it.

the

United

States be¬

and control the

ital,

credit,

sources

then

and

plan, operate

operations of

cap¬

national

re¬

trade,
means

of production,

should favor the present

Charter for the

international

reaucracy called ITO.

that

than does the average citizen.:

are

faithful

the

representation
of the wages

indeed

States outstanding, then we should

reject it and make another try.
sheer

idiocy to reject what

has proven to be good and
adopt

what

has proven to be bad.

much

paid to capital. It is

but its

omy:

mis¬

exaggeration

dispensable feature of
volume

to that economy
of the lubricant

in¬

and

econ¬

our

relation

the volume

the

which it enables to

machine

In pro4
portion, there was less of that lu¬
bricant in 1947 than in 1929; even
than

run.

iricredible—

seems

1932.«'Dividends

•

built

this marvelous mechanism we

call 7
States, Oand dividends V
price f
which the American people paid
y
fori"that'vmighty;elementin:^l
the

United

cash -wages
a

of; venture■'capital- in

in.which the

year

of labor -7

.wages

better

products,, more

and
of

tidnar

brains

and

industry to

get

pered
restore

in general have shared in the

re¬

-Every time it happens in
the future, the same results will
follow.
Every time it does not

happen,

the

not the
really hurt.

man,

so-called

rich

;

little

who

man,

the

Unless

grew.

that

into

•

such

court try

condition

pros¬

can

giving
renewed encouragement to saving
and investment, our whole nation
will dry up, just as the sources of
life-giving capital have dried up.
This need not

happen; it must not
■ '■;•';: V ;y i
? y. •" •: • '■

happen; ;?:;; y

If you agree with me as to both
diagnosis and remedy, I hope you

will

and

went

channels, "arid

and his

ward.

enterprises?; For,; 75
than. 20%: of our na-

income

substantial reward for his efforts

integrity. Every time that
process has operated in the past,
the man's neighbors and society

• ••

jobs created. -The nation 'H

new

with

y'.

duetiori is to be increased and additional

perpetuation in this country
the' opportunity' for any man

pro-,

pro-

rriotion' arid distribution,: if!

needs

Early,

than

concerted

tell

and

so.

nationwide

Many things that once were re¬
garded as politically impossible
have been brought to pass because

action is needed. If you believe as
I do in the vital importance of this

those who believed in them

cause,

were

willing to devote enough .time and
energy to making them popularly
understood ; and

acceptable. ' To
some
Americans, "capitalism" > is
a
horrid word; but if those who
believe in capitalism will explain
its

those for whom it has done

much.

Not

"■

only

;77.7'y

George

Gallup

Claude Robinson but also

daily experience tell
the

real

and

our own

how few

nature

profits and the part profits have
played in making America.
How
many of your employees, and ours
that

—for

matter,

stockholders

—

how

know

many

real

that

in this country have multi¬

wages

since the Communist Mani¬

years

festo

issued?

was

realize

agent in this
ital

How

that

many

process was

the

holders,

others in your circle of influence.'

Particularly,, you will enlist your
employees—for". this:,is/ truly to
their benefit; and you will urge
these

steps

and

already quoted
Karl
permit me to quote
his most famous disciple. "It is the
duty of every communist," said
Lenin, "patiently to explain." That
to you;

much we may take from Leninist
doctrine and adapt for our own—

explain patiently

economic

system

has

worked

ers

better

Given
ted

earn

than work¬

double

taxtion

eliminated

earners

and

income

vive

dividends

ceiling is
tax.
wagea

job in manufacturing

industry. That

money

has to

such

what

working.

nothing
which

within

this

us.

sys¬

can

sur¬

flourish under de¬

even
as

before

why

and

of
the

chance, permit¬
it was meant to

reason

and

have

never

been

system.

any

endure the continued exhaus¬

can

foreign relief and

Indeed,

war.

and salaried workers will

create

there

struction—yes,

ultimately be the principal bene¬
ficiaries; but they will not know
it unless—it. is clearly and
fre¬
quently pointed out to them. It
takes as much as $8,000 nowadays
to

decent

operate

operate,

tion

anywhere else?

tem cannot do for

All Groups Will Benefit

work,

well,

facts

makes

must be done to keep it

mands

the

life—what

American

the cap¬
that

the President

have

Marx

made

live

economic

tools

Congressman

your

his advisors.

enabled American workers to out-

and

and Senators and

nroduce the world and
more

will enlist in it your
associates,' your stock¬
your customers, and all

you

business

primary

the

furnished

that

placed

ciples that have made the United

too

and

distinguishing

Exaggerated

are

years/

the

prin¬

'77"' •/'

Vy;'

There has been

arid

concerned about is the revival

It has been

bureaucracy

preservation

and

fair

bu¬

earthly paradise of the socialist.
If

'jobs.

that

are necessary

them

should

learn

•

capital

creation

their

Y.'' plied eleven times in the hundred
we

should

wages for

comprehension of what were at !a /theft ;.allrtirrie high;-. {'
;
makes it work.:and; what is need-;
^Industry, needs' more machines/1
ed to keep it in healthy
condition, more:;;;to61s, rhore researeh, new

-any

understand

tem: which has rnade ours the most
Tavorbd nation!- Indeed,11 artY rioi

among

freedom, private initiative
private enterprise/the Char¬

The

as
in
profits and divi¬
Employers know that high
wages are necessary to create and
preserve markets.
Equally, em¬

less—^and this

dends.

Profits

these

much in wages and

salaries

Practical?

under

of the

times

many

be?

and

seems

to be based

assumption that ITO is

How

workings and preach its bene¬
fits, some day capitalism will be
as
popular as it deserves to be

unequalled record of achievement

said

im¬

there

from

authority,
our

is best.

will do/ not through im¬

ments

mon-

monopo¬

will adopt, whichever

the

trade.

weight

serious
the

said that it would be

possible

•

The strictures against

lies

the

calling for renegotiation.

again

its treatment of cartels and

see

functions, I return to the

Monopolies

do,

could

Treatment of Cartels and

inextricably

Renegotiation Required

tion of your government.

V -:

lieve that the function of govern¬

Commerce

participa¬

left;

well-being

respective; economic sys¬ 7 T say to you that my concern
tems ? wilUite? tinder v study 7ajnct in this matter is not for the few
gomparisop<^Sooner or later each rich 'men and women J' What I

In¬

draft Charter.

mendation

condition for the

gravely

continue

some

principles. I doubt

offense

the

involved, t

are

whether any of you would
accept
such

giving

The

is, :'<• Starting

being bound to ob¬

of the

nation

nations may be

function,

vana

emerged, the United States is al¬

servance

other

to another grave

that by the time the final Charter

most alone in

so,

purpose

contrary. The time

from

cure.

should

the

Our

required by the laws of the United

without

the

excep¬

legis¬

disapprove, its ability to

eliminate

without

received

has

Delegates evitably enmeshes the participants

intended to
was

upon

ing paralyzing factors, are in fact
the safest guarantees for concrete,

what

caution in this case, far from be¬

wish to

long

number

or¬

that ITO
And

now,

of the

tion in the doctrines and practices

these

evidenced t>y

even

ganization if the setting
organization

in¬

Thus,

was

then., build from there

arid

universally, applicable,

deeply.

seems

Inevitably, as vye do; this, we
find' certain rules which are

up.

Will

ence

cussion

history. To me it

that the

compre¬

economic

our

continued belief in private- en¬
terprise, whereas throughout the
documents are 'the doctrines of a

a;;

Was it thought that knowledge
Right here is an explanation of
why many of our people look with
the chances of ratification by any
a jaundiced eye on the
provisions

people

them

hend the Charter.'

that

seem

helpful,

been

not

discussion' of

further,

could

many

place to begin anew is to
few find the ^axjmum area' of agree¬

The; Ha¬

decided

Conference

even

many.

world. ;
■

indifferent

are

that

25%

?V I tax proposals : are :
economically
dif¬
impeccable but politically impos¬
ferent economic systems operat¬
sible.
They smack too much, I
ing in the world;; We in the am
told, Of an attempt to shift
United States think that, imper¬
tax burdens from the shoulders
fect as our system may be it does
of the rich to those with less abil¬
produce more for us and the world
ity to pay.
1 have heard that,;
than any other.
Nevertheless, we even from
one or two of our own
respect everyone's right to use the
stockholders, in response to a let¬
system they prefer.
ter on this subject which I sent
We

Objections to Charter

the

penalties,,
being of¬

ago,

inducements,

'Y. 7,7-7 Jfv

page 21)

sarned,i then saved;- before - it cart
be; invested. During its
lifetime/
that;. investment
will
produce

short- and long-

to negotiate?

councils

this

for

generation

trade

Many countries have State con¬
-strong
economically trolled
enterprises.
Often
they
through the practice of the prin¬ are complete monopolies;
Per¬
ciples of private enterprise. Our haps the number of them is even
practice of these principles is far
increasing.
While
the
United
from perfect, just as is every other
States is known for its anti-cartel,
human practice.
But, fundamen¬
anti-monopoly policy, that view is
tally, we know that such success
by no means universal in other
What Can Be Done?
as we have had—in fact our
very countries.
'7 ,77:7.'t'v
We are living together in the
ability to aid other nations—flows
Obviously there was no meeting same world and have more con¬
;from the achievements of a pri¬
of minds on this important issue. tacts with each other than ever
vate enterprise
•

was

not

universally applied, which is only
say

But with the

availability
capital already shrunk¬
perhaps 75% under what it

com¬

international

and finance cannot at this

invest.

commissions
created

Y ;V'Vj^''/-;'(Cpntinued4rom

■7

need for investment capital;
We
know that our rate of
progress

range problems are very different.
If that be true, then what is there

have

false.

nonsense

the international bu¬
reaucracy;
An extensive and ap¬
parently permanent machinery of

become

economy.

An Incentive Plan for

States

have

Thursday; October 7, 1948

an assump¬

second, it is

that

have.

the

believe

As to the

But if Cartels

that

and conviction.,

individual

thousand

FINANCIAL

Viewpoint

important

exceptions
Trading.?• The

State

condemnation

even

recon¬

the

can

cold
edure

everything but the hobbles which
grind the machine to a halt and
will
for

not

let it

run

free.

brightest

word

economic

dictionary,

The tool

breaking' those hobbles is the

can

the

American

"incentive."

restore incentive

to its

place, and keep it there, I
confident that this country and

proper
am

its

people

can

reach

any

be. they set for themselves.

goals

Volume 168

ficient

meet

reserve

utilize

and

ments

the

require¬
newly

created credit to make

new

investments

unless

and

Board

—

loans

raise

ments

such

require¬
that

reserve

high

rate

the proceeds from the liquidation
of
government obligations \will

have to
the

legal

used

entirely to meet
requirements.

reserve

the

our

What

bankers?

the

can

Even

further

the

volume

such

undue

pre¬

increase

bank

credit, will
development
stop
the

economic affairs,

fall within the scope

of activities

they

of inflation, if
successfully handled, it will con¬
tribute materially to world peace
and prosperity. If not
carefully
handled,
its failure may cause
many in Europe to look towards
Russia and its philosophy as the
only way out of the present situa¬

bankers.

Briefly,

are

(1) Assume fully and fearlessly
responsibility for credit ex¬
pansion, particularly as regards
the
extension
of
mortgage and

the

and

credit. Bankers should

consugier

loans

and

other

all

inflationary practices, particularly
the support of farm prices at a
very high level? Is not raising re¬
requirements and endeavor¬

serve

ing to control inflation through
restricting the ability of the banks
to lend and

invest, without at the
curbing the inflation¬
ary practices of the government
putting the cart before the horse?
time

same

(3) If prices of government se¬
remain pegged
but re¬
serve
requirements are
raised,
may not the ensuing increase in
money
rates
induce
insurance
companies to sell their medium■and long-term government obli¬
gations to the Reserve Banks and
curities

think

in terms of the nation

the

future

of immediate

not

(2)

terms

than

benefits.

panicky

become

about the Government Bond mar¬
and

ket

not

complicate the
monetary
authorities through
unnecessary
liquidation of government obli¬
gations.
By
the
same
token,

credit

problems of the

should

bankers

optimistic

become

not

about

too

movement

the

of Government Bonds and should

adhere

which

investment

policy

will

give them adequate
and satisfactory earn¬

liquidity
ings.

the

rate

interest

and make your charges commen¬
surate with risk and costs. This

then utilize the proceeds to grant
loans or buy the debentures of

will enable the banks to strengthen

large borrowers? While the latter
may
be. forced to pay higher
rates of interest, there seems to
be no doubt that they will be able

tion

their

earnings
and

will

adequate

and capital posi¬
provide them with
to take care of

reserves

future losses. At the

same

time, it

to obtain the necessary accommo¬

will remove the pressure for loans
and for credit expansion. Rates of

dations either from the

interest

banks

insurance
companies.
The
only group that would be ad¬
versely affected by a material in¬
crease
in reserve requirements
and
restrictions on V the
lending

the

and

investing ability of the banks
be

would

small

medium-

and

sized borrowers, who might not be
able to obtain credit
at
all. If
situation should develop, if

such

the

large

should

borrowers

able to obtain the credit

accomo¬

altogether too low for
the good of the country and the
are

banks.

they need, even though the
borrowing may be in¬
creased, and at the same time
of

smaller

borrowers

unable

are

obtain necessary bank credit with
the result that some of them are
forced

out

blame

the

placed

these

for

not

will

not

failures

the bank?

there

business,

(4) Assume economic leader¬
ship in your community by preach¬
ing moderation in capital expen¬
ditures and industrial expansion
as well as in consumption. Revive

banks may become the scapegoat
both for the inflation as well as
for the decline in business

will

that

ensue

tight and

comes

medium-sized
obtain

once

activity

credit

small and

many

unable

concerns are

adequate bank

modation?

be¬

accom¬

Surely
the
conse¬
quences
of
inflation
are
very
serious, and no one can deny that
bank credit plays an
important
role in the inflationary process. It
is clear to every student of busi¬
ness, however, that the increase
,

in the volume of bank loans that
occurred

last

the
result of the inflationary forces
and of the sharp rise in the cost
year

was

of doing business than
of them.
'

the cause

What

shall

banks?
arise
i

done

number

in the

minds of

by the
questions

those

seri-

ously interested in the welfare of
the

country.

Must

our

economy

inevitably go through the busi¬
ness cycle?
Do we have to con¬
tinue the process of inflation to
v

the

bitter

fronted

and then

end
a

con¬

serious depression?

have to stand idly by and

watch the

savings of many people
destroyed by the forces of infla¬
tion, and later on witness the
process of deflation destroy the
jobs and livelihood of
lions of Americans?

many

The

mil¬

answers

to these

questions lie with us, and
they will depend in part on our
faith
in the
system which has
made

the United States the fore¬

most

nation

the

world.

will depend on how seriously

They

each

aggra¬

the problem

The banker must constantly

tion.
teach

that

nation eager to ex¬

port must also be willing to im¬
port, and that the United States

prestige. The country is

employment is plenti¬
the standard of living
of the majority of the people is
higher than ever. Nevertheless,
the process of inflation is gnawing
at the economic security of the

take

advantage

weaken

ful;

mine

and

people;

serious

panied by

im¬

the

rest

and

all freedom-loving people

The re¬

for guidance.

sponsibility of our generation is
very
great, perhaps as great asthat which confronted us during
the war.
We have demonstrated

accom¬

factors have

of others will

system and under¬
time when the eyes
of the world are on

the

look

that

bearing on the activities
banks. They indicate the

portant

large-scale unemploy¬

These

ment.

setback

our

it at

is widespread

there

and

hard

work.

prices

should

prosper

indefinitely while

are

willing to make great

sacrifices to maintain

for great caution in lending
investing and for an increase
in money rates to compensate for
the higher risks.
need

our

liberties

We must demon¬

and institutions.

strate that

and

delay

again, and we must not
fail.

Newfield & Go. Resumes

The chief tasks before the coun¬

try

clear: first, to

are

Business in Los Aug.

Americans,
one ^to

every¬

take s keen interest in the

political affairs of the community
where he lives. Only a carefully
selected Congress will be able to
solve

the

serious

problems con¬
fronting the nation at the present
time.
The

range business
the
country
and

long
for

banks therefore
each
we

Morris & Wessell Being

erate
the

and

the

of inflation.

cause

one

are

fully

depends

thinks and

out¬
the
how

acts. If

of what is at

aware

than

result

The ability

of the Reserve Banks to

raise

credit

long

the -Reserve

ernment

fixed
ment

all gov¬

obligations offered at

price.

The pegs

securities

will

Formed in Baltimore

re¬

requirements will not re¬
the
availability
of ' bank

serve

duce

Banks stand ready to buy

on govern¬

BALTIMORE,
Wessell is

fices

—

Morris &

the

Keyser

Building to

in the securities business.

Partners in the

new

firm

are

Morris and F. Carl Henry

main¬ Jr.

tained, because to remove them

engage

MD.

being formed with ofr-

Both

were

DIRECTORS

beyond reason,
leadership
in
the

Assume

responsibilty
phases of

full

J. P.

formerly partners

[Chairman

MORGAN &
CO.
IyCORPORA TED

It. C. LFFFLYG WELL

'CYXaY

NEW

towards education in all

YORK

ARTHUR M. AXI) KRS OX

the

Chairman Executive Committee

community where you are
Only a
well
educated
community can stand the strain

located.

and

stress

able

lems !of

the

meet

great

G FORGE

prob¬

the

Vice-President

guiles

and

permits the children of his

(6)
each

well

One of the

fight

JOHX L. COLLYER

the

inflation
the

was

Company
H. 1\

DA VIS OX

Vice-President

now

deficit.

must

recent

take

preventing a deficit, par¬
ticularly during
a
year
when
business activity is bound to be
at
a
high level. To permit a
deficit during 1948-49 would be
an act of national irresponsibility.
some

reason

another

ex¬

penditures cannot be reduced, or
if they should
have to be in¬
creased because of conditions over

which this country has no
taxes should

15,393,535.28

Federal Reserve Bank

Other Bonds and Securities

of Morgan

Grenfell V

1,200,000.00

(including Shares
Limited

Co.

and

Cie. Incorporated)

13.050,415.81

Loans and Bills Purchased

157,123,300.99

Accrued Interest, Accounts Receivable, etc...

2,312,400.11

Banking House

3,000,000.00

Liability of Customers on Letters

$8,003,042.44

of Credit and Acceptances
Less

RALPH

IV.

GALLAGHER

31,695.11

Prepayments

7,971,347.33
$630,289,466.98

X. I). JAY
Chairman Martian & Cie.

Incorporated
DEYEREUX C. JOSEPHS

LIABILITIES

President New York Life
"Insurance Company 4

THOMAS S. LAMOXT
Vice-President
G US TA V METZMAX
-Railroad Company

$546,851,041.92

Deposits

10,261.648.09

Official Checks Outstanding
Accounts

Payable, Reserve for Taxes, etc.

$557,112,690.01
6,060,609.67

control

be raised. No group

Acceptances Outstanding and Letters of

IV. A. MITCHELL
Vice-President

JUNIUS S. MORGAN

Credit Issued

8,003,042.44

...

Capital

20.010,000.00

Surplus

20,000,000.00

Vice-President

19,113,124.86

Undivided Profits
ALFRED P. SLOAX, JR.
Chairman Genera\ Motors

the

lead in

If for

Stock of the

Morgan

251,945,523.78

President Nno York Central

government, which
be converted into a

Bankers

$178,292,943.68

....

Municipal Bonds and .Votes

Vice-President

Federal

may

State and

CHA R L ES I). 1)1 GREY

as a

surplus of

large

Hond and Due from Banks

President The B. P. Goodrich

major bulwarks in the

against

months

A"*.

United States Government Securities

CHARLES S. CHEST OX

gov¬

in his business.

CARTER

Cosh

Incorporated

(7) The banker must of neces¬
sity take a keen interest in the

ernment, for these affect him

Corporation

President Mercian & Cie.

rope, all public works that are not
absolutely
essential
should
be
postponed until the present ab¬

Federal

CABOT

BERXARI) S.

present,
when
industry
is
working at capacity to meet do¬
mestic requirements and help in
the rehabilitation of Western Eu¬

citizen

September 30, If)J8

ASSETS

President State Street
Investment

com¬

The responsibility ?for a
public works program in
community and state rests
large extent on the banks.

affairs of the

<>*

Vice-President
PAUL C.

fiscal

Condensed Statement of Condition

C. R. A TlxIX

munity to be entrusted to under¬
paid and incompetent teachers is
shirking his duty and is not as¬
suming the responsibility his posi¬
tion imposes on him.
sound

■

HEXRY C. ALEXANDER

-theday

promises
of the demagogue. The bank offi¬
cer who is not a member of the
school or church board or who
to

WIUXXEY

President

and

times

modern

$630,289,466.98

Corporation
E.

TAPPAX STAXXARD
Prcsid cat Ken n ceott

Copper Corporation
JAMES L.

THOMSON

Chairman Finance

United States Government securities carried at $27,048,519.25- in the above
statement arc

plcdfted to qualify for fiduciary powers, to secure
as required by laze, and for other purposes.

public monies

Committee Hartford Fire
Insurance

Company

JOHX S. ZINSSER
Chairman Sharp & Dohmc Inc.

E.H.

Wessell,

in Stirling, Morris & Bousman.

commodity

some

buyers' resistance movement.
(5)

;

•

••

the

assume

task

the desire of one economic group

economic power and inter¬

prosperous;

fear

the

Human greed and

bring the
the rest of the world is povertyprocess of inflation and the spiral
of wages and prices to an end,
stricken.
=-■V:/: /-'V,
LOS ANGELES, CALIF.—Jerry
and then to prevent the readjust¬
(9) Bankers can exercise great
J. Newfield and Arthur A. Newment
from
degenerating into a
influence on the economic habits
field
announce
the re-establish¬
depression. The measures taken
of the people. Perhaps the A. B. A.
ment of their firm with offices at
by the special session of Congress
could provide its members regu¬
215
West' Seventh
Street.
The
were by themselves inadequate to
larly with a short outline of busi¬
meet the problems of the day be¬ firm, which in the past specialized
ness
conditions
today
and the.
cause
they were entirely one¬ in investments, will now act as
dangers inherent in them. Such a
sided in that they were designed financial consultants specializing
summary,
widely distributed to
mainly to reduce the landing and in business
negotiations, general
depositors, could be of great im¬
investing powers of the member
portance in educating the. general
insurance, real estate.
banks.
public.
The increase in the volume of
(10) Finally, and this applies
bank loans during the past two
not only to bankers •• but to all
years has on the whole been mod¬
it is the duty of
cannot

normal demands have disappeared.

Europe

citizen.

every

interest in the virtue of thrift and

prey

danger that the

aid

our

vates

look

dation
cost

particularly the
European Recovery Program.
While

of its

conditions

ness

peak

strong

healthy busi¬

Raise

(3)

international

interest

keen

take

must

banker

The

(8)

'.i'. Conclusion

maintenance

The

The United States is at the

national

strengthen the economy of the
United States? I have jotted down
10 items which I believe definitely

iorces of inflation unless the gov¬
ernment itself stops the guaranty

mortgage

deficit

continued

effects

the

than bankers who

course

specialists in credit and know

is indeed

economic body and

position to advocate

financing.

raising of the

requirements should

reserve

vent

if the

such
are

better

individually as well as
a
group, do not only to prevent
an economic catastrophe but also
bankers,

follows:

•

(2)

is in

the

of Governors is given the

power

responsibility to¬
wards our country and society.
What are the responsibilities of
takes

long-range outlook
promising.
'

entirely would have consequencesj
which nobody desires.
,
!

then

accordingly,

the

The Outlook for Banks
of

act

and

stake

(Continued from page 23)

(1461)

FINANCIAL CHRONICLE

COMMERCIAL

THE

Number 4740

Member Federal Reserve

System

Member Federal Deposit Insurance Corporation

(1462)

THE

COMMERCIAL

section

FINANCIAL

the

bond

market

tinued steady but inactive.
was

Canadian Securities

greater

ternals

By WILLIAM J. McKAY

the

recent

Conservative

Progressive

convention

assurance that the next

likely the Progressive
prin- f

gives
clear-cut

Canadian election will be disputed on

basic
the

issues.

Liberal

In addition it is

publicity will
vincial rights,

Conservative

leader.

With

the
be

Canadian

draw

gold

devaluation of the Canadian

issues

already have a
of popular approval

measure

the

and

Stocks

Liberal

incumbents

Wall Street

result

"Public

ties

against

office

by the U. S. Democrats
might be paralleled by a similar
termination of the Canadian Lib¬

eral Government's attitude toward

erals'

longer maintenance of

even

political
Thus

right

power.

turned

this

country

,,be

Perhaps,

political

valuable

the

ac¬

will

Conservative

"bureaucratic

insomuch
a

leader

master

naturally

inclined towgrd freedom of indidividual action and a recognition

sible

accentuation of Canadian restric¬
tions and controls, that the Con¬
servatives

call

for

the

abolition of restraints
and individual

meet with
over

policies in
In any

tween
on

clash

old-world

the

statist

hand

one

progressive

ideology

and

be¬

socialism

new-world

conservatism

the

other.
:

similar direction.

too

not

Dominion

cision

far distant

will

whether

make

when

its

de¬

maintain

restrictions

return to

gressive

and

controls

free

the

Canadian

elections will normally take place
in 1950 it is possible that
early
campaigning fervor will
bring
matters
to
a
head
during the
of

course

indicated,

next year.

the

As already

Progressive

Con¬

servatives will base their platform
the

removal

and freedom of

state

controls

eight
Mr. R
W. Ralston,

victory

relations

possible that
in

this

likely

although it is
Republican regime

country would be more
to see eye to eye with a

Conservative government in Can¬
In the field of economics

and

finance,

however,

deviations from
cies

important

the present poli¬

to be expected and among
these it is almost a foregone con¬
are

clusion

that

immediate

mining industry and this doubt¬
lessly would be achieved by

private enterprise.

During

de¬

Canadian dollar.

week

the

was

the

Department

Despite the pig iron increase announced—and maybe
iron is still selling for less than the cast iron
Replaces, "The Iron Age" concludes.
' •
'
'

The American Iron1 and

past

years,

1st

head

Benkert

nected
with
he

editorial

Moody's

was

ment

Manuals
of the

manager

capacity
and

This

Canada.

Our

seventy-five
timate

import

'T\

old

banking

years

services

are

business

backed

practical experience

plus

Statistical Depart¬
afterwards
Associate

and

cjf

12,055,000

Canada

well

Agents

the

world

are

ests of those

Supervisory

ment.

is
&

Depart¬

serve.

A son, Andrew W. Ralston, Jr.,
now a member of Hornblower

Weeks, research department.

New York Stock Exchange

Weekly Firm Changes
The New York

;

Stock

Exchange
has announced the following firm
changes:
L.

Eugene

Marx

retired

partnership in Salomon
Hutzler Sept. 30.
O'Connell
solved

Co.,

from

Bros.

Loadings of

1871
wire

CANADA

system

between

New

Head

Boston,

dis¬

Sept. 30.

York, Toronto and

Montreal

W. RICE, Agent
Bell

R. G.

Kaye,
Real
&
Co.,
72 Wall
Street, New York City, is now do¬
ing business
J.

are

corporation.

FALLING OFF IN WEEK

This

revenue

was

decrease

1,762 cars,

output

sharply

0.2%

It also represented

3.2% under the corresponding week
0.9% during the similar period in 1946.

below

the prq-

decrease of 29,983 cars,
1947, and 8,544 cars, or

.V.

higher

with

resumption

Kaye, President;

Hospodar, Secretary; David

Production of
to

trucks

and

cars

the

United States and Canada

120,065 units from 98,394 (revised)

as' the

result

resumption

Besides the gains from Chrysler

units the

operations

previoqs

Chrysler

Canada.

Business
(j

•••

failures

'V'\

highest

level

.''' •••'•

eight

weeks

Commercial and industrial failures increased to 112, the highest

number in

eight weeks, in the week ending Sept. 30 from 101 in. the
reports Dun & Bradstreet, Inc.
This exceeded
the 81 and 28 occurring in the comparable weeks of 1947
and 1946,
respectively.
It was below the prewar level; total failures num¬
bered 279 in the corresponding week of 1939.
s.V
; "'!<vVv'

week,

Failures involving liabilities of $5,000 or more rose to 9-3 from 79
This compared with 64 casualties of this size a year ago.

last week.

Small failures with liabilities under $5,000 declined to 16 from the
previous week's 122 and were less numerous than the same week
of

1947.

;;

: <

Wholesale

failures

,;. '

;

numbered

20,

the

A ; >

most/,in

•:

this

trade

since

April.
Manufacturing failures numbered 28, against 21 last, last
week, while retail failures declined to 44 from 52 and compared
with

had 10

Construction

ago.

year

casualties, slightly

and

commercial

service

each

than in the preceding week.
The Pacific States accounted for one-third the total failures.

level

food
since

Continued

modities

price
march

declines

resulted

food

index
9

and

wholesale

commodity

important

lowest

1948
food

com¬

sharp drop in the Dun & Bradstreet

index last

declines
feb. 24,

the

some

further

price

sltand at $6.70

index fell

The

week.

cents

Sept. 28, from

$6.82 a week previous.
Added to
last week's dip, this marks a total decline of 25 cents, or 3.6%, in the
past two weeks.
The current figure shows a decrease of 3.3% from
$6.93 a year ago and represents the lowest level since this year's
low point of $6.61, recorded on both March 9 and Feb. 24.

ated

CORPORATION

Output in the similar period a year ago was 86,330 units a year
ago and 76,820 units in the like period.of 1941, !
.r •
'i
This week's output consisted of 88,448 cars .and
25,462 trucks
made in the United States and 3,914 cars and
2,241 trucks made in

wholesale

PROVINCIAL

and

Packard/where assemblies
pad been halted by the Briggs Manufacturing Co. plgnt guards' strike,
increases in production were reported
by Ward's at General Motors,
Hudson and Nash.-; ••• .''-J'

'■[]

GOVERNMENT

operations by chrysler and packard

Of¬

Kaye, Vice-President- An¬

further

/r*/''

products

The

Dun

Bradstreet

price

index

weakness

•••

decline

farm

accelerand

food

wholesale commodity price index'
pace during the
past week,
largely due to further weakness in farm and food products, the
index fell to 273.88 on Sept. 28, the lowest since mid-February, and

ta-ended

downward

A. E. AMES & CO.
INCORPORATED

TWO WALL STREET
NEW YORK 5,

N. Y.

WORTH

4-2400

1-1045

daily

rapid

drop of 1.7% from the Sept. 21 figure of 278.72.
It compares with
382.23 on the corresponding date a year ago, or a drop of 3.0%.
i
In comparatively light trading, prices of leading grains con-

tinued to

HOGG, Asst. Agent

System Teletype NY 1-1G21

Kaye, Real Incorporates

Office—Toronto

NEW YORK AGENCY—49 WALL STREET

970,462,000 kwh. in
corresponding period two years
"."V'V ;"./■■
'! ,/' •;!/■'' ,V/' " "'//> 'A

deding week this., year.

Private

in the preceding week, but an in¬
the figure reported

freight for the week ended Sept. 25, 1948,
totaled 907,971 cars, according to the Association of American
Rail¬

preceding

CANADIAN STOCKS

Established

-'a'-* :'C

■

The Dominion Bank

tons

Packard, according-to "Ward's Automotive Reports."

helpful in furthering the business inter¬

1,757,400

SLIGHTLY FOR WEEK

kwh. below output

and

centers

the

ago

f AR LOADINGS SHOW SLIGHT

Week,

MUNICIPAL

throughout

Correspondents in the principal commercial

equivalent to

month

of 513,703,000 kwh., or 10.4%
higher than
week ended Oct. 4, 1947.
It was also
e'xcess of the output reported for the

for the

vestment

with

in¬

and 1,281,210 tons for the average week

one year ago

wholesale

over

15,, last.

The amount of electrical energy distributed
by the electric light
qnd power industry for the week ended Oct. 2, was 5,448,554,000
kwh., according to the Edison Electric Institute.
This was a decrease

/■

operating* rate

ELECTRIC OUTPUT DECLINES

increased

external

knowledge of local conditions.

Branches

capacity

Manager of the organization's In¬

Bessie

export

week's

March

in 1940, highest prewar year.

Standard

Co.'s

great assistance to exec-'
or

and castings compared to 1,737,600 tons one week
ago, 1,703,300 tons a month ago, 1,681,700 tons, or 96.1%, of the

contemplating

Monday '

\ steel ingots

later

CANADIAN BONDS
utives

announced

it
l.

week the operating rate of steel companies having 94%

highest since the week of
indicated rate was 94.5%.

.,,

Business with Canada
be of

Institute

Steel

scrap

Research

Schiller, Treasurer.

can

capacity of the industry will be 97.5% of capac-'
a rise from,
j the preceding week of 1.1 points, or 1.1%. It also equaled the

n! ago.

During his long Wall Street ca¬
reer, Mr. Ralston was also con¬

drew

The Dominion Bank

electric

i ity for the week beginning Oct. 4, 1948, representing

Co., Inc., 70 Pine Street, New York
City.
•, roads.

ficers

the

available scrap, the magazine points out.

mean less

crease

action

would be taken to assist the gold-

valuation of the

Sr.

A Pro¬

economy.
Conservative

would
probably not cause any
striking change in U. S.-Canadian

political

age

For the

present

system of strong central
government with its multiplicity

the

died

following
long illness.

its

ada.

Although

face

event the issues at stake
only too clear and the

now

the

increasing favor. More¬

Cripps has served to
bring into sharper focus the fun¬
damental

are

time

now

the recent visit to Canada of

Statistics

industry

Sir Stafford

the

threatening
pressure from the right, that the
Liberal government might even¬
tually be impelled to reorient its

complete

liberties will

sta¬

the

administration adopted a
portion of the CCF pro¬
gram in order to stave off a strong
left-wing challenge, it is now pos¬

of incentive for initiative and in¬

dustry.
It is logical, therefore,
especially in view of the recent

izations,

the

large

atmosphere

general, however, the underlying
spirit of the people of the North
continent

Just

made

come—the

bank¬

tistical organ¬

stealing the thun¬

der of his opponents.

exigencies

of restriction and state control. In

American

Wall

financial

Liberals

success

ing firms and

political strategist Mac¬
King, their former leader,

who excelled in

world-wide trend to the left

inevitably created

the

years

Street

its

and

deaf ears,; Liberal

wartime

wheat

steel

pig iron made by a major producer
couple of weeks ago' is being followed by producers in other areas.
been plaguing

;

several

addition

artificially

however,

recall

kenzie

centralism

Ottawa" have fallen
and

In the

vigorous attacks of the

Ontario
the

for

low
prices for export wheat to Britain.

can

count north of the border.

past

market

imposition

apparent swing to the

free

controls.

carbon

The increase in the price of

amount

Raises have averaged $3 a ton.
Mounting costs have
blast furnace operators for some time.

Utili¬

identified with;

the important Farmer vote can not
fail to be influenced by the Lib¬

the

centralized

Compen¬

over

mounting protests
irritating rigidity of

the

furnace alone will
a

dium" and for

o'f

Industry

page

•

'?! the steel-making

Sr., for¬
merly Editor of "The Chronicle's"
Ralston,

have

interesting inference that the end
of the long
sustained tenure of

increase

t of this

Analyst Dies

the

also been placed on the defensive

the

(Continued from
'

Andrew

These

large

The State oi Trade and

in¬

Torontq
board displayed greater strength
led by Imperial Oil which was in
strong demand following further
encouraging reports of new Al¬
berta discoveries.
The golds also
met
with support on persistent
hopes of an imminent upward re¬
vision in the price of gold.

market,

dollar.

the

Conservatives

encouraged

free

Canadian

and

probability of a Republican vic¬
tory next month south of the bor¬
der,

likely that greater
be given to pro¬
the establishment

Canadian people will be given the
opportunity to vote for the free¬
dom
of
private
enterprise- so
strenuously advocated by the new

will

Conservatives will be

Government's

cipal opponents in the forthcom¬
ing political trial of strength, the

price changes were
negligible despite the firmness of

overwhelming victory of Prime Minister George Drew of

Ontario

con¬

There

animation

Thursday, October 7, 1948

but

free funds.

The

CHRONICLE

Cash

tjhan

move

corn

irregularly.

fluctuated

over a

wide

range

and closed

sharply lower

week ago. Interest in the deferred deliveries of corn remained
light, with tra'ders waiting announcement of the government loan
rate, scheduled for early in October.
a

Harvesting of the
a

few

weeks.

The

new corn crop

cash

wheat

is expected to be general within

market

was very
quiet and prices
sharply at the close after holding steady
throughout most of the period.
Export demand for wheat continued
heavy, largely for shipment under the Marshall Plan.
Oats showed
independent strength despite light demand. Trading ip all grains
on
the Chicago Board of Trade fell to a daily average of about
23,500,000 bushels last week, as compared with .30,900,000 bushels

for

cash

wheat

declined

Volume

the

168

Number :4740

week

and

THE

53J00,000

Demand

a; year, ago.

COMMERCIAL

for

CHRONICLE

FINANCIAL

markets,

lamb

prices

hogs trended lower.

were

steadier,

but

botn

steers

and

Trading in spot cotton markets was more active last week.
Prices showed little change for the week but the undertone was'
; better, aided by reports of further allocations for ther staple under
ECA

Money Supply
Operations

arid

226,000

ing for

domestic

interest

shown

new

mill

for

cotton

crop

account

both

into

moderate

was

prompt and

the

1948

forward

with

the Boston

increase

bonds

bank
lending power, does not
apply to nonmembers of the Fed¬

vast

eral Reserve

quiet,

very

only scattered sales of small lots
reported for piecing-out pur-'
Trading in the Western States was likewise quiet.
Prices

market

reserve

and

curtail

System, which in the

aggregate account for about
fourth

bank

the

assets

total

commercial

the

country.
The
this discrimina¬

of
the Chairman of the Fed¬

consequence

tion,

eral

Reserve

out,

has

Board

the

penalize

banks

and

pointed
member

the

weaken

the

Australian

wool

auctions

showed

easier

tendency toward

But

the

AND

FOR

WHOLESALE

TRADE

WEEK BUT ABOVE

Fractional

declines

FRACTIONALLY

YEAR

consumer

LOWER

purchasing

were reported for
continuing to exceed moder¬
year ago, according to Dun &

the past week with retail dollar volume

ately that of the comparable week

Bradstreet, Inc., in its current
tance

high prices

summary of trades.

Consumer resis¬

generally sporadic although discrimination
was. reflected
in slight declines in the prices of
Merchandise of good quality in the medium-price range
continued to be in large demand.
1
in

scattered

Some

was

areas

goods.

Women's fall and winter apparel continued to receive favorable
consumer

Demand for women's tweed, sueded wool and
large with zip-in lined coats popular.

response.

broadcloth

continued

coats

Women's

suits and

attracted

considerable

dresses

corduroy,

consumer

velveteen

attention.

and

The

faille

rayon

retail

volume

men's

apparel and furnishings increased slightly during the week
with demand for tweed, covert, gabardine and worsted
apparel hold¬

ing

well,

Retail food volume decreased slightly during the

;

demand

consumer

there

although

for

meats

continued

for meat and butter substitutes.
fose

fractionally.

lower

than

that

frozen foods

Fresh
down

was

The retail volume of canned
and

fractionally.

retail

hardware
demand
of

decreased

for

week

volume

radios

demand

Retail

and

*..

com¬

cars

increased

the

was

country
estimated

the

period

from

;;

ended
to 7%

Wed¬

above

week

with

dollar

corresponding

order

volume

week

holding

decreased

moderate

ago.

year

slightly

fractionally
orders

New

above

prices continued to be in large demand.
on a country-wide basis,

during
that

the
the

taken from

the

terms

the

tribute
costs

similar
which

week

According

;

store

reduced

sales

1947

the

interest in

the

week

of
a

1948.

more
moderate weather,
buying of fall merchandise.

Reserve

rise of 3% and for the year to date increased by 5%.

'The First Boston

engaged

The

Corp. has been
Columbia

Gas

tain

prospectus and

solicitation

subscriptions

the

stock.

The

tions

$10

per

share in the ratio of

one

new share for each 10 shares held.
The subscription offer will expire
Oct. 28.
...

'. Any member of NASD may

ob¬

Hulsebosch

Co.,

Cedar

including June 1, 1955, the
gradually
decreasing

Street, New York
doing business as a
Officers

are

bloated

pump

City, is

Hulse¬

premium

bosch,

thereafter.

W. A. McDermott, Vice-President;
and Anna A. Egenes, Secretary.

Pacific

Gas

and

Electric

Co.

President

Treasurer;

and

building

into

more money

but

GRACE NATIONAL BANK
OF NEW

YORK

HANOVER SQUARE. NEW YORK

higher-priced

merely

Statement

Then there is the government's
price program for farm products.
is

of Condition, September 30, 194#

important

any

prices,

the

government

pro¬

vides support despite the fact that
lower
food
prices
would bring
substantial relief to many

American

RESOURCES

upon

losses

absorb

incurred

ment.

the

also

will

the

penalized

the

that

and

will

work

course,

natural

bring about

31,657,323.70

1,210,000.00

43,346,858.56

forces
a

5,041,383.25

21,832,583.23

Stock of Federal Reserve Bank

Customers'

180,000.00

Liability for Acceptances

Accrued Interest and Other Assets

912,120.03

327,121.56
$104,507,390.33

LIABILITIES

that we
stages of the boom

in the last

are

heavy

past practically all of the
price support programs have led
to
overproduction
and
chronic
surpluses.

possible, of

U. S. Government Securities

by the govern¬
long
run,
the

will

Brokers, Secured

Slate, Municipal and other Public Securities

the

It is

Loans and Discounts

taxpayers

Demand Loans

Instead,

having paid
record
high
prices for potatoes and the like,
consumers

Cash in Vault and w.ith Banks

millions

consumers.

correc¬

they always have in the
Since
last
January
the

index of American farm commod¬

Capital Stock
Surplus

$3,000,000,00

....

7,142,165.87

_J,142,165.87

Deposits*

93,514,890.02

Certified and Cashier's Checks
Outstanding

Acceptances
Less Own

•

3,000,000.00

Undivided Profits

1,191,083.94

1,349,944.23

Contingencies, Interest, Expenses,

437,533.31

etc.

1101,507390.3 3

•Includes U. S. Government

2,221,717.19

2,541,028.17

.......

Acceptances in Portfolio

Reserve for

Deposits aggregating $2,608.048.44

ity prices has declined by about
6%

result

bumper

crop

DIRECTORS

Timmons-Poik

(Special

The

C. R. Black, Jr.

Financial

C. R. Black, Jr.,

ZANESVILLE, OHIO —Charles
Wintjen has become associated
with
Timmons-Polk, Inc., First
National
Bank
Bldg.
He was
formerly with Kahn & 'Samson
and

Herbert

Co. in New York

Oppenheimer
City.

for

by communicating

First Boston Corp., 100 Broadway,
New

York,

one

its branch

Pittsburgh, Chi¬

Cleveland, Philadelphia, Sain

Francisco

and

With
(Special

T. J. Welsh
(Special

The

Welsh

ORLANDO,
Lormann

FLA. —Allen

now

connected

Financial

Street.

now

associated

was

Byllesby &

Borland

Leedy, Wheeler & Alleman, Inc^
Florida Bank Bldg.

with

with
Co. and Betts,

Co.

Chairman of the Board,
Mercantile Stores Company, Inc.

J. Cuddihy

Vice-President and Treasurer,
Funk &? Wagnalls Company

Clark H. Minor
Chairman, Executive Committee,
International General Electric

''I--"'";''/

David Dows

William M. Robbins

New York

Vice-President
,i

Robert E. Dwyer
Executive Vice-President,
Anaconda Copper Mining Company

The

Financial

W. R. Grace

Griswold and

Company, Incorporated

of Daniel
of

Trade

F. Rice and Co.,,, Board
Bldg., members of the

New York and

changes.

Vice-President

Frank C. Walker

Chicago Stock Ex¬

Chairman, Executive Committee,
Comerford Theatres, Inc.

Ingcrsoll-Rand Company
The Grace

name

has been identified with domestic and international

banking and
MEMBER

Airways, Inc.

James H. Sharp

President,

M.
staff

Co.

Pan American-Grace

Kirlin, Campbell, Hickox li Keating

Chronicle)

to the

Vice-Chairman,

President,

President

D. C. Keefe

ILL. —Patrick

General Foods Corporation

Harold J. Roig

John C. Griswold

Cletus Keating

Joins Daniel F. Rice

;

Co., Inc.

■

•

Shea has been added

R:.

formerly

(Special

with

Robert

Company

F. G. Kingsley

Chronicle)

ILL. —Thomas

CHICAGO,

Chronicle)

with Goodbody

The

The Cuban-American Sugar

Hugh J. Chisholm
President, Oxford Paper Co.

Chester R. Dewey

Goodbody & Co., 105 West Adams

Washington, D. C.

Financial

CHICAGO,

Leedy, Wheeler

President,
Corporation

President

and

there¬
with The

David M. Keiser

President

Chronicle)

;

140

corpora¬

homes.

stock

for subscription to its
stockholders of record Oct. 5, at
mon

tion.

con¬

stream,
thereby
inflationary pres¬
sure.
Since the building industry
is now operating at capacity, lib¬
eral
lending does
not provide
additional
housing
accommoda¬

compensation payable

cago,

new

copy

participating dealers' agree¬
containing full information
with respect to this offering, the

its

provided

ment

offices in Boston,

the

System, Inc., to organize security
dealers to obtain subscriptions for
Columbia Gas System is offering
1,223,000 shares of additional com¬

now

and

Wintjen With

Board's

index, department
York City for the weekly period to Sept. 25,
change from the same period last year.
In the
an increase of 10% was shown above the similar
For the four weeks ended Sept. 25, 1948, sales
regis¬

For Columbia Gas Stock

Hulsebosch Incorporates

The bonds may be redeemed in
whole or in part at the principal
amount plus a premium of 4% to

spending
adding to the

New

First Boston Corp. Acts
As Subscription Agsnt

ural gas.

all bonds

outstanding, including this
issue, will require approximately
$13,952,000.

result

1948, .showed no
preceding week
tered

Almost all of the gas dis¬
by the company is nat-«

prospects here and abroad.

dropped below the volume for the

consumer

Federal

one-

Government

toward

and

past.

York

tributed

the ;

tion,

in New

financing

Federal

the Federal Reserve Board's index for the week ended Sept. 25, 1948,

by 1% from the like period of last year.
This compared
with an increase of 12% (revised) in the preceding week.
For the
four weeks ended Sept. 25, 1948, sales increased by 6% and for the
year to date by 7%.

plants.

max¬

by
overly generous provisions of
National Housing Act.
Easy

the

increased

trade

about

mortgages and

were

Department store sales

Retail

applies

approximately 58% was produced
in
its hydro-electric plants and
approximately 42% in its steam

substantial increase, stimulated

generally for
prompt and nearby delivery; many buyers requested that deliveries
be accelerated on current reorders.
Good quality merchandise at
a

billion,

addition the government

guarantee

area.

one-fourth of the farm mortgages.
Real estate loans have shown a

farmer

Middle West and Southwest 0 to 4, Northwest 3 to 7, and Pacific
Coast 4 to 8.

wholesale

out¬

lending

Federal
around
$10

third of the home

called

Total

loans

the

after

Regional estimates exceeded those of a year ago by the following percentages: New England and South 2 to 6, East 5 to 9,

while in

ity

demand for tele¬

consumer

inconsistency

amount

of
is

$36,733,401;

weakness in major farm commod¬

building materials and
during the week.
The consumer
was considerably below the level
"-r

for

last week

ago.

year

used
was

total

Whenever there

volume

for

major appliances,

moderately

There

ago.

vision sets.

nesday

foods

slightly

was

Consumer interest in furniture and household supplies
pared favorably with the high level of the preceding week.

The

increase

vegetable volume
previous week.
The consumer

the

fruit

week.

fractionally
preference for inexpensive cuts and

continued

was

The

in its territory.

July 31, 1948 were reported as
$195,803,818
and
gross
income,
after depreciation and all taxes,
as

surround¬

its

and

Of the total electric en¬
ergy generated by the company in
the 12 months ended July 31, 1948,

for the 12 months ended

reported

39 cities

Francisco

San

ing

Gross operating revenues of the
company

both in

gas

now

lending role
by the government itself.

standing
agencies

AGO

and gas services

imum annual interest

is to be found in the

played
RETAIL

greatest

electricity
having an es¬
timated
population in
1947
of
10,000 or more each, including
either

serves

meet prospective
increases in demand for electricity

meas¬

curb inflation.

which

program

large part

of northern and central California.

the

use

was

poses.

the end of the week.

construction

effec¬

tiveness of Federal Reserve
ures

one-

sale of the

to retire bank loans of $12
million and to finance in part its

designed

throughout

operates

the 1 money

delivery.
Entries of
continued in

market continued

wool

its bid of 100.03999.

recent

government loan stock

raw

bonds, Series R, 3V8%, due
1, 1982 at 100.517% and accrued interest yielding 3.10%.
The
group was awarded the bonds on <$>■

Buy¬

somewhat

bales during latest
week, against 71,200 during the week previous.
Registrations under the export sales program were
small, totalling
only 12.900 bales for the season to date,^compared with 82,921 last
{year.
Activity in cotton textiles continued dull, particularly in printcloths and sheetings. ...Prices for most constructions were
unchanged
to slightly lower.
•':! ..a-.-.,-.
in

Electric Co. first and refunding mortgage

The company plans
net proceeds from the

The CCC reported total entries for the season
through
17 at 215,243 bales.
This indicated total loan entries of 101,241

Business

headed by Halsey, Stuart &
public offering Oct. 6 of $75,000,000 Pacific Gas and

requirements, designed to tighten

good volume.

Sept.

nation-wide underwriting group

June

supply.

scarce

215,800 bales,

a year ago.

and

Co. Inc. made

construction materials

The

ro'se

Bank

program.

Total sales in the ten spot markets last week
compared with 155,800 the week before and

Halsey Stuart & Go. Heads Nation wide Group
Offering Pacific Gas & Electric Bonds

(Continued from page 16)

the

lard

quiet with, cash vla'reL^
bpntinuin^ to recede^ largely influenced
by further declines in cottonseed oil and
soy beans.
Butter prices
declined 8V2 cents for
the, week, reflecting increased offerings, heav¬
ier cold storage stocks and a
falling off in demand at retail.
In
was

livestock

(1463)

FEDERAL

commerce

DEPOSIT

for almost

century.

INSURANCE

CORPORATION

THE

(1464);

COMMERCIAL

Feai

Bank and insurance Stocks

FINANCIAL

CHRONICLE

Psychology From the Investors Viewpoint

(Continued from page 2)

JOHNSON

H. E

This Week—Insurance Stocks
This

has

week

attention
each year

of fire.'

result

and

Week

Prevention

Fire

designated

been

through a number of trade associations and civic groups
is being focused on the loss of property and life suffered

Board of Fire Under¬

estimates of the National

According to

writers, fire losses for the first eight months of 1948 amounted to
$486,464,000, a new high record for the period.
Considering the
possibility that fire losses will soon turn upward because of seasonal
This

million.
record

total

fire

of
the

exceed

and

losses,

likely to exceed $700

1948 are

considerations, losses for the year

if reached,

would

mark

new

tabulation compiled from figures of the National
Underwriters, shows the monthly esthnates of fire

The following
Board

losses

for

seven

year

Fire

the

five

past

together

years

with

period 1933-39.

the

average

1944

1945

1946

1948

1947

29,789 7 38 280
29.972

April
May —:

25,464

7 34,746

23 387

32,815

July
August

everyone's

1948

times

the

share of

_777

corporations

November

December

the

purchasing

lar

has

58,029

63,751

";s

56,545

59,256

54,706

is that many of the

49,357

50,955

panies

30 618

49,029

have

40,019

51,359

40,256

47,990

40,108
44,706

54,946

there has been

51.346

58,094

68,361

wherein

market

have

higher

comparison,

For example, during the past several years, fire losses have in¬
12.3%., So far in.'1948, the increase over 1947
is approximately 10.3% and in August, the estimated loss was less
than last year by 4.5%.
7

Such treads are important from the standpoint of insurance com¬
pany underwriting operations. If the period of increasing fire losses
to an end and a period

of stable-or declining losses is at
underwriting portion of the business after several years
unsatisfactory operations should again turn profitable.
the

:(
Some of these factors at work were reflected in the first six
months' report of certain companies. The
following tabulation from
A. M. Best Co. was compiled from the semi-annual
reports of seventy

•

SIX MONTHS' PERIODS ENDING
June 30

Dec. 31

1948

June 30

premiums written.
;
Net premiums earned.177:7
Statutory .underwriting results----—
Change pi premium reserve equity-—.

1947

$349.7

investment income..

investment

Federal

300.2

1S.7.

l—.

ratio

*Ratio

21.4 \

7;-

'.16.9

; 21.5
5.17

7 -^-5.8

2.3

10.6

56.2%
'

———

55.1%

64.3%

37.4

•—

37.7

38.9

93.6%

12.4

Combined
ii:

—31.6

4.1

—

♦'•Expense ratio

losses

premiums

earned.

92.8%

:,:*Ratio

103.2%

expense

halt

large

as
While the upward trend

great, as

was only about oneperiod over 1946 and

the- gain shown for the 1947

highey premium rates

insurables.

not

formerly and the

well

as
an
actual increase in
of fire losses continued, it was

rate

of gain in premiums earned
exceeded the increase in the loss account.
; As a result the loss ratio
declined from 64.3% in the first six
months of 1947 to 56.2% in the
compaiable period ol 1948. Premium
writings continued to gain at
a taster rate
than expenses and the expense ratio showed
a further
decline.

During

evidence
tun

July and August these
barring disasters such

and

1948 should compare

year

"buyers"

very

same
as

general trends were in
Texas City, results for the

favorably with

recent

periods.

competitive markets
the
important

point is* that the securities
has not discounted

ket

COMPARISON

19 New York

City

Talk at New School

3rd

speak

Circular

folio for Investor and
on

Request

Laird, Bissell & Meeds
Members

120

New

Bell

(L.

York

Stock

Exchange 1

BROADWAY, NEW YORK 5,
Telephone:

Scientific

BArclay

Teletype—NY

N. Y.

7-8500.

1-1248-^.9

Gibbs. Manager Trading Dept.)

the

Twelfth
at

New

Street, Thursday,

5:30 p.m.

lecturer in
current

Oct.

analyzing the
problems of the investor

and economist

war

likely to continue into the fore¬
future the demand from

seeable

the rest of the world,
South

particularly
Africa and Aus¬

America,

tralia,, for this country's products.

Although exports

and prob¬

can

ably will shrink somewhat further
the exceptionally high rate
prevailing in 1946 and 1947. they
will undoubtedly continue to ex¬
ceed other peactime levels.
It is
from

opinion that there is not likely
an
appreciable decline in
the rate of industrial production
in
the
foreseeable
future,
but

our

rather

that

the

postwar

boom

production is leveling off.

Credit May Be
Conclusion

past year has been

Our, analysis of the ten prin-»
cipal

fears

public's

the

mind

will not,

under

in the foreseeable future to

;

wilt

occur

all
that

of
a

the

food^ is

dicat© to
for

speculation

income-producing

That the Back-Logs of Or¬
World War II Are

(9)

The

merchandise

vacant

occurred

that

lines

war are

pipe

result of

being and have in several

instances

been

filled

with

working

ness

Fur¬

inventories.

good
Busi¬

size

is arriving at a more normal

position

competitive

many

Certain real short items

lines.

likely

are

be
1950,

through

many

Wrightsman toHead I
Fitzgerald & Go. Depl.:
Fitzgerald & Co., Inc., 40 Wall
New
York
City,
have-

Street,

opened

mu¬

nicipal bond
depart ment
th

under

momentum

management
of

Edward

Wrightsman.
Mr. Wrights¬
man

for¬

was

merly

man¬

of 7 the
municipal
bond
depart¬

ager

ment

such

Fisk

Har¬

economy

our

corpora¬

dustrial

der

Maintained.

high operating ratios un¬
more
competitive business

conditions.

(6)

The

That Inventories

gerously High.
Inventories
dollars

measured

since

dollars

prewar

marked
that

the

high.

New

orders-

)

;

are

have

•i

partments. He has been active in
the
municipal
bond
business
since 1934.
.,7
7

sustained at

or near

Co.,

areas

•

-•>

there has been

world.
some

the war devastated
and the war-injured coun¬

recovery

Joins

Cartwright Co. Staff

(Special

with the needs and de¬

Although

near

.'id*

>;•'

level of industrial produc¬

mands from the rest of the

record

also >

Wrightsrtian

Chicago,
as
manager
of the syndicate and trading de¬

combined

(with

value

be at

peacetime high point because
domestic demand re¬
sulting from Ine momentum of a
high peacetime level of economy

it is only

dollar

inventories would

of the large

times in

manner

prices at high levels),
natural

Not

its

depreciated since
very

Production May

tion is being

are

and

Dan

ere

pre¬

informed investment managers.

vey

the

and

tion

declines is not justi¬
proven

Brunei

Being Rapidly Filled.
;

under
allocation
such' as pipe for
natural
gas
line
transmission.
(5) That Operating Ratios Are However, the stock market in its
High and Cannot Be Reduced.
low ratio to appraised longer term
We believe that the fear that earnings of corporations has large¬
these high
operating ratios are ly discounted the competitive po¬
somewhat fixed in their character sition that business is arriving at.
and would be a hardship if future This relalive position is arrived at
business becomes somewhat
less now when the .country is in a
active
and
the
price structure prosperous active business condi¬

when

bonds,

ders Created by

ther, the yield on stock prices is
historically liberal as is the yield
on
discount bonds arid preferred
stocks. Earning forecasts are ade¬
quate to support higher prices.

past

choice of

carefully selected

are
anticipated and that
ferred amd. common stocks which
competitive business condi¬
must be continually followed by
tions are in the offing* '

rate that makes stock prices

been

easy

issues, but rather one for invest¬
ment

including the im¬
portant items of personal income
and liquid savings have expanded

had

common

profits,

for

income

and

the basis of timely and

Analysis of all of the factors in-,
us that this is not a time*

in¬

unlikely

foregoing
price

stocks

conservative diversification.

moderate

particularly

decline,

wage

seems

of
•

expected: that somewhat less lush

However, this

relatively attractive.

fourth round of

view

decline; that corporations
have improved their physical and
financial positions; that total na¬

appear

That

statements

huge

types of

the

bonds, 7 preferred

creases

periods, having been, exceeded in
the bull markets terminating in

tional

invest?
in continuously
supervised and well-selected
viding -that

ments are placed

less, feel that it is inevitable^ -U.7

<•

statement does not compensate

50%

7: J8)y That a Fourth Round
Wage Increases May Occur. '

in relationship to only three past

1946, 1937 and 1929.

Stock prices currently are high

course

given by A. Wilfred May publicist

these

from

there continues and

areas,

margin rule.. We. da mot expect
this change soon but,-neverthe¬

That Stock Prices Historic¬

ally Are at High Levels.

a
a

ion, after extensive research and
appraisal of earnings of a great
number
of / corporations,
that
stocks generally are selling, at a
low ratio to their future earnings
possibilities:
- 7?:v-K.:.
7 77:

West

Mr. Graham is guest

Germany,

the stock market has a great rise, tude of the
day, it is our opinion
it is - extremely improbable that
ihat funds invested at this time
higher margins would be required; will over the long-term result in
appraised as the- rate of earnings
in
normal
competitive business The more likely trend of margins benefits, both as to current income
years.
Therefore it is cur opin¬ is toward a reduction at sometime and to potential enhancement pro¬

Port¬

Speculator"

School,

various reguiat iens

reduced

Bank Stocks

"The

and

demands

injured
is

should carry on, in Sons, Inc., and
opinion", into the foreseeable
previou sly
tions have shown great flexibility future.
7'.'77: ;7; 7:/'*7;7; / y;7
with Barin the manner in which they have
(10) That the High Rate of In¬ cus.
Kindred

Benjamin Graham to

ex¬

rise
in prices but on an average is dis¬
counting the future earnings of
leading corporations at approxi¬
mately ten times (a low ratio).
This is what could reasonably be

times in the

Benjamin Graham, President of
the Graham-Newman
Corp., will

QUARTER 1948

mar¬

these

ceptional earnings through

fied,

EARNINGS

ex¬

share of
not likely to be
per

moderately
PRELIMINARY

such

of course, change the fear
psychology. Therefore, we must
their control, such as increased recognize.that these fears act as
bank
reserves,
increased redis¬ a restraining influence on security
count/rates. and loaning regula¬ prices and that the cloud over¬
tions.
Under recent act of Con¬ hanging the securities markets re¬
gress, bank credit can be further sulting from^these fears affords
restricted, however, as long as the values in securities that largely
demand for funds continues, bor¬ discount the'f uture.
rowers will be able to pay increas¬
Historically, when there have
ingly higher rates.
been so many important worries
The
principal
restriction
of overhanging the- securities mar¬
credit that affects securities prices kets, the
price level of securities
is
the
arbitrary
discriminatory presents an opportunity for ad¬
margin rules requiring 75% mar¬ vantageous investment. .'Thus, in
gin on listed securities.
Unless recognition of the cautionary atti¬

However

occur. 2-

future
at

to tighten bank credit through use

profit
the

•

That Bank

of, the

period of moderate¬
ly lower price structure and when

-The net premium volume
during this period was approximately
16% above the first hall of 1947. This increase

reflected

are

that

continue

agers over the

that

the fact that the purchasing power
of the dollar has had a rapid and

written.

premiums

products

normal

earnings

1947 and 1948

(4)

10.7

Dividends declared
♦Loss

245.9

45.8 7

' T7{

44.9

increased

taxes

'* 19.17

gains—losses^.—

270.7

77-. 7.7 7

$301.4

be¬

industrial nations

great

world

the

The record of the money man¬

This has resulted

obvious

sustained in

1947

$307.4

the

Further Restricted.

■

-millions-

Net

(7)

com¬

demand

likely to be sustained

the ,7 foreseeable
orders

value levels.

real selling cost

than

It is

ceptional

are

our

high lev¬
els, that inventories; can com¬
fortably continue at record dollar

"sellers"

their

such

competition.

creased at the rate of

been

leading

em¬

over

;

32,173
34,470
33,847 7 37 393
48,694
49,478

been

that

program are

sharp rise in coiporate earnings

50,840

opinion

new

Another factor that has caused

46.094

tries, it will be several years
fore

possible

de¬
mands for foreign aid and defense

of the dollar.

52,153

37,950.
34.153

comparisons show the average rate of increase is less than formerly.

Other

power

for

long as it appears that
ployment, national income,

natural after such deflation of the

purchasing

aside

set

corporations has
largely increased. Hence,
depreciated dollars
per
share which is only

earned

declines.

de¬

are more

7 40,998

companies.

extreme

74,236

leveling
off. The loss for August estimated at $49 029.000 is the lowest in a
year. In addition after a decade of rapidly rising losses, year to year

Net

been

Therefore, it is

time when the number

71,521

While the latest figures are large by any historical

•stock

suffered

have

price

of the dol¬

72,435

$292,186 $423,538 $455,329 $561,487 $692,635

is coming

improvements
such
as
schools, highways, etc. Moreover,
in many industries large reserves

nine

the

51,759

In recent months there have been indications that losses

power

7 44,240

28.645

Total

hand,

automo¬

and

public

ended Dec. 31, 1945. These
earnings, of course, are measured
in dollars per share and since 1945

ratios.

made

.equipment

biles, to say nothing of the con¬
tinuing delay in the building of

per

stocks of leading

34,054
34,096

21,446
23,715

railroad

two

53,252

7 19,900 ; 31,448 7 32,447

October

houses, commercial building

Earnings

earnings

average

common

34,090

32.706

20,926

September

■

mind.

approximate

20,550

—

will

20.525 7 30.555

-7777

June

$63,010

$49,808

from

by retailers, there

$57,180
64,247

$44,865
41,457

$38,572

February
March 7-77-7
_____

there

39.084 7 40,876

$27,867

Aside

countered slack periods of

econ¬

not been

000's

January

a
relatively stable
.V

of shares of these

-1933-39

omy.

cline at

7 Year Aver.

necessary.

spotty situations in industries
where
manufacturers
have
en¬
some

years

previous year's total of $692,635,000.

thus

are

Japan, France,- England, will be
buying able to domestically satisfy their'
is no evidence own demands, to say nothing of
of any great over-stocking of con¬ the demands that come from other
(3)
That Record Earnings of
sumers! goods or durable goods. war molested areas such as the
Today Cannot Be Continued.'
In fact, there continues a great East
Indies, China, Italy, Belgium,
The
question of "Can record
Holland and Denmark. In addition
earnings be sustained?" is one that shortage of rayons, steel products
sult

highs and large'inventories

record

fourth round of wage
increases,
thus forestalling a further spiral
of inflation. All of this should re¬
a

Thursday,* October 7; 1948

The

Financial

Chronicle)

OHIO—G. Web¬
ster Anderson is now with CartCINCINNATI,

wright & Co., Inc., Union Central

Bldg.'

'7v*V'>.■•'*'

\Jlfc

Volume 168

-v

THE COMMERCIAL

Number 4T40

FINANCIAL- CHRONICLE

with

ratings

comparable market
companies.

sions.

While

the

manufactured

Which

seemed do

companies, for
available,

gas

figures:

were

sell at about the

same

price times earnings ratio as those
of electric companies, this appar¬
ently
results
from
the
higher
percentage payout of earnings in
dividends

the stocks of the gas

importance
in the market's
appraisal of equity securities. In
this connection,
I found that 5
manufactured gas companies paid
in total dividends during 1947 an

companies

and

the

which yield plays

amount

98% of their
1947 reported earnings against a
payout of less than 80% for 5
electric-companies. The slim mar¬
gin of retained earnings empha¬
sized the seriousness of your prob¬
lem in raising capital requirements
through any junior equity financ¬

equal* to

speaking, it
issue addi¬

since, generally

ing

would be impossible to

tional stock, with the accompany¬
.

ing dilution in earnings -without

reducing, dividends. As contrasted
with the higher yields on both
the bonds and stocks of manufac¬
tured

companies, figures for
New York state, prepared by the
Rochester Gas & Electric Corpor¬
gas

ation,

reveal

decade,

that,

the

invested

rate

the last
earnings on

over

capital

of straight gas
companies has been from 1 to
2% below that of other utility
companies in that important state.
~

All of this might not be so seri¬
ous

it not for the

were

necessity

a substantial amount of equity
financing to raise the increased
capial required. As you know, in

order that

the

that

and

marketed

favorable

most

essential
debt

securities

rates, it

balance

between

equity

capital be pre¬
financial structure.
While it might not seem of itself
too important to pay % % more on
served in your

the bonds to be floated, yet even
that additional rate will be inade¬

quate unless
market for
amount of

have a reasonable
corresponding

you

equity financing, with¬

which
market your whole fi¬
nancing program might fail. I do

out

hot

need

elaborate

this

six instances of
G. A.

13th

Annual

Riding Club was held on
29, at 65
B r o a d way.

Sept'.

Gerhard
•<.

Struckmann,

.p of the Bank of
Manhat-

:y the
tan

Co.,

was

returned
office

the

President

p. of -

With

this form

affairs, Will deter-;
mine the; degree of success of your

industrial sales

not

ticular importance, therefore,

likely to have a high re¬
gard for the business; Acumen of
the industry in which such a con¬

the

re¬

vicious

stantial
build

the

acceptance
manufactured

that
securities

may,

some

eliminate

pendence

replace

instances be modi¬
excessive

' These

materially improved,

•

this

condition

Three;Reasons',.V;1, TTT

exist.

should

Control of Costs

••'

make* any usefi^ I" Coritrpl ever costs is agairi. a
suggestions as to -liow this cor-: subject to which you have unrection in public /ppinion can be;
doubtedly devoted very consider¬
Tin. order, fo

about, it might be

brought
to

look

into

lack of
I

cite

the

esteem

three

wCll able

for

reasons

thought. 'This
control
is
another way of stating the objec¬

the

previously noted,
often

reasons,

tive of

The first

is that the

industry.
glance,

This

gas

when

basis,

might,

indus¬

at * first

contradictory to the
that gas sales
are increasing and new plant
is
needed.
Nevertheless,
for
the
1930

to
1940, manufac¬
sales remained virtually
constant, and • it was during this
decade
that ;! the
opinion
was
tured gas

formed

the

acter of the

stagnant

lag

behind

with

hthe

result

the

char¬

come

than

business; and most of the
sion has
where

been

the

rates

classes
have

net

income.

Spiralling operat¬
ing Costa riiore than absorbed the
revenue gains of the
industry for
.

ratio,

that,

for

purposes

I will define

manufactured

during
21

the

expenses

and post-war years, the

in¬
war

operating

ratio, as defined, of manufactured
gas utilities has mounted rapidly
arid is still rising. It is this rapid
increase from the stable level of

60%

during

the

pre-war

years,

to - 75% or more at the present
time, (this percentage, I repeat, is
before general taxes and depre¬
ciation

which, if added to operat¬
; and
Mrs. Miling expenses, would produce at the
dred M. Butpresent time a ratio of around
;
ler,
of
Mc90 %) which is frightening to the
V). L aughlin,
investor, as he sees his proper
^f.Reuss & Co,,
share in the revenue dollar being
vind
Miss
spent before coming to him.
••
'V-

; the

and to

attention

investors

change.their heretofore all

gloomy

dustry.

;

opinion
>

of
,

•

your

sum

AND TRUST COMPANY

of NEW YORK
Main Office, 37 Broad Street

years,

out

the

September 30, 1948

•

the

Electric

post-war
level

years,

where

available

son

for

does

percentages

1946,

not

when

68.7

were

State and

war

while sub¬
have still left this ratio

stantial,

$136,041,365.98

>U. S. Government Securities

212,036,693.80

indus¬

try's operating ratios in 'the

Cash and Due from Banks

the operating ratios
companies, and that the

increases
and

RESOURCES

than

gas

CONDITION

Citing again the fact that there
competition between the gas

lower

STATEMENT

CONDENSED

little less than

1947.

for

manufactured
gas
and 48.2
for
electric utilities.) This comparison

plays the spotlight on the neces¬
sity for a better control of operat¬
ing costs by manufactured gas

Otfier

Municipal Securities

Securities

tin

Loans and Discounts

Customers'

Liability for Acceptances.

7,079,678.56

163,035,221.64

Stock of the Federal Reserve Bank

Banking Houses

15,120,144.43
T

1,533,509.22
660,000.00

2,220,617.01

Accrued Interest Receivable

....

Other Assets

•

,»

•

914,472.99

184,641.81

•

$538,826,345.44

utilities.
It

would
to

tell

this

ness

be
you

is,

presumptuous

whose busi¬
this objective

how

be accomplished. From some
knowledge of the utility business,
however, there are a few sugges¬

tions

which

LIABILITIES

men,

can

make.

Capital

$9,625,000.00

Surplus

12,375,000.00
22,000,000.00

One,

|G.

A third factor I cite is, to some

Cambridge; of
extent, a combination of the above
J. & W. Seligtwo but applies
directly to the

Struckmann

were

man,

elected

Presidents.

Vice-

comparisons which
the

electric

are

made with

industry.

Francis

You

are

Hoart,
of
competing with others for the in¬
office of vestor's
dollar, and when he sees
Treasurer
and
Miss
Dorothy an electric
industry with a more
Stewart, of Drexel & Co., that of favorable growth trend and lower
Secretary.
operating ratio, that is the place

Moore & Schley, fills the

William

Salisbury,
Union where he is
Securities Co., and Joseph Lands- his dollar.

berg,
Co.,

Brickman, Landsberg &
elected to the board of

were

directors.
Struckmann

recently announced

these

likely to invest

transfer

headquarters

required

correct

this

the

from

Riding Academy, Pelham Manor, rates;
where

ducted

the

drill

club

will

rides

hold

each

con¬

-Friday

evening,; beginning Oct. l.v

costs
need

and,
must
not

second,
be

control

over

reestablished.

elaborate

requirement,

made

cost

since

the

first

review

control

other

business, but in the utility field,
limited, perhaps, by the require¬
ments

uniform

accounting
practices as laid down by regula¬
tory commissions, improvements
in cost accounting appear to have
languished. I am sure you are
aware

of this and

correct it. .;

principal

are
club's ride condition
clear.
First,
the
the ring on present favorable growth trend
must be maintained at profitable
"West 67th Street to the Split Rock

the

dustry; Great advances have been

are

in Lower

confident,

Costs

also,

that

necessary to question
the traditional methods of opera¬

tion, both in the conduct of your
business and in the manufacture
your

the
and

ciation

Payable Oct. 1,1948

$30,972,324.54
,

275,000.00
868,731.50

Reserved for Interest,Taxes, Contingencies

Acceptances

3,848,877.13

$3,840,222.87

Less: Own in Portfolio
Other Liabilities

2,189,979.44

1,650,243.43
316,101.66

500,895,067.18

Deposits

$538,826,345.44
United States Government Securities carried at $10,994,347.18

pledged to

secure

purposes as

MEMBER: N.

public and trust deposits, and for other
required
Y.

CLEARING

permitted by law.
HOUSE ASSOCIATION

FEDERAL RESERVE SYSTEM

FEDERAL DEPOSIT INSURANCE CORPORATION

product. The progress of

manufactured
of

8,972,324.54

Unearned Discount

are

you

particularly

Dividend

working to

conscious Of the fact that, with
old and stable industry, it is

are

Undivided Profits

■'■'-"-'■T"; :/■.

Research

the

are

for the lack of regard for
manufactured gas securities, the

reasons

means

control of
operating costs generally, is a
further improvement in the cost
accounting practices of the in¬
necessary to the better

the

gas

American

companies
Gas

research

Asso¬
new

25 Offices Located

Throughout Greater New York

in¬

."V

utili¬

gas

war

cents

the

rapid
in the

tract

in¬

taxes.

the

Af.'. '

hounda^^

The Public National Bank

some

gross

jeopardize the return to the in¬
vestor. (The last direct compari¬

•are

percentage of total revenue
required for operating expenses,
excluding
depreciation and
all
Because

arid the possibility of profit iqTL'bri
sale. of gas to newrcustohiersr al).

too

and electric industry for the util¬
ity, investor's dollar, I point out
that the operating ratios of elec¬
tric companies are very materially

that little if any of the increased
revenue
has been carried down
to

the- imipef

diate improvement irr the volume
Of servicC Which you can render*

in emphasis, that the

return

will

inV

and,

dollar, to

revenue

such

been

some

half this

expan¬
of sales

the

dollar

reduced,

fell,

from

keep pace with the material rates
of
expansion in other lines of

that

wiped- out. Thus,

cases,

ties

any

say,

material cost,.the stability of
cost on ther basis ofCfixed

long-term t-contracts^

which " you- so

increases,

cost

investor's

severely

industry. Since then

done

mate¬

supplies ^promise;
able- to secure such

gas

you

ways

panded materially; but these sales
not

cost

this

dimin¬

manufacture
badly need.

can>be

supplies, the marketTraductionJm
raw

gas

May I

it is. true that gas sales have ex¬
have

Were

encouraging* in this
note Jhat / big trans¬
continental natural gas pipe lines
promise shortly to provide for you
arid economcial raw material for

with a high and
mounting op¬
erating ratio, rate increases, even
where they can be obtained with¬
out jeopardizing the competitive
position of the business, will al

condition

decade

costs. .It

circles

possible immediately
to
increase prices and preserve
the profit margin. On the other
hand, in
a
regulated business,

seem

known

increase

operating

Unregulated business,

rializes

"growth"

as a

low and stable

ratio. In

men¬

tioned
in ;, financial
literature,
concerning the manufactured gas
industry.

try is not considered

natural

ishing supply; have' imposed
jmiendbus burdens "on operating,
respect

vicious
,

is to * be kept
competitive level. Gas

oil prices, in the face of a

you

costs,

your

broken,; but only by the;;.type oiT
spectacular improvement; which

product
a

with

enable

without
which reduction, again, investor
confidence will be lacking.
•

a review of your op¬
erating statements reveals- that
the one prime requirement is a
cheaper raw material, if price of

end

equipment
will

which

reduce

however,

down at

obsolete

facilities

de¬

sheer manpower.
Important as these points are,

the

possible. You need to attract

investor confidence to permit you
to raise the amounts
needed to

companies depending largely on
prices of competing heating fuels, oil for the production of gas, have
there seems no valid reason why; been badly squeezed, as mounting

industry be

gas

facilities, without

new

tract this investor confidence will

not be

out

largely by hand, may justify fur¬
ther
adaption to machinery, or
fied

need

permit the

of money needed to

sums

the

you now
you

which the growth essential to at¬

operating

carried

were

which

Thus,

investor confidence to

dition prevailed. With the present:

investment program. If ,is of par¬

circles in

yourselves.

procedures

heating

substantially'-higher

in the past, where many

space

your

creases

Street

sales.

have- of

financial centers, where the
opinion of the local businessman,
based on what knowledge he may

of this discussion

commercial

being registered, with no increase
in net income therefrom, he would

companies, more and more of this
financing
will have to be
in
smaller communities, away- from

erating

Meeting

wage
rates,., the .t i m e -1 r i e d
methods which have been evolved

addition

space

the

The

costs.

this very success
spectacular gains in

any

The

com¬

to the potential investor is the op¬

the Board of Directors of the Wall

economical acquisition of the sub-^

the

gas

panies. It is pertinent to point out
here also, that with the dissolu¬
tion of many of the great holding

Re-elect Struckmann

than the m&rked increase''in labor

residential

point, for it is a frequent subject
1946. gnd 1947j
ft
jof. discussion and has received
considerable notice by your,state ,;.->A second, factor of importance

Wall Street Riders

find

exception, of course, is in the
heating field,; and to
a
lesser extent in industrial sales,
where the greatest potentialities
lie. It is necessary to point out,
however, that if the prospective
investor in a company's securities
should see
tremendous gains
in

manufactured

straight

natural gas seems to me to be the
crux
of
breaking through the

prohibits

have been recorded by
during the past decade,
which
only
two
were
by

nancing
A.

ities in the. '20s,

stock fi¬

common

of.

supplies

of this
'adequate

of saturation attained by gas util¬

for

need

program

securing

search, however, research in op¬
erating practices must also be em¬
phasized, if for no other reason

your

of equity financing, I find that just

stocks

common

V
this

face

prosecution

this
sup¬

literature indicates that you
are
fully conscious of the need.
While your industry is to be con¬
gratulated upon the high degree

commis¬

regulatory

!;'
the

electric

Federal

and

(Continued from page 4)

■

methods, is encouraging in
respect, and needs earnest
port.
;

■yrsy.

Market foi Manufactured Gas Securities

11465)-"53.

(1466)

THE

COMMERCIAL

in effect that the recent action

has

Tomorrow's

down
will

Markets
Walter

within

both

possibilities. Which

dominant

will

about

one

ably be answered in the next
days.

Whyte

Says—

Meanwhile readers

are

CHRONICLE

still

long of various stocks. These
5= By WALTER WHYTE =
are:
Alleghany Ludlum, 29-30,
Market on verge of new ad¬ stop 27; American Airlines,

Their

reaction. Stops now 7-8,, stop?(6^Loew's, 16-17,
All three are cur¬
important than ever. stop 15.
Lows of Sept. 27 a critical rently
flirting
with
their
stops.
Should any of them Oil of New^Jersey, 70-72, stop
level.
break through
they should hec 68 ^Standard Oil of Ohio, 25From the signs present - in sold.
*20, stop 24; Richfield Oil, 30*
• *
the past few days, the market
*
31, stop 28.
-_.V
looks like it is again headed
Last week I mentioned four
More next Thursday.
vance

for

setback.

The

question is oils

how far will it go, assuming
that it happens at all. I throw
in

qualifying phrase because
there
is
nothing set about
a

stock

the

as
likely candidates for
buying side. Before last

—Walter
[The
article

views
do

week's column got into
your
hands they started up and be¬

those of

not

necessarily

were

coincide

a super-government of brotherly love
reasonableness, Governor Dewey is, of course,
quite right. The imperialistic ambitions of the Kremlin

time gangsters. While we must confess to doubts whether
Russia is at this time prepared to push her efforts to the

point

happen the combina¬
tion indicates a change. - It is
up to the individual to de¬
direction

this

(Continued from first page)

n'-'

ket is faced with

"ifs."

"If"

would be

ing effectively

in the face of

week ago

day it would still be
sign.
;
*

•

little if

Mon¬
good

—

if it has

ever

deep division within its

own

ranks be¬

;
>

;

—

It is at this

time, too, that the leading candidate (or so
generally regarded) for the Presidency chooses to make
strong plea for a United States of Europe, about which so

Real

Danger

undertaking to promote a United States of Europe — an
easily cost us many billions of dollars

endeavor which could

he is
a

The real question is whether we are in
danger of passing
from the foolish idea of "One World" to another scheme in
which we fail to
recognize the difficulties and the hazards

and the "West"
to say nothing of
minor cracks elsewhere in its basic structure.

many

much has been said from time to time in the

quite convinced

are

anything else.

keep function¬
functioned effectively —

tween the "East"

good sign. "If" it
goes down, but doesn't violate
a

the lows of

>,;

the moment engaged in a painful effort to
mar¬

couple of
holds here, it

we westerners regard as moral
principles have
meaning whatever to Stalin et al. Nor do they regard
their pledged word as more than a device
by which they
may gain time or some other end they have in mind.
That it must in any event be honored is a
concept quite
foreign to their thought. They understand power, but

ponder these questions since the United Nations is at

From where I sit the

to suppose,

seem

that what

As We See It

change will take.
>

many

things

what

;

to make Mussolini and Hitler appear like small- '

appear

the

They are presented
the author only.)

quite evidently recognizes the utter fu¬

or even

this

that he

tility of hoping for

at any

those

with

of that fact.

Whyte

expressed

Chronicle.

fore the end of the week

time

markets; when various

termine

Thursday, October 7, 1948

three
points bring ourselves to believe that a Russian dictatorship could
buying levels. and would act just as did Fascist dictatorship. It has long
Had we gotten them I think been clear that the Kremlin has never had the
slightest no¬
I would consider
selling them tion of joining forces with the non-communist countries in
at present
prices because a any sort of world regime. The "One World" has vanished,
sharp advance in so short a or, rather, the mirage which we mistook for the "One World."
time under
present market There never has been a clearer demonstration of the recog¬
conditions cannot be ignored. nition of that fact than the rhost recent
proposals of Gover¬
Inasmuch as you did not get nor
Dewey, although the so-called Marshall Plan and all that
them, I suggest keeping your has developed under it and much else in our official policy
buying orders in awaiting a during the past year or two have scoffed at the old concep¬
decline. Here are the stocks, tion.
Regardless of the result of placing the Berlin situation
buying levels and stops: Pure in the lap of the United Nations, we are now back in the days
Oil, 30-31, stop 2$; Standard of power politics, and the Republican program is
eloquent

prob¬

few

FINANCIAL

two

and above

and substantial
without

past by indi¬

quantities of

accomplishing much

our

precious natural resources
than arousing the ill-will

lender is always apt to incur,
viduals who have usually been
particularly when loans are
regarded as dreamers of
trading pol¬
made a part of some plan to exert control over the borrower.
dreams. On the heels of this declaration of
policy by Gover¬
icy, a keen trader might do a
Should we fail to obtain a United States of
nor
Dewey comes word that a leading French military figure
Europe or some
little
buying on the first
other arrangement which would
has refused to serve under British
prove a powerful bulwark
leadership in an effort
break-through, average.^ his
j to organize a joint defense of Western Europe against the against the encroachments of Russia we might easily find
position at the lows of Mon¬ i
ourselves much weaker than if we had been more circum¬
encroachment of Russia, and that
following this refusal the
day a week ago, and provide 1
French Government has decided to withdraw its support spect in the management of our affairs.
himself with mental stops to
from the plan.
It is not always easy for the
clear out of all positions if
average American to
realize that he and his fellow citizens are
Of course, it may be that in time the common danger
those latter lows are broken
definitely "for¬
in individual stocks by more
eigners" everywhere in Europe. They are, moreover,
to which all western European countries are now ex¬
citizens of a young nation which is all too
than a few points.
posed will reduce distrust and animosity, although it
likely to be '
'
*
*
*
must be recognized that in some of the countries there
regarded as relatively "uncultured," and certainly lack¬
are
ing in understanding of things European. Any effort on
very substantial minorities which regard Russian
The bear also has a modus
our part to build western
Europe into a bulwark against >
aggression not as a danger but as a blessing. It is even
operandi in such a market,
a

matter of

though

his

call for

activities

risk.

would

He would

conceivable,

go short at present prices and
Watch those Monday's lows

come

Very carefully.

not

In the event
prices get down there and
firm up, he would cover.
If

ble

minor

even

ones,

drib¬

suppose,

into actual

that

being, but

hope that defense of
in

the

future

our own

living

some men now
a

Russia must be made with

may

'T';

United States of Europe

must say that

shores is not

become, dependent

upon

any

will

that

from

can see

from the above

of the market,

which

means

without

question "in the cards" from the

clerk,

Schwabacher & Co.
New

York

Stock

Exchange

San

Francisco

Stock

Wall Street

COrtlandt

7-4150

(Associate)

Trade

Teletype NY 1-928

Francisco—Santa

Officet

Fresno

Mr.

Division of the

Chairman

1944.

Woollen

membership

Committee

wa$

the Ex¬

the

Trust

ABA and became
Committee in

the

elected

was

Vice-Presi¬

Division

Director

his

advanced to Chair¬

was

Land

Bank

1943.

Since

and

served

1946-47.

year

President

during

the

1945,

the

Association

On Oct.

1, 1947, he

1942,

be also

may

be lost by glossing it

over.

measure

the

of most of

idea

eliminated.

Debate in the open, and voting

eyes

of the world

the

intrigues,

groups

were

the

powers.

among

major

The
is to be

come a

the

Fletcher
from

and

Joint

1935

the

State

Life

Woollen

was

Health

and

ap¬

Charities.

elected President in

served until 1933.

1933

From

was

Director

the

and

Past President

Indianapolis
He is

Fund.

ment

Community

trustee of the Na¬

long,

way

Fund,

having

to the board in

since those early

dream-like postwar day^ when many of us simply could not

Children

which he

•

iv—.

~
.•

'■

elected

Riley Hospital

Indianapolis,

named this year.

was

'IVi
u

been

1944; and a mem¬

ber of the board of

for

Speech

accepting the office of Presi¬

■

,'.7 '//J■■■

session

••
i

the

Convention

Sept. 29:

1931

Indianapolis City
Controller. From 1938 to 1942, he
was a member of the Indianapolis
Board .of School Commissioners,
serving as President in 1941.. He
1935, he

Woollen's Acceptance
; In

sociation, Mr. Woollen made the
following address at the closing

Mr.

1930,

was

and
to

and

We have,

Presidency. '.'•••'> ';V.v

dent of the American Bankers As¬

tional Health and Welfare Retire¬

oppose.

was elected Vice-President of
the
Association succeeding Mr.
Dodge,
who was then
advanced - to the

In¬

logic of events is difficult to
hoped, at least,

January,

Company of Indianapolis.

Public

Aroused at Length?

Vice-President

pointed to the-Indianapolis Board

before the

powers

board

was

Director

surance

to take the place of the bickering,

"deals"
~

,he has been
Vice-President of the Indianapolis
Clearing House Association. He is

■

said, at least by the idealist, and it used

in substantial

the

1948.

but nothing can be gained by blink¬

—

flicting interests of this globe. This organization would
be quite "democratic," one country being substantially
equal to another, and cliques, alliances, "understand¬
ings," whether regional or other, and all the parapher¬
nalia of world politics of the past being subordinated or

Barbara

Monterey—Oakland—Sacramento

1943,

ecutive

and

man

New York 5. N. Y.

Private Wires to Principal
San

with

elected to

dent of the Trust Division in

Stock

Exchange

Chicago Board of
14

identified

Trust

Director

Members

New York Curb Exchange

1920.

Company
since
In 1935, he was elected

bank.

influential public figures, that the United Nations
would in effect develop into a sort of a world govern-'.;.,
ment which would restrain, control and direct the con-)^

President

our

Orders Executed

class

that time.

first.

very

being

Fletcher

Russia, at all events

It used to be

Pacific Coast Exchanges!

the

To say that it has now come about is not
necessarily to crit¬
icize any individual, any government or any
party—outside

Securities

all this may

ing the fact and much

Pacific Coast

Yale

be, the fact is clear enough During World War I, he served as
Second
Lieutenant
in
the
73rd
this suggestion of Governor Dewey and virtually all
Field
Artillery.
He started his
which now dominates our foreign policy is deeply in¬ business career in 1920 as a bank

But however

was

You

skill than

(Continued from first page)

About Face

through those

that I have covered both sides

ABAHolds 74th Annual Convention

such

lows, he else
could be reasonably safe in consistent with the
notions which some years ago were so
believing that the entire mar¬ widely disseminated under the name and style of "One
ket was going down. ~
World." This change that has come over the face of things
.

much

have been exhibiting.

ardently

now, nor

realization.

they don't firm and certain
stocks,

something in the nature of

see

"I
you

\vVO.A".

Jr
acknowledge1 the

honor which
have conferred upon me, and
sensible

the

responsi¬

bility which it involves.
"The

American

ciation

has.

through

Dodge

T h

and

That

for good

given

can

has

pression to what

done
been

in the

formality

cir¬

anti-inflation
by President

has

fluence

Assor

creditably

difficult

vigorously "

him

things.
there

launched

program

cuted

year

cumstances.

Bankers

' come

many
an

in¬

economy,

doubt.,
and

prose¬

has

public

ex¬

was on

the minds

jYolume 168
and

Number 4740

consciences

THE * COMMERCIAL

thoughtful
bankers across the, country*.
It
'has brought a new unity to those
of our calling. It has been favor¬
ably presented to the public by

Bankers

Association

FINANCIAL

CHRONICLE

(1467)

the

and

American Bankers Association. He
has served as Chairman of the
Federal
the

Legislative Committee of

New

Jersey Bankers Asso¬
put ciation, as Treasurer, Vice-Presi¬
record
the
capacity of dent, and President of the Asso¬
banking for self-discipline. "
//; ciation. Since 1941, ho has been
/ "To Joe Dodge I have been of¬ a member of its Executive Com¬
an

approving

press.

has

the

ficially-; devoted, and to. him J
"/personally devoted.
At

remain

inconvenience to himself, he
has gone out of his way to extend
some

to the Vice-President.

T shall

have
To

cessor.

the

was

you

have

over

the

many

intimate
"We

i^ear

suc¬

who

one

has given faith¬

banking.

into

from 1936 to 1948 and served

knowledge

bring forth, but

be reasonably certain that its
perplexities will be no less than
of the

past year.

We know

that

present conditions dictate a
continuance of the anti-inflation

program.

know

that

what¬

ever

the developments of the year

may

be, they will involve

ous-points

numer¬

contact- with

the

various branches and departments
of government and with that vast

personnel.

ernment, let

dealing

with

gov¬

act as representa¬
tives of business interests but con¬
us

Bankers

As¬

Chairman

National Bank Division from 1941

William

Marcus

Frank

/■

King

1943, and as President of the
Division in the year 1943-1944.
Frank P. Powers Continued

Dr.

Nadler, Professor of
New
York University,
York;
Gwilym A.
Price,
President, Westinghouse Electric
Corporation, Pittsburgh, Pennsyl¬

Treasurer

Powers, who

tion,

native

elected

Mr.

re¬

was

Associa¬

vania; John Lawrence McCaffrey,

Stillwater,

Powers

President, International Harvester

first

was

this office at the ABA
Convention in Atlantic City, New

Jersey, Oct. 1, 1947.
Early in his infancy, his family
moved to Mora,
Minnesota, where
Mr.

Powers

schools.

attended

After

the

father, he carried
farm

Army

public

death

his

the

family

entered the

until he

State

the

United

the

Summer

1918.

Trust

sition

cashier

the

Company,

Rochester, New
York;
Preston
Delano,
Comp¬
troller of the Currency. Washing¬
ton, D. C.; Maple T. Harl, Chair¬

Upon his discharge from the
army in 1919, he accepted the po¬

admin¬

new

istration, I do claim some sense
taking
advice.
I
know
many sources/of good
advice in
about

the

American

tion.

You

may

will

sources

.."We

Bankers

Associa¬

that those

sure

tapped.

have/an

>,:/;///,'/

honorable

tra¬

dition; we have an able and finespirited staff; and we have a
membership full of talent and
zeal.

Thankful for these

pledge
duty."

you

resources

attention

Elected

t
•

Association

Quamba

rard,

•

State

Kansas,

tending high
From

1917

1914

the

banking
Gi-

while

that

1919, he
in

at¬

city.

served

Finance

De¬

partment of the U. S. Army. Re¬
turning from military service, he
a

Kansas

aminer in 1919.

the

ex¬

1919, he

First State

Cherokee, Kansas.

From 1922 to 1935

1928 when he
and

bank^

Later in

became cashier of
Bank

state

cashier

was

(except 1927-

Vice-President

the- Citizens

Na¬

Bank,
Okmulgee, Okla¬
homa), he was national bank ex¬
aminer in

the tenth, eighth, elev¬
enth, and second Federal Reserve

districts.
was

elect¬

ed
Executive Vice-President of
the First National Bank of Pater-

Paterson,

New

Jersey,

and

was

mittee

He is

Council

and

from

times.

member

ways

Campbell

dur¬

served

currently

several

Committee.

graduate of the

Banking,

The

Graduate

conducted

Bankers

Class of 1947.
New

Convention

building
foster

National

marily

elected

Presidents

and

Section:

the

State

President

government

furthered

subsidies

government
an

substantial

Executive

Council

National

Bank

June

Officer, Bank of America
SA, San Francisco/ Cal.;

and President of State
Association

Section, Paul W. Albright, Gen¬
eral
Secretary, Savings Banks As¬

of new bank
holding com¬
panies, and to require the separa¬

V',.'/.t:T..„, ::// -',/ ',./

tion

substantial

from

such

companies

1, 1946, he became Chairman
Chief

Executive

Officer

and

the

"Therefore

the

officers

experience in this field reveals the
acute

difficulty

the prices of houses to

thb

people

who

point

need

Pumping more government
credit

holding

the

State

interest, in keeping with sound
banking and in conformity with
the

established

principles

Proceedings

consolidated institution, the First
Paterson National Bank and Trust

Company.

working
of

the

Jersey

Association

into: building

resolution

groups.
the

OF SEPTEMBER 30,

1948

liabilities

$ 71,135,094.10

Deposits

./.

Unearned

16,137,416.89

19,557,546.66

Demand'Loans/..

19,080,547.41

Time Collateral Loans
•:V Bills Discounted

Banking Houses
Customers'

Liability under Acceptances.

Other Resources

1,458,356.96
860,336.01

.........

142,187.50

.....

$3,479,185.64

Acceptances Held in Portfolio

2,800,766.18

678,419.46

57,648,285.49

/.....

Accrued Interest Receivable

Acceptances Executed
Less:

82,035,805.23*
v

$250,488,876.11

5,306,972.33

.....

Discount..............

Reserve for Dividend Payable October 1, 1948

(Includes United States Deposits $4,713,597.11)

97,875,403.31

2,838,554.23

401,822.87

....

...

$5,687,500.00

'//

;

(par $20.00)

Surplus.

;

10,312,500.00

Undivided Profits

......

16,000,000.00
2,473,474.16

18,473,474.16

594,472.44

130,623.05
..../(

Capital Stock

Reserves.

•

<►>

•

»•..«

$274,569,321.89

°.

2,467,671.69

«.

$274,569,321.89

♦Reserve in the amount of $674,657.79 has been deducted from the total Book Value of Loans.

and

Because

Corn

National BanMnd Drvst Company
-

maintained
and

Statler

PHILADELPHIA

Hotels; and some of the division
meetings were held at other hotels

city.
Among the speakers at the

Established 1858

division

meetings

MEMBER

gen¬
are

FEDERAL

DEPOSIT

INSURANCE

CORPORATION

this

adopted at Boston

Other Securities

convention, joint

were

Book-Cadillac

and

1937."

in the

eral

the

Mr. Peterson has been active
in
the
affairs of the New

Bankers Association

Accrued Taxes, Interest, etc.

New

committees, commissions, councils,
size

company

will be in the public

expressed

money

easier

bank

American

them.

such

legislation

The Convention

the

this

financing

Association are hereby directed to
housing needs of the nation, use their best efforts to
obtain
especially those of veterans. Our prompt enactment
by the Congress
the

Resolutions

headquarters

all

non-banking activities.

State,*Cou n ty4 Municipal Securities 3,420,129.77

York, New York City.

and

the

tion

taxa¬

Regarding housing, it was stated:
"Banks of the country have had

$169,010,497.41
•/,

Bank
Division,
King, President, Cali¬
Bank, Los Angeles, Cal.;

Upon the consolidation

Paterson

legis¬

"The Association therefore urges

the

of the First National Bank and the

effort to

agreement

the nature and content of

policy at French Lick, on April 20,
1948, which supported the princi¬
ple of such legislation.

that

through

'resources

U. S. Government Securities.

State

Convention

met

where they are beyond the reach

Cash & Due from Banks

only .be

tion."

the

interested

government

can

lil/lj'STATEMENT

Presidents

Division, H. M.
Bardt, Vice-President and Senior
NT

huge

are

in¬

pri¬

and

that the Congress take prompt ac¬
especially sensitive to tion designed to
place under effec¬
the
inflationary
threat
to
our tive
supervision
bank
holding
economy carried in the payment
companies, to regulate the crea¬

"We

present

President of Trust

Trust

Board

other
inflationary influ¬
against the public interest.

ences

fu¬

are

are now in prog¬
the Federal Reserve

between

the

Bank

Frank

"Conferences
ress

School

Division, William
W. Campbell, President, National
Bank of Eastern
Arkansas, For¬
rest City,
Ark.; President of the
Savings and Mortgage Division,
William A. Marcus/Senior VicePresident, American Trust Com¬
pany, San Francisco, Cal.; Presi¬
dent

due

spending 'which

spending
and • the
bureaucracies which

company

Association/

were

Divisions

Association

necessity for restraint in

government

they

holding

Association adopted a statement of

seed

bank

Division

following

four

banking

companies for the
appropriate and ef¬

legislation.;

meeting the
crying demands for new housing
without at the same time forcing

beyond

holding

enactment of

"The

"As citizens bankers also recog¬
nize the

maladjust¬

largely

are

part of
banks and

lation id be proposed.

in redistributing the debt
through the sale of savings bonds.

our

bank

fective

the

agencies,

the

are

causes

control of

mittee, its Executive Council, and
Finance

"The

flation

member
of the ABA Administration Com¬
its

economic

which

interest

government

arrive

program

ture depressions.

Nominating Com¬ Z
Minnesota

and

ments

general

the government's anti-inflationary

carries with it social injus¬

tices

Sessions, which
following year was advanced
began on Monday, Sept. 27, with
Presidency of that institu¬
tion/: In 1942, he assumed the title meetings of the four divisions of
the
Association, was preceded on
of' Chairman as well as that of
Sunday, Sept. 26, by meetings of
President.
to

Bardt

agencies and others in

nomic upsurge has been inflation.
The price level is rising, which al¬

becoming

President in
a

Executive

1941-1944

sociation

1936, Mr. Peterson

son,
the

ing

member of the

fornia

tional

ABA

the

Bank of

school in

lieutenant

became

1941, and serving
1942-1943.
the

Farling-. the

the

Division,

Vice-President of the Division in

was

Mr. Peterson began his

career

born

was

ton, Kansas.

Peterson, who

Vice-President

Bank

American

Vice-President

F. Raymond

elected

State

F. Raymond Peterson

H. M.

the effectiveness of this program.
"Bankers have also supported

the

Albright

Company, Chicago, Illinois; Fred
Kent, director, Bankers Trust
"Over the past year organized
Company, New York, New York;
Dr. Kenneth McFarland, Superin¬
banking has held many meetings
tendent of Schools, Topeka, Kan¬ over the
country to study bank
sas; Frank C. Rathje, former Pres¬ lending and find ways to elimi¬
ident of the ABA, and President of nate such
lending as may contrib¬
the Chicago City Bank & Trust ute to inflation and has
sought to
Co., Chicago,
Illinois; John W. educate both bankers and custo¬
Remington,
Vice-President
and mers in the wise use of credit.
Trust Officer, Lincoln Rochester The trend of bank loans has shown

stantly with duty as trustees in State
Bank, Quamba, Minnesota,
sphere for the public. Let us a town seven miles
Deposit Insurance
from Mora. man, Federal
be
prepared to express and to In
1922, he was elected President Corporation, Washington, D. C.;
document
our
M. S. Szymczak, Board of Gov¬
opinions and, if of the bank.
In 1932, the bank
heed be, to assert our rights vig¬
ernors
of
the
Federal
Reserve
was moved to Mora and the
name
orously; but let up approach gov¬ was
changed to the Kanabec State System, Washington, D. C.; and
ernment with minds open to an
the retiring President Joseph M.
Bank.
Mr. Powers has been its
understanding of
its -problems. President ever
Dodge.
since.
/
At the closing session, the Con¬
By so doing, we shall open minds
Mr. Powers has taken a promi¬
to an understanding of our prob¬
vention adopted the report of the
nent part in the activities of the
lems.
■.
■. //> ,■,'?>V
Resolutions
Committee
which
//vu/ ';/• American Bankers
Association; he
"I join with you in facing the
covered
the
topics of inflation,
was elected its Vice-President for
plain fact that today our Associa¬ Minnesota in
housing and bank holding com¬
1935, and served as
tion passes from an administra¬
pany legislation.
Regarding infla¬
a
member
of
the
Organization
tion of greater ability to one. of
tion, the report of the Resolutions
Committee in 1936 and 1937.
In
less ability. That must be the oc¬
Committtee stated:
1939, he was elected a member of
casional experience of every or¬
the Executive Committee of the
"One penalty of this great eco¬
For

public
policies
brought
about makes the situation worse rather
through the influence of pressure than better."
groups both in Congress and in
Concerning the controversial
government administration.
question of Federal regulation of
"To the end that the bankers in
bank holding companies, the Res¬
their
own
business
may
avoid olutions
Committee
reported as
adding to inflation we pledge our¬ follows:
selves to a vigorous program of
"The
Association recognizes a
education and action.

Finance,

New

elected Treasurer of the

Minnesota.

Marcus

our

ganization.

Paul

Frank P.

may

those

American

Association

new

little

may

the

its

of the Executive Committee of the

wel¬

relationship

1942-1943.

year

sociation, he served

counsel.

enter

with

what

elected

years

him

m.y

Vice-Presidency,

just

service

come

td accord

member of the

Clearing House Association

erson

I trust that

grade

treatment

same

ful

Executive Committee of the Pat¬

courtesy and consideration President in the

every

the

mittee.

(1468)

THE

COMMERCIAL

FINANCIAL

CHRONICLE

Thursday,-October 7, 1948

Indications of Current Business
The

following statistical tabulations

shown in first column

are

cover

either for the week

month ended

Latest

AMERICAN IRON AND
Indicated

steel

operations

(percent

Equivalent to—
Steel

ingots

■

•

Crude

oil

Crude

runs

Kerosene
oil

Gas

(net tons)

■

Oct. lo
'

•

stills—daily

•,! i"'i

output

Residual

Sept. 25

(bbls.)

i5,343,100
§4,789,000
§15,i00,000
§2,194,000
§5,997,000
§6,380,000

fuel oil

(bbls.)

Revenue

freight loaded

Revenue

freight rec'd from connections
'
■">
.V '

(number

gas

5,196,00C

Natural

5,290.00,

Manulactured

§15,023,000

17,722,000

16,501,00C

§1,934,000

2,165,000

CIVIL

CONSTRUCTION

ENGINEERING

7,491,000

6,136,00i

8,818,000

8,580,00(

§79,200,000

95,504,000

82,472,00c

§24,613,000
§59,567,000
§36,808,000

23,281,000

22,829.00C

Domestic

66,425,000

60,406,00c,

Natural

70,853,000

56,777,000

907,971

909,733

1,495

Mixed

715,334

700,591

92,459

ENGINEERING

—

construction

Private

Public

and

_____

$128,139,000

Sept. 30
Sept. 30

municipal

$146,301,000

Bituminous

coal

and

coke

42,009,000

imports

SALES

INDEX—FEDERAL

products

60,385

74,443

gal¬

170,256,000

166,330,000

159,237,000

11,843,000

11,522,000

10,969,000
50,000

!
(bbls.)—

4,011,000

184.930.000

*181,282,000

14,040,000

*10,358,000

$647,385

■

CONSTRUCTION

URBAN

DEPT.

PERMIT

AREAS

\$699,657

130,241,00c

36,571,00c

Now

residential

74,557,000

24,563,00c

New

nonresidential

20,372,000

6,778,000

12,008.00c

Additions,

11.840,000

11,835,000

12,150,000

12,296,001

"1,228,000

1,171,000

1.282,00{

151,300

146,800

142,300

140,10(

Total

Month

—

Residential

SYS-

DEPT.

Aug.

*219,962

,% 170,197

96,142

etc
S.

*373,717

*105,978

94,009

*$1,719

$1,364

*1,320

1,042:

(millions):

1,355

(nonfarm)

building
!

inomarm)

"337

318

255

31(

5,448,554

5,460,609

5.469,539

AND

INDUSTRIAL)—DUN

BRAD-

STREET,- INC.

129

!_Sept. 30

101

and

nonresidential

garages

building

Farm

•

—

■■.!•
...

Institutional

and

Remaining
112

114
...

restaurants

Educational

types

260

117

...

Hospital
(COMMERCIAL

FAILURES

500

*331

■
"

Religious

4,934,851

*675

'.r

338

______

Warehouses, office and loft buildings.
Other

Oct. 2

'• y

690 ?,

t. 'i

Commercial

Sept. 25

$1,735
—

building

273,625

construction

$537,831

331,852

■219,391

J—

CONSTRUCTION—U.

new

Private

____!

alterations,

Industrial

kwh.)

000

178,951,000
3,223,000

VALU¬

THE

LABOR —Month

81,335,000

INSTITUTE:

(in

output

7,294,000
4,624,000

9,749,000

export

,,(bbls.)v-L— —~r

65,466,000

■'1,200,000

AVERAGE=100

ELECTRIC

Electric

4,425,000

—

and

Storcs,
EDISON

28,000

28,000
11,478,000

Imports

stock

177,880,000

171,196,000

(bbls.)
(bbls.).—

consumption—domestic

37,922,000

.Sept. 25

RESERVE

(bbls.

output

(bbls.)

58,294,000
•

.__—i.——Sept. 25

STORE

TEM—11)85-8!)

136,47®

56,718

EUR¬

183,067,000
oil

output
(bbls.)

Nonresidential
DEPARTMENT

1,815,348

147,343

July (three 000's omittedj:
All
building construction.—

68.609,000
48.020,000

—___Sept. 25

•

(tons)

2,026,261

1,804,368

INSTITUTE—Month

gasoline

LABOR

(tons)
(tons).

therms)

(bbls.)

MINES):

lignite

anthracite

Pennsylvania
Beehive

BUREAU

2,012,096

136,264

therms)_•_

output

BUILDING

(U.

OUTPUT

crude

Increase—all

$166,812.00(

59,530,000
-

—.Sept. 30

$100,303,000

20,589,000

COAL

2,084,864

therms)—

production

each

oil

ATION

.Sept. 30

construction

State

sales

domestic

BUILDING

NEWS-

1—1

construction...

Not avail.

—

Total

16,394

July.

Benzol

729,070

gas

PETROLEUM

lons

RECORD:

47,998

11,382

Month

■__

—

sales

gas

AMERICAN

937,95*1

,____Sept. 25

cars)

Ago

43,557

2,022,00.

§6,401,000
§6,025,000

Sept. 25

(number

therms)

5,682,000

Indicated

cars)

Year

Month

1,891,832

ASSOCIATION—For

5,528,850

RAILROADS:

,'ii

GAS

gas

Refined

AMERICAN

52,937

August:

Crude

ASSOCIATION

Month

aluminum—short tons (end of July)

*5,294,350
§4,680,000

§61,884,000
§37,326,000

Sept. 25

Latest

July—\

of that date)

1,681,700

Total

Sept. 25
Sept. 25

—_—

are as

MINES)-—x

primary aluminum In \lie U. S.

§25,055,000

Sept. 25

(bbls.)

1,703,300

tons)—Month

§78,669,000

Sept,25

Sept. 25
oil output

output

1,737,600

average

(bbls.) at
Gas oil and distillate fuel oil
Residual

96.1

short

(in

Total

gallons each)

of 42

Kerosene

Production

Ago

94.5

(BUREAU

AMERICAN

Sept. 25
Stocks at refineries, at bulk terminals, in transit and in pipe lines—
•*
Finished and unfinished gasoline (bbls.) at—
Sept. 25

ALUMINUM

month available (dates

of quotations,

cases

(bbls.

(bbls.)

oil

fuel

1,757,400

Sept. 25

distillate fuel

and

96.4

'■

v'"

(bbls.)

output

97.5

Year

or,

Stocks of

output—daily average

Gasoline

Ago

Oct. 10

PETROLEUM INSTITUTE:

AMERICAN

Month

Week

that date,

castings

and
••

capacity)

Week

STEEL INSTITUTE:

Activity"

production and other figures for the latest week

■'

construction

Vr!! A1;

*90

*21

;•'•■• /V

,..11

■

z~:

"l v',22;', .-..♦•"k!

■

*97

;

______

...

;:■:■/

'■'l

■,

130

*127

•

>•

Public
IRON

PRICES:

COMPOSITE

AGE

Finished

steel

Pig

(per gross

iron

Scrap

______

Sept. 28

3.75255c

_—___Sept. 28

ton)——.*_£
gross ton).
;—;—J___.

(per

steel

lb.)

(per

utilities

——.

$45.07.

\*$45,07

$44.61

$43.16

$43.1G

Sept. 28

$43.16

3.18925(

Other

$36.9:

Public

$31.It

and

public

(E.

M. J. QUOTATIONS):

Electrolytic copper—
Domestic

Export

Straits tin
Lead

at.!

(St.

Zinc

(East

York)

Louis)

21.225c

Sept. 29

23.425c

21,425.

103.000c

<103.000c

Hospital

•<

.__

80.00Ct

19.500c

15.000c

Military

.—Sept. 29

——

19.300c

14.8C0c

15.000c

10.500c

"'. Sewer

and

All

—Oct. 5

1__.

—____•

100.70

114.46

100.70

....

111.25

116.22

—Oct. 5

;—_.———r__

..Oct. 5

—Oct.' 5

corporate.,—

Average

100.72

BUSINESS

119.2

.Dun .&

H4.46

■■.<

114.46

Group

Public Utilities

110.52

110.70

114.8?

—Oct. 5

—

104.66

104.83

105.17

10^.09

107.27

107.44

109.6C

112.00

-Oct. 5

115.24

115.43

118.20

Bonds

-Oct. 5

2.45

2.23

corporate

-Oct. 5

3.10

3.09

3.08

2.92

-Oct. 5

2.84

2.83

2.93

2.77

Group..

Group
YIELD

BOND

Govt.

Average

DAILY

-Oct. 5

116.02

Utilities

Industrials

3.13

3.46

3.44

public

3.32

3.31

,»1Z

*14

190

*169

149

—_

32.

...

'60

6,723

7,690

8,055

$29,726

'■

(NEW)

INCORPORATIONS—

Inc.,

month

August..•

INVENTORIES, DEPT. OF COM¬
of
July (millions of $i:

MERCE—Month

8,048

3.06

2.8f

FACTORY EARNINGS

AVERAGE

2.89

Oct. 5

398.2

415.6

2.91

$53.86

'2.88

*56.48

52.5S

49.77

*49.50

45.75

..!'!;■.
!

manufacturing —...
goods _!_•__

Durable

goods

—

$49.21

Hours—

2.7'

421.0

*$53.08

57.33

DEPT.

".■"v, "!'•.

Nondurable

$51,353

August:

•

All

manufacturing

Durable

INDEX

13,616

HOURS—WEEKLY

ESTIMATE —U.

LABOR—-Month

Earnings—
All

AND

8,011

13,597

Retail

3.1;

.Oct. 5

Group

COMMODITY

MOODY'S

enterprises—

...

Wholesale

3.32

3.33

-Oct. 5

Group

3.14

3.47

-Oct. 5

Group

-3.14

-Oct. 5

Public

service

development—

AVERAGES:

Baa

Railroad

$30,100

and

Manufacturing

2.69

-Oct. 5

MOODY'S

;

„

$51,745

—Oct. 5

Industrials

——

Bradstreet,

BUSINESS

107.27

Oct. 5

—

>■■■»

•

.,92

117.61

—Oct. 5

Baa
Railroad

A, 322.

V. !;i:,

103.9"

114.6(

111.62

116.41

other

116.41

111.44
■--

123

...

water

Conservatipn

AVERAGES:

!'______!

Govt.. Bonds

DAILY

PRICES

BOND

:, ' !

.*■:■

-'20

facilities—

public

nonresidential

naval

—

and

1.____

institutional

and

Miscellaneous

MOODY'S

v*;A^

.i_._

._!—.^

Highways

' t. "*399

■!;

145

■•

than

__•__!

—

other

All

103.000c

Sept. 29

——1.

(other

facilities)——

naval

Educational

Sept. 29

at__

St.

23.200c

...

at—

Louis)

23.200c

.I—Sept. 29

:
at

23.200c

430
.

—

building

Industrial

- • •

_T__Sept, 29

;

building.

military

—

York)

(New

Lead

relinery

refinery

152

207
•'

Residential
PRICES

utilities

Nonresidential
METAL

telegraph...

construction

233

-!»**.

...

Telephone

!' ■;■:

245

—

Railroad
.___

439.4

40.0

goods

Nondurable

——

!__________

goods

*39.9

40.7

—„—

39.3

*40.2

39.4

40.0

*39.5

39.5

*$1,332

$1,238

1.422

*1.406

1.313

1.264

*1.252

1.153

Hourly earnings—
.NATIONAL
ITY

Foods
Fats

COMMOD-

All

GROUPS—1935-39=100:

—

products

!'■■

238.9

244.8

242.7

213.0

222.2

267.6

267.3

265.?

Oct. 2

■

METAL

OUTPUT

—

Month

commodities.™

295.6

294.2

290.?

217.4

222.9

295.4

274.1

284.8

283.4

262.:

233.8

190.:

Ccpper

170.1

Oct. 2

.169.8

169.0

169.:

Gold

(in

fine

194.3

197.4

214.2

Lead

(in

short

187.4

159.1

Silver

235.3

226.6

Zinc

Chemicals

and

Fertilizer

materials

drugs

Oct. 2

187.3

235.6

Oct. 2

235.4'

157.5

_Oct. 2

149.8

155.6

142.2

Oct. 2

;

Fertilizers

155.3

140.8'
4

machinery

All

Oct. 2
—Oct. 2

—

combined

groups

146.0

1*14.5

222.4

(in

MOTOR

PLANTS

127..

FACTURERS'

213.:

Total

received

Orders

Production

Sept. 25

165,103

173,044

166,039

(tons)-.

—Sept. 25

188;i46

192,334

183,835

183,55"

Percentage
Unfilled

OIL,

activity—

orders

PAINT

Sept. 25

AVERAGE—100

PRICE

REPORTER
'

DRUG

AND

10?

._—Sept. 25

at—!

(tons)

358,586

386,808

344,469

NEW

437,55C

Oct. 1

143.9

144.6

143.6

All

TURE

Textile
Fuel

All

*474,556

349,409

*356,764
*116,780

261,158

motor

771

*1,012

1,765

6,723

7,690

8,055

farm

*169.2

168.4

156.2

190.8

190.1

189.3

184.7

187.8

189.9

187.8

177.6

Food

Sept. 25

187.9

188.2

189.9

186.2

Feed

Sept. 25
-Sept. 25
Sept. 25

146.7

147.2

147.7

140.8

Sept. 25
Sept. 25
—Sept. 25
—Sept. 25

products

materials

lighting
metal

and

Building

products

materials

Chemicals

allied

and

Housefurnishings
Miscellaneous

products
goods

commodities

July:

coaches—

INCORPORATIONS—DUN

INC.—Month
BY

DEPT.

August—s.-.

FARMERS

—

INDEX

AGRICUL¬

1909-July, 1914—100—As of

products

Crops

293

grain

Feed

Tobacco

137.8

137.7

137.4

115.0

171.8

*171.5

171.7

150.4

203.2

202.3

182.0

Fruit

132.5

132.2

123.F

Truck

147.8

146.8

131.9

Oil-bearing

119.3

120.3

118.4

114.9

Cotton

202.9
133.5

235

297

248

263

346

352

245

252

250

183

...

crops

Livestock
Meat

products

animals

•

282
343

materials

All

figure.

■

182.0

181.7

171.1

Sept. 25

158.3

158.6

159.0

151.3

Sept. 25

164.4

*165.5

164.2

*164.6

163.8

Poultry and eggs
Seasonally adjusted—

150,9

163.8
153.3

150.0

than

farm

tReflects

refinery strike."

182.4

products
—_—.r_—Sept. 25
than farm products and foods
Sept. 23

articles

products
other

commodities other

•Revised

Sept. 25

Manufactured
comodities

173

310

311

344

315

411

408

367

305

Semi-manufactured
All

181

172

...

crops

and

276

223

286

hay

grain

254,
~

227

—

and

286

236

...

grain

Special groups—
Raw

86,486

Unadjusted168.7

products

and

Metal

FROM
MANU¬

111,760

August,

Sept. 25
leather

SALES

(AUTOMOBILE

15:

Sept. 25

Foods
and

29,106

348,804

RECEIVED

Sept. 25

—!

products

Hides

46,526

461,335

NUMBER —U.

144.5

OF LABOR—1926=100:

S. DEPT.

commodities

Farm

2,758,516

*51,221

BRADSTREET,

Sept.
WHOLESALE PRICES—U.

►3,047,798

73,286.

201,168
;■

vehicles—1

BUSINESS

PRICES

INDEX—1926-86

FACTORY
S.

ASSOC.)—Month

180,644

*34,090

passenger cars
motor trucks

number

Number

(tons)

*161,911

23,090
47,092

♦75,561

183,397

2,922,449

_>■

tons)i—_—1

Number

ASSOCIATION:

PAPERBOARD

70,932
_______

ounces)—

VEHICLE

135.6

Number

NATIONAL

151.6

144.5

metals

tons)
tons)

fine

135.7

225.6

—

ounces)__

short

225.3

MINES)

recoverable

short

140.8

—

S.:

147.5

149.8
'

Farm

production

the

__Oct. 2

187.5

materials—

Mine

—

July:,

296.8

194.1

Building

—

(BUREAU

233.8

Miscellaneous

—

goods

209.9

—

!____—_____——

Livestock

$1,345

245.C

259.8

goods

Nondurable

232.f

205.6

——

—

Cotton

Oct. 2
Oct. 2

.___!—

—

oils

manufacturing

Durable

______—Oct. 2

——1

__;
and

Farm

ASSOCIATION—WHOLESALE

FERTILIZER

INDEX

effect

■
•

,i'

strike

California.

^Excluding

California

*.'•

*153.5

figures

153.2

which

unavailable

were

Fruit

Truck

♦Revised

■»

-«

(•

-Ml H

'ib

figure...
»

(<*

246

187

180

220

248

253

313

278

242

249

282

247

298

crops

Dairy products
Poultry and eggs

138.2
due

253.

v«

...

*»*

** t "

236

COMMERCIAL

THE

Volume 168» Number 4740

(in

facilities

credit

from

the

nearly

sharpest contrast to

other sector of the community).
The trend in general legislation toward greater
capital, profits, and free

(2)

and discrimination against private

on which
alleviation
change in
the law is needed; only a forsaking of the present apparent crusading
prejudice by the Federal Reserve authorities. As indicated in the
preceding preliminary paragraphs, such relaxation and "liquefication,'

most

The

important

well

most

point

likely

"Wall Street" can pin its post-'48 hopes is in the possible
of the present vital restrictions on securities credit.
No

(Continued from page 5)

holders
every

(1469)

CHRONICLE

FINANCIAL

help may be forthcoming by reason of a change in Administration
and in its legislative and administrative philosophy.
-

Observations
v;': V

.•

stringency
enterprise.

would

have far-reaching

rise,;. (A

depression in business
agriculture
might follow.)
(2) If bank credit is allowed to
continue its expansion, inflation
will get worse and worse (and ultimately interest rates will rise
very
high, also precipitating a
and

business depression).
solution of the

The

effects throughout the nation's investment

prob¬

wage

lem on money at work is one of
Surely the increasingly- community.
■ J
y."/'y'Vr
i'V
the
toughest
assignments now
applied application of rate-progressivism and of levies according to
In the field of taxation, it is fel't by many observers that the
the principle of ability-to-pay is confiscatory; and as a logical and
double taxation of dividends would he eliminated forthwith by a confronting the monetary author¬
ities.
These authorities are mov¬
practical matter, makes most risk-bearing by those having capital Dewey Administration. In the first place, the promptness of such
a
fruitless heacls-you-win-tails-I-iose operation.
Our taxation, in action is doubted by this writer, when, he recalls the complex ing Cautiously and it is fortunate
for the nation and for the world,
its impact against income, as well as capital profits, functions as a
accompanying problem of tax avoidance which must be taken care
at large that the Administration
most powerful element of corrosion of the stockholder's capital. For
of satisfactorily,
In any event, it is this writer's considered guess
example, as is usually overlooked, calculated from an actual net- that in the sphere of taxation as in the various above-indicated facets at Washington will be in more
income "take-home" basis the taxing' of dividend income at progres¬
competent hands from next Jan¬
of socialization and other media of attack on the investor class, any
uary
onward.
sive and high rates enormously narrows the spread between the
imminent gains will be but a temporary interruption ("rally") to
income-yield actually obtainable from stocks on the one hand and a secular long-term trend toward collectivization and other political
Corporation
Profits;
A
more

The important impact of taxation.

(3)

from

bank account

savings bond on the other.

inroads

purchaser of a common stock at
the Dow-Jones Averages' current yield of about 5xk %, might harbor
the superficial impression that he is gaining a differential of 3.10%
oyer the 2.4% income yield obtainable from long-term government
bonds. But this is to figure the increment gross, before tax. Actually,
supposing that our investor is a $23 000-income individual (without
dependents) and thus in a 50%-bracket; he will be increasing his
net income by only IV2 %, getting only $1,300 additional net increment
from a transfer of $100,000 into common stocks as compensation for
his risk-bearing.
'
•
1
'
For

example,

the prospective

tor is that this truth should be faced

»be

at least 25% into the "house
"kitty contribution" coupled with all of the
pitfalls of the market-place, greatly accentuates the tendency of
speculative operations to be single-track losing propositions.
into

turned

kitty,"

cash

without paying

And this 25%

Then too, the long-term holder of common stocks is being irri¬
tated, if not impoverished, by the double-taxation of his earnings,

blasted that "inflations are bullish for
During the 10-year interval, 1937-47, the cost of
living paid by the American investor has increased by 54%, against
almost

concept

completely

stocks."

actual decline of 10%

in the capital value of the stocks he pre¬

sumably would have held
Industrial

shares).

The

(calculated

bondholder,

the Dow-Jones Index of

in addition to being inflicted

with the higher living costs, would have suffered a decline of 16%
in the yield of the bonds he actually owned, arising from calls and
forced

refundings prompted by the falling interest rate.
plight is demonstrated in a studv appear¬

The stockholder's sorry

ing in the monthly letter of the National City Bank of New York for
July, 1948. Its compilation showing how individuals in various voca¬
tions

are now

better

or worse

off than in 1930 after

allowing for the

effect of income taxes and raised living costs en net income, found

ever,

out

(Continued fr om

crop
year.

setting

aside

part

of his

have

to use as seed for the next
When he uses this seed for

production it is capital.
putting MONEY TO WORK.
Most of us, however, find the
process of saving more compli¬

He is

not

save

actual

goods,

conversion

the

indirect

our

savings into actual capital may be,,
the net result is the same.
By

in drawing conclusions from

that

probable

reported

profits of corporations this year
(after taxes) will establish a new
all-time high record.
That state¬
ment, of course, refers to the total
expressed in dollars. It is an esti¬
based

mate

12)

thus

for

comparisons
often
controlling influence on

interim reports
public by repre¬

upon

made

far

sentative

To conclude

concerns.

that

profits are running at too
high a level merely because they
Despite such risks, I would like surpassed the totals of other years
to make a few generalizations re¬ is no more
justifiable than a simi¬
garding the wages of labor and of lar conclusion about wages and
money at work on a national basis
compensation of employees, which
during recent years, since 1929.
will
also establish
new
records
The rate of interest on savings this
year.
is the basic wage rate on MONEY
In
gauging; profits, they are
AT WORK.
Savings banks now sometimes
expressed as a percent¬
pay l%% to 2% on deposits. That
age
rate of return on invested
is less than half as much as was
capital.
Such comparisons now
paid some years ago.
with earlier years would be large¬
The basic rate of interest on
ly invalid, because of the infla¬
long-term government bonds is tion.
Balance
sheet figures" on
pegged at 21/2 %. Payments to in¬ net worth
or invested capital are
vestors in government bonds have
far
below the present replace¬
been held artificially low in order
ment costs, even, assuming that it,
to ease the burden upon the Treas¬
would be physically possible to
ury in order to finance the enor¬
replace
plant
and
equipment.
mous
war
debt.
Low.wages on
Wide
changes
in... the
general
money at work were gladly ac¬
price-level have destroyed the
cepted by our citizens as a patri¬ usefulness of
many of our statist
otic duty during the war.
The tics.
Adjustments to allow for
existing low interest rates have
this shrinkage in the dollar (or
been made possible only by the
he resort to other dataware there¬
the

further

cated.

page

selected

profits.

easily be made, how¬

can

figures labelled "profits."

Money at Work
farmer

corporate

found

Errors

of such investment principles and policies will be spelled
by the writer in esuing articles.
1

common

spur him all the
and methods in the

Details

like corn or wheat, but
they accrue to his corporation's tiil. and again when they rather a portion of our wages or
are paid out to him in the form of dividends.
earnings. Then usually some one
(4) The limitation oil even the gross dividends being distrib¬ else uses our money to~ buy ma¬
uted to the security holder. The difficulty of raising needed capital chinery or tools and equipment.
in the capital markets, coupled with high tax rates, is prompting Perhaps, more commonly, we use
corporate directors to withhold from distribution unusually large our savings or idle funds to pur¬
proportions of their earnings. This trend is reflected in a shrinkage chase the securities of some estab¬
lished company. In such cases we
in the proportion of their profits paid out in dividends, by 152 large
merely replacing some one
industrial companies, from 33% in the 1932-41 period to 57% in are
else's savings which were origi¬
1946-47.
nally used to provide capital goods
Stockholder Position Has Deteriorated in Inflation
for the company. No matter how
During the last decade the American stockholder has seen the

first

ably

realistically, and

embracing the best possible policies
management of capital.
to

The American

capital gains tax similarly inflicts a heavy penalty
on investors as well as speculators.
Its importance is often overlooked
in stock purchases undertaken to gain advantage froVn, or hedge
against, the impact of inflation. The cold inescapable fact is that,
despite wishful thinking to the contrary, market aopreciation cannot

commonly used measure of wages
of MONEY AT WORK is prob¬

property.

This writer believes that the pragmatic conclusion for the inves¬

conclusions

drawn.

setting aside a part of our current
production we make it possible to
produce more goods in the future.
Now, how about the wages of substitution of bank credit for
money at work?
Statistics of a investors' savings. Now the na¬
general nature are often mislead¬ tion is apparently confronted with
ing because they try to cover too a grave choice between two al¬
much ground.
There are always ternatives, resulting from holding
many
exceptions to
the rule; too low and for too long the wages
(1) If
sometimes, the exceptions pre¬ of MONEY AT WORK.
dominate and make
generaliza- j bank credit expansion is stopped,
reversed, interest rates will
tions impossible. Also, the dates' or

fore necessary.

this

also

should

instance,
be

;

made

allowance
the

for

growth of trie country,; Since
1929 population has expanded by
20%.
Plant capacity of many in¬
dustries was increased during and

(Continued on page 58)

that, taking the 1930 living standard at 100, the coal miner's position
was 191; the textile worker 139; the railway worker 122; the Con¬
gressman 75—with the stockholder only 79, and the bondholder trail¬

Chicago City Bank

ing at 38.

Since 1939 our national product has risen by 155%, national

income

182%, and wholesale prices by 71%. But throughout
that entire period the Dow-Jones Average of leading stocks has
advanced by only 16%. We have seen that even after price inflation
really took hold after the ending of ,OPA controls in 1946, followed
by two years of sharply rising general prices in commodities and
services, contrastingly stock .prices failed to rise to their levels of
June 1946, and are still 14% below them.
Personal liquid savings have grown enormously since prewar.
From 1940 to the beginning of this year currency holdings and bank
,

deposits of individuals and unincorporated businesses rose from $46.1
billion to $132.3 billion, or 187%. During the same period the market
value of all common stocks listed on the New York Stock Exchange
increased from $40.2 to $60.5 billion, a rise of only 50% so that per¬
sonal cash

reserves

now

.amount to 218%;

of the value of listed stocks

compared with only 115%

in 1940.
appears that the American investor has neither the wherewithall nor the inclination to use common stocks as a real inflation
It

hedge.

event,

any

equities do notr provide
inflation.
Y

HALSTED

must face the practical conclusion that
satisfactory vehicle in self-defense against

we
a

Finally, while there

may

million-or-so

stockholders

STATEMENT

the

nation,

their

importance and

proportionate

influence

is usually not the sole

source

of their support, in

citizenry dependent on farming, coal-mining,
occupations for their livelihood.
our

Another

arising

from

corporate

reason

the

for stockholder

various

factors

the other

impotence is their disorganization
from the separation of

resulting

ownership and control.
sjt

Possible Areas of Reform
The

and

contrast

f.. .".rVy

foregoing analysis forces us to the conclusion that the stock¬
holder's corporate plight is one of the situations which is not curable
merely through a change in the national government. But from the
''financial" .viewpoint, there do appear to be several areas wherein

of CONDITION
LIABILITIES

DEPOSITS:

hand and in Other

011

$22,402,423,60

Banks

Funds

Public

Municipal and Other Bonds'

States

United

235,500.20

War

ment

$94,056,641.29
Loans

and Discounts.......

Real Estate Loans—

Real

Estate

1,596,146.35

Real

Estate

Stock

Federal

1.00

Reserve

lor

Taxes,

Interest

280,373.93

and Insurance

1,000.000.00

Capital

Surplus

...................

1,000,000.00

United

Undivided Profits

744,134.87

Contingent Reserve

60,000.00
Interest

188,278.04

101,779,614.95
$101,860,986.98

Reserve

Lease....

Batik

Accrued

De¬

1,356,063.90
657,554.83

Agency.

Building

Bank

Etc.,

All Other Deposits

165,777.55

12,915,029.45
585,169.59

Bank

Tax,

posits

Guaranteed

Federal

tration

Adminis¬

2,616,809.79

Loans..

Participation

Insured

Ac¬

830,748.29

Federal Housing

Loans
^Federal Housing Adminis¬
tration Mortgage Loans...
*G.I. Mortgage Loans

*R.F.C.

Loan

count

Commerciill

Govern¬

6,522,676.98

Conventional
In du strial

$ 2,062,345.70

Securities 71,418,717.49

U. S. Government

are

income
to

Trust Company

RESOURCES
Cash

our

far less, if not actually negligible. An important reason
for their relative unimportance in the community as a competing
pressure group protecting its own interests, and, for their lack of
cohesive organization, is that they are stockholders by avocation
and not by vocation.
In other words, their interest or dividend

and

SIXTY-THIRD

September 20, 1948

*■

society

135.512.35

States Government Securi¬

397,449.40

ties

Customers'

Liability

Letters of Credit
Other Resources

TOTAL

Under

2,879,647.22
Liability

55,545.00

Under

Letters

Credit

55,545.00

6,717.39

$108,076,553.12
Under State Government and Chicago
Member Federal

TOTAL

Clearing Douse Supervision

Deposit Insurance Corporation

Member Federal Reserve System

$108,076,553.12

(1470)

THE

COMMERCIAL
24%

war.

result of

production

the

able

are

which

physical
units and the
inflationary rise in

them

prices,

entire

national

our

soared.

income

crossed

$202

has

obtain

build

with

last

plants

and

machinery.

factories

| durable

wealth."
NYSE pamphlet.)"

around

$220 billions, according to
latest estimate by the Department

and

of Commerce.

percentage

come.

Doing

this,

national

find

iri-

1948

and

for

ure

the

official

it is also

1947.

estimate

This

ratio

(9.0%) and

their

for

figin

compares with

par-

1929, which

was

that

see

and

prosperous

this span
taxes have

years, profits after
almost kept pace
with

the

despite the big
taxation, total profits
by industry still hold very

nearly

the

position

same

this

point

that

the

noted

the

corporation

the

security-holder,

receives

and

has

taxes.

come

ceives only his

payment,

re-

niggardly interest

amount

cally,
high.
half

that

large

income

amounts

all-time

with

paid

only

income

1929.

about

investor, is,
than

after

the

executive

poor

last

4.3%
will

in
be

year,

work.
In

his

message

Con¬

are

Wages
On the other

today far short of the indus¬
trial
capacity
we
need
for
a
growing future.
At least $50 bil-

Labor

hand, total

wages

and

salaries paid
(including supplements to wages) accounted for
over
62% of the national income
last year versus 58%
about 62% in 1941.

j lion should be invested by indusj try to improve and expand our
productive facilities

over the next
few years. But this is
only the be¬

in 1929, and
Here again,

the figures are over-all
data.
do not represent

ginning.
tion

They

take-home pay
individual which is

place

Stock

for

place

securities

INCOME,

•'.'■■'•'S::.1
v."
Income

Wages

ments

Corporate
♦Based

•

___________

Salaries

(plus

first

76%

DISTRIBUTIVE

quarter,

cash

that

wrench

taxation.
of

earns

the

Divi¬

gress

—

once

them,

place

one

act

would arise from

ues

law

the

12V2%

would

benefit

the

Under

far-sighted

For

MONEY

—1941—'

—1947—

-*1948-

103.8

100 0

100.0

202.4

100.0

215.5

%
100.0

64.3

61.9

127.5

62.9

134.0

62.2

9.4

9.0

18.1

8.9

19.2

8.9

adjusted seasonally to an annual rate.
Estimates, by U, S. Dept. of Commerce.

based

first

Dept. of Commerce.
received.

dividends

6.7%

quarter
Excess

•

1947

1948

$202.4

resources, but
aided
materially

natural

market appeal.
Because of insti¬
tutional preference for securities

which

■'tMy

3.4%

"pay out" rapidly, banks
insurance
companies
have

and

new

from

stock

equities

main¬

are

when

again

this

the

trend

continue,

charges. None of

wants to

working conditions,
less burdensome

the

the gains achieved
last decade wiped out and
see

utility capital structures put back
to where they were in the
'30s,
with all the attendant
dangers. Al¬

greater security,

working rules, greater freedom.

capital

structures
our

servatism in dividend and depre¬
policies will be required
of
these
companies
ciation

during the
coming years, even if the antici¬
pated high level of revenues and
profits is realized.

credit

status comparable to that of elec¬
tric and telephone utilities.
Of the
lion

approximately $800 mil¬
and

new

refunding issues
companies in our
group since 1945, more than half
were placed
privately with insti¬
floated

the

tutional investors.

issue has

been

placement,

fact

that

issues,

gas

million,

obstacle

rect

the

The size of

were

di¬

shown by the
largest natural

two

each

well

from those which have
both distribution and trans¬
mission facilities.

Thus, the capi¬

tal

structure

sold in this

manner.

Furthermore, we know that the
bulk of the
publicly offered issues
taken

was

tors.

This is

these
in

inves¬

same

sharp contrast to

the conditions prevailing some ten
years

ago, when natural gas bonds

aroused almost

gas

debt

fact,

the

are

their

institutional in¬

institutions

market
such

they

present

market

now

natural

extent

that

"locked

in"

virtually

for

positions:

anything

other

going

rates appears to exist. In¬
stitutions have,

money

the

protective

provi¬

corporate

industry.

Structure
Let

paid by corporations

look

now

heavy debt financing

effect

upon

third

the

debt; another 71%
preferred

69%

debt

stock;

and

12%

Similarly,

the other
companies
in
our

transmission

show

group

transmission

one

13%

preferred.

debt

ratios

ranging
from 50 to 65%. The
companies
with
large investments in dis¬
tributing facilities show smaller
debt

ratios.
Thus, five of the
companies in this group, including
two largest, have about 50%

the
of

their

38%,

one

three

sion

capital in debt; one has
28%, and the remaining

show

High

about

debt

15%

ratios

for

companies 'have

fended
such

both

for

have
the

firm

con¬

purchase

safely undertake a higher initial
proportion of debt. This argument
some

appeal,

but

limitations, too, and in

has

its

some cases

it has been carried too far. It
may,
in

fact, be almost completely in¬
applicable to a transmission com¬
pany whose costs of gas and costs
of

transmission, including depre¬
on
a
high-cost line, are
sufficiently great that other fuels
ciation

to be

many

have

now

which

are

encounter

being
in

constructed

contemplation

such

sold

may

higher costs and,

gas equities
high ratios to earn¬

offerings

have

been

materials

Shortage of
equipment have at

and

times

delayed construction proj¬
ects, but adequate funds
both
equity and debt—have been read¬
ily available.
—

not

believe that

prin¬

heavy reli¬
financing is that

debt

the

for such

reason

management took the easiest way
and loaded up with as much

out

cheap money
regardless
I

the

why

and

gotten

consequences.

they

flowed

assumptions
our

economy.

the

inclined to believe that

deeper

could

reason

did

the

lay.

from

certain

future

It is my belief that
lies

reason

the

theory

widely held

towards the
World War II that war

end

prosperity
sure to be followed
by post¬
depression. The unexpected

was
war

need

for

funds,

therefore,

was

looked upon as
something limited
and

temporary in character,

the

that
were

attitude
size

then

being

under¬

completed. The

was

prevalent

some¬

when

over

same

in.

the

utility industry where the

the

postwar

expansion

dawned only gradually
the industry with the result

program
upon

would

projects

electric
or

natural

New

taken

pipe lines which

particularly strong in the

years

ings.

unfavorable

new

com¬

is that

years

quickly absorbed and have soon
sold at substantial
premiums over
the
offering price.

thing

business. conditions.

recent

of natural gas
companies. For

case

be able to compete success¬
fully with it during periods of
may

commonly ad¬

expensive" to be justified. This
rationalization does not appear to

transmis¬
de¬

most

stock in

mon

ance

been

reason

the market has been bad and the
flotation of common stocks "too

cipal

gas and for its sale to responsible
distribution companies, they
may

has

The

vanced for the failure to sell

debt.

the ground that where

companies

tracts,

are

the

and

Some of the

Heavy Debt And Capital
,

debt

$100

over

compa¬
we

terially

and

achieved

now

the

First,

as¬

sumed a heavy burden of fixed
charges and debt retirement. Con¬

the

industry has

fact, the

group.

note
corporate structures of
transmission companies vary ma¬
that

the

prosperity

is necessary.
Money
At 1 Work

nies

29%.

with its capital structures
heavily
loaded with debt and with a
high
burden of fixed

wage

line shows 80%

estimate.

dividends

However,

Should

be attracted to the cap¬
market, more than merely

found natural gas debt issues
very
much of their
liking. In

17.300

3.4%

cash

our

they have also
in
providing

health of the natural
gas

*$215.5

6.880

4.3%

results.
of

gas

sions written into these securities
well as in the
general

4.465

5.823
Income_____

lie in the "wast¬

1941

ratio

industry will face the inevitable
shakedown that follows

(Continued from page 8)

tures appears to

in¬

gas company

looking
days of high
leverage and that trading on the
equity
once
again
has
allure.

Growing Debt
Burden in Gas
Industry

therefore,, great

Dollars)
$103.8

from

backwards

The

interest

DIVIDENDS
of

natural
Serious

not, of course, arise

debt

management

better

from 30 to 60%, there is cause for
uneasiness. It then appears that

money to

wants

electric

weak.

are

natural

its

any

ratios
begin to go from 42 to 59%, from
to 70%, from 40 to
65%, or

remain

speaking,

structures

companies
a

due

peo¬

effectively, and fof:

WORK

not

common

national
can

any

require¬

generally

tained.

Treasury,

these changes
expected in the future.

Indeed,
it is just for the
purpose of en¬
abling management to meet ex¬
pansion requirements that high

reven¬

whole

that,

15%

revision of the

capital

concern

creases

distinction

satisfactory
If vis Like
Labor,

a
dangerous thing for the enter¬
prise system and hence for the
country.
Double
taxation
on

Con¬

all capital gains
as to the hold¬

betraying-

expanding

capital

gas

flat tax of

investor, and the

ital

accu¬

larger

reasons

advanced

utility corporations, electric

problems

Undoubtedly

not

utility corporations

good of all

leadership

the

then
capital
losses
fully deductible from
If the objective is rev¬
the presentv law is sense¬

enue,
less.

case

well

Our

income,

every

sure,

that we at the
Securities and Exchange Commis¬
sion are disturbed
by the fact that

belief

to be regarded

are

about

ments.

machin¬

where

for the

If capital gains

and

injustice to all tax¬

gross

economic

1945,

only

secrets when I say

when

can

ple.

money

stockholder receives
income.
This
is more

the

ever,

their

new one.

since

rose

tivity, have, since 1945, relied so
heavily on. debt financing' to meet

from

ing period., Such
source

For

justify the issuance of debt. How¬

from

ratios.

as gas, and,
indeed, many
corporations in other lines of ac¬

■

Here

wages

him

ery.

capital

asset

doubled
assets

one-third.
can,

many

making in¬
vestment decisions based on
judg¬
ment, and is merely a monkey-

10%

capital

has

altnough

pro¬

taxpayer from sell¬

old

prevents

came

the

dominate

$87.4

National

^Estimate
over

deter

with

taxed twice

are

terest.

9.6

Income

data:

cor¬

58.1

Dividends

domestic

Dollars;

1929

Source

figures

8.4

Tax.._____

CASH

Board

financing in 1947 repre¬
debt
financing and only

sented

"(Billions

Percent

population?"

50.8

after

Source:

National

equip¬

supple¬

salary)
Profits

Reserve

that

porate

87.4

growing

Federal

—1929—

and

s"How
can
a
larger volume of
business be financed at
high-price
levels?"

(Billions

All

our

show

NATIONAL

plant

needs

National

existing

ment?" "Where can funds be ob¬
tained to improve and
expand fa¬
cilities needed to meet the

market

"Aided by the mechanism
security markets, corporations
.

industry is to func¬

payers who have put their
mulated savings into Stocks,

American enterprise
going to ob¬
tain the capital
required to re¬

na¬

tributed.
.

other

facing
today is the question, "How is

is, of course,
the New York
Stock Exchange.
The
services performed
by the
Exchange are clearly described in
a
pamphlet which has been dis¬

applica¬

One of the vital
problems

Exchange

principal

industrial

constantly

the

nation's

The
atomic

further opportunities for
expansion."
open

somewhat
lower, due to "with¬
taxes.
However, it is
clear that labor has fared far
bet¬
ter than capital thus
far in

inflationary expansion of the
tional income.

energy and
scientific advances will

holding"

The

revenue

putting money into

post¬

from

ing asset" character of

annual

gress, President Truman said: "We

The

ing

very

best.

(the

failure, and is bound

ing

debt

ineir

the total oebt outstand¬

ready, many companies have

leadership in
! the
use
of
Economic
Energy,
which, as we have seen, is the key
to
putting physical
energy! to

ac-

MONEY AT WORK (the
investor)
is
the
FORGOTTEN
MAN
IN
America.

one

again
than

me-

MONEY AT WORK is not
being
encouraged now as it was formerly, and as it must be if America
is to retain world

any

funds

corporation

them

clerk,

the

doubt the greatest

work)

provisions

so, because acceptance
of
is optional on the part of
taxpayer. What the tax does

large volume

the

modify

Need For New Capital

cording to latest official estimates,
Truly,
the
basic
supplier of

finance

at its

dends

all.

worker,

American
No

railroad

Because

discouragement
heavy hand of

typical

farmer

flow

corn-

must

the

source.

di-

"forgotten

school-teacher

business

3.4%
of
the
pie, comparing

6.7% in 1929 and
Results in
1948

1941.

our

with

New money,
particularly
the sorely needed venture
capital,
must be supplied in
if

the

dynamic

harmful

tax.

requirements,
however,' should
operating to restrict fur¬ income.

now

tion

un¬

part of the national

was

national

the

that

other

j chanic,

However, it is only about

either

this

the

se-

personal interest

markets,

observed

American,

Histori-

new

individual

development of industry

ther

additional

pamphlet.)
view of this fact, it should

man,"

these

income).

was

the

used

capital
are

and

creases

the group

its

levied,

now

revenue

want

the

ducer it is

previous, savings of the
corporations themselves.
Working

pro-

as part owners of the

none

$6,880,000,000 in

(before taxes

individual

are

NYSE

on record.

Stockholders last year received
net

funds

income.

from

pansion program nave shown in¬

enterprise

minor

economy,

venture cap¬
dominant
source
of

the

dollars
war

offered

securities

from

nearly

dividends

are

represented by listed securities,
or
indirectly,
as
the
holders of insurance policies and
savings banks accounts." (Quoted

record—even before individual
income taxes, which are

highest

These

j panics

the

j rectly

close to the lowest

now

country—have

in-

bondholder

primary

tax

money

perform

our

very

eliminate
of

taxes, wealthy people who
normally supply such funds, have
small
surplus i left
after
high
taxes and
living costs.
Many millions of the capital

by his company.
"Many millions of people—possibly half the population of the

what

after

funds.

new

however,

curities

investor,

left

market

high

mostly through the sale of
by investment bankers
public and to institutions.

the

not what

but

not

bond

and

gains

—

| large

through the Exchange by
or
exercise of
subscription
rights—the right of the sharehold-

wages

are

earns

the

cisions.

shortage is in

which

sale

our

should

actual

MONEY AT WORK

ital

not

vided

1929.

Often,

national income

The

prices.

exchange

investment

through

This

conservative

companies, it is to be noted that
wnicn participated in the ex¬

gains"

worse

desire

source

Turning again to our group of

up-

Treasury, is often a major factor
in the
making of investment de¬

record.

use

they

process, without delay,
the best available

system.

although

adequate capital now,
by bonds.
We' have
through the greatest in¬

come

the

function

reliable

come

even

work

"capital

doubt

key

construction
manner.

all

so-called

On many oc¬

from

consequently, should finance their

extent.

deterrent

flation

securities

en¬

and other costs and

increase

just

put

bonds

There

the

source

largement
of
national
income.
Despite the rise in hourly wages,

earned

rule

The

Wall Street and
purchase entire
of

makes- it

by going into debt to

tax

represented

money to work
know that they can

they

raised

$6.6

About half

negotiations
with investment
bankers.

in-

.securities

bonds.

WORK

for

desirable

sum

issues

pro-

may

insurance
some

that such needs have to be

poses

met

houses

put their

reverse

over

People

The
we

speculators

into

where

withdraw the money to
other purpose, as

unless

market

much too

life

Thursday/ October -7, 1948

industry
to
raise
equity capital for expansion pur¬

much

casions, insurance companies

invest-

our

ex-

some

care

year.

Here

and

[choose.

8.9%

was

corresponding proportion of 9.6%
in

ready

money

for I may

the actual

slightly lower than

1941

only i vestors

income,

because

debt

the

year

corporation

part

machinery

that: vides

current and recent profits are
about
8.9% of national

That

necessary

(after
paying
death
benefits and dividends to
policy¬
holders) was invested in fixedincome securities—much of it

j alleled the historical development
of the country. The exchange is

| ment

difficult

high and in equities

this

Now, one way to measure the
trend of profits is to express them

MONEY

situation.

received
billions in premiums.

from

The development of the
change and its facilities has

flotations.

theT£??S?arllFs

other

(Quoted

stock

healthy

Last

equip

Thus

CHRONICLE

low.

with

country

year, about double what it
was
in
1941 and five times the: productive
depression level of 1933.
This

year, the national income will

funds

converts the sur¬
plus funds of its people into real
savings of our nation—that is, the

billions

proportion

too

represented
is not a

The

(Continued from page 57)
larger

FINANCIAL

That

Money at Work
after the

Volume

168

Number 4740

THE

that plans had to be

continuously
revised upwards. Indeed, what ap¬
have

pears

agement

wnether

demand

the

letdown

expected

postwar

would

keep the

sufficient

becomes

facilities operating

new

reasonable

ratio

take in

new

assumptions,
conclude

that

attractive

priate

solution

the

Cheap

short-term

boom

for
to

seems

been the idea. The

fund

immediate

could,

accrue

reduce

capital

debts

the

expan¬

believed, would

was

structures

point

and

where

the ratios looked better.

.With
we

the

can

1945

benefit

now

that

see

were

hindsight

1944

and

blindly waiting for

history to repeat itself. We
waiting for the problems
faced

were

that
after the first World War

td reappear and this time we
were
determined to be prepared for
them. Had we had the wisdom we
would

have

that

seen

do not wish

ural

the

and

which to

stacles.

for it.

end my re¬

The nat¬

industry has shown the
to undertake tremendous

gas

courage

tasks

carping note.

on a

ingenuity

overcome

with

formidable ob¬

confident

the

that

its

financial problems will be met in
the same aggressive manner and

in manu7. •with eminent good sense.

"Gluttons for Punishment"
;

visitors

from

section

which, for the last month

Government.
this

has had rather flattering attention
in the current Presidential cam¬

I should

Federal

Agency

think that

would

feel

chagrin about the ridiculous

some

reflections

which are being cast
paign.
Yes, some rather choice upon the business which it was
epithets have been coming our set up to regulate.
way.
Homer has referred to one
Every informed person knows
of these gems, "gluttons for1
priv¬ that our financial markets are the
ilege."
I could suggest a more most
depressed of all the impor¬
appropriate phrase. For example, tant businesses
in this country
"gluttons for punishment."
I be¬
today. This should be a matter of
lieve you
will agree
that this grave concern to all who are in¬
would, at least, be more accurate. terested in the
national

has

been

long time since ing.^

The condition of these

hearing lately. You of

Certainly, it is

pacity to the

nings

two

hilt

for

that

and

years

be far from

than

still

appears

satisfied.

Conditions Facing Us
We would have

seen:

That the American people had
accumulated huge liquid
savings,
..

were

enjoying

a high level of in¬
and were determined to
translate those funds into
higher
standards of living.

come,

That

millions

erans,
armed

services,

newly

set

and

families.
'That
the

the

world

stored

would
that

have
in

areas

.That

arid

business

the funds

pand

re¬

way or
in such res¬

had

the

desire

with which to

capacity,

modernize

developed

war.

ex¬

plant,

and put upon the market
the

products

new

during

the

-In

short, most of us discounted
heavily the fact that con¬
sumers, farmers, businessmen, and
too

state and
in

the

our

local

governments

best financial

history,, that

withal to live

were

condition in

people had

our

the determination

and the where¬

better life.

activity has been

the

demand

leveling

for

instead

gas,

falling off

was

has

expected,

community, in this

year

1948. Ordinarily, we would
shrug
it off with amusement.
Indeed, it
is good to note that
many thought¬
ful
people are

continued

in¬

the

over

national

the

legislature.
most inopportune

villification

when the

ratio

the New York

our

turn¬

Stock Ex¬

change to total shares listed has
been, running in 1948 at only about
15%.
This is a fair index to the
state of the capital markets gen¬

erally.

The millions of holders of

corporate securities must feel very
unhappy indeed to hear candidates

for high office make
cheap po¬
doing just this.
hysterical attacks re¬ litical attacks on Wall Street when
our markets are
irresponsible hostility and
reflecting, such a
complete lack of understanding lack of investor confidence that
of "our financial
corporations needing funds for
markets. And

But

these

flect

for

additional expansion find it diffi¬
cult or impossible to sell

equity
obliged to re¬
sort, instead, to debt financing.
securities and

must

somewhat

would

disturbed.

presumptuous

•

audience.

are

for

It is

deplorable fact

that this

country continues to dis¬
attempt to speak for all of
to discriminate against
Wall Street, or for the financial courage,
district of Boston, or for LaSalle and to shackle the investor, the
risk-bearer and the enterpriser.
Street
in
Chicago or
for
the
to

other

financial

centers

this

country. I do, however, represent
of the important units .of the

one

great

System

through which in¬

vestment funds
the

creation

harnessed, for

are

business

and

in¬

dustrial activity. I do not hesitate
to speak in my
capacity as Chair¬
man •

the

Board

New

■

York

Governors
Stock

Ex¬

change. Without the machinery of
private capital markets, the
necessary development of enter¬
prise in this country could not be
continued in accordance with the
tested
principles which h a v e

the

of these

initiative

that

and

owe

our

faith
enor¬

expansion
and
our
rivaled standards of living.
mous

un¬

creased,

additional

and

stations

have

compressor

built,

new

have

gas

reserves

had

larger
had

of natural

developed,

had
the

new

While
my

obtained

pay

facilities.
I

have

for

under the

impact of unsound tax
policies; yet nothing is done about
it.
Considering the rapid increase
in our
population, we should be
thinking in terms of vastly great¬
er
production and employment.
Instead, obstacles are put in the
way of our risk-investment proc¬
Thrift is penalized and in¬
centive is destroyed.
esses.

most

when

times

are

expenditures

point

out

good and capital
I must also

that

good

capital

structure is vital when times are
bad and revenues and
profits fall.
As we have all learned,

sions
one

are
ear)

not

'sit

depres¬
quite periods when

back

and

clean

Columbia

need

that

not

the

live

Gas

System,

Inc.-

Memorandu m—Oppenheimer,
Vanden Broeck
&
Co., 40 Ex¬
change Place, New York 5, N. Y.
Consolidated

govern-

Vultee

within, its; Corp.—Analysis—John

Aircraft

Lewis

discuskon j & Co., 63 Wall Street, New York 5,

There is much

the

"management" of the na-; N. Y.
or less per-i
Electric Light and Power Inbasis; too little thought is; dustry—Study in current issue of
given to a settled policy of debt I "Monthly Market Letter"—Good^

tional debt, on a more
manent

reduction;

jbody & Co., 115 Broadway, New

Retrenchment

the

government
real

has

there

and

out

Soon after the

Also

war

1 f0''

budget could Ipe held at a
$20,000,000,000 level^Later, as the

assuming

Dry,

Douglas

tions became
apparent, these estimates
were
revised
upward to

Aircraft,

Petroleum,

$30,000,000,000 .or more. " Now,
tual 1949
appropriations, plus

analysis

^ Baltimore & Ohio, and
on
Canada

tent

obliga-

new

are

leaflets

Cup,

eral

necessity of

available

of the A. E. Staley Manufacturing

Con-

ended,
estimates that the Fed¬

were

' York 6, N. Y.

fewer and fewer

friends, in

gress.

cost

Dixie

Mid-Con¬

Socony
«

and

Fuller Manufacturing Company

—Study—William A. Fuller & Co.,
209 South La Salle Street, Chi¬
cago 4, 111.

ac¬
au¬

thorizations for later expenditures,
Gauley

estimated at around $42,000,000,000.Even some of our legis¬
lators who only a short while
ago
are

most vocal

were

for

sound

resolute

for

policy

trends in

Foods

Corp.—Memo-

timei

the

some

General

less

high

measure

quences

Co.—

and -for

seem

economy

today.

Coal

yield—Data on
request—
George Birkins Co., 40 Exchange
in their demands Place New York 5, N. Y.

tax

government

Mountain

High

the

conse¬

12°
Broadway, New York 5, N. Y.

present

Lock

thinking.

Nut

Corp.

America—

Analysis of speculative possibiliCan

Have

National

Security and
Strength

Economic

cago

Were these consequences

sary to
prefer
But

neces¬

the reinforcement of

national

security,

them

they

our

would

unpreparedness.
not inevitable or

keep our na¬
tional .sanity, we can have national
security and economic strength at
the same time.
The price for this
is not
regimentation, or the decay
our

prise.

system of individual enter¬
Let us determine that such

price shall not be paid,

The real
been

saying to

that

must

this evening is

you

have

rebirth

strength. Confidence underlies all
true values.

senseless

attack

leaflet

Maine

Central

Railroad—An-

alysis—A. G. Woglom & Co., Inc.,
53 State Street, Boston 9, Mass. *
Maule Industries,
—Aetna

Inc.—Analysis
Corp., Ill

Securities

Broadway, New York 6, N. Y.
Minnesota

Mining

Co.—Detailed

Manufac¬

brochure—

Kidder, Peabody & Co., 17
Street, New York 5, N. Y.

Wall

Mullins

Manufacturing Corp.—
M.
Kidder
&
Co.,
1 Wall Street, New York 5, N. Y.

Circular—A.
Also

.If confidence is to

confidence in these United States.
Confidence is the first essential of

the

available

L'Aiglon Apparel, Inc.

turing

of what I have

essence

3, 111.

Also

are

necessary.

then

ties—Bennett, Spanier & Co., Inc.,
105 South La Salle Street, Chi¬

be restored,
on
business

available

leaflet

list¬

ing 20 investment issues furnish¬
ing liberal income on security

New England Public Service Co.

—Analysis—Ira Haupt & Co., Ill
Broadway, New York 6, N. Y.

government

financing of pri¬

vate

business.
Make no mistake
about it, - that would mean nation¬
alization or
term

ever

you

prefer.

find

difficult

that those who
to

discredit

appreciate
quences

Federal

but

part

continuing, deliberate

cam¬

are

scorn.

those of
ness

have

who work and produce and
supply
capital.
We must have fiscal and
tax policies that stimulate

interested,

however,

pres¬

great

for

reward

the

Northern

man¬

must have

these

Engineering Works—

Circular—Fitzgerald &

all

for

40 Wall

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

Philadelphia Transportation Co.

produc¬

recognizes the imperative need in

of government.

conse¬

doing.

are

our

operating

fi¬
un¬

our

times

free institutions. It

for

tional confidence.

revival

na¬

iittrance, on the part of politicians
or others.,
designed to retard this
Any act

revival of confidence

regarded

can

disgraceful

only be
conduct

regulation.

apparently has
by those who
up

to pub¬

deal

re¬

spect for the

SEC

higher levels of the

for

reward

fair

finance

of the

men

agement,

dividends.

for

reward

seeking

It
would
seem
that
in the securities busi¬
a

fair

—-

are

holding Wall Street

lic

progress

labor,
fair
farmer, fair

It which creates disunity and strikes
seems odd that the
Securities and directly at the national welfare.
Exchange Commission, with all
All of us realize that rearma¬

of its vast
powers,
been lost sight of

re¬

paign against business. As such,
it cannot be ignored.
The organ¬
ization which I represent does not

and

have forgotten that

rigid

good government and in the

And I sometimes wonder
whether

der

this

the

ervation of

they

are

all

believe

dangerous

what

lieve that

to be¬

reason

We must have

cease.

affirmation

today

business
the

there is every

deeply

Dangerous Consequences
I

ever,

must

take part in partisan politics. It is

socialization, which¬

nancial markets

large,

financing is inevitable,
budget is no long-

prise. We must recognize that fair
reward
is the motivating force

they

lining the importance of main¬
taining a strong capital structure

—

freedom of

remarks here towards under¬

Stern
&
Co.,
25' Broad
Street, New York 4, N. Y.
■

being made to lull

dangerous idea

seeing the sources of
equity capital gradually drying up

Chesapeake & Ohio—Memoran¬

means.

Co., 231 South La
Street, Chicago 4, 111.

Salle

acceptance of the notion

ment

and

Arkansas Western Gas Company

desirable objective.
The ex¬
periences since the early nineteen
thirties are recalled to support the
er

Corp.

—Comstock &

balanced

Wells

—Detailed information for dealers

Various groups

dum

are

that deficit
that

Struthers

New England Electric System.

The alternative to the
processes
of our free capital markets
would

pointed

into

is informa¬

principle of
opportunity and enter¬

storage capacity has had to
be constructed, and new distribu¬

; able to sit back, collect revenues,
and
pay
off old debt, an ever
greater stream of new money has

ice,

leaflet

same

Southeastern Public Serv¬

some

us.

Efforts

the
on

brought this country to its pres¬
I would prefer not to take the
ent position of preeminence in recent criticism of the financial
the world.
:;4 4
How¬
%'r:.!;4,: community too seriously.

new

tion facilities provided. The result
has
been that instead of
being

clamor in

tion

in high places—
application of a wide va¬

confront

are

taxing capacity to the full.
Thus new and ever
larger facili¬
ties have had to be
planned and
constructed. Capacities of
existing
pipe lines have had to be in¬
crease,

;

carded. We hear

page

Street, Newark 2, N. J.

majority
of
our
people
thought, only a short time ago,
that they had rejected and dis¬

The lack of vitality in our
cap¬
ital markets is too well known to
need further emphasis before this

larger opportunities
rapidly growing population

our

The effect of the continued
high
level of business

that

There is, of
course, much irony
in what is
being said about the

one

another funds to aid
toration would be provided.>
.

which William Jen¬
Bryan used to engage.

increasingly

devastated

and

sure, as
exercises in

national security and
with the
problem of financing our indus¬
trial expansion and of
providing

rear

reminded, I am time for
I have been, of the vocal business

the

from

homes

new

and

my genera¬

anyone who is concerned with our

determined

were

ing attention of the Government

been

vet¬

young

released

have

financial

great

mar¬

huge volume of demand ac¬
cumulated during the war years—
a volume of demand so
great that
it has taxed our
war-expanded ca¬

tion

(Continued from

—C. D. Kobbins & Co., 810 Broad

with respect to policies which the

well-be¬

Recommendations

There
are
indications already
that, in our concern over the pos¬
sibility of war, we are permitting
a
spirit of complacency to grow

(Continued from page 11)
of

group

Dealer-Broker

Possibility of War

tion is the only method
by which
we
can
meet the problems that

kets should have the understand¬

the

Over

stubbornly insist that regimenta¬

this country was last entertained
by the particular brand of politi¬
cal invective which we have
been

depression, deflation, and unem¬
ployment, but those of satisfying

Concern

con¬

quarters—even

Business and Finance—

prob¬

lems facing us were > not those of

developments

part

riety of controls.

easily be met

result

the

cure

prepared

Other

for the

from the depreciation
charges and
from the profits that were sure to

sion. Time, it

always

better

have

heavy sinking

felt,

was

wisdom to

the

payments '.and - the
large.;
retirements
undertaken

serial

Yet

shifts

unexpected

marks

substitutions^, and

great geographic

(1471)

tribute to this postponement.

commodity

CHRONICLE

ties.' The

burden.

strong.

FINANCIAL

life.

happening.

vitally dynamic econ¬
omy, continually undergoing vast
changes, severe price fluctuations,-

appro¬

money

too

Ours is

the

was

not

financing

debt

rates

problem.

natural

was

troublesome

factoring apd distributing activi¬

Indeed, during the '30s we found
a capital structure
just could

partners; On these

care

that

capacity.

therefore appeared undesirable

during
the busy days of
prosperity. De¬
pression, we have learned, can be
so
severe ..that
the necessity of
meeting daily operating expenses

man¬

was

following

concerned

the ends not taken

COMMERCIAL

than

some

ment

and

assistance

tions have

ling factors in

deed,
ness

the
at

abroad
that
our

has

may

our

program

home

return

other

na¬

today become control¬

and

economy.

prepared¬
reconstruction

assumed

postpone
to

In¬

proportions

indefinitely

normal

national

tion

and

create
a

incentives.

—Circular—Boenning & Co., 1606
Walnut Street; Philadelphia 3, Pa.

reduction in the cost

We must have a
definite policy for the payment of
the national debt.
We must dis¬

Standard Oil of,New Jersey—
Analysis—J. R. Williston & Co.,
115 Broadway, New York 6, N. Y.

card socialistic theories of
govern¬

Also, available

ment.

And we must create a na¬
tional environment in which busi¬

ness

and labor and

work in

all.

agriculture

can

these

measures

leaflet
,

Co.—Analysis—H.
M.
Byllesby & Co., Inc., Stock Ex¬
change Bldg., Philadelphia 2, Pa.

and

these

policies and these reassur¬
we can have such an up¬
surge of confidence as we have
witnessed
many

preserve our

this

country in
Thus we can
precious freedoms at

Winters

position)

leadership.
;

;

Crampton

Corp.—

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

years.

home and strengthen our
of world

study

White Sewing Machine.

Warner

ances,
not

harmony, for the good of

Given

many,

are

Pittsburgh Steel Co. and

Also available is

i Miles
/

;

analysis of

Shoes, Inc.
v.

./v..

THE

(1472)

COMMERCIAL

Securities
•

•

common

INDICATES

;

Foundry & Machine Co.
Oct. 1 (letter of notification) 2,000 shares of preferred
(par $100), of which 250 shares will be exchanged for
present outstanding preferred stock and 1,750 shares will
be offered at par to present stockholders.
Unsubscribed
shares will be offered to the public.
No underwriter.
•'

(Wis.)

Algoma

•

Motorists

American

Insurance

ISSUE

The note is convertible into the company's

stock at the rate of 134 shares for each $1,000

The stock, will be sold to

Underwriter—William R.

Central Arizona Light & Power Co. (10/19)
28 filed 300,000 shares (no par) common stock.

Sept.

vide

obtained

$3,000,000
&

Trust

Co.

during 1948
Pittsburgh.

Electric &

Co.

Gas

its

construction

own

program

for other general

corporate purposes.

held

cumulative

preferred
Hill, Crawford &

Price,

stock.'

Under--

par.

L^ford, Inc., and Southern

Securities Corp., Little Rock, Ark.
E. C. Barton, President.

$12

15,000

Black
S.

Oct.- 5

Hills Power

Dak.

filed

Light Co.,

Rapid City,

15,000

stock and
5,000 shares of ($100 par) cumulative preferred stock.
Underwriter—Dillon, Read & Co. Inc.
Offering—Com¬
mon
stock will be offered for subscription by common
stockholders and the preferred to the public.
Proceeds
($1

par)

common

for

each

underwriter.

increase

offered

units

purchasers

of which

will

have

Mfg. Co.,

(one

common

the

right for

(letter

Inc., Brooklyn, N. Y.

notification)

convertible preferred

37,400

stock.

Underwriter—

Cantor, Fitzgerald & Co., Inc., New York.
share. Working capital, etc.

Price—$1

Warshoff & Co.,

500

Price—$8 per

Newark, N. J.

To meet obligations.

Coleraine Asbestos Co. Ltd., Montreal, Canada

Aug.

16 filed

$100,000), will be added to company's general funds.
$230,000 would be used to purchase equipment

About

and $185,000

Eastern

200,000 shares of capital stock.
Price—
Canadian Currency.
Underwriter

San Francisco.

—$4.25
•

Stock

being sold by Dardi & Co.

Price

Blue Mountain

Dusting Co., Walla Walla, Wash.

24 (letter of notification) 500 'shares ($100 par)
cumulative participating preferred stock.
No under¬

writing.
V

For development and expansion of business.

Brockton

Sept.

filed

(Mass.)

$4,000,000

Edison

first

Co.

(10/19)

mortgage

and

collateral

trust bonds, due 1978. Underwriters—Names to be deter-

/ mined by. competitive bidding.

Probable bidders: Halsey, Stuart & Co. Inc.; The First Boston Corp.; Kidder,
Peabody & Co.; Harriman Ripley & Co.
Proceeds—
Tq pay $2,625,000 of promissory notes and to finance
additional
be

costs

received

and

about

Bids

expected to

19.

Bucyrus-Erie Co., South Milwaukee, Wis.
Sept. 29 filed 320,000 shares ($5 par) common stock.
Underwriter—Harris, Hall & Co. (Inc.)
Offering—To
^be offered for subscription by common stockholders.

common

stock.

Price

—

Grubbs, Scott & Co., Inc.

100,000 shares

per

pay

share.

past

($1 par)

Underwriter—
and for

expenses

equipment.

new

Ekco

Columbia

Sept. 9. (letter of notification) 12,800 shares ($25 par)
common stock.
Price—$23 per share.
Stockholders of
record Sept. 10 are given the right to subscribe to the
one

new

for each

10 held.

Rights

expire Oct. 18.

Western Utilities Corp., owner of over
%rds of stock, will exercise its rights. No underwriter.
For construction/

Gas

Sept. 24 (letter of notification) 12,000 shares ($2.50 par)
stock.
Price—$25.
For general treasury.funds

common

and additional working capital.

Rollins

loan,

new

Inc.
Proceeds—To retire 2V2% term
$225,000, held by Marine Midland
balance for general funds.

Sep. 2 filed 25,000 shares of 4!/2% cumulative preferences
stock, series A (par $50) (convertible to and including
Aug. 1, 1956) and 97,580 shares ($1 par) common stockto be reserved for conversion of the preferred stock.
Underwriter—E. H. Rollins & Son, Inc.
Proceeds—To
outstanding

bank loans and

commercial

Enamel

Corp.,

paper.

Cleveland, Ohio

Sept. 17 filed 79,080 common shares ($1 par).
Offering
—To be offered for subscription by stockholders in ratio
of one
additional shares for each four shares held.
Underwriter—Merrill

Lynch,

Pierce,

Fenner &

Beane.
.

of common stock of record
share for each 10 shares held.

Rights expire Oct. 28. Price—$10 per share. Underwrit¬
ing, none, but The First Boston Corp. has been appointed
agent to solicit subscriptions.
Proceeds—For general
funds to be used for construction.

•'.

FinhoOm Pianos,
5

(letter of notification) 8,000 shares-of 6% pre¬
and 4,000 shares of common stock

(no par).
and

Inc., New York

Price—$50 per unit of 2 shares of preferred
of common. Working capital, etc. No un¬

derwriting.
First Guardian Securities Corp., New

York City

Columbia (Pa.) Telephone Co.
Sept. 21 (letter of notification) 3,000 shares of common
stock (par $25).
Price—$40 per share. Stock will be
offered to stockholders on Oct. 1 and rights will expire

5% cumulative convertible
preferred stock ($25 par) and 172,000 shares ($1 par)
common stock.
(72,000 shares of common to be reserved
for conversion of the preferred.)
Underwriter—None.
Price—$25 a share for the preferred and $10 for the com¬

mon.

pany

to purchase

Three

$40

per

officers

the

June 4 filed 36,000 shares of

have

agreed

with

com¬

unsubscribed shares at
Conversion to dial telephones, expan¬

share.

Yard

each of

sion, etc.
Cooperative Assoc.,

Kansas City,

Missouri

Oct. 16 filed $3,000,000 non-dividend common stock

($25
and 4%% 10-year
cumulative certificates of indebtedness; and $2,000,000 of
1V2% demand and 2V2 % 6 months cumulative loan cer¬
tificates.
No underwriting.
Offering—Offered only to
stockholders and patrons and members.
Price—At face
amount.
Proceeds—For acquisition of additional office
par);

$6,000,000

3J/2%

Gauley Mountain Coal Co., Now York
13 (letter of notification) 6,093 shares of capital
stock
(par $10).
Price, par.
Stockholders of record
Sept. 1 will be given right to subscribe at rate of one
new share for each five shares held.
Rights expire Oct
Aug.

15.

five-year

Underwriting—None.

Sept. 27 filed 100,000 shares ($3.50 par) common stock,.,
54,000 shares will be sold by the company and

of which

46,000 by selling stockholders.
& Co.,

Sold
on

—

Quoted

request

BROKERS

Reynold & Co.
and other

Pittsburgh

Chicago

*L%?

New

York Cork Exchange

DEALERS

principal exchanges

120 BROADWAY, NEW YORK CN.'Y.
WOrtb 4A'"00

Offices in other. Principal Cities

•

Teletype N. YV* 1

Underwriter—A. C. Allyn
Proceeds—Company's

Price by amendment.
proceeds for working capital.
Inc.

FREIGHT CORP.

—

General improvements, etc.

Goldsmith Bros. Smelting & Refining Co.

and plant facilities.

New York Stock Exchange

Sons,

amounting

Oct.

one

Analysis

(10/20)

Sept. 24 filed _20,000 shares of $1.50 prior convertible
preferred stock, series A (no par) and 20,000 shares of
Class A common stock ($2 par).
Underwriter—E. H.

ferred stock (par $25)

Oct. 5 in ratio of

Bought

Private Wires

No underwriting.

Employees Credit Corp., New York

COMMON STOCK

Boston

Proceeds—Company and subsidiaries will use the funds
for general corporate purposes.-Offering postponed.,

New York

System, Inc.,

EMERY AIR

New York

Co., Chicago

229,874 outstanding shares

Water & Telephone Co.

shares in ratio of

Products

Sept. 16 filed 1,223,000 shares (no par) common stock.
Offering—Offered for; subscription by holders of 12,-

Consumers

Proceeds—To pay costs of expansion program.

new

public

developed mining properties.

Ferro

Morgantowvr, W* Va.

Candy Corp.,

(letter of notification)

•

California

notification)

sold

Nov.

corporate needs.

Oct.

Temporarily postponed.-

Sept.

reduce

Proceeds—For drilling operations.

share.

per

units

—P.E.Frechette.
Sept. 17

Sept. 7 (letter of notification) 15,000 shares of common
stock (par $1).
Underwriter—The First California Co.,

Los Angeles

Associated Industries,

(letter of

50 cents per share in

Colonial

Blair Holdings Corp., New" York

for working capital.

274,083 class "A" pre¬
at $1 per share.
No
underwriter.
For the purpose of obtaining a controlling
interest in organizations of producing oil properties and

—For construction;
,

100,000

Family Finance Corp.
common

share. Underwriter—Charles

per

filed

Trust Co., New York, and

Cobalt Mines Corp., Newark, N. J.
July 26 (letter of notification) 290,000 shares of
stock.

Manufacturing Co., St. Louis, Mo.
shares (80c par) common stock.
Underwriter—White
& Co., St. Louis.
Price—$5 per
share.
Proceeds, plus an additional amount which may
be obtained from the sale of franchises (estimated at
Dynacycle

ferred

IYj warrants) at $2.75 per unit, the balance
shares being reserved for exercise of 15,000

Clarostat

($1 par) common stock reserved for exercise of warrants.
Underwriter—Minot, Kendall & Co. For working capital.

Sept.

Products, Inc., Brooklyn

debentures, and 10,000 shares

reserved for conversion of

•

four years to purchase shares at $2.75 per share.
Gen¬
eral corporate purposes.
Underwriter—Dunne & Co.,
New York.

33,730 shares

share.

warrants

share and
-

cumulative

•

new

Aug. 3 (letter of notification) 25,000 shares of common
20,000 warrants. Offering—10,000 shares and

Aug.

Sept. 20 (letter of notification) 25,000 shares ($10 par)
5% cumulative class B preferred stock.
Underwriter—
Gordon Meeks & Co.
For working capital.

one

stock and

Stock being sold by

Berry Motors Inc., Corinth, Miss.

per

Chieftain

warrants,

Co., Jonesboro, Ark.

Sept.' 23 (letter of notification) 1,000 shares ($100 par)

basis

working capital.

/ Barton-Mansfield

(letter of notification)

convertible debentures, with

Sept.

Oct.

stock

$100,000 of 5-year 5%
non-detachable stock pur¬
warrants; 10,000 shares of common stock ($1 par)

chase

Paine, Webber, Jackson & Curtis and Stone
Proceeds—May be used in
making additional investments in common stock equities
of its telephone subsidiaries and may be applied in
part
—„

Webster Securities Corp.

for

Portland,

Inc.,

Co.,

Manufacturing

Maine

Aug.

is being sold by
James A. Walsh, President of the Company. Underwriter
—F. Eberstadt & Co., Inc., New York.
-

—

eapital.

Douglass

(ID/13-15>■

end

writer

Sept.

;
Century Electric Co., St. Louis, Mo.
August 23 (letter of notification) 25,000 shares ($10 par)
common stock.
Offering—Common stockholders of rec¬
ord Sept. 7 will be given right to subscribe on or before

Armstrong Rubber Co., West Haven, Conn.
July 8 (letter of notification) 1,000 shares of 4%% cumu¬
lative convertible preferred stock ($50 par). To be sold
et $44 each for Frederick Machlin, Executive Vice-Presi¬
dent and Secretary of the company.
Underwriter—
F. Eberstadt & Co., Inc., New York.

Calif*

Corp., Los Angeles,

Diamond Head Screw

National Bank

Armstrong Rubber Co., West Haven, Conn.
June 30 (letter of notification) 1,000 shares of 4%%
cumulative convertible preferred stock, ($50 par) and
2,000 shares of class A common stock. To be sold at $44

first

•

Sept. 9 filed 30,000 shares of $2.50 cumulative convertible
preferred stock (stated value $50 per share).
Under¬

This

Washington.

loans

Mellon
Central

Pump Corp.

respectively.

and

from

(10/20-21)
Sept. 21 filed 200,000 shares ($2 par) convertible class A
stock. Underwriters—Herrick, Waddell & Heed, Inc. and
Sills, Minton & Co., Inc. Price—$8 per share. Proceeds
—To retire indebtedness and for working capital,
v :

(10d par).

York

construction

(par $5).

■

20 (letter of notification) 8,000 shares of capital
stock (par $10).
Price, par.
No underwriter. To pro¬

American Steel &

Underwriter—James T. DeWitt Co.,
To be offered in units of
two shares of class A and one share of class B at $5 per
unit.
To reduce or pay in full present borrowings from
the Manufacturers Credit Corp., to reduce the present
current liability position and to provide additional work¬
ing capital...
. • ! J...V
■'/
:;./Y
stock

New

writers

$9 per share.

Inc.

(letter of notification) 50,000 shares of class A
stock ($1 par), 25,000 shares of class B common

Underwriterst—The First Boston Corp. and Blyth & Co.,
Inc. Proceeds—To be
applied on currently outstanding

scription, by stockholders.
Unsubscribed shares may be
sold to such parties as directors may determine.
Price—

$11.75,

Crosbie Co; of Washington,

Sept. 7
common

Offering—To be offered for sub¬

Underwriting-—None.

Registration

SINCE

Staats Co.

Chicago

Co.,

100,000 shares of capital stock

28 filed

$140,000.

common

ing capital.

Sept.

ADDITIONS

principal amount of the note.
the public at $8.75 per share.

retire bank and other loans and for additional work¬

stock

to
•

Now

Thursday;''October?, 1948

CHRONICLE

Capitol Records, Inc., Hollywood, Calif.
Sept. 29 (letter of notification) 11,390 shares of common
(250 par).
To be offered by George G. DeSylva,
who holds a promissory note of the company amounting

shares ($10 par)
No underwriter.

(letter of notification) 7,160
stock, to be offered at par.
For additional plant facilities.
r
Sept.

FINANCIAL

•

Bellingham, Wash.

Algaederm, Inc.,

^
11

Volume' 168

COMMERCIAL

THE

Number 4740

Electric

Central

Gas Co

•

13, 1948
_-Preferred

—

(EST),^——Bonds

11:30 a.m.

Northern

Great

______——_—Bonds

October

Co.

Public Service
Youse

(E. S.)

of N.

Bonds and Pref.

Co., Inc

Bonds

...

Common

October 19, 1948

—_.Bonds

Edison Co

Brockton

Central Arizona

....Common
Debentures

Light & Power Co.
Michigan Bell Telephone Co

...Common

Oklahoma Gas & Electric Co

ferred

1948
American Steel & Pump Corp._

______

America, Inc., Minneapolis
Aug. 13 filed 100,000 shares of common stock ($1 par).
Stock will be sold to present warrant holders for $3

•

McCormick & Co.,

Hacienda

1948

Preferred

26, 1948
.Bonds

Service Inc

Manana

Hotels,

Inc.,

Denver,

Colo.

(letter of notification) 35,000 shares ($1 par)
s.tock to be offered at $7.50 per share.
No un¬

common

To construct and

derwriter.

operate

resort hotel.

Sept.

(letter of notification)

ers

No underwriters.

$20 per share.

4,830 shares

Matheson

lative

For additional

Henderson

Underwriter

bonds.

lottesville, Va.

—

stock

C. F. Cassell

Co., Inc., Char¬

To retire bank loans.

Chemical Corp., New York, N. Y.
filed 59,579 shares of cumulative convertible

(no par) to be offered common stock¬

preferred stock

holders in the ratio of one share of preferred for each 20

stock

common

Underwriter—A.

held.

Price—By

amendment.

manufacturing

facilities.

Electrochemical

Co.,

Niagara

Falls,

Oct. 6 filed 50,262 shares of cumulative second

(convertible into common stock before Dec. 1,
Underwriter—Smith, Barney & Co.
Offering—
offered for subscription by common holders on

1958).

basis

held.

mon

one

new

' Proceeds—For

and

facilities and to

and

processes.

for

each

capital

shares of'com¬

additions

plants

provide for changes' in; equipment

•

Mont.

May 17 filed 100,000 shares of 4% cumulative preferred
stock ($100 par) and 500,000 shares ($10 par) common
stock.
Underwriter — Tom G. Taylor & Co., Missoula,
Price—$300 per unit, consisting of two shares of

preferred and 10 shares of common stock. Proceeds—To
erect and operate a bleached sulphate pulp mill with a
200-ton per day capacity.
Institutional

Ltd.,

New

York

filed

$75,000,000

writers—Names

determined

Stanley & Co.
Proceeds — To repay advances from
Telephone & Telegraph Co. (parent), which
expected to be about $81,500,000 by Oct. 19.
These
advances were used for general corporate purposes, in¬
cluding construction, additions and improvements. Bids
expected Oct. 19.
P;_-yy
V
;V,v'Vare

•

tributor—Hare's Ltd., New

York.

Proceeds—For invest¬

ment.

Power Co.

(10/13)

Minneapolis, Minn.
Sept. 29 (letter of notification) 5,928 shares of common
stock (par $25).
Price, par.
No underwriter." To re¬
duce bank note indebtedness.

Monarch

Machine Tool

Iowa

Public Service Co., Sioux City,

Proceeds—Stock being sold
Offering indefinitely postponed.

Hawley, Shepard & Co., Inc.
by certain stockholders.

National Battery Co.

Sept. 24 filed $3,000,000 first mortgage bonds, due 1978,
and 109,866 shares ($15 par) common stock. Underwriters
•—Bonds
will be
offered
under competitive bidding.
Probable bidders:
& Co.

Bros.

Glore, Forgan & Co.; Halsey,

Stuart

65,000 shares

Service

Public

Orleans

($50 par)

Inc.

(10/26)

Stuart & Co. Inc.;

Halsey,

Probable bidders:

bidding.

Kidder, Peabody & Co.;' The First Boston Corp.; Lehman

Ripley

Harriman

Brothers;

Proceeds—Will

Co.

used for construction and other corporate expenses.

expepctecl about Oct. 26.
•

Niles

sixth of
will be

new

share for each share held.

less than $15.

rate

one-

Price of stock

Sioux City Gas & Electric Co.,

(

are

underwriters but C. F. Cas¬

common

stockholders

held

rate

two

new

Oct. 7.

Price, by amendment.
Proceeds—To defray cost of new plastic plant, restore
working capital and provide new working canital.
one

Otter Tail

Power Co., Fergus Falls, Minn.
27 filed 141,490 shares ($5 par) common stock,
Underwriting—Names by amendment (probably Glore,

Sept.

Forgan

Co.

Kalman

and

Co.).

Proceeds—For

retirement of $2,500,000

of loans owing to the First NationaWBank of Minneapolis and for betterment of facili¬
ties.
' ; v/*
/ *

Pennsylvania
Sept.

Power & Light Co.

(10/21)

preferred stock.
The First
rate will
To be applied to¬

28 filed 63,000 shares

($100 par)

Underwriters—Drexel & Co., Philadelphia and
Boston Corp., New York.
Price and dividend

amendment.
Proceeds —
$100,000,000 construction program.

.yL

Peoples Gas Light & Coke Co.
Sept. 24 filed $16,400,000 3% convertible debentures, due
Dec.
1, 1963.
Underwriters—Competitive bidding will
names

chase unsubscribed

of the underwriters who will

debentures.

Probable

pur¬

Hal¬

bidders:

Stuart & Co. Inc.; The First Boston Corp.; Glore,
Forgan & Co/ Offering—To be first offered for subscrip¬
tion by stockholders in ratio of $100 of debentures for
each four shares held of record Oct. 22. Rights will ex¬
pire Dec. 1. Price, par. Proceeds—For construction and
for the purchase of additional capital stock of certain
natural gas companies.
-

sey,

Petroleum

Engineers

Oklahoma

Sept.

(letter

Producing

notification)

Corp.,

Tulsa*

3,400

($25

par)

preferred stock and 1,700 shares of common stock. Offer¬
ing—To be offered in units of two shares of preferred
share of common (each unit to have one war¬
entitling the holder to buy two additional shares of
at $30
per
share).
Underwriter — Central
Royalties Company. To purchase and develop additional
oil properties.
'
.'
one

common

■9

Production
1

5,000 shares of cumula¬
preferred stock (par $10).
Price, par.
No un¬
For working capital.
Electric Corp.,

New York

Sept. 30 (letter of notification) 15,000 shares of common
per

(par

share.

$1). To be offered to employees at $16.90
No underwriting.
Inc., Seattle, Wash.

Norpac,

Sept. 21 (letter of notification) 10,000 shares of class B
(no par) non-voting common stock.
No underwriter.
For working capital,
Nuera

Products Co.,

16 filed

Sept.

100,000 shares ($1 par) common stock in
company's offering of 100,000 shares

preferred stock, registered in July, 1948. With
share,of preferred stock, subscribers will have the
right to buy one share of common.
Proceeds—For or¬

of $10 par

each

ganizational expenses.
Films,

Inc.,

New York

July 16 (letter of notification) 49,000 shares 350 cumula¬
tive preferred stock (par $5) and 49,000 shares of com¬
mon
stock (par 100).
Price—$6 per unit, consisting of
one
share of each. Working capital and other general
purposes.

Underwriter

—

Aetna

Securitiei

Corp., New York.
Oklahoma

Gas

Electric Co.

the

company's

19.

& Co.

.'"V;

/'.

■

f/V,

■

of Colorado

construction.

(10/18)

Bids

expected

vy//yvp;/V/p- p,y:v^-v::p.,p

9 filed $7,000,000
Underwriters

1978.

;

shares,

week
■'

(10/18)

first mortgage bonds, series D,
—

Names

will

determined

Bids expected week of Oct. 18.

property additions.

Public Service

Electric & Gas Co.

June 11 filed 200,000 shares

($100 par) cumulative pre¬
Proceeds—For property additions and im¬

provements. Underwriting—The company rejected bids
submitted Aug. 4.
The SEC on Aug. 23 exempted the

the competitive bidding rule.
basis being discussed.

agency

Montreal,

—

Sale
Can.

proposed sale from
Quebec Oil

Development

Ltd.,

Aug. 4 filed 2,000,000 shares of capital stock, ($1 par
Canadian funds).
Underwriter—Hiscox, Van Meter &
Co., Inc.
Price, $1 per share (United States funds). For
each
liver

20,000 shares of stock sold, the company will de¬
to the underwriter stock purchase warrants en¬

titling the holder to purchase, on or before Sept. 1, 1950,
1.000 shares of capital stock of the company at $1.50 per
share. Proceeds—For drilling operations.

Aug.

Ltd.
•

Harbor

Corp., Hewlett Harbor, N. Y.

(letter of notification)

(par $100).
rectors.

common shares (par $1).
Price,
Underwriter—Did Colony Securities
Proceeds for gold mining operations.

share.

Toronto.

Sea

Oct.

83 shares of capital stock a-*

Repay loans to di¬

Price—$110 per share.
underwriting.
•/'

V*.-

Mines Ltd., Toronto, Can.

filed 1,088,843

40 cents per

through

Bids expected to be received

Original filing was for sale of 400,000

through competitive bidding.
Probable bidders: Halsey,
Stuart & Co. Inc.; Kidder, Peabody & Co. and Blytlr &
Co,, Inc. (jointly).
Proceeds—Of the proceeds, $3,600,000 will be applied to the reduction of outstanding shortterm bank borrowings.
$3,400,000 will be deposited with
the indenture .trustee, available for withdrawal against

St. Anthony

will receive the pro¬

Underwriters—Names to ,be determined

Harriman Rippley
Oct.

common

costs

18.

(10/19)

Sept. 13 filed 250,000 shares ($20 par) common stock.
Offering—Standard Gas & Electric Co. which owns 750,ceeds.

through competitive bidding.
Probable bidders:
Halsey, Stuart & Co. Inc. (bonds only); The First Boston
Corp. (bonds only); Glore, Forgan & Co. and W. C. Langley & Co. (jointly on both); Harris, Hall & Co. (Inc.)
(bonds only); Lehman Brothers (bonds only); Eastman,
Dillon & Co. (stocks only).
Proceeds—To provide part

ferred stock.

Denver, Colo.

connection with the

Official

■

Sept- 17, filed $10,000,000 first.mortgage bonds;, <Jue £97$,
and 66,000 shares of cumulative convertible preferred
($100 par).
Underwriters — Names to be deter¬

due

Noma

./ V"

stock

Sept.

•

Inc., Van Nuys, Calif.
notification) 59,375 shares ($1 par)
For additional working

underwriter.

Public Service Co.

Sept. 29 (letter of notification)

Aids

capital.

tive 6%

derwriter.

(letter

common.

Public Service Co. of New Hampshire

competitive bidding. Probable bidders: The First Boston
Corp. and Merrill Lynch, Pierce, Fenner & Beane; Bl.yth
& Co. and Lehman Brothers; Smith Barney & Co. and

of record Nov.

offered

Inc.

stockholders

Oct.

Cabinet Co.,

(Mich.)

be
Bids

000

common

325,000

Co., Inc., Charlottesville, Va., and Gearhart & Co.,
Inc., New York, will solicit subscriptions from common
stockholders.
Offering—01' the total 278,318 shares will

mined

Sept. 23 filed $10,000,000 first mortgage bonds, due 1978.
Underwriters—Names to be determined by competitive

Inc.; Kidder, Peabody & Co.; White, Weld & Co.;
Allyn & Co.; Harriman Ripley & Co.; Salomon

Hutzler; Otis & Co.; The First Boston Corp.
Offering—The stock will be offered for subscription by

Corp., Winchester, Va.
shares ($1 par) common stock.

sell &

Oct.

convertible pre¬
ferred stock.
Price and dividend, by amendment.
Un¬
derwriters—Goldman, Sachs & Co., New York; Piper,
Jaffray & Hopwood, Minneapolis.
Proceeds—To retire
$3,000,000 of bank loans and general corporate purposes.
; ; *" ' •Pf1"' /P//v:'V'P
Temporarily deferred.
14 filed

July

corporate

Iowa

27' filed

Rubber

rant

com¬

Probable bidders: Halsey, Stuart & Co.
Inc.; The First Boston Corp.; Smith, Barney & Co.
Pro¬
ceeds—Of the proceeds, $2,400,000 is to be applied to pre¬
payment of promissory notes, $1,400,000 will pay in full
the $724,446 balance on a lease and purchase agreement
and for property additions; and $1,200,000 will deposited
with corporate trustee under bond indenture, available
for withdrawal against property additions.
Bids—Bids
for the purchase of the bonds will be received by the
company at the office of Chase National Bank, 11 Broad
Street, New York, up to 11:30 a.m. (EST) Oct. 13.

Sept.

and

Co.

13 filed 26,000 shares of common stock (no par).
Underwriters—F. Eberstadt & Co., Inc. and Prescott,

Sept.

Sept. 10 filed $5,000,000 first mortgage bonds, due 1978.
petitive bidding.

•

O'Sullivan

Monarch Lumber Co.,

Underwriters—Names will be determined through

Co.

poses.

determine the

(10/19)

debentures.
Under¬
by competitive bid¬

40-year

Probable bidders: Halsey, Stuart & Co. Inc.; Mor¬

stock

Sept. 27 filed Bank Group shares aggregating $2,500,000
and Insurance Group shares aggregating $2,500,000.
Dis¬

Interstate

To retire mortgage in¬

available inventory.

increase

Michigan Bell Telephone Co.
Sept.

Insurance

initially offered on a "when, as and if issued" basis;
13,333 shares will be purchased by underwriter for pub¬
lic or private offerings; and the remaining 40,000 shares
will be publicly offered on a "best efforts basis" on
completion of the subscription of the first 40,000 shares
and the company's receipt of a license to do business In
North Carolina.
Proceeds—For general business pur¬

DeHaven, Inc., Fresno, Calif.
Sept. 27 (letter of notification) $11.5,000 bonds.
Under¬
and

such

protested

24 filed 100,000 shares of capital stock (par $5).
Price—$15
per
share.
Underwriter—First
Securities
Corp., Durham, N. C.
Offering—26,667 shares will be

ward

Mathews &

debtedness

Co.

•

be filed by

ratories, etc.

New

Idaho-Montana Pulp & Paper Co., Poison,

•

(par $20) and 1,000 shares of
par). Underwriter—Mohawk Valley

Replenish working capital funds for payments
of capital stock of Paragon Testing Labo¬

unit.

VP/"TV1,;»

Hygenic Service Co., Boulder, Colo.
August 16 (letter of notification) $50,000 first mortgage
5% 20-year (closed) bond issue.
Underwriter—E. W.
Hughes & Co. For new plant construction and improve¬
ment of existing plant.

Mont.

account

preferred,

series A
To

Investing Co., Inc., Utica, N. Y. To be offered in units
preferred shares and one common share at $100

Becker & Co. will acquire the un¬
Proceeds—To be used in part for im¬

provement and expansion
Offering postponed.
Hooker

Rutherford,

subscribed shares.

•

East

Inc.,

stock

(no

State

„

pre¬

American

$110,000 first mortgage

Heyden
June

par)

gan

Charlottesville, Va.

Ervin,

Co.,

preferred

ding.

working capital.

Sept. 24 (letter of notification)

(no

cumulative

of five

($20 par)

Offering—To be sold present stockhold¬

stock.

common

1,000

Price—Common $50 per share,
share.
No underwriter. For work¬

(par $100).

writer—Hargrave Mortgage Co.

Hammond Bag & Paper Co., Wellsburg, W. Va.

•

Inc., Baltimore, Md.

2,500 shares of

preferred $100 per
ing capital..

per

Sept. 28

and

stock

North

shares for each

notification)

(letter, of

ferred stock

•

Proceeds—For additional

share. No underwriting.
working capital.

per

Otis
V •

Underwriters—There

Lithium Corp., of

common

Orleans Public

Inc.

Sept. 7 (letter of notification) 5,000 shares of 6% cumu¬

Pennsylvania Power & Light Co
New

Sickle,

Kingsburg Cotton Oil Co., Kingsburg, Calif.

October

Van

working capital.

Sept. 30 (letter of notification) 1,000 shares of common.
Price, at market. Names of underwriters by amendment.

common

Class A
Employees Credit Corp
Pfd. and Common
United New Jersey RR. & Canal Co.
noon
(EST)
Bonds

Underwriter—Kenneth

stock.

For additional

Sept.
October 20,

October 21,

Inc.

(letter of notification) 78,000 shares (25c par)
common
stock and 1,925 shares of $5 cumulative pre¬

•

18, 1948

Public Service Co. of Colo.____

Soya Products Co.,

.Kansas

sale.

June

N. H.

Aug. 2

14, 1948

Virginian Ry. 11 a.m

Dunaway Corp., Dover,

negotiated

Old

(letter of notification) 5,000 shares ($30 par)
preferred stock
(with conversion rights for a like
amount of common stock par $1).
No underwriter.
For
working capital.

Ry
Trust Ctfs.
RR.__'»___———..Equip. Trust Ctfs.

Central

Illinois

method.

Pacific Gas & Electric Co. noon (EST)___..Common
October

through

stock and take all unsubscribed shares.

new

Judson

Sept.

Central RR. of N. J.___—Equip. Trust Ctfs.

Interstate Power Co.

(1473)

Proceeds—For construction program.

NEW ISSUE CALENDAR
October

CHRONICLE

of the stock, will purchase its pro rata

owner'of 61.2%
share of the

FINANCIAL

■

" k

(Continued

page

62)

•

p.,

(1474)

THE
(Continued from page 61)

•

Sea Harbor

Oct.

(letter

FINANCIAL

capital stock to be sold at 15 cents

CHRONICLE

share. " No under¬

per

For machinery, equipment and
development of
mining properties.
'
; V
'
,

stock

common

(no par).
Price—$100 per share.
Of¬
subscription by class A stockholders of record

fered for

Oct. 7 at rate oi

lVz shares of B stock for each A share

held.

Rights expire Oct. 23.
writing.
•

Service

Sept.

•

underwriter.

For

the

Oct.

will

ditional

for

common

provide

each

portion of the

investment in the

Co. and

Bankers

Trust

Cooke.

For

gage
1968.

General

general development.

outstanding

full

stock

Co.

Associated

Telephone Co.

bank

notes,

(Edwin L.)

filed

200,000

Aug. 24 filed 22,000 shares of $2.60 cumulative (no par)
preferred stock.
Underwriters
Paine, Webber, Jack¬

Proceeds—For payfor further improve¬

cher, Pierce &

Co.

Price

amendment.

working capital.

in part, bank loans used for construction pur¬
Indefinite.

Standard Cable Corp.,

additional machinery.
Tide

Water

Co.,

Wilmington, N. C.

July 30 filed 80,000 shares (no par) common stock. Un¬
derwriters—Union Securities Corp. and W. C.
Langley &
Co.
Price by amendment.
Proceeds—For construction.

•

Indefinitely postponed.

common

Inc.,

shares.

upon

version of the preferred stock.
at

$12

share.

per

vertible

into four

beau

Each

Douglass,

Los

shares.

Angeles.

con¬

gypsum wallboard and lath plant in

construction

•

Central

•

Great

March

emissions

Bros.

ponder

his

new

gage

first

Gulf
1

bonds

cleared the

for

refunding mort¬

rahan

appears

new

have

issue calendar of

anything in the way of formidable
undertakings for at least a fort¬
night.
Although
manner

utility's

imoressed
which

big

the

West

financing

and,

per¬

the
Coast

was

have

new

been

securities

additional capital.
was

major

offerings
Mr.

Han¬

particularly pointed in

allusion to the sharp
the ratio of debt issues to
the

case

the

latter

rise

compa¬

Considering the lione-too-encouraging behavior of the
soned

States

the

sea¬

equity market it appeared

that efforts to carry out his
sug¬

Ry.

Utilities

better

the

sale,

Probable

current

stock

Pacific Gas
The

Gas

brisk

"Quickie"

Co.'s

for
new

the

new

riod

issue market

time.

over

Institutional investors

pe¬

v
are

keen for yields of less than

the

level

provided,

quality is there,

assure

success

appears

issue.

What with the head of the Se¬

curities and Exchange Commis¬

bit

common

stock

difficult

sudden

and

might

unless
marked

por¬

prove a

there

moved
some

out

and

evi¬

Gas

Electric

Gas

Electric

stock, had been

Co.

contem¬

and

011
-

reoffering to yield 3.10%, includ¬
ing the
successful
group.
The

bids, and to call foi*

change for

"drop-outs" in /

competing groups, due
to
disagreement
with

absorbed the entire issue, which

' •1

tenders

y"' /

only

smattering of

small issues due for market in the

interval.:
But

oil

Oet. 19, unless there is

Present

one

$75,000,000

the

group
via

same

Central
Power Co.
'

the

;

day

scheduled

bankins

par

bring
of

out

300,-

common

Light

61
&

•

Registration covering this
fering states that the
.

of¬

company
proceeds to the

will

apply the
liquidation /of

com¬

block

Arizona
.

tradi¬

slated to
;

negotiations,

000

of 40-

the

banking field

are

pete for the deal.

Looking Ahead
T.».
The underwriting
industry will
be
"resting on its oars" so to
speak for the next ten days or two
with

bids for

for this business

for

weeks

debentures.

headed
by
tional rivals in the

competitive

all three

some

1973

Stearns & Co.

Groups

the block to 250,000
shares, which
it figures better for

Despite

mort¬

registration with the SEC

year

challenged the
hearings are cur¬

company has decided
revision
of
plans which

the stock.

White, Weld

open

ascribes to "market conditions."
It now plans to cut the size of

planned a 3.125 basis, so
Were" shooting
pretty
much at the same
target.

Oct.

a.m.

slated to

Co.,

Three groups sought Pacific Gas
bonds and two of them
planned

all

a
change in plans, a
pickup is
indicated. On that date
Michigan
Bell Telephone
Co.
(Bell
System subsidiary), is

oversubscrip¬

selling

;

price
ideas
or
the
"spread,"
preliminary inquiries were re¬
ported almost sufficient to
bav$

pa?i-i.^^ns the early

rent before SEC. Meanwhile
the

Brothers and Bear,

But Otis & Co.

course,

bids

200,000 additional shares of
capital stock.
stockholders will be offered
rights to purchase
for each two
shares held.

Oklahoma

proposal

(10/14)

used

plating doing the job via negotia¬

look.

contemplating the' divestiture
its holdings of
400,000 shares

3%,*

stockholders

Waukesha Motor Co.

tion with bankers.:"

not

either

greater

•

this

common

restore

(jointl)'

Standard

yet slight edge in return above
that

Changing the Plans

through underwriters.
mailed

outstanding.

receive

served to point up a condition that
has been increasingly manifest in

and

ultimately

bonds

financing

to pay off
short-term bank'notes
working capital. Probable
bidders: Hal¬
sey, Stuarl, & Co.
Inc.; Harriman Ripley &
Co.; Shields
& Co.;
Kidder, Peabody & Co.
and

bidders:

Pacific

(10 20)

$9,500,000 first lien and
refunding
bonds, series C, dated Oct.
1, 1948, due Oct 1

/ Proceeds will

re¬

stock

company will
the sale of

gage

dently with

demand

Electric

common

tion.

tion of capital through the issue

immediate cut-

possibly

of the

subscription period will expire
The
company has, at
present, 2.956,089

Virginian Railway

plans the
debentures.

guine about

the

The

Co.

company
new

•
'

(10/14)

gestion

sold

Dec.

for

sorbed investment bankers
by and
large were not especially san¬

seek

Nov.

shares of

;

com¬

Proceeds

par.

market situation.

that

will

warrants will
15 and the

third

equities

nies.

ab¬

subscription at

300,000

& Canal Co.

its

Transferase

equipment trust certificates,
beginning
on Sept.
1, 1968. Probable

was

bit.

his
in

Northern

$15,000,000

long period now, the
light industry, and more
recently the natural gas pipe line

source

for

offer

funds

soon

Virginia Electric & Power Co.
1 the second
step in company's long-term

about

working capital.

reported

new

inclined

Jersey RR.

and the remainder

1949, and ending
Halsey, Stuart & Co. Inc.; Salomon
Hutzler; Harris, Hall. & Co. (Inc.); Harriman

power and

Co.'s $75,000,000

and

year

remarks
a

cer¬

include:

Oct.

haps, slow down

Pacific

Cpar $1)

Additional

extensive construction
program was announced.
plan calls for offering to
holders of common stock
additional shares to raise
approximately $11,000,000, at
the rate of one new
share for each four
shares held of
record Nov. 12, 1,948.
Price of the new shares
will be
determined on conditions
existing at that time.
Any upsubscribed shares will first be
available to stockholders
who desire to
purchase more than their
pro rata amount

bidders:

plans

company

capital.

The

Riple.y & Co. and Lehman Brothers
(jointly); Kidder,
Peabody & Co.
W-, ,■ ■.//WW/WW'-''''' -

apparently

might

15 years will be received

financing by public utility

companies,

bidders

United New

•

New

Probable

additional

Southern

Oct.

to mature in 30 equal semi-annual
instalments

sion, E. JYL Hanrahan, sounding
a
warning against the mounting

companies,

Monica,

Commission

The company has issued
invitations for bids to be
ceived Oct. 14 for
$12,720,000

assumed that this source of

Electric

Engineering & Manufacturing Co.

reported

•

Marketing this week of

Sherman,

bids up to noon
Street Station, Phila¬
delphia, for the sale of $6,487,000 general
mortgage bonds
of the United New
Jersey RR. & Canal Co. Bonds will
be dated Oct.
1, 1948 and mature Oct. 1, 1973. Probable
bidders include:
Halse.y, Stuart & Co. Inc.; Harriman
Rippley & Co.; Shields & Co;
Kidder, Peabodv & Co.
and White, Weld & Co.
(jointly).

pay

one to

13/

for additional

S. Grant
Mining Co., Butte, Mont.
Sept. 20 (letter of notification) 500,000 shares
(100 par)

Gas and

mon

For

Santa

Jersey (10/13)
purchase of $1,500,000 equipment trust

General

Oct.

•

Report

California

$10,000,000

Pennsylvania RR. will receive
(EST) Oct. 20 at Room 1811 Broad

Co.

about

Inc.;
(Inc.),

Consolidated Electric & Gas Co. and Middle
West Corp.
will sell 120,000 shares and
34,000 shares, respectively;
Copper Ranee Co., 34,000 shares and several
individual
owners 11,200 shares.

Reporter's

RR.

Co. and

to
increase
authorized
stock from 2,500,000 to
4,000,000 shares (par $5)
permit the directors at their discretion
to raise

needed

•

by the
Halsey, Stuart &
Salomon Bros. & Hutzler;
Harris, Hall & Co.

Co.

—

Our

used

Oct.

company

debt

tificates, due in

•
Upper Peninsular Power Co.
Sept. 28 filed 200.000 shares of common stock
(par $9).
Underwriters
Names to be determined
through com¬
petitive bidding
Probable bidders; The First Boston
Corp.; Kidder, Peabody & Co.; Merrill
Lynch, Pierce,
Fenner & Beane, and Paine,
Webber, Jackson & Curtis
(jointly).
Proceeds — Will go to
selling stockholders.

•

will

Bids for the

Phoenix, Ariz.

Utilities & Specialty Corp.
/
July 29 filed 41.000 *hare<= of 5% cumulative convertible
preferred stock
($10 par).
Underwriters—George R.
Cooley & Co., Inc. Herrick, Waddell & Reed,
Inc., have
withdrawn as underwriters. Proceeds—For
general cor¬
.

Mitchum Tully & Co.

United

porate purposes.-

applied

Corp.; White, Weld &
(jointly).

Co.

The

Kidder, Peabody & Co. (jointly); Paine,
Webber, Jack¬
son
& Curtis, Stone
& Webster Securities
Corp. and
(jointly).

con¬

Underwriter-r-Bour-

For

has

N. Y., up to noon (EST) on
bidders include Blyth &
Co., Inc.;

& Co. have been
selected to
manage a syndicate to sell
its entire interest in
the common stock of
Southern In¬
diana Gas & Electric
Co., and an additional amount >of
common stock to raise a
portion of the funds
required
for that
company's construction program.

off $2,900,000 of short-term
bank notes and for construction.
Probable bidders in¬
clude: Halsey, Stuart & Co.
Inc.; White, Weld & Co. and

Preferred will be offered

preferred

common

ceeds

(10/13)

Indiana Gas & Electric Co.
Z
Sept. 29 Justin R. Whiting, President of
Commonwealth
& Southern
Corp. (Del.), announced that Smith
Barney

;

Suplee,
Price—$7.62V2 each.

Inc., Philadelphia.

•

Working
N. J., is

Teterboro,

authorization to sell $6,000,000 first
mortgage series
bonds, due Nov. 1, 1978, at competitive
bidding.
Pro¬

Co.

proposed $10,900,000.
The financing may be
undertaken
by sale of common or
debentures, or a combination jof
these and other methods
Traditional underwriter of
bonds: Halsey,'Stuart & Co.
Inc.
"
'
'

for

Union Piaster Co., Los
Angeles, Calif.
Sept. 22 (letter of notification) 25,000 shares of 60-cent
cumulative preferred stock, series A
($10 par) and 100,000 shares (850 par) common
stock, issuable

Electric

needed

Associated Telephone
Co., Ltd.,
California

Company

Harris,

complete the company's construction and
replacement program, the management
states, adding
that hot more than $5,600,000 will be

Prospective Offerings

•

Power

Probable

lip

Proceeds—From company's offering will be used to
pay
for opening a new branch store in
Lancaster, Pa.

Sept. 17 (letter of notification) 94,000 shares (250 par)
capital stock.
Price—$1 per share.
Underwriter—Ster¬
ling, Grace & Co
To move the plant and purchase

Gas

13.

and

underwriter.

Yeatman & Co.,

Westerly, R. I.

are

(E. S.) Co., Inc. (10/18-22)
Sept. 27 filed 57,000 shares ($2 par) common
stock, of
which 12,000 are
being offered by the company and
45,000 by three stockholders.
Underwriter'—

To pay,
poses.

sale

common

Youse

Proceeds—

the

Peabody Coal Co.
Oct.
5,
stockholders
voted

Co., Pittsburgh

named

Curtis; Stone & Webster Securities Corp.; Raus-

for

•

—

son

North

Agnew

preferred and three
Willis Air Service,

one

capital.

Oct

American Co. is
inviting bids for the pur¬
whole of 75,000 shares of
common stock ($25
par), of Pacific Gas & Electric Co. Such bids will be
received
by North American Co. at Room
1901, 60

Willis-Rose

Southwestern

The

Oct.

Corp., New York
Oct. 4 (letter of
notification) 1,000 shares of 4% cumulative preferred stock
(par $100) and 3,000 shares of
common stock
(par $1). Price—$103 per unit consisting

$1,800,000 note to

Pacific

chase

Offering indefinitely postponed.

•

bids

Salomon Bros. & Hutzler;
(Inc.); Kidder, Peabody & Co.

The First Boston

ers.

(10/14)

receive

(jointly);

&' Co.

•

(no par) common stock.
Underwriter—Hemphill, Noyes & Co., New York. Price,
by amendment.
Proceeds—Will go to selling stockhold-

of Iowa Public Service

reduce

Wiegand
28

will

Broadway, New York 4,

Underwriter—The Ohio Co.

Sept.

—

Hall

sinking fund bonds, dated Sept. 1, 1948, due Sept. 1,

ment

share of ad¬

Proceeds

Brothers

Western Reserve Telephone
Co., Hudson, Ohio
Sept. 29 (letter of notification) $125,000 3%% first mort¬

required to make ^further

sums

common

pay

held.

>■

•

entitled to subscribe to

company

$5,500,000 equipment trust
certificates, series AA, to be
dated Oct. 1, 1948 and to
mature semi-annually 1'rom
Feb. 1, 1949, to
Aug. 1, 1957. Probable bidders: Halsey,
Stuart & Co.
Inc.; Harriman Rippley & Co. and Lehman

Side

ments and extensions and for
additional

shares in the ratio of one-fifth of

new

Illinois Central RR.

The

underwriting.

purposes.

record

•

common

Western Air Lines, Inc., Los
Angeles, Calif.
shares of capital stock (par $1).;
Offering—William A. Coulter, former
director, is offer¬
ing the stock on the New York Stock
Exchange without

City (Iowa) Gas & Electric Co.
Sept. 21 filed 71.362 shares of common stock (par $12.50).
Underwriting—None.
Offering — Holders of common
of

Mining Co., St. George, Utah
(letter of notification) 74,100 shares
common,

Sioux

stock

•

Proceeds

share.

per

486

Sept. 29 filed 215,597

Sightmaster Corp., New Rochelle, N. Y.
Sept. 24 (letter of notification) 99,000 shares of common
stock (par 25c) and options for the purchase of
25,000
shares (owned by Michael Kaplan) at end of 13 months
after public offering of 99,000 shares.
Underwriter—
Price—$3

notification)

and

—For general corporate purposes.

Willis E. Burnside & Co.

also elect to raise funds
through sale of additional
stock, coincident with the debenture offering.

common

34,100 shares of which will sell at 25 cents
per share
40,000 shares at 50 cents per share.
Underwriter—

Corp. of America, Columbus, O.
June 28 filed 25,000 shares or cumulative
preferred stock
(no par), with class A common share purchase warranto
attached and 25,000 shares of common stock reserved foi

corporate

West

Sept.

working capital.

Underwriter—Lee Higginson Corp.
Indefinite.

(letter

Radiator Corp.

•

Shoe

warrants.

(N. Y.)

may

•

Price—$35 per share. A total of 243 shares is
being offered to stockholders and 243 shares to
key
employees. No underwriting.

Engineering, Inc., Washington, D. C.
of notification) 5,000 shares ($5 par)

stock.

Working capital. No under¬

(letter

common

Utica

Oct.

Thursday,^October 7, 1943

Halsey, Stuart & Co. Inc.; The First Boston
Corp.; Stone
& Webster Securities
Corp.
It is thought that company

writer.

Corp., Hewlett Harbor, N. Y.
notification) 1,359 shares of class, B

COMMERCIAL

currently
out¬
standing construction loans of
$3,000,000 secured from Pitts¬
burgh
in

the

need

banking interests earlier

the

The

year.-

■

prospectus,

fact

that

•

moreover, cite

the

■company

wil

additional, $9,000,000 t<
complete its construction
plan

through to the

end

of next yeai

Volume

168

Number 4740

THE

COMMERCIAL

Rebutting Dr. Spahr On Gold

FINANCIAL

CHRONICLE

(1475)
the

British Rearmament

the

ture

system

should

force

not

hard

uneasily

people
with

do not

this

"The

but
it

hit

people

even

could

most

the

maintains

free

the

said

standard,
monetary

need

there

substantially free. If this vital
out,

for

Soviet

unit

market

the

terms

Union

gold
its

expresses

of gold,

large gold reserve
gold for some of its in¬
a

good

leadership in monetary af¬

and

fairs.

The

ternational transactions.

subject is too complex
of them to understand."

for many

I believe this doctrine

pessimistic. I
have

capitalist

badiy
the

which

socialist

monetary
the

alternatives

early

thirties

world

too serious and

believe

lic

collapse

could

have

central

banking
the

compare

would

the

field

three

when

ment

fire

spreads.

that

say

depart¬

would

interfere

The

be¬

erroneous

let

the

fact; that

Jan.

Here

the

words.

The

the

as a

unit

national

value

stantially free."
do not have

standard,

material

raw

lead

im¬

large-scale

unemployment, and a reduction
of food imports would necessitate
cuts

the

ployment

and

ship

the

that

and
be

not

it.

member¬

Britain's

would

thus

defeat

most

specific

points

Kemmerer,
he
fully the basic

this

international gold
there is no large in-

the

Britain

conclusion

that

embark

assistance

have
on

it
re¬

obtained

liabil¬

ment.

figures

Its

entirely

as¬

under

should

requirements.
have

basis

(Special

Standish

balance

ATCHISON,

The

York,

"gap"

Board

TOPEKA

RAILWAY

N.
of

Y.,

Iltul

with

and

the

Dollar

Dividend
of

Two

AND

28,

1948

Capital

Stock

payable

December

Common

Capital Stock
Company
at
29, 1948.

the
October

Dividend
Common
orders

checks

will

the

1948
the

holders

mailed

who

have
office.

this

dollar

one

share and

($1.00)
extra

business

DODGE, Treasurer.

both

the

per
one

the

Company,

registered

Capital Stock

therefor

per

shareholders of record at the close of
on
November 13, 1948.

Directors

($2.00)

NO.

dian)
the Capital" Stock of this
Company,
both payable December 13,
1048, to

usual

Dollars

said

bcokt

business
holders

filed

®FERRO ENAMEL
CORPORATION

suitable

CLEVELAND,

and continue

indefinitely."

PAUL DENT BORDWELL

the

United

increase

the

United

tune

States

the

dollar

States

cover

The

WILSON, Assistant Treasurer.
Broadway, New York 5, N. Y.

120

Board

Enamel

deficit

world

politics," the
argument
runs,
"are they-pre¬
pared to pay the piper?"
This

Dividend

September
29, 1948

Notice

OHIO

grateful,

Street,

amount

New York City 5, N. Y.

Britain

Wall

1948

financial

lias

received,

receiving, from the United

Jos. Meyers Opens Office
ROCKVILLE CENTRE, N. Y.¬

Joseph H. Meyers has opened of¬
fices

Lincoln

Avenue

engage in the securities

business.

But

with

the

realistic

(Special

The

Financial

BEVERLY HILLS,
gy

Chronicle)

CAL.—Peg¬

Carson has become connected

with
North

Bourbeau

Douglass,

Robertson Blvd.-

133

force

revise

purposes

British
bined

effects

would

present

the

strength of the

strength of
ain

the

rearmament

the

negligible.

3Vi%

Should

reg¬

America

3Vi% CONVERTIBLE
PREFERRED

87'/i
COMMON

STOCK

SECOND

420

Dividend Notice
vi

($1

par

value

■

COMMON

STOCK

Each

dividend

(e:j-a dividend)

October 8,

payable

December

1 948, to Stockholders of record at the
close

STEPHEN

1948.

Board

proposed

•

Directors

twenty-five

the

payable
record

October

3:00

Plan

15,

o'clock

Married

the
for

submission

Employees,

meeting

UPSON, Secretary

September 27,

BRAND,

Secretary.

1948.

ATTENTION !!!

29, college grad¬
desires banking connection
possibility of acquiring in¬
terest
in
future.
Compensation
secondary to opportunity to learn
general banking as lifetime career.
veteran,

uate,
with

Experienced
ance,

of November 14th

and

Town

west

in real estate, insur¬
property management.
of Missouri River
pre¬

Rfl YOni€R

ferred.
References.
Box
S-23,
Commercial and Financial Chron¬
icle, 25 Park Place, New York, 8.

through the 18th

PRODUCER
OP

for the NSTA ANNUAL
CONVENTION
in

get

PURIFIED
WOOD

CELLULOSE

Dallas, Texas.

Apropos of dates;
your

firm's

now's
in

the

time

The

Secretary

has

OFFICIAL
Thorough

Board

declared

dividend

Directors

quarterly
fifty cents

NSTA CONVENTION ISSUE of
"THE

ence;

Wall Street experi¬
capable of acting in capa¬

CHRONICLE."

city

teletype, plugboard,

November 15,

Send it in
today to "The Commercial &

handle

stockholders

Financial
Nnw Yunk

Chronicle," 25 Park Place,
8, N. Y.
V;-vVn

principal's
own

available
counter

for

assistant,

cage work,
correspondence,

small

house.

over-the-

Particularly

adapted for one-girl office. Box
929, Commercial & Financial

(50^)

per

Common

the

Stock, payable
1948,-to

record

the close of business Octo¬

ber 29, 1948.
EDWARD

BARTSCH

Chronicle, 25 Park Place, New
York 8.

to
m.,

the Corporation, at a special
called on November
18,
1948.

SITUATIONS WANTED
BANKERS

1948,

the stockholders of

Dated

date

per

stock

be mailed.

approved

Pension

held

cents

common

Checks will

also

'•'/

■.

declared

Corporation,

the Board

dividend

a
was

The

meeting of

stockholders

of business November 1, 1948.

Chalk up the

today,
the

in¬

Lexington Avenue, New York 17

STOCK

cents per

(46th Consecutive Dividend)
37'/i cents per share

Brit¬
it

following

CUMULATIVE PREFERRED
87Vi cents per share

illu¬

numerical
in

Vanadium Corporation

Burlington Mills

the

dividends:

democratic

Communists

Directors of

4% CUMULATIVE PREFERRED
$1 per share

for

com¬

purely

Corporation has declared

of meeting this ad¬

deficit

countries
sory.

Lend-Lease

Board

ular and extra

pre¬

pared

December 3, 1948.

G- W- WALLACE, Treasurer

CO RIM) RATION

The

the

eyes

Ferro

Burlington Mills

viewed

argument seems inescapable.
Unless the United States are
the

Douglass

still

States.

the

ditional

Joins Bourheau &

situation

the

Dividend of thirty-five cents ($.35)
per-

September 18, 1918

assistance

and

Corporation has this day declared

holders of record

sound

may

ungracious and un¬
in view of the large

October 6,

Directors

a 10% Stock Dividend on the
outstanding common stork of the Com¬
pany, payable December 20,1948, to share¬

calling

are

50 cents per share

...

Bank

Smelting Co., Limited
Dividend

and

Stock

National

dollar ($1.00) (Cana¬
per share has been declared on

has
this
day
de¬
quarterly
dividend
of
One
Fifty Cents ($1.50) per share, being
No.
143,
on
the
Common
Capita
the Company, and an extra dividend

clared

Foster

Bay Mining

noii

(Canadian)

COMPANY

September

DIVIDEND

still

Dividend of

SANTA

with

now

Chronicle)

ORE. —John

DIVIDEND NOTICES

New

Financial

Bldg.

DIVIDEND NOTICES
THE

Chronicle)

civilian

diminished

the

The

Marshall,

Those requirements

rearmament.

PORTLAND.

calculated
of

in any way

not

Staff

Financial

Foster & Marshall Adds

cover rearma¬

were

the

The

share, and

sub¬
we

further

fixed

sense

But

meant to

Common

people

additional

was never

power¬
a

nue.

made plain that the Marshall Plan

armed

security.

American

granted

Plan.

"The

used

Marshall

through

object.
It
disorganize Britain's econ¬
without strengthening her

Many

and

as¬

vital

its

become

COLUMBUS, GA. — David G.
Lewis has been added to the staff
Courts & Co., 1303 First Ave¬

the

Rearmament

enemy.

British

easy task to per¬

consent

just

Party

increase.

that

sistance

strength against an external en¬
emy would be more than offset
by the increased strength of the
internal

(Special

sistance, in view of the large

This

Communist

Court Adds

the

that the effect of the

mean

increase

would

advantage

are

greatly

would

cuts

would

taking

would

unem¬

discontent

Communists
chances

Both

food

widespread

cause

the

rations.

London

Congress

opinion

through"the effect of rearmament

large inter¬

which
In

would

the

essential.

from

simply

may be briefly de¬
monetary system where
value, in terms of

market

suade

and

large scale unless

once

quantity of gold in

would not be

lack

Curtailment of

If the United States

asset and not

Lend is

the

realized in

for

armament

Professor

materials

imported
equipment.

with

strength
Italy is impaired.

France and
It

impaired

Rearmament would have to

many

become
way

down

would be futile

would
same

slow

exhaust

Britain

ally,

major factor in the defense
against Communist aggression

highly critical situa¬

come

the

drain

exhaust

omy

satisfactory solution demands
high degree of international co¬
operation, which should begin at

Monetary Policy) in his

additional

riddled

raw

would

since

which prices,
wages and debts are
customarily expressed and paid,
consists

herself

tion.

ports

Britain

rearmament,

find

assistance

Plan.

ity in the task of preventing war,
or
winning it if it cannot be pre¬
vented, then a revival of Lease-

caused

Communism, and her strength

would

the gold reserve Britain would be
a

difficulties

ful

might

rearmament

faced with

unaided

result

exchange

sometime

the

economic

year.

Should

materially

>.iot

its

the

gold

book Gold and the Gold
Standard:
"This standard

fined

acute

crease

the

American
Marshall

reserve.

want

necessity when he said, "The sub¬
ject is an international one, and

former President
of the Economists'
National Com¬
on

listed

will

understood

throughout my article is substan¬
tially that of Professor Kemmerer

mittee

being based

conceptions

foreign
from

would

badly out of date. Though I dis¬

definition

(Incidentally

Professor

This

only say in closing that
Professor
Spahr's
attitude
to¬
wards
international
control
is

the

time

ynited States has been on
standard
internationally
31, 1934."
question of

become

natural

present

the

above, is completely irrelevant

with

face

part

what I said.

Again Professor Spahr says, "It
is mystifying to read of an inter¬
national gold standard not
being
the

greater

Spahr's rebuttal,
the

anything else

with

the

was

generally accepted.

law of combustion.

attainable at

which

one

the

arising

rearma¬

swing within

so.

problem

slow

the

that

mean

that

assume

be in full

agree

must

because

many nations have it?" Yes,
is precisely what Mr. Bord¬

formulate

months

The

Spahr

burn,

standard

in¬

means
by an international
standard, and that is what
is generally
meant, for Professor
Kemmerer was not trying to in¬
vent a new definition but
simply

in
the
autocratic
state
would say that the
only way is to
station a fire inspector in
every
cow
stall to prevent fires in the
first place. But Professor
would

well

Mrs.

The

gold

sonable

ment will

gold

lievers

city

unless

good enough to put out the
before

Mr.

that

O'Leary's
cow
kicks
over
the
lantern, it is the job of the public
authorities to have

playing with
Bordwell, by
no

all

positions,

that

say

for

chance, think that there is

transactions.

"Does

great pub¬

ternational

straight forward application of the
generally accepted principles of
international

of too

importance

words.

had been

central reserve. This is

ex¬

pect everyone else to use his own
private definitions. This subject is

autocracy.

been prevented if there
a

works

spnere,
I
the worst

it to mean, but he should not

should

gold

(Continued from page 8)

caused

Professor Spahr, like Humpty
Dumpty, has the right to make a
word mean just what he chooses

to be too

believe that

not

system

that, much
of

sole

uses

And Lend-Lease

which is sub¬

indeed,

internal market which

even an

left

detachment,

the

market

free;

criterion

But

us.

that

aware

the

simply

regard the system

scientific

mass

not

monetary

cushion

panic,

how

measure

The

sun.

ternational

stantially

the

equally vital that the addition to
the
"gap"
through
rearmament

(Continued fr om page 6)
rather in the spirit of an astro¬
physicist measuring the tempera¬

aid

under

President

September 29, 1948

COMMERCIAL

THE

(1476)

Thursday, October 7, 1948

CHRONICLE

FINANCIAL

outlook

The

BUSINESS BUZZ

whether the

Republicans will control the Sen¬
ate, in the sense of having a ma¬

A
gJ
jljL IIVM/

Behind- the-Scene Interpretations
from the Nation's

Capital

jority of at least one to organize
the upper chamber, is still nip and
tuck.
It is not beyond the realm
of imagination that the race will

•

JL \J U/

which

decide

party organizes the

«t

the question, how

candidate in

GOP

the

serious

tention?
As it is

here, the promotion

seen

the

GOP

they

by Russian aggression would
the

that

will next

year

with ra¬
tioning, allocations, controls, and
military

economy

spokesmen

the

when

GOP,

"What

Western European

union

cdnnotes for tlie U. S. is not only

aid

military

Western

Europe,
in

but military aid in volume and

For the decision to form

hurry.

and

out

tion

out

political

federa¬

Britain, France, Belgium,

Netherlands, and other

the

sharply and at once with the crisis
which all expect will one day de¬
termine
war or

fateful

the

decision

come

when Russia must decide whether

she cannot achieve her objective
of

the continent of
going
to
war

dominating

without

Eurone
about it.

simply

build

economically

Europe

the

point where the scales eventu¬
Western

against

the

•

the

World,

East.

level

the

her mind whether she want¬
to

fight

too late.

before

atomic

the

would

thrust

Russia

diplomatic

re¬

political decline.

pean

take

the

^Political

union,

Something far

however,

measure

mobilize
it

what
to

has

now

men

far

important than merely pro¬
posing to mobilize all Western
Europe's resources to check any

Russian aggression. Political union
would mean to Russia that ag¬

gression of any kind against any
part of Western Europe would
mean

war,

This

LOS

assur¬

making

discourage

back

question

nowr

Gov.

intends

Russia

offer

twenty bucks

out of

such

that

such

dramatic

his

for it—said

original

charges

124

The day before the
of J sprang its latest judicial(?)
(1).

one

representatives

move,

Alcoa

retreat. It might end the uncer¬

asking D of J to act and get
thing settled, but the Attorney
General, 24 hours before, could
then offer Alcoa no hope of im¬

tainty which otherwise can last

mediate action.

Russia

indefinitely,
war

state

But

peacetime

for

the

forward

people

the

capital

the

Federal
-

They

question;

power

reconciled

position

Dewey's

Gov.

over

fact

the

are

the

that

Government under any

Administration

undertake

will

upon

the cutting out of all feas¬

JThere is said to be a close re¬
between
the Justice

ible

lationship

that the

Department's current suit against
the
Aluminum
Co. of America,

feed

source

of aluminum.
estimates thaL

here

elements

the

bureaucracies

hungry

power

to distribute

electricity,

distribution lines

where

and

subsidy,

GOP nominee will not

produce

year

if it

were

jjt

pro¬

duced.

Alcoa, naturally, is not disposed
increase capacity while under

the guns of the

Most Famous At¬

far

tor

competitors might
want to boost capacity, but not
while there is the juicy prospect
that the
Department of Justice
will smash up Alcoa and force it
to sell some of its plants to those
competitors at bargain prices.
Incidentally, the Department of

the

first

opportunity,

try to seize it.

Revolution, armed
revolution by commies in France,
distinct

possibility
given circumstances.
as

seen

under

Should there be Western Eu¬

union,

ropean

the

then

phy.

Alcoa's

the

that

The

Financial

has

become

Mr. Williams for

the

with

Chronicle)

associated

with

de¬

Bldg.

many years was

Bingham-Walter & Hurry.

their

hand,

most

op¬

South Jersey Gas

in-«

are

come

election

re¬

to the conclusion

Taft-Hartley Act has so

proved to be a negligible fac¬
in this year's elections.
Of
21 Senators who favored the

some

The

defeat

renominated.

been

have

act,

U. S.

tentative

slipping

butter

that

belief

other two

of the

was

explained by issues apart from
their
favoring the Taft-Hartley

the

butter

other

market.

the

Certainly,

voted

Seatex Oil

Soya Corp.

said, the falling of prices could
not

explained

increased

production, for the trend is still
smaller

toward

one

been

has

food

shown

department.

M. S. WlEN & Co.

ESTABLISHED

Members N.

Cream,

milk, even whole milk,

and ice cream, seem in
of

herds.

anticipated

finally

has

canned

dairy

"consumer resistance"

1919

Y. Security Dealers Ass'n

Exchange PI., N. Y. 5
Teletype N. Y.

the way

HA. 2-8780
1-1397

affected.

being

:-s

Further-

s|i

i.i

softening

;

lumber

during the latter part of
reported to be in the
offing.
It is due to the fact that
the
lumber
industry
has been
able to raise production finally,
despite the terrific building boom,
to the point where some stocks
are beginning to accumulate.
prices

this year is

«N'.'w

Accumulation
due to the

•

■

.* '

stocks

reported decline in the

Actually building
high until the
latter part of the Summer that a
starts have been so

record

volume of home

been

tion is

Trading Markets:
Ralston Steel Car

Oregon Portland Cement
Riverside Cement A & B

Spokane Portland Cement

not

building boom.

Of 302 House members who

Act.

Lonsdale Co.

price

and

Finishing

Dorset Fabrics

aajry products are priced out of

well

except

observers

sults have

something the commies
They will seize that con¬

want.

this

the

torney General since Frank Mur¬

the

ernment is

trol

market

Angeles Stock Exchange.

Belle Isle Corp.

is.

long

the gov¬

other

There

which

shortage

458

Spring Street, members of

Williams

is insuf¬

linking

^balance

however, that Dewey will insist

economy.

control

the

trolled

strikes,

getting

verting to the government con¬

the

are

favoring the act.

Thus the

ess.

the

terstate character. They believe,

minium could be absorbed by

short

evidence

feat

there

and

recent

Power

cidental to the production proc?

government. Control

ficient

the vast hydro projects of an in¬

One

hikes, and the like,

renominated,

re¬

and

ripped the seat

here that the explanation for the

city do not appear to be worried

in¬

without

Dowd

LOS ANGELES, CAL.—John A.

renominated.

military
could not

ponents of the act also have been

the

economy,

larger

substantially
carried

into

utilization
factory capacity

materials

raw

the

of full

manpower,

flated

danger

the

Russia.

with

present

John

pants on his swivel chair!"

were

challenge if properly backed up
cause

CAL. —Duke

with Sutro & Co., Van Nuys

challenge. There are many who
believe

gave

| against Alcoa have been reduced

seriously

Dewey

Chronicle)

Financial

with Gross, Rogers & Co.,

(Special

"He

' I Justice's

upper-

minds

Washington

whether

The

Williams With Sutro Co.

Russia

500,000 additional pounds of alu¬

wage

has
firm,

XF-

the first expendables..

the

the Los

illustrated by a
specific example.
In France, the
commies are doing about as well
as
they could be expected to do
in sabotaging French economy, by
be

may

investment

ANGELES,

Banks and

now

South

material

and

front.

own

Kemp & Co.

(Special

po¬

speedily and in volume. The U. S.
would
have
to
be prepared
to

preparedness program

solid

without

immediately would confront Rus¬
a

his

Avenue.

years

many

Two With Gross, Rogers

military aid

that

political union of Western Europe
sia with

for

Robles

Los

Kemp

headed

from the
,U.S. would be forthcoming, and

important. A

drastic

federation

litical

and
,

South

Thomas

the Western Euro¬
nations would be unlikely to

might

fight and
be

world,

begin

and

treat

would

war

upon

would

••

Russia

Then

112

Mr.

However,

most

gan¬

Chronicle)

Financial

Kemp has become associated with

Controls

economy.

The

Paine, Webber, Jackson & Curtis,

measure

might be escaped.

Russia saw

scales

("Special

PASADENA, CAL.—F. Thomas

substantial

Kemp Joins

Paine, Webber, Jackson

might
than that foreign

governmental

ger of tipping, she would make
up

achieve

and

feeling

The

that when

has been

exports, the rate should not

changed.

F. Thomas

year.

real coordination of
procurement.
Dewey with Con¬
gressional backing might actually

ally would be tipped in favor of
ihe

able

challenge, and im¬
mediately
start
reorienting
its
economy to producing large addi¬
tional volumes of military goods

Western

much

from

Hitherto the strategy has been

does not retard all avail¬

rency

in power, is
National De¬

Establishment,

ances

The crisis will

peace.

the

aid outlay by

Russia

confront

would

tries,

coun¬

fense
save

the

master

first

the

millions

if the value of the cur¬

words,

hundred

able

be deter¬

relation to
exports.
In
other

nation's

the words

mean

was

official

the

within the realm of pos¬

was

,s»!

cards

Bank,

that

mined primarily with

sibility that foreign aid might at
least start slowly, say only a few
If

other unpleasant devices.

many

the

Monetary

the

World

clear

ation is that it should

might next

hoard
and

thinking about currency devalu¬

say.

just about nail down the prospect
into

Fund

escape

seem

ened

the

made

year, under
going into a mili¬
tary or semi-military economy.
Sure, foreign military aid would

political union among the
"Western European nations threat¬
of

Dewey,

this in¬

During t-lie meeting last week

WASHINGTON, D. C.—When Gov. Dewey in

ters

<
-

will

death

Senate.

his Salt Lake City
speech indicated that he intended to use U. S. aid as a device for
achieving the goal of a United States of Western Europe, he touched
off some fierce speculation among business representatives in the
capital city. The speculation cen-^

normal

the

that

illness

chances

LERNER & CO.
Investment Securities

10 Post Office Square,

Boston 9, Mass.

anticipated for 1948,

for

the

289 have

act,

construc¬

Telephone Hubbard 1990

Teletype BS 69

Reds

would not try by hook or crook

without great risk
the
then

French
there

isolated attack
the

Western

would

to take over

government,
would

upon

any

European
attack

one

Firm Trading Markets

nations

upon

Hence

well
with

back

the

GARR1S0N-0N-HUDS0N, N. Y.

Under

confront

decision

Russia

fight

Hill, Thompson & Co., Inc.
Markets and Situations for Dealers

ram, mams 4 CP- Inc.

120 Broadway, New York 5

Management
•

Reservations

accepted

for Columbus

down.

Without

New

European union pretty

would
the

achievement

FOREIGN SECURITIES
All Issues

them

all.

Western

Day week-end

<
,

such

N. Y. Office:

spectacular

challenge to the Reds, there was
»t. least an-outside chance that

Teletype—NY 1-971

HAnover 2-0050

for

war.

Tel. REctor 2-2020

SPECIALISTS

HAnover 2-4862

Garrison 601

FOREIGN SECURITIES

50 Broad Street
__

New York 4, N. Y.

AFFILIATE: CARL MARKS & CO. Inc. CHICAGO

Tele. NY 1-2660

Full text of Commercial and Financial Chronicle : October 7, 1948, Vol. 168, No. 4740

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