Full text of Commercial and Financial Chronicle : October 9, 1947, Vol. 166, No. 4636

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Bus.

adm-

T3

.'*?■

SUBRARV

...

"

1947

ESTABLISHED
1830":

'

U.-.*-V»A.

Reg. U. S. Pat. Office

Volume

166

Number 4636

New

York, N.; Y., Thursday, October 9, 1947

Price 30 Cents

a

Copy

American Bankers Association iS |]
Holds 73rd Annual Convention
Convenes at Atlantic City, Sept. 28 to Oct. 1.
v :

G. W;

Bailey

Frank

as

Joseph M. Dodge succeeds
President; Evans Wool Ien, > Jr. j becomes Vice-President,- and

Powers

P.

is

elected

Treasurer.

New

Division

*

officials

chosen.

Addresses of

Winthrop; W. Aldrich; A. L. M* Wiggins, Under Secretary of
tli& Treasury, and- others are given herein. Convention approves; resolutions;
favoring both aid to Europe and national debt i and tax reductions.

,

At the conclusion.of its sessions in Atlantic

City from Sept. 28 to Oct. 1, the 73rd An?
Joseph M* Dodge, President,
C. W. Bailey, the
retiring President., In his elec¬
Presidency of the ABA, Mr. Dodge was advanced

nual Convention of the American Bankers Association elected

^co succeed
tion to the

State and
•-

;

.....

_

v..Y

.

Municipal
R. H. Johnson & Co
Established

CANADIAN

Bonds

SECURITIES

1927

INVESTMENT SECURITIES

Hirsch & Co
Members New York Stock

Exchange

and other Exchanges

hi

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

Chicago

BOSTON

Troy

PHILADELPHIA

Albany

Baltimore

London

Buffalo
Dallas

-

Pittsburgh

THE NATIONAL CITY BANK
Members

Syracuse

New

OF NEW YORK

Harrisburg

Scranton

52 WILLIAM

SERVING SOUTHERN CALIFORNIA

ST., N. Y.

Bell

Bond Dept. Teletype: NY 1-708

:

THE CHASE

>

York Security Dealers Assn.

Wilkes-Barre

Williamsport Springfield Woonsocket

(Representative)

Bond Department

Street, New York S

Teletype NY 1-210

Cleveland

Geneva

64 Wall

HAnover 2-0980

Teletype NY

New York

1-395

Montreal

Toronto

yyt

$2.40 Conv. Preferred

Bond

Solar Aircraft Company
90c Conv.

UkgensellerSDurst, Inc

Underwriters and

Preferred

*Twin Coach Company

•

Brokerage

Service

SPRING

ST.

ANQEIRS

•

•

PASADENA

•

REDLANDS

Reynolds & Co.

Established

New York




1899

Members New

CLEVELAND

MEMBER lOS ANGELES STOCK EXCHANGE

TELETYPE: LA 68

Electric Company

Cincinnati

Chicago

Columbus

120

Denver

Toledo

Buffalo

York

Stock

Exchange

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

REctor

Bell Teletype:

When Distributed

& Common

i

(Incorporated)
-CLAREMONT

Portland General

and Dealers

90c Conv. Preferred

*Prospectus on request

14

y

for Banks, Brokers

^Universal Winding Company

r

Corporate Securities

TRinity 5761
LOS

$1.25 Conv. Preferred

and

S.

626

THE CITY OF NEW YORK

. .

Distributors of Municipal

Investment Securities

OF

Raytheon Manufacturing Co.

SINCE 1927

\

NATIONAL BANK

Hardy & Co
Members New

York Stock Exchange
Members New York Curb Exchange

30 Broad St.

New York 4

2-8600

NY 1-635

Tel. DIgby 4-7800

Tele. NY 1-733

ira haupt & co
York Stock Exchange
Principal Exchangee

Members New
and other

Broadway, N. Y. 6

.111
REctor

2-3100

Boston

Teletype NY 1-2708

Telephone:

Enterprise 1820

2

(1406)

THE

COMMERCIAL

&

FINANCIAL. CHRONICLE

\

Thursday, October 9, 1947

X

Iron Hand Over Securities Business

Metal & Thermit

Memo

on

Alabama &

Oppresses Our Economy

Corporation

Louisiana Securities

By EMIL SCHRAM*

request

President, New York Stock Exchange

Bought—Sold—Quoted

,h.:

humanity does not automatically go forever forward, Mr. Schram decries unorthodox
dealing with our vast economy. Holds capitalism should not be planned, and unwise plan¬
ning is already prevalent in nations abroad.
Says there is shortage of prviate venture capital, and
Contending
methods in

New York Hanseatic

ascribes this to "iron hand

Corporation
120 Broadway, New York

~

or

"

Our

3/6s, 1956

tegrity
out

—

make

6% Preferred "A"

world.
ever,

Vanderhoef & Robinson

not

York Curb Exchange

e

j

I

the:;

this -is

The

Karl
ficial

•those

in

the

rest

the

of

world

Enjil

use¬

philosophy

of

may teach an arti¬
doctrine keynoted to
the

needs,"

but

naturally

our

evolved economic system actually

lacks.

sorely

For

food,

Common

operates to reward "each accord¬
ing to his contribution."
Sometimes free enterprise

be
'••'Remarks

synthetic

reward

Marx

his

Schram

fuel and many of the other mate¬
rial things of life, other nations

American Water Works

en¬

more

phrase, "Each according to his
ability, and to each according to

things

which

personal

at the heart

are

system mtist
fulness to society.

abu ndance

1-1548

pressing

nomic

We

Telephone COrtlandt 7-4070

well-being.

our

^properly -called
democratic capitalism.
Our eco¬

How¬

have,

the

to

terprise,

to boast about.

5

to

competitive system of

the

of

'

the /;

situation

a

refer

we overlook
which con¬

factors

most

incentives which

and
,

of

rest

the

tributes

.de¬

woe

often, I fear,

of

one

contrast

the

pression
of

Bag

by

Schram

Mr.

unkind

efficient,

be¬

the

to

but

weak

may

in¬

and

stirs

it

often

more

meeting of Pitts-; the lazy and forces the selfish
burgh
Chamber
of Commerce, into useful activity.
The
apologists for capitalism
Pittsburgh, Pa., Oct. 7, 1947.

fore

Bought—-Sold—-Quoted
Request

on

and asserts

Steiner, Rouse & Co.

dinner

a

economy.

U

beaten path to our door.

a

Too

stand
sharp¬

in

with

Class "A"

Prospectus

requirement

S.

XX.

our

est

Teletype NY

* '

with the free institutions of their capitalistic

pros-

national x in¬

Savoy Plaza

Bell System

75% margin

capital markets."

What I have to say relates to the lives and
well-being of all of us. There never has
been a time when the people of America have been better satisfied with their democratic

perity and

31 Nassau Street, New York

Attacks

our

.

political system,

Members New

understanding of
4

Savoy Plaza

Chase

securities business."

5

Teletype NY 1-583

BArclay 7-5660

over

"Federal Reserve Board lacks

Bought—Sold—Quoted

the

:

have

stressed

profit

is

ever,

HAnover 2-0700

:

our

the

The

work.

portant

for

KENDALL COMPANY

.

Bought, Sold,

plan and execute; but for
entrepreneur there must be
many
"privates"
in
the ranks.
These "privates" must have in¬
centives, too.- That is why in¬
centive wages, incentive salaries,

preneur

every

the

incentives

-

of

living

and

Quoted

advancement

of

the incentive of

higher standard,

a

important.
diagnose the slow
progress of our unfortunate Brit¬
ish friends in bettering their pres¬
If

I

are so

to

were

Members Baltimore Stock
120

condition, I would be forced
note of a misplaced em¬
phasis
on
consumption
rather

to

Bell

than

production.

on

not

There

Teletype NY 1-1227

has

been

enough to consume in
these
last
few
years.
From the standpo'nt of ideals, it
(Continued on page 58)

Detroit Int'l Bridge

England

York

Stock Exchange

Detroit Canada Tunnel

York

Curb Exchange

By S. B. LURIE

BROADWAY, NEW YORK 5

.

Paine, Webber,

Jackaon

New Common

Curtis

&

Frank C. Masterson & Co.

Tel. REctor 2-7815

I

Mr. Lurie holds the business situation has

/

OLctual TdatkeX6
& Steel
& pfd.
Electric Bd. & Share Stubs
New Eng. Electric System
Gen'l Aniline & Film "A"

As

Taylor Wharton Iron

S. Finishing com.

,

Electrochemical
Guaranty & Trust

Hooker
Title

Northern

New

Piece

United

England

Dye

grown

spheres.1

Boston Terminal 3

United Artists Theatre
Federal Liq. Corp. W.D.
Dumont Laboratories
Boston & Maine R.R.

speculative fear of another post-Labor Day financial panic

past year
the

doom

of

those who

to

Or

fears with the

movement

market

today

the
the

wolf

er

than it

a

around

was

most

Warner & Swasey

corner

On

Hood Chemical
U. S. Glass Co.

fact

for

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

that

Curb and Unlisted

we

means

little to the hold¬

securities
which

in

those

entered

indus¬

buyers'
They have suffered their
private bear market in a pe¬

riod of

But

Will

a

generally increased

what

an

is

of

the

earn¬

taken

continue

degree

to

of

confound

American-La France

remainder

of

Securities

the

But
be
the

glittering generalities can
misleading, for they obscurt
diversity of trend which has

been

a

MICHAEL HEANEY, Mgr.
WALTER

KANE,

Asst.

Mgr.

feature of this year of con¬

fusion, midst

plenty. It is prob¬
ably stretching a point to assume

New Lease

that

Life

business front,

earlier

a

case

the

were

in

a

cause

the

year

failure

to

reac¬

localized

soft

Joseph McManus&Co.
Members

New

York

Stock

Chicago

in business
permanently
high
spots
been

"chain

of

follow

that

means

plateau

Curb

Exchange

Exchange

a

has

achieved.

Furthermore, the
fact remains—although lost sight

39 Broadway

New York 6
Teletype NY 1-1610

Digby 4-3122

a

in

manufacturers

outlook now?

extraordinary

selectivity

the

the

.

ings and dividends.

Trading Markets in

Exchange

NEW YORK 5

HAnover 2-9470

one

new
lease on life. of in the past two months—that
point, the textile in¬ the fundamental situation today
dustry has largely divorced itself is weaker than it was last Sum¬
from depression fears — for, fol¬ mer or last Spring.
A year ago
lowing a drastic house-cleaning although the end of the consumer
in the Winter and Spring months, goods boom and the national buy¬
a
wave
of retail reordering got ing spree was in sight, the pros¬
under
way
in June.
Even the pect of continued capital good.'
jewelry trade, which was one of prosperity pointed to at least over¬
the industries hard hit by the end all business stability.
Now, how¬
of the national buying spree, re¬ ever, the capital goods- props to
our
economy
are
weakening —
cently reported a pick-up in or¬
ders.
And
direct
checks - - with with the result that the oply ques¬

As

market.
own

and

so, has
he still

the corner?

concern

have

Sidney B. Lurie

approximately at the mid-way
point in the trading range which
has persisted in this year of in¬

Members N. Y. Security

or

If

there is
denying the fact that some of

no

are

tries

shot

the industries which

but

Street.

of

been

hand?

for

tions"

every

decision

at

on

Conversely,
however, the

ers

decisive

^eally

a

both -business

Industries With

prosper¬

Wall

in

ago

year

and

ABC Vending Co.

fWeneaiXompcm^

is

markets

evident in al¬

Time, Inc.

WALL ST.

year.

mistakenly sought ref¬
in the loose terms bull or bear

market?

their

support

level

uge

can

little

find

Punta Alegre Sugar

Empire Steel
Int'l Detrola

1923

York Curb

Teletype NY 1-1140

prophets

ity
at
least
outwardly

Haytian Corp.

into limbo,

passes

64

activity in the
comforted neither the extreme pessimists nor the perennial optimists. Certainly,

Aetna Standard Eng.

Newmarket Mfg.
Moxie Common

Established

Members New

fact stands out: The action of the stock market and the trend of business

actually high¬

Wks.

fuj^iamentally weaker, particularly in cap'tal goods

ihat businlss'cautiondoes not presuppose securities iiquida,tion, and predicts series of "baby" bull and bear markets. More immediately, a rally of May-July pro¬
portions, is forecast.
and exports

*

Candy

Tobin Packing

What's Happened to the Wolf?

Members

'

t-

2-4230

take

New

U.

Exchange

Broadway, N. Y. 5
WOrth

ent

New

,

120

branch offices

tives which makes free

Loft

frfc PONNELL & CO.

Y.!
■

La.-Birmingham, Ala.

Direct wires to

incen¬
enterprise
profit motive is im¬
it makes the .entre¬
of

one

NV 1-1557

—r

and praised
Profit, how¬

motive.

only

25 Broad St., New York 4, N.

New Orleans,

——

often

Mpmbert New 'York Stock Exohange ■.

incidentally,
the

other

in

— who,
worried about

general

seem

ness

activity

will

but

business

fellow's

not their own—suggest

be

that busi¬

at

a

high

tion

is

whether

the

Southern

Production

deterioration

will become obvious

early or later
this Winter, and whether it will
constitute
merely
a
"shaking
(Continued

on page

Members

York

New

Security

Dealers

Ass'n

53)

Dictaphone
General Portland Cement

Giddings & Lewis
Grinnell

^Standard Ry. Equipment Mfg.
>

Standard Stoker

Placer

Gaumont-British

GAS

British

Common

Air Products,

Inc. Com. & "A"

Detroit Harvester Co. Com.

"

PRODUCTION

-

Emery Air Freight Corp,
Common

COMPANY
Common

Securities

Department

WATER

CORPORATION

SOUTHERN

Scophony, Ltd.

Goodbody & Co.

WHitehall 4-4970

'




&

;

Members TV. Y. Stock Exchange and Other Principal Exchanges
115

BROADWAY1

Telephone BArclay 7-0100

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

,

^Georgia Hardwood Lumber Co.
Common

BOUGHT

—

SOLD

—

QUOTED

*Prospectu8

G.A.Saxton& Co., Inc.
Y. 5

Securities

Department

*Prospectus available to
dealers and banks only

Teletype NY 1-609

Paper

Development

Canadian

United Kingdom 4 %

'90

Rhodesian Selection

Minn. & Ont.

*Tennessee Gas & Transmission

70 PINE ST., N.

Paper

Brown Co.

^Standard Milling Company

FEDERAL

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

on

request

J-G -White 8 Company
INCORPORATED

37 WALL STREET

NEW YORK 5.

ESTABLISHED 1890

Reynolds & Co.
Members New

'

Tel. HAnover 2-9300

Tele.'NY 1-1815

York Stock Exchange

120 Broadway, New

Telephone:
Bell

York 5, N. Y.

REctor 2-8600

Teletype: NY 1-635

"

Volume 166

Number 4636

THE

COMMERCIAL

INDEX
Articles and News
Abandon Savings Bond

FINANCIAL

CHRONICLE

(1407)

Shrinking Profits in Securities

Page

Issues!—Ray B. Westerfield

&

llCHItnSTtlP

B. S.

Cover

AND COMPANY

Iron Hand Over Securities Business
Oppresses Our Economy

—Emil'Schram

2

What's Happened to the Wolf?—S. B. Lurie

By JOHN DUTTON

4

Fiction—Max

vs.

'

Winkler

1

to

Sustaining Prosperity and General Stability
;> —Emerson

P.

Schmidt.

6

_______

Dollar Problem and World Trade—Alan H.
Temple

'

7

What to Do About Germany—Lewis H. Brown

9

Home

Building—Roger Babson

for

Needed:

economics has

10

Handicaps to Venture Capital—James F. Burns, Jr
Blame

12

to

some

non-members.

poll

a

was

not

18

the

new

who stuck it out for

men

a

made as much as
even $200
per month average income, and that's not takehome pay but before taxes. The results ofthis

20

26

year

28

Earning Power of Banks—Joseph Stagg Lawwence

30

and

FDIC£and

the Dual Banking System—H. Earl Cook

Securities

Exchange Commission in their determined efforts
reduce mark-ups in the sale of
over-the-counter securities.

32

-Grain

Exchanges Increase Margin Requirements

President Truman Outlines Food

11

Saving Program

NYSE Governors to Act

Higher Commissions

on

13

...

efforts to reduce
mark-ups to

14

-____

Chester C. Davis Extols Job Done
by Banks in Agricultural
Credit

portions have

seen

the

ever

handwriting

throughout the country that have been in
the forefront, of those who haVe
heaped praise upon the ac¬

17

tions of the

'j^ecurities and

NASD.

Arnold Ginsburg Quits SEC Post

of restrictive bureaucratic actions.

37

Brooklyn Chapter of NACA Announces 1947-1948
Meeting
;
Program
f-

49
49

v

-

"Walter Tower Says Steel Companies Are
Increasing

Page
We

Bank

See

and

Business

(Editorial)

Insurance

Man's

Canadian

•Coming

It

Stocks

j

Investment

Dept.

STREET, NEW YORK
Telephone: WHitehall 4-6551

Aeronca Aircraft Cora. & Pfd.
New

Jersey Worsted

Moore Drop

Mills

Forging

Haile Mines

Finishing Com.

& Pfd.

J.K.Rice,Jr.&Co.'
Established 1908

Members N. Y.
Security Dealers Aa«*.

REctor 2-4500—120
Bell

Broadway

System Teletype N. Y. 1-714

Investment

Washington

! Securities

Securities.

Indications

jMutual

Bargeron

Business

of

Now

The

6

of

State

Activity—

57

Bankers—

44

j Washington

56

Tomorrow's

might

(Walter

38
and

Notes

Observations—A.

v**

Corner

Trade and

power

56

Registration

Wilfred May

5

;)See

Markets

article

Industry..

14
64

9.

dure
Published

The

Twice

Weekly

COMMERCIAL

Dominion

Caneda,
Other
Countries, $42.00

and

etTLLIAM
25

B.

S.

Patent

DANA

Park

$25.00

COMPANY, Publishers

2-9570

to

and

per

year:

Record

the

—

extra.)

Monthly,

postage extra.)
fluctuations

in

the

HERBERT D. SEIBERT, Editor & Publisher
WILLIAM

•WILLIAM

DANA

SEIBERT,

D. RIGGS,

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

be

President

made

in

New

York

DUNNE & CO.
Members New York
Security Dealers Assn.

25 Broad
WHitehall

St., New York 4, N. Y.

3-0272—Teletype NY

ever

a

say we don't do this but the actual state

Elk Horn Coal
Common
BOUGHT

—

SOLD

—

QUOTED

FIRST COLONY
CORPORATION
New York

is that

Tel. HA 2-8080

5, N. Y.

Tele. NY 1-2425

they

so

No matter how fair the members of
the Com¬

they

are not trusted.

since

They have

proce¬

we

have had

an

over-the-counter market and

Established

their rounds and

of the NASD

men

are

visiting dealers trying to get them

firm securities transactions

as

making

Members
New

York

New

York

New

Stock

agents instead of principals

despite
practice and the probable
procedure is that it will narrow the profit

(Continued under "Securities Salesman's Corner"

Exchange

Curb

York

Exchange

Cotton

Exchange

Exchange,

Board

of

New Orleans Cotton
And other

Inc.
Trade

Exchange

Exchanges

to con¬

under rules which the NASD thinks
should be proper
the fact this is
contrary to trade
for such

1856

H. Hentz & Co.

Commodity

Right at this time field

reason

1-9S6

or

or

existing today in the securities business
well do

Sugar

because the very fact that
they have such
always hangs over the heads of those who fear and do

as

funds.

Business Manager

Thursday, October 9,-1947

S.

Susquehanna Mills

Chicago

year.

postage

(Foreign

account of

mark-ups,

year.

i^oid—Monthly,

(Foreign

Earnings

per

Note-r-On

9576

Quotauuii

year.

Monthly
$25.00

Place, New York 8, N. Y.

REctor

per

per

Other Publications
Bank

Office

certain rule

to

dealers in securities.
$38.00

-

FINANCIAL CHRONICLE
Reg. U.

of

a

teamed up
too often, and that
organization has been
steadily narrov/ing spreads in the securities business and
sending emissaries around the country attempting to
change
trade practice and custom which
has been standard

■

page

can

mission may be
with the NASD

5

You

on

as

Lea Fabrics
U.

52 Wall St.

not trust them.

60

Whyte Says),
and

opinion

of affairs

8

j

Funds

About Banks

in

of

The SEC

34

Salesman's

Securities
the

Punta Alegre
Sugar

the Broader implications

customer.

62

Securities

8

Ahead of

News—Carlisle

NSTA

Utility

Haytian Corporation

9

| Real Estate Securities

Recommendations

News

37

®

Dealer-Broker

"From

Goyernments

Report

Prospective Security Offerings

! Railroad

Field

on

Reporter's

55 ; Public

—

the

j Our

13

Securities

in

Page

40

Bookshelf

Events

I

Cover ; Our Reporter

see

regulation; or a differ¬
challenge of the pro¬
priety pf a statement made in writing, or by one of their un¬
schooled
agents while conversing with a
prospect
or
ence

Regular Features
As

infraction of

some

63

7

firms also

ing reasons: They do not feel free to expand a business which
overnight can be demolished by the simple act of an overzealous bureaucrat who can come into their
office, rip their
books out, copy off the names of their
customers, go on a
fishing trip and end up by throwing the book at them for

46

Bogota Bond Exchange Offer Extended to Oct. 1, 1948
i

Manyflarger

Most dealers dp not
put new men to work for the follow¬

.

40

'Export-Import Bank Grants Credit to Mexico

s

to

99 WALL

the

Ilqmer Vilas to Head Association,of Stock
Exchange Firms._ 37

Capacities^

smaller and smaller pro
on the walk It is not the

smaller dealers
17

10% Rail Rate Rise Granted by ICC

EIC Banks Place Debentures

to

competitive
bidding for new issues, and also back up the Commission's
blood brothers in the NASD in that
organization's continued

13

Irish Free State Bonds Drawn for
Redemption..,.

,

ready

you.

Those who have voiced their
approval of the attempts
of the Securities and
Exchange Commission to define conscionable and unconscionable
profits, to enforce

American Bankers Association Holds 73rd
Annual Conv._Cover

,

is

.selling

those who have for
years been favoring the attempts of the
National Association of Securities Dealers
and the

The

•

re

survey indict

International and Domestic Economic Problems
—Hon. A. Lee M. Wiggins

.

to
are

conducted by certain investment

why. new men were
coming into the securities business. The answer in brief
was
that they couldn't make
enough money. Only 2% of

16

Taxes—Beardsley Ruml

we

firms in Boston to discover if
possible

American Interest in European Reconstruction

•—Winthrop W. Aldrich

bowling balls

junk

Obsolete Securities

been

never

the

U. S.

Recently

More

The Outlook for Banking—Marcus Nadler

of

for

compared

•

14

Uniformity in Blue Sky Laws
—Murray Hanson

play

buy from

devil will out.

Higher Prices—Carroll Reece

The Debt, the Budget and

give discounts

planets

refuted or repealed.
When it is
negated by action of government
bureaus, or policies, the
effects of this law are at times obscured for
a while but the

9

...

.Our Capital Must Move Abroad—Francis Adams
Truslow

Using
child's

One of the first laws of capitalistic
economics is that if
you wish to stimulate production
you should encourage
profit. The more attractive you make profit
possibilities in
any line of endeavor the more
people will go into that type
of business and production will
be increased.
This law of

7

Federal Reserve Policy and
Inflationary Pressures
—Oliver P. Wheeler

sees

tive., Advocates revising Securities Acts and
depriv¬
ing NASD of monopolistic power to forbid members

4

Europe's Poverty—Facts

IS A sissy!

Author

3

What's Ahead for Retailing?—Jules Backman

SUPERMAN

NASD and SEC
mark-up policies mak¬
ing investment banking business less and less attrac¬

2.

Shrinking Profits in Securities Business Step Toward
Communism—John Dutton

*»

3

N. Y. Cotton
NEW
CHICAGO

Exchange Bldg.

YORK 4,
DETROIT

N. Y.
PITTSBURGH

GENEVA, SWITZERLAND
on

page 56)

TITLE COMPANY

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FINANCIAL

&

COMMERCIAL

THE

(1408)

CHRONICLE

Thursday, October 9, 1947

What's Ahead for
By DR. MAX WINKLER

By JULES BACKMAN*

"

,

Associate Professor of Economics, New

,

.

Bernard, Winkler & Co.

York University
Dr. Winkler asserts

retailing developments during past year and analyzes favorable and unfavorable
Concludes on basis of his analysis that strength rather than weakness is
j stiH predominant characteristic of business picture, but warns recent increases in food prices, if main? tained, will have general adverse effect.
Points out full effect of rising store costs has not yet been
t
felt and reiailers will have to be on their toes to maintain satisfactory profit margins.
f Dr. Backman reviews

United States refutes the contention that

factors in immediate outlook.

we

retailing, it probably will be useful to determine
What has been the record during the past year and what bear¬

ing does this record have upon

touching-, literally

of the

general

indexes

of

*

production,
carloadings,

employment,
etc .—h a v e

their

at

been

hignest level

peacetime

in

history. By

stand¬

every

ard

have

we

been

going

through

a

period
of
large
scale

Jules Backman

prosperity. This record has con¬
founded
the prophets of doom
who have been forecasting de¬
pressions at three month intervals
since the end of the war. As each
date for the anticipated decline
arrives, and the forecast proves to
have been inaccurate, the date is

pushed forward another three or
six months. If this process is con¬
tinued

will

there
tween
ness

be

the

a

some

coincidence

performance
forecast,

the

and

prophets
to

enough,

long

of

call the

day
be¬

of busi¬
and the

doom, whom I like
pessimistic pessimists,

turn to

about 15% ahead of last year, re¬

increases in
the record
levels of 1946. In contrast, sales
in New York City apparel stores
have run ahead of last year in only
two months,
January and May.
In each of the other months, sales
have been lower this year despite
the rise in prices. Recently, ap¬
parel store sales have been aver¬
aging some 20% below a year ago.
Specialty stores in Massachusetts
did 6% less business in the firsthalf of 1947 than they did in the

first

take

we

term

sales

a

record,

the Federal

at the long-

look

that

find

we

Board index

Reserve

department store sales for the

of

1946 was 264,

year

in

100

the

'

t h

nounced

their

figuratively.

,

o

available to governments needing

aid,

f

Owing to the marked, interest in

four

tention

(1948- 51),, a total of i
$22,440,000,000

of

years

United

of

portant to keep in mind that the

comparisons will be made with

ing

a

dollars

figures

very

$660,000,000 represents
the
of "dependent" territories.
Germany has been in¬

we

last

"Naive"

only 6%.

was

Mark downs

During

the

markdowns

months of
1947, department store sales aver¬
aged about 7% above the same
period in 1946. In recent weeks,
however, total sales have been
running a little behind last year.
The expansion
in the sales of
durable goods has helped to main¬
tain high level retail sales. The
sharp increase in sales early in
1947 as compared with 1946, re¬
flected in part the fact that prices
were
substantially
higher
this
.

The

first

rise

actual

somewhat

was

because

less

index

ial

months

six

increased

clothing
the

dollar sales thus far in

1st half

as

a

Department and specialty stores under $1,000,000

4.1
3.8
3.9
3.8
4.4
5.0
4.0

stores—$1-2,000,000
Department stores—$2-5,000,000
Department stores—$5-10,000,000
T__
Department stores over $10,000,000
; Specialty stores
over $1,000,000.:
Department and specialty stores over $1,000,000
Department

8.1
7.1
8.0
7.2
7.6
5.5
7.6

will

the first-

__

_

643.0

_

be

i

terials,

in

have

downs

months

recent
once

in

rate

1947

than

for

at

62.5

9.1

23.0

226.4

186.4

337.7

39.7

6.0

29.4

$

t

t

❖

22.4

7.9

218.5

(e)80.9

24.8

3.6

6.8

183.3

330.0

438.4

84.0(c)

105.3

14.3

35.9

60.0(d)

54.2

9.9

6.1

168.0

165.2

43.0

95.2

1,416.0

392.2

479.6

236.1

207.0

55.8

8.4

3.6

2,587.0

373.6

227.0

785.0

6,392.9

_

_

_

2,079.3

1,458.6

28.0(a)

_

.9

_

Ireland

___

__

_

161.0(b)

_

Italy

mark-

higher

a

corresponding

any

period in the last 12

__

Netherlands

-

Norway

__

___

Sweden

.1

__

Switzerland

United

__

_

Kingdom

„

The cumulative markon showed

1947

in

change

each

of

(Continued

from

the

1946

"An

address

by

Dr.

Backman

Chicago, 111.,. Sept. 30, 1947.

in

not available.

total

for

the

'

( *) Included
amounting to $197,100,000.
(a) As of 1944.
(b) Includes gold and sterling funds, (c) as of 1940. (d) As of 1945.
(e) Italy's balances in American banks as of March 31, 1947; the
postwar peak of $321 million was reached on Jan. 31, 1947. In De¬
cember 1941, they stood at only $15,400,000.
(f)

Figures

mainder

48)

before the Fall Merchant Confer¬
ence,

2,181.6

to

categories of

on page

190.0

_

Portugal

years.

Gross Margins

little

120.0(c)

Luxembourg

Turkey

very

149.7

reflected

more

were

2.0

3.1
34.90

178.8

ma¬

competitive merchandising. Markdowns

Direct

Investment

22.9

-

Greece

ersatz

above

32.0

France

wartime

the

696.0

__

compared with the

undoubtedly reflected

of

why

Portfolio

.9

Belgium

large extent the attempt to

dispose

ask

Investments

in U. S.

Austria

1947

(percent)

Americans

to

could not,

Balances

Gold Reserve

Iceland

1st half

1946

a

While around the turn of the year

rise in prices

contributed ' to

undoubtedly

1947,

Denmark

probably
the offi-

(Understated

1946. The

rices in

1946.

of

of

became

follows in

as

to

the

half

more

importance
retailing. According to data
compiled by the Controllers' Con¬
gress of the NRDGA, markdowns

markdowns

in

first

once

in

are for June. In
that
month,
the BLS
clothing
price index was 185.7 (1935-39 =
100), as compared with 176.5 last
December, or an increase of 5.3%.
For June last year the index was
157.2. During the firgt six months
of
1947,
clothing
price
index
averaged about 19% higher than

eight

(Fig¬

dollars.)

at least in part,
within
the
group
of be employed by European coun¬
tries for what apparently are le¬
recipients.
On Sept. 19, the U. S. Depart¬ gitimate needs. The argument that
ment of Commerce revealed that
liquidation might entail "sacri¬
all foreign assets in the United fices" will
hardly be accepted as
States amounted to $14,900,000,valid even by those anxious to
000, while gold reserves of all
extend American aid most liber¬
foreign countries aggregated $11,400,000,000 — a total of $26,300,- ally.

while for
difference

quarter of 1946,
housefurnishings
the

have for

housefurnishings

forthcoming,

cluded

less than 8%
prevailing in the

were

the level

above

consumers' prices for clothing and

picture.

million

tempted

first-half of 1946.

The latest indexes

once

details, the subjoined
have been taken largely

in

ures

assets

half of 1947
Prices

i

at

are

other U. N. Statistical Bulletins.

from

.

countries. The remain¬

Western

increased

been

appear

from the Federal Reserve and the

$5,970,000,000

needs

retail

has

the extent

which

furnished
Max Winkler

Dr.

factor of considerable

business

directed to

resources

is perhaps not entirely warranted.
Since
the
Department has not

when prices had already
risen substantially. Thus, clothing
period

years

good.

is

their

to suggest that the talk of an im¬
minent collapse, unless American

States

and

American

compared

as

privately

are

..the. status of the-16 countries at¬

next

1947, and early in 1948, it is im¬

1935-1939.
In
July,
1947, this index was
about 275. In 1941, generally con¬
sidered a year of fairly good busi¬
ness
activity, department store
sales were 133, or less than half
as large as they have been aver¬
aging in 1947. In other words, the

with

because- they

,

owned and their liquidation might,
entail sacrifices!
'.
'<}" ' * ] *<

period of will be needed
actual rise 0 f w.hi c h
was
probably smaller than that $15,810,000,000
be
sup¬
hown by the official index. In will
evaluating the outlook for retail plied by the
months

—1,

—

000,000. These assets, the Depart¬
ment's analysts contend, are not

the

the last three

The 16 nations, seek¬

<$>—

comparable
too,

are

ments:. During

ucts, the average price in the first
1947 averaged about 17%
1946. 'Here,

us

require¬

the

half of

sales in

as

,

e

extent

17%. For this group, of prod¬

the

well
s.'-'v

Mar shall

Similarly, hpusefiirnishing
prices in June were 482 6 as compared with 177.1 last December, p,
rise
of
approximately 3%.- As
compared with last, June, the rise

above

•

Program,
have just an¬

1947.

was

as

.4

so-called

prices in June

period of 1946.

same

Sales

the

above

income

farm

If

sharp

the

flecting

proclaim to the world how
right they were.
Turning now to several of the
indicators of retail business, we

In

this subject later.

Rural sales have been running

will

find the following

than a year ago. I shall re¬

year

business

—industrial

the

the future? By way of preface, it should be emphasized that

during 1947 all

dollars from

more

-

Western Europe's plea for American financial assistance has been
very

examine what's ahead for

what's behind in retailing.

held in

resources

indispensable for prevention of European collapse.

ing aid under

Before

,

large amount of foreigners'

of

re

Europe,

Now Carter &
EASTERN CORPORATION

Whitney

LOS

Bought—Sold—Quoted at Net Prices

CALIF.—The

firm

ANGELES,

of National Series Dis¬

name

215

tributors,

QUEENS BOROUGH GAS & ELECTRIC CO.
6% Cumulative Preferred

Street,

West

been

has

Seventh

changed

Carter & Whitney and

to

the firm is

now

Central National

Fairbanks Co.

Corporation

ESTABLISHED 1927

22 East 40th

Portsmouth Steel

doing business as a partner¬

ship

Diebold Inc.

with Rufus Lee Carter and

Lewis

Whitney,

Jr.,

as

part¬

Street, New York 16, N. Y.

I
.

Teletype: NY 1-2948

Telej)hone: LExington 2-7300

and

State

4%

Public

Convertible Debentures due 1956

Fashion

Municipal,

Railroad, Industrial

Graham-Paige Motors Corporation

Upson Company

t

United States Government

Lamson & Sessions
The

J.

ners.

Park, Inc.

Utility

-

j

..

BONDS

Osgood Company "B"
SPECIAL

REPORTS

AVAILABLE

Analyses
120

Tele.

REctor

NY

2-8700

1-1*286-7-8

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to

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Dealers Association

PHILADELPHIA

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Boston 10

Experience •
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facilities
->

'Volume

166

Number 4636

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1409)

Copenhagen Bonds
The

: v -

Steel Production

-

Electric Output

Carloadings

and

•

Retail Trade

j

Commodity Price Index
'

•

r

s

'

Guaranty

•

-

By A. WILFRED MAY

Food Price Index

New York

-

Business

Trust

City of Copenhagen

Failures

DEFLATING prophets

for payment on Nov.

war

business and industry set about to di¬

rect its efforts to peacetime

production to meet the challenge of com¬
petitive markets that normally obtain in a peacetime economy.
Needless to say these efforts were hampered on the one hand
by

price-control and rationing due to
"rials

a

shortage of essential raw mateother, by a dearth of
■

consequence of the war, and on the

a

as

.Skilled ; labor and industry-wide, strikes: Jtor higher
wage rates at wartime levels.

pay

to maintain

Inter-union disputes and other labor-

management problems also barrel the

way to full production. •
The eventual repeal of price-coiitror and. rationing measures left

:

much to be: desired since government continued to

project its dead¬
ening influence into the picture. Then too, the black and gray mar¬
kets that obtained during the war continued to flourish in the
days

A list of the

-

-

which most other industries depend for
the maintenance of their production schedules is a case in
point. The
scrap metal market and its product which is so essential in the mak¬
ing of steel experienced the effects of such disastrous operations.
As

result of these manipulations, the consequent impact

a

on

aftermath

some

could

have

not

advance and distortion in prices were inevitable and
been avoided, but maintains that the situation has

been aggravated by a combination of factors which
them the financing of the war by too small a

includes

among

proportion of funds ob¬
by taxation and too large a proportion by bank borrowings
which it points out, is definitely inflationary.
The fear on the part of government that
large agricultural sur¬
pluses in the postwar period would threaten the farm economy led
to a campaign of heavy meat
consumption and the feeding of several
hundred million bushels of grain to livestock.
The foregoing, to¬
gether with the Administration's failure to anticipate Europe's relief
needs and provide the necessary storage
facilities, played its part in
the present acute shortage.
The dread of heavy unemployment
following V-J Day induced
tained

the Administration to stimulate buying power
by encouraging wage
increases which in turn opened the way for the present

wage-price

.

spiral.
Other factors stressed by the "New England Letter" included the
transfer to Russia of the European
"breadbasket,"-

leaving

Europe

alternative but to turn to the United States for substantial amounts
of food and raw materials; the so-called

-no

Morgenthau plan which had

Tor its purpose the reduction of Germany to a
pastoral state and which
has since been discarded,, and greater food

consumption growing out
sharp increase in national income.'
The government policy of
paying mere than the market price for
farm products for export and
giving advance notice of this course ol
.action has encouraged speculation in the
grain and commodity mar¬
kets. Crop failures in Europe and the sharp reduction in our own
corn
crop due to bad weather conditions have combined, says the
news letter, to set in motion powerful
inflationary forces. • •
of

ket

:

that

technical

methods

are

helpfu.

evaluating the present status of the

just

physician

evaluates

mar-

his

patient's
} health as of a given time; but that they do not
V: foretell the future, any more than a thermometei
makes a prognosis of illness.
A thermometer is
not

as

a

Abitibi Power &

Brawn
Great Lakes

barometer!

a

Charting the market's course through its
A. Wilfred May
concepts of tops and bottoms, secondary areas,
major and minor reversals, break-through points,
valid and invalid penetrations, confirmations, primary and secondaryadvances, patterns, etc., the Dow formula defines what kind of mar¬
ket—bear or bull—is existent at any particular time (usually).
As i
definition of the present this is useful, but as prediction it signifies
absolutely nothing. It merely is a weather vane showing which way
the wind has been and is blowing, that is, whether up or down th(
financial hill.
Actually, it does not thereby give any clue as to how
long it will continue to blow that way—not even whether it will
continue to blow for another day.

Paper

•

Company
Paper Co. Ltd.

Minnesota & Ontario

Paper

HART SMITH & GO.
52

WILLIAM ST.,

NY 1-395

Toronto

Montreal

New York

Logically, it does not guarantee the

IIAnover 2-0980

N. Y. 5

Bell Teletype

BIDS MADE

wind—that is, the price trend—any more than does the weather vane.

ON
Dow Theory A

Logical Absurdity

BONDS

Stripped of all its surrounding circumlocution and esoteric
jargon, the Dow principle is an absolute absurdity as a matter o,
logic.
It commits the same kind of error indulged in by gamblers
which

the

mathematician

Steinmetz

termed

WITH

"the

maturity of the
chances," and which he called "the most mischievous of gambling
superstitions."
It embraces the psychological fiction—of which the
Dow thinking is a converse variation—that when there has been a
run in favor of
any particular event, the mere occurrence of that rur.
alters the otherwise mathematically correct odds concerning the nexl
repetition of that event.
This psychological' aberration leads boyi
tossing coins to base their bets on the idea that a series of successive
heads is more than 50%

likely to be followed by a tail; and the same
is true of most systems for
outwitting the mathematical facts of dice
or
black-and-red on a roulette wheel.
The roulette system .addid
becomes bankrupted by an excessive run of the same color against

Coupons Missing
'•

GUDE, WlNMILL & CO.

*

1

Members New York Stock Exchange

St., New York 5, N. Y.

Wall

DIgby 4-7060

Teletype NY 1-955

'

ACTIVE MARKETS

him.

a

Reviewing the happenings of the past week on the industrial
it is noted that manufacturing activity reflected a
slight in¬
crease with industrial output at a
higher level than that of the corre¬
sponding week of last year.
Employment and payrolls were sustained at peak levels and
labor-management relations remained generally propitious.
front

As in weeks

past

some

types of material and skilled labor

mained difficult to obtain and order

backlogs in

many

industries

re¬

con¬

tinued substantial.
STEEL OPERATIONS HIGHEST SINCE JUNE 9 WEEK

High British and French Government supply officials swarmed
Washington this week armed with their steel, coal and food re¬
quirements. At mid-week they were meeting with Washington ex¬
perts who had been supplied with complete statistics on American
steelmaking capacity and production, according to "The Iron Age,"
national metalworking weekly.
on

The-job this week is to decide whether
European demands under the Marshall Plan

not present reduced
can be cut further and
or

then present an acceptable proposal to the steel
leaders of American
industry. Domestic conditions in this country are so

greatly affected
the magazine that

by the distribution of available steel supplies, says
any improper unbalance would lead to conditions far out of
propor¬
tion to the actual tonnage involved.
T

fact

toward

the

This, together with gov¬
ernment purchases of agricultural products for export above domestic
market prices and other farm policies put our entire
economy out ol
kilter and produced the inflationary spiral that the nation is now
undergoing.
In an analysis showing the principal cause for the
sharp rise in
prices, The First National Bank of Boston in its September "New
England and Letter," points out that as a result of the war and its

the

of

upon

durable goods industry proved tremendous.

num¬

Through the plethora of current methods of "doping" the stock
bers drawn in current and pre¬
present and future there seems to run a basic fallacy in
confusing the detection of a past or present price trend with, sup¬ vious redemptions is available at
posedly resultant ability to predict its future course.
This fore¬ the Trust Department of Guaranty
casting error,! not always realized, applies not Trust
Company.
only to the popular and much publicized Dow
>t ..theory, but also to many other "technical" systerns, ranging the gamut from the Cycle Theory
all the way to the Formula Plan. - The main
misconception lies in belittling as thin and theo; retical the really hard-and-fast line between the
v.; present and the future.
The Dow theory is a perfect demonstratior
-

industry

1947, in

market's

of peace.

The steel

15,

Copenhagen, London, Amsterdam,
and New York.

With the close of the

.

Dow

..

page

than

tion

turns

of

error

a

Di-Noc Co.

con¬

out

wrong,

the

chart,

Soya Corp.

Virginia Dare Stores

the Dow theorist blames himself for having
and exculpates the sacred system (a maso¬

chistic mental somersault).

Cycle Technique

Similiarly exemplifying the temptation unconsciously to glory ir
hindsight, is the growing popularity of Cycle Theory. Thus, a recent
blurb for a current
amazingly well-selling book significantly says
that it "is not a book of crystal
gazing.
It explores the probabilities
of tomorrow by
scientifically clocking the trends and cycles of the
past.

The authors have assembled

SIEGEL & CO.
3!) Broadway,

DIgby 4-2370

N. Y.

NY

Teletype

1-1942

wealth of data—have charted it

a

studied

it, analyzed it, compared it—and they have reached some
fascinating and startling conclusions.
Study of economic cycle
rhythms provides a series of weather charts for American business
which give the businessman a chance to prepare for any kind oi
.

.

.

DANISH and SWEDISH
Blocked Balances

business weather."
This surely is only a slight variation from our weather-v«ne
analogy for the Dow technique's assumption of the future for the

past.

BOUGHT
with

two main categories of such

cycles: the business cycle
which is represented as bringing on its own successive phases through
internal conditions within the respective situation; and rhythmic
cycles which are supposed to follow each other in rigid mathematical
are

.

on page

SOLD

quoted for

any

foreign exchange, free or

kind of
blocked.

F. BLEIBTREU & CO., Ine.

f

79 Wall St., New

*This is the first of three weekly instalments on this topic.

(Continued

AND

approval of local controls.

Markets

There

York 5, N. Y.

Telephone HAnover 2-8681-2
Cables:
Solofret, New York

63)

51)

Ohio Match

LAMBORN& CO.,Inc.

Match

Universal

9 9

T

American Maize Products Co.

Portland General Electric Com.

WALL

STREET

NEW YORK 5, N. Y.

i

When Distributed

»'!)

Their

even—in

"mis-read"

6s, 1950 <

il

basically believe that the chances

rather than
other words, that the trend will probably be
extended rather than reversed.
Incidentally, in common with the other technical systems'foi
beating the stock market as well as games of chance, when a predic¬
less,

Portland Electric Power
v

likewise

sists in the assumption that the chances then are greater,

There is a strong feeling in. steel circles here that before
any
American steel is shipped abroad under the Marshall
Plan the govon

theorists

succession of identical results are other than even.

'

(Contihued

Bought—Sold—Q uoted

SUGAR
Raw—Refined—Liquid
4t'i*.

"IP f 'V

FREDERIC H. NATCH 4 CO., INC.

Stryker & Brown

iui

5

'

Teh

;

v V

50^ROAp; ST* NE W

HAnover 2-3970




Established

YORK 4; N. -TTr:'

"

Teletype NY 1-1582

of

that certain

4% Loan of 1901 have been drawn

PART ONE*
<

Company

announces

bonds of the

=

Auto Production

Industry

s

Drawn for Redemption

■

4

State of; Trade

5

-

:
63 Wall

' MEMBERS N, Y. SECURITY DEALERS ASSOCIATION*

Street, New York 5, N. Y.

1

.

'

Exports—Imports—Futures

1888

'

■,

Bell Teletype NY 1-897

•

DIgby 4-2727

6

(1410)

,THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, October 9, 1947,
-J

Sustaining Prosperity and General Stability

on

Ahead

!.!

V

News
of th

By DR. EMERSON P. SCHMIDT*

.

Director of Economic Research, United States Chamber of Commerce

,

After commenting on disruptive forces of rapidly rising prices, Dr. Schmidt holds we are still confronted
with further inflationary forces.
Asserts even peak production cannot overcome plethora of circulating

I

,

media, and

By CARLISLE BARGERON

can

'

As

an example of the unreality in which we are living these days,
correspondent cites the flip,-flop of the National Labor Rela¬
tions, Board on the ruling of its general counsel, Robert N. Denham,
that the executive council of the AFL had to sign the anti-communist
affidavits before any of its constituent organizations could receive

.your

recognition from the board.

] Reams of
iiewsp

,

The Tax of Inflation
if

had

we

chaos

in. labor-man¬

agement relations, our production

have

been

written

would be slowed up,' we

tl)is

be able to

as

regards its

we

bearing

therefore

labor

-

n

m a n-

'country.

example

of how far

have

propaganda.

Here was
'situation,
s

in the

and

Carlisle Bargeron

Third

Rapid
ations

in

of

the

should

bow

It had

no

the Third

our

destruction.

in Wash¬

Not in my experience

American Air Filter

I suppose, have I seen
misinformation
about
any

ington,
more

thing. The headlines gener¬
ally on Tuesday blared that the
board had overruled its general
one

Consider H. Willett

Murphy. Chair Company
Varnish

War and

counsel.

Co.

Only one that I read was

truthful.

said

It

had

board

the

the

BANKERS BOX D ^
Incorporated

1st

KENTUCKY

Long Distance 238-9

Bell Tele. LS 186

its

override

general counsel.
is the big shot. He is not sub¬

He

Floor, Kentucky Home Life Bldg.

LOUISVILLE 2,

first

place, the board
under the Taft-Hartley Act, can¬
not

ordinate
most

the

to

He is the

board.

the

in

set-up

important

board.

lyiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiip

what

the

it

board

did

do

could

was

do

and

rule

to

that

its jurisdiction was con¬
which meant to certify
the proper bargaining
agents, it would disregard Lewis'
decision, as an officer of the AFL,
that he didn't have to sign the
insofar

as

cerned,

Trading Market»

unions

American Furniture Co.
Bassett Furniture Ind.

as

affidavit.

anti-Communist

Dan River Mills

But

this still meant that Denham, the

*

general

—

Scott, Horner &
Mason, Inc.

counsel, could have said

that his

—

ruling stood, and that al¬

board had accepted
certain labor organizations as the

though
proper
not

so

Lynchburg, Va.
Tele. LY 83

the

bargaining units, he would
accept them.
Then they

(Continued

on page

though there is

even

and'some evidence

Profits—Cause

dences of

Businessmen

hands
the
Schmidt

the purposes of

not

on

of' thereby cause the very depression
Which those urging the cuts wish

basis

fair, normal
exchange
for

to

enables

to

some

cumulate

debased

General

dollars, subject

cial

rapidly

rising

entire economy

our

Widespread

complacency

be the prelude to catastrophe.
unwise and

Waste, inefficiencies,
uneconomical
covered

investments

up—for

mitments

while.

a

are

Com¬

made which will be¬

are

onerous

and

when the free ride

burdensome

a

over.

Because of the unequal enrich¬
ment based not on clear or meas ¬

economist

noted

Beryllium Corporation
Data

on

ST. LOUIS

New

best

way

currency.

Stix & Go.

to destroy

.

.

methods

Also

1420 Walnut

more

obvious

consequences

their

vicious

methods.

ST.LOUISI.MO,

Exchange

Street, Philadelphia 2

New York

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

Members St. Louis Stock

Exchange

Private Wire System between

Philadelphia, New York and Los Angeles

SPOKANE* WASH.
American Box Board

NORTHWEST MINING

Botany Mills

SECURITIES

are,

The real damage will come and

or

of

Quotes call TWX Sp-43
Exchange

from

A.M.,

Pac. Std.
other hours.

10:45

Time:

on

to

H. M. Byllesby &
PHILADELPHIA

on

net worth

(%)

Members Standard
of

Brokers

Stock Exchange Bldg. Phila. 2
Telephone
RIttenhouse 6-3717




Teletype

Real

profit

per

net worth

PH

73

-

Dealers

-

Branches

often regarded as
spiritual father of the New
Deal spending programs. He had
every sympathy with the masses
of mankind.
His analysis, there¬
fore, should carry some weight
the

with

those who

blame

Underwriters
at

Kellogg, Idaho and Yakima, Wn.

in

are

American

are

profits for industry as a

whole have been good in the

pasij

running at a satis¬
(with some se¬
rious exceptions such as airlines
and
railroads, for example) the
and

year

are

factory rate now

total

profit

corporations

all

for

five

than

less

to

cents

dollar of sales in 1946. Thus,
sweeping general price cuts out of
per

profit margins

could

greatly

not

reduce prices as a whole. In 1946,
total net profits of corporate en¬

only 31%
above
level, after allowing for
the shrinkage in the purchasing
power of the
profit dollar, and
this in spite of a much larger in¬
vestment in corporate enterprise
terprise
the

were

1929

and

in

excess

the

of

business

of

volume

total

a

much

output in

1929.

The great chain food stores

sell

dollar's worth of product
at a profit of less than two cents.
The meat packers year in and year
out make only about one cent per
every

dollar of sales.
The

official

data

on

corporate

summarized
accompanying tabulation:
earnings

are

in

the

% Change
1946 Over

1939

$o.O

$12.5

17.0

+ 49

+ 150

5.2

3.7

8.2

11.2

+58

+ 122

4.1

5.1

N.A.

—16

+24

+ 31

+78

6.1

6.8

5.0

8.9

10.9

4.2

3.7

5.9

7.2

+ 40

+ 59

N.A.

—26

—12

3.6

4.1

4.9

dollar of sales (cents)

*AU data from U. S. Departments of

Commerce

The

and Labor.

1946

and

estimates.

deposits and three times
supply of currency; consumer
and commercial credit are rising.
individuals

in

the

form

of

time and demand de¬
posits
and
government savings
bonds have jumped from $65 bil¬
lion in 1939 to $223 billion in De¬
currency,

1946, of which individuals

■'Address

for the

upward drift of prices.

1929

hold $157 billion. Money is looked
Not Enough
need, more production,' but upon as a perishable commodity—
something to be exchanged as soon
even peak production carinot over¬
as
possible.
If the velocity of
come
a
plethora of circulating
media. At other times in our na¬ money turnover continues to step
tion's history when the inflation¬ up, we cannot avoid still higher
and higher prices.
The wartime
ary forces were let loose through
a
multiplication of t he money "savings" are being put to work
their owners having been urged
supply, maximum possible produc¬
tion still could not prevent in¬ during the war to "save" for those
postwar purposes.
So long as we
flation.
have not adjusted the cost-price
Today, we have twice our prewar

cember

mood to

a

business

1947

(%)_J.

Stock Exchange

Spokane

Peyton Building, Spokane

written "o.y John May-

was

Keynes,

1946

profit after taxes (billijons of dollars)
on

of

cause

income (1939 prices):

Liquid asset holdings by business

CORPORATION

Company

a

1939

'

and

at

STANDARD SECURITIES

OFFICE

not

$8.4

(billions of dollars)--

Floor

Nazareth Cement

Warner Company

and

1929

11:30

Sp-82

had
consciously
profiteers are a

The

1st Half

our

For Immediate Execution of Orders

Sterling Motor Truck

These

broadly speaking,
the entrepreneur class of capital¬
ists, that is to say, the active and
'profiteers'

capitalist society, who in a period
ot rapidly rising prices cannot but

demand

Pittsburgh Rys. Co.

of

We

Member of

Empire Southern Gas

well

to

Production

STREET

Philadelphia and

Empire Steel Co.

as

direct on to a
class
known
as
'profiteers' the
popular indignation against the
seek

weak,

constructive element in the whole

1947 data

Los Angeles Stock Exchanges
New York Curb

the

a

N.A.—Not available.

509 OLIVE

declared

...

in their

reckless
as

society are weakened and the
people
become
susceptible
to

Real net

Request

York,

fol¬

system was to debauch
In the latter
stages of the war all the bellig¬
erent governments practiced from
necessity, or incompetence, what
t-a
Bolshevist
might have
done
from design.
But further, the
governments
of
Europe,
being
many
of them at this moment
the

of

Real return

BUCKLEY BROTHERS
.

sta¬

capitalist

divisive forces. The cohesive forces

Real net corporate

INVESTMENT SECURITIES

Members

as

This
nard

amounted

the

that

effort, bitterness
and antagonism develop between
employers and employees,
and
between other groups. The forces
of cooperation give way to the

Return

Corporation

to

wrote

"Lenin is said to have

urable merit and

heightened suspicion and fall
prey of panaceas and nostrums.

Lenin

rising prices."

While

mal¬

the

lows:

.

is

in

After the first world war (1919)

artifi¬

creating
a
false
of prosperity and full em¬
ployment,
if
not
over-employ¬
may

shifted;

continues. The road
bility is avoided.

stimulus,

ment.

is

ady

prices

an

blame

The

ac¬

to still further debasement.

give

Confusion and serious

misdiagnosis
prevails,
even
some government circles.

accumulate
to

The high prices are al¬

of business.

production, but on the basis of the
capricious behavior of the dollar.
This

avoid.

leged to be due to the high profits

promoting higher

earnings, and forces others

of

consequence

Effect?

urged to in¬
OPA, to reduce

are

voke a private
prices, which if it raises general
anticipation of general price cuts
might cause buyers to wait, and

own¬

ership change

Dr. E. P.

or

Proper¬

and other evi¬

*Net corporate income:
Net profits after taxes

Milling & Elevator Co.

Portsmouth Steel

mind

conceived.

Profit per dollar of sales (cents)

Colorado

some

of defla¬

therefore?,

the
European governments are
carrying
a
step
further
the
fatal
process
which the subtle

Annual Rate

PHILADELPHIA

i..

we appear still to be con¬
with further inflationary

get rich quick whether they wish
it or desire it or not.
By directing
hatred against this class,

56)

LD 11

iillllllllllllllllilllJIlllllllllllllllllllll

the full only

tion in certain sectors.

securities

ty,

come

What

LYNCHBURG

talk

sense

bowed to John L. Lewis.
In

forces,

make

tunes.

relation to labor-

World

to

and break for¬

Lewis

L.

management relations, no relation
to chaos in industry, no relation
to
the
Communists
dominating

definite

Reliance

John

to

to

American Turf Ass'n

Today

fluctu¬

dollar

revealed

fronted

the

value

be

when the bubble bursts.

extra effort.

World

Europe and therefore no relation

LOUISVILLE

will

any

de¬

again.

a
o

we were told, of chaos in labormanagement relations. Well, then

m

without

war on our

.

in

\

third

a

ac¬

to others

crue

contemplate.
However, instead- of its being
all that, it was just a question of
whether
a
government
agency

we

become

enmeshed

rewards

stroy civilization and that would
be that. It was as simple as that,
and it was an awful' picture to

per¬

fect

.

and

Europe

over

War the atomic bomb would

It

the

was

take

would have

hands,

this

in

wouldn't

produce for Europe as

Rapidly rising or falling prices may levy a cruel tax on some persons and unj us'
tifiably enrich others. Hard vj^ork and production by some persons may go underrewarded,
+
while
higher^

should, the Communists would

we

agement rela¬
tions

an

or

"

copy

o

are

exchange economy where nearly everyone makes his living by trading his
products for money, it is of the highest importance that the money unit have a
reasonably stable buying power from month to month and year to year.
services

-

a p e r

about

control
In

increases that create inflation spiral

self-defeating. Denies business, of itself,
prices and lays down 11 point integrated program for fighting inflation and deflation. %,/

new wage

delivered

.by
Dr.
Schmidt, Oct. 3, 1947, before In¬
stitute for Commercial Organiza¬
tion
Secretaries,
University
of

Wisconsin, Madison, Wis.

structure

to

this

enlarged

money

supply and so long as it keeps on
enlarging, we cannot expect the
inflationary forces to subside per¬
manently.
This

rise

in

the

cost

of

living

has put into the hands of the labor
leaders a government-made argu¬
for
demanding
the
selfdefeating cost-of-living wage ad¬
justments.
It
has
stimulated
strikes which reduced production.
ment

of the reach of those

people whose
with

incomes have not kept pace

the rising

prices.

Can Wage

,

Increases Offset

*

Inflation?

While

the
upward march of
reduces the value of the
wage and all other dollar incomes;
the effort to correct any imbal¬

prices

ance

must

the

by upward wage adjustments
be self-defeating.
In factj

entire

theory,

so

widely

ac¬

today, that wage
rates
ought to keep pace with the rise
in the cost of living, must be selfdefeating under current condi¬
tions.
Surely, if due to scarcities
prices are rising, the addition of
a dollar a day to the pay envelope
of every one simply enables the
consumer to bid more fiercely for
cepted

the
If

limited supply of goods.
our labor leaders do not show
restraint

in

the

months

It has inflated the value of inven¬

more

tories

ahead, the American people-will
be forced to conclude that full

risks

and

of

thereby increased the

business.

business to

It

has

forced

price its products out

(Continued

on page

46)

}

Volume 166

Number 4636

By ALAN H. TEMPLE*

,

'

\

THE

can

continually

foreignnations

to

productive capacity and dislocattyn of labor.
inflation both abroad and at home.

Sees further

sources of inflationary pressures, and points to excess
currency and
deposits as principal causd of inflation^ Holds because of large ratio of government to
private
debt, Federal Reserve System is forced to seek control of credit through open market
operations and,
in. ofder. lo protect value, of
government securities, must stand ready to fake up such securities offere j.
by banks.r Stresses credit expansion possibilities cf heavy bank bondholdings, and concludes there is
now little Federal Reserve can do in
applying traditional controls, so much is left to initiative of banks.

a serious
export decline and explains difficulties
arising from dollar shortages.

trade

literature

have

we

the

have the phrase-of-the-month.

1,

'

'•

•

hangs

a

over

4n

s

Western

Eu¬

rope, who see
i n
i t
t h e

dampening

of

their

hopes
..for relief from

privation and
for accelera¬

;

tion

of

their

along

progress

I the

road of
reconstruction

Alan

and

H.

Temple

recovery.

It- is

black

a

cloud

v

Asia

and

smaller

a

Latin America. It is
eyes

also

and

—

minds—of

I

think

in

the

our

dollar

In

all this

of human
see

we

^

the^tendency
to simplify and

see

nature

its problems in terms of catch-

phrases.
some

I

think

quarters

in

see

workings of
Savages
depend
on
help and safeguard

fetishism.

fetishes

also

we

the

to

them, to protect them from harm
and
disaster, and consider the
fetish more powerful than their
efforts. I wonder if there

own

hot remnants of
ishism

in

\vhich

the

are

primitive fet¬

a

mental

state

with

so
many
people of the
turn to the dollar
today to

world

help and safeguard them and

pro¬

tect them from harm.

i The

taught

that the elements of his
story are:

what,

where,-

how. I

once

a

discuss

when,

why,
and
training as

had brief

newspaper

to

and

man,

this

I

propose

complex top
of dollar shortage in world trade
under

very

similar

headings.

they

here. It is

would

like

to

ances

point

a

countries,

to

buy

decline in the world

a

holdings of gold and
the

dollar

where

United

bal¬

many

Western

Europe, and

American

countries,

are

their

on

During
months

States

the

of

this

was

providing
at the

recent

early

becom¬

services

rate

of

pur¬

scale.

the

United

goods to and
for foreigners

$21 billion

a

year.

Our purchases of goods and serv¬
ices
were
at
the
rate
of only

$8 billion
is $13

a

year.

The difference

monetary

been

'purchases.

| This,

Bank

issues

have

because

reserves,

most necessary

element in,

the

recon¬

is to build confidence in

currencies.

Some

countries

gold and dollars than

more

they need, but they

few. Some

are

countries should have greater re¬
serves
to stabilize their curren¬
cies.

Dollar shortage therefore is a
phrase signifying that the dollars
are
running out, that the rest of
the world

has

from

United

can

is

the

been

buying

States

continuously

its people want

it

it

for.

pay

and need?

ally the world' is short
because

more

than

Why
pay for the goods

it unaole to

does

Basic¬

of dollars

not.

produce

enough goods.and services which
it

could

sell

to

an

.

This

us.

is

of

over-simplification.

Other factors enter into

the

situ¬

ation, such as the lack of con¬
vertibility of the world's principal
Argentina
certainly produce and export far
more goods than
they did before
currencies. Canada and

the

to

the fact

war;

that

inability

to

freely into dollars the pounds aind
they earn for their ex¬
ports.

Another

sale
I

factor

it

indisputable

foreign

countries
kind

the
at

can

us

buying

in

were

cover

curities

drafts

the
on

and

on

of

other

1947

record

$4.5

assets;

that

money

can

be

tic

of

present economic sys¬

our

furnishes

for

the

basic

leverage

inflationary

prices.

pressures on
The other characteristic to

place, Webster de¬ productive

inflation
or

"undue

as

increase,

expan¬

in paper cur¬

as

tary income
services.

creates

process

well

mone¬

goods and
Monetary income is but
as

as

prices}
etc."
That
ap¬ the other side of the shield of pro¬
point, but is hardly duction. That fact may be illus¬
adequate for present
purposes. trated in this way.
A factory in
Perhaps we can go back a step or operation sells its products and is
two and arrive at a more satis¬ paid for them.
The receipts are
factory
understanding
of
the monetary income which is dis¬
bursed
for wages and
meaning of inflation.
salaries,
proaches the

We always think of money in
its different forms when we think
inflation.

of

Money,

whether it be gold,

no

silver,

matter
paper

bank deposits,, has a
characteristics, but one

currency or

number of

goods

services

and

pro¬

duced are not available to those
who received the income for pro-*

ducing

them.

tinues

The

money

con¬

in

existence, but in a wa»
economy the goods ami services
hever come into existence so far
as
the normal' or civilian pari
the

Of

economy
is concerned.
creates
inflationary -.pres¬

This

sure's, but there are still other fac¬
tors

to

intensify those pressured

In war, the government pays for
war material and
services, but

the

the

process in itself provides n<*
income for the government to use
in
making the necessary' pay¬

ments.

The

the

for

us

his

enemy doesn't pay
ammunition fired at

soldiers

dropped
he

and

the

bombs

his cities, neither does
for our planes, ships;

on

pay

materials,
depreciation,
interest tanks and other wealth which he
rent, with the balance going destroys. The government can, of
to the owner or owners as profits.
course, levy taxes on the civilian

and

These

disbursements

become

the

monetary income of the recipients,
including the owners, and they
equal

the

value

economy.

levy

is

civilian

If the amount of this
sufficient to absorb all

income

and

over

above

total

price that required to purchase the
by the factory for the goods and services available to the
has a lot to do with its inflation¬
goods and services it produced. Civilian economy, the
inflationary
ary potentialitiesi.
Money can be The point is that under our eco¬ pressures we were talking about
system, the creation
of a moment ago are cancelled out
used, but not used up, unless it is nomic
cancelled by using it to repay goods and services creates the in¬ so to speak and the government
come
with which to buy those
can
bank debts.
pay all its war costs.
This
To be sure the paper
goods and services at any given
has never been done, hpwever,
currencv we use each
day wears
price level.
and it has always been necessary
out. It finds its way back to the
If the system works perfectly
for the government to borrow half
Federal Reserve Bank where we
the flow of monetary income or
or more of the funds required t<*
punch three holes in each piece,
purchasing^ power balances the meet the costs of
war.
The source
cut it in half Jand send the parts
flow of production and economic
of this borrowing is important.
in separate shipments back to the
stability- ensues.
When a large
If you and I and all incomeTreasury in Washington for de¬
part of the productive system is
struction.
In the normal process,
receiving civilians loan the gov¬
used to produce goods
that are ernment that
part of our income
however, this money is imme¬
them that

of

we

seldom

think

of

or

received

withdrawn from normal

diately replaced with
or

in

currency

write

you

your

a

deposit

form.

some

check

new

to

pay

destroyed

monetary

When
a

bill

are

is

used

to

up

the

as

you

income

not reduced.

address

Mr.

or

continues,

but

uses

flow

and

of

purchasing
the

goods

not available to match against

the

purchasing
of

sence

You have merely

by

the

war,

are

concerned, but bank deposits

"An

in

power

amount of the check as far
are

money

so-called

direct controls
straint

Wheeler

power.

or

the

on

of

In the ab¬

artificial

or

voluntary

re¬

part

of

income

after
the
for

taxes

value
us

which is in

to use,

the

equal

the

of

feet, this
our

of

production

civilian use.

that

means

If, however,

Chapter recipients generally this sort of
of California Society of Certified situation creates terrific
upward
Public
Accountants, San Fran¬ pressures on prices.
Money is
cisco, Calif., Oct. 1, 1947. •
paid for production, a large part

spending;.

fail to do this

we

(Continued

to

power

the government for war

before the San Francisco

In ef-*

transfer

we

purchasing

excess

available

the remainder will

value

available for

of

excess

goods

on page

we

50)

if

GLASS
WE

ARE

than

more

we

from them.

If

and

are

IS

of

the

cur¬

of $8 billion.

Why haven't
enought goods

NOW ASSOCIATED

foreign
and

April 30,

ratio

months

$1,136,077.74-

liabilities
of

end¬

including cash of

1947,
were

current
a

to

9

of

as

$ 115,-

1.

WITH OUR
Earned

TRADING

assets for six

$668,673.17,
499.36;

now

CORPORATION

Current

DEPARTMENT

over

of

30c per

share for first

six

months

Net

quick assets over $2.75

1947.

more

dollars more than
they now are
earning. In short, they might be
selling us say $12 billion of goods

instead

ANNOUNCE THAT

against

American tourists I venture to
say
that they
could
earn
a
billion

services

TO

Mr. Julius p. Hyman

they could
feed

PLEASED

ing

that they could
perhaps a third or even
pay

Current

Stern & Co.
members

25

new

york

stock

new york

members

curb

exchange

BROAD

STREET

Telephone

countries

services

«

share.

Bulletin

on

request

(associate)

NEW YORK

HAnover

Fitch

per

price about $2.50

exchange

4, N. Y.

PETER BARKEN
Member Nat'l Ass'n of Securities Dealers, Inc.

32 Broadway, New York

2-52ZD

4

Tel. WHitehall 4-6430 Tele. NY 1-2500

to

and have aggravated the situation. The

balances at

billion.

As

of

foreign countries had
$5.3 billion in bank

rise

oi

new

eastern

Asia

nations

fered

with

tin,

the

with the flow of

may

carpet
fore the National Coffee Associa¬

tion, Yosemite Valley,
1, 1947.




Cal., Oct.

duce

flow

and

and

by Mr. Temple be¬

South¬

wool.

in

the formation of

STRADER, TAYLOR & CO*, INC
to

conduct

crude

products,

the

a

general business

in

hodson& company,
Inc.

Investment Securities

future

synthetics

for

old

re¬

natural

products. A simple and concrete
example of economic disruption is

(Continued

announce

burlap, jute and

New

markets

of

other

interfere

We

Parkistan,

Burma, and Indonesia—has inter¬

short-term assets. They still have

$4 billion in the unspent

in

India,

—

around

*An address

that

which I refer is the fact that the

goods that we
which our people

accommodate

balances, and $1.4 billion of other rubber,

:

as

fact

used
but
not
used
up,
when
coupled with another characteris¬

tem

my

such

The

the

—

dollar bank

rate

June,

was

audience

an

another

fines
sion

in

Productive Process Creates Money

turning

provided
I; sell? One perfectly understand¬
give the figures in, annual -rates—■; able reason is the
wartime de¬
by donations running at the rate struction of
productive capacity
bf $2.4
billion, by
the
loans and: and
dislocation
of, labor
credits at the rate of about
$5.4 forces. Great political and social
billion, and by sales of gold, se¬ upheavals
resulting from the war
i

version

there

variations of

many

of

prices

will and

half

be

that

sure

of them to someone else.

of

simply overpriced.

think

out

a

that

foreign countries have for

are

need

is

the goods and services

cases

which

could

I'm

exchange

the francs

some

inflation.

even

they
getting short of dollars is due
their

rent figure

bxcess

the

heavily in those
they should retain

and

and

their

degree
of

them.

currency

substantial

to

cover

great

reserves

expanded

countries

have

of

of your share

part

a

rency,

holding

and

$1

to

perhaps

misapprehen¬

a

in

represent

the

approximately

month

totals,

sion to
think that all
the gold
and dollars available
may be used
to
maintain
current
purchases.

The buyers had

a

the
_

billion.

billion

credits

Moreover, there is this.
the officially re¬
In

substantially.
However,, it is

therefore

find

unex¬

figures of dollar holdings

They

"bombast";, another is "great
I hope you won't accuse
me
of possessing those qualities
unduly if 1 take the speaker's
prerogative and choose what I
hope you will1 accept as common
ground for our further discussion
conceit."

that

understate'

sell to

summer

year,

selling

of

Latin

some

ing unable to continue their
chases

ported

Kingdom,

Canada, the liberated countries

the

uncommitted

reserves.

doubt

are

First, what is the dollar short¬
age? It is an inability of for¬
eigners to
pay
us
for
all the
.

things

lar
no

course.

is

newspaper .man

"dollar

the Export-Import
Bank. Ex¬
cluding Russia, all countries had
about $18 billion of
gold and dol¬

shortage,} their

X

must be cured.

is

we

of

employment and struction

own
the

including

and

credit

some

prosperity

credits

countries

people in this
country who believe that to. pre¬

serve

and

over

mist in the

i

economics

portion of U. S. Government loans

over

cloud

a

•

is

'

pended

_

inflation

The phrase of this month

like
d

o u

people

One of Webster's definitions of<$>~
is "pomposity"; another
j transferred

to coffee

•

book-of-the-month, in

shortage".,.'It
cl

in

cause

j

„

In

bank

Holds Ui S. is in position to

withstand

.

7

Pacific Coast banker analyzes

buying more from U. S. j
Lays chief cause to inability of

for,

pay

(1411)

By OLIVER P. WHEELER*-

produce sufficiently due to wartime destruction of

'

CHRONICLE

Vice-President, Federal Reserve Bank of San Francisco

holds it merely signifies that, world has been
than it

FINANCIAL

New York

catch phrase^ leading bank economist

a

&

...

Vice-President, National City Bank of

Terming "dollar shortage"

COMMERCIAL

on

page

58)

-

...twVyy'

Ludwell A. Strader
Clarence E. Taylor

Peoples National Bank Building

Phone
7440

165

Lynchburg, Virginia

Broadway, New York

:

8

THE

(1412)

& FINANCIAL CHRONICLE

COMMERCIAL
stocks is

as

The current

follows:

portfolio (based on market prices,

■'ft.

and in the case of Wisconsin, ten
times earnings), is worth about

Dealer-Broker Investment

$120,000,000 or $95,000,000 after
paying the bank loans. The total

Recommendations and Literature

claims of the two groups

Standard Gas & Electric Plans

stockholders)

common

(omitting
based

It is understood that the

on

firms mentioned will he pleased

to send interested
parties
only,
The long awaited integration plan of Standard Gas & Electric
approximate $90,000,000 for the
proved to be "twins" last Friday when filed with the SEC. The rival senior preferreds and $83,000,000
groups in the Board of Directors, while both presumably basing their for the junior. If both groups had
Access to Markets of the World
plans on a single valuation of the company's portfolio, produced dif¬ equal claims on the assets, this
Color
illustrated booklet de¬
ferent plans for the Commission's perusal.
The valuation had been would mean a division of about scribing overseas banking service
ordered early last Spring, to be prepared within a few weeks by
52-48. However, considering sen¬ —National
City Bank of New
Stone & Webster of New York<£
iority and respective price records, York, 55 Wall Street, New York
and J. Samuel Hartt of Chicago. but estimating the value at arounit appears unlikely that the sec¬ 15, N. Y.
times
recent
earnings, the
The valuations and the resulting ten
ond preferred will
receive less
plan were, according to press re¬ value might be in the neighbor¬ than 10% or more than 30% of
Import and Exchange Regula¬
ports at the time, to be ready for hood of $15,000,000 (after allow¬ total assets. Using our valuation
tions in the Principal Countries of
release in the early summer. Ap¬ ance for selling costs). Since the
of $95,000,000 for available assets, the
World—Folder—Chase
Na¬
parently they were only com¬ company has estimated net quick this would work out about as
tional Bank of the City of New
pleted some weeks ago and have assets of about $10,000,000, this follows:
York, Pine Street corner of Nas¬
been in the hands of the directors, would about eke out the amount
Estimated
Allocation Formula sau, New York 15, N. Y.
who have now completed the two required.
Shr. Value
90-10 80-20 70-30
The minority plan would then
tentative plans.
Railroad Developments of the
$183 $162 $14?
The word "tentative" is used distribute 80% of the remaining *Pr. pref. stks.
12
25
.37 Week—Current developments af¬
because both are somewhat in¬ assets to the senior preferreds and f$4 second pfd.
*The assignment to the $7 stock
fecting
the
industry—Vilas
&
definite, as explained later. One 20% to the $4 preferred and com¬
would, of course, be somewhat Hickey, 49 Wall Street, New York
mon (the common would presum¬
was prepared by four of the di¬
parger than to the $6.
tLess anv 5, N.Y.
rectors representing the $4 (sec¬ ably get only a token allowance),
amount assigned to the 2,163,000
is al¬
ond ) preferred and common stocks if Philadelphia Company
shares
of
common
stock, which
Security Charts — Recent issue
(acting jointly), and the minority lowed to remain intact. But if
will probably be small.
Philadelphia Company is to be
of
80-page folio of 303 charts
plan was submitted by Chairman
Presumably the SEC will soon containing vital data on leading
Leo T. Crowley and William J. dissolved, the distribution would
Froelich, the two members who be 92% and 8%, respectively. The order hearings and after these listed stocks, graphically portray¬
had been elected by holders of reasons for the wide difference in are completed, there may be the ing weekly price ranges, earnings,
these two sets of ratios is not usual period of quiet reflection dividends, business
the prior preference stocks.
index, relative
the
SEC
announces
its group action and other
The first step in both plans is made clear in the condensed re¬ before
important
It is, of data—free
Securities Research
tp. pay off the company's bank ports of the plans as published findings or decision.
n
the Wall Street Journal. Pre¬ course,
quite possible that the Corp., 141 Milk Street, Boston 9,
loans which have been reduced to
about
$24,750,000.
These loans sumably the difference reflects whole issue might finally^ go to Mass.—Ask for Folio CFC-106.
the divergent views of the stock¬ the courts unless the SEC is able,
were incurred some time ago in

dividend

and

par

arrears

v

the following literature:

-

—

-

-

Products & Chemical and Fashion

Park.

Lamson &

Sessions—Special

re¬

port—Ward & Co., 120 Broadway,
New York 5, N.Y.
Also available are special re¬
ports on Upson Company, Diebold
Inc., Fairbanks Co., and Ports¬
mouth

Steel.

Lohg Bell Lumber Companyanalysis available for in¬

Detailed

terested dealers—Comstock &
231

South,La Salle
cago 4, 111.
Merchants
Late

Street,

Distilling

data—Faroll

Sohth

La

Co.,
Chi¬

Corp.

—

&

Co.,
208
Street, Chicago

Salle

4, 111.
Metal & Thermit Corp.—Memo¬
randum

New

—

York

Hanseatic

Corp., 120 Broadway, New York
5, N. Y.

—

retirement of the company's bonds

jp cash after

a

gation

the method

over

long period of liti¬
of pay¬

ment (whether to be in securities
o?

cash).

course,

The loans must, of
be paid off before any al¬

location of assets

can

be made to

the four classes of stockholders—

the

$7 and $6 prior preference,
the $4 (second) preferred and the
common.

The

minority plan

(which fa¬
vors the senior preferreds) would
retire the loan as soon as possible

by selling 750,000 shares of Okla¬
homa

Gas

& Electric, currently
around 35
(some "new
money stock" of this company was
spld last sprmg, thus making a

selling

market

for

the

remaining stock
held by Standard). At the current
price, around 35, the stock would

holder groups over the SEC order
that

Philadelphia
Company
be
up.
It is understood that

broken

Chairman

miracle, to satisfy both
Tax Loss Sales—Bank & Insur¬
groups.
In the meantime, atten¬ ance Stocks
Circular
Laird,
tion may be focused on integra¬
Bissell & Meeds, 120 Broadway,
tion plans for Philadelphia ComNew York 5, N. Y.
oany—which is one lap ahead of

by

some

Crowley and the mi¬
have been fighting
proposal while representa¬ the parent company.
tives of the junior issues are less
Future values for the $4 pre¬
antagonistic to the SEC proposal. ferred would, of course, increase
Presumably the minority (senior) sharply if:
(1) general market
group used this method of indi¬ yardsticks improve; or (2) Phila¬
cating
their opposition
to
the delphia
Co.'s
break-up
value

nority

group

—

—

that

and

their

contention

Philadelphia Company is

nomically justified.

It

seems

eco¬
un¬

likely that the SEC will agree to

higher than the present
price around 11
(which seems
liberal enough in relation to earn¬
ings and dividends).

proves

the wide differential.
The majority plan would (after
"etiring the bank loan) allocate
the
stockholdings in Oklahoma
Gas & Electric and Louisville Gas
Se Electric to the

Trackage

Facilities

—

Informa¬

sites having trackage facilities in
the territory served by the Union
Pacific

—

Industrial

Department,
Railroad, Omaha 2,

Union Pacific

Neb.
*

,

*

this

with
is

tric Co.—Memorandum—H. Hentz

Co.,

York

60

Boston

of three shares for each ten shares

Beaver

Street,

New

Elevated

Railway Co.—

Federal Water and Gas

Public Service Co. of Indiana

*Indiana Gas & Water

Puget Sound Power & Light

from 500 000 to

650,000 shares was
authorized
by
stockholders
on
Sept. 5, 1947.
underwriters

The
shares

on

of

rently

request

Established

1879

the

1849

and
pany

after

or

Falls

the
the expiration
by

Falls

Indemnity

Commerce

Company

Insurance

practically

of

insurance

every

Portland Electric Power

—

1420

Data

—

Walnut

&

Elevator

Buckley

year.

38%

When Distributed

62%

of

written by the

the

by

Premiums

wrote

this volume was
fire companies and
casualty company.

continued

to

2, Pa.
Also

is

available

Portsmouth

Steel

information

lium

and

Beryl¬

Corporation.

jump

1947 to a six months
$22,000,000.
Like
other
insurance
companies, the
Glens Falls Group has felt it de¬
sirable to obtain additional capital
in order to be able to accept the

Gilbert J. Postley
29

&

Co.

BROADWAY, NEW YORK 6, N. Y.
Direct Wire to Chicago




r

-

of

over

increasing

volume

of

Brass

and

Co.

Porter

Co., Inc.—Memo¬

—

Public

National

Co.—Third

Bank

&

Trust

analysis—C.
E. Unterberg & Co., 61 Broadway,
quarter

New York

6, N. Y.

Circular—Truster, Currie & Sum¬
74 Trinity Place, New York

mers,

6, N. Y.
Royal

Dutch

Co.

Hayden,

Stone

&

business

being produced by its agents.

— Analysis —
Co., 25 Broad

Street, New York 4, N. Y.
Corp.—Bul¬

Shatterproof Glass
letin—Peter
way,

Barken,

32

Broad¬

New York 4, N. Y.

Sterling

Truck

Motor

Co.—

Analysis—Adams & Co., 105 West
Adams Street, Chicago 3, 111.
Co.—Analysis avail¬

brokers

to

and

dealers—

Gas

Electric—

&

Anaylsis—G. H. Walker & Co., 1
Wall

Co., 37 Wall Street, New
York 5, N. Y.

Company—Special

Upson

re¬

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

—

Mohawk

&

Circular

Investing

Co.,

—

Cotton Mills,

Mohawk Valley

Inc.,

238

Genesee

Street, Utica 2, N. Y.:

Street, New York 5, N. Y.

COMING

Glens Falls Insurance Company

EVENTS
In

Investment

Field

York 5, N. Y.

Glenn

L.

review in

letin"—John
Wall

^Martin Co.—Special

cdrrent "Aviation Bul¬
H.

Lewis

&

Co.,

14

10-12,

Oct.

Security

Forest

Graham-Paige

Motors

Analysis—Seligman,

Corp.—

Lubetkin

&

Co., 41 Broad Street, New York 4.

available

(Myrtle

Beach,

Dealers of the

Caro-

Hotel, Myrtle Beach, South

Carolina.
Nov. 30-Dec. 5,

1947

Fla.)

(Hollywood,
.

Investment Bankers Association

New York.

Also

1947

South Carolina)

linas annual meeting at the Ocean

Street, New York 5, N. Y.

sharply in
total

review

a

Brothers,

Street, Philadelphia

increase of 39% over the

Portland General Electric Com.

and

Seligman, Lubetkin &
Co., Inc., 41 Broad Street, New
York 4, N. Y.

standard form —Analytical Brochure—Geyer &
During Co., Inc., 67 Wall Street, New

premiums of about $36,000,000, an
previous

6s, 1950

K.

H.

randum

except life.

1946 the Glens Falls Group

of

part on an interview with
the management.

Com¬

has facilities for the writing

of

Co.

Columbia

organized in
its
subsidiaries,

was

with

and

review

a

Greene &

Milling

concur¬

offering

is

Bridgeport

on

U. S. Glass

Chicago 4, 111.

Colorado

on

warrants.

Glens
Glens

the

outlook

able

offer

may

stock

capital

with

company

of

Paine, Webber, Jackson & Cbriis

An increase in

the capital stock of the company

Southwestern Public Service

*Prospectus

Salle Street,

held of record at the close of bus¬

iness Oct. 6, 1947.

Railroad;

ern

Reiter Foster Oil Corporation—

Underwrites Glens

subscribe for the stock at the rate

Trading Markets in Common Stocks

available

Also

New York, Susquehanna & West¬

4, N. Y.

Falls Insurance Stock

not

Co., 15 Broad Street, New York 5,
N. Y.

«

American Water Works & Elec¬

prior preference
Memorandum discussing interest¬
the suggestion that
ing
speculative
possibilities —
enough to satisfy
which,
Glens Falls Insurance Co. has Maxwell,
Marshall & Co., 647
after allowance for selling costs, senior claims, that "other assets
Standard, including possibly mailed to holders of its capital South Spring Street, Los Angeles
would abo"t cover the amount of of
the loan. The majority plan, pre¬ common stock of Philadelphia or stock warrants entitling them to
14, Calif.
sumably preferring to await better underlying assets thereof," might subscribe to 150,000 shares of its
markets so far as possible, pro¬ be assigned in addition.
$5 par capital stock at $35,50 per
Buda Company — Detailed re¬
It is obvious "tha t neither plan
poses that the loan be paid off by
share.
Morgan
Stanley
& Co.
port—Stifel, Nicolaus & Co., Inc.,
sale of a smaller holding, the 1,- is
complete, and neither seems heads a
group
of underwriters
100,000 shares of Wisconsin Public likely to be adopted. The final that will purchase any unsub¬ 314 N. Broadway, St. Louis 2, Mo.
working scribed stock.
Service common stock, and the plan may represent a
compromise.
use of other available cash. There
Central Public Utility Corp.—
The subscription
warrants,
is no minority stock of this cornOne way of appraising the valwhich expire at 3 p.m. (EST) Oct. Detailed
Study
and
Outlook—
pgny in the hands of the public, ues of the two groups of preferred
22, 1947, entitle stockholders to Brailsford & Co., 208 South La
stocks,

if

be worth about $26,300,000

Co.—Apprai¬

tion regarding available industrial

&

Morgan Stanley & Co.

Gypsum

based in

lhis

break-uD

National

sal and outlook—Kalb. Voorhis &

are

analyses of

Osgood Company "B," Tennessee

Annual Convention at the Holly¬
wood

Beach Hotel.

Volume

What to Do About
By
Chairman

Mr.

of

LEWIS H.

his report

on

FINANCIAL

By ROGER W. BABSON

prices

on

can

is eased.

be expected but because quality will improve
Sees no change in home mortgage outlook.

mission to

of German

Europe

or buyS
—
older-type riod, however, there were only i extremes in size and architecture,
house. I shall 2,600,000 net dwellings added to as the "out-of-style" types will be
discuss
these the total.
At the beginning of the first to crash valuewise when
problems
to¬ this year, I therefore estimate an the demand fades.
accumulated
day.
demand
for
about
Bear in mind that the future

recovery.

•

Specifically, 7,000,000 dwelling units.' The Bu¬

and
Ger¬

move

I

and

many.

waiting

of

pean

is

few

have

tie

lems. Whether

your

lit-

a

while

longer if
c a n

do

increasing stand¬
living or an increasing dis¬
play of strength. Should such a
situation arise, the American peo¬
ple, finally awakened at the 11th

pressing prob¬
it

have
would

on an

ard of

most

like

we

stay there

the

of

then

Either

advise

to retire from Europe or base our

recovery

one

would

choices.

Euro¬

world's

forward, penetrating France
Italy as well as Germany. *

We

This ques¬
tion

all

at

an

pleasure to discuss with you gentlemen today my recent
Germany and to submit to you a plan for reviving Western

Western

'

specific questions about securities, the people at the present time, seem most
interested in problems concerning the residential
building outlook. Many are asking
whether they should build now or wait!
Others want to know whether they should build

organization similar to SHAEF to aid in implementing Marshall
a

building a home, not because lower
for building materials and labor

as pressure

Next to

plan and recommends increasing diet of German workers. Criticizes
Europe and sees need
Advocates setting up
Plan and suggests seven-point program

(1413) «9

Mr. Babson advises waiting a little while longer before starting

Corporation

Britain's failure to export coal to Western
of 10 million tons of British coal in Europe.

It is

CHRONICLE

Germany

what to do to restore
Germany economically, maintains key to Western Europe recovery
is food and coal for Western Germany.
Denounces Morgenthau
Brown, commenting

&

BROWN*

Johns-Manvillc

Board,

COMMERCIAL

THE

Number 4636

166

you

possibly
Pres¬

so.

build¬

sure

on

ing

materials
building

and

Labor

of

reau

value

the

erned

were

pleted

in

During the last half of the
there

should

year

be

700,000
more
completions.
Yet, 1,000,000 more
couples will get married in 1947!
Hence, it can be seen that the
of

pressure

remains

demand

of your

house will be gov¬
price district in
which you buy or build.
Never
build a $15,000 home in a $10,000
price district. If you do, you may

Statistics reports
359,000 units com¬
first half of 1947.

that there

by

the

be

throwing away $5000 imme¬
diately.
Generally, depreciation
occurs on the house only, and ap¬
preciation
occurs
on
the
land
only; while money spent on per¬

ex¬

tremely high.
This prevents any sonal desires either on a new
hour would not permit retirement.
not
we
have
very
strong. sharp early decline in the cost of home or on remodeling an old
Roger Babson
There could then only be one out¬
a big stake in
construction.
This
means
I, however, would one must be charged off when re¬
come!
WAR!
it.
In the in¬
that your freedom to
insist on predict that during 1948 the price selling.
Watch out for restric¬
terests of our
quality is still restricted. Those of of building will remain close to tions.
The Worst Can Happen
own
welfare
present levels; but with improved
you who want the best should be
I am not saying that the above in a better
Mortgage Outlook
we cannot af¬
position to demand it quality of construction and less
ford
to
let
things will happen. No one can next year than now.
labor union interference.
Lewis H. Brown
In fact,
During the months ahead, I do
Western
Eu¬
I expect building costs to stabil¬ not
prophesy today amid the uncer¬
expect any change in the
As far as price is concerned, I
tainties of Europe.
ize not far from current levels.
But there is do not
rope drift into deeper chaos, con¬
mortgage money situation.
The
believe you will save any
a
decided possibility that these
fusion and despair.
pressure
of savings seeking in¬
money
by waiting
until
next
Should I Buy an Old House?
I do
not think
the American things will happen. It is unrealis¬
vestment should continue low in¬
year.
Your saving will be
in
If your need for a house is im¬ terest rates and an easy attitude
people as a whole realize the seri¬ tic to put on rose-colored spec¬
quality which, after all, is most
tacles to view the war-shattered,
ousness of the situation and what
important when you are making minent and pressing, you might on the part of bank appraisers.
effect a collapse of Western Eu¬ misery-ridden,
consider buying an old house if The biggest demand for mortgage
hungry continent a
20-, 30-, or 50-year investment.
the location is right.
rope may have on the destinies of of Europe and imagine the worst It also is wise to
However, if money will be for multiple dwell¬
wait until you
cannot happen.
you can wait, I suggest you wait
every
American.
These
points
can get a firm contract
ing units.
High costs of homes
price and
have not been brought home to
and then build a new and modern force many in the lower-income
These things are, in fact, ex¬ build under an architect's
super¬
the individual.
home.
In buying an old house, groups to seek small rentals in
tremely likely to happen unless vision.
You members of the Association
be doubly certain that needed re¬ apartment dwellings.
the American people wake up to
Hence, the
What About Demand?
of National Advertisers are ex¬
pairs are not too extensive as demand for such houses will reach
the immensity of the
problems
The years
1939 through 1946 renovation costs are now very ex- a higher level and there will be
perienced in reaching the con¬ that confront us in Europe and
saw a net increase in families of
sumer.
You know how to appeal act in time.
r>pnsive.
In
selecting
an
old more of some types of government
about 9,600,000.
to that composite, cross-section of
During that pe- house, be very careful to avoid housing subsidies.
Communist
Russia, of course,
all of us, referred to by the stat¬
hopes that America will do noth¬
isticians as Mr. and Mrs. Average
98.717 which was, just short of
On Monday, Oct. 20, Alabama
ing to forestall the threatened col¬
American.
If you set your abil¬
lapse of Western Europe,
that
Power Co. will open bids for
7/s of a point under the winning
we

or

labor

still

is

,

ities to it I

abroad

prosperous

while

have

that

a

Europe is to their ben¬
ruined

a

disastrous

a

can

affairs

to

them

show

and

you

people from

indifference

their

efit

that

sure

American

the

rouse

am

Europe

effect

like

indulgence I would
discuss this point a little
speculate on what may

us

happen in the United States on
this
question
of
recovery
for
Western Europe.
Because of the
on

ence

a

chronic indiffer¬

part of many of our

the

people to problems abroad there
probably will be an unwilling¬
ness to be taxed sufficiently and

high enough prices to pro¬
food and goods to
substantially on her
feet.
There may be a refusal to
eat less meat, eggs, poultry and
butter so that more grain will be
available
for
shipment
abroad.
There may be a tendency to in¬
dulge in spasmodic relief rather
than continuous support until the

countries

It

is

ful

waiting,

that

and

take

advantage

of

If

an

fail

take

to

appropriate
action we will
be playing
into
Russia's hands. If Western Europe
we

fails to recover, her

economic col¬
de¬
pression
that
would
spread
throughout the
British Empire
lapse will result in a severe

and

the United

States.

It

job is done.
things happen, there is
no doubt in my mind that misery
and deterioration will continue in
If these

Western

Europe.

Meanwhile the

hard-Socialists countries

of East¬

driven by the Com¬
Russian whip, will work

Europe,

ern

munist

hard and

will

be

get on their feet. They
by the fact that

aided

Eastern Europe

usually has

a

food

surplus while
Western
Europe
usually has a food deficit.
When the Germans in the Rus¬

sian

Zone of Germany eat better
their

than

fellow

countrymen

in

it is highly
the Communists
ideological battle

Zones

Western

the

conceivable that
could
in

win

the

hold down a
such a situa¬
to develop, American

Germany.

To

hostile Germany, if
tion

were

occupation troops would have
be increased.
*

to

Communism would

Mr. Brown before
of National Adver¬

Address by

Association

tisers, Atlantic

City, N'. J., Oct. 8,

1947.




is

to

our

own

advantage,

Judging

by

the

"spreads"
bidding for Pa¬

which marked the

cific Gas & Electric Co.'s issue of

$75,000,000
mortgage
day,

of

2%%

in

bonds,

investment

becoming

are

33-year,

new

attempting

Tues¬

on

bankers

bit

a

to

first

finally
realistic

more

calculate

what

This

was

tended to

raise

that

been

And

since there has

comparable set of differ¬

a

entials in the

While
not

in¬

was

capital.

new

it is quite a spell

it

bidding.

the

reoffering

permit

did

bid
on

a

appears

to

be the

ual in

allow repricing at "par" with an

our

mittee

of

country. The joint
the

Association

of

com¬

Na¬

tional Advertisers and the Amer¬
ican

Association

Agencies
with

the

America

has

of

to

indicated

2.875%.

Advertising

formulate

a

program

resell America to Americans,
promote a public understand¬
ing of the American system of
free enterprise and its advantages
to every economic group.
to

to

But

the

able

is at stake in
Our destinies
are
linked with Western Europe.
If we are to strengthen free en¬
terprise in the United States we
must help the countries of a shaky
Europe to fortify themselves po¬
litically and economically.
You
gentlemen can play a big part by
(Continued on page 55)

this

level,

of

yield,

though
desir¬

institutional

found
a

reports in

from the

removed

bqyers just

anxious

selling

syndicate

a

bit. of

job

a

had

which

company

Western

re¬

cently amended its registration
raise

the

coupon

2%% to 2%%.
the

rate

next banking

ing syndicate

from

The tender of
group

full half point under

est, at 99.05.

than

was

a

the high¬

The third compet¬

entered

a

bid of

utility

raise

at

it

bonds,

is

lic offering

of the balance of the

American

Under the program,

the

close

the

until

right,

business

Monday,

on

to

of

sub¬

derstood

shares of the

stock

Works

at

$8

to

each

company

of

share

the

$25,000,000

to

an

parent

public

to

and

public common holders of

the

of¬

new

to

look

for

early in December.
issuer prevails

on

Exchange

in¬

marketing

Unless the

the Securities

Commission

to

waive its rule, this stock would
under

competitive

bid¬

ding.

stocks

receptive to preferred

recently,

have

been

not

particularly keen about taking on
this type of

riod

of

have
bids

operation. Over

months

few

such

a pe¬

companies

themselves

found
for

a

without

issues.

The Exchange offer

Community.
to

stockholders

Water Service Co.

Ohio Cities Water Corp.

the

of

senior equity, with bankers

vestor too

exchange of its shares

preferred

un¬

an

Banks, not having found the in¬

stock held.

of Community

is

a

Meanwhile the company was of¬

fering

that

step.
utility

contemplate

share in the ration of one share
for

rather

reported

a

Coast

of

clined

and

scribe for 2,343,105

capital

new

stock,

had

Works shareholders

are

part

a

California Edison Co. is

big

fering

yesterday.

Water

The

firms

least

needed

preferred

considering such

under the disin¬

tegration schedule, launched pub¬

foregoing also expired on
Amott, Baker & Co.

Monday.

Incorporated

New

Issues Ahead

Among issues
via

The winning bid was 99.55 to

to

their

through

bit "cool" in their

do.

the

Water. Works

of

that
to

Electric Co., Inc.

reception and, perhaps, gave the

Free Enterprise Is At Stake

enterprise
Europe.

circles

far

not

basis

keeping with the recent in¬

Southern

and

on

dealer

to

Free

yield to the buyer of

been

cooperating
Advertising Council of

buyers, it did

company

partial

a

financing its construc¬

Co. for American Water Works &

"breaking point" for in¬

surance

which

first

30-year
as

Projects New Preferred
In

come

winning

of

dications

handling the distribu¬

American

Water

basis,

an

received.

2,698,472 shares of common

of

stock

unusually large is¬

an

considering

sue,

Bankers

tion of

stock

market will take.

2.90%

is

offering

public

for

American Water Works Co.

immediate problem
for you gentlemen to tackle.
Get
the facts across to every individ¬

Here

priced

the company

the

therefore, to take the necessary
precautions to
prevent such a
catastrophe.
It can be prevented
through constructive help, through
incentives to production with ade¬
quate safeguards to be sure that
we are not resurrecting the Amer¬
ican dole but are sirriply provid¬
ing the means to helping Western
Europe to help herself.

bonds, they would have

approximately the level which

the

that would fol¬
economic collapse.

its

bonds,

tion program.

been

chaos and despair
low

of

mortgage
means

at

ready to spring

ever

that,

reported

was

hadvthe last indicated group cap¬

upon

judgment

best

my

$10,000,000

it

fact,

tured the

themselves

among

agree

Russia will not go to war at this
time. Her policy is one of watch¬

vide the" money,

Europe

In

plan of reconstruction.

to pay

set

figure.

of

Europe will not be able

in

further.
Let

to

other

and

Western

their

on

your

to

France

may

well-being.
With

England will not dig coal and that

competitive

slated for award
during the

bids

W holesaler and Retailer

coming weeks is the $100,000,000
Pacific Tel. & Tel. 40-year

will

Bids

tures.

be

deben¬

opened

on

Our

and

Texas Power & Light

Co. on

Oct. 14, will offer for bids,

gage
new

Trading

Department

specializes in real estate bonds

Oct. 21.

000,000

of

Investment Securities

of

30-year

bonds,

to

first

raise

construction.

bank

stocks,

title company and

participation certificates.

$8,-

mort¬

funds for

150 BROADWAY
Boston

NEW YORK 7,

N.Y.

Philadelphia

10

(1414)

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

Illinois

Buy U.S. Savings Bonds

Our

Thursday, October 9, 1947

Capital Musi Move Abroad!

An investment banking group under the co-management of F. S.

By FRANCIS ADAMS TRUSLOW*

Moseley & Co., Glore, Forgan & Co, and Merrill Lynch, Pierce, Fen& Beane on Oct. 8 publicly offered 218,000 shares of Associates
Investment Co. $10 par value common stock at $30.25 a share.
Of
these shares 18,000 are being sold for the account of certain stock¬
holders and 200,000 represent a new issue.
J

President, New

ner

Active Trading

Markets in

STERLING MOTOR

<t>-

Paul

II.

Davis

which offered

Common Stock

of

one

oldest

the

nies in the truck manufacturing

$25,

par

compa¬

Mfg.

busi-

of

Co.,

La

Inc.

5% cumula¬

stock

*

was

offered at par and the proceeds
will
be
added
to
working

Earnings per common share for

ness.

the

nine

ended July

months

31

were

$2.68.
at

The stock is

about

rate

of

three

annual

25-cent

currently priced
the

times

dividend

quarterly

*

CHICAGO 3.

TELETYPE CO 361

ILLINOIS

the

sold

$40
of

the

and

shares

balance

underwriting syndicate
headed by Glore, Forgan & Co.

£1.30

and

sales

William

Lumber

The

Earnings

Share

per

1947 First 6 Months

!

$2.50
3.00

1947 Semi-annual

current

record

payment

may

continuing

be

at

dividend

December

liberalized.

Approx. Price—$18

share

per

surface lines.

transferred

was

District
Detailed

analysis available for

interested

dealers

CHICAGO

the

Paul

Motorola sales for the third quar¬
ter ended Aug. 31, 1947 amounted
to

after

the

used

the

the

retail

department
in

compete

but

serve

no

in

connection with

of

transaction

and

to

$105,943,461
to

start

was

Philip
of

by

in

group

our

with

exclusively.

It

the

was

pointed
for

Chicago

Si

the

of

Federal

the

sale

Ross
the

Central Paper Com.

Hearst Class A

*

Illinois
&

3 to

general vacation period.
ended
to

Aug.

5 XA

31,

$15,259,169
last

totaled

per

iin

make

even

briei

a

trade with

our

am¬

the

res
re¬

confront you.
In the first

to

convert

to

ocean

we

able

were

a

work

is written

here.

The

record

share

common

sponding
fiscal

in

period

the

in

corre¬

the

1946

year.

Co.

on

and

Oct.

ij:

years

Mullaney,
placed op

1

Exchange

par

Chicago Stock Exchange

offering of 100,000 shares

a

Curb

135 South La Salle St., Chicago 3, HI.
Tel. ANDover 5700
Tele. CG 650-651

&

Bolger

Co.

&

Co.,

have

in honor of

the

now

Chase National Bank

served

for 25

years

or

gold

by the
liquida¬

transfers,

foreign

assets,

payments

to

and

divi¬

foreign

that

a

of

nation

goods

goods,
ital.

through

foreign

on

Although there

scattered

and Arthur W.

Sept.

30

the

men

and

157

Straus

located

women.

five

and

in

Chase

Invited

overseas.

for

during 1947, each of whom
presented with a commemora¬
tive gift of his or her own selec¬
tion on the date when the
quarter

&

century anniversary is reached.

our

man's

that

&

invention

I

*■■■#:■»




»"'«<

trade

creditor.

If

the

yea

ly

swings through which such activ¬
ities pass are flattened into

The

an

the

lands|

Andean torrents of

Peru, the

llanos of Venezuela and the mines
and

tertility of Brazil and Colom¬

bia

have

and

a

for

acquired

new

There

accessibility

potential of

is

use.

shortage

no

capital.

our

It

of

work

and I be¬

can

lieve will work beside the capital
of other lands in the

development

of their

as

productivity

ital worked with

(Continued

their

cap¬

in creating

ours

on

page 11)

Merchants Distilling

Corporation
Latest

statement

on

request

Standard Silica Corp.
Commca

Stock

world

which

financed

FAROLL & COMPANY
Member New

and

other

208

av¬

these

brief

observations

not continue

world,

the trend

port trade which

we

during the last 50
at which

creased

our

is

*From

slow
of

an

—

Andover

MSO

St.

4
Tele.

CG

TRADING MARKETS

156

.

our

—

Gas Co., Inc.
Common

can¬

Stock

ex¬

Chase Candy Co.

have enjoyed

years.

Salle

Kansas Nebraska Natural

Common

The rate

Stock

Convertible

productivity has in¬

address by Mr. Tru¬
the 30th Convention

National

Securities

in

we

So. La

CHICAGO
Phone

Preferred

•

outrunning the rate at

before

the

or

York Stock Exchange
Principal Exchanges

our

the second fact emerges. We must
increased productivity in

Association

Administrators,

of

Jack¬

William A. Full er & Co.
Members of

Chicago Stock Exchange

209 S. La Salle Street
Tel. Dearborn 5600

•

Chicago 4

Tele. CG

146

sonville, Fla., Oct. 2, 1947.

(Stock Dividend distributed by

Central Public

Utility
Corporation
Income

North American Co.)

SOLD

Quoted

QUOTED

Detailed

5%s, 1952
and

Estimate of Final

Members:

225

Teletype CG 451

<**••

other

Arabia, the forests
Africa, the wide lands of China',

of

EAST

MASON

PHONES—Daly 5392

Chicago

Stock

ST.

Revised

Workout

on

>

i

Values

Request

Chicago: State

Brailsford & Go.

Exchange

MILWAUKEE
0933

208

(2)

Teletype MI

*

-T *

3

TH-V-V **

S

*'v ♦*• •*

5

*

-

8.

J'

«'

*

•*>

*

S. La Salle Street

CHICAGO 4

488

Tel.
V *

the

COMPANY

Telephone Randolph 46S6

>*

is

trade debtor to

Specialists in Foreign Securities

*

land

our

The deserts of

COMMON STOCK

208 S. La Salle St., Chicago 4, Illinois

«

spiral

a

were

Available

ZIPPIN

iii

unpromising in the
days of earlier loops in this eco¬
nomic spiral, have today become

exports

Wisconsin Electric Power Co.

BOUGHT

in

is

is

abundantly blessed by
Through the devices of

which

cap¬

the rest of the
world and then emerged as a
pos¬
itive and increasingly pronounced

status

is

Shillinglaw,

and

are

are

men

loop

this

It

one

nature.

From 1876 to 1834, we
in and out of our position

the rest of the

are

that

process.

a

believe

only

finance

organization,

the

merely

can

us.

the total 25-year
group of
1,106, representing more than 15%

Chase

up
production

of

which began somewhere in the
heart of Asia at the birth of man.
No one who has visited the world

in the world, in each
other 72 years the world

of

the entire

the

open

our way

From

Of

utilized
to

think

can

of

history

our

prior to 1876 in which

McCann, President.

the first time last night were 162
staff members
attaining 25-year

by

end

14 years

were

through

development is becoming progres¬
sively less able to pay by exports
to us for our exports to it.

were Winthrop W. Aldrich,
Chairman of the Board of
Chase,
and Arthur W.
McCain, President,

fi¬

world

for its imports
its exports of

pays

it lives

or

have

world

sources

world

fact

the essential economic fact is

ers,

the

own¬

erage to reveal a trend, our posi¬
tion becomes compellingly clear.

South African Gold Mining Shares
—

the

was

British Securities

Sold

more

on

con¬

held in the grand bailroom of the Waldorf-Astoria
Hotel
Oct. 8. Hosts and speakers at the
more

women

banking syndicate headed by

Brailsford

the

branches

stock

common

made

was

who

of

dend

of

Fifty-seven of the

%

$1

staff of

949

#

200,000 shares of

tion

of

moved

1,100 employees

nation

affair

Lines,

*

Co.

A dinner

than

a

if the difference is covered

offset

carried

Employees

When

imports more than it
pays for by export, it is living on
the capital of other nations. Even

Net

year.

$1,827,119, pr
share, after

clearly in the statistics

trade.

our

with

pregnant with latent productivity,

place,

wilderness into a
highly productive land
because
foieign capital came across the

common

taxes ahd reserves, as compared
with $222,409, or 28 cents p&r

bonds,

spokesman

cumulative
convertible
preferred
stock, par $10 and

STRAUS & BLOSSER

—

.

1947,
$32,060,236,
as

period

same

25-Year

offered at par and interest.

An

Common

Bought

nation

a

free people.

a

ing of this republic, two facts will

of

out, that paved the way
purchase and unification

*

National Tank Co.

York

July

en¬

during
July 21

Chase Dinner

market

was

Member

Truslow

lations which the rest of the
world
has had with us since the found¬

paid

$800,000 first mort¬
gage 43/4% sinking fund bonds of
Conlon-Moore
Corp.
The
issue

Associate

of

earnings

Au¬

litigation.
The

Enamel Com.

Members

period
a

$2.28

District

of these

Authority

*

Minnesota & Ontario Paper

New

due

year,

the

Hall,

of the Surface and Elevated
thus ending more than 20

Stock

of this

compared1 with

pre¬

Transit

Edward

the

Transit

a

120 South La Salle Street

York

common

„Net sales for the first threer

Harrington,

pleted the syndicate's purchase
of $105,000,000 of the Author¬
ity's revenue bonds plus accrued

FLOYD D. CERF CO.

New

quarter

per

decline from the

was a

amounted

the

interest.

Members

cents

during

$447,345,

were

Court of Judge Michael L. Igoe.
The transfer successfully com¬

Correspondence invited.

Nu

56

quarters

closing

President of Harris, Hall as rep¬
resentative of the banking

under¬

way

them

reserves

primarily to the fact that the

working capital, as a
meet costs and adjust¬

thority,

tractive issues for their clients. Main¬
no

to

second

and

period

same

share. This

as

to

ments

1501

writing and distribution of securities,
providing investment dealers with at¬

we

taxes

equal

System. The balance will

Chairman

taining

$10,928,692, and that net profits

as

A.

of the world and the
financial

for

Serving Investment Dealers

owhj

Galvin, President of
Inc.,
announces
that

Francis

will

you

the

the

life
bitious to remain
If

of

the

in

fact, will in¬
fluence
the

of

The

dealers,

to

current

-

sistently

fund

in

against

America

enormous

course of our

the

sented

exclusively

V.

Motorola

proposed modernization program.

specialize

amounted

year
as

relations

and

and to store up enormous
reserves
of credit. No one who has roamed

the

which

trade

our

credit

business,"

and

path of

North

the

review of

Federal

purchase

fiscal

we

curi

*

has, in my opinion, approached
circle in our' economic his¬
tory.
The poverty stricken set^
tlements on the eastern shores of

'

s e

'

•

full

simp¬

tire plant was closed down

be

Teletype CG 955

We

Net

'

ties

'.i

•

.

that

lify
in
phrase

the

nancial

and

-

Transit

4

Dearborn

to

over

in competition
to think about some

productivity of the rest
world, is increasing.

The

activity

lump

liabilities of $851,531.

Of

to

taxes.

of

other'

of

Surface Lines and $12,162,500 was similarly transferred
to purchase
the Chicago, Rapid

COMSTOCK & CO.
231 So. La Salle St.

Court

income

$9,396,593.

were

$i,478,t> * 9,.

system

Chicago

request.

on

the

a

transportation

$105,943,461
received by the Authority Sept.
30 from an investment banking
group headed by Harris, Hall &
Co. (Inc.), The First Boston
Corp.
and Blyth & Co., Inc.,
$75,000,000

.30

earnings

rates,

and

Dividend

Paid per Share-.—
With

of

Federal

Current assets at the elo^e of

*5?

operation

owned

Earnings

Share

per

Co.

&

Sji

publicly
in
the
nation's second largest city
began at midnight, Sept. 30, when
the Chicago Metropolitan Author¬
ity took over the city's elevated

Company

Common Stock
1946

Blair

Jj?

for

the

parts

minutes
you

r:"—-—'~ '

but

vast

few

a

which the

Ex¬

change,
all

Co.)

per

Exchange

Florida, I would like

York

which

$422,764, or about
share, after provision

Curb

export

attention for

your

the %

Curb

for the fiscal year
June 3U, 1947 reported a

enaeti

can

just

New

Hi

net profit of

the

The Long-Bell

pre¬

by stockholders.

IJtensii

York

excess

affect

not

Brailsford .& Co., will be
♦

I

may

(formerly The Club Aluminum

purchased

was

II

with the attractions of
trends
which

Club Aluminum Products Co.-

94,738 shares at

share

per

5,262

by

for

convertible

H:

total the stockholders

subscribed

PHONE STATE 0101

Hi

and

and

ser

.

Of

the

100,000 shares of $1
par common; stock. The shares, to
be
publicly offered by under¬
writers headed by Straus & Blos¬

offering of 100,000 shares
of capital stock, par $10 of the
Continental
Casualty Co., with
offices in Chicago came to a suc¬
cessful
conclusion, according to
an announcement made
Sept. 18.

STREET

* -

cumulative

ferred

$

The

basis.

ADAMS 6- CO.
ADAMS

#

a

Analysis Available

105 WEST

5%

capital.

current

earnings and is on

stock

and

par

Munising Wood Products Col,
Inc., Chicago, has registered with
the Securities & Exchange Com¬
mission 50,000 shares of $10 par

Plante-Choate
The

preferred
at

at $6 per share.

common

-

'

The

offered

was

issue

an

tive convertible preferred stock,

important producer of heavy duty
and

Blosser.

syndicate
Oct. 7

on

of 40,000 shares of

trucks

headed

Co.

&

underwriting

an

Truslow, noting U. S.

trend, stresses using sur¬
plus capital to finance increased productivity in rest of
world.
Locks for heavier
marke:irrg of foreign securities, and use of secur¬
ity exchanges to furnish marketability for America's share in
for¬
eign enterprise.
Predicts renewal of private capital investments
abroad following end of
government relief expenditures.

.

TRUCK COMPANY

An

Mr.

* -i

\

State

9868

CG

95

'

Volume. 166

THE

Number 4636

Increase;

&

FINANCIAL

CHRONICLE

gins,

Margin Requirements

comply with Administration's request that down

Commission

America.

10)

page

Men will interfere with

this process and the artificial bar¬

ricades

which

raise
slow it, but the process will

may

continue

just the

believe

I

i

and your

always

men

same,

that

Trade

gentlemen
will increas¬

you

successors

ingly have before you applications
tor the registration of foreign se¬
curities.

bers

believe that the

I

of the

change,

New

of the Administration, backed up by the
recommendation of J. M. Mehl, i administrator of the Commodity
Exchange Division of the Agricul-!-*
tural
exchanges to
Department, the principal grain
adopt
the
grain
exchanges,
following the, 33% % margin as originally pro¬
lead
of
the
posed by the Agricultural Depart¬
Chicago Board of:

York

mem¬

Curb

Ex¬

of

the Stock Exchange
and
other
Exchanges
will
in¬
creasingly be called upon to fur¬
nish marketability for America's
share in foreign enterprise. I be¬

in

noted

adopting

of

cents

•into work in other lands.
much

doo

to

desks

our

this

down

action

an

not

un¬

as

exotic and troublesome
but as particles of the
process
I have described to be
welcomed, directed and encour¬
aged.

dent

Truman

Department,

not

5

or

so

5

However,

satisfy Presi¬

the Agricultural

the President

an¬

in

his

radio

address

that

he

would

direct

nounced

Oct.

transaction
additional

payment.

did

September. Accord¬

grain

exchanges,

less

of

your

than

331/3%

the

of

market

were signed
Commodity Exchange Commission
and gave the names of the three
members:
Secretary
Anderson,

price." The telegrams

Chairman;
merce

C.

W.

Secretary

Com¬

of

Harriman

A.

and Tom

the

cannot

force

Administration
in

increase

an

the

that

grain

just

isn't

enough

meet

our

own

normal

needs

domestic

and

at

plans

hungry nations

tion,

of

the

organiza¬

the following state¬

gave out

ment:

well

will

that

know

neither

such

alleviate

a

nor

for

is

led

exports

into

mistaken

the

operating method of

described

a

remedy,

dent

his

has

been

allowed

hope that in such

lies the

he has been
"Grain
undue

they

for

cure

panacea

in

are

to

the

part

over-all

as

the

situation.

food

They

being

are

illogiddly

and

given

being

used

as

the whipping boy.

mar¬

"We

believe

the

people should

part of the

erroneously

he

was

"The

these
are
dreams
one session, but I can¬
them without suggest¬

leave

not

This advertisement is neither

an

nor a solicit if ion of an offer to buy
offering is made only by the Prospectus.

offer to sell,

The

any

by

our

methods and organizations
a

model of

efficiency

"Furthermore
does

not

seem

have

that prices

formed

markets

have

immediate

President

the

to

been

is

been

consistently

prices of grain for

delivery."

of these securities,

2,687,069 Shares*

probably not a mind
which is not restless
:and overshadowed by the violent
words on Flushing Meadows and
•the alternatives they imply.
We
lhate the thought that a new sys¬
tem of slavery is spreading in the
us

-world.

We

;although

the

that

find

only

Changed.
;and

world

1

hunger

this is

where

listen

the

to

so,

ability to

sist other nations

to regain

were

subscribed for by,

issued in exchange to,
Company, Incorporated,

or

Water Works and Electric

Community Water Service Company and Ohio Cities Water Corporation pur¬
to Subscription and Exchange Offers which expired on October 6, 1947.
The remaining 1,902,476 shares have been purchased, and 1,625,000 of such
shares have been resold, by the several Underwriters, who are offering the bal¬

false

suant

continued free-

our

A*'

stockholders of American

.promises by which millions have
'We know that

'

*784,593 of the above shares

.•already been enticed into slavery.

tdom depends on our

Par Value $!> Per Share

A

■

have

growing in the

are

will

now

persists

that

know

that

and

we

faces

and

Common Stock

na¬

to crush

evil

same

We

suffering

-people

Hitler,

names

that

our

resources

of

tyranny

:and

fact

have spent

tion's blood and
"the

the

abhor

we

ance

of

277,476 shares on the terms and conditions set forth in the Prospectus.

as¬

their:

istrength and become invulnerable
vto these false promises.

.•government

burse

authority

central

the

our

relief, temporary dollars

rary

Share

agent to dis¬

Copies of the Prospectus

only provide tempo¬

can

per

of our

funds to foreign lands.;

our

."Such aid

as

Price $8.00

short we must

time is

Because

-

ruse

of the undersigned

to

be obtained in any State only from such
registered dealers in securities in such State.

may

as are

ibe spent to buy at once the things
*

we

Such dol-1

have and they need.

Tars

will

will

and

•abroad

in

vestments

permanent
vfolio wed

transient

be

not

as

They

in¬

—

productivity

cure.

Tected

be

personally guided in¬

vestments which add to credit the

Tiuman

driving force that trans-;

mutes credit into working

,}

For

in

.part

for

and

our:

industry's;

our

life of our .country,:

the

veconomic isolation must disappear

/just

as

surely

as our

political iso¬

lation has ceased to exist.
'capital

must

pelled

by

:which

has

Eastman, Dillon & Co.

Glore, Forgan & Co.

Goldman, Sachs & Co.

move

an

abroad

economic

been

moving

"throughout history.

Harriman Ripley

Kidder, Peabody & Co.

& Co.

Merrill Lynch, Pierce, Fenner & Beane

Incorporated

Stone & Webster Securities Corporation

Union Securities Corporation

capital.1

for

gentlemen,

you

^country

Blyth & Co., Inc.

the kind of numer-

by

and

The First Boston Corporation

the

must

individual and personally se-

«ous,

W. C. Langley & Co.

voyagers

stay

Our
pro¬

trend:

capital!

A. C. Allyn and
Coffin & Burr

Blair & Co., Inc.

A. G. Becker & Co.

Company

Central Republic Company

Incorporated

Incorporated

Hemphill, Noyes & Co.

(Incorporated)

Kornblower & Weeks

W. E. Hutton & Co.

Incorporated

E. H. Rollins & Sons

Alex. Brown & Sons

Estabrook & Co.

Graham, Parsons & Co.

Incorporated

Laurence M. Marks & Co.

F. S. Moseley & Co.

Schoellkopf, Hutton & Pomeroy, Inc.

For the pres¬

ervation of freedom in our own

[land and in the lands of the out-'

Whiting, Weeks & Stiibbs

Riter & Co.

Paul H. Davis & Co.

Equitable Securities Corporation

;side world, that capital must move
ifrom

private

hands

at

home

to

jprivate enterprise abroad.

,«■■!

Our

foe

eyes

and

raised beyond

the

work

the

your
our

eyes

must

borders

world.

waiting to be

done




to

in

Harris, Hall & Company
(Incorporated)
October 8, 1947

Maynard H. Murch & Co.

in¬

in the futures

field of economics.
There

m

distribution system.

ing their significance beyond the

;among

'

institutions

marketing

the

whose

'

NEW ISSUE

re¬

appellation is undeserved

matters,

Perhaps
enough for

mis¬

thesis thai

'gambling'

lower than the

wanted,

therefore,
been

sponsible for price advances.

have been

sadly misinformed.

emphasis

price

a

high prices, then

prices

play

build

to

as

a

the

feed

unfortunate,

President

seeking

same

world.. *

the President has

exchanges which

is

to

of the

correct the situation for which the

namely, high prices. If the Presi¬

the

out the government's

carry

"It

that

"We

economics

Grain

there

to

tock,

President

11

prices are
only influenced by the laws of
supply and demand and the facts

President's "order," J. O. McClin-

unfairly

Clark, Attorney General.

Although

on

the

that

request

board

announce¬

elemental

time

move

"By direction of the President

told Jthe

of the situation.

compliance of the
Chicago Board of Trade with the

readingras fol¬

lows:

we

of

ment

be

are

the

to

sent to the

were

the governing
exchange increase
minimum initial margin require¬
ments on all transactions in grain
system,, futures on your exchange to not

scale

futures

a

require

It is not

to

hope that all of you
rand all of us will greet the plans
for
foreign
investment
which

-■come

sliding

a

late in

ment

ingly, telegrams

last

of

whereby each 10 cent rise in the

will be increasingly agents for the

capital

"Chronicle"

(Oct. 2, 1947, p. 16) the
Chicago Board of Trade, had at¬
tempted to meet the widespread
demand for increased margins by

wbuld

American

the

week,

and securities dealers of America

of

the

increased

6

requirement on
futures transactions in grain to
33%% of the purchase price. As

lieve that the investment bankers: price

channeling

Oct.

on

minimum margin

Act.

Subsequent

In line with the request

(Continued from

down payments, in grain
speculation, it had power
trading in grain futures
the Commodity Exchange

limit

under

be 33%% of purchase price.

payments in grain futures trading

(1415)

or

market
to

Grain Exchanges

Move Abroad!

COMMERCIAL

Singer, Deane & Scribner

12

&

COMMERCIAL

THE

(1416)

FINANCIAL

CHRONICLE

governmental and economic theo-i
.ries and inequitable and punitive

to

taxation which stifled

By JAMES F. BURNS,

—and

JR.*

a

corpora-;
tions with
many

thousands of

of

you

sent

Some

smaller;-

should exist for necessary revenue
and

system of free enterprise.

There
the

products—for improvement
plants and facilities—are an

of

to

stockholders

remember

.partners,

overtax our memory

formation

of

dearth

the

sound

fixed charges beyond

There are de¬
the fulfilment of the

proportions.

terrents

protective
that

and

piurposes

should

it

not unjustifi¬
incentive or the

jeopardize

ably

only—

accumulation
Prudence

of

savings.

and

the

necessity for
savings require

tive enterprises.

of

Internal

Revenue, there are
approximately 85% more

latter

in the 1930's or to re¬

the prin¬

And these deterrents should be
$165 billion level for national in¬
for the extent and
of grave concern to each of us come
payments and with present
ually owned
depth of that depression period.
here this evening.
Federal taxes, it is estimated that
and operated businesses.
Conditions today, however,
All are
It is, I believe, self-evident that the annual income of that group
essential to the proper economic created by 12 years of depression
forms
of
private capital— in the immediate period ahead,
functioning of a community such and 4 years of war, have devel¬ all
as yours.
And no one, therefore, oped an unprecedented demand either for equity investment or before taxes, will be approxi¬
knows better than you the part for
capital formation.
Present for fixed interest or dividend re¬ mately 41% larger than it aver¬
emanate
from
the aged in the 1925-429 period but
that private capital has played in capital expenditures by industry turn—must
your successful development and are substantial, and it has been savings of the people of our coun¬ that, after taxes, it will be approx¬
the risks that such capital was estimated by eminent economists try. If there were no savings and imately 10% lower.
willing to accept in order to pro¬ and statisticians that in the five all individual incomes were uti¬
Furthermore, Dr. Edie estimates
mote and to participate in your year
period 1947 through 1951 lized for the payment of living that after allowance has been
these requirements will approxi¬ expenses and taxes, then forma¬ made for
enterprises.
the increased
cost of

individ¬

you,

The

F.

James

growth, "the

Burns, Jr,

cipal

mate

expansion of

causes

150 years could
not have been accomplished with¬
out the use
of venture capital.

upon

This capital

the

the

past

This

hit-or-miss fashion

in

Most of it

was

assembled through

the broad efficient and economical
facilities

try.

of

This

the

securities

indus¬

industry, consisting

of

national securities exchanges and
♦Remarks

Jr.,
Stock

by

of

Burns,

Firms,

Commerce

at

enormous

ability

these

of
Before

of

But

sum.

will

to
depend

for

of

rising standard of living
people

would

be

sup¬

poverty.

one

have

to

billion

come

from

mendous

a

year

private

.

It

sources.

a

Federal

our

our

today must be higher than
were

15

years ago.

was

income

pay for, one
prolonged by unsound

will

group

annual basis. This

is

less

than

estimated

financial

to

he construed

offering oj these securities for sale, or as an offer to buy, or as
solicitation of an offer to buy,
any of such securities. These securities are initially being offered only by the
Company to its common stockholders and such offering is being made only by means of the Prospectus.

NEW

as an

ISSUE

October 2,

a

1947

of

what

it

requirements

industry for 1947 through 1951
about three

are

times

in the former period.

as

great as

This saving

potential is less than one-fifth of
these

estimated

ments

for

capital

1947-51

require¬

whereas

great

the

as

high

tures

these

would

of

capital

expendi¬

inevitably
be

Most

assuredly,

other

than

our

risks

them

by

someone.

groups

which

it

may

that

part

I

day

some

of

companies

in

the

be

mass

risk

ventures.

Nevertheless,

as I have said before
the larger risks must be assumed
sufficient

which

to

withstand

always

to

accompany

rates

it

seems

evident

individual

that the

me

tax

income

have

impaired

alarming extent this major
of risk capital.
In

addition,
tax

ture act

as

in making

our

rates

as

to

The First Boston

Corporation

legally be distributed.

Harris, Hall & Company
(Incorporated)

Harriman
.

Merrill Lynch,




Ripley & Co.

Lee

Higginson Corporation

Incorporated

Pierce, Fenner & Beane

such

sources

as

wages,

.amounts

<

to

$100,000

would

pay a
tax of $72,086 on
earnings compared with a
tax of $63 954 on similar
earnings

those

from other sources.
In

the

first

:,

v,

example, duplicate

of 184%.

in¬

an

In the latter

ex¬

ample, duplicate taxation has

ac¬

crease

counted for only a 12.7% increase.

Furthermore, while

our govern¬

has recognized that perma¬
price
and
wage
controls

ment
nent

have

place in

a free enterprise
in times of peace, it has
apparently failed to comprehend
no

economy

that

taxes

of the

tend

to
become part
doing business and

cost of

are
eventually reflected in the
prices
of
goods
and
services.

Hence

high corporate taxes are
themselves highly inflationary

in

and

play

costs

the

important

an

producing

spiral

a

and

of

in

part

increasing

increasing prices—with

attendant fear of their

even¬

tual

collapse

and

the

effect

such

collapse

upon

our

economy.

Capital
wise

investments

are

of

like¬

deterred

by the application
of the arbitrary and
discretionary

features

This

of

tax

the

is

establishes
riod

definite

a

which

100%

capital gains tax.

arbitrary

in

determines

it

that

holding

pe¬

whether

50% of the capital accre¬

or

tion is subject to tax—either at
fixed

rate

income.
in

that

which

a

part of ordinary
This tax is discretionary
as

is effective only in re¬
successful investment

it

to

or

a

for one

necessity

reason

cash

to

another,

or

prudence,

or

or

is

con¬

other media of

investment.
Of

there

course,

than

are

taxation

factors

which

are

affecting the free flow of venture
capital.
' - "
\

extended

listed upon

our

There is the

in work stoppages
seriously
fecting essential production.

investments.
in

af¬

There

is
the grave
financial
condition of many European coun¬
tries which may have farreach-

ing effect

upon our economy.,

However,

the

point

wish to make this

combined

inevitably be

deterrents to incentive

caused by

management which have resulted

well

other

concern

the demands of labor leaders and
the disputes between labor and

these taxes

as

securities

on

national securities

exchanges.

the

income tax struc¬

our

be

may

individual in¬

librium.

If

which

our

an

our

■!
I

evening is that

eventual

on

,

effect

of

economy "Will

unbalanced equi¬

system of

iree jen-

terprise is to continue—if it ia i to
flourish and progress rather than

re¬

spect to the taxation of corporate

stagnate

and

disintegrate—then

earnings. Our present method of the tax structure of our Federal
taxing net profits first at the cor¬ Government must be placed upon
poration
level and
then
again a sound basis. It must
prodube
when the profits are distributed
the needed revenue for our .Gov¬
in the form of
dividends

equitable for the

reason

is

in¬

that the

corporate tax rate is not correlated

Drexel & Co.

unincorporated business

an

earnings

an

source

This is particularly true

may

the

the profits of progress.

come

Prospectus

tax

a

$171

rents, interest, etc. On the other
hand,
the
individual
taxpayer
wjiose. shar§ of such corporate

equity capi¬

as

limited

features of

dealers in securities and in which such

compared with

as

from

or

corporate

by an individual
earnings were the same

whose

from

$1,000

extent the amount of credit which

losses

Copies of the Prospectus may be obtained from any of the several under¬
writers only in States in which such underwriters are
qualified to act as

earnings
of
only

of

safeguards

is

.

share

tions of the Federal Reserve Board
which restrict to an unjustifiable

In that respect

Rights, evidenced by Subscription Warrants, to subscribe for these
shares have been issued
by the Company to its common stockholders,
which rights will
expire at three o'clock P.M., Eastern Standard
Time, October 20,1947, as more fully set forth in the Prospectus.

$486

his

on

discussed will provide some of the
funds directly and under proper

income

those

by those whose financial strength

Convertible prior to October 1, 1957—$100 Par Value

a

There are the arbitrary, dicta¬
torial, and discriminatory regula¬

tal

4% Cumulative Preferred Stock

cor¬

distributed,;

were

have

surance

Company

j

/

that

normal and surtax income bracket
would pay a total tax of

ether

The

accompany

assumed

an¬

our

shareholder in the first individual

con¬

savings for security purposes be
utilized by savings banks and in¬

American Brake Shoe

poration

verted

estimates

assure

prosperity.

possible

199,101 Shares

presuming
earnings of a

the entire net

spect
as

that period.

volume

which

ticipate

of

amount

funds needed in

The

example,

in

1925-29 it was more than twice

must
circumstances

an

1925-29, whereas the

which

no

to

on

saving potential

one-third

averaged in

tinuing

This is under

amount

approximately $1.2 billion

We have

long depression to

which

is about three times the aver-

in

Obviously,

expenditures.
they

This, too, is an enormous sum

increase

years a

For

living, the saving potential of this

of

.

large
As it has been estimated that
part of what otherwise would have
two-thirds
of these capital
re¬
accumulated
as
savings of the
quirements will come from un¬
distributed earnings and reserves, people of this country has gone
it appears that one-third or ap¬ by taxation to defray the tre¬

capital

burgh, Oct. 7. 1947. Mr. Burns is
partner in Harris, Upham & Co.

system

of nationalization
which thus far has only produced

our

taxes

a

a

our

During the past 15

will

Pitts¬

our

be

enterprise which has af¬

planted by

country.
Upon that ability will also depend
the prosperity of this city.
prosperity

private capital would

free

forded

industry

of

funds

proximately $61/2

Association

Exchange

Chamber

F.

James

President,

an

the

obtain

in the main was not

assembled

is

of

impossibility and

an

each year.

American industry and commerce

during

tion

$100 billion—or $20 billion

who own shares in
American corporations.
{
•.;

taxation has accounted for

According to a study prepared
Lionel D. Edie, based upon
•statistics compiled by the Bureau
by

to
today
which, if not eliminated or individuals having incomes, before
ameliorated, may make it difficult taxes, of $10,000 or more than in
if not impossible of achievementj the
period 1925-29. Based upon a

either to
of capital

call that this was one of

certainly

for

increase

to

We do not have

perous economy.

of
good

prudent limitations

are

former,

business management is not going

essential characteristic of a pros¬

atively few

some

equitable—that it

of

better

organizations

and

\

expansion—for new and

for

try

repre¬

with their rel-

"or

be

underwriters and age annual amount that was preservation of
raised in the prosperous 1925-29 that the risks inherent in venture
securities, and
capital be borne by those who can
over-the-counter
markets,
has period.
Part of this required capital will afford the losses which are in¬
provided the machinery for the;
evitable in a. progressive economy
flow of capital to industry from be obtained through debt financ¬
sources everywhere,
ing, and part must come from apd the losses which accompany
development of new and competi¬
v
Capital expenditures by indus¬ equity financing or risk capital.
distributors

-trial

"owners.

should

tion

their members,

here this eve¬

ning represent
large indus-r

their

major part of

a

citizens understand this just
they also understand that taxa¬

as

•$>—

Some of you

to

war

ican

invited to talk before such a distinguished gather¬
which is so typical, and is

great honor to be

terrible

a

brackets

production

the costs of rehabilitation of many
nations involved therein.
Amer¬

Stressing importance of well organized securities industry in U. S. economic growth and expansion^ Mr.
Burns points out current unprecedented demands for capital formation, estimated at $20 billions an¬
nually is not likely to be obtained under present high taxation and arbitrary, dictatorial and discrimina¬
tory cred.t regulations of Federal Reserve Board.
ing of the business leaders of this community—a community
one of the outstanding results, of the functioning of our American

have

we

for—including

pay

Exchange Firms

Retiring President, Association of Stock

It is indeed

Thursday, October 9, 1947

#

to

the

owners'

or

shareholders'

It

is unfair

because

or

under

the

cannot

to

is

Stock

great

discrimination

shown

punitive
must fos¬

ter—not retard—our economy and

present method of taxation there

against those in the lower, income

being

confiscatory—and it

industrial

personal income tax status.

Smith, Barney & Co.

without

ernment

this

be

progress.

delayed for

end

the

Correction

long and

Association','of

Exchange Firms is devoting

its full energies and abilities,

v

"Volume

166

Number 4636
»

V«:''

!

THE

.■

•

.

COMMERCIAL

-\c

p

\

,

President Outlines Food

FINANCIAL

&

"...

■

•

_

CHRONICLE

Program

In radio talk bc>stresses emergency needs and

inflationary dangers. Concedes exports and competition
for scarce goods elevate prices, but places blame for some of the increase to gambling in commodities.
Asserts that 90% of recent corn future accounts were
speculative. Says restoration of Western Europe
as
free, self-supporting democracies is essential requirement of lasting peace.
In

radio

talk, Oct. 5, following sim lar short broadcasts by Secretary of State
Secretary of Agriculture Anderson, secretary 01 Commerce flamman, and
Charles Luckman, Chairman of Citizens' Food Committee, President Harry S. Truman
a

Marshall,

outlined

food

a

saving

.program

which

and

he

segments

o

-the President's
address

f

1

o

-

lows:

My

fellow

citizens:
The

•has

that

Truman

President

how

cannot

you

will

has

I

have

whole¬

my

confident

am

the

of

support

American.

The situation in Europe is

forbidding
as
winter
ap¬
proaches.
Despite the vigorous
efforts of the European people,
their crops have suffered so badly
droughts,

that

the

floods

cold

and

hunger

tragedy of

is

a

stark reality.

be

scraping the bottom
They cannot
through the coming winter
spring without help—gener¬
soon

the

get
and

barrel.

food

help—from the United States

ous

aside

turn

way,

from

essential

requirement

of

lasting peace in the world is the
restoration
Western

of

the

Europe

countries

as

free,

self-

There is

to believe that those coun¬

reason

will accomplish that task

tries
we

of

if

and

help

them

get

back

their feet during the next few

■>n

a

of

success

gram

competition among
for scarce goods. The
our
food-saving pro¬

will help to reduce these in¬

flationary pressures.

difference

between success and failure.
Their most

the

peace

Americans

their

food

with

there would be

failed

to

share

hungry

no more

people
tragic ex¬

in all history of
needlessly lost.
ample

a

prices naturally

is

a

transactions.

of all ac¬
recent corn futures
found to be specula¬

a

Trading
75%

90%

But

wheat

in

futures

in September compared

August. Normal trading in
at Chicago should amount
to three or four million bushels a

with

peace

half

exchange, almost
year's crop was traded.

on

the

one

instructing the Commodity
Exchange Commission, which con¬
sists of the Attorney General and
the Secretaries 6f Agriculture and
I am

Commerce, to demand of the grain
Danger of Inflation
Another

exchanges that they increase their

for conserving
margin requirements to at least
controlling in¬
33%%.
If the grain exchanges
flationary spirals and in preventing undue price burdens for our refuse the Government may find

food

Bookshelf,

is

to

reason

aid

supported

by

in

where you can. .
s
On the other hand, there
also many Americans, who

government restaurants and cafe¬

terias,

of food overseas.

Mrs. Truman has today directed
the White House follow all

that
the

these
I

proposed by
Committee.

measures

Citizens

Food

throughout
same

country,

that

the

Army,

the Navy and the Air Force

segments of

must make

their contribution to¬

saving grain.
,
Farmers must cooperate b!y re¬
ducing the amount of grain' now
feed

to

livestock

their

and

come;

of

best

grain used

so

to make

as

the

best

no

shut down

hardship on
a 60-day

for

period. This action alone will feed
millions of hungry people.
Quite apart from the responsi¬
of

bilities

farmers

and

industry

and I—as individual Ameri¬
cans—have our responsibility. Yoi
have all heard Mr. Luckman g;ve
you

the immediate consumer prograir
for the people

of the United States
complete approval and
full support.

It has
my

my

The
It is
It

can

From

Investment

Company

to

degree

which

The

This advertisement is not, and is

offer

to

under

no

simple and straightforward
by all. Learn
it—keep it always
Here it is:

grain

we

out,

need.

Hungry
tries

which has been
ton'ght, if faith¬
will save the

you

carried

people

look

to

in

the

other

United

wish

to

accumulate

books

help. I know that they will
be strengthened and encouraged
by this evidence of our friend¬
ship.

I know that they will be wait¬
ing with hope in their hearts and
a fervent prayer on their lips for
the response of our people to this

program.

no

meat

Irish Free State Bonds
Drawn for Redemption
Holders

on

Tuesdays

no

poultry

of

Irish

which

cerns

small

desire

to

of National City Bank of New York.

that many millions

I realize

circumstances to be

construed

as, an

v

offer to sell,

solicitation oj

or a

an

t**,

218,000 Shares

establish

libraries for staff use—The

Amos

Tuck

School

of

Associates Investment Company

Business

Administration, Dartmouth Col¬
lege, Hanover, N. H. — Paper —
50c

(special discount of 30% to
those ordering 20 copies or more).
Security

Charts

Common Stock
($10 Par Value)

—

Recent

issue

of 80-page folio of 303 charts con¬

taining vital data on leading listed
graphically
portraying
weekly
price
ranges,
earnings,
dividends, business index relative
stocks

group action and other
data

Free—Securities

—

Price $30.25 per share

important
Research

Corp., 141 Milk Street, Boston 9,
Mass.—Ask for Folio CFC-106.

i

Report

Get

on

Copies of the Prospectus may he obtaine'd from such of the
undersigned

Germany, A—How to

as are

registered dealers in securities in this State.

Germany

eventually off the
Backs of the American Taxpayers
—Lewis H. Brown, Johns-Manville
N.

:

■

Corporation,

New

York,

F. S.

Y.—Paper.
Security

America

of

N o

r

t h

Directory
of
stock
houses in the United

and,

Canada —Mid-Year

1947 Edition—$9.00;
•?'1 f rj..

Glore, Forgan & Co.

Moseley & Co.

'*-•:/

Merrill Lynch, Pierce, Fenner & Beane

Blyth & Co., Inc.

A. G. Becker & Co.

—

9ndi bond
States

Dealers

Central Republic Company
(Incorporated)

Incorporated

Hornblower & Weeks

E. H. Rollins & Sons

Lee Higginson

Corporation

Incorporated

I——mi

-

~

t

«.

Paine, Webber, Jackson & Curtis

Hay den, Stone & Co.

White, Weld & Co.

W. W. Miller Opens
; SOUTH
W.

BEND,

IND.—Welby

Shields & Company

Riter & Co.

Graham, Parsons & Co.

Miller

curities

is engaging in the se¬
bus'ness from offices in

the National Bank & Trust Build¬
ing. Mrv "Millet recently was. with
Slaytoll •v&ti>'Co.;H'Ine.,:^ and '-•prior':,
.theretoc&ndUCtedhlsdwninvestment business in South Bend; ~ ;




The Wisconsin Company
$'i

October 8, 1947

*.

••

State

deemed at the head office of The

request.

HEW ISSUE

for

Free

(Saorstat Eireann)

or eggs or

buy, these securities. The offering is made only by the Prospectus.

con¬

coun¬

States

for

•

study and reference, and for

us

external loan
sinking fund 5% gold bonds, due
Thursdays.
Nov. 1, 1960, are being notified
Three:
Save a slice of bread that $16,000 principal amount of
every day.
these bonds have been drawn by
Four: Public eating places will lot for redemption on Nov. 1, 1947,
at par.
serve
The bonds will be re¬
bread and butter only on
Two: Use

-i

Reading List on Business Ad¬
ministration—Fifth revision—De¬
signed for the use of those who

is
on

good of all.
program

presented to

Shares—

Publishers, Inc., New York, N. Y.

of

each

Stevenson—Fiduciary

•—paper—SI.00.

now

We must not fail them.

be understood

One: Use

self-control

Program

it—memorize

in mind.

that

control.

willing to exercise self-control

its and

it will be

to

shall be testing at every meal

the

fully

to

serve

years

voluntary program is the
for us to do the job.

The
tips country have on
hand huge stocks of distilled spir¬

greatest possible saving.

distillers in

them

save*

way

for the

the

'

will

stead in the

believe

We

is

self-denial

good
} :

The

we

Industry must reduce the vol¬
ume

1

food in the

save

prosperity ? and to save

Our

in

us

ward

used

Own

our

rope.

population

our

to

shall the: free countries o£ western! Eii>:

also comply with this program.
All

The battle

Chief United States is the battle to

in

Commander

ordered

In

will be fol¬

measures

As

have

the

the

'

Alec Brock

are

are

overeating and wasting food.* Un¬
less these people cut their con¬
sumption in the ways required
they will be taking more than a
fair share of the supplies avail¬
able. They will be personally con¬
tributing to increased inflat on at
home and to the desperate scarcity

'September, how¬

trading averaged almost 30
million bushels a day. In a single
month,

will be

part of the Federal Govern¬

every
ment.

wheat

day. In this past

Food

Citizens

the

by

Committee

place for legitimate

trading in futures and for hedging

rose

proposed

ever,

urgent need is food.
should be lost be¬

cause

food is gambling

kets.

tive.

gamblers in grain.
The food conservation program

poultry.

respond to the law of supply and
demand, but they should not be
subject to the greed of specula¬
tors who
gamble on what may
lie ahead in our commodity mar¬

There

to limit the amount American housewives have al¬
"r
'
ready begun strict conservation
I say to. those house¬
I say this because the cost of measures.
living in this country must not be wives, "Keep up the good work"
a football to be kicked about
by and save even more when and

factor that contributes

Another

to high prices of
in grain.
Grain

were

the

prices is

of

result

market

marks

effect upon

upward pressure on

They must do most of the job
They cannot do it if
thousands of their people starve.
We
believe that
they can—and
will—do the job if we extend to
them
that measure of
friendly

"

Man's

the

in

If

Business

not

counts

which

their

but they
exercise a controlling in¬
on
food prices., Most of

fluence

13

it necessary
of trading.
-

lowed.

'Exports have * some

years.

aid

•

standard of living.

aid them through this critical

winter

lower

to

prices

high

by

that

themselves.

The nations of Western Europe
will

long and hard the

supporting democracies.

grim

and

from

No mat¬

goal.
An

support.

it

every

of

just and lasting peace.

just been

presented to

being forced

are

Americans

we

pro¬

hearted

incomes

do

ter

which

gram

many

domestic prices of grain,

i

food-

saving

low

or

tion to peace. We have dedicated
ourselves to the task of securing

of

text

Already

home.

But more than this, the foodsaving program announced to¬
night offers an opportunity to
each of you to make a contribu¬

f

population.
The

at

countries.

and

by all

support

people

American families with moderate

American feels in
his heart that we must help to
prevent starvation and distress
among our fellow men in other

co¬

operation

spare.

I know every

ap¬

pealed for

%from other countries which

have' food to

ior

•(1417)

•

Blair & Co., Inc.

Watling, Lerchen & Co.
.

■

'

■•".

,■>

,

,a

}

.

14

(1418)

THE

There is

Markets

tion

Whyte

Says—
By WALTER WHYTE=

Increased volume

strength

on

and position of averages en¬

couraging for nearby period.
Steels

indicate

leader¬

new

ship.
least

two

column

There

were

Chairman, Republican National Committee

always a possibility
long awaited move
won't stop at 180 but go right
on
through. In order not to
lose what may be an advan¬

Republican Party spokesman, contending basic causes of present high prices go back 15 years, lays
on:
(1) New Deal "easy money" policy; (2) Administration's aim to increase production by
promoting wage increases while seeking to hold down prices; (3) unwise and unbusinesslike handling
of food purchases for- foreign relief; (4) Administration's bungling of price
controls; and (5) Democratic opposition to reducing government costs.
Says if price controls are reestablished, wage controls

tageous

will be essential.

blame

the

position,

it

is

sug¬

;

the rest "until the market

thing

one

#

*

kind

of

.

pre¬

This

v-v,question is;^
—:
——:
' i—
1
—
-*
by the huge amounts
why
i s
the rise
of the next few months—is the ex*
cost of living money added to the total money cessive cost of government. I won*
too high,. and; supply by the Democrat Admin¬ der how many persons realize that

another.

or

❖

■

what

trading- will
couple of mil¬ require more than casual at¬
lion-share days—and the av¬ tention but. in any case I
don't think
trading is a parterages are back to the ticklish
180 level. Another nice thing, time job. If you can't give it

which has
the

nothing to do with

of the World Series.

The fact

that the writer in

moment

a

one

and

strike

*

*

game; and
have to be,

the

the

will

answer

that

will

the market.
be

ahead

run

of

Among them will

Bethlehem,

U.

morosely in

brokerage of¬

a

matter

that

anything no
balefully you

how

[The

views

article do

S.

Steel,

time

expressed

not

with

*

any

those

of the
Chronicle. They are presented as
those of the author only.']
}
t

In the latter portion of last

the

that every

me

market

time
down
to

got

around 174 it

Halsey, Sfoart Group
Offers C. & 0.

Equips.

fruit.

associates

Oct. 7

on

were

opinion has certificates, maturing

But

there

are

little
in

things one must observe
trading them in a six-point

range.

awarded

JV

>V

buying

because

stock

a

one

or

doesn't

stocks,

buy the

averages, you will have to de¬
termine

for

either 174

or

yourself

where

180 would carry

that particular

issue.

If, for

example, 60 in the stock
174

resents

and 64

is

in

the

rep¬

averages

equivalent to 180,

then you must be prepared to

15,

1948

form

Pacific Coast

Securities
Orders Executed

on

Exchanges

Commission

Schwabacher & Co.
Members

Exchange

New York Curb Exchange
(Associate)
San Francisco Stock Exchange

Chicago Board of Trade
14 Wall Street

New York 5, N. Y.

COrtlandt 7-4150

Teletype NY 1-928

Private Wires to

San Francisco

Monterey

—

Principal Offices

—

Santa Barbara

Oakland

—

Fresno




it

—

been

But

is

pur¬

cause

inflation.

corresponding

a

of

Had

in¬

there

such

Democrat

fused and bewildered government

the

is

complete

control

ment

designed to decrease

or

weak

And one
of the surest symptoms of bank¬
a

ruptcy

government.

confusion

and

is

uncon¬

I

that all Americans—

sure

am

Republicans
and
Democrats
alike—regret that,in every crisis
both foreign
and domestic, our

was

no

corre¬

sponding increase in production.
Tn fact, the overall policy of the
Administration
than

more

was

14

years

of

during
it was in

the

govern¬
or

curtail

production. This was done
through taxation designed to dis ¬

industry from expanding
facilities, and by

courage

its

production

many
our

eat.

is

It

Our

appalling,

total

$50,000,000,000

tax

other devices conceived by
theorizing
bureaucrats
in

the nation's total food bill for 194$
was about
$39,000,000,000. It

may

be

somewhat

available
that

it

total

higher for 1947 but

information

will

tax

still

bill.

be

The certificates

we

are

threatened with more; be¬

Com¬

will

ditionally guaranteed

be

to

uncon¬

80%

of

to

the

estimated

at

standard-gauge
equipment, consisting of

1,000 50-ton all-steel box
70-ton

all-steel

cars

hopper

and

for the

reason

But what is the

Inflation
In

Nigh Commissions

At a meeting of the Board of
Governors of the New York Stock

Exchange

on

Oct.

tional amendment
crease

3

a

constitu¬

looking to

in commission

an

income

in¬

the low income brackets
may

ing.

She

overlook

may

of the

Causes

spite of all the highly techni¬

the taxes of the farmer who raised
the wheat, of the merchant who
it for him, of the miller who

sold

ground the flour, and of the baker
who baked the bread, as well
as
of the grocer who sold the loaf to
the ultimate consumer. Taxes are

reflected in the cost of

buy.

we

Make

to

the Democrat Admin¬

Sacramento

fore the Board of Governors

templates the calculation of
basis

*on

the

the

moment

and

a

an

commission

con¬

of

cause

looking

cause

for

flood

a

the

instead

of

source

water which broke the dike.
is

is

the

cause

of

our

of

the
Here

inflation

step

by step.
Inflation

occurs

when

the

sup¬

ply of goods and services fall be¬
hind the supply of money. Stated
in another way, the total price of
the things on the market is usual¬
ly the total amount of money that
the people are willing to spend.
This

is

true

whether

or

the

not

government tries to control prices

because,
perience

as we

learned by sad
recently,

very

ex¬

when

in

gross

by approxi¬
which would offset
part the increased costs since

March, 1942, when the commission
rates

were

who is unwilling or un¬

Inflation in America
as

inevitable

as

last increased.

fore

address
the

was

tomorrow's

made
sun-

by Mr. Reece be¬

Women's

of

prospect
in

the

the

a

cost

form

of

of

pro*

posed

world. The ultimate decision

its very

whether
that

not

or

shall

we

if

money, and
shall spend,

we

of

the

the

government,

curtailed

in

produc¬

dollars into circulation.

more

It did

because every year until

so

Republican

Republican
"Organizing for Victory" Confer¬
ence, Detroit, Mich., Oct. 3, 1947.

gress. I am not

whether

be

to

as

spend

how

so

will

Congress

was

much

worked

if

spend

serious

would

doubt

that

this

inevitably produce

ex¬

policy
dan¬

a

gerous degree of inflation. But the
Administration
resorted to such
totalitarian devices

as

controls

in

order to defer the day of reckon¬

ing.

Everyone

some

—

except, perhaps,

Deal

New

knows

that

if

safety

valve

economists

—

tie down the
steam engine
up the fire under
the boiler it is only a question of
time until you have an explosion;
We followed that practice under
then

and

you

on

a

build

New

Deal

years

and

direction
now

we*

for

many

have had

the

explosion.

The problem confront¬
today is what to do in order
to minimize the damage done by

ing

us

the explosion.

And the most im¬

mediate aspect of that problem is
the high cost of living.
Excessive

There

cost of

Cost

are

in

the

of

many

Government

factors

in¬

present1 excessive

living, but the one which is
immediately pressing^-because it
is the one upon which a decision
can, and must,
be made within

do

we

making
to

under¬

relief

cam¬

should

we

embark

first-hand

determine

the

tent

it.

upon

both

commitees, are
investigations
the

extent

of

needs of Europe and the ex¬
of our resources which may

be

any

should

much

eral Congressional

believe

receiving dollar credits in
change. There never has been

we

At the present time various
agen¬
cies of government, including sev¬

additional

by
printing
bonds and placing them in banks
or selling them to individuals and

undertaking to say

not

how

or

elected it spent more money than
it raised in taxes.
It obtained the
money

or

this world-wide

paign,

brought about by its own pol¬
icies, insisted upon pumping more

volved
*An

con*

was

able to break the law.

income

mately 20%,
in

consumer

money-involved

increase

face

a

real

are

Ad¬

restricting the acreage

Meanwhile

businessman

the

the

in

government

we

it

and wheat.

corn

and

was

com¬

of

Repub¬
lican Congress and the American
—

about
V

At

the

re¬

tion

part, consist of attempts
blame

everything

mistake

no

that.

take

most

and

fact

every time she buys a loaf
bread she is paying a share of

"economy of scarcity"
illustrated by the slaughtering of
pigs and the ploughing under of

the

istration

that

that
of

appropriations to finance
widespread relief operations iri
Europe and other parts of the

that
of

in

not

cotton and

cause

price control prevents free ex¬
change the goods go underground
and free transactions take place in
If approved
by the Board, it will the so-called black market. Thus,
be submitted to the
membership price control affects only the man¬
for a vote. The plan which is be¬
ufacturer or the merchants or the

missions

note

intention

the

out by the President and the Con*

cal explanations of our inflation
—explanations
which, for the

cars.

NYSE Governors to Act

will

you

avowed

ministration from

during the

Democrat

tion.

The basic

inflation?

the

cost,

the

so-called

itself.

on

pay¬

new

of

high cost of living today is infla¬

feeds

power,

value and dividends

$6,745,220, of
railroad

as

the

days

begin¬
ning to bring about higher prices.
For that purpose it adopted the

inflation, like

cause

perfectly simple. Some Adminis¬
tration apologists have been argu¬
by endorsement by The Chesa¬ ing that the termination of price
peake and Ohio Railway Company. control is the principal cause of
Proceeds of the issue will be high prices existing today. That is
like saying that a weak dike was
used to provide for not more than
of par

ment

of. the statements made

than

housewife

realize how much of that total tax
bill she and her
family are pay¬

with

early
gime,

indicates

less

The

increase

we

about

accounts for
approximately
$40,000,000,000, of the total. Ac*
cording to the official statistics

further

brutal fact is that

is

That in*

tion

fronted

exhibits; Washington.' It is not surprising
that this policy should have been
followed. If you will recall some
sion, if not bewilderment.
today in the United States
serious degree of inflation, and

but it is

bill

per year.

Administration

present

submitted to be acted upon
by the
Board of Governors on Oct. 17.

York Stock

there

is not the

power

inflation

increase in

totalitarianism because of
financial
practices.
A
bankrupt government is inevita¬
bly a weak government. A con¬
ship

authorization, white-wash

prices to yield from 1.10%
1.90%, according to maturity.

On

New

from

of

unsound

to

at

700

Pacific Coast

periods bank deposits
outside banks increased'
$42,500,000,000 in 1933 and
$64,000,000,000 in 1939 to $166,000,000,000 during recent months.
same

currency

chasing

eco¬

to

eludes state and local taxation as
and: well as Federal, but Federal taxa*

our

of

an¬

1957, in¬
clusive.
The
certificates, issued
under the Philadelphia
Plan, were
immediately re-offered by the
merce

. ■

.

In

nually Oct.

$530,000

group, subject to Interstate
jTJ

, ■

true.

government itself. crease in production of the com¬
History—including some very re¬ modities the people wished to pur¬
cent history—has shown that free chase, this increase in the money
governments frequently come to supply would not have had this
disaster on the rocks of dictator¬ inflationary effect.

a

Halsey, Stuart & Co. Inc. and

a
buy and $5,300,000 Chesapeake & Ohio
time it got within hoot¬ Railway Fifth Equipment Trust of
ing distance of 180 it was a 1947 1%% serial equipment trust

"borne

$5,500,000,000 in 1933 and $7,600,000,000 in 1939 to more than $28,000,000,000
today.
During
the

This tremendous

nomic system and possibly of our
very

The cold

was

So far this

future

they are paying more today to be
governed — some might say misi
governed — than they are paying

the

depend

have

every

sale.

may

istration. Because of, the New Deal
free spending and deficit financ¬
ing
methods,
the
volume
of
money in circulation increased from

evidence of indecision and confu¬

*

Week's column I wrote that it
seemed to

solution

rect

this

glare at it.
❖

cor-

trolled inflation.

in

necessarily at

coincide

the

entire

foreground, will be the

ones

It is

of which

nothing. But it's Youngstown, etc.
a lot more fun to
yell yourself
More next Thursday.
hoarse at some guy
trying to
—Walter Whyte
run out a base hit than to sit
fice and look at the
tape
won't run out

more

politi¬

a

upon

B. Carroll Reece

of

problem

a

meas¬

Lavagetto,
If the current obstacle is
changed his negotiated (180-82) I think
market perspective.
the leaders, with the steels in
❖

living is
than

trust, do it for you.

you

on

You may well ask what the
market has to do with the ball

cost

cal issue.

collected,

entire

situ¬

The

you'd be better off to
give it up entirely, or let some
one

be

the

edy

serves,

disgust got odds of 10 to 1 There are no halfway
ures to
in the ninth
trading.
inning of that
game, when it was two out

,

rem¬

ation?

the attention it needs and de¬

of

and

can

to

done

a

market, is that third game

.

gested that only half of a po¬
Probably the most immediately acute problem facing the American people today is the
sition be liquidated at the
problem of the cost of living.
We all know it is too high. There is no argument about
equivalent of 180, holding on that. As I said a
year ago, what this country needs today is a good five cent nickel.
The

written.

was

Higher Prices

By CARROLL REECE*

additional precau¬
take on the up-side:

encouraging

things occurred since the
vious

Thursday, October 9, 1947

an

to

that

to

At

Blame for

There is

does

i

CHRONICLE

profit if it gets to 64.

your

ee

FINANCIAL

&

get out of your position if the
stock gets under 60, and take

Tomorrow's

Walter

COMMERCIAL

available

to

final

a

relieve

decison

distress.

should

I

be

deferred until those investigations
have been completed and we have
available
needed

to

to

the

us

work

information

out

wise

a

solu¬

tion.
I do want to

point out, however,
embark upon such
a
relief
program
as
has
been,
rather vaguely proposed without
making compensating reductions
if

that

in

the

home,

do

we

cost

the

of

government

at

net

effect inevitably
keep prices here oh
their present high level, and pos¬
sibly to increase them. It may be
will

be

that

to

other

justify

considerations

such

despite

the

upon our

will

of

action

undesirable

effect

a

course

domestic price level.

is something to be decided

That

by the

appropriate

governmental agen*.
cies after complete information is
available.
It

is

•

too

not

much

to

%

that
complete and trustworthy infor¬
mation is not available today. For
more than
14 years Congress has
been

called

gency

action

formation
tration

instances

to

upon
on

such

take

emer*.

the basis of in¬

supplied

sources

say

by

and

Adminis*.
in

1

many

information

has.

proved to be inaccurate. After all
these years of Democrat control:.

Volume 166

Number 4636

i

Of

THE

foreign relations, the world

our

food

more

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1419)

15

exported during whatever relief program
may be ah; extent not paralleled anywhere1 Ms close
situation is in the worst mess of the
asociates are talk¬
period from July 1, 1946 to approved is administered
in
a
else in the world because from
all history. Now that a
Republican June 30 1947 than during any businesslike
ing about restoring them.
That
and economical man¬ the
beginning of our government is an
Congress must assume a share of previous
example of the con¬
year in- our entire his¬ ner.
our
people were encouraged to fused
the responsibility for the conduct
thinking in the White House
tory. In his mid-year -economic i
We can do
something about it invest part of their earnings or I
of our foreign
mentioned heretofore.
The Re¬
affairs—although report to Congress Mr. Truman by encouraging consumers to
savings in the tools of production. publican
under the Constitution
the; pri¬ himself admitted that food ex¬
Party
javoid any purchases which are They did so because they knew maintenance of stands for the
mary responsibility rests with the ports tended to
the free enter¬
not absolutely
push prices up.
nfecessary. And we that the government would not
President—let's be sure we are
prise system which has made this
(4) The Administration's un¬ can' do something about it if the take away from them what,
they country great. If we go back to! a
right before we act.
wise handling of the removal of Administration will give us a good had
invested,' This was the only controlled
In
this
connection, however,
economy at this time
price controls. Remember that at faith enforcement of the labor re¬ major nation on earth in which
there is one phase of the situation
it may well be that we will have
the time controls were removed lations act so that we will not be
they had such assurance,"
upon
which
I
such a. system fastened upon us
think
all
loyal the
Democrats
had
substantial faced in the future with costly
Americans will agree. That is that
Hence, from the beginning of permanently.
f'
and
majorities in both Houses of Con¬ Strikes
interruptions
of our existence
as an independent
Whatever we may spend of our
At one stage of our history we
needed production.
gress.
In June,
1946, Congress
nation up to the advent of the
money and our resources to re¬
fought a bloody war to prove that
passed the OPA Extension Bill
Earlier in this address I stated
Democrat
lieve distress in other
Administration,
each a nation could not exist half slave
parts of the which
permitted the continuation that from its very inception the decade'
saw a
world must not be spent in such a
steady increase in and half free. Our free enterprise
of controls until July 1, 1947 and Democrat - Administration
oper- bur national stock of tools.
mariner as to perpetuate in
But, system cannot continue to funo.
power
provided an orderly method for 9ted under a policy designed to
during the decade between 1930 tion half controlled
governments devoted to the pro¬
and half free.'
the gradual elimination of control.
discourage increases in the pro¬ and 1940 our stock
motion of theories and
practices Mr. Truman vetoed
pf' tools actu¬
Make no mistake about it, ifj
that bill and duction of; the things the
people ally decreased by 20% and, in
alien, or even actively antagonis¬
we re-establish controls on
his veto was sustained by the then need and want to
prices
buy.
Let me terms of dollars, that 20% de¬
tic, to our own free system. We
we will have to go the whole
Democrat Congress.
Then
Con¬ illustrate
how ! effectively
way.
that crease represented about $35 bil¬
can feed
starving people without
We will also have to establish
gress passed another OPA Exten¬ policy has worked to the detri¬ lion. I
have
described this
supporting bad governments. That sion
controls on wages.
Bill, which Mr. Truman said ment of the nation.
We will also,
process of a nation
thought, I believe, should be kept was better
eating up its have to
than the first one and
bring back rationing. We
own
The principal reason
facilities of production as
in mind in working out whatever
why the
which Paul Porter, then OPA Ad¬
tried that system during the war
United States has had
a
That is
plan may be finally approved by
higher economic cannibalism.
and, even with the favorable in--,
ministrator, described as work¬ standard of
Congress,
living than the rest what I mean by saying that the fluence
able. Under this second bill con¬
of wartime psychology, it
t
of the world is that we have made present
Administration has dis¬
did not work well.
trols on meats were re-instituted
We can all,
Democratic Party Responsibility
greater and more intelligent use couraged production of the things
but the situation
rapidly deterio¬ of mechanical production meth¬ the people need and that is one of remember how unsatisfactory i it
As I have indicated
earlier, the rated
was
to try to eat ceiling prices
and, finally, on Oct. 14 Mr. ods.
Those mechanical aids are the major causes for the inflation
basic causes for present-day
high Truman
instead of steaks.
personally ordered their what you may call the tools of from which we are
prices go back over the past 15
suffering to¬
removal. Then, on Nov.
This nation today is
9, 1946, production. I am not now
paying the
years, and, because the Democrat
talking day. If we are going to check the
on
his own volition Mr. Truman
about a hammer or a saw or a
ruinous onward march of infla¬ price and the penalty for the most
hoe,
party was, in complete control of removed all
price controls except I am
financial debauch in
tion we will have to reverse the prolonged
our government
talking about the huge and
during all but the on
all history.
sugar, rice and rents. When he complicated machines in
It will be sometime
last few months of that period,
our
in¬ policies which have created it and
did
so
he
announced
publicly dustrial plants. The use we made encourage the people to produce before the effects have worn off,
that party must bear the respon¬
that:
but the remedy for it is hot more
of these tools of
production ex¬ more and more of the commodi¬
sibility for the present situation.
"The general control over
prices plains why an American worker ties we need. The only sovereign of the same unwise policies which
This fact, of course, does not re¬
and wages is justifiable
caused it in the first place.
in order to
only so
lieve the Republican Party of its
buy a pound of bread remedy for high prices is a supply
long as it is an effective instru¬ need work
The choice is ours.
The people
only six minutes, while of goods commensurate with the
responsibility now that it has con¬ ment
against inflation. I am con¬ a Russian worker must work for
trol of Congress for
an
supply of dollars in circulation.
by their votes last November reg¬
doing every¬
was

.

,

,

,

.

thing possible to remedy the situ¬
ation, but we should always keep
in mind who created the situation
in the first place. Among the fac¬
tors which have led
inevitably to
the present undesirable
high price
level may be listed the following:

(1) The "easy money" policy of
New
Deal
Administration

the

over

a

decade-and-a-half,

put into circulation

which

amount of

an

currency out of proportion to the

goods
available
for
purchase.
Most of this money was borrowed
and

that

fact

had

further increase

a

tendency

inflationary

to

pres¬

sure.

(2)

Administration

policy,
apparently dictated by political
motives, of increasing the cost of
production by promoting wage in¬
while

at

arguing

that

this

Without

increasing

an

elevator

up

it goes

hot

time

true

this

in

up

as

a

prices.

When

building

goes
can

wages, but

to

It

pressure

made

a

half¬

stabilize

immediately after V-J

abandoned

that attempt
openly for further
wage increases which, its spokes¬
men said, could be made without
price increases. In this fantastic

and

came

out

procedure the Administration

the

time

controls

convinced
would

that

do

come

serve

continuance

nation's

economy

harm than good."
All of this
happened, remember,
before the Republican Congress
more

took

office

in

January

of

this

year

The Administration's bitter
last-ditch opposition, to all efforts,
jii

i

»i •

the

on

Congress
cog^ 0£

J.

of

part

to

n

the

and

ot*

the

thus

cost

series

of

very

costly

strikes

a

in

basic industries aided and abetted

by a phony report put out by the
Department of Commerce under
ihe
then
Secretary,
Henry
A.

Wallace, that
creased

25%

could be in¬
without any conse¬

quent increase

wages

in prices. After the

workers had lost billions of dol¬
lars in wages and the nation had
been deprived of more billions of

bring

250 hours.

'

a

wide¬

campaign
designed
about the reinstitution

These mechanical helpers, or
tools,
actually do about ninetenths of the work in
ductive system and the

also

our

pro¬

owners

of

restoration

friendly

of the product while the workers
who operate the IAAIC? receive flio
tools
the

economy.

D

other

nine-tenths.

ijnited States,

of

We,

in

the

sorted

to

machine

production

re¬

to

eye

a

upon

1948.

with

"controlled"

price controls.

Executive

ished

look

Order

controls.

Now,

jn this connection,
mention only a few ex-

he

Then
abol

some

of

decision

that

frenzied
opposition
all Congressional efforts to cut
appropriations for our overgrown
Federal
man's

bureaucracy;
vetoes

reduction
veto

the

of

passed

his

almost

of

the

relations

Tru¬

two

bills

and

gress;

Mr.

tax-

that

decision

will

reiterated

and

system

trouble;

which
we

caused

will insist,

all

even

upon

reduction

bills

inflationary
effect of
the

wages

unlike
it

a

an

does

were

particularly

because
tax cut

the

the maintenance of

our

our

is

to

people the highest standard of

the

greatest

and

most

powerful

nation in the world.

not

increase

the

costs

for

the

causes

fully set forth in the Prospectus.

we
can

to do

One thing we
Congress tried
during the last session. We

can

cut

and

we

will

not

be

able

to

do

that
we

to

have

a

Share

a

a

Republican President who is
really interested in government
economy, but we can keeo trying
the meantime and

man

$35.50

government expenditures
cut taxes.
Maybe we

to Warrant Holders

can

substantial extent until

in

Subscription Price

about it?

do is what the

can

share)

the

of

present high price level.
Now
to the question what
done

a

Rights, evidenced by Subscription
Warrants, to subscribe for these shares have
been issued
by the Company to holders of its
Capital Stock, which

rights will
expire at three o'clock P. M., Eastern
Standard Time, October
22, 1947, as mow

What Can Be Done About It?
much

(par value $5

of

produces.

Company

Capital Stock

of the taxpayer, but,
outright wage increase,

the commodities which the worker

So

Glens Falls Insurance

interposes

his

if Mr. Tru¬
veto

power

The several
Underwriters, including the undersigned, may offer shares
of Capital
Stock acquired through the exercise of
rights and any shares of Unsubscribed Stock
at prices not less than the
Subscription Price set forth above, and not
greater than
the highest price at which the
Capital Stock is currently being offered
by others
in the over-the-counter market
plus the amount of any concessions to
dealersv

dollars in badly needed produc¬ again, the
responsibility will be
tion, Mr. Wallace blandly ad¬ his.
And, I wish to emphasize
mitted

that

this

report

was

in-

Accurate and misleading.

that

we

make

can

a

net

cut

in

government

(3) Unwise and un-businesslike

handling

expenditures without
precluding the possibility of a
reasonable relief program abroad.

of the government's food
purchases for foreign relief. To
cite one specific example, on Jan.

We

£0,

in

can

do so

by making substan¬

Copies of the Prospectus may be obtained from such
of the several Underwriters,
including the undersigned, as may legally offer securities in
compliance
with the securities laws
of the respective States,

tial and long overdue curtailments
the

1947, the Commodity Credit
Corporation bought
more
than

for

19,000,000 bushels of wheat

bureaucrats, but

and

a

the

expenditures
maintenance of useless

unnecessary

to do a good job
Congress must have the
cQoperation of the Executive.
So

few days later the price of wheat
had gone up about $1 per bushel,

on

•pie importance of these ill-timed
purchasing operations is indicated

far, Congress has not had it—and
we
may have to wait there until

when

1948 when

we

remember

that, accord¬
ing to Mr. Truman's food export
report on July 6 of this year,




■

MORGAN STANLEY & CO.

this,

we

We can do

problem

by

elect

a

Republican.

something about this
making sure that

THE FIRST BOSTON
CORPORATION
Dated: October 8, 19J7

free

living in all history and made this

150,000 Shares

general
increase

the

at the

enterprise system which has given

an
offer to sell nor a solicitation of an
offer to
buy any of these Shares. The offer is made
only by the Prospectus,

labor-management

in

price of temporary inconvenience,

by Con¬
hysterical

designed to avoid
costiy interruptions of production
whjch always cause higher
prices.
Mr. Truman's vetoes of the tax

be

We will not go back to the

This announcement is
neither

bill

there

fifth term for the New

of

So far, we do not know
President wants.:" Once

what the
he favored

by

who

no

Deal—and

emphasized

It is significant
the advocates of
of price controls are

persons

their

will be

to

price controls.
that many of

iivjng

need

was

was

worker must work for

At the moment there is

nples—the

be

effort

spread

Question of New Price Controls

lo

cific

this

istered

why an American work¬
can
acquire enough dollars to
buy a'suit of clothes by working
only 26 hours, while a Russian
er

the

reduce

come

of

A 1

Republican

reduce

government
T

hour and

the tools receive about one-tenth

(5)

.i

simply attempting to kid the wage
earners by giving them more dol¬
lars which bought less. One spe¬
result

no

indeed,

am,

their

the

has'

can

I

purpose.

done

unit. You

war-time

Administration
hearted
attempt

it

be

raising the ceiling.

under

the

Day

time

same

could

the floor without at the

raise

same

is

the

that

useful

^

The

creases

vinced

when these

SPENCER TRASK & CO.

16

Thursday, October 9, 1947

CHRONICLE

& FINANCIAL

COMMERCIAL

THE

(1420)

uniform

act

fraud'

the

of

distribution would be permissible

Needed: Moie

By MURRAY HANSON*
General Counsel, Investment Bankers Association
:

of America

Mr. Hanson strongly urges uniformity in State Blue Sky Laws and better integration
with Federal Securities Acts and SEC rulings. Points out difficulties in distribution of

"red herring"

subject of discussion almost annually

matter which I realize has been the

a

culties

which «>

have

grown

of lack

out

unifo

ment

form
t i

k

wo r

is

d

out

years

and

the

uniform

fi¬

back

nancial
ip

e n

to

and

ers

the

past.

much, much

be

have
of

cooperative efforts
with all this,

particularly

be

prise.

we

important that
make this problem a matter of

top
In

to

me

priority for
first

the

citizens
think

in

it

several

place,

reasons.

just

as

good

cruciai times, I

these

behooves

all

of

us

con¬

nected in any way with any bus¬
iness to do our utmost to make

that

business

function

tively and efficiently
if

we

are

to maintain

effec¬

as

possible

as
our

way

of

life in this country and encourage
others of like views to continue
the struggle for a comparable
way
of life elsewhere.
Short of an¬
other

there

certainly could
greate catastrophe today to
the people of this country or to
be

the
of

war,

no

other
the

here.

remaining free peoples

world
It

than

seems

a

to

therefore, that if

depression

me

we

are

obvious,
to

meet

our present and
likely future com¬
mitments abroad, service our huge

public debt, maintain

present
standard of living and avoid ram¬
our

a

As

a

free flow

free flow of equity

a

you

enter¬

new

well know, it is in

field

latter

of

providing for
free flow of equity capital where
lack

the

of

uniformity

in

our

state laws and their non-integra¬

with

tion

present

the

and

for

delays,

duplication
present

lenge and
this very

tion
think

us

of

effort,

time,

with both

a

chal¬

to make

the

overall

behooves

it

therefore,
eliminate

to

a

do

every

contribu¬

problem.
each

I

of tus,

all^e.fcan ■ to

restriction; ob¬

similar in¬

provide

the

"sell"

terms

or

inflation,

that

most

the red

before they like¬
the hook."
I think

group

wise

"on

are

exception of
one state securities act, your state
laws of the regulatory
type do
not specifically embody this ob¬
jective; but it is certainly not
with

possible

the

with

inconsistent

protective

the

type law
if not

scheme of the regulatory
and

I

sure

am

all, of

securities

of

vast

of

majority

cases

protection to inves¬
know, we have
long series of discussions
as

you

Commission

with

the

there

isn't

of

to

see

practicable

some

Act

amending the

to

accom¬

the

red

interest

getting

the

herring prospectus at least to
and
professional buyers

dealers

before the offering date,

the Com^

mission last year
Rule 131.

promulgated its
We immediately found,

however, difficulties and obstacles
the

under

blue

sky

laws

of course, in the main en¬
acted before the '33 Act, and there¬
fore with no thought of this prob¬
were,

stacle, difficulty, duplication and

interested

in

the

absolutely
essential to the protection of in¬
vestors
and
the
general public

tion

shapes

interest.

the
the

In

why

reason

problem

I

think

of uniformity,- and

been
no

way

up

states

be

this situa¬

as

various state
six

rities may be

Another
this

now

strue

42

the

we

con¬

some

registration

or

is

so

in these states Rule

inoperative

even

to

as

other

condition, in

the

states but

31

dealers
are

sales

the

dealers

made

are

are

whom

to

actually

are

en¬

gaged in buying and selling secu¬
rities

as

business.

a

however,

there

of

the

made

by

red

herring,

in

anyone

be

may

states

21

whereas it must be made only by

secu¬

sold without having

problem.

further
the

complicate

restrictions

strict

the

on

would

vertisements

distribution

picture,

the

of ad¬

use

probably

of

red

re¬

herring

prospectuses in two states among
the 31 where'sales to dealers are
exempt.

Rule

131

panies,
is

to

which

could

lead

more

particularly

should

be

given

of

ferent
solve

trust

banks,

more

com¬

un¬

certain, but it hardly seems worth
And

of

if

the

indeed,

have

we

as

can't

I

uniform

do

laws

expect otherwise.

or

recognize, of

that this

course,

and that

long-range project

a

eight

to work out the Uni¬
was
approved

years

which

Act

form

in

back

that if

but

1930,
in

time

way

I

hopeful

am

approach the problem

we

this

Indeed it took

time.

take

will

we

much

results

get

can

different

slightly

a

sooner.

In the meantime I see no alter¬
as the sev¬
year—that is

native but to proceed

to

making such amendments
and

say,

indicated by experience

are

as

did this

states

eral

conditions in the busi¬

changing

to
make their respectivelaws as workable and non-restric¬
ness,

legitimate business as is
with the protection of
the investors in their states and
tive

to

consistent

general public interest.

tury, through the

This

good offices of

Davis, has been endeavor¬

Arthur

ing to be helpful and we want to
continue

to be.

With

respect

over-all
devel¬
uniform laws,
the

to

and encourage the

opment

red

distribution of

herrings to investors prior to

the effective date of both Federal

uniformity

greater




long

so

model

in

and

inte¬

of

most

of

that

the

new

have doubtless seen
Bar Associa¬

you

American

tion, at its convention in Cleve¬
land last week, adopted a resolu¬

Securi¬
which

tion of its Committee on

and Regulations

ties Laws

reads in part as

follows:

That the matter of

"Resolved,

drafting a new uniform or model
State Sale of Securities Act be

Confer¬
Uni¬
State Laws for its considera¬
to

referred

form

the National

Commissioners

of

ence

tion, with a request that
ference
the

on

the Con¬

act or acts of

prepare an

which it may consider
practical to the end that the

type

most

gration of this great body of law, existing diversity of legal require¬
but I feel certain that you are ments preliminary to the issuance
of securities be minimized to the
just as well aware of the situation,
greatest possible extent."
if indeed not more so, than I.
I
It seems to me that the National
recognize also that the problem
is

difficult

exceedingly

an

and that we shall

probably

one,

never

attain

perfection

or

which

is

satisfactory

everyone

Common Stock

we

study, looking toward the

.

Western Gold Mines, Inc.

Consequently,

have

not

'33

integration,

33,400 Shares

even

prob¬

same

Act should be amended to permit

top

New Issue

substantially the

and,

that picture in

course

Yet

acts.

new

a

to
is a field, of course, in which the
under IB
A, for the past quarter of a cen¬

complicated and

while to give you

considered the adop¬

less, rather than more, uniformity,

respect

herrings

insurance companies

and

even

with

red

present

number of cases, dif¬
states were trying to re¬

though, in

the

situation

The

distributing

their

amended

tion of entire

tations since the sale, or distribu¬
tion

many

acts, and in three other states the

here,

Even

further limi¬

are

As

states:
their blue sky laws this

doubtless know,

others

is

registered and in other

that

me

Indeed, one state adopted an
new act, one completely
rearranged its existing law, 17

it

sales

to

seems

entirely

subject to

whom

to

it

laws

a

toward the end I think

amended

states, that

some

With

would all like to achieve.

we

the

desire.

year.

exempt in

are

in

could then hope for real

we

progress

dealers.

Sales to dealers

the

people

lem, their approach was entirely

not exempt

are

law'

of

might

state

different.

Sales to dealers

detail.

acts.

where

registered there is, of course,

substantial

requiring

the following situation:

in 11 states
131

laws

sky

model

a

the

types

legislature

exempt.

blue

notice

type

a

exemption

the

states

of

turns up

which

I think you may

which is not

of

a

registered dealers in 10 states. To

of

lem in mind.

expense

if

way

plish this objective.
In

the

of

form

states

and,
a

provisions

of

in

are

from regis¬

involved in

are

analysis

the '33 Act, as it has
out in practice, has not

afforded this

held

An

made

the

tors

or

of transaction which is

they are familiar to

as

you,

worked
in

which I need not go

reasons

into here,

all

involved

class which is exempt
tration

the

you

objective.
For

state registration unless

prior to

that most,

think this a desirable

herring can't be distributed

be

whichever

of

model

such

you

prudent construction in
situations, then, of course,

and state registration, it would be
In 42 states, however, blue sky
largely inoperative in a great
priority is laws
require some form of notice
many .states as . your state, laws
that it has a direct bearing on the
only to a "bust" and another de?
or
registration
of
non-exempt now stand.
This, I think, is am
pression, we are going to have to protection all of us .would like to securities before such securities
excellent illustration of the urgent
see given
to investors. Certainly
seize every opportunity to expand
may be sold in those states.
It need for greater integration of
one of the very laudable purposes
appears probable that, in at least the state with the Federal
our
production, our productive fa- of the Securities Act of 1933 was
regula¬
a few of these 42 states, the dis¬
tory schemes if dealers and inves¬
to provide the investor, through a
tribution of red herrings as con¬
*From an address by Mr. Han¬
tors are to be given the protection
statutory prospectus, with full and templated under Rule 131 would
son at the Convention of the Na¬
contemplated by the '33 Act.
accurate information on a secu¬ be held not to constitute an activ¬
tional
Association
of
Securities
I could with little difficulty, of
Administrators, Washington, D. C., rity before he is legally bound to ity within the meaning of the course, cite many other examples
Oct. 2, 1947.
buy it or before he is "on the term "sale" and therefore such which
point up
the need for

pant

current

the

more

would

available

we

dis¬

the

in

dealers

to

tributing

unneces¬

opportunity to make

an

turn

to

greatest

the
and

at

important phase of the
work
more
efficiently

business
in

acts

This situation thus

expense.

does

and

Federal

makes

difficulties,
sary

formation

would

we

as

it, there must be

capital funds to industry, and

this
seems

productive ca¬

our

capital to both old and

done.
It

and

pacity is to expand

deal¬

remains to

important

economy

But

more

but I do think it has

bearing
on
the
over-all problem. Certainly if our

excellent examples of the

results of such

necessary

concerned,

filed by brok¬

Hanson

a

to

also

was

not

prerequisite
to
meeting the larger problem
with which we are all so vitally
even

an

state-

t

course,

gest that the solution of our prob¬
lem of uniformity and integration

was

e

some.

of

am,

the boys at the Com¬
put it. Indeed, the aim

as

mission

remote to the problem

and I

hand

at

form

o n

hook,"

system

foolish enough to believe or sug¬

registra-

which

economic

our

somewhat

uni¬

The

law.

of

-

work at maximum efficiency. All
of this at first blush may seem

i t y

r m

gration of tfiis
great body of

in

of

the

cilities, and to make every seg¬

of

non-inte¬

and

are

activity within the

an

a

there

"sale," which would certainly be

conventions. I am aware also that through the work of your committees with other
interested groups, substantial progress has been made on some of the more pressing diffi¬

ers

assume,

definition

at your

Col. Murray

we

constitute

securities laws.

This is

given

If

of great body of

resulting from application of state laws, and advocates overall study

prospectuses

of such laws

type and one of the dealer-regis¬
tration
type
so
that
basically

however, that the
distribution of red herrings does

Unifoimity in Bine Sky Laws

out

prior
to
registration in those
states, but even here we run into
possible difficulties with the pro¬
visions of these laws having to
do
with advertising.

concerned,
this

that

think
from

entirely

but

should

going forward

solution

a

I

to

don't

deter

us

aggressively

Conference

is the logi¬

organization to head up such

cal
a

Commissioners on

of

State Laws

Uniform

but I

study,

am

very

hopeful

will do so in collabora¬

that they

tion

as

all

with

such

parties

interested

organization, all the

your

organizations represented on

with this work.

the

program

this morning, the SEC,

breaks itself down into two parts.

and any

other group which has a

What

substantial interest in this

As I

Price $8.50 Per Share

by the undersigned

we

need, fundamentally,

study

of

body of law with a
evolution
of

the

tion

Frank L. Porter

the situation, our task

over-all

an

Orders will be executed

see

(i)

of

a

new

this

is

great

course,

confined

dealer-security

registra¬

Street, New York 5, N. Y.

WHitehall 4-6078

out

maximum possible uni¬

and

and

type
tion

seems

type, designed to bring about

the

(2)

maximum integra¬

eral acts.

it

In such a

important

to

fewer

me

groups

clear

greater hope

that

but it

it holds

of a workable

acceptable solution in the end.

Speaking
be

to

more

for the IBA. we shall
than

happy

to do any¬

thing we can in such an endeavor •
study I would and I bespeak your hearty cooper-

of these laws with the Fed¬

think

take more time than one

view to the
act

project.

over-all approach will; of

an

uniform

formity in the state laws of this

52 William

Such

also to work

COMMERCIAL

THE

Number 4636

Volume 166

FINANCIAL

&

CHRONICLE

(1421)
i i m

i-1

Extols Job Done

10% Rail Rate Rise Granted by ICC

by Banks in Agricultural Credit

Order allows emergency freight rise on all commodities
except coal,
coke and iron ore.
Expected revenue yield is $700 millions.

80% of total sound farm production and operating credit.
1935, banks have never supplied less than

Chester C. Davis tells American Bankers Association since
Speaking at the general session

of'

of the 73rd Annual Convention

take

advantage

will public service in the community.
"On the other hand, he may
but it

they

it,

of

agriculture,

the American Bankers Association

still

finance

in Atlantic

will

be largely through

City, N. J. on Oct. 1,
Chester

k

C.

Presi-

Davis,

Federal Re¬
Bank of

serve

| St.

L o ii i s,

stated that the
A

ican

m e r

banking

sys¬

of

the

financial

community.

may

'the

public

in low-risk,

a

ficient

Two

and

investments

the

encourage

that

sound

time

the

is

it

the

may

income

to

easy

bank

a

Two With

se¬

way.

of

business

to

scale

for

Herrick, Waddell

KANSAS CITY,

F.

same

have

been

added

to

Smith

P.

the

staff

of

Herrick, Waddell & Co., 1012 Bal¬

full

ore.

rates

new

A special <$>-

time,

set

were

commodities.

up

the

Commission

the

At

au¬

thorized the Southern railroads to

increase passenger fares to bring
them up to the level of present
rates in

other

parts of the

coun¬

try.
rate

form

freight
basis

MO.—Raymond

Burton

and

Bentz

of

these

The

(Special to The Financial Chronicle)

provide suf¬
satisfy
the

source

sound loans

coal, coke and iron

the

But it will not set

as

means

and local

On Oct. 7, the Interstate Commerce Commission authorized an
interim increase of 10% on freight charges for all commodities
except

ing community income."

banker up as a useful citizen
the

This

farmers

create greater efficiency and ris¬

gen¬

low-yield outside

This

bank's needs.

or

| realizes."

disposal.

to him. He
concentrate his investments

For

ag¬

to

eral courses are open

tem "has ren¬

service to

into

munity.

pipelines in his

He has its deposited

at his

funds

dered

riculture than

build

debentures.

or

first

tal

local capi¬

excess

The local banker controls most economic development, of the com¬

curities.

greater

low-yield

supported bonds

the

of

dent

of

chase

carefully direct

the pur¬
government-

increases

bills

are

to

take

to

the

additions

of

figured on the
present rates, excluding

of

the

3%

tax.

This

as

Federal

transportation

method

was

suggested

by the railroads.

timore Avenue.

According

costs

"wholly beyond the power of
petitioners to prevent." An
application for a more general and
higher rate is still pending before
the

the Interstate Commerce Commis¬

sion, the
merely

pteserit 10%

rate in¬

having vjb e.e n

crease

granted

as

it

measure,

interim emergency

an

has

been

Chester

C.

railroads from this action

to the

ICC,

during

lions per annum.

the

term,

been

most active in

Davis

short-

operating, farm loan
field, let's focus our attention for
a moment on that type of loan,"
Mr.

or

Davis

banks

stated.

have

"Since

supplied

never

1935,
less

than 80% of the total sound farm

production
direct

operating

and

farmers.

to

has

been

the

FCA

and

to

tives.

These

funds

largely

counts.

units

of

loans

to

farmer

FCA

Intermediate

credit

balance

by

makes

which

farmers

The

advanced

copera-

units

through
Credit

obtain

Federal

Bank

dis¬

The Federal Intermediate

Credit Banks in turn obtain funds

through the sale of debentures to
the investing public.
Banks not
only have supplied 80%

or

more

of the farm production credit di¬

rectly to farmers, but in addition,
Dec. 31, 1934, banks have

since

purchased

from

73%

to

85%

of

Federal Intermediate Credit Bank
debenture issues offered for sale.

It

is evident, therefore, that the
banking system has supplied most

of the funds with which competi¬

tive agencies have made loans to
farmers and farmer cooperatives.

All
the

things considered, then, has
banking system done such

bad job in farm finance?
it

has

done

a

I think

commendable

very

Jol?.
"The banking system has ren¬
dered greater service to, agricul¬
ture than the public realizes.
"More

coming

and

to

nothing

in

record

of

would

set

risk

more

realize

the

past

farm

group,

of

that

highcounting in the

the

as

a

worst

farm

depression in history. With proper
inter-bank organization and ade¬
quate staffing, commercial banks
can

handle

duction

the

loans

farm

sound
and

pro¬

reasonable

a

portion of the farm mortgage loans
without government support and

subsidy.

If country banks indi¬
vidually will organize good farm
service

departments, and if city
banks will adjust some of their
activities

a

little

country bank's

there

point,
fear

is

toward the

more

needs

and

real

no

view¬

need

ATED

is

repayment

apart

even

are

there

borrowers

them

experience

bankers

that

to

further

inroads of competi¬
government-sponsored loan
agencies.
tive

R

as

one

hardware
MOORE

-

PANY, INC., of

of the

five

largest wholesale

companies in the
HANDLEY

United

HARDWARE

Birmingham,

distributes

stances for

than 40

more

work

ing, and furniture.

materials,
and

throughout

automobile

many
a

other

accessories,

lines

large part of the

clothing,

estimated that

merchandise

area

the

house

furnishings,

With

new

floor

cover¬

and improved prod¬

ucts coming into supply daily, it is conservatively

sporting

of

of the

many

of the Company's operations to include toys,

scope

and mill supplies and machinery, building supplies

goods,

with

New lines of mer¬

chandise added in recent years have broadened

COM¬

general

hardware, electrical supplies and appliances, mine
and

years,

nation's leading manufacturers.

States,

comprised by

over

50,000 different items

are

car¬

ried in stock.

the States of Alabama, Mississippi, Florida, Georgia
and

Through its

Tennessee.

over

are

ing

retail establishments, rail¬

will

roads, public utilities, coal and iron mines, metal
processors,
ers.

Sales for 1947

are

-

HANDLEY'S

for

school

acquaint

MOORE

running far ahead of 1946,

-

over

many

100

more

distinctive

HANDLEY'S

management

when they exceeded $20,000,000.

MOORE

a

Company's

and various other types of manufactur¬

course,

which has since

the National Wholesale Hard¬

Association, MOORE-HANDLEY is conduct¬

ware

9,000 customers during the first half of 1947.

Among its accounts

training

own

been published by

Organized in 1882, the Company did business with

is

gearing

ex-GI's, who
quality

reputation

is

attested

by

pansion
power

day

the

trade

hard-hitting,
its

one

with

Southerners

-

mark.

aggressive

organization

period of growth commensurate with the

exclusive selling contracts, going hack in some in¬

for

new

a

ex¬

of industry and the increased purchasing

in the South.

"Times

change, and the business
banking must change, too, to
keep up with them. There is little
of

Another
Southern

in the future picture to lead one
to
believe
that bank resources

will

not

banks

remain

the

and

industrial

industries,

is

in

the

series

developments.

ready

to

do

its

by

Equitable Securities

Equitable has
part

in

helped

supplying

to

Corporation featuring

finance

others

with

many

capital

South'

funds.

that

will not continue to be in

excellent
serve

high,

em

advertisement

financial

the

sound

nation.

position

credit

That

needs

includes

to
of
the

farmer, too. To serve him, country
bankers, and their city big broth¬
ers, too, need to know that end
of their job. Reliable farmers are
entitled

to

credit

NASHVILLE
DALLAS
KNOXVILLE

productive
purposes, credit that is tailored to
fit their peculiar needs,
Banks
have the best opportunity to serve
that need directly. If
they fail to




NEW

EQUITABLE

BIRMINGHAM

NEW ORLEANS

for

YORK

MEMPHIS
HARTFORD

GREENSBORO

Securities Corporation

CHATTANOOGA

BROWNLEE O. CURREY, president

322 UNION

STREET, NASHVILLE 3, TENN.

estimated

that the additional gross revenue

will be equal to about $700

the

to

the calendar year 1947 there were
marked
increases
in
operating

"Since banks

have

17

■>> .1 yt.\ •'

TWO WALL STREET,

NEW YORK 5, N. Y.

mil¬

18

THE

(1422)

I plan to center
my remarks on a problem of the
greatest interest and concern to
all of us—as bankers, citizens and
individuals —
>i
■
•
'' economic

Western
Since

f

the end of the

have

/I

War

as

trips to WestEurope
have

e r n

and

i

traveled

n

Britain,"
Hol¬
land, Belgium,
Great

Switzerl and
and Germany.

Thesefour

trips

were

addition to
Britain

W.

W.

Aldrich

in
I made to Great

one

during the war itself.

My

conclusions are based not only on

personal observations but also on
with

conversations

numerous

in¬

public and private
life in Europe and with many
civilian and military representa¬
in

dividuals

tives of the United States Govern¬
ment both here and abroad.

| With the foregoing background,

it is my judgment that our secur¬

ity

as

a

measure

nation depends in large
upon
the prompt and

successful

tion

economic

of Western

reconstruc¬

or

is

red,

hostile

to

of

with

since

elan<?pd

have

hostilities
to

we

make peace

omy.

For

many

decades Western Eu¬

has been one of the principal'
workshops of the world, import-

rope

and Austria, and
Europe remains divided into? two'f lnS raw materials and exporting
finished products, and even today
separate economic areas b^the
iron curtain erected by Russia and it ^producing a large quantity of
Western Europe, in spite
her satellite nations.
Failure to goods.
of being cut off at present from
give assistance to the nations of
Western Europe now would re¬ Eastern Europe, is not "finished.'
sult inevitably in their economic It is the largest concentration of
skill
and
ability
outside
the
collapse and this, in turn, would
United States and, with our help,
lead to the fall of present govern¬
Germany

the

of

nations.2

European

It

able to render such aid in the

five

after the end of the
.World War when British

years

First

coal filled the

gap

of urgent coal-

needs* created by the war damage;
to the Belgian and French mines-;
and

the

The

occupation of the Ruhr, j

reconstruction

of

Western

Europe which has- already taken
place has, been not only: of am

lem, aggravated

our pair port facilities, to rehabilitate
internal
transportation,
and to

Europe.1

have been unable

was

Corporation for European Reconstruction" to aid and enforce

Tragi¬ further
development and expan¬
cally enough, the world today is sion of world trade depends upon
not one world, but two worlds—
the restoration of this very im¬
engaged in economic and diplo¬
portant sector of the world econ¬
matic conflict.
During the two
years which
the
cessation

margin

a

needs

economic character but psycho¬
by the effect of logical an<f physical! as well. War'
currency, inflation, and
unsound weariness is now passing: audi
; deepest national- and moral , con¬
It, exists because psychological attitudes in general
victions.
We should
do every- provide food until exports became fiscal policies.
'sufficiently large to enable the most countries have been unable are somewhat better. The physi-^
j. thing that lies within our power
to produce goods and services in cal condition of the
peoples of the
(to preserve those nations which nations of Western Europe to be¬
sufficient amount to pay for the nations occupied
share with us the traditions of in¬ come self-supporting.
by Germany has1
In the report just issued by the products of the farms and indus¬ improved. As we know
dividual liberty and the rights of
only too>
sixteen
nations
which
recently tries of the United States and of; well from historical experience,
man.
met in Paris, it was pointed out other nations of the Western Hem-, much time is required to repair
The
preeminent political im¬
that the destruction and disloca¬ isphere which they must obtain in the ravages of war. The purpose
portance of sustaining democratic
Dollars have been of the American credits
tion of the Second World War was order to live.
already5
systems in Western Europe should
greater than that of the First. provided by our government not, granted was to> give time for re¬
not, however, obscure the tre¬
"Agricultural and industrial pro¬ for the selfish purpose of insuring, covery, but the* two years which'
mendous economic significance of
duction was severely reduced, tra¬ American prosperity, but to meet these credits have actually been,
Western European reconstruction.
ditional sources of food and raw the urgent transitional needs of a able to finance have proved tooi
The peoples of the Western Euro¬
material supply were cut off, so war-ravaged world.
short.
pean nations, totalling some 270,that when the war was over the
000,000 and living in an
area
Recovery Since the End of
Impediments to Full Recovery
about
one-half as large as the devastated countries had to start
the War
Although recovery in Western!
United States, are skilled and in¬ again almost from the beginning."
When viewed against the back¬ Europe doubtless has been more4
At the conclusion of the war
telligent.
They command
im¬
the United States was and', in fact, ground of conditions at the end substantial than is generally ap¬
mense industrial and natural re¬
hostilities,
when
Western preciated, it is far from complete,,
sources.
Before the war, Western still is the only nation capable of Qf
these
urgent require¬ Europe was in a state of almost, and without additional assistanceEurope, including all of Germany, meeting
ments.
Our productive facilities complete
prostration,
the
eco¬ the crisis at hand will result in a
accounted for about 50% of the
undamaged
by nomic recovery already attained serious relapse.
!
world's international trade;
The are large and

iblack

France,

critical

will be recalled that Great Britain

essential to plan, and wants

four

made

the

Western

production and to check inflationary pressures. Sees German recovery
removal of trade restrictions and elimination of
unnecessary national economic controls. -

increased

Europe.

for

of New York

Leading American banker, after reviewing background of European conditions,
asserts our security as a nation depends largely upon prompt and successful eco¬
nomic reconstruction of Western Europe., In addition to Marshall Plan, suggests
creation of "U. S.

reconstruction
0

requirements and leave

Chairman, Board of Directors, Chase National Bank

This morning,

the

Thursday, October 9, 1947

By WINTIIROP W. ALDRICH*

Stated

Problem

The

FINANCIAL CHRONICLE.

&

COMMERCIAL

has

people have
psychological
shock
raids, enemy
occupation and insufficient food.
With these advantages and the
action.

enemy

been

inestimable

further
the
we

Our

advantage

been

noteworthy.

For

ex-

Many obstacles have conspiredt
impede full recovery. Among-

index of industrial
production in France is more than
double
the
level
prevailing at

to

V-J

into

emple,

spared
the
of bombing

the

has

Day and 95% of the 1937 rate.
in

The index

of

these obstacles first and foremost

Netherlands is

The

our

almost three times higher than in

freest

economy, in the world
alone have the opportunity to

been

the

division

of

Europe
and
inability to make peace. Then
two

antagonistic

camps

there has been the continued

eco¬

August, 1945, and 89% of the level nomic paralysis of Germany, the
1937.
The
Belgian index is persistent' and unchecked infla¬

exercise constructive leadership in

of

shaping world developments dur¬

more

ing this critical period.

Day and 87%

According
tions

of

Council

recent

to

our

National

compila¬
Advisory

International

on

Mone¬

tary and Financial Problems, the

twice the level at

than

of 1937.

nations

these

self—and

tionary

have

placed their
systems in work¬

transportation
ing order—a

V-J

Moreover

no

have

the

pressures,

controls associated with
and

the

British

task in it¬
resumed agricul¬

economic*

planning,4

unexpected drain

the

on

balance-of-payments.

mean

Secretary Marshall's Proposals

al¬ tural production. While creditable J
It was against this background
ready
made
available
by
the recovery has occurred in these na¬ of incomplete recovery in West¬
United
States
Government
is tions, the recovery attained lags ern Europe and rapid exhaustion
ments.
The danger then would (can again become a large, pro¬
about 16 billion dollars. This sum behind that of the United States, of
dollar resources and
credits
be
that the
democracies which ducer of both consumer and cap¬ does not include eur contribution where the index of industrial
pro¬
that Secretary Marshall made his
ital
goods.
The higher
living
still
exist
in
Western
Europe
duction stands .about 60% above address at Harvard
to
the. International
Monetary
University on
standards which-would result are
would be replaced by dictator¬
Fund or our stake in the Interna¬ the 1937 level. European recovery, June 5, 1947. The rehabilitation of
the most effective means of dem¬
ships of the left or the right. To¬
tional
Bank
for
Reconstruction of course, has been retarded by the economic structure of Europe,
talitarianism,
whether
brown, onstrating the superiority of per¬ and
Development. Approximately last winter's exceptionally severe Secretary Marshall emphasized,
sonal freedom and the democratic
12.5 billion dollars of the 16 bil¬ weather followed in turn by this will require a much
longer time
1 By
"Western Europe" I mean, for way of life over the dictated and
lion dollars made available have summer's prolonged drought. The and greater effort than has been
purposes of definition, the sixteen nations
police-controlled
economies
o f
been utilized, leaving a balance process of European recovery is anticipated.
represented on the Paris Committee on totalitarianism.
The
reasons
cited

European Economic Cooperation

(Austria,

Belgium, Denmark, France, Eire, Greece,
Iteland, Italy, Luxembourg, The Nether¬
lands, Norway, Portugal* Sweden, Switz¬
erland, Turkey and the United Kingdom)

plus the three western zones of Germany.

still far from

of 3.5 billions still unused.

Postwar American Aid to Western

Europe
Even before the end of the war,

it was generally recognized that
by Mr. Aldrich be¬ the United States must extend
fore the 73rd Annual Convention substantial aid to Western Europe.
of the American Bankers Asso¬ Aid was needed to .furnish inven¬
ciation, Atlantic City, N. J., Sept. tories of raw materials, to rebuild
*An address

factories, to provide ships and re-

30, 1947.

assistance

financial

postwar

About $11.5 billions, or

approxi¬
mately 72% of the total amount
of. postwar
financial
assistance
made
available
by
the
United
States,
have
been
granted
to
European nations. Of this amount,

approximately $9.5
been utilized.
nancial
the

to

tended
which

billions have

The bulk of the fi¬

assistance made available
whole

of

the

to

attended

Europe was ex¬
sixteen

nations

recent

Paris

assistance

from

the

Conference.

1

This

PACIFIC COAST

the

financial

United

gifts,

AND

HAWAIIAN SECURITIES

Direct Private Wires

Dean Witter & Co.
MEMBERS

"!

NEW YORK STOCK

SAN FRANCISCO STOCK

EXCHANGE

LOS ANGELES STOCK

HONOLULU STOCK EXCHANGE

EXCHANGE
EXCHANGE

plus personal
loans and remit¬

States,

private
tances, plus liquidation by for¬
eigners of their holdings of longand short-term dollar assets, plus
shipments of gold, have paid for

Although

complete.

the dislocation of the entire

were

industrial

total

pro¬

fabric

of the

European economy,

duction in the United Kingdom is

the

probably somewhat lower than in
the prewar
period, nevertheless

currencies,

substantial

the modern system of the division

the

progress

there

made

has

been

also since the end of

now

volume.

In

in

certain

exports

were

the

lack

of

in
a

local
peace

settlement and the breakdown

in

of labor. The

remedy, he pointed
restoring the confi¬
dence of the European people in

the

exceed the
lines

the economic future of their

in¬

is

spectacular,
as in the case of cutlery and hard¬
ware,
vehicles,
machinery
andj
electrical
goods and apparatus:
Exports of coal, which at one time

crease

confidence

of

prewar

Exports from the United

war.

Kingdom

loss

out,

lies

countries

in

and

of

Europe

own

as

of

whole.
In

the

constructive

its

urgent economic problems of

Western

the backbone of British for¬

approach to

Europe,

Secretary Mar*

shall's address embodies the high*

eign trade, are negligible, and ex-*
ports of cottons And woolens are
below prewar levels.
These data
illustrate the change which has

est

qualities of statesmanship. It
provides a basis for close eco¬
nomic cooperation among the na¬
tions of Western Europe and for

occurred in the character of Great an
integration of their resources
huge commodity export sur¬ Britain's foreign' trade — a trend and enterprise in achieving the
evidence
in
the
inter-war common goal of economic sur¬
plus. This export surplus is the in
measure of the urgent need of the
period when coal and textiles con¬ vival.
Their own vigorous parti¬
world, and of Western Europe in stituted a declining proportion of cipation is laid down as a condi¬
particular, for the products of her total export trade. Great Brit¬ tion for further American hid.
American agriculture and indus¬ ain may indeed find it more ad¬
The nations of Western Eurdpe,
try.
It is an indication of our vantageous to concentrate her ef¬ including Great' Britain, live by
ability to produce and of the in¬ forts on those types of exports trade and cannot live in a state of
ability of Western Europe and which, since the end of the war, economic isolation. Trade between
other parts of the world thus far have shown the largest gain—high themselves
and the rest of the.
to attain adequate production.2
quality merchandise to which a world must be large if these na¬
The so-called "dollar problem" high proportion of value is added tions are to become self-support¬
is primarily a production prob- by manufacture.
ing.
A close integration of the
In the immediate future, how¬ economies of Western Europe is
2 Our
commodity export surplus can¬
ever, Great Britain could render imperative to increase production,
not
continue
indefinitely
kv
unprece¬
dented
,to overcome widespread
amount.
misery
Eventually it will dis¬
a most important contribution to
our

.

and other principal

Security and Commodity Exchanges

14 WALL STREET,

NEW YORK 5, N.Y.

and give way to a commodity
import surplus.
To ease and facilitate
this
transition*, the United States has
wisely embarked on a campaign to re¬

appear

Telephone BArclay 7-4300
SAN FRANCISCO




•

LOS ANGELES

•

HONOLULU

duce

trade

charter

for

ganization.

barriers
an

and

to

International

formulate

Trade

a

European
covery

if

and

she

to

her

were

own

able

re¬

to in¬

jand hardship, and to give hope:to
Ipeoples with whom
•

crease

coal

production to

a

level

Or¬

which

would

satisfy

domestic

3 The

we are

closely

of the Paris parley en¬
visages a substantial increase in British
coal production.
.'
rreport

Volume

associated

and

traditions

in

out¬

These peoples look to us for

look.

help in order to solve their 2conomic
problems and to enable
constant pres¬
from outside their own bor¬

them
sures

ders to

of

withstand

to

try the economic planning

adapted to changing requirements,
the

Corporation would quite nat¬
urally give consideration to the

effect of its

own

Two Stages of Secretary Marsall's

Proposals
Additional assistance granted by
United States to the nations

Europe would of ne-t

cessity fall into two stages.
•

•

the

The

first is the urgent need to relieve
fodd. and fuel shortages this com-

irig. winter.

of relief

needs

has

been

CHRONICLE

mine the type and amount of aid
to be allocated to various areas

and nations.

will

the

to

bring about

struction.;.

It should retain the

Within

power to extend aid in kind as
well as in money and to buy goods
in

take

(1423)v 19
recon¬

'■ 't:

the

United

■'

•

States,

the

Corporation should maintain close
liaison with the National Advisory

world's

review, wide discretionary powers

order to

a

four-

project, with the amount of
declining over

the period.
Within the limits and
set

by

*

..

the

Congress

should be granted to the Corporar
tion in administering the funds

appropriated for the recovery and
reconstruction of Western Europe.

the

ascertain that assistance

International

Bank

terms in the private
kets.

for.

Insofar

as

they
"stop-gap" institutions.
said,

possible, the Corpo¬

foe concerned

can

firms and corporations in the

plants

and

industrial

equipment
Europe.
Direct in¬
vestment, the "partnership baste
of private capital," will, I am sure,
take place on a substantial scale
of

Western

if the investment of such Ameri-'

Re¬

can
funds is given non-discrimi¬
Development natory treatment and
given is constructively used. It
adequate
and which the Bank is prepared
safeguard by foreign law and,
should be given the right and ob¬
to make. You will remember that
above all,
if the American in¬
ligation- to negotiate agreements the International Bank itself can-l vestor is
convinced, that there is
concerning the* measures which not extend loans which borrowers) a reasonable prospect of continued

construction

the beneficiary

nations themselves

able

are

to

and

obtain

on

reasonable

(Continued

primarily with prob¬

of recovery and reconstruc¬
Relief appropriations by the

tion.

Congress would allow time to con¬
sider the means, functions, terms
and

instrumentalities of rehabili¬

tation.

To the extent that

in

generous

tions,

we

are

relief appropria¬

our

favorable atmosphere will

a

foe created for the

long-range as¬
pects of Secretary Marshall's pro¬
gram.

U. S. Corporation for European
Reconstruction
,

Since the

.financial

close

the United

the

of

assistance

the

war

extended

by

States Government

to

various foreign nations has taken
the

form

loans,

of

Export-Import Bank

direct

loans, Lend-Lease
"pipe-line" and inventory credits,
.-surplus
property
credits,
ship
^ales

credits of the United States

Maritime

Commission,
civilian
.supplies to occupied areas by the
.War and Navy Departments, ad¬
vances by the United States Com¬
mercial Company, grants supplied
foy
UNRRA,
etc.
In
addition,
there

the

are

operations

of

HOW THE CHASE
t

*

ill
K;

'

/*«•«

the

International Monetary Fund and
f,he International Bank for Recon¬
struction
footh

of

and

Development,

which

the

United

.♦

You

fhe

will

recall

that

in

States

Jias the largest single stake.

„

it was

for

of

coordinating the
foreign loan policies of the United
.States and of relating these poli¬
purpose

The Chase National Bank maintains close

correspondent relationships with

cies to those of the Fund and the

Bank, that the National Advisory
Council

International

on

Mone¬

tary and Financial Problems was
Established by the Bretton Woods

Agreements Act.4

I

•the time

has

come

the

embodied

idea

now

believe
in

to

the

that

practically

every

banking facilities directly available in commercial

a Government corporation to
T>e known, perhaps, as the United
.'States Corporation for European

Reconstruction.
The purpose
of
:such a Corporation would be that
•of extending and supervising the
extended

to

provided

centers

throughout the hemi¬

business firms

to

are:

Cashing of draffs under Traveler's Letters of Credit

lishment of the National Advisory
a step
further, particular¬
ly with respect to additional aid
to Western Europe, by establish¬

aid

are

the Chase makes

way

carry

Effecting Collections

Council

Additional

important bank in the Americas. In this

sphere. Among the services which

estab¬

ing

West¬

Making Remittances

Opening of Commercial Letters of Credit
Credit Information

Assistance iff arranging Business

Information

on

These Chase facilities which

spondent banks provide

a

Connections

Exchange Conditions and Regulations

are

always

at

the disposal of

valuable service for their

our

domestic

own customers.

European nations; in short, it

ern

Would

tary
■were

the

be

-which

we

through

agency

You

are

should carry out Secre¬

Marshall's

proposals.

established

in

the

If

near

invited to send for our

Voider "Import and Exchange Regulations

of the Principal Countries of the World,"

it
fu¬

ture, it could administer the re¬
lief appropriations
required
to
«carry Europe through this coming
-winter

as

well

as

the

appropria¬

tions concerned with longer
range
reconstruction needs.

THE

NATIONAL

CHASE
OF

The Board of Directors of such
Corporation should be com¬
pletely non-partisan in character
.-arid might consist of five persons
>of: expert competency appointed

CITY

THE

OF

NEW

BANK

YORK

/'

sa

lay -the. President

of

the

United

."States with the advice and consent
•of the Senate. In the develonment
•of its

"to

be

in

and
con-

sists of the; Secretary of the Treasury.
tHe Secretary of State, the Secretary of
"Commerce, the Chairman of the Board

<©f
«f
•of

Member Federal

LONDON—6 Lombard Street
Havana

Governors

of

the

Federal

and

Reserve

the Chairman of the Board
of the Export-Import Bank
Washington.
Directors




•

San Juan

Offices of
•

character

^ 4 The National Advisory Council

^System,

HEAD OFFICE: Pine Street

policies, which would have
flexible

encour¬

direct investment by Ameri¬

The second stage, lasting for a
period of perhaps four years, will
lems

mar¬

age

not

are

capital

ration should endeavor to

character.

this

of

FINANCIAL

specifica¬
and
subject to periodic Congressional

year

as

Existing institutions The Corporation should have. rea¬
such as the International Money
sonably liberal authority to deter¬
tary Fund and'the International'
Bank for Reconstruction and De¬
velopment obviously are not the
proper vehicles for the financing
-As

&

cheapest markets. Council, with the International
Its operations
should follow as Monetary Fund and with the In¬
closely as occasion allows the pat¬ ternational Bank for Reconstruc¬
terns of private enterprise.
The tion and Development.
In
my
Corporation should give continu¬ judgment, the Corporation should
ous review to the economic prog¬
not be permitted to extend loans
ress made in Western Europe in
which fall within the province of

tions

the

Western

on

The program

itself should be viewed

,

of

program

American economy.

assistance extended

totalitarian police state.

a

COMMERCIAL

THE

Number 4636

166

Panama

Berkeley Square
•

Representatives: Mexico City

THE CHASE BANK:

Paris

•

of Nassau

Deposit Insurance Corporation

51

•

•

corner

Shanghai

Colon
•

*

•

Bush House, Aldwych

•
•

Cairo

Cristobal

•

Hong Kong

•

Balboa

Bombay
•

Tientsin

corre¬

on

page

38)

j

.

WW***1**

20

(1424)

THE

COMMERCIAL

The activities of the banks dur¬

ing

the

flected

last

two

have

years

economic

war,

of

the-

still

as

a

whole

are

in stronger position than

the

deficit

costs of

further

policy,

sonal loans is excessive.

the holding of

ties

the
bank began to
decrease,
and
by

these

were

at
part
loans and

replaced

Dr. Marcus Nadlei

in

least

by

'

rise

the

in

cost

of

the banks of the country.
The

dire

the

hostilities, that the United

States would

soon

witness

a

seri¬

The

dollar

caused

a

shortage

has

already

decline in the volume of

recession accompanied by a exports,
and
many
people are
sharp increase in the number of wondering what the effects of a
unemployed, did not materialize. sharp decrease in exports will be
On the contrary, the nation is rid¬ on the economy of the United
ing on the crest of the greatest States, maladjustment in wages
wave of prosperity ever witnessed
and in prices and the realization
in the economic history of the that a readjustment is bound to
country. It is rather ironical that take place in the future are caus¬
those countries which planned to ing considerable concern among

ous

fluence

made

predictions,

at

home and abroad shortly after the
Address

State Bank

by Dr. Nadler before
Division

at

73rd

An¬

on

business

and

banks.

Internationally,

lack

cooperation

of

western
*

Europe.
political

between

democracies

The

and

is
the

eastern

deterioration

relations

the

on

there

between

in

United

Bankers

Union has caused ait great deal of

States

J,^J?Qut. the

'

and

the

Soviet

$psgibility of (war.

mergers
and
consolidations
of
small
and
medium-^sized
con¬

Costs

cerns.

banks

in

certain

the

future

and

to

of

production

have

tions
tion

is
of

unit

not

banking institu¬

desirable.

consolidation

fraternity. While
sirable

ful

The labor unions

and

operate

are

power¬

industry¬
wide scale.
This at times places
the small enterprise at a disad¬
vantage.
Increased
competition
and

the

effort

of production

tensification
which

on

to

an

reduce

the

will lead to
of

an

requires large capital

vestments

and

which

in¬

obtain.

In

order

to

small-sized

reduce

the
are

bound to be considerable changes
the
methods
of
distribution,

in

from

which

the

independent re¬
It is not neces¬
to inquire whether the con¬

tailer may suffer.
sary

that

it

of

or

industry and

unsound.

trade

The fact

is

is

progressing and, there¬
fore, must be taken into account.
The merger movement in indus¬

try and trade is bound to have its
effects

on

the banks.

Small insti-

While the

number pf new busi¬ titutions will be absorbed
ness^ concerns has^icfeased sharp¬ larger ones and converted

merger

banks, therefore, deserves the

utmost

attention

in

of

the

banking

mergers are de¬

localities

where

too

banks exist, yet a too rapid
absorption of the smaller institu¬
many

tions does not

seem wise, particu¬
larly at the present time.

Will the Banks

Primarily

in¬

business enterprises are unable to

high cost of distribution, there

The ques¬
and

cost

production

mass

of

banks

banking system

rapid reduction in the

a

fore.

conclusions:

The Trend Toward Concentration

the

on

and that

increased materially, and compe¬
is bound to be keener in
the future than perhaps ever be¬
tition

centration

draw

American

number of small

is sound

the

of

rests

The purpose of this talk

today is
analyze some of these changes
and problems that will confront

strength

ly in recent years, there has also
been • a strong movement toward

to

the

nual Convention of the American

Association, \Atlanti
City, N. J., Sept. 29, 1947

merger

fact should not be overlooked that
end of

The constant
living since
V-J Day has brought about an in¬
crease
in the cost of operations control their own economic en¬ business and banking circles.
of the banks, with the result that vironment and which were most
While it cannot be denied that
their earnings as a whole were pessimistic about the future of the
serious
economic
and
political
somewhat lower during the first United States and about the sys¬
problems will have to be solved
half of 1947 than during 1946. The tem of private enterprise, should
in the future, it is comforting to
banks
throughout
the
country themselves experience a serious know that the banks as a whole
have become more aggressive in crisis and ask the United States
today are in a stronger position
seeking loans and in serving their for assistance running into bil¬ than
perhaps ever before and are,
lions of dollars.
communities, with the result that
therefore, capable of contributing
the volume of risk assets of the
Notwithstanding the great wave their share in meeting any eco¬
various institutions has increased of
prosperity and the essentially nomic readjustment that may take
at a relatively fast rate, which in sound
outlook for business, there place. Important economic
changes
turn has again brought to the fore¬ is a
great deal of uneasiness all are Pound to take place, and they
front the question of the need of over
the country, which is exer¬ will undoubtedly have their ef¬
increasing the capital resources of cising a strong
psychological in¬ fect on the activities of the banks.
by other securities.

the

trend in industry, and trade, _wjU
become bigger; and this in turn
raises a number of questions,- The

govern-

securi¬

to

banks. It is fair¬
ly certain that the banks of the
country,
reflecting the
general

policy. Says no material changes in money rates are likely, and warns bank
deposits are larger than needed for business, and'trend of expansion of per¬

manage¬

contribute

movement among

increase in term loans and mortgage holdings; and (4) conservative dividend

adoption
present

ment

In many cities which
over-banked, mergers of
sized institutions are also

are

likely to take place. The increased
operating banks plus rela¬
tively low rates of interest will

before, Dr.

ever

bank changes and problems as: (1) trend' toward concen¬
tration} (2) greater reliance on lending activities and expansion of loans; (3)

of the

ment

branches.

Nadler points out

financing, and

debt

Thursday, October 9, 1947

equal

Asserting banks

try. With the
termination of
the

CHRONICLE

Professor of Finance, New York University

conditions prevailing in the coun¬

end

FINANCIAL

By MARCUS NABLER*

re¬

financial

and

&

by
into

At

the

Continue to Be

Investing
end

of

Institutions?

World

lending activities of the
cial banks

War

I,

commer¬

throughout the country
investing

tended to decrease while
in

all

kinds

the increase.

of securities

This is not

was

in the future.

first

there

place,

are

on

likely to

be repeated

In the

to

reasons

believe that the

Treasury will en¬
the holding of
government
obligations of
the
banks, particularly during periods
of good business activity.
Even
though the United States may be
deavor

to

reduce

called upon to contribute between
three and five billion dollars
per
for a period of four or five
in order to assist in the re¬

annum

years

habilitation of the western Euro-

Tydol Flying-A-Gasoline

i

PUTS WINGS ON YOUR CAR!

Get these
Improved Veedoi 100%

Veedoi

Pennsylvania Motor Oil
GIVES YOUR MOTOR THE
*

'..-'-i

for

vour
MOTOR OIL.

v--.-

•

./:«

CLEAN-SMOOTH TREATMENT!

car!
Federal Tires

-

.

r?

T.'

GOOD...FOR A LONG SAFE RIDEI

i.

Flying-A-Dealer for EVERYTHING THAT'S GOOD FOR YOUR CAR

a

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)■

See your Tydol

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r

WATER

MP5'ASSOCIATED
"

H-.

OIL COMPANY

.,V|—




17 Dar'firy

Piace, N«v,' 'roi!< 4

M <

1

■

Volume

166

W-.y.

;,y

v.:

THE

Number 4636

COMMERCIAL

economies, a cash deficit of as that of government obligations
Treasury is not likely. Even and that the return pn the former
though the actual surplus of the should; 'therefore, be "commensu¬
Federal
Government
may
be rate with inferior marketability.
small, the activities of the gov¬ Second, under present conditions,
ernment-operated trust funds dur¬ aanks do not seem warranted in
ing periods of good business will buying state and municipal ob¬
enable the Treasury to meet the ligations with a very long matu¬
requirements for European assist¬ rity, partly because of the smallance and at the same time to re¬
ness
of the ratio of capital re¬
duce the volume of government sources to risk assets and partly

prevailing

pean

tions

the

country.

obligations held by the
cial

commer¬

banks.

The question of taxation versus

reduction
bound
to

in

to

the

remain

public
acute

debt

for

While it is fully realized

come.

obliga¬
tions, particularly with restricted
marketability, may be subject to

because

The

fluctuations.

in mind
tnat economic conditions are sub¬
should

banks

also

bear

reduction in the very heavy
war taxes is desirable in order to

new

and

substantial

be

is

What

increase.

the

bank

short-term

for

mand

de¬

credit

im¬

more

portant, the threat of unemploy¬

constant rise
stagnation, with
a

will decrease and economic

ment

but

may

whicn

of a planned economy, in that
event, there is not much hope for

enterprise unwilling to
take risks and relying on the Fed¬
eral government for aid and sup¬

security will grow. Above all,

port, and to take the initiative?

private enterprise does work and

whole. In fact, one might go so
far as to state that it is doubtful

that

whether

we
will have demonstrated to the rest

private

of

If the first assumption
then

will

production

prevails,
commodities

of

will

business

increase,

that

world

it

still

the

offers

system of
to

more

the

people than any other system thus
far devised

ex¬

by human beings. We

will not only

pand, new industries will spring
up,

the

ance

and competition will be keen.

insure the continu¬

of this system

for ourselves

the banks

for the economy as

or

a

could with¬

System

our

the

stand

shock

of

another

a

a

industry and trade, yet if

choice has to be made between

reducing taxes and unbalancing
the
budget, bankers throughout
the
country
should ! definitely
favor not only a balanced budget
but also as far as possible reduc¬
tion
in
the
public debt, even
though it may be harmful to many
individuals and may continue to
handicap the flow of equity capi¬
tal. It is, however, fairly certain
that so long as the forces of in¬
flation are pronounced and com¬
modity
prices
are
rising,
the
monetary
authorities
will
en¬
deavor through refunding and re¬
demption to reduce holdings of
government obligations
by
the
commercial banks in order to

the

tail

created

of

The

1929-1933.

future

of

other

obligations

or

than

Realizing the growth in risk as¬
and tne changing character

sets

business, and bearing in mind

of

possibility of an economic re¬
adjustment
sometime
in
the
future, the banks will continue
to
follow
a
very
conservative
dividend policy and will endeavor
to plow back as much as possible
of their earnings into surplus and
undivided
profits.
Some banks
will endeavor to
increase their
the

cur¬

government

at least to prevent

capital resources through the
new capital to the public

own

of

sale

of

firming

moderate

A

money

rates and stabilization of bank ex¬

have a favor¬

penditures should

able effect on bank earnings and
attract

new

capital.

point in money rates
since been passed, and
present we are witnessing
moderate
firming in short-term
rates. The unpegging of the bill
rate and the shortening of, the
The

further increase.

has

low

at

increase.

The banks,
large and
small, will engage to a larger ex¬
tent

than

before

the

war

in

the

long

financing of the purchase and sale
of durable goods. So long as the
supply of durable goods is smaller
than the 'demand, however, and

maturity

particularly

so

of

pf inflation

are

the forces
pronounced,
it is advisable that the banks, now

long

nated,
in

exercise
an

soon

be

elimi¬

great moderation

short-term

unpegged, the Board of Governors
the Federal Reserve System

of

System will continue to purchase
hold

and

volume

loans will

of term

increase, and the holding of mort¬
gages by the commercial banks
will also continue to grow. Here,
word of caution

seems

to

be indicated. A term loan is usual¬

period of three to five
A credit which may be
entirely sound at the present time
may be less sound three to five
a

years.

from today.

years

cial

is

individual institution is

such

as

ly for

however,

rates,

stated that "The Federal Reserve

of

by its own position and need
for earnings, at the same time,
banks must realize that they are
quasi-public institutions and must,
Jberefore, also bear in mind the
Welfare of the nation as a whole,

a

unpeg¬

bound to be very moderate in
character.1 When the bill rate was

tent

too,

in¬

of

the

forecasts

ging of the certificate rate some¬
time in the future. Any firming

of necessity guided to a large ex¬

The

certificates

on

debtedness

loans.

the extension

While

as

very

that controls will

i

present stockholders.

and to their

The volume of loans is bound to

a

credit obliga¬

buy

banks

have

The

commer¬

increased

mate¬

bills

Treasury

well

as

securities in

other government

amounts deemed necessary in the
maintenance

of

an

orderly

discharge of the System's respon¬
sibility with regard to the general
credit situation of the country.'
other

stability oi
the government bond market is
still considered the key to broad
economic stability. So long as this
In

words,

policy
prevails,
no
material
changes in money rates are likely
to take place. The unpegging of
the certificate rate will probably
have

effect

medium

on

government obligations, but

term

it

minor

a

is

not

ticular

likely to have

effect

SALESMANSHIP,? HELPED BUILD OUR NATION

GOOD

the

any

long-term

on

par¬
gov¬

ever,

We

at

stopped

found there

a

ranch,

a

and

traveling salesman,

displaying his merchandise before
the

good people of the place, who

with

everything

eyed

astonish¬

ment.
It

veritable

a

drug store

operating with savings de¬
posits, it should be borne in mind

will continue to fluctuate
primarily under the influence o'
psychological factors.

.

.

highly inflated and that
there is no relationship between
present market prices and eco¬
nomic

values.

Banks

also should

bear in mind that there is
nite

relationship

a

between

defi¬

their

cj^n capital reBburces-and the risk
assets
which they" can ' assume.
FHA mortgages on the whole may
be considered as riskless assets.

This cannot be said about all other

The

increased

supply of mort¬

well as of state and
municipal obligations is bound to
have an effect on high grade cor¬
porate bonds with long-term ma¬
gages

as

miniature

this store in the

.

The

sorts

cases

the old horses'

on

opened,

being

on

things

of

were

a

turity; i.e., 25 years or more. A
further firming in the rate oh this
segment
may
be

of

the

capital

expected.

It

amortization

noted, however, that

be

change
in
money
rates that may take
place is bound to be moderate in

vent any

any

sharp break.

'

Despite -the inflationary condi¬
tions

; jThe
decline in government!
js^curities held by the banks will]

which

still

prevail inr the

country, the huge public debt, the

bp counteracted in part by an in-1 large volume of short-term ob¬
Crease in the holding of state and!
ligations, and the fact that a large
Jnunicipal obligations. These tax-! amount of the public debt can be

'exempt securities are sound in-i redeemed- at a moment's notice
Vestments, for commercial .banks impose aj responsibility on the
provided they are of high grade j monetary; authorities to prevent
andlhave a certain matur-i any material decline in prices of
ity distribution.' Jh buying state; government obligations.

jah<h

mmnici^al bond^^^oWeyeiil

the banks miust.bear

their

im-^ind fhati

marketipili^




The

;

The general broad butipok for
the
on

banks will depend primarily
economic and

articles!

of

indeed!

talkative
a

gentleman

With

to

number

a

tempting

flattered them, praised

and

smiled

Ni

.-

well

a

a

embarrasses

tion

for

dealer.

the

prospective

produot

and

the

MM dealers have no com-

acquaintance
in

your

go

over

with

problems

your

you,

the
.

.

.

He will

carefully

and after an impartial

consideration, you may
with

of

locality

expect him to sell you

with "fireworks" oratory.

deal

creates dissatisfac¬

the

don't

YOUR

*

him

.

.

.

choose to

but it will be

choice.

Bankers, knowing the dependa¬

bility

of

integrity

MM
of

dealers, are

and the
individual MM

products

the

cooperating with the

dealer and the fanner in counsel¬

ing

he

them
.

he

of

barometer or

and extending credit for the

purchase of equipment to further

their good

to
.

one

far,

and offered

choice

words

ladies;

the

As to the men

was,

but

High-pressure salesmanship of¬
ten

customer and

doubt,

appealed

a

*

profusion

a

salesman.

looks,

grinder,

dealer

MM

and

this basic industry.

no
MM
.

.

.

he laid it so thick on their vanity

v; M
MODERN

worth

tractors

and

machines

are

waiting for.

MACHINERY

market

should

iportgages, particularly if the loan character and that the monetary
exceeds the economic value of the! authorities, will endeavor to
pre¬
property
and
the
charges are low.

What

away

the

the

Make

said

pair of smoked glasses.

to see!

A miracle

he

he

had gone too

corset

instead,

coffee

when

ever

pressure" tactics in selling their
line of quality farm implements.

blush,

her

made

the

came

flowery corset to a

Something

girl.

sensing he
her,

backs,

end.

fireworks

articles to offer nor do
have
to
use
"high

promise
they

to sell a

her

to

put

marvel

he

tried

digging in

highlight, tho, of his ora¬

torical

were

All

there;

without

that real estate prices are in many
Instances

The

resist

could

cash?

the

things for every need and

open.

use.

who

that
for

pretty

was

ernment obligations. These, how¬

sound investments for commercial
banks

SALESMAN

TRAVELING

the

rially the volume of their mort¬
gages.
While mortgage loans are

"

THE

gov¬

ernment security market and

political condi-

MINNEAPOLIS -MOLINE POWER IMPLEMENT COMPANY
MINNEAPOLIS

1,

the

banks, of the economy, of the sys(Continued on page 22)

tions.

volume of bank deposits
through loans and invest¬

in

ments

to

banks

cial

de¬

pression of the magnitude of that

Now is not the time for commer¬

that

21

also induce other na¬
are still free to act,
to follow our way of lite.
If, on the other hand, economic
stagnation sets in, it is bound to
be followed by the establishment
we

tions

palities may be adversely affected
by a decline in business activity.

tal into

will

leading to

the supply of

ject to rapid changes and that the
credit standing of some munici¬

strengthen private initiative and
to revive the flow of venture capi¬

that case,

will

it be marked by

term

long

very

is considerable

years

in the

(1425)

securities, both stocks and bonds,

be

future

standard of living; or will

the

prise,

In

the

throughout

the'

Will

by a dynamic expansion
system of private enter-

marked
of

CHRONICLE

FINANCIAL

&

MINNESOTA

22

THE

(1426)

COMMERCIAL

&

The Outlook lor
tern

ductive

capacity is greater today
than ever before, and we are in
a position
to meet the economic
requirements of our people. The
general - standard
of
living
is
higher than ever before. Although
a number of individuals, particu¬
larly in the lower income groups,
have already : disposed of, their
savings and. have incurred new
debts, the accumulated savings of
the nation are still very great and

(Continued from page 21)
of private enterprise—in fact,

the future of the American

way

of life—depends on

economic and
political developments that may
take place during the next few.
years. . >
i
As to which of these conditions

will prevail, the answer

will de¬
the wisdom of
our. leaders in government, busi¬
ness, banking, and labor. Basic¬
the pent-up demand for all kinds
ally, there is no sound reason why
of
commodities
is
tremendous.
this country should not enjoy an
The demand for housing, for ex¬
indefinite period of good business
from which the violent swings of ample, is only too well known. As
soon as a moderate decrease in the
thebusiness -cycle
have
been
eliminated. In contrast to Europe, cost of construction takes place,
it is bound to lead to a substantial
where
so
much
damage
was
wrought during the war, our pro- increase in the volume of building
pend primarily

r

•

on

*

1

activity.
chinery

Banking

The demand for ma¬
and equipment remains

unabated and will continue strong

because manufacturers

realized

as a

whole

that

the only way
high cost of labor
is through the acquisition of more
modern
machinery
and equip¬
ment. The demands for our prod¬
ucts from abroad are bound to
be
considerable, particularly if

have
to

combat the

.

the Marshall Plan is carried out.

Furthermore,
a
number ; of
that wereilresponsible to
a large extent for the collapse in
1929 have
already been elimi¬
-

abuses

Thursday, October 9, 1947

CHRONICLE

FINANCIAL

.

while bank

practical

failures

Wholesale

nated.

have, for all

of the average

of

farms, such as
occurred in the '30's; are also not
likely

to

is

therefore

basically,

It

economic

recur.

that,

conditions

in

the

United

States

sound, and there is no good
reason
why we should not have
an expanding
economy for a long
period of time.
are

-

:

It

that

cannot, of
there

ments

and

are

which

be denied

course,
many

must

maladjust¬

be

rectified

problems which must
nated.
The stock market cannot be solved, The decline in exports
exercise the same influence on the is bound to have an effect' on
volume of credit and on business some
phasesy of
our
economy.
activity as it did in the '20's, Food prices are altogether too
many

-—

;

elimi¬

foreclosures

real estate and of

evident

large a proportion
family income has

high, and too

been

purposes,

devoted

be

to

The

food.

to

pro¬

has not kept
pace with the increase in wages,
and costs of production and dis¬
of

ductivity

labor

tribution will have to be lowered.
Sooner

later these maladjust¬

or

have

will

ments

rectified;
the

be

to

takes

this

when

and

place,

country will go through a period
of readjustment from a sellers",
to a buyers' market. Painful as
this readjustment may be to some,
on
the whole; it should not be

prolonged, because any decline in
prices, notably in the cost of construction, will make possible the
conversion of potential demands
into actual
demands. Once this

,

readjustment is ended, there are
po reasons why business activity
in the United States should not
continue at

high level, accom¬

a

by a growth in national
wealth and income, a decrease in

panied

the public debt, and a rise
of living.
These

standard

less

in the
goals

achieved, however, un¬

cannot be

devote all our energies at

we

present time to preventing
existing maladjustments from be¬
coming more aggravated.
j
What can the banks do in this
the

direction?

First, they must exer¬

in the creation of
Federal budget

cise great care

the

With

credit.

the public debt de¬

balanced and
• ••

creasing, new
deposits can be
created only by the banks through

lending and investing of
granting loans or in

increased

idle funds. In

making

the

investments,

new

should

banks
the

account

into

take

following factors:
The volume of

posits

already

is

<

bank de¬
larger than is

(1)

The

needed for business purposes.
same

is

of

volume

the

of

true

circualtion,
which
now exceeds $28 billion.
(2)
The volume of personal
in

currency

loans and those made for the pur¬
pose

of

purchase
has

the

financing

of
sale

and

durable

goods

rapid rate. A fur¬
ther acceleration is not desirable.
increased at

a

The controls

will

ing

The banks are,
and

instalment sell¬

over

removed

be

1.

Nov.

on

therefore,

their

on

utilize

must

great re¬
loans.
(3) Loans by commercial banks
on mortgages increased at a rapid
rate
during 1946. Some of the
own

straint in making

smaller

new

in particular were

banks

little too aggressive in
this respect, with the result that

perhaps
in

a

institutions

some

of

the

volume

mortgage loans is entirely out
their

of line with

resources.

(4) While inventory loans have
increased

not

ventories
sidered
the

large

present

making
should

that

materially and in¬
such

as

too

take into

con¬

relation
of

volume

inventory

most

not

are

in

banks
the fact

account

commodity

to
in

sales,

loans

prices

are

excessively

high,
that
buyers'
resistance is gradually develop¬
ing, and that economic changes
can take place without warning.
;
The above suggestions are not
intended

to

mean

that

banks

should stop making

loans. On the
contrary, the granting of loans is
the prime function of the com¬
mercial banks. What is implied,
however, is that the banks should
be

more

cautious in the extension

of

loans

at

do

In

a

small

bank,

single National Multiple-Duty Account¬

a

ing Machine handles all

seven

of these basic bank account¬

ing jobs. It posts depositors' accounts
discount records

ledgers

trust

records
ment

It

.

.

.

..

.

.

.

.

any

type

.

.

.

the general ledger

.

.

.

.

.

.

and daily state¬

changes from

1

one

snap on—no screws,

of these jobs to another in

a matter

catches,

or

fittings to fuss with. In

a

nlarge bank, separate National Multiple-Duty Accounting
V

Machines

may




specific jobs. In either

National
to

each be assigned to handle

one, or more,

case,

they will he busy

hour of the banking day.

Multiple-Duty Accounting Machines help you

speed production and reduce errors-^-as do any of the

many

other National machines and systems expressly

designed for hank
Call your

of condition.

of seconds! For its removable form-bars simply lift off and

,

every

loans and

of mortgage records

writes checks and posts related payroll

posts

of these

local

sentative,

or

The

write to

National

Register

use.

repre¬

Cash

Company,

their

the

best

present time and
to

prevent

a

too

rapid increase in the volume of
deposits, particularly so long as
the

forces

of

inflation

are

still

old banker
once
said:
"When
everything
looks rosy, it is advisable to be-come
cautious; when things look
dark,
it
is
time
to,
become
optimistic." I believe this is truer
today than perhaps at any time
during the last four or five years.
Acting as economic counselors
for their clients, the banks can
also do a great deal to prevent
overexpansion followed by too
rapid contraction. Banks can ad*
pronounced.

A

wise

Dayton 9, Ohio. Offices

vise their customers, be they cor¬

in

porations

principal cities.

or farmers, that it
(Continued on page 24)

is

Volume 166

THE

Number 4636

<

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.

COMMERCIAL

&

FINANCIAL

CHRONICLE

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-

Creative Imagination

working for

you at

Chrysler Corporation

They borrowed winter to help you stop
Tuks is

The

picture

of the

latest
-

to

not a scene

was

in

an

Eskimo service station;

taken in Detroit—and shows

one

experiments that helped bring about the
important automobile brake improvement.

The fur-collared
test

this

new

winter of the

man

is

an

down

kind of brake in the artificial

the brake pedal of

a

one-wheeled

"test-car," reads the sensitive instruments that

to

new

20° below

brake works
zero

...

at

temperatures

and reports

the results

thick dust and other

driving conditions. And thou

sands of miles of on-the-road

testing showed then,

by microphone to another engineer outside the

superior for all kinds of driving

observation window.

you

This

engineer, dressed

Chrysler Corporation Cold Room.

He steps on

tell how the

to

was

one

of the

experiments that led

us

to

all

on

our

them in cold-weather

Other

tests

It

cars.

proved

you can trust

driving.

checked them in

Safe-Guard

sult of the
the

extreme

heat,

.

.

they brin^

30% less foot pressure!

put the revolutionary new Safe-Guard Hydraulic

Brakes

;

the safety of easier brake control with 25%

Hydraulic Brakes

are

another

re¬

practical imagination that has led to

exceptional value of the new Plymouth, Dodge,

De Soto and

Chrysler.

c

CHRYSLER

CORPORATION

DODGE

PLYMOUTH
\

Airtemp Heating, Cooling, Refrigeration




•

Chrysler Marine & Industrial Engines

•

Dodge Job-Rated Trucks

•

t

DE SOTO

^

J*.

Oilite Powdered Metal Products

CHRYSLER

*

♦

Mopar Parts & Accessories

•

CydeweW

24

& FINANCIAL

COMMERCIAL

THE

(1428)

The Outlook for
circle of

Banking

toward monopoly in business
and labor
is dangerous to the
workings of the system of private
enterprise.
Price guaranties by the govern¬
ment and violation of the forces
of the law of demand and supply

High
justified only if they
are
of a
accompanied by an increase
what the traffic will bear. Prices in the productivity of labor. Un¬
of
many
commodities
are
too less the productivity of labor and
high, and a further increase above equipment increases in the United
the present level certainly is not States, it will not be possible to
desirable or advisable.
Bankers maintain the present high stand¬ handicap the satisfactory opera¬
of
the
system of private
of living of the American tion
must also remind the public as ard
often as possible that exorbitant people. Banks - must teach their enterprise. Since the farmers were
demands of labor merely lead to customers, large and small, that among the principal objectors to
the OPA and to the imposition
higher costs and prices, which in the American system is based on
turn further stimulate the vicious competitions and that any tend¬ by government decree of ceilings

(Continued from page 22)

not

advisable

to

take

advantage
sellers' market and to charge

wages

prices and wages.

ency

are

(

Thursday, October 9,1947

CHRONICLE

commodity prices, they ought leges and universities sought em¬
to favor floors under prices ployment in the financial institu¬
many
commodities produced tions, this does not seem to be the
case
at the present time.
by them either.
Ways
Similarly, government guaran¬ and means must be found to at¬
ties of loans serve a purpose in tract capable young people into
periods of war but they are cer¬ the financial business.
tainly out of place at the present
(3) The banks must give careful
time. The banks are in a good study to the financial problems
position to judge whether a bor¬ that confront the nation, in order
rower is a good credit risk or not.
to be able to give sound advice
Banking is a business, and the not only to their own customers
on

not
of

banks

must

which

eliminate

not

adopt policies
taking of
risks. Such policies can lead only
to increased government competi¬
tion and greater interference by
the government in the field of
banking. In order to preclude fur¬
ther government competition, the
the

but also to the Congress and the
government. This applies partic¬
ularly to the management of the

public debt, in which the banks
are

vitally interested, and also at

the

present time to the needs of
and the assistance which

Europe

the United States

and

can

should

must be able to meet this render to
foreign countries. For
competition through aggressive¬ example, the Marshall Plan does
ness in seeking loans and by ap ¬
not seem to be well understood by
plying business standards to loans. the public at large. The banks
Taking the good credit risks and ought to make it their duty to
sending the weak ones to a gov¬ educate at least their own cus¬
ernmental agency does not solve tomers as to the
meaning and im¬
the problem. If a credit is not
plications of the Marshall Plan
good for a bank, neither is it good and what it means to the rest of
for a governmental agency. If, on the world and to us.
the other hand, a credit is good
All of these problems are of
for a governmental agency, a bank vital
importance to the banks, and
also should find ways and means their solution will have an irhof granting it.
oortant bearing on the future of
Then there is the problem of
the banking system.
how
to
provide
small
and
The dire predictions that were
medium-sized
business
concerns

banks

THE GREATEST NAME
IN WOOLENS

with equity

capital. This problem
been given careful
consideration by the government
as well as by the banks. So far no
satisfactory
solution
has
been
found. It is, however, evident that
the initiative in finding a solution
to this problem should be taken
by the private banks of the coun¬
try. The banks should also utilize
has

already

their

V

-

Contributing vitally, not only to the
welfare

of

thousands

our

of

employees,

but also to the communities in which
,

■

•

_

mills

are

..

I :.

.

.

.

located, the

our

■ ;

.

Company today is

largest worsted mill in the world and the
on

a

full time basis

ing that the gaining of a tempor¬
ary advantage to the individual
or concern at the expense of the

keeping the economic
which the country is
sound. And finally, let us

by

only
based

on

overlook the most important

not

fact:

namely, that nothing is more
important to us, either as individ¬
or as a nation, than the main¬
tenance of liberty and freedom.
The
above
program
outlined

uals

the

There

is

banks

are

closer

to

a

will

near

in scope.

however, which
to solve in

have

future.

mention may be

em¬

broad

number of problems

home,

banks

the

assuring steady

Among

these,

made of the fol¬

lowing:

enterprise
activity in

States have

ized.

and

the

material¬

not

The country

is today riding
the crest of the greatest wave

on

of

prosperity ever witnessed in
history of the nation.
But
many maladjustments have crept
into our economy, and they will
the

have

be

to

Their

rectified.

will bring

rection

about

cor¬

read¬

a

companied by large scale

unem¬

ployment. At present, an ideologi¬
cal
war
is raging between the

to

acquaint

important
banks.

logical conflict will be determined
not on the battlefields, but in the

of economic activities in
during the next

sphere

the United States

few years.
If

American

the

the
role

public with
played by

the
the

It is not sufficient merely

splendid work

to hark back to the

by the banks during the
war in providing the government
with the wherewithal to fight an
done

external enemy.

It is also neces¬

people

ap¬

proach their problems in a spirit
of patriotism and good will, then
the wide swings of the business
cycle can be eliminated and large
scale unemployment can be pre¬
In that event, the United

vented.

will

States

demonstrated

have

that its way

rior

of life is by far supe¬
that advocated by other

to

Not

countries.

(1) Good public relations: It is
the imperative duty of the banks

ployment through the first quarter of 1948.

private

business

United

community is not wise. Above all, system of private enterprise as
bankers
and i businessmen ;:mus( practiced in the United States and
constantly bear, in mind that the the system of totalitarianism as
economic and political welfare of practiced in other parts of the
the individual can be achieved world. The outcome of this-ideo¬

the

with orders ahead

influence

of

about

justment in the economy of the
expansion, the erection of build¬
country, and in the not distant
ings at exorbitant cost, and the
future the present sellers' market
acquisition of real estate at pres¬
will be converted into a buyers'
ent inflated prices.
market. This readjustment will be
In brief, what is advocated here
is increased responsibility of the painful, but all indications are to
individual in banking and in busi¬ the effect that it will not be very
ness
toward the community and severe nor of long duration.
The greatest problem that con¬
the economy of the country as a
whole, and less reliance on gov¬ fronts the nation at the present
ernment.
What
is
particularly time is that of preventing a sharp
stressed is the necessity of realiz¬ decline in business activity ac¬

for

largest woolen mill,

to

prevent over-

customers to

system

operating all of its mills, including the

efforts

best

their

made about the future of the sys¬
tem

only does it offer

individual

the

to

all

the

human

privileges for which
mankind has fought for so many
and

rights

decades and centuries, but it also
assures

him

a

much higher stand¬

of

living.
The actions .and
policies of the banks will to a
ard

considerable extent determine the
outcome of this ideological

strug¬

gle.

to point out the leading role
the banks have played in the re¬
sary

conversion period and are playing
at the present

mefaazn
225




FOURTH

AVENUE

is necessary to

en
NEW

\jompctnu

YORK,

N.Y.

to

time. Above all, it
educate the public

the fact that

system

is

the proper
tem of

a

sound banking

absolutely essential to
functioning of the sys¬

Banks must give close at¬
tention
to
employee
relations,
primarily with the view to at¬
tracting capable young men and
to

become

future

tives of the institutions.
at

the

end

of the

caliber young men

execu¬

Whereas

Lyon & Co., members of

Ross,
the

will

private enterprise.

(2)

women

Ross, Lyon & Co.
To Be Formed in N. Y. C.
New

offices

York
formed

be

at 61

Stock
on

Exchange,

Nov.

1

with

Partners
will be Harry Ross, member of the
New

York

Broadway.

Stock

and

Curb

Ex¬

and Sidney Lyon, gen¬
partners, and Irving Ross,
limited partner. All were former¬
changes,
eral

war, high ly, members of the firm of Brand,
from the col¬ Grumet & Ross.

last

Volume

166

THE

Number 4636

COMMERCIAL & FINANCIAL

CHRONICLE

(1429)

25

J:®

■

u.

Railroad traffic of America. It called stop
might well be
the
blood
w

if

stream

our

nation is to be

cannot

strong and healthy.

United States Steel is
has been able to

railroads

efficiency of America's

through better steels and better

products of steel.
ir
•,

Steel

proud of the part it

has been used in

more

than 65,000

freight

cars

and also to reduce

streamlined

deadweight in numerous
trains,* trolley cars/ buses and

trucks.
The

research

Steel is

.stainless steel streamliners that helped to revo¬

i

high-strength,v low-

-

bearing the U • S • S trade-mark partici¬

and finer steels to

United

a

pioneered in

alloy steel for light-weight construction that

pated im the development of the gleaming
i 9

transportation.

United States Steel has also

developing Cor-Ten,

play in the constant improve-1

ment of the service and

lutionize railroad
passenger

States

Steel

program

of United States

continuing daily—to develop

newer

provide better living for you.

corporation

subsidiaries

1




/'

26

'Si

i debt

is

of

one

Mr. Ruml discusses

all of us. There is no practical
value in dis-

•

of

| real economic

Recommends budgetary

abstractions,

i) We must

rec¬

4 \

ognize
that
:
taxes, " the
:!■ budget, j. ■ and

is to say, the
i] fiscal policies
'I of the United

world

a

Beardsley Ruml

'
- 1 .' f
world that has not yet been re¬

a

in

and

peace

to

stored

its

even

old

of

levels

productivity. This disturbing set¬
ting
provides an unwholesome
frame of reference in which fiscal

must be applied. It also

measures

imposes
major budgetary facts
that must be surmounted in any

,

| fiscal proposals that

be con¬

can

sidered realistic.

is

tional

i quirements
in

the

budgetary
on

na-

annual

The

re-

for this purpose are
of $10'billion. We

order

be

item
may

prepared

abnormal

an

the

item,

conse¬

quence of living in a disordered

the

in which

organization of
we

can

peace1' which

a

for its

case

peace

be

then

a

want in any
sake. When this

we

own

expendi¬

our

defense

national

can

reduced. But
that time is not yet, nor does it
drastically

fseem

to be in a future near
Ienough to soften the effect of the
$ defense item on present fiscal
^{policy. To put it bluntly, for the
i foreseeable
future,
expenditure

§for national defense will have to
be paid for by

taxes.

»

A

Expenses

be

major budgetary fact
presented to us by our

unreconstructed
ond

budgetary

world.

fact

This

best the most optimistic will agree
and

of

the

which

on

we

in the
nature of things seriously shaken
and insecure. Nevertheless, even
the most skeptical must admit that
they must

months

recent

has

build

been

much
in

made

are

progress

defining

terms under' which

the

real coopera¬

Let

proper

adequacy

of opinion as
of the moral,

and political

cultural,

assurances

that have and will be given to us
as

the basis for

participating in an
admit
first.

economic program. Let us
that these questions come
But let

us

assume

everything

ing

the

der

that after tak¬

into

decide to share

our

account, we
strength. Un¬

has met
these requirements, we then will
have questions of our own fiscal
policy that can be separately dis¬

that

program

their

on

to these

com¬

munity. Part of this requirement

jwill be for urgent humane meas¬

account.

own

It

fiscal questions solely
to address my next

wish

I

remarks.

Misunderstanding of Marshall
Plan
The

public does not understand
elementary facts with
respect to the economic operations
the

most

of

loan under the Marshall pro¬

a

posals.

Editorials, cartoons,

com¬

for the relief of human suf¬ ments of commentators—all make
fering and starvation. Part of the matters worse. Once again we
/ requirement
will
be • directed have the blind leading the blind
yjtoward restoring the productive —uniformed opinion being con¬
/facilities and capacities that were solidated by uniformed opinion.
'destroyed by war. We have al- Here at this point the bankers can
5ready been made aware of some cut through and can explain to
leaders of opinion the simple facts
an v international
financial
ft H *An address by Mr. Ruml be- of
i
ifore the National Bank Division transaction at the governmental
,

i at the 73rd Annual Convention of

level..
There

I the American Bankers Associa; tion, Atlantic City, N. J., Sept. 29,

that

three

are

the

stand:

1947.

contribution of the United
relief

to

goods and services,

in

cotton,

in

food,

will

reconstruction

and

be in material
in

States

steel,

in

engineering.
we

To the extent that
make it possible for others to

buy these things from us, we do
them

not have

things

presently for

Since

use.

own

scarce,

are

of

some

our

these

ourselves

we

must, for the time being, consume

understanding of these
points will establish the mutuality

dren

access

will

be

ment
v:

I

to

loans

made

remain

selves

come

need;

home

at

goods

be¬

services

and

go

abroad.

third point on which

a

the public should be clear

when

the

time

be

can

—

that

for

repay¬

States,

repay¬

comes

ment to the United
ment

made

in

goods

and

services required by us—in hemp
and

that

in

metals,

tourist

services,

substantial
of

mitted
of

to

pends

the

how much we require in
and when, and the
we ourselves impose.

on

in the days to come

Expenditures

public

-

.

the equivalent
of the goods and services we now

dissociated from advances for the

reconstruction of

but

ities.

appropriate to

basic

should

points
under¬

r

-

other
the

countries

product

our

Just

money.

as

that

then exist¬

for

ours,

not

moves,

what

as

we

it is
the
send

abroad becomes wages, rents,

and
profits to us in dollars, so what
they some day send back to us in
will

repayment

then

be

wages,

for

relief

Throughout the century-plus of this

has been

own

productive facil¬

•

These

three

points should be
by
every
citizen:
dollars that are sent

in

repayment

our

materials,

in

manufactured

and

in

kind

borrower

and

has always been on

records.

security for the policyholder.

The confidence generated by

During the past 18

this pol¬

members in stead¬

ily increasing numbers.

Recent growth

land

Mutual's

years,

insurance

in

new

New Eng¬
force

has

doubled, surplus funds have tripled, and
assets have nearly quadrupled.

New England Mutual Life Insurance Co.

Boston

in

goods,

convenient




INSURANCE

COMPANY

CHARTERED

IN

AMERICA—1835

&■:'*

*-■*

*

x

a

also

be

educational

an

of

vol-J

it must
plan. It

must teach

people why they must
eat only what they need, waste
nothing, and plan their food use
the

greatest

must

It

care.

that

mad,e
people
feeling of authentic personal
participation in alieviating the
distress of a tragic period in the
world's history.
The. food requirements for this
they

are

to understand. It must give
a

winter will
that

there

be

is

the mind

of

met

eats

the extent

to

brought

vividly tQ
American one
that what one

every

simple thought
man

—

another cannot eat, and

that at best there's not enough to

around.

go

than

We

food

waste

or

need,

we

cannot
to

afford

consume

even

if

to

more

we are

to pay for it.

able

!

From the financial

side,

include loans that

totals

suitable

Bank,

the

modest

seem

the

great

a

relief

on

be

the

fore

are

International

the

serve

a

double purpose:

first,

it will reduce the amount of dol¬
lar contribution that must be made
will

under the Marshall

account;
a

arising
duction

and

second, it
living costs

on

States

and

there¬

inflationary

on

In

check

United

tendencies
irremediable pro¬

from
shortage.

addition

to food, there are
goods and materials that
will be in high demand for con¬
struction here, for reconstruction

other

there. In these badly needed
goods and materials, there will be
shortages
and
inconveniences.
Businesses will be
affected' as
well as individuals. A measure of
over

patience
be

and

required,

cautious

understanding will
an
attitude* of

and

consumption

will

help

relieve many strains.

getting the world back to produc¬
Financing Reconstruction r
tive health, and considering also
the strength and resiliency of the
Helpful public attitudes toward
American economy. Nor are the the reconstruction phases as dis¬
amounts so large that the portions tinguished
from
relief require¬
going
into
productive
plant, ments can be fortified by the way
equipment, and working inven¬ the reconstruction phases are fi¬
tories cannot be paid back to us nanced. That portion of our aid to
in raw materials and various serv¬ Euprope and elsewhere that goes
ices in future years without seri¬ into plant and equipment, into in¬
ous distortion of the normal flow
ventory, into the rebuilding of
international commerce.

However, when we examine the
kind of goods the world requires

tools and

facilities, is productive

loans and given a fair chance will
build up the level of

productivity.

Productive loans

abroad for world
it is apparent that the
amounts become very large, par¬ reconstruction should be financed,
not by taxes but by the sale of
ticularly in 1948. Of coufse the
(Continued on page 34)
-J4
overwhelming problem is food.
us,

"

t

.s'i,

both

to

lender.

Since transactions that may oc¬
cur

from

George Willard Smith, President

untary plan. To succeed

in

of

LIFE

in raw
and
in
amounts

repayment
services,

work that remains to be done in

indus¬

an

plan

will

for

.

even

food\conservation

receive

time

proposals
must be thought of as goods and
first, that
abroad do hot leave this country services moving from us to them,
but are spent at home; second, we ask ourselves, "What kind of
that goods shipped' abroad, pur¬ goods and in what amounts?" As
chased with borrowed dollars, are far as the aggregate amounts are
the
general picture
taken from* what could be con¬ concerned,
drawn
does not
sumed at home; and third, that that has been
seem
too ambitious. Even when
repayment to the United States

remarkable,

The

1947 has been organized as a

long, and the inter¬
est rate must be very low or none
at all. We must be prepared to

The

must be very

Need For Food

understood'

its effects

sharp
reduction
of
food
consumption
and in the using up of foodstuffs
will restrain and perhaps reduce
food prices. This effect on prices

currencies.

try which itself has been making

complete mutuality

be

must

rents and profits to them in their

Company's business life, the emphasis

MUTUAL

also de¬

terms which

THE FRUITS OF SOUND TRUSTEESHIP

FIRST

possibility
It

success.

enough,. considering

THE

in

repayment,

and in the arts. We could receive

annual

new

as

not per¬

are

%

conservation

j

the adequacy

loan,

destroy

decisive

a

which

measure

British

the

such
affected

contingencies,

price rise

if

in

people that it is their
duty to follow principles of food

in fact adequate for the task
that has to be done, and that un¬
the

the Americaii

on

whole,

a

persuade

available

made

are

uncertain

no

physical terms.*
So clearly the possibility of shc-f
cess
is present, and the stage is
set.
*■.
j
i

with

are

for

icy has attracted

recon¬

the Mar¬
proposals or otherwise. But
the question remains not "Can the
loans be repaid?" but "Will they
be
repaid?" The answer to this!
question is,
"That depends." It
depends on whether the program
succeeds. It depends on whether

amounts

as

be measured

shall

foreseen

There is

"grave hardship

struction in response to

in

large exports of food
possible
without
imposing

are

have

and

Chairman of

as

that

terms

or,

rents, and profits to

wages,

the

us;

urgently

they

be

must

citizens'

.people

world

waste

appointment J of

His

Aid has declared

out the manner

for

food

and

advisory committee
gives to the conservation effort
vigorous and courageous all-out
leadership. His assignment of the
committee, to headquarters within
the White House gives to the com¬
mittee's work the prestige of all-,
out
Presidential
support.
The
President's Committee on Foreign

in which repayment can be made
of

.

Charles Luckman
the

materials that

raw

,

stopped.

resources?

have pointed

we

and

duced

vitally needed to supple¬

our own

the moral, cultural, and political
to foundation for reconstruction is
put it in other words, we do not adequate. It depends on forces of
give up the dollars; instead we man and nature which are un¬
give up certain things that the predictable in any program. It
dollar will buy. The dollars them¬
also
depends
on
whether
the

what

ing needs. Notice particularly, for

ures

j

require.

Public

share, different in kind to be sure,

that

includes the

world

differences

the

to

admit that there will be

us

point that all should

The second

less in order'that others may

sec-

| over-all requirement for expen¬
ditures that may be appropriated
IJby Congress to promote the re;!construction

are

that the foundations

is

second

will

cultural, and political
convincing, and at

moral,

character

cussed

World Reconstruction

i

understand is that the substantive

peace

have confidence,

attained,

is
for

tures

i

It will not be easy to agree
that these desirable assurances of

and work, tion is thinkable.

world. We may look for,

for,

be both unworkable and unwhole¬

,

/

voluntary program ' of
food conservation recognizes that
food
consumption must be re¬

be

income.

na-f

call last week for an all-out

tionwide

that

some.

to cover this
for some years to come. We
hope and believe that this in

must

is

these

expenditure

our

defense.

must

tional

a

of

first

The

facts
I

United States. President Truman's

in response to a exceptions to this general prop¬ countries. We can receive, in ex¬
osition.
We know that these ex¬ change for some
restriction on
holds out
some
promise for its ultimate success. ceptions are immaterial and that, current consumption, a share of
The ability to do and the will to broadly speaking, a dollar made the production of others for years
available abroad is spent in the to come.
What better measures
do must both be present in such a
program.
We
must be
spared United States, and that it becomes could be taken to assure for our
a
part of the stream of our na¬ children and our children's chil¬
political participation that would
abroad

program

by ap~i
be
drastic

can

people of the

tion of food by the

is

developed

| that is not at
•

will then

we

it
only by

money;

available

made

of interest that gives dignity to
generally agreed, I believe, that dollars do not leave our shores; both borrower and lender. The
that they become wages,
•transactions
rents;
possible under the
appropriations
by
the
United
States for the reconstruction of and profits for American citizens. Marshall proposals are advanta¬
You know and I know the minor geous to us as well as to other
productive
and
economic
life

States —must

Jin

which

cannot be produced

elimination of wasteful consump¬

be made in goods and services

can

unusually

food

propriating

■

First, that the dollars which the
in
States
lends abroad
or
the response by 16 countries to United
which are appropriated for re¬
Secretary Marshall's proposals.
No matter what is done for re¬ lief abroad are actually spent in
United
States;
that
these
lief on humanitarian grounds, it the

the debt—that

be

The
year

and tax reforms, along with tax reduction and proper
H
as instrument of fiscal policy.

of national debt

use

of these requirements

measure

i

:

the world

form of

un-

for

on

supplies to help meet
crisis this winter;
food that is needed this;

large food

(1) that money for relief abroad is spent in U. S.; (2) that it will take
goods and services; and (3) tt at repayment can be made only in goods
and services. Urges reconstruction aid be financed by sale of savings bonds.

this
subject • in

£ terms

have been called

phases of Marshall Plan and points out three basic points

are:

1 cussing

Marshall

proposal, the United States would

Chairman of the Board, R. H. Macy & Co., Inc.

to

concern

grave

Marshall proposal or no

By BEARDSLEY RUML*

In these anxious days, the sub-

ject of taxes, the budget, and the

f
|

Thursday, October 9, 1947

CHRONICLE

Debt, the Budget an# Taxes

s4,

;

|

FINANCIAL

&

COMMERCIAL

THE

(1430)

Y

.

,

Volume

166

Number 4636

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1431)

'




^

P lt ll f E R T Y I JI S I R A J C R

Cmd/MUMCO

Tfo

wteuctM rwm&f

6^cS$-/'l&UC<2S(s

mTT T!

*THE
NEW

FIRE

YORK

AUTOMOBILE

MARINE

i.±^

1

/!«,

■>

\

58

COMMERCIAL

THE

(1432)

&

FINANCIAL CHRONICLE

Thursday, October 9, 1947

it
Three
I
>

;

address

to

convention

of

By HON. A. LEE M. WIGGINS*

it was my
the annual

ago

years

pleasure

.

Asserting major economic problem is to make sure dollar size of the economy
physical size, Treasury executive and former

ABA President

|he.

l^'fSvnrh'm^nt;
^to^

v

■J.

o

stable |

discussion

yo u r

goy^rni^pt$4 ^ domestic front, he depicts financial policies of
management,! budgetary expenditures and

in debt

ernment

!or

f s o me

peace

and

both

natiohal

matters

•

problems.
Through

requiring careful

the past eight
o nth s,
I
have
been

J im

L.

able

M. Wiggins

hand

to

ob¬

serve

A.

at

first

the

ment

operations of govern¬
and have
participated in

handling

some

of the problems of

government.
That

experience confirms,
and
deepens
the
strengthens,
conviction

that

I

have

expressed

to you on

other occasions, namely,
that democratic
government, as
conceived and
wrought by the
American

people, is the best sys¬
tem of human relationships yet
devised by man. It continues to
be the last best hope of man.
Too

much

are

we

inclined

to

weaknesses
of
the wastes
in our system of checks and bal¬
ances,
the
failures that result
from political influences, the un¬
balanced
weight
of
powerful
emphasize

democratic

minorities

the

processes,

in

the

determination

of national

legislative programs, and to con¬
sider these things as evidence of

*An

address

the

Mr.

Wiggins

Annual

Conven¬

by

73rd

in

weakness
of

of

Some

stitute

a

basic

the

democratic

an

Democratic govern¬
understand it and as
value, must operate in

free

are

please, to differ
to

seek

to

think

to
as

their

which is attributable

•

.vS*

the

views

national

life.

It

democratic

life that

the
of

flexibility
that
assures
strength
and
permanence

the freedoms

of

in

our

taken

economic

under
war.
Many government
have
been
removed,

were

for

tion

controls

government.

away

perhaps too quickly, but all
through the operation of demo¬
cratic processes. Throughout much
some

It

is

now

since

the

The

more

end

of

than two years
our

armed

readjustment from

con¬

war

the

of

to peace

has ever been a difficult
Much of the world has
little progress in that ad¬

the

period.

world, this has not hapnecessity of regimentaon the other hand, the

stern

pened, but,

tion of the American Bankers As¬

made

sociation, Atlantic City, N. J. Oct.
1, 1947.

justment. In this country, we have
moved further and more quickly

Our

If

Post

War

powers

of the state have further

increased and the freedoms of the

our labor force and our phys¬
plant.
This leaves but one nteS
way in which production can be
substantially increased promptly*
and that is through greater! pro¬
duction per individual: employed.

the

side

domestic

of

de¬

patience. Large backlogs still re¬

Economy

examine

our
postwar
in terms of prewar, we
several
important de¬
velopments. The Federal Reserve
; we

economy
discover

Board's

index

duction

is

industrial

of

pro¬

67%

higher than
the .average for the year 1939.
Although industrial production is
only a portion of total production
in the
economy,
we
find from
now

available

evidence

that

total

the

cluding agriculture and elsewhere
in the economy, as well as in in¬
dustry—has risen nearly propor¬
tionately.

Furthermore, the flexibility of
has made
possible the restoration of many

both

On

two years of

conflict.

of the

aln\o$t

now

mand, our major difficulty is im¬

output of goods and services—in¬

end

,

re¬

balanced Fed¬

democratic government

this

is

the war,

to

is

j

find

we

fully" employed. This lis true of

4

budget within

eral

policies of government, there
necessarily follows a flexibility
that
responds to the changing
of

In

have been further

stricted.'

!

[

ical

as

a

have achieved

we

into

needs

finance.

Andj in spite of continuing
high costs of government, most of

they

as

of

field

war.

they will, and

translate

the

the. war, our • financial
machinery was adequate and has
handled a government debt in an
amount undreamed of prior to. the

environment of freedom. When

men

in

of disturb¬

during

as we

it has true

a

spite of the necessity of vast op¬
erations in financing. government

them, no doubt, con¬
price for democracy.

democracy.
ment,

minimum

been

ance

government.

individual

peacetime has been a marvel of
industrial
readjustment.
There
has

structure

But, more important to me, they
are
the evidence of a flexibility
which constitutes the strength of

flict.

before

any of us dared hope. The
shift from wartime production to

supply and ojn

side of supply,

that pur economy
V ' r

concern.

than

policies, and the give
and- compromise
on

take

and-

the side of

On the

,

M

on

the side of demand.

gov¬

tax reform

phys¬

•• ...)•
. ,j
; j .
this problem, we are
confronted with major idiffidulfies

thajit release springs of incentives; and (3) establishment of sound and

ments

r

continye;

the

three requirements for preserving

as

economy

In solving

stability: (1) world-wide increase in per capita production; (2)
international and doimsticu^poperationspf ^Tree^ meiu under systems of govern-

three years, I
official of

lays down

the

of

ical size...,

economic

return. >as .an

,

I

,

size

does not further outrun its

does not further outrun its

Rafter an 4n^fcterv al
of

economic

major

our

dollar

the

Association as your re¬
tiring
Presi-, aent.
Today,

Bankers

Today

problem at home is to make sure

Under Secretary of the Treasury

American

the

But
even

purchasing
more

national

172%;

dividuals

duction

and

162%;

risen

about

250%

1939.

Purchasing power has
outrun
production. Prices have
gone up all along the line. The
most fundamental prices of all—
those paid
by consumers—have
gone up about 60% since 1939.

effective, while;
to

be

con¬

unwilling to

to

catch

up

with 'their

orders.
The situation
on

the

calls for restraint

part of government,

con¬

business, and labor—re¬
straint in spending, restraint in
pricing policies, restraint in wage
demands, restraint in tax policies.
If we will exercise this restraint,
sumers,

the

present

tors

we

combination of
in "a long

result

can

fac¬
con¬

period of prosperity; if
not, it can result only in

do

We

commercial

increased

war
period and
purchasing ppwerj to

wait for the regular course of pro¬

further

in

the

seem

increased

has

liquid assets held by in¬
have

them

make

sumers

power has risen
production. Our

deposits

the total

from

there is the

tinuing

income

banks have

since

than

main

inflation.

little,

accomplish

if

any¬

thing, by merely writing up price
tickets.

We

create

cannot

pros¬

perity in this country merely by
writing
up
higher and higher
tickets, whether on wages,
commodities, or on profits. Al¬
though
our
economy
is
now

price
on

geared
lars

to

to a higher ratio of dol¬
the volume of production

Important 2-way trade
with

long served by the Great White Fleet

Middle America is

THE coffee, tropical foods ofcocoa andAmer¬
other
nutritious bananas, sugar,
Middle
ica
COLOMBIA

COSTA RICA

HONDURAS

BRITISH HONDURAS

—

so

have been

years

tained

transported northward for almost 50

lished

on

new,

by the Great White Fleet.

Southward these familiar white
CUBA

JAMAICA, B.W.I.

DOMINICAN REPUBLIC

Regular freight schedules

North American tables —

popular

ships sailed

NICARAGUA

coming into its

over

are

The company

again.

being main¬

the Great White Fleet's

routes.

long estab¬

is building fast,

fully Refrigerated vessels

needs of

own

to

meet

the

expanding trade with Middle America.

deep laden with the products of United States

And, in the months ahead, the Company will

farms and factories.

re-establish its passenger

Today—after the
EL SALVADOR

PANAMA

GUATEMALA

the

necessary

If you

ship diversions of

have

a

service.

i

shipping problem involving

of the countries listed at the left,

any

please call on us.

PANAMA CANAL ZONE




war

years—this important 2-way trade with

■

UNITED FRUIT COMPANY
General Offices: I Federal

Pier 3, North River, New
321 St. Charles

York 6

St., New Orleans 4

Street, Boston 10

1

,

:; |;

I

■

v

111 W. Washington

i

■

St., Chicago 2
U.

1001 Fourth St., San Francisco 7

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I

JijjV

Volume

COMMERCIAL

THE

Number 4636

166

&V FINANCIAL

CHRONICLE

(1433)

29

why many people in basic necessities of
life,
natipns give up their* births which may follow renewed
and courage.
1
,f :}
right and surrender their souls to
It is easy to surrender our
systems
of
government
under
which freedom disappears and the to a sense of hopelessness
derstand

from capita production. This mean, first and destroy their hopes than are
hope: oiSall, hard work and the produc* willing to work with one another
tion of goods.' It means also the to rebuild their national life and
\
relationship, a continuation of the
spirit multiplication of human produc¬ improve their well-being. Many
write-up of more and more dol¬
as to tion through the use of mechani¬
are tired and discouraged and see
lars
must
inevitably lead to a
individual becomes the slave of die future of many parts of the cal energy. Second, it requires the no hope for the future.
Others
top-heavy dollar structure.
I do not subscribe to the cooperation of free men
the state. I think the answer is world.
under are
imprisoned
by
a
ruthless
World-Wide Goods Shortage
that
hunger, fear, hopelessness inevitability of any such conclu¬ systems of government that will minority of a police state. Our op¬
The
familiarity
with
death sion. On the other hand, it is my release the springs of incentives. portunity is in doing all we can
pressure
of
the
dollar and. a
against goods arises not only from break down the will, destroy am¬ deliberate conviction that to the The third requirement is sound to keep the spark of their hope
this unbalance but also because of bition and weaken resistance. It furthermost part of the world to¬ and stable governments of integ¬ alive.
the desperate shortage of goods is a .surrender to futility. Under day there beckons an opportunity rity that will invite world-wide
Perhaps we are too much in¬
throughout the world. We hear such conditions, freedom becomes within grasp in the foreseeable investment and trade. Under such clined to see the destructive forces
much of the dollar shortage, but a mockery and a government of future of the greatest advance in conditions, capital and manage¬ at work throughout the world and
that is
a
mere
symbol of the free men an idle dream. As this the standard of living and well- ment know-how will flow to the to look only at*the dark side of
spreads throughout
the * picture.
the being for the most people in the four corners bf the earth.'
shortage throughout the world of poison
There is no more
I do not mean to say that this thrilling
goods that require dollars to pro¬ world, it destroys freedom every¬ shortest period of time in the his¬
epic
of
courage
and
where and gets into the blood¬ tory of the world.?
duce. While we are consuming' in
opportunity will be grasped heroism in the long tragic fight
than before the war, and no

will

the

above

continue

doubt

prewar

many,

.

this
of

the

country

production

largest volume

in

history,

our

in

of the countries of Europe
is on a starvation

many

consumption

level. This is particularly true as
to food. With reasonable temper¬
ance

in eating and careful avoid¬

ance

stream
no

of

choice

civilization.
but

to

We

have

we

ever,
argument,
lightenment are

facts, and
not enough

barren

soil.

That

have. How¬

soil

there

en¬

situation.

In

opportunity,

three requirements. The
the countries of the

terested

in

world to utilize the experience of
.his
nation
in
rpultiplyipg per

fertilized through provision of the

('

for

'

i

f

the

world.

At

the

of

present, it appears that many peo¬
ple in many nations are more in¬

be

must

food, we Can feed
millions of hungry people.
We are today confronted with
the practical urgent necessity for
taking proper action in dealing
this

are

is

that

first

of waste of

with

realize

To

throughout

Essentials

Three

fight its spread

with all the tools

in

internal strife

for freedom than

Men

2fforts to promote

and

women

(Continued .On

:

mestic economy we cannot afford
allow the pressure of dollars

to

against goods to rise to the point
that it will endanger our whole
economy. At the same time, we
must

face

stark

the

realities

situation,

of

REG. TRADE MARK

generous

RESEARCH

hungry

the

we

world

An

integrated J

know deep down in
that aside from any

AND

or

FACTORING

impulse,

not,

we

prosperity
of

realize that

now

maintain

in the

midst of

RETAIL STORES.

we

island

an

of

reports

sea

a

adversity.

for the fiscal
Our

Limited

DISTRIBUTING

SELLING AGENTS

our own longrequires a par¬
ticipation in meeting the needs of
other peoples.
Whether we like

it

I textile company

MERCHANDISING

term self-interest

cannot

PLANTS

IIKG. TRADE MARK

the

As

'r(%^

\

WEAVING MILLS
FINISHING

we

hearts

our

conscience

our

requirements
of
in other nations.

people
face

in

f

ended June 30, 1947

year

Resources

Our resources

are not unlimited.
We would be foolish to tear down
and
give away our own house

through
must

remain

only

is

continuing

HIGHLIGHTS

impulses. We
strong, because not

generous

our

hope of the world. We

OF

strength

necessary to preserve this nation
but a strong America is the best
find

must

balance between the head
the heart.

The year was one
and

proper
and

We

must

long-term
mit.

This

share

for

world

will

that

as

per¬

must

we

maintaining

America

deaf

to

ear

life with
throughout
the;

disaster.

has

that

mean

should accept the responsibil¬

we

starvation
nations

and

that

death.

do

not

prevent

To

have

means

with

which

must

also

provide

to

many

current

repay,

equipment and loans with
to

being for

poses,

could

sound

and

and

be

is

able

loans

and

There 'is
in

action
tions

productive

June 30,

by

both

are

on

we

a

and

fields,

necessary
to avoid

lent lo $5.36 per share On
stock

common

compares

previous

outstanding

side

and

if

the

Political

of

problems, but
world

to

have

na¬

twilight of

Problems

the

our

entered the

new year

power

with the largest

of Americans have added

a

many

shortage of dollar

enjoy good business and operated success

fully during the past

year.

pur¬

Retail

millions

great number of

a

well in volume. Canadian and Argentine sub¬

very

and standard of living of

foreign distribution. Although

experiencing

exchange, present monthly shipments are holding up

con¬

$1,413,814.

backlog of orders in its history. The increase in

are

creases.

new

operations have shown substantial in¬

store

With the opening

of eight

new

units this Fall

*

customers for textile

products. The requirements of

growing population employed at increased
levels

point to

a

and

a

store

wage

industry.

additional locations next

of

subsidiaries

under the

generally sustained good outlook

for business in this

seven

names

the

Spring, the retail

company

which operate

of Robert Hall Clothes, Inc. and Case

Clothes, Inc., will have

a

combined total of fifty units.

FIVE

YEARS

AT

A

GLANCE

Total Net Sales

we

1944

eco¬

1943

(Including Intercompany

$230,194,945

$160,402,043

$126,362,417

$125,587,446

$98,173,161

21,132,358

9,098,705

5,334,049

4,984,098

4,256,656

***3,898,125

Sales)

1,281,025

**1,264,772

*632,388

575,174

1,178,916

$ 1,160,228

1

Net Profits

Number of Common Shares

Total Dividends Paid

on

Outstanding

Common Stock

$

5,850,977

Common Stock and

$

$

2,800,138

1,770,230

$

36,466,419

*10% Slock Dividend May 6, 1944

33,152,645

30,919,282

26,430,708

21,869,651

52,746,135

Surplus

37,237,783

31 150,192

27,995,640

24,536,754

'Stock split 2 for 1 March 7, 1945

***Stock split 3 for 1 August 14, 1946

international

cannot close

political

side.

our

The

revolution of the past half

peoples

among

whose * economies

United Merchants

Manufacturers, Inc.

and

been wrecked, who are liv¬

ing in wretchedness and who face
hopelessness and despair. Such is
the breeding ground pf commu¬
nism. We

find it' difficult here in

America, where the individual; i§,

his

not

sidiaries

chasing

its field of

markets

some

earnings, the corporation's share
in companies

mills in

Exports continue active and our organization has
extended

earnings

new

Operation late this Fall and full operation next Spring.

1945

urgent
prompt

some

century finds fertile fields
many

"

of June 30, 1947. This

year.

undistributed

finishing plant

Uruguay and Venezuela are scheduled for partial

with net profit of $9,098,705 for the

In addition to these

of

as

new rayon

this October. The

gov-'

capital.

"1" hctve discussed only the

eyes

should be in operation

the 3,898,125 shares of

Working Capital

International

nomic

mills at Maracay, Venezuela and

our

Louiseville, Canada. The

1947.

Consolidated net profit was $21,132,358 equiva¬

may

disintegration.

•

ended

enterprise

through

private

immediate

is

year

YEARS ENDED JUNE 30

multiplied

ernment

be

for

give, but the limits of

for

need

should

pur¬

year

finishing plapt at Old

basis. Generosity
not
be
mixed.

limit to what

a

to

be1

can

need

Such

productive

and

solid

loans

There

which

for such equipment.

pay

loans,

we

productive

rayon

Fort, N. C. and

solidated amounted to

to

newly constructed

our

our

Colonia, Uruguay and a large plant addition at

$230,194,945 for the fiscal

The company

fuel

the highest in

by $7,611,003.

capital additions during the

amounted to

ity of working out their problems,
we have a clear
duty to pro¬
and

This includes

funds reinvested in plant

as

and additions, were

vide

but

food

Net fixed assets have been increased

of record accomplishments. Sales
well

history. Total net sales including intercompany sales,

turned

never

hunger and cold and

This does not

extensions

as

OPERATIONS

neces¬

until they are able to sur¬
through their own produc¬

tion.
a

generous

production of the

peoples

imany

vive

as

means

our

sities

be

self-interest

earnings,

YEAR'S

THE

own

master and where

surrounded

we

by abundancerto




are

un¬

1412

This summary
--

of the annual report is

not a

presented in connection with

BROADWAY, NEW YORK 18, N. Y.
representation, prospectus

any

sale

or

offer lo sell

or

buy

or

circular in respect of

any

stock

or

security

any

now or

stock of this corporation and is not
hereafter to be issued.

in every

land

are
pouring out5'their last ounce
of resistance against the tides that

political ideolDgies that restrain the energies of
men, that remove, their incentives

do¬

our

find

we

nations of Europe

today.

in

and

man

in many of the

page.

36$

,

•

30

THE

(1434)

&

COMMERCIAL

CHRONICLE

FINANCIAL

Thursday, October 9, 194T

of
considering the future earn¬
of banks, it is neces¬
sary to start from the
circum¬
power

stantial

in

context

which

two

years

re¬

from

ueuinq ui jeav

^sa;eaj.3

oq;

history.
W e
are
suffering
inevitable

the

con-

a

flict.

,

We

are

still

con¬

fronted

with

profound

Jos. Stagg Lawrence

un¬

certainties

garding
certainties

which

the

to

terms

of

followed

the
the

the

problem first in
experience which

First

World

War.

The analogy has been drawn often

■enough so that it is not necessary
to repeat the process here.
In
both

M

in

a

instances, we were involved
worldwide conflict which re¬

sulted

in

distortions

and

neces¬

corrections, many of them
and painful.
However, in
comparing
the
prospect
today
with the events of 1920 we may be
pursuing an easier line of reason¬
ing, probably to false conclusions.
sary

costly

What I

mean

are many

followed

First

differences

World
so

War.

substan¬

significant that it may
us to be on our guard,
lest in accepting superficial sim¬
ilarity as proof of fundamental
identity, we commit serious er¬
rors of judgment.
so

be well for

Consider

*An

As

course.

increased,
in

consumed

was

as cap¬

the

strug¬

as prices rose, money rates
moved up.
Between the start of

the

the

and

war

rate

average

the

of

course

money

4%%.

to

the

to

on

Armistice, the
long-term gov¬

address

by Mr.

at meeting of the

Lawrence

Savings Division

at 73rd Annual Convention of the
American

Bankers

Atlantic City, N.

Association,
J., Sept. 29, 1947.

This

conformed

action

requirements

of

classic

It is still doubtful

which

peace

sented

before

vere

that

as

We know that our friends on

of

ences

Railroad

marketed

$50,000,000

a

gold bonds at

In the following month, the
U. S. Treasury had to offer a rate
of 5Mj% on six months U. S. Cer¬
par.

tificates.

The

touched

15%.

Liberty
low

of

call

in the

as

effectively

as

I do not mean to im¬

past.

Loan
81.10.

in

Bear

mind

the coupons on government
at this time

Here

is

were

that

bonds

tax-exempt.

clear

a

rate

money

instance

where

history does not repeat itself.
are

now

moved

more

from

We

than two years re¬

the

end

of

the

war.

We have passed the comparable
period in which a money market
crisis might occur.
There is not
the

remotest

that

long

any
-

chance

at

collapse

will
securities

term

this

occur

or

today is

a

or

the

depression-

that we should

indefinite

assume
continuation
of

present high levels of business. I
simply mean to refute the impli¬
cation in Left-wing forecasts of

depression that capitalism has fa¬
flaws which spell the inevit¬
able doom of our society.
tal

This well advertised
not

has

schedule

depression

occurred. On the
prognostication, it is

yet
of

When those ad¬
justments occur which the end of
a
great war demand, and we as
overdue.

long

a

nation

cile

are

compelled to recon¬
a lower level of

ourselves to

business

activity,

I

am

the necessary
spiritual resources

possess

and

sure

we

material
to meet

the test.

in

Consider

now

detail

some

tions

which

been

affect
and

the

We
year

are

burden

present,
of

such

buying

the

has

lightened

in

vast

a

power

state

has

couraging

in

no

spite

condi¬
general

particularly

entering the third fiscal

after the war. The American

of

part

necessarily dis¬
upon
personal

a

effect

incentive and in the long run will
act as a wet blanket upon Ameri¬

prosperity and progress.
has the government made
much
headway in shrinking
a
swollen Federal budget. Current
expenditures in the aggregate are
running at a level four times total
can

Nor

Federal outlay in the period 193539. Some

slight progress has been
made, against the most vigorous
resistance, in the reduction of the
huge
personnel
of the Federal
government.
total

In

relation

to

the

task, progress has been dis¬

appointingly

20's

time

that

the

of the world

did

distinct

disarmament.

may

civilization
diate

world

and

com¬

our fiscal position with that
prevailing after the First World
War. During the third fiscal year

of

the Armistice of

taxes

tion

22

of

had

been

38%.

destruc-f

properly

reflected

this

from

there

nevertheless

are

in

ments

other

was

off

peak.

of

a

agreeable character.

more

the

first

place, the

banks

occupy a
position of far
greater security than they held at

the

beginning of the '20's.
We
today approximately 15,000
commercial banks, against twice

have

that

number
that

now

in

1920.

We

were

there

altogether^

know

too many banks on the earlier oc¬
casion and that the failure of state
and federal

bank

major

was

failures

which

in

generic

caused

so

have

a

scheme

proved effective.

1933,

of

deposit insurance which has
ber

many

banking.

result of the crisis in

a

now

the

of

one

that

of

causes

weakness

we

authorities to restrict

charters

bank

far

so

A smaller

num¬

of

income

practices than
'20's.

for the 1921

budget

itself

-

had

vigorous paring and in

82.5%

No

from

on

While

was

the

ings do constitute

will

see

and

charge-offs

country will
judgment.

in

political phenom¬
voters

due

of

course

were

this
pass

element

anything like the losses

necessary

carried

in

banking

in

the

'20's

Co.
Underwriters

—

Distributors

Dealers

PUBLIC UTILITY, RAILROAD
PHILADELPHIA

and INDUSTRIAL SECURITIES
CHICAGO

W. C.

Langley & Co.

Members New York Stock Exchange

115

Broadway

that
and

through into the decade of

the '30's.

c<?0

of

is doubtful that the next ten
years

the present oc¬

the

an

safety in the banking structure. It

progress

a

in thef

percentage

client, the fact is that these hold¬

wartime

which

case

government securities in our
portfolios is properly deplored as
an unwise emphasis
upon a single

the

on

the

high

of

corresponding

casion. This is
enon

New York 6, N. Y.

Tel. BArclay 7-8800

j(t' vjt

In

them¬

selves

total of

a

prevailing in 1918-19

has been made

'if?.

ele¬

the

picture, particularly
they affect banking, which are

as

a

the third year after the Armistice

•

of

mood

optimism.

1918, Fed¬

cut

Personal

The

year.

sustained

i;t

imme¬

no

possible

banks,
operating
in
a
larger economy and with greater
total business, find themselves in
wartime peak of $5,689,000,000 to a competitive position where it is
a level of< $3,554,000,000, a reduc¬
possible to pursue safer banking
after

eral

had been cut to 50%




the

of

good

under

was

threat

a

tion. The stock market of the '20's

As

here

pause

rate of 65%

NEW YORK

toward

progress

The
like

seemed

world;
peaceful and prosperous. Western

meager.

$1,270,000,000 to a total of $719,000,0Q0, a drop of 43.4%. The top

&

at_ the

powers

achieve

way

preemption
the

on

taxes had been cut from

Eastman, Dillon

leading

thoroughly
per-f
they of each other's

of

pare

greater

the outlook for banks.

marked contrast to

1920.

some

of the specific

business outlook

respects, the out¬

in

vic-

slight

some

If we do not at present enjoy
the relief from high taxes, if the gov¬
heroic and persistent efforts of ernment has been disappointing in
Congress to grant relief. Although its budgetary economies, if peace
it may not be readily apparent at today is indeed a dim prospect,

personal

We
Outlook For Banks

that

rates will rocket to levels

In certain other

income for the year 1947-48. This

time

existing in the late Spring of 1920.

look

proof
the

that

statement

this

by

fore¬
they have

these

confuse

will

future

casters

On

May 20, 1920,
41//4S dropped to a

of

national

estimated

The

war.

So

were

an unpre¬

burden

predicted a depres¬ aggregate of Federal taxes repre¬
sents an increase of 1.9% over the
sion for us, the severity of which
total collected during the last year
seems
to vary directly with the
of the war. We are all able to
"liberalism" of the prophet.
We
confirm painfully the fact that our
hope that business events in the

ply

issue of 10-year 7%

the

pre¬

tea-party conversations, achieved
a
reasonably harmonious peace-

taxation. The Federal government
alone is collecting approximately

of

had

comparison
protracted, futile confety
today seemed like mild

with the

the Left have

United States today is

theory. At the end of
these rates continued a
sensational
upward
trend.
In
April of 1920, the Pennsylvania

time

peace

the

to

menacOi

nations, after
haggling, which by

intentions

is still bearing

economy

the

Germany

torious

structure.

cedented

major foe had beeri

No

reconstitute

to

:

depression as se¬
24.7%
experienced in 1920-

the

v/ar,

shall

collapse, a

ness

21.

we

present time a busi¬

at the

have

that

economic

money
.

conventional

a

the public debt

period and that which

the

are

tial and

to say is that there

material differences be¬

tween this

They

lowed

ernment bonds moved from 3 V2 %

Consider

Expects No Severe Depression

one

major dimensions of bank
earning power. During and after
the First World War, they fol¬

gle,

them.
I

constitute

rates

of the

un¬

operations of banking
profits
realized
from

the

and

re-

These

rates.

ital

bound

are

,

Our

other aggressor had
arisen in the ranks of the victors;

suaded

the

political and economic future,
affect

standard.

;

1920.

defeated.

follow

which

,

In another respect, the outlook
today is less attractive than it was;

of New York

no

!

dislocat ions

jj such

Company

pronounced upward swing in money rates that
would enlarge bank earnings. On dark side, sees no relief from high taxes and
international discord, but points out sounder position of banks today than in
1920. Holds both Treasury and Federal Reserve will expand their powers of
credit control, and lays down as essential to restore free money market: (1)
prohibiting Federal Reserve Banks to acquire government securities; (2) lim¬
iting use of such bonds as Federal Reserve collateral; and (3) restoring gold

banking
operates
to¬
day.
We are

moved

Empire Trust

in

Bank economist predicts

Amer-

ican

.

Vice-President,

.

STAGG LAWRENCE*

JOSEPH

By

In

ing

Volume
4

166

THE

Number 4636

Future of Bank

stances have been

Earnings

In

considering the future of
bank earnings, we must recognize
that earning power is predomi¬
nantly a function of gross asset
value

and

business

The

volume

of

depends
primarily on
business conditions and

general
the

rate.

size

of

the

public

debt.

In

spite of much wishful thinking on
the part of bankers, it must be ad¬
mitted reluctantly that the' rate
Which banks

able to realize

are

their assets depends

COMMERCIAL

on

primarily

on

joys

where it is difficult

National

made on a basis
for the bank
to realize adequate compensation
for the service performed and the
risk

seem

so

a

limited area,

the rate as

range;

f

broad return of a free money
market are almost insuperable. •
the

first

place,

it

is

on

and

the

financing

will

over. any.

con¬

instrument of

an

nomic control.'

any

In

precedence

Federal

rate

ceivable necessity on the part of
the Federal Reserve Board to use

a

and it remains to
be seen whether they will stick.
For the forces operating against
limited

the

obligations

of

take

which
significant are cor¬

within

rections

control

to

government

However, the corrections
may

need

rate

assumed.

CHRONICLE

unquestioned
priority.
policy has resolved that

an

the

FINANCIAL

&

ex¬

eco¬

_

The tolerant attitude which the

Treasury

possible
rate

*

displays. - toward
changes in the

now

upward
the

are

result. of

^obvious

special circumstances. Due to the

strated the ability of the state to

tremely unlikely that the govern¬
ment', having demonstrated its
ability to control the rate struc¬

continuation of high wartime tax
rates and an unprecedented level

Control the

ture and

teen

conclusivelydemon¬

years

detached

a

attitude

to¬

prosperity, the: Treas¬
is accumulating, a substantial

mandate

to

control

the

cise of rate control by the Treas¬

£.34%.

Suppose that

we

had

power

credit due

to the exclusive

exer¬

In lieu of money rate control,
authorities
are ; now L de¬

ury.

these

manding

only
on

ing

to

conference and

a

Congress is not hospitable to

Federal Reserve

to

the

(Continued

sum¬

particularly the yield
ment

bonds

under

the

and

govern¬

on

following

conditions—conditions which may
develop during the course of the
next

decade:

repudiates
its

deem

in

(1) the government

its

obligation

as

to

ACCESS

to

order

deliberate

inflation

to

help favored
(3) It conducts

groups.

and

uous

malicious

in

political

Throughout

this

balances

its

to

»-

contin¬

a

campaign

against wealth and business.
once

WORLD

...through National City Service

dons the gold standard.
sorts

OF THE

re¬

corollary aban¬
(2) It re¬

a

MARKETS

THE

TO

and securities

currency

gold and

Correspondents

(4)

period it never
budget but on

the contrary reports deficits year
after year.
(5) The public debt

irises steadily. (6) Toward the end
of this period, a great world war
breaks

out

country
times
face

which

with

of

all

these

"What

conditions,
happen

to

i

without

that

correspondent relationships

bonds

■

j

"

.

access to

<«

•

v

•Xf' i

world markets through

these
to

46

would

branches of its

overseas

own

—

more overseas

branches

go

up, that public credit would nec¬
essarily decline and that the yield

government

^

City Bank offers quick

exception would

that rates would have

on

well established

to

important banks throughout the world, National
■

<

particularly the

confident

are

savants
say

with

we

would

on government bonds?"

We

addition

n

a

interest rates, and

yield

I

this

public debt ten
peak in 1919?" In the

the

repeat,

leaves

than those of all other American banks

together.

in¬

evitably skyrocket. We know how
such

wrong

have

conclusion

a

been.

We

know

would

how

National

of

classic

know that rates
at

their

are

level

in

lowest

period.

year

economics.

today

We

know

debt

of

this

than

at

it

could

at

a

of

a

total

sult

has

Head

Office

concerning

handling of collections, foreign department facilities and

month

credit

taken

or

foreign.

1%% notes with

a

of 1% notes,
slight increase in

plus

some

a

Write for

color-illustrated booklet describing

lip

vague

to believe that

us

requirements, domestic

issue

service by officials in favor
freer
money
market, may

;

at

Short-Term

notes and

of

officers

Unfreezing

rate,

some

these

write

or

problems relative to bond portfolios, efficient and prompt

representing
the

in profitably developing customer relationships. Con¬

time in the

paper
by the government,
refunding of $4,394,000,000 of

12 y2

best aid

any

recent-unfreezing of short-

l1/2%
a

may

rate

term

the

facilities and how they

can

lower

Rates

The

always available and ready

our

past.
Effect

discuss specialized

you

15-

that

$258,000,000,000,

money

,to

We

are

roughly

government, in the face of
borrow

City's officers

com¬

pletely the experience of the last
15 years has challenged the teach¬
ings

of

our overseas

a

banking service

lead
turn

place.

There are a number of reasons
why we should regard this ap¬
parent
turn
with
the
utmost
,

reservation.

In

the

\

•

first

place,
broader figures representing the
rates at which money can be bor-r
rowed

in

the; principal

centers

of

the

to

this

change.

money

country show,

up

this

If

f

J

p

J

1*

,

time,
no
appreciable
Corporations and quali¬

fied borrowers are still able to
borrow at roughly the same rates
which prevailed a year ago. I say

with

full

knowledge of the
change in certain special categor¬
of lending which have been

THE

NATIONAL
1812

—

CITY
135 th

BANK

Anniversary

OF
—

NEW

YORK

1947

ies

announced
New
that

York
some

by

several

banks.

upward

It

is

leading

correction




Head Office: 55 Wall Street

66 Branches in Greater New York

possible
in

certain rates may be
taking place,
as indeed
they should take place.
Accommodations
in
some
in¬

on

page*
t

posed

rate

money

authorities, that

it regards such aspirations as

to them this problem: "What will

happen

Member Federal Deposit Insurance Corporation

The

needed!

the questionable aspirations of the

fifty lead¬
economists of the

monetary

credit.

this program is that our cur-,

rent

expanded qualitative

an

comment. presently

moned at that time the

World

bank

Board.

business

to control the money mar¬ ;$27(9,8OQ,OOO,0OO. ta $258,400,000,ket. These are the Treasury and 000. It is definitely not in the
the
Federal Reserve
Board.
In market for fresh money at this
this competition, the Treasury en¬ !time. Under the circumstances, it

Evidence is overwhelming*

fifteen years in this country. The
average
yield' on
government
bonds at the end of 1933
was

member

.

having profited' by' thatT
money market. A lot
of bankers still doubt this! Very control, will freely relinguish it. ury
lew professional students do. .The 'Two important : agencies < of the surplus. It: has been able to pull
compete
for
the id own the total Federal debt from
government
Consider the record of the .last

of

the, money - rate' and view £y, qualitative.-control, they refer
with some indulgence a firmihg to stock market
margin and con¬
of that rate; that is, provided such sumer
credit regulation.
a firming process does not
get out
In addition, they have asked
of hand.
for
completely flexible power
over reserves, the right to require,
Federal Reserve's Power
the maintenance of secondary re¬
If for any reason, not visible
serves, the right to regulate the
certainly at the present time, the character of member bank long-,
Treasury
should
abandon : its term
security portfolios.
They
power
over the
money market,
have repeatedly suggested that
the Federal: Reserve authorities
they would be much, happier i£
are
prepared, to / seize it. These all the banks in the
country wereauthorities nurse a sense of mis¬
subject to the full authority of
sion.' They think they have a
the Federal Reserve
cycle. They have in recent years
repeatedly Complained of the in¬
ability to control the quantity of

.

control

31

ward

of domestic

government policy.: The last. fif¬

take

can

(1435)

\

41)
-fay.

in4
Jf

a

*2.

(M36)>

THE

CHRONICLE

& FINANCIAL

COMMERCIAL

Thursday, October 9,1947

-

The FDIC and the Dual Banking System
"The
needs

dual

."

banking

justification.

no

By H. EARL COOK*

system
It

works

^

v

dent last year,
Frank

-

C.

the

sen-

of

time nts
Amer i

who apply the

■

in

of

practi¬
cality' to this
import ant;
segment

the

tested,

strength

i

A

H. Earl

n

study of banking in other na¬
tions emphasizes the uniqueness
of our dual system. As a matter
of fact, we should be well ad¬

Cook

banking
system are brought to sharp focus.

vised

For more than 80 years, this
country has conducted its bank¬
ing through the facilities of in¬

Federal

and

State

law

<

tem

revolution

which

banking

has

increased

size

as

well

nually

to

a

billion

pre-World

The existence of
of banking fur¬

progress.
dual system

makes

banking a
cooperation be¬

just

as
Federal and state gov¬

tween the

nation.

This cooperation main¬

the state and the Federal banking

authorities

establishes

the

rules

which encourage

out of individuals.

abilities always
tive.

have

alterna¬

an

served

long

ago

that

the

Fed¬

eral, system of government maxi¬
mizes

the

opportunity for testing
policies while at the same time it

II

minimizes

the

risks of

doing.

so

Likewise, this same feature is an
advantage, afforded by the dual
banking system.
From time to
time, the various states have es¬
tablished
provisions
for
bank
regulation
which
proved
their
worth

An address by Mr. Cook before

Bank .Diyisipu^atN the
annual convention ! "of! the
American
Bankers -Association,
Atlantic City, N. J., Sept. 29, 1947.
State
^

on

a

small scale

and

then

widely adopted. Thus, sound,,
improvementsi sc^n permedte;the
entire banking /system; the others
were

wither

with

away

little

or

no

conformed

minimum

to

in'
of supervi¬

achieved

was

over

cen¬

Federal and the various state

au¬

the'

require¬

in
liberalizing charter
provisions developed. However, it
certainly was much
more
re¬

than

strained

that

characteristic

of the earlier "free banking" era/

most

-v

involved

social

philosophy than
an institution

one

opr

states. |

In; some instances; bank !Of state banks, and the membercommissioners/ were empowered 'ship increased rapidly, reaching a'
to examine banks; but nothing in total of 1,648 in 1922. 1
the way of fundamental progress
Viewed in terms of its philo¬
achieved

because

in

weakness

stemmed

from

the

inher¬

the

the

fact

system
that

banking system consisted
Of state institutions.
The

the

solely

urgency

monopolistic features..
Between eral Government was confronted
1836 and 1863, the banking system with the urgent necessity for mar¬
consisted
solely
of
institutions keting its bonds. Organizers of
chartered by the states. The prin¬ banks were given an opportunity
ciple of "free banking" first en¬ to obtain a charter as a national
acted by the Michigan Legislature banking association which carried
in 1837 rapidly.spread to the other with it incidentally the right of
Calculated to eliminate the

Since"• the/ note|Issue

ppte issue.

developed when privilege involved a pledge- of
the chartering, of a bank required IF, S. Government Bonds as se¬
special .legislation,
these
"free curity, a broad market for these
obligationswas practically- as¬
old abuses which

of

the long and
in banking, the
the major
the
state banking

upon

corrected

1863

in

providing

system

by

with

sound

a

the

error

the

nation

hand-to-hand

Furthermore,

rency.

& CO.

hitherto

it

cur¬

avoided

demonstrated

b,y experience with the first and
second Banks of the United States.

NEW YORK COTTON EXCHANGE BUILDING

After

4, N. Y.

Teletype NY 1-999

Uptown Office—Sherry Netherland Hotelt 781 Fifth Avenue

the

prohibitive tax was
imposed in 1865 upon the issue of
notes by state banks, the feeling
became widespread that banking
b y
state - chartered institutions
was

to

doomed. The statistics seemed

bear

cause

state banks conduct-!
business on a nationwide

among

ing

or another,
desired to re¬
main outside of the scope of the

scale.

For

these

institutions

National

one

reason

Banking

Act;
with

confronted

were

yet they
problems

extending far beyond the reaches
of
the
states
which
chartered
them.
A web of common inter¬
ests knitted these institutions to¬

Reserve

gether, and the Federal

System was a legislative recog¬
nition of this fact/ It restored a
balance to the dual banking-sys¬
tem which had shifted off center
in the

period of economic change
■ the
80s and the First

between

World War.

/

/

-

weakness

Established 1856

sophical implications to the dual
banking
system, the
establish¬
ment of the Federal Reserve pro-;
vided a mechanism for coopera-!
tion

of war financing
time, America tested and after occasioned the adoption of the
two
experiments, finally aban¬ National Bank Act. Nevertheless,
doned in 1836 the idea of a single the structure created by this leg¬
bank chartered by the U. S. Gov¬ islation rested on a much firmer
ernment, largely because of its foundation. At the time, the Fed¬

states.

central

"free banking" legislation was not course of progress towards higher
>
accompanied by any important istandards of bank supervision.
advances
in
bank
State banks acquired member¬
supervision.
Widespread
abuses
developed, ship in the Federal Reserve Sys¬
most of which involved the issue tem (slowly; and by June, 1917,:
of bank notes with inadequate 'only 53 had joined but of a list of'
provisions for specie redemption. eligibles!" totaling'" approximately
Numerous attempts/at correction ? 8,500.
Clarifying legislation sub-1
were
undertaken by the various seqUently removed the misgivings

ent

Historically, the dual banking
system began with the National
Banking Act of 1863. Prior to that

elastic currency and

provision for
banking facilities.
Unerating -under, the charter of the iquestionably, the system also.is<
Federaf Government. Moreover, one of the milestones in the
ican

Drawing

-

but

of the 19th
tury. ( Competition between

be granted automat¬

ments, v the

which

Act

Telephone BOwling Green 9-8420

Slow
progress

the last quarter

varied experience

60 BEAVER STREET, NEW YORK

levels

state

ically to all bank organizers who

sured.1

H. HENTZ

/steady

thorities
ters were to

was

Coming of National Banking

-

Students of political science ob¬

Moreover, the system has facili¬
tated the rise of many new indus¬
tries and the widespread distribu¬
tion of the products thereof. The
development of automobiles and
the electrical industries are cases

73rd

and

legislatures.
less

or

sion both at the Federal- and the?

banking" acts provided that char¬

the dominated, by

dual regulation of

system,

long, as the dual system pre¬
vails, men in the exercise of their

total of approximately $25 billion.

the

which

is

As

an¬

War

principle

unifying
the

authorities

state

and

wholesome com¬
petition and prevent it from de¬
generating into conflict and dis¬
organization.
Cooperation is the
American way of getting the best

es-

dollars

Cooperation between the Fed¬
eral

ently to the economic facts of life.

The

Jk&blishments has expanded from
a

experi¬

the necessary competitive
setting.
It makes possible
the
flexibility whereby men can ad¬
just their activities most effici¬

grown from more than 30 million
to
nearly 143 million and the

than

early

competition. Cooperation between

developed

these

important, of
;K:
;•
■?•
v,. /
Effect of Federal Reserve
capital.
Under
liberalized
charter
ences of certain states in the field
procedures,
With the creation of the Federalof deposit insurance contributed state,banks increased rapidly in
Reserve
System in; 1913, state
number from about 500 in 1834 to bank members acquired a mech¬
importantly to, our federal legis¬
lation. In the absence of that ex¬ a peak of 1,600 in 1861.
anism designed to cope at the na¬
perience, I am confident that the
In the passing of time, it be¬ tional level with problems ex¬
Federal Deposit Insurance Cor¬ came evident that a
This,'
banking sys¬ tending across state lines.
poration would have been quite a tem composed entirely of state- however, was merely incidental to
different and certainly a much chartered
the primary reasons for the legisinstitutions
was
no
less satisfactory agency.
more in accord with basic Amer¬ ; lation; namely, the cremation of an:
that the

example,

a

nishes

replete with
illustrations. In this same period,
for
example,
population
has

L less

of the dual

tains standards and sets limits to

a

are

manufacturing

aspect

intelli¬

Highly

in the volume and

value added by

System Competitive

social

history

this

that

gent competition is an essential
condition for our economic and

has

,

richness of its economic life.
annals of

,

son

considerable show of rea¬

a

ernments makes the United States

system, the nation
tremendously in

as

,

Dual

Associated with the rise of the

dual

sys¬

coun¬

a

strength of the dual banking
is nothing more nor less
than the strength inherent in our
organic political philosophy.

established the United States

.

American

banking

system

the leading economic power in

the world.

the

is really

the

has played an important part in
the successful financing of four
Wars as well as a continuing in¬
dustrial

it

it

terpart of the Federal structure
government.
Fundamentally,

source of charter power&aind govr
ernmental surpervision. The sys¬
tem since its inception in 1863

now

because

of

the

as

call

to

rather than the dual

stitutions free to choose between

,w

the dual banking

as

serious handicaps.

pose

of

s

our

as

system is in itself a sufficient jus¬
tification. We tend to forget, for

well

as

system, and it is easy to see im¬

t

One could argue

with

portant (reasons why alternative
forms; of organization could im¬

n

harmful effects.

bringing

improving (Standards

•

tion

f

r^any ele-

e

V.

other system of bank
organization which might func¬
any

econom¬

Thus

-

Indeed, it is difficult to

envisage

structure.:

their

m

o

point.

V,-

state

ous

more

c a n s
■

was

fea-!

in

tures to the attention of the vari¬

Asserting the strength of. dual banking system lies in our organic political
philosophy, Mr. Cook contends Federal Deposit Insurance Corporation has been
a major factor in restoration of confidence in all banks, both state and national.
Stresses standardizing function of FDIC and says it is only Federal agency that
has direct contacts with state banks not members of Federal Reserve System.

was

Rathje, epito¬
mize

ic

1

i

These words written by the

distinguished gentleman who
your Presi¬

test

tices, the National Bank Act
effective

.

Director, Federal Deposit Insurance Corporation

!-<l

..

out these

the number

sentiments be¬

of state banks

deny that the Federal
Deposit
Insurance
Corporation
was a major factor in the restora¬
tion of confidence in our banks
after
the
financial
collapse of
1933.
It is now abundantly clear
that we could have readily slipped
into some form of absolute cen¬
tralization
as
a
logical
conse¬
Few will

of the crisis, and

quence

sacrificed
free
tem.

the

advantages

thereby
of the

enterprise dual banking sys¬
Fortunately, the program of

deposit insurance adopted at that
achieved the twofold objec¬

time

tive of restoring
in

banks

and

public confidence
the same time

at

preserving the system of

banking

which is peculiarly adapted to the
approximately 1,600
American way of life.
in 1861 to 247 in 1868. However,
the banking needs of the country
i ;■
j Standardization
were
changing.
Deposits were
Broadly speaking, the Federal
growing in importance as circu
lating medium, and by 1885 the Deposit Insurance Corporation t is
state banks discovered that, they a standardizing agency All banks
could operate profitably on the which measure up to its standards
basis of their deposit business are eligible for insurance irre¬
without the note issue privilege. spective of membership in ithe
Federal Reserve System* incor¬
Thereafter, the number of state
banks increased rapidly, reaching poration under the National Bank
2,250 in 1890, 5,000 in 1900, and Act, or the possession of a char¬
declined from

STOCKS

•

BONDS

COMMODITIES

•

.

.

MEMBERS OF:
New York Stock

Exchange

New York Cotton

Exchange-

Chicago Board of Trade

New York Curb Exchange

-

Commodity Exchange, Inc.

:

-

Chicago Stock Exchange
Detroit Stock Exchange

•

1

Boston Stock Exchange

and other leading Exchanges

v-~

mendous
-

-

-




DETROIT

PITTSBURGH

expansion in the eco¬
the dual banking

nomic field; and

Branch Offices

CHICAGO

17,000 in 1913. These years, like¬
wise, were characterized by tre¬

GENEVA, Switzerland

system
afforded the necessary
flexibility to cope with the cur¬
rent financial problems.
Embodying the best thought then
„

prevailing

with respect to

bank

chartering and supervisory prac¬

ter from any particular state;

Since

attending the failure of an
insured bank are sustained in the
first instance by the Corporation,
losses

appreciates the evils re¬
sulting from the competitive char¬
tering pf banks as well as inade¬
quate supervision vof operations.

it fully

Accordingly,
thp

Fprieral

from

its

Deoosit

inception;
Insurance

Volume 166
{

i

) ' '

f' r>

i

Number 4636
"

' * '

'1

t

."

*■ 1

THE COMMERCIAL & FINANCIAL: CHRONICLE,

Corporation has

served as a con¬
nection between Federal-and state

state banks that are

supervisory

not; members pected: that the state nonmember

The

authorities

with

>

the

purpose of enlisting their.coopera¬
tion in
mitigating these evils. Ef¬

forts of the Corporation to main¬
tain high standards have received
the wholehearted

cooperation

Federal and state

of

authorities, and

of the difficulties which
heretofore beset the dual banking
many

-

system have Jargely vanished;;
*-

The

development of

examination

uniform

a

report for

banks

is

of the major steps in the di¬
of closer cooperation be¬
tween Federal and state super¬

one

of

the

Federal

Reserve

System.

.banks would turn to Federal De¬

to

view

their

aspirations

sym¬

This- portion of the
banking system is relatively small,
pathetically.
measured

in

of

terms

financial

but large numerically;
and it is very responsive to the
traditions

enterprise.
Value

American

of

free

>

of FDIC

to

a

larger sense, it is fitting
that the Federal De¬

proper

posit

Corporation

Insurance.
be

the

Federal

agency

to

jority of the states, Moreover, in

a

the

of

advent

almost three-fourths of the states,

joint

scheduled

are

with

visory authorities.

is

seeming
the

American

for

necessity

contradictions.

a

solution

at

national level, it was to be ex-

of the New York Stock

system

cooperation

recognition

of

its

strengthening

nonmember banks are national in
scope.

The

Corporation

has

a

the

Federal

Corporation

interest; by

banks

generally,

Deposit

Insurance

continues

to

stand

where it always stood—an ardent

supporter

of

the

Hyman

dual

banking

Exchange,
Julius

P.

has

become
associated:
with them to handle, trading,".spe-1

Previously Mr.,
associated with1

.was

Struthers & Dean*

"Obligations to

public

the

In

that

announced

when Hyman

the commonwealth is at stake.

further

of

have

Walter L. Cahn has also become
associated with the firm.

For the

past several

years Mr. Cahn has
been associated with E. F. Hutton

& Company as a specialist in re-*
organization
ofrailroads, and;
previous to that, was in a banking ;
and

brokerage -business for him-;

self in New York and Amsterdam.

system.

••

*'

/>

,i

"
'

.

%"

: "•

..r

■

.v

•

••

»'{

•

•;

•

•

,

••

-

examinations

concurrent

or

its

.

requiring

Broad

banking wherein the free play of
cializing in high-grade preferred;
ingenuity is fettered' only by the stocks
and bonds.

In
and

problem

since

Federal

,

25

acter could be mentioned.

of the Federal agencies and a ma¬

taken

have

Company,

This

which the state nonmember banks

Banks

&

Other instances of a similar^ char¬

should

State

Stern

Strefet, New York City, members^

spite

Deposit
Insurance
Corporation. With slight modifi¬
cations, this form is used by all

been
the

which

Hyman & W, Cahn

Now With Stern & Go. 1

means of legislation the right to
participate in so-balled "V" loans.

resources,

best

J.

33:

*

may turn. The dual banking sys¬
Owing to the fact that the other tem works only so long as the
major* parts of the - banking sys¬ separate parts, are able to define
tem could turn to other and long their
problems and to reach ap¬
established Federal agencies when
propriate solutions. Many prob¬
lems confronting the small state
they
were
confronted
with
a

authorities

very real contribution to make to
the success of the dual baring,

Corporation js the only Fed¬ posit Insurance Corporation iri system in cooperative efforts to
eral agency? whose contacts with .similar,
circumstances.,
Dudng deal with-these problems.
the state banks are direct
and World War II, the corporation co¬
To sum up then, the practical
continuing. It is in a position to operated actively with them in a man knows intuitively that the
successful; effort to
secure
by* dual
appreciate their difficulties and
banking system is good, de¬

rection

visory

(1437);

-

state

super¬

i
w

Not only does

t';

4.

W

this

arrangement achieve impor¬
tant savings for both the super¬

visory authorities and the institu¬
tion under

examination, but it fa¬

cilitates cooperation among all of
the interested

about

parties in bringing

corrective

when

measures

necessary. Here again* dual bank¬
ing is buttressed against weak¬
nesses which tend to call
quacy of the system

into question

Bank Reports

.

..

the ade¬

.

Comprehensive and timely in¬
formation is
conditions

one

of the necessary

for

intelligent policy
with respect to banking. In a very
real sense, the life of the-dual
banking system depends upon the
availability of facts. Accordingly,
the
Federal
Deposit. Insurance
Corporation has been steadfast in
its efforts to bring about consis¬
tency in statistical data through
the adoption of uniform condi¬
tion and earnings report forms.
Furthermore, it cooperates with
the other supervisory agencies in
compiling the pertinent informa¬
tion into a useful body of knowl¬
edge.

That's "American" for
When

among the

with

supervisory authori ies

respect

improved meth¬
ods of asset appraisal and classi¬

When

of

Corporation in its role as a
standardizing agency for the dual
»banking system. • Prior., to / that
time, practice
common for
the1 supervisors to identify one of
the qualitative
with the term,
the

comes out

cant,

that also is rivalry

And

rivalry, spelled another

at

windshield

an

¥

with

a new

and better lubri¬

categories, of assets
^slow;"

Following

consultation

:

various

between

authorities,

system

of

work.
way, says

competition.

adopted

which

a

new

classification

was

definitely

classi¬

Few will

the

dispute that rivalry and competition have been and are

spark plugs of America's astounding industrial growth. lit

the Petroleum Industry

alone, there "are

over

34 thousand indi¬

vidual

producing, refining, transporting and marketing
panies, each vying daily to outperform competitors.

com¬

fied assets in terms of the relative

credit

risk.

change
of

was

bond

In

addition,

bask
made in the appraisal

investments.

of investment
market

For

issues

merit, valuation at

abandoned

was

a

and

:o

The result is that America is constantly getting improved fuels,

better lubricants,

as

well

as

over

5,000 other products from

cos

less appropriate amortization was
substituted therefor.
Admittedly

petroleum.

these

changes fall short of per¬
fection, but it is well to remem¬
ber that they are advances in su¬
pervisory methods which help to
make the
dual banking system
work

in

an

era

of

Interpreted in human
better health and

terms,

more

this

progress means more

happiness for all of

us.

economic

change.
The executive committee of the

National.

-

Association

of

State

Bank Supervisors was establishes
as-the advisory council for Fed¬
eral

Deposit Insurance Corpora¬
by
Chairman Crowley in
1938..Thereby, the Corporation
has?provided itself with a mech¬
tion

anism for

exchanging information

with the various state bank super¬

visory authorities.

The exchange

of ideas between the segments
<

then-system

is

essential

*

for

of
the

continued existence of dual bank¬

ing,.

and

the

inception.

»;

has
times since

arrangement

proved its worth
its

many

:

-

r

Of major importance, although
more or
as

a

less incidental to its work

standardizing

agency,

has

been the work of the Federal De¬

posit

4

Federal Deposit Insur¬

ance

extensive

oil company

an

your

work.

at

to

fication furnish still another illus¬
tration

service station attendant gives

polish, that's rivalry

extra

The agreements reached in 1932

your

Progress

Insurance

Corporation

in

articulating the problems of the'




THE PURE OIL COMPANY

comfort,

34

THE

(1438)

COMMERCIAL

FINANCIAL

&

Thursday, October 9,

CHRONICLE

stalled

on most of the main line,"
large amount, of c.t.c. has been
constructed, wooden bridges ;and
trestles have been replaced in an
important degree by steel and
concrete Construction, and other
major improvements have been
made all along the line, A sub¬
stantial amount of non-productive
branch
line
mileage , has been
abandoned.
New equipment has
been installed, and, in particular,
the road has gone in extensively
a

-

One of the strongest spots in the rail market in recent weeks has
Rio Grande 5% preferred stock.
Just under 40

v.

been the Denver &

at the end of last week, the stock was only a small fraction from the
year's high and 14 points above the 1947 low of 25%. Many analysts
consider that the shares- are still attractive at recent levels, based
on prospective1 payment of back dividends before the year is out,
■and. the favorable long-term earn-y ...X,',
..v.-,1,:1
ings prospects for the reorganized erated amortization and last year
the company in the final month
properties.
There are only 325,313 shares made a special charge for pos¬

sible

liability on account of dis¬
puted freight rates on government
This
to the extent earned. The reor¬ shipments in prior years.
ganization was actually consum¬ year, however, the road has been
mated only early this year but staging a strong comeback.

of the stock

($100 par) outstand¬
ing, and dividends are cumulative
.

effective

the

date

1,

Jan.

was

Net

the first

for

income

1943. Dividend accumulations now

months

of 1947

amount to $10

884,980

contrasted

a

earlier.

a

share from 1943

1944

earnings and the com¬
pany's-financial position is ade¬
quate to allow payment of these
and

Net

arrears.

of • the
excess

of

the

"net"

last

of

end
of

working capital as

$17

millions.

cost

stock

of

levels

in

was

Payment
the

would reduce

arrears

recent price

June

purchased at
to below $30

year

eight

amounted to $1,-

with

deficit

a

The 1947 figure

than covered the full year's

more

dividend

preferred shares
and there is little question but
that these earnings will: be aug¬
the

on

by profits in the closing

mented

Aside from the

four months.

of

ment

dividend arrears

pay¬

of $10

for dieselization.

Rehabilitation

and

the

of

modernization

from 86.3% in the like 1946 inter¬

84.1%

for

(Continued from

now have available,
the
The
conventional
budget' i s
requirements under the adapted to purposes of adminis¬
Marshall proposals for productive
trative and financial ; controliv^ Jt)
oans—that is, for goods and ma¬ shows transactions between gov*)

that

we

annual

full

the

billion

five

dollars,
and
this
amount is not too large to be han¬

ernment

dled annually by the sale of sav¬

appropriate; it carries some items

ings bonds.
Such

'H

v

j

I

i

program of sales of sav¬

a

on

otherwise have to be withdrawn

ministrative

is

year

selective

does

not

and

that it

impose

on

therefore

those

Grande

"Anamikon NisMme"
-v

•"

Western

activity ductivity, productive loans

as

different but also

a

portant

occasion

an

important budget, and it

an

serves

his

Truman

Economic

first

Report, is to
impact of govern¬

the

measure

ment transactions

the economy.

on

The consolidated cash
this

im¬

an

That purpose, as
points out in

purpose.

President

because

first,

dated— that

is,

budget does
is consoli¬

it

it

includes

all'

transactions between the government and the people, and it ex¬

dis¬

Denver
& Rio tinguished from grants for emer¬
gets the profit¬ gency relief, are covered by sales
to these plants, of bonds to the
public rather than

by Congress under proper condi¬
following firm tions, we will have done only half
a job unless the leaders of opinion

The New York Stock Exchange
has announced the

changes:

in

David

•

communities

our

understand

retired from

Kramer

I.

the true nature of the transaction
partnership in Friedman, Brokaw and behave accordingly.
Lesser

&

Interest
Williams

She's beautiful!

She's here!

an.

all

cludes

internal

transfers

agencies

between

of

the

the

federal

government

itself;
and
second,
Decause it is a cash budget—that
is, it shows the intake and outgo
able coal
haul
on
a
cash basis in the year in
protected by the fact that the coal by taxation. The tax burden is far
which the transaction takes place.
mines
are
also
owned by the too
high, and one important meas¬
The
difference
between
the
steel corporation's subsidiary. Rio ure of tax relief will be found
conventional budget and the con¬
Grande will also get a smaller if the
proceeds of the sale of sav¬
solidated cash budget can be ap¬
volume of other raw materials and
ings bonds are used for budgetary
preciated when it is realized that
a portion of the movement of fin¬
expenditures of a constructive and in the
past fiscal year, 1947, the
ished products.
non-recurrent
nature
such
as
With
the
combination of in¬ those which we are now discuss¬ surplus in the consolidated cash
budget
was
about
$6
billion,
creased efficiency and the new ing.
'
■.;!
greater than was shown in the
traffic sources it is generally ex¬
I have spoken at this length
conventional
budget.
In
other
pected that the road should have concerning the economic realities
words, the cash taken from the
little difficulty in normal business underlying prospective
interna¬
public by the government was $(»
cycles in covering the preferred tional financial commitments in
billion more than the surplus in
dividend requirement by a good the hope that I might persuade
the
conventional
budget might
margin.
you as individual bankers to carry
imply.
on
quietly but vigorously your
So when we are interested in
New York Stock Exchange personal program of public edu¬ the impact of
government trans¬
cation
on
this
subject.
Even
actions on the economy, we shall
though an appropriation is passed
Weekly Firm Changes
is

- ■

is

This

The consolidated cash budget is
also

pro¬

Ojibtvay for

control.

budget.

who

afford

cannot

lic would also afford

of

was

by taxation. It has the great ad¬ important purpose, and the con-;
vantage over taxation in that it ventional budget is an important

month.

level

more,

created and has been*
improved as an instrument of ad¬

share this year, therefore,

high
anticipated.

where

are

The "conventional

budget

it,
as
taxation
might, the direct costs of recon¬
71.0%, or more than ten points struction of productive plants. The
lower than in the corresponding
sale of savings bonds to the pub¬

sustained

people

accrual basis where this is<

an

convenient.

ings bonds to the public picks uo
purchasing
power
that
would

1946. In August, 1947 alone the
operating ratio had been cut to

1946

the

and

other financial controls

Aside from the benefits of prop¬ for making people aware of their
it is
a share. T
\
: ..
generally expected that the stock erty rehabilitation, the character personal
association
with
the
In 1945 and 1946 there were no will go on a regular 5% basis in of the road has been changed ma¬ overall
program of world recon¬
earnings reported available for 1948.
terially in recent years by the struction.
the preferred stock, This lack of
In principle, I think it can be
During
the
trusteeship
just expansion in steel mill facilities
earning power in the past two ended The Denver & Rio Grande in the Provo-Geneva area of Utah. said that we shall be on sounder
The
Government's
years was due largely to special,
plants § have ground if all our international
Western property was practically
been purchased by a subsidiary of commitments that are directed to
nop-recurring, charges, In 1945
there were the charges for accel- rebuilt. Heavy rail has been in- United States Steel Corp. and a
the reconstruction of world
a

26)

page

difference
which
government savings bonds to the made
little
public. The sale of these govern¬ budget was being referred to, but
ment savings bonds should be by today it is necessary to distin¬
nationwide
intensive
campaigns guish between them and to use
associated with care and restraint them correctly for the purpose to
in consumption. From the figures which each is adapted.

tain transactions between the gov-,

traffic sources
for the company, making it pos¬
sible to compete nipre aggressively
for
through freight.
Also, the
property
improvements
should
vastly improve the basic operat¬
ing efficiency of the road. It is
notable that the operating ratio
for the first eight months of the
current
year
dropped to 78.1%
and

Debt, the Budget and Taxes

property terials other than for relief and ernment
agencies; it excludes cer¬
equipment food—seem to be in the order of

of

has opened up new

val

The

1.

the

&

Co.

ceased

the

of

late

Alfred

S.

Klauber in Lober Brothers & Co.

the

of

MacDonald,

an

late

relief
turn

leave

and

to

special

these two

reconstruction

general

more

tion of

September 30.

Interest

us

items—national defense and world

September 30.

ceased

Let

—

and

considera¬

taxes, the budget, and the

If

budget

that

consolidated

cash

objective is a
is balanced in the

our

economic sense, then it is the con¬
solidated'cash
budget that we
want

to

balance.

As

a

matter of

less, since being an administrative
budget, it can be balanced at any
time by definition, by inclusions
or

exclusions.
The

consolidated

becomes

debt.

Harold P.

Taxes, the budget, and the debt
Exchange member, include the principal subject mat¬

in Blair S. Williams &

the

budget.

fact, balancing the administrative,
conventional budget is meaning¬

Budget

Taxes and

George E.

late

Beer

of
in

Interest

sC

October

to

look

Co., ceased ter with which national fiscal pol¬

of

cash

special

budget
importance

since it is the budget which should
be used in setting rates of taxa¬
tion.

So

far

this has

been

never

icy must deal; and in many ways done; but now, with budgets and
taxes at their present levels, we
they are the key to our own con¬
cannot afford the unneeded sur¬
To Be Brand, Grumet & Co. tinuing prosperity and to the pos¬
or
the concealed ? deficit,
sibilities of world reconstruction. plus
Effective November 1, the firm But
let
us
not
overrate
the either of which may be invisible
September 30.

CniCAGO

TWIN CITIES

•

Though only
has

already

•

MONTANA

•

WASHINGTON

few weeks old, the Olympian Hiawatha

a

acclaim

won

as

the Queen of the Hiawatha fleet.

of fiscal policy nor look to on the face of the conventional
The Tax Bill of 1948
policy as a panacea. Good budget.
break new ground,« and
members of the New York Stock fiscal policy can support sound should
Exchange,
will be changed to efforts; bad fiscal policy can re¬ should organize its rate structure
Brand, Grumet & Co. Harry Ross, strain and can destroy. These con¬ to the requirements of the con¬
siderations are sufficent to justify solidated cash budget.
By doing
Sidney Lyon, and Irving Ross will
high concern with fiscal policy, so, we shall find that both debt

name

55
twin cities

TWO

A

DAY •

CHICAGO

•

LA CROSSE

ST. PAUL

o

EACH

NORTH WOODS

WAY

THE

MILWAUKEE
o

FISHERMAN'S

FRIEND

SERVING THE BEAUTIFUL

WINONA

UPPER WISCONSIN VALLEY

MINNEAPOLIS

MINOCQUA

•

J! MIDWEST /

CHICAGO

the

k

•

CORN

BELT

SIOUX CITY

partnership in the

October 31.

o

SIOUX FALLS

Guaranteed Stocks
Bonds

Special Securities

of the Speedliners

j

»'

•

*




change in size from prewar

25 Broad Street

New York 4, N. Y.

Telephone BOwling Green 9-6400
Teletype NY 1-1063

and

tax

reduction
..

^

are

:

^

.-..•'•'Taxes
Next, with respect to taxes, I am
able to present to you today

not
my

views

rates.

on

The

tax structure and tax

reason

is that the Com¬

predepression
days
raises
questions that were once aca¬

mittee for Economic Development

demic, but which have now be¬

ment

and

matters

of

vital

concern.

questions is, when
talk about THE federal budget,
of these

There

Chicago 6, 111,

Chicago, Milwaukee, St. Paul and Pacific Railroad

u

size, amounting to between 15 and
The

20% of the national income.
mere

reduction

possible.

which budget do we mean?

CUARANTEED RAILROAD STOCKS-BONDS
i"

with taxes, and

with the debt.

we

708 Union Station,

_•/

with the budget,

One
F. N. Hicks, Passenger Traffic Manager
The Milwaukee Road

••

fiscal

come

1

road

Speedway

powers

First, the federal budget. We
have today a budget of enormous

CEDAR RAPIDS

DES MOINES • OMAHA
^

milwaukee/
^

THE

on

New

WOODRUFF

mmvatm
THRU

withdraw from

firm

& Ross,
York City,

of Brand, Grumet

Broadway,

are

both in good

two federal

budgets,

standing. One budg¬

et, the more familiar, is the con¬
ventional budget; the other is the
consolidated
federal

cash budget.

budgets

were

When
smaller, it

will

shortly issue a Policy State¬
on taxation, and I have been
working with others on this State¬
ment

for

several

months.

this report is released, I

When

am

sure

will find it of great interest.
This much, however, I can say

you

because
the

it is

no

secret—taxes

in

1948 can and should be
substantially reduced. Priority in
tax reduction should be given to
year

several measures of tax reform,

Volume 166

the

aggregate of which will still

leave

billions for general tax

some

reduction.
There

is

well

some

informed

opinion to the effect that
reduction should be
until

after

contemplated

have

we

tax

no

seen

abatement of present

some

inflationary

However, it is apparent
that the pressure toward
higher
prices centers in and stems from

pressures.

the food
effect

situation; with its-direct
living costs and through

on

Wages

the costs of production.

on

THE

Number 4636

COMMERCIAL

debt management.
hundred and fifty

A debt of two
billion dollars
has to be managed in one way or
another, and decisions have to be
made several times a year that

I

not

am

tion

action

must

conserva¬

be

also

con¬

within

rid

of

these
questions by
them, and' sooner or
people
will
be
making
speeches on this phase of the mat¬

snubbing

ter,

today is in a more general
aspect of the subject; namely, in

to

and

and

series

a

price

rises

by mass starvation
shortage of food caused by

a

failures.

crop

of

off

It therefore

seems

My

interest

in

debt

manage¬

ment

possibilities of debt manage¬
as
a
tool of fiscal policy,
affording perhaps a new instru¬
ment

ment to maintain

a high level of
employment. "
The possibilities of debt man¬

appropriate to think in terms of

merely

agement

at

arise first from the

the
>

factors in

If

—

debt

chronic

with

our

these

taxes, the budget,
are
no
longer

—

annoyances

community

re¬

economic life.

tools

of

fiscal

policy

well managed, they will con¬
tribute much to the prevention of
are

government interference in the
specific decisions of businesses
and

private individuals. For the

consequences

of

action

at

the

level of fiscal policy are general,

impersonal; and appropriate to the

a

may

then

be

taken mitted to

preserve,

•:

general frame of refer¬

ence, a frame of reference estab¬
lished in the public interest and
not distorted

Fisher Hawes Forms Own

Investment Coimpany

by private greed nor

destroyed by the blind whirlwinds
of economic collapse.

KNOXVILLE,

TENN.

—

Fisher

Hawes has formed Fisher Hawes

The^instruments of fiscal policy &
Co., Inc., with offices in the
give us our best hope that we can Hamilton Bank
Building to en¬
preserve our economic freedoms:
gage In the securities business.
to buy and to sell; to borrow and
Mr. Hawes was formerly Man¬
to invest; to move from place to
ager of the municipal department
place; to employ and to be em¬
in Knoxville office of J. C. Brad¬
ployed; and to receive for our own
ford
Company,
private
use
wages,
rents,
and
profits as a reward for skill in the
_

application of

our

efforts in sup¬

X C. White Go* Opens

plying what others need. To make
sure

that these powerful tools

,

|

WALLACE,

of

fiscal policy are managed in the

White will

public interest, we must find in
the democratic processes of our
government the organizational ar¬

J, C.

IDAHO —/. J.
C.
engage in a securities

business under the firm
White

Co.

Cedar Street.

r '

of

name

from offices on
'

': v'

^L

;

productive

tax program for 1948 that would
produce only an ordinary surplus

the

associated

the

check

the

sponsibility for common activities.
On the contrary, they have now
so.*, developed that they are prime

tinued. throughout 1948. Monetary
policy, or credit policy, or fiscal
policy cannot be depended upon
touched

throughout

35

development of the economy as a rangements that will protect the
The individual's specific economic freedoms we are com¬

of

conditions

(1439)

whole.

decisions

who should get it; and, above all,
who should decide. But we do not

get

throughout 1948, direct

employment in
the
They can also be

States.

used to assist in the establishment

going to discuss those
phases of debt management that
involve the horrid questions of
what the interest rate should be;

later

continues

United

CHRONICLE

fiscal policy

the

problem

productive

FINANCIAL

world that will be conducive to
are
based on more or less clear a just and durable peace.
True,
principles and on more or less ex¬ fiscal policy cannot be looked to
as
a
plicit objectives.
panacea.
But the tools of

The food problem must be met by
direct conservation action now. If
food

&

a

high

Such

levels
tax

a

of

employment.

our

will permit

the debt and second from its

One

tax

reform

immediately and

without waiting for an over-all
general tax program. That meas¬
is to permit income
splitting
toy families for purposes of fed¬

small, the possibilities and

but

those

the

debt

in

the

are

composition

debt; that is to

order to give
equality of tax treatment with the
states that have community
prop¬

the

be

This

passed at

spread

of

the

reform

once

that

so

institution

of

the national
debt is in no sense a homogeneous
global aggregate. Through the ap¬
plication of surpluses and through
the terms of

retirement

from state to state

of debt from

force

the

material but

on

It is unsound

separate

adopt

property

would

not

states

legislation

to

they

have otherwise passed

another

the

tax discrimination.

splitting

by

families

should not be considered
of tax reduction.

a

It is

meas¬

simply

to the broad principle
equality of treatment as be¬

tween taxpayers of the same class.

Besides,
ment

if

the

does

not

federal
act

govern¬

promptly, the

the

I

kind

of

//

the

on

purchasing

a

"Union Pacific West

maintenance

have

four

said

there

least

at

are

distinguishable kinds of pub¬

lic debt. Let

me

them.

name

First, there is the debt in

response

of

classification to

consequences

Debt management is
corollary of tax policy
of high em¬
ployment at stable price levels.'
in

a

RAIL!

in the

each

public.

sure

ure

BY

transference

remaining in the hands of

power

therefore

the irresistible pres¬
of avoiding federal income

the

one

and

from

sums

or

has

amount

except for

Income

GETS THERE

Facts Favor Your Future

refunding issues, the

classification

irrelevant grounds.

say,

of

community property is not forced

to

FREIGHT

of

generally ignored.

eral income tax, in

provisions.

YOUR

neces¬

The national debt consists of at
least four distingushable kinds of

Should

•

sities of debt management would
be negligible. The implications in
the size of the debt are
obvious,

ure

erty

WIND, RAIN, SNOW OR HAIL

were

of

measure

i/
IN

com¬

plex composition. If the debt

ture and substantial reductions in
current rates.

should be made

tool of fiscal policy
sheer size of

a

present struc¬

program

tooth reforms in

as

hands of
could

American

perhaps divide this classi¬

fication

in

terms

of

maturity, and get

amount

and

significant

some

states will take matters into their

differences.

hands; and the revenues now
being unequally collected by the

Second, there is the debt in the
hands of savings banks, insurance
companies, and other institutional

*]
Industry J
to

the

private individuals. We

own

federal

will

government

be

lost

Third, there is the debt in the
hands of the commercial banks.

t

National

The

And
Just

last,

the

Debt

national

budget and taxes has raised
and

unfamiliar

the

size

creates

of

have

we

the

new

also

so

national

had

little

preparation.
Much thought and much experi¬
will

ence

have

can
we

needed

before

we

debt policy in which
have full confidence.

can

I

be
a

think

we

can

be

by

reasonably

certain that the easy answers are

probably wrong—for example, that
no importance be¬
we

owe

it to ourselves.

haven't heard that

one

since

We
the

debt passed its first hundred bil¬

lion, but it never
practical sense.
Then

that

there

we

was

the

is

true in any

proposition

must retire

fixed per¬

a

Federal
trust

Reserve

funds,

and

It

is

is retired,

what kind in¬
what kind redistributed

creased,

times of refunding operations.
Accordingly, the simple demand
at

that debt be retired for the
sake of retirement is
and

is

guide

no

mere

meaningless

whatsoever

for

policy.
During the
the sale

of

war

we

knew that

bonds to

war

private
individuals,
particularly
those
with small and moderate incomes,
was

alternative to taxation

an

area

factories, warehouses and dis¬

as

a means of
withdrawing purchas¬
ing power from the hands of the
people. We knew that sales of

centage

bonds

the credit of the Federal govern¬

Union Pacific
the

western

on

served

by

a

wide margin. Result

—greater interest in the West

the

leading to permanent residence

right-of-way in

states

V':

show

vacationists favor the western

com¬

have located

tribution facilities
a

great deal of difference what kind
of debt

concerns

other

that it makes

apparent

mercial

Fact 3. Travel surveys

day, hun¬

dreds of industrial and

held

Banks,

Federal agencies.

the debt is of
cause

the

Federal

debt

situation for which

new

a

problems,

Fourth, there is the debt

debt.

the high new level of the

as

Fact 1. Since V-J

investors.

anyway.

•

by

•

.

growing markets,

manpower

more

for industry.

the railroad.

Fact 2. This
rich in

raw

resources,

workers

.

vast

Fact 4. Over its

territory is

materials, natural

Middle

skilled and unskilled
.

.

with ideal

plenty of

space

Pacific

living

for future

Route,uniting the East

with the West

conditions, good schools, and

rail

strategic

Coast, Union

provides unexcelled

transportation.

ex¬

pansion.

had different effects. But in spite
of the fact that we made these

or fixed amount of the
debt each year if we are to keep

ment

good,

these

retirements to

be made regardless of the state
of employment and national in¬
come. This proposition flows un¬

the

to

commercial

banks

distinctions in wartime, we do not
seem
to have carried a parallel
conception over to the long-term

problem of managing

thinkingly
from
analogy
with
prudent handling of private bor¬
rowings. It is as if to say, "Now
what would I do if I owed

debt

a

be

$250 bil¬

Specific -

lion dollar debt.

some¬

I

hasten

invent

to

the

that I did not

say

four

classifications

distinguished above,

nor

of

did

body two hundred and fifty bil¬

I

lion dollars?" The fixed debt

Union Pacific will gladly furnish confidential
information regarding available industrial
having trackage facilities in the territory

bilities, for good and evil, in debt

re¬

create

the

problems and possi¬

tirement policy has a resoectable

management.

following
which
I
believe
is
rapidly diminishing as the impli¬

of

management exist. These

cations of such

creations of the

a

policy

are

better

understood.
The

big

size

those

that

that

are

questions

new

ciated with

debt

a

asso¬

national debt of the

ours

has

relate

to

become

are

the

present
The

The

exist,

the

tools

classifications

problems
are

facts

of put

fiscal

policy

powerful instruments that

can

UNION

PACIFIC




of

used

to

Address

Industrial

Dept.,

Union
' Tj

maintain

a

RAILRO Alt

are

be
.

policies

serves.

not

situation.

of

it

Pacific Railroad, Omaha 2, ISebr

ol

imagination; they

stubborn

fiscal

sites

high level of

7J<e

yfrafeffc/MdiSk

•>

<

"36

THE

(1440)
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COMMERCIAL
j

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&
' ' ' *

FINANCIAL
i"

CHRONICLE

'

"

itures should be made to conform t should be given to the particular;
to J the ^pre-deterrriihed. level/(it I heeds bf Overy segment of bur

International and Domestic Economic Problems
their share.

'Would: engulf them.

securities to the

•carry

not, at this time let
forts

I

but

freedom

land

a

as

with the means that
can make possible the translation
of the dreams of millions of peo¬

ply

through

bank-held
There have
debt

the

liquidation

government

since

that

terest and

the

to

the

Fed¬

of

that may arise.
So long as the
public debt remains at high levels,

be¬

ginning of the war. The first was these powers should and must be
the period
in which vast sums exercised. They should be exer¬
were raised through the issuance' cised to permit so far as possible,;
Progress
of new securities to provide funds a degree of freedom in the money
./|:?fln our own country there are for war purposes. The second markets., and in. the investment
some, who prbfess to see acroSs the
However,
the
major
phase began with the end of the markets.
ple into reality.

Y'Y,."

Threats to Our Economic

horizon

indications

of

trouble

consideration must be the effect of

ahead in pur own economic prog¬

such management on the economy

Victory Drive, which resulted in
large Treasury balances in the
against banks. These balances were used
kuch trouble is to recognize these
largely to retire bank-held gov¬
• threats and to take
timely action. ernment debt. We are now in the
The

ress.

best

In

public.

providing the

meet those

spite

forts

of

revenues

requirements.

,

the

continuing ef¬
made to reduce the

insurance

of the nation

as

a

whole.

The basic factors in

show that

our

economy

support a high
level of production and consump¬

tion for

a

There is

we

can

substantial period ahead.
a

large backlog of

accu-

j: mulated individual savings

|
\

and
corporate surplus, an unsatisfied

Budgetary expenditures of the

operating

level,

achievement of
there

is

funds.

no

Debt

a

and,

with

Federal

the

lion

balanced budget,

need

for

for

fiscal

the

June 30, 1945,

additional

management

have

Government

been

reduced from more than

estimate

now

year

consists of reducing the total debt

of

to
$37

a

$100 bil¬
year ending

current budget
billion for the

ending June 30,

1948.

This

two-thirds within a
through the use of a budget sur¬
plus, and the transfer of the debt three-year period. Most of the re¬
| tinues a dynamic growth of our through the sale of securities to duction was in items for war pur¬
| productive economy. We have dis- non-bank holders, including trust poses. Of the present budget of
jj covered secrets of production dur- funds of government, and using $37 billion of expenditures, about
> the
war
period through the in¬ the proceeds to further reduce the three-fourths of the total are for
genuity of our workers and the bank-held debt. During the period purposes related directly to war,
wider use of mechanical power from
the effects of war, or efforts to
February, 1946, to date, in
|; that astonished us and seemed a which the gross outstanding debt prevent a future war. This leaves
| miracle to the rest of the world. was reduced 21 billions of dollars, 26% of the current budget for all
Our large
purchasing power is the bank-held debt, during the government programs, of which
8
widely distributed among the peo- same period, was reduced $24 bil¬ the share of general government
i; pie. Demands for our products lions, the difference resulting is only 4%. The President has
i multiply throughout the world from the shift of
been most vigorous in his efforts
ownership.
to reduce budget expenditures. In
j and the continued flow of trade is
I need not say to bankers that
5 essential for them and most imthe current budget, he made a re¬
the policies pursued in debt man¬
£ portant for us,
duction of $5.5 billion from the
agement have an important ef¬
1 ! If failure comes, it will be fect upon the entire financial estimates submitted to him by the
various departments.
I through our failure to properly
As part of
community, including the 'money
the readjustment plan, the Presi¬
harness and direct the forces that markets, bank earnings, returns
dent not only recommended recion long-term investments, as well
make it
possible to stabilize a
sion of $65 billion of appropria¬
as pn the pockets of the taxpayers.
high national income for years, to
tions, but set limitations which
All of these are important

demand

for

that

goods

will

is

re-

a

cut

of

f quire years to fill, and there con-

'

con¬

:

come.

of

? race
/our

It may also come from the
the

various

economy

to

segments

secure

f share of the fruits of

our

tion through trying to

llfeYK/Y;

'

V :

i. •?i

.

'

a

of

amount

of

this

debt

i

matter

comes

a

would

seem

to

of judgment.
me

proper

to

It
use

relatively simple formula: That
a high level of income,
and particularly in times of infla¬
tionary
pressures,
larger
pay¬
a

in times of

ments should be made

Under

on

the debt.

adverse

conditions, little,
if any, can be paid.
Whatever
government income
there may be above budgetary re¬
quirements and proper applica¬
tion to reduce the debt, the excess
should be used for tax reduction.
the

For

It is generally

recognized

that the existing tax
structure was designed to finance
the war to the largest extent pos¬
sible out of current income.
its major

as

of

tion

maximum

reflection

no

on

to achieve

sued

It has

objective the produc¬
revenue.

the

policies

It

is

pur¬

that objective

to
recognize that certain other con¬
siderations were of less impor¬

that

were

in

the

There

programs

are

times and conditions

under which government expend¬

public interest,

bankers must accept
responsibility for the
policies they pursue. The bankers
have a definite obligation in ex¬
Nov.

1, the

serious

the

ercising their powers to create de¬
posits, to examine carefully the
effect of all loans on our current

equities have crept into

v
(

banks

economy.

monetary
system,
to
create
re¬

our

able

are

through; the

serves

of gov¬

sale

ernment securities to Federal Re¬
serve

Through the use of

banks.

private
credits
multiplied
seven-fold.
This power of multiplication of
credit imposes a serious respon¬
sibility upon the banks in terms
of the uses for which such credits
such

reserves,

be

may

made;

are

The result has been that in¬

tance.

our present tax structure are illdesigned for peacetime conditions
and objectives.

management

rapid increase of such loans adds
inflationary pressure to the spend¬
ing stream. With the termination
of controls on consumer credits on

Under

by Congress.

debt,

is

national

tax structure.

consumer

proportion to national in¬
well within bounds, the

loans in
come

of

volume

the

While

committees

our

pur¬

create no productivity and
merely add to the volume of de¬
posits. Consumer loans promptly
flow into the spending stream.
poses

appropriate

the

and

for speculative

made

loans

of Congress have had under study

year

laws and

in

:

important

The bankers have an

and longer,
Department

past

the

ly below the appropriations made

been

:;

Responsibilities

Bankers'

.

Treasury

both

weighed.

larger fully cooperative with government

produc¬
put-the

retirement should be will vary
under different conditions and be¬

reduced expenditures substantial¬

have

general welfare.

part in dealing with the problems
fense, veterans and interest on the I have discussed. Their actions
public debt.
and attitudes will have a direct
This leads to a consideration of effect
in
finding
the
correct
taxes.
Any tax program must answers.
..7/y/
start from the budgetary require¬
On the inflationary front, the
ments; of government. Assuming banks have a potent instrument
a
balanced budget, the cost Of
in the creation of loans. ; Bank
government
must
be' provided
deposits have increased from the
through current taxes. The second
prewar level almost proportion¬
consideration is a surplus to be
ately to the increase in national
used to retire the public debt.
income. Further increases through

siderations and must be constantly

Bankers

'quired in such ways that the ^ re¬
sults will be in the best interest

remain

What, the

third phase, in which government
balances are kept at peacetime

load; the controlling objective

must be to raise the revenue re-*

of

•

Budgetary Expenditures

the

being
of our national economy as a
government, the budget whole. In achieving that objective,
relatively high in self-interest must give way to

cost

will

System, with their high
terms of prewar budgets. An out¬
of cooperation;; not only
lay, of $23 billion, or nearly twohave, the essential powers but the
thirds of the total budget, is now
machinery and the know-how for
required for the three items of
the
sound
management of the
expenditures
for
national
de¬
public debt under any conditions

debt.

the

convinced

both

'

in¬

degree

been three phases of

management

am

of

ef¬

Reserve

,

for

more

our

eral Government and the Federal

,

people

distribute

debt into the hands of the

.

and

to

in

up

economy

affairs, we are con¬ fax;
fronted With the practical hecesf' and

lower

.

tion

and to the effect of every
as to rate and structure;
every effort made to achieve
require¬ the hiost; equitable distribution of

fthe* present "state

world

of

public;:and even
including policies that resulted in sity of measuring the
bank earnings/ We must ments in terms of the national

They still
In achieving a sound, continu¬
the torch of freedom:in the
"oface of cyclonic winds that would ing economy, the financial poli¬
Extinguish the light forever. Their cies of government will play an
"/bodies are wracked under the important part. In particular, this
i heels of
tyrannic despotism/ but: means the management of the
their spirits do not yield. They publip debt/the size and character
••lift their eyes to the'hills from of the government. budget, and
3 whence cometh help, if help is to the policy
taxation followed.
^be had.
Throughout the world,
The policy of debt management
/America stands today not only as has been specifically directed to¬
a symbol of hope and the inspira¬
ward a reduction in money sup¬
•

revenue/ but in

highest possible price tickets oh including the sale of government

(Continued from page 29)

Thursday, October 9, 1947

some

our

tax

of the burdens of

The Secretary of the Treasury,

testifying before the Committee
on Ways and Means of the House
of
Representatives on May 19,

ers

responsibility of bank¬
preserving

third

A

is in the interest of

our

private enterprise system. We-

must

confine

not

efforts

our

in

this direction merely to lip serv¬
ice.

that the
enterprise, system
which

We should recognize

kind of private

that will survive is one in

there is

free

a

play of competition

that will restrain both prices and.

1947, said: "I should like to repeat

profits. In a period of shortage of
conviction that at this goods, heavy demand, and a plen¬
have a unique oppor¬
tiful supply of dollars, competi¬
tunity to modernize the Federal tive factors have not had free
tax system. We are nearing lower
play. In some cases the facilities
peacetime levels of government to produce actually become a tem¬
expenditure and continuing high porary
monopoly. The result has
levels of national income and pro¬
been
higher prices and higher
duction.
A period of tax reduc¬
profits than would be possible
tion
is
approaching."
He con¬ under free
competition and a full
cluded his presentation by saying:
supply of goods. The banks them¬
"The
development of a
sound selves have been largely free from
postwar tax system constitutes excessive
prices and
the hire
one
of the most important steps
of the dollar remains the lowest
my

firm

time

we

toward

International Shoe Co.




the

assurance

of continu¬

ing prosperity in this country. If
production is to continue to in¬
crease, if the American standard
of

living is to improve in the fu¬
as it has in the past, the tax

wage

in

bankers

but the
important
restraining those who
economy,

our

have

can

influence in

place their

own

an

immediate profit

above the national good.

ture

system must yield the needed rev¬
without

enue

ST. LOUIS, MO.

and

impeding

business

work incentives, without re¬

stricting investment and without
weakening consumer markets."

%

On

many

laws that shall constitute

a peace¬

for America is

by no means an easy one, nor will
it be possible to find full agree¬
ment everywhere on any tax revi¬
sion
program.
The problem is

largely an economic one
and
judgment must be applied in the
determination of probable eco¬
nomic effects, not only of vary¬
r

;

«,•

r>i
a

-i\?

■

vl

ing rate schedules but in the many
fields of taxation. It is in these
fields of judgment that differences
of opinion will arise.
H
/ The objective of tax revision ;is
clear.

While

every

consideration

//"; ' Y
u

I

have

trends toward state
socialism in this country and have,

pointed

out

warned bankers that if the nation

should be propelled in that direc¬
tion^ we might find the banking
system among the first.targets.'il

The application of these sound
principles of taxation to basic tax have how
time tax program

\ occasions

come

to the

GpnfjLqsionu

that this will not, of necessity, be
the case. So long as our dtial'sys¬
tem/ of chartered banks reih&ihs

strong and continues to. performthe^Mgh) degree of. public ffiyiver
that

the

commands

and respect of the

ple/so long
tional

as

confidence

Americ^h'peo¬

bankers place-ha*

welfare

abo veZ* private

profit} so long as our banking .sys¬
tem consists of tjhqusands pif units-

scattered/
nqt

Ira ted in
mg

across

allowed
a

to

th^

.

land; .aha
concent

become

'few large branch

tank-

systems or holding company

THE

Number 4636

Volume 166

COMMERCIAL
.

&

FINANCIAL

CHRONICLE

circles that

systems, - so long as the bankers
'themselves fulfill the responsibil¬

Our

tions of trust require of them, so

banking in this country

can

the

escape

designs

would ^ socialize
economy.'

■

t

of

any who
American

our

'

*

.

;/.

•«

j

.

{ The crowning-responsibility of
the- bankers; as bf ^everyone" else,

-

is $0 participate in

government.

-This

democratic -govetrimeht of
which' X'speakTs not merely- made

"

of a legislative, judicial,

-up
:

administrative

and

Reporte r

driver's

Qpeq^lma^feet

Generally the authorities varemat ton active in the

for

pointed

meetings of the various committees and

what our

short-term

of

-ably is that hei snot,ibut that he
,merely one of l40 million peojrie who, through the prOcesses of
goverriment, has been handed cer-

groups

a

of:

Congress-and a
on the bench; so are you
and;every other citizen i of this
nation; Of course, all have dif¬

*j udge

ferent assignments and different
duties to perform, but every one
of Us,, under the democratic con¬

of

vidual

the rights of the indi¬
also has our own indi¬
responsibilities
and
is

equally

a

cept

vidual,

call

part

of this

democratic
the

In

face

thing

we

low

all of

of

the

diffi¬

culties of this complex society in
which we find ourselves and of
the

desperation

which

much

conflicts

and

of

the

world

in

finds

should

-

•. -

...

is; expected

to y pick

up,

as: inveslors onake ♦ more adjustments? 1ni

holdings.

i

Ginsburg Quits SEC
;

.

.

.

some

^

.

•

.

On

•

-

•-

the

other

hand,

...

it

generally

are

more

indicated

is

in

may

attractive than the

not be

new

as

large

liquidation

as

member

of

the

New

York

T

reaffirm

faith

rr>v

.

.

,

in

to be the

seem

.

.

j, ; Young in Seattle

of the

and

men

on

and

and

Although

,

the SEC in 1941.

.

engage in a securities
business from offices at 9005 Crir-

keek

k f:

Drive.f

i-'SM

fear of this
■<!

.

.

SCARCITY FACTOR

Bank-eligible issues appear to have plenty of friends despite the
feeling that the.y are not likely to go against the market trend.
Periods of price weakness will therefore be utilized to build up po¬
.

.

.

The scarcity
factor, together with the refunding policy of the authorities, is the
to the demand for bank bonds.
Corporate bonds, despite
the higher yields that are appearing are not likely to influence the
eligible obligations very much, because of the longer maturities of
the non-government issues, and the limited marketability.
Likeanswer

.

.

.

.

.

Underwriter and Distributor

.

.

.

Investment Bonds and Stocks

.

th«

of America

women

.

.

vision

their zeal and devotion to

v

f

•
,

The

DIFFERENTIAL

NARROW

M
»

.

downward

in

movement

corporate bond prices, which has
very pronounced recently, especially in new issues, will un¬
doubtedly make for greater confusion in the non-Treasury market,
because of the adjustments that must be made between the various
been

the

cause

of

ourselves

freedom, not only for

but

to

the

uttermost

parts of the earth.

ratings to bring these issues in line with each other.
not

Homer Vilas Named for
PITTSBURH,

widening
to

A.

tions.

&

n

o

m

for

i

at

n

the

e

d

presi¬

dency

of

the

Association of

|; Stock
ch

Ex¬

a

n

g

Firms,

it

.

AAA's

.

can¬

will

.

.

the .defensive until returns have been

on

have

..

v

conditions

the

in

influence

some

bond

corporate

upon

government

.

LTnited

e

'e d

\w

O

c

he

c

n

t.:

G

States

Municipal

Government

and Revenue

Securities

Securities

market

security

reached that will allow the non-government obligations to com¬

investment merit.

~

first

...

It is held in well-informed money market

Industrial
☆-

;

Public Utility

•

Railroad

Bonds and Stocks

-

the

I'r Association
the

>

directly with Treasuries from the standpoint of real

more

6

o v

of

ernors

State'

.

prices, it is quite likely to be psychological until yields have been

pete

.

will

bonds

reflect the investment grading of these obliga¬

uncertain

naturally

corporate

was

an n ounc,

will

;

While

Sons, New York, has been

.

.

few basis points under those

a

differentials between

...

^ilas, partner of Cyrus J. Law¬
rence

of yield

keep that market

reached which

PA. —Homer

just

are

AA's, because this difference in risk must be compensated for.

The
tend

Pres. of Exch. Firms
;

for

long sell at yields that

at

SPECIALISTS

—

IN

—

Canadian and

ses¬

Foreign Bonds

sion of their
Fall

\

,

'

Homer A. Vilas

Board's

Bank and Insurance Stocks

United States Government

week received

the

the

meeting

being, held
here
this
report

Committee

to

of

Securities

nomi¬

nate officers for the year 1948. Mr.

Vilas will succeed James F. Burns,

Jr., partner of Harris, Upham &
Co., New York, on Nov. 17 next
following the Annual Meeting.
John

Witter,

;

partner

of

nominated to

President;

jpasiner,
;ydrk, i

serve

George

as

Dean

State and

tantamount

Stokes, Jr., partner

C. J. DEVINE

as

These nominations are
to

election

i

inasmuch

48 Wall

the Board of Governors of the
7v '

{

1 l

''<**

."v, f/i

'^'v

terms of
only ^ of the 33: members of the
Board

Chicago

•'

jserye; one year and; the;

CO.

&

New York

INC.

Offices in

principal <

HAnover 2-2727

Street, New York 5

.

-

«•

••

•*

•

,

Boston

Philadelphia

•

'<
v

Cincinnati

•

v..

•* -

•St. Louis

••

•

Pittsburgh
■■■'

•

•

-

<:

•

San Francisco

expire at the time of the
"rr

Annual Meeting in November;




Pittsburgh

Chicago
f

Philadelphia San Francisco Cleveland Washington \

Private
w,re

cities

Cleveland

•

/,/

Boston

1

Hartford

Association selects the officers to
•

Prices

Second Vice-President,

Tf^^rer,

r

at Net

☆

Kantzler,

;JStokes, Hoyt & Co.; New York

4,J

Municipal Bonds

First Vice-

R.

Trading Markets

in the above Securities

E; F. Hutton & Co., New

as

and Walter W.

as

We maintain

☆

Witter & Co., San Francisco, was

Ie]

Young will

in the past, because it is believed that the bottom

of the barrel is not too far away.

CORPORATE

i

f| [

WASH;-^essie

*

.

capacity

:

mi

SEATTLE;

Ginsburg; joined the legal staff of

issue will give

same

.

and

courage

.a

Stock

Exchange drom 1922, to 1942." "T "

Philadelphia Gas Coriomlssiori. Mr;

as

outstanding

the powers that be could sell marketable issues in order to keep

-prices in tow, there does not

Mr. iClark had been

age of 64.

Thomas C. Egan, Chairman of the

that

quarters

some

fillip to the market, especially the top bonds.

a

:f

Ray Clark, partner in Rich &
Clark, New York City, died at the

.

subscriptions to the non-marketable bond
issues

^'Ray JGIadk'Dead

<
.

Arnold R. Ginsburg, principal

1 wise the protected position of Treasury securities together with the
'
! increase in risk assets in bank portfolios, makes it imperative that a
principles on which this nation' substantial amount of funds be
-----kept in the highest quality obliga¬
was
built and on the vigor and tions, which are United States Government bonds.
itsplf

1i

■

1^ worth-while
wait arid try - to buy securities nedr the
trading aV^a; *; ^(Yplume^ whicjbr hjfs;been li^it;

ment in corporates

sitions in these securities, particularly by investors.

government.

.4

.

lower limits PL

few investorS have

pbligations' in- place

had been estimated, and this, along with the fact that

:is \ a' member

.

yielding government securities. ,
Uncertinty attorney in the solicitor's office of
degree by the foreign situation, the downward move¬ the
"Securities' and Exchange Comcoupled with "open mouth operations" has created
mission, has resigned arid ; will
a
feeling of caution among the quick turn operations in Treasury
issues.
'
--••••
practice Jaw. in association with
j
i
"
caused in

ls

^'■

.

bonds, arid the upward trend in yields, because
really ;; is;,4 I .;4opk been .taking on the
better-grade Inon-Treasury

srilf if the President iS. really !governrhent. The ;ansWer: unmistak-

"

7^

••

.

might bring
new developments'into the situation which could have an influence
for its failure.
Asanadminis- .upon prices of government securities.,. v./
,^
trator- working in Washington, I
For the present, more attention, is being, given to corporate

yacfossjthe^street ^fr^^rny ^bffic^ >.

" V

...

out that

have tried to * discover

j.

f

seat

-

Although banks must go along in order to protect
earnings- the
uptrend in loans has been very helpful to many of the
deposit insti¬
showing signs of strength seems tutions, some of which have shown a greater interest
lecently in
to have pulled in its horns somewhat, as traders and investors assume
selected near-term securities.
During periods of uncertainty
a waiting attitude because of the
conflicting feelings that appear to such as now, this: is a natural development.
While there isbstill
be coming in the picture.
Certain followers of the money markets need for higher income obligations, there is not the same
desirofto
seem to be quite bullish on the bank-eligibles, while others believe
*eaCh up and pay-fancy-prices as there was a short
time ago.tijj-.
the powers that be will resume their old role of market regulators,
The feeling that government
security prices will tend to move within
withvthe closing of the-books On the new offering.
trading ranges
; v.
responsible in some measure for- the belief .that it

-every

government,

corporate yield of 3.00% will have to'be
will be serious competition with Treasury

government market after

Merriment and

.

AAA

litigations:^^-;:-11

Governments

on

when they are retailing ah issue, which'some feel is the reason
the recent strength in Treasury securities...^.; It is also being

indiyidual;is a part of govresponsible for the
-success
of that
government or

37

By JOHN T. CHIPPENDALE, JR.

The

system.rIt. consists

>b£:t ree; frtehAnd;w6meri;^

a

reached before there

ities of; leadership that : their posi¬
long

(1441)

n

•

"SV

Buffalo

Providence

Springfield

■

system

38

THE

(1442)

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, October 9,1947

assets of Affiliated Fund includ¬

farmers

ment i

income

duce

shows

an

sets

Mutual Funds

fixed

ing the $8,000,000 bank loan now
approximates $35,250,000. On Oct.
31, 1946, Affiliated had gross as¬

people

of

approximately $25,000,000

price
imposed,
and
the
brought in as little pro¬
they possible could. This
increased
the scarcity, and
the
as

of

the

large

and net assets of $20,000,000.
The
ratio of its bank loan to gross as¬
sets

"The Survival of the
Of the 521 investment

companies of all types registered under the

SEC in 1940 (or later), 156 have
registration either voluntarily or "by

"withdrawn" from
Presumably the vast ma-^

already

jority of this latter group has as¬ the writer indicates that only 35
sets of less than $1,000,000 each have assets of $10,000,000 or more.
and obviously none of the open- As was pointed out in this, col¬
end mutual funds in this category umn last week,
a mutual fund

active
sponsorship - any
since annual registration
the SEC is a prerequisite to

enjoys
longer,
with

shares for

mutual fund

offering

in

funds

mutual

122

the

Of

,

group of funds under one spon¬
sor
with combined assets of less

or

than $10,000,000 appears to be an
economic step-child that may be
forced to shift for itself before at¬

sale.

registration

a

now

recent study of

taining maturity.
While every mutual
to

start from scratch

fund

at

one

had
time

another, in view of the in¬
creasing competition in the busi¬
ness and the growing number of
fiascoes among would-be sponsoror

AGRICULTURAL

distributors, this column suggests
that mutual fund investors

SHARES

of any sponsor as

ative
of

fore

Group Securities, inc.

check

the net assets under the control

on

well as the rel¬
offerings be¬

his

deciding to buy.

The

raison

basic

mutual

fund

follows:

as

of

merits

may

d'etre

of

be summed

a

up

"Through the pooling

of funds of thousands of small in¬

vestors, each
tain

the

can

same

management

Act

pany

Investment Company Act with the
order."

now

economically Ob¬

type of investment
as
the
man
of

the

mitted to borrow up
gross assets.

"The

i

Merchant's

Warning"

.

G eorge

yjearv record of

Putnam Fund of Boston;
old tale that has timely

an

implications.

"A

merchant,

so

pooled, it is virtually im¬
possible to provide them with the
investment management they ex¬
pected and to which they are en¬

a
;

prospectus

on

from your investment

Distributors
63 Wall

request

dealer

or

Group, Incorporated

titled.
where

Street, New York 5, N. Y.

There
size

are

is

few

businesses

important to
assure
permanent and able man¬
agement. When contemplating the
purchase of shares in a small mu¬
tual fund, "Caveat emptor" is a
good motto to remember.
more

Abbott's Affiliated Fund

took down another $1,000,000 un¬

m

der

total

'

Prospectus
your

upon

investment dealer,

National
research
120

request from,
or

The

from

securities

'••••;

&

2%

its

loan

agreement,

bringing

bank loans up
money

per

vested

to $8,000,000.
is being borrowed at

annum

in

is being in¬

and

common

stocks.

Gross

154

Years

The

Later

"These

Things Seemed Impor¬
tant" published by Selected In¬
vestments Company of Chicago,
how

on

history

is

re¬

the

The growers with¬

growers.

their

hold

for

tables

the bureaucrats

own

report by the Paris Com¬

mittee

European Economic Co¬
operation estimates that the trad¬
ing deficit of the Western Euro¬
pean nations and their dependent
on

territories with the Western Hem¬

to about 15%

And

are

predicated

the

fullest

use

necessities."
conditions

signat"
first

A.

Prof.

B.

White,

1896, commenting on

in

Cornell,

in

France

inflation

result

of

of

the

in

"as-

the

"The

1793:

'Maximum'

(a

price control law) was that every
means

was

taken

to

evade

''

.

%

I

m
y>'^

United

INCORPORATED

Chicago

—

Los Angeles

to

reduce

tariff

increasing
amounts the products of Europear
industry. These estimates, too, are
predicated upon the "creation ol
internal
financial
stability"
throughout Western Europe and
substantial increases

tion the

ing

of

ways,
war
as

in the

foodstuffs,

coal

In addi¬

development of oil-refin¬

capacity

and

inland

water¬

and the restoration of

merchant fleets

are

pre¬

envisaged

integral parts of the programs

5 The

Lord, Abbett & Co.

States

rates and to receive in

production

pi
i'w

capacity of the Western European
nations; upon continued restric¬
tions on the consumption of food,
clothing and fuel; upon an ex¬
panding volume of world trade
and upon the willingness of the

electric power and steel.

upon request

W3&

the

upon

of the existing manpower, raw
material resources and productive

upon

m

Prospectus

New York

of the total.

Estimates of, the trading deficits

more

allow.

Fund, Inc.

Funds

production

taken as
a
whole, represent an expansion of out¬
put
similar
in
general
scale
to
that
achieved
by
the United States
in
the
mobilization years,

programs,

1940 to 1944.

Certificates of Participation in

as

sponsors,

i

:

Hugh

Long's
Manhattan
Bond Fund recently declared its
37th. dividend amounting to 14c
a

W.

share, of. which nine cents was

derived

income

investment

from

five

and

cents from

realized

se¬

1

4;

European

■■3

by the International Bank for Re¬
construction and Development and

hopes that $2.8 billion will be fi¬
nanced by a surplus in trade with
non-participating
nations
other
those

than

the American con¬

expectation and

the

and

hope materialize, a bal¬
$16.5 billion dollars re¬
mains to be financed directly by
of

ance

of

Governments

the

United

the

Canada and
American Republics.

Latin

the

States,

estimated size of the trad¬

The

ing deficit of the Western Euro¬

Western
part at¬
tributable to the lack of supplies
with the
is in large

nations

pean

Hemisphere

formerly available from Eastern
Europe, southeast Asia, and other
non-European sources. In conse¬
quence,
these nations need to
draw heavily upon the food, fuel
and

materials

raw

this

of

resources

Hemisphere.

The

!

prepared by the
Paris Committee, acting upon the
instigation of Secretary Marshall,
report

is now submitted to the American

people for their careful consider¬
ation

decision.

eventual

and

The

decision to be taken is most criti¬
cal for not

only will it determine
leadership to be ex¬
by the United States in

the degree of

ercised
world

affairs but it will also de¬

termine whether the economies of

Western
and

to

Europe

make

are

their

to

full

recover

contribu¬

tion to the welfare of the world.
In my own thinking I have as¬
sumed that the maximum amount
of

dollar

aid

required over the
would total about

next four years

$16 billion,

figure which corre¬
sponds to the estimate in the Paris
report of the trading deficit of
Western Europe with this country.
This

sum

tional

SHARES OF CAPITAL STOCK OF

on

tinent. If both the

loans

INVESTMENT FUNDS
investing tlieir capital

fund

leading New York
sponsor,, have turned very bullish
on stock prices in recent weeks.
a

Income
offering curity profits.

average

isphere will total $22.4 billion for
farm prod-:
the four-year period from 1948
ucts
in
Germany
as
follows:
Abqut $16 billion
"Farmers are compelled by laws, through 1951.
of the trading deficit is with the
carrying jail sentences, to deliver
United States and about $6 billion
certain portions of their produc¬
with
the rest of the American
tion to a market, where the prices
continent.
The estimated deficit
are
also
fixed.
The
prices, in;
declines each year, amounting in
marks of sorely depreciated pur¬
1948 to about 36%, and in 1951
chasing value, do not compensate

Affiliated

Custodian

National

current price fixing of

corporation

a

Using

mutual

as

....

.

broadway, new york 5, n. y.

ey stone

we

Reconstruction

they hold out produce so they can
baiter on the black market for

Borrows

Another Million

Lord,

Series.

well

American Interest in

than

Affiliated"

grape-vine

while
on a precarious journey to a dis¬
tant city, was joined one night at
his campfire
by two travelers.?
Introducing themselves :as Hard
Times and Fear, they explained
that they too, were journeying to
a distant
(Continued from page 19)
city—'It is our destiny
to
ruin
A series of projects are planned
20,000 merchants,'
ex¬ world stability and security over
plained Hard; Times. The .mer¬ a long period of time. In the long to exploit new sources of electric
chant traveler was horrified. Ad¬ run
direct
private investments power, to encourage the standard¬
dressing Hard Times Re queried, will make the maximum contribu¬ ization of mining and electrical
'Do you .not feel guilt rest beavily tion to
European recovery and re¬ supplies and to promote the pool¬
upon you at this evil thing?' Hard
construction with minimum ex¬ ing of freight cars and other types
Times smiled. 'I?
no,' he an¬ penditure, accompanied as they of transportation facilities.
swered.
'I shall ruin but a very
Of the trading deficit with the
are
by the managerial skill and
few who are deserving of it. My "know-how"
Western Hemisphere of $22.4 bil¬
of American busi¬
companion Fear will
ruin the ness.
lion, the Paris Committee expects
others.'"
that $3.1 billion will be financed
Cost of American Aid

peating itself with respect to the

are

the

tale of many years ago runs,

comments

ors

Through

a

only

However, if the funds of
few hundred small invest¬

prosperity of the farm¬
ers
through the purchase of its
"Agricultural Shares" on which a
new folder has been prepared.
"National Notes" No. 428 Issued
by National Securities & Research
Corporation, describes the seven

wealth."
a

the

Under the above caption, "The
Prudent Investor" issued by the
relates

Oddly enough the current return

Boston
on

current

is per¬
to 33%% of

issue

return of 6.1%.

is also 6.1%.
'

Distributors Group believes that

company

this

alone

average

understand that one of the largest

the investor should cash in

ago.

Biggest"

were

Notes:

amounts to 22V2% as
compared with 20% 11 months
Under the Investment Com¬

By HENRY HUNT

cities

put on an allowance."

prices and payments from invest¬

and

a

would include the dollar

extended
Bank

by

for

Development

the

Interna¬

Reconstruction
as

well

as

di-

IN

BONDS
k

(Series B1-B2-B3-B4)

PREFERRED STOCKS
(Series K1-K2)

PUTNAM

COMMON STOCKS
(Series S1-S2-S3-S4)

,

your

NVESTQRSj

§;, FUND"':;!

Prospectus from

local investment dealer or
*■

The Keystone Company
of Boston
50

Congress Street

Boston 9,

.Massachusetts




Prospectus
your

the

may

be obtained from

local investment dealer,

PARKER

Prospectus

upon

request

or

corporation

ONE COURT STREET. BOSTON 8, MASS.

HUGH W. LONG & CO.
iNCCRROBAtlO

48 WALL

STREET, NEW YORK 5. N Y

Putnam

Pund

Dletrtbutora,

50 8tate St.,

Boston

Inc.

Volume

166

Number 4636

THE

COMMERCIAL

rect

appropriations by the Ameri¬ the reserves to create that con¬
can Congress.
It would cover not fidence. ^
'I '
1
■?*
ifci ■ A
6nl# - immediate relief needs btrt'
Need for Constant Supervision
also recovery and reconstruction1
The prospect for a constructive
requirements.
4

■■

It would

improbable that
(at ex¬
isting price levels) would: exceed
$16 billion. It could be smaller, and
seem

the total dollar assistance;

successful

and

of

use

the

assist¬

granted will be greately en¬

ance

hanced

if the proposed
United
Corporation for European

of

&

currencies

to

FINANCIAL

realistic

CHRONICLE

levels.

(1443)

removed. No single step could

are

Currency stability will then be at¬
tuned, for in the last; analysis

contribute

currency stability rests' upon the
adoption of appropriate internal

strictions and import duties.

measures.

If

measures

are

the

so

much to recovery as

elimination

s

great free trade

appropriate internal
taken, the currency

of

all

area

trade

re¬

If

a

established, the nations of West¬
Europe would be enabled to

ern

tance of this
problem, the Paris
Committee in its report announced
that a customs union
study
was

to be

were

stabilization fund of 3 billion dol¬

effect the best utilization of their

lars proposed by the Paris Com¬
mittee ■} will not be tequired. If

natural

Reconstruction gives constant at¬

recovery was accelerated in West-'
erh Europe* Economic recovery

tention to the

appropriate internal

will be accelerated if the economies

necessary to make certain c that
the funds will be used In a way

closely integrated, If popula¬

are

tions, are willing; to work assidu-*

advanced.

most

of the monies

use

Constant

conducive

attention

is

to

recovery. In
the immediate future a consider¬

an

resources

and

to achieve

optimum division of labor. The

taken, t|ds fund will become
dissipated.
'•

all nations which subscribe to the

Trade Restrictions

principles *>f freer trade and, in*

: .'Therewill beriittle
ously :at;the task of reconstructiori
opportunity deed, of private competitive .en¬
and if monetary and credit and able. amount must unavoidably be
for economic
*
recover^ in Western terprise.
fiscal systems are put on a sound spent on foodstuffs. It is essential,
In recognition of the impor¬
basis. The cost of American aid can however, that the amount spent Europe unless trade restrictions

be held to

minimum if the credits

a

on

agricultural

as

well

as

set

its

up

first

which

group
would

report

within

three months of the time it was
convened. The French and Italian

Governments
that

have
.

being combined in such
to make

a

measures
■u

are

to be taken

(Continued

on

page

indus¬

trial rehabilitation increase

loans

and if 7 the

^dducta; pipped from

r

carried in American bottoms.
Impact

The

on

v

the American Economy

precise effect

on <our own

of the granting of addi¬

economy

tional aid and assistance to West¬

Europe^ coming to a possible
maximum total of $16 billion over

ern

is now being
by committees appointed
by the President and will depend

corporation

should

endeavor as one of its primary
objects to discourage inflationary
trends in Western Europe. Other¬
wise the financial assistance ex¬

tended by the United States will
be dissipated in a futile effort to
offset

the inflationary
budgetary deficits.

Inflationary

the next four years,

studied

,

The

country do; not have to be

severe

pressures

effects of
are

very

in France and Italy and are

not absent in England. In France
and Italy they result from huge
.

upon a. variety of accompanying
budgetary deficits, and in England
pend upon the level of business ac¬ from the quest for cheap money
tivity in the United States, whether (wholly unrealistic in view of
the economy is operating at full or England's enormous capital needs)
less than: full, capacity. The effect and from the payment of large

circumstances. The effect will de¬

will also depend upon

the

source

of the funds used to assist Europe;

whether, for example, they come
within the scope of a balanced
budget. In my judgment,
the funds appropriated to assist
Europe must be provided within
the scope of a balanced budget
even though this might postpone
for a considerable period of time
the over-all reduction of existing

subsidies

for

food

and

clothing.

Such pressures must be brought
to an end if complete recovery is
to be attained in Western Europe.

federal

Inflation
as

opposed

promotes speculation
to production, dis¬

savings, gives rise to the
hoarding of foodstuffs and raw
materials,
causes
manufacturers
to withhold goods from the mar¬
ket? deters agricultural produc¬
taxes. Si
•
* 1 '
•V;.V: yr,,T
tion, induces the, farmer to feed
If European demand is for goods his grain to livestock instead of
in scarce supply,
priorities be¬ sending it to the markets, disrupts
tween domestic and foreign needs trade channels and diverts activi¬
may have to be established. If the ties to the black markets. Infla¬
credits are "not granted in the tion, in the presence of fixed ex¬
form
of tied
loans, and if the change rates, causes a progressive
funds are left free to be spent in overvaluation of currencies and
the
cheapest markets wherever distorts the balance of payments
they may be, the effect on our do¬ —attracting imports, retarding ex¬
mestic price level for scarce com¬ ports, checking the inflow of for¬
modities will be diminished. If the eign investment funds and lead¬
should
develop
that
European ing, in accordance with Gresham's
needs impinge heavily on our food law, to a flight of capital and the
stocks, we may have to introduce hoarding of gold and foreign ex¬
voluntary forms of food conserva¬ change. In fact, the so-called baltion in order to release a larger ance-of-payments problem, which
quantity for export. These effects is but another name for the cur¬
on our economy will not be
pop¬ rent dollar shortage, is in part the
ular. But the question of granting result of distortions arising from
courages

A GREAT NEW PERFUME IS A

RARE EVENT

,

additional

Europe

solely

assistance

should

upon

not

to

Western

be

decided

the basis of its tem¬

effect on the American
General considerations

porary

internal inflation.

Experience has demonstrated,
notably in the case of Belgium,
that

inflation is checked,
foreign
currency
and
gold reappear, commodities come
and humanitarian character are of
out of storage and internal sav¬
preeminent importance.
ings build
up.
An
immediate
need, therefore, is to work out by
Possible Success of Marshall
cooperative effort a comprehen¬
sive plan for monetary reform,
Program
The question is frequently asked including
the convertibility
of
economy.

of

when

whether

additional

assistance

to

currencies.

Budgets

should

will, in * reality* balanced, central banks should
upon
the
promoter further recovery there. cease issuing credit
No one can guarantee the future basis of the public debt, internal
of human affairs. But aU experir investment programs
should be
lose less S limited fo voluntary savings, an*
in the long run when we boldly terest rate policies should toe made
attack such problems with com¬ flexible,
subsidies
should
be
teaches

ence

us

that

petent organization

eliminated, and realistic rates

exchange in line with cost and
price structures should be estab¬

ablfe to.; me that
age

and the inten¬
3t is inconceiv-

cannot man-1
to help the ablest people in lished.
we

on their feet in rea-;
scimbly short order if we are de¬
so.

If

our

Govern-

ineht is committed to .succeed in
enterprise it can succeed at

this

the

of

-

The initial

Europe to get

termined to do

step in the checking

of

inflation demands not only that
governmental budgets be balanced
but

that a
surplus be realized
equal in largest possible measure

minimum

cost, for its confi¬ to the assistance received from the
pri¬ United States and other creditor
enterprise in adding its ca¬ nations. The surplus would be em¬
pacities to the task and give new ployed in internal debt reduction
life to the money and capacities and, in
being used in this fashion,
in Europe that are now in hiding would exert a
constant downward
dence

will justify American

vate

from

the

risks

of

Mere

fragrance does not make

a

perfume...

fust as paint does not make a painting...
nor

sounds

a

symphony.

'Muse is the climax

marked

by

of eight years of sensitive composing.«...

many moments

of discouragement but crowned

by ultimate triumph... eijfht years of subtle, masterful
blending of more than thirty ingredients to create
a new

masterpiece in perfumes. A

born in the heart
a

classic,

growing

new

perfume

of Paris,'Muse is destined to become
ever greater

with the passage of time.

It is
to

a

perfume for the

recognize

a

woman

who has the instinct

masterpiece at its inception.

we

tion

to succeed.

&

be

Western Europe

.

■w

hoarded

political, strategic, economic

a

WA

inflation

and

economic uncertainty. The creation
of confidence is the basis of pro¬

duction, of trade, well-being an''
political stability. We alone have




pressure

the
price
level,
thereby - stimulating.^exports and
retarding imports. The adoption
on

of Jiecessary fiscal
policies should
be accompanied

by

a

devaluation

way as

by the

nations represented at the Paris

not

this

a

viable unit. Meanwhile,

rapid¬
(i.e., if the borrowers ly in order that Western Europe
may become self-supporting,
required to spend the sums
borrowed • in the United States),
"V The Problem of Inflation
granted do not take the form of

tied
are

announced

they stand ready to com¬
negotiations with all Eu¬

mence

union
established
toy ropean governments who wish to
Belgium, The Netherlands and enter a customs union and whose
Luxembourg, points the way for national economies are
capable of

measures are

not

•

being

present

customs

would be smaller to the extent that

States

39

Compounded and Copyrighted by Coty, Inc. in U. S. A.

40)

>"

40

THE

(1444)

&

COMMERCIAL

FINANCIAL CHRONICLE

Thursday .October

1947-

discloses somerrather
surprising >•. facts.; For;: example,
Franklin Fire, which, has appre¬

p Thisi table

Bank and

Insura

ciated 1.8% this year vs. an aver¬

age decline of —4.2%, is currently
selling at 4% less, than its 1942
low. ? Home; which is up 3.0 %
this year, is only 6.8% above its
This Week — Insurance Stocks
1942 lowr whil^ Security of New
It is interesting and helpful to make comparative studies, from Haven, declining 13.1 % thus far
time to time, of the market action of stocks over both long-term and in. 1947 .is 20.9% below7 its ; 1942
rshort-terrii periods. The following tabulations are therefore presented low.
On the other hand; such
this week, to show the relative percent market gains or losses of a stocks as Continental; Fidelitylist.' of 21 well-known fire insurance stocks over^ Various periods, Phenix, -Hartford ;Fire/ Insurance
•as noted. ;
//■;./'/•' ///..,*
,.//
■/.:-/•/ of North .America, which show
price"declines in 1947 are 60.5%,
TABLE 1
75.0%, 30.8% and 56.8%, respec¬
IARKET APPRECIATION OR DEPRECIATION
ANNUAL
1945 '
1946
:*1947
1944 r
1943
1942
rtr
tively above their 1942 lows, com¬
3.41;
+ 13.6%
*-18.1%
5.9%
+
6.3% /
10.8 &
-Aetna Insurance
pared with an average of +24.5%.
6.8
—18.4
+ 17.8
+ 2.7
10.3
+
6.5
Agricultural InsuranceIt is also rather surprising to find
4.6
—17.7
+ 25.8
+ 12.1
14.8
+
4.3
Boston Insurance——

Reconstruction

By E. A. VAN DEUSEN

,

■/■.■v.:

—

—

—

—

-

Continental

Franklin

,

Co.

las.

—16:2

+

—21.4

7.1

+

1.8,

+

2.6

2.2

0.9

+

7.1

+ 18.8

—20.4

+

7.6

+

1.9

+ 19.4

—20.2

i

2.5

7.2

+

5.6-

+ 16.4

-+-13.3

—

+

+

i-

7.8

+

9.4 '

+ 13.4

—22.0

+

7.3

+

9.8

1.8

+ 11.2

7.2

Security Insurance
Springfield Fire & Mar.

—

+ 11.5

1.4

+

4.8

+ 18.4

—11.8

9.0

8.9

+

—12.4

8.2

—

5.8

—

—11.0

—

5.5

—

+ 22.9

2.3

+

7.8

—15.2

4.1

+

"6.1

—17.6

4.5

+

1.6

—16.8

+

2.8

3.5

+ 17.1

—16.7

+

4.0

—

+

6.0

+

6.0

+

U. S. Fire

3.0

—10.4

3.2

—

6.1

—11.0

1.9

+ 13.5 \

+

Change

3.9

+

+' 6.0

1.1

—

2.0

1.1

+

Marine1

+

Change

—

0.5

2.5

Insurance

Fire &

+

No

No

—'14.5

+ 21.9

+ 10.5

4.0

+ 10.0

0.5

+

—12.S

13.2

+

1.2

River

+

7.8

■

such

stock

—10.9

+

-

Paul

—20.3

+

Providence-Washington6t.

i,. % +21.9

4.8

of. No. America
Fire

Phoenix

6.3

7.2

Hampshire

Horth

+

—

3.2
6.2

—

8.5

Home • insurance
national

—11.8

4*

Fire

Hew

+ 26.4

No

+

Fire

Fire

Hartford

—

0.5

+

13.2

American

Hanover

+ 21.5

+

+ 18.0

8.6

Association

Fire
Great

9.1

Change

13.0

+ 10.7

No Change

Insurance-

5.9

+

0.5

+

6.7%

+

—

3.0

+

—13.1

and

sound

a

conservative

Phoenix only 5.1% above
its low of 1942. Aetna Insurance
is

as

approximately at its 1942 low,

it having declined

1.1%

21

OF

+

1.0%

—13.7%

+15.0%

ments between the various

Economic Controls

jt is to be hoped also thai West*
ern

—

European nations will bring

about the earliest possible termi¬
nation of governmental economic

4.2%

Exchange,

1945 all. .stocks

of

15%;

gain

an average

These year by year comparisons
however, like all short-term com¬

•

in

Insurance

Meeting Program

following '

■

of —4.2%; but

average decline

an

the

all

1946

except

1947,

individual 5J/2

seven

period

a

of

approximately

1942 Low

Insurance

*

Boston

53 V2

Insurance

62

+ 26.9

49%"

+ 60.5

30

52%

+ 75.0

43

49

+ 14.0

Fire

21%

21

22%

29 Va

+ 28.7

19%

25%

+ 29.6

_

Association

Franklin
Great

Hanover Fire

Hartford
Home

Fire

National

Fire

__

Fire

&

S.

0.3

48%

+ 23.2

24%

+ 30.7

78

+

34%

+ 19.5

69

+ 56.4

33 y2
_

26%

101%

_

109%

37%

'

OF

+

44 Va

+

Hy;

'

i

■

! *

•

7.6

+ 39.1

+
.

tAdjusted, 20%

5.1

—20.9

52

21

*

Adjusted 10''for 1 split 1945.
iAdjusted, 5 for 1 stock split 1944.
■

47%

6.8

28%

Marine

Fire

AVERAGE

-

+ 56.8

18%

Security Insurance
Springfield Fire & Marine
U.

+ 30.8
+

89

74%

__

Insurance

Providence-Washington
Paul

99%

39%

America

25%

56%

47%

North

River

Phoenix

4.0

23%

-

of

Hampshire

North

—

76%

Insurance

Insurance Co.

;•

0.3%

American

tFire

■/':

+

+ 27.1

48 Ta

_

Insurance

Fidelity-Phenix

tSt.

from 1942 Low

68

31

Continental

New

% Change

Sept. 30. 1947
46%

46 Va

_

Insurance

will

of

joint meeting of Brook¬

a

.

24.5%

j

stock dividend, April 1948.

The

recovery are fairly obvious/ The
include the economic unification
the

St.

roof

of

the

will

at

a

special meeting

held

be

at

Michel's

Restaurant, Brooklyn, Mr. Henry
C. Perry, Treasurer of HeywoodWakefield

chapter

Co.

will

address

the

"Effective Controls for

on

Distribution Costs."

Subsequent meeting dates and
speakers are as follows:
Nov. 19, 1947: Mr. B. F. Lickey,
Management Consultant of the
Brooklyn Chamber of Commerce.
Dec.
10, 1947: Mr. Paul D.
Seghers of Paul D. Seghers & cCo.
Jan. 21, 1948: Mr. J. S. Seidman
Feb.

18,

1948:

Wilber R.

Mr,

Stevenson,

Jordan

&

Harrison.

Bank & Insurance Stocks

March 24, 1948: Mr. William W.

....

,

oi INDIA, LIMITED

...

Bankers to the Government in

Inquiries invited in all Unlisted Issues
<:

1,..

:

Head

Trading Department, LOUIS A. GIBBS, Manager

Officer

26, Bishopsgate,
London, E. C.

Branches In India,

Burma, Ceylon, Kenya
Colony and Aden and Zanzibar

Laird, Bissell & Meeds
VP

MEMBERS
120

NEW

YORK

STOCK

£4,000,000
£2,000,000

Reserve

£2,300,000

The

Bank

Fund
conducts

every

description

banking and exchange business




supervise

Teletype NY 1-1248-49.

businesf

German

indus¬

try, the termination of reparation
deliveries, the establishment ©'
sound monetary, credit and fiscal
systems, and the establishment <
direct

wo3(Lhavei:to/eote£tits influence
to persuade >;We'stern Europeali
.

nations

contact

between

Germa*

and

check

to

■

inflationary

pressures./ It would have to. en4
the removal of trade re**

courage

and economic

strictions

controls^

Administered in this manner,

Corporation
Secretary

the
would
implement
Marshall's
proposals

and would insure that the assist¬

granted was matched by in¬
production;;

ance

creased,

I suggest such a corporation; as
of carrying out Secretary

a means

Marshall's program

for I believe
organization of non-parti¬

such

an

san

experts /would / mix

brains
in¬

with the money we advance,
sure the' effective use of our

re¬

and immediately establish
that reliance upon our determina¬

sources,

tion

of

would

which

task

unite* in

rehabilitation

the

the

confi¬

dence; credit and energy in Eu¬
rope
which
are
now
lacking.
Nothing will help Western Europe

help Itself so rmach m tot us to or¬
ganize in a businesslike manner

foreign pur¬
chasers of the products of Germa
industry.

with

Recovery in the Western Zones
will be promoted if the food and

the final victory—the estab¬
lishment of conditions of freedom

men

goods which

we

send

Germany

to

stimulate production, especial¬

ly of coal.

are

distributed

German coal is

a

so

as

basic

the

the

And

war.

to win

assurance

same

the peace as we

organized to win
have within

we

our

grasp

in Western Europe

that would in¬

the greatest welfare of peo¬

sure

ple there and

our

security

own

Those things for which we

here.

need not only of the economy of

fought

Germany but also of that of West¬
ern Europe as a whole, and its in-

store to the world enough strength

still

we

This is

have.

can

opportunity to

our

re¬

maintain

to

peace,
the human
liberty that makes ? life worth
while, and the incentives to pro¬
nt of the Securities and Exchange duction and the increasing wel¬
fare of humanity.
With Western
Commission.
Europe so restored we can be safe
April 14, 1948: Mr. Howard C. to
continue our guarantees of life,
Greerj Vice-President and Gen¬
liberty and the pursuit of happi¬
eral Manager of Kingan & Co,
ness in, our own way and sell to
May 26: Mr. Mason Smith, a
%6ur/tfhel^hwrs,./:'btty;V frbni7 6u^
partner Of A. TV Kearney & Cb. neighbors and visit our neighbors

Wemtz, of Allen R, Smart & Co.,
who was formerly chief account-

and National President of the Na¬

tional

Association

of .Cost

Ac¬

countants.

in peace and quiet
mutual advantage/

ideologies that

These meetings

willlbe ;held at

Restaurant,

York.

a

world

Brooklyn,

—

and to

our

There are#rio
greatly disturb

constituted.

It is not in the character of the

American

,

,

so

can

people

to do nothing
welfare of Eu*

1948 meeting is the
annual meeting of Brooklyn
Chapter, N.A.C.A.4 at which the
election of officers for the ensuing

for the liberty and

for piecemeal and futile ameliora¬

The May 26,

On
May
5,
1948,
Brooklyn
Chapter will hold.a special meet¬
ing which will take the form of

If/what

rope.

and too late

we

our

do is too Tittle

hearts and purse-

strings will be continually, pulled
tion.
to

But it is more in our

take

the

bold

and

natqre

effective

of providing well-managed!
adequate assistance to make
good the conditions in .the world
course

and

_

Subscribed Capital
Paid-Up Capital

EXCHANGE

BROADWAY, NEW YORK 5, N. Y.

Telephone BArclay 7-3500

of

year

Kenyn Colony and Uganda

P

co¬

will be held and presentation
of awards for the year then end¬
ing will be made.

NATIONAL BANE

Called Securities

competent

zones,

administration

New

'

anc

Governmental Agencies for

many
those

Michel's

Over-the-Counter and

zones

to

George.

On Oct 29,

which

the

on

Western

the establishment of central Ger¬

consumers'

held

be

of Seidman & Seidman.

-v;^v•

three

will

Wright,

v-;r

prerequisites of German

business

Hotel

Europ*

^ill'be penttaiicihtl|; iindermihed-

Chapter, N.A.C.A. and the
Brooklyn Chamber of Commerce
on
the subject of "Management,
Labor and Costs." A large turnout
is expected for this meeting which
lyn

Asked Prices

Agricultural

Manufacturers

sociation
address

years.

TABLE II

Aetna

To

stagnation levels,-the

economic life of Western

of

stocks parisons, are not - conclusive per
Brooklyn Chapter, National As¬
1 of sc. /They mustbe reliated to longer sociation of Cost Accountants has
For announced the
North America which appreciated term market performance.
program
of its
this reason Table II is presented
meetings for the coming year.
3.9%, while the average decline which shows the market
perform¬
On Oct. 8, Mr. Earl Bunting of
was
—13.7%,
Thus far in 1947 ance of each of the 21 stocks from
O'Sullivan
Rubber
Corporation
the 21 stocks, as a group, show the lows of April, 1942 to Sept. 30,
and President of the National As¬
but

declined,

that, unless production , rise?

above these

Announces 1947-1948

thus far in 1947.

Germany is of such vital impori
ance

Bklyn. Chapter (NACA)

+1-0%. During
appreciated with

for

.

-j-6.7%, all stocks moving up has done better than average in the New York Stock
except Security of New Haven each year except 1944 and Fidel- effective Oct. 16.
which declined —2.3%. The year
ity-Phenix in each year except
1944 was a mixed year, 11 stocks 1944 and thus far in 1947. Hanover
moving up, two experiencing fio has also done above average ex¬
change and eight declining, while cept in 1946, and Hartford except
was

and

,

stocks

was

experience

needs

,

"

average

those

the extension of
this additional assistance, I have
suggested that a new: instrumen¬
tality be established, the United
moted, rigid restrictions must be States
Corporation for European
abandoned as quickly as possible
Reconstruction.
Such a Corpora¬
and .full play given to the. com*
tion will have great responsibil¬
petitive forces ; of then market ities. It would have to make cer¬
place.
•/ V
tain That? assistance by; the United'
States was productively used and
German Recovery Essentia!
used to promote key. industries. It
It is essential, as part of the

,

the

of

tion

Economic

their 1942 loss more than more essential to the less essen¬
24.5%' average, eight stocks tial industries. If full scope is
less than this average, while two given to dynamic economic forces
stocks are currently priced below and if risk capital is to be pro¬
from

the

In New Quarters

glance the table ap¬
confusing and meaningless.

great merit of Secretary
Marshall's!;; proposals/lay/in/;thef
fact that the needs, of Western Eu¬
rope were envisaged as a whole.
A basis was. laid for the integra¬

operative effort on the part of Eu¬
controls,
if ropean > nations in
overcoming
continued, prevent the best use of their economic difficulties.
Act¬
a
nation's resources, distort pro¬
ing upon suggestions of Secre¬
duction and, along with the threat
tary ; Marshall,? the /nations
of
of possible further nationalization, Western
Europe met together and
dampen incentive. The controlled now. have submitted their, report'
controls.

register moderate gains,
PHILADELPHIA, PA.—Georgeviz:
Franklin; Great American, son & Co. announces that its
pears
Closer study, however, brings to Home,
North River; St. Paul,
Philadelphia office will be located
light a number
of significant Springfield and U. S. Fire.
in the Harrison Building on and
Further study reveals other inpoints, despite the array of widely
after Monday, October' 6.
The Marshall program, that the thre<;
irregular and even diverging mar¬ terestingl facts*
For Example, firm's
telephone number will be Western; zones of Germany bejput
ket moves. V
Aetna
Insurance has performed
into
production in accordance,
Rittenhouse 6-0546.
For instance, during 1942 the below average in each year ex¬
with the revised plan for the level
average move of the 21 stocks, cept 1946 while National Fire and
of industry. The most recent es¬
J. C. Louis to Admit
from year-end to year-end, was Security Insurance have each con¬
timates place? production in tb
Lee J. Spiegelberg will become
—1.1%; however, ten of the stocks sistently performed below aver¬
American zone at only 49% of the
a
partner in J. C. Louis & Co., 1937 level and in the British zone
age.
actually appreciated in market
Savoy Plaza Hotel, members of at about 34%.
price. In 1943, the average move
On the other hand, Continental
The economy oi
first

The

—184% since
3i; * 1946, the maximum ^de¬ price'^system of France is riddled This/act/required courage an£ :
cline on the list, presumably the with' inconsistencies, leading, to a f aitft-rcourage / iti! • opposing / the
result; of additional financing this misdirection7 of economic effort. policy of Russia and faith in the
Wage controls in England; have willingness of the United States
year and consequent dilution.
v Eleven
stocks have recovered tended to divert workers from the to extend additional aid. '
i

>/v. *To September 30, 1947,
At

Conclusion

coun¬

tries and to transfer surplus labor.

Dec.-

1942.
AVERAGE

,

•

■

JPidelity-Phenix

(Continued from page: 39) ..
>
,
conference to secure a progressive creased production/will serve as
relaxation of import restrictions,
a powerful dynamic factor.
to/ improve
payment
arrange*

;

Trusteeships and Executorshipsalso undertaken

,

v ~

a-.visitation

of

to

"Daily News."
paper

by

a

/the

A talk

New
on

York

"News¬

Accounting" will be given

member of the "News" staff

after a tour through the plant.

for

which

we

spent

treasure in the war,

men

/1

/ and
+

If the American people under¬
stand the facts-1 am certain that
:

they will dedicate their efforts
the task and

assure

its

success.

to

.'Volume 166

Number 4636

(Continued from first page)
government spending or through

Of Banks

investment| in public works.

(Continued fronvpage 31)
dom.

I
r

with

* f1
free¬

economic

1

is

A1

companion

doctrine that gained
acceptance in this fateful decade
was that the depression could not

that either of be lifted unless interest rates
these two agencies, the
Treasury were reduced to and maintained
or the Federal Reserve Board, at Unprecedented levels* In short
would voluntarily
relinguish any by a prolific and intense propa¬
It

hot likely

material fraction of their
present

power over money; Governments
.have learned—and this certainly
applies most emphatically to our
own government
that they can
avoid the pressure of
scarcity as
:

—

a

factor in the
money market. The
of
currency is a

issue

sovereign
prerogative. The gold standard
and statutory provisions
have al¬
ways
placed a limit upon the
of issue. With the

power

emascu¬

lation of the gold standard
the changes in central bank
serve

and
re¬

requirements -1' which

any

government

solute

can
make, no ab¬
operates to prevent
issue of
currency and

limit

whatever
credit

the

government

may

sider desirable.

con¬

Conditions of Natural
Money
Market
To

-

the

bankers who hope

-Believe that
is

and

free money market
that rates will

a

returning and

rise, we must say that a natural
.money market cannot exist with¬

out

the

-least

reestablishment

three

of

at
conditions:

essential

first, the cancellation of the

ent power of Federal
Banks
curities; second,
tion

a

their

upon

Reserve

for Federal

collateral

as

Reserve

se¬

limita¬

severe

use

Bank

ganda

loans;

our people were persuaded
high taxes, big public debt,

that

government intervention, riotous
spending, and "easy money" were
virtuous and indispensable.
In

implementing this program
Treasury utilized, among other

the

techniques, the Savings Bond and
Stamp.
When the World War
in

started
tions

were

Europe, our prepara¬
in part financed by the

"Defense

Savings
Bond"
and
"Savings Stamp" ;>and later these
were

diversified and made

part

of

a

abandon

ury

the

the

its

a

great suc¬

with this device the

Treasury

quite naturally decided to retain
it in the postwar finance.
The
name
was
changed to "United
States
Savings Bonds" and the
"Stamps" were dropped as too

Federal

Reserve

authorities

renounce

their

trol

American

the

through

.

power

and that

ambition

to

con¬

economy

a

manipulation of credit
factors. It is
only by or through
the realization of
these conditions
that a free
money market, re¬

sponding to supply and
demand,

can

again emerge.

If

we

does

accept the

it

mean

in

terms

of

in

that

earning power, the possi¬
bilities for increase are
severely
.limited. It is a mistake to
an¬
.

ticipate

change in this

any

.which

might restore
levels of the twenties

levels
any

it
or

rate

to

the

even

the

prevailing a decade ago. If
change occurs, it is

upward
bound to be

of

modest

propor¬

tions.

Portfolio policy should be
developed accordingly.
The in¬
come
that is forfeited
today by
bank

portfolios on
short
term
securities should be
measured as
a premium
against the kind of

in¬

in

crease

rate

which

is

probable

during the next, five

years. It may
well be that when
this premium is
measured against such a

possible

change it

may be found in
many
instances to be excessive.

Ir* other words,

portfolio policy
'm
many instances
is predicated
upon a change in rates of a
magnnitude which is not
likely to be
realized.
A bulging
portfolio of
>short term securities
does not con¬
stitute the valuable
hedge against
great changes in the
.

money

■'in!'

was

•

Portfolio

.

betting

the

once

buy

management

on

a

be

may

probability;

i.e.,

a

substantial change in
rates, which
not likely to occur.
Within the
; range of rate
change which
is

now

rseems

possible

and

"bond

month" by charg¬
ing their accounts. They have also
cluttered their advertisements and
a

a

script with
"buy bonds."

and

probable, the

forfeit of income
entailed by some

portfolios may prove an
excessive
: premium
for, the protection they
afford.

admonitions to

*■.'

Barrow, Leary & Co.
(Special
to

The

Financial

Chronicle)

SHREVEPORT, LA.
William
McKenzie, Jr., is with Barrow,
Leary & Co., 515 Market Street.
—

A.




vested the bulk

duced

private enterprise.
They
do not help finance the operations
of

individuals, corporations or co¬
They never become
"risk" capital. They never finance
"small" business or large.
They

operatives.

do

sold the total sales above

not

help to meet the present
housing shortage with which the
veteran contends, except
perhaps
a trickle of
"public housing."
The

from taxes and other
uses

them either to

sources

cover

there

is

reduction

funds

materials for the construction and

unspendable funds
in banks

The

public

with

the

debt

ductions

the

In the former case,

nity,

the

savings of the

the

and

were

deposited

put into War Savings

creation of

deposits at the com*
(Continued on page 42)

commu¬

government

or

increased

Some of the

volume of deficits financed by the

—

securities.

by

Thrift also kept down the

Bonds.

same.

purchased

was

attained

taxes, and rationing.

point of view

of the government was

of

was

THE NATIONAL CITY BANK OF NEW YORK
18)2
Head

—

J35tfi ANNIVERSARY

of Condition

as

savings

(in

Due

and

Banks

from

dollars only—cents

(Direct

of

Agencies

State

Fully

or

Obligations

.

Deposits

$1,208,876,854

Guaranteed)

.

\

Liability

J

,,,,,,,,

and

Items

Bankers'

and

$27,896,868)

Accept¬

Bills.

in

$31,397,641

.

■

Portfolio

Transit

in

Reserves

Securities

2,955,770

with

-

19,341,550

12,056,091

Branches

5,747,315

.

and

Unearned Income

Acceptances
Federal Reserve Bank

International
Banking Corporation

,

6,900,000

I

7,000,000

of

.

34,345,337

,

$ 77,500,000

....

152,500,000

Unpivided Profits

.$4,957,416,117

,

2,325,0C0

....

$urplus

3,409,828
,

5,231,674

.

Capital

28,714,293
,

,

%

"...

Dividend
,

,

Bank Premises

...

Other

Interest, Taxes, Other Accrued
Expenses, etc

18,039,851

,

.

for:

Unearned Discount

Customers' Liability

.

$4,622,164,738

.

1,144,278,147

Real Estate Loans

.

...

.

78,798,334

Acceptances

Other Assets

.

Less:Own Accept-

244,767,711

»

on

ances and

30,529,300

Other Securities

Ownership

.

Loan Deposit

2,183,146,029

Other Federal

ances

in

.

.

(Includes United States War

Municipal Securities

and

omitted)
LIABILITIES

.

,

U. S. Government Obligations

redemp¬

Total

38,260,503

268,260,503
$4,957,416,117

....

Figures of Foreign Branches

not

are

as

of September 25, 1947

$273,436,706 of United States Government Obligations and $3,396,013 of other assets are deposited
to secure $206,640,344 of Public arid Trust
Deposit#and for other purposes required or permitted by law.

(member

available). Had

institutions

of September 30, 1947

Including Domestic and Foreign Branches

$5,531 millions from July 1, 1945.
to April 30, 1947, (the latest date
for which data are

1947

—

Office: 55 Wall Street, New York

Condensed Statement

Cash

Chairman

co¬

of the Board

federal deposit insurance

corporation)

President

Vice-Chairman-of-the Board

Gordon S. Rentschler

operated it is probable that these

W. Randolph Burgess

Wm. Gage Brady,

Jr.

$5,531
millions would in
very
large part have been deposited
in these institutions.

According to estimates of gross
saving
by
individuals
in
the
United

States

from

1940

to

1946

CITY BANK FARMERS TRUST COMPANY

inclusive, of the $251.0 billions
saved, $87.7 billions went into
currency, bank deposits and sav¬
ings
and
loan
accounts, while

1822
Head

—

125th ANNIVERSARY

—

Office: 22 William Street, New York

$42.4 billions went into U. S. Sav¬

ings Bonds.
be

In

remembered

Condensed Statement

addition it must
the

from the people a
$22.5 billions for Govern¬
pension and insurance re¬

(in

total of

serves, business that under a pri¬
vate enterprise system would be

handled

panies

by

on a

the

insurance

Cash

These
the

savings

voluntary basis.

and

Due

have

a

for¬

competitor for the

sav¬

people; but instead of
protesting against this competition
and the
deep inroad into their
proper domain, they through ig¬
norance, bad judgment or mis¬
guided sentimentalities are doing
just about everything they can to
our

They are pro¬
intervention
private thrift.
The wages that
employees allow
their employers to deduct and
put

moting

Banks

from

omitted)
LIABILITIES

,

.

\

or

Fully Guaranteed).

of

$ 27,856,823

Deposits

and

$118,579,746

and

,

in

$2,993,655)

Reserves

4,206,131

1,227,878

and

Securities

Federal Reserve Bank

Bank Premises

.

•

1,665,299
600,000

,

Other Real Estate

,

,

114,500

Capital

.

Surplus

$10,000,000
10,000,000

3,157,494

,

Other Assets

Total

Loan Deposit

5,432,799
100,475

Advances

Real Estate Loans
Stock

(Includes United States War

1,073,604

Municipal Securities

Other Securities

Loans

107,752,302

Other Federal

Agencies

State

figures surely serve to
point that our private

institutions

midable

ings of

-cents

dollars only-

U. S. Government Obligations

(Direct

Competitor of Private Savings

force

of September 30, 1947

com¬

Institutions
-

as

ASSETS

Obligations
A

of Condition

Government

requisitioned
ment

Undivided Profits

8,500,994

28,500,994

2,305,697

.........

$151,286,871

Total

$151,286,871

$4,598,062 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

government

federal deposit insurance

corporation)

into the field of

into

these

never

U.

S.

Savings Bonds

reach these private

savings

Chairman

of the Board

Gordon S. Rentschler

Ttoe

delivery of war materiel. Volun¬
tary reductions in consumption
were supplemented
by forced re¬

.

the result from the

current

power

consumption of certain ci¬
vilian goods and released men and

directly into War Savings Bonds,
or deposited them in these
insti¬
tutions, or
made
interest
and
principal payments on their loans,

and

.

war.

they amortized
mortgage loans* Whether
customers put their savings

the

public
merely the substitution of
Savings Bonds for other types of
no

the

from borrowers as

expenditures or to pay off matur¬
ing obligations. In the latter case,
debt

de¬

new

purchasipg

received

their

commingles
moneys derived

these funds with

of their

with

private

bonds, and similarly

war

reinvested

Treasury

tions of U. S. Savings bonds—the
total amount outstanding
rose

the

posits in

This does not

saver.

series

foster its progress."

With

savings institutions quite
properly joined the Treasury «a
urging thrift as never before, for
winning the war transcended att
other
considerations. Thrift re¬

ment in

Total

The result is that for all

mar-

case.

needed to prosecute the

prevent inflation. Indeed it helps
the government continue the high
spending program that it has pur¬
sued since 1930.
During the war
the private savings institutions in¬

among other helpful things, the
scheme of having their depositors

bank

It means that so
the money rate is a
factor

as

clothed

They

Stock

earning power?
far

government spends the savings in
lieu of the

magnitude, the
savings institutions of
the country were importuned to
sell and encash them; and in ad¬
dition to the "wage deduction"
plans,
the
banks
inaugurated;
banks

of

radio

foregoing, what

are,
rather,
along to the Treasury.
are
diverted from invest¬

Loans, Discounts,

order

new

41

Savings Bond Issues!

They

ASSETS

Having made such
cess

(1445)

hurried

millions.

a

present

money market

institutions.

CHRONICLE'

war

third, the restoration of the
gold
eumbersome and expensive.
standard. An obvious
The
corollary of
these conditions is that
the Treas¬ propaganda for their sale took on
over

FINANCIAL

basic

finance, the "War
Savings
Bond"
and
"Saving
Stamp." Patriotic zeal was whip¬
ped up so that employers readily
set up "payroll savings" or "wage
deduction" plans -and subjected
their employees to considerable
pressure to save in this way.
The
government
employed
every
known type of propaganda in per¬
suading the people to buy these
Bonds and Stamps. The net pur¬
chases above encashments, from
their inception in 1935 to the end
of June 1945, amounted to $45,586

pres¬

to acquire
government

&

Abandon

Earning Power
compatible

COMMERCIAL

THE

President

Lindsay Bradford

I

42

THE

(1446)

COMMERCIAL

&

FINANCIAL CHRONICLE

The

Abandon Savings Bonds Issues!
•

;

;(Continued from page 41)

mercial banks—that
flation in check.

Savings Bond
•

'

iV;.
-/

■

in¬

is, it held

rV

;'■'

no

"^

•''

able

that

industry

private

be

pete with private savings institu¬
tions and ride rough-shod over;
our traditional American system.
When war ends it is time to re¬

Longer Justified

■

With the cessation of the war

and the completion af jreconversion to peacetime pursuits the store private rights and liberties,
government is no longer justified peacetime rules, practices and
in its effort to corral the people's
conceptions.
Instead of trying to reduce
current
consumption
oi
many products with-a view of in¬
creasing the war potential, the
peacetime program should be to
enhance their production and thus
supply a greater consumption; to
shrink the competitive expendi¬
tures of government; to balance
the budget and end deficit financ¬
ing; to reduce the public debt, es-;
pecially that held by commercial
banks; to pare government cash
savings.

■1

and

bank

balances

to

the

Probably it is illusory to expect
the

has

exit.

too

successful.

Indeed

them, and that by using the Sav¬
ings Bonds in refunding, the large

mini¬

and dangerous supply of govern¬

would

the

reduce

since

it

namely, savings. Why should they
sacrifice their function and, at
same time, spend their income
promoting their competitor—
special obligation do they
owe the
state Vthat they -should

the

.

interest

in

what
,

the .state. They
are not eleemosynary institutions.
They are private. Their net earn¬
ings belong to their depositors and
stockholders as in other private
in the service ;of

enterprises;

dustrial
i—■

a

plant,

demand

help abroad
capital that

and
for

•(s'sy-to.

was

mar¬

new

petition1 with government issues,
and the sellers enjoy an untramimeled privilege of purveying the

140

MADISON AVE. OFFICE

Broadway

Madison

Ave.

60th

at

St.

ROCKEFELLER CENTER OFFICE
1

5

destroy the market for their own,
and they are not branded as un¬
patriotic for deasting frdm sutix
suicidal action.

aggressively and to point out the
ways
in which they excel the
Bonds. The

United States Savings

Savings Bonds are in fact a poor

with an ac¬
banks or
savings and loan associations. The
yield on the Savings Bond is be¬
low the market, unless perchance
they are held many years. Take
a $100 Series E Bond. It sells fdjc
$75. If held 10 years (to maturity)
it will
amount to $100; which
represents a yield of 2.90%. If,
however, the holder needs money
and has it redeemed during the

investment compared

count

by the $3.3 billions of Postal Sav¬
ings and by the 2% rate, paid
thereon,
and
have
vigorously
pushed
legislation
designed
to
correct the Situation, they have
behaved inthe absolutely opposite

times

LONDON

PARIS

•

<,*«..t

Cash

on

«•

:

.

■

'

'

-

RESOURCES

-

-

Hand, in Federal Reserve Bank, and Due from

Banks and Bankers.

U. S. Government

Loans and Bills Purchased-

Public Securities.

.

?

.

.

.

.

.

.

.

.

.

.

$

.

.

.

Obligations
.

.

528,013,046.59
1,407,618,355.96

789,353,139.34

$

Stock of the Federal Reserve Bank
Other Securities and Obligations
Credits Granted on Acceptances ,
.

100,481,560.01
9,000,000.00
11,808,699.35

6,988,853.59

Accrued Interest and Accounts 4 *
Receivable j
.vT
9,971,204.00
Real Estate Bonds and
Mortgages.-;1,351,385.46
<

.

Bank Premises

.

.

.

7,7
•

•••
•
• •
•
.
......
•
•

Other Real Estate

•

•

•

i

•

i

»

much.

as

As

noted

Enterprise
There

•

,

Total Resources

here

stitutions

perversion of
indeed a doubtful

It is

a

$2,869,596,711.48

makes

withdrawals

terest

(or

During
the
late War the demands of patriot¬

$

.

Undivided Profits
Total

•

Capital Funds

.

•

,

,

•

•

Total

n

25,089,414.19

Investment

V*

•

I

$

2,475,101,407.21

* 15,725,651.66

6,988,853.59

*'v

•v

At End

Savings

of Year

232,933.00

Bonds

1,934,434.78

; 1934

1929

«

4

•

1939

23,292,657.52

»

¥,209

1940

Accounts Payable, Reserve for

3,195

! 1941

6,140
15,050

35,448,878.89
Total Liabilities

•

Securities carried at $80,358,068.53 in the above Statement

are

Federal Deposit

.

j 1942
1943

27,363

$2,869,596,711.48

1944

39,400

pledged to qualify for fiduciary

moneys as required by law, and for other purposes. This Statement includes the
French, and Belgian Branches as of September 26, 1947:
*"""




is

dividend)

withdrawn

the

in¬

on

the

for

the
time

case

the

of

holder

S.r Savings Bond

is

of

a

distress¬

ingly different. There is no such
thing as interest (or dividend)
date. If he has his bond redeemed
at

anytime before the end of the

tenth year

he loses. For instance,
disposes of the bond sorfcetime in the latter half of the third

if he

cannot live, i1

Insurance

resources
,

Corporation

.

*

1945
powers

to

secure

public

and liabilities of the English
.....

1946

46,800

(*)

.

(Millions of dollars)

48,300

-

24,663
26,592
28,734
31,365
34,212
37,509
40,800

.

1

•;

'!

'

v

!

.Total

Accounts Loan Accounts
-

•

-

8,792 7—

16,209
28,189
23,156
27,059
27,738
27,729
28,431
32,748
39,790
t

v

..

Savings &

Savings

7 Life 77
Insurance

3,408
5,488
12,801
15,687
23,024

1920

Foreign Branches

(and Net Difference in Balances between Various Offices
Statement Date-of .Foreign Branches).

Member

The

U.

■

1914'

3,000,000.00

Due to Different

.

lose

can

the

dates,

dividend )
date at the rate paid by the sav¬
ings institution.

case there is no sound
for requiring such special
devotion
to
country from Ibe
savings institutions, a devotion
which is devouring the very sub¬
stance bn which they feed and

they

he

(or

amount

any

which

that

in¬

between

dividend)

till the next interest (or

the legend goes, we fought that

without

Liability as Endorser on Acceptances
and Foreign
Bills.; . .......
Dividend Payable October 1, 1947

Expenses, Taxes, etc..

exacted

of

long and terrible War.
In

in¬

of

8,736,798.07

«.

$

Items in Transit with

have

time

reason

Deposits

Acceptances
Less: Own Acceptances Held for

all that;
peace it has
no
defensible place. It runs counter
to the traditional concept of the
so

359,046,425.38

$2,450,011,993.02

Outstanding

terest

in

American way of life, for which,

$

.

Deposits
Treasurer's Checks

100,000,000.00
200,000,000.00
59,046,425.38

may

but

Capital
.7 7 7 7 7 7 7 7
Surplus Fund

most

ism

LIABILITIES

loss

dividend) by premature
withdrawals,
especially because
the institution, (or others)
will
lend against the account. If he

enterprise.

private

avoid

can

terest (or

patriotism to aggrandize the role
of government and to promote its
usurpation of the functions
of

4,879,381.78
131,085.40

•
.

is

thought.

139,601,702.41
.

savings

the

Condensed Statement of Condition, September 30, 1947
<

toward the United States

most

at

above, the end of three years, he gets
private savings institutions interest at: i<06%. If at the end Of
are
pushing the sales of these five
years, 1.79%. Not until near
bonds in every possible way.
the end of the sixth year does he
If one asks the manager of a get as much as 2%.
savings institutions why he pushes
By contrast, take, for example,
the sales of the Savings Bonds, an account at the savings banks
he'll
probably
say
it
is
the and savings and loan associations
patriotic thing to do. But it is just of my home City, New Haven,
as
patriotic to push Postal Sav¬ Conn. These private savings insti¬
ings! Both are operated by the tutions pay interest and dividends
government. The funds redound to ranging from 2 to 3%. The cus¬
the same Treasury coffers, and tomer gets a yield of this amount
result in comparable sales of gov¬ on his savings from the date of
ernment securities. Both have the deposit, payable and withdraw¬
same adverse effect on the private
able every? six months without
savings institutions. Both repre¬ penalty.
:
sent the socialization of savings.
By careful observation of in¬
terest
(or dividend)
dates the
A Usurpation of Private
saver in these private savings in¬

BRUSSELS.

•

*

savings institutions,
fearing such branding, 'hesitate
"sell" their accounts and services
The private

savings to the Post Office.*

manner

and

'securities

comparing them favorably with
any and all government securities.
They are not expected simulta¬
neously to push the sales of gov¬
ernment securities and thereby

Savings Bond campaign, although first year, he gets no interest
these savings amount to nearly 17
whatever. If he has it redeemed at

40 Rockefeller Plaza

r

of7 their

virtues

While the private savings insti¬
been much alarmed

MAIN OFFICE

"tof

sense

patriotic obligation elsewhere.
security issues- Of corpora¬
tions, municipalities and states are
sold in the market place in com¬

tutions have

FIFTH AVE. OFFICE
Fifth Ave. at 44th St.

such

no

The

.

savings funds in housing, the
improvement of highways, the ex¬
pansion and rehabilitation of in¬

.

.

is

There

.

intense demand

for

not

destroy themselves? They are

introduced in 1910.
ing to build and maintain reserves
They have fought it chiefly on the and in having the free facilities
grounds that it is government in¬ afforded by the Post Office. The
ket is reduced.
The broad dis¬
tervention into the domain of pri¬ Buck bill was
designed to restore
persion of ownership, particular-' vate
industry; that they them¬ the original conception and status
ly by people of small income, is selves
provide
ample
savings of
Postal ' Savings.
The, fotsdj
expected to make for political facilities; that the safety of de¬ amount of Postal Savings ?now^Is
the
government- about $3.3 billions. The lower rate
stability and for conservatism, as posits under
sponsored FDIC and FS & IC would probably result somewhat
well as (to give the holders a more
insurance schemes is as great as in
Shifting these funds to private
direct and intense interest in the the direct
obligation of the gov¬ savings-institutions; and it would
Federal government.
ernment in Postal Savings.
have less tractive force in drawing
ment securities afloat in the

is reversed and gov¬
should make a graceful
an

been

the securities in the hands of final
investors who are likely to keep

scene

There is

its

government, regard the program
as an ideal method of financing.
They stress the point that it lodges

necessary;

ernment

reverse

many, both inside and outside the

terprise, through the savings in¬
stitutions or directly. In short, the
.whole

to

policy and withdraw from the sale
of Savings Bonds.
The program

to allow savings
to flow freely into productive en¬

mum

government

past session of Congress
supported
the 1 Buck7 bill

which

rate Of
presently paid ons Postal
Savings from 2% to 1%. The 2%
Assuming, therefore, "that the: rate is
higher than Ithe pomm0|'sales of -IT. S. Savings Bonds will!
cial bahks and many mutual savv
go forward, both equity and expe¬
ings banks are paying; whereas
diency require that the govern¬ in 1910 the
2% rate was far below
ment compete in the market on
the going rate paid by the private
equal terms with the private sav-,
thrift institutions. Thb intent of
ings institutions; that it does not;
Congress in establishing thd Postal
dragoon these
institutions
into
Savings system was not to com¬
selling, redeeming and otherwise
pete with the. existing savings
servicing these Bonds at a loss,
institutions, but rather to have the
if at all; that the government pay;
government accept deposits only
a
yield on the Bonds which, is from
persons who did not want to
equal to or&bove the market; and
place their funds in private insti¬
that the private institutions feel
tutions -for whatever reasons, and
quite free to call the public's at¬ if
they did so, they paid the
tention to the poor features of
penalty of a lower rate of interest.
the bonds and
| the better features
During the past 15 years, how¬
of their own savings plans.
ever, the market rates of interest
One strange distinction is cur¬ have declined while the
rate on
rently drawn by the private .sav¬ Postal Savings stood fast, so that
ings institutions. They have waged now the Systems/has a competitive
a
vain and losing fight against
advantage hot only in paying
the Postal Savings system ever
higher rates, but also in not need¬
Better Yield Should Be Given

It
: Will shortly exceed the supply.
is no longer necessary or desir¬

7" sacrificed, that government com¬

7

they

Thursday, October 9,1947

-

1,890

V.

48,452 1
53,960

1,019 7!

,

61782

77

5,343
4,680

" 4

4,785

*•'

5,250
5,740

56;972

65,556
77,465
97,216

6,400

119,802

'7,600

8,600

47,772
44,186
60,381

.5,095

7

13,219
23,587

140,361
-

151,660

(♦) Contains-some estimates
(Sources: U. S. Treasury Bulletin, Federal Reserve Bulletin, United
States Savings & Loan League, Institute of Life Insurance)
7

Volume

166

he gets interest at the rate

year

COMMERCIAL & FINANCIAL CHRONICLE'

THE

Number 4636

of

tribution

income

national

of

at

1.06%;, whereas if he refrains
encashing it, he would be
earning from that date to the end

;he expense of bondholders and
others with 'fixed incomes.
The

of

thropic and educational founda¬

from

the tenth year at the rate of
3.52%. It is, in other words, very
expensive to have the bond re¬

deemed

that

so

he

get his
money out of his investment.
What is worse, he /can not
get
can

part of his money out with¬

any

out taking this

heavy penalty. If

occasion, say during the latter
half of the third
year, he needed

on

only $10, but desperately enough
to

have

the

bond

redeemed, he

Would lose
Interest
a

at

Cumulated

investment.

demption

the rate of 3.52%

year

his

on

value

at

whole

The

that

re¬

time

all

over

again,

rising from 0%
2.90%

the

the

tenth.

only reinvest
$67 units.

the

first

He

yield

year

in

can

to

fact

$50, for there

are

110

Advantage of Savings Accounts
In the
at

of

case

a

savings account
private savings institution he

a

withdraw any
amount, odd or

can

even, large or small, at any
time,
with equal
ease; and similarly he
can increase his
account by
any

amount, odd or even, large or
small, at any time, with equal
The

ease.

account

lateral for

is

good

col¬

loan from any
bank,
as well as from
the debtor insti¬
tution. The account is far
more
a

this demand.

A. M. Kidder Branch

their

trust

In

congeal

funds, with the view of depressing
the prices of outstanding market¬
able securities to levels deemed

portfolios, banks may well
go slowly in voluntary congela¬
tion as they purchase the new
Treasury Bonds.
It is hoped that sufficient has

curities from the
market
and
charges or to forego doing their
handling of private savings and
freezing them in the hands of the free, unrestricted use of the
customary services.
holders. Glaeiation of the debt is
public market are fundamental
a
Government Bonds Should Have
popular idea ip government features of the traditional Ameri¬
Market Test

The

securities

circles. Last year the Federal Re¬
serve
authorities demanded that

-

issued

can

the

determined and
the

financial

government

a

be

proper guide for

management of the

same

rates.

end

Jacksonville, Fla.

Kidder
New

&

Co.,

York

the

enterprise

system.
issue of

prospective

Fenner

members

He

not

can

at

his

days. He

pledge it

bank

time.
any

60

can

it to anyone at
any time.

The

collateral

as

elsewhere at any

or

they
designed to be purchased by

are

savings institutions and
fore
all

Congress quite wisely

less

there¬

are

destructive to them,

other

criticisms

respects

the

in

above

Beane

in

connected with

was

&

Jacksonville,

Glore, Forgan

Co.

year

yield for the money it

proper

the

on

one

shifting
tional

ST.

hand,

gratuitously

from

ward has been added

TRUST

ward

was

previously with Slayton

Co., Inc.

basic
of

post

offices; and satisfactory

identification is often very diffi¬
If

the

saving public really un¬
these differences in the

derstood

character

of

investment,
that

the

Bonds

sales

of

U.

be

levels.

in

two

of

doubtful

S.

Savings

maintained

But

the

ignorance.

at

public

The

savings ^institutions,
reasons

types

is highly

would

current

kept

these

it

for

is

private
specious

noted above, refrain from

publishing

these

adverse

com¬

parisons, and the Treasury wisely
does not call the
public's attention
to them.
'

The

redemptions of the U. S.
Savings Bonds run high. Of Series
E,

for

example, the percent of
redemptions to sales (plus accrued

discount)
30

last.

34.69%, as of April
of $45,794 millions

was

Out

sold, $16,330 millions had been
deemed

before

redemptions
in interest

public

maturity.

a great
saving
goodly part of the

a

debt; but this economy is

trying to

are

These

mean

on

at the expense of
the
are

re¬

an

save

people who

They

money.

especially

good

people.

Instead

thrifty

penalizing its

citizens

of

the

class

of

government

national

fundamental

feature
traditional American pri¬

the

are

cult.

One

of

enterprise

system

is

public

markets where prices of all kinds

deemable
the

considerations

policy.
vate

They are re¬
.only
at
authorized
banks, at their discretion, and at

freely and openly determined.

Our

government

increasingly

is

proceeding
opposite
all sorts of

the

on

course,
marked by
interference with the market. For
the past 15 years the market for

government

securities

manipulated

has

been

and

controlled, in
money, high public

pursuit of easy
spending and other dubious poli¬
cies.
The
monetary
authorities
have acted with
secrecy
as

well

for

with

as

a

high degree of

to method

as

a

and

COMPANY

callous

and

the

capitalistic

system of production.
!

A

Product

of

securities in favor of its
own, and
has
exacted
a
higher code of
moral
conduct in the securities
market than it itself is

willing to

abide by. It has rigged the market
and stabilized the
yields of its
securities

while

vestment

bankers

prohibiting in¬
from pursuing

similar tactics in private issues.
For the purpose of this
article,

however, attention is particularly
to the restriction
imposed
by the government on the securi¬
called

Early this September it

announced

repercussions of

its

intention

soon

to

issue 2Vz%

further
than this. The low rate of interest

Treasury Bonds, with
18-year maturity, not callable for
redemption by the Treasury be¬

paid by the

fore

alty, however,

run

the

much

government

large fraction

of its

on

policy

"easy money" which the

ernment
.years.

has

The

pursued

low

cost

this

debt is part

and parcel of the inclusive

1 of

pen¬

the

gov¬

last

makes

17

bor¬

maturity,

holders
them
the

the

on

or

first

month,

writing,

acceptance

theories

as

of

underconsumption

in the 1030's, leads to

chronic budget deficits. The low
rates

on

securities

fixed-interest-bearing
causes

a

broad




redis¬

Thus

State and

at

ward

in

second

the

redeeming

April 1, 1948,

of

any

calendar

month's notice

fixed

idea

fiscal

is

on

in

are

policy.

$1.4

3,469,433.64

.

34,733,059.15

Stock of Federal Reserve Bank

,

.

,

.

...

3,037,500.00

•

Other Securities

22,271,871.64

0,

Loans, Bills Purchased and Bankers'

Acceptances

478,137,329.52

Mortgages

14,606,478.62

Banking Houses

10,235,345.07

Other Real Estate

Customers'

Equities

262,100.73

Liability for Acceptances

4,965,850.49

.

Accrued Interest and Other Resources.

6,356,783.00

$2,299,713,390.51
liabilities

Capital

.

.....
.............

$41,250,000.00

Surplus.

.....

60,000,000.00

.....

21,075,452.27

Undivided Profits
Reserve for

Reserves for
Dividend

122,325,452.27

Contingencies

9,839,672.85

Taxes, Unearned Discount, Interest,

Payable October 1, 1947

.

.

.

.

etc.

1,237,500.00

x

Outstanding Acceptances
Liability as Endorser on Acceptances and Foreign Bills
.

7,478,238.12

.

5,208,104.40

.

197,337.19

.

Deposits

2,153,427,085.68

$2,299,713,390.51
United States Government and other securities carried
to

secure.

at

$56,392,984.24

pledged
Deposits of $23,951,018.73 and other public
deposits, and for other purposes as required or permitted by law.
arc

IJ. S. Government War Loan

funds arul

trust

directors
EDWIN

M.

ALLEN

New York

EDWIN J.

PAOLINO GERLI

City

President, Lincoln Savings Bank

Chairman, Atlantic, Gulf and

President, Lambert Company

BRUSH

LOU R. CRANDALL

Chairman, Trust Committee
L. A. VAN BOMEL

F. MacLELLAN

President, National Dairy
Products Corporation

President, United Biscuit Company

President, George A. Fuller Company

of America

GUY W. VAUGHAN

JOHN T. MADDEN

CHARLES A. DANA

FLANIGAN

Corporation

Savings Bank
.

'

IIENRY C.

JOHN P. MAGUIRE

of the Board

JOHN M. FRANKLIN'

President, Curtiss• Wright

President, Emigrant Industrial

President, Dana Corporation

SMITH

ERNEST STAUFFEN

■»>

Simpson Thacher & Bartlctt
KENNETH

V.

President, Home Insurance Co.

OSWALD L. JOHNSTON

Corporation

Vice-Chairman

HAROLD

JOHN L. JOHNSTON

Steamship Lines

Chairman, American Home
Products

Coal Co.

HAROLD C. RICHARD
New York
City

FREDERICK GRETSCH

EDGAR S. BLOOM

ALVIN G.

President, Scranton & Lehigh

D. GIBSON

President

Chairman, The Sperry & Hutchinson Co.

West Indies

GEORGE J. PATTERSON

President, Gerli & Co., Inc.
HARVEY

BEINECKE

Chairman

VON

ELM

of the Board

President, John P. Maguire & Co., Inc. ALBERT N. WILLIAMS
*

'

President, United States Lines Company

C.

R. PALMER

President, Westinghouse

President, Cluctt Peabody & Co., Inc.

Air Brake Company

punitive.

carried

It

Head Office: 55 Broad Street, New York

for¬

is

the

step in this change in debtalmost

Mortgages

Municipal Bonds

redemption

management policy. In the past six
months

532,126,444.37
1,139,511,194.28

U. S. Government Insured F. H. A.

HORACE C.

after

one

the

giving

option of

day

on

but

rowing and spending too easy for values. These values

governments, and combined with

$

U. S. Government Securities

represented by the United States
Savings Bonds. In these the very
right of market is denied. The
only disposition of them is to the

Savings Bond has led the Treas¬

billions

of

marketable obligations have been

(t

RESOURCES

Cash and Due from Banks

ties market
when it issues re¬
stricted non-marketable
securities,;

curities.

close of business September 30, 1947

as at

disregard

SEC, for example, it has re-:
stricted the market for private

to extend the policy of offer¬
ing restricted non-marketable se¬

Policy
The

of Condition

traditional concepts. Through

the

ury

"Easy Money"

.-1*

intent,

should premiumize them for
this: Treasury at fixed punitive prices.
virtue, so fundamental to private The success of the United States

enterprise

-s

suppliers of

Condensed Statement

75

ranking

offices

in

greater

City

new

york

European Representative Office: 1, Cornhill, London, E. C. 3
Member Federal Reserve

System

.

Member New York Clearing House Association

*

the staff

Morfeld, Moss & Hartnett, 818
Street, members of the St.
Louis Stock Exchange. Mr. Wood¬

to

bondholder, or on the other hand,
living parasitically off the private

to

of

Olive

Manufacturers

na¬

taxpayer

Chronicle)

LOUIS, MO.-rKpight Wood¬

pro¬

undue amount of

an

income

//

Morfeld, Moss Adds
(Special to The Financial

from the people and is not

cures

$10,000.

are

'

;

&

applicable.

are

&

prior to that time he spent
15 years in Wall
Street, where he

government be supplied. Only in
this way can it be known whether
the
government
is
allowing a

maximum holdings by
of-bonds issued any

person

M.
the

of

Stock

and

2M>% Treasury Bonds, Investment
Series A-1965, is less violative of
these features than
the
United
States Savings
Bonds, in that

by raising their discount

The

private

While

by the
freeze the short-term
United States Treasury should, in Congress
debt in the member banks and
peace time at least, be continu¬
count it-as reserves, in order to
ously subject to test in an open
save the .Reserve Banks from the
market, where all the influences
which affect value have free and necessity of refusing outright to
unrestricted opportunity to exert
buy or loan against the securities
themselves. Only in this way can
or
to accomplish indirectly the
the credit of

refundings by the sale of securi¬
ties in the open capital
market, in
free competition with the offer¬
ings of corporations and govern¬
mental units, can we know these

during the first

f

JACKSONVILLE, FLA.—A.

capital. Only if the
Treasury finances its deficits and

not sell

;

to

Exchange, an¬
indefinitely. The Treasury seems been said to show: (1) that the
re¬
nounces the
opening of an office
ducing the income of depositors persuaded that this is an oppor¬ United States Savings bond makes in the Barnett
National
Bank
and annuitants, an<L raising the tune time to satisfy the existing for the so-called "socialization" of
Building, under the direction of
demand other than by selling se¬ savings and
premiums on insurance. Thrift is
usurps the functions John J.
Morley. For the past five
curities in the open market.
of private savings
discouraged.
The
earnings
of
institutions; and years, Mr.
Morley has been con¬
other objectives, the (2) that it displaces the
banks are reduced, "so that they ; SAmong
test pf
nected with Merrill
Lynch, Pierce,
are
forced to resort to service policy aims at removing the se¬ the market place. Both the private

The only dispositions the
bond¬
holder can make of his
investment
are to hold it or
to encash it. He
can
not have
it even redeemed

1

government

*43

(1447)

accede

pared, crippling their services,

manageable than the bond. The
bond is an awkard
possession.

.

and

not

And now, relieved from
Congres¬
sional
requirement
to

the Federal Reserve

holdings of
Banks

did

tions, of trust funds of all kinds,
of savings bank portfolios and of consonant with monetary policy.
insurance company reserves are This program cannot be pursued

is

$77.00, and if he reinvests the re¬
maining $67.00 in bonds, he must
start

yields of endowments of philan¬

throwu ion the market, from the

Member Federal Deposit Insurance Corporation

:r:;

44

(1443)

THE

COMMERCIAL & FINANCIAL CHRONICLE
with

| 1 CONSOLIDATIONS
NEW

-

i*

V-'

,

CAPITALIZATIONS

of the

NATIONAL

NEW

Total

resources-

Deposits i

_______

E. Chester

Gersten, President of

C.

U, S.

19,531,669

Govt,

rity

*The Public National Bank & Trust
tCo. of New York, announced on
:
*

American

{'

Karl Schenk, founder of the
Trade Bank and Trust Company

President,

Executive

Secretary

He

the

of

the

and

Deposits,

Association,

Mr. : Green

was

,

and

nomic

died

Development

Cash

in

work

war

business.

U.

discounted

of

S.

43,948,557

45,713,393

22,991,305

—

20,301,378
981,059
///:
4

1,043,692

hold.

&

Undiv.

OF

NEW

Cash

U.

S..

Undiv.

U..

505,320,504

Undiv.

and

S.

div.

BANK

Deposits
and

U.

..

Cash

on

...

Hand and Due from Banks.

.

United States Government Securities*

Liability

Other Assets.

.

.

■

'.

.

.

.

.

.

.

.

■:

356,407,198

429,810,380

414,979,966
13,760,370

14,123,292

banks

i

as

H

'
.

AND

NEW

TRUST

393,202,598

&

CO

386,393,240

of

416,046,058
24,681,079

407,570,503

J.

24,155,237

-

53,513,485

*50,906,977

72,200,107

80,7^2,995

&

"

.

company

york

:

-

*

-

:

r-.v

i

079,092.158

.

59,046,425
^

1

-

1,406,053,590
-4-' "-C-'Ki.:' P

789,353,130

..

bills

*'.v

'•

•

Undiv, proiits
<%

r

....

--

-

.

:

-

Deposits—Demand

.

.

Deposits—Time

.

.

.

$228,962,150.48

•

.

*

■

.

Total

2,640,482.47 $231,602,632.95

Deposits
Cash

Acceptances

$ 15,731,713 78

......

Less Held in Portfolio.

461,580.11

Accrued Interest,

S.

15,*270,133.-67-

Capital

and

468,130,704

t

discounted

76,654,837
25,798,494

Undivided profits

•1,500,000:00

*

OF

NEW

banks
U. S.

Thatcher M. Brown

Govt,

1•"

"*>

and ' bills

524,438,509

Ray Morris

72,240,171

Complete Facilities

for

Domestic

8,271,140

7,856,663

THE

Foreign Banking

PUBLIC

NATIONAL

TRUST CO.

E. R. Harriman

Commercial Letters

H. D. Pennington

Knight Woolley

Brokers

of

Purchase

of

Limited Partner—W. A. Harriman

for

Total

resources--

Sale

Cash & due

rity

David G. Ackerman

Howard P. Maf.der

Donald K. Walker

Edwin K. MHrrill

Joseph R. Kenny

Gale Willard

PHILADELPHIA, VA.h>bi.)'..T.-'v
r
Sept, 30, '47 June 30, *47
$713,838,267 $712,623,219
Deposits___*648,475,219
646,492,061.
Cash & due from
■'
\
's-"X
1 bunks
240;715,735
230,510,35^

F. H. Kingsbury, Jr.

Ernest E. Nelson

Harry L. Wills

Robert H. Chamberlin

John A. Knox

;

M erritt T. Cooke
James Hale, Jr.

Thomas J. McElrath

new

york

resources—

;

William A. Hess

^

Herbert Muhlert
Arthur L. Nash

,

William C. Horn *'

U. S

Richard Platt
-

1

William f: Ray

Arthur R. Rowe

secu¬

holdings^i

Loans

and

-

bills

62,199,987
'K
V
t

69,581,006

34,441,370

32,327,664
2,835,339

discounted;
Undivided profits

,

Laurence W. Simonds.

•

Govt,

rity

*

2,817,802

'

":■;

;

f

v

Charles

'

'

George E. Paul, Treasurer

Carlson, Comptroller

,

y

.

_

the

Arthur B.Smith, Ji uditor\

Licensed as Private Bankers/and iubject to exatnination and regulation by..the., J
Superintendent? of Banks of the State of. New; York, and, by-the Department of.
v
Banking of the' Commonwealth- ofPennsylvania. Subject-to; supervision-and ex-" f
animation by the. Commissioner of Banks of tie^ Commonwealth
pf Massachusetts.
"

'

"




4>- "

V v-.V.-V*Vl»;.

V-"~'

>■

'.#

H<

commercial

*

'«

national

and trust company of new
. —

•*»*•*>.;•» ;-

;

'

-p

'

j

bank

york

Cash & due from

-i banks_i_'
U. S. .Govt, .secur

'

s

47,436,008
i

„<

•'•'rity-holdings—

Govt,

125,9^5,824
.

•

Undivided profits

r'• --^

2,bbu,631

S.

.

secu-

holdingsand

298,623,750

309,441,39*

120,327,025

120,070.988

8,081,853

7,876,060

bills

discounted

___

TRUST COMPANY OF PHILADELPHIA
t
-/'Sept. 30, '47 June 30, '41

'^

Total resources—
r**—v

-i*—_i_^*

*

Bank

Trust

&

$279,600,587 $271,546,086
256,408,944
247,263,760

Cash & due from.i
S.

rity
Loans

H

;

banks
U.

f

^

,

69,593,792"

Govt,

holdings..
and

108,945,234

109,683,184.

77,913,682

69,265,831
3,241,414

bills

discounted
Undivided

68,625,725

secu¬

___

profits

3,044.962

*

*

*
,

-

:

>

by the Federal and
State
Banking departments has
been given to plans for the acqui¬
sition by the County Trust Com¬
Approval

of

Maryland

(main

office

Company of Dansville, New York,

pany

became the Dansville office of the

Cambridge, Md.) of the Commer¬

Security

cial National Bank of Snow

Trust Company
Oct.

of

Ro¬

1, complet¬

weeks.

This

Rochester

was

indicated in the

according to the Baltimore
"Sun"
of
Sept. 25.
The plans
were

referred to in these columns

Sept. 25, page 1236.
♦

"Times-Union," which

Citizens Bank and Trust Company
continue as officers of the

will

Security Trust Company, to
ate the Dansville

bank.

oper¬

The staff

Citizens

Waukegan,

111,

*

*

*

■

-I*

will

Tribune."

These

advices

that after the dividend the
capital structure will ccm'sist1; 0$
$200,000 capital, $175,000 sUrpliis,
undivided profits and
•

;

jS'/L:

-

in;
y

The. Board of Directors
Manufacturers

;:$ept/.oi^'':^te4

Bank and

$ty •;

ofJ^e

K-'J'.-dd.

National.^ Bank/o(

promotion on/Sept. *24 by Detroit, Mich, ori
the directors, of the Hartford Na-! clared^ ;a ,quarterly
tional

Bank
of
increase' its

capital from: $150,000 to $200,000;
through the
declaration
of1 $
33 V3% dividend, payable in stock
lyauic in
T.
Sept.. 30, William
Q'MearS}
President, said; on Sept. -14v it' 13
learned from the Chicago

,

The

.

National

of the bank is, likewise; being re-' and
$75,000
tained."
An item regarding the; reserves.-

merger agreement
appeared"
our issue Of Sept 4, page 926.

Hill*

Md.,

dividend

of

•
v

Trust

-

117,885,474
46,436,922

...

Company) $1)50 per share,-payable on Sept»1
"of Hartford, Conn, of three of the:
30, 1947 to stockholders of record •**.
bank's ^senior officerS was; naade; on;-Sept; 16;
1947;. In) annbuhclhg / •
!
'
*
knownf in; the- ^ar^ord; ;"Daily ihij&txpaymen^
48,164)^16
b H '>i Courantl' of jSept;;
whicfr said' quarterly, basis, Charles. A* Kan*

Sept. 30, '47 June 30, *47
Total resources— $217,985,458 $220,580,558
Deposits '-IjuJk-i': 191,680,466" 194,774,808'
.

Loans, and - bills
discounted

';.V.'

*

Citizens

stated that George H. Plummer,
7,503,280
President; Paul E. Wamp, Jr.,
* tV*
i i
Secretary and; Treasurer; Alice R. I
trust comp^nt' i
Finn, Assistant Secretary, of the)

_______

Arthur K. Paddock

38,793,075

#

125,246,190
7,197,603

June 30, '47
$152,902,599 $140,613,605
Deposits
120,030,271
107,580,404
Cash & due from
.-V
>
'
.banks..
36,650,650
20,476,964

Assistant Managers

21,075,452

profits

in its issue of

Sept. 30,'47

'

450415,149

_

301,141,782

States
of

Total

Undiv.

478,137,330

bills

discounted

Vj: 7

resources—

1,175,263,724

142,562,"973

profits

tnited

&

1,139,511,194

had

bills

John C. West

M. Dutton Morehouse

hold.

Bernard E» Finucane, President, of
the
Security
Trust
Company,

Li Parks Shipley

Charles F. Breed

;

v-

.

.^09,901,883

holdings-

Undivided

Managers

536,519,343

115,460,405

;

discounted

Joseph C. Lucey

]

June 30, *47

secu-

and

582,126,444

due

278,950,382

.

U. S. Govt,

2,113.002,694

Govt.

secur.

:"L-

Deposits
*

:

ing the merger negotiations that
been under way for some

AND

YORK

NEW YORK

Sept. 30 also said:
"In making the announcement,

from.

1. banks

Investment Advisory Service

Loans

Edward Abrams

BANK

OF NEW

$550,757,489 $555,932,090
514,263,481
520,046,838

Deposits

Securities

OF

chester effective

Sept. 30, '47

Credit

and

*

and

Deposit Accounts* Loans-Acceptances

Louis Curtis

!

512,246,362

63,892,753

J

.

Sept. 30, *47
June 30, *47
$2,299,713,391 $2,259,311,590

banks

The

holdings-

-M

■

MANUFACTURERS .TRU^f

and

Loans

18498 983

'/

2,153,427,086

S.

'

rity

139,328,1951

18,811,023

COMPANY

from

*

•

■

the philadelphia national bank,:

CORN EXCHANGE NATIONAL BANK AND

^'.<.1

204,009,705

secu¬

*

Thomas McCance

Prescott S. Bush

YORK

213,323,403

discounted
Undivided profits

FACILITIES

Stephen Y. Hord

'*

Tot'I resources

U.

Cash & due from

att

rity

Moreau D. Brown

XttE",

.

T■/v*"X;*;

258,793,824

146,169,971

Deposits

Sept. 30, '47 June 30, '47
$827,819,087 $812,741,984
782,641,524
767,512,666

Total resoruces—

Loans

PARTNERS

123,515,072
26,039,371

BANK TRUST COMPANY

Deposits

Required by Law $1,600,000 U. S. Government Securities
Pledged to Secure Public Deposits.

245,215,996

discounted

dl.

elected

,

"Evening Buls
its Sept;;-25.

Loans

bills

Undivided profits

Cash

CORN ECIIANGE

13,825,283.54

$262,480,901.19
As

(r

*

2,000,000.00

11,825,283-54

467,372,087:

bills

been

reported / in

Undivided profits

holdingsand

k

rity'.holdings—

282,851:03

167,500,731

rities
Loans

has

»

''

secu¬

secu¬

*

$

Surplus

148.348,719

Govt,

Loans

etc
.

& due from

? banks

'

Expenses,
Contingencies

Reserve for

Sept. 30, '47, June 30, '47
$793,575,213 $847,187,900
626,627,093
703,820,719

resources-

U. S. Govt,

*

;

.

.

.

,

*

.

•

.

Com¬

■

...

t

.'LIABILITIES

Trust

of Hazleton, Pa.
He sue-:
ceeds C. Marvin Pardee who. res.
mains as Chairman of the
board,"
the Philadelphia

U.

:

j.

■.

25,

%

and

Koch

Total

Capital & surplus

$262,480,901.19

F.

-Si; 1

58,124,196

.

p". thorgan
;co:"' inc./new york
61,404,302
56,142,926
Sept.130,'47' June 30r'47
13,825,284
13,805,284) Total
ft* •* *
1
-*—*.
"
;.resourc)esi.. $706,320,349 $701,757,337
%rW!:-v'.. C4
| ' V- '
Deposits,, ——1- 633,671,778 630,679,398
THE FIRST NATIONAL
Cash & duc from
BANK OF
THE
banks
CITY OF NEW YORK i
'i
167,944,220
162,195,587

discounted

#

Bank

issue..

596,220,879

T

1,407,618,356

'bills 1

discounted-

■

secu-

was

Sept.

Bank

trust

528,013,047

hold.'

secur.

Newell
of

President of the Hazleton National

*

new

-

Govt.,

Loan's

#

*

_

banks

J$tx 8.

Mr.

issue

surplus $16,000,000.

.

from

to

transfer,
the
capital
remains
$5,687,500. Surplus will be $10,312,500, making total capital and

;
.
;;
Sept. 30, '47
June so, '47
tii
$2,uoo,/b
Deposits
2,475,101,407 '2,417,706,061
Cash and due- V-;
y -;*.->•>>•'' '•: letin"
.

continues

profits to surplus ac¬
After giving effect to this

count.

Tot 1 iesources

HARRIMAN

of

our

683,952,211

guaranty
••

He

undivided

YORK

653,113,547

s?

"

V——-

BANK

OF

due

profits

the

death
in

bills

*

which

pany of Philadelphia, a transfer
of $312,500 was authorized from

Sept. 30, '47
June 30, '47
$1,buu,143,423 $1,568,036,845
1,422,676,351
1,431,750,976

"

1

'

of

Director."

a

National

769,540

8,250,072

HANOVER

discounted-

from

and

1,227,878

hold.

&

and

At a meeting of the board of
directors of the Corn Exchange

Govt.

Undiv,

Sept. 30, *47 June 30, '47
$262,480,901 $250,952,016
4^. 231,602,633 •224,22b,on

rity. holdings

Loans

1,012,100.51

.

.

in

22,930,552

110,403,745

8,500,994

banks

S.
secur.

resources—

U* S." Govt,

}5,259,5W2,

27,856,823

107,752,302

prolits

Loans

371,785,555

—

there

page 1216.

bills

and

Board.

as

,■;

hold.

&

the

noted

$147,024,238
114,147,633

Govt.

from

U.

297,833,838

BROTHERS,

Cash & due

61,404"301.79

Acceptances,

.on

of

The

banks

S.

Cash

bills

Deposits"

4,722,4-26.-60-

Company merged

due

Deposits

-

54,368,883-'97

Other Marketable Securities*.
Loans and Discounts

COMPANY

Govt.
hold.

John O.

him

John O. Enders became Chairman

serve

$151,286,871
118,579,746

Tot'I resources

June

281,258,833

«'

Total

36,036,301

COMPANY

YORK

.

State, Municipal aiidOthet PublicSeCurltids *

Customers'

due

&

BROWN

38,260,503

discounted-

?0, '47
$1,142,110,049 $1,121,173 424
1,038,100,769
1,047,892,028

Undiv, profits

.$ 53,513,485.27
' 72,*206,107.03

.

*.

.

from

secur.

63,978,421

MANHATTAN

discounted-

*••'•••

ASSETS

■

S.

1,181,679,629

Bank

CENTRAL

banks

secur.

Loans

1,144,278,147

*

NEW

succeeded

Hartford National Bank and Trust
314

300,716,608

64.681,957

THE

Tot'I resources

*

2,^54,497

bills

and

Undiv.

Sept. 30. '47

*

Cash

547,624,771

320,671,403

*

President,

Aetna National Bank, participated
in a consolidation from which the

Company—..

278,183,071

537,804,370

OF

*

2,183,146,029

hold.

Deposits

un¬

OF

irom

1,301,215,569

Tot'I resources

bills

PHILADELPHIA

Cash

4,730,475,216

1,208,876,854

profits

Loans

profits

v new

BANK

Govt.*
&

City

U.

❖

-

COMPANY

YORK

260,982,619

hold.

&

Surplus &

PRIVATE BANKERS

The

due

discounted-

CO.

38,201,728

Govt.

Loans

the

the

CITY

>

discounted-

June 30, '47
Sept. 30, '47
$1,159,267,873 $1,159,522,229
1,030,192,659
1,035,687,213

banks

secur.

Business Established 1818

NEW

part:

President of the United

as

Enders,

Farmers Trust

Deposits

U.

S.

secur.

«l!

TRUST

of

served

States Bank and his son,

4,622,164,738

due

banks

Loans

IRVING

Tot'I resources

from

and

602,665,899

V

30,278,277
1,692.94a

NATIONAL

——

Cash

592,512,863
38,913,064

OF

Cash

$1,526,091,313
1,340,581,583

558,311,249

profits

in

Enders

J(,

333,432,893

•!"

'^5 r;

_

bills

THE

added

"Courant"

■

June 30, '47

330,943,128

hold.

34,987,653

___

member of the

a

time.

some

Presidency. The United States
Bank was one of three; banks
OF NEW-YORK
/ 7
which
merged
in 1923.
These
Sept. 30, '47
June 30, '47
Tot'I resources
$4,957,416,117 $5,044,245,923 banks
composing the HartfordDeposits
*
—
THE

Govt.

&

138,435,342

1,859,070
.',***

from

banks

140,505,378

bills

Undivided profits

due

discounted-

of Conditionf September-30, 194-7

and

respec¬

Enders

the

father

holdings-

their

becomes, the third
family to become
224,789',623 President of the
bank, or its pre-»"
61,146,531 decessors, Thomas Enders, grand*
of

secu¬

discounted

YORK

1,393,338,536

and

secur;

Statement

rity

COMPANY

Sept. 30, '47

Deposits

The

"Mr.

June 30, '47

55,187,277

Govt,

Loans

7,289,613

Tot'I resources
$1,573,355,231

Loans

BOSTON

S.

*

TRUST

board for

Y,

226,649,871

uanas

;

U.

369,030,356

BANKERS

Hazen has been

COMPANY

Sept. 30, *47

,

npnoshs
Deposits

463,613,551

7,811,083

TRUST

Cash & due from

325,011,456

398,194,912

sjs

BROOKLYN, N.
:

bills

profits

from

NEW YORK

OF

\h

in

tive departments. Mr. Glover was
elected to
be
a
director.
Mr*

Total resources— $244,115,866
$242,600 401

1,168,958,598

463,008,401

*

BROOKLYN

NEW YORK

310,334,303

discounted-

small

&

THE

Govt.

secur.

He has been associated

BROWN BROTHERS HARRIMAN

TRUST

due

banks

Loans

post¬

field

the

its

OF

&

1,195,134,163

and

from

for¬

in

BANK

Glover, Vice-President in the
banking department, to be senior
Vice-Presidents

bills

Undivided profits

'■/■'■TsVifci Sept. 30, '47
June 30, '47
Tot'I resources
$1,3/1,804,300 $1,293,U93,043

leave of absence in July, 1944, to
assist
the
Committee
on
Eco¬

73 years of age.

was

of

CHEMICAL
COMPANY

merly Director of public relations
for the Bank, which gave him a

Ave.,

Vice-President,

Oct. 3.

on

President.

who had served successively

its

Bankers

a

resigned to; return to the Franklin
Square, National Bank, Franklin
Square, L. I. on Oct'. 6, as a Vice-

'I

fas

has been Director
Relations Council

year

ant Trust Officers.

.

over

Public

Oct. 2 the appointment of John
King and Erik O. Skog as Assist¬

of New- York* at 481 Seventh

Green, who for

H.

19,274,028

secu¬

holdings-

Loans

Advertising Department.

THE

W.

78,721,679

Cash & due from

banks

death of Robert B. Newell; Maynard T. Hazen, Vice-President in
the trust department, and Milton

June 30, '47
-$90,888,855

$90,709,331
78,138,181

*

r

BANK

YORK

Sept. 30, '47

Council vacated by Mr.
Green, in
addition to his duties as Director

,7;:

Thursday, October 9,

GRACE
OF

many years, will assume the post
of Director of the Public
Relations

'

OFFICERS, ETC.

.REVISED

THE

ABA since February,
1946. John B. Mack,
Jr., Deputy
Manager of the ABA in charge "of
ifs
advertising department for

About Banks
NEW BRANCHES

the

-

-42,l37„795
2,265,038/

they
are
Ostrom; Enders^/ First ter^ / Fl^sider^S r stated^^
y
yi ce-Presid exit, to ; b e / P
4 o-t, l^irdjqldir^qtprs
ha^^i^pt^;tbe y):
tilliiig the vacancy caused, by
'
customary "corporation practice oi
.

; •

THE

Number 4636

Volume 166

dividends quarterly, insemi-annually as hereto-i

paying
stead of

Institute

trol, Controllers
America.
'

,yw,

fore.

J[,

President

of

First

the

Wisconsin

Board

of

Cal., died

old.

The

years

guest at a dinner at the Milwaukee Country Club on Sept. 15
according
to
the
Milwaukee
"Journal" from which it is learned

"Chronicle"

.

.

Mr.

that

Campbell began

a

as

*

#-:'4:rt
' > . ..
^

*

»

j

Sept. 15, 1897.

on

of

Directors

'

tional

Bank

';r

,5V .V34*

Minneapolis

of

i

V

Midland Na¬

the

au-

the
account from un-j
distributed earnings arid" reserves,
according
to announcement on
Sept. 10 by Arnulf Ueland, Presi¬
dent.
The
Minneapolis
"Star,";
from which we quote, added:
With this addition the entile
capital structure of the bank will
consist of $1,000,000 common stock,
$1,500,000
surplus and $670,829
undivided profits and reserves, a
total of $3,170,829.
bank's surplus

the

Bank which*

Bank

and

Company of St.

Trust

Louis, Mo., has announced the ap¬

of John E Hauss as
Manager in charge of instalment

pointment

credits, collections and general
office operations of the Consumer
Credit Departments.

office

* #-

W.

P.

Kansas City, Mo.,

died

of

Bank

Side

South

the

of

dent

formerly Presi¬

Henry,

on

Sept. 29.

*

lowed
to

to

the

of

United

may

be al¬

Proprietor is limited

a

net

United

Kingdom rate
payable by the Bank—namely, 5s.
in the pound.

Group!

of

rate

a

new

issue of 199,-

share

one

held

mon

"Oregonian" of Sept. 14 re¬
ported that Mr. Spencer who suc¬

of

of

record

S.

less

1,
The

ferred

Nelson, was elected on Sept. 30
by the trustees of the Washington
Mutual Savings Bank of Seattle to
the

this

Seattle

Mr.

that

Street

be

convertible

into

time prior to Oct. 1.
price of $44.44 per share

a

Proceeds of the

Strader, Taylor & Co.
Forming in Lynchburg

after Sept. 30,

par

LYNCHBURG, VA. — Strader,
Taylor & Co., Inc., is being formed

if redeemed

1957, plus accrued

with

dividends.

offices in

the

Peoples Naf

for¬

preferred

new

of short-term bank loans

totaling

$12,250,000

merly Vice-President and Gen¬
eral Manager of Marshall Field &
Co., Chicago.

the

incurred

for

re¬

tirement on Sept. 20, 1947, of the
company's outstanding 5%% cu¬
mulative preferred stock, at $125

Barclays Bank (Dominion, Co¬
had also formerly been a
lonial and Overseas) of London
Vice-President of the old Pioneer
announces that Anthony William
Trust Co. In 1941, said the Kan¬
Tuke
and
Captain Derek Fitz¬
sas
City "Star" of Sept. 29, he
gave up a position with the Re¬ gerald have been appointed di¬
rectors of the bank.
construction Finance Corporation,
Barclays Bank (Dominion, Co¬
where he was in charge of pre¬
announces
ferred stock in the tenth [Kansas lonial and Overseas)
age,

Mr*

sales of
dar

$77,590,394 for the calen¬

1946. Consolidated net
profit for-the first six: months of
year

1947 amounted to

$2,567,594

com¬

pared with $4,005,029 for the year
1946.
Cash dividends have been

paid

on

the

common

stock of the

company and its predecessor
each year since 1902.

in

.

With Ediward E. Mathews
(Special to The Financial

BOSTON,

Chronicle)
Ludwell A. Strader

MASS.—Albert

W.
Davis has been added to the staff
of

Edward

State

E.

Mathews

Co.,

tional Bank

53

the

Street.

share, and any balance
general corporate purposes,

per

cluding a plant replacement and
improvement program undertaken

securities

engage

business.

ii

Officers

Horner & Mason, Inc. in charge of
corporate bond departmejni.

Vance, Sanders & Co. of Boston.

the

Mr. Taylor

local

manager of te
unlisted trading
department for the same
was

securities,

and stock

(Special to The Financial Chronicle)

firm.

PORTLAND, OREG.—Anthony

The

B. Harrison has become associated

new

firm

will

conduct

a

Wilcox, Cascade general business in investment se¬
Building. He wag formerly with curities, specializing in Virginjk
issues
of
all
types,
including
Daugherty, Cole & Co. for many
municipal bonds, corporate stockb
years.
with

Sloan

&

and bonds and all local

for

in¬

Clarence E. Taylor

Building to

will be Ludwell A.
Strader, Presi¬
dent; Clarence E. Taylor, Vice|With Vance, Sanders Co. President, and M. J. Strader,
Mr.
Strader
DUBLIN, N. H.—Philip F. Mc- Secretary.
wjais
Lellan has joined the staff of formerly Vice-President of Scoti,

Joins Sloan & Wilcox

stock are, to the extent available
to be applied toward repayment

"Times"
was

to

of common.

bank's

the

is

1957, at

by

known

pur¬

common any

board, it was
Dietrich Schmitz,
President of the bank. In making
on

shares

20, 1947.

&

announced

of

number

scription rights, expiring on Oct.
Each share of new pre¬

President

General Manager of Frederick

serve

the

chased upon the exercise of sub¬

*

Street,

com¬

new

scaling down to

Oct.

1947.

the current year.

and

The

preferred is redeem¬
able at $103 per share on or be¬
fore Sept. 30, 1949, and at prices
.

preferred

on

A.,group headed by
Boston Corp.
ceeds the late Lee Paterson, has First
and Harris,
Hall & Co. (Inc.) are underwrit¬
served
as
Secretary
and
legal
counsel for the directors most of ing an aggregate of 100,000 shares
*

995,507 shares of

stock.

mon

totaled $55,041:,662 compared with

stock for each five shares of com¬

Port¬

land

*

stock and

Consolidated net- sales for the
six months ended June 30, 1947,

101 shares of 4% cumulative
pre¬
ferred stock ($100 par) at the

director, of
the
bank,
George
Brice, Sr., President of the insti¬
The

First Boston

shareholders

Savings Bank of
Portland, Ore. has been elected a

Henry, who was 64 years of

Mr.

repayment
Kingdom income tax

The American Brake Shoe Co.
on Oct; 2 -offered to its
common

Arthur C. Spencer, Secretary of

announced.

or

Of Anter. Brake Shoe

-

Oregon Mutual

tution has

payable by the Bank is
The rate at which

Underwrites Pf(tissue

director of the bank

board for the last 14 years.

stated

*

*

*

founded iri 1868.

was

of 41 years and held
of Chairman of the

the

CHRONICLE

Edward

of

son

a

; -hi*;.v

FINANCIAL

Mr.

that

He became

William

Mercantile -Commerce

The

Francisco

San

Kruse, one of the original incor¬
porators of the Sari ~ Fraricisco

thorized transfer of $500,000 to

■

He was 83

reports

was

San

Francisco,

at the age

National

mesehger at the old First
*

Bank',

Kruse

the

of

at San

Oct. 2.

on

rate of tax

relief

Chairman of the

Directors

Francisco Bank

National Bank of Milwaukee, Wis*
was

'

- *

.

In recognition of his 50 years'
service, George T. Campbell Vice-

*

of

&

5s. in the pound.

Emil T. Kruse,

*

COMMERCIAL

Also

Gillespie & Wouters Adds

associated

with

stocks.] |
the

firrii

general sales manager will jbre
Philip T,. Strader. who for two
as

(Special to The Financial Chronicle)

> GREEN BAY, WIS.—Harold R.
years was with Scott, Horner &
Mclnerney is now connected with
Mason, following service in the
Gillespie & Wouters, Northern
Outstanding capital stock, ad¬
Marine Corps. Mrs. Virginia.
Building.
Mr. 1 Mclnerney
was
|Tf.
justed to reflect the financing, is
previously with Paine, Webber, White will serve as office secret
City] Federal Reserve District, to that a branch of the bank would be to consist
qf the new 4% preferred J.ackson & Curtis.
tary.
^
,-i-J fe
become President of the South opened at Nassau (Bahamas) on
Side bank.
Last July, the "Star" Oct. 1.

added, he sold his interest in the
South Side bank and joined the
American Meat Company as VicePresident

and

Bank

directors
Ltd.

the

London

Midland
announce

DIRECTORS

i<»
*

&

$

member of their board

a

Martin E. Kilpatrick,

of Atlanta,

the

board

Executor

by the Board of Directors of
Fulton
National Hank
of
Atlanta to fill the vacancy created

recent

the

Smith.
lanta

death of

Marion

In indicating this the At¬
"Constitution" of Sept. 17

Mr. Kilpatrick's law
represented the Fulton
National as legal council for many
stated

that

has

the

and

Midland

Trustee

of

Chairman

Company

R.

*

GEORGE WHITNEY
on

Sept. 9 in

President

Condensed Statement of Condition September 30, 1917

and The .Union Bank of Australia

HENR T C. ALEXANDER

Ltd. states that for the protection
of their Proprietors, the directors

Vice-President

Vice-President
Cash

made known on Feb. 21
last plans of the proposed merger

their

Doty

announce

President
on

the

of

death

Beverly

Preston

August 29.
*

*

;

.

;

of the
First National Bank of Arizona at
Phoenix announce the death on
The officers and directors

Sept. 21 of Maurice J. Hackett,
Vice-President of the bank.
:
„

*

,t

*

*

was

solution
nical

appreciated

of

the

difficulties,

that

PAUL C.

BERNARD

was

countries

would
The

take

and

six

States,

considerable

a

of

the

decision

a

represented

stock

Ostengaard,

Assistant Comptroller of

on

Letters

of Credit and Acceptances
Less

$

9,982,929.12

Prepayments

734,672.89

9,248,256.23

CHARLES D. DICKEY

have been actively pur¬
sued, but an entirely new situa¬

$706,320,348.80

Vice-President

RALPH W.

GALLAGHER

N. D. JAY

!Incorporated

formerly

*'

The

Court

of

G US TA V METZMAN

President New York Central
Railroad

JUNIUS S. MORGAN

recen'tly 'appointed Assistant

Cashier and assigned; to the banks

,

deduction of United
tax

at 9s. in
find bankers department. Former
Comptroller of the Live Stock Na¬ at the rate of 7% per annum, less
tional Bank, Chicago, Mr.. Osten¬ tax, on account of the,year ending
gaard joined the California Bank Oct. 15, 1947. The dividend will
fctaff over two years ago. He is ac¬ be payable; on Oct. 3 to Proprietors
tive in the National Association of registered in the books of the
come

Bank on Sept. 8. The advices in
serving as President oi the Chi¬ the matter Aug. 28 added:

Bank Auditors and Comptrollers,

cago xcmference;in 1942^ and is a-

Angeles Cori-T




By
relief

reason

the

of

net

double
United

taxation

Kingdom

Vicfi-President

Accounts

32235,467.10

Payable, Reserve for Taxes,

$633,671,777.58

etc...

3,854,619.33

Acceptances Outstanding and Letters of
Credit Issued

9.982,929.12

■' i,'

20,600.000.00

Surplus

20,000.000.00

Undivided Profits

18,811,022.77

ALFRED P. SLOAN, JR.

an,

Kingdom in¬
the pound, being

,u

.

,

Capital

Vice-President

of the

hfy Bank * Lo& Angeles, Cal. was

Company

IK A. MITCHELL

Califor- Bank of Australasia has declared

$601,536,310.48

Official Checks Outstanding

Vice-President

*

Directors

Deposits

THOMAS S. LAMONT

understood that until the position
of the two banks under this pro¬

*

LIABILITIES

Vice-Chairman Morgan & Cie.

interim dividend of 3s. 6d. per
share (3%% actual), subject to

haember ofii the LOs'

2,299,081.33

3,000,000.00

Liability of Customers

Vice-President

to

merge

'■

Rudolph

-

„

Receivable, etc..

tion has been created

1
♦

•

13,690106.00
146,1-69,971.05

Banking House

II. P. DAVISON

arrangements for the imple¬

mentation

Accrued Interest, Accounts

COLLYER

Company

time.

1,200,000.00

(including Shares

Loans and Bills Purchased.

President The B. F. Goodrich

JOHN L.

17,532,718.01

of the Federal Reserve Bank

of Morgan, Grenfell 4" Co. Limited and
Morgan $• Cie. Incorporated)

CHARLES S. CHEST ON

duties, of an amalgamation of this
magnitude involving the laws of

345.235,995.90

Municipal Bonds and Notes

Other Bonds and Securities

CARTER

Incorporated

dividend of $50,000,
posal is clarified, the directors are
Wljiile.the; other; $50,006 was-rea¬ not in a
position to proceed. fur¬
lized'by the sale of $50,000 of
ther with the merger."
hew stock.
"fl'■]'
by

S.

Stock

President Morgan & Cie.

legal and tech¬
particularly in

by the pro¬
Tbe First National, Bank in
Boulder, Boulder, Colo., increased posed nationalization of the Trad¬
the
Australian
its capital on Sept. 15 from $100,- ing 'Bhnks : by
Government. It will be readily
000 to $200,000.; Of the $100,000

Increase $50,000

State and

CABOT

President State Street
Investment Corporation

the

$167,944,220.28

fro m Banks

United States Government Securities

Vice-President

the matter of taxation and stamp

three

Hand and Due

on

1. C. R. AT KIN

ciple,

"It

ASSETS

ARTHUR M. ANDERSON

of the two banks, as soon as they
had reached agreement in prin¬

The officers and

Texas,

NEW YORK

behalf of the Bank of Australasia

advices state that:

directors of the
First National Bank of Beaumont,

INCORPORATED

C. LEFF1NG WELL

*

of the two institutions. The latest

years.

J. P. MORGAN & CO.

THOMAS IK LAM ON T

Bank

Chairman Executive Committee

An announcement

-"

16

the

of

and

Ga., a member of the law firm of
Ltd.
Smith, Kilpatrick, Cody, Rogers &
McClatchey, was elected on Sept.

firm

of

of

Secre¬ that Lieutenant-Colonel F. Leslie
Orme, O.B.E., has been elected

Financial

tary

by

*

*

*

The

by the company rsince the war.

Chairman General Motors

$706,320,348.80

Corporation
E. TAPPAN S TANNARD
President Kennecott

,

Copper Corporation
JAMES L. THOMSON
.

>

„

^-

,

Chairman Finance

United States Government securities carried at $17,942,971.24 in the above
statement are pledged to qualify for fiduciary powers, to secure
public monies as required by lazu, and for other purposes.
•

•

»

-

1

.

.

i.

.

-

.

^

\

.

5

.

ComthiUee Hartford Fire
.

Insurance

Company

JOHN S. ZINSSER
Chairman Sharp & Dohme Inc.

Member Federal Reserve

System

Member Federal Deposit Insurance Corporation

T 'M

46

(1450)

THE

COMMERCIAL

FINANCIAL

&

CHRONICLE

Our total net export balance

ance,

Sustaining Prosperity and General Stability

(Continued from page 6)
employment
and price
stability

incompatible. The Adminis¬
tration, through the Wagner Act
are

and

of other laws and ad¬

scores

ministrative rulings has built up a
powerful monopolistic labor move¬
ment, Now this movement has a

dynamism and momentum which

through successive rounds of

wage

increases appears destined to con¬
tinue to push costs up and pull

prices

through the enlarged
money income in pay envelopes,
until the wage-price spiral will
burst
in
mass
unemployment.
Then

up

the

blamed

businessman

for

will

be

"not

finding jobs."
The Administration in Washing¬

ton, largely

responsible for this

in the first half of

ning

at
billion.

impasse, is absolutely bankrupt
By concentrating upon receni;
remedies; it has no medicine months, it can be shown that the
for the disease.
The erstwhile cost of living has overtaken wage
brain-trusters. who cooked
this rates and weekly wage income
stew have fled back to the colleges For persons who spend a
large
and universities or the practice proportion of their income
upon
of law from whence they came, -v
food, real hardship exists.
But for the great body of fac¬
Higher production may help to
counteract inflation, but working tory workers real wages^are still
alone against an inflationary cur¬ substantially ahead of prewar and
rency, it cannot solve the problem. predepression. Real wages'vtoday
Similarly, higher wage rates for are about 54.% above?1929^and
those who can get them may off¬ about 31%
above 19^'Sdrely
set in part the rise in the cost of this is no mean
gaihil^^spteGially
living; but their gain is likely to considering: the phghi^of thefipeocome at the expense of the pen¬
pies in nearly every other, coun¬
sioners, teachers, clergymen and
others living on fixed incomes— try in the World. The official data
thereby accentuating the social are provided in the accompanying
of

and
*

meat

iteers

99.4

139.31

157.1

28

95.2

159.6

190.5

44

125.8

139.9

Real average

hourly factory earnings (1939 prices)
Real average weekly factory earnings (1939 prices)—
V

*A11 data from U. S. Departments of Labor and

Inflation

and

Pension

of

be

asked

to

make

level to rise

trol of the businessman.

settled.

ever higher,
we are
breaking faith with the
millions of actual and potential
beneficiaries of the government's

old

effect

and

age

survivors' insurance

nessman

Can Business Control Prices?

Although

Others, saving for their
retirement, will discover that their
thrift has been

the

held

been

program.

ernment,
with

the

illusory. The

having
causes

failed

of

to

gov¬

deal

inflation, will

circles

for

businessmen

responsible

in

have
some

the

rising prices and

substantial

profits which the

intense

buying demand have made

possible, the facts, as pointed out

his

has

control

supply of
would
has

say

would

con¬

became

a

270,000

their

has

ment,

sys¬

trade

of

midst.

;The scarcities in line after., line

avi

INCORPORATED

production

scheduling; bottlenecks have con¬
tinued and private rationing of
scarce raw materials and supplies

BROOKLYN

OF

retarded smooth

have

have

1859

and

prevailed.

One

man

or

late

or

as

people

expenditure

.

of

loans

loars

and

funds

the

shotild

be

the

frorh

carefully

scrutinized in terms of their effect
our domestic problems.

on

(8) The government should gen¬
erate

a

coordinated

substantial

a

plus and

held

debt

with

a

budgetary

sur¬

off that part of the
by commercial banks

pay

view to

reducing inflation¬
this time.

ary pressures at

(9) The Administration, the ap¬
propriate Congressional Commit¬
tees, and the Federal Reserve
System should take steps imme¬

prevent

pro¬

and

and

price,

general

any

activity.

should
decline of

The anticipa¬
demand

consumer

is the

essence of sound production
price policies in terms of pre¬
venting the shrinkage of markets.

and

(2)

Management

and

labor

should

increase total production
cooperating to increase ef¬
ficiency, to reduce waste, and
wherever practical and desirable
they should work longer hours.

by

mean

the speed¬

stretch-out, but it does mean
labor turnover, reduced
more thoughtful
coordination of all the productive
elements in the factory, the store
up or

the

which will reduce

or

abolish

inflationary

from

side

the

this is

pressures coming
of money.
Unless

all other steps must
fail, and our economy will end iri
collapse.
'
done

(10) The government should es¬
tablish the rules of collective barT

gaining, but should not; intervene
in

determining the results of col¬
bargaining merely to get
over a momentary crisis.
lective

(11) The disposal of surplus war
commodities should be greatly ac¬
celerated
months of

during the remaining
shortages, when the dis-^

posal will have the least disrup¬
tive effects and do the most good
reducing scarcities.

in

reduced

Conclusion

absenteeism and

wherever

and
and
a

men

management

working together for

are

common

else

through

cut to

short-term

credit

where long-term financing should

and checkbook money.

v(4) In all

cases

of renewed

ganizedwage demands,

or-

manage¬

of

management,

government.

The

*

labor and

*

FIG Banks Place Debs.

be

employed. This will reduce the
further rise of demand deposits

good economic health.

foregoing suggestions, if to be ef-<
fective, call for the closest cooper¬
ation

purpose.

(3) Business management should
not finance operations or expan¬
sion

Unfortunately, there is ho short

A

successful

offering

of -two:

issues of debentures for the Fed¬
eral ' Intermediate
Credit Banks
was made Sept. 17
by; Charles ft.
Dunn, New York, fiscal, agent i&t

missing.at-the. ment and men should sit down 4he :;banks^;Ther vfii^eingi con-*\
may reduce! ^together and ask themselves thesh sisted Of
010,008 *l.I5.%vl£obM N
solidated debentures dated Oct.
whole team of questions:.-^•.'
I,
■"
';* ■; '-p\
(a)^If .the cost of living is 1947, and- duo July lv 1948, anct

drill press

of

output

workmen.

a

(

Supply

necessary

the

'

foreign

All

and

to the type of products,

quality

economic

turnover

absenteeism have been high.

bench
the

Labor

for

This does not

our

agriculture

in

■

ac¬

in

to

diately to, develop a coordinated
fiscal,: monetary, and credit pro¬

Causes

shortages

calls

tion of changing

world

balance

clear

government

imports, thus stimulating in¬

these

or

possible by stimulating
production. Business alert¬

their

The

the

business,

demand

control.

"favorable"

make

exports are

of

the

a

constantly adapting
duction to changing tastes

which businessmen have had little

centuates

policy,

(7)

a

document which has
prophetic in its diagnosis

It

our

more

clothing, in the rest of the
economy the increased prices have
been roughly equal to the rise in
wage rates, another factor over

unsatisfactory progress to¬
peace has made
a
heavy foreign demand upon the
output of the American economy.
During the first half of 1947 we
exported $2.50 worth of product
for every dollar of imports; this

Control

the

goods

gram

ness

and

ward

"Price

for

wherever

for

Inflationary

over

than

(1)
Businessmen
should
do
everything possible to hold the
price line and to reduce prices

as

prices" have
little to do with the rise
living, 55% of which

Further

This is
more

as

because

flation.

the

The following
steps merit consideration:

by the
rising food prices arid < another
16% by clothing. Apart from food

no

told

with

government policy.

industries with

accounted

problem.
we

in

ago

labor.

"administered

been

the

deal

demand

that foreign loans at this time may
mean a further excess of
exports

the closest cooperation of
govern¬

200% as compared with
for nori-farm prices.

had very

foreign

an

prescription.
A rounded program will call for

in the cost of

or

year

proven

83%

The durable goods

DEPOSITORS

develop

checks

money,

(6) Insofar
expanded
should

and sound in its

the guide to production.
Since August 1939 at the whole¬
sale level farm prices have risen

nearly

may yet

will

which

Decontrol,"

general; it

some

of

causes

story

the

private rationing

this

we

which

gram

The only

negate the free .market

the Presi¬

program
for fighting
both inflation and
deflation, a pro¬

prices is through
output of the
commodities. Yet few
that the businessman

a

on

of

terference with production.

Consumption," by

Economic

hope that
integrated

are

$ 50,000,000

SURPLUS

and services and reduces all in¬

An Integrated Program

the

$498,000,000

RESOURCES

supply

This analysis is recited with the

OPA and then he would have to

If

A coordinated program should
be developed which reduces the

Report, Govern¬
ment Printing
Office, 1947.)

cutting production * or
withholding supply. If the busi¬
nessman
were
to depress prices
below the market rates, he would
be constituting himself a private

tem.

.

government

been

institute

ex¬

activities, both adminis¬
trative and legislative, to see how

was

Production and

over

of

(5.) The government should

in

substantial control which the busi¬

By permitting the general price

of

by

amine its

governmental poli¬
(For an analysis of the forces
operation see: "Food Prices,

31

in

ments

offset

questionable

most recent available.

Lord

unless

increase

expense

cies.

24

Keynes, are that
forces
making for inflation
not substantially within the

by

below

spending—although not ali
avoidable, and other

it

dent's

good the disparities caused by the inflation.
So the wheel of maladjustment
keeps whirling, and nothing gets

Require¬

the

rising
productivity. Only greater out¬
put can provide more to share
among all of us.

;

1G6

54

at

to some¬

wage

each of its steps affects three main
categories:
7 (a) The
supply of money and
growing out
credit :
of our methods of
!.
// ,
■
financing de¬
(b) Its demand for goods and
pression and war and repeated
personnel
wage boosts since V-J Day. We
(c) The supply of goods
are
paying the price of long-time

97

31.35

,

the great increase in liquid assets
and money incomes

49.25

are

postwar

cost

a

Every

come

others,

their

We are the victims of
depres
<siqn and .wartime shortages and}

the Joint Committee

1947 data

this

.

income is

must

car

•

38

31.20

23.86

20.28

of Commerce.

through

else.

one

in
your
Sunday newspaper
classified, advertisements/
•
\

94

71

one's

or

19

.783

priced

one-third

cars

118

.773

pound?

motor

have

1.23

.633

red

and

per

leading

43.74

23.86

.458

—

butter

1.08

.633

25.03

The

low-priced

100

101.6

.566

get

In short, we must find new ways
of helping us to see that every

the market demand price,, a$ can
be seen in the "usedmew" car
lots,

58

132.5

to

high prices on prof¬
speculators is sheer non¬

manufacturers

1939

117.1

living (1935-39=100)
Food (1935-39=100)
Total non-food (1935-39=100)
Average hourly factory earnings

1929

122.5

Cost of

or

sense.

Increase Over
1947

doing all we can to help the
government and all the people

$12.7

rate

dollar

one

are

deficit

1946

of

we

run¬

reconstruction?

wonder that

any

1947 Percent
1939

annual

an

was

To blame the

WAGES AND PRICES-1929-1947

1929

1947

In the face of these facts, is it

;

tabulation.

political tensions.

Thursday, October 9, 1947

Demand

and
.

Disequilib-

rium

Profits last year

,

pressing on the pay envelope
and ~ if ^oue l shop y gets - ;a! wage

.

were

up

-

,

only

increase,
% ther

how-will

this

affect

total balance iri the economy

$8,000,000 1.10% consolidated de¬
Oct. I, v 1947, ;*n<£;
due; Jan. 2, 1948.
Botlv isspfOSfe;
bentures dated

.

were

plabe^nt paa^f^Th^roceeds^/^v

$7.5

FULTON ST. and DE KALB AVE.
86th

STREET

and

19th

AVENUE

$42,010,000,

wage

with cash funds, to
retire;:$58,i
955,000 of debentures du£: Oct. !,

between? purchasing power andbillion
above 1939r„ while
the supply of goods?
and
salary incomes had
moved up from $48 tcr$417 biiliam
.-(&)"£Will- what we do here
> help to get a pattern for upward
This enormous inerease^dni inecHiie
is! what ifbidding
>wage:: adjustments
in '.other
Yet, at present we-have only
plants?
J-:*-.
6% more milk cows in production
(c) If so, will a wage increase
in our shop improve the real
than in 1939.
Our pig crop this
year is expected to be 1.5% below
buying- power of our pay en¬
1939.
velopes, -or -Will it .merely be
Today we have 12 million
more mouths to feed than we had-another step in the: wage-price
irt 1939 and we are feeding.; a
■spiral as was the case in 1946?
considerable part of the rest ot
v. (d)'
If we say: "Others are
the world.
getting their*; let's get ouri
Normally, we are • a
while the getting is good,'! are
food-importing nation on net bal¬
,

AVE. J and CONEY ISLAND AVE.

BROOKLYN,

N.

Y.

FEDERAL

DEPOSIT




INSURANCE

CORPORATION

amount of debentures
was

,

*

yiisdd;1; .together

,1947. As of Oct, i; i94T't!te totaK:r
$379,555,000.

With Chace,

outstanding
"

;v

;

Whitesi<Ie,

Warren & Sears, Inc.

(Special to Th* FrwiNclAt Chronic1e>

BOSTON,

.

MEMBER

were

Brooks

has

MASS.--Viola
been

staff of Chace,
&

added

to

the

Whiteside, Warren

Sears, Inc., 24 Federal Street.

*

Volume

Jcs. H.

THE

Number 4636

166

,Cin-

-

Exchange, a s>.
Vice - Presia

:

d

an

re

s

-

would! be "obliged" to take
up^ further substantial quantities to hold the market at
something; like the present exaggerated level — al¬
though, of course, Mr. Eccles does not put the matter
'. iu precisely this language, j Commercial:, hanks, would
in this way be placed in possession of greatly increased
reserves ami thus be in a position ta enlarge theirloans
and deposits ih still greater measure.

The

urer.

•JJl!:.-'?-"

changed

One may be excused if at the very outset one: wonders
why; Mr; Eccles dreads; further expansion of bank credit*
money supply and the like rather, than possible fuller em1*
ployment of funds* already int the haiids/ of the public as a

to

a

c orpora¬

from

a

partner¬
ship and will
continue
the

der

un¬

title.

ent

source

pres¬

sions

Mr.

Vasey,

been

the

in

business

the

for

past

18

previously manager of
trading department for H. B.

years, was

the

to

such matters

as1

these' than the reasoning by

position and- the logic which
which are
describing
accurately and reasonably the process by which enormous
increases in money supply and cash or the
equivalent
Federal Reserve

appear so helpless
of chief interest at the moment.
He begins by

accumulated in the hands of the

Coble & Co.
•

But it is less his conclu¬

of what he terms inflation

as

makes the

Joseph H. Vasey

invest¬

ment

One WondOrs

'

which he reaches his present

who

has

Organized in 1862, Geo; Eustis

general public during the

He is

fully aware of the fact that the Federal Reserve,
which he has a large part in administering, made all this
firm in Cincinnati. Officers under
the corporation status are George
possible by absorbing some $20 billion in government obli¬
Eustis, grandson of the founder, gations.
But then—welly let the Chairman speak for him¬
Co.

&

is

the

President;

R. Staib, ViceSecretary; and Mr.

Lee

President and

Vasey.

United Merchants

was

developing to

And,

was

United
Merchants
Inc., in its an¬
covering operations

The fact of the matter h that the danger of infla¬
tionary price movements will not vanish so long as the
Federal Reserve policy remains what it is.
We shall
at some time have to find a means of

permitting Treas¬
obligations to seektheir ownleVel lit aniunrigged
market.
And there is no reason to suppose; that this is
an impossible task.
For a good while past funds have
been accumulating disproportionately in institutions
ury

whose

forms.

investments

1947.
Total net sales,

including inter¬
sales, for ; the year
$230,194,945

com¬

pared with $160,402,043 for the
fiscal year ended June 30, 1946.
Consolidated net profit amount¬
to

ed

shares of

ing

share

the

on

to

3,898,125

stock outstand¬

common

of June 30. 1947.

as

pares

eauivalent

$21,132,358,
per

This

com¬

with net profit of $9,098,705

for the previous year.
In

the

addition

these

to

earnings,

corporation's share of undis¬

tributed

earnings

in

to

relatively

riskless

on

its

own

AND TRUST COMPANY

be removed.

of NEW YORK

Business wanted freedom from alloca¬

tions, price controls, building permits, rationing, and repeal

f<">r the fiscal year ended June 30,

$5.36

limited

are

This may well be the time to make a bold be¬

permitted free play, a sharp rise in prices would result.
people of the nation, however, not fully realizing the
dangers in the situation^ made clear their wishes that con¬

nual

to

the government bond market in danger dur¬

ing these twd years? Fedbraf Reserve: figures seem to sup¬
ply the answer; IrrFebruary, T946^ Treasurybondr With15 years or more to run were yielding around 2.12%. They,
yielded* 2>22%
194^ Commercialhanks;during this^
period reduced their holdings of governments by some $24
billion.
Evidently there is a market somewhere, outside
the commerce .banking
systemjat> the ixidi^lously
high prices asked for obligations of the United States—a
market strong enough to enable • the Federal Reserve: sys^
tern tb lighten its load considerably more than it did With¬
out
precipitating any such situation as Mr. Ebcl'es seems to
fear would- result from any substantial sale of governments
by the institutions over which he presides.

"By the end of the war vast holdings of money and
other liquid assets had been accumulated and large deferred
demands had been built up.
At the prevailing level of

trols

company
amounted

further point of danger.

ginning in putting the government market

self:

and Manufacturers,
reoort

a

U. S. Bonds in Danger?

The

Record sales and earnings were

by

that Mr. Eccles and his

seems to us

prices, demand was far in excess of any supplies that could
be made available within any short period of time.
"It should have been apparent that if these forces were

Reports! Record
Sales and Earnings
reoorted

war.

investment

oldest

It

companies

not consolidated amounted to $1,-

413,814.

of

Main Office, 37 Broad Street

profits.
Farmers wanted release of all controls
affecting agricultural products. Labor wanted removal of
restraints on higher wages. ti. In response to these public
pressures, wartime controls, such as allocation of raw mate¬
rials, building permits, price and wage restrictions, as well
as
the repeal of the excess profit tax, were prematurely
excess

•

CONDENSED- STATEMENT

abandoned.
"We

CONDITION

OF

September 30,1947

currently witnessing the results of this na¬
tional policy. . . . The country is now suffering the conse¬
quences of having placed our reliance upon the restoration
of a competitive price situation to bring about necessary
postwar readjustments in an abnormal period when effective
demand far exceeds available supplies.
"As a result, the economy is caught fast in a serious
wage-cost-price spiral."
are

RESOURCES
$109,901,882.56

Cash and Due from Banks
U. S. Government Securities
State and

278,950,382.22

.

8,737,117.94

Municipal Securities

4,991,852.12

Other Securities

142,562,973.28

Loans and Discounts

'

"The

entered the

comnanv

new

the largest backlog of
its history," according
Schwab, President.

year with
orders in

to J. W.

Working capital showed
crease

an

in¬

of $3,313,774 at the end of

the fiscal year,,

with current assets
of $71,140 241 affainst current lia¬
bilities of $34,-373,822.
Inventories
were car red to $24,835,767, com¬
pared with $23,930,968 at the end
of the previous year.
The com¬
pany's established "last in-first
out" method of pricing raw cotton
has resulted in inventorying this
commodity
at
an
approximate
average of 17.12 cents per pound.

Customers'Liability for Acceptances.

Helpless
Confronted with this situation the Federal Reserve,

Group of

I. B. A. Elects Officers
•CLEVELAND",
J.

OHIO—Russell

Field Richards &
Co., has been elected Chairman of
the Northern Ohio Group of the
Olderman,

Investment

Bankers

Association

of

America,
succeeding
John
Burge, Ball, Burge & Kraus.
Other
Carl

R.

new

officers chosen

BArgrriann,

were:

Braun, Bos-

worth & Cb;, Toledo, Vice-Chair¬

John
R.
Johnston,
McDonald- & Co., Secretary-Treas¬
man,

urer.

tee

and

On' the Executive
are

John

S.

Commit¬

Clark,

Fahey,

Clark & Cb.- George W. Blauvelt
of
the
National
City Bank of

Cleveland;
•nard M

Franle B. Reid, May-

Murch

& Co.;

L. Lamb- of Merrill

and Ray
Lynch, Pierce,

Fenner & Beane.




1,590,950.13

.

660,000,00

Stock of the Federal Reserve Bank

according to its Chairman, is helpless, since it must

Banking Houses

support the market for government obligations.

2,213,288.34

Accrued Interest Receivable

Fed¬
eral Reserve authorities, whatever they may have
thought of giving up wartime controls in general, have
long been demanding authority far in excess of any
enjoyed by them during the war, and Mr. Eccles now
complains that in the absence of such additional power
he and his associates are largely helpless to do anything
effective in the existing situation — and so are other
bank supervisory agencies throughout the nation.
So much for the defeatist attitude of the head of

banking meehanism—if such it can be termed. So
much, also, for this nth reiteration of demand for further
great gobs of power.
It is certainly not an inspiring or
even an encouraging position.
But there

are

several very

important facts which

Mr. Eccles appears to overlook.
First of all, the policy
of the institution he himself heads.
From the end of

February, 1946, to June 30, 1947, the Federal Govern¬
ment reduced its outstanding marketable debt by $31
billion.

Most of

the reduction occurred

in

•

••••••

965,822.91

273,219.59

Other Assets.

$550,757,489.09

LIABILITIES
$ 9,625,000.00

12,375,000.00

Surplus.

22,000,000.00

our

central

Northern Ohio

47

.

firm has been

tion

(1451)

ment, the Federal Reserve

Stock

dent

tion

(Continued from first page)

— Joseph
Vasey has become associated
; &ea:; EustisCo.r Fourth
National Bank Building, members

T

CHRONICLE

than $12 billion.

CINCINNATI, OHIO

©£ the

FINANCIAL

associate#inflationary situa¬

K.

cinriati

&

Vasey With

Ceo. Eastis & Co.
.

COMMERCIAL

Undivided Profits
Dividend

7,503,279.81

....

Payable Oct. 1,1947

Unearned Discount

.

.

.

.

.

.

.

....

.

.

.

.

Portfolio

Other Liabilities

.

.

.

2,527,440.93

.

.

Deposits

_

•

.

.

.

»v

•

•

*•

•

•

•

•

1,705,951.66
212,678.89

.

securities

held by the banking system.
A great deal of it was
held by the Federal Reserve hanks.
Has there been

638,994.72

4,158,102.82

$4,233,392.59

....>..

Less: Own in

275,000.00

•

Reserved for Interest,Taxes, Contingencies

Acceptances.

$29,503,279.81

>

514,263,481.19
$550,757,489.09

Securities carried at $7,203,286,25 are pledged to secure

anything like

U, S, Government War Loan Deposits of $4,421,701,95

ment

other public and trust

a corresponding decline in the govern¬
holdings of these institutions?
Let us turn to the
record.
At the end of February, 1946, the 12 Federal
Reserve hanks held government obligations in the
amount of $22.9 billion.
On June 30, 1947 these same
institutions owned some $21.9 billion government obli¬
gations. This is a decline of one billion.
During this
period, the money supply in the hands of the general
public of which Mr. Eccles speaks so feelingly rose more

and

deposits, and for other purposes as
required or permitted by law.

MEMBER: N. Y. CLEARING HOUSE ASSOCIATION
FEDERAL RESERVE SYSTEM

FEDERAL DEPOSIT INSURANCE

CORPORATION

26 Offices Located Throughout Greater

New York

48

THE COMMERCIAL & FINANCIAL

(1452)

..

.

.

.

•

'Okvvv.:>\;

,

CHRONICLE
with the present labor force and
hence act to relieve pressure on

What's Ahead for
Cash

able.

discounts

showed

ous year.

ing.

a

which when taken
together with the increase
in
markdowns, led to a decline in
gross margins. The average de¬
cline was from 2.5 to 3 percentage

Nineteen

has

which

taken, place

in

Reserve

Board

complies

place in these orders. In May the
total was
$548 million or only

level

about one-third

previous

as

large

as

in the

June,
open
$471 million.
by these stores ag¬
gregated $735 million last July,
reached a peak of $919 million in
July.

In

orders

dramatic reversal

increased

Stocks

20.8%. Nineteen forty seven

held

to

of these

high level profits. Under November; by June, 1947 the total
the
impact of higher expenses, had declined to $769 million. In
smaller cash discounts, and sharp other
words, there has been a
increases in markdowns, profits considerable improvement in the
have fallen
considerably below inventory plus open order posi¬
the 1946 level. Another significant tion of retailers in the. first half
in

trends

was

payroll
the
of

this

reversal

from

expenses

sales

in

dollar

to

1946

of

increase

the

first

in

retailers

the

half

a

about

months

ahead.

volume of business of

over

Sfcl,000,000 had net profits before

the

11.3%

1946.

Net profits after taxes were

cut

in

in

half.

the

first-half

They averaged 3.1%
as

compared with 6.4% in the previ¬

uncertainty.

in

Thus,

as we

summarized

main

1940

Factors

follows.

To

the

extent

additional

available

for

in

Sales

re¬

*

.V

-

U

''

i

In

attempting to evaluate what's
retailing, it is useful to
summarize briefly the important
factors which will affect business
consumer

spending.

the

vol¬

total

consumers' expenditures
redemptions will be rela¬
tively small, they can act as a
bolstering force for a relatively
short
period of time and are
these

available
sold

by

2.

for

the

types of goods
department stores.

Outlook

Industries.

in

Durable

An

Goods

examination

of

durable goods industries indicates
that they will continue to experi¬

high level activity. Thus, all

ence

the

automobiles that

can

purchasing

be

pro¬

tion

until

1948.

difficult

to

Montague Street

Brooklyn 2, N. Y.

New York 4,

N. Y.

large,

the

on

as

compared

U.

S.

Government

State and

Securities

140,505,378.78
7,577,247.99

Securities

Other

2,435,285.52

Loans and Bills Purchased-

Bonds
Bank

and

34,967,653.32

Mortgages

273,936.72

Buildings

2,500,000.09

Other Real Estate

Other

1,000.00

Resources

668,086.99

con¬

Building is tak¬
ing place at record levels. Despite
this fact, however, construction,
which
normally accounts for 8
to 10% of the gross national prod¬
now

Material

accounts for Only about

distortions

shortages

the

cost

barriers standing
of further expansion

in

building.

way

remains

and

are

in

However,
of

one

the

this

area

Consumer

Credit.

Effective

1, installment credit restric¬

tions

will

be

removed.

The

tories. Such inventories would not

to

prove

1947

was

with

$4.9

as

billion;

lion in 1946 to

$6.2

as

Better

8.

tween

stimulus

to

20

makes

possible

a

conditions

it

will

be

4. Disposable Income.

a

very

of disposable income, that
is, the income of individuals less

the

taxes

they must pay, is now
at an all time high.
Currently,
disposable income is running at
about $175 billion, as compared
with the $151 billion in the first
half of 1946, $164 billion in the
second half of 1946, and $170 bil¬
lion in the first half of 1947.

By
of comparison, the total was
$70.2 billion in 1939 and $92 bil¬

Taxes, Expenses, etc

1,063,114.02

$244,115,866.40
United States Government and State and

carried

i

The recent increases

disposable

higher

226,649,871.54

at

Deposits

$17,148,345.55

and

for

other

One of the Oldest Trust
r

Federal

Member New

Reserve

System




York

and

are

pledged

purposes,

as

Municipal Bonds
to

secure

required

Public

law.

by

Companies in the United States
Clearing House Association,
Federal Deposit Insurance

Corporation

25

million.

Even

been

wage
come

the

income

in

farm

large

income

have

been

measure

and

to

higher

payments.
Disposable in¬
is the major determinant of

level

of

retail

sales.

I

see

little likelihood of any significant
decline in the level of disposable
income.

5. Productivity.

During the first
year of the postwar period, pro¬
ductivity failed to show any in¬
creases

culties

because
and

production
sion.

of

labor

diffi¬

the

interruptions to
attending
reconver¬

In recent months labor pro¬

later in

sooner or

a

lower volume

of sales of non-food products. This
in turn could have adverse reper¬

cussions upon production and em¬

ployment in the non-food sectors
of

the economy.

2. Higher Rents.
tion

of

rent

that

means

The liberaliza¬

control

necessarily

increases in rents

some

will take place. To

the extent that
larger share of the customers'

a

income

be

must

substantial increase in the
income of the vast
majority of the

people.

In fact, it is this increase

is

reduction

a

available to

better

and

products.

used

to

meet

buy more
clothing and

quality

housefurnishings than ever be¬
fore. This development
probably
goes as far as any one single factor
in explaining why the volume of

One

factor

which

has

contributed to the high level of
retail sales has been the declining
portion of the consumers' dollar
which had to be spent on

housing,
price of which was held down
by rent control. To the extent that
rents rise, less will be available
to buy other products.
the

3. Department Store Sales Rela¬

tively High Based Upon Past Re¬
lationship to Disposable Income.
I have previously referred to the
importance of disposable income
as

determinant of

a

Over

the

retail

sales.

there has been

years

a

close

relationship
between
the
level of
disposable income and
various types of retail sales. Dur¬
ing the first half of 1947, the total

volume
stores

of

was

a

sales
in
department
higher than warranted

by the prevailing level of incomes.
In part, this situation was made
possible by the inadequate supply
of durable

trol.

goods and by rent con¬
the combination of*

Now,

higher

food

prices, more ample
supplies of durables, and relaxa¬

tion of rent control
suggest it will
be much more difficult to main¬
tain

level

a

of

with historic

sales

out

of

line

relationships.

4. Exports,
One of the major
supporting factors in the business
throughout the postwar period. It picture in the first half of 1947,
will continue to remain a factor was the large volume of
exports.
of considerable
During that period exports were
importance.

sales has been

well maintained

so

at the annual rate of

Unfavorable
The

factors

of

Factors

or

strength in the

business picture have been
briefly
outlined in the foregoing com¬
ments.

Now

let

examine

us

the

unfavorable factors.
1. Food Prices.

One of the most

important unfavorable factors is
the sharp increase in food
prices

months.

Prior

prices

had

much

to

this

in recent

already

rise, food
increased

than had other types
products. For example, as of

of

July

more

12,

1947,
gathered

before

the

recent

increased

food

126%,

farm

products,
149%,
and
all
wholesale prices except farm and
food prices, only 57%, as com¬
pared with January, 1941. If the
is made
with
any

other date, a similar distortion is
revealed. Thus, for

example, food

products in July were 66% above
the

level
in
1928, whereas all
wholesale prices except farm and
food products, had risen
only 32%.
If we go back to
1920, the same

picture

During the past

emerges.

two months these distortions have
been magnified

considerably. The
high level of food
be demonstrated in

abnormally
prices

may

other

ways.

food takes

a

billion in

Thus, spending of
substantially higher

$20.7 billion,

excess

of

im¬

ports.

President Truman, in his
Mid-Year
Economic
Report,
pointed out that "The increased
volume

of

exports

has

demand

at

added
a

when domestic demand itself

a

time
was

running
extraordinarily
high."
(p. 46) However, he observed that
the power of various countries "ta
finance purchases not in their own
resources

and

grams

of

tional

aid,

the

is

.

certain

Even if

are

present pro¬
and

during

character

eration

their

American

substantially
year...

momentum,

had

$12.7

substantial

comparison
The total

level

1,859,070.44

Reserves for

and

allowing for the increase in
prices, it is clear that there has

billion
in
credit which has taken place

business

whether

5,700,000.00

643,810.40

Distribution.

after

products

Undivided Profits

Contingencies

unless

One of the major developments
during the war and transition
years has been the sharp equaliza¬
tion of incomes. To a large extent
this equalization has taken
place by increasing the incomes

rise

Surplus

Reserve for

Income

consumer

$2.9 billion in June,

controls

attributable

Deposits

burdensome

there were a terrific decline in
business activity, a decline which
I do not foresee at this time.

of

today is $10.9 billion as compared
with $9.9 billion in 1941, an in¬
crease due largely to the increase
in charge accounts from $1.7 bil¬

8,200,000.00

$

be

total

volume of installment credit

in

Capital

high
rela¬

of

sources

handled by your stores.
If food,
prices continue at their present
high level, it will be reflected

tionships. A high volume of pro¬
duction and a high volume of sales higher housing costs, there will
be less available to buy non-food
necessarily requires higher inven¬

potential strength in the business
picturue if building costs can be

lion in 1941.
LIABILITIES

not

prewar

income

level

way

$244,115,866.40

between

struction also adds support to the

High

at

housefurnishings and other items

accu¬

business picture.

$ 55,187,277.08

Municipal Bonds

with

levels.

doubt

Reserve Bank and Other Banks

relationship

capacity

operate

significant factor.

Hand and due from Federal

any

supplies, which helps to ex¬
plain the persistent pressure for
higher food prices. Similarly, this

to

starting at that date. However, I
Cash

Inventory

inventories and sales is

1947. The elimination of consumer

RESOURCES

that

mulation at all levels of business
has tended to slow up.
By and

credit

Condensed Statement of Condition, September 30, 1947

There

in

compared

26 Broad Street

7. Inventories.

in income rather than

June, 1941. Total

177

date

continue

June,

NEW YORK OFFICE:

evidence to

no

dustries

in

Nov.

MAIN OFFICE:

is

visualize a major
employment or in
business activity while these in¬

3.

COMPANY

be built in record volume.

of

be sold

can

cut.

BROOKLYN TRUST

New

those at the lower end of the
during the next
income pyramid. Thus, before the
year.
Similarly,
the
electrical
war
there were only
6 million
equipment, railroad
equipment,
and
farm
equipment industries familities with incomes between
have
large backlogs
of orders $2,000 and $5,000 a year. Now this
which assure them of full opera¬ total is variously estimated at be¬

duced

5%.

ahead for

activity, -

of

are

of

ume

ucts,
Conditions Ahead
+>

funds

current

terms

recession

levels, markdowns are high, gross margins are
contracting, profits are declining,
and
the inventory
position has
been substantially improved.

••

re¬

after Sept. 2, 1947.
that they are re¬

on or

deemed,
While

billion

$2

is

attempt to evaluate

as

deemable

Almost

and

'

record

near

Bonds.

Investments.

significant reversal in this type
of spending is taking place.

at least the spring of
High level activity for these
industries will be accompanied by
high level of steel production. It

the
plus

the future, we find that the cur¬
rent picture in retailing may be

of

©f sales in the first half of 1947

as

'

taxes of 6.0% of sales as compared

with

same

1941

year.

During the first half of 1947, the
Controllers' Congress reports that
department and specialty stores
with

relationship of inventories
outstanding stores to sales

of

Total
operating
expenses
rose
from
28.1% to 30.6% These figures on
profits and expenses point up the
most
important problem facing

create

was

of 1947. In the spring of 1947,

total

15.5%

the

this

17.2%

profit

in

to

worth of these bonds became

data. From that date until May of
1947 a fairly steady decline took

profits never before attained.
According to the National City
Bank tabulations, the return on
net worth for department stores

factor

appear

major improvement in the in¬

Federal

©f

a

that

6. Business

plant and equipment continues to

1. Redemption of Armed Forces

outstanding orders. In July, 1946,
these outstading orders reached a
peak of $1,073,000,000 for the 296
department stores for which the

with the elimination of the excess

was

those

and

Leave

cline

six
was
the
for retail profits.
Large increases in sales combined

lias witnessed

their profit

widened

than

ventory and open order picture of
department stores. Of particular
importance is the tremendous de¬

forty

a

then

factors

The first half of 1947 witnessed
a

year

profits tax gave retailers

narrowed

Inventories and Open Orders

Profits

bonanza

have

retailers

favorable

Favorable

figures lend no support to the
eharge
sometimes
made
that
profiteering by retailers has led
to higher prices.
f

it is clear

the

margins.

These

to 35.2%.

On the contrary,

rather

points. For department and spe¬
cialty stores with sales of over
$1,000,000 the gross margin de¬
from 38.0

power, prices, and in turn, the
level of retail sales. I shall discuss

first

that

small decrease,

clined

prices.

Here, too, there is no sup¬
port for the charge of profiteer¬

(Continued from page 4)
stores for which reports are avail¬

Thursday, October 9, 1947

V

'

t

new

now

interna¬

to

decline

the

present

programs of

under

consid¬

put into

effect, it is
quite unlikely that the high levels
of export and
export surplus ex¬
isting during the past six months
will

be maintained." (pp. 45 and
47). The decline in export sur¬
plus forecast by the President be¬
gan to develop with a sharp cut
in

the

total

volume

of

exports

during June and July. The recent
emphasis upon the shortage of
dollar exchange is also of
signifi¬
cance

in

point.

However,

connnection

takes

with

this

decline that
exports will not
any

place in
necessarily be a completely ad¬
factor, because to a large

verse

extent the products
exported can
be absorbed in the domestic mar¬

ket. These larger supplies would
in¬ act to
relieve shortages and to re¬
anticipated duce the
pressure on prices.
on the basis of
past relationships.
Farm
5. Federal Budget Surplus. Dur¬
income,
reflecting these
higher food prices, has reached ing the fiscal year 1947-1948. It is
stratospheric levels. Net farm in¬ estimated that we will have a
come in 1947 has been at the rate
budget surplus ranging from $2.5
of $17.6 billion
annually which to $7.5 billion. In his recent budg¬

proportion

come

than

of

disposable

our

would

be

with about $15 billion
1946, $5.7 billion in 1929, and
about $9 billion in 1919 at the
compares

in

peak of the post World War I in¬
flation.

prices
tionate

This
means

share

food

give under the Marshall Plan is

dispropor¬

determined, the size of the Fed¬

high level
that
of

dollar is used to

a

the

et statement, Mr.
Truman esti¬
mated the budget surplus at
$4.7
billion. However, until the
mag¬
nitude of the assistance we will,

of

consumers'

buy food which

eral

Budget

known

with

surplus

cannot

be

degree of preductivity has once more been
One
Moreover, as the past
result will be a
improving. To the extent that
relatively smaller year has shown, the actual cash
productivity does increase, addi¬ proportion of the consumers' dol¬ surplus may exceed the budgetary
tional oqtput will become possible lar
available
to
buy
clothing, surplus by a considerable amount.
is

a

basic necessary of life.

ciseness.

any

Volume 166
TVhile

the

THE

Number 4636
not

is

amount

exact

known, to the extent that Federal
cash payments to the public ex¬
ceed cash receipts, a deflationary
force

may

cause

the

set

be

the amount of

ing

in motion

effect is

net

to

purchas¬

consumer

available for the

power

be¬

reduce

pur¬

chase of goods out of current in¬
comes.

6.

Higher

Costs.

Wage

During

the past year and a half, substan¬
tial
increases
in
hourly wages

have taken place in leading indus¬
tries. Since the beginning of 1946,

hourly earnings have in¬
creased from about $1 an hour to
$1.23 and further increases seem
probable.
These increases have
average

exceeded

by a wide margin the
improvement in productivity and
hence have exerted pressure upon
unit labor costs in industry. I have

previously
described
how
the
sharp increases in labor costs in
retailing contributed to the de¬
clines in profits in 1947.

beginning

are

rumbles of

increases

to

Now,

hear

we

ominous

third round of wage
offset the most re¬

a

to

cent

rise in living costs.
Such a
development would contribute to
a

maintenance of the present high

level of prices and in many areas
of
the
economy
would
make
necessary still further price rises.
The net result would be to price
additional

large numbers of

con¬

out of the market, particu¬

sumers

larly those groups living on rela¬
tively
fixed
incomes.
Such
a
development would add another
notch to the wage-price spiral and
create
new
distortions
in
our

COMMERCIAL

Am. Water Works Stock Bogota

Bond Exchange

Publicly Offered at $8
offering

of

$5

Oct. 1, 1948
Holders

value

par

stock of American Water

common

Of the 2,687,069 shares under¬
written, 784,593 shares or approxi¬
mately 29% of the total were
taken by certain stockholders of

external

due

pons

Ohio

and

Cities

offers

ex¬

which

expired
Oct. 6 and 1,625,000 shares or

on
ap¬

proximately 60% of the total have
been sold by the underwriters to
Northeastern

Water

Co.,
available

277,476

shares

general

Works

the

stock

common

from

and

the

John Hancock Mutual

co

sale

Life In¬

Co. of $15,000,000 10-year

surance

collateral trust bonds to pur¬

3%

chase

American

from

dollar

acting

as

in

sult

a

the water

if

retail

upon

products,
level

of

maintained

sales

the

of

non-food

continuing

incomes

distribution

will

adverse effect

an

of

and

the

income

the

Exchange, announces
the opening of his own office to
transact
a
general
investment

business.
fices at

160

He

will

maintain

better

that retail sales will be well

sus¬

new

company

trust

1957 and

/alue

expenses are continuing to
Many stores have not yet felt
impact of 1947 wage in¬

Keener

creases.

competition

for

the

consumer's

that

markdowns will continue

dollar

suggests
at

a
relatively high rate. To a large
extent, the substantial increases

in costs

during the

war years

war and post¬
absorbed and ab¬

were

sorbable because of the

in volume.

Unchanging sales and

particularly
sales,
bad

moderate

a

therefore,
squeeze

effort

every

sharp rise

result

can

on

drop

profits

is made to

in

in
a

unless

improve

efficiency and to trim costs.

I

do not

count

see

how retailers

upon a further

can

just

Volume to absorb the increases in

they face.

riot

period of hard times

mean

a

ahead for retailing.

that retailers

their

toes

will

in

This does

It does
have

order

to

to

mean

be

on

maintain

satisfactory profit margins.

due

Sept.

(Special

to

The

ATLANTA,

Financial

An

GA.

—

Adrian

Co.

and

Milhous, Martin & Co., RhodesHaverty Building. Mr. Ford was
previously with Trust Company of
Georgia and the First National Co.

will

be

per annum

on

at

pay¬

able semi-annually. The

principal
repaid in 20 semi-annual
beginning June 30,
These
obligations of Na¬

1950.

approved

the Mexican
acceptable
to

by

and

Bank, and the Mexican Am¬

Financiera

will

ditionally
guaranteed
Republic of Mexico.

be

uncon¬

by

the

The

Export-Import Bank also
that other Mexi¬
projects continue to receive

announced today
can

consideration.

active

TRUST COMPANY
Founded 1824

165

Broadway, New York

CONDENSED STATEMENT OF CONDITION

banking

'*■

At the close

of business, September 30, 1947

Co.,

Forgan &
Lynch, Pierce,

on

Oct. 8

*

ASSETS

Glore,

Merrill

•

group

publicly

218,000 shares of Associ¬

Cash and Due from Banks
U. S. Government

$

Obligations.

ates Investment Co. $10 par value
stock at $30.25 a share.

State and

Of

310,334,308.47

463,008,401.46

Other Bonds and Investments-

common

these

sold

shares,

for

18,000

the, account

are

of

being

certain

stockholders and 200,000 represent
new
issue.
Net proceeds from

a

the

sale of the

new

issue will be

used

by the company to increase
working capital.
With

the

nancing,
Co.

completion of this fi¬

Associates

will

have

stock

mon

junior

outstanding 1,041,-

and

notes

June

15,

stock

common

dividend of 45 cents

paid Sept. 30

par common

annual

share

on

the

placing it

have been paid

a

share

new

on

$10

$1.80

a

year

a

split.

a

Dividends

pros¬

out.

Associates

Investment

$1,599,182,

common

equal

share.

For

'

a
or

share

for

'

113,596.74

Credits Granted

on

Acceptances——

7,335,885.27

.

Accrued Interest and Accounts Receivable.

3,424,955.64

Other Assets

942.870.44

$1,321,804,300.01
LIABILITIES

Capital Stock.

to

$25,000,000.00

Surplus

75,000,000.00

Undivided Profits
Reserve for

Reserves for

Dividend

■7,811,083.06

Taxes, Expenses,

4,378,022.80

4,158,115.88

etc

Payable October 1, 1947

Acceptances Outstanding
own

the

$107,811,083.06

Contingencies—.

acceptances held in

Other Liabilities

f, 125,000.00

.

.

$ 9,079,057.48

portfolio)

555,508.01

8,523,549.47

1

Deposits (including Official

674,366.10

and Certified Checks

Outstanding $37,449,317.25)

1,195,134,162.70

the

$1,321,804,300.01

ended Dec. 31, 1946, earnings

compared with $1,411,368

194,793.50

2,231,631.45

Mortgages

(Less

totaled $1,313,234 or $1.42

a

,

.

*Other Real Estate

quarterly without

interruption since 1918, the

earned

398,194,912.15
•

was

basis, equivalent to $3.60

before the

1947,

Loans and Discounts

*Banking Houses

1953.

recently
increased
to
1,500,000
shares,
$10
par,
from
750,000
shares, no par, and the oustanding
stock was split two for one.

was

76,851,751.38
59,171,193.51

$10,000,000 of 3%

due

The authorized

A

Municipal Bonds

Investment

324 shares of $10 par value com¬

Co.

Ford has become associated with

prepared to approve credits

inder the co-management of F. S.

$1.86
C.

amounts

of 3J/2%

stock.

investment

Moseley &

30,

Chronicle)

Financiera

Interest

1,

For the six months ended June

Milhous, Martin & Co.

Dr.

1949.

Se

Assoc. Investment Stk;

pectus pointed

Adrian Ford Now With

and

the rate

31,

bank

Moseley Group Offers

expansion in sales

costs which

Bank

Dec.

outstanding

to $50,000,000 to finance proj¬

up

2,704,472 shares of $5 par

common

offered

rise.

was

f

o

comple¬

upon

bonds

Fenner & Beane

the full

$3,500,000 is to be

Nacional

Chemical,

of this financing will consist
$15,000,000 ten year 3% col¬

tained through the balance of 1947
ever,

the

until

to

cional

the

complete segregation of
properties of the Amer¬

and the early part of 1948.

How¬

first

of

Government

Broadway, New York

relations

installments

ects

City.

satisfac¬

is to be

it

of¬

economic

This credit of

is the

his

financial

between the two countries.

United States, announced May 14,
in which the Bank indicated that

Stock

this

well-balanced

Antonio Espinosa de los Monteros,
Ambassador
of
Mexico
to
the

David B. Bandler, member New
York

expressed

with

cooperation for the attainment of

available

system's electric and miscel¬

of

high

indicate

bassador
tion

specific credit
be authorized for Mexico by
the Export-Import Bank since the
exchange of letters between Mr.
William McChesney Martin, Jr.,

agent.

ican Water Works & Electric sys¬
tem (with minor exceptions) from

lateral

and

facilities <§>

by Nueva
Chapala,
a

This

exchange

tion

probably have

associated

in its water company sub¬
This transaction will re¬

ments

strength, rather than weakness, is

concern,

to be used to finance pur¬

sidiaries.

the

istic of the businesss picture, al¬
though some danger signals are
flying. While the recent increases
in food prices are a matterof major

are

Chairman

of New York is

Export-Import

financial agency of the Mexican

a

under construction

to

The National City Bank

1948.

the

& Electric Co., Inc., sub¬
stantially all of the latter's invest¬

Conclusion

character¬

Financiera, S. A.,

Proceeds of the credit

of Mexico.,

1, 1970, has been

extended from Oct. 1, 1947, to Oct.

1,

and

Water

properties.
Outstanding
capitalization

predominant

Washington

Works

An analysis of the favorable and
unfavorable factors suggests that
the

in

Oct. 3 the latter's approval of a credit of $3,500,-

serving
the city of Guadalajara and ad¬
jacent territory in the central part

David Bandler Opens

Water

use

bonds, due Oct.

Embassy

on

Compania Electrica
public utility
company

the

to

Co.,
greater part of
the proceeds from the sale of its
will

now

leaving

public.

American

Inc.

fund

and

station

Water

Corp. under subscription and
change

Government.

for Republic of Colombia 3%

sinking

Mexican

000 to Nacional

these bonds and appurtenant cou¬

external

Co.

-

chases in this country of materials, equipment and services required
to complete the installation of a new 54,400 kilowatt hydroelectric

April 1, 1947, are being noti¬

Co., Inc., Community Water Serv¬
ice

The

Bank announced

fied that the offer of exchange of

American Water Works & Electric

49

Extension of $3,500,000 for hydroelectric development
is first of series of loans to aggregate $50 million.

of City of Bogota 8%
sinking fund gold bonds
Works Co., Inc. was made Oct. 8 of 1924, due Oct. 1, 1945, and of
by a banking group headed by W. Municipality of Bogota, Colombia,
C. Langley & Co. and The First power and light consolidation loan
1927
Boston Corp. The stock was priced of
20-year external 6J/2%
to the public at $8 per share.
secured sinking fund gold bonds,
An

(1453)

Export-Import | Credit |to

Offer Extended to

*

still

CHRONICLE

laneous

economy.

i

& FINANCIAL

share

previous

$1.40
year.

Securities carried
to secure

at

$37,110,899.22 in the foregoing

statement are

deposited

public funds and for other purposes required by law.

These share earnings are adjusted
to reflect the stock split.

With F. S. Moseley & Co.
(Special

to

BOSTON,

The

Financial

With Buckley Brothers

Chronicle)

MASS. —Donald

C.

Kneale has been added to the staff
of. F. S. Moseley & Co., 50 Con¬
gress

Street, members of the New

(Special to The Financial

LOS

bur A. Morris has joined
of
Buckley

Brothers,

York and Boston Stock
Exchanges

Sixth

and other

with

exchanges.




Chronicle)

ANGELES, CALIF.—Wil

Street.

He

was

the staff

530

West

previously

Edgerton Wykoff & Co.

>jr

50

(1454)

THE

System

Federal Reserve Policy and
(Continued from page 7)
have

excess

purchasing

mercial

force

banks.

process

in

power

civilian economy to exert up¬
ward price pressure or to be con¬
trolled in some way.
We also

builds

bank

From Bank

What happens when the govern¬
borrows from the banks?

ment

the

saw

gives the bank
return

for

other

promissory note.

a

this

creates

its

books.

as

With certain excep¬

hand,

This

purchasing power for the
use of
the government by giving
the government a deposit credit
on

case,

brings

the

on

about

a

net

addition to deposits.

the bank

note

latter

borrowing,

its bonds to
In

the

In

moment ago,

a

case of any other bor¬
when the government sells the transfer.
tions, bank
a bank, in' effect it

rower,

and

the indi¬
vidual transfers his deposit to the
government, and the spending of
the transferred funds merely re¬
builds commercial bank deposits
back to the level they held before

Borrowing

As in

this

commercial

this
is the
difference between

dividuals,
we

v

Obviously,
up

deposits

essential

bills.
Increased Money

com¬

Treasury borrowing at the banks
and Treasury borrowing from in¬

the

government to borrow
from the banks in order to pay its

,

Inflationary Pressures

deposit accounts at the

own

our

COMMERCIAL & FINANCIAL CHRONICLE

increase

commercial

purchasing
power, or government deposit, is ment or for the account of the
transferred from the bank to the private citizen or business
organi¬
Federal Reserve Bank for credit zation.
As we know, these de¬
5. to the Treasurer's account in that
posits are as good as any other
v

>

institution.

bills by
that

The

Treasury

drawing

account.

pays

checks

These

form

its

against

checks

purchasing
Because

are

written in favor of suppliers and
•others

who

of money

of

purchasing

deposit them in their

borrowing

when it

this,

comes

and

goods

adds

through

to

the

to

services.

the creation

power

on

When

are

we

prices, particularly
working under con¬

ditions of full employment of our
resources,
including
materials and capital
To

viduals
does

of

bank

upward

manpower,

equipment.

set up to pool bank
to bring about great¬
flexibility in the nation's mon¬
etary and credit structure. These
was

reserves and
er

purposes
were
accomplished by
requiring member banks to carry

with

the

Reserve

Banks

business

or

not

pressure

on

their

customers'

The
banks

ments are set at their

ciple still

available

The prin¬

use.

remains, however, and

it is the basis of much of
rent

our

cur¬

difficulty.

During the last

we

war

added

ating deposits,
later, reach the point where they
need

more

in

reserves

order

to

satisfy the legal requirements of
the

Federal

billion

fact

gives the

created by the bank¬

was

gov¬

ernment.

gov¬

To

ernment

be

has

the banks in

the

sure,

reduced

its

debt

Act.
This
Reserve Bank its

opportunity to influence the

vol¬

and cost of bank deposits.

ume

During

to

degree, but this

Reserve

the

World

1920's

War

I

and

the Reserve Bank advanced funds
on
this collateral, were therefore

and the destruction of values.

an

best,

will

we

have

live

to

At

with

most of that hundred billion for

long

time.

New

production,

a

no

dition

HANOVER

SQUARE,

our

supply.

money

tried to show that production cre¬

NEW YORK

ates income

well

as

as

goods and

services, and that is just what
Statement

of Condition, September

3o,

194.J

RESOURCES

Cash in Vault and with Banks
Demand Loans to Brokers, Secured
U. S. Government Securities
.

-y-

t(

«

*

$19,561,668.90
1,316,500.00
43,948,557.17
1,522,515.33

a
h

State, Municipal and other Public Securities
Other Bonds

,

Loans and

Discounts
?
Stock of Federal Reserve Bank
.

.

a

100,000.00

*

«

»

s

22,991,304.61

.

.

*

»

H

»

■

g

Customers* Liability for
Acceptances
Accrued Interest and Other Assets
,

180,000.00

736,061.27
352,723.56

$90,709,330.84
LIABILITIES

Capital Stock
Surplus

$3,000,000.00
(

Undivided Profits

.

«

,

t

„

Deposits*

3,000,000.00

1,043,691.96
.

.

Certified and Cashier's Checks Outstanding

Acceptances
Acceptances in Portfolio

Less Own

$ 7,043,691.96
78,138,180.59

«

.

.

.

3,943,697.75

2,087,895.28
798,071.27

1,289,824.01

Reserve for Contingencies, Interest, Expenses, etc.

785,689.27

efforts

ity.

President, Oxford Paper Co.

we

be

much

Vice'President and Treasurer,
Funk & Wagnalls Company

Sugar Company

F. G. Kjngsley
Chairman of the Board,

Mercantile Stores Company, Inc.

Chester R. Dewey

Clark H. Minor

President

Chairman, Executive Committee,
International General Electric

David Dows

ant

initiative

with

the

Vice-President,

Executive Vice-President,

General Foods

Copper Mining Company

John C. Griswold

Harold

in

were

w. r. Grace & Co.

Griswold and Company,

President,
Pan American-Grace

Kirlin, Campbell, Hickox & Keating

Airwayi, Inc.

James H. Sharp
Vice-President

Chairman, Executive Committee,

President,

Comerford Theatres,

Ingersoll-Rand Company
name

Inc.

has been identified with domestic and international
commerce

for almost

a century.

■cSJ
MEMBER

FEDERAL

DEPOSIT




banks

INSURANCE

CORPORATION

in¬

remaining authority to

little

shall

We

reserves.

crease

soon

how the open market opera¬

see

tion has been rendered practically
a

of restricting

means

credit

bank

under

as

cir¬

existing

The essence of the open market

in

lies

operation

ability

the

of

buy or sell

the Federal Reserve to

were

government securities strictly in
contemplating doing accord with the System's interpretation as to the need for easing or
Gradually the Federal Reserve
tightening the money market. It
System discovered that it could
hardly needs to be said that this is
take the initiative
by buying or impossible in war. Wars must be
selling government securities on financed.
If taxation
does not

borrowing

or

•

so.

situation

a

every

the

knows,

one

midst

of

on

the

expansjve side. At

the

reserves

1930's
that

did

had

any
easiness

considerable

during
not

been

most

the

of

appear to do all
hoped for it as a

business stimulant.

of

our

heavy holdings of government se¬
curities

in

been

have

and

are

now

position to force the Federal
Reserve
to buy those securities
and
thus
to
augment
existing
bank reserves. All they need do is
to offer government securities on
a

resources

pression of truly serious propor¬

of its reserve account.

tions.

ber bank then has added

The Functions of Federal Reserve

brings us to the Federal
Reserve System, the part it has
played in war finance and the
it

The

mem¬

reserves.

for

the

member

bank

to

extend

credit.

more

highly

inflationary

of the present

potentialities

situation.

The Sys¬

If the Federal Reserve wishes to

credit the Reserve Bank sells

curities in the open market.

mainly through three paid

which

requirements. Its purpose
in using these tools is to influence

and

reserve

the

volume

credit

so

a

as

and

to

cost

maintain

of
or

bank

bring

are

accounts
this

these

for

approaches to the money mar¬
ket—the discount rate, open mar¬
ket
operations and changes in

sales

debited

of

by

se¬

It is

checks

to the reserve

member

banks.

In

depleted
member bank lending opera¬

tions

way

reserves

made

this

or

any

eight

or

more

are

difficult.

other

is about six
one.
With

way

more

or

to

oresent member bank holdings of

billion

of

governments, the
place themselves in
position to expand loans by
about $350 billion or more if they
$59

banks

can

about

banking and

open

It also appears

peacetime

tem operates

Frank C. Walker

D. C. Keefe

The Grace

as

in

all

part

President,

Incorporated

member

make reserves less plentiful and
play under existing thus make it more difficult for
conditions in controlling the commercial
banks
to
extend

J. Roig

Vice-Chairman,

Cletus Keating

the

not

rate,

This

Corporation

the

through

operation,

the Federal Reserve has but

that

member

Normally, this makes it possible

William M. Robbins

Robert E. Dwyer

or

than

Co., Inc.

New York

Anaconda

But
are

mendous

President,

betook 1

cumstances.

on

jo stimulate business activ¬

with

The Cuban-American

Robert J. Cuddihy

.

them

tre¬
If the Federal Reserve System
activity, wishes to put more reserves in the the market in amounts sufficient
hands of the banks it purchases to threaten
pretty
government security
fully employed.
The problem is government securities from banks price levels and the Federal Re¬
to find some way to live with this or individual holders.
These pur¬ serve is bound to take them in
huge reservoir of funds without chases are paid for with a check the interests of maintaining sta¬
letting it spill out so fast that it drawn against itself. That check bility in the government security
distorts our whole economic sys¬ is deposited in the Reserve Bank market.
The expansion factor of
tem and produces a business de¬ by a member bank to the credit the added reserves obtained
in
we

David M. Keiser

partly

Reserve

in furnishing

reserves

market

necessarily placed the preponder¬

less

redeemable

and

demand—would

order

Hugh J. Chisholm

Federal

initiative

with

and

reasons

the

borrow-

Bank for

the Reserve

from

cause

ceased

bankers

the

are

calling for increased spending in

DIRECTORS

ing

the

This

being,

because

have

serious if

Includes U. S. Government Deposits aggregating $2,929,706.61.

our

time

open market.
This procedure
doing.
We
provide sufficient funds, and it
practically reached full em¬ is now known as the Open Mar¬ never does, borrowing is essential.
ket
Operation.
Open
market When
ployment of our productive re-r
patriotism points to the
were
the
sources, including manpower and operations
principal pocketbook, even in wartime, the
capital equipment.
.The figures means by which the System en¬ urge
to
buy
bonds can be
show that current income has also deavored to influence the money
dampened
considerably by
the
reached record heights. If, under market and the banking and cred¬
fact, or the prospect, of serious or
these conditions,
people try to it situation during the 1930's and mild declines in bond prices. De¬
spend their current income and at until this country entered the last sirable as it
might have been for
the same time draw on this hun¬ war. It will be interesting briefly
the Federal Reserve to have sold
to trace through the mechanics of
dred billion of excess cash, pres¬
bonds on the open market during
sure on prices will persist.
This this operation. To begin with, the recent years in an
attempt to
is true even though the volume underlying theory is the same as
check an undesirable credit ex¬
of production were to reach the that
applying to discount rate pansion, this was made impossible
maximum
attainable within the changes and to all central bank or
by the overriding necessity to
Bank
limits set by our present produc¬ Reserve
functioning.
If
support government bond prices.
tive capacity.
Prices would con¬ member bank reserves are plenti¬ We do not need to go into the
bankers
tinue to rise until the distortions ful
will
tend
to
lend
whole
problem of easy money
in the price structure and the ac¬ more
and
thus
presumably to rates to understand that.
If
companying
maldistribution
of stimulate business,. activity.
If this be true, then the Federal
income brought on a depression. member bank reserves are less
Reserve
has been virtually
de¬
The
existence
of
this
vast plentiful member banks will tend prived
of
its
only
remaining
amount of excess currency and to restrict bank credit and thus
power to exercise a positive in¬
bank
deposits—and,
we
might to retard business activity. In the fluence toward checking credit
add, of a little less than $50 bil¬ past this theory appears to have expansion.
But this is not all.
lion
in
savings bonds held by worked better on the restrictive The commercial banks with their

current

individuals

,709,330.84
*

As

said

earlier, money can be
but not used up, unless it is
returned to the banks.
We also
we

used

least for the
is true partly

little significance, at

useless

how

to

become of

discount rate has

The

impotent.

become

part

most

important influence on the
member banks.
This procedure

large in volume it banks, since Reserve Bank in¬
depended upon whether
may be, cannot wipe out this ad¬ fluence
matter

.

the

various
in

banks

generally satis¬
has been largely offset by the fied their reserve requirements by
growth of private borrowing at borrowing at the Reserve Bank,
the banks since the end of the using their customers' paper as
war.
Net reduction of bank credit collateral.
Changes of the dis¬
through debt repayment is a slow count rate, or the rate at which
some

Reserve

bank deposits. in its
attempts to help keep the
lending and cre¬ United States on an even keel,;
banks, sooner or economically speaking, have for

about $100 billion to our currency
and bank deposits.
This hundred

ing system and spent by the

the Federal

to

up the volume of
In the process of

unless business depression
intervenes and forces liquidation

OF NEW YORK

.

prices because it merely transfers bank
certain
reserves
against tral Reserve cities of New York
purchasing power without adding their customers' deposits provided and Chicago.
to
it, whereas borrowing from the Reserve Bank with its most
banks adds directly to
Tools Have Become Impotent
purchasing important power. As we all know,
power.
Some refinement of this bank loans create bank
deposits.
These three tools, discount rate
statement is
possible, of course, So do bank purchases of invest¬
changes, open market operations,,
particularly if borrowing from ments. We have seen how bank
and reserve requirement changes,;
the private individual or business purchases of
government securi¬ which are the basic implements
organization
transfers
inactive ties during the recent war built

process

GRACE NATIONAL BANK

only has the discount
market operation to use
as an indirect influence cn mem¬
ber bank reserves; it may also
alter
reserve
requirements
dinot

and open

recetly within certain limits.
At
the present time reserve require¬
legal maxirequirement that member mums except for a small increase
carry
with
the
Reserve that could be required in the Cen¬
against

reserves

organizations

increase

Under the law the Federal Re¬
serve

certain

borrowing from indi¬ deposits.

repeat,

funds into active

of

bank deposits cannot be avoided
when bank credit is extended, be
it for the account of the govern¬

This

pressure

Thursday, October 9, 1947

could

a

to

chose

do

so.

In

addition

to

these

potentialities I might call
your attention to the fact that net
gold imports into this country
during the past two years have
amounted to about $1.8 billion.
Every dollar of that amount has!
been

a

net

addition to

bank

re¬

serves.

The

inflow and outflow of gold for the
account
of
commercial
banks

high degree of economic changes the picture in some of its
stability.
details, but does not alter the
Originally, the Federal Reserve essential principles.

Bankers' Responsibilities
I

shall not comment

flationary

pressures

potential amounts of
could

create

if

the in¬

on

that

these

new money

thrown

into

an

•

Volume 166

Number 4636

THE

COMMERCIAL

operating
at Commercial banks hold about $70
practically full employment levels. billion of governments.
A drop
I should like to
say, however, that of 14% in price would equal 7%
bankers generally appreciate of their total assets.
Such a drop
the
responsibility this situation would result from a rise of the
them.

upon

There

is

no

immediate indication that
they
plan to enlarge their reserves or
to expand loans to the full extent
possible.
It is nevertheless true
that bank

operating costs

declined this

governments
from the present figure of 1.5%
to

we

can

ers

some

their

straint

•

and

cised

an

powers

ability to prac¬
statesmanship.

Federal Reserve has exer¬
form of mild restraint of a

a

nature

not

1946

it

yet discussed.

Early

'

the preferen¬

removed

tial discount rate of

borrowings

secured

V2 of 1%

tions

reserves
in
governments.
Effective in July of this
year the
excess

System withdrew its standing of¬
fer to purchase all
Treasury bills
offered at % of 1%.
of introducing
uncertainty in

price
tant

This had the

of

sector

securities

the

government

market.

The

now 0.8 of 1%,
previous rate, and as

banks

move,

vert

Treasurv

must

Bank at

serve

high

sulted in

some

into

con¬

reserves

to

the

This fact has

as

re¬

It is questionable whether mild
restraints such as these are suff¬
icient to cope with the tremendous
.

have

inherited

from

These restraints
ciated

with

that

pressures

are

the

we
war.

closely

asso¬

market opera¬
tions and must therefore be con¬
fined

to

They

rather small proportions.

be

can

moral

open

supplemented

suasion

and

by
limited

by

steps in the field of so-called
lective

se¬

controls which attempt to

regulate

particular type of
as loans for purchas¬
ing or carrying securities. Moral
suasion, at least in so far as it has
yet
been developed, has never
credit

been

highly

successful for any
time.
The use of se¬

of

lective controls has been confined
to

narrow

There
of

is

enlarging

economy.

immediate

prospect

either

scope

controls

covered.

the

of

areas
no

selective
fair to

of

credit

the

Perhaps

epitomize

the

or

it

our

of

areas

would

be

thoughts

on

mild restraints and moral suasion
with the simple statement
that
the profit call in boom-time has
all the urgency of the mating call
in springtime.

There

those

are

who

would

deny that the Federal Reserve
System is relatively impotent in
the current situation.

They would

have the System act with
greater
independence
of
the
Treasury.

and

the

phase

Federal Reserve

of

developed

was

over

a

pe¬

when

private indebtedness
the predominant factor in the

nation's

debt

structure.

In

the

intervening

years
the situation
changed.
At
the
end
of
World War I, although the public

has

debt

the

of

United

higher than it had

States

was

been be¬

ever

fore, it was less than one-third as
large as private debt. But at the
end
was

of World War

the specific

products requested. Steel leaders
privately believe with firm con¬
viction
steel

that

must

the

be

end

of

use

carefully

If European

anything

f

(1455)

the

of

the

relationship

to

a

three-to-two ratio.
The

volume

of

public

debt,

has arisen chiefly as a re¬

of

war

of

reasons

finance,

but also

for

public

welfare, does
not
respond directly
to regula¬
tion which
changes the supply,
availability and cost of credit.
volume
other

leaders

this

week

probably

mean

cation of

a

American steel

allo¬

of

private

debt,

hand—which

on

arises

of

expected

as

their

contemplated Marshall Plan ship¬
ments of steel will be in the
ingot
or

semi-finished form.

The

total

tonnages
of
steel
ultimately be shipped

which will
to

Europe

under

the

Marshall

a
large percent¬
output. But with the
domestic steel picture tighter than
at
any
time since the war the

effects of such shipments will far

outweigh the

actual

tonnage

in¬

volved.

sion plans.
of

Contrary to the ef¬

official

statements

by

steel leaders which appeared to

indicate

a

nonexpansion

atti¬

in

cost

rather

than

future

in

respond

con¬

some

degree to such changes.
Now

that

is

postwar
three parts

of

up

Federal debt to two parts private
and other debt, it becomes neces¬

to

sary

discuss

Reserve

policy

the

System

in

the

situation.

justification

for
tional controls to

customary

instruments

light

There

of

is

this

little

the

of

i^tudies
of

are going for¬
of the increase
basic

steel

equipment emphasis is
a

on

hasic

exploiting
factor

for

mill

more

and

oxygen

as

increasing

steel capacity.
Whilp

the

industry

about steel exports

sibility of
in

steel,

a

one

new

or

applying
a

ditional

more

total

our

made

considerable

increases in in¬

terest rates,

regardless of the ef¬
capital values.
It does
seem
probable that interest rate
changes, which are one of the
most important means available
fect

to

to

on

central bank in its endeavors
influence the volume of bank

a

credit

in

large to

have

use,

such

changes

value

of

ments.

culiar

would

Naturally,
capital

worries

and

the

pos¬

long-term tightness
of the country's most

What

a

pe¬
se¬

existing

would

quarter of 1947 compared with
the

period in 1946, except

same

the

Mid-West

the

and

be

condi¬

the

most

regions, both
of which estimate small reduc¬
tions.

Automotive

Output

Than

year

10.2% Higher

Year Ago

a

The amount of electrical
energy
by the electric light
and power industry for the week

distributed

ended Oct. 4, 1947 was 4,934,851,000 kwh., according to the Edison

Electric

Institute.

This compares

with

4,956,415,000 kwh. in the pre¬
ceding week, and was 10.2% in
of

excess

the

produced

in

4,478,092,000 kwh.
corresponding

the

Production

of

first nine months of the year, this
would make the 1947 total more

than 5,014,000,

including approxi¬
mately 3,685,000 passenger cars
and 1,329,000 trucks.
The truck
total, it is understood, would be
a

record.

new

Production
States

such

a

by

procedure, but their situa^

tlon will

serve

as

an

during the
past week totaled 103,443 units,

Railroad

compared with

Freight Loadings Main¬

Loadings of
the

week

totaled

tion

nounced.

6,882

Sept.

937,954 cars,

of

American
This

cars, or

freight for
27, 1947,
the Associa¬

revenue

ended

Railroads

was

an¬

increase of

an

0.7% above the pre¬

ceding week. This represented an
increase of 21,439 cars,
or, 2.3%
above the corresponding week in
1946 and an

increase, of 105,445

cars,

or

week

in

12.7%

above

the

the

same

in
are

the

states

Ward's.

sponding

1946,, accord¬

ing to estimates recently compiled
by the
13
Shippers' Advisory

units

1941

In

in

the

the

week

corre¬

the

figure

76,820 units.

was

Last week's output comprised

97,450

vehicles

made

in

this

country and 5,993 in Canada.
"Tlie U. S. total included 69,240
and

cars

the

28,210

Dominion
cars

trucks, while
showed

figure

and 2,103 trucks.

Business Failures Continue to

ex¬

above those in

period in

91,925

comparable period of last year,

same

1945.

pected to be 6.2%

and

3,890

Freight
carloadings
fourth quarter of
1947

revised figure

a

of 106,734 units in the previous
week

Rise
In the week

mercial
rose

and

ending Oct. 2,
industrial

to

81, the
(Continued

com¬

failures

highest
on page

number

52)

constituted.
As private debt
again increases relative to public
debt, it will become necessary to
so

traditional

resume

tem

methods

Reserve
of

STATEMENT AS

Sys¬
RESOURCES

Cash & Due from Banks
U. S. Government Securities

u-

The

Financial

Other Securities

Chronicle)

Demand Loans
Time Collateral Loans

&

Christensen,

Inc., U. S. National Bank Buildjng. Mr. Copeland was previously

Bills Discounted

283,413.701

283,413.70

staff of

Boston.

has

been

added

to

(par $20.00)

Surplus

.10,312,500.00

Other Resources

158,261.28

16,000,000.00

616,179.36

HARTFORD, CONN.—Ralph A.
Starkie

$ 5,687,500.00

2,500,940.54

Customers' Liability under Acceptances

Chronicle)

Acceptances Held in Portfolio 1,782,497.11

Capital Stock

Accrued Interest Receivable

(Special to The Financial

142,187.50!

....

$2,065,910.81

5,239,572.93

45,335,677.22

Banking Houses

Whiting, Weeks

Acceptances -Executed
Less:

27,338,431.38

77,913,681.53

& Stubbs

731,517.37
1,046,094.89<

Reserve for Dividend Payable Oct.
1,1947

16,040,209.37

with Otis & Co.

With

$2,692,364.72)

Unearned Discount
Accrued Taxes, Interest, etc

19,589,085.04

Peters,

$256,408,944.44

(Includes United States War Loan Deposit

108,945,233.95

State, County & Municipal Securities 3,548,875.67

DENVER,
COLO. —James
C
Boyden and Arthur B. Copeland
hav.e become associated with
Writer

Deposits

$178,539,025.65

Two With Peters, Writer
to

1947

LIABILITIES

$ 69,593,791.70

much fluctuation in its value.

(Special

OF SEPTEMBER 30,

influencing

changes in the amount of private
debt.
But in doing so, our large
public debt should be protected,
by suitable methods, against too

Undivided Profits

3,044,961.55

19,044,961.55
Reserves

1,943,467.65

$279,600,587.10

the

$279,600,587.1 (L

Whiting, Weeks & Stubbs,
In

the

Weeden &

Co.

past he

was

with

J. R. Kable Is With

Trust

Company of Georgia

ATLANTA,
the Trust

Kable

nicipal

illustration. i Co.




United

the

in

Canada

and

week of last year.

no

GA.

—

John

National BamMnb Trust Company

R.

their Investment

affected

cars

tradi¬

security values?
Banks are not
the only part of the
economy that

adversely

V\

and
trucks in September, a postwar
monthly high, indicates that the
1947 goal of 5 million units for
U. S. and Canadian plants will be
reached, according to Ward's Au¬
tomotive Reports.
;
Manufacturers
plan
to build
more' than
1,335,000 units in the
final quarter, and, combined with
the 3,679,688 turned out in the
451,490

Kable has become
associated with

be

for

Lower

Latest Week

debt structure

probable effect of widespread and
sharp depreciation of government

would

Trans-

Missouri-Kansas

of invest¬

have

government

on

under

rather

the

wide range

effect

curities

tions.

a

alter

They

be

to

be effective.

week

month

one

tain Uptrend for Week and Year

The Marshall Plan will he an
added impetus to steel expan¬

fect

Electric Output

product, especially
a large part of the

Because

present

one

one

ago.

authority states. Once this
done, individual producers lose
complete control over a large por¬

ward.

sumption—does

tons

and 1,593,200 tons

trade

faction which

get frtJm

1,475,200

ago,

output, the above

tude, actual expansion and ad¬

consumers

pared to 1,651,900 tons

percentage of

is

if

ory Boards estimate an increase
in carloadings for the fourth

and-90.4%

week's operating rate is
equivalent to 1,681,700 tons of
steel ingots and castings com¬

ago

tion

yeap,Ji.

All of the 13 Shippers' Advis¬

The

fully

compulsory

certain

es¬

modities in the corresponding pe¬

ginning
June
9,
when
they
touched 96.9%, representing an
increase of 1.7 points, or 1.8 %
from the preceding week.

in 1948.

On the basis of those

riod of the preceding

as

Apparently they would not shrink
from

51

timates, loadings of the 32 prin¬
cipal commodities will be 8,077,063
cars in the fourth quarter of
1947,
Compared with 7,606,832 actual
carloadings for the same com¬

One year ago.
Current operations were at the
highest level since the week be¬

dicting the steel supply picture

from the expected productivity of
business investment and the satis¬

debt

ago

screened there is not a chance
in the world of adequately pre¬

Steel

Boards.

compared with 94.4%
week ago, 84.3% one month

one

Until

age of total

the

6, 1947,

carefully

are

urgently
completed.

on Monday
operating rate
of steel companies having
94%
of the steel capacity of the in¬
dustry will be 96.1% of capac¬
ity for the week beginning Oct.

.steel production will come into
*balance with
demand
would
guess.

are

of this week the

steel they have demanded, any
as
to when, domestic

be a wild
European requests

that

Institute announced

^estimate

only

groups—oil

agrees

before

may

The American Iron and Steel

receive

amount

industrial

gas—reluctantly

be years
needed pipelines

the

Plan will not be

The

it

checked

nations

like

debt-retirement program has

which

important

and

arid policed.

II, public debt
almost twice as great as pri¬
debt.
Since then, the Fed¬

changed

sult

page 5)
certain that

be

realize that the Marshall Plan will

activity
was

should

the need is there for

money

supply.

riod

(Continued from

ernment

regulating the expansion

bank

a

such

length

of

means

Re¬

hardening of short-

flationary

ing mechanism.
They are de¬
signed to influence the supply;
availability and cost of credit as a

vate

term
rates
to
bank
borrowers.
Prime bankers' 90-day acceptances
now
sell at
1%, compared with
0.8% prior to July.

in

have seen, such moves are an
essential part of the central bankr

eral

of

connection

we

result

a

discount twice

a

interest

twice the

or

them

before.

as

current

wishing to

bills

sell

now

impor¬

one

rate is

this

degree of

a

for

reasons

aimed at influencing
rate in a situation

moves

the

the

deliberation> in

great

This

securities.
This had
been established
during the war
to encourage banks to invest their

indicate

to

with

on

by short-term

government

effect

i.~

CHRONICLE

The State o£ Trade and
Industry

still other considera¬

are

dominated by war and its mone¬
tary and financial aftermath.
As

important
of self-re¬

their

economic

The

in

facing

now

of

tice

Perhaps

safely conclude that bank¬

are

.test

securities.

1.75%.

There

sections of the country.
It is also,
true
that
loans
generally pay
higher returns to a bank than

.government

on

Any effective curb on
inflationary pressures via rising
interest rates would probably re¬
ris¬ quire a sharper increase than that.

are

in

year

yield

average

ing and that bank profit margins
have

FINANCIAL

already

economy

thrusts

&

PHILADELPHIA

Company of Georgia in

was

Department.

Mr.

previously in the

mu¬

department

of

Courts

&

Established 1858
MEMBER

FEDERAL

DEPOSIT

INSURANCE

CORPORATION

V

52

THE

(1456)

COMMERCIAL

&

FINANCIAL

CHRONICLE

k
.

Thursday, October 9, 1947

buying increased but
generally slow.

"<*r

were

fe

volume

Food

sulted in

(Continued from page 51)
recorded tor any week since early
•

& Bradstreet wholesale food price
index to $6.93 as of Sept. 30, from

Bradstreet,
Ihc. While concerns failing were
up only slightly from 77 in the
preceding week, they were almost
July,

reports

three times

bun

&

$6.91 a week ago, when the index
dropped sharply from the Sept. 16
record

high level of $7.12. The
current figure compares with $5.28
for the corresponding 1946
date,

in the

numerous as

as

corresponding week of 1946 when
Despite this

increase of 31.3%.

an

28 businesses failed.

sharp rise from last year's level,
failures

remained

prewar

total

of

far

below

which

279

Commodities

the

higher

,

Three-fourths
$5,000

week's'

liabilities

hams,

failing

this

in

size

group

fell off slightly from

in the

preceding week but

wide

sale

ex¬

der

in the

12

•

week

Retail

trade

number of

had

largest

concerns

failed.

ers

from

last

facturers

increased

week

when

The

rose

failed;

this

31

foods

side

repre¬

in

on

on
Sept. 30, from
earlier, and 229.64
corresponding date a year

the

mid-September
29.39 cents

trading

in

grains

early

Only
industry
or
trade
group, wholesaling, had as many
as 12 concerns failing this week.
Construction and commercial

one

other

vice

1946

failures

total

of

12.

continued

at

fered

ser¬

low

a

week:

of

volume.

The
advance,
however,
was
considerably less than the trade

Picking

the Pacific

of

many

with

Over

16.

and

twice

regions as in
geographic division.

bushels,
wheat

Slightly Upward in Latest Week
Food

price trends

this week
vidual

with

advances

in

cotton

cotton

In

prices

textile

firm

tions

indi¬

in

govern¬

would

be

Southwest winter

and

reports of killing

northerly

more

the

belt.

corn

report issued

commodities slightly more
than declines. This re¬

the

program

A

sec¬

recent

by the Department

of Agriculture indicated that about

numerous

70%

of

the

corn

crop

was

safe

standing

books

Gold

JOHN ADRIAN LARK IN
Chairman of the Board
EDMUND

P.

specialists in the field of personal

ROGERS

to

for the

care

Honorary Chairman

estates

of

trusts

length,
surface.

condition

of

estimated

was

7 to 11%

most

a

above

year

Prices

tralian auction
but very

ed

for

sales

by the following

ago

New England 6 to

Middle

the

was

report¬
United

accounts

of

States

importers. Imports of
parel wools into this country

ap¬
re¬

mained

small,
totaling
868,700
pounds in the week ended

clean

Se^t. 19,

compared with 795,900
in the previous week.
Retail and Wholesale Trade Holds

the

of

year

week,

Resistance

remained

although
tered

corresponding

ago.

resulted

in

high

verbal,

largely

discrimination

areas

week

to

in

of

good

scat¬

be

sought.

both

ed.

The

volume

of

merchandise

some

siderably, with
quick delivery.
Department

increased

definite

for
con¬

tral Reef

It

country-wide basis,

as

on

able

a

taken from

S.

RUSSELL

For 57 years

PRENTICE

FRANKLIN

B.

E.

HENRY W.
O'DONNELL

BURKE

STEPHEN C.

our

BULL

at

customers

the

ISELIN

E. TOWNSEND

this

who

IRVIN

CLARK

bring their

in retail trade here in New York

last week

Credit and instalment

sale

as

a

or

Consult

of

one

our

officers

47%

Activity in the whole¬
was
marked
by

demand

for

coats

suits also reflecting the

S.

132

Th,

of

i
€

:

|

1002
•

in

NATIONAL

MADISON AVE.
-f

Member Federal Reserve




20%

BANK

FOUNDED

1836

•

posed

and

tv.y'l

'

Federal Deposit Insurance Corporation

Mining and Milling

of the
to

be

BANK

TO HANDLE THE ACCOUNTS OF

CORRESPONDENTS AND NATIONAL CORPORATIONS

1

"

Member

Federal Deposit Insurance Corporation

-

•

•

•

•'

which is

be¬

As

a

drilling it has been

that

mill for

drilling

there

over

assays

To realize the

build

1

ESPECIALLY WELL EQUIPPED

area

mineralized.

$4.01 per ton.

ROBERT V. FLEMING, President

<£ef. 77th & 78th Sts.) NEW YORK 21
.!?£

200,000 shares, or
outstanding stock

arev

over

three years.
are

have revealed an average

WASHINGTON, D. C.
of

;

ten

630,000 tons of probable gold ore,
or sufficient to
operate the pro¬
The

YORK

owns

gold.

Rito Seco

lieved

MOSELEY, Jr.

"

of

oz.

estimated

NEW

Crown

During 1946 and
early 1947, 110 holes were drilled

today.

(Singer Building) NEW YORK 6

or

outstanding stock of
Crown Mining Co. of Ari¬

result of such

OF

225,000 shares,

owns

Co. of Colorado.

BROWN

149 BROADWAY

previous

the

Western owns

us.

FULTON TRUST COMPANY

of

work, 20,000 tons
oz. silver and 0.5%

about 90% of the

relatives

McVeigh

result

a

30,
1947
amounted
to
867,00ft
pounds of zinc, 127,900 pounds of
copper, 23,374 oz. of silver and

i

a

as

company

immediately

reserves

the six months period ending June

WALTER N. STILLMAN
FREDERICK

the

mines and modern milling equip¬
ment.
Profitable production for

drop in

has

CHARLES J. NOURSE

by

Golden

zona.

and

COURSEY FALES

charles s.

of

Golden

markets

strong

RUSSELL V. CRUIKSHANK
DE

ore

Western

result of the cool

accounts to us

suggestion of friends

in¬

100%

a

Sept. 27, 1947,
by 24% from the like copper, and 35,000 tons averaging
period of last year. This compared
i8 oz. silver and 1.5% copper to
with an increase of 7%
(revised the ton. There are also said to be
figure)
in the preceding week.
50,000 tons of profitable dump ore
For the four weeks ended Sept.
on
the property. These immedi¬
27, 1947, sales increased by 7%
ately available reserves of 105,00ft
and for the year to date increased
tons are sufficient to operate a
by 8%.
100-ton mill for a period of
Sharp gains were established
years.

continued to

Many of

long have done business with

CHARLES SCRIBNER

CHARLES'S.

estates.

75-ton flota¬

a

owns

55,000 tons of prob¬

are

developmental
averaging 16.7

for the week ended

LARGEST FINANCIAL INSTITUTION IN THE NATION'S CAPITAL

trust company

specialized in personal

LORD

The property is

Mines, located in Utah.

available

the Federal Reserve Board's index

STANLEY A. SWEET
BERNON

also

estimated

is

that there
sales

day.

per

equipped with

terest in the Silver Reef and Cen¬

dependents.

advantages for them.

tons

Western

buyers eager for
store

an

gold

oz.

tion mill.

not restrict¬
reorders

reveal

to

value of about 2

days to prepare this mine for
regular operation at the rate of

prices continued to be evident but
was

said

are

the

60

preceding

now

buying generally

in

feet

300 feet below

ton over an average width of
1% feet. The management
estimates that it will require about

corresponding week
Some resistance to high

1946.

300

an
ore

about

well

was

the

this

1947

stated, made

per

to? 11.

volume

of

was

some

Assays

of

the

in

7

September

it

approximately

average

South¬

25

slight de¬

quality

range

14,

13, South 5 to 9, and

that

weather.

medium price

to

to

8

In

increased

consumer

last

10

West

week and the

as

occurred

and

Wholesale
above

strong,

shoot

Re¬

year ago.

10, East

were

little buying

from

percentages:

fine wools in the Aus¬

on

a

be

to

And, personalized service also will have

ARTHUR J. MORRIS
President

Mines, Inc., located in Cali¬

fornia.

of

a

selecting

out¬

Bear

gional estimates exceeded those

sold-up

mills.

Articles
for

the

well

clines in the prices of some goods.

is sound reason

of

Brown

important gold discovery—an

prices

There

of

day

level

of Directors

93%

owns

stock

company,

with retail volume well above the

Board

notions, stationery and
improved.

in the week ended last Wednes¬

purchasing

&fiecfali$ed attmtuxa

Western

Interest in

Inquiries for print cloths
sheetings were numerous but
offerings were scarce due to the

Moderate increases in

de&mve

New York.

and

at High Level for Week and Year

4

mining properties in which it has
acquired a controlling interest, is
being financed through an offer¬
ing of stock by Frank L. Porter,

higher.

were

—r

PERSONAL TRUSTS

is engaged in the business of de¬
veloping, financing and operating

Retail volume for the country

in¬

the

in the
of

influences

Shr.

a

Inc., which

to

leading factor

a

sharply to 570,uuu,0uu
continued
unfavorable

area

frosts

mixed

were

sections.

many

a

that

reports

increased

Wholesale Food Price Index Trend

was

Other

export

weather

;

of

ing sections of the West.

ment

other

any

ginning

Coast

cluded

failures occurred in each

these

and

made good progress in most areas
but labor scarcity was reported in

to

rise.

Western Gold Mines

were eagerly sought. The
scarcity of nationally advertised
major appliances persisted, with
demand
for
hardware, building
supplies and paints considerable.

Pacific

the

Offered at $8.50

nishings

had anticipated.

to

by 8%.

rose

West. Gold Mines Stock

were

quality floor cov¬
other household fur¬

west 9

in

increased 12% and for the year
date

Good

and

market, most of the activity was
reported from the wool grow¬

ment account

as

announced after

ple wool available in the Boston

North

and

for

12, Northwest

East

16,

demand

made

of 21%
(revised figure) in the
preceding week.
For the four
weeks ended Sept. 27, 1947, sales

fishing and
hunting equipment increased and
automobile
supplies and
acces¬
sories were
purchased in large

Fine domestic wools remained

14, Middle Atlantic with 17,
with

The

in good demand during the past
week. With very little fine sta¬

with

Central

preceding

of

be

in Pitts¬

were open only onb day last
owing to a power shortage.
compared with an increase

year

This

centering on mediumpriced items. Children's back-toshoes

should

burgh

hats
Wool

suits

allowance

week

for the fact that stores

and

well received, with

school clothing
and
steadily purchased.

Federal Re¬
department

weekly period to Sept. 27,
increased 35% above the
period last year.
In using
year-ago
comparisons
for
this

quantities.

Winter

and

were

sliding scale
of margin requirements by lead¬
ing commodity exchanges failed
to check the advance. Aggressive
buying of cash wheat for govern¬

businesses failing this
New
England States

the

the

Announcement of

level, totaling 5 and 8 respectively.
Four regions had about an equal
number

during

well.

sold

substantial

Fall

erings

week.

the

also

in

25 points over the Aug. 15 figure.

markets

trading, but prices went
sharply
higher
at
the
close,
erasing much of the losses suf¬

from

suits, dresses
increased.
Lingerie,

shoes

index

1947,

demand

women's

record and represented a rise of

Irregular

featured

price

The

the

to

sales in New York City for

same

apparel continued to attract
attention.

in¬

office

in

the

plenti¬

reasonably priced.

topcoats

the close of trading on Septem¬
ber 30.
This was a new high

increased considerably last week.

fluctuations

was

parity

Fall

special

volume

Board's

store

buying of dairy products was
steady and at a high level, with

favorable

with

in

-

According
serve

The

ful and

strong

equipment lines.

well with
substantial.

demand

The

new crop.

ued

creases

very

fresh fruits and vegetables

Men's

expecta¬

The decline in early

movement of the

week

of

the

and

higher parity price for

a

sold

the demand for sugar

chased

in out¬

strength

canned goods

were

ment and durable goods contin¬

prices of cheaper
Frozen foods and

meat.

of

cuts

active,

Orders for mechanical equip¬

locales the increased

raised

demand

dress

slow.

wear

rally

late

some

were

reorders

temperatures. Furs

though"

•/
moderately
high-priced

sweaters and heavy weight under¬
and
sleepwear were pur¬

for

decline

a

In

lar.

and

dealings reflected mainly heavy
hedge selling against increased

282.23

a

by

the staple.

&
Bradstreet
daily
commodity price index

Volume

rise

a

to

despite

markets

tion of

gen¬

ago.

manu¬

was

Dun

278.66

slightly

24

Index

total of the price

of

moderate

a

week

influenced

range

wholesale

Manufacturing with 26

also

the

collections

meats and butter remained popu¬

coats

Prices

quotations

for

substitutes

and

for'

fairly

were

easier and final

showed

moving uncertainly in a
for several days, the
general price level resumed its
upward trend, aided by sharp ad¬
vances in grain and food markets.

failing during
the week. Totaling 30, failures in
this group rose from 27 in the pre¬
ceding week and were 10 times
as numerous as in the comparable
week in 1946 when only 3 retail¬
failures

Price

sum

markets

active during the week.
were

use.

narrow

year.

the

Cotton

After

just ended against

responding week of last
■'

were

rye,

steady but cocoa prices
soared to new high ground, re¬
flecting extreme tightness of sup¬
plies.
:

Daily Wholesale Commodity Price
Index Continues Upward Trend

week ago and 6 in the cor¬

a

Food

pound

eral

with loss to creditors

out

week

corn,

high mark of
hundredweight. Coffee

per

remained

un¬

17 businesses

$5,000 where

went

per

during the week occurred

crease

in small failures with losses

steers setting a new

bellies,

sents the

in¬

All of the

margin.

Livestock markets generally were
firm
with
choice
heavyweight

The Dun & Bradstreet Whole¬

65

ceeded last year's total of 22 by
a

Sept. 19. Fol¬
lowing substantial bookings last
week, domestic buying of flour
was sharply curtailed due to spiraling wheat and flour prices.

butter,
coffee,
potatoes, rice, raisins, currants,
prunes, and lambs.

of

Numbering 64,

more.

or

concerns

the

of

involved

moved

oats,
barley, lard, cheese, cottonseed- I
oil, cocoa, steers, and hogs. Low-'
er quotations were recorded for

•

failures

the

wheat,

from damage as of

$35.90

that

during

flour,

was

reported for the comparable week
of 1939.

small rise in the Dun

a

rose

said' to
value

,

capital needed to

mill, company is; of-,
fering to the public 33,400 shares
common stock
(10 cents par>at $8.50 a share.
Of the $233,800;
to be realized from the financing.
a

new

of

$130,000 :will be used to construct;
$103,800 will be used

the mill and
•

Federal Reserve System

for working

capital and other

cor-

porate purposes; The issue is being
marketed through Frank L. Porter,-

Volume

tion of present maladjustments.
This
is the issue
before
the
market

today; if a favorable an¬
swer is
forthcoming, another at¬
tempt to narrow the theoretical
lag between stock prices and the
various yardsticks of value can

Hence, it is perti¬

the

offset

Stimulant?

Within the past year, there

have

that

indications

over-all

in

probably is in
For one thing,
and

1945

in

contraction

a

total

1946

quar¬

will

ance

at hand

near

depend

foreign

interrelated

these

Unhealthy
fatal

but

situation

fears

necessarily

not
have

an

pre¬

proven

mature.

another

contraction

here out?
of

rate

from

Is the steadily slowing

must

field

Naturally,

there

are

offsetting

be

weighed; higher labor
manufacturing costs in¬
tensify the need for modern costcutting facilities, etc.
But with
corporate management today more

and other

caution

bust threat

that

the situation

might get completely
out of hand? On longer view, the
fact that manufacturers have

rec¬

ognized the dangers inherent in
the present abnormal situation is
a healthy development which will
minimize

any

necessary

correc¬

On shorter

view, however,
the
significant consideration
is
that the over-all business prop of

to stand

is being
will have
feet, i.e., con¬

accumulation

inventory

lost; the

economy
on

its

soon

own

sumption will be king.
Supporting
evidence
found

the

in

fact

that

the

steel

another

did not "touch
buying spree; ap¬

parently, the urge
to

and necessity

accumulate inventory today is

not

pressing as it was a year
In turn, this condition re¬
not only the high output
level in various stages of manu¬
as

ago.

flects

facture, but the fact that a num¬
ber

prevail with respect

may

penditures reflects plans made

a

of

industrial

raw

materials

have

approached supply-demand
balance,
if not
overabundance.
Secondly, since last July manu¬
facturers' shipments have
been
running ahead of new orders with
resultant reduction in order back¬

Exports—Fading Boom

If proof

living in
that

be needed that

we

States

cannot

be

island of prosperity in a sea of
depression—it can be found in the

an

facts

that: (a) While our exports
Europe from 1937 to 1940 were
more
than twice as large as our
imports, European countries fi¬

to

nanced their trade deficit with

us

primarily by buying and selling
from each other; (b) although last
year we sold Latin America more

than

goods

countries

had

five
of

the

these

border

export surplus

an

times

as

in

some

large with the rest

world.

the

purchased,

we

below

In

like

a

vein

of

thought, if proof be needed that
an export boom
has been one of
the

main stimulants

this

omy

the

year,

newspaper

to

our

econ¬

it can be found in
headlines of the

three weeks.

past
In

light of the foregoing, it is
pertinent to note the steadily ac¬
cumulating evidence which sug¬
gests that the recent $15.1 billion
annual export rate will not be
maintained.

(1) Following an al¬
uninterrupted
month-to-

most

month rise since last October, ex¬

declined in June and July;
significantly, most of the drop
ports

logs. While this could mean noth¬

ing more than a return to back¬
log normalcy—i.e., a correction of
duplications, absurdly long
delivery dates, etc.—it obviously
lessens the pressure and incentive

world

to maintain

heavy inventories.

in

commodities

which

the

desperately needs; (2) With
imports only offsetting 38% of
exports this year as com¬

-

view, in¬
dustry's capital expenditures per¬
form the necessary and desirable
functions of; (a) Expanding the
nation's productive capacity and
From

a

broad point, of

improving our manufacturing ef¬
ficiency;
(b) Productively ab¬
sorbing a portion of corporate and
individual savings. The adjectives

""necessary"

and

"desirable"

also

from a practical market
point' of view—for industry's cap¬
ital outlays
play an important
;apply

part in determining the overall
level of business activity.
As a
;case in point, during the depres¬
sion 30's there was a period when
a 10% change in the value of the
nation's goods and services was
associated with a 25% change in

plant

and

equipment

tures.
-

expendi¬

a




the

present

that

the

cued"
and

working
pertinent to
situation is the fact

building

the

economy

than

more

the

total

our

Particularly

industry "res¬
in the 1920's,

offset

post-World

exports to them via pro¬

our

tariffs,
tightening
ex¬
change controls or import bans on
certain

consumer

goods; (3) The
wrought by

devastation and havoc

World War II—-and the Iron Cur¬
tain

in

the

War

has

been

the Sterling Bloc ac¬
counted for about 45 % of our pre¬
war

exports.

After
and

doubling between 1914
1920, exports were almost

shifts

in

tionably^ there
factors

in

the

are a number of
present situation

thing, while foreign buy¬
power has been reduced by

one

inevitable.

of

neces¬

level

prices

sagged,

unless

than

in the forepart of 1946, and there
were less than
seasonal increases
in

construction

actually

put in
however, under
loopholes in
the new rent law and negative ac¬
ceptance of the going price level,

place.
the

bear markets within

deterioration

Joeen recorded; (7) Speculatively,

prospect of a moderate decline in
result

not

tion.

in

investment

Thirdly,

the

which

at-

is

power

\he

price buoyancy

be

a

is

sales

in

(Special to The Financial

the face

is

the

acid

ANGELES,
CALIF. —
George G. Vodra has been added

de¬

of

and

connection,

construction

there

are

a

"investment"

can

1946

(2)

Contrary

have

level

in

of

subse¬

been

recent

below

months;

earlier expecta¬
non-residential building

tions,

a

boom

has

This

if

the

price

With

recog¬

Merrill

&

last

observation

Lawson,

And

Lynch,
Beane,
523

....-(Special to The Financial Chronicle).

requires

emphasis—for the background to¬
day is similar in
last

Spring,

some

when

Levy

Williams

SAN

FRANCISCO,

Richard S. Lesser is with

respects to

Levy & Williams,

1

Lawson,

HALSTED AT 63 rd STREET

Statement of Financial

to

not

followed

the

Federal controls;

re¬

RESOURCES
Cash

Municipal
Loans

!>R.F.C.

fluctuations.

by Federal and State highway and

being
held
in
abeyance.
But before
building activity can become a
positive stimulant to the over-all
economy, there must be a decline
costs—in

which

now

connection

it

be noted that: (a) The lesson

only

a

without

$23,683,536.0(3
65,858,069.52
611,639.54

Bonds

Discounts

Participation

^G.I.

( "Insured

270,810.78
Mortgage Loans.

(b)

Costs

the

necessity of

1,130,169.55

or

Guaranteed

by

Federal

a

in

Accrued

Federal
Interest

Customers'
Other

601,606 27

E state Lease

Reserve
on

1.00

Bank

United

—

States

Government

Securities

60,000.00

246,740.53

Liability Under Letters of Credit

82,869.35

Resources

9,062.68

TOTAL

$103 5 »8 862.20

LIABILITIES
DEPOSITS:
Public

Funds__.

United

States Government

War

$2,056,696.18

Loan. Account

Federal Housing

Tax, Etc.,
All
Reserve

Other
for

499,888.86

...^

Administration

Deposits

...

160,442.20

—

Deposits

97,776.924.72

Taxes, Interest and Insurance

Capital

$100,493,951.96
197,461.13

$1,000,000.00

——

Surplus

1,000,000.00

Undivided

Contingent

Profits.—

Reserve

600,034.89

-

!

•_

154.544.87
2,754 579.76
82.869.35

Liability Under Letters of Credit

S103.528.862.20

TOTAL

can

Under

State

Government

Member

de¬

and

Federal
Member

Chicago Clearing House

Supervision

Corporation
System

Deposit Insurance
Federal

Reserve

a

Board of Directors

Academic

Sigurd R. Anderson
Edwin

way

Agency
12,375.337.25

Real

Frank C.

Not

1,010,073.89

Building

major recession.
Recession

2,433,505.18

Loans

Loans__

Mortgage

$90,153,245.12

$6,42] ,6h4.80
1,109,093.05

moder¬

decline is required to stimu¬

activity;

Other

sFederal Housing Administration

Stock

income

Banks

Industrial and Commercial Real Estate Loans....

prices.
The
prospective
decline
in
building activity next year may
be small, however, inasmuch as
the 1921 and 1938 experience sug¬
gests that residential building ac¬
tivity can be largely independent
national

Other

Securities

Estate Loans—Conventional

Real

Bank

Further, total construction activ¬
ity undoubtedly will be bolstered

and

and

in

and

Government

market for

homes exists at these

Hand

on

S

Bank

a mass

(3)

Condition

June 30, 1947

U.

of emphasis, with the

Federal Reserve Board industrial

production index having declined
to 178 in July from the March

Hans D.

Carson
Claussen

Peter DeVries

Charles

W.

Heidel

Morris

Rathje
Holland

Z.

Henry F.

Jaeger,

Fred H. Korthauer

Chester
Arthur A.

W. Kulp.
Lawder,' Jr.

Wm. H

>.

Montgomery

important' Street.

an

.

CALIF.

CHICAGO CITY BANK
and TRUST COMPANY

It

By

of

Fenner

West Sixth Street.

nizes all risks.

ac¬

least

at

are

barometer

activity,

the

cline

staff

the

the

three factors that point to a hiatus
in
1948:
(1)
Contract
awards,

late

to

Pierce,

poor

the question of the permanence of
the up-swing noted above. In this

may

Chronicle)

LOS

speculation if the price
high—whereas the most
marginal company can be a good

probability that building
activity will ■ reach a new dollar
high this year means relatively
little; the large number of proj¬
ects started but not completed in
1946 almost made this a foregone
conclusion.
More
important, is

in

year.

too

The

quent

the

be

may

Joins Merrill Lynch Staff '

earning
capitalized per

price

quarter

interesting of the

conservative

moderate downward business

a

fourth

most

liquida

current

being

trend—for

tivity have increased.

which

broad trad¬

a

Second¬

process.

general

Recently,

stimulus

home

times; (3)

severity of any eventual price
adjustments; (4) The prospect still
remains one of "Baby" bull and

the over-all business indices need

of

started

were

our

ing range rather than extended
swings; (5) While in past years
immediately occurs, investor psy¬
the profits were mainly to the pa¬
chology will be buoyed by contin¬
tient, the profits of 1947 will be
ued prosperity in such industries
only for the agile; (6) The 1947
as the steel,
automotive, machin¬ stock market
highs have not yet
ery and oil.
In other words, the
ly,

and

smaller number

a

homes

new

feature of

This condition in turn will soften

theoretically best investment

of

a

1946

the

will witness a rapid correction
present maladjustments—rem¬
iniscent of 1920-21—rather than a

mits

professional builders had rebelled
against high prices.
Old home

probably hehigh; (2) The sta¬
cheapness, of stocks may

tistical

we

two

high cost halted the
then budding boom, there were
widespread indications this past
Spring that the buying public and

around—and

remain

of

"shaking-down"

(1) There,is a
ceiling to the stock price

low—the

that

mean

generalizations:

definite

pessi¬
For one

Nor does it

Conclusions

Practical market application: of
the foregoing suggests a number

not
automatically
major depression is

a

price-times-earnings

Market

re¬

of 1920 when

ate

during the prosperous
our
foreign trade
well below the post-World War I
peak. Will history repeat itself in
substance if not degree? Unques¬

that

re¬

bull market high.

does

gap

can

two point ipr-

a

ratio of the Dow-Jones industrial
would spell a return to the 1946

;

does not

the realization

only cheap
via the fearful hope

Only

in the

the

the

WPA—history

world

a

peat itself.

"all-out"

an

via

are

of

terminant of purchase or sale. The

thereafter

left

outlook

spell

to

or

crease

market
policy.
thing, the existence of a deflation¬

news

the

halved in 1921—and the slow rise

still

been
.

,

be

stocks

attaches

ownership. Given
in
psychology —

commodity

regarding the building
industry's prospects. Reminiscent

of the 1920's is that

20's

sarily

to

sentiment

public works programs

as

of

export

treated

has become front page news high¬
inasmuch

I

the security

of

lights and intensifies the situation

business

rate

Europe—have disrupted
relationships so neces¬
sary for world trade prosperity;
(4) The British dollar crisis which

the normal

end

boom.

is doubtful that

which cannot be under-estimated.

recently,

force.

pared with 71% from 1937 to 1941,
many countries are attempting to

doubling of For
private ! * expenditures ^ for 1 new ing
More

of

one-tenth

moval of

curb

Business Spending—Tighten¬
ing Purse Strings!

and

only the largest sin¬
new captal invest¬
ment, but it is perhaps the coun¬
try's major employer — directly
and
indirectly supporting about

our

hibitive

(2)

laws

not

notable
are

interrelated world—

an

the United

was

order

is

that

Yet, caution with respect to the

gle outlet for

buyer
(3)

,

.

hampererd by archaic labor pol¬ mistic

Thus far this year,

ing.

turn

be

can

and coal price rise

off"

months ago,

1948

the

to

general out¬

six

was

manufacturers'

the boom and

tions.

than it

look

has

;

change

whether it

our
economy—are weakening,
and the over-all trend has there¬
fore changed. The initial postwar

high

of stock

any

to

(4) The Building Enigma

local

value

quarter.

production

antiquated

hypochondriacs

in

corded.

icies,

slight improvement in the pre¬
mium this community of
economic

by

preceding paragraphs,
however, the factors which make
business activity—the basic
props

constructive considerations which

inventory
gains reported in recent months a
deflationary sign—or elimination

of

appears

inevitable.

warning
a

the

compared with 189 in
As was dis¬

as

first

mean

long time ago, another prop to the
economy appears to be weaken¬

outlook

exports

the

ary

tions.

the

in

quarter

building and allied trades never¬
theless play an important part in
the nation's economic well-being.
For
example, < the
construction

budgets.
Bearing in
mind that the present rate of ex¬

of

busi¬

to

prop

that

nothing especially alarm¬
ing in the fact that the index av¬
eraged about 185 in the second

costly distribution methods—the

past two years each quarter
a steady increase
in the
annual rate of spending.

production curtailments—and un¬
the weight of off¬
setting
constructive
considera¬
what

that

activity is losing its potency;

ness
a

important

is

fact

accentuated

there is

showed

concerned about the

But

play.
generaliza¬

the
was

factor of mass vacations
return of the prewar factor
seasonal
changes.
Moreover,

cussed

into

On balance, the one
which can be made

for

dip

without

came

53

and without apparent reason.
All
that really happened then was

a

the

They
have
over-esti¬
mated the significance of local¬
ized sore spots which did result in
derestimated

called

advance

longer
True, allowance must
no

new

of

Although in effect a "horse and
buggy" industry—one which is

when in¬

about

made

available, this year the
expenditure is proving to
original estimate.
Secondly, the latest quarterly fig¬
ures indicate a tendency to level
off on a high plateau whereas in

dustry's inventory accumulation
program—although an important
stimulant to the economy—inevit¬
ably and eventually
spelled a
repetition of the 1920 collapse; or
(2) With war depleted pipe lines
on
their way to being filled, the
activity would have to
solely on domestic and
consumption.
Thus far,

be

tion

actual

be less than the

was

be

Summer

resources,

became

been recurrent fears that: (1) In¬

time

of

and

estimates of plant expend¬
itures were generally revised up¬
ward
when' the
final
figures

or

maldistribution

a
-

business recession

a

the

terly
(1) Inventories—Sore Spot

dustrial

of

otherwise have been wit¬ the fact remains that gold and
balances
are
still
when government spend¬ dollar
well
ing contracted after V-J Day. Of above prewar levels. Secondly, if
late, however, while certain in¬ only because of our political as
dustries such as the public utility well as economic self-interest, it
probably will continue to spend seems that Congress will look
an
unprecedentedly large with favor on the Marshall Plan
interim
means
of
amount of money, there have been and
assist¬

whereas

state of health.

—

(1457)

is academic.

might

prospect for 1948.

1

CHRONICLE

nessed

the

economy's

which

slack

business

determinants

the

FINANCIAL

has helped | price rises and there probably is

and equipment

plant

nent to consider the present posi¬
tion and outlook for the various
of'

&

HappenedItailhe Wolf?

(Continued from page 2)
down" process or a rapid correc¬

witnessed.

COMMERCIAL

postwar high of 190, the question

What*s

be

THE

Number 4636

166

McDonnell

James McHugh
John Mueller
Max Patinkin

Adolph Quist

54

(1458)

THE COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday, October 9, 1947

'

,!

■

American Bankers Association Holds 73rd Annual Convention
Evans Woollen, Jr., Elected

(Continued from first page)
turning to the banking business
as
an
assistant examiner,
later

Association

The

becoming the senior examiner, in
the Michigan State Banking De¬

Fletcher

partment. Subsequently he joined
the Michigan Securities Commis¬

succeed

sion

as

examiner

special

a

and

of

the

Secretary

became

later

Commission.
In

joined the First National Bank in
Detroit and served as Vice-Presi¬
chair¬
of the board bf that institu¬

man

President of the

in

Detroit

National Bank of

Mr.

for

of

1933.

of

number

a

Detroit

years.

President of the Michigan

Association

and

1945,

June,

June,

from

the previous year.

served

on many

state

bankers

He was
Bankers
1944, to

Vice-President
Before that he

committees of the
association
from
For

the middle nineteen-thirties.

he was Chairman of
the Legislative Committee of the
several years

Michigan Bankers Association and
is now a member of its executive
Council.
In

1946, Mr. Dodge's war serv¬

the Gov¬
11, 1946, he

ernment.

March

On

the

awarded

was

Distinguished

Certificate of the United

Service

services ren¬

States Treasury for

dered

on

nance

behalf

of

Fi¬

War

the

Program. On Sept. 18, 1946,

Secretary of War Robert P. Pat¬
presented the Medal for
Merit to Mr. Dodge on behalf of

terson

President Truman.
Merit is

The Medal for

highest civilian

the

war

award, ranking with the military

Distinguished Service Medal, and
is

authorized

only by the Presi¬

1920.

I, he served
in

the

as

bank

a

Artillery.

He

in 1920

career

clerk, being identified

Fletcher

since that
elected

Committee

Trust

ing,

Division.

He is

conducted

Retiring

President

and

He

President Addresses

At

the

the

and director of the

1942

Since

1943.

President

of
of

In

1930,

Mr.

Woollen

the

He

was

Public

He

Health

in

elected President

was

and served until 1933.

to

he

1935

of

serving
is

Indianapolis
He is

Fund,

In

C.

W.

Bailey

other

we

Amer¬

icans

of

President

Community

having been elected

to the board in

"As

with

the

in

responsibility for providing mate¬
rial help and leadership in the task
He

tional Health and Welfare Retire¬
ment

t.

share

1942 he

trustee of -the Na¬

a

eco¬

reha-

bankers

Indianapolis

Past

1944.

world

was

rehabilitation."

Bailey stated, "While

M

r.

banks do

our

not produce food or manufactured

products,

services

our

are

essential

to the creation and

carrying on of
enterprises. In bank
have an efficient sys¬

all productive

checks,

1943, Mr. Woollen

we

elected

United

the

States

membership

Committee
elected

there,

in

1944.

He

was

of

the

Trust Division in 1945, and served

becomes

useful

to

individuals, to

business firms, and to

Our

ment.

our govern¬

commercial nnd

sav¬

aS'President of the Division dur¬

for

Treasurer

director of the Eco¬
The Executive Council on Oct. 1
nomic Club of Detroit, a director elected Frank P.
Powers, Presi¬
of Detroit Chapter of the Amer¬ dent, Kanabec State
Bank, Mora,
ican

Red

a

Cross

and

of

Detroit

Chapter of the Y. M. C. A.
also

member

a

Trustees

^Detroit.
ber

of

of

of

Board

of

Hospital

in

the

Harper

In addition he is

the

Detroit

He is

mem¬

a

Committee

of

11 he Council of

Foreign Relations,
of
the
Community

director

a

"Chest

of

director

Metropolitan Detroit,
of

a

Michigan Post of the

Minnesota, as Treasurer of the
American Bankers Association to
a

Army Ordnance Association, and

schools.

son.

attended
After

father, he

He

makes

Grosse Pointe,

his

and has

States

home

carried

public

death

the

on

his

of

family

1918.

at

Army

Upon

Michigan.

Army
State

U.S.Savings Bonds
REGULARLY

his

a

in

the

Bank.

Quamba,
miles

Minnesota,
from

Mora.

elected President

was

In 1932 the bank

to

the

Mr.

was

Kanabec

Powers

ever

has

was

State

been

its

member

of

in

Association; he

the
1936

elected

was

Executive

State

Bank

as

Organization
and
a

1937.

Committee

Division,

In

member of
of

the

becoming

Vice-President of the Division in

1941, and serving as President in
1942-1943. He was a member of
the

Ask where you

WORK

Ask where you

BANK

1

;*7\

-.i; /■




have

the

of

banking

the

ing, and agricultural and foreign
Regard-ng reduction of

business,

including: the National
vision,

four

our

serving the four classifi¬ policies.

the

State

Savings

Bank

Bank

Di¬

Division,

Division

and

the

Management and Country
Operations
Commissions.
cause

country

ticular

Bank

Be¬

banking is of

interest

to

par¬

I want to

me,

call attention to the work

of

the

latter

commission, which is de¬
voted to improving the operations
and

services

More than

part

in

smaller

of

7,000 banks have taken

its

cost

analysis

during the past three
in the process of

now

banks.

studies
It is

years.

publishing

a

manual

on
'Simplified Cost An¬
alysis for Smaller Banks." This is

but

of its accomplishments."

one

New

by

a

the

government

pean

aid,

country

it

debt

should

and

Euro¬

that

held

was

"This

be

able to give
reasonable aid to other countries

Division

Presidents

den

those

at

points
where
it
greatest inequities and
greatest handicap on

creates the

olaces

the

the

incentive of the
people to
work, and save, and create better

living conditions."
In

the

matter

of

government

lending agencies, the Convention
approved a statement that "Loans
and

loan

mental

guarantees
and

agencies
favoring

by

govern¬

semi-governmental
in reality subsidies

are

certain

of

groups

bor¬

They

impose a further
burden on the taxpayers at a time
when
the
government's
budget
rowers.

of

working

banking

some

economic

or

A.

B.

A.

Executive

Council

during 1941-1944 and served
member of the

mittee

from

times He

was a

committees

as

a

Nominating Com¬
Minnesota

several

member of various

and

<

at

Referring to banking progress,
Bailey added, "It was one year
that

present

is

a

stood

I

before

tion's

various

Mr.

must

presidents of the Associa¬

Alton

divisions

is

include

Vice-President

the U. S. National

of

Bank, Portland,

the First National Bank of Tusca¬

of which is devoted to

phase

other

New

groups,

each

the

con¬

vention of the American Bankers

loosa,

Ala.; Mr. Brooks is Pres¬
ident of the Central Bank & Trust

Co., Denver,

Colo.; Mr.

Tobie

is

President of the Meriden Savings

Bank, Meriden, Conn., and Mr.
Hausman is Secretary of the Illi¬
nois Bankers Association.

Association and said that bankers

challenged to provide better

were

Convention

banking at every level.
A year
ago many responsible analysts and
writers

economic subjects were
that we
would
have
a

on

fearful

recession.

Today,

Proceedings

and

Resolutions

a

of

time like the present,*the banks
the country have

ing to the extent that it
ages
ary.

of

addition to separate sessions

the

various

Association,

as

divisions

well

as

of

the

committee

re¬

need

encour¬

production is anti-inflation¬
At the same time, there is
for

caution

regarding loans
be used for excessive

that might

and. speculative inventory accu¬
mulation, for over-spending by

individuals,
of

for over-expansion
Such loans stimulate

or

business.

inflation
In

special

a

sponsibility in view of the infla¬
tionary trend. Their sound lend¬

and

risks for both

involve

abnormal

banks and borrow-?

ers."

In

this meetings of committees, commis¬
dies
In¬

a

resolution

for

current

covering

reme¬

"inflation,"

it
sions and councils, and a number was recommended
that the na¬
employment
has advanced to the highest level of receptions and teas, the Con¬ tional budget be "better than bal¬
in our history, and per capita in¬ vention held two
general sessions, anced, the national debt be re¬

fear
a

elected its Vice-President for

Committee

"

We

Hausman

policies, housing and home financ¬

Ore.; Mr. Palmer is President of

and

business

since.

promi¬
part in the activities of the

1939 he

•

cations

C.

to

coun¬

cils,

ago

Minnesota in 1935, and served

"

is

than

more

Mr.

American Bankers

the

Association

sions, committees, sections,

the

he

Mr. Powers has taken

a

Bankers

every community serve as active
members of its divisions, commis¬

accepted

he

President

nent

ican

strict definition much

cashier of the Quamba

seven

changed

J*.

Bankers

Association,
the
State
bankers
associations, and
local banking groups.
The Amer¬

the

Bank,

1922

was

of

summer

moved to Mora and the name

If!" *

ican

from

1919,

as

town

In

in

discharge

of the bank.

1

tom of cooperating by our partici¬
pation in activities of the Amer¬

life."

position

Buy

the

the

Mr.

farm until he entered the United

; Mr. Dodge is married
one

term.

one-year

Powers

Foundation.

divisions

Harry

according

be drastically reduced and
they encourage unsound and in¬
flationary lending.
Its membership
Powers succeeds S. Albert Phil¬ trade association.
the following: R. M. Alton, Trust
"The country's banking system
is made up of more than 96% of
lips, the Vice-President, First Na¬
Division; Gordon D. Palmer, Na¬ and other
the banks by number, represent¬
private credit agencies
tion Bank, Louisville,
tional Bank Division; Elwood M.
Kentucky.
have
the
resources,
the knowMr. Powers is a native of Still¬ ing more than 99% of the banking Brooks,
State
Bank
Division; how and the will to
resources of our country.
supply busi¬
Thou¬ L. A.
water, Minnesota.
Tobie, Savings
Early in his
Division; ness, large and small, the credit
sands of bankers representing in¬
Harry C. Hausman, State Associa¬ it
his
infancy,
family
moved
to
stitutions of all sizes located in
requires and should have."
tion Section.
Mora,
Minnesota,
where
Mr.
And it was further stated: "At
serve

JT trustee

of the American Cancer

interests.

our

A. Tobie

participate

the Executive

on

Vice-President

Standard Accident Insurance Com¬
pany

L.

bankers

tem
for
making payments and Trust Division.
We
have
our
to effect a substantial reduction of
exchanging values. By extending commissions which are
devoted to the
Committee of the Trust Division
public debt, and at the same
credit, the accumulated wealth of
improving bank management and time to make some further read¬
of the American Bankers Associa¬ our
country, represented by de¬
operations, including the Bank justment of the wartime tax bur¬
tion and became Chairman of the posits of more than
$139 billion,

to

ings accounts and our trust serv¬
ices are important in helping to
ing
the
Association
year
just
"exceptionally meritorious con¬ closed. He has been a member of keep the people of our country in
duct in the performance of out¬ the
American Bankers Association a sound financial position.
The
for
standing services in the war."
world
Subcommittee on Federal Deposit basis
recovery
is a
Mr. Dodge is also a leader in
sound, productive America.
Insurance Study since 1943.
"In our business of banking, we
civic and business affairs in De¬
have applied the American cus¬
troit.
He
is a
director of the
Frank P. Powers Elected
of

dent

Brooks

in

Commissioners,

and

M.

o

readjust-

m e n

1931

President in 1941.

as

the

Fund.

to

Elwood

bilitation
and

From 1933

1938

School

director

a

of

From

member of the

a

Palmer

country

sharing

nomic

Indianapolis City

was

Controller.
was

in

t

„

world

ap¬

Charities.

and

D.

efforts toward

pointed to the Indianapolis Board
of

Gordon

the
responsi¬
bility of bank¬
throughout

Company of Indianapolis.

surance

R. M. Alton

called

ers

director of the State Life In¬

a

Clarksville,

attention

has been

Association.

House

Na¬
Bank

Term.,

Vice-President of the Indianapolis

Clearing

First

tional

Fletcher

he

30, the
C. W. Baley,

president,

is

director

a

Sept.

on

retiring
who

of

first General Session

Convention

Vice-Presi¬

was

graduate

a

Convention

Joint Stock Land Bank from 1935

is

the

the American

by

Company
In 1935, he was

time.

of that bank.

to

of

Bankers Association, class of 1947.

Second Lieutenant

Field

73rd

Bank

During World War

as

started his business

with

Legislation

of The Graduate School of Bank¬

Dodge.

University, receiving his
degree from Yale in the

B.

on

Veterans, Con¬
Committee, and the

Credit

sumer

Committee

War

Vice-President to
Mr. Woollen

as

Mr.

class of

the

for

Executive Committee of the State

educated at Hotchkiss School

Board

ices were recognized by

Evans

and Yale

dent

has been active in
organized banking

Dodge

affairs

been
Bank

has

and

The

since December,

the

He was Vice-

1933,
of

President

the

to

1932-1933.

in

tion

assistant

and

dent

elected

Jr.,

apolis, Ind.,
was

of

Service

President of the
Trust Company, Indian¬

Woollen,

A.

Dodge

1932, Mr.

August of

member

Vice-President

has

not

stead,

our

come

in

realized.

been

national

the

larger than

United.

States

is

before.
All this
has been achieved in the face of a

one on

ever

and"

Tuesday morning, Sept. 30,
other

the

Wednesday

on

tired,

production

increased

and

of

all

sorts

be

people", spend' less

outlook. morning, Oct. 1. Speakers at the and save more.- "
made first general sessions were Mr.
.'As a final resolution the Con->
much progress in our adjustment
Bailey, the retiring President, and vention endorsed the program to
from war to peace, there remain
Mr. Aldrich. Chester C. Davis and help, strengthen the international
to be solved many pressing do¬
mestic and world-wide problems. Under-Secretary
Wiggins ad¬ economy, but added that this na¬

greatly disturbed
However, while

world

we

"To enable us to

these

problems,

help in solving

your

Bankers

Association

over-all

program

fitted the

various

tivities in which

have

American

has

into

a

broad

which

specialized

we

as

is
ac¬

individual

dressed

the

second

general session.
Before

the

resolutions

government

closing

tion "can

help needy

nations to

help themselves, but it is not jus¬

final

were

and

1

session

closed

adopted covering

debt

and

tified
sums

in

spending, they will

government lending, bank lending tive."

lending

in such form

be

other
or

wasted

countries

manner
or

tha£

ineffec^
«

Volume

166

Number 4636

(Continued from page 9)

-

out the other

interpietlng this problem for the
American public.
Since my return
I have had the

dress
this

several

from

Europe

opportunity to' ad¬

the importance of reviv¬

ing Western Germany to relieve
the
plight of Western Europe.
And I have suggested a
plan for
the industrial recover of this area.

My talks

based

were

day in

COMMERCIAL

report from

a

&

FINANCIAL

CHRONICLE

fed well enough to increase

were

Railway
equipment is
Ruhr coal output has again being used to export from Ger¬
slumped. On Sept. 4 a record of many 10,000,000 tons of coal to
244,080 tons was reached.
Then other European countries by an

on

ob¬

my

food

rations

for

off.

Output

tons.

the

Because of

fell

miners

unnaturally long rail haul. To

ag¬

dropped

to 238,800 gravate the transportation short¬
expected con¬ age, each country obtaining coal
tinued food shortage, coal output from
Germany in cars that have
is expected to drop further.
been
repaired by the military
In

an

"Report

my

Germany," I governments, keeps the good

on

recommended that the diet of the

and

sends

German

bad

should
be
in¬
calories over a

back

that

cars

page report on what to do to get
Germany on its industrial feet
and eventually off the back of the

taxpayer.

This

submitted to General

report

are

in

Clay

on

July 19.

The release of the com¬
plete report has been authorized

and

as

soon

sufficient

as

copies
can be obtained from the
printer
they will be given to the press.

The report will also be
published
in book form by
Farrar, Straus
and

Company

Get. 27.

on

In my report to General
Clay I
the fact that the key to
the recovery of Western Europe
is Western Germany.
And the
key to Germany's recovery is food
and coal.
As matters now stand,
Western Germany is trapped in a
vicious cycle.
The production of Ruhr coal is
on

food,

cannot

miners

work

tion diet.

because
on

have to rebuild their pro¬
ductive capacity and exports ac¬

digging and exporting of coal by

cordingly. For a five-year period
this declining guarantee for food
would cost about $2 billion.

Britain's Coal

the

starva¬

a

Food must be obtained

Great Britain.

Today

Under this plan meat and
spe¬
cial energy foods would be

the

vided,

ports

pro¬

starting

with

ground Ruhr miners.

stressed

dependent

declining at 20 % intervals each as my studies developed it became
year for the following four years.
amazingly clear that the crux of
To make up the difference in this the
recovery problem of Germany
declining guarantee, the Germans and Western Europe lay in the

would

the

They would

be given special coupons

them to

under¬

entitling

coal

Britain

to

she did

war

not

shipping

Europe.

Before

Her coal

so.

ex¬

the basis of her power.
Her failure to export coal is one
of the big factors
contributing to
were

75% increase in rations her dollar
50% increase in coal pro¬
a

shortage. And she is
for a
attempting
to
overcome
this
duction. At present Ruhr produc¬
shortage by austerity, Nationalism
tion of coal amounts to
roughly and Socialism.
240,000 tons a day. Proper nour¬
Meanwhile German plants are
ishment for the miners would in¬
stalled because they cannot obtain
crease this to 360,000 tons a
day.
coal. If a moratorium were de¬
The bulk of this food, of
course,
clared

would

have

United

States.

to

from

come

This

would

the

be

a

for

months
coal

from

now

one

to

year

15

the

on

10,000,000 tons of
being shipped out of the

Germany
cannot
feed
herself.
Western Germany, therefore, must

heavy burden on the American
Ruhr, the restoration of Germany
taxpayer. Because of the world
and Western Europe would be as¬
food
shortage and the demands
sured. But this moratorium is
only
on
our
country for shipments of

manufacture

food

from

abroad

because

products

in exchange for food.

dustry

is

stalled

Western

for export
But her in¬

because

of

the

lack of coal for power and other
use:i.
And she cannot
produce
in

coal

sufficient

quantities

of the lack of food.

cause

be¬

And

so

Somewhere
made

start

a

be

must

this vicious cycle.

break

to

Application
it

of

not

Morgenthau

been

for

the

Plan
falla¬

cious policy of Henry Morgenthau
who wanted to make an agricul¬
tural

nation

out

of

an

industrial

nation, Germany would not be
bogged down in such difficulties.
Unforunately,
Mr.
Morgenthau
persuaded

President Roosevelt to

this policy which, among
other things, resulted in partition¬
ing Germany into four zones. Rus¬
sia and Poland gained control of
accept

Germany's

breadbasket

in

the

East.
While Russia is still waiting for

complete

a

economic

breakdown

in the West to further her oppor¬

tunities

for

conquest it is highly
doubtful that she will agree to
unification of Germany. Few peo¬

belief

is that

chance of Russia

there

little

is

agreeing to uni¬

fication at the November Council
of

Foreign Ministers in London.
Unification
the

Under

should

of

Zones

circumstances

we

proceed

to be the only basis for the

economic

rehabilitation

of

West¬

Europe.

ern

In

three Western

the

Western

Zones

of

again supplies

Germany, tries

Britain

coal

of Western

to

the

would

while

have to

a

proper

be

main¬

tained to prevent food prices from

end

of

should

many

for

pay us

the

coal

have

industry and
presented

critical problem for

rising higher.
the

they

miners

five years

be

our

required

assistance.

payment should be

a

Ger¬

to

re¬

And

re¬

first charge

of coal to

prosperous British economy

The

explained
Labor

to

the

Germany's capacity to pay. upon putting reform
sound recovery.
Repayment to us should even pre¬
But

reparations.

The expenditures to assist Ger¬

should be looked upon as
investment to get her into vig¬

many
an

orous

production, to fortify the
shaky position of Europe and to
help world recovery. Because it
is

investment

an

we

should

see

place
more

austerity
of

a

a

is not

miners.

Government

of

cannot

take

the

More

and

austerity only tends to push
further

down

in

has used the proceeds of

our

loan

to buy food
supplies. These sup¬
provide the proper qual¬
quantity of food. For if plies could have been bought, in
part at least, with coal, had the
merely stuff the Ruhr miners

that

ity
and

miners been induced to
Germans
with
dig coal
poor
for export.
will not be able to
No direct incentives have
we
will
have
little
been

other

food,

they

work

and

chance
our

of

getting

return

any

on

(Continued

on

page

is

indeed

the latent

remarkable

along

lines
pres¬

the

In place of loans,
gifts and grandi¬
ose global
plans of dubious merit
based on the old

democratic
for

bold

world

conceptions, the
is crying out

imaginative

guidance.

able position for this
purpose vis¬

a-vis the United States, no coun¬
try is better equipped to interpret
the

American

viewpoint to Brit¬

The Marshall Plan is indefnite in

ain and the rest of the
democratic

scope and entirely vague as to its
application.
The European cus¬
toms union favored by some of the

world.

Plan

countries

suggested

form

is

be

effective

too

if

even

it

sible to overcome the
ish opposition.

However, if such
extended

to

democratic

in

were

to

pos¬

strong Brit¬
scheme

a

its

limited

the

cover

trading

were

the

free
be

peoples of the world would
given the first glimmer of hope

for
In

to

return

a

economic

sanity.
existing divergent in¬

view of

terests, it would be difficult
either

this

country

for

Britain

or

fponsor such a revolutionary
this

proach

to

world's

economic

however,

one

solution

ills.

to
ap¬

of

is,

which

country

is

uniquely fitted to be the first
a plan of this kind.

to

advocate

Canada already is giving serious
to

the

idea

of

eco¬

nomic union with her great south¬

neighbor and

ern
a

no

greater interest in

tioning

countries,
situated

country has
freer func¬

a

foreign

of

trade.

moreover,

to

are

jectives
equal

to

Both

pioneer this great

ex¬

following the institution
establishment of

is also

well

initiative
dian

unassailable

tariff

ram¬

It would, of course, be im¬

practical

to

immediate

attempt

complete

dom, but there

are

to

free¬

glaring

many

economic

During
section

of
a

week

the

also

strengthen

tendency

stronger

position

to

advocate

a

Stocks,

led

the

by

clined

to

British Commonwealth

as

a

whole

Canadian

were

the

on

liquor

of

buoyant.

In gen¬

the return to Ot¬

Finance Minister

important

Abbott

commit?^

ments.
~*rr

'

' ■

mm

56)

investment.
Restoration of Equipment

Business with Canada

Food, of course, is not the only
factor retarding Ruhr coal
pro¬
duction.

There

are

such as poor and

other

factors

damaged equip¬

is almost

worthless,

location

of

Ruhr

an

unwise al¬

coal

and

the

shortage of transportation.
Because

of

the

acute

shortage

of

transportation it would not be
possible to haul all of the in¬
creased

Ruhr

amounts of coal from the

mines,

even

if the

CANADIAN BONDS
GOVERNMENT
PROVINCIAL

Inquiries

are welcome regarding markets,
agents, desirable plant locations, taxes and

other

matters

pertinent

to

business

with

Canada.

MUNICIPAL

Our

CORPORATION

miners

our

New York

Agency is connected with

Toronto and Montreal offices
by a pri¬

vate wire

system.

Germany there are 48,000,000 peo¬
ple.
Deprived of Eastern Ger¬
many's breadbasket, these zones
can
provide only about half of
their
food
requirements.
The
other half must be obtained by
manufacturing
and
exporting

calories

living

on a

ain

the

and one-third the diet of

starvation diet.

No

one

It is

can

do

heavy work and produce on such
a

diet.
This

Street, New York 5

The Dominion Bank
A. E. AMES & CO.

fact

was

clearly




brought

CANADA

Established 1871

Head

Office—Toronto

INCORPORATED

day.

people of the United States.
a

CANADIAN STOCKS

company

diet of 1,200

That is less than
i/2 the diet of the people of Brit¬
a

64 Wall

the German peo¬

Last Summer
were

&

WHitehall 3-1874

goods in exchange for food.

ple

Taylor, deale

Branches

CANADIAN

SECURITIES
Government
Provincial

TWO WALL STREET
NEW YORK

5, N. Y.

London,

England,

RECTOR 2-7231

3

King William

Street,

E.

C.

NEW YORK AGENCY—49 WALL STREET

Municipal
Corporate

throughout Canada

Branch:

A,

W. RICE,

NY-1-1045
Bell

System

the
and

the market is in¬

await

before making

the

to

firmer

exception of the senior

were less

between

and

the

issues, but the mining stocks

paper

tawa

country

the

inclined

free

likewise,

upgrade,

similar plan to be put into effect
this

de¬

and

dollar.

eral, however,

a

market

were

the

external

tone

following
of

^

the

bond

steadier

be

in

cur¬

*

the

golds,

then

their

automati¬

world peace.

forthwith.

would

have

would

causes

that could

Canada

S. and Cana¬

already

cally lead to greater political sta-r
bility and augmented hopes for

with

removed

world-

rent ills and the removal
of their

obstacles to U. S.-Canadian trade
be

common

to the solution of the world's

achieve

tariff

free-

parity in common.
Thus Canada
has the unique
opportunity to of¬
fer the world a practical
approach

not

of

a

the U.

dollars

der

also

a

qualified to take the

as

internals

but

of

In this respect, Canada

currency.

example of

only unfortified

along the path of

world customs union would be the

the

free

8f

are

economic rehabilitation

veloped

4,000 mile bor¬

achieved

The next
step

world

periment, and thus offer the world
a

be

importance to both Wash¬

ington and Ottawa.

ideally

are

world

received with increasing

now

the

There

in

respect and attention and the ob¬

entire

system

Furthermore,

affairs in general, Canadian
views

we

and

we

world

previously orthodox
greater relief the
inadequacy of the

machinery.

a

depression cycle. For two years
thp Labor Government has been
avoiding the main issue. Yet it

the

war-ravaged coun-3>tries of western Europe can
prove with ultimate extension to include
their ability to
help themselves it also
western Europe.
will be too late for North
Amer¬
In addition to Canada's favor¬
ican aid to achieve its
purpose.

parts.

production.

Great Britain

Before

international sit¬

statesmanship to exploit

of

efforts

serve to throw into

ent economic

insists

ahead

on

cede

the

such

so many years.

The vital importance

being

merely

uncoordinated

consideration

reluctant to face the issue be¬

cause

Piecemeal

coun¬

Europe.

are

possi¬

And all the

strength of the free countries

once

ble.

ment, inadequate housing, squalid
working conditions, a mark that

immediately to
bring about an effective unifica¬
tion of the British, American and
French zones. Currently this ap¬
pears

to

Great

The leaders of all factions in
Great Britain recognize that coal
is the key to recovery. But

ple in Europe with whom I have
talked have any such hope.
My
own

of

areas

addition

if

wasteful
with
food
and
would
have to shift their diets somewhat
to make these food
exports

At

Had

in

people would have to be less

our

balance

it goes.

other

to

Europe

possible

of the recognized stark
realities of the
uation the failure of democratic
view

Marshall

is

Western

By WILLIAM J. McKAY
In

cars

repair.

people

servations^ obtained during my creased to 2,600
When I went to
Germany to
trip to Europe last Summer where five-year period and guaranteed
study the problem of German re¬
the/request of General Lucius under the Marshall Plan on a de¬ covery, I expected that the answer
D, Clay, I prepared a detailed 250- clining basis—100% the first
year, would be found in Germany. But

was

55

Germany. Because of food short-1" output.

at

American

(1459)

ages

business groups on
In my talks I have

subject.

stressed

THE

Agent

Teletype NT

1-1621

4

ma

56

THE

(1460)

COMMERCIAL

Securities Salesman's Corner

FINANCIAL

&

•(Continued from page
offered
to

the miners

to

CHRONICLE

Thursday, October 9, 1947

(5) Establish

55)

to go back

central govern¬

a

ment for Western Europe.

borrowing
thus

the

six-day week and to pro¬
(6) Abandon the Morgenthau
duce extra coal during the week. idea of a Federal
Reserve System
If the miners did this they could and establish
a Central bank
pat¬
increase coal production from 30 terned after the
banks of Europe.
to 50 million tons a year. Assuming
(7) Provide new currency as
30 million tons of toal exported at
soon
as a Central bank is estab¬
say $16 a ton, Britain would ob¬
lished, the budget is balanced and
tain $500,000,000. This would help
goods are available so that the
materially to close the gap now
currency will have value.
existing between British exports
The reorganization of the Ger¬
and imports.
The direct return would be only man economy must be part of the

The

country.
would

obtained

5

dollars
paid by

be

the borrowing country to the U. S.

#

By JOHN BUTTON

PROFITS IN SECURITIES BUSINESS

SHRINKING

STEP TOWARD COMMUNISM
(Continued from page 3)

today's small mark-ups and
place them in direct competition with a few very large firms
margins of dealers even below

afford to
basis of straight stock exchange commission.
that they

whose volume of business is so great
work

the

on

The Securities

can

Exchange Acts which grant this excessive

to the SEC, and the Maloney Act which
right into the hands of
Marxists and Communists whether you know it or not.

and unlimited power
does the

the

for the NASD, work

same

able

tools and capital invest¬

benefit

the

of

part

take

over.

That is what

to

produce

goods for

,

United States.

bureaucrats

have

power

to

REGULATE

MARK-UPS IN ANY BUSINESS.
The state has

already taken

doubt in my mind

no

incentives

direct

to

the

Britain has the

miners will work.

coal and the barges to haul
miners have money

the securities business

If you are a security dealer you may think
business. You do IN NAME ONLY. You pay
the bills, take the risk and do the work but when it comes
to the amount of profit you are allowed to make for your
efforts THE NASD AND THE SEC TELL YOU HOW MUCH
YOU CAN MAKE.
The losses you can keep for yourself.
in this country.
you own your

this condition exists in the securities business the
production of risk capital in this country will remain at low
levels, new men will not come into the business, and the
MARXISTS WHO LIKE IT THIS WAY WILL CONTINUE

As

long

as

it. The

but the things

loans

should

The next session of
duced: (1) An

amendment to the Maloney Act repealing that

section which denies the

in

the

right of members of the NASD to

to remain

in it

can

do

so

and those who do not can

resign. (2) A complete revision of the Securities Exchange
Acts of 1933 and 1934 wherein all ambiguous and discretion¬
ary powers

of the Commission are removed from the statutes.

That which cannot be put
square

into definitive law and meanwhile

with the Constitution of the United States should be

abolished.

It's

about

enabling the miners to

buy these commodities could be
given to them for increased pro¬
duction. They will then produce
Their wives and chil¬

coal.

more

dren will

to that.

see

If Germany's
is

be

to

industrial logjam
the

broken

British

must

assist by exporting 10,000,000 tons
of coal to Western Europe so that
this amount of Ruhr coal would be

available
This

to

is

Germany.
the

time

we

stopped trying to

securities business in the midst of a

guessing

the

any

revive

to

Western

there

sure

important

ly

Germany

and

Europe.

To be

are

other vital¬

aspects

which

we

must consider.

For example, Ger¬
must be prevented from de¬
another war machine.

Her munitions and aviation indus¬
tries

have

must

never

an

destroyed.

be permitted

In its place

army.

set up

been

She

to have
should

we

coordinated army of

a

cupation

consisting

American

and

of

If

these

loans

they

vided
bulk

French

oc¬

forces

so

successful
V/e

during the

should

hower

ask

International
struction

Bank

and

game.

These

ers.

would

This

would

control

latter

deal with

organ¬

repaid later

in

we

The bulk of the

government.

paid

in

countries

could

possible

our

be

obtain

re¬

dollars

borrowing countries

vestors for the purchase of invest¬

ments in these countries.

investors

dollars

for

could

the

industry

But,

these

over a

loans.

Summing up, any new policy
for Germany must deal with the
military, political and economic
organization of the three Western
Zones
of
Germany,
with
the
psychological aspect of giving new
hope to Germany, with the use of
food

both
to

other

and

the

crease

Great

get

incentives

production
Britain

Ameri¬

exchange
of the

currency

to

in¬

of coal

and

in

Germany

industry going, and with
a practical means of

provision for

repayment for
We

assistance.

our

prevent

can

Europe's

col¬

lapse and

can do it in a business¬
like way.
The cost of such pre¬
vention would be
immeasurably

depression

a

that conceivably could wreck our
economy.

Borrowing

could deposit their currency in a
fund to be used by American in¬

can

or American
long period of
years, this quota of duty-free im¬
ports would permit the repayment

labor.

in

through sales to us of physical
goods and services. Where this is
not

would not be destructive of either

American

course,

could

ways.

From

It

is

the

to

up

leaders of

our

government and the committees of

Congress to act with the utmost
promptness in developing
for Western

plan

a

Europe's recovery for

submission to

special session of

a

Congress this Fall.
Let

not

us

There is

delude

time for

no

ourselves.

delay.

Washington Ahead of the News
(Continued from page 6)

had recognition from
but no way to process

board

complaints.

Denham

would

ground

stand.

He

A

similar

tion

should

be

organiza¬

developed

for

result

in

another

We must let them know

will make it possible for

we

more

will

able

be

without

will

fear

be

to

forge

that

their

dismantled

and

(2) End the denazification

Co., Min¬

80,000

top

Nazis.

At

productive brains of

but to do his bidding.

(3) Invite the Germans to

Treasurer—George A. MacDonald, First National Bank, Minne¬ ticipate in the Marshall
Sorum, Allison-Williams

was
as

NLRB

moving to

Fran¬

machinery.

constitution

remove

to

All

Mr.

idents.

vention

council

This
was

it

the

Vice-Pres¬

seemed,

the

con¬

about to do.

composing it were getting fright¬
thought they might
jobs. This was not true
the case of Denham who was

be out of

by

friends

Plan

that

the

(4)

the rhetoric that has

and

spoken

about

par¬

been

con¬

particular provision of the
Taft-Hartley Act, there is not the
slightest doubt as to what Con¬

Clear the way for German

exports.

thing

written

this:

gress

intended.

U.

It wanted to run

get

inter¬

this

that

or

par¬

particular

that either

me

thing

Lewis

S.

is

is

able

get

that

to

his
now

once

strut

and

victory against the

Government.

This

is

the

only thing involved in the matter
of the Board's

ham's

flip-flop and Den¬
Frankly, I

acquiescence.

inclined

to

decently

think

in

Denham

the

circum¬

stances.
But what the AFL and the CIO'

seemingly

don't know
is
that
management
can
challenge
the
board's interpretation any time it
fit

sees

ened with the

whole

again

only

acted

NLRB,

persuaded

The

the

eliminate

are

to

seems

in

in the meantime,
was languishing for want of busi¬
ness.
The
typical
Bureaucrats
The

It

am

provision that the members of its
executive

fellow

interpretation or that one
adopted by the board will
him, get every one of them.

the

to change

was

Denham's

fellow in the CIO.

to

obstacle

world it had to do
its

because

meeting in San
their

have

would

apparently,

Anent all

ferences.

—

AFL,

Lewis

what

not

pointment. He is now serving un¬
der an interim appointment.

power

Secretary—Preston B. Shute, Jamieson & Co., Minneapolis.

is

that

wouldn't

claim another

bers of the Nazi party and had lit¬
tle choice
when Hitler
was
in

present the

neapolis.

down¬

Germany are in enforced idleness
because they were nominal mem¬

Friday, Sept. 26. New ception of

Vice-President—Bernard L. Decheine, J. M. Dain &

bring about the

CIO.

theorists*

told

am

ticular

would

NLRB

would be clarified
when Congress meets and there¬
fore he should not let himself be
made such a case of controversy
as
to make impossible his reap¬

gram for all Germans with the ex¬

neapolis.

This5

I

Communists out of the

pretation

mood.

upon

fall of the whole works.

in
pro¬

his

was

which

the

probably

the

shipped to other countries.

McNaghten, Williams-McNaghten Co., Min¬

in

tion

cisco,

plants

Kermit B. Sorum

this

prevailed

happened,
Recommendations

on

this

him not
to take this stand and bring about
the picture of a ridiculous situa¬

Operation

we

been

taken

being beseiged by
letters to do just

and

And

Counsel

have

had he

was

telegrams
this.

economic

ahead




suggestion, Congress might
a new plan to permit a

a

less than the cost of

loans, of

They

two

sound

trialists

Co., Minneapolis.

use

would have to be direct from

and

(1) End the reparations of capi¬
tal goods so that German indus¬

B.

goods for

possible relief program that
might
face
in
the
United

any

eco¬

join the family of na¬
tions.
To this end I suggest the
following seven-point program.

Kermit

repaid

Bank could also make loans to be

the

once

—

and

through the normal channels of
foreign trade. Our Export-Import

Germany

of

them to rebuild their country and

Committeeman

As

consider

Sitting
around
and
discussing
with the labor and
legal

that

National

theise

their

SHAEF.

Germans.

?

of

loans.

the

provide this food and this
new organization for Germany we
must rekindle new hope in the

apolis.

long way

repayment

the

As

;>

Recon¬

be

this organiza¬

Rathole.

President—Robert S.

the

would have

Traders Association held its annual meeting

on

toward

tion and to develop a civilian eco¬
nomic organization, also patterned

or

TRADERS ASSOCIATION

Country Club in St. Paul
officers elected were as follows:

for

Development

Eisen¬

the Marshall Plan will not be dis¬

at the South View

through the

through private investment bank¬

war.

General

to reinstate

sipated in boon-doggling activities

Preston B. Shute

Reduction

and

Western Europe to assure us that
that any assistance we give under

Bernard Decheine

physical goods, the prob¬

of the tariff would go a

after

run

NSTA Notes

Robert S. McNaghten

be

Loans may be made

was

administration.

CITY BOND

with

dealing

lem of the tariff arises.

of

willing to accept the
payment in physical

would make the Germans respon¬
sible for its political and economic

Twin City Bond

to

intelligently
repaid, pro¬

are

can

we are

of the

British,

patterned after SHAEF which

nomic

The

incentive

an

Europe to help herself.

ern

States.

important
policy that may be

ization

TWIN

Rather, the

most

except at the same price as with veloping

public. Then those who are now in this association and

wish

the

Coupons,

many

trade with non-members

an¬

goods.

have

I

adopted

Congress should see two bills intro¬

be

of

increase production, to help West¬

made,

able.

phase of

TO WIN THE BATTLE OF AMERICA.

assistance

our

other American dole.

to buy are not avail¬
suggested that the
mining regions be

they want
stores

over

But

should not be in the form

There is

that

more

stocked with needed commodities.

when

happens

of

generalized quota of imports duty

export.

go back into more and better
ment that the state will have to

question

any

repayment of foreign loans by

means

Britain for exporting

free

not

In

the

to reorganization of Western Europe
free up to 10% of the" physical
coal. under the Marshal Plan. It will
cost billions to bring about West¬ quantities
of the production of
Other
sections
of
the
country
ern Europe's
recovery. We cannot any American industry now hav¬
would be encouraged to produce
protective or prohibitive
more
in the hope of incentives. and should not deceive ourselves ing a
tariff.
Over a period of years,
And if additional coal were avail¬ on that score. And most of that
such
a
moderate
importation
able, British industries would be money will have to come from the
small

a

Great

Those

people who do not believe in our way of life and our
enterprise system want to see the securities industry in
this country destroyed completely. They would destroy Wall
Street first. They know that if the savings of the people do

Government.

and

therefore hold

representation

complaint

of

case

or

unfair

up

a

of

a

one

labor

prac¬

tice.

It

happens though that

or¬

ganized labor, or the leaders

are

so

making
their
the

strenuous fight to hold

a

power

labor act.

They

have

made

John

L.,

the

ground

For

a

a

can say now

dent

in

it,

that

slave-

they

or

that

management, there is

this

comfort:
are

on

Taft-Hartley Act is

the Great has.

When

the

engaged with

kind, they

labor leaders

an

are not so

issue of this

likely to be

demanding higher wages for their
constituents.

Number 4636

Volume 166

THE

COMMERCIAL

&

FINANCIAL

CHRONICLE

(1461)

57

Indications of {Current |Business Activity
h

|The following statistical tabulations

¥

shown in first column

are

cover

production and other figures for the latest week

either for the week

or

month ended

on

that date,

Indicated

steel operations

Oct. 12

Previous

Month

Week

Ago

Latest

Ago

94.4

96.1

84.3

90.4

BANKERS

DOLLAR

ACCEPTANCES

STANDING—FEDERAL

Equivalent to—
Steel

ingots and castings produced (net tons)

Oct. 12

of that date):

are as

Year

Week

(percent of capacity)

month available (dates

or

of quotations,

cases

PETROLEUM

1,681,700

1,651,900

1,475,200

OF NEW

1,593,200

INSTITUTE:

YORK—AS

RESERVE

of

Aug. 30:

$132,792,000

Gas

oil

and

distillate

fuel

Sept. 27

5,196,000

Sept. 27
Sept. 27

5,290,000

5,280,000

5,209,000

16,501,000

16,388,000

16,753,000

14,824,000

Sept. 27

2,022,000

1,993,000

1,910,000

6,275,000

5,919,000

5,727,000

27

8,772,000

8,962,000

82,472,000

81,987,000

84,105,000

86,813,000

27

22,829,000

22,254,000

20,723,000

21,203,000

Sept. 27
Sept. 27

60,406,000

59,283,000

54,808,000

60,825,000

56,777,000

56,934,000

55,242,000

58,858,000

oil

output (bbls.)
i
Sept.
Residual fuel oil output (bbls.)
Sept.
Stocks at refineries, at bulk terminals, in transit and in
pipe lines—
Finished and unfinished gasoline (bbls.) at
Sept.
Kerosine (bbls.) at
Sept.
Gas

oil

and

Residual

distillate

fuel

oil

fuel

(bbls.)

oil

at

(bbls.)

at

:

27

5,199,900

5,156,850

Dollar

on

Revenue

OF

freight

Revenue

AMERICAN

loaded

1,100,000

$187,344,000

$206,848,000

$475,000,000

$427*,000,000

$411,000,000

228,000,000

243,000,000

134,000,000

127,000,000

80,000,000

72,000,000

62,000,000

460,000,000

418,000,000

347,000,00*

228,000,000

189,000,000

130,000,000

120,000,000

104,000,000

76,000,000

70,000,000

54,000.000

15,000,000
7,000,000

9,000,000

4.000,000

7,ooo"66o

2,000.000

4,000,000

2,000,000

8,000,000

$494,805,000

$413,494,000

$373,056,000

301,785,000

222,772,000

193,020,000
152,979,000

190,722,000
146,324,000

229,622,000
143,434,000

44,398,000

25,368,000

$244,000,000 *$244,000,000

THE

LABOR—Month

22,000

7,205,000

40,041,000

OF

1,000

6,664,000

261,000,000

shipped

$142,000,000

between

-

CONSTRUCTION

AREAS
All

and

5,896,000

254,000,000

stored

countries

BUILDING

IJ.

of

IN

S.—IJ.

S.

URBAN
DEPT.

OF

June:

building construction
residential.

New

RAILROADS:

(number of cars)

—

,

freight rec'd from connections

937,954

931,072

925,732

729,165

712,453

701,227

716,316

ENGINEERING

CONSTRUCTION,

ENGINEERING

New

NEWS

Private

S.

construction

Oct.

and

$122,766,000

90,272,000

49,988,000

36,571,000

52,078,000

32,494,000

83,731,000

24,563,000
12,008,000

43,802,000

28,884,000

75,217,000

8,276,000

3,610,000

8,514,000

Oct.

building

New

z

non-residential

Additions,
CIVIL

etc

construction

residential

New

$133,719,000

83,105,000

Oct.

Federal

$135,183,000

130,241,000

Oct.

municipal

$166,812,000

Oct.

construction

State

alterations,

Federal—all

construction

Public

non-residential

Additions,

RECORD:
Total U.

residential

New

CIVIL

-

alterations, etc
Non-Federal—all building construction

916,515

Sept. 27

(number of cars)

non-residential

Additions,

Sept. 27

alterations,

ENGINEERING

64,000,000;
54,000,000

CONSTRUCTION—EN¬

NEWS

GINEERING

etc

106,000,000

RECORD—Month

of

August:

COAL OUTPUT

(U,

S. BUREAU

OF

MINES):

Total

Sept. 27

12,300,000

12,240,000

12,030,000

1,278,000

*1,256,000

1,200,000

1,260,000

Sept. 27

134,400

*134,100

129,500

Construction

Construction

Public

and

State

123,400

Construction

S.

U.

Private

12,864,000

Sept. 27

Municipal

Federal

DEPARTMENT

21,642,000
12,053,000
13,666,000

$206,307,000

good

foreign

New

ASSOCIATION

9,439,000
11,286,000

11,350,000

exchange

Based

credits

$152,260,000

45,056,000

8,407,000

—

7,974,000

27

warehouse

1,726,000

6,136,000
8,580,000

Domestic

4,777,500
4,817,000

shipments

$114,898,000

4g,762,000

Domestic

output—daily average (bbls. of 42 gallons each)__
Crude runs to stills—daily average (bbls.)
Gasoline output (bbls.)
Kerosine output (bbls.)
j,

Ago

BANK

Exports

Crude oil

Year

Month

OUT¬

Imports
AMERICAN

Previous

Month

Latest

AMERICAN IRON AND STEEL INSTITUTE:

in

or,

STORE

SALES

INDEX—FEDERAL

PAPER

COMMERCIAL

RESERVE

Sept. 27

317

301

277

257

of

As

EDISON ELECTRIC INSTITUTE:

RESERVE

ERAL

Aug.

Oct.

4

4,934,851

4,720,659

4,478,092

OF

NEW

YORK—

29
INDEX

INCOME

ATE

4,956,415

OUTSTANDING—FED¬

BANK

PRICE

CONSUMERS

118,066,000

MODER¬

FOR

FAMILIES

CITIES—1935-39=100—As

LARGE

IN

of

July

35:
158.4

157.1

14121

193.1

190.5

165.7

155.0

154.6

126.*

220.2

216.9

173.1

178.8

171.5

179.1

203.0

183.0

1G1.»

202.0

205.0

188 .A

180.8

181.3

126.*

182.0

188.3

137.9

179.7

179.7

138.5

Clothing

184.7

185.7

Rent

110.0

109.2

119.5

117.7

items

All
-

foods

Ail
2

81

77

60

28

Cereals

and

Meats

IRON AGE

COMPOSITE

PRICES:
3.19141c

3.19141c

3.19141c

$36.93

$36.93

$37.08

$28.13

$37.75

$37.75

$37.83

METAL PRICES

Electrolytic

(E.

&

M.

$19.17

and

1

21.425c

21.425c

121.425c

16.900c

1

80.000c

80.000c

f80.000c

52.000c

1

15.000c

15.000c

115.000c

8.250c

1
Oct.

21.225c

14.800c

14.800c

114.800c

8.100c

1

10.500c

10.500c

110.500c

8.250c

122.31

122 49

121.02

117.00

116.80

1-21.225C

and

—

sweets

—

,

electricity and ice

Fuel,

14.150c

oils

and

Fats

copper—

21.225c

vegetables

Beverages

Sugar

Oct.

91.7

91.7

92.1

146.6

143.0

133.3

184.3

182.6

157.9

Miscellaneous

139.5

139.1

128.2

263.7

281.2

262.7

and

Gas

Other

electricity
and

fuels

ice

CONSUMER PURCHASES OF COMMODITIESDUN

&

BRADSTREET,
of August

(1985-1939=

INC.

100)—Month
7

3 22.24

7

Aaa

Oct.

114.66

7

114.85

119.41

119.CI

121.67

COTTON GINNINGS (DEPT. OF COMMERCE)—
Prior

121.25

to

Sept. 16:

647,391

1,225,327
23,884,702
22,018,548

379

358

396

12,267,000

120.02

119.00

114.85

116.80

116.61

7

107.27

107.62

109.79

110.34

109,60

3 09.97

112.37

112.37

Spinning spindles in place Aug. 31Spinning spindles active on Aug. 31

7

116.62

116.41

118.60

117.80

Active

7

-Oct.

117.80

114.85

7

-Oct.

117.60

7

Baa

23,832,156

1,552,858

bales

Running

7

-

A

118 20

118.20

12022

12C.02

COTTON SPINDLING (DEPT. OF COMMERCE)—

spindle

Average

23,807',000
21,415,434
21,197,000
9,034,000,000 8,530,817,633 9, 448,813,582

August
hours per spindle

hours,

spindle

place

in

August
MOODY'S BOND YIELD DAILY AVERAGES:

U.

'

S.

Govt.

Bonds

-Oct.

7
7

2.92

7

2.68

OF LABOR—Month

1.49

-Oct.

-Oct.

1.50

1.51

1.65

2.93

•

•

2.80

2.82

2:67

2.57

2.59

-Oct.

7

2.77

2.76

2.65

7

2.91

2.91

2.81

7

3.32

3.30

3.18

3.15

3.19

3.17

3.04

3.04

-Oct.

7

Oct.

7

2.85

2.83

2.64

7

2.74

2.74

2.64

439.7

438.2

426.2

workers

in
12,404,000
6,488,000

11,767,00*

6,309,000

5,967,000

5,916.000

5,783,00*

149.9

goods

151.4

5,984,00*

Employment indexes—

2.65

7

Nondurable

2.65

Oct.

DEPT.

AU manufacturing
Durable goods

2.82

Baa

S.

of July:

number of production
manufacturing industries—

Estimated

2.70

-Oct.
*'■

PAYROLLS—U.

EMPLOYMENT AND

Average corporate

158.1
113.3

Housefurnishings

MOODY'S BOND PRICES DAILY AVERAGES:

Aa

:

Fruits

J. QUOTATIONS):

1

products

Eggs

2.73011c

30

bakery

—;

products

Dairy

339.7

All

manufacturing

Durable

143.*

174.7

goods
Payroll indexes—

179.7

165.7

130.3

goods

Nondurable

129.1

126*

COMMODITY

NATIONAL

FERTILIZER

ITY

INDEX

BY

..Oct.
Oct.

ASSOCIATION—WHOLESALE

267.1

350.6

365.9

296.3

Nondurable

INDEX

319.6

Durable

MOODY'S

277.9

274.2

238.5

All

313.9

manufacturing

goods
goods
Estimated number of employees in

COM

GROUP—1935-39=100:

manufac-

x

turing industries—
4

232.9

231.4

4

245.0

234.1

187.6

193.1

Durable

4

265.5

258.6

261.0

217.5

Nondurable

Oct

4

290.5

294.6

303.2

363.4

Oct.

4

295.4

274.5

277.9

216.8

Oct.

4

Oct.

Grains

226.1

All

187.4

194.2

191.6

154.2

167.8

164.2

143.5

214.2

214.5

210.9

210.8

Durable

159,1

159.1

159.1

124.5

226.6

226.5

231.3

178.G

149.7

128.2

7,307,000

7,219,000

*$49.03

52.49

*52.23

45.98

*45.65

39.8

AND

*39.8

WEEKLY

HOURS

DEFT.

S.

OF

Nondurable

4

Fertilizer

256.1

190.6

169.3

4

--Oct.

256.5

190.6

4

4

Oct.

262.3

4

Fuels

goods

ESTIMATE—U.

AVERAGE

14,526,000

7,863,000

7,464,000

$49.29

goods

EARNINGS

FACTORY

15,327,000

7,655,000

7,515,000

15,170,000

manufacturing

4

151.5

149.6

LABOR—Month of

August:

Earnings—
All

.

manufacturing
goods
goods

Hours—
All

manufacturing

4

135.6

134.0

130.8

121.9

Durable

4

135.7

135.7

135.5

125.1

Nondurable

4

127.1

127.1

127.1

116.5

4

213.3

211.0

210.2

173.8

—

39.9

goods
Hourly Earnings—
All manufacturing
Durable goods
Nondurable goods

Orders

received

(tons)

Unfilled

380,644
.

orders

152,814

167.268

160,969

181,483

176,588
99

101

440,769

425,412

MONEY

170,970

101

437,550

(tons)

183,554
102

Production

569,409

IN

OIL, PAINT

AND

DRUG REPORTER

INDEX—192G-3G

RECEIVED

NUMBER—U.
3

144.5

143.3

140.1

PRICES—U.

S.

DEPT.

LABOR—1926=100:

All

Sept. 27

156.2

158.1

154.0

124 a

184.7

189.8

181.7

156.6

-Sept. 27

177.6

182.3

172.1

185.5

183.3
140.1

125.4

114.2

95.1

149.8

114.2
134.0

115.0

Sept. 27

mater

150.4

115.0

150.3

18q.9

179.3

123.6

122.2

117.6

farm products and




a

OF

AGRICUL¬

1914

=

100—

131.9

131.9

115.1

115.9

foods..:

297

270

222

248

3.96
265

Fruit

181

177

210

Truck

101.8

Meat

and

167.9

143.6

150.9

149.9

116.';

150.9

152.7

148.9

117.5

Truck

150.0

151.1

147.9

117.4

138.2

138.0

137.3

112.4

and

eggs

308

236

2n5

250

349

282

products

:

211

258

271

246

products

315

367

crops

animals

Fruit

224

221

Seasonally adjusted:

Dairy
;*

154

179

311

crops

Oil-bearing
Livestock

173.6

day.

207

267

151.3

given for previous

236

246

252

171.1

Sept. 27
arc

255

278

grain and hay
grain

276

254

Cotton

115.0

114.9

243

286

383

Sept. 27

holiday—quotations

10.4C0

313

Sept. 27

products-.,
other than farm products
than

9,041

346

Sept. 27

tSept, 1 being

8,055

352

Sept. 27
articles

commodities other

DEPT.

1909-July

Feed

98.2

131.9

Feed

Poultry

materials

""Revised figure.

August—

FARMERS—INDEX

products

Dairy

All commodities
All

$28,253,878,909

Tobacco

groups—

Semi-manufactured

j.

182.0

-Sept. 27
-Sept. 27

Raw

Sept. 27
-Sept. 27

and

Manufactured

S.

$28,297,227,423

&

Sept. 15:

farm

140.9

140.7

-Sept. 27

Special

$28,148,676,876

31

Crops
Food grain

133.0

186.2
140.8

-Sept. 27

Chemicals

of

*1.152

Unadjusted—

-Sept. 27

Building

BY

TURE— August

139.4

As

WHOLESALE

of July

INC.—Month of

BRADSTREET,

PRICE

AVERAGE<=100

*1.306

1.158

INCORPORATIONS—DUN

BUSINESS

PRICES

*1.232

1.314

CIRCULATION—TREAS¬

DEPT.—As

URY

NEW

*39.6

$1,238

:

—

NATIONAL PAPERBOARD ASSOCIATION:

40.0

39.7

goods

249

171

205

253

275

235

278

265

267

236

224

213

180
--

crops

—

products

Poultry

and

---,

eggs

♦Revised figure,

'

•

58

(1462)

& FINANCIAL CHRONICLE

COMMERCIAL

THE

is

rities

Iron Hand Over Securities Business

insignificant when com¬ debt. This is the only sound and
total value1 of Secu¬ logical course to follow; and I 1
rities outstanding. I am forced to believe it is the present-day pat¬

pared^ to

that, in

my opinion, he has
beyond the intent of
Congress when it gave the Fed¬
say

Oppresses Our Economy
(Continued from page 2)

ated by turning spigots on and off
right and proper to or raising and lowering levers.
stress the popular doctrine of "to The would-be social
mechanics,
each according to his needs,"
yet, who tamper with the complicated
fundamentally, this has been a inter-relationships of hundreds of
"share the poverty" program dis¬ millions of iheii and
women, lack
•

has

3

seemed

i

t

i

t!»,n

into

raomrait

frftm

began to recover from

situation

that

Just about

Knrfnn

urn

we

thrown

were

we

and it became necessary

war

far

gone

stocks.
tn

of preferred
the time

Thursday, October 9; 1947

Reserve

eral

Board

American

and

regulate the amount of credit that

other

all

fallacy is that
mankind, in spite of all its human

Here, at home, the dilutions of
capitalism have been more minor

flourished.

errors, : inevitably must continue
to progress.
One fallacy is as bad

in

the fact that

the other.

as

Civilization does not have to
continue its march forward.
The
world can retrogress just as easily
it

as

nature.
But capitalism

be de¬

can

stroyed, progressively, by so di¬
luting it as to make it ineffective.
watered down

Socialism has

the

standard of living in Britain and

can progress.
As a matter of
fact, it did retrogress for hundreds

Communism merely has guaran¬
teed perpetual poverty and hope¬

Of

less

after the fall of Rome:

years

and

its

recent

persistent progress
the discovery of
engine and the begin¬
ning of the capitalistic system.
dates only from

slavery for the

many

millions

Russians who deserve

of

much

a

better fate.

the steam

Dangers of Unwise Planning

in most

of the other countries

of

Europe.
The

Soviet

rulers

tell

their

people that capitalism contains in
itself

the

seeds

of

its

de¬

own

struction; and that for this reason,
no other, such a highly de¬
system

America

as

must

have

we

commit

in

suicide.

They teach that it only will be
necessary for Communism to wait,
and the North
American giant,
like a ripe apple, will fall-with all
its

wealth

into

the

laps of those

who rule in Moscow.

Now, let us consider the other
fallacy, which is far more dan¬
gerous.

Humanity does not auto¬
matically go forever from one
good thing to something better.
Europe, in our time, has found
this

out.

The

common

condition

has

man

of

to

ceased

the
im¬

prove from

year to year and gen¬
eration to generation in
England,
in France, in Germany, in

Italy,
in Czechoslovakia, in
Hungary, in
Poland, in Bulgaria, in Roumania,
and in
Greece.
Things do not
have to keen
America.

on

We

getting better in
be

can

caught

the backwash of the world's

These

the

and,

in

some

respects,

accept

unorthodox

dealing

with

The out-and-out Communist

used

for

carrying

listed

Centralized and absolute
planning
is dangerous.
It is dangerous be¬
cause
few, if any, of us under¬
stand

exactly

works.

We

how

ture, but not all

the

part

see

economy

the

of

of it.

pic¬

Moreover,

even

the most conscientious plan¬

ners

are

influenced

as

to

objec¬

tives

by a selfish outlook
limited experience.

and

a

society immediately
tact with
and
of

a

con¬

set of automatic checks

balances, the perfect working

which

is

necessary to correct
the combined mistakes of
society
aad to
keep the whole system
operating for the benefit of hu¬

manity.
avoid

a

Whenever

check,

and when
set

other

Soon

the

fectively

we

lose

we

lose

things

- we

out

system

a

of

works

because

we

balance.
less

someone

ef¬

has

meddled with its operation.
It

cannot

be

too

keeps

a

These
seem

a menace.

dramatic times.
We
to have a new crisis every
are

morning and
Sometimes

evening.

every

forget the reason.
The world is
sailing through the
backwash of the biggest war the
world has ever experienced.
War

disorganizes the world's
relationships, it dis¬
turbs currencies, it destroys prop¬
erty, it creates shortages.
War

has

its

human

impairs

conse¬

morals

and

tires

personal and public morale.
are confused and they are
confused when the war is over
when it is in progress.

People

With the economy disturbed and
human factor physically and

the

emotionally fatigued, time honor¬
institutions begin to be ques¬

ed

tioned.

We need not fear for the

future of
as

a

institutions

our

people

recognize

for

the

we

weak

often

or

emphatically stressed that the

too
sys¬

tem of enterprise known as
capi¬
talism
was
not
planned..
It

evolved




prices

generally, the stocks
of the leading banks

many

low

level

of

stock

Of
are

The demand for

capital is

nec¬

entire economy.

because our economy is
crying for production. To expand,
industry has had to go into debt,
essary

instead
this is

of

equity financing, and
policy.

unsound

an

address

an

Sept. 25, last,

on

Sound Patterns to Follow

In

conclusion,

form

of

before the National Association of

Supervisors of State Banks, Marriner
Eccles,
Chairman of the
Board of the Federal Reserve Sys¬
tem, declared:

debt

I

know

"Supervisors should take

debt—whether

it

to

Eccles

ically, curbs
real

estate

excessive
loans

mentioned,
consumer

on

loans,

loans

inventories,

for

specif¬
credit,

to

any

purposes.

Since the middle of the year, ac¬

cording to the
banks have
rate

been

equivalent

year.

commercial

of

expanding at
to $10 billion

a

Now, if Mr. Eccles is really

disturbed

about

the

of Bohemian

case

Germans
Either

have

the

been

factories

new

built in

Germany
in

resettled.
have

or new

to

be

workers

Czechoslovakia.

Here

then is another aspect of the dol¬

lar shortage.
Dollars

are

a

of private venture capital at

time when the demands for such
never

been greater in

history of the country.
Venture

Industry,

Capital

to

grow,

Needed

must

have

capital and, I repeat, there is a
great need and demand for it now.

the

than

curious
internal
creases

are

dollar.

results.

short

because

inflated

This
The

has

more

many

inflation

purchasing

power

of

in¬

the demand for American

increase goods, which in
many cases are
in commercial loans, it is difficult
cheaper than competitive goods
to understand why he persists in
despite the price rise here. Infla¬
holding such an iron hand over tion also has the effect of driving
big

I

fear, however, that too many
people; in high places fail to real¬

For too many years, all to fre¬

quently, our economy has depend¬
ed entirely too much upon the
government, upon its capital. In
the early '30s when bankers could
not make loans and the market
for

securities

peared

we

had

adopted

almost
a

disap¬

program

of

securities business.

How

he

can

justify

a

period from
one

1920

to

considered the

in

rities

on

so-called

the

75%

mar-

1925

when of

new

dollars is repelled.

put

dis¬

a

listed

secu¬

regulated stock ex¬
changes without driving specula¬
our

on

tion—inherent

in

system:—

our

into other forms of venture. Mar*-

gin

requirements

been

lowered

have

should

long

5(1%.

to

ago

This would have tended to

checks-

rein loose and Uninformed specu¬

lation in other markets.
The

structure

tax

vised

in

the

be

must

interest

re¬

venture

of

capital.
I

might add that

realistic ap¬

a

proach to the problem of furthe'r
financial aid to foreign countries
cannot

ignore the question of tax

relief for the American taxpayer,
in
the interest of producing
a
flow

of

deal

with

The

private
the

risk

capital

to

global

problem.
program for 1943 shapes

tax

in two directions:

up

Democratic

and

Republican; it should be so
completely divorced from petty
political considerations

is

as

our

foreign policy. From the point of
view

of
world
conditions,
the
tragic thing that could hap¬
pen today, short of war, would be
a slump in business in this coun¬
try, resulting in a sharp increase

most

unemployment, accompanied by

social

unrest.

Incentive
of the

ucts

and initiative, prod¬
profit system, are the

accounts

for the slow progress

ing

production.

farmer

in

in expand¬

Will

Burma

or

the
the

rice

.

wheat

farmer in France exert himself if
his rupees

their
he

francs tend to lose

or

purchasing
the

cannot

Will-

power?

Ruhr

work

hard

a

if

buy anything for the

marks he

earns?

What

implication
does
the
shortage of dollars hold for world
trade in basic commodities?

gold

and

duced

dollar

to

loans

reserves

Once

are

re¬

the

are

minimum, and if
discontinued and ex¬

valued

goods

tend to

come

tion
will
lar

is

ages

be¬

that

and

services

must

down.

The implica¬
bearish influence

a

be exerted

on

prices in dol¬

areas.

Again,

if we assume that the
shortage will become more
acute, the support that our enor¬
dollar

export surplus is giving .to

mous

Furthermore, inflation discour¬

volume of

New York Stock

frozen

cannot

against

country where

production. It leads to resort
to more planning, controls and
Exchange excessive?
*
regulation, which stifles enter¬
And how can he justify prohib¬
prise.
People have money, but
iting of the^ substitution of stocks
Can't buy much more than their
business

We

crimination

hausted, foreign countries will be
able to buy from us no more than
they can sell to us. To sell us
the inflation is running. Gresham's more, the prices of their over¬
dollars out of the

loWer, in relation to stock prices, tion, is illustrated on an internathan at any time for which data |tional scale.
In France, for exare
available? Or when the vol¬ ample, gold and dollars have dis¬
ume
of stock trading, in relation appeared into hoarding.
The in¬
to national income, is only a small ducement to evade exchange con¬
fraction of what it was in the trols is immense, and investment
no

taxation.

miner in
also

gin requirement when stock mar- law, which says that bad money
ket credit has declined to a level drives good money out of circula-

age

for imagination and bold decision
in the fields of credit control and

(Continued from page 7)
glass, which into goods. It has been responsible

is unobtainable because millions of

address, loans other
currencies

same

investments

and

or

I

disturbed about is the short¬

coming.
My recommendations in dealing
with the present-day situation call

spurs to continued recovery. Our
does
not
call
for
equity. The tax policy should revolve around
higher commodity prices and the venture capital and the factors of
greater the risk, the larger the incentive and
initiative
in
all
proportionate amount of equity to ranks of our society.

trained

carry

and

speculative

within

be

the

am

bank

accommodations will not be forth¬

crit¬

a

increased production
and movement of goods/'
Mr.

of

abundance

an

large

in

of no
public

than

other

ical attitude toward any expansion
of loans
unless they contribute

directly

for

is

capital; otherwise,
new
financing and

without the banking system—that

Eccles' Inconsistency

In

are

links and act to correct those er¬
rors in time.
The weak link that

planned economy and the goverirspontaneously,
without meiit not only went iftto the
human planning, out of the expe- banking business but recapitalized
rience of society.
It is not oper- the banks through the' purchase
.

stocks

common

of

Values

normal trade

quences—it

new

by

the

cause

inter-connected and,
ing the income of this country that
we
are
gradually drying up the already* the weakness of industrial
normal sources of equity capital. and other stocks of high quality,
The pressing demand' for taxes following announcement
of the
has blinded our perspective and attempt to raise additional capital,
we may kill the proverbial
goose. has had its effects throughout the

we

ize
that there
is
an
alarming
shortage of venture or equity cap¬
ital today, I'd like to discuss for
try to just a moment, a few of the
balance; causes of this shortage.

balance

one

which

meaning economic planner, how¬
ever, can be

capital have

in

come

nostrum

a

is evidenced

call

terms

loans.

on

scale

increasingly diffi¬ selling below book value, pre¬
cult to sell. The bond market, the cluding
the
raising of
capital
market for preferred stocks, has
through the sale of additional
become sticky, increasing the de¬ stock.
The capital needs of the
pressing effect on the market for banking industry and the diffi¬
junior securities.
culty "it is undergoing in raising
Some market analysts and econ¬
additional capital on any terms
omists say the lack of interest on
are clear indications of the
present
the part of the investing public
status of our new issues market.
in securities is caused by the un¬
The Federal Reserve Board, I am
certainty of the foreign picture,
constrained to say, lacks under¬
but I fear it goes much deeper
standing of our capital markets.
than that.
Stock prices do not have iron cur¬
For the past 15 years, We have
done such a good job of socializ¬ tains isolating one from the other.

world, and fails to fill the stom¬
achs of its followers.
The well-

the political and economic
the planners in a capitalistic

area,

to

great nation like Russia, a thou¬
sand years behind the rest of the

the

Capitalism Not Planned
In

ten

This

stiffer

borrower

higher interest rates

venture

becoming

are

is

dangerous in
our
political
system.
Our people will not lis¬

must
in

destroying its effective¬

not

as

economy.

eggs,

ness.

as

methods

vast

our

golden

balances

folly.

we

America

by voluntarily
abandoning capitalism, but I do
fear that unwise planning will
make
"improvements"
on
this
automatic system of checks and

times

unorthodox

are

in

that

fear

no

will kill the goose that lavs

ever

if for

veloped

have

I

Let's treat with the Russian fal¬

lacy first. I say it is Russian, but
it is held in some form or other

of business

lines

the

The

be

can

securities.

to supply,

most

from

to

power

not only our own war
Mr. Eccles, however, does rec¬
machine, but that of our allies as ognize the need for capital.
In
guised as a "share the wealth" the intelligence of the system it¬ well. The industrial expansion was the talk to which I
referred, made
measure.
self.
A loose screw here, a broken on such a gigantic scale that the
by Mr. Eccles* he urged that com¬
cog there, and an artificial gear government again, furnished the mercial banks be
required to en¬
Two Fallacies
somewhere else
can
make
the necessary capital.
Following the large their
capital if they persist
I want to call attention to two whole structure
squeak and groan. war, industry began to use up its in increasing risk assets either
by
popular fallacies.
One of them
In
late
years,
the economic reserves and surplus earnings for retention of
earnings, or, if earn¬
now is current in Russia and the
planners and the reformers have reconversion and when that source
ings are not large enough, by
other one is abroad in America.
tampered more and more with showed signs of exhaustion and sale of
additional stock. Mr. Ec¬
The
Russian
fallacy assumes this complex machine.
On the industry began to look to the nor¬
cles appears to overlook the fact
that
our
present
prosperity
in European continent and in Eng¬ mal source of capital, the. securi¬
ties markets, it found that these that the banks, by and large, have
America is sowing the seeds of a land the machine
actually has
been following very conservative
depression in which Capitalism been injured to such an extent markets apparently were suffer¬
dividend policies.
will perish from the earth.
Moreover, be¬
that it almost ceases to operate. ing a depression at a time when
The

tern, for bank officials and other
lending agencies are demanding

domestic

our

weakened.

situation

Let

will

be

remind

me

yotfc
again that this surplus of exports
over imports ran for a time in the

early

summer at the rate of $13
billion annually. This means that

rations with it, and they lack in¬ our producers were
being paid for
they are not up to his 75% centive.
$13 billion of goods and services
margin requirements?
By doing
In the world generally, there¬ which were moved
out of our
so; he places the American inves¬ fore, inflation is a far greater fac¬
country, which were not available
tor in the same category as the
tor in dollar shortage than most for use
by the people who pro¬
foreigner,
whose
assets
were
people realize. What is necessary duced them. This is inflation. It is
frozen during the war. The for¬
is fiscal reform* elimination of de¬ auite true
cause

that the amount of in¬

eigner, however, has had better ficits,
treatment

because,

in

most

revaluation of currencies flation may be, and to some ex¬
in¬ where unavoidable, and restora¬ tent has been reduced because
the

stances, he has been granted the
right of substitution.
All

tions, at
of credit

a

tion

unnecessary restric¬
time when the amount in

used

for

carrying

of

confidence

in

currencies

and the habit of saving.

these

secu-

currencies

has

Mistrust

brought

markets, speculation and

a

black

Federal

has

flight to

Government

from people

has

taken

than

it

spent; that is, it has taxed

us

for its gifts abroad. But

on

away

pay

more

,

Volume

balance

166

Number 4636

THE

the

export surplus has
been inflationary.
By the same
token, contraction of the export
surplus will be deflationary.

ling

once

COMMERCIAL

freely convertible

more

into all currencies, so "far as the
proceeds of current transactions
concerned.

were

dollar

FINANCIAL

&

usually

area

means

CHRONICLE

the

"dollar account area," the; coun¬
tries to which they have obligated

things
being equal, these two develop¬
ments tend to have the following

themselves to make all payments
in U. S. dollars.
In the British

shortage, considered
toy itself. At this point we should

effects:

includes Latin America, but with
the vital exception, for purposes

toroaden

dollars must feel

So

much for the economic and

commercial

implications

of

as¬

sumed dollar

tho

discussion.

nomic

analysis

which

In

eco¬

a

term

we.use

have

we

in tracing the ef¬
fects of economic forces, when the

Other

(!) Coffee producers who need
a greater reluc¬

sense

of

of the

term, the dollar

area

discussion, of Brazil, and
also of Argentina and Uruguay.
our

tance to sell their product in the
inconvertible currency

Under

and

the British will continue to make

countries,

the

current

arrangements,

(1463)

July 1946, to about $650 million
in July 1947. In the latter amount
included blocked sterling bal¬
ances of about £ 6.0 million. ($240
are

comes

We

skepticism

system
from

set up, she was able

was

June

<;

'

by

limited and speci¬

their

charters.

Foreign

and

Switzerland) would tend to
be curtailed, or more
probably,
the anticipated increase in
ship¬

nearly one-third of her
But

reserves.

the

at

billion in long-term securities and
assets, much of which, however, it

not materialize.
In
other words, the overall interna¬
tional trade in coffee would either

end of July she still
$130 million in gold and
dollars left.
She may be able to
recoup some of the loss.
None of
the major mild coffee producing

would

contract

countries

countries

have not only $1.4 bil¬
lion in short-term assets, but $8.2

be

impracticable to liqui¬
New
gold produced will

date.

largely
we

come

should

our

Finally,

way.

certainly

at the

assume

present time that something will
of

come

the

efforts

tary

Marshall's

will

result

credits

to

consistent

program,

with

further

a

would

the

anticipated post¬
expansion—on which much

war

or

of the bullish sentiment in coffee

trade

has

retarded.

been

based—would

In either

This, however, is
long-run economic

grants

or

analysis of

an

effects.

this

traction of

our

exports

seems most

probable.
The

second

point

is

that

the

business of this country is in posi¬
decline in

a

ex¬

ports perhaps better than at any
other

time

in

demand

part

of

velop.

take

can

slack

any

In

its

history. Short¬
pressing and domes¬

ages are still

tic

rencies,
later.

tion to withstand

It

is

that

automobiles

least

at

up

de¬

may

and

steel,

confident

i

of

confidence must have
weakened by the

been

develop¬

ments

in sterling, but if it is a
matter of moving a
crop, the de¬
cision
may
well
be
to
accept

blocked currencies.

Or the coffee
countries may engage
in bilateral deals as
before the
war. But bilateral
trading, no mat¬

producing

ter how expedient it
at the time, almost

everything that is

in the

being sold

now

abroad could be sold at home and
that a drop in exports of those

products

would

employment

not

and

contract

power.

In

domestic

situation

the

supporting influences in the
of

accumulated

mands

orders

continue

strong.

hardly conceivable that
have

much

de¬

It

we

slackening

the next nine months to

way

and

is

shall

through
ajyear

in

automobiles, steel, railway and
Utility equipment, or farm imple¬

ments, or in residential construc¬
tion.

Even the soft goods are giv¬

ing

more support to business for
the coming Fall and Winter than

many

We

people

can

being in

considered

regard

farm

likely.

income

as

essence underwritten and

guaranteed by export demand at
least
until
the next
crops
are
available.

For

double

probability

—

that

the Export decline will not be too
violent when, measured in rela¬
tion to

our

;and that

total national

some

product,

of the slack may be

the

countries
of

reduction of

a

mild
the

coffee

over¬

currency

largely
trade
the

the

in

the

extension

convertibility
continuation

pattern

war.

producing

shortage of dollars

the setback

developed

The

loss

of

dependent

them.

substantially

a

afford to drink
of

coffee, she

Coffee and the Shortage of

f
1

Dollars
Since

ally

coffee

traded

is

an

internation¬

the out¬

look for coffee is bound to be in¬

fluenced

by

of dollars.
influenced

worldwide

It is also

by

abandonment

the
of

shortage
likely to be

failure

Great

and

Britain's

attempt to make the pound ster¬




absorb

it to

Ameri¬

Europe to enable

purchase not less coffee, but
According to

Paris,

the

a

report from

four-year

coffee

re¬

quirements of the 16 participating
nations

of

Western

Europe

were

placed at nearly 35 million bags,

lion bags from
Brazil

about 8,700,000 bags a year. To

or

reach this

figure, after allowance

coffee

for

the current

crop.

in

is

great need of dol¬
lars to finance her plans for in¬

in

produced

areas, exports

colonial

of coffee from Latin

America to Europe would have to

increase by about 40%

figure which they

Marshall
United

under

the
the

supply dollars

Europe for dollars 40%

Latin American

have

expansion,
to
extend
transportation facilities, and to
buy farm equipment.
Her total
gold and foreign exchange re¬
serves declined from the peak of
about $750
million, reached in

a

of

a

coffee than

if

5%

4%

and

of

CASHIER-AUDITOR
With sound background

The

Board

Mature

judgment

tive

ability

with

stock

and

desires

of

in in¬

payable
record

has

Directors

50 and

151
15^
30<f

Total

No.

51

per
per

share
share

per

Europe. Hence
coffee

as

far

producing

as

have

S.

market

from

and

position

November 15, 1947, to holders of
close of business October 20. 1947.

October 2. 1947

references.

a

commodity
grown

marketed within the dollar

term

is

the

dollar

and

area.

area?

has two definitions.

country

trust

or

The

In this

include in the dollar
Central American and

we

Dominican

their
does

currencies
Mexico.

Republic,
to

To

the

the

or

peg

dollar,

as

British the

world

on

great

staple

entering world trade.

if

consider

we

shortage is
the

that

the

dollar

of the evidences of

one

dismaying slowness of world
and

recovery

particularly

the

slow expansion of European pro¬
duction
For

and

purchasing

basically

dollar

that

is

certain countries

power.

what

shortage is. It

not

are

the

that

means

produc¬

ing and selling enough to the only
which

country

supply

can

the

things they need and want to buy.
Brazilian

coffee

is

of

one

the

commodities affected by this situ¬
ation

because

needs

should
all

take

of

other

this

fact

into

On

the

the

Secretary

poten¬

Marshall's

must

we

watch

what the outcome

see

be. I'll

definitely
namely,

have

and

events and

We

basic

we

of

approach

coffee

market.

reckoning.

our

hand,

tialities

may

Brazilian

European

a

leave with you one

optimistic opinion,
the

belief.. that

coffee

*

consumption in this country will

on

and

money

crop

the belief that the income

purchasing

of

power

the American people will continue

large, supported by

high rate of

a

both

manufacturing and agricul¬

tural

output at profitable prices.

DIVIDEND NOTICES

COMMON

On September 30,

seventy-five cents

portfolio.

1947
per

vember

15,

LEE RUBBER & TIRE

CORPORATION
•

REPUBLIC

York 8.

INDUSTRIAL
^

LEE TIRE & RUBBER

business

Common

jj Capable of organizing Over- J
jj the-Counter Department Jj
jj wishes position. Over twenty jj

cember

jj years' experience.

The

jj

York

8,

N.

Y. m

November

.

14,

share

upon

The Board of Directors has (his day
declared the regular quarterly div«i
Idend of 50c per share, also an
extra dividend of

1947.
per

INC.

Conshohocken, Pa.

15, 1947 to stock¬
holders of record at the close

$1.00

COMPANY

LEE DELUXE TIRES AND TUBES

per

cember

of

RUBBER PRODUCTS

OF NEW YORK,

share for the fourth
quarter of 1947 upon the $5
Preferred Stock, payable De¬

Unlisted Securities |
TRADER
(

RUBBER

Youngstown, Ohio

NOTICE

The Board of Directors

$1 .25

New

CONSHOHOCKEN

DIVISIONS

Chronicle,

fg Place,

the

FACTORIES

DIVIDEND

Best ref-

on

R. A. BURGER, Secretary.

lowing dividends:

|

declared

was

1947. Transfer
books will remain open. Checks will be mailed.

has declared today the fol¬

|

quarterly dividend of

the close of business October 23,

Excellent

25 Park Place, New

a

share

1947, to Stockholders of record at

Box MC 109, Com¬

mercial & Financial

COMPANY

STOCK

Common Stock of this Company, payable No¬

YOUNGSIOWN

jj erences and contacts. Box jj
the
Caribbean
countries
which jj L 107, "Commercial & Fin- jj
either use dollars,
as, for example,
jj nancial Chronicle," 25 Park jj
the
the

area

other

The truth of this becomes evident

Secretary

treasurer's

are

coffee.

and

the

upon

commodities

exchange firm, in¬

the mild

Brazil

The dollar short¬

depressing effect

a

trade

Dalb Parker

to

countries

my

nature

share

on

at

execu¬

3%,

crops

the

unrelieved

CAN

following dividends:

Regular Quarterly
Extra

vestment securities and finance.

the three

their

in

things being equal—must tend to

they

CORPORATION

Common Stock—No.

securities

respectively,

be

summary.

age.-^

COLUMBIA

declared this day the

less afford

year

will

more

GAS & ELECTRIC

D

Colombia sold about 20% of its
to Europe before the war.
Mexico and El Salvador each
sold
Last

many

AMERICAN

SITUATIONS WANTED

crop

sold,

good

complex subject and

very

conclusion

department of corporation with

40%.

a

DIVIDEND NOTICES

t&vv

coffees.

countries

carried

threads through-this discussion of

dustrial

vestment

about

how

seen

large through this

to enable coffee producers to sell
to

healthy

a

is

probably beyond. I base

program,

will

it

develop.

this

Plan

maintain

until

continue

whether,

States

I do recommend that the

year and

The question we must ask our¬

is

of

public

or

above the

reach this year.

selves

.Gallup
poll

no

expected to

are

extra two to three mil¬

an

to drink the more
expensive mild

What

commodity,

of 600,000 bags shipped dur¬
ing the war years.
It has been
hoped that the expanding demand
for coffee on the Continent might

normal amount

can even

more.

be advanced to

age

Europe cannot

Mild coffee remains
almost
exclusively

age tends to generate.

Brazil

upon

If

on

more

market, and the
reopening of Europe has brought
as
yet relatively little new busi¬
to

only

demand, but partly on the as¬
sumption that enough dollars will

European

U.

should

shortage of dollars is much
pertinent for the Brazilians.
coffee
growers
have en¬
tertained
great hopes from the
reopening of the European mar¬
ket.
Before the war nearly 40%
of their coffee exports went to
Europe, but during the war years
only 8%.
Since the war there
has been a rapid revival. In 1946
nearly 20% of Brazil's coffee crop
went
to
Europe,—nearly
four
million bags as against the aver¬

not

question,

not Dr.

am

conducted

trade

events

can

during

that the emphasis on dollar short¬

—

The

the

modify the pessimistic conclusions

up

(except Costa Rica and
Nicaragua) is,' therefore, under
pressure to sacrifice coffee.

the United States

ness

some

based

seems

means

of

concerned, the outlook is changed
relatively little, except that there
may be more competition in the

'taken

had

markets during the war made the
mild
coffee producing countries
almost entirely

"

This

appear

all trade.

and

the

may

always results
disruption of normal trade

channels and

our

purchasing

collecting

This

for example, it is
plain that almost
!

weaken¬

a

ing of prices.

which

be

the long-

case

effect should be

range

Secre¬

proposals,

in

from

devise

ments

country. Hence not
a
prophecy
of
immediate
a
gradual and moderate, rather
weakening. Coffee producers hav^
than an early and violent, conbeen selling for inconvertible cur¬

:

coffee

I

shall not

Congressional

opinion.

until

2

have

either

I

I

this

answer

as

the so-called transferable account

•

fied

inasmuch

to

are

consuming.

and

say

these funds

now

attempt to

Brazil is also seriously
affected by the suspension of the
convertibility of currently earned
pound sterling into dollars.
Be¬
ing one of the countries in which

million).

greater desire to sell it here.
Aug. 20 to
qualify our anal¬
(2) Consuming countries will be payments to all the "dollar ac¬ change into-dollars her surpluses
the outcome should husbanding their dwindling gold count" countries in U. S. dollars, of currently earned pounds ster¬
toe thus and so, other things being and U. S. dollar reserves for the but will of course carefully dis¬
ling. But on Aug. 20 this priv¬
equal.
Actually,
other
things purchase: of the most' essential criminate as to what theses^dol¬ ilege was . suspended.
However,
seldom are equal, and the other commodities. Just how essential lars will be paid for.
can
still
use
However, Brazil
currently
things in this case are tremen¬ they may regard a further
there is nothing to hold the Co¬ earned pounds sterling for pay¬
expan¬
dously important.
sion of itheir coffee
purchases, if lombians, lor example, from ac¬ ments to other countries with
One "other thing" is the Mar¬ at the
She can,
expense of their supply of cepting Belgian or French francs transferable accounts.
shall plan and, the possibility of dollars, is not for me to estimate. for their coffees if they are will* for:
example, transfer it freely to
^further temporary aid to Europe But certainly one would be foolish ing to hold them long enough Sweden, Argentina, Canada, Italy,
before the Marshall plan is im¬ not to maintain a healthy doubt. until suitable goods become avail¬ India and South Africa, and the
plemented.
The
second
"other
American buyers who can offer able for export from those coun¬ rest of the sterling area. In other
thipg" is the nature of the domes¬ dollars therefore must tend to tries.
words, there is still some degree
tic situation, apart from the ex¬ gain
in
The dollar area countries have of transferability retained.
bargaining
strength
port outlook.
Brazil will produce this year, I
against the coffee producer. The a dollar shortage problem of their
Pessimistic
interpretations European buyers who can offer own. Some of them, such as Mex¬ am told, nearly 17 million bags.
based on a prospective decline of dollars will be fewer.
And the ico, are badly pressed for dollars. There is of course no prospect of
exports may be overdone. I have buyer who offers inconvertible Costa Rica and Nicaragua have marketing this quantity for dol¬
already mentioned the $18 billion currencies will be in a weaker practically exhausted their war¬ lars. Some of you may have opin¬
of gold and dollar balances still
position, at least until recovery time accumulations.
But the sit¬ ions, but I have none, as to how
held by foreign countries and the has
progressed further and the in¬ uation is not at all bad in Guate¬ much she may sell against incon¬
$4 billion of unused credits. Over convertible currencies will
buy mala, El Salvador, Venezuela, and vertible currencies. The alterna¬
and above that are the $6 billion more
goods at more favorable the Dominican Republic. The gold tive is the accumulation of stocks,
potentially available in the Inter¬ prices in
their
own
countries. and dollar reserves in all those or a contribution of coffee to help
national Bank and International Sales
of
coffee
to
Europe for countries are still near the war¬ Western Europe.
Monetary Fund, although it should either "soft" currencies or dollars time peak. Colombia, the largest
The
strength that the coffee
be recognized that the uses
of
(with the exception of Sweden mild coffee
producer, has
lost market is displaying at present
time

ysis,

a

are

59

$1.00 pei share

and in addition thereto,

the

from

the

.capital stock held in the Treasury
of the Corporation, a dividend of
I 5% (one twentieth of a share on
each outstanding share), all on
the outstanding capital stock of
the Corporation, and all payable
October 28, 1947 to stockholder!

Stock, payable De¬
1947 to stock¬

15,

holders of record at the close
business November
14,

of

1947.
Goodyear Tire & Rubber Co.

By W. D, Shilts, Secretary
Akron, Ohio, October 6, 1947.

The

"Greatest

of record at the close of business

October
not

15,

in Rubber

1947.

Books

will

be closed.
A. S. POUCHOI

Name
Sept. 25,1947

Tresturer

r

60

THE

(1464)

COMMERCIAL

Securities
•

Air Products, Inc.* Allentown, Pa.
(10/20)
Sept. 26 filed 150,000 shares ($1 par) common.
Under¬
writers—Reynolds & Co., and Laurence M. Marks & Co.,
both of New York.
Price by amendment.
Proceeds—
To repay bank loan and for working capital.

& Co. Inc.;

:

.

;

Harriman, Ripley & Co., Goldinan, Sachs &
Co., Lazard Freres & Co. and Equitable Securities Corp.
(jointly); Shields & Co. Expected in October Pri*®—
To be determined by competitive bidding.
Proceeds—
To finance part'of its expansion program,
bias—Bids
for the purchase of the bonds are expected to be opened
at 11 a.m. (EST) Oct. 20 at 20 Pine Street, New York.
Atlantic Products Corp., Trenton* N. i.
Sept. 23 (letter of notification) 29,568 shares of common
stock (par $1). Price—$1.75 per share. Underwriting—
None. To be offered for subscription to common stock¬
holders to the extent of 10% of present holdings in an

Colorado

Sept. 8

Central

9,872 shares

(letter of notification)

common;

($10 par)

Company will sell the

Prlce---$30 a share.

s

through investment bankers or security dealers
& commission of $1.25 a share. Proceeds will
repay a $100,000 loan and to reimburse its
treasury cash. ■■ > -.717 77.".
V
.
:v
1
and pay

be used to

Derby Gas & Electric Corp., New York
Sept. 4 filed 43,610 shares (no par) common.
Under¬
writing—If a public sale is made the underwriter will
be supplied by amendment.
Offering—The shares will
be offered to

share for

stockholders

common

each

the basis of

Unsubscribed

held.

shares

five

on

one

shares

privately or publicly through an under¬
Price to be supplied by amendment.
Proceeds

be sold

may

writer.

—Proceeds from the sale of stock and from the

aggregate of 8,525 shares.
Reimburse company
for sum paid by it for purchase of said shares,

new

i

purposes.

Belden

Manufacturing Co., Chicago
Sept. 22 (letter of notification) 29,164 shares ($10 par)
common.
Price—$10 a share.
Offered for subscription
to stockholders of record Sept. 29 on basis of one new
share for each 10 shares held.
Rights expire Oct. 28.
No underwriting.
For general corporate purposes.
: / Bellefield Co., Pittsburgh, Pa.
Sept. 14 (letter of notification) 30,877 shares (no par)
capital stock.
To be offered to shareholders at $5 a
share.
Underwriter—Pioneer Land Co., Pittsburgh. For

improvement of hotel properties.
Brayton Flying Service, Inc., Robertson, Mo.
(letter of notification) 50,000 shares ($1 par)
21Vz cent cumulative, convertible preferred and 50.000
March 24

shares (10c par) common. Price—$5 per unit, consisting
of one share of each.
Underwriter—White and Co., St

Louis, Mo. For expansion of operating facilities and for
working capital.
k
Callaway Mills, LaGrange, Ga.
Aug. 28 filed 123,306 shares (no par) common. Under¬
writing—No underwriting.
Offering — Shares will be
offered only to those stockholders who exchanged their
holdings of common for preferred in 1945.
Price—$35 a
share.
Proceeds—For corporate purposes.

debentures will

used to

be

make advances

sale of
to the

company's three operating subsidiaries for construction

—By amendment.
repay

Proceeds—To redeem outsianuing

de¬

bank loans and to increase general funds.

Duke Power

Co., Charlotte, N. C.

Sept. 26 filed 252,512 shares (no par) common.
Under¬
There will be no underwriting; however, the
Duke Endowment has agreed to purchase all shares not
subscribed to by stockholders.
Offering—For subscrip¬
writer

—

tion to stockholders
four held.

on

the basis

Price—$82.50

a

of

share.

one

share for each

Proceeds—To finance

construction.

Elec-Trick-Toys, Inc., Utica, N. Y.
Sept. 30 (letter of notification) 750 shares preferred
(par $100) and 750 shares common (par $1).
Price—
Par for each class.
Underwriter—Mohawk Valley In¬
vesting Co., Inc. Operation and development of business.

Electric

Steam

Sterlizing Go.,

Inc.,

N.

Y.

Sept. 22 (letter of notification) 65,000 shares of common
stock (par 100).
Price—65 cents per share.
Under¬
writer—Reich & Co., New York.
etc.

Empire Projector Corp., New York (10/27-31)
Aug. 21 (letter of notification) 80,000 shares ($1 par)

ing—Shares will be offered to stockholders in the ratio

common on

of

one

new

share

for

each

four

shares

held.

Unsub¬

scribed shares will be sold publicly.
Price—By amend¬
ment.
Proceeds—To increase capital funds.
Central Ohio Distributing Co., Columbus, Ohio
Sept. 9 (letter of notification) $150,000 5% sinking fund
debentures, due 1959, with stock purchase warrants at¬
tached, and 7,500 shares (no pat*) common.
Debentures
will be sold at 100% and the common will be sold upon

exercise pf the warrants at $5 a share until Sept. 1, 1948,
a share until Sept. 1, 1950, and $6.25 a share until
Sept. 1, 1953.
Underwriter—The Ohio Co., Columbus.
For modernization and expansion purposes and to pur¬

$5.50

chase equipment for wholly owned subsidiary and to
..provide working capital for the subsidiary and the is¬
suer.

will

be

sold

to

L.

Sherman

D.

&

Co., New York, the
principal underwriter, at 60 cents a share. The under¬
writing discount for 80,000 shares will be 50 cents a
share. The company will use its proceeds to increase
working capital.
Ero Manufacturing Co.,

Chicago

;
Century Shares Trust, Boston
Sept. 25 filed 200,000 shares of stock.
Underwriter—
Ripley & Co., Inc. Price based on market.

Proceeds—For investment.
Chain Candy Stores, Inc., Boston
Sept. 23 (letter of notification) $200,000 7% debentures,
of which $100,000 will be offered in
exchange for out¬
standing preferred.
The balance will be sold in units
of from $100 to $1,000.
No underwriting.
For expan¬
v

purposes.

receive proceeds.

Federal

Cleveland
(Ohio) Electric Illuminating Co.
Sept. 26 filed 254,989 shares (no par) preferred, series of
1947.. Underwriter
Dillon, Read & Co., New York.
Offering—To be offered share for share plus a cash ad¬
justment for outstanding $4.50 preferred. Unexchanged
shares of new preferred will be sold publicly.
Price by
'

—

amendment.

Proceeds—To

retire

unexchanged

shares

of old preferred.

Electric Products Co.

Federal

Finance

Services

Corp.,

ating capital.
•
Flagstaff Bonanza Mining Co., Park City, Utah
Sept. 30 (letter of notification) 600,000 shares (50 par)
common.
Price—5 cents a share.
To be sold through

Moore, President
development.

of the

company.

Florida Rami Products, Inc.

,

Corporate and Public Financing

account

6 at

CORPORATION

.




■

president,

(10/23)

per $hare on; the^ basis;,of1 three ;new
10 shares held. ; Bights expire 3^^ ^

(ESTFpct. 22.i -Unsubscribed shares' will be offered pub-i
Proceeds—To be added to

licly through underwriters.
Great Eastern

Mutual

Life

Ins.

Co., Denver

Sept. 2 (letter of notification) 45,250 shares ($1 par)
capital stock.
Price—$2 a share.
To be sold through
officers of the company.
Of the total 13,250 shares will
be sold for cash and 32,000 will be issued in exchange
for 32,000 shares of capital stock of Western Agency Co,
in order to acquire all of the latter's assets.
Great Western Biscuit Co., Los Angeles

Aug.

filed

11

—

249,972

shares

($1

Fewel & Co., Los

par) capital stock,
Angeles. Offering

Shares will be offered to stockholders at $2 a share in
the ratio of one new share for each two now held. Un¬
subscribed shares will be offered
The underwriters will receive
a

a

share. Proceeds—For business

publicity at $2 a share.
commission of 25 centa

expansion and to reduce

short term indebtedness.

Greenback (Tenn.)
Industries, Inc.
Sept. 17 (letter of notification) 25,000 shares ($10 par)
preferred and 50,000 shares (100 par) common.
Price—•
$10 per unit, consisting of one share of preferred and
two shares of common.
Underwriter—L. L. Bailey &

Co., Knoxville, Tenn.
ings.

To

for equipment and build¬

pay

Hawaiian-Philippine Co., Manila, P. I.
Sept. 24 filed 500,000 shares 7% cumulative preferred,
par 10 Philippines pesos per share (currency basis one
neco equivalent to 50 cents).
Underwriting—No under¬
writing. Offering—For subscription by common stock¬
holders on the basis of one share for each 1% shares
owned.

Price—$5

a

share.

Proceeds—For rehabilitation

program.

Hickok

Manufacturing

Inc.,

Co.,

Rochester,

York

Sept, 19 filed 200,000 shares ($1 par) common.
writer—E. H. Rollins & Sons, Inc., New York.

Under*

Price—
By amendment.
Proceeds—The shares are being sold
by 36 stockholders who will receive proceeds.
•

Howe Plan Fund, Inc.,

Rochester, N.

Y.

Oct.

3 filed 500,000 shares ($1 par) capital stock.
Un¬
derwriter—George D. B. Bonbright and Co., Rochester.
Price based on market prices.
Proceeds — For invest*
ment.
•

Business—Investment business.

Idaho

Oct.

7

Power

Idaho
($100 par) 4% preferred arid

Co., Boise,

filed 35,000 shares

Underwriters—Blyth

& Co.,

Inc., and Lazard Freres & Co., both of New York.
by amendment.
Proceeds—To repay short term
bank loans and to finance additions and improvements
Price

to its electric system.

Business—Public utility.

Chicago
July 24 filed 120,000 shares ($1 par) common. Under¬
writers—Brailsford & Co., and Straus & Blosser, Chicago,
Price—$9.25 a share.
Proceeds—The shares are being
sold by four stockholders and represent part of the stock
the sellers will receive in exchange for their holdings
of four furniture companies to be merged with the regis¬
trant. The merging companies are Toccoa Manufacturing
Co. and Stickley Brothers, Inc., both Illinois corpo¬
rations, and the Luce Corp. and Stickley Bros. Institu¬
tional Furniture Co., both Michigan corporations.

Inglewood Gasoline Co., Beverly Hills
July 7 (letter of notification) 100,414.8 shares ($1 par)
capital stock. Price—$1 r share. To be offered to stock¬
holders.
Unsubscribed shares to be offered publicly
.

•

InJand Airways, Inc., Walla Walla, Wash.
Sept. 30 (letter of notification) 500 shares of $100 pkr
5% cumulative preferred. Price—$100 a share. To b©

For mine

(10/14-17)

(letter of notification) 100,000 shares ($1 par)
common.
Price—$3 a share. Underwriter—Batkin, Jacobs & Co., New York. To purchase new machines

equipment, to

pay

off some current liabilities and

Oct.

15

to

date

of

writer—Warren W. York & Co., Inc.
1st mtge. 6s.

delivery).

*

through Bennett & Co., Hollywood. To purchase equip¬
ment, liquidate indebtedness, and for working capital.
An amended application may be filed in near future.

Under¬

To refund $67,300

Boston

Chic^o

company

Insurance Co.

the company's general funds.

class A

Of interest from
,

Gerity, Jr.,

(N. Y.)

$35.50

shares for each

florin Water Co., Harrisburg, Pa.
Sept. 22 (letter of notification) $67,000 4% 1st closed
mtge. ref. bonds, due Oct. 15, 1969.
Price—99 (excl.

FIRST BOSTON
v

James

ing—Offered for subscription to stockholders of record

-Oct,

to add to working capital.

The

of

Sejpti d 8 filed 150,000 shares ($5 par) capital 'Stockstjii*.
derwriter
Morgan > StanleyCoM: New York., Offer*,

Aug. 1

and

X

Washington

Sept. 24 (letter of notification) 2,870 shares of 6% cumu¬
lative preferred stock.
Price—$104.50 a share.
Under¬
writer—Mackall and Coe, Washington, D. C.
For oper¬

Charles

-<4

—

the

Illinois-Rockford Corp.,

26, filed 150,000 shares ($1 par) common class A
Underwriter—E. F. Gillespie & Co., Inc., New York,
Price—$7.25 a share.
The registration states princi¬
pal stockholder has granted the underwriters an option
to purchase 45,000 shares of class B ($1 par) common
at $7.25 a share, exercisable for a period of three years.
Proceeds—Proceeds of approximately $870,000, together
with $755,000 of other bonds, will be used to repay the
balance of $34,000 of a property mortgage, to pay off
loans In the amount of $1,295,000 to Bankers Commer¬
cial Corp., New York, and for additional working capital.
•

Gerity-Michigan Corp., Adrian, Mich.
Sept. 29 filed 40,049 shares ($1 par) common. • Under*
writer—Name to; be filed by amendment. "Price by
amendment.
Proceeds
The shares are, being sold for '•

100,000 shares ($20 par) common.

Sept. 30 filed 150,000 shares ($1 par) common: Under¬
Blosser, Chicago. Price—$7 a share.
The underwriting commission will be $1 a share. Pro¬
ceeds—Shares are being sold by stockholders who will
writer—Straus &

Feb.

Harriman

sion

behalf of the company, and 15,000 shares ($1
par) coipmon on behalf of officers and stockholders. The
80,000 shares will be sold at $3 a share. The 15,000 shares

Expand sales

products, etc.

Purchase of inventory,

Camden (N. J.) Fire Insurance Association
Sept. 19 filed 100,000 shares ($5 par) capital stock. Un¬
derwriter—Butcher & Sherrerd,1 Philadelphia;
Offer¬
7'

of

Underwriter

Dodge Manufacturing Corp., Chicago
Sept. 30 filed $1,500,000 15-year sinking fund deben¬
tures.
Underwriter—Central Republic Co.: A. C. Allvn
& Co., and H. M. Byllesby & Co., all of Chicago. Price

bentures,

Edward R. Parker Co., Inc<, New York.

Glens Falls

stock

aggregate of 21,043 shares and to certain key employees

i

?

Colo.

Golden,

Co.,

Power

in

an

Thursday, October 9, 1947

INDICATES ADDITIONS SINCE PREVIOUS ISSUE

equipment, retirement of bank loan and working
capital.

c

.

Registration

in

new

.^f,7 Alabama Power Co., Birmingham, Ala. (10/20)
Sept. 19 filed $10,000,000 20-year first mortgage bonds.
Underwriters—To be determined by competitive bidding;
Probable bidders: Halsey, Stuart & Co. Inc.; Morgan

J Stanley & Co.! Drexel & CO.; Lehman brothers; 'Biyth;

Now

CHRONICLE

Coleman-Pettersen Corp., Cleveland, Ohio
Sept. 15 (letter of notification) 2,000 shares ($20 par)
6% cumulative preferred and 4,000 shares (no par) com¬
mon.
Price—$30 per unit, consisting of one preferred
share and two common shares.
No underwriting.
For

-

:

FINANCIAL

&

Frailey Industries, Inc., New York
Sbpt. 26 (letter of notification) 34,500 Shares of..class'A
(pal; $1).
Price—$5 per share. Underwriters

stock

1^7-v..

;

COMMERCIAL

THE

Number 4636

•Volume 166

FINANCIAL

&

CHRONICLE

derwriter—Geyer & Co., New York.
Offering—Offered
for subscription to stockholders of record Oct. .7 aL $261

NEW ISSUE CALENDAR

Providence
(R. I.)
Washington Insurance Co.
Scpt4 > 25"filed-1.0,0,000 shares ($10 par) < capital .stock..
Underwriter—First Boston Corp., New York.
Offering
—For subscription to stockholders on the basis of one

share on the basis of one new share for each four
Rights expire Nov. 6 and unsubscribed shares will
publicly. Price by amendment. Proceeds—For
expansion of business.
per

held.

October

10, 1947

Mutual Finance Co

Pref. and Common

October

14, 1947
Florida Rami Products, Inc
Class A Common
New York Chicago & St. Louis
3 p.m. (EST)--—;
Equip. Trust Ctfs.
Texas Power & Light Co. (noon)__
—-Bonds

11!

•

For operation of business.

Oct.

underwriting.
•

1947

October

,

21, ,1947

Co

Under¬
determined by competitive bidding.
Halsey, Stuart & Co. Inc.; The First
Boston Corp.; Drexel & Co.
Proceeds—For payment of
bank loans, purchase or construction of new facilities.
Bids—Bids for the purchase of its bonds will be received
up to noon Oct. 20 at Room 2601, 61 Broadway, New

-Debentures

October 22,

1947

Akron Canton &

CondT Sales Agreem't

October

be

October 27,

1;

October

28,

November
Public Service Co. of

sinking fund debentures
cumulative preferred.
Underwriter—Goldman, Sachs & Co., New York. Price—

Capital Stock

Proceeds—For general corporate pur¬
including construction of new facilities. Business
—Manufacturers of scotch tape and other adhesives.
By amendment.

Common

Jacksonville Terminal Co.

•

Bonds

the company.

1947

For equipment and supplies.

Munising Wood Products Co.,
Stock

through officers of the company. For development
of business as air transportation company.

Interstate Power Co., Dubuque, Iowa
May 13 filed $19,400,000 of first mortgage bonds, due
1977, and 2,132,223 shares ($3.50 par) capital stock.
Proceeds—For debt retirement, finance new construction
and for working capital.
Bonds awarded Sept. 24 to
Halsey, Stuart & Co. Inc. on bid of 101.90 for a 3%%

rate.

Stock awarded Sept. 24 on bid of $4.05 per
share to Lehman Brothers, Goldman, Sachs & Co. and
Wertheim & Co. The SEC on Sept. 25 rejected the bid
The SEC in its decision declared the price

offered for the stock "would not effectuate

(letter of notification) 150,000 shares of common.
a share.
To be sold through officers of

Price—10 cents

Bonds

sold

Inc., Chicago

Sept. 29 filed 50,000 shares ($10 par) 5% cumulative con¬
vertible preferred and 100,000 shares ($1 par) common.
Underwriters — Straus & Blosser and Brailsford & Co.,
both

of

$10 a preferred share and
$6.12V2 a common
Proceeds — The securities are
being sold by 12 stockholders who will receive proceeds.
Chicago.

Price
share.

—

Mutual Finance Co., Tampa, Fla. (10/10)
Sept. 18 (letter of notification) 2,420 shares ($100 par)
5% cumulative preferred and 2,420 shares (no par) com¬
mon.
Price—$105 per unit, consisting of one share of
each.
To be distributed by A. M. Kidder & Co. as agent.
For payment of current obligations.
•

Nashville

Oct. 7 filed

er—A vco

(Tenn.)

;

-who

will

receive

proceeds.

BusinessJ

of

Indiana, Inc.

(11^3)

$15,000,000 first mortgage bonds, series G,

Underwriters—Names to be supplied by com-'

Rice-O'Neill

for otherwise.

Breaker

Co.,

a

Underwrit¬

Philadelphiha

Sept. 15 filed 61,476 shares ($10 par) common.
Under¬
writer—No underwriting.
Offering—The shares will be
offered to ($10 par) common stockholders of
Railway &
Industrial Engineering Co., South Greensburg, Pa., on
an exchange basis of
U/£ shares of I-T-E Common for
one share of Railway Common.
The offer will be made
pursuant to a plan of reorganization.

Jersey Shore (Pa.) Gas & Heating Co.
Sept. 10 (letter of notification) $25,000 first mortgage
sinking fund debentures. Price, ' par. Underwriter—
Bioren & Co., Philadelphia.' To retire present loan of
$20,500 and to add to working capital.
Koch Chemical Co.,

Winona, Minn.
(letter of notification) 60,000 shares ($1 par)
common.
Price—$5 a share. Underwriter—H. P. Carver
Corp., Boston.
To retire debt and for working capital.

July 22

American Airways,

Inc.,

New York
Sept. 29 (letter of notification) 21,250 shares ($1 par)
common on behalf of a
stockholder, N. Basso Jr., of New
York.
Price—$2.50 a share. No underwriting.

Legend Gold Mines, Ltd., Toronto, Canada
June 27 filed 300,000 shares ($1 par) common treasury
stock.
Underwriting — To be supplied by amendment.
Price—50 cents a share. Proceeds—To develop mining
properties. Business—Mining.
Liberty Loan Corp., Chicago
Sept. 25 filed 100,000 shares ($10 par) 75-cent cumula¬
tive convertible preferred, and 100,000 shares of Class A
common, reserved for conversion of the preferred.
Un¬
derwriter—Sills, Minton & Co. Price—$15 a share. Pro¬
ceeds—To reimburse treasury for cost of redeeming 50cent preferred.
i;: ,
Manhattan Coil Corp., Atlanta, Ga.
May 20 filed $500,000 5% serial debentures, due 19491957; 12,000 shares ($25 par) 5^% cumulative converti¬
ble preferred and 85,000 shares ($1 par) common.
Un¬
derwriter—Kirchofer & Arnold, Inc., Raleigh, N. C. Price
—The debentures at 102.507, while the preferred shares
will be offered at par and the common shares at $4
Proceeds—To

retire

bank

indebtedness

and

Aircraft Corp., which, in turn, is parent 'of the
registrant, has agreed to purchase shares not subscribed

Offering—The shares will be offered to

Consolidated's

to

common

shares of Nashville

Consolidated

stockholders

common

and

common

the basis of two

on

in return for

$18 cash.

one

share of

The exchange of

is part of a program whereby Consolidated will
transfer the assets of its Nashville division to the regis¬

Proceeds

Manufacture

of

capital.
Business —
and frozen food storage

For working

—

buses,

stoves

cabinets.

Natra-Lyn Corp., Camden, N. J.
Sept. 23 (letter of notification) 10,000 shares of capital
stock (par $5). Price—$5 per share.
Stock shall be sold
only by J. Howard Cundiff, Jr., 98 Park Ave.;; Collingswood, N. J.
For advertising products of corporation,
consisting principally of cosmetic preparations.
•

New Stages,

Oct. 1
ital

renovate
•

Inc., New York

(letter of notification) 1,500 shares ($10 par) cap¬

stock.

Price—$10

share.
No underwriting.
small theatre and to produce plays.

To

a

Old Republic Credit Life insurance Co., Chicago

Oct. 3

(letter of notification) 8,850 shares ($1 par) cap¬
by three stockholders.
Price — $5.10 a

ital being sold

Underwriter—Paul H. Davis &

share.

Robinson Airlines Corp.,

Oct.

Co., Chicago.

of California, Los Angeles
Sept. 24 filed 19,750 shares ($10 par) common. Under¬
writing—No underwriting.
Offering—To officers and
employees of the company. Price—$18 a share. Proceeds
For general corporate purposes. Business—Finance and
Pacific

Telephone & Telegraph Co. (10/21)
Sept. 19 filed $100,000,000 40-year debentures.
Under¬
writing — To be determined by competitive bidding.
Probable bidders: Morgan Stanley & Co.; Halsey, Stuart
Proceeds—For construction program.

Bids—

Company will receive bids for the purchase of the bonds
up to 11:30 a.m. Oct. 21.

Payne Cutlery Corp., Brooklyn, N. Y.
Sept. 2 (letter of notification) 14,000 shares of common
(par 50c).
Price—$1,875 per share.
Offered on behalf
of or for benefit of Greenfield, Lax & Co., Inc., who is
named underwriter.
Effective Sept, 10.
•

Pittsburgh

(Pa.)

mon.
a

Industries, Inc., Depew, N. Y. (10/15)
Get. 6 (letter of notification) 15,000 shares of common
stock (par $5). Price—$10 per share.
No underwriting.

Offered to stockholders of record

share

on

the basis

of

one

share

for

York.
employees and offi¬
Offering—Company is offering the
preferred and 50,000 shares of the common and Reynolds
Metals Co., Richmond, Va., parent of the registrant,- is
offering the remaining 500,000 shares of common. Price
by amendment. Proceeds—To pay obligations.
The 50,000 shares will be offered to
of the company.

cers

•

Rural

Oct.

2

five

held.

Increase working capital.
•

provements.

Corp., Newark, N. J. (10/15)
(letter of notification) 10,000 shares of common
/Stock (par $20). Price—$20 per share. No underwriting.
Buy machinery, plants, equipment and other corporate
6

purposes.

Massachusetts Bonding and Insurance Co.»
Boston (11/7)
\y:;..r
Sept. 19 filed 100,000 shares ($5 par) capital stock. Un¬

:




Prosperity Co., Inc., Syracuse, N. Y.
Sept. 17 (letter of notification) 3,000 shares 5% .($100
par) preferred.
Price—$100 a share.
Offered for sub¬
scription to class A and preferred stockholders in ratio
of one new share for each 13 shares held. ' Rights expire
Oct. 13.
poses.

No

underwriting.
'

'

•

Directories, Inc., Bowling Green, Ohio

(letter

Price—$100
No

of

notification)

500

shares

($100

par)

For general corporate pur¬

a

preferred share and $1 a common share.
For additional working capital.
■
-

underwriting.
Salant &

March

28

Salaiit, Inc., New York

filed

240,000 shares ($2 par) capital stock.
Underwriter—Eastman, Dillon & Co., New York. Price
by amendment. Proceeds—Shares are being sold by 13
stockholders who will receive proceeds.
Seaboard

Finance

Co.,

^,v

Los Angeles

Sept. 29 filed 50,000 shares ($1 par) common. No under¬
writing. Offering—To company's employees.
Price by
amendment.
Proceeds)—The shares are being sold by W.
A. Thompson, President of the
company, who will re¬
ceive proceeds.

.

,

>

r..,

.7

f

Seattle (Wash.) Gas Co.
Sept. 4 (letter; of notification) $300,000 ($50 par) pre¬
Price—$50 a share. Underwriter—Shea & Co.,
Boston; and Smith, Landeryou & Co., Omaha, Neb. For
payment of loan and current obligations.
ferred.

•

Securities

Sept,

29

Acceptance

(letter

Corp.,

Omaha,

Neb.

of

notification) 10,000 shares of 5%
cumulative preferred stock.
Price—$26.25 a share. Un¬
derwriters—Cruttenden & Co., Chicago, and The First
Trust
Co. of Lincoln, Neb.
For additional working
capital.
•

Schranz &

Oct.

Bieber

Co., Inc., New York

1

(letter of notification) 2,950 shares of first pre¬
ferred stock.
Price—$100 a share.
To be sold through
officers.
For working capital.
•

Skyway Advertising Inc., Washington, D. C.

Oct.

6

(letter

of notification) 1,000 shares ($10 par)
Price—$10 a share. No underwriting. To pur¬
equipment and for operating expenses.

common.

chase

South Jersey Gas

Sept.

Co., Newark, N. J.

(10/15)

3 filed $4,000,000

30-year first mortgage bonds.
Underwriters—To be determined by competitive bidding.
Probable bidders: Halsey, Stuart & Co. Inc.; The First
Boston Corp. - Proceeds—To redeem outstanding securi¬
ties of Atlantic

City Gas Co., and Peoples Gas Co., which
merged to form South Jersey Gas Co. Bids—Com¬
pany will receive bids for purchase of bonds up to 11:30
were

a.m.

Oct. 15 at office of Drexel & Co., Philadelphia.

Southeastern Development Corp., Jacksonville,
Fla.

Sept. 30 at $7
each

Rights expire Oct. 20. Pioneer Land Co., Pittsburgh, one
of the large stockholders, has agreed to purchase any
unsubscribed shares for investment.
For property im¬

Marlow

Underwriter—All but 50,000 shares of the com¬

will be underwritten by Reynolds & Co., New

mon

Terminal Warehouses, Inc.
10,000 shares ($5 par) com¬

•7 Marco

.

1

ferred.

Oct. 1 (letter of notiifcation)

ment.

i";>.

Ithaca, N. Y.

Robertshaw-Fulton Controls Co. (10/20)
Sept. 26 filed 120,000 shs. of 4%% ($25 par) cumulative
preferred and 550,000 shares ($1 par) common; also
300,000 shares of common for conversion of the pre¬

insurance business.

finance purchase of machinery and other plant equip¬

Mo.

(letter of notification) 35,000 shares of capital
(par $1).
Price—$3 per share.
Underwriting—
None.
Working capital.

Pacific Finance Corp.

& Co. Inc.

Co., St. Louis,

t

•

common

trant.

Shoe

cumulative preferred and 1,150 shares (no par) common.

Corp.

820,834 shares ($1 par) common.

the sale of the bonds.

Oct.

(/TJ

Sept. 29 (letter of notification) 10,200 shares (no par)
common.
Price—$15 a share.
No underwriting.
Pro¬
ceeds to be added to stated capital.

Vultee

each.

.

petitive bidding, * Probable bidders: Blyth & Co., Inc#
The First Boston Corp.; Glore, Forgan & Co.; Hateey,
Stuart & Co. - Inc.; Kuhn, Loeb & Co., and Harriman
Ripley & Co. (jointly). Proceeds—About $4,000,000 will
be used to reimburse the treasury for expenditures al¬
ready made and the remainder will go for additional
construction requirements. Bids—Expected about Nov. 3.

Manufacturing - Corp., parent of Consolidated

reorganiza¬
tion plan which would be fair arid equitable to the per¬
sons effected thereby."
The SEC's action also held up

Latin

Corp., New York

140,000 shares

stock

Moonlight Mining Co., Inc., Newport, Wash.

Oct. 2

3, 1947

Indiana, Inc

Massachusetts Bonding & Ins. Co

•

filed

1

due 1977.

poses

1947

(noon—EST)

November 7,

Circuit

underwriters.
Proceeds—To increase its capital

Public Service Co.

Oct.

Minnesota Min. & Manufacturing Co., St. Paul

Oct. 6 filed $10,000,000 20-year
and
100.000
shares
(no par)

1947

Empire Projector Corp

I-T-E

Unsubscribed

Shirt manufacturer.

©

•

23, 1947

Glens Falls Insurance Co._—

for the stock.

To

bidders:

held.

through

York.

Youngstown__:

coupon

—

filed

3

shares

publicly

—

Aug. 29 filed $4,500,000 of first mortgage bonds.

writing

three

offered

Publix Shirt

stockholders

at

Probable

^

f?:

Chemical Co., Inc.* Greensboro, N. C.
(letter of notification) 60,830 shares ($1 par) com¬

of which 19,537 shares will be offered to stockhold¬

Metropolitan Edison Co., Reading, Pa. (10/20)

_

each

be

($1 par) common.
Under¬
writer—Reynolds & Co., New York. Price by amend¬
ment.
Froceeds
The shares are being sold by three

$2.50 a share and 41,293 shares will be offered
publicly at $3 a share.
Underwriter—Main. Line Invest¬
ment Co;, Merion, Pa.
For expansion of business. / f
ers

——______-Common
AlabamaPower Co.f (noon—-EST)—
Bonds
Metropolitan Edison Co. (noo'ri)"iJ:_i:---Li
Bonds
Robertshaw-Fulton. Controls Co. -Pref.* & Common

Pacific Tel. & Tel.

•

Merritt

Oct. 1
mon

for

will

by amendment,
surplus.

and

Air Products,.Inc.---—
■

Matey Co., Inc., New York

(letter of notification) 1,000 shares each of $100
5 % cumulative preferred and $1 par common. Price
—$101 per unit, consisting of one share of each. No

15, 1947
Equip. Trust Ctfs.
Common
Marlow Corp.
Common
South Jersey Gas Co. (11:30 a.m.)--—
Bonds

share

shares
Price

Oct. 2

October

October 20,

~

new

par

Erie RR. (noon—EST)
Marco Industries, Inc

Vro/.V,

sold

be

61

(1465)

July 29 (letter of notification) 8,000 units consisting dl
share ($10 par) 6% cumulative preferred and one
share ($1 par) common.
Price—$12.50 per unit. Under*
writer—Southeastern Securities Corp., Jacksonville. Fo:r
working capital.
\

one

Southern

Colorado

Power Co.,

Pueblo, Colo,

-j

Sept. 26 (letter of notification)

29,810 shares (no pari
common, to be offered to stockholders at $9.50 a share
foil the basis of one share for each
15 shares heldj.
(.Unsubscribed shares will be sold publicly through

underj-

(Continued

on

page

62)

,

I

62

(1466)

THE

(Continued from page 61)
writers

will be offered

headed

by Hutchinson & Co., Pueblo, Colo.;
Bosworth, Sullivan & Co., and Boettcher & Co., both
of Denver.
The public offering price will depend on
the number of shares offered.
For working capital.
Southwest Lumber Mills,

Inc., McNary, Ariz.

Aug. 11

(letter of notification) 40,000 shares ($1 par)
capital stock.. Price—$7.50 a share. To be offered to
stockholders. Any shares not purchased by stockholders
will be bought by Imperial Trust
Can. To restore working capital.

the basis of

on

100

shares for

Sept. 8 (letter of notification) 1,621 shares ($1 par) com¬
mon, on oehalf of company and 8,000 shares ($1 par)
common, on behalf of four stockholders.
Price—$12 a
share.
Underwriter
Scott Horner
& Mason, Inc.,
Lynchburg, Va.
Company will use its proceeds for
working capital and expansion purposes.
—

of

Co.

Moseley &

through underwriters.
Price by amendment.
Proceeds
—For working capital to meet expanding operations.
business.

Business—Petroleum

Texas

Power

&

Light Co.

(10/14)

Public

Proceeds—To repay

•

Akron Canton

conditional

conversion

Underwriter—Carver &

of the debentures.

Co., Inc., Boston.
Price—Debentures 98; common $3.75
share.
Proceeds—For plant construction, purchase

short-term bank loans.

equipment

for working

and

capital.

Registration

statement became effective June 28.

'

&

Youngstown RR.

for

the sale of $3,800,000
equipment trustv certificates
to be dated Nov.
1, 1947, and due annually Nov. 1, 1948-*
1957.
Bids will be received at

(10/22)

company's office, 2910

Terminal Tower, Cleveland.
Probable bidders: Halsey;
Stuart & Co. Inc.; Salomon Bros. &
Hutzler; Harris;
Hall & Co. (Inc.); R. W.
Pressprich & Co.
.

•

•

Central Maine Power Co.
7

Northeast Airlines,

Oct. 20 stockholders will vote on
authorizing an issuq
bf 65,000 shares (no
par) preferred stock.
If approved^

applied to the SEC for permission to
first and general mortgage bonds
and enough common stock (par $10) to raise $3,000,000,
Company is engaged in a $11,420,000 construction pro¬
gram.
Probable bidders include The First Boston Corp.
company

issue and sell $4,000,000

the

proceeds of the new issue
may be applied in pari
the payment of about
$900,000 of notes held by the
Atlas Corp.
Atlas also owns 100,000 shares of stock in
to

Northeast Airlines.

Probable underwriter,

son

•

Central

Power &

be

•

for

used

Stuart &

•

Oct. 7 it

Edison Co. of New

Edison Co.

was

reported company has under consideration
plans for raising $25,000,000 in new
money through sale
of a preferred stock issue.
Expectations at present are
that the offering will be
ready for the market by early
December.
It
probably will come along via the com¬
petitive bidding route.
Probable bidders include The

Probable bidders:
Halsey,
(bonds only); The First Boston Corp.

Consolidated

Southern California

Lee Higgin-*

Corp.

Light Co.

expansion.

Co. Inc.

;

Inc.

York, Inc.

Oct. 2 company filed a petition
mission for authority to issue

with the N. Y. P. S. Com¬
$30,000,000 first and re¬
funding mortgage bonds, proceeds from which will be
used to retire the company's outstanding 3Vz% bonds
due in 1958.
Probable bidders: Morgan Stanley &
Co.;
Halsey, Stuart & Co. Inc.; The First Boston Corp.

First Boston Corp.
•

<

Springfield Fire & Marine Insurance Co.

Oct.

Cleveland, Ohio.

6 stockholders voted to
reduce the par value of
the capital stock from
$25 to $10 a share, and to increase
the number of shares to
500,000 from 200,000.
Stock¬
holders also authorized the
directors to call in and cancel
the outstanding certificates
and to issue in
exchange
21/2 shares of the new $10 par stock for
each share of the
old $25 par value stock.
Stockholders further voted to
increase the authorized
capital stock to $7,000,000 by
issuance of 200,000 new shares of

•

Peabody & Co.

•

Erie RR.

(10/15)

The company has issued invitations for bids for the
pur¬
chase of $6 850,000 of l-to-10-year equipment trust cer¬

tificates.
15

at

Bids will be

received

company's office,

Room

stockholders
of

vote

stock

be

not

on

(no

authorizing

250,000

•

par)

of which 150,000
The dividend rate on the

series A.

as

would

Transportation Corp.

will

preferred

stock

to noon (EST) Oct.
Midland Building,

$3.75 and 'not more
the underwriting commission would range
from $2 to $2.50 a share.
The proceeds would be used
to repay loans of $5,700,000 for working capital, and to

plant expansion. Underwriting discussions
being held with Kuhn, Loeb & Co.

21

Motor

Co.

stockholders will vote

on

increasing authorized

capital, etc.

are

•

West Texas Utilities Co.

Oct.

5

reported company plans issuance of
$5,000,900
preferred.
Probable bidders:
The First Boston
Corp;. Harriman Ripley & Co*
new

Georgia Power Co.

Oct.

Kidder,

stock from 400,000 to
600,000 shares (par $5). Additional
shares would be offered for
subscription to stockholders
on
basis of one new share for
each two shares held*
Proceeds for. working

less than

finance

Waukesha

Oct.

than $4.25 and

•

$10 par^ The issue will
by The First Boston Corp. and

be underwritten

General American
3

up

1307

6

company applied to the SEC for permission to
$10,000,000 mortgage bonds, to bear interest not
to exceed 3 lk % with a maturity date of not less than

issue

Vauze

Dufault

Mines, Ltd., Toronto, Canada
($1 par) common.
Under¬
writer—Name to be filed by amendment. Price—50 cents
a share.
Proceeds—For general operating expenses.
Mar

31

•

filed

500,000 shares

Veterans

&

Mortgage Loan
Chattanooga, Tenn.

Construction Co.,

(letter of notification) rights for 25,000 shares
of common stock.
Price—$11 a share; Dana L. Milli-

Sept. 30

and Edwin

Jr.,

gan,
v~s

will act

as

C. Milligan, both of Chattanooga,
For operation of busi¬

securities salesmen.

ness.

30

years.

is

issue

The

Probable bidders include:

to
be
sold
competitively.
Halsey; Stuart & Co.; Morgan

•

Oct.

3

a

new

issue

of

must be sold

Milwaukee

will be offered to stockholders and unsubscribed shares

been started

Tower, President of American Iron and Steel Institute,
expansion and improvements totaling
more than a billion dollars, with outlook for 2,500,000 tons new
ingot capacity by 1948.
to record-breaking

long

as

two years

as

300

pansion,

with

together

companies are completing this year large-scale postwar
of expansion and improvements involving record-breaking
peacetime ex-<S>

penditures to¬
taling
than

$1,000,-

000,000,
cording

ac¬

to

statement

Listed

a

and

recently
Walter S.

Tower, Presi¬
dent of the
American

1948

for
are

completion in 1947
the addition of 2,-

500,000 tons of

new

ingot-making

In
of

addition, nearly 3,000,000 tons
new coke oven facilities; 3,000,-

000 tons of

blast furnace

new

ca¬

pacity, and 3,000,000 tons of new
sheet and strip capacity are also
under

construction.

Substantial

tion

and

expansion.

"The

various

end

been

crease

Walter S. Tower

ities

of facil¬

now con-

pleted will

quire

additional

re¬

expenditures of




steel

companies'

improvement programs have been
in various stages of
for

development

months, some projects having

steel

demonstrate

shortages
■

expansion
steel

the

faith

.

,

to¬
-.

'

and
im¬
facilities
of

companies in a continued
peacetime demand.

79%

this

in

in

large

1947

has

making

been

a

of

major factor
the virtual

possible

the

nation's

.

!

f "Throughout

all

its

peacetime

the

United

States

has

main¬

years.

As late

prominent

government econo¬
members of the

the steel

Temporary

Economic

Committee,;

were

complaining that
industry was "contribut¬

ing dangerously

to technological
unemployment through
excessive,
ihodernization of equipment. Tes¬
timony to this effect was pre¬
sented

before, the T. JSf._ E.

April,'n 1940.
executives

C.

'
.

"Responsible

a

elapsing between the two

1940

as

leaders,

.

productive capacity well
ahead of demand.
Operation of
the industry in the more than 20

industry has
over-expansion,'
has.
under-expan-

of

but never before in
peacetime
it been accused of

National

production

the

past

')

/

'

in,
,

Vi-

steel

themselves

company
have been;

more

concerned, perhaps,
than
any other group with the problem

steel

World

high

capacity.

mand.

"Existing capacity of 91,241,000
tons of ingots compares with
62,314,000 tons in 1920, two years

ter balance.

after

facts

"During the first eight months
1947 the production of steel
ingots was 56,000,000 tons.
This
of

the

accused

and others

up

safe., assert history the modern steel
industry

day.
of

"In
been

steel

"The

tained

about

rolled

compared with 1939.

plaints

strip

Tower, "the
expansion and

the country's population.

mists,

of

Plans

Mr.

a

increase of. 46% xom-1
an increase of
35% in

an

pared with

year

was

CLEVELAND

and

products,

the

lost tonnage had

available, it is

"Current

to

in

tion that there would be few. com¬

provement

also being made.

tightness

war—more than full employment of
'
output during* the -total labor force.

If this

flat

•

SAN FRANCISCO

•

any
-

labor

the

of actual

period.

of

CHICAGO

sion.

abnormal

of

production

is

•

ST. LOUIS

mobiles, refrigerators and similar

,

conditions, .inr
eluding the loss of 18,000,000 tons
of steel ingots from strikes since
10%

This

•

products used by makers of auto¬

market for steel has resulted from

in capacity for finished

are

J

current

increases

According

85,000,-

for

history

YORK

BUFFALO

tons

"The

holding back, both production

products in addition to sheet and

the

in

time year.

this year, is the best answer
to statements that steel companies

Iron and Steel

for

highest

year

•

PITTSBURGH

•

above the output of 53,000,in 1939, the last peace¬

000

Institute.

further in¬

the

breaking peacetime steel produc¬

the

capacitiy.

is¬

sued

by

several hundred million dollars.

more

tons,

60%

record-¬

BOSTON

•

PHILADELPHIA

peacetime

"This important program of ex¬

are

programs

NEW
ATLANTA

at the annual rate of

was

£> Co.

INC.

The Com¬

ago.

Walter S.

Steel

Blair

common
stock planned by the
at competitive bidding, the In¬

that an issue of preferred stock
may be sold by negotiation provided the price is ap¬
proved by the Commission.
The company proposes to
sell 214,451 shares of common and 50,000 shares of pre¬

Says Steal Companies Are Increasing Capacities
points

CORPORATE SECURITIES

mission held, however,

Sept. 29 filed 370,000 shares of common. Underwriter—
Loewi & Co., Milwaukee.
Offering—Shares initially

GOVERNMENT,

STATE, MUNICIPAL AND

Indianapolis Power & Light Co.

diana Public Service Commission has ruled.

Investment Co.,

UNITED STATES

Stanley & Co., Blyth & Co., Smith, Barney & Co. and
Kidder, Peabody & Co. (jointly); Lehman Brothers, Har¬
riman Ripley & Co., Goldman, Sachs & Co., Lazard Fre¬
res
& Co.
and
Equitable Securities Corp. (Jointly);
Shields & Co.; Drexel & Co.

company

Wisconsin

4

New York Chicago & St. Louis RR.
(10/14)
Company will receive bids up to 3 p.m. (EST) Oct. 14

per

of

I

(10/28)

by John B. Hyde, ViceRoom 916, 71 Broadway, New York City;
Probable bidders: The First Boston
Corp.; Morgan, Stanlev & Co.; Halsey, Stuart & Co.
Inc.; Dick & .Merle-*
Smith.

(EST) Oct. 22.

noon

new

15-year convertible debentures
shares ($1 par) common. The state¬
112,000 shares of common reserved for

Indianapolis.

near

President,

sales

would be issued

Dec. 20 filed $700,000 5%

generating plant

Jacksonville Terminal Co.

Company will receive bids up to noon (EST) Oct. 23
for the purchase of
$4,000,000 first mortgage bonds, se¬
ries A.
Bids will be received

agreement, for the financing of new
equipment. Bids will be received by H. B. Stewart, Jr.,
President, 12 East Exchange Street, Akron, Ohio, up to

Nov.

covers

Service

Company will receive bids for the purchase of $600,000

shares

due 1962, and 225,000

new

-

New York.

Utah Chemical & Carbon Co#

a

•

(jointly); W. C. Langley & Co.; The First Boston Corp.

30-year first mortgage bonds.
Underwriters—To be determined by competitive bidding.
Probable bidders include: Blyth & Co., Inc., Smith, Bar¬
ney & Co. and Kidder, Peabody & Co. (jointly); W. C.
Langley & Co. and Glore, Forgan & Co. (jointly); Halsey, Stuart & Co. Inc.; The First Boston Corp., Hemphill,
Noyes & Co. and Drexel & Co. (jointly); White, Weld &
Co., Lazard Freres & Co. and Harriman Ripley & Co.
(jointly).
Proceeds—To finance construction program.
Bids—Bids for the purchase of the bonds will be re¬
ceived up to noon Oct. 14 at Room 2033, 2 Rector Street,
Sept. 12 filed $8,000,000

ment also

of

Underwriting—To be determined by competitive bidding.
Probable bidders: Halsey, Stuart & Co. Inc.; Shields &
Co.; Glore, Forgan & Co., and Harriman Ripley & Co.

to

($10 par) common.
Under¬
Co.
Offering—Shares initial¬
ly will be offered for subscription to common stockhold¬
ers.
Unsubscribed
shares
will
be
offered
publicly
S.

ferred to raise nearly
$10,000,000 to finance construction

Price—

investment.

Oct. 5 reported company plans issuance of about $6,000,000 bonds and $3,500,000 preferred stock, the proceeds

Ohio

Oct. 2 filed 584,320 shares
writer—F.

Proceeds—For

•

Oct.

^ Sta-Kleen Bakery Inc., Lynchburg, Va.

Oil

prices.

Thursday, October 9, 194?

Prospective Offerings

$1,000 debentures purchased.
Price by amendment.
Proceeds—To provide working capital.

Standard

CHRONICLE

Corp., Milwaukee
Sept. 30 filed $4,000,000 30-year first mortgage bonds.

each

•

FINANCIAL

publicly through underwriter.

market

on

Wisconsin

Houston, Texas

Sept. 26 filed $1,200,000 of 4% debentures, due 1955, and
230,000 shares ($1 par) common.
Underwriting — Well
Service Securities Co., an affiliate, will be sold a portion
of the common for resale to Spartan's officers and em¬
ployees.
Offering—Common will be offered in conjunc¬
debentures

Based

&

Co., Ltd., of Montreal,

Spartan Tool & Service Co.,

tion with the

COMMERCIAL

Wars

the

close

averaged

of

World

61 %

War

of

I.

of

postwar

steel supply, nnd de-.
They have been lending

every effoft to bring about

"Meanwhile, analysis
clearly

shows

a

bet¬

of all the

that

where

■xm

i

Volume 166
there

steel

are

largely

due

tions.

shortages, they

"1. Since

there

kinds

of

end

been

of

two

demand

the

war

concurrent

for

steel—one

de¬

mand for prtjds caused
by the
sharp jpfrtailment of civilian prodiction during the war, and the

Other to fill up war-depleted
ventories.

Obviously the

in¬

second

kind of demand has been unusual
and

will

taper off when

inventories

"2. In

CHRONICLE
middle

normal

of events

varied

as

economic changes, sporting event results, farm

as

price swings, and even panics to astronomical phenomena like the
sun-spot cycle and the changing positions of the planet Venus.
Current

Cycle theorists claim1 that there*

existing trends in

are

trends, and that this information

fallacy
its concept ignores

in

can

be used to predict

to this writer to be that this technique
causes and "stresses .only the objective per¬

seems

Japan, the stjeel industry formance. Thus, even the unpredicted interjection of a war sqp-r
f?as lost 18,000,000. tons of steel posedly does not upset a previous forecast based on rhythmic expec¬
Ingots; through strikes in steel and tations.
COal.

'y'- '?X['
Strikes^janid delays in indus¬

"3.

Thus

cycle

brace the

theory and techniques, even more than Dow, em¬
assuming the future continuation of past patterns.

of

error

tries supplying machinery for the
steel industry have hampered im¬

provements and expansion plans
>ln the. industry'i f^p^xaipplei 3,-

j000,000 additional

tons

of

sheet

and

strip capacity over July, 1941,
planned to be in operation
July 1. 1947., vBut only. 1,000,-

was
>©n

C00 tons of

thai increase

pleted

on

schedule,

jability

to

get

was com¬

through

in-

equip¬

necesssary

ment.

"Steel company shipments of
iSteel for export this year have
amounted to about 7% of total
:

shipments. This is

no greater per¬
centage than in prewar years.
A

substantial

amount

of

the

steel

exported has been in accordance

;with government directives.
Al¬
though heavy demand for Ameri¬
can

steel

Europe

to

may

immediate
on

reconstruct

Western

be necessary for the

lessen

as

"Ratio" Technique■

European Steel produc¬

ingots is running at the annual

rate of about
r

for this is the

and

Other

critically short sup¬
poor
quality of scrap.

reasons

are

strikes

in

market

as

by constructing the points which represent the closing prices of a
stock or group, divided by the closing price of a good average, on a
daily or weekly basis. ... If we use semi-logarithmic chart paper, we
need compute the Ratio figure for only one stock.
Then we measure
the distance of the price close from the Ratio Figure and plot that
distance from the closings of the other stocks to get the Ratio
Figures

Semi-logarithmic charts are preferable, in
they enable us to guage comparative swings in
different stocks [sic] very simply.

addition,

of

existing

capacity

and

of

a

materials

steady flow of the
essential

in

steel-

The expansion program

essing

for

raw

handling and

of 1947, whereas food exports
increased $30 millions over cor-

responding period of last

year.

Exports of foodstuffs from the

Line

Foodstuffs recording the great¬
export increase during the
half of

1947

compared with
the same period in
1946, were
grains
and
preparations, rising
from

l
<

point or penetration
months' duration) fore¬

or

direction."

Disguised Hindsight Again

favorable
And

trend Signal.

efforts
the

clearly

very

based

the

on

seen

ratio

the

in

theme.

product

This

of

another

popular
explains its

organization

"a study of the relative market action of the securities of

as

various

and

groups

the

development

of

patterns

which

have

indicate the future attractiveness of the individual groups

to

in relation to the market

as

a

whole."

The most apt comment

following sample excerpted from that service's specific
analysis and recommendation, despite the esoteric fol-de-rol, clearly
shows again the illogical attempt to translate
per se the past into
It reflects

on

a

specific industry thus:

"This group of stocks suffered

serious loss of position

a

$412 millions to $674 mil¬
lion; fruits and preparations, from
$74 millions to $95 millions; fodders and feeds, from $3 millions
to
$17 millions; and nuts and

preparations, from $7 millions to
$20 millions.
Wheat-flour exports for the first
'Of
1947
totaled
47,085,000

half




it is

as

commodities

put-

standing in exports were corn,
peanuts, and grain sorghums, with
quantity increases of 596%, 383%^
and 18,150%, respectively.
Other

exported agricultural
products showing major increases

in

value;

65%

in

evaporated

quantity

milk, down

and

rose

and

prepared

Cane sugar imports

52% in quantity and 105% in

value;

unground

black

pepper

3,212%
in
quantity
and
6,400% in value; bananas, up 20%
quantity and 30% in value; and
prepared coconut meat rose 400%

rose

59%

value; wheat, down 39% in

in

quan¬

tity and 27% in value; dehydrated

in

quantity and value.
Import decreases

for

cause

recorded

cattle, down 91% in quantity

and

in

79%

value;

wheat

down

95% in quantity and value; olives
in brine, down 33% in quantity
and 35%
in value; and brandy,
down 75% in quantity and value.

Among imported non-food agri¬
cultural

products
increases

showing
the
in
the
1947

greatest
period pyer 1946 were copra, up
226% in quantity and 900% in
value; linseed oil, up 226% in
quantity and 947% in value; and
tung oil, up 1,185% in quantity
and 1,248% in value.

Imports

of

coffee

and

co.coa

but

increases

in

value;

in

value,

quantity and

cocoa

coffee,
up

30%

If

it be conceded that at some point "badly-acting" securities
become undervalued, only by assuming that the market com¬
munity will always react like a pack of morons toward that security
can
it be concluded, as these systems do, that the demonstrated
disparity will continue indefnitely—or even continue at all.

93%
down

down 97% in quantity jand

beans, down 7%

in

value;

31%

in

dried

and

food

in

agricultural

imported
products

recorded for flaxseed,

increases in

foodstuffs during the

compared with 1946
ed for

Decreases

eggs,

quantity and 25%

in value.

Major

in quantity and up 150% in value.

Market Ratio

other technical behavior.

or

Markets followers who

cane

sugar,

imports

of

in

quantity

and

79%

in

trend

on

Formula-Timing

his

from

previous

"escape"

methods,

technical

to

once

the

more

device

of

formula-timing is being increasingly used by institutional and indi¬
vidual investors as well as by downright speculators—sometimes
for part, sometimes for all, of their capital. Because of space limita¬
tions we shall not go into a discussion of formula-timing, other
these

practitionersfulthough actually pointing
in Dow theory and professedly
eschewing it, themselves actually engage in the latter's same basic
out

that

which

error,

even

forecasting

is

formula-timing

principal tool, it does
A

involved

have been describing.

we

while

use

does not
past behavior

rely

on

forecasting

as

its

its major premise.

as

formula-timing plan essentially is a rigid and advance deter¬
of the proportions of one's fund to be allocated between

mination
volatile

(stocks)

and defensive

(bonds) securities. One category of
"equalizing," that is, maintaining unchanged
levels a pre-stipulated proportion between the

these plans is confined to

all

volatile

market

and

defensive

securities.

The

however, comprises "sliding scale"

other

more

usual

operations; that is

a

variation,
formula is

established for automatically fixing varying proportions of
tiles and defensives to be held at different market levels.
The

equalizing
the

of

the vola-

method
no

market

consists almost wholly of an airtight
fundamental forecast of either the long-term
or
of its intermediate trading range.
The

investor at the outset, and only
once, decides exactly what proportion
between common stocks and fixed-income suits his needs for capital

preservation, income and appreciation; besides meeting his reasoned
opinion as to the constitution of the best hedge. But the "sliding
scale"
technique (including even its sometimes restricted form

employed by Yale University), does require

as

cast.

For

historical

market

a

grounds

as

level

or

on

in

terms

a

fundamental fore¬

market

index, either on
judgment, must be
varying proportions; and likewise the

some

the median of the

of

other

a

basis

of

market's future upper and lower limits must be estimated.
And this historically-pointed fundamental forecast is speculative,
if

not

dangerous.

For

would probably have
of

out

stocks

a formula plan devised 30 or 40 years ago
subsequently gotten the individual completely

when

the previous historical price ranges became
A look at the historical precedent existing at the

broken through.

start of important bull markets ever since 1897 bears this out.
At
the time of the start of the bull market in 1914 we would have

that

seen

had

one

bear

between

reached

a

1897

low

and

1914

53;

of

every

previous bear market but
of the succeeding 1917

yet the low

market'

was 63.
Again in 1924, before the great bull market
1920's, the common stock position would have been reduced
minimum, as the 121 price level of that time was historically
hjgh. But subsequently during the next six years the low was 115—
a
decline of only 4%—and the market went on up to 381—a rise

of the
to

a

of

over

200%.

True it may be that "the higher they go, the harder
But how "high"?
of mine mentioned to a salesman of Formula-Timing

they fall."
A

friend

plans the objection that in

a "permanent new era" one would be
permanently out of the market. The salesman's answer was that it

would take ten years for a subscriber to

having

a

realize it was "permanent";
client for the intervening 10 years, this was all right

with him.
%

Analysis of the effects

:!i

of

these

*

technical market methods

on

the individual practitioner and on the community, as well as general
conclusions about forecasting, will follow in next week's columns.
Meanwhile

record¬

tity and 25% in value; and hops,

technical

down 5% and

vital

15%, respectively.

a

Perhaps because of the investor's desire to "escape"

cod-liver oil, down 40% in quan¬

were

of

trend.

1947 period

unground black

continuance

assume

committing merely in another form the same
kind of gamblers' error as
the aforementioned "maturity of the
chances," which assumes the immediate reversal of the previous

non¬

value;

thus

technical grounds, are

were

down 93%

,

Under a system which replaces logical by "technical" reasons,
absolutely worthless securities (even the outstanding German Bonds
with no chance of yield) could and would be bought at any price
—no matter how
high—provided only that they show a favorable

so

soups,

buying opportunity; and hence would

a

may

beans show decreases in quantity

down 18% in

supposition that it
as valid on

is just

reversal rather than a continuance of the trend.

a

selected

were

unfavorable "

as

technical approach.

the

on

speculative-investors with

in the

in

first six months of 1946.
Individual

bananas,

pepper,

coconut meat.

^

indi¬

For a single stock or a group of stocks behaving worse than the
market might well result in the stock becoming a good value on
criteria of actual investment worth and thus provide the intelligent

hedge, and requires

hundred-pound sacks, amounting
to $283
millions, and represent¬
ing a quantity increase of 84%
as
compared to 25,572,000 hun¬
dred-pound sacks, amounting to
$98,000,000, shipped
during the

interpreted

now

demolishing the basis of both the Dow

direction should and will be reversed, as is their
will be continued. And this contrary
supposition

during

The

the future.

Poorer-than-average market performance is

theorists and the Ratio practitioners is also the most simple—namely,
that it would be just as reasonable to conclude that a trend in one

For
is

succinctly about another industry, thus:

more

cated and the outlook for the group is

formance.
This

again,

"This group, which has carried-an uncertain designation since
ppcember 1944, h,as this month prpdnced a new low -ratio, requiring
that the Warning Signal previously in effect be replaced by a Down¬

than to show how

-

perhaps well-disguised manner,

a

embody our afore-mentioned fallacy, employed in the Dow and Cycle
theories, of trying to read the future through projection of past per¬

States

est

first

reversal

(of several weeks'

new

in
the first half of 1947, were
during the first cornstarch and
cornflour, up 377%
half of 1947 totaled $1,241,000,000,
in quantity and 358% in value;
an
increase of $30 millions over
crude soybean oil,
up
311 % in
the corresponding period last year,
quantity and 713% in value; burthe Office of International Trade,
ley leaf tobacco, up 12% in quan¬
Department of Commerce, said.
tity and 54% in value; and in¬
United States imports of food¬
edible tallow, up 351% in quan¬
stuffs during the first half of 1947,
tity and 767% in value.
totaled
$831,000,000
compared
Decreases were recorded in ex¬
•with $633,000,000 in the first half
ports
of canned
meats, which
of 1946, an increase of
$198,000,dropped 94% in quantity and 92%
000 or 31.2%.

United

as

future

Commerce Department reports an
increase
of $198 millions in
U! S. food imports for first half

:

Ratio

proc¬

Along With Exports

i

in the

move

a

a

materials."

Food imports Rise

;

of

Both of these ratio methods, in

includes construction of additional
facilities

could quickly indicate a reversal of the better-than-average market
action which has been given for some time by the
group, no such
indications are yet evident. The outlook for the group is interpreted

means.

penetration

Channel would coincide closely
have no additional value

a

it would

interpret the action pf the group and is not drawn on the chart.
Although the Ratio Line and the Control Line are in a position which

because

Ratio Trend Line

a

casts

value,

making.

a

whole, pnd hence indicates its future.

a

longer Channel shown

to

line

tion

the planned increases in capacity
will
require uninterrupted pro¬
raw

economic

category of these "ratio-ists" who interpret the rela¬
tionship of the movement of a single issue or of a group to the be¬
havior of the general market as a
whole; has many practitioners.
One of these explains his method as follows: "We construct our ratio

service

and

of

other

The

fields,
the
unsatisfactory
quality of coal and fuel oil and
pther factors.
Full-scale opera¬

duction

escape from

single1 security in relation to the
balance of the market.
Operating in the first category, for example
with great popular appeal is a brilliant technician who bases comnlex
trigonometric calculations and accompanying erudite interpretations
on the premise that an index embodying the relative volume of
highpriced and of low-priced stocks reflects public confidence in the

the

coal

of

to

6,000,000 tons below

the industry's productive capacity.
There are a pumber of reasons
•for this.
One outstanding reason

ply

desire

interpretation

(as according to industry) or of

"A

"At the present time, production

As the bottom line of such

the

the economic

the confusions resulting from the
factors, "ratio" schemes in
various forms for forecasting have also become
increasingly .pooular.
This kind of so-called "differential analysis" technique makes deduc-r
tions from the comparative behavior of different groups of issues

tion rises.

of

the

In

attempted

future, the dependence by mechanical

the United States for steel will

with

the economy that can be measured and: demonstrated beyond
doubt,
that there is distinct rhythm or periodicity in the cycles tfyat accom¬
pany these
the future.

broad Uptrend

a

From the
.

years.

The business cycle guess will go wrong with every
tmponderable in the current economic situation that is unanticipated.
The rythmic cycle, on the other hand, has
rigidly related the timing

fall of

i

large part of its loss.

a

63

charts, it
be seen that a much narrower Channel than the one shown
might be drawn to bound the action of the group over the past three

succession.

Their basic

the

'30s, but since late in 1938, it has been in

may

arerestored.

the 24 months since

(1467)

which has reestablished

(Continued,from page 5)

to supply the unprecedented

'

FINANCIAL

impor¬

the

have

&

condi¬

the most

of

tant of these are:
•

COMMERCIAL

are

abnormal

to

Some

THE

Number 4636

at

least

the

has served to high-light
of forecasting elements in

it is hoped that the above

usually-unrealized

presence

approaches, and the common embodiment therein of
of mistaking mere hindsight for valid foresight.

the

error

1?

64

THE

(1468)

COMMERCIAL

FINANCIAL

&

CHRONICLE

Thursday; October 9,1947

Canadian dollar while this pro¬

is under way.

gram

*

OTl

from the Nation's Capital

.

channel

A

Behind-the-Scene Interpretations

have a
broad affect upon many U. S. in¬
dustries. They will provide a new

•

•

•

V/\j|

IHI'

JLA

the

prisoner of a few years standing finally is denied parole,
his thinking gets shaken up a bit.
He has to reconcile himself to a
longer term of unpleasantness.
Something of the same kind of
shake-up is now going on in the minds of top Administration officials.
It started after the European committee came forth with its
version of the Marshall "plan."

'

*

To

i.

understand

I

;

thought

the

how

of the Administration

processes

have /been

j

things

it is necessary to

on,

pushed

by

around

the Marshall "plan."

'Talking
began
tion

—

■

-<V

*-i'

""

"•

since

time—ever

some

Of

been

worried

about

recession."

help

of their same,
tactics.
With
typical

by

more

present

Russian stupidity they can com¬
mit

act.

overt

some

But unless the Russians do the

the Administration was not
quite prepared to see NO end
in sight for the "spiral." Now
the Marshall "plan" has changed

it, there is

Sji

$

ago,

r

;
-

.

all that. They have come

to

see

what they think is the price of

European aid. That price is the
indefinite

continuation

spiral

r

prices-wages-cost

of

-

growing feeling that
4-year
Marshall
"plan,"" Congress may approve a
series of year-to-year "stop gaps."
instead

the

of

•

of

living.

a

of

is

there is
rise in the cost

worse,

"of

living

into
next year's political campaign. In
terms of politics, that is practically until eternity. The prospect
'has the top politicians terrified.
The joke on them is that
the
•Republicans are almost as jittery.
may

over

carry

,

Both sides
of

L

hit

will

political

afraid the old HC

are

them

between

the

need

came

tion

three

the

Administration

They

sight.

This

Inflation,

see

It

on

of
big

a

the

market

third

some

more

predict¬

no

of prices, over¬

probably

will

$10

mean

billion of additional bank credit
in the next 12 months. And very

little

be done about it.

can

*

So

from

on

the

Adminis¬

tration will fight a shoot-and-retreat action against inflation. It

will

plead

"sound"

with

banks

loans for the

to

make

production

of goods, and as few loans as pos¬
no
matter
how
sound, to

sible

increase the competition for buy¬

ing

goods.

Everybody will be
fight
the good fight
against inflation. The more every¬
body helps the better. So this talk
against easing up when it becomes
possible on consumer credit. And
asked

to

$

contain one
hostile force abroad, the Adminis¬
to

tration did not want to encourage
the advance of another—inflation
at
no

to

So

home.

grain

buying the

matter what the consequences

out of the question.
And to reimpose controls, it is
necessary
to
restore
rationing.
price,

was

This is just a

ity

short

physical impossibil¬
months. So

of

several

quently the heat is on the volun¬
tary campaign. "It just must be
made to work."
$

It is

the

rear¬

engagement
against
enemy we cannot stop.
*

an

*

It is premature at present to

form

a

gress

will do with the Marshall

judgment
But

on

what Con¬

there

are

rum¬

blings. Some of the people here
who seldom get their ears off
the ground, say

that the "plan"

is being received, with

ing
is

There

they

increas¬

skepticism.

not

The skepticism
just political opposition.

are

are

growing doubts, and

sincere.

Congressmen
whether

the

asking
"plan" is

are

Marshall

designed to

OES,
The

war.

know

what

these

you

changes

are,
authoritatively, for months.
Despite the fact that the Board

has been working on the new plan
for

mobilizing the machinery for
next
war
for
nearly
two
years,
the
plan
can't
be ^ an¬
the

nounced.

would

Everybody

is afraid;; it
"disturbing"
in
the

be

present international situation.
one

out for your¬

be

a

self.

There

will

little

more

steam behind the industrial stock¬

piling
now

of

materials,

scarce

the

A-N

Until

on.

Munitions

nOw

Board

has

This has been for two
did

not

want

to

materials

scarce

the

ciled

to

crawled.
reasons.

compete

against

American

Board

work

high

This does not rule out price-

rationing
definite

at

controls

date

future

European

some

was

It

for

the

re¬

industry.
not

recon¬

deteriorate.

But

now,

at

And

disappear

industry

Large

That

is

how

to

bring about a solution of its ex¬
change deficiency. The Dominion
has got to write off one of its
historic assets. Sterling converted
into dollars, U. S., balanced the
Dominion's

international

prqtty well until

went onto

A

*

prospective

few packages

a

are

has

the shelf." It

on

just gone off dead center.
❖

*

try could catch

is

be,

may

the

of

for

than

S.

in

in¬

the

"waste

less"

committee's aggressiveness.

Despite

the

citizens

to

results

effort
eat

must

to

be

induce

the

less,

main

obtained

by

inducing farmers to feed less—
or

substitute

The

perts

cheaper feeds for

European

l;J

Congressional

studying

are

tax

ex¬

quietly

the

problem of permitting husbands,
and

of this

feed

wives

separate

in

all states

income

tax

file

to

returns,,

without mixing up the question
of

estate

come

will

up

not

taxes.

with

They

hope

answer

an

boomerang.

to»

that

And

of

nation-wide separate

course,

re¬

turns probably will be included?
in the quickie $4 billion tax cut
the

Republicans

are

planning.

grain.
Under the

tj:

Department of

new

National Defense, the A-N Mu¬

the

Board

becomes, simply,

"Munitions Board."
*

There

was

the

something significant

in

how

grains

the

by

to

move

distillers

Distilled

cut

use

came

Spirits

of

about.

Institute,

of the divisions within the

industry

which

total capacity to

diminished

said to have considered
and
ary
man

its

help UNRRA, is
informally

can

possible

as

form

of

domestic

uckman

at

his

side,

Secretary

then:

Rails

in

Millers

Domestic &

over

would

Foreign

Securities

be

as

New Issues

It would leave

by-product.

This could be fed

to livestock. This is the
of feeding

—

of

Mr.

Reorganization

1,056,000 tons of mill feed

of

with

Europe

This

bushels of wheat.
home

bushels

Then

Old

equal to shipments of 245 million

bushels

committee.

flour,

needs.

idea of volun-

the

to

produce 104 million cwt.

cooperation with the Luck-

dropped

hand with

their plea to send as much of the

wheat

*

*

tji

If flour millers get a

equivalent

at home—37 million

corn

or

40

million

M.S.Wien & Co.
V

wheat.

Or

does

the

government feel that indirectly in
the

guise

of feeding humans

fay ESTABLISHED 1919

Members
40

N.

Y.

Security Dealers

Exchange PI., N. Y. 5

Teletype N. Y. 1-1397

it

U

|

Assfn^

HA. 2-8780

: :1;: 7

HAnover 2-0050

Teletype—NY 1-971

Empire Steel Corp;

dollar

three-quarter

of

year

it

indus¬

Firm Trading Markets

U.

so

help
$

to¬

its breath.

What the significance

also

animals?

of

after

the

should

not where

*

0

deficit

the

stockpiling.

purchases

day

Kelly, but that's
petty cash!"

pay¬

England
skids.

the economic
*

of

little

a

curtailment

the

use

launched—before

was

*

Canada's

ments

from

volume

while.

a

Miss
our

industry's

morrow," he requested. And

is

not in store. The Board "will put

aware

war.

for

stand

can

competition

get you to "waste less."

the

grain

action

The

*

discuss

to

here

dication

present, it is the boogyman to
*

it

Now

Anderson called up the

worse,

and if prospects for next year's

grain

prices.

here,
keep

new

spokesmen. "Get somebody down

likely to

the

situation gets

you're

we

recognized that high prices aren't

in¬

if

—

know

'i

from

more

billions,
cannot
be
tossed
off
lightly.
Inevitable is a drastic cut in

FOREIGN SECURITIES

Susquehanna Mills

All Issues

purchases from the U. S. Branch

really limited to rehabilitation
is

won't

nitions

*•!•'

*

since

come.

guard

"plan."

late

what count. But

are

And

*

seeking

•of

*

changes

converting

grain speculation. This is typical
to

the

of

"waste

Eyes North! In just a few days
top
officialdom
will
wrestle with its toughest problem

also this talk—bitter talk—against
more

business

and

know, however,' is

set-ups of the WPB,

WMC

this had to be abandoned. Conse¬

*

*

now

was

food and following
up
in price. The

the voluntary

was

to

con¬

less" campaign.

in

parole

no

at least

able abatement
all.

feels

the necessity

means

or

were

the reinstitu-

was

tion of controls. The other

buying the

industry

like

*

extending foreign aid

.

One

*
*

imprisoned by
scale.

President's cabinet,

alternatives

sidered.

Man¬

*

tions Board recommended for the

latest

them.

for mature considera¬

the

in

War

the changes which the A-N Muni¬

don't

you

about

worry

up

Stabiliza¬

of

«

Figure that

When the feed-Europe business

While

Yet

least,

at

to

Production,

of controls. For the

rumors

eyes.
*

What
would

sji

*

present,
what

And

Office

and

$

You will hear about controls
and

danger that this

a

;

War

power.

and

job for the Marshall "plan," it is
a safe bet right now that it won't
be put across in Congress in any
overall form, until well into 1948.
First will
come
"stopgap" aid.
And while it is too soon to predict

Yet up until a couple of weeks

of

Economic

of

war.

prospec¬

a

*

*

*

Boardhas

plan for the next

Office

tion,

about

The former Army-

go.

a

tive

indus-

for

is just

Munitions

Office

committee. They can

European

blue-print

mobilization

drafted

Russians
will
put
over
the
Marshall
"plan" for Mr. Truman and the

the

rising cost of living. It has been
'trying to figure out how to stop
*it, or at least keep from being
burned politically by it. For some
time now the government's eco¬
nomic sooth-sayers have stopped
/setting the date for a "corrective

the

It is said to include

always

is

'

■

V

Navy

*

$

sis

<

being kept under wraps,

ready to

get

there

course

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plants may be better "integrated" with their U. S. parents.
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,

:

50 Broad Street

;

v

SPECIALISTS

'

J

Hill, Thompson & Co., Inc.
Markets

New York 4, N. Y.

AFFILIATE: CARL MARKS & CO. Inc. CHICAGO

120

and Situations

for Dealers

Broadway, New York 5

Tel. REctor 2-2020

.

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